[Congressional Record Volume 148, Number 119 (Thursday, September 19, 2002)]
[Senate]
[Pages S8920-S8926]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
By Mr. BOND (for himself and Ms. Collins):
S. 2967. A bill to promote the production of affordable low-income
housing; to the Committee on Banking, Housing, and Urban Affairs.
Mr. BOND. Madam President, I rise today to introduce the Affordable
Housing Expansion Act of 2002. I include a summary of the provisions of
the legislation with my statement, and I urge all members to review the
bill and the summary. Obviously this is a major piece of legislation
that will undoubtedly be considered in the next session of Congress as
well, but I want to be out in public for discussion this year so we can
work on it early next year. This is an important bill that is designed
to start to meet the long-term housing needs of very low- and extremely
low-income families. This bill is targeted especially to provide
affordable housing for extremely low-income families, those at or below
30 percent of medium income.
In particular, the Affordable Housing Expansion Act would establish a
new block grant program to be administered by the Department of Housing
and Urban Development--HUD. HUD would allocate funds to state housing
finance agencies for the development of mixed income housing with the
Federal funding targeted to the development of the very low-income and
extremely low-income housing component of the mixed income housing.
Each state housing finance agency would have to submit an affordable
housing expansion
[[Page S8921]]
plan to HUD that ensures the funds are allocated to meet the low-income
housing needs in both the rural and urban areas of each state. States
also would have to contribute a 25 percent match. Moreover, each state
housing finance agency could use up to 20 percent of these block grant
funds to preserve existing low-income multifamily housing and for the
rehabilitation needs of low-income multifamily housing.
The Affordable Housing Expansion Act also provides new authority for
low-income housing production under the Section 8 program and the
Public Housing program. Under the Section 8 program, the bill provides
new authority for a ``Thrifty Voucher'' program that would allow the
use of section 8 project-based assistance for new construction,
substantial rehabilitation and preservation of affordable housing for
extremely low-income families. Because the cost of these vouchers is
capped at 75 percent of the payment standard, these vouchers will need
to be used in conjunction with other housing assistance programs, such
as the HOME program, the Community Development Block Grant program or
Low Income Housing Tax Credit program, to be successful.
The bill also would authorize a new loan guarantee program that will
allow public housing agencies to rehabilitate existing public housing
or develop off-site public housing in mixed income developments. The
long-term debt of these loans would be tied to the pro-rata share of
funds under the Public Housing Capital and Operating Funds that would
be allocated to the units that are rehabilitated or constructed over a
maximum of 30 years. This tool will allow Public Housing Agencies to
address more aggressively the over $20 billion backlog of public
housing capital needs.
The Affordable Housing Expansion Act of 2002 is an important first
step towards addressing a growing shortage of affordable housing for
very low-income and extremely low-income families. While homeownership
rates have grown and the cost of housing has skyrocketed, many very
low-income and extremely low-income families are being left behind
without the availability of affordable rental housing. This is
unfortunate. It is a tragedy. The social and economic costs to the
Nation are dramatic. And while we have several Federal housing
production programs, such as the HOME program and the Low Income
Housing Tax Credit, not enough is being done.
In particular, HUD's most recent report on worst case housing needs,
A Report on Worst Case Needs in 1999: New Opportunity Amid Continuing
challenges, concluded that the shortage of affordable housing has
worsened. In particular, the number of units affordable to extremely
low-income renters dropped between 1997 and 1999 at an accelerated
rate, and shortages of affordable housing available to those renters
worsened. As we have seen in this economy, as rents continue to rise
faster than inflation, the pressure for above-average rent increases at
the bottom end of the rental stock is eroding further the supply of
rental units that are affordable without Government subsidies.
In addition, this report found a record high of 5.4 million
families--some 600,000 more families with worst case housing needs than
in 1991--that have incomes below 50 percent of median income and pay at
least 50 percent of their income in rent. In addition, worst case
housing needs have become increasingly concentrated among those
families with extremely low-incomes. In particular, over three-quarters
of the families with worst case housing needs in 1997 had incomes below
30 percent of median income. I have seen no evidence that these
families have fared better since 1997, and as rents have increased, I
think it obvious that the problem has worsened. Further, since that
time, we have lost some 200,000 units of section 8 project-based units
to rent increases as well as to decisions by owners of the housing not
to renew their section 8 contracts. Also, as families age and people
live longer lives, we are beginning to face a new crisis of a lack of
affordable housing for our seniors.
The Affordable Housing Expansion Act is designed to provide
additional, needed tools that will allow States and communities to
develop new affordable low-income and mixed-income housing, including
units targeted to extremely low-income families. This would help fill a
gap in the housing needs of the Nation that would allow these lowest
income families to begin to climb the housing ladder to homeownership.
Decisions would be driven by local choice and need and start to meet
the burgeoning need for new low-income housing in tight markets where
there is little or no housing for families and seniors at the low end
of the economic scale. These families need to be served and the cost is
small compared to potential cascading social and economic costs to both
communities and families--it is a simple equation--homes equal stable
environments in which children are educated and people can obtain jobs.
Jobs and homes represent the tax base of any community and educated
children are the future of our Nation.
This is important legislation. The private sector is not making the
needed investment to meet the low-income housing needs of the present
and future. The Federal government must show the leadership and make
the needed investment to partner with state and localities as well as
public and private entities in the low-income housing infrastructure of
the Nation. This bill is designed to start to meet this need and focus
the debate on the importance of low-income housing production to the
current and future housing needs of this Nation.
Too often in this body we say we are going to help low-income people
get more housing because we are going to expand the number of section 8
certificates. The sad fact is that in many communities, particularly in
the St. Louis area, no matter how many more vouchers you put out, no
more housing is available. Too many of the vouchers, the certificates,
are not used because there simply is not the affordable housing. This
deals with the problem that we see, not just in St. Louis but across
the Nation.
I believe my colleagues should take a hard look at this. We invite
their comments and consideration. We must do something, and it will
probably be next year, but we must get to work right now thinking about
how we are going to meet the need for affordable housing for the very
low and extremely low income people who live in our country.
I ask unanimous consent that a summary of the legislation be printed
with my statement.
The ACTING PRESIDENT pro tempore. Without objection, it is so
ordered.
Mr. BOND. Madam President, I send the bill to the desk and ask for
its appropriate referral.
The ACTING PRESIDENT pro tempore. The bill will be received and
appropriately referred.
Affordable Housing Expansion Act of 2002 (Introduced by Senators Bond
and Collins)
TITLE I--PRODUCTION OF NEW HOUSING FOR EXTREMELY LOW-INCOME AND VERY
LOW-INCOME FAMILIES
Establishes a $1 billion block grant program beginning in
2003 that would allocate funds to state housing finance
agencies on a per capita basis according to the population of
the state. No state would receive less than $6 million.
Allows funds to be used for acquisition, new construction,
reconstruction, or moderate or substantial rehabilitation of
affordable housing; permits funds to be used for
rehabilitation needs and preservation of existing assisted
low-income housing (although no more than 20 percent of the
funds can be used for rehabilitation and preservation);
allows conversion of existing housing to housing for the
elderly or for persons with disabilities.
Requires states to meet a 25 percent matching requirement
to ensure accountability and to leverage additional funds.
Requires housing developed to be low- and mixed-income
housing with at least 30 percent of the assisted unites
targeted to extremely low-income families (families at or
below 30 percent of medium income); remaining assisted units
would be targeted to very low-income families.
Rents for assisted units are modeled after the low-income
tax credit program only with deeper targeting--extremely low-
income families would pay no more than 25 percent of 30
percent of medium income and very low-income families would
pay no more than 25 percent of 50 percent of medium income.
Authorizes a new multifamily risk-sharing mortgage
insurance program to help underwrite housing assisted under
this title.
TITLE II--SECTION 8 HOUSING PRODUCTION
Thrifty vouchers
Establishes a ``Thrify'' Voucher Housing Production program
that targets section 8
[[Page S8922]]
project-based assistance for new construction, substantial
rehabilitation and preservation with eligible families
defined as ``extremely low-income families'' (those at or
below 30 percent of adjusted income).
Limits assistance to 25 percent of units in a building
while limiting the cost for a unit at 75 percent of the
payment standard or fair market rent (really is operating
costs, utility costs and reasonable return on operating
costs.). Initial rent term would be 15 years with renewals
through at least year 40. The premise is to use anticipated
section 8 project-based funds to capitalize the cost of new
construction, substantial rehabilitation and preservation
while subsidizing these costs over some 40 years plus.
Thrifty vouchers could be used in conjunction with low-income
housing tax credits, HOME, CDBG or the (Title I) ``Bond''
Housing Production Block Grant program.
New Thrifty Vouchers would be distributed under the formula
used for the HOME program.
Reallocation of vouchers
New section 8 provision would provide for the reallocation
of section 8 funds where a PHA fails to utilize at least 90
percent of allocated section 8 tenant-based assistance, and
then 95 percent after 16 months from notice on failure to
meet the 90 percent utilization requirements. Allows PHAs to
challenge for a new survey of market rents in an area for an
increased rent payment standard or fair market rent. Provides
for a reallocation to another PHA, State or local agency, or
nonprofit/for-profit capable of administering section 8
assistance upon a finding that a PHA has failed to meet these
performance requirements. Upon a finding that there is a lack
of eligible families for section 8 assistance in an are, HUD
may reallocate section 8 assistance to other needy areas.
Preservation of sections 8 assistance on hud--held and owned
properties
New provision that requires HUD to maintain existing
section 8 project-based assistance for any HUD-owned or HUD-
held multifamily projects upon disposition, except where HUD
determines the project is not viable. (Mirrors Bond provision
carried in annual VA/HUD Appropriations Acts for the
disposition of HUD-owned or HUD-held multifamily projects
that serve elderly or disabled families.)
TITLE III--PUBLIC HOUSING LOAN GUARANTEE PROGRAM
Establishes a new HUD loan guarantee program for public
housing agencies for the rehabilitation of a portion of
public housing or the development of off-site public housing
in mixed income developments. Long term debt is tied to the
pro-rata share of funds under the Captial and Operating Funds
that would be allocated to the units rehabilitated or
constructed over a maximum of 30 years.
There being no objection, the bill was ordered to be printed in the
Record, as follows:
S. 2967
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION. 1. SHORT TITLE.
This Act may be cited as the ``Affordable Housing Expansion
Act of 2002''.
SEC. 2. PURPOSE.
The purposes of this Act are to expand the production of
affordable low-income housing for extremely low-, very low-
and low-income families:
(1) through the creation of a housing production block
grant program that will be administered through state housing
finance agencies;
(2) through new section 8 ``thrifty'' voucher authority;
and
(3) through new loan guarantee authority for public housing
agencies.
SEC. 3. DEFINITIONS.
For purposes of this Act, the following definitions shall
apply:
(1) The term ``extremely low-income families'' shall mean
persons and families (as that term is defined in section
3(b)(3) of the United States Housing Act of 1937) whose
incomes do not exceed--
(A) 30 percent of the area medium as determined by the
Secretary with adjustments for smaller and larger families
and for unusually high or low family incomes; or
(B) 30 percent of the national nonmetropolitan medium
income, if it is higher than the area medium income.
(2) The term ``insular areas'' shall mean the Commonwealth
of the Northern Mariana Islands, Guam, the Virgin Islands,
America Samoa, and any other territory of possession of the
United States
(3) The term ``low-income families'' shall have the same
meaning as provided under section 3(b)(2) of the United
States Housing Act of 1937.
(4) The term ``project-based assistance'' shall have the
meaning given such term in section 16(c)(6) of the United
States Housing Act of 1937, except that such term includes
assistance under any successor programs to the programs
referred to in such section.
(5) The term ``public housing agency'' shall have the
meaning given such term in section 3(b) of the United States
Housing Act of 1937.
(6) The term ``Secretary'' shall mean the Secretary of
Housing and Urban Development.
(7) The term ``section 8 assistance'' or ``voucher'' shall
have the meaning given such term in section 8(f) of the
United States Housing Act of 1937.
(8) The term ``State'' shall mean any State of the United
States, the District of Columbia, and the Commonwealth of
Puerto Rico.
(9) The term ``State housing finance agency'' shall mean
any State or local housing finance agency that has been
designated by a State or insular area to administer this
program.
(10) The term ``very low-income families'' shall have the
same meaning as provided under section 3(b) of the United
States Housing Act of 1937.
TITLE I--PRODUCTION OF AFFORDABLE HOUSING FOR EXTREMELY LOW-INCOME AND
VERY LOW-INCOME FAMILIES
SEC. 101. AUTHORITY.
The Secretary of Housing and Urban Development shall make
funds available to State housing finance agencies as provided
under section 102 for the rehabilitation of existing low-
income housing, for the development of new affordable low-
income housing units, and for the preservation of existing
low-income housing units that are at risk of becoming
unavailable for low-income families.
SEC. 102. ALLOCATION OF RESOURCES.
(a) In General.--The Secretary shall allocate funds
approved in appropriations Acts to State housing finance
agencies to carry out this Title. Subject to the requirements
of subsection (b) and as otherwise provided in this
subsection, each State housing finance agency shall be
eligible to receive an amount of funds equal to the
proportion of the per capita population of the State in
relation to the population of the United States which shall
be determined on the basis of the most recent decennial
census for which data are available. For each fiscal year,
the Secretary shall reserve for grants to Indian tribes 1
percent of the amount appropriated under the applicable
appropriations Act. The Secretary shall provide for
distribution of amounts under this subsection to Indian
tribes on the basis of a competition conducted pursuant to
specific criteria developed after notice and public comment.
(b) Minimum State Allocation.--If the allocation under
subsection (a), when applied to the funds approved under this
section in appropriations Acts for a fiscal year, would
result in funding of less than $6,000,000 for any State, the
allocation for such State shall be $6,000,000 and the
increase shall be deducted pro rata from the allocation of
all the other States.
(c) Criteria for Reallocation.--The Secretary shall
reallocate any funds previously allocated to a State housing
finance agency for any fiscal year in which the State housing
finance agency fails to provide its match requirements or
fails to submit an affordable housing expansion plan that is
approved by the Secretary. All such funds shall be
reallocated pursuant to the formula provided under subsection
(a).
SEC. 103. AFFORDABLE HOUSING EXPANSION PLAN.
(a) Submission of Affordable Housing Expansion Plan.--The
Secretary shall allocate funds under section 102 to a State
housing finance agency only if the State housing finance
agency has submitted an affordable housing expansion plan,
with annual updates, approved by the Secretary and
designed to meet the overall very low- and low-income
housing needs of both the rural and urban areas of the
State in which the State housing finance agency is
located. This plan shall be developed in conjunction with
the housing strategies developed for the applicable States
and localities under section 105 of Cranston-Gonzalez
National Affordable Housing Act.
(b) Citizen Participation.--Before submitting an affordable
housing expansion plan to the Secretary, a State housing
finance agency shall--
(1) make available to citizens of the State, public
agencies and other interested parties information regarding
the amount of assistance expected to be made available under
this Title and the range of investment or other uses of such
assistance that the State housing finance agency may
undertake;
(2) publish the proposed plan in a manner that, in the
determination of the Secretary, affords affected citizens,
public agencies, and other interested parties a reasonable
opportunity to review its contents and to submit comments on
the proposed plan;
(3) hold one or more public hearings to obtain the views of
citizens, public agencies, and other interested parties on
the housing needs of the State; and
(4) provide citizens, public agencies, and other interested
parties with reasonable access to records regarding the uses
of any assistance that the State housing finance agency may
have received under this Title during the preceding 5 years.
SEC. 104. ELIGIBLE USE OF FUNDS.
Funds made available under this title shall be used for--
(1) the acquisition, new construction, reconstruction, or
moderate or substantial rehabilitation of affordable housing
for mixed income rental housing where the assistance provided
under section 102 shall be used to assist units targeted to
very low-income and extremely low-income families, including
large families, the elderly, and persons with disabilities.
(2) the moderate and substantial rehabilitation of rental
housing units that are currently assisted under State or
Federal low-income housing programs;
(3) the preservation of Federal and State low-income
housing units that are at risk of
[[Page S8923]]
being no longer affordable to low-income families;
(4) the purchase and creation of land trusts to allow low-
income families an opportunity to rent homes in areas of low-
vacancy;
(5) conversion of public housing to assisted living
facilities for the very low- and extremely-low income
elderly;
(6) conversion of section 202 elderly housing to assisted
living facilities for the very low- and extremely-low income
elderly;
(7) conversion of HUD-owned or HUD-held multifamily
properties upon disposition to housing for the very low- and
extremely low-income elderly, housing for very low-income and
extremely low-income persons with disabilities and to
assisted living facilities for the very low- and extremely
low-income elderly; and
(8) creation of sinking funds to maintain reserves held by
State housing finance agencies to preserve the low-income
character of the housing.
SEC. 105. MATCHING REQUIREMENTS.
(a) In General.--Each State housing finance agency shall
make contributions for activities under this title that
total, throughout a fiscal year, not less than 25 percent of
the funds made available under this title.
(b) Allowable Amounts.--
(1) Application to housing.--A contribution shall be
recognized for purposes of a match under subsection (a) only
if--
(A) made with respect to housing that qualifies as
affordable housing under section 107; or
(B) made with respect to any portion of a project for which
not less than 50 percent of the units qualify as affordable
housing under section 107.
(2) Form.--A contribution may be in the form of--
(A) cash contributions from non-Federal sources, which may
not include funds from a grant under section 106(b) or
section 106(d) of the Housing and Community Development Act
of 1974 or from the value of low income tax credits allocated
pursuant to the Internal Revenue Code;
(B) the value of taxes, fees or other charges that are
normally and customarily imposed but are waived, forgone, or
deferred in a manner that achieves affordability of housing
assisted under this title;
(C) the value of land or other real property as appraised
according to procedures acceptable to the Secretary;
(D) the value of investment in on-site and off-site
infrastructure directly required for affordable housing
assisted under this title;
(E) the reasonable value of any site-preparation and
construction materials and any donated or voluntary labor in
connection with the site-preparation for, construction or
rehabilitation of affordable housing; and
(F) such other contributions to affordable housing as the
Secretary considers appropriate.
(3) Administrative expenses.--Contributions for
administrative expenses may not be recognized for purposes of
this section.
SEC. 106. DISTRIBUTION OF ASSISTANCE.
Each State housing finance agency shall ensure that the
development of new housing under this section is designed to
meet both urban and rural needs, and prioritize funding, to
the extent practicable, in conjunction with the economic
redevelopment of an area.
SEC. 107. ELIGIBLE AFFORDABLE HOUSING.
(a) Production of Affordable Housing.--In the case of new
construction, housing shall qualify for assistance under this
title only if the housing--
(1) is required to have not less than 30 percent of the
assisted units occupied by extremely low-income families who
pay as a contribution towards rent (not including any Federal
or State rental subsidy provided on behalf of the family) not
more than 25 percent of the adjusted income of a family whose
income equals 30 percent of the median income for the area,
as determined by the Secretary, with adjustments for the
number of bedrooms in the unit, except that the Secretary may
establish income ceilings higher or lower than 30 percent of
the median income for the area on the basis of the
Secretary's findings that variations are necessary because of
the prevailing levels of construction costs or fair market
rents, or unusually high or low family incomes;
(2) except as provided under paragraph (1), is required to
have all assisted units be occupied by very low-income
families who pay as a contribution towards rent (not
including any Federal or State rental subsidy provided on
behalf of the family) not more than 25 percent of 50 percent
of the median income for an area; and
(3) will remain affordable under the requirements provided
in paragraphs (1) and (2), according to legally binding
commitments satisfactory to the Secretary, for not less than
40 years, without regard to the term of the mortgage or to
the transfer of ownership, or for such period that the
Secretary determines is the longest feasible period of time
consistent with sound economics and the purposes of this Act,
including foreclosure where the responsibility for
maintaining the low-income character of the property will be
the responsibility of the State housing finance agency.
(b) Priority for Extremely Low-Income Families.--State
housing finance agencies shall give priority for funding to
those projects that maximize the availability and
affordability of housing for extremely low-income families.
SEC. 108. TENANT SELECTION.
An owner of any housing assisted under this Title shall
establish tenant selection procedures consistent with the
affordable housing expansion plan of the State housing
finance agency.
SEC. 109. PROHIBITION ON USE OF FUNDS FOR SERVICE
COORDINATORS OR SUPPORTIVE SERVICES.
No funds under this Act may be used for service
coordinators or supportive services.
SEC. 110. PENALTIES FOR MISUSE OF FUNDS.
The Secretary shall recapture any assistance awarded under
this Title to the extent the assistance has been used for
impermissible purposes. To the extent the Secretary
identifies a pattern and practice regarding the misuse of
funds awarded under this Title, the Secretary shall deny
assistance to that State for up to 5 years, subject to notice
and an opportunity for judicial review.
SEC. 111. SUBSIDY LAYERING REQUIREMENTS.
The requirements of section 102(d) of the Department of
Housing and Urban Development Reform Act of 1989 may be
satisfied in connection with assistance, including a
commitment to insure a mortgage, provided under this Title by
a certification of a State housing finance agency to the
Secretary that the combination of assistance within the
jurisdiction of the Secretary and other government assistance
provided in connection with a property assisted under this
Title shall not be any greater than is necessary to provide
affordable housing.
SEC. 112. MULTIFAMILY RISK-SHARING MORTGAGE INSURANCE
PROGRAM.
The Secretary shall carry out a mortgage insurance program
through the Federal Housing Administration in conjunction
with State housing finance agencies to insure multifamily
mortgages for housing that qualifies under this Title. This
program shall be consistent with the requirements established
under section 542 of the Housing and Community Development
Act of 1992, except that housing that meet the
requirements of this Title shall be eligible for mortgage
insurance.
SEC. 113. EFFECTIVE DATE AND REGULATIONS.
(a) Effective Date.--This Title shall take effect upon the
date of enactment of this Act.
(b) Rules.--The Secretary shall issue notice and comment
rulemaking with final regulations issued no later than 6
months after the date of enactment of this Act.
SEC. 114. AUTHORIZATION OF APPROPRIATIONS.
There is authorized to be appropriated $1,000,000,000 for
fiscal year 2003, of which no more than 20 percent of such
funds may be used for rehabilitation needs and to preserve
existing housing for low- income families.
TITLE II--SECTION 8 HOUSING PRODUCTION
SEC. 201. PROJECT-BASED VOUCHERS AND THRIFTY VOUCHERS.
(a) In General.--Section 8(o)(13) of the United States
Housing Act of 1937 is amended--
(1) in subparagraph (C)(ii), by inserting before the period
at the end the following: ``, revitalizing a low-income
community, or preventing the displacement of extremely low-
income families'';
(2) in subparagraph (D)(ii), by striking ``apply in the
case of'' and all that follows through the period and
inserting the following: ``apply--
(I) in the case of assistance under a contract for housing
consisting of single family properties (buildings with 1 to 4
units);
(II) for dwelling units that are specifically made
available for households comprised of elderly families or
disabled families; or
(III) outside of a qualified census tract, for buildings
with 5 to 25 units or with dwelling units that are
specifically made available for families receiving supportive
services.
For purposes of this clause, the term `qualified census
tract' has the same meaning given that term in section 42(d)
of the Internal Revenue Code of 1986. The Secretary may waive
the limitations of this clause, consistent with the
obligation to affirmatively further fair housing
practices.'';
(3) in subparagraph (F), by striking ``10 years'' and
inserting ``15 years'';
(4) by adding the following to the end:
``(L) Use of assistance in conjunction with public housing
capital funds.--
``(i) Capital fund.--Notwithstanding any provision to the
contrary in this Act, a public housing agency may attach
assistance under this paragraph to a structure or unit that
receives assistance allocated to the public housing agency
under the Capital Fund, established by section 9(d).
``(ii) Operating fund.--A unit that receives assistance
under this paragraph shall not be eligible for assistance
under the Operating Fund established by section 9(e).
``(M) Thrifty vouchers.--
``(i) In general.--For the purpose of encouraging the
production or preservation of housing affordable to extremely
low-income families, a public housing agency may use amounts
provided under an annual contributions contract under this
subsection to enter into a housing assistance payment
contract for Thrifty Voucher assistance that is attached to
the structure. Except as otherwise specified in this
paragraph, such housing assistance contract shall be subject
to the limitations and requirements of subparagraphs (A),
(B), (C), (D), (E), (F), (G), (J), (K) and (L).
``(ii) Use for new production, substantial rehabilitation,
and preservation.--Assistance under this paragraph may only
be attached to a structure that is newly constructed,
acquired for preservation as affordable housing, or
substantially rehabilitated.
[[Page S8924]]
``(iii) Eligible families.--A prospective tenant of a unit
that is assisted under this subparagraph must qualify as an
extremely low-income family at the commencement of the
proposed occupancy by the tenant.
``(iv) Limitation.--Assistance under this subparagraph may
not be attached to more than 25 percent of the units in a
building. For purposes of this clause, a project consisting
of single family structures shall be treated as 1 building if
the single family structures are owned, and constructed,
substantially rehabilitated, or acquired for preservation
under a common plan.
``(v) Rent calculation.--
``(I) In general.--A housing assistance payment contract
entered into under this subparagraph shall establish the
gross rent for each unit assisted in an amount equal to the
per unit operating cost of the property plus the applicable
utility allowance of the public housing agency for tenant-
paid utilities. An owner may accept a gross rent that is less
than the per unit operating cost of the property plus the
applicable utility allowance, if the gross rent exceeds the
limitation under subclause (IV).
``(II) Unit operating cost.--As used in this subparagraph,
the unit operating cost is the allocable share of the
ordinary and customary expenses of the unit incurred to
operate the property, including applicable owner- paid
utilities, contribution to the replacement reserve, asset
management fees, and a cash flow allowance equal to 15
percent of all other allocable operating costs. A public
housing agency shall require an owner to demonstrate that the
unit operating cost for units assisted under this
subparagraph does not exceed the operating cost of other
units in the property that are not assisted under this
subparagraph, with appropriate adjustments for unit size,
and shall establish policies to ensure that expenses
included in the unit operating cost that are paid to the
owner or a related entity are reasonable and consistent
with prevailing costs in the community in which the
property is located. Required verification shall be
determined by the public housing agency.
``(III) Adjustment.--A public housing agency shall, upon
request, make an appropriate annual adjustment in the rent
established under this clause based on documented changes in
unit operating costs and any increase in the applicable fair
market rent or payment standard.
``(IV) Limitation.--Gross rent established under this
paragraph shall not exceed the greater of--
``(aa) 75 percent of the payment standard used by the
public housing agency for a dwelling unit of the same size;
or
``(bb) 75 percent of the applicable fair market rental.
``(V) Exception.--The Secretary is authorized to approve an
exception to the 75 percent limitation in subclause (IV) for
not more than 2 percent of the total number of vouchers
funded under this subsection, not to exceed 90 percent of the
payment standard or applicable fair market rental, if the
permitted maximum rent could not otherwise support the
reasonable operating cost of rental housing, and the public
housing agency can demonstrate a need for production or
preservation of affordable housing.
``(vi) Renewal of assistance.--
``(I) In general.--The Secretary shall increase the
adjusted allocation baseline for renewal of funding under
subsection (dd) for public housing agencies that attach
assistance under this paragraph to a structure.
``(II) Increase equivalent.--An increase under subclause
(I) shall equal the number of additional families that a
public housing agency can assist as a result of the reduced
payments permitted under this paragraph.
``(III) Exception to limitation on project-based
assistance.--The additional units assisted as a result of the
reduced payments permitted under this paragraph shall not be
considered in determining the compliance of a public housing
agency with the percentage limitation in subparagraph (B).
``(IV) Applicability.--This subparagraph shall not apply to
incremental assistance initially issued under this paragraph.
``(vii) Allocation of incremental assistance for use under
this paragraph.--
``(I) In general.--Incremental assistance appropriated for
use under this paragraph--
``(aa) shall be allocated for public housing agencies
within each State, after reserving appropriate amounts for
insular areas, in accordance with the formula established by
the Secretary under section 217(b) of the Cranston-Gonzalez
National Affordable Housing Act (42 U.S.C. 12747(b)); and
``(bb) the Secretary shall obligate amounts that are
available for public housing agencies within each State, as
determined under item (aa), to qualified public housing
agencies within the State pursuant to specific criteria for
the selection of recipients for assistance in a notice
published in the Federal Register.
``(II) Recipients.--Subject to the allocation referred to
in subclause (I) and any additional criteria that the
Secretary may establish, the Secretary shall award such
incremental assistance for use under this paragraph to a
public housing agency that administers a program of tenant-
based assistance under this subsection and--
``(aa) administers funds for the construction,
preservation, or substantial rehabilitation of rental housing
other than public housing; or
``(bb) has an agreement with an agency or entity that
administers funds for the construction, preservation, or
substantial rehabilitation of rental housing that will enable
a prospective developer of such housing to submit a single
application for both types of funds.
``(III) Limitation.--Incremental assistance for use under
this paragraph shall not be considered in determining
compliance by a public housing agency with the limitation in
subparagraph (B).
``(IV) National competition.--If the Secretary determines
that sufficient funds for incremental assistance for use
under this paragraph have not been appropriated for public
housing agencies within each State in accordance with the
formula established under section 217(b) of the Cranston-
Gonzalez National Affordable Housing Act (42 U.S.C.
12747(b)), the Secretary may award such funds to qualified
public housing agencies through a national competition.
``(viii) Definitions.--In this subparagraph--
``(I) the term `substantial rehabilitation' means
rehabilitation expenditures paid or incurred with respect to
a unit, including its prorated share of work on common areas
or systems, of at least $25,000, which amount shall be
increased annually by the Secretary to reflect inflation, and
such increased amount shall be published in the Federal
Register; and
``(II) the term `extremely low-income families' means
persons and families (as that term is defined in section
3(b)(3)) whose incomes do not exceed--
``(aa) 30 percent of the area median income, as determined
by the Secretary with adjustments for smaller and larger
families and for unusually high or low family incomes; or
``(bb) 30 percent of the national nonmetropolitan median
income, if it is higher than the area median income.''.
(b) Effective Date.--
(1) In general.--This section and the amendments made by
this section shall take effect upon the date of enactment of
this Act.
(2) Rules.--The Secretary shall promulgate rules, as may be
necessary, to carry out section 8(o)(13) of the United States
Housing Act of 1937, as amended by this Act, and shall
publish--
(A) either proposed rules or interim rules not later than 6
months after the date of enactment of this Act; and
(B) final rules not later than 1 year after the date of
enactment of this Act.
SEC. 202. REALLOCATION OF VOUCHERS.
(a) In General.--Section 8(dd) of the United States Housing
Act of 1937 (42 U.S.C. 1437f(dd)) is amended--
(1) by striking ``Subject to'' and inserting the following:
``(1) In general.--Subject to''; and
(2) by adding at the end the following: ``(2) Reallocation
of chronically unutilized vouchers.--
``(A) In general.--The Secretary may reduce the allocation
baseline, only to the extent that the reduction reflects the
lesser of the unutilized portion of tenant-based subsidies or
of budget authority provided under this section, of a public
housing agency that--
``(i) fails, in a fiscal year, beginning in the fiscal year
in which this Act is enacted, to utilize at least 90 percent
of its allocated number of tenant-based subsidies or at least
90 percent of the budget authority provided under this
section that has been under annual contributions contract for
12 months on the first day of the fiscal year, not taking
into account, in the numerator, funds used for services and
other activities under section 4; and
``(ii) fails, within 16 months after written notice by the
Secretary of a failure described in clause (i), to utilize at
least 95 percent of allocated vouchers for rental assistance
provided under this section or contracted budget authority
provided under this section with respect to vouchers that
have been under annual contributions contract for 12 months
on the first day of the fiscal year, not taking into account,
in the numerator, funds used for services and other
activities under section 4.
``(B) Notice to tenants and community.--When the Secretary
provides written warning to a public housing agency of a
failure described in subparagraph (A)(i), the Secretary shall
also publish notice of such failure in the Federal Register
and shall provide written notice of such failure to the
chairman of the subject public housing agency's resident
advisory board established pursuant to section 5A(e). Not
later than 14 days after the date of receipt by the public
housing agency of notice of a failure described in
subparagraph (A)(i), that public housing agency shall provide
a copy of such notice to all members of its resident advisory
board or boards.
``(C) Utilization rate determination.--
``(i) In general.--At the request of a public housing
agency, the Secretary shall determine the voucher utilization
rate of the public housing agency for use under subparagraph
(A), based on data regarding the utilization of vouchers from
the period beginning 6 months prior to the request of the
public housing agency.
``(ii) Eligibility of a PHA to request a new survey of fair
market rents.--If a public housing agency requests, within 60
days of receipt of the written notice by the Secretary of a
failure described in subparagraph (A)(i), that the Secretary
conduct a further survey of market rents in the area to
determine the accuracy of the applicable fair market rent or
the need for an exception payment standard, and the Secretary
determines as a result of such survey to increase the fair
market rent or payment standard,
[[Page S8925]]
the written notice shall be considered null and void. Whether
a public housing agency complies with the standard under
subparagraph (A)(i) shall be determined based on the first
complete fiscal year in which the agency has the opportunity
to use the increased fair market rent or approved exception
payment standard. To be eligible to request a rent survey
under this clause, a public housing agency must use the
maximum allowable payment standard for that area for a period
of not less than 6 months prior to such request.
``(D) Determination of ineffective performance.--A
reallocation of chronically unutilized vouchers under this
subsection shall be deemed to be a determination that the
agency is not performing effectively under section
3(b)(6)(B)(iii).
``(3) Reallocation.--
``(A) In general.--The Secretary shall allocate the
contracts for the vouchers made available by the reduction in
baseline authority authorized under paragraph (2) in a manner
that ensures that applicants on the waiting list of the
public housing agency from which vouchers are reallocated may
continue to be served, consistent with this paragraph.
``(B) Metropolitan area.--
``(i) Designation of metropolitan administrator.--If
vouchers are reallocated from a public housing agency located
in a metropolitan area, the Secretary shall, based on a
public competitive process, designate a metropolitan
administrator for all or a portion of the metropolitan
statistical area in which that public housing agency is
located, in a manner consistent with clause (iv).
``(ii) Distribution of vouchers.--A metropolitan
administrator designated under clause (i) shall receive all
vouchers in that administrator's region made available
pursuant to paragraph (2).
``(iii) Eligible administrators.--The Secretary may select
as a metropolitan administrator an agency--
``(I) that--
``(aa) currently administers a voucher program serving
residents of the geographic area served by the agency whose
voucher allocation has been reduced;
``(bb) has the legal ability to serve such area; or
``(cc) has an agreement with the Secretary to serve such
area pursuant to section 3(b)(6)(B)(iii); and
``(II) that is--
``(aa) a public housing agency that administers a voucher
program;
``(bb) a State or local agency that has experience in
administering tenant-based assistance programs; or
``(cc) a nonprofit or for-profit agency that has experience
in administering tenant-based assistance programs.
``(iv) Selection process.--
``(I) Preference for certain public housing agencies.--The
Secretary may give preference in a competitive selection to a
public housing agency described in clause (iii)(II)(aa) over
other eligible administrators described in items (bb) and
(cc) of that clause (iii)(II), if the public housing agency--
``(aa) is a well-managed agency, based on objective
indicators, including a high rate of utilization of allocated
vouchers or contracted budget authority provided under this
section, and a high rate of compliance with eligibility and
rent determination requirements; and
``(bb) has demonstrated an ability to increase the number
of voucher holders residing in low poverty areas.
``(II) Selection criteria.--In selecting a metropolitan
administrator, the Secretary shall take into account--
``(aa) whether the entity has operated tenant-based
assistance programs in a manner that has not led to an
overconcentration of tenant-based subsidy holders in certain
areas;
``(bb) whether the entity has the administrative capacity
to administer the number of additional vouchers it is likely
to receive if it is selected as a metropolitan administrator
and to serve the geographic area served by agencies from
which vouchers are reallocated;
``(cc) the relative need for assistance under subsection
(o) of the eligible population not receiving housing
assistance in the area currently served by the entity; and
``(dd) any other criteria for choosing a metropolitan
administrator that the Secretary determines to be
appropriate.
``(C) Nonmetropolitan area.--
``(i) In general.--If vouchers are reallocated pursuant to
this subsection from a public housing agency that is located
in a nonmetropolitan area, the Secretary shall reallocate
such authority to a public housing agency or other eligible
administrator as specified in subparagraph (B)(iii). The
Secretary may designate an entity to receive vouchers
reallocated from all or a portion of the nonmetropolitan area
in a State.
``(ii) Selection.--In selecting an entity to receive
vouchers reallocated from a nonmetropolitan area, the
Secretary shall utilize the preferences and criteria in
subparagraph (B)(iv), and shall consider the relative
administrative costs likely to be incurred to serve families
that reside in the geographic area of the agency from which
the vouchers were reallocated.
``(D) Designation of a new administrator.--If, at any time,
the Secretary determines that the criteria established under
this paragraph for a metropolitan or nonmetropolitan
administrator are not met, the Secretary shall designate
another administrator.
``(E) Additional vouchers.--The Secretary shall ensure that
certain criteria or benchmarks regarding voucher success
rates and concentration of voucher holders are met each year
before providing an administrator with additional vouchers.
``(F) Lack of eligible families.--If the Secretary
determines that the primary cause of voucher underutilization
by a public housing agency under paragraph (2)(A) is a lack
of eligible families in the area of operation of the public
housing agency, the Secretary may establish criteria and
procedures to reallocate vouchers from that agency to another
public housing agency or another metropolitan or
nonmetropolitan administrator outside of the area of
operation of the public housing agency. First priority for
vouchers reallocated under this subparagraph shall be given
to an entity that has previously voluntarily relinquished to
the Secretary a portion of its allocated voucher budget
authority and has subsequently demonstrated a need for, and
an ability to use, such budget authority under criteria
established by the Secretary. Second priority shall be given
to an entity that serves a jurisdiction in the same State as
the agency from which vouchers are being reallocated.
``(4) Special populations.--Vouchers that have been
designated by the Secretary to be used by special populations
shall--
``(A) retain such designation on reallocation; and
``(B) be reallocated, if there is an eligible applicant
within the State or area that has experience administering a
voucher program for a special population, in accordance with
paragraphs (2) and (3).
``(5) Prompt reallocation.--Within 60 days of reducing a
public housing agency's allocation of vouchers pursuant to
paragraph (2) in an area for which the Secretary has
designated an administrator to receive vouchers reallocated
pursuant to this subsection, the Secretary shall enter into a
contract with the designated administrator for the
reallocated vouchers.''.
(b) Rules of the Secretary.--The Secretary shall promulgate
rules to carry out this section not later than 6 months after
the date of enactment of this Act.
SEC. 203. DISPOSITION OF HUD-HELD AND HUD-OWNED MULTIFAMILY
PROJECTS.
Notwithstanding any other provision of law, the Secretary
of Housing and Urban Development shall maintain any rental
assistance payments attached to any dwelling units under
section 8 of the United States Housing Act of 1937 for all
multifamily properties owned by the Secretary and multifamily
properties held by the Secretary for purposes of management
and disposition of such properties. To the extent, the
Secretary determines that a multifamily property owned by the
Secretary or held by the Secretary is not feasible for
continued rental assistance payments under section 8, the
Secretary may, in consultation with the tenants of that
property, contract for project-based rental assistance
payments with an owner or owners of other existing housing
properties.
TITLE III--PUBLIC HOUSING LOAN GUARANTEE PROGRAM
SEC. 301. PUBLIC HOUSING LOAN GUARANTEE PROGRAM.
(a) Section 9 of the United States Housing Act of 1937 is
amended by inserting at the end the following new subsection:
``(o) Loan Guarantee Development Funding.--(1) In order to
facilitate the financing of the rehabilitation and
development needs of public housing, the Secretary is
authorized, upon such terms and conditions as the Secretary
may prescribe, to guarantee and make commitments to
guarantee, only to the extent or in such amounts as the
provided in appropriations Acts, loans or other financial
obligations entered between financial institutions and public
housing agencies, for the purpose of financing the
rehabilitation of a portion of public housing or the
development off-site of public housing in mixed income
developments (including demolition costs of the public
housing units to be replaced), provided that the number of
public housing units developed off-site replaces no less than
an equal number of on-site public housing units in a project.
Loans or other obligations guaranteed pursuant to this
subsection shall be in such form and denominations, have such
maturities, and be subject to such conditions as may be
prescribed by regulations issued by the Secretary.
``(2) Subject to the availability of appropriated funds,
the Secretary may not object to making a loan guarantee under
this subsection unless the rehabilitation or replacement
housing proposed by a public housing agency is inconsistent
with its Public Housing Agency Plan, as submitted under
section 5A, or the proposed terms of the guaranteed loan
constitutes an unacceptable financial risk to the public
housing agency or for repayment of the loan under this
subsection.
``(3) Notwithstanding any other provision of this title,
funding allocated to a public housing agency under
subsections (d)(2) and (e)(2) of this section for the capital
and operating funds are authorized for use in the payment of
the principal and interest due (including such servicing,
underwriting or other costs as may be specified in the
regulations of the secretary) on the loans or other
obligations guaranteed pursuant to this subsection.
``(4) The amount of any loan or other obligation guaranteed
under this subsection shall not exceed in total the pro-rata
amount of funds that would be allocated over a period not to
exceed 30 years under subsections
[[Page S8926]]
(d)(2) and (e)(2) of this section on a per unit basis as a
percentage of the number of units that are designated to be
rehabilitated or replaced under this subsection by a public
housing agency as compared to the total number of units in
the public housing development, as determined on the basis of
funds made available under such subsections (d)(2) and (e)(2)
in the previous year. Any reduction in the total amount of
funds provided to a public housing agency under this section
in subsequent years shall not reduce the amount of funds to
be paid under a loan guaranteed under this subsection but
instead shall reduce the capital and operating funds which
are available for the other housing units in the public
housing development in that fiscal year. Any additional
income, including the receipt of rental income from tenants,
generated by the rehabilitated or replaced units may be used
to establish a loan loss reserve for the public housing
agency to assist in the repayment of the guaranteed loans or
other obligations under this subsection or to address any
shortfall in the operating or capital needs of the public
housing agency in any fiscal year. The Secretary may require
the payment of guaranteed loan premiums by a public housing
agency to support the creation of a loan loss reserve account
within the Department of Housing and Urban Development to
minimize the risk of loss associated with the repayment of
these guaranteed loans.
``(5) Subject to appropriations, the Secretary may use
funds from the Public Housing Capital Fund to (A) establish a
loan loss reserve account within the Department of Housing
and Urban Development to minimize the risk of loss associated
with the repayment of guaranteed loans made under this
subsection, or (B) make grants to a public housing agency for
capital investment needs or for the creation of a loan loss
reserve account to be used in conjunction with a loan
guarantee made under this subsection for the rehabilitation
of a portion of public housing or the development off-site of
public housing in mixed income developments (including
demolition costs of the public housing units to be replaced).
``(6) To assure the repayment of loans or other obligations
and charges incurred under this subsection and as a condition
for receiving such guarantees, the Secretary shall require
the public housing agency to enter into a contract, in a form
acceptable to the Secretary, for the repayment of notes or
other obligations guaranteed under this subsection and
furnish, at the discretion of the Secretary, such security as
may be deemed appropriate by the Secretary in making such
guarantees.
``(7) The full faith and credit of the United States is
pledged to the payment of all guarantees under this
subsection. Any such guarantee made by the Secretary shall be
conclusive evidence of the eligibility of the obligations for
such guarantee with respect to principal and interest, and
the validity of such guarantee so made shall be incontestable
in the hand of the holder of the guaranteed obligations.
``(8) The Secretary may, to the extent approved in
appropriations Acts, assist in the payment of all or a
portion of the principal and interest amount due under the
note or other obligation guaranteed under this subsection, if
the Secretary determines that the public housing agency is
unable to pay the amount it owes because of circumstances of
extreme hardship beyond the control of the public housing
agency.''.
(b) Effective Date.--
(1) In general.--This section and the amendments made by
this section shall take effect upon the date of enactment of
this Act.
(2) Rules.--The Secretary shall promulgate rules, as may be
necessary, to carry out section 8(o)(13) of the United States
Housing Act of 1937, as amended by this Act, and shall
publish--
(A) either proposed rules or interim rules not later than 6
months after the date of enactment of this Act; and
(B) final rules not later than 1 year after the date of
enactment of this Act.
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