[Congressional Record Volume 147, Number 125 (Monday, September 24, 2001)]
[House]
[Pages H5949-H5955]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
MARK-TO-MARKET EXTENSION ACT OF 2001
Mr. GREEN of Wisconsin. Mr. Speaker, I move to suspend the rules and
pass the bill (2589) to amend the Multifamily Assisted Housing Reform
and Affordability Act of 1997 to reauthorize the Office of Multifamily
Housing Assistance Restructuring, and for other purposes, as amended.
The Clerk read as follows:
H.R. 2589
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Mark-to-
Market Extension Act of 2001''.
(b) Table of Contents.--The table of contents for this Act
is as follows:
Sec. 1. Short title and table of contents.
Sec. 2. Purposes.
Sec. 3. Effective date.
TITLE I--MULTIFAMILY HOUSING MORTGAGE AND ASSISTANCE RESTRUCTURING AND
SECTION 8 CONTRACT RENEWAL
Sec. 101. Definitions.
Sec. 102. Mark-to-market program amendments.
Sec. 103. Consistency of rent levels under enhanced voucher assistance
and rent restructurings.
Sec. 104. Eligible inclusions for renewal rents of partially assisted
buildings.
Sec. 105. Eligibility of restructuring projects for miscellaneous
housing insurance.
Sec. 106. Technical corrections.
TITLE II--OFFICE OF MULTIFAMILY HOUSING ASSISTANCE RESTRUCTURING
Sec. 201. Reauthorization of Office and extension of program.
[[Page H5950]]
Sec. 202. Appointment of Director.
Sec. 203. Vacancy in position of Director.
Sec. 204. Oversight by Federal Housing Commissioner.
Sec. 205. Limitation on subsequent employment.
TITLE III--MISCELLANEOUS HOUSING PROGRAM AMENDMENTS
Sec. 301. Extension of CDBG public services cap exception.
Sec. 302. Use of section 8 enhanced vouchers for prepayments.
Sec. 303. Prepayment and refinancing of loans for section 202
supportive housing.
Sec. 304. Technical correction.
SEC. 2. PURPOSES.
The purposes of this Act are--
(1) to continue the progress of the Multifamily Assisted
Housing Reform and Affordability Act of 1997 (referred to in
this section as ``that Act'');
(2) to ensure that properties that undergo mortgage
restructurings pursuant to that Act are rehabilitated to a
standard that allows the properties to meet their long-term
affordability requirements;
(3) to ensure that, for properties that undergo mortgage
restructurings pursuant to that Act, reserves are set at
adequate levels to allow the properties to meet their long-
term affordability requirements;
(4) to ensure that properties that undergo mortgage
restructurings pursuant to that Act are operated efficiently,
and that operating expenses are sufficient to ensure the
long-term financial and physical integrity of the properties;
(5) to ensure that properties that undergo rent
restructurings have adequate resources to maintain the
properties in good condition;
(6) to ensure that the Office of Multifamily Housing
Assistance Restructuring of the Department of Housing and
Urban Development continues to focus on the portfolio of
properties eligible for restructuring under that Act;
(7) to ensure that the Department of Housing and Urban
Development carefully tracks the condition of those
properties on an ongoing basis;
(8) to ensure that tenant groups, nonprofit organizations,
and public entities continue to have the resources for
building the capacity of tenant organizations in furtherance
of the purposes of subtitle A of that Act; and
(9) to encourage the Office of Multifamily Housing
Assistance Restructuring to continue to provide participating
administrative entities, including public participating
administrative entities, with the flexibility to respond to
specific problems that individual cases may present, while
ensuring consistent outcomes around the country.
SEC. 3. EFFECTIVE DATE.
Except as provided in sections 106(a)(2), 303(b), and
304(b), this Act and the amendments made by this Act shall
take effect or are deemed to have taken effect, as
appropriate, on the earlier of--
(1) the date of the enactment of this Act; or
(2) September 30, 2001.
TITLE I--MULTIFAMILY HOUSING MORTGAGE AND ASSISTANCE RESTRUCTURING AND
SECTION 8 CONTRACT RENEWAL
SEC. 101. DEFINITIONS.
Section 512 of the Multifamily Assisted Housing Reform and
Affordability Act of 1997 (42 U.S.C. 1437f note) is amended
by adding at the end the following new paragraph:
``(19) Office.--The term `Office' means the Office of
Multifamily Housing Assistance Restructuring established
under section 571.''.
SEC. 102. MARK-TO-MARKET PROGRAM AMENDMENTS.
(a) Funding for Tenant and Nonprofit Participation.--
Section 514(f)(3)(A) of the Multifamily Assisted Housing
Reform and Affordability Act of 1997 (42 U.S.C. 1437f note)
is amended--
(1) by striking ``Secretary may provide not more than
$10,000,000 annually in funding'' and inserting ``Secretary
shall make available not more than $10,000,000 annually in
funding, which amount shall be in addition to any amounts
made available under this subparagraph and carried over from
previous years,''; and
(2) by striking ``entities) and for tenant services,'' and
inserting ``entities), for tenant services, and for tenant
groups, nonprofit organizations, and public entities
described in section 517(a)(5),''.
(b) Exception Rents.--Section 514(g)(2)(A) of the
Multifamily Assisted Housing Reform and Affordability Act of
1997 (42 U.S.C. 1437f note) is amended by striking
``restructured mortgages in any fiscal year'' and inserting
``portfolio restructuring agreements''.
(c) Notice to Displaced Tenants.--Section 516(d) of the
Multifamily Assisted Housing Reform and Affordability Act of
1997 (42 U.S.C. 1437f note) is amended by striking ``Subject
to'' and inserting the following:
``(1) Notice to certain residents.--The Office shall notify
any tenant that is residing in a project or receiving
assistance under section 8 of the United States Housing Act
of 1937 (42 U.S.C. 1437f) at the time of rejection under this
section, of such rejection, except that the Office may
delegate the responsibility to provide notice under this
paragraph to the participating administrative entity.
``(2) Assistance and moving expenses.--Subject to''.
(d) Restructuring Plans for Transfers of Prepayment
Projects.--The Multifamily Assisted Housing Reform and
Affordability Act of 1997 (42 U.S.C. 1437f note) is amended--
(1) in section 524(e), by adding at the end the following
new paragraph:
``(3) Mortgage restructuring and rental assistance
sufficiency plans.--Notwithstanding paragraph (1), the owner
of the project may request, and the Secretary may consider,
mortgage restructuring and rental assistance sufficiency
plans to facilitate sales or transfers of properties under
this subtitle, subject to an approved plan of action under
the Emergency Low Income Housing Preservation Act of 1987 (12
U.S.C. 1715l note) or the Low-Income Housing Preservation and
Resident Homeownership Act of 1990 (12 U.S.C. 4101 et seq.),
which plans shall result in a sale or transfer of those
properties.''; and
(2) in the last sentence of section 512(2), by inserting
``, but does include a project described in section
524(e)(3)'' after ``section 524(e)''.
(e) Addition of Significant Features.--Section 517 of the
Multifamily Assisted Housing Reform and Affordability Act of
1997 (42 U.S.C. 1437f note) is amended--
(1) by striking subsection (c) (except that the striking of
such subsection may not be construed to have any effect on
the provisions of law amended by such subsection, as such
subsection was in effect before the date of the enactment of
this Act);
(2) in subsection (b)--
(A) in paragraph (7), by striking ``(7)'' and inserting
``(1)''; and
(B) by adding at the end the following new paragraph:
``(2) Addition of Significant Features.--
``(A) Authority.--An approved mortgage restructuring and
rental assistance sufficiency plan may require the
improvement of the project by the addition of significant
features that are not necessary for rehabilitation to the
standard provided under paragraph (1), such as air
conditioning, an elevator, and additional community space.
The Secretary shall establish guidelines regarding the
inclusion of requirements regarding such additional
significant features under such plans.
``(B) Funding.--Significant features added pursuant to an
approved mortgage restructuring and rental assistance
sufficiency plan may be paid from the funding sources
specified in the first sentence of paragraph (1)(A).
``(C) Limitation on owner contribution.--An owner of a
project may not be required to contribute from non-project
resources, toward the cost of any additional significant
features required pursuant to this paragraph, more than 25
percent of the amount of any assistance received for the
inclusion of such features.
``(D) Applicability.--This paragraph shall apply to all
eligible multifamily housing projects, except projects for
which the Secretary and the project owner executed a mortgage
restructuring and rental assistance sufficiency plan on or
before the date of the enactment of the Mark-to-Market
Extension Act of 2001.''; and
(3) by inserting after paragraph (6) of subsection (b) the
following:
``(c) Rehabilitation Needs and Addition of Significant
Features.--''.
(f) Look-Back Projects.--Section 512(2) of the Multifamily
Assisted Housing Reform and Affordability Act of 1997 (42
U.S.C. 1437f note) is amended by adding after the period at
the end of the last sentence the following: ``Notwithstanding
any other provision of this title, the Secretary may treat a
project as an eligible multifamily housing project for
purposes of this title if (I) the project is assisted
pursuant to a contract for project-based assistance under
section 8 of the United States Housing Act of 1937 renewed
under section 524 of this Act, (II) the owner consents to
such treatment, and (III) the project met the requirements of
the first sentence of this paragraph for eligibility as an
eligible multifamily housing project before the initial
renewal of the contract under section 524.''.
(g) Second Mortgages.--Section 517(a) of the Multifamily
Assisted Housing Reform and Affordability Act of 1997 (42
U.S.C. 1437f note) is amended--
(1) in paragraph (1)(B), by striking ``no more than the''
and inserting the following: ``not more than the greater of--
``(i) the full or partial payment of claim made under this
subtitle; or
``(ii) the''; and
(2) in paragraph (5), by inserting ``of the second
mortgage, assign the second mortgage to the acquiring
organization or agency,'' after ``terms''.
(h) Exemptions From Restructuring.--Section 514(h)(2) of
the Multifamily Assisted Housing Reform and Affordability Act
of 1997 (42 U.S.C. 1437f note) is amended by inserting before
the semicolon the following: ``, or refinanced pursuant to
section 811 of the American Homeownership and Economic
Opportunity Act of 2000 (12 U.S.C. 1701q note)''.
SEC. 103. CONSISTENCY OF RENT LEVELS UNDER ENHANCED VOUCHER
ASSISTANCE AND RENT RESTRUCTURINGS.
Subtitle A of the Multifamily Assisted Housing Reform and
Affordability Act of 1997 (42 U.S.C. 1437f note) is amended
by adding at the end the following new section:
``SEC. 525. CONSISTENCY OF RENT LEVELS UNDER ENHANCED VOUCHER
ASSISTANCE AND RENT RESTRUCTURINGS.
``(a) In General.--The Secretary shall examine the
standards and procedures for determining and establishing the
rent standards described under subsection (b). Pursuant to
such examination, the Secretary shall
[[Page H5951]]
establish procedures and guidelines that are designed to
ensure that the amounts determined by the various rent
standards for the same dwelling units are reasonably
consistent and reflect rents for comparable unassisted units
in the same area as such dwelling units.
``(b) Rent Standards.--The rent standards described in this
subsection are as follows:
``(1) Enhanced vouchers.--The payment standard for enhanced
voucher assistance under section 8(t) of the United States
Housing Act of 1937 (42 U.S.C. 1437f(t)).
``(2) Mark-to-market.--The rents derived from comparable
properties, for purposes of section 514(g) of the Multifamily
Assisted Housing Reform and Affordability Act of 1997 (42
U.S.C. 1437f note).
``(3) Contract renewal.--The comparable market rents for
the market area, for purposes of section 524(a)(4) of the
Multifamily Assisted Housing Reform and Affordability Act of
1997 (42 U.S.C. 1437f note).''.
SEC. 104. ELIGIBLE INCLUSIONS FOR RENEWAL RENTS OF PARTIALLY
ASSISTED BUILDINGS.
Section 524(a)(4)(C) of the Multifamily Assisted Housing
Reform and Affordability Act of 1997 (42 U.S.C. 1437f note)
is amended by adding after the period at the end the
following: ``Notwithstanding any other provision of law, the
Secretary shall include in such budget-based cost increases
costs relating to the project as a whole (including costs
incurred with respect to units not covered by the contract
for assistance), but only (I) if inclusion of such costs is
requested by the owner or purchaser of the project, (II) if
inclusion of such costs will permit capital repairs to the
project or acquisition of the project by a nonprofit
organization, and (III) to the extent that inclusion of such
costs (or a portion thereof) complies with the requirement
under clause (ii).''.
SEC. 105. ELIGIBILITY OF RESTRUCTURING PROJECTS FOR
MISCELLANEOUS HOUSING INSURANCE.
Section 223(a)(7) of the National Housing Act (12 U.S.C.
1715n(a)(7)) is amended--
(1) by striking ``under this Act: Provided, That the
principal'' and inserting the following: ``under this Act, or
an existing mortgage held by the Secretary that is subject to
a mortgage restructuring and rental assistance sufficiency
plan pursuant to the Multifamily Assisted Housing Reform and
Affordability Act of 1997 (42 U.S.C. 1437f note), provided
that--
``(A) the principal'';
(2) by striking ``except that (A)'' and inserting ``except
that (i)'';
(3) by striking ``(B)'' and inserting ``(ii)'';
(4) by striking ``(C)'' and inserting ``(iii)'';
(5) by striking ``(D)'' and inserting ``(iv)'';
(6) by striking ``: Provided further, That a mortgage'' and
inserting the following ``; and
``(B) a mortgage'';
(7) by striking ``or'' at the end; and
(8) by adding at the end the following new subparagraph:
``(C) a mortgage that is subject to a mortgage
restructuring and rental assistance sufficiency plan pursuant
to the Multifamily Assisted Housing Reform and Affordability
Act of 1997 (42 U.S.C. 1437f note) and is refinanced under
this paragraph may have a term of not more than 30 years;
or''.
SEC. 106. TECHNICAL CORRECTIONS.
(a) Exemptions From Restructuring.--
(1) In general.--Section 514(h) of the Multifamily Assisted
Housing Reform and Affordability Act of 1997 (42 U.S.C. 1437f
note) is amended to read as if the amendment made by section
531(c) of Public Law 106-74 (113 Stat. 1116) were made to
``Section 514(h)(1)'' instead of ``Section 514(h)''.
(2) Retroactive effect.--The amendment made by paragraph
(1) of this subsection is deemed to have taken effect on the
date of the enactment of Public Law 106-74 (113 Stat. 1109).
(b) Other.--The Multifamily Assisted Housing Reform and
Affordability Act of 1997 (42 U.S.C. 1437f note) is amended--
(1) in section 511(a)(12), by striking ``this Act'' and
inserting ``this title'';
(2) in section 513, by striking ``this Act'' each place
such term appears in subsections (a)(2)(I) and (b)(3) and
inserting ``this title'';
(3) in section 514(f)(3)(B), by inserting ``Housing'' after
``Multifamily'';
(4) in section 515(c)(1)(B), by inserting ``or'' after the
semicolon;
(5) in section 517(b)--
(A) in each of paragraphs (1) through (6), by capitalizing
the first letter of the first word that follows the paragraph
heading;
(B) in each of paragraphs (1) through (5), by striking the
semicolon at the end and inserting a period; and
(C) in paragraph (6), by striking ``; and'' at the end and
inserting a period;
(6) in section 520(b), by striking ``Banking and''; and
(7) in section 573(d)(2), by striking ``Banking and''.
TITLE II--OFFICE OF MULTIFAMILY HOUSING ASSISTANCE RESTRUCTURING
SEC. 201. REAUTHORIZATION OF OFFICE AND EXTENSION OF PROGRAM.
Section 579 of the Multifamily Assisted Housing Reform and
Affordability Act of 1997 (42 U.S.C. 1437f note) is amended--
(1) by striking subsection (a) and inserting the following
new subsection:
``(a) Repeals.--
``(1) Mark-to-market program.--Subtitle A (except for
section 524) is repealed effective October 1, 2006.
``(2) OMHAR.--Subtitle D (except for this section) is
repealed effective October 1, 2004.'';
(2) in subsection (b), by striking ``October 1, 2001'' and
inserting ``October 1, 2006'';
(3) in subsection (c), by striking ``upon September 30,
2001'' and inserting ``at the end of September 30, 2004'';
and
(4) by striking subsection (d) and inserting the following
new subsection:
``(d) Transfer of Authority.--Effective upon the repeal of
subtitle D under subsection (a)(2) of this section, all
authority and responsibilities to administer the program
under subtitle A are transferred to the Secretary.''.
SEC. 202. APPOINTMENT OF DIRECTOR.
(a) In General.--Section 572 of the Multifamily Assisted
Housing Reform and Affordability Act of 1997 (42 U.S.C. 1437f
note) is amended by striking subsection (a) and inserting the
following new subsection:
``(a) Appointment.--The Office shall be under the
management of a Director, who shall be appointed by the
President from among individuals who are citizens of the
United States and have a demonstrated understanding of
financing and mortgage restructuring for affordable
multifamily housing.''.
(b) Applicability.--The amendment made by subsection (a)
shall apply to the first Director of the Office of
Multifamily Housing Assistance Restructuring of the
Department of Housing and Urban Development appointed after
the date of the enactment of this Act, and any such Director
appointed thereafter.
SEC. 203. VACANCY IN POSITION OF DIRECTOR.
(a) In General.--Section 572 of the Multifamily Assisted
Housing Reform and Affordability Act of 1997 (42 U.S.C. 1437f
note) is amended by striking subsection (b) and inserting the
following new subsection:
``(b) Vacancy.--A vacancy in the position of Director shall
be filled by appointment in the manner provided under
subsection (a). The President shall make such an appointment
not later than 60 days after such position first becomes
vacant.''.
(b) Applicability.--The amendment made by subsection (a)
shall apply to any vacancy in the position of Director of the
Office of Multifamily Housing Assistance Restructuring of the
Department of Housing and Urban Development which occurs or
exists after the date of the enactment of this Act.
SEC. 204. OVERSIGHT BY FEDERAL HOUSING COMMISSIONER.
(a) In General.--Section 578 of the Multifamily Assisted
Housing Reform and Affordability Act of 1997 (42 U.S.C. 1437f
note) is amended to read as follows:
``SEC. 578. OVERSIGHT BY FEDERAL HOUSING COMMISSIONER.
``All authority and responsibilities assigned under this
subtitle to the Secretary shall be carried out through the
Assistant Secretary of the Department of Housing and Urban
Development who is the Federal Housing Commissioner.''.
(b) Report.--The second sentence of section 573(b) of the
Multifamily Assisted Housing Reform and Affordability Act of
1997 (42 U.S.C. 1437f note) is amended by striking
``Secretary'' and inserting ``Assistant Secretary of the
Department of Housing and Urban Development who is the
Federal Housing Commissioner''.
SEC. 205. LIMITATION ON SUBSEQUENT EMPLOYMENT.
Section 576 of the Multifamily Assisted Housing Reform and
Affordability Act of 1997 (42 U.S.C. 1437f note) is amended
by striking ``2-year period'' and inserting ``1-year
period''.
TITLE III--MISCELLANEOUS HOUSING PROGRAM AMENDMENTS
SEC. 301. EXTENSION OF CDBG PUBLIC SERVICES CAP EXCEPTION.
Section 105(a)(8) of the Housing and Community Development
Act of 1974 (42 U.S.C. 5305(a)(8)) is amended by striking
``through 2001'' and inserting ``through 2003''.
SEC. 302. USE OF SECTION 8 ENHANCED VOUCHERS FOR PREPAYMENTS.
Section 8(t)(2) of the United States Housing Act of 1937
(42 U.S.C. 1437f(t)(2) is amended by inserting after
``insurance contract for the mortgage for such housing
project'' the following: ``(including any such mortgage
prepayment during fiscal year 1996 or a fiscal year
thereafter or any insurance contract voluntary termination
during fiscal year 1996 or a fiscal year thereafter)''.
SEC. 303. PREPAYMENT AND REFINANCING OF LOANS FOR SECTION 202
SUPPORTIVE HOUSING.
(a) In General.--Section 811 of the American Homeownership
and Economic Opportunity Act of 2000 (12 U.S.C. 1701q note)
is amended by striking subsection (e).
(b) Effectiveness Upon Date of Enactment.--The amendment
made by subsection (a) of this section shall take effect upon
the date of the enactment of this Act and the provisions of
section 811 of the American Homeownership and Economic
Opportunity Act of 2000 (12 U.S.C. 1701q note), as amended by
subsection (a) of this section, shall apply as so amended
upon such date of enactment, notwithstanding--
(1) any authority of the Secretary of Housing and Urban
Development to issue regulations to implement or carry out
the amendments made by subsection (a) of this section or the
provisions of section 811 of the American Homeownership and
Economic Opportunity Act of 2000 (12 U.S.C. 1701q note); or
(2) any failure of the Secretary of Housing and Urban
Development to issue any such regulations authorized.
SEC. 304. TECHNICAL CORRECTION.
(a) In General.--Section 101(a) of Public Law 100-77 (42
U.S.C. 11301 note) is amended
[[Page H5952]]
to read as if the amendment made by section 1 of Public Law
106-400 (114 Stat. 1675) were made to ``Section 101'' instead
of ``Section 1''.
(b) Retroactive Effect.--The amendment made by subsection
(a) of this section is deemed to have taken effect
immediately after the enactment of Public Law 106-400 (114
Stat. 1675).
The SPEAKER pro tempore. Pursuant to the rule, the gentleman from
Wisconsin (Mr. Green) and the gentlewoman from Indiana (Ms. Carson)
each will control 20 minutes.
The Chair recognizes the gentleman from Wisconsin (Mr. Green).
General Leave
Mr. GREEN of Wisconsin. Mr. Speaker, I ask unanimous consent that all
Members may have 5 legislative days within which to revise and extend
their remarks and to include extraneous material on H.R. 2589, the bill
now under consideration.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Wisconsin?
There was no objection.
Mr. GREEN of Wisconsin. Mr. Speaker, I yield myself such time as I
may consume.
The legislation we are considering here today is about affordable
housing for low-income families and how to keep it affordable. The
mark-to-market program and the Office of Multifamily Housing Assistance
Restructuring, OMHAR, are both scheduled to terminate on September 30,
2001. The legislation we are considering today represents a House-
Senate consensus. H.R. 2589 extends the Office of Multifamily Housing
Assistance Restructuring through October 1, 2004, and reauthorizes the
mark-to-market program through October 1, 2006.
My colleagues should note, as a way of background, that in the late
1970s and in the early 1980s, about 800,000 units in 8,500 multifamily
housing projects were financed with mortgage insured by the Federal
Housing Administration and supported by Section 8 housing assistance
payment contracts. The Federal Government guaranteed that these
projects would be built by insuring the mortgages and using Section 8
contracts to guarantee that the rents would be high enough to pay off
the mortgages. In most markets, these rents were above market levels.
Typically, the mortgages for these multifamily dwellings had terms of
40 years and the Section 8 contracts had terms of 20 years.
By the late 1990s, the 20-year Section 8 contracts started to expire.
Congress started renewing the Section 8 contracts for 1 year at market
rents. In some areas, the market rents were sufficient to support the
property, but in other areas, market rents were not enough to support
the mortgage payments. Consequently, those properties were in danger of
defaulting and costing the Federal taxpayer billions of dollars.
In 1997, after a careful review of the insured multifamily portfolio
of the FHA, Congress realized that if substantial changes to the
Section 8 project-based program were not made, the renewals of expiring
contracts for Section 8 assistance would consume an increasingly larger
share of HUD's future budgets. In fact, HUD estimated that if no action
were taken by 2007, the annual cost of renewing project-based Section 8
contracts would rise to approximately $7 billion, or about one-third of
HUD's entire budget.
In an effort to address this growing problem, Congress enacted the
Multifamily Assisted Housing Reform and Affordability Act. The goal of
that 1997 legislation was twofold: First and foremost, to preserve
affordable low-income rental housing; and, second, to reduce the cost
to the Federal Government of rental assistant payments.
Specifically, the legislation established OMHAR, the Office of
Multifamily Housing Assistance, and the mark-to-market program for
restructuring section 8 based properties with FHA-insured mortgages.
The mark-to-market program provides the tools necessary for HUD to
restructure the insured Section 8 multifamily housing projects by
lowering their rents to market levels when their current Section 8
contracts expires, and also by restructuring their mortgage debt, if
such action is necessary, for the property to continue to have a
positive cash flow.
In addition to extending OMHAR and the authority of the mark-to-
market program, H.R. 2589 simplifies issues of jurisdiction and
coordination by requiring the program director to report directly to
the Federal Housing Commissioner instead of the Secretary of HUD. At
present, the Office of Housing is responsible for Section 8 subsidy
payments and the management of insurance contracts while at the same
time OMHAR is responsible for restructuring them for the future. The
same projects are under the jurisdiction of two separate equal offices,
each reporting to the Secretary simultaneously. Having OMHAR report to
the Commissioner will simplify these issues of coordination and
jurisdiction.
Mr. Speaker, I will be submitting for the record a section-by-section
analysis of the bill and also several support letters for this
legislation, letters from the National Association of Home Builders,
the National Leased Housing Association, the National Housing Trust,
and the National Affordable Housing Management Association.
{time} 1545
Mr. Speaker, this legislation is supported by the National Leased
Housing Association, the National Apartment Association, the National
Multi-Housing Council, the National Affordable Housing Management
Association, the National Association of Realtors, the Institute of
Real Estate Management, the Mortgage Bankers Association, the Council
for Affordable and Rural Housing, the Coalition for Affordable Housing
Preservation, the Appraisal Institute, the National Housing Trust, and
the National Association of Home Builders.
Mr. Speaker, with all of that support, I urge my colleagues to
support this legislation, and I urge its adoption.
Mr. Speaker, I submit for the Record the letters and section by
section analysis I referred to earlier.
National Association of Home Builders, Legislative and
Political Relations,
Washington, DC, September 24, 2001.
Hon. Marge Roukema,
Chair, House of Representatives Subcommittee on Housing and
Community Opportunity, Rayburn House Office Building,
Washington, DC.
Dear Chairwoman Roukema: On behalf of the 205,000 members
of the National Association of Home Builders, I write to
express our support for H.R. 2589, the Office of Multifamily
Housing Assistance Restructuring Act of 2001.''
Timely passage of the reauthorizing legislation is critical
to the continuation of the Department of Housing and Urban
Development's (HUD) authority to restructure mortgages on
multifamily properties insured by FHA and enhanced by Section
8 rental assistance. This program ensures the continued
viability of affordable multifamily properties and ultimately
saves the federal government money. Because the program is
due to expire on October 1, 2001, I respectfully request your
support for swift passage of H.R. 2589 which extends the
program for another five years.
NAHB urges you to support passage of H.R. 2589, as amended.
Thank you in advance for your consideration of views
important to the housing industry.
Sincerely,
Katherine E. Doddridge,
Acting Senior Staff Vice President.
____
National Leased
Housing Association,
Washington, DC, September 24, 2001.
Hon. Marge Roukema,
Chair, Subcommittee on Housing & Community Opportunity,
Rayburn House Office Building, Washington, DC.
Dear Chairwomen Roukema: I am writing on behalf of the
National Leased Housing Association (NLHA) in support of H.R.
2589 as revised. The bill includes the necessary
reauthorization of the mark to market program while making a
number of non-controversial revisions that will improve
processing under the program.
The bill will present a disruption of mortgages currently
in the OMHAR pipeline and will provide a measure of stability
for future properties that will benefit from the technical
provisions impacting contributions to rehabilitation, length
of second mortgages, and the eligibility of HUD-held loans
for certain mortgage processing. The bill also ensures the
adequate distribution of technical assistance funding and
corrects several inconsistent provisions in current law.
We are grateful for your leadership in crafting a
compromise with the Senate to eliminate the controversial
provisions in S. 1254. NLHA recently joined with a number of
industry groups to express our concern with several
provisions contained in the original S. 1254, including the
National Apartment Association, the National Multi Housing
Council, the National Association of Realtors, the Institute
for Real Estate Management, the Mortgage Bankers Association,
the Council for Affordable and Rural Housing, the National
Affordable Housing Management Association, the Appraisal
Institute
[[Page H5953]]
and the Coalition for Affordable Housing Preservation. We
appreciate your efforts to address and mitigate those
concerns.
As always, we are thankful for your interest in promoting
the preservation of the affordable housing stock.
Sincerely,
Denise B. Muba,
Executive Director.
____
National Housing Trust,
Washington, DC, September 24, 2001.
Re: Extension of Mark to Market Authorization; HR 2589
Congresswoman Marge Roukema,
Chair, House Financial Services Subcommittee, Housing and
Community Opportunity, Rayburn House Office Building,
Washington, DC.
Dear Congresswoman Roukema: Formed in 1986, the National
Housing Trust is a national nonprofit organization, located
in Washington, D.C. The Trust is dedicated to the
preservation of existing affordable housing. Its board of
directors is comprised of nationally recognized authorities
and practitioners in the housing and community development
field.
The Trust is a multi-faceted organization, with expertise
in the financial, regulatory, tax and legal aspects of
existing, federal assisted, multifamily affordable housing.
It performs a path-finding role in the area through a unique
mix of public policy development, technical assistance and
transactional activities.
The Trust plays a leading role in providing information and
technical assistance to various stakeholders concerning
various HUD proposals which concern the mortgage
restructuring and subsidy renewal for nearly 1.3 million
units of federally assisted and insured housing stock. The
Trust has testified numerous times before Congress on this
issue, developed policy papers concerning various proposals
and developed a unique database for these apartments, noting
term of contract, time of expiration, and the relationship of
the current contract rent level to local rents. The Trust
also trains and helps explain to residents their rights under
HUD programs, including HUD's ``Mark to Market'' program.
The September 30, 2001 sunset date for the Mark to Market
legislative authority provided Congress a unique opportunity
to both review the existing program, analyze its progress and
remedy any perceived problems with the current program. In
our view, HR 2589 is a significant bipartisan response to the
need for continued Mark to Market legislation.
The program of marking HUD rents down to comparable market
levels has been successful at both saving the taxpayers
unnecessary expense and reducing overleveraged HUD
properties. At the same time, experience has shown that many
Mark to Market assets provide necessary shelter for very low
income American families who would have no other choice if
the housing was not available to them. We are currently at
mid point in the program's progress and an extension is
obviously necessary.
HR 2589 is to be particularly commended because it not only
extends the program but also rectifies some technical flaws
that will make the program work better in the future. For
example, apart from the very important procedural changes and
extensions of the program itself, without any additional
material cost to the American taxpayer:
HR 2589 makes plain that the HUD Secretary shall provide
already statutorily provided funds for technical assistance
to residents and nonprofits who are interested in Mark to
Market housing and that funding for these programs should
flow to those in entities on an uninterrupted basis.
As originally intended by Congress, the HUD Secretary is
given the option to provide sufficient ``Exception Rents''
options for properties where the Secretary determines that
the housing needs of residents and the community cannot be
adequately addressed through implementation of the rent
limitations in the statute.
HR 2589 makes a technical change permitting subordinate
debt to be assumable by a nonprofit organization interested
in preserving the housing as affordable;
HR 2589 permits HUD to consider for Mark to Market certain
properties for sales to nonprofits and tenant groups which
had previously not been permitted in the program;
HR 2589 requires the Secretary to include, for partially
assisted projects owned by nonprofit organizations, budget
based costs related to the project as a whole, including
costs incurred with respect to units not covered by the
contract for assistance; and
HR 2589 permits Section 223(a)(7), a HUD insurance program
ideally suited for Mark to Market projects, more useful for
Mark to Market financing.
Thank you for your leadership on this important issue.
Very truly yours,
Michael Bodaken,
Executive Director.
____
National Affordable Housing
Management Association,
Alexandria, VA, September 24, 2001.
Hon. Michael G. Oxley,
Chairman, Committee on Financial Services,
House of Representatives,
Washington, DC.
Dear Chairman Oxley: NAHMA is pleased to express its
support for H.R. 2589, the Mark-to-Market Extension Act of
2001.
An effective mortgage restructuring program can meet the
dual objectives of reducing the cost of section 8 assistance
at the time of contract renewal and preserving the existing
supply of housing affordable by lower income families.
Although we have been disappointed at times by the slow
implementation of the mark-to-market program and by some of
its procedural shortcomings, we believe that reauthorization
of the program presents the best opportunity for an orderly
restructuring process that protects the interests of owners,
residents, communities and the public.
We want to thank you and your staff for considering the
views of the multifamily housing industry in the development
of this latest version of H.R. 2589. As currently drafted the
bill makes a number of important improvements in the mark-to-
market program and its administration. We believe that H.R.
2589 will increase the confidence of all stakeholders in the
mark-to-market process.
Again, NAHMA thanks you for your leadership on this issue.
Sincerely,
George C. Caruso,
Executive Director.
____
H.R. 2589 ``Mark-to-Market Extension Act of 2001''
sec. 1 title--``mark-to-market extension act of 2001''
sec. 2. purposes
The purposes of this Act are: (1) to continue the progress
of the Multifamily Assisted Housing Reform and Affordability
Act of 1997; (2) to ensure that properties that undergo
mortgage restructurings are rehabilitated to a standard
allowing them to meet long-term affordability requirements,
and that they have adequate reserves for long-term
commitments; (3) to ensure that participating properties are
operated efficiently and that operating expenses are adequate
to maintain the properties in good physical and financial
condition; (4) to ensure that properties that undergo rent
restructuring have adequate resources to maintain the
properties in good condition; (5) to ensure that OMHAR
continues to focus on the portfolio of properties eligible
for restructuring; (6) that the condition of these properties
is tracked on an ongoing basis; (7) to ensure that tenant
groups, nonprofit organizations, and public entities continue
to have the resources necessary to build the capacity of
tenant organizations; (8) to encourage OMHAR to continue to
provide participating administrative entities with the
flexibility to respond to specific problems while ensuring
consistent outcomes around the country.
sec. 3. effective date
Except for sections 106(a)(2) and 303(b), this Act and its
amendments take effect on the earlier of the date of
enactment or September 30, 2001.
Title I--Multifamily Housing Mortgage and Assistance Restructuring and
Section 8 Contract Renewal
Sec. 101. Definitions
This section makes some technical changes to section 512 of
the Multifamily Assisted Housing reform and Affordability Act
of 1997 (42 U.S.C. 1437f) designating ``office'' as OMHAR.
sec. 102. Mark-To-Market Program Amendments
(1) This section amends 514(f)(3) of the Act by requiring
HUD to give restructuring grants to tenant groups, tenant-
endorsed community-based nonprofits, and public entities for
tenant services in projects undergoing restructuring. These
grants are available over a two-year period.
514(g)(2)(A) of the Act--Exception Rents--is amended by
striking ``restructured mortgages in any fiscal year'' and
inserting ``portfolio restructuring agreements''.
516(d) is amended to require section 8 tenants, living in
projects that will no longer receive assistance, to be
notified at the time of a rejection that a project will no
longer participate in the program, and subject to the
availability of appropriations, tenants of the project will
be given enhanced vouchers and aided with reasonable moving
expenses.
524(e) is amended by adding that if the owner of a property
assisted under the Emergency Low Income Housing Preservation
and Resident Homeowenership Act of 1990, requests HUD to
participate in the restructuring program in order to
facilitate the sale or transfer of the property.
517(b)--Restructuring Tools--adds that if a participating
administrative entity (PAE) determines that major additions
(air-conditioning, elevators, etc.) are required for a
property in the mortgage restructuring program, the owner
contribution may not exceed 25% of the amount of
rehabilitation assistance for this purpose. This applies to
all eligible multifamily projects except those that worked
out a restructuring plan with HUD before the enactment of
this Act. All owners are still required to obtain at least
25% of the amount of rehabilitation assistance received
from non-project sources for regular rehabilitation
concerns.
512(2)--Look-Back Projects--allows the Secretary to treat a
project as an eligible multifamily housing project if the
project is assisted pursuant to a contract for project-based
assistance under 8 of the United States Housing Act of 1937
and renewed under section 524 of this act, if the owner
consents and the project meets the requirements in this
section for eligibility. Essentially, this provision gives
the Secretary authority to
[[Page H5954]]
``look back'' and bring properties into the Mark-to-Market
(MTM) program after they have already gone through an initial
rent comparability review at the discretion of the owner.
517(a)--Second Mortgages--permits second mortgages on
participating projects to be resized to not more than the
greater of the full or partial claim made under this program
or the difference between the first mortgage. This provision
also allows the Secretary to assign the second mortgage to an
organization, such as a non-profit corporation.
514(h)(2)--Exemptions From Restructuring--amends section
811 of the American Homeownership and Economic Opportunity
Act of 2000 (12 U.S.C. 1701q) to exempt elderly properties
from restructuring.
Sec. 103. Consistency of Enhanced Voucher Assistance and Mark-to-Market
Rents
Requires the Secretary to establish procedures and
guidelines that ensure that rent payment standards for
enhanced voucher assistance, mark to market and contract
renewal are consistent.
Sec. 104. Eligible Inclusions For Renewal Rents of Partially Assisted
Buildings
Amends section 524(a)(4)(C) to require the Secretary to
approve rents under the section 8 contract to cover budget-
based cost increases for the project as a whole, including
costs incurred with respect to units not covered by the
contract for assistance in order to permit capital repairs or
acquisition by a nonprofit owner or purchaser.
Sec. 105. Eligibility of Restructuring Projects for Miscellaneous
Housing Insurance
Section 223(a)(7) of the National Housing Act (12 U.S.C.
1715n(a)(7)) is amended by including properties undergoing
restructuring in FHA's streamlined refinancing program, and
permits restructuring properties to have a refinance term of
up to 30 years.
Sec. 106. Technical Corrections
This section makes technical corrections to the Multifamily
Assisted Housing Reform and Affordability Act of 1997 (42
U.S.C. 1437f note).
Title II--Office of Multifamily Housing Assistance Restructuring
Sec. 201. Reauthorization of Office and Extension of Program
This section extends the Office of Multifamily Housing
Assistance and Restructuring (OMHAR) for three years and
restructuring authority for an additional two years.
Section 579 of the Multifamily Assisted Housing Reform and
Affordability Act of 1997 is amended by repealing Subtitle A,
the Mark-to-Market program, (except for section 524)
effective October 1, 2006. Subtitle D, OMHAR, is repealed
effective October 1, 2004 (except for this section).
Repealing Subtitle A in 2006 terminates HUD's authority to
restructure mortgages after 5 years, though excluding section
524 allows HUD to continue to renew section 8 contracts
indefinitely. Repealing Subtitle D in 2004 terminates OMHAR
after 3 years.
sec. 202. appointment of director
The Office shall be under the management of a Director, who
shall be appointed by the President. The amendment made by
subsection (a) shall apply to the first Director of OMHAR
appointed after the date of enactment.
sec. 203. vacancy in position of director
Section 572 is amended to permit the President to appoint a
Director of OMHAR within 60 days after the position becomes
vacant.
sec. 204. oversight by federal housing commissioner
Section 578 is amended by placing oversight authority and
responsibilities for OMHAR with the Federal Housing
Commissioner.
Section 573(b) is amended by requiring the Director of
OMHAR to report semi-annually to the Federal Housing
Commissioner regarding his activities, actions and
determinations, rather than to the Secretary of HUD.
sec. 205. limitation on subsequent employment
Section 576 is amended by changing the limitation on
subsequent employment from 2 years to 1 year (anti-conflict
of interest provision).
Title III--Miscellaneous Housing Program Amendments
sec. 301. extension of cdbg public services cap exception
Section 105(a)(8) of the Housing and Community Development
Act of 1974 (42 U.S.C 5305(a)(8)) is amended by striking
``through 2001'' and inserting ``through 2003''.
sec. 302. use of section 8 enhanced vouchers for prepayments
Section 8(t)(2) of the U.S. Housing Act of 1937 (42 U.S.C.
1437f(t)(2)) is amended to provide a technical correction
allowing residents of developments, where the owner prepaid
in FY 1996, to be eligible for enhanced vouchers.
sec. 303. prepayment and refinancing of loans for section 202
supportive housing
Section 811 of the American Homeownership and Economic
Opportunity Act of 2000 (12 U.S.C. 1701q note) makes
technical corrections to allow the program to proceed without
advance appropriations and make effective immediately
notwithstanding any delay in issuing HUD regulations.
sec. 304. technical correction
This section makes technical corrections to the McKinney--
Vento Homeless Assistance Act (42 U.S.C. 11301).
Mr. Speaker, I reserve the balance of my time.
Ms. CARSON of Indiana. Mr. Speaker, I yield myself such time as I may
consume.
Mr. Speaker, I rise in support of this bipartisan legislation which
extends HUD's authority to reduce above-market rents on expiring
section 8 projects and to restructure federally insured mortgages on
these properties which the lower rents can no longer support.
The bill before us differs somewhat from the bill passed by voice
vote in the Committee on Financial Services in July. However, the
changes represent informal bipartisan, bicameral discussions that have
taken place over the last few months. The final product is a good
consensus bill with bipartisan support; and, certainly, therefore, I
would urge my colleagues to adopt it.
H.R. 2589 extends for 5 years HUD's authority to conduct ``mark-to-
market'' activities and extends for three years the Office of Multi-
Family Housing Assistance Restructuring also known as OMHAR. This
extends OMHAR's authority to continue the carry out mark-to-market
activities. The purpose of market-to-markets is to reduce the level of
project based section 8 rental assistance for affordable housing
projects to rent levels commensurate with local market rents.
The end result is that this process saves money for the Federal tax
payers by reducing our section 8 expenditures. However, the statutory
authority for mark-to-market activities and for OMHAR is set to expire
at the end of this month. According to the GAO, 1,588 properties have
entered the mark-to-market program but only 500 of these properties
have completed rent reductions. Thus, over 1,000 properties have yet to
have their rents reduced. As more contracts expire, there will be
additional properties that need to go through rent restructuring.
Therefore, Mr. Speaker, it is essential to extend the program at this
time. I would note that this legislation is estimated to save over $300
million through the reduction of rents. I would also note that since
this bill saves money, there is a reasonable possibility that it will
later be attached to the VA/HUD appropriations conference report in
order to receive a credit from the savings from this bill. If that
occurs, we would urge appropriators to reinvest these savings in
affordable housing programs instead of being diverted to other programs
as is often the case.
With respect to the specific provisions of the bill, we have struck a
balance between giving OMHAR the tools it needs while retaining
accountability. We have also included a number of good provisions to
further housing affordability including providing technical assistance
to tenant groups and increasing flexibility for nonprofits to operate.
So in conclusion of my remarks, Mr. Speaker, I am heartened by the
bipartisan way we have developed the first major piece of housing
legislation in this Congress. I am urging a ``yes'' vote.
Mr. Speaker, I yield such time as he may consume to the gentleman
from Massachusetts (Mr. Frank), a very distinguished, knowledgable,
articulate and dynamic friend of mine.
Mr. FRANK. Mr. Speaker, I thank the gentlewoman for yielding me this
time. I am currently in the Committee on the Judiciary having hearings
on the important question of the anti-terrorism legislation. The
gentlewoman from Indiana (Ms. Carson) graciously agreed to come down
and has done a very good job of explaining the bill.
I simply want to note that the gentlewoman is correct. This is
bipartisan. It is bicameral. We have worked it out in conjunction with
the other party. It is important to note what I think is a duality of
these issues. When it comes to how best to use existing resources to
preserve housing, we are able to work together.
There continues to be differences between the parties on how much we
should be putting in additional resources for housing. But once we have
come to an agreement by whatever process as to what resources are
there, I am very pleased we have been able to work in agreement because
I think we are committed to the principle that for the Federal
Government to have put
[[Page H5955]]
money into subsidized housing, to have invited people to come in and
live there, and then to allow people's economics to drive them out of
what have become their homes is simply unacceptable.
We need to have this ongoing commitment to do this. This is part of
that ongoing commitment. It shows we can make adjustments that will
save government money as well as require in other instances, not in
this bill, increases. So I am grateful for this. I do note it, but I
note that it does not do away from what I believe and I know what the
gentlewoman from Indiana (Ms. Carson) believes, is the need to put
additional resources in this very rich country into the area of
housing.
Let me ask the indulgence to say because I know the other bill will
be coming up, the one on the Housing Commission. I also want to express
my gratitude to the gentleman from New York (Mr. Walsh), the chairman
of the Subcommittee on VA, HUD and Independent Agencies of the
Committee on Appropriations because he was helpful in working that out.
I am glad we are able to work out the extension and the appropriate
staffing.
With that, I will take my leave and let us be guided by the
gentlewoman from Indiana; and I will go back to the hearing of the
Committee on the Judiciary.
Mr. OXLEY. Mr. Speaker, I rise in support of H.R. 2589--the Mark-to-
Market Extension Act of 2001.
The Committee on Financial Services approved unanimously this
legislation on July 25, 2001 and reported [House Report 107-196] to the
House on September 5, 2001. The Senate Committee on Banking, Housing
and Urban Affairs considered a similar bill on August 1, 2001.
H.R. 2589 will extend authorization of the Office of Multifamily
Housing Assistance Restructuring, also known as OMHAR, which is
currently a separate office within the Department of Housing and Urban
Development (HUD). The authority would extend by three years the office
through FY 2004 and extend the Secretary's authority to provide mark-
to-market services through FY 2006. We believe that HUD will be
provided the special tools necessary to restructure developments that
receive both project-based rental section 8 payments and Federal
Housing Administration mortgage insurance.
As I understand, the original Act was enacted in 1997 and was
designed to curtail exploding section 8 rental costs for units renting
at far above the prevailing market rates. Without this Act, section 8
contract renewals could top $7 billion dollars and account for as much
as one-third of HUD's future budgets. Because the authorization for
this office sunsets September 30th of this year, it is necessary that
this bill pass the House today.
The Committee majority and minority staff worked with our Senate
counterparts to agree on a legislative solution. Moreover, this
Committee worked with the Administration and the Department of Housing
and Urban Development to accommodate their concerns. According to the
Congressional Budget Office, this compromise language will result in
savings of over $307 million dollars.
Mr. Speaker, this is a good bill and deserves favorable House
consideration. Housing Subcommittee Chairwoman Marge Roukema and
Ranking Member Barney Frank are to be commended for their leadership on
this issue.
Mr. GREEN of Wisconsin. Mr. Speaker, I yield back the balance of my
time.
Ms. CARSON of Indiana. Mr. Speaker, I have no further requests for
time, and I yield back the balance of my time.
The SPEAKER pro tempore (Mr. Miller of Florida). The question is on
the motion offered by the gentleman from Wisconsin (Mr. Green) that the
House suspend the rules and pass the bill, H.R. 2589, as amended.
The question was taken.
The SPEAKER pro tempore. In the opinion of the Chair, two-thirds of
those present have voted in the affirmative.
Mr. GREEN of Wisconsin. Mr. Speaker, on that I demand the yeas and
nays.
The yeas and nays were ordered.
The SPEAKER pro tempore. Pursuant to clause 8 of rule XX and the
Chair's prior announcement, further proceedings on this motion will be
postponed.
____________________