[Congressional Record Volume 153, Number 66 (Tuesday, April 24, 2007)]
[House]
[Pages H3787-H3788]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
PRESERVATION APPROVAL PROCESS IMPROVEMENT ACT OF 2007
Ms. BEAN. Madam Speaker, I move to suspend the rules and pass the
bill (H.R. 1675) to suspend the requirements of the Department of
Housing and Urban Development regarding electronic filing of previous
participation certificates and regarding filing of such certificates
with respect to certain low-income housing investors.
The Clerk read the title of the bill.
The text of the bill is as follows:
H.R. 1675
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 ``Preservation Approval
Process Improvement Act of 2007''.
SEC. 2. SUSPENSION OF ELECTRONIC FILING REQUIREMENT.
The Secretary of Housing and Urban Development shall--
(1) suspend mandatory processing of Previous Participation
Certificates (form HUD-2530) under the Department of Housing
and Urban Development's Automated Partners Performance System
(APPS) and permit paper filings of such certificates until
such time that the Secretary--
(A) revises the December 2006 draft proposed regulations
under subpart H of part 200 of title 24, Code of Federal
Regulations, to eliminate the unnecessary burdens and
disincentives for program participants; and
(B) submits such revised draft proposed regulations to the
Committee on Financial Services of the House of
Representatives and the Committee on Banking, Housing, and
Urban Affairs of the Senate for review by such Committees;
and
(2) suspend immediately all filing requirements under the
Previous Participation Certificate process with respect to
limited liability corporate investors who own or expect to
own an interest in entities which are allowed or are expected
to be allowed low-income housing tax credits under section 42
of the Internal Revenue Code of 1986.
The SPEAKER pro tempore. Pursuant to the rule, the gentlewoman from
Illinois (Ms. Bean) and the gentleman from Texas (Mr. Neugebauer) each
will control 20 minutes.
The Chair recognizes the gentlewoman from Illinois.
General Leave
Ms. BEAN. Madam Speaker, I ask unanimous consent that all Members may
have 5 legislative days within which to revise and extend their remarks
on this legislation and to insert extraneous material thereon.
The SPEAKER pro tempore. Is there objection to the request of the
gentlewoman from Illinois?
There was no objection.
Ms. BEAN. Madam Speaker, I yield myself such time as I may consume.
The Preservation Approval Process Improvement Act of 2007, introduced
by myself and Representative Gillmor, was recently reported out of the
Committee on Financial Services without objection, and I am pleased it
is being given consideration on the House floor today. In addition to
expressing my appreciation to Chairman Frank, Ranking Member Bachus,
and Housing Subcommittee Chairwoman Waters, I would especially like to
thank my colleague from Ohio (Mr. Gillmor) in moving this bill forward
and his efforts to address the regulatory barriers impacting the
investment in affordable housing.
I am also very appreciative of the expert assistance provided by the
House Financial Services Committee staff, including Jeff Riley and
Cindy Chetti, who have been working on this issue for more than 1\1/2\
years.
H.R. 1675 will reduce burdens caused by HUD's unnecessarily complex
regulation of its previous participation reporting requirements, known
as the 2530 process.
Written many years ago when small mom-and-pop companies were
investing in affordable housing, HUD's regulations governing the 2530
process are no longer in sync with the type of real estate transactions
being conducted today. As a result, when applied to the more typical
investor of today, these regulations impose huge administrative and
regulatory hurdles. The application of these cumbersome regulations was
made worse last summer when HUD automated the 2530 process using an
electronic system known as APPS. In addition to being difficult to
navigate, the APPS system experiences technical difficulties almost
daily and has led to a number of security breaches involving personal
data.
As a result, H.R. 1675 will suspend the requirement that 2530 filings
be done through HUD's electronic APPS system. Participants may choose
to continue to use APPS, but HUD must permit other participants to
submit 2530 paper filings. The suspension of HUD's requirement that all
filings be done through APPS will continue until HUD revises the 2530
rules to eliminate unnecessary burdens and disincentives for all
participants. The revised regulations are to be submitted to the
Committee on Financial Services as well as to the Senate Banking
Committee for review.
Further, the bill requires the HUD Secretary to immediately suspend
all filing requirements under the previous participation process for
limited liability corporate investors owning an interest in entities
that receive low-income housing tax credits. Limited liability
corporate investors have no operational control over properties and
pose no risk to the Department. The investors are simply providing much
needed capital to build affordable housing for low-income Americans,
and such investment should not be inadvertently discouraged by
outdated, burdensome regulations.
I submit for printing in the Record a letter addressed to Chairman
Frank and Representative Bachus from nearly 30 organizations endorsing
this legislation, including the National Association of Realtors,
National Multi-Housing Council, the National Association of State and
Local Equity Funds, and many more.
It is time for us to bring a commonsense approach to affordable
housing. In passing this bill we will be taking an important step
toward encouraging investment in such housing options and reducing
unnecessary regulatory roadblocks.
March 27, 2007.
Hon. Barney Frank,
Chairman, House Committee on Financial Services, Washington,
DC.
Hon. Spencer Bachus,
Ranking Member, House Committee on Financial Services,
Washington, DC.
Dear Sirs: We are writing to express our support for H.R.
1675, the Preservation Approval Process Improvement Act of
2007, introduced by Congresswoman Bean and Congressman
Gillmor on March 26, 2007. This legislation is very important
to ensuring continued investment in safe, affordable rental
housing.
The Preservation Approval Process Improvement Act will
reduce unnecessary and onerous HUD filing requirements for
purposes of participating in HUD programs. The current
requirements, under the HUD 2530 filing process, are
discouraging investment in affordable housing.
HUD's current 2530 Previous Participation Review process is
intended as a risk assessment tool, but has, in fact, been a
barrier to housing development and preservation. The current
regulations and the accompanying electronic system that
processes 2530 submissions do not take into account the
complexities of today's real estate transactions. The
reporting requirements are unduly burdensome and offer no
additional benefit to HUD.
Presently, investors who represent more than half of the
investment in the Low-Income Housing Tax Credit program have
elected not to invest in HUD multifamily properties if such
investment would subject them to the 2530 filing
requirements. Investors have reduced their share of
investments to below 25 percent in any property, or fund of
properties, so as to not trigger the unduly burdensome
requirements.
With the assistance of many members of the House Committee
on Financial Services, we have been working with HUD for more
than a year to try to resolve this issue. The Preservation
Approval Process Improvement Act is a significant step toward
reducing filing burdens and requires immediate useful action
from HUD, whose previous response has been contrary to the
goals of encouraging investment in affordable rental housing.
Our organizations strongly support this legislation to
reduce filing burdens for, and encourage investment in,
affordable rental housing. Please contact Francine E.
Friedman, Affordable Housing Tax Credit Coalition, 202-955-
1536, or Denise B. Muha, National Leased Housing Association,
202-785-8888, with any questions or concerns.
Affordable Housing Tax Credit Coalition
American Association of Homes and Services for the Aging
Bank of America
Barker Management Incorporated
Boston Capital Corporation
California Council for Affordable Housing
California Housing Partnership Corporation
CharterMac Capital LLC
Council for Rural Housing and Development
G.G. MacDonald Companies
[[Page H3788]]
Housing Advisory Group
Institute for Responsible Housing Preservation
Institute of Real Estate Management
The John Stewart Company
Local Initiatives Support Corporation
Mortgage Bankers Association
National Apartment Association
National Association of Affordable Housing Lenders
National Association of Home Builders
National Association of Realtors
National Association of State and Local Equity Funds
National Housing Conference
National Housing Trust/Enterprise Preservation Corporation
National Leased Housing Association
National Multi Housing Council
PNC MultiFamily Capital
The Related Companies of California
Stewards of Affordable Housing for the Future
Texas Affiliation of Affordable Housing Providers
Madam Speaker, I reserve the balance of my time.
Mr. NEUGEBAUER. Madam Speaker, I yield myself such time as I may
consume.
Madam Speaker, I rise in support of H.R. 1675, the Preservation
Approval Process Improvement Act of 2007, introduced by Representative
Melissa Bean, Financial Institution Subcommittee Ranking Member Paul
Gillmor, and Full Committee Chairman Barney Frank.
1675 addresses problems with HUD's processing of previous
participation certificate or HUD's form 2530 under HUD's automated
partners performances system.
Specifically, this legislation suspends the electronic filing
requirement for the previous participation certificates and the filing
requirements of these certificates for certain low-income housing
investors. Form 2530 has been used for many years to ascertain the
prior record of participants in certain HUD programs. This enabled HUD
to refuse to do business with participants who have not previously
carried out their obligations. However, passive investor disclosure
requirements have created problems for private individuals and groups
who wish to participate in the construction and preservation of
affordable housing through the low-income housing tax credit program.
The 2530 process is designed to review principals, including any
limited partner, with a 25 percent or greater interest in property.
These rules were developed long before low-income housing tax credit
programs were actually created. Low-income housing tax credit deals
with the typical investors or institutions, that is, publicly traded
and regulated national and multi-national financial institutions,
including government sponsored enterprises whose reputation is well
established.
Under the 2530 process, officers, directors, and stockholders with 10
percent or greater holdings are required to submit their names, Social
Security numbers, as well as their individual and prior record with
HUD. Industry groups have objected to these disclosure requirements as
they are passive investor partners and are not involved in the
construction, maintenance, and operation of the property. They claim
that these reporting requirements are costly, time intensive, and deter
investment in affordable housing. Investors developers, syndicators,
and others have contacted HUD to ask that passive investors be exempted
from filing with HUD.
In December 2005, former Chairman Oxley requested that HUD extend the
opportunity for paper filing, and asked HUD to explain why passive
investors should be required to file. HUD allowed the paper filing
until June 30, 2006. In December 2006, after repeated inquiries from
the Financial Services Committee and requests from interested parties
to provide relief, HUD sent the committee a proposal that, according to
the industry, made filing more burdensome in many respects.
On December 21, 2006, noting that HUD's applications for 2530 filing
requirements have become broad and overreaching and, in some cases,
unnecessarily delayed or even prevented HUD transactions that were
beneficial to people in need of housing, Chairman Frank, Ranking Member
Bachus, Chairman Waters, and Chairman Oxley asked HUD to discuss the
matter further with interested parties before taking any action on the
proposed rule. Since then, however, HUD has not taken any overt action
to amend the proposal.
H.R. 1675, the Preservation Approval Process Improvement Act of 2007,
requires that HUD take action to alleviate the concerns mentioned above
in order to encourage private sector participation in affordable
housing programs.
HUD's current 2530 previous participation review process is intended
as a risk assessment tool, but in many ways has been a barrier with
housing preservation because the current regulations in the
accompanying electronic system that process 2530 submissions do not
reflect the complexity of today's real estate transactions. The
reporting requirements are unduly burdensome and offer no additional
benefit to HUD.
To this end, H.R. 1675 requires that HUD suspend mandatory previous
participation filings through the APPS computer program, and that it
allow paper filing until HUD submits to Congress a revised draft that
would eliminate unnecessary filing burdens.
In addition, this legislation eliminates the requirement to file a
2530 form for passive investors who expect to own entities that are
allowed or expected to be allowed in low-income housing tax credits.
Madam Speaker, I urge my colleagues to support this legislation.
Madam Speaker, I reserve the balance of my time.
{time} 1230
Ms. BEAN. I have no further requests for time, and I reserve the
balance of our time.
Mr. NEUGEBAUER. Madam Speaker, I yield back the balance of my time.
Ms. BEAN. Madam Speaker, I would just say this is a bill where we had
strong bipartisan support, and while technology didn't work in the case
of the APPS system, bipartisanship did.
I yield back the balance of my time.
The SPEAKER pro tempore. The question is on the motion offered by the
gentlewoman from Illinois (Ms. Bean) that the House suspend the rules
and pass the bill, H.R. 1675.
The question was taken; and (two-thirds being in the affirmative) the
rules were suspended and the bill was passed.
A motion to reconsider was laid on the table.
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