[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.
                                 ______