[Congressional Record (Bound Edition), Volume 153 (2007), Part 7]
[House]
[Pages 9886-9887]
[From the U.S. 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.

[[Page 9887]]

       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
     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.

                          ____________________