[Congressional Record (Bound Edition), Volume 154 (2008), Part 1]
[House]
[Pages 638-640]
[From the U.S. Government Publishing Office, www.gpo.gov]




  SECTION 515 RURAL HOUSING PROPERTY TRANSFER IMPROVEMENT ACT OF 2007

  Mr. HODES. Mr. Speaker, I move to suspend the rules and pass the bill 
(H.R. 3873) to expedite the transfer of ownership of rural multifamily 
housing projects with loans made or insured under section 515 of the 
Housing Act of 1949 so that such projects are rehabilitated and 
preserved for use for affordable housing.
  The Clerk read the title of the bill.
  The text of the bill is as follows:

                               H.R. 3873

       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 ``Section 515 Rural Housing 
     Property Transfer Improvement Act of 2007''.

     SEC. 2. CONGRESSIONAL FINDINGS.

       The Congress finds that--
       (1) providing rural housing for poor families in the United 
     States has been an important goal, and the primary reason for 
     enactment, of the Housing Act of 1949;
       (2) rural multifamily housing financed under the section 
     515 of the Housing Act of 1949 has been an essential resource 
     for providing affordable housing for some of the Nation's 
     poorest families;
       (3) the majority of the approximately 16,000 projects 
     financed under section 515 that currently have loans 
     outstanding were constructed more than 25 years ago and need 
     new financing in order to continue to provide decent, 
     affordable housing for families eligible to reside in such 
     housing;
       (4) many owners of such projects are working to transfer 
     the properties, which often involves leveraging Federal 
     resources with private and commercial resources; and
       (5) the Secretary of Agriculture should protect the 
     portfolio of section 515 projects by making administrative 
     and procedural changes to process ownership transfers in a 
     commercially reasonable time and manner when such transfers 
     will further the preservation of such projects for use as 
     affordable housing for families eligible to reside in such 
     housing.

     SEC. 3. TRANSFERS OF SECTION 515 RURAL MULTIFAMILY HOUSING 
                   PROJECTS.

       Section 515(h) of the Housing Act of 1949 (42 U.S.C. 1485) 
     is amended--
       (1) by inserting ``(1) Condition.--'' after ``(h)''; and
       (2) by adding at the end the following new paragraphs:
       ``(2) Transfers for Preservation and Rehabilitation of 
     Projects.--
       ``(A) In general.--The Secretary shall make such 
     administrative and procedural changes as may be necessary to 
     expedite the approval of applications to transfer ownership 
     of projects for which a loan is made or insured under this 
     section for the preservation, continued use restriction, and 
     rehabilitation of such projects. Such changes may include 
     changing approval procedures, increasing staff and resources, 
     improving outreach to project sponsors regarding information 
     that is required to be submitted for such approvals, changing 
     approval authority between national offices and the State and 
     local offices, simplifying approval requirements, 
     establishing uniformity of transfer requirements among State 
     offices, and any other actions which would expedite 
     approvals.
       ``(B) Consultation.--The Secretary of Agriculture shall 
     consult with the Commissioner of the Internal Revenue Service 
     and the Secretary of Housing and Urban Development, and take 
     such actions as are appropriate in conjunction with such 
     consultation, to simplify the coordination of rules, 
     regulations, forms (including applications for transfers of 
     project ownership), and approval requirements for housing 
     projects for which assistance is provided by the Secretary of 
     Agriculture and under any low-income housing tax credits 
     under section 42 of the Internal Revenue Code of 1986 or tax-
     exempt housing bonds. The Secretary of Agriculture shall 
     involve the State Rural Development offices of Department of 
     Agriculture and the Administrator of the Rural Housing 
     Service in the consultations under this subparagraph as the 
     Secretary considers appropriate.
       ``(C) Preservation and rehabilitation.--The Secretary shall 
     actively facilitate transfers of the ownership of projects 
     that will result in the preservation, continued use 
     restriction, and rehabilitation of such projects.
       ``(D) Final authority over transfers.--The Office of Rental 
     Housing Preservation of the Rural Housing Service, 
     established under section 537 (42 U.S.C. 1490p-1), shall have 
     final regulatory authority over all transfers of properties 
     for which a loan is made or insured under this section, and 
     such Office may, with respect to such transfers, work with 
     and seek recommendations from the State Rural Development 
     offices of the Department of Agriculture.
       ``(E) Deadlines for processing of transfer applications.--
       ``(i) Procedure.--If a complete application, as determined 
     by the Secretary, for a transfer of ownership of a project or 
     projects is not processed, and approved or denied, by the 
     State Rural Development office to which it is submitted 
     before the applicable deadline under clause (ii)--
       ``(I) such State or local office shall not have any further 
     authority to approve or deny the application;
       ``(II) such State or local office shall transfer the 
     application in accordance with subclause (III); and
       ``(III) such application shall be processed, and approved 
     or denied, in accordance with clause (iii) and only by the 
     Office of Rental Housing Preservation, which may make the 
     final determination with the assistance of other Rural 
     Development employees.
       ``(ii) Deadline for state and local offices.--The 
     applicable deadline under this clause for processing, and 
     approval or denial, of a complete application for transfer of 
     ownership of a project, or projects, shall be the period that 
     begins upon receipt of the complete application by the State 
     Rural Development office to which it is submitted and 
     consists of--
       ``(I) in the case of an application for transfer of 
     ownership of a single project, 45 days;
       ``(II) in the case of an application for transfer of 
     ownership of multiple projects, but not exceeding 10 
     projects, 90 days; and
       ``(III) in the case of an application for transfer of 
     ownership of 11 or more projects, 120 days.
       ``(iii) Deadline for office of rental housing 
     preservation.--In the case of any complete application for a 
     transfer of ownership of a project, or projects, that is 
     transferred pursuant to clause (i), shall be processed, and 
     approved or denied, before the expiration of the period that 
     begins upon receipt of the complete application and consists 
     of--
       ``(I) in the case of an application for transfer of 
     ownership of a single project, 30 days;
       ``(II) in the case of an application for transfer of 
     ownership of multiple projects, but not exceeding 10 
     projects, 60 days; and
       ``(III) in the case of an application for transfer of 
     ownership of 11 or more projects, 120 days.
       ``(iv) Appeals.--Only decisions regarding complete 
     applications shall be appealable to the National Appeals 
     Division of the Department of Agriculture.''.

     SEC. 4. REPORT.

       Not later than July 1, 2008, the Secretary of Agriculture 
     shall submit a report to the Committee on Financial Services 
     of the House of Representatives and the Committee on Banking, 
     Housing, and Urban Affairs of the Senate that--
       (1) identifies the actions that the Secretary has taken to 
     coordinate with other Federal agencies, including the 
     Department of Housing and Urban Development and the Internal 
     Revenue Service, and, in particular, with the program for 
     rental assistance under section 8 of the United States 
     Housing Act of 1937, the multifamily mortgage insurance 
     programs under title II of the National Housing Act, the 
     program under section 42 of the Internal Revenue Code of 1986 
     for low-income housing tax credits, and the program for tax-
     exempt bonds under section 142 of such Code;
       (2) identifies and describes any resulting improvements 
     within Rural Housing Service of the Department of Agriculture 
     in expediting the transfer of ownership of projects with 
     loans made or insured under section 515 of the Housing Act of 
     1949; and
       (3) makes recommendations for any legislative changes that 
     are needed for the prompt processing of applications for such 
     ownership transfers and for the transfer of such projects.

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from New 
Hampshire (Mr. Hodes) and the gentlewoman from West Virginia (Mrs. 
Capito) each will control 20 minutes.
  The Chair recognizes the gentleman from New Hampshire.


                             General Leave

  Mr. HODES. Mr. 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.

[[Page 639]]

  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from New Hampshire?
  There was no objection.
  Mr. HODES. Mr. Speaker, I yield myself so much time as I may consume. 
I rise today in support of H.R. 3873.
  Mr. Speaker, rural poverty is a particularly harsh brand of 
indigence. It tends to be more extreme than urban poverty, and because 
it develops in areas far from television cameras and daily newspapers, 
to most Americans it is faceless. But its presence and its consequences 
are real, and they present formidable challenges to both our country 
and our conscience.
  The poverty rate in rural areas is 14.6 percent, topping that of most 
urban centers. Rural families are farther from population centers and, 
thus, less likely or able to take advantage of basic housing services. 
There is desperate need in parts of our country. As Members of the 
people's House we have a moral imperative to help children and parents 
trapped in destitute circumstances.
  The shortage of affordable housing is a problem nationwide and a 
crisis in rural communities. To reduce the barriers rural families face 
when trying to find affordable housing, together with my colleague from 
West Virginia (Mrs. Capito), we have introduced H.R. 3873, the Section 
515 Rural Housing Property Transfer Improvement Act of 2007, which 
would take important steps to help alleviate this rural housing crisis.

                              {time}  1315

  The section 515 rural housing program provides loans for the Rural 
Housing Service. These loans are made to nonprofit, for-profit, 
cooperative, and public entities for the construction of rental or 
cooperative housing in rural areas. The loans are made to make units 
affordable for low and very low-income areas in rural areas. This 
important program serves roughly 450,000 families.
  Section 515 loans have financed approximately 16,000 projects. Of 
those, more than 50 percent of the projects were constructed more than 
25 years ago. These aging properties are often in desperate need of 
renovation, which most often happens when a property is sold.
  When a section 515 property is sold, the transfer of ownership must 
be approved by the State's rural development office. The process by 
which States approve the transfer of ownership of section 515 
properties is too slow and steeped in bureaucracy. Families sometimes 
wait years for housing while loans are held back by red tape. Our bill 
will make several key changes to cut through the red tape so rural 
families can move into affordable houses.
  Now, while some State rural development offices transfer section 515 
applications in a timely way, others do not. Nonaction on these 
applications often results in deals going bad. Because of the reduced 
turnaround and red tape, the appraisals become outdated and invalid, so 
the deal cannot be underwritten.
  Under our bill, if applications are not processed in a timely way by 
the State rural development office, the applications will be 
transferred for processing to the national Rural Housing Service. The 
State offices that process applications on time won't have to worry 
about provisions in the bill.
  The bill will also improve the way rural housing program money is 
used with low-income housing tax credits. When the tax credits and 
rural housing programs are used together, there are often different 
rules and procedures required of the participants in the deals from 
each of the agencies involved. More red tape. Our bill requires the 
USDA to work with the IRS to resolve the differences. Better 
coordination will make tax credit deals move smoother through the USDA 
and leverage more money for much-needed rural housing.
  H.R. 3873 will help both the owners of the property as well as 
residents in rural communities both in my home State of New Hampshire 
and across the country.
  I'm pleased that 13 housing organizations support H.R. 3873, 
including the Council for Affordable and Rural Housing as well as the 
Housing Assistance Council.
  The Financial Services Committee reported the bill by voice vote. I 
ask my colleagues on both sides of the aisle to support H.R. 3873.
  Mr. Speaker, I reserve the balance of my time.
  Mrs. CAPITO. Mr. Speaker, today I rise in support of H.R. 3873, the 
515 Rural Housing Property Transfer Improvement Act of 2007, which 
would expedite the transfer of ownership of rural multifamily housing 
projects with loans made and ensured under section 515 of the Housing 
Act.
  First, I would like to commend my colleague from New Hampshire (Mr. 
Hodes) for his dedication to rural housing issues and for the 
bipartisan way that this bill has come to the floor. I would also like 
to thank the chairman of the full committee. Since he's sitting there, 
I want to thank him.
  The result of these bipartisan efforts is a bill that represents a 
sound approach to improving the administration of the Department of 
Agriculture's section 515 program.
  Section 515 is a direct loan program administered by the USDA that 
provides low-interest loans to construct and renovate affordable 
multifamily housing. While this program has provided numerous benefits, 
as my colleague has enumerated, to low-income rural families, the 
process by which the USDA's State rural development offices considers 
requests to transfer ownership must be improved.
  Section 515 owners may wish to transfer the project to other entities 
during the terms of their loan for a variety of reasons, including 
changes in owner circumstances or changes in local market conditions. 
Transfers of ownership in section 515 can be beneficial for all 
parties, as it presents an opportunity to recapitalize a project for 
better maintenance, rehabilitation and improved management.
  Unfortunately, the transfer application process is time-consuming, 
and many of the rural development offices do not process these 
applications in a timely fashion simply because they are probably 
overwhelmed with the process. Certain RD offices have been slow in 
approving transfer requests, leading to a number of problems, including 
inaccurate appraisals and expiration of outside financing rate 
guarantees and bond and tax credit deadlines. This nonaction has been a 
major source of irritation for owners of 515s and groups representing 
section 515 tenants.
  H.R. 3873 would fix these impediments by directing the USDA Secretary 
to streamline the application process, require applications to be 
processed within a timely deadline, and to transfer any applications 
not processed within that deadline to the Office of Rental Housing 
Preservation that would then have sole review authority.
  Mr. Speaker, this bill was approved, as my colleague mentioned, by a 
voice vote in the Financial Services Committee and makes commonsense 
changes to section 515 that would improve the ownership transfer 
process.
  I urge my colleagues to support this worthwhile measure.
  Mr. Speaker, I reserve the balance of my time.
  Mr. HODES. Mr. Speaker, I yield to the distinguished gentleman from 
Massachusetts (Mr. Frank), the chairman of the Financial Services 
Committee, so much time as he may consume.
  Mr. FRANK of Massachusetts. Mr. Speaker, I appreciate the leadership 
that my colleague and neighbor from New Hampshire has shown on this 
bill, and I appreciate, also, the work on the other side.
  Let me begin with a very important point: People in this country, I 
think, and our friends in the media misunderstand the true and 
legitimate meaning of partisanship. Partisanship has a very essential 
role to play in democracy. The Founding Fathers simultaneously launched 
this Nation, denounced parties, and formed them, because it does seem 
inevitable when large numbers of people are going to govern themselves 
that some forms of organization come forward.
  Partisanship is not only not a bad thing, it's a necessary thing in a 
self-governing polity. Partisanship becomes

[[Page 640]]

a problem if the legitimate differences that define the parties spill 
over angrily and make it impossible to work on issues where those 
differences should not exist.
  I think the Committee on Financial Services, under my predecessor as 
chairman, Mr. Oxley of Ohio, and I hope under my own chairmanship, have 
shown that that is not necessary to be the case, that it is possible 
from time to time to have legitimate strong differences on an 
ideological or partisan basis without that in any way interfering with 
our ability to come together on areas where we should agree. This bill, 
obviously, today is an example of the latter.
  We have a bill that has been brought forward in a totally bipartisan 
manner to improve the efficiency with which assistance goes for rural 
housing. That's the second point I wanted to make. Much of what we do 
is, in fact, to improve the efficiency with which programs work, and 
the committee has had a chance to bring several bills to the floor that 
do that. We will be doing more.
  The gentleman from New Hampshire mentioned one of the conflicts we 
are trying to resolve here is between the rules that apply when you 
were trying to use tax credits for low-income housing and those that 
apply when you were talking about the programmatic legislation. We do 
something about that here.
  Under the leadership of the chairman of the Committee on Ways and 
Means, the gentleman from New York (Mr. Rangel), and the Financial 
Services Committee, we are working out legislation that will do that 
kind of reconciliation for all housing programs. And we will shortly 
have on the floor of this House a bill that will greatly increase the 
efficiency with which all housing programs can be merged, tax-based 
ones and appropriations-based ones, increasing the amount of housing we 
can build at no further increase to the taxpayer.
  And the third point I would note is that this is rural housing. Too 
often when people think about Federal housing programs they think only 
about the urban areas. Urban areas are important, but so are rural 
areas. And I am very proud that this committee has given equal 
attention, or let me say appropriate attention, to both. Obviously, the 
need is often greater in the more heavily populated areas, but we have 
given fully proportionate attention to the rural areas.
  So, I am very proud we have a bill today that shows how you can be 
bipartisan, even while there are legitimate partisan differences, that 
aims at increasing the efficiency with which Federal funds are spent 
and which recognizes that people in the rural areas have a need for 
housing assistance, to some extent, just as do people in the urban 
areas.
  I thank the gentleman from New Hampshire for the leadership he has 
shown. I appreciate the gentlewoman from West Virginia, who has become 
the ranking member of the Housing Subcommittee and with whom we have 
very good relationships. And I hope the bill is passed.
  Mr. HODES. Mr. Speaker, I thank the gentleman for his comments and 
reserve the balance of my time.
  Mrs. CAPITO. I have no further speakers. I urge passage of this bill. 
We have the best of intentions here. We've worked out any kind of 
differences we may have had, and the end product is going to be better 
and more affordable and more accessible rural housing across America.
  Mr. Speaker, I yield back the balance of my time.
  Mr. HODES. I thank the gentlewoman for her work in a bipartisan way 
on this bill. And I thank the chairman for his great leadership for 
rural housing over many years.
  Mrs. MILLER of Michigan. Mr. Speaker, I rise in strong support of 
this legislation.
  This measure corrects a problem which has been culminating since 1974 
when the National Flood Insurance Program began subsidizing flood 
insurance rates. These rates were designed to encourage participation 
in the program and to generate sufficient income to pay anticipated 
claims on these properties. Originally, Congress had expected that over 
time the percentage of these structures would decline and that most of 
them would be subject to actuarial rates. However that has not 
occurred.
  This bill corrects this problem by removing subsidies for properties 
that are purchased in excess of a half of a million dollars.
  Sadly, this is just one of the many problems the National Flood 
Insurance Program faces. Currently, FEMA is engaged in efforts to 
modernize flood maps throughout the country, which in many places, are 
horribly outdated. Utilizing antiquated data impacts millions of 
property owners, property owners that live on, near or around the Upper 
Great Lakes, which is essentially everything in the Great Lakes Basin 
upstream from Niagara Falls. So Lake Superior, Lake Michigan, Lake 
Huron and Lake Erie, Lake St. Clair and the St. Mary's River, St. Clair 
River, the Detroit River and the Niagara River.
  Unfortunately, FEMA's efforts in the upper Great Lakes are being 
conducted with flawed and outdated data. The data currently being used 
is from when Great Lakes water levels were at an all time high, and in 
the 20 years since this study was completed, lake levels have fallen 
for 11 years.
  Let me use St. Clair County in my district as an example. In St. 
Clair County, FEMA is abusing the authority Congress granted them 
through management of the National Flood Insurance Program. As the 
agency continues to modernize the maps in the county, the effects will 
double the number of county residents who will be forced to purchase 
flood insurance even though they are at virtually no risk of flooding. 
More specifically, Lake St. Clair is currently more than 55 inches 
below the current flood level, and over 6 feet below FEMA's proposed 
flood level. This means that St. Clair County alone has subsidized the 
flood insurance program to the tune of $8.2 million. Using such flawed 
data is nothing more than a waste of FEMA's time and money not to 
mention the waste of taxpayer dollars.
  How can the FEMA justify doing this? The agency claims these 
residents are at a higher risk of a flood and wants to raise the base 
flood elevation which determines the boundaries of the 100-year flood 
zone. As a result, states like Michigan become ATMs for FEMA to 
withdraw money and spend it in regions of the country that experience 
high levels of repeated flooding. In Michigan, we look down at the 
water, not up.
  Certainly we can all agree that using sound science in this 
instance--when hundreds of millions of dollars are about to be assessed 
against American property owners--is the most prudent course of action. 
It is time that FEMA stop using antiquated data and forcing the 
American people into purchasing a product that some don't need.
  Mr. HODES. Mr. Speaker, at this time, I have no further requests for 
time and I yield back the balance of my time.
  The SPEAKER pro tempore. The question is on the motion offered by the 
gentleman from New Hampshire (Mr. Hodes) that the House suspend the 
rules and pass the bill, H.R. 3873.
  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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