[Senate Report 105-21]
[From the U.S. Government Publishing Office]
Calendar No. 63
105th Congress Report
SENATE
1st Session 105-21
_______________________________________________________________________
THE PUBLIC HOUSING REFORM AND RESPONSIBILITY ACT OF 1997
__________
R E P O R T
of the
COMMITTEE ON BANKING, HOUSING,
AND URBAN AFFAIRS
UNITED STATES SENATE
to accompany
S. 462
together with
ADDITIONAL VIEWS
May 23, 1997.--Ordered to be printed
COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS
ALFONSE M. D'AMATO, New York, Chairman
PHIL GRAMM, Texas PAUL S. SARBANES, Maryland
RICHARD C. SHELBY, Alabama CHRISTOPHER J. DODD, Connecticut
CONNIE MACK, Florida JOHN F. KERRY, Massachusetts
LAUCH FAIRCLOTH, North Carolina RICHARD H. BRYAN, Nevada
ROBERT F. BENNETT, Utah BARBARA BOXER, California
ROD GRAMS, Minnesota CAROL MOSELEY-BRAUN, Illinois
WAYNE ALLARD, Colorado TIM JOHNSON, South Dakota
MICHAEL B. ENZI, Wyoming JACK REED, Rhode Island
CHUCK HAGEL, Nebraska
Howard A. Menell, Staff Director
Philip E. Bechtel, Chief Counsel
Melody H. Fennel, Professional Staff Member
David L. Hardiman, Legislative Assistant
Steven B. Harris, Democratic Staff Director and Chief Counsel
George E. Whittle, Editor
______
Subcommittee on Housing Opportunity and Community Development
CONNIE MACK, Florida, Chairman
LAUCH FAIRCLOTH, North Carolina JOHN F. KERRY, Massachusetts
MICHAEL B. ENZI, Wyoming JACK REED, Rhode Island
RICHARD C. SHELBY, Alabama CHRISTOPHER J. DODD, Connecticut
WAYNE ALLARD, Colorado RICHARD H. BRYAN, Nevada
CHUCK HAGEL, Nebraska CAROL MOSELEY-BRAUN, Illinois
Christopher D. Lord, Staff Director
Kari Davidson, Deputy Staff Director
Cheh Kim, Professional Staff Member
Susana Limon, Detailee
Jonathan Miller, Democratic Professional Staff Member
C O N T E N T S
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Page
Introduction..................................................... 1
Purpose and Summary.............................................. 2
Legislative History of the Committee Bill........................ 2
Need for Legislation............................................. 3
Explanation of the Legislation................................... 4
Title I--Public Housing.......................................... 7
Title II--Section 8 Rental Assistance............................ 32
Title III--Safety and Security................................... 43
Title IV--Miscellaneous Provisions............................... 43
Section-by-Section............................................... 44
Section 1. Short title; Table of Contents.................... 44
Section 2. Findings and purposes............................. 44
Section 3. Definitions....................................... 44
Section 4. Effective Date.................................... 44
Section 5. Proposed Regulations; Technical Recommendations... 44
Section 6. Elimination of Obsolete Documents................. 45
Section 7. Annual Reports.................................... 45
Title I--Public Housing.......................................... 45
Section 101. Declaration of Policy........................... 45
Section 102. Membership on Board of Directors................ 45
Section 103. Authority of Public Housing Agencies............ 45
Section 104. Definitions..................................... 46
Section 105. Contributions for Lower Income Housing Projects. 46
Section 106. Public Housing Agency Plan...................... 47
Section 107. Contract Provisions and Requirements............ 48
Section 108. Expansion of Powers for Dealing with PHA's in
Substantial Default........................................ 49
Section 109. Public Housing Site-Based Waiting Lists......... 50
Section 110. Public Housing Capital and Operating Funds...... 50
Section 111. Community Service and Self-Sufficiency.......... 51
Section 112. Repeal of Energy Conservation; Consortia and
Joint Ventures............................................. 52
Section 113. Repeal of Modernization Fund.................... 52
Section 114. Income Eligibility for Public and Assisted
Housing.................................................... 52
Section 115. Demolition and Disposition...................... 52
Section 116. Repeal of Family Investment Centers; Voucher
System for Public Housing.................................. 53
Section 117. Repeal of Family Self-Sufficiency; Homeownership
Opportunities.............................................. 53
Section 118. Revitalizing Severely Distressed Public Housing. 54
Section 119. Mixed-Finance and Mixed-Ownership Projects...... 54
Section 120. Conversion of Distressed Public Housing to
Tenant-Based Assistance.................................... 54
Section 121. Public Housing Mortgages and Security Interests. 55
Section 122. Linking Services to Public Housing Residents.... 55
Section 123. Prohibition on Use of Amounts................... 55
Section 124. Pet Ownership................................... 55
Title II--Section 8 Rental Assistance............................ 56
Section 201. Merger of the Certificate and Voucher Programs.. 56
Section 202. Repeal of Federal Preferences................... 57
Section 203. Portability..................................... 57
Section 204. Leasing to Voucher Holders...................... 58
Section 205. Homeownership Option............................ 58
Section 206. Law Enforcement and Security Personnel in Public
Housing.................................................... 58
Section 207. Technical and Conforming Amendments............. 58
Section 208. Implementation.................................. 58
Section 209. Definition...................................... 58
Section 210. Effective Date.................................. 58
Section 211. Recapture and Reuse of Annual Contribution
Contract Project Reserves Under the Tenant-Based Assistance
Program.................................................... 58
Title III--Safety and Security in Public and Assisted Housing.... 58
Section 301. Screening of Applicants......................... 58
Section 302. Termination of Tenancy and Assistance for
Illegal Drug Users and Alcohol Abusers..................... 59
Section 303. Lease Requirements.............................. 59
Section 304. Availability of Criminal Records for Tenant
Screening and Eviction..................................... 59
Section 305. Definitions..................................... 59
Title IV--Miscellaneous Provisions............................... 60
Section 401. Public Housing Flexibility in the CHAS.......... 60
Section 402. Determination of Income Limits.................. 60
Section 403. Demolition of Public Housing.................... 60
Section 404. Technical Correction of Public Housing Agency
Opt-Out Authority.......................................... 60
Section 405. Review of Drug Elimination Program Contracts.... 60
Section 406. Sense of Congress............................... 60
Section 407. Other Repeals................................... 60
Changes in Existing Law (Cordon Rule)............................ 61
Regulatory Impact Statement...................................... 61
Cost Estimate.................................................... 61
Additional Views of Senator Allard............................... 72
Additional Views of Senator Enzi................................. 73
Additional Views of Senator Reed................................. 75
Calendar No. 63
105th Congress Report
SENATE
1st Session 105-21
_______________________________________________________________________
THE PUBLIC HOUSING REFORM AND RESPONSIBILITY ACT OF 1997
_______
May 23, 1997.--Ordered to be printed
_______________________________________________________________________
Mr. D'Amato, from the Committee on Banking, Housing, and Urban Affairs,
submitted the following
R E P O R T
together with
ADDITIONAL VIEWS
[To accompany S. 462]
introduction
The Committee on Banking, Housing, and Urban Affairs,
having considered the same, reports favorably a Committee bill
to reform and consolidate the public and assisted housing
programs of the United States, and to redirect primary
responsibility for these programs from the Federal government
to States and localities, and for other purposes.
The Senate Committee on Banking, Housing, and Urban Affairs
marked up S. 462, the ``Public Housing Reform and
Responsibility Act of 1997,'' on May 8, 1997. The Committee
considered, as original text for the purposes of amendment, an
amendment in the nature of a substitute, which incorporated the
principles of S. 462, as originally introduced by Senator Mack,
and cosponsored by Senators D'Amato, Bond, Faircloth, and
Grams. The substitute also included all or parts of 20
amendments to S. 462 filed by members of the Committee prior to
the markup in accordance with Committee rules, as well as
technical and other revisions to S. 462 as originally
introduced.
During the markup, the Committee approved one amendment by
voice vote. An amendment by Senator Reed clarifies the law
which permits housing authorities to reduce public and assisted
housing rents of welfare recipients whose benefits have expired
due to the expiration of a lifetime time limit on welfare
benefits. In addition, the Committee considered an amendment by
Senator Boxer, not previously filed, dealing with eradication
of cockroaches in public housing. The Committee agreed with the
concept of the Boxer amendment and committed to work toward
inclusion of the proposal in a manager's amendment. The
Committee also rejected, by voice vote, an amendment by Senator
Bennett to strike bill provisions regarding pet ownership.
S. 462 as amended was ordered reported by a roll call vote
of 18 to 0 with the following Senators voting in the
affirmative: D'Amato, Gramm, Shelby, Mack, Faircloth, Bennett,
Grams, Allard, Enzi, Hagel, Sarbanes, Dodd, Kerry, Bryan,
Boxer, Moseley-Braun, Johnson, and Reed.
purpose and summary
S. 462, the Public Housing Reform and Responsibility Act of
1997, represents a major revision of the United States Housing
Act of 1937 to make the nation's public and assisted housing
programs operate more effectively and efficiently. This bill
represents an important first step toward an expected overhaul
and restructuring of Federal housing programs and a greater
sharing of responsibilities among all participants in the
Federal system.
S. 462 consolidates public housing funding and transfers
greater responsibility over the operation and management of
public housing from the Department of Housing and Urban
Development (HUD) to housing authorities. In addition, it
merges two similar programs that provide tenant-based rental
assistance to low-income families and repeals program
requirements in the current tenant-based assistance programs
that discourage participation by private sector landlords.
legislative history of the committee bill
S. 462 continues an effort that began in the 104th Congress
to reform the nation's public housing system. During the last
Congress, the Senate unanimously approved S. 1260, a public and
assisted housing reform measure similar to S. 462. However, no
conference agreement was reached with the House of
Representatives prior to the adjournment of the 104th Congress.
On March 18, 1997, Senator Mack, Chairman of the
Subcommittee on Housing Opportunity and Community Development,
introduced S. 462 with Senators D'Amato, Bond, Faircloth, and
Grams.
On April 9, 1997, the Subcommittee on Housing Opportunity
and Community Development held a hearing on S. 462. Testifying
before the Subcommittee were: The Honorable Andrew M. Cuomo,
Secretary of the Department of Housing and Urban Development;
Ms. Cushing Dolbeare, Chair, Policy Committee, National Low
Income Housing Coalition; Mr. Ricardo Diaz, representing the
Council of Large Public Housing Authorities; Mr. David Bryson,
Interim Director, National Housing Law Project; Ms. Deborah
Vincent, representing the National Association of Housing and
Redevelopment Officials; Mr. Tom Shuler, representing the
National Multi-Housing Council; Mr. David Morton, representing
the Public Housing Authority Directors Association; Mr. Billy
Easton, Executive Director, New York State Tenants and
Neighbors Coalition, accompanied by Judy Smith, Board Member,
New York State Tenants and Neighbors Coalition; and Mr. Deepak
Bhargava, Director of Public Policy, Center for Community
Change.
need for legislation
The Public Housing Reform and Responsibility Act of 1997
addresses a public housing system fraught with
counterproductive rules and regulations. Over the years, public
housing agencies (PHAs) have been saddled with requirements
imposed in previous legislation by Congress and through
regulation by HUD that make it difficult for even the best PHAs
to operate effectively and efficiently to innovate, or to
respond to local needs or conditions. Further, the residents of
public housing currently face powerful disincentives to
achieving economic independence and self-sufficiency.
The Committee realizes that much of public housing is
well-run. Nevertheless, many public housing developments have
concentrated the poorest households in developments that are
havens for crime and drug abuse and islands of welfare
dependency. The well-publicized problems in public housing that
are so visible in some of the nation's largest cities threaten
to discredit an entire public housing system that is home to
1.3 million American families.
Compounding the structural problems of public housing are
the dual concerns of budget and HUD capacity. Public housing
agencies are facing significant and growing subsidy
requirements in an era of diminishing Federal government
resources. Given these limited resources, PHAs need the
increased flexibility to use their funds in a manner that helps
to maintain decent, safe and affordable housing for their
residents. In addition, HUD itself faces a potential reduction
in overall staffing of almost 40 percent over the next five
years. The prospect of diminishing staff resources means that
the Department will lack the capacity to maintain the same
degree of oversight and control that it has exercised over the
public housing system in recent decades. Instead, the
Department will be required to focus its efforts on ensuring
the accountability of PHAs and addressing problems created in
housing authorities that fail to meet performance standards.
Because these circumstances pose an immediate threat to the
ability of PHAs and the Federal government to maintain and
monitor a public housing program that ensures the provision of
decent, safe and affordable housing to residents, the Committee
believes it is essential to make public housing reform a high
priority and to develop a comprehensive reform proposal that
fundamentally alters the historical relationship between HUD,
housing authorities, and residents.
Increasing flexibility in the use of Federal resources is
critical both to increase the economic viability of public
housing developments and to provide a platform from which lower
income households can achieve economic self-sufficiency.
Subject to strict performance standards and comprehensive
planning requirements, the bill allows housing authorities to
use their funds in a more cost-effective and creative manner,
and returns greater responsibility over the operation and
management of public housing to local housing authorities.
The Committee acknowledges that the Administration
considers public housing reform to be a major priority. S. 462
incorporates a number of significant reforms, particularly
specific management improvements, contained in comprehensive
public housing legislation transmitted to Congress by the
Administration on April 17, 1997.
explanation of the legislation
Overview
S. 462 consolidates public housing programs into two
flexible block grants--one for operating expenses and one for
capital needs--and requires HUD to establish new funding
formulas for these activities through negotiated rulemaking. In
addition to providing a more flexible source of funding, the
bill also eliminates a series of statutory requirements that
have prevented the effective and efficient use of funds. For
example, the bill repeals the one-for- one replacement
requirement and streamlines and makes flexible the demolition
and disposition process to permit PHAs to demolish or dispose
of obsolete or vacant housing developments. It also allows
housing authorities to participate, via joint ventures or
partnerships, in the development of mixed-income, mixed-finance
communities.
The bill changes targeting requirements that will allow
PHAs to serve residents with a greater range of income, while
retaining targeting requirements that assure that very low-
income families in public and assisted housing will receive a
significant portion of available housing assistance. The bill
also repeals Federal preferences and allows PHAs to operate
according to locally established preferences consistent with
local housing needs.
The underlying principles of the bill are local
responsibility and resident empowerment. S. 462 will provide
housing authorities with greater flexibility to set their own
rents with protections for very low-income families. S. 462
returns the so-called ``Brooke Amendment'' to its original
intent by permitting housing authorities to charge residents up
to 30 percent of their adjusted incomes for rent. In addition,
the bill permits housing authorities to develop rental
policies, such as ceiling rents and exemptions from adjustments
to earned income, that will encourage and reward the employment
and self-sufficiency of residents. The bill also provides a
limited 18-month disallowance of earned income from public
housing and section 8 rent determinations for newly employed
tenants as a means of encouraging employment. Further, the bill
creates a new, more flexible program that links supportive
services to residents of public housing. This program includes
a set-aside of funds for resident organizations that provide
empowerment-related activities for public housing residents.
While allowing well-run housing authorities much more
discretion, the bill also requires strong action against those
housing authorities that are troubled. Although small in
number, these PHAs with severe management problems control a
disproportionate share of the nation's public housing stock. It
is critical that the management and physical problems of these
PHAs be addressed with HUD and localities becoming more
responsible and proactive. The bill requires HUD to seek a
judicial receiver for large PHAs that are unable to make
significant improvements in their operations, and requires the
appointment of either judicial or administrative receivers in
the case of other troubled PHAs. It also gives HUD expanded
powers to break up or reconfigure troubled authorities, bring
in private management including nonprofit organizations,
dispose of their assets, abrogate contracts, or not be bound by
State or local laws that significantly impede the correction of
the housing authority's problems.
The Committee believes that low-income families who are
eligible for Federal housing assistance should have the widest
possible choice of available affordable housing units. Thus,
while a primary focus of the bill is preserving the nation's
significant investment in the public housing stock, it also
improves the ability of tenant-based section 8 assistance to
work successfully. The bill combines the current section 8
certificate and voucher programs into a single, tenant-based
assistance program. The new voucher program will emphasize
lease requirements similar to those in the private rental
marketplace, and it repeals current program requirements such
as ``take-one, take-all,'' Federal preferences, and unique
lease requirements that now discourage landlord participation
in the section 8 programs.
Over the last two years, the Committee has considered
proposals to convert the public housing system to a market-
based system of tenant-based assistance. While the Committee
strongly supports providing assisted households with the
maximum residential choice, it is concerned that an entirely
``voucherized'' system is not completely practical, given both
the wide local variances in the costs of tenant-based versus
project-based assistance and the limited availability of
affordable housing in many housing markets which limits
resident choice. Further, the Committee is concerned about
preliminary data showing high initial tenant rent burdens for
new admissions to the voucher program. Finally, the Committee
recognizes that public housing represents a $90 billion federal
investment that should be preserved, when viable, for future
generations because of the overall lack of affordable housing.
Nonetheless, the Committee strongly believes that vouchers
are an essential part of a broad-based Federally assisted
housing strategy that promotes affordable housing and
residential choice. Thus, the bill seeks to protect the most
vulnerable public housing tenants by requiring that alternative
housing including vouchers be provided to residents of
distressed and nonviable public housing. It also requires PHAs
to conduct development-by-development assessments of the cost
of operating their public housing, and gives them the option of
``vouchering'' out their public housing stock if doing so is
more cost-effective than operating developments as public
housing, and they have demonstrated support from the community.
Findings and purposes
The Committee believes the public and assisted housing
programs are in disrepair. They are inefficient, frequently
ineffective, and often fail to meet the needs of the households
they were created to serve. The Committee also believes that
public and assisted housing should be not only sources of
affordable, decent, and safe housing, but also the platform
from which participating households can achieve economic
independence and self-sufficiency and realize the dream of
homeownership.
The findings and purposes contained in S. 462 reflect the
problems inherent in the current system of public and assisted
housing and the solutions that will make the programs work more
effectively and efficiently.
The Committee recognizes, for example, that the current
inventory of public housing units owned and operated by public
housing authorities represents a substantial Federal investment
in affordable low-income housing. However, the Committee
observes that the current public housing system is plagued by a
series of problems, including the concentration of very poor
people in very poor neighborhoods and disincentives to self-
sufficiency. Further, the bill cites complex, top-down
bureaucratic rules and regulations as aggravating these
problems.
The Committee finds that the interests of low-income
persons, and the public interest, will be served by a system
that: consolidates public housing programs; streamlines program
requirements; vests increased authority, discretion and
control, with appropriate accountability, in the hands of
public housing agencies that are run well; and rewards
employment and economic self-sufficiency. Further, the
Committee believes that the tenant-based section 8 voucher and
certificate programs can be made more effective and successful
in assisting low-income families to obtain affordable housing
by consolidating the two existing programs into a single,
market-driven program.
Therefore, it is the intent of this legislation: (1) to
consolidate the programs and activities under the public
housing programs administered by HUD in a manner designed to
eliminate Federal overregulation; (2) to redirect the
responsibility for a consolidated program to States,
localities, and public housing agencies and their tenants; and
(3) to focus Federal action on the problems of public housing
agencies with severe management problems.
Elimination of regulations
Under the Committee bill, all rules and regulations
relating to public housing and tenant-based section 8 are
sunsetted one year from the date of enactment. This provision
is intended to force HUD to review all of the current
regulations to determine those that are obsolete. While the
Committee recognizes that many regulations may still be
appropriate for reissuance, it also fully expects the
Department to conduct a careful review of every regulation and
eliminate those that are obsolete, inconsistent with the goals
and provisions of this Act, and unnecessarily micromanage the
operations of public housing and section 8.
The Committee is aware that the Department contends that it
is in the continuing process of reviewing, consolidating, and
eliminating burdensome and excessive regulations. Nonetheless,
the Committee believes that HUD needs affirmative direction to
remove conflicting and sometimes incomprehensible rules which
govern the public and assisted housing programs. The Committee
also recognizes that this is a significant task and expects HUD
to implement an expedited review and publication process for
those regulations which are critical and necessary to the well-
being and proper management of the public housing and section 8
tenant-based programs.
Annual reports
S. 462 changes the way in which PHA programs are
administered and monitored, and the Committee expects that
these changes will affect both the demographics of families
receiving assistance and the economic viability of PHAs
themselves. In addition, changes in public housing rent rules,
coupled with reforms in welfare programs, are expected to have
a direct impact on the employment activity and earned income of
residents. The Committee bill requires HUD to report to
Congress not less than annually on the direct impact of the
changes in policy contained in this Act.
Title I--Public Housing
Composition of boards of directors of PHA
The Committee bill requires PHAs to have at least one
resident or section 8 tenant on their boards of directors. The
Committee expects that if a PHA's primary function is the
provision of public housing, than the tenant representative
will be a resident of public housing rather than section 8.
With regard to the selection of the resident, the Committee's
expectation is that the resident to serve on the board will
represent the interests of all the residents to the greatest
extent possible. To this end, the bill allows for the election
of resident board members if provided for in the public housing
agency plan as developed in consultation with the resident
advisory board. The bill creates an exception for PHAs in which
the State requires the board of directors to be salaried and to
serve on a full-time basis. A second exception is provided for
PHAs with fewer than 300 units where there is no demonstrated
resident interest in serving on the board. This determination
may come only after reasonable notice of the opportunity to
serve is provided to the resident advisory board.
The Committee believes that placing a resident on the board
is important to promote a greater understanding of resident
concerns and foster a working relationship between PHAs and
residents. In the view of the Committee, it is important to
ensure meaningful participation by residents in the important
decisions that affect their lives. The requirement for a
resident on the PHA board is inapplicable to PHAs with no board
of directors.
Rental payments
The Committee bill amends section 3 of the 1937 Housing Act
to revise the method by which PHAs calculate rental payments
for public and assisted housing. Under current law, residents
must pay a monthly rent equal to the highest of (a) 30 percent
of monthly adjusted income, (b) 10 percent of monthly gross
income, or (c) the welfare rent. Generally, rent is set at 30
percent of monthly adjusted income, commonly referred to as the
``Brooke Amendment.''
During the development of this bill, the Committee received
extensive comments on the rent provisions. Housing authorities
expressed concerns that the legislation did not afford PHAs
sufficient flexibility in the area of rent setting. They argued
that the only way to generate additional revenues and improve
social conditions in public housing is to have flexible rent
structures developed according to their respective financial
conditions and local circumstances. Further, they warned that
many PHAs will face fiscal hardship in these times of
decreasing Federal resources for the operation and maintenance
of public housing without the ability to set flat rents.
Finally, PHAs argued that rent flexibility is essential to
develop policies that encourage and reward employment.
On the other hand, advocates for low-income families
expressed concerns about the impact that a repeal of the Brooke
Amendment (or 30 percent requirement) would have on the poorest
of the poor. They argued that a flat rent that requires a
family to pay more than 30 percent of its income for rent would
impose a harsh and undue burden on poor families, and in some
cases, could result in the constructive eviction of existing
tenants without the resources to pay higher rents.
The Committee recognized the validity of both of these
arguments and, therefore, tried to strike a balanced policy
taking into account the opposing concerns. Of particular
concern to the Committee was the detrimental effect current
rent policies have on the upward mobility of residents and
their ability to achieve greater financial independence.
Because the current law generally requires residents to pay 30
percent of their adjusted income for rent, a resident's rent
automatically goes up in proportion to increases in income. As
a result, it is often the case that residents make rational
decisions either to remain in the housing and not work, or to
leave public housing because their rent after returning to work
exceeds the market value of the unit. This, in turn, affects
the rent rolls of PHAs and the composition of public housing by
removing the working families who represent positive role
models. Concentration of very poor families in public housing
has directly contributed to the sharp rise in public housing
operating subsidies. In addition to discouraging efforts to
work, current rent policies also contribute to the break-up of
families since the wages of all family members older than 18
years are used to calculate a family's rental payment.
The Committee bill includes changes that begin to address
the built-in disincentives in current law by giving PHAs the
essential tools to implement a workable system of flat rents,
ceiling rents, earned income disregards, and minimum rents.
1. Flat rents
The Committee bill first addresses the work disincentives
under current law by allowing PHAs to set flat rents. The
Committee bill retains the current rent cap of 30 percent but
permits a PHA to charge less than 30 percent or up to 30
percent of a household's adjusted income. This provision is
intended to provide PHAs with greater flexibility to develop a
system of flat rents designed to retain and attract working
families in public housing developments.
2. Ceiling rents
Another way the Committee bill addresses the work
disincentive is by establishing a workable system of ceiling
rents. Section 3(a)(2)(A) of the 1937 Act currently allows PHAs
to establish maximum or ceiling rents. However, the current law
is flawed and has had limited use because the formula for
establishing ceiling rents includes a calculation of imputed
debt service which produces a number that is generally higher
than the actual market value of most units.
The Committee bill authorizes PHAs to establish ceiling
rents that reflect the reasonable market value of comparable
housing, but are not less than 75 percent of the cost to
operate the housing. The Committee bill sets the lower floor at
75 percent rather than full operating cost because studies have
shown that in certain rental markets, operating costs exceed
market values. Where such is the case, many households would be
priced out of the public housing market making it more
difficult for PHAs to retain or attract working families and
create more mixed-income communities. Setting the operating
cost floor at 75 percent provides PHAs with greater flexibility
to establish a viable system of ceiling rents that reflect true
market value.
3. Earned income adjustments
The Committee bill replaces the current income disallowance
in section 3(c) of the 1937 Housing Act and replaces it with a
bar against any rent increase for public housing or tenant-
based section 8 households for 18 months as the result of the
employment of a family member who was previously unemployed for
1 or more years. Any household with an income disallowance
under present law is grandfathered.
The purpose of this provision is to provide work incentives
to facilitate the transition from welfare to work. The
Committee bill applies this provision to all members of the
household to remove the disincentives in the present rent rules
for dependent children or other adult members in the household
to work.
Under the Committee bill, any rent increase due to the
continued employment of the family member must be phased in
over a 3-year period after the 18-month moratorium. Phasing in
any rent increase will prevent the newly employed person from
experiencing a large increase in rent that could otherwise
discourage them from working or staying in public housing.
While the Committee hopes that all families will have the
opportunity to make the transition to private housing and
economic independence, it is also concerned that public housing
communities are losing positive role models and stable living
environments when working families move out because of adverse
rental policies.
In addition to the 18-month income disregard, the Committee
bill also provides PHAs the flexibility to disregard any other
earned income it deems appropriate. This provision was designed
to be simple and flexible to allow PHAs to develop innovative
rental policies that reward work and encourage economic self-
sufficiency.
4. Minimum rents
The Committee bill allows PHAs to establish a minimum rent
not to exceed $25 for each family living in public housing or
receiving section 8 tenant-based or project-based assistance
administered by PHAs. Under the Committee bill, minimum rents
are voluntary for the PHA and can be anywhere from $0 to $25.
The purpose of the minimum rent provision is to promote
personal responsibility and resident investment in their living
space. It is also intended to ensure that families benefiting
from housing assistance are making some contribution to support
operation of their units at a time when there are far more
families eligible for housing assistance for whom no assistance
is available who are paying excessive rents in the private
marketplace.
This provision is not intended to create excessive hardship
for those simply unable to pay a minimum rent. For this reason,
the minimum rent provision is voluntary and up to the PHA to
apply fairly and appropriately according to the financial
circumstances of the PHA and its residents. For example, a PHA
could exempt certain classes of people, such as persons with
disabilities who have not yet qualified for disability income,
from the minimum rent requirement.
The Committee intends that PHAs be allowed to require every
family to pay up to $25 for their rent and utilities. The
Committee realizes that in some instances residents are
reimbursed for the amounts that they pay directly to the
utility company. The minimum rent provision is not intended to
alter the current treatment of utilities in the calculation of
tenant rent contributions.
The Committee believes that the reforms in rental policy
made by this legislation will have a positive effect of
providing greater incentives for public and assisted housing
residents to work and economically improve their lives. This,
in turn, will create better role models, more stable families,
and a healthier social climate in public and assisted housing
communities, as well as reducing financial burdens on PHAs
themselves.
Public Housing Agency plan
A major feature of the Committee bill is the creation of
the public housing agency plan that is designed to serve as an
operations, planning, and management tool for PHAs. The plan is
to be developed in consultation with a resident advisory board.
The plan must also be consistent with the Comprehensive Housing
Affordability Strategy (CHAS) for the PHA's jurisdiction and
include a description of how the contents of the plan are
consistent with the applicable CHAS.
The Committee bill calls for a 5-year plan and an annual
plan. The 5-year plan includes a mission statement for serving
the needs of low-income and very low-income families in the
PHA's jurisdiction and a statement of goals and objectives of
the PHA to serve the needs of those families.
The annual plan must include: a statement of low-income and
very low-income housing needs in the community and how the PHA
intends to address these needs; a statement of financial
resources and their planned uses; the PHA's general policies
governing eligibility, selection, admission, assignment,
occupancy, and rents; the PHA's policies for the maintenance
and operations of the agency; a statement of the PHA's
grievance procedures; a plan describing any capital
improvements; a description of any housing to be demolished or
disposed of; a description of any developments designated for
elderly or disabled; a description of any properties to be
converted to tenant-based assistance; a description of any
homeownership or self-sufficiency programs; a description of
policies for safety and crime prevention; a certification of
compliance with fair housing laws; and an annual audit.
In developing the plan, the Committee intends for a PHA to
operate in concert with citizens of its jurisdiction to address
the housing needs of low and very low-income people. To that
end, each PHA plan should reflect the housing needs of the
jurisdiction as they are articulated in the CHAS or
consolidated plan. Further, each jurisdiction must assure that
the public housing agency plan is reflected in its consolidated
plan.
The plan must be submitted to HUD for approval 60 days
before the start of the PHA's fiscal year. HUD must review the
plan to determine whether it: (1) is complete; (2) is
consistent with the information and data available to HUD; and
(3) does not include material prohibited by, or inconsistent
with, applicable law. Insufficient time to review a plan is not
a valid reason for HUD to reject a plan. If HUD fails to
approve the plan within 60 days (or 75 days the first year), it
is deemed approved.
The intent of the plan is to provide a framework for local
accountability in a new era of deregulation, flexibility, and
local discretion. In developing this legislation, the authors
believed that in removing many of the Federal statutory and
regulatory requirements for PHAs and diminishing HUD's
oversight function that it was essential to have a mechanism to
ensure that decisions are made with accountability to
residents, the community, and local government. The intent is
for the PHA to consolidate all of its policies, rules, and
regulations into a single planning document that is responsive
to local needs and allows residents to be instrumental in its
development and have open access to its contents.
The Committee intends for PHAs, residents, and local
governments to take the planning process very seriously. This
legislation represents a very significant departure from
current law and practice, and creates a greatly expanded role
for the PHAs and its residents. The plan is the blueprint for
how the PHA will approach its new responsibilities and serve
its community as well as possible.
During the development of this bill, concerns were raised
that this new planning requirement was too bureaucratic and its
required contents were more excessive than what is currently
required of PHAs to submit to HUD. Concerns were also expressed
that this requirement might create an excessive burden on small
PHAs, particularly those with limited or part-time staff.
Finally, PHAs and HUD commented that the Department does not
have the capacity to conduct a thorough review of every aspect
of the plan in a timely manner.
The Committee does not intend for the plan to create an
excessive bureaucratic burden on PHAs or HUD. Rather, it is
intended to represent a locally established planning document
to replace many of the statutory and regulatory requirements
that have constrained PHAs from operating more efficiently and
effectively in the past. The Committee recognizes that some
PHAs may decide to continue operating as they have in the past
while others may welcome the opportunity to develop new
policies appropriate to local needs and conditions. Therefore,
the process for developing a plan will reflect the extent to
which a PHA wishes to adopt new policies. If a PHA wants to
rewrite all of its current policies it may do so, or it may
simply wish to adopt existing policies as part of its plan.
Under the Committee bill, HUD is given the authority to
develop a streamlined plan for high-performing PHAs, those with
fewer than 250 public housing units, and those that only
administer tenant-based assistance. This provision recognizes
the difficulties for small PHAs with limited staff to develop
comprehensive plans and attempts to reward high-performing PHAs
by providing incentives for continued high performance. Final
regulations regarding the plan, including what will be required
in a streamlined plan, will be developed through negotiated
rulemaking. The Committee strongly urges the Department in
developing streamlined planning requirements to retain those
features of the planning process that maximize resident
involvement in the development of the plan.
In order to ease the administrative burden of plan
submission to HUD, the Department has indicated its intention
of enabling PHAs, to the maximum extent practicable, to submit
their responses to all HUD planning and reporting requirements
in one annual document. The Department has also indicated its
intent to structure these requirements and the HUD system in a
manner that allows, and eventually could require, PHAs to
submit their responses by computer. The Committee strongly
supports and encourages these actions to streamline the
planning and reporting system. To ensure that HUD can
accomplish the review of the plans in a timely fashion, the
bill permits the submission of plans on a staggered basis.
The Committee bill also provides the Department with
discretion on what aspects of the plan it deems appropriate to
review to ensure that it is complete, truthful, and in legal
compliance. This provision recognizes the limited capacity and
declining resources at HUD to review every aspect of the plan
in great detail. The Committee believes that the main value of
the plan is the local process of consultation and review that
it engenders. The Committee believes that the upfront review of
the plan by HUD is necessary and expects that HUD will examine
the plans as thoroughly as possible. But, more important, the
Committee believes that HUD's efforts should be focused on the
post-audit review to ensure that the PHA is performing well and
operating according to what is outlined in its plan. Therefore,
the Committee strongly encourages HUD to focus its attention on
audits, including audits of PHA performance vis-a-vis their
plans, and monitoring troubled or at-risk agencies.
Finally, the Committee bill includes a provision for a
General Accounting Office (GAO) audit of the degree of
compliance of PHAs with their public housing agency plans. The
Committee expects the GAO to review a representative, but
limited, sample of PHA plans and to report back to Congress in
the time frame specified by the statute with its pending
recommendations.
Resident advisory board
One of the primary objectives of this legislation is to
return power and decision-making authority from the Federal
government to local housing agencies. With the devolvement of
authority, however, comes the need for local participation and
accountability. The Committee strongly believes that local
agencies are better equipped to make decisions and develop
policies to address local needs and conditions. It also
recognizes, however, the importance of oversight at the local
level and involvement by residents and local citizens in the
decisions that impact their lives and communities. The
Committee believes that one of the keys to a successful housing
authority is a meaningful and trusting partnership between the
PHA and its residents. Therefore, the Committee bill encourages
PHAs to facilitate resident input and involvement to the
maximum extent possible and requires the establishment of a
resident advisory board or boards to participate in the public
housing agency planning process.
The role of resident advisory boards is to make
recommendations regarding the development of the plan which the
PHA must consider and include in the submission of its plan to
HUD. In addition, each resident advisory board must review any
significant amendments or modifications to the plan that the
PHA submits to HUD. The Committee does not intend for the
resident advisory board or boards to have veto power over the
public housing agency plan; however, it does expect the PHA to
provide the board or boards with a meaningful role in
developing the plan and to consider fully the comments and
issues raised by the board throughout the process.
The Committee envisions that resident advisory boards will
be formally organized with rules of governance and an orderly
process for nomination and appointment such that the advisory
board is representative of a diversity of perspectives among
the residents. It is anticipated that resident advisory boards
will establish processes, such as public hearings, town
meetings, or other means of acquiring information, to assure
that advisory board members are informed of the opinions of
other residents. Resident advisory boards are not to be
considered ad hoc groups convened solely for the purpose of
reviewing public housing agency plans and then disbanded.
Rather, they are expected to be permanent organizations that
meet on a regular basis as is necessary to carry out their
responsibilities. Further, PHAs are expected to operate in good
faith with resident advisory boards, providing them with the
sufficient notice and complete information about issues the
boards are to consider, so that the boards are able to make
decisions and recommendations from an informed position. The
Committee expects that PHAs will allocate sufficient resources
to assure the effective functioning of resident advisory
boards.
The Committee received several comments from housing
agencies and resident groups that the requirement for the
establishment of a new resident advisory board may be redundant
in situations where there already exists established resident
organizations actively involved in the housing authority
decision-making functions. Another concern was raised about the
potential cost and difficulty of conducting a PHA-wide election
to select residents to participate on the resident advisory
board. The Committee does not intend for the board requirement
to create an undue hardship on PHAs, nor does it intend to
supersede an already successful resident participation process.
Therefore, the Committee bill allows HUD to waive the
requirement for the establishment of a new board or boards if
the PHA demonstrates that an existing resident council or other
resident organization of the PHA adequately represents the
interests of the residents of the PHA and can perform the
advisory functions under the plan.
Performance measures and accountability
The Committee believes that the Public Housing Management
Assessment Program (PHMAP) will provide the critical yardstick
for a post-audit review to ensure that PHAs are performing
their duties as managers of public and assisted housing. During
Committee hearings on public housing reform, concerns were
raised about the effectiveness of the PHMAP process. Reports by
the HUD Inspector General indicated that in some circumstances
information reported by PHAs could be fabricated, and may have
been fabricated in the past. Since this legislation places
great emphasis on performance reviews and post-audit functions,
the Committee expects that HUD will dedicate the appropriate
resources to ensuring the integrity of the PHMAP and audit
process.
The Committee supports HUD's effort to reevaluate the
performance evaluation system and determine how to place more
weight on physical inspections and audits. The Committee also
supports the Department's intention to seek the advice of
industry groups, other real estate management experts and
resident groups as part of this effort to yield improvements in
the monitoring and evaluation system.
The Committee bill contains four new additions to PHMAP.
The new performance indicators include: (1) the extent to which
the PHA coordinates, promotes, or provides effective programs
and activities to promote the economic self-sufficiency of
residents and provides opportunities for residents to be
involved in the administration of public housing; (2) the
extent to which the PHA implements effective screening and
eviction policies and other anti-crime strategies; (3) the
extent to which the PHA provides acceptable basic housing
conditions; and (4) the extent to which the PHA successfully
meets the goals and carries out the activities of the public
housing agency plan.
These new indicators of PHA performance reinforce, and are
consistent with, some of the primary objectives of this
legislation: to empower residents to become more active
participants in the decisions that affect their lives and
provide them opportunities to break out of the cycle of poverty
and achieve economic independence; to provide residents with
decent housing in a safe and secure environment; and to place
greater emphasis on local decision-making.
The first new indicator involving resident empowerment is
intended to strengthen the link between housing assistance and
welfare reform by requiring PHAs to coordinate and promote
participation by families in self-sufficiency programs.
Recognizing that the PHA's primary function is to provide
quality housing, this provision is not intended to require PHAs
to initiate or necessarily manage such programs, but to
facilitate linkages between residents and programs initiated
and managed by appropriate social service agencies.
The Committee bill includes HUD's proposal to add a
required PHMAP indicator regarding housing conditions. The
Secretary of HUD and HUD's Inspector General pointed out that
under the current PHMAP system, a PHA can escape ``troubled''
designation even though a substantial portion of its units
would not meet basic housing quality standards. The Committee
shares the Department's concern and, therefore, added this new
indicator with the belief that it is critical to evaluate the
basic conditions under which residents live when measuring PHA
performance.
The Committee bill also directs the Department to assess
and rate PHAs based on their performance in developing and
implementing screening, eviction and other anti-crime
strategies. The Committee is keenly aware that PHAs which have
experienced the greatest success in combating crime within
their developments have worked closely with local law
enforcement officials as well the residents themselves in the
formulation and implementation of their anti-crime strategies.
Therefore, in conducting its PHMAP assessments of anti-crime
efforts, the Department will also assess PHA efforts to
coordinate and consult with local government officials and
residents in their anti-crime efforts.
The Committee bill also includes a new PHMAP indicator to
measure PHA compliance with its plan. During the development of
this legislation, concerns were raised about accountability and
potential abuses which may occur as a result of the repeal of
many Federal requirements governing the public housing program.
The Committee carefully considered the comments it received
concerning the balance between flexibility and accountability.
The Committee bill attempts to achieve that delicate balance by
providing PHAs with greater authority to develop policies
appropriate to local needs through the public housing agency
planning process but adding the new performance indicator to
ensure that PHAs actually perform according to the objectives
set forth in their plans.
As discussed in the section on the public housing agency
plan, given the limited resources and oversight capacity at
HUD, the Committee intends for the Department to concentrate
its efforts on monitoring performance and program
implementation. The Committee believes that the Department's
resources will be better utilized by examining results and
measuring PHA performance against plan objectives.
Preferences
The Committee bill repeals Federal preferences for public
housing and rental assistance programs and allows each PHA to
establish its own system of preferences with input of local
residents, community members, and government officials through
the adoption of a PHA plan.
Under current law, PHAs are required to target 50 percent
of new admissions to people with worst case housing needs. By
repealing Federal preferences, PHAs will be provided much
broader discretion to admit relatively higher income families
to the public housing program or to admit eligible families
based on their assessment of local housing needs.
The Committee believes that Federal preferences have been
one of the primary causes of concentrating the poorest of the
poor and creating unstable public housing communities. This
well-intentioned provision was originally designed to guarantee
that finite housing resources serve families most in need.
However, it has resulted in the unintended consequenceof
warehousing very low-income families in areas of high concentrations of
poverty and despair; for example, PHAs, on average, house families
below 20 percent of area median income--a decrease since 1981 before
the institution of preferences. Eliminating Federal preferences should
result in greater local autonomy, better income mixes, and improved
social environments in public housing communities. The Committee hopes
that the change in this policy will revitalize those communities and
lead to even more opportunities for the creation of affordable housing.
Leases
The Committee bill replaces the current statutory provision
requiring specific minimum and maximum time frames, which PHAs
must comply with when providing written notice of lease
termination, with a provision requiring that notice
requirements be consistent with State or local law. However,
the bill provides that in cases of lease terminations for
serious cases, the PHA may provide a notice within a period,
which is determined by HUD to be reasonable, that is shorter
than that provided for under State or local law. This shortened
notice period could be utilized by a PHA when the health or
safety of residents, the employees of the PHA, or members of
the surrounding community are threatened, or where drug-related
crimes, violent crimes, or any other crimes resulting in a
felony conviction are involved.
Troubled public housing authorities
Although the Committee bill generally devolves greater
authority to well-performing PHAs, the Committee believes that
one clearly appropriate role for HUD is dealing with the
problems of so-called ``troubled'' housing authorities that
suffer from chronic and severe management problems. Thus, the
Committee bill provides HUD with expanded powers to deal with
PHAs that default on their contractual obligations.
The Committee believes that a more aggressive approach to
troubled authorities is essential to protect the interests of
the residents and the government's substantial investment in
the housing stock. S. 462 provides the maximum amount of
flexibility for the Department to ensure the timely resolution
of the problems of troubled agencies, and protect the interests
of the residents in projects operated by those authorities. HUD
already possesses numerous tools and administrative authorities
to help address the problems of troubled PHAs, including
technical assistance, entering into memoranda of agreement to
force corrective action, and the ability to seek a court-
ordered receivership. HUD has recently intervened to take over
several large, troubled PHAs. However, the current tools
frequently have been employed unevenly and inconsistently, and
in some cases they are insufficient to ensure that the problems
of troubled authorities can or will be corrected in a timely
fashion.
The Committee bill gives PHAs designated as troubled a one-
year period, beginning on the later of the date on which the
agency receives notification of its troubled status or the date
of enactment of this Act within which to leave the troubled
list. If this does not occur, then HUD shall declare the PHA in
substantial default of its annual contributions contract and
take over the PHA or place it in receivership.
The Committee believes that this approach is absolutely
necessary to ensure that decisive action will be taken to
address the problems of chronically troubled agencies. It helps
ensure that appropriate actions will be taken whether or not
HUD has the political will to act. In the Committee's view, HUD
should not have the discretion to avoid imposing what is, in
effect, a ``death penalty'' on any housing authority that fails
to meet basic performance standards, and it points out that HUD
supports the Committee's position.
The Committee bill requires, in the case of housing
authorities with more than 1,250 units--large PHAs--that have
been in troubled status for at least one year (or one year from
date of enactment), that HUD seek the appointment of a judicial
receiver to assume responsibility for the management of the
authority. Historically, the appointment of a judicial receiver
has frequently been a time-consuming process. Therefore, to
assure that immediate action can be taken to correct management
deficiencies in the troubled agency, the bill permits HUD to
assume administrative authority over the operations of the
housing authority during the period prior to the assumption of
responsibility by the judicial receiver. In the case of a
housing authority smaller than 1,250 units, the bill requires
the Department to either petition for the appointment of a
receiver or assume receivership administratively.
If a receiver is appointed, the receiver shall have powers
accorded by the appointing court and, in addition, may abrogate
contracts that substantially impede correction of the default
after taking certain specified steps; demolish or dispose of
the assets of the agency subject to applicable law; require the
establishment of one or more new public housing agencies; and
be exempt from certain State or local laws that substantially
impede the correction of the substantial default. If HUD takes
possession of the PHA, HUD will have the same powers that could
be conferred on a court-appointed receiver.
The Committee's decision to establish an administrative
procedure for HUD's takeover of a PHA that is parallel to that
of a court-appointed receiver is intended to give HUD the
maximum flexibility to deal with troubled housing authorities.
However, the Committee also realizes that HUD's capacity to
assume direct control over a substantial number of troubled
agencies may be limited, which is one reason why judicial,
versus administrative, receivership is mandated for large,
troubled authorities. The Committee expects HUD, where it has
the option in the case of smaller PHAs, to continue to rely on
the court-ordered receivership process to the greatest extent
feasible, or in the alternative, to use its authority to
appoint an administrative receiver to assume the
responsibilities of HUD, as S. 462 permits.
Finally, the Committee stresses that it expects HUD to use
judiciously its authority to abrogate contracts and preempt
State or local laws concerning civil service requirements,
employee rights, procurement, or financial or administrative
controls. Such expanded authorities should be used only where
such laws or contracts have substantially contributed to the
default and impede its correction.
Site-based waiting lists
The Committee bill allows PHAs to establish procedures to
maintain site-based waiting lists for admissions to public
housing developments. In the view of the Committee, site-based
waiting lists will provide residents with the maximum amount of
choice as to where they want to live and, therefore, help
foster a sense of community in public housing neighborhoods by
strengthening existing ties to family, school, work, and
neighborhood institutions. The Committee is mindful that HUD's
prohibition against site-based waiting lists in the past was
based on a concern about racial steering and a desire to
prevent housing discrimination. The Committee bill clearly
states that any procedures used to establish site-based waiting
lists must comply with civil rights and fair housing laws and
further requires full disclosure of all housing choices
available to all applicants. The Committee anticipates that
PHAs will assurethat all applicants are aware of their rights
under the fair housing and civil rights laws. The Committee also
encourages the Department to monitor the implementation of site-based
waiting lists to assure that steering does not occur.
Capital and operating funds
The Committee bill consolidates and streamlines the
existing public housing funding system by establishing one
Capital Fund and one Operating Fund for providing financial
assistance to PHAs. In the view of the Committee, consolidating
the existing public housing programs and making them eligible
activities under the two block grants will provide PHAs greater
flexibility to make decisions that reflect local priorities and
needs. It also recognizes the limited capacity and inability of
HUD in an era of downsizing to administer effectively numerous
categorical programs each with its own set of complex rules and
regulations.
Prohibition on new construction of public housing
The Committee bill contains a provision prohibiting the
construction of any new public housing except for replacement
purposes with certain exceptions. The exception allows a PHA to
use its Capital and Operating Funds for the construction and
operation of new units, but would not have the increased number
of units reflected in its formula allocation. In other words,
it is permissible for a PHA to develop new housing
opportunities if it is efficient and can use its regular
formula allocation for such purposes. However, the formula will
not provide additional funding to develop and operate the new
units. This provision reflects a concern by the Committee that
PHAs should not be taking on the responsibility for
administering new units at a time when there are insufficient
subsidies to operate and maintain the current housing stock.
During the development of S. 462, concerns were raised that
such a prohibition would negatively impact a PHA's ability to
invest and leverage its funds in mixed-income and mixed-finance
housing projects with other public and private partners--an
activity that the Committee generally supports and believes
should be encouraged. Therefore, the provision was amended in
Committee mark-up to clarify that operating and capital funds
could be allocated for operating expenses and modernization of
new units as long as they were part of a mixed-finance project
and the estimated cost over the useful life of the project is
less than the estimated cost of providing tenant-based
assistance.
Operation Safe Home initiative
The Committee bill would make permanent the authorization
for the use and appropriation of vouchers in connection with
witness relocation. Effective witness protection for law-
abiding citizens who have the courage to offer testimony
against dangerous criminals is essential in the nation's
efforts to build safe and secure communities.
The Operation Safe Home initiative, currently administered
by HUD's Office of Inspector General (OIG), will be funded as a
set-aside from HUD's Headquarters Reserve. The Committee is
firmly convinced that the practice of funding this initiative
as a set-aside from the Drug Elimination Grant program should
be discontinued. This practice, which provided necessary
support for the initiative in its early stages, has ironically
resulted in a decrease in funding for local anti-drug efforts
and is counter-productive to the nation's efforts to combat the
scourge of drugs and crime in public and assisted housing. In
addition, this practice resulted in a diversion of funds
originally intended to address drug-related crime to the
Inspector General to combat fraud and equity skimming in public
housing and the section 8 program. The Committee believes these
laudable goals should be met with separate funding accounts.
Therefore, the Operation Safe Home initiative will be provided
funding from the HUD Headquarters Reserve.
While the Committee believes that the Operation Safe Home
initiative has produced heartening results in confiscating guns
and drugs from public housing, significant questions concerning
the initiative remain. The Committee is skeptical of the
desirability of program administration under the auspices of
the OIG. This practice raises significant concerns regarding
effective program evaluation and oversight and the Committee
urges the Department to evaluate alternatives. The Department
is also urged to define the mission of the OIG more clearly and
to differentiate between those functions which are inherent
within the day-to-day operations of the OIG and those requiring
separate program funding.
Repeal of energy conservation
The Committee bill repeals the current section 13 of the
1937 Housing Act. Section 13 currently directs the Secretary to
require that newly constructed or substantially rehabilitated
projects be equipped with heating and cooling systems selected
on the basis of criteria which include a life-cycle cost
analysis of such systems.
Repeal of this free-standing requirement is consistent with
the Committee's goals of reducing Federal micromanagement of
PHAs and delegating, to the maximum extent feasible, decision-
making authority to the PHAs. Given the severe budgetary
constraints under which PHAs are likely to be operating in the
future, the Committee expects that housing authorities will be
conscious of the need for energy conservation measures.
Nonetheless, the bill allows the new Operating Fund formula to
take energy conservation into account.
Consortia and joint ventures
The Committee bill expands the authority of PHAs to
establish consortia with other PHAs to administer all or some
of their housing programs. Under this section, PHAs will have
great flexibility in determining the scope of responsibility of
any consortia they may form. For example, two PHAs may form a
consortia for the purpose of sharing managerial
responsibilities, administering a joint section 8 program, or
effecting a complete merger.
The Committee bill expands the authority of PHAs to form
wholly-owned or -operated subsidiaries and other affiliates.
Members of the PHA governing board or other PHA employees would
be allowed to direct, manage, or otherwise control these
subsidiaries. In addition, the Committee bill allows PHAs to
enter into joint ventures, partnerships, or other business
arrangements or otherwise contract with persons, organizations,
entities, or units of government for the purpose of
administering the programs of the PHA.
The purpose of this section is to provide PHAs with the
maximum amount of flexibility feasible to engage in
entrepreneurial endeavors in order to reduce costs and generate
income which must be used for the provision of low-income
housing or to otherwise benefit the residents of the PHA. This
section allows PHAs to undertake business arrangements for the
purposes of facilitating access to alternative sources of
financing (including use of the low-income housing tax credit),
developing mixed-finance projects, instituting innovative
managerial improvements, and contracting with other entities in
order to reduce administrative costs, generate revenues, and
empower residents. Resident empowerment could take the form of
the creation of employment opportunities, expansion of
services, or development of mixed-income projects.
The Committee believes that in an era of shrinking
resources, PHAs should have the authority to undertake business
ventures for the purposes of providing financial stability. To
this end, the Committee bill includes a provision which
abolishes the operating subsidy penalty contained in the
current Performance Funding System. This penalty has served as
a disincentive for PHAs to engage in joint ventures and other
entrepreneurial efforts. Instead, PHAs will be able to retain
amounts generated through activities carried out under this
section without sustaining a loss in funding through the
Operating and Capital Funds or other funding sources provided
under the 1937 Housing Act. However, PHAs will be required to
utilize such amounts for the provision of low-income housing or
to otherwise benefit the residents of the PHA. It is the
Committee's firm intention that PHAs should be granted wide
discretion in choosing how best to utilize these proceeds. For
instance, PHAs can use these funds to provide additional low-
income housing by providing capital for mixed-finance
developments. Also, PHAs could benefit residents through
economic development by providing employment opportunities or
by supporting service programs. It is not the Committee's
intention to see this provision stifled by a requirement that
PHAs receive prior approval by HUD, beyond that provided in the
PHA plan requirements, before embarking on business ventures--a
situation that would amount to micromanagement.
Community service and self-sufficiency
A central theme of the Committee bill is to promote self-
sufficiency and personal responsibility for families that
receive housing benefits. The Committee strongly believes that
housing policy should encourage assisted families to move into
activities that improve their economic situations and to assume
a greater degree of responsibility for their living conditions.
In recognition of the historic welfare reform law passed by the
Congress last year, the Committee bill contains a number of
features that aims to further promote work over welfare and
personal responsibility over public dependency.
First, the legislation requires able-bodied adult residents
of public housing to contribute not less than 8 hours a month
through participation in community service activities (except
for any political activity) or self-sufficiency activities.
Residents could perform community service through a variety of
maintenance activities such as grounds keeping or volunteer
activities that help their neighbors, such as a neighborhood
watch program. In addition, PHAs and residents could consider
the benefits of community gardening. Residents could also
fulfill the 8 hour requirement by participating in a self-
sufficiency activity, such as literacy or job training courses.
The Committee does not intend the community service and
self-sufficiency requirement to be perceived as a punitive or
demeaning activity. Rather, the Committee expects the
requirement to be a rewarding activity that will assist
residents in improving their own and their neighbors' economic
and social well-being and give residents a greater stake in
their communities.
To ensure that the community service and self-sufficiency
requirement does not impose an undue hardship on public housing
residents, the Committee bill provides a number of exemptions
from the requirement. Elderly and disabled residents or
residents that act as the primary caretaker of someone who is
disabled would be exempted from the requirement. The Committee
recognizes that a substantial population of public housing
residents and assisted families also receive welfare assistance
and will generally be required to meet the work participation
requirements prescribed under the Personal Responsibility and
Work Opportunity Reconciliation Act of 1996 or under a State
funded only program. Accordingly, these families and those
families who are not receiving welfare assistance that fulfill
the State or locality's work participation requirements would
be exempted from the 8-hour requirement. Under the welfare
reform law, to be counted as engaged in work, a welfare
recipient would have to be participating in an eligible work
activity for a minimum number of hours. In addition, residents
who meet the State welfare agency exemption requirements would
also be exempted. For example, the welfare reform law prohibits
States from penalizing a single parent caring for a child under
6 for refusal to work if the parent is able to prove that child
care was unobtainable. States can also exempt single parents
who are caring for a child under 12 months of age. Lastly,
State funded only programs could have additional exemption
requirements.
The Committee bill's exemptions would not only make the
community service and self-sufficiency requirement consistent
with State and local welfare program requirements, but simplify
the administrative task in identifying the exemptions.
The Committee bill allows maximum flexibility on how the
community service and self-sufficiency requirement can be
administered. PHAs and their resident advisory boards should
work together in devising a structure, including the option of
using residents, to administer this requirement.
It is critical to note that the community service
requirement contained in the bill is in no way intended to
result in the direct or indirect displacement of public housing
employees or to supplant job opportunities within PHAs. The
Committee continues to believe that the PHAs themselves are an
important source of employment opportunities for the residents
of public and assisted housing and others in the community. The
Committee commends those PHAs which currently employ persons
residing within public and assisted housing. It is vital to
stress that the community service requirement contained in the
bill vests the ultimate authority for selecting appropriate
service with the residents themselves--the PHAs will not have
the authority to demand specific work activities in order to
fulfill the requirement. The Committee also notes that the
community service requirement may be complied with through
activities located within the community at large, and not on
public housing premises or grounds alone.
The second provision in the Committee bill that promotes
personal responsibility relates to the interaction of housing
assistance and welfare assistance benefits. Under welfare
reform, a significant number of public housing and assisted
families will be required to meet State welfare requirements
and any change in welfare benefits will affect the family's
adjusted income and thus, the amount of resident contribution
to rent. This will, therefore, affect the amount of housing
benefit provided. Under current housing law, a family's share
of rent is reduced when its income declines, including
instances where the decline is due to reductions or termination
of means-tested benefit programs, such as welfare or public
assistance.
To support the States' welfare reform efforts, the bill
contains a number of reforms to the current federal rent policy
to reward work but to also ensure residents comply with welfare
and public assistance requirements. The Committee recognizes
that the current rent structure, which generally requires that
a family contribute 30 percent of its adjusted income for rent,
has created disincentives for residents to work. As discussed
previously, the bill would allowresidents who obtain employment
to keep their earnings by phasing in rent increases on a gradual basis.
But, for cases where residents who have committed fraud or who have not
complied with welfare or public assistance program requirements, their
housing benefits would not be increased to make up for the reduction in
cash benefits. In other words, PHAs would not be required to reduce a
sanctioned family's share of rent. This policy will facilitate State
welfare reform efforts to ensure that sanctions have real meaning.
The Committee strongly believes that welfare recipients who
receive housing assistance should not receive different
treatment from welfare recipients who do not receive housing
assistance. Further, housing assistance is a significant
benefit since only one in four who needs housing assistance
actually receives it. Therefore, the Committee believes that
those who are receiving such a benefit should assume personal
responsibility.
The Committee bill's sanction policy also mirrors what is
in the welfare reform law. For example, families are prohibited
from obtaining an increase in benefits from a means-tested
public assistance program (such as Food Stamps or housing
assistance) in cases where a welfare recipient's benefits were
reduced due to fraud. The welfare reform law also prohibits an
increase in Food Stamps benefits due to noncompliance with a
means-tested public assistance program. The Committee bill
clarifies that the changes to rental policy due to sanctions
for noncompliance and fraud do not apply in cases where welfare
benefits are terminated due to the expiration of their benefits
under the State's lifetime time limits.
Lastly, the Committee bill encourages greater coordination
between housing providers and welfare agencies by requiring
PHAs, to the maximum extent possible, to establish cooperation
agreements with welfare agencies. The Committee believes that
it is important for the PHAs to perform outreach efforts to the
State and local welfare agencies so that residents obtain the
necessary services and resources recognized under the welfare
reform law for self- sufficiency efforts and so that PHAs can
focus their efforts and resources on managing their inventory.
The Committee also believes that a coordinated approach toward
welfare reform could benefit both the welfare agency's efforts
in moving people from welfare to work and, thus, improving the
economic condition of public housing residents, and the PHA's
efforts to stretch operating subsidies as far as possible and
to improve living conditions. The cooperation agreements could
also facilitate the development of job training and child care
centers located in or around public housing developments with
PHAs and welfare agencies sharing costs and resources.
Further, the cooperation agreements could be used to
transfer information to welfare agencies on rents, income, and
assistance to assist the welfare agencies in carrying out their
functions such as fulfilling reporting requirements under the
welfare reform law. For example, State welfare agencies are
required to report to the Secretary of Health and Human
Services on what sources of public assistance, including
housing assistance, welfare recipients receive.
Eligibility for public and assisted housing
The Committee bill changes the current income eligibility
standards for public housing and section 8 assistance. For any
public housing units or project-based section 8 units made
available for occupancy each fiscal year: (1) not less than 40
percent must be occupied by families whose incomes do not
exceed 30 percent of the area median; (2) not less than 75
percent must be occupied by those whose incomes do not exceed
60 percent of the area median; and (3) any remaining units may
be made available for families whose incomes do not exceed 80
percent of the area median. For vouchers made available each
year: (1) not less than 50 percent must be provided to families
whose incomes do not exceed 30 percent of the area median and
(2) any remaining assistance must be provided to families whose
incomes do not exceed 80 percent of the area median. These
provisions apply to new admissions on turnover and to
incremental units.
The issue of income targeting raised great concerns by the
public housing industry, low-income housing advocates, and HUD.
Currently, the income of the average public and assisted
housing resident is below 20 percent of local area median, and
the vast majority of all public housing residents have incomes
below 50 percent. There is widespread agreement that the public
housing program needs to serve families with a broader range of
incomes both for social and fiscal reasons, but there are
significant disagreements on how to achieve the proper mix.
Those representing the public housing industry argued that
PHAs should have greater flexibility to make income targeting
determinations. The PHAs pointed out that given the imminent
cuts in Federal funds for public housing, PHAs will need less
stringent income targeting rules to generate more revenues for
operation and to achieve greater income diversity.
Both HUD and low-income housing advocacy groups, on the
other hand, argued that loosening income targeting rules too
much, coupled with the repeal of Federal preferences, will
alter the fundamental mission of public housing--to serve low-
income families unable to find decent and affordable housing in
the private housing market. While the Department also
recognized the need to mix working families with those on
welfare, it held the position that income targeting rules
should allocate 40 percent of the units to families below 30
percent of the area median income, and 90 percent below 60
percent of the area median income. Additionally, it claimed
that the revenue earned from rents for families at 60 percent
of the median will be substantially the same as revenue earned
from households between 60 and 80 percent due to the likely
implementation of ceiling rents. The Department was also
concerned that the upper limit of 80 percent in the Committee
bill was too high for the section 8 tenant-based program and
argued that 75 percent of the vouchers should be targeted to
those below 30 percent of the area median income while the
remainder should be made available only to households with
incomes up to 50 percent of the area median.
The Committee believes that the income targeting provisions
combined with the repeal of Federal preferences in S. 462 will
provide PHAs with adequate flexibility to attract higher income
tenants and, at the same time, ensure that a fair portion of
the units be made available to the very poorest families in our
nation.
The Committee bill also requires PHAs to achieve a diverse
mix of incomes in each development including scattered-site
public housing and prohibits the concentration of very low-
income families in certain public housing developments. The
Committee included these provisions to ensure that PHAs strive
to create better income mixes in each development rather than
continuing to concentrate the poorest of poor in particular
public housing developments. At the same time, the Committee
does not intend for PHAs to use the more flexible targeting
provisions to house only eligible families with higher incomes
in the scattered-site projects or the most marketable
developments. The Committee bill does not prescribe, and
intends for theDepartment not to prescribe, specific
percentages or number of families at each income level that should
occupy each project, in order to maximize a PHA's flexibility in
achieving income mixes according to local conditions. The Committee
intends for the PHA to have maximum discretion to establish its
policies and requirements for a diverse income mix according to local
needs under the public housing agency plan.
Demolition and disposition of public housing units
The Committee bill modifies the standards in section 18 for
demolition and sales of public housing units to enhance the
ability of PHAs to remove obsolete, distressed and excessively
costly developments. Under the bill, HUD must approve an
application for demolition or disposition within 60 days of
receipt if the PHA certifies: (1) in the case of a demolition,
that the project is obsolete and unsuitable for housing
purposes and cannot be made useful for housing by any
reasonable, cost-effective program; and (2) in the case of
disposition that the conditions in the area adversely affect
the health or safety of the residents or the feasible operation
of the project; or the disposition allows the acquisition,
development or rehabilitation of other properties that will
work better as low-income housing; or that the non-dwelling
property is in excess of the PHA's needs.
In addition to streamlining the approval process, the
Committee bill removes the counterproductive requirement that
any units demolished or sold be replaced on a one-for-one
basis. The one-for-one replacement requirement has been one of
the major impediments to eliminating the most distressed public
housing and revitalizing public housing communities. Because
there typically have been no funds to fulfill the requirement,
as well as an insufficient number of suitable sites for
replacement housing, the one-for-one replacement requirement
has simply prevented the demolition of obsolete and dangerous
projects.
In order to safeguard the interests of residents living in
developments proposed for demolition or disposition, the
Committee bill includes provisions that ensure that displaced
residents receive payment for relocation expenses, are offered
comparable housing, and are provided with necessary counseling
to find such housing. The Committee bill also requires that an
application be developed in consultation with residents
affected by the demolition or disposition.
The Committee bill also provides any eligible resident
organization, or nonprofit organization acting on behalf of
residents, a right of first refusal in appropriate
circumstances if a PHA proposes to sell a public housing
project or portion of a project. If a resident organization
expresses written interest in purchasing a property, no sale
may occur for 60 days in order to give the organization the
opportunity to obtain a firm commitment for financing the
purchase of the property. While the Committee believes it is
important to give residents a fair opportunity to purchase
properties for their future use, it is also not the intent of
this provision to be used to slow down or obstruct the sale of
a property where its retention is not in the best interests of
the residents or public housing agency.
The Committee believes that these new provisions will go a
long way toward improving public housing communities by giving
PHAs greater flexibility in removing obsolete housing that has
been a financial drain and threat to the health, safety, and
welfare of public housing residents.
The Committee also urges HUD to enter into partnerships
with PHAs and nonprofit organizations in disposing of the HUD-
owned or held multifamily housing stock for use as affordable
housing. The sale of this housing at a nominal cost or for free
will help ensure the continuing availability of affordable,
low-income housing at little cost to the Federal government.
Voucher system for public housing
The Committee seriously considered proposals to convert the
public housing system to a market-based system of tenant-based
assistance. The Committee strongly supports the concept of
residential choice embodied in the voucher program, and this
legislation is committed to ensuring that tenant-based section
8 assistance is effective in meeting the housing needs of lower
income households. In addition, the Committee is committed to
safeguarding the Federal taxpayers' $90 billion investment in
the nation's public housing inventory and assuring its
continued availability for helping to meet the affordable
housing needs of low-income households.
The Committee believes that a total conversion to a voucher
system is a ``one-size-fits-all'' approach that is not
appropriate or will not work in all markets or in all
circumstances. For example, a June 1995 study by the General
Accounting Office determined that while nationwide the cost of
vouchers versus the cost of operating public housing is
similar, the averages conceal wide differences in these two
options in different market areas. Further, while voucher
success rates are generally high, the Committee is concerned
that voucher utilization rates also vary widely around the
country, which calls into question the viability of converting
the entire stock of public housing to vouchers. The Committee
has attempted to provide a framework for assessing the relative
costs of tenant-based assistance and public housing so that
PHAs can make informed judgements about their policies.
The Committee bill generally requires all PHAs to conduct
an assessment comparing the costs of continuing to operate each
of the projects as public housing with the costs of converting
to and operating a system of tenant-based assistance. The
required assessments include: (1) a comparison of the costs of
continuing operation of the units in question for their
remaining useful life as public housing to the costs of
providing tenant-based assistance in substantially similar
units over the same period of time; (2) an analysis of the
market value of the project both before and after
rehabilitation and before and after conversion to a system of
tenant-based assistance; (3) an analysis of local rental market
conditions and the likely success and feasibility of providing
tenant-based assistance for the specific residents of the
project in question, including an assessment of the
availability of decent and safe dwellings rented at or below
the payment standard established by the entity administering
tenant-based assistance in the local area; and (4) an
assessment of the impact of a conversion on the neighborhood
where the project is located (taking into account such
circumstances where projects act as anchors of their
communities).
HUD may provide a waiver of the assessment requirement as a
result of a request by a PHA or HUD's own authority. In
addition to the waiver authority, HUD may allow PHAs, in
certain circumstances, to perform a streamlined assessment,
either as a result of a request by the PHA or HUD's own
authority. HUD may provide a waiver or otherwise provide for a
streamlined assessment for specific projects or classes of
projects such as those designated as elderly housing, disabled
housing, or elderly and disabled housing, scattered-site, or
mixed-finance projects. HUD may provide a waiver or provide a
streamlined assessment to PHAs that are not planning to
convert, are small PHAs, or are large PHAs where conducting an
assessment for each of its projects would constitute an
unnecessary burden. In these cases, HUD may provide for a
streamlined assessment which may include less detail, or allow
for a single PHA-wide assessment or allow for consolidated
assessments for multiple substantially similar projects.
The broad authority granted to HUD to waive or provide for
a streamlined assessment is based on the Committee's intent to
avoid placing a burdensome and unfunded mandate on PHAs. It is
the Committee's intent that the assessments conducted under
this section may be based on existing data and shall not
require expensive new appraisals. Nevertheless, the Committee
feels that the assessments conducted under this section will
provide a useful and invaluable source of data on which the
Congress, HUD, and the PHA will be able to draw upon in order
to make informed decisions concerning the future of the public
housing portfolio. HUD is urged to develop a mechanism for
collecting, aggregating, and analyzing the data in the
conversion assessments.
The Committee bill provides an option to PHAs which conduct
a conversion assessment to develop a plan to convert a public
housing project or portion of a project to a system of tenant-
based assistance. In order to implement such a plan, the PHA
must demonstrate that the conversion would principally benefit
the residents, the PHA, and the community and that the costs of
providing families occupying the units in question with
vouchers would not be more expensive than continuing to operate
the units as public housing.HUD may disapprove a plan where it
is plainly inconsistent with the findings of the assessment or with
reliable data and information known to HUD.
The Committee bill requires the assessments and plans
conducted under this section to be made in consultation with
public officials and with the significant participation of the
affected residents. In addition, the assessments and plans must
be submitted as part of the applicable public housing agency
plan and must comply with the requirements of the plan
including timing, notice, hearing, opportunity for public
comment, review by the resident advisory board, consistency
with the local CHAS, and review and approval by HUD.
The Committee feels that providing an option to convert to
tenant-based assistance will provide an added incentive for
PHAs to perform well and maintain safe and decent living
conditions, particularly in light of the possibility that
residents and local governments may bring added pressure on
PHAs to improve their operations or exercise the option to
voucher out.
Repeal of family investment centers
The Committee bill repeals the current section 22 of the
1937 Housing Act which provides for the creation of Family
Investment Centers. Consistent with the Committee's goal of
program consolidation, the establishment of similar programs
for the benefit of residents becomes an eligible activity under
a new section 33 supportive services program.
Repeal of Family Self-Sufficiency Program
The Committee bill repeals the requirement for PHAs to
develop a family self-sufficiency program. While the Committee
strongly supports the goals and concept of the Family Self-
Sufficiency Program and encourages PHAs to adopt such programs,
where feasible, the Committee was concerned that the program
became an unfunded mandate on PHAs with no separate
appropriation available for program administration. Therefore,
the Committee bill repeals the program and makes it an eligible
activity under the new block grants. In addition, self-
sufficiency activities may be funded under the new program for
supportive services and resident empowerment activities in
section 33. Existing family self-sufficiency programs are
maintained to the extent that there are any existing contracts
or agreements made under this program.
Homeownership opportunities
The Committee bill repeals section 5(h) of the 1937 Housing
Act but adds a new, more flexible provision in section 23.
Section 23 authorizes a PHA to sell any of its units to its
low-income residents or to a conduit organization for sale to
residents. The sales price is determined by the PHA in
accordance with its plan, and the proceeds must be used by the
PHA for purposes related to low-income housing. The legislation
also contains a resale restriction to prevent purchasing
residents from gaining a windfall if they resell the property
within one year. The Committee patterned the new homeownership
provision according to the section 5(h) program which has
proven to be a highly successful program for assisting public
housing residents in becoming homeowners.
In order to expand the opportunities for resident
homeownership, the Committee includes a provision that allows a
PHA to use its operating or capital funds as well as any other
sources of income to provide assistance to residents to
purchase a home. Such assistance is intended to help low-income
families who are financially capable of becoming homeowners,
but lack adequate savings to purchase a home. Assistance is
intended to include downpayment assistance, below market
interest rate loans, closing cost assistance and other
financial assistance to bridge the gap to homeownership.
Residents may receive such assistance to help them purchase
either a public housing unit or a single family house,
condominium or cooperative unit owned by a public or private
entity.
The Committee strongly supports the expansion of
homeownership opportunities for residents of public and
assisted housing to provide incentives for upward mobility and
economic self-sufficiency.
Severely distressed public housing
The Committee recognizes the value of retaining a severely
distressed public housing program, similar to HOPE VI, for two
additional years. HOPE VI provides grants to public housing
authorities for the demolition and replacement of severely
distressed public housing. The National Commission on Severely
Distressed Public Housing estimates that 86,000 out of a total
inventory of 1.4 million units nationwide are severely
distressed. This program provides local authorities with the
flexibility they need when determining which developments need
to come down and where they are located. HOPE VI represents
efforts to remake public housing into the type of housing
envisioned throughout this bill. The new developments will be
less dense, include greater income mix and integrate services
for low-income residents. Extending this program two more years
will enable housing authorities with projects in progress to
finish the work in progress. This program provides necessary
and large capital grants to tear down obsolete public housing
which would normally be too costly under the Capital Fund.
Mixed-finance projects
The Committee bill addresses many of the issues faced by
PHAs that are working with private partners to create mixed-
income and mixed-finance developments, often in HOPE VI or in
other endeavors to replace or reconfigure obsolete
developments. The Committee has broadened significantly the
ways in which a PHA can develop housing to replace its obsolete
stock or to respond to needs identified in its public housing
agency plan. The bill authorizes PHAs to form public-private
partnerships with private for-profit or nonprofit entities to
develop affordable housing that serves residents with a broad
range of incomes and avoids concentrations of poverty. A PHA
can invest its capital funds and deploy its operating subsidies
in such mixed-income developments to provide opportunities to
those it serves to live in more socially diverse, stable
housing communities. For example, the Committee bill allows a
PHA to form a public-private partnership, to transfer some of
its operating subsidies to fund public housing units in a
building owned by that partnership, and to convert the
previously subsidized units owned by the PHA to market rate
units (so long as the number of subsidized public housing units
remains the same). The Committee intends this provision to
include partnerships that could also include State or local
public partners.
Under the Committee bill, a PHA can also elect to remove
itself from day-to-day real estate management by turning that
task over to its private partners or other contractors, thus
enabling the PHA to be an asset manager for the community's
low-income housing needs. These arrangements will bring into
play resources beyond those of public housing, such as private
investment, low-income housing tax credit proceeds, HOME funds,
CDBG funds, and State and local programs. With the decline in
Federal funds dedicated to the operation and maintenance of
public housing, these added resources will assist in removing
old, obsoletepublic housing and creating additional housing
opportunities for low-income families in more stable environments.
The Committee bill also seeks to encourage public-private
partnerships and simplify the creation of mixed-finance
developments by allowing a PHA to elect to exempt the units
assisted by it from the often cumbersome requirements of
section 6(d) of the 1937 Housing Act relating to cooperation
agreements and payments in lieu of taxes. Instead, the units
could be made subject to the same real estate taxes as apply to
the rest of the development where such a choice facilitates the
mixed-finance development.
Conversion of distressed public housing to tenant-based assistance
The Committee believes that a high priority of public
housing reform should be to protect tenants who are currently
trapped in non-viable or seriously substandard public housing
developments.
The Committee bill requires PHAs to identify developments
in their inventory that are distressed and remove them from the
public housing inventory. Distressed housing is defined
according to criteria in the Final Report of the National
Commission on Severely Distressed Public Housing. It includes
developments where the PHA cannot assure the long-term
viability as public housing and where the cost of continued
operation and modernization of the property exceeds the cost of
providing section 8 vouchers for all families in the
development. The Committee intends that HUD have reasonable
discretion to determine which criteria are applicable. PHAs are
required to develop a five-year plan to remove all such
distressed housing from their inventory. If a PHA fails to
develop the required plans and implement them appropriately,
HUD is given the authority to step in. The Committee stresses,
however, that most decisions concerning public housing
conversions are local decisions and that HUD should get
involved only in circumstances where it is obvious that the PHA
is acting incompetently, in bad faith, or making decisions that
are detrimental to residents.
While the Committee fully expects PHAs to eliminate the
most distressed public housing stock that currently traps
people in dangerous situations, it also recognizes the current
budgetary, relocation, rental market, and redevelopment
scheduling constraints that may make it difficult to dispose of
such housing immediately and provide replacement housing for
families in occupancy. Therefore, the Committee bill allows HUD
to extend the 5-year deadline but only if the 5-year deadline
is impracticable.
In order to safeguard the interests of residents living in
developments identified for conversion, the Committee bill
includes provisions that ensure that displaced residents
receive payment for relocation expenses, are offered comparable
housing, and are provided with necessary counseling to fund
such housing.
Linking services to public housing residents
The Committee bill authorizes a new program in section 33
to allow HUD to make grants to PHAs, resident management
corporations, resident councils, or resident organizations for
supportive services and resident empowerment activities to
assist public housing residents in becoming economically self-
sufficient. Except for funds provided directly to resident
councils, funds may be allocated on the basis of either a
competition or a formula. The intent of this provision is to
consolidate the numerous existing set-asides, demonstration
programs, and categorical grants involving resident empowerment
into a single program that emphasizes services and self-
sufficiency on behalf of residents.
Resident management corporations and resident councils have
been funded in the past for the purpose of exploring the
feasibility of resident management of public housing and for
developing resident capacity so that such management might be
possible. Resident management has been quite successful in many
public housing developments throughout the country and should
be encouraged to continue and expand wherever possible.
Evaluations of resident management programs have shown,
however, that the program has worked most effectively when
focused on the broader goal of self-sufficiency and economic
up-lift rather than just resident management of public housing.
Therefore, the expanded program gives PHAs, RMCs, RCs, and
other resident organizations financial assistance for: physical
improvements to a public housing project to provide space for
supportive services; the provision of service coordinators; the
provision of services related to work readiness; resident
management and participation activities; economic and job
development; and other activities designed to enhance the self-
sufficiency of residents. The Committee intended to allow a
broad range of eligible activities in order to give grant
recipients the opportunity and flexibility to design innovative
programs to enhance the economic independence and self-
sufficiency of residents.
The Committee bill requires that for funds appropriated
under this section, a certain amount be provided directly to
resident organizations to ensure that they are actively
involved in the development and implementation of these
programs.
The Committee is concerned by recent reports of misuse of
funds in the current Tenant Opportunity Program, and urges HUD
to take prudent steps to ensure the accountability of funds
provided under this program.
Pet ownership
For many years, residents of federally assisted housing
designated for the elderly and disabled persons have been
allowed to own ``common household pets,'' such as dogs, cats
and birds, according to regulations issued pursuant to Section
227 of Public Law 98-181. It has been demonstrated,
particularly with respect to the elderly, that pet ownership
can add to the quality of life of individuals, families and
communities. This bill extends this privilege of pet ownership
to residents of other federally assisted rental housing (i.e.,
public housing and federally assisted, project-based rental
housing), subject to reasonable requirements of the owners, if
the resident maintains each pet responsibly and in accordance
with applicable laws and regulations.
The Committee recognizes that owners and managers of
federally assisted rental housing have an enormous
responsibility to provide safe and clean living environments
for their residents, and they are legitimately entitled to
regulate the conditions of pet ownership. S. 462 permits owners
to establish pet policies appropriate for their properties. For
example, residents wishing to keep pets may be charged a
nominal monthly fee, a reasonable pet deposit, or both. In
addition, the bill establishes as a condition of ownership
compliance with applicable State and local public health,
animal control and animal anti-cruelty rules and regulations.
Further, it is fair to ask pet owners to comply with other
reasonable pet ownership requirements of their housing
developments as practiced by private market rate owners. These
may include appropriate limits on the number, size and type of
animals any one resident may own or keep. In the Committee's
view, it is also appropriate for owners to require the
spayingor neutering of dogs and cats, to limit pet density, and to
establish appropriate standards of veterinary care as conditions for
ownership.
The Committee intends that the pet ownership provisions of
S. 462 shall take effect after notice and comment rulemaking by
HUD, and expects that such rulemaking will be forthcoming in a
timely manner. In addition, the Committee expects that public
housing agency plans will address the conditions of pet
ownership.
Title II--Section 8 Rental Assistance
Overview
Tenant-based section 8 rental assistance has become a very
effective and powerful means of meeting the housing needs of
low-income families. To date, the programs have successfully
assisted well over a million families in obtaining affordable,
quality housing in the private market. Unlike public housing,
the flexibility and portability of these programs have
empowered families to choose where they live based on personal
and economic needs. According to a recent congressionally
mandated study, about 87 percent of tenant-based section 8
subsidy holders (excluding New York) successfully obtain
housing, and success rates have steadily increased in recent
studies. Studies have also found that recipients of tenant-
based rental assistance were less likely than public housing
residents or unassisted low-income families to live in
concentrated poor urban communities; however, the Committee is
concerned that concentration of poor and minority households
has also occurred in the tenant-based program.
Despite the success of the section 8 certificate and
voucher program, the process in obtaining housing has been
often demanding and difficult, and landlord acceptance of
section 8 has been limited in some areas. Also, tenant-based
section 8 has been less well-accepted in tight housing markets.
The Committee recognizes that reforms are critical to address
these deficiencies and intends that the bill's reforms will
make the program operate so that low-income families can use
section 8 to rent affordable housing more widely in the private
market. These reforms are especially important as the Congress
considers measures that expand the use of tenant-based
assistance as an alternative means of providing affordable
quality housing. For example, the public housing reforms of the
Committee bill will provide some public housing residents with
tenant-based assistance in cases where distressed public
housing is sold or demolished. The Committee also believes the
section 8 reforms are necessary to assist residents in
multifamily properties insured by the Federal Housing
Administration where owners prepay their mortgages and convert
their properties to market rate. As the Committee considers
broader reforms to HUD's assisted housing programs including
the conversion of certain project-based assistance to tenant-
based assistance, this bill's reforms will allow vouchers to
work more effectively.
In the Committee's view, the administrative reforms to
tenant-based section 8 programs contained in S. 462 are
critical to the effectiveness and efficiency of the program. By
combining the best features of the section 8 voucher and
certificate programs into a single voucher program, the reforms
provide housing agencies the flexibility to design their
programs tailored to local needs while ensuring an adequate
level of accountability to residents, local governments, and
the Federal government. A more streamlined program will
encourage more private owners to participate, provide section 8
families with a greater selection of housing choices, and
increase the success rate in obtaining quality affordable
housing. The Committee urges HUD to collect the appropriate
data to monitor the effects of the reforms in this bill on the
success rate for section 8.
The section 8 certificate and voucher programs were created
separately in 1974 and 1983, respectively. The programs
currently serve about 1.4 million low-income families. About
2,500 State and local housing agencies administer the section 8
programs. HUD has entered into about 30,000 multi-year
contracts with these housing agencies to operate these
programs. Housing agencies are responsible for determining
household eligibility, selecting families and individuals to
receive subsidies, contracting with landlords whose rental
units have been selected by the subsidy holders, and
determining that units meet rent and housing quality standards.
Housing agencies and HUD have been administering two
separate programs with similar statutory requirements, rules,
regulations, and funding notices. While most requirements are
the same for both programs, significant differences still
exist. For example, except in limited circumstances,
certificate holders cannot pay more than 30 percent of their
income for rent. Under the voucher program, however, assisted
households can pay more or less than 30 percent of their income
for rent, and voucher holders have a ``shopping incentive'' to
seek lower-cost apartments. The Committee bill merges the
existing certificate and voucher programs into a single,
market-driven, streamlined program that embraces the best
features of both programs. Many reforms are modeled after S.
2281, which the Committee approved in 1994. Other changes are
based on studies by and discussions with HUD, PHAs, the General
Accounting Office, and low-income housing providers and
advocates.
Merger of certificates and couchers
Under the Committee bill, the existing certificate and
voucher programs are merged into a single voucher program under
a revised section 8(o) of the 1937 Housing Act. The new voucher
program retains the current program administrative system used
under the existing certificate and voucher programs since the
current administrators (public housing agencies and state
agencies) understand the intricacies of the programs, the local
market they operate in, and the clientele they serve. Using the
existing administrative structures will ease the transition to
a merged program.
The new voucher program also retains certain features of
the current certificate and voucher programs while providing
additional flexibility to housing agencies to respond to local
market conditions with minimal Federal involvement. For
example, the Committee bill allows housing agencies to set a
payment standard between 90 percent and 110 percent of HUD's
fair market rents (FMR). This flexibility will allow housing
agencies to react more quickly to changing real estate markets
than is possible under the current certificate program's FMR
system.
In general, the value of the subsidy is the difference
between the payment standard and 30 percent of a tenant's
adjusted income. An assisted family's monthly rent is the
highest of 30 percent of adjusted income, 10 percent of gross
income, or if a family is receiving welfare assistance
designated for housing, the portion of those payments that is
so designated. If the initial rent on a unit exceeds the
payment standard, the assisted family is responsible for paying
the difference up to 40 percent of income. However, this
provision only applies to the initial rent, and an assisted
family can pay more than 40 percent of income towards rent when
rents are increased.
Eligibility
Eligibility for tenant-based assistance remains essentially
the same as current law and includes very low-income families,
previously assisted families, low-income families, families
that qualify under a homeownership program, and eligible
families under the Low-Income Housing Preservation and Resident
Homeownership Act of 1990 (LIHPRHA). The new voucher program
recognizes that certain low-income families, such as working
families that need temporary housing assistance, deserve to
participate in the section 8 program. The Committee, however,
intends that housing agencies will continue to serve a
significant number of very low-income families in response to
local housing needs. Accordingly, the bill establishes minimum
targeting requirements where 50 percent of new vouchers, both
incremental and turnover, would be dedicated to families with
incomes at or below 30 percent of area median income and the
rest to families below 80 percent of area median. These
targeting standards are established under a revised section 16
of the 1937 Housing Act found under Title I of this Act.
Rent burden
The new voucher program retains the feature of the current
voucher program that allows assisted families to pay rent
levels of more than 30 percent of adjusted income while setting
reasonable parameters on initial rent burdens. Assisted
families are allowed to rent a unit above the payment standard.
The tenant rent contribution, therefore, could be higher than
30 percent of adjusted income. However, the Committee bill
limits the rent burden upon move-in at 40 percent of adjusted
income. This would prevent assisted families from paying
excessive rent burdens, which has occurred under the current
voucher program. The Committee is very concerned that a
considerable number of current voucher holders that have moved
or been newly admitted to housing units are paying excessive
amounts of income for rent. This may be due to artificially low
payment standards which do not reflect local rental rates,
improper monitoring of rent levels by PHAs, or other factors.
The Committee expects HUD to evaluate why this has occurred and
to monitor the rent burdens under the new voucher program.
To balance the Committee's concern of excessive rent
burdens with local flexibility, the Committee bill gives
housing agencies the discretion to set payment standards
between 90 and 110 percent of the FMR without HUD's approval.
Current law for vouchers restricts the payment standard between
80 and 100 percent of the FMR, with some exceptions up to 120
percent with HUD approval. The bill also gives HUD the
discretion to require housing agencies to submit their proposed
payment standard for approval if the housing agencies propose
to set payment standards below 90 percent of the FMR or above
110 percent of the FMR. The Committee believes that it is
important to allow some flexibility in setting the payment
standard above the FMR so that voucher holders will have more
housing choices. Further, the Committee recognizes that recent
changes to the calculation of the FMR have lowered the FMR
value, which have restricted housing choices for section 8
families.
The Committee bill also requires HUD to monitor rent
burdens and to review any payment standard that results in a
significant percentage of assisted families paying more than 30
percent of adjusted income for rent. Housing agencies are
required to modify the payment standard if the results of the
review establishes that the payment standard is too low for a
particular market and that too many voucher holders will have
to pay an excessive percentage of their income for rent.
Preferences
The Committee bill repeals preferences for all project-
based and tenant-based section 8 programs and allows housing
agencies to establish local preferences consistent with their
public housing agency plan. Local flexibility in establishing
preferences for housing assistance has the benefit of allowing
local housing agencies to respond to their community needs. The
Committee believes that locally established preferences would
be determined after a comprehensive and careful review of the
locality's housing needs, which would include the needs of
vulnerable populations such as the elderly, disabled, homeless,
and very low-income families.
Increasing owner participation
One of the key factors to the success of the tenant-based
rental assistance program is the ability to attract property
owners and managers to participate in the program. Owner
participation plays a significant role in providing a broad
range of housing choices for assisted families. The history of
section 8 has shown, however, that private owners and managers
have been reluctant to participate, in large part because of
time-consuming and costly program requirements which conflict
with normal market practices. In fact, a recent survey found
that owners and managers representing about 53 percent of
private multifamily housing properties would accept section 8
subsidies. Some program requirements have constrained the
ability of owners to make rational business decisions. For
example, the ``take one, take all'' rule requires landlords who
rent to one section 8 recipient to rent to all otherwise
qualified section 8 recipients and not refuse to lease to such
recipients because they receive section 8 assistance. Further,
section 8 leases have no set terms and section 8 landlords are
required to renew leases for section 8 tenants (the ``endless
lease'' rule).
The Committee bill reforms section 8 to make the program
operate like the unassisted market as much as possible while
maintaining the program goals of providing low-income families
with decent and affordable housing. The Committee expects that
these changes, combined with landlord outreach efforts
conducted by housing agencies as part of their program
administration, will greatly expand the choice and availability
of housing units.
The key reforms that encourage greater owner participation
include providing flexibility in resident screening and
selection, minimizing housing agency involvement in tenant-
owner relations, eliminating the ``take one, take all'' and
``endless lease'' rules, and conforming section 8 leases to
generally accepted leasing practices. These reforms streamline
and simplify the program by reducing the involvement of the
Federal government and housing agencies. The Committee
recognizes that rules such as ``take one, take all'' and the
``endless lease'' were created to protect assisted households
from owner discrimination. The Committee, however, does not
anticipate that the repeal of these rules will adversely affect
assisted households because protections will be continued under
State, and local tenant laws as well as Federal protections
under the Fair Housing Act and the Americans with Disabilities
Act. The intent of the repeals is not to excuse discrimination
against section 8 holders but to remove disincentives for owner
participation and to expand the number of housing choices
available to section 8 families. These provisions in this bill
are predicated, in part, onrepresentations by assisted housing
owners and associations that these changes will, in fact, expand the
supply of affordable housing.
Lease conditions
The Committee bill recognizes that the lease conditions
under the current section 8 programs have deterred private
owners from participating in the programs because they require
owners to treat assisted residents differently from unassisted
residents. The Committee bill reforms the lease conditions to
make the new voucher program operate as much like the
unassisted market as possible.
The most significant change is the elimination of the
``endless lease'' rule, which has prevented an owner from
terminating a section 8 tenancy unless the owner instituted
court action. The new voucher program permits the use of
section 8 leases that are similar to a standard market lease.
The Committee bill specifies that the use of standard market
leases be the same as those used in the locality, contain terms
and conditions that are consistent with State, and local law,
and are also applicable to unassisted residents.
Lease terms of one year are permitted under the Committee
bill and shorter term leases in cases where housing choices
would be expanded for section 8 holders and if such shorter
terms are considered to be acceptable local market practice.
The Committee does not expect that the use of lease terms
shorter than one year would be used frequently and safeguards
against this by requiring the approval of the housing agency.
The Committee recognizes that some small private owners use six
month term leases as standard practice and that assisted
families should be allowed access to such housing. However, the
Committee intends that rental assistance under the new section
8 voucher program be used only as a permanent housing resource
and not be diverted for temporary housing purposes.
The Committee bill also allows owners to terminate the
tenancy on the same basis and in the same manner as they would
for unassisted tenants in the property. Lease terminations
would have to comply with applicable State, and local law.
Further, owners are required to provide written notice to the
tenant, which would specify the reasons for terminating the
lease.
Repeal of the 90-day notice requirement
The new voucher program will no longer require that a
participating owner provide a 90-day notice to HUD when it
intends to terminate a section 8 contract. This requirement has
been a meaningless paperwork burden on HUD and owners by
involving HUD in the owner's termination of section 8
contracts. This has discouraged owner participation and hurt
the program's effectiveness. Where an owner terminates a
contract, section 8 assistance will ordinarily continue to be
provided to families.
Housing inspection procedures
The new voucher program retains current requirements for a
housing agency to inspect units to assure that they meet
housing quality standards (HQS). The Committee bill, however,
makes inspection procedures more flexible by allowing
inspectors to use local housing codes or housing codes adopted
by public housing agencies instead of HUD's HQS. These two
optional codes may only be used if they equal or exceed HUD's
HQS and do not severely restrict housing choice. The Committee
recognizes that in some cases the optional codes may have
excessive housing requirements and, therefore, may limit
housing choices. In these cases, the optional codes should not
be used.
The Committee bill also requires that the Secretary
designate another entity to make inspections and rent
determinations for units that are owned by PHAs. The intent is
to prevent a conflict of interest for PHAs. The Committee
expects that HUD would consider a variety of entities in
addition to local government agencies, such as nonprofit and
private sector contractors, to perform this function.
Housing quality inspections would be required before lease-
up and at least annually thereafter during the section 8
contract term. The intent is to provide some flexibility for
housing agencies in performing inspections in response to
different housing circumstances. The Committee emphasizes the
importance of ensuring that the government is subsidizing
quality housing units, and this provision is not intended to
compromise this goal. Further, this provision does not preclude
housing agencies from performing inspections more frequently
than annually for certain circumstances where the unit's
physical condition has been damaged due to vandalism,
disasters, or other special circumstances. The Committee
expects that housing agencies will develop policies and
procedures to ensure that timely inspections are performed to
safeguard the physical condition of units occupied by section 8
residents without overburdening owners.
Late payments
Housing agencies are required to make timely payments of
rent to owners or they will be subject to penalties in cases
where they are responsible. To ensure that late payments are
not funded out of subsidy allocations, the Committee bill
requires that late payments be paid from the housing agency's
administrative fees. The Committee recognizes, however, that in
some instances, late payments are not due to the housing agency
but to factors beyond their control. If HUD determines that
late payments are due to factors beyond the control of the
housing authority, no penalty would be assessed.
The Committee believes that HUD should closely monitor the
frequency of late payment penalties for housing agencies and
consider strong sanctions for such housing agencies that
repeatedly and consistently fail in making timely payments. One
possible sanction is to contract the administration of the
program to another entity.
Assistance for manufactured housing
Tenant-based rental assistance will continue to be provided
to families who own a manufactured home and rent the property
on which it is located. Housing agencies would establish a
payment standard which could not exceed an amount established
or approved by HUD. The Committee encourages HUD to rely more
on local rental cost data for manufactured home properties in
lieu of establishing separate FMRs.
The calculation for the subsidy payment to manufactured
homeowners who rent their property is revised to provide a more
generous subsidy amount based on a less complicated formula.
This calculation uses the same subsidy determination like that
used for housing assistance payment for other tenant-based
units in the new voucher program by basing the subsidy on the
real property rented, plus an allowance for any tenant-paid
utilities. The mortgage payment would be excluded from the
original formula calculation.
Shopping incentive
The existing voucher program contains a ``shopping
incentive,'' whereas the certificate program does not. The
purpose of the shopping incentive was to provide assisted
households the monetary incentive to seek the lowest possible
rent by allowing the tenant to keep thedifference between the
rent and the payment standard. If tenants could lower their housing
costs, they would then have additional money available for other uses,
such as food, health care, or transportation. Also, the shopping
incentive was expected to prevent inflation in rents.
The Committee bill eliminates the shopping incentive. The
Committee believes that this will reduce Federal costs for the
tenant-based programs since about one-third of voucher holders
in fact do not shop for the best buys but actually remain in
the units that they already occupied prior to receiving
assistance. If the shopping incentive were continued, the
average shopping incentive for those that receive it would be
about $1,100 per year. Some have argued that eliminating the
incentive would persuade assisted families to move to more
expensive units. However, a 1990 study by Abt Associates found
that more than one-third of all certificate holders, who do not
receive a shopping incentive, rented units below the FMR.
Therefore, the comparison between the certificate and voucher
programs have found that the shopping incentive did not appear
to persuade families to select the best buys. Furthermore, HUD
has not found any evidence that the shopping incentive helps to
prevent inflation in rents. Excess subsidy saved from
eliminating the shopping incentive could be used to assist more
families.
The Committee recognizes that whether families receive
housing assistance or not, they do not make housing choices
based on cost alone. Other factors such as distance to work and
families, crime activity, and transportation play a role in
where a family elects to live.
Portability
One of the most distinctive features of the tenant-based
program is the ability to use the rental assistance in a
variety of communities and neighborhoods. The Committee
believes that assisted families should have the maximum
flexibility in choosing where to live. The new voucher program
promotes portability for assisted families to fully explore and
select from a multitude of housing options.
The portability feature under the new voucher program
allows assisted families to move anywhere within and outside a
PHA's jurisdiction. The Committee bill recognizes that the
section 8 program is a national program and therefore reforms
the program to allow portability anywhere in the country where
the program is being administered. National portability will
also permit voucher holders to respond to job and educational
opportunities and other significant changes in their lives
without loss of subsidy.
The Committee recognizes that when assisted families leave
their jurisdictions, an enormous administrative burden for PHAs
is created. Therefore, in order to make the portability feature
work more effectively and efficiently, the Committee bill
authorizes HUD to establish procedures and reserve funds for
compensating PHAs that issue vouchers to families that move
into or out of another PHA jurisdiction. This provision should
resolve these administrative difficulties created by billing
receiving jurisdictions.
The Committee expects that these changes combined with
intensive counseling for voucher holders will make mobility
easier for families while addressing the PHAs' concerns in
administering the portability feature. The Committee is aware
that some metropolitan-wide jurisdictions have dealt with the
administrative problems effectively, but in other locations
PHAs have discouraged families from exercising their
portability rights. The Committee expects that PHAs will
develop procedures to make the portability feature work
effectively.
Homeownership option
Section 8 currently requires PHAs to make the homeownership
option available to tenant-based assisted families through
cooperative housing. The present law allows assisted families
to use this option if they meet certain employment and income
criteria such as being a first-time homeowner and participant
in the PHA's Family Self-Sufficiency (FSS) program. However,
the current section 8 homeownership program has significant
statutory limitations that make it an ineffective tool for
achieving homeownership.
The Committee believes that the homeownership option has
the potential to serve as an effective tool for expanding
housing choices and residential mobility for assisted families.
The bill amends section 8 in several ways to make the program
more flexible and operable for housing agencies to administer.
First, it allows a family to receive section 8 assistance for
homeownership through shares in a cooperative housing
development or through lease-purchase arrangements, whether or
not the family is a first-time homeowner. Second, the
assistance formula for families receiving assistance for
homeownership is modified to make it similar to the tenant-
based rental assistance formula. Third, the bill removes a
complicated provision for recapturing the reduction in the
household's share of housing cost resulting from the exclusion
of home equity from income. Finally, the requirement that at
least 80 percent of the downpayment amount must come from the
homebuyer's own resources is eliminated.
The reforms to the homeownership option will help in making
the program easier to implement and administer. Since the
program is optional for PHAs to administer, the Committee bill
allows PHAs to contract with nonprofit organizations to
administer the program. The Committee provides this option
because some PHAs may not be interested in or capable of
running a section 8 homeownership program. The Committee
encourages PHAs to inform assisted families of this
homeownership option and foster the implementation of this
program whether the PHA administers or contracts out the
program.
Repeal related to single room occupancy (SRO) facilities
In an effort to streamline the 1937 Housing Act, many
obsolete or unnecessary provisions are repealed, including one
which allows tenant-based assistance to be used for housing
units without a kitchen and/or bathroom. These units are often
in SRO facilities and are an important permanent housing
resource for single people who have been homeless. HUD's Office
of General Counsel has determined that no special legislative
authority is required to allow tenant-based assistance to be
used for SROs. The repeal of this provision is intended in no
way to prohibit or inhibit tenant-based assistance in SROs.
Repeal of Moving to Opportunity Program
The Committee bill repeals the Moving to Opportunity
Demonstration program (MTO), which was created in the Housing
and Community Development Act of 1992. The goal of the program,
which was modeled after the Gautreaux experiment in Chicago,
was to provide counseling and tenant-based section 8 assistance
for low-income households to move from poverty-concentrated
neighborhoods to areas with lower poverty rates. Section 8
certificates and vouchers were provided to families in
conjunction with funding for tenant counseling and landlord
recruitment by fair housing and community-based organizations.
The Committee is not convinced that MTO has achieved its
original goal of assisting low-income families to move to
housing that provided more economic and social opportunities.
Instead, the program has been plagued by poor implementation
that has created opposition to it in numerous communities.
Further, the Committee believes that some of the opposition to
the program has resulted from the perception that HUD is
attempting to transform a program designed to complement the
voucher program into a much broader, social experiment for
dispersing low-income families to middle-income suburban
neighborhoods. Moreover, the Committee believes it is wrong to
require low-income families to move to certain neighborhoods.
Families will be empowered when provided with information which
provides real housing options through informed choice.
The Committee recognizes that assisted housing programs
have both real and perceived impacts on inner cities, abutting
communities, and suburban neighborhoods. In the Committee's
view, the reforms proposed to the section 8 program--to
eliminate some of the barriers to landlord participation, to
encourage homeownership and work, and to screen applicants for
criminal or drug histories--will help promote wider acceptance
of the section 8 program.
Finally, the Committee also expects that some functions of
the MTO program, such as tenant counseling and screening and
landlord outreach can and will be performed regularly by PHAs
as part of their administrative functions. The Committee
encourages HUD to monitor these efforts through its review of
the management performance of section 8 administering housing
agencies. In addition, the Department may continue to evaluate
the MTO program and report on the results.
Implementation
The transition period for merging the existing certificate
and voucher programs will require thoughtful and careful
planning and discussions with housing agencies, owners, section
8 tenants, and other interested parties. A General Accounting
Office (GAO) study of merging the two programs pointed out that
during a transition period, HUD and housing agencies would have
to administer three programs--the certificate program, the
voucher program, and the new merged program. Accordingly,
negotiated rulemaking procedures will be used to develop
regulations to implement the new voucher program. After the
regulations for the new voucher program are implemented, HUD
will be allowed to continue to apply former law where necessary
to simplify the program administration or to avoid hardship to
assisted families and owners. The Committee believes that the
coordination and cooperation of all parties will be important
in ensuring a smooth merger.
Recapture and reuse of section 8 reserves
The Committee bill provides HUD with the authority to
recapture and reuse housing agency project reserves of unused
or excess tenant-based section 8 funds for purposes of amending
current housing assistance contracts or renewing expiring
housing assistance contracts. With this authority, HUD would be
able to redistribute recaptured section 8 reserve funds to any
housing agency.
HUD currently allows housing agencies to retain unused or
excess section 8 funds as contingency funds for future use. HUD
believes that this policy allows housing agencies to cover
unexpected program cost increases or other contingencies. These
reserves have grown in recent years due to a budgeting
procedure which allocates funding to housing agencies based on
the assumption that assisted families would have no income and,
therefore, make zero rent contributions. The reality, however,
is that many residents have earned income and have been
generally contributing 30 percent of their income for rent.
In recent years, the Department has been attempting to
reconcile section 8 contract accounts to determine the amount
of unused funds in the housing agencies' project reserves. HUD
identified about $1.6 billion in unspent section 8 funds as of
the end of fiscal year 1996. It was later determined by the
Secretary of HUD that this amount could be as high as $5.8
billion; however, the Secretary has stated that the actual
amount has not been completely reconciled.
The Committee was surprised by the amount of reserves
uncovered. The Committee strongly believes that these excess
funds should be used for renewal purposes only. The cost of
renewing all expiring section 8 contracts will grow from $10.2
billion in fiscal year 1998 to over $20.7 billion in fiscal
year 2007. The cost of renewing expiring tenant-based section 8
contracts alone will grow from $8.1 billion in fiscal year 1998
to $12.9 billion in fiscal year 2007. The Committee urges HUD
to complete its efforts in reconciling these funds and keeping
the Committee regularly informed of its progress.
Title III--Safety and Security
The Committee bill builds upon the safety and security
provisions contained in the Housing Opportunity Program
Extension Act of 1996 (P.L. 104-120) and includes a number of
new measures aimed at improving the safety of the residents of
public and assisted housing. A provision in Title I of the bill
expands the authority of PHAs to allow police officers to
reside in public housing, regardless of income limitations, in
an effort to make public housing safer for its residents. In
addition, a separate provision in Title II allows owners of
project-based section 8 housing to exercise the same option.
The Committee bill combines the screening and eviction
provisions contained in the Housing Opportunity Program
Extension Act and expands these provisions to apply to housing
assisted under the section 8 program. In addition, violent
criminal acts and criminal acts resulting in a felony
conviction are added to the list of offenses for which eviction
standards are required regardless of the geographic location of
the crime. Also, the bill permits PHAs to request written
release of records of drug-related activity in order to aid
PHAs in their screening activities.
Title IV--Miscellaneous Provisions
Title IV contains clarifying and conforming provisions
relating to the CHAS, income limit determinations in certain
jurisdictions, the demolition of certain public housing
developments, a technical correction to the Immigration Reform
and Control Act of 1996 and other miscellaneous provisions.
Sense of the Congress
This section contains a sense of the Congress that PHAs
should consider the needs of individuals who are victims of
domestic violence when establishing their system of
preferences. The Committee also urges PHAs to take into account
the current and future needs of the growing elderly population
when developing preferences for occupancy. By highlighting
these particular groups, the Committee does not intend to
diminish the important needs of other groups or individuals.
Review of drug elimination program contracts
The Committee bill requires the Secretary to investigate
all security contracts awarded by grantees under the Public and
Assisted Housing Drug Elimination Act of 1990 that are public
housing agencies that own or operate more than 4,500 public
housing units. The Committee is concerned about allegations
that certain security firms under such contracts have engaged
in discriminatory hiring practices and allowed their employees
to proselytize while on duty. In particular, the Committee is
concerned about security firms affiliated with the Nation of
Islam which have received more than $20 million in HUD
contracts. Further, the Committee seeks to determine if proper
procurement procedures were followed.
Legislative action is required to ensure that the Secretary
thoroughly reviews each security contract, and reports the
findings of the investigation to Congress. If a security
contract is not in full compliance with applicable laws and
regulations, the Secretary must promptly bring the contract
into compliance, or terminate the contract.
Repeals
In an effort to streamline the 1937 Housing Act, the
Committee bill contains several repeals of programs, studies,
or demonstrations that are either consolidated into the new
block grants, expired, inactive, or already completed. The
Committee intends to continue, and urges HUD to assist in,
efforts to identify additional programs and initiatives that
can be repealed or consolidated under the new block grant
structure.
Cockroach eradication
The Committee is very concerned that a recent study
sponsored by the National Institute of Allergy and Infectious
Diseases relates severe asthma in children to exposure to
cockroaches, and finds a high incidence of such cases in
children growing up in public housing. It is the intention of
the Committee to include a provision addressing the eradication
of cockroaches when S. 462 is considered by the full Senate.
SECTION-BY-SECTION
Section 1. Short Title; Table of Contents
This section states that this Act may be cited as the
Public Housing Reform and Responsibility of 1997.
Section 2. Findings and Purpose
This section describes Congress' intent to reform public
housing and section 8 tenant-based programs by consolidating
programs, streamlining program requirements, and providing
well-performing public housing agencies (PHA) with maximum
discretion and control in conjunction with accountability to
tenants and localities. It also stresses the need to reform
public housing to remove disincentives for economic self-
sufficiency of residents by allowing PHAs the flexibility to
design programs that reward employment.
In addition, the section stresses the need to improve the
section 8 tenant-based assistance programs using market-based
principles.
Section 3. Definitions
This section defines ``public housing agency'' and
``Secretary''.
Section 4. Effective Date
This section states that unless otherwise specifically
provided, the Act and amendments made by the Act shall be
effective upon date of enactment.
Section 5. Proposed Regulations; Technical Recommendations
Subsection (a) requires all new proposed regulations
necessary to implement the law to be submitted to Congress
within 9 months of enactment.
Subsection (b) requires HUD to submit to the appropriate
committees of Congress within nine months of enactment any
recommended technical and conforming legislative changes to
carry out this Act.
Section 6. Elimination of Obsolete Documents
This section prohibits the enforcement, after one year from
the date of enactment, of any rule, regulation or order
promulgated under the U.S. Housing Act of 1937 prior to the
enactment of this Act, as it relates to the public housing and
section 8 tenant-based programs.
Section 7. Annual Reports
This section requires the Secretary to report to the
Congress annually on what impact the amendments made by this
Act have had on public housing tenants and households receiving
tenant-based assistance, the economic viability of PHAs, and
the effectiveness of the rent policies established by this Act
on the employment status and earned income of public housing
residents.
Title I--Public Housing
Section 101. Declaration of Policy
This section amends section 2 of the 1937 Act to state that
it is the policy of the U.S. to: assist States and localities
to remedy unsafe housing conditions and the acute shortage of
decent and safe housing; assist States and localities to
address the shortage of low-income affordable housing; and vest
in PHAs that perform well the maximum amount of responsibility
and flexibility in program administration in conjunction with
local accountability to public housing tenants and localities.
Section 102. Membership on Board of Directors
This section adds a new section 29 at the end of Title I of
the 1937 Act. The new section requires that a PHA board of
directors contain at least one member who is a public housing
resident or Section 8 recipient, except on boards where the
members are salaried and serve on a full-time basis. This
section also allows for the election of the resident board
member if provided for in the public housing agency plan
developed in consultation with the resident advisory board. In
addition, the requirement does not apply to a PHA with less
than 300 units if the PHA has provided reasonable notice to the
resident advisory board of the opportunity for a resident to
serve on the board and no resident expresses an interest in
serving on the board. It also prohibits discrimination against
public housing residents in the selection of governing bodies
of PHAs.
Section 103. Authority of Public Housing Agencies
Subsection (a) amends the Brooke Amendment rent calculation
by allowing PHAs to set rents that do not exceed 30 percent of
a public housing resident's adjusted income rather than
charging rents based on a straight percentage of adjusted
income. This provision does not apply to recipients of tenant-
based assistance.
Subsection (b) permits PHAs to adopt ceiling rents that
reflect the reasonable market value of the public housing
units, but are not less than 75 percent of the monthly cost to
operate the public housing units and to make a deposit to a
replacement reserve. Subsection (b) also allows PHAs to adopt a
minimum monthly rent of no more than $25 for publichousing and
for section 8 tenant-based and project-based programs. This subsection
also allows rental of public housing units to police officers who are
not otherwise eligible. In addition, this subsection allows a PHA with
less than 250 units to rent a unit to an individual or family that is
not low-income on a month-to-month basis if there are no eligible
families on the waiting list. The PHA must also ensure that the rent is
not less than the operating cost of the unit, the over-income family
vacates the unit if an eligible family applies for residence, and
reasonable public notice of the availability of the unit is provided.
Finally, subsection (b) requires PHAs to establish rental policies that
encourage and reward employment and economic self-sufficiency.
Subsection (c) provides a transitional provision for the
establishment of ceiling rents until final regulations are
issued. PHAs are permitted to set ceiling rents: (1) at 75
percent of the monthly cost to operate the public housing
units; (2) equal to the 95th percentile of the rent paid for a
unit of comparable size in the development; or (3) equal to the
fair market rent for the area in which the unit is located.
Section 104. Definitions
Subsection (a)(1) amends the definition of ``single
persons'' by striking the sentence establishing a preference
for elderly or disabled persons before single persons who are
otherwise eligible.
Subsection (a)(2) clarifies the definition of ``adjusted
income.'' The definition would also permit PHAs the flexibility
to establish any other adjustments to earned income that a PHA
deems appropriate.
Subsection (b) requires PHAs, when calculating a family's
rental payment under the public housing and section 8 tenant-
based programs, to disregard increases in income for 18 months
as a result of employment of a member of the family who was
previously unemployed for one or more years. After the 18
months, there would be a phase-in of the income increases over
a three-year period. The 18-month earned income disregard would
only apply to tenant-based assistance programs provided that
funds are appropriated on or after October 1, 1997. This
subsection also grandfathers any household with an income
disallowance under current law.
Subsection (c) defines terms used in reference to public
housing. It makes it clear that costs related to obtaining non-
Federal financing for development are eligible development
costs and that financing charges for developments with non-
Federal funds are eligible operating costs. Subsection (c) also
contains new definitions for the following terms: public
housing agency plan, disabled housing, elderly housing, mixed-
finance project, capital fund, and operating fund.
Section 105. Contributions for Lower Income Housing Projects
This section deletes sections 5 (h) through (l) of the 1937
Act which: permit PHAs to sell public housing units to their
tenants; require use of solar energy; place restrictions on
PHAs eligible for development funding; authorize the use of
development funding for major rehabilitation of obsolete
housing; and prohibit recapture of development funds until 30
months after they were made available. The legislation
transfers authority for PHAs to sell public housing units to
their residents to section 117 of this Act.
Section 106. Public Housing Agency Plan
Subsection (a) adds a new section 5A of the 1937 Act,
establishing requirements for the submission of written public
housing agency plans.
This section requires each PHA to submit to HUD a public
housing agency plan which must be developed in consultation
with a resident advisory board and be consistent with the
jurisdiction's comprehensive housing affordability strategy
(CHAS).
Under this section, PHAs are required to submit a 5-year
plan and an annual plan. The 5-year plan calls for a mission
statement for serving the needs of low-income families in the
PHA's jurisdiction and a statement of goals and objectives of
the PHA to serve the needs of those families. The annual plan
must include: a statement of low-income housing needs in the
community and how the PHA intends to address the needs; a
statement of financial resources and their planned uses; the
PHA's general policies governing eligibility, selection,
admission, assignment, occupancy, and rents; the PHA's policies
for the maintenance and operations of the agency; a statement
of the PHA's grievance procedures; a plan describing any
capital improvements; a description of any housing to be
demolished or disposed of; a description of any developments
designated for elderly or disabled; a description of any
properties to be converted to tenant-based assistance; a
description of any homeownership or self-sufficiency programs;
a description of policies for safety and crime prevention; a
certification of compliance with fair housing laws; and an
annual audit.
The plan must be submitted to HUD for approval 60 days
before the start of the PHA's fiscal year. HUD must review the
plan to determine whether it: (1) is complete; (2) is
consistent with the information and data available to HUD; and
(3) does not include material prohibited by, or inconsistent
with, applicable law. Insufficient time to review a plan is not
a valid reason for HUD to reject a plan. If HUD fails to
approve the plan within 60 days (or 75 days the first year), it
is deemed approved.
In addition, the new subsection 5A(e) requires: (1) each
PHA to establish a resident advisory board but allows HUD to
waive the requirement for the establishment of new boards if
the PHA demonstrates that existing resident organizations
adequately represent the interests of the residents and have
the ability to perform the advisory functions required under
this section; (2) a public hearing on the plan with public
notice and an opportunity to inspect the plan; and (3) any
significant amendments to the plan: be adopted at a duly-called
meeting of public housing commissioners (or other comparable
governing body); be considered by the resident advisory board;
be consistent with the CHAS; and be approved by HUD. Under this
subsection, HUD is required to review and approve plans and
significant amendments within 60 days (or 75 days the first
year) of submission and allows HUD to reject plans and
significant amendments only if they are incomplete,
inconsistent with information available to HUD, or prohibited
by law. This subsection also allows HUD to request additional
information from troubled or near-troubled PHAs and to
establish streamlined planning requirements for small, non-
troubled PHAs, high-performing PHAs, and PHAs that only
administer tenant-based assistance.
Subsection (b) requires negotiated rulemaking within one
year for development of regulations on the plan and also
requires HUD to issue an interim rule within 120 days of
enactment.
Subsection (c) requires the General Accounting Office (GAO)
to audit and review a representative sample of PHAs and report
to Congress on the degree of compliance of PHAswith their
plans. The GAO must conduct the audit within one year of the effective
date of the regulations and report to Congress within 2 years after the
plans are initially required to be submitted to HUD.
Section 107. Contract Provisions and Requirements
Subsection (a) amends section 6(a) of the 1937 Housing Act
by adding a provision requiring that any contract for loans,
contributions, sales, leases, mortgages, or any other agreement
made pursuant to this Act be consistent with the public housing
agency plan.
Subsection (b) repeals section 6(c) of the 1937 Act that,
in general, contains the system of Federal and local
preferences for admission to public housing allowing PHAs to
develop their own preference system for admission to public
housing.
Subsection (c) repeals an obsolete provision requiring
excess funds from annual contribution contracts to be offset
against subsequent year annual contributions.
Subsection (d) makes technical amendments to the Public
Housing Management Assessment Program (PHMAP) for assessing the
management performance of PHAs and adds four new PHMAP
indicators: (1) the extent to which the PHA coordinates,
promotes, or provides effective programs and activities to
promote the economic self-sufficiency of residents and provides
opportunities for residents to be involved in the
administration of public housing; (2) the extent to which the
PHA implements effective screening and eviction policies and
other anti-crime strategies; (3) the extent to which the PHA is
providing acceptable basic housing conditions; and (4) the
extent to which the PHA successfully meets the goals and
carries out the activities of the public housing agency plan.
Subsection (d) also allows HUD to use a simplified system of
performance indicators for PHAs with fewer than 250 units.
Subsection (e) adds violent crimes and criminal acts
resulting in felony convictions to the list of offenses for
which eviction is called for, regardless of the geographic
location of the acts. Subsection (f) deletes the current
provision which specifies the timing of notices of lease
terminations. Instead, PHAs would provide such notices, as
provided under State or local laws, except that PHAs would be
allowed to use shorter notice periods, as determined reasonable
by HUD, when the health or safety of the PHA residents or
employees, or members of the surrounding community are
threatened or when drug-related or violent crimes or criminal
acts resulting in felony convictions have occurred, regardless
of the geographic location of such acts.
Subsection (g) deletes a provision in section 6(o) of the
1937 Act concerning the Family Unification program. The bill
makes activities under the Family Unification program eligible
under the new block grants.
Subsection (h) deletes section 6(p) of the 1937 Act, which
requires a preference for public housing development for areas
with an inadequate supply of very low-income housing.
Subsection (I) provides a transition to allow PHAs to
establish local preferences between the date of enactment of
the Act and approval of the PHA plan.
Section 108. Expansion of Powers for Dealing With PHAs in Substantial
Default
This section amends section 6(j)(3) of the 1937 Act that
give HUD options for dealing with PHAs in substantial default
under their Annual Contributions Contracts.
Subsection (a) amends the four options available to HUD for
dealing with substantial defaults. Provisions providing for
solicitation of proposals for alternative management of public
housing and permitting HUD to require an agency to provide for
alternative management of public housing would be extended to
cover section 8 and any other program of an agency. A new
clause is added to authorize HUD to take possession of the PHA,
including all or part of any project or program.
Subsection (a) establishes procedures for dealing with
troubled housing authorities. For any troubled PHA that cannot
correct its troubled status on the later of the date of
troubled designation and the date of enactment of this Act, the
Secretary would be required: (1) in the case of a PHA with
1,250 or more units, to petition for the appointment of a
judicial receiver, or (2) in the case of a PHA with fewer than
1,250 units, to either petition for the appointment of a
judicial receiver or take possession of the PHA and appoint an
individual or entity to act as an administrative receiver. The
administrative receiver would assume the responsibilities of
the Secretary for administration of all or part of the PHA. In
the case of a public housing agency with 1,250 or more units
the Secretary may, during the period between the date on which
a petition is filed and the date on which the receiver assumes
responsibility, take possession of all or part of any project
or program of the PHA.
Subsection (a) also provides additional powers where HUD or
a receiver has taken over a PHA to: abrogate contracts impeding
correction of the substantial default; demolish or dispose of
PHA properties and transfer ownership to resident-supported
nonprofit entities; break up the troubled PHA into one or more
new PHAs; and preempt State or local law relating to civil
service requirements, employee rights, procurement, or
financial controls that, in the written opinion of the receiver
or HUD, substantially impede the correction of the substantial
default. HUD would be given such additional powers as a
district court could confer on a receiver to achieve the
purposes of the receivership.
Subsection (a) permits a court to terminate receivership
when the court determines that all defaults have been cured or
the PHA is capable of again discharging its duties.
Subsection (b) would make this section applicable to
actions taken before, on, or after the effective date of this
Act. This subsection would also make clear that it is
applicable to any receivers appointed for a PHA before the date
of enactment of this section.
Section 109. Public Housing Site-Based Waiting Lists
This section adds a new provision to section 6 of the 1937
Housing Act allowing PHAs to establish site-based waiting lists
for admissions to public housing developments. This section
requires any procedures for site-based waiting lists to comply
with title VI of the Civil Rights Act of 1964, the Fair Housing
Act, and other applicable civil rights laws. It also requires
that PHAs provide full disclosure of any housing options
available within the PHA to individuals applying for public
housing assistance.
Section 110. Public Housing Capital and Operating Funds
This section rewrites section 9 of the 1937 Act involving
annual contributions.
Under the amended section 9, all public housing programs
are merged into two funds, a Capital Fund and Operating Fund.
In general, the Capital Fund may be used for: development and
modernization, vacancy reduction, deferred maintenance, code
compliance, management improvements, demolition and
replacement, resident relocation, empowerment activities,
security, and homeownership activities.
This section provides several factors for HUD to consider
in developing the Capital Fund formula including: the number of
units and percentage occupied by very low-income families; the
number of units converted to vouchers; the costs to
rehabilitate, reconstruct,develop; or demolish units; the
degree of household poverty; security costs; and the ability of the PHA
to administer effectively the Capital Fund. This section also contains
a condition on the use of capital funds; the condition requires that
any public housing developed with capital funds be operated under the
public housing rules for a 40-year period and any public housing
modernized using capital funds be maintained and operated under the
public housing rules for a 20-year period.
Under this section, the Operating Fund may be used for:
management systems, routine preventative maintenance, anti-
crime and anti-drug activities, resident services, resident
management and participation activities, operation of mixed-
finance projects, insurance, energy costs, and administration
of the public housing community service and self-sufficiency
requirement under section 12.
This section provides several factors for HUD to consider
in developing the Operating Fund formula including: operating
costs, the number of units and percentage occupied by very low-
income families, the degree of household poverty, activities to
promote economic self-sufficiency, the number of chronically
vacant units, security costs, and costs to effectively
administer the Operating Fund.
The amended section 9 also: (1) allows a PHA to use up to
20 percent of its Capital Fund for activities eligible under
the Operating Fund; (2) disallows the use of assistance under
the Capital or Operating Funds for the construction of public
housing that would result in a net increase in the number of
public housing units owned and operated by the PHA with certain
exceptions; (3) requires HUD under certain circumstances to
provide operating and capital assistance directly to resident
management corporations managing public housing projects under
contract with a PHA; and (4) authorizes HUD to provide
technical assistance (TA) funds to PHAs and resident
organizations including training and TA to PHAs at risk of
becoming troubled or already troubled. In addition, this
section includes a two percent set-aside for emergencies,
settlement of litigation, and costs to administer the Operation
Safe Home program and requires HUD and the Office of Inspector
General to report on the feasibility of transferring the
Operation Safe Home Program to the Department of Justice.
This section also includes a provision requiring PHAs to
obligate their Capital Funds within 18 months and spend any
capital assistance within 4 years with certain exceptions or be
subject to the withholding of future assistance or recapture of
funds.
Finally, this section requires the formulas for the Capital
and Operating Funds to be established through negotiated
rulemaking and provides for a transition period whereby
operating and modernization funds would be allocated to PHAs
according to current distribution mechanisms under sections 9
and 14 of the 1937 Act. It also provides that HUD not take into
account in developing the transitional formula any reduction of
or increase in rental income where a PHA establishes an interim
rental policy that allows rental amounts to be less than 30
percent of a family's monthly adjusted income.
Section 111. Community Service and Self-Sufficiency
This section amends section 12 of the 1937 Housing Act by
adding three new provisions related to community service and
self-sufficiency. The first provision under subsection (c)
would establish a requirement for adult public housing
residents to participate in a community service or self-
sufficiency activity for not less than 8 hours per month. This
requirement also provides for exemptions to someone who is: (1)
elderly; (2) disabled or a primary caretaker of someone who is
disabled; (3) engaged in an eligible work activity; or (4)
otherwise exempt as defined under a State welfare program. This
section uses the same definition for work activities under the
welfare reform law. Second, under circumstances where the
welfare or public assistance benefits of a public housing or
section 8 family is reduced due to noncompliance or an act of
fraud, the family's share of rent may not be reduced during the
period of the reduction. It also clarifies that the sanctions
provision does not apply where a family's benefits are reduced
due to the expiration of time limits. Lastly, this section
establishes a requirement for PHAs to enter into cooperation
agreements with State or local welfare agencies for purposes of
transferring information between the agencies and to target
assistance to public housing and section 8 families.
Section 112. Repeal of Energy Conservation; Consortia and Joint
Ventures
This section repeals section 13 of the 1937 Act, which
requires life cycle cost analyses of energy systems for new
construction and modernization developments.
Section 112 establishes a new section 13 that permits any
two or more PHAs to form a consortium to receive assistance and
allows PHAs to enter into joint ventures, partnerships or other
business arrangements with other entities to administer public
housing programs. Also, PHAs will be able to retain amounts
generated from activities carried out under this section
without incurring a reduction in funds provided under the
Operating or Capital Funds or other funding sources provided
under this Act. Such amount must be used for low-income housing
or for the benefit of the residents.
Section 113. Repeal of Modernization Fund
This section repeals the public housing modernization
program in section 14 of the 1937 Act and makes numerous
technical and conforming amendments.
Section 114. Income Eligibility for Public and Assisted Housing
This section replaces section 16 of the 1937 Act involving
income eligibility for public housing, tenant-based assistance,
and project-based assistance.
The new subsection (a) states that for any public housing
units (including those in a mixed-finance project) that become
available each year, PHAs are allowed to serve families up to
80 percent of the area median income, but requires that 75
percent of the units be made available to families with incomes
at or below 60 percent of the area median, and 40 percent of
the units be made available to families with incomes at or
below 30 percent of the area median. This subsection also
allows PHAs to establish a different eligibility standard for
good cause in accordance with their public housing agency plan
and if approved by HUD.
In addition, subsection (a) prohibits a PHA from
concentrating very low-income families in certain public
housing developments and requires PHAs to achieve a diverse
income mix among tenants in each development and among
scattered-site public housing.
The new subsection (b) sets out the income eligibility
standards for tenant-based assistance providing that a PHA may
serve families up to 80 percent of the area median income but
must set aside 50 percent of the tenant-based assistance that
becomes available each year for families with incomes at or
below 30 percent of the area median income. This subsection
also allows housing agencies for good cause to establish a
different eligibility standard for tenant-based assistance if
approved by HUD. Subsection (b) also establishes thesame
eligibility requirements for section 8 project-based assistance as for
public housing under subsection (a).
Section 115. Demolition and Disposition
This section replaces section 18 of the 1937 Act concerning
the demolition and disposition of public housing.
The new section streamlines the requirements for demolition
and disposition and establishes standards that PHAs must meet
in order to sell or demolish public housing units. In order to
demolish a project, a PHA must certify that the project is
obsolete and not cost-effective to rehabilitate. In order to
sell a project, the PHA must certify that its retention is not
in the best interests of the tenants or the PHA. In addition,
this section allows HUD to disapprove an application for
demolition and disposition if it determines that any
certification made by the PHA is clearly inconsistent with the
information available to HUD and if the application was not
developed in consultation with the affected residents or
resident advisory board.
The new section 18 also: (1) provides residents with the
opportunity to purchase developments in the case of proposed
sales--not demolitions; (2) permits any replacement units to be
built on the same site but only if the number of replacement
units is fewer than the number of units demolished; and (3)
repeals the one-for-one replacement requirement.
Section 116. Repeal of Family Investment Centers; Voucher System for
Public Housing
Subsection (a) amends section 22 of 1937 Act by repealing
the program for Family Investment Centers and replacing it with
a new section involving a voucher system for public housing.
Section 22, as amended, allows PHAs to develop a plan to
convert public housing units to a system of tenant-based
assistance and requires PHAs to develop a conversion assessment
within 2 years of enactment. The assessment must include a cost
analysis, market analysis, and impact analysis on the affected
community, and a plan to achieve such a conversion if the PHA
intends to take any action with regard to converting any
developments to vouchers. HUD is allowed to waive the
assessment requirement for some projects or classes of projects
or allow for a streamlined assessment.
In addition, the new section 22 allows a PHA to implement a
conversion plan: (1) if the conversion assessment demonstrates
that the conversion will principally benefit the residents,
PHA, and community; (2) if the costs of conversion do not
exceed the costs of continued operation as public housing; and
(3) if the plan is not inconsistent with the data available to
HUD or with the PHA's assessment plan. The section also states
that the funds to provide tenant-based assistance shall be
added to the housing assistance payment contract.
Subsection (b) includes a savings provision for any
contracts under the Family Investment Centers program entered
into prior to date of enactment of this Act.
Section 117. Repeal of Family Self-Sufficiency; Homeownership
Opportunities
Subsection (a) amends section 23 of the 1937 Act by
repealing the Family Self-Sufficiency Program and replacing it
with a new section allowing PHAs to sell their units to their
residents and allowing PHAs to provide assistance to residents
to purchase a home. Section 23, as amended: (1) includes
purchase requirements that require residents to occupy the
property as their principal residence and to certify that they
will occupy the property for one year and require PHAs to
recapture 75 percent of the proceeds if a family sells the
property within one year; (2) allows PHAs to use sale proceeds
for low-income housing consistent with their public housing
agency plan; and (3) allows PHAs to use operating or capital
funds or other earned income to provide assistance to residents
to purchase a principal residence, including a residence other
than public housing.
Subsection (b) contains conforming amendments and
subsection (c) makes it clear that the amendments made by this
section do not affect any contracts under the Family Self-
Sufficiency Program entered into prior to the date of enactment
of this Act.
Section 118. Revitalizing Severely Distressed Public Housing
This section rewrites section 24 of the 1937 Act involving
the revitalization of several distressed public housing. This
new simplified program allows HUD to provide competitive grants
to PHAs for demolition of obsolete projects, site
revitalization and replacement housing. The competition will be
based on: (1) the need for additional resources; (2) the need
for affordable housing; (3) the supply of other housing
available and affordable to voucher holders; and (4) the local
impact of the proposed revitalization.
This section sunsets the grant program on October 1, 1999.
Section 119. Mixed-Finance and Mixed-Ownership Projects
This section adds a new section 30 to the 1937 Act to allow
PHAs to own, operate, or assist in the development of mixed-
finance projects. The proportion of public housing units to
total units should equal the proportion of public housing
financial commitment to total financial commitments in the
mixed-finance project.
The new section 30 permits a mixed-finance development to
elect to have all units taxable, or for the PHA to elect that
the public housing units that are part of the mixed-finance
development be exempt from local taxes. Where a PHA is unable
to fulfill its contractual obligations to a mixed-finance
development as a result of a reduction in appropriations for
capital or operating funds, this section allows the entity that
owns or operates the development to deviate (under regulations
developed by HUD) from otherwise applicable restrictions
governing public housing rents and income eligibility to
preserve the viability of the units.
Section 120. Conversion of Distressed Public Housing to Tenant-Based
Assistance
This section adds a new section 31 to the 1937 Act that
requires, to the extent provided for in appropriations, each
PHA, in consultation with residents and the local government,
to identify public housing units that are distressed and
develop a plan for removal of such units over a five-year
period. PHAs must use guidelines based on criteria established
by the National Commission on Severely Distressed Public
Housing in determining which projects are distressed.
Subsection (a) requires a PHA to provide displaced families
with notification of the elimination of the distressed units,
any necessary counseling, and actual and reasonable relocation
costs. PHAs are also required to offer each displaced family
comparable housing that meets housing quality standards
including tenant-based assistance, project-based assistance, or
units in another public housing project. Where the PHA fails to
adequately develop or implement a plan for removing distressed
properties from the public housing inventory, this section
requires HUD to take actions to ensure the removal of such
units.
Subsection (b) repeals parallel language to this section in
section 202 of the Departments of Veteran Affairs and Housing
and Urban Development, and Independent Agencies Appropriations
Act of 1996.
Section 121. Public Housing Mortgages and Security Interests
This section adds a new section 32 to the 1937 Act to allow
PHAs to mortgage or grant a security interest in any project
where approved by HUD. Each mortgage or security interest must
have a term that is consistent with the terms of private loans
in the market area and that does not exceed 30 years, and have
conditions that are consistent with conditions to which private
loans in the market area are subject.
Section 122. Linking Services to Public Housing Residents
This section adds a new section 33 to the 1937 Act to allow
HUD to make grants to PHAs, resident management corporations,
resident councils, or resident organizations for supportive
services and resident empowerment activities to assist public
housing residents in becoming economically self-sufficient.
Grants may be used for: physical improvements to a public
housing project in order to provide space for supportive
services for residents; the provision of service coordinators;
the provision of services related to work readiness; economic
and job development; resident management and resident
participation activities; and other activities designed to
improve the economic self-sufficiency of residents.
The new section 33 requires that $25,000,000 of the amount
appropriated for this program be made available to resident
councils, resident organizations, and resident management
corporations.
Section 123. Prohibition on Use of Amounts
This section states that no HUD funds to carry out this Act
may be used to indemnify contractors or subcontractors of the
government against costs associated with judgments of
infringement of intellectual property rights.
Section 124. Pet Ownership
Section 124 creates a new Section 35 of the 1937 Act.
Subsection (a) permits a resident of a dwelling unit in
federally assisted housing to own or keep one or more common
household pets in a dwelling unit, subject to the reasonable
requirements of the owner of the federally assisted rental
housing, if the resident maintains each pet responsibly and in
accordance with applicable rules and regulations. Reasonable
requirements may include requiring the payment of a nominal
fee, a pet deposit, or both, to cover the operating costs to
the project relating to the presence of pets.
Subsection (b) prohibits discrimination against any person
in connection with admission to, or continued occupancy of, any
unit by reason of ownership of common household pets.
Subsection (c) defines ``federally assisted rental
housing'' as any public housing project or any rental housing
receiving project-based rental assistance.
Subsection (d) provides that this section shall take effect
upon the date of effectiveness of regulations issued by the
Secretary pursuant to notice and comment rulemaking.
Title II--Section 8 Rental Assistance
Section 201. Merger of the Certificate and Voucher Programs
This section amends section 8(o) of the 1937 Act to create
a single tenant-based assistance program from the section 8
existing certificate and voucher programs. Some of the features
of the new voucher program include the following:
(1) Payment standard. Public housing agencies (PHA) are
permitted to set a payment standard above 90 percent of HUD's
fair market rents (FMR) and below 110 percent of the FMR. PHAs
may also request to set a payment standard outside the 90 to
110 percent of FMR range if approved by HUD. HUD is also
required to monitor rent burdens and any payment standard that
results in a significant percentage of section 8 assisted
families paying more than 30 percent of adjusted income for
rent. Based on this review, HUD could require the PHA to modify
its payment standard.
(2) Tenant rent contribution. The monthly amount of tenant
rent contribution would be set at the greatest of (a) 30
percent of the family's monthly adjusted income, (b) 10 percent
of the family's monthly income, or (c) if a family is receiving
welfare assistance, the portion of the welfare assistance that
is designated to meet housing costs. This section also deletes
the ``shopping incentive'' provision which allows families to
pay less rent if they lease a unit renting for less than the
payment standard.
(3) Rent burden cap. If the tenant wishes to lease a unit
where the initial rent on a unit exceeds the payment standard,
tenants may pay the difference up to 40 percent of their
adjusted income.
(4) Program eligibility. Program eligibility for the new
voucher program would include very low-income families,
previously assisted families, low-income families that meet
eligibility criteria specified by the PHA, families that
qualify under a homeownership program, and certain families
that reside in properties eligible for preservation incentives.
(5) Family income review. PHAs are required to conduct
reviews of assisted family incomes. These reviews must be
conducted at least annually.
(6) Local preferences. PHAs are permitted to establish
local preferences consistent with their public housing agency
plan. (Federal preferences are repealed in Section 202.)
(7) ``Endless lease.'' The amendment eliminates the
``endless lease'' rule, which prevents an owner from
terminating a section 8 tenancy unless the owner institutes
court action. The new voucher program: (a) permits PHAs to
approve section 8 leases for a term of not less than one year
unless a shorter lease term will improve the tenant's housing
opportunities and if such shorter terms are considered to be
acceptable local market practice; (b) allows owners to use a
standard market lease that is used in the locality by the
owner; and (c) clarifies that a section 8 tenant would have
access to remedies under State, tribal, and local law on the
same basis as any other tenant.
(8) Inspection of Units. PHAs are required to inspect
section 8 units at least annually to ensure that the units meet
decent and safe housing quality standards (HQS) established by
HUD, the local housing agency, or local codes, whichever are
stricter and do not severely restrict housing choice. The
provision also requires that HUD designate another entity to
make inspections and rent determinations for units that are
owned by PHAs.
(9) Vacated units. The bill would ensure that subsidy
payments are not being made during any time after an assisted
family vacates a unit.
(10) Rent reasonableness. PHAs are required to check for
rent reasonableness in the same way that they do under the
existing tenant-based programs. Families may also request PHA
assistance in negotiating a reasonable rent.
(11) Timely payments. PHAs are also required to make timely
payments of rent to owners or they could be subject to late
payment penalties in cases where PHAs are responsible for the
late payment and where late fees are permissible under local
law. In such cases, the penalties will be paid out of the PHA's
administrative fees.
(12) Manufactured housing. Rental assistance is still
permissible to families who own a manufactured home and rent
the property on which the home is located.
(12) Project-basing. As currently allowed under the
existing certificate program, PHAs will have the discretion to
project-base up to 15 percent of their section 8 vouchers.
(13) Witness relocation. HUD, in consultation with the HUD
Office of Inspector General, is required to provide section 8
assistance to relocate families under a witness relocation
program.
Section 202. Repeal of Federal Preferences
This section repeals Federal preferences for all section 8
programs--both project-based and tenant-based.
Section 203. Portability
The State/metropolitan portability feature is expanded to a
national level. Also, discretion is provided to HUD for
creating a pool to reimburse PHAs which lose vouchers to
tenants leaving their jurisdictions. The reimbursement pool
will allow the receiving PHA to absorb the new vouchers without
a loss to the sending PHA. This section also prohibits assisted
households from receiving a voucher if they have moved out of
their unit in violation of a lease.
Section 204. Leasing to Voucher Holders
This section eliminates the ``take one, take all'' rule,
which requires owners to accept all section 8 tenants once they
have begun participating in the program.
Section 205. Homeownership Option
This section amends the current homeownership option
authority by allowing voucher holders to obtain homeownership
through shares in a cooperative housing development or through
a lease-purchase arrangement, whether or not the family is a
first-time homeowner. The provision also alters the assistance
formula for families receiving assistance for homeownership
which would make it comparable to the new formula for tenant-
based assistance. Further, PHAs would be allowed to contract
with a nonprofit entity to administer the program.
The bill also amends the law by allowing participation only
if the PHA determines that the families have sufficient
resources.
Section 206. Law Enforcement and Security Personnel in Public Housing
This section amends section 8 by permitting owners of
project-based section 8 housing properties to rent to police
officers and other security personnel.
Section 207. Technical and Conforming Amendments
This section repeals the 90-day notice requirement which
compels a landlord to provide a 90-day notice to HUD when the
landlord decides to terminate a section 8 contract. This
section also repeals the Moving to Opportunity demonstration
program authority and section 8(n)--the single room occupancy
authority.
Section 208. Implementation
This section requires that HUD use negotiated rulemaking
procedures to develop regulations that carry out the amendments
made by this Act.
Section 209. Definition
This section expands the term public housing agency for
purposes of the section 8 program to include entities that
serve multiple jurisdictions.
Section 210. Effective Date
This section provides that the amendments made by Title II
shall be effective not later than 1 year after the date of
enactment of this Act.
Section 211. Recapture and Reuse of Annual Contribution Contract
Project Reserves Under the Tenant-Based Assistance Program
This section would provide HUD with the authority to
recapture and reuse unspent section 8 contract reserves for
purposes of amending or renewing section 8 contracts.
Title III--Safety and Security in Public and Assisted Housing
Section 301. Screening of Applicants
This section provides that a family is ineligible for
Federally-assisted housing for three years if evicted by reason
of drug-related criminal activity or for a reasonable time (as
may be determined by the PHA) for other criminal activity. In
addition, this section requires a PHA or owner of Federally-
assisted housing to establish standards prohibiting admission
of persons or families who the PHA or owner determines to be
using a controlled substance or who the PHA or owner has
reasonable cause to believe that such household member's
illegal use (or pattern of use) of a controlled substance or
abuse of alcohol (or pattern of abuse) of alcohol would
interfere with the health, safety, or right of peaceful
enjoyment of the premises by other residents. In order for a
PHA to make that determination, this section also allows a PHA,
under certain conditions, to require each person applying for
housing assistance to sign a release authorizing the PHA to
obtain written information related to the applicant's current
illegal use of a controlled substance or abuse of alcohol.
A PHA or owner of Federally-assisted housing may deny
admission to any applicant household that, during a reasonable
period prior to applying for housing assistance, had engaged in
any criminal activity. A PHA or owner may require that an
applicant household prior to admission authorize the PHA to
obtain any relevant criminal records from the National Crime
Information Center, police departments, or other law
enforcement agencies.
Section 302. Termination of Tenancy and Assistance for Illegal Drug
Users and Alcohol Abusers
This section requires a PHA or owner of Federally-assisted
housing to establish safeguards and lease provisions allowing
termination of assistance to residents who the PHA or owner
determines to be engaging in the use of a controlled substance
or whose illegal use of a controlled substance interferes with
the health, safety, or right of peaceful enjoyment of the
premises by other residents.
Section 303. Lease Requirements
This section provides that leases for Federally-assisted
housing must contain provisions setting forth grounds for
termination that include criminal activity and activity which
threatens the health and safety of other residents.
Section 304. Availability of Criminal Records for Tenant Screening and
Eviction
This section provides that the National Crime Information
Center, police departments, state law enforcement agencies
designated as registration agencies under a state registration
program, or other law enforcement agencies shall provide to the
PHA upon its request information regarding the criminal
background of an adult applicant for housing assistance. An
applicant must be given an opportunity to dispute any such
information. PHAs may be charged a reasonable fee for provision
of the information.
Section 305. Definitions
This section sets forth the definitions of certain terms
used in this title.
Title IV--Miscellaneous Provisions
Section 401. Public Housing Flexibility in the CHAS
This section amends the 1990 National Affordability Housing
Act to require that the Comprehensive Housing Affordability
Strategy (CHAS) include a description of how the jurisdiction
will help address the needs of public housing and coordinate
with the local public housing agency plan. It also requires the
CHAS to include a description of how the CHAS will help address
the needs of public housing and is consistent with the local
public housing agency plan.
Section 402. Determination of Income Limits
This section excludes Rockland County, NY from the New York
City metropolitan area for purposes of determining the income
level of low-income families.
Section 403. Demolition of Public Housing
This section permits PHAs to be eligible for Capital and
Operating Funds for certain public housing units demolished
under the authority of section 415 of the Department of Housing
and Urban Development--Independent Agencies Appropriations Act
of 1988.
Section 404. Technical Correction of Public Housing Agency Opt-Out
Authority
This section makes a technical correction to clarify when
PHAs may opt-out of compliance with section 214 of the Housing
and Community Development Act of 1980.
Section 405. Review of Drug Elimination Program Contracts
This section requires the Secretary to review all security
contracts awarded by grantees under the Public and Assisted
Housing Drug Elimination Act of 1990 that are public housing
agencies that own or operate more than 4,500 public housing
units. The Secretary shall determine whether such contractors
have complied with anti-discrimination laws and regulations and
shall submit the findings of the investigation in a report to
Congress.
Section 406. Sense of Congress
This section expresses the sense of Congress that PHAs
should consider preferences for individuals who are victims of
domestic violence when establishing preferences for the
selection of residents.
Section 407. Other Repeals
This section repeals several programs, studies, or
demonstrations that are either merged into the Capital or
Operating Funds, expired, inactive, or already completed
including: the Public Housing One-Stop Perinatal Services
Demonstration, Public Housing Childhood Development Program,
Indian Housing Childhood Development Program, Public Housing
MINCS Demonstration, Public Housing Energy Efficiency
Demonstration, Public and Assisted Housing Youth Sports
Programs, Report Regarding Fair Housing Objectives, and Special
Projects for Elderly and Handicapped Families.
CHANGES IN EXISTING LAW (CORDON RULE)
In the opinion of the Committee, it is necessary to
dispense with the requirements of paragraph 12 of rule XXVI of
the Standing Rules of the Senate in order to expedite the
business of the Senate.
REGULATORY IMPACT STATEMENT
In accordance with paragraph 11 of rule XXVI of the
Standing Rules of the Senate, the Committee makes the following
statement regarding the regulatory impact of the bill.
On balance, the Committee believes that the various
provisions of the reported measure would reduce regulatory and
administrative burdens. In addition to significant programmatic
reforms, the Committee bill would sunset all existing rules,
regulations or orders issued under the United States Housing
Act of 1937, unless they are re-proposed by the Department of
Housing and Urban Development (HUD).
Title I of the bill would consolidate approximately 10
separate programs into two formula block grants, and it
provides for substantially less Federal regulation of the day-
to-day management and operation of well-run housing
authorities. It reduces or eliminates numerous program
requirements that public housing authorities have found
particularly burdensome or costly, and which frequently have
required up-front approval by HUD. These include providing
increased flexibility in the use of public housing
modernization funds, repeal of certain requirements for the
demolition and disposition of public housing; and repeal of the
Family Self-Sufficiency Program, which is an unfunded mandate.
Title II of the bill would consolidate two parallel rental
assistance programs and streamline program requirements for
both public housing authorities and private rental property
owners.
The Committee does create a new public housing agency
planning process, and requires most housing authorities to
conduct a one-time assessment of the costs of administering
each of their public housing developments. The bill also would
establish a community service requirement for some public
housing residents, which housing authorities would be required
to administer. However, the Committee believes that any cost
that might be incurred in administering this program could be
offset by having participating residents themselves administer
it.
COST ESTIMATE
In accordance with rule XXVI(11)(a), the Committee submits
the following estimate of the costs of S. 462 prepared by the
Congressional Budget Office.
U.S. Congress,
Congressional Budget Office,
Washington, DC, May 23, 1997.
Senator Alfonse M. D'Amato,
Chairman, Committee on Banking, Housing, and Urban Affairs, U.S.
Senate, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for S. 462, the Public
Housing Reform and Responsibility Act of 1997.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Carla Pedone.
Sincerely,
June E. O'Neill, Director.
Enclosure.
S. 462--The Public Housing Reform and Responsibility Act of 1997
Summary: S. 462 would significantly change the programs
through which the bulk of federal low-income housing assistance
is currently provided. It would amend or delete many sections
of the United States Housing Act of 1937, which authorizes the
public housing program and the section 8 rental assistance
program. S. 462 also would consolidate a host of public housing
programs and merge two rental assistance programs.
CBO estimates that S. 462 would authorize appropriations
totaling $107 billion over the fiscal years 1998-2002, assuming
that all expiring section 8 contracts would be renewed and that
all programs authorized by the bill would be funded at the 1997
level adjusted for inflation. If programs affected by the bill,
except section 8, are assumed to be funded at the 1997 level,
without adjustment for inflation, the authorizations in the
bill would total an estimated $104 billion over the five-year
period. CBO estimates that enactment of this bill would result
in direct spending savings of $62 million over the period.
Therefore, pay-as-you-go procedures would apply.
S. 462 contains several intergovernmental mandates as
defined in the Unfunded Mandates Reform Act of 1995 (UMRA), but
CBO estimates that the total cost of these mandates would not
exceed the threshold established under that act ($50 million in
1996, adjusted annually for inflation). The bill contains other
provisions that could have a significant budgetary impact on
public housing agencies, but they would not be considered
mandates as defined in UMRA. The bill contains one private-
sector mandate, but that requirement would have virtually no
net cost to private-sector entities.
Estimated cost to the Federal Government: The estimated
budgetary impact of this bill is summarized in Tables 1 and 2.
Table 1 shows the authorizations in the bill increasing
gradually from $17.6 billion for 1998 to $24.9 billion for
2002, assuming that the programs authorized without specific
funding levels receive appropriations equal to the 1997 funding
adjusted for inflation and that all expiring section 8
contracts are renewed. Total outlays for the affected programs
would increase from about $23 billion in 1997 to $26 billion in
2002, including the outlays in those years from sums
appropriated in previous years. As a basis for comparison, the
table also includes the spending totals under the CBO baseline
with adjustments for inflation, which, pursuant to the Budget
Enforcement Act of 1990, is constructed assuming that all
expiring contracts under section 8 of the Housing Act of 1937
are renewed.
Table 2 shows similar figures but assumes no adjustments
for inflation, either in the funding authorized by the bill or
in the corresponding programs in the CBO baseline. (Funding
levels in Table 2 allow for renewal of all expiring section 8
contracts, which are adjusted for inflation.)
The costs of this legislation fall within budget function
600 (income security).
Basis of estimate: CBO assumes that the bill would be
enacted by October 1, 1997, and that the necessary sums would
be appropriated by the beginning of each fiscal year.
Public housing
Title I of the bill would revise the statutes governing the
federal public housing program. The existing program is
administered by local public housing agencies (PHAs) that own
and manage low-income housing projects. The activities of the
PHAs are supervised closely by the Secretary of the U.S.
Department of Housing and Urban Development (HUD).
Under the program established by the bill, funding for most
public housing programs would be merged into one of two funds,
a capital fund and an operating fund. In addition, S. 462 would
revise the current grant program for revitalizing severely
distressed public housing and authorize it for fiscal years
1998 and 1999. The bill would also authorize a revised
supportive services program. PHAs would receive funding in the
form of block grants and would be given greater flexibility in
managing public housing. With certain constraints, a PHA could
choose to use its grant to cover operating expenses or capital
needs.
TABLE 1.--ESTIMATED COST TO THE FEDERAL GOVERNMENT WITH INFLATION ADJUSTMENTS
----------------------------------------------------------------------------------------------------------------
By fiscal years, in millions of dollars
-----------------------------------------------------
1997 1998 1999 2000 2001 2002
----------------------------------------------------------------------------------------------------------------
Spending for Housing Assistance Under Current Law:
Budget Authority...................................... 10,625 0 0 0 0 0
Estimated Outlays..................................... 23,253 18,960 11,422 9,010 6,996 5,510
Proposed Changes--Subject to Appropriation:
Estimated Authorizations of Appropriations............ 0 17,558 19,661 21,364 23,191 24,924
Estimated Outlays..................................... 0 5,030 13,410 15,940 18,452 20,605
Proposed Changes--Direct Spending:
Estimated Budget Authority............................ 0 0 0 0 0 0
Estimated Outlays..................................... 0 -8 -13 -13 -14 -14
Spending for Housing Assistance Under S. 462:
Budget Authority/Estimated Authorizations............. 10,625 17,558 19,661 21,364 23,191 24,924
Estimated Outlays..................................... 23,253 23,982 24,819 24,937 25,434 26,101
MEMORANDUM
CBO Baseline with Inflation Adjustments:
Budget Authority...................................... 10,625 17,545 19,751 22,071 23,932 25,697
Estimated Outlays..................................... 23,253 23,901 24,469 24,930 25,497 26,259
----------------------------------------------------------------------------------------------------------------
Note.--This table does not include spending for HUD's administrative expenses.
TABLE 2.--ESTIMATED COST TO THE FEDERAL GOVERNMENT WITHOUT INFLATION ADJUSTMENTS
----------------------------------------------------------------------------------------------------------------
By fiscal years, in millions of dollars
-----------------------------------------------------
1997 1998 1999 2000 2001 2002
----------------------------------------------------------------------------------------------------------------
Spending for Housing Assistance Under Current Law:
Budget Authority...................................... 10,625 0 0 0 0 0
Estimated Outlays..................................... 23,253 18,960 11,422 9,010 6,996 5,510
Proposed Changes--Subject to Appropriation:
Estimated Authorizations of Appropriations \1\........ 0 17,372 19,256 20,772 22,359 23,831
Estimated Outlays..................................... 0 4,989 13,263 15,655 17,996 19,946
Proposed Changes--Direct Spending:
Budget Authority...................................... 0 0 0 0 0 0
Estimated Outlays..................................... 0 -8 -13 -13 -14 -14
Spending for Housing Assistance Under S. 462:
Budget Authority/Estimated Authorizations............. 10,625 17,372 19,256 20,772 22,359 23,831
Estimated Outlays..................................... 23,253 23,941 24,672 24,652 24,978 25,442
MEMORANDUM
CBO Baseline without Inflation Adjustments:
Budget Authority \1\.................................. 10,625 17,360 19,345 21,433 23,037 24,526
Estimated Outlays..................................... 23,253 23,864 24,333 24,655 25,056 25,609
----------------------------------------------------------------------------------------------------------------
\1\ Funding levels include renewals of all expiring Section 8 contracts with inflation adjustments.
Note.--This table does not include spending for HUD's administrative expenses.
S. 462 also would authorize PHAs to demolish or otherwise
dispose of distressed public housing projects and to provide
tenant-based aid in situations where the cost of maintaining a
project as public housing over its remaining useful life would
exceed the cost of tenant-based assistance over that period.
Over the long term, this provision would reduce combined
outlays of the capital grant, operating grant, and voucher
programs. The net impact on spending patterns of these programs
in the short term is uncertain, however, because the
characteristics of the distressed projects vary. In some cases,
the combined costs of removing a project from the inventory and
of issuing vouchers may be greater than the short-run cost of
operating a project as public housing; in other cases, they may
be less.
Of the amounts that would be appropriated for the capital
fund, the Secretary would be allowed to retain up to 2 percent
for a headquarters reserve fund. This fund would be used for
needs resulting from natural disasters or other unforeseen
events. Based on the Secretary's previous use of reserve funds,
we assume that the Secretary would retain all of the funds
allowed and that they would be disbursed within two years.
S. 462 does not specify the amounts of funding authorized
for the future years. Based on 1997 appropriations totaling
about $6 billion, CBO estimates that S. 462 would authorize
appropriations over the 1998-2002 period of $30.7 billion,
assuming adjustment for inflation, or $28.4 billion, assuming
that 1997 funding levels are continued without adjustment for
inflation (see Tables 3 and 4).
Section 8 rental assistance
S. 462 would authorize additional tenant-based section 8
assistance to replace aid for tenants currently being assisted
under certain other housing programs or to help them relocate
elsewhere, for example, under the witness protection program.
The bill does not, however, specify the amount of the
authorization. Therefore, this estimate reflects the 1997
appropriation of $240 million, projected with and without
adjustments for inflation.
Because the bill would modify certain aspects of the
existing section 8 project-based program, CBO assumes that the
bill would implicitly authorize funding for the renewal of
expiring section 8 contracts. Under CBO's baseline assumptions,
without the amendments to the section 8 programs contained in
S. 462, the total authorization over the five-year period would
amount to an estimated $52.1 billion for renewing tenant-based
aid and $18.2 billion for project-based aid. The bill has
several provisions in Title I and Title II that would change
the cost of renewals, and, in some cases, affect spending from
previous appropriations. The net impact of those provisions
over the five-year period would be a reduction in the estimated
authorizations for renewals of $0.5 billion and a direct
spending savings of $62 million. The major program changes and
their estimated budgetary impact are discussed below (see Table
5).
TABLE 3.--ESTIMATED AUTHORIZATIONS BY PROGRAM TYPE WITH INFLATION ADJUSTMENTS
----------------------------------------------------------------------------------------------------------------
By fiscal years, in millions of dollars
--------------------------------------------
1998 1999 2000 2001 2002
----------------------------------------------------------------------------------------------------------------
SPENDING SUBJECT TO APPROPRIATION
Public Housing Spending
Capital Fund:
Estimated Authorization Level.............................. 2,254 2,316 2,377 2,441 2,508
Estimated Outlays.......................................... 0 248 818 1,382 1,870
Secretary Reserve:
Estimated Authorization Level.............................. 51 53 54 55 57
Estimated Outlays.......................................... 26 52 53 55 56
Operating Fund:
Estimated Authorization Level.............................. 3,229 3,317 3,406 3,497 3,593
Estimated Outlays.......................................... 1,550 3,239 3,359 3,449 3,542
Severly Distressed Public Housing Grants:
Estimated Authorization Level.............................. 564 579 0 0 0
Estimated Outlays.......................................... 0 11 52 159 262
Supportive Services:
Estimated Authorization Level.............................. 62 63 65 67 68
Estimated Outlays.......................................... 2 24 45 62 65
Total--Public Housing:
Estimated Authorization Level.............................. 6,161 6,328 5,902 6,061 6,225
Estimated Outlays.......................................... 1,578 3,575 4,327 5,106 5,795
Section 8 Aid:
New Tenant-Based Aid:
Estimated Authorization Level.............................. 246 253 259 266 274
Estimated Outlays.......................................... 16 237 253 260 267
Renewals of Tenant-Based Aid:
Estimated Authorization Level.............................. 8,218 9,363 10,669 11,487 12,362
Estimated Outlays.......................................... 2,763 7,483 8,537 9,513 10,256
Renewals of Project-Based Aid:
Estimated Authorization Level.............................. 1,999 2,858 3,672 4,507 5,182
Estimated Outlays.......................................... 673 2,136 2,922 3,694 4,424
Amendments:
Estimated Authorization Level.............................. 923 948 973 999 1,026
Estimated Outlays.......................................... 0 0 0 0 0
Changes in Cost of Subsidies:\1\
Estimated Authorization Level.............................. 12 -89 -111 -128 -145
Estimated Outlays.......................................... 0 -21 -99 -121 -137
Total--Section 8:
Estimated Authorization Level.............................. 11,397 13,333 15,462 17,130 18,699
Estimated Outlays.......................................... 3,452 9,835 11,613 13,346 14,810
Total:
Estimated Authorization Level.................................. 17,558 19,661 21,364 23,191 24,924
Estimated Outlays.............................................. 5,030 13,410 15,940 18,452 20,605
----------------------------------------------------------------------------------------------------------------
\1\ See Table 5 for details.
TABLE 4.--ESTIMATED AUTHORIZATIONS BY PROGRAM TYPE WITHOUT INFLATION ADJUSTMENTS
----------------------------------------------------------------------------------------------------------------
By fiscal years, in million of dollars
--------------------------------------------
1998 1999 2000 2001 2002
----------------------------------------------------------------------------------------------------------------
SPENDING SUBJECT TO APPROPRIATION
Public Housing Spending:
Capital Fund:
Estimated Authorization Level.............................. 2,205 2,205 2,205 2,205 2,205
Estimated Outlays.......................................... 0 243 794 1,323 1,764
Secretary Reserve:
Estimated Authorization Level.............................. 50 50 50 50 50
Estimated Outlays.......................................... 25 50 50 50 50
Operating Fund:
Estimated Authorization Level.............................. 3,145 3,145 3,145 3,145 3,145
Estimated Outlays.......................................... 1,510 3,114 3,145 3,145 3,145
Severely Distressed Public Housing Grants:
Estimated Authorization Level.............................. 550 550 0 0 0
Estimated Outlays.......................................... 0 11 50 154 252
Supportive Services:
Estimated Authorization Level.............................. 60 60 60 60 60
Estimated Outlays.......................................... 2 23 43 58 60
Total--Public Housing:
Estimated Authorization Level.............................. 6,010 6,010 5,460 5,460 5,460
Estimated Outlays.......................................... 1,537 3,441 4,082 4,730 5,271
Section 8 Aid:
New Tenant-Based Aid:
Estimated Authorization Level.............................. 240 240 240 240 240
Estimated Outlays.......................................... 16 231 240 240 240
Renewals of Tenant-Based Aid: \1\
Estimated Authorization Level.............................. 8,212 9,337 10,611 11,381 12,194
Estimated Outlays.......................................... 2,763 7,476 8,510 9,453 10,148
Renewals of Project-Based Aid: \1\
Estimated Authorization Level.............................. 1,999 2,858 3,672 4,507 5,182
Estimated Outlays.......................................... 673 2,136 2,922 3,694 4,424
Amendments:
Estimated Authorization Level.............................. 900 900 900 900 900
Estimated Outlays.......................................... 0 0 0 0 0
Changes in Cost of Subsidies: \2\
Estimated Authorization Level.............................. 12 -89 -111 -128 -145
Estimated Outlays.......................................... 0 -21 -99 -121 -137
Total--Section 8:
Estimated Authorization Level.............................. 11,362 13,246 15,312 16,899 18,371
Estimated Outlays.......................................... 3,452 9,822 11,573 13,266 14,675
Total:
Estimated Authorization Level.............................. 17,372 19,256 20,772 22,359 23,831
Estimated Outlays.......................................... 4,989 13,263 15,655 17,996 19,946
----------------------------------------------------------------------------------------------------------------
\1\ Funding levels include renewals of all expiring Section 8 contacts with inflation adjustments.
\2\ See Table 5 for details.
Minimum Rents. Section 103 would allow PHAs to set minimum
rents up to $25 per month for the section 8 programs that they
administer, which include the tenant-based programs and the
section 8 moderate rehabilitation program. Under the section 8
program, tenants generally pay 30 percent of their adjusted
income for rent. Based on data provided by HUD, CBO estimates
that this provision would affect less than 6 percent of
assisted families and would increase their rent contributions
on average by about $15 per month. Federal outlays for section
8 assistance would drop by an estimated $58 million over five
years (see Table 5). Of that amount, $12 million would be
savings in outlays flowing from previously appropriated funds
and thus would be considered direct spending.
Disregard of Certain Earnings. Section 103 also stipulates
a disregard of certain earned income in the determination of
rent contributions for families with tenant-based assistance.
The provision would only apply to aid funded from 1998 and
later years' budget authority. Earnings by any adult who had
not been employed during the previous year would not be counted
as income for a period of 18 months. After that period, any
rent increase would be phased in over three years. Because
adults who would have worked anyway would receive additional
assistance, subsidies would increase for those households.
Based on census data CBO estimates that about 6 percent of
assisted families would receive additional subsidies initially.
To the extent that the provision would induce additional adults
to become employed, the cost of renewing their section 8
assistance would be reduced after the first 18 months of
employment. Although it is difficult to predict how many
households would respond to such an incentive, CBO assumed for
this estimate that about 3 percent of assisted families
(excluding the elderly) would respond initially, and more in
subsequent years. CBO estimates that on balance this provision
would increase net outlays of tenant-based assistance by $94
million over the five-year period.
Disallowance of Rent Reductions. Section 111 would disallow
a reduction in rent payments for families with tenant-based
section 8 assistance, if their income fell as a result of
noncompliance with welfare or public assistance program rules.
Based on recent findings by the General Accounting Office and
data from the Department of Health and Human Services and from
HUD, CBO estimates that about 11 percent of families whose
benefits are terminated or reduced because of sanctions also
receive tenant-based section 8 assistance. CBO estimates that
the average loss of income is between $1,200 and $1,300 per
year. As a result, federal outlays would be reduced by about
$30 million over the 1998-2002 period, of which $3 million
would be direct spending savings.
Elimination of Shopping Incentive. Section 201 would merge
the two current forms of tenant-based assistance--the
certificate and voucher programs--into one revised voucher
program. Generally, under the current certificate program, the
government pays the difference between a unit's rent and 30
percent of the tenant's adjusted income, provided thatthe
unit's rent does not exceed the so-called Fair Market Rent. Under the
voucher program, the government pays the difference between a payment
standard, which is similar to the Fair Market Rent, and 30 percent of
the tenant's income. If the tenant chooses a unit that rents for less
or more than the payment standard, the tenant may pocket (under the
``shopping incentive provision'') or must pay, respectively, the
difference between that rent and the payment standard. The revised
voucher program would combine features of both programs by, among other
things, eliminating the shopping incentive but allowing tenants to rent
units with rents above the payment standard. Assuming that the
revisions would be implemented as of October 1, 1998, CBO estimates
that the elimination of the shopping incentive would reduce federal
outlays by $0.4 billion over the 1999-2002 period.
Repeal of Preference Rules. Section 202 would repeal
federal preference rules for admitting new recipients of
section 8 assistance, both for tenant-based and project-based
programs. Current rules give priority to applicants on waiting
lists who have the most severe housing problems and who
typically have much lower incomes than other eligible families.
For tenant-based assistance, the bill would permit PHAs to
establish local preferences consistent with their public
housing plan. CBO is uncertain whether and how that provision
would change the cost of tenant-based assistance because it
would depend on the priorities of the individual PHAs. CBO
expects that private owners of projects with section 8 project-
based assistance would have incentives to offer a portion of
their newly vacant units to working families with somewhat
higher incomes to serve as role models and possibly make such
projects more desirable to live in. Because such tenants would
pay a larger share of the rent, spending for federal subsidies
would decline by an estimated $84 million over the five-year
period, of which $47 million would be direct spending.
HUD's administrative costs
CBO expects that, on balance, enacting this bill could
result in administrative savings to the federal government in
the long run but we cannot estimate those savings because we do
not have sufficient information as to how HUD would implement
the changes. Those savings are expected to result from
consolidating various programs and streamlining their
requirements, as well as shifting certain program oversight
activities from HUD to well-run PHAs.
Certain provisions of the bill, however, would impose
additional administrative responsibilities on HUD, such as
reviewing the various types of plans that PHAs must submit,
providing technical assistance, and developing distribution
formulas for the two consolidated grant programs. In the near
term, HUD might also incur some additional costs to implement
the revised voucher program.
TABLE 5.--ESTIMATED CHANGES IN COST OF SUBSIDIES
----------------------------------------------------------------------------------------------------------------
By fiscal years, in millions of dollars
--------------------------------------------
1998 1999 2000 2001 2002
----------------------------------------------------------------------------------------------------------------
SPENDING SUBJECT TO APPROPRIATION
Minimum Rent up to $25:
Estimated Authorization Level.................................. -5 -11 -12 -12 -12
Estimated Outlays.............................................. -2 -8 -12 -12 -12
Disregard of Certain Earnings:
Estimated Authorization Level.................................. 20 30 23 15 8
Estimated Outlays.............................................. 4 33 27 18 12
No Rent Decrease in Cases of Noncompliance with Welfare Rules:
Estimated Authorization Level.................................. -3 -5 -6 -7 -8
Estimated Outlays.............................................. -1 -5 -6 -7 -8
Eliminate Shopping Incentive:
Estimated Authorization Level.................................. 0 -97 -106 -109 -113
Estimated Outlays.............................................. 0 -39 -102 -109 -113
Repeal Federal Preference Rules:
Estimated Authorization Level.................................. 0 -6 -9 -14 -21
Estimated Outlays.............................................. 0 -3 -6 -11 -17
Total Changes:
Estimated Authorization Level.................................. 12 -89 -111 -128 -145
Estimated Outlays.............................................. 0 -21 -99 -121 -137
DIRECT SPENDING
Minimum Rent up to $25:
Estimated Budget Authority..................................... 0 0 0 0 0
Estimated Outlays.............................................. -4 -5 -2 -1 0
No Rent Decrease in Cases of Noncompliance with Welfare Rules:
Estimated Budget Authority..................................... 0 0 0 0 0
Estimated Outlays.............................................. -1 -1 -1 0 0
Repeal Federal Preference Rules:
Estimated Budget Authority..................................... 0 0 0 0 0
Estimated Outlays.............................................. -3 -7 -10 -13 -14
Total Changes:
Estimated Budget Authority..................................... 0 0 0 0 0
Estimated Outlays.............................................. -8 -13 -13 -14 -14
----------------------------------------------------------------------------------------------------------------
Pay-as-you-go considerations: The Balanced Budget and
Emergency Deficit Control Act of 1985 specifies pay-as-you-go
procedures for legislation affecting direct spending or
receipts through fiscal year 1998. CBO estimates that the
changes to the section 8 program in S. 462 would result in
direct spending savings of $8 million in 1998.
Estimated impact on State, local, and tribal governments:
S. 462 contains several intergovernmental mandates defined in
UMRA. CBO estimates that the total cost of these mandates--
primarily preemptions of state and local laws--would not be
significant. The bill also contains a number of other
provisions that are conditions of receiving federal financial
assistance, and while these conditions are not mandates as
defined in UMRA, their enactment would have a significant
budgetary impact on public housing agencies. CBO estimates that
compliance with these new conditions would result in additional
costs to PHAs totaling $65 million in the first year and about
$35 million annually thereafter. These costs would be at least
partially offset by increased rental income that would result
from new flexibility given to PHAs. S. 462 would not impose
mandates or have other budgetary impacts on tribal governments.
Mandates
A number of provisions in S. 462 would preempt state and
local laws by allowing HUD, or a receiver of a PHA, to be
exempt from certain state and local laws and by requiring a
PHA's Board of Directors to include a public housing resident.
Such preemptions are mandates under UMRA. CBO estimates that
their enactment would not require state or local governments to
expend additional funds and that any loss of fee or penalty
revenue from these provisions would be small.
Other provisions in the bill would require public agencies
to provide information to PHAs. First, the bill would require
police departments and other law enforcement agencies to
provide PHAs with information regarding the criminal conviction
records of adult applicants for federally assisted housing. CBO
expects that PHAs would make as many as 100,000 new requests
for information. A survey of police departments indicates that
the cost of providing such information generally ranges from
$10 to $20 a request. In total, CBO estimates that the
incremental annual costs of this mandate would be less than $2
million. The bill would allow police departments to charge a
reasonable fee for any information provided, and CBO expects
that affected agencies would charge such fees to cover
additional costs.
Second, the bill would require various types of medical
facilities and treatment centers to provide PHAs with
information regarding the illegal use of controlled substances
or abuse of alcohol by adult applicants for housing assistance.
CBO has no basis upon which to estimate how often PHAs would
make such request of public medical facilities. However, the
bill would allow these facilities to charge a reasonable fee
for any information provided, and CBO expects that the
facilities would charge such fees to cover additional costs.
Other impacts
The bill would impose several new requirements on PHAs.
These requirements are conditions of receiving assistance from
HUD, and thus are not mandates under UMRA. They include
establishing and enforcing community service work requirements
for adult residents of public housing and preparing more
detailed public housing agency plans. The bill also contains
provisions that would provide PHAs additional administrative
flexibility, including the authority to increase rental income
over current levels.
PHAs would be required to implement and administer
community service work requirements for adult residents of
public housing. (Alternatively, adult residents could choose to
participate in self-sufficiency programs.) PHAs would also be
encouraged to enter into cooperative agreements with state and
local welfare agencies to provide information about assistance
programs. Under the bill, HUD would evaluate PHAs on how well
they coordinate, promote, or provide effective programs that
promote the economic self-sufficiency of public housing
residents.
This provision would apply to all public housing or tenant-
based section 8 residents receiving assistance with certain
exceptions. Among those excluded from the work requirements and
self-sufficiency agreements would be the elderly, disabled, and
those complying with (or excluded from) work requirements under
other public assistance programs. Based on information from
HUD, CBO expects that these new requirements would apply to
less than one-third of the households in these programs
(800,000 out of 2.7 million).
Information from public housing organizations indicates
that PHAs, particularly small ones, would require additional
staff to comply with this new requirement. (Many large PHAs
already have similar programs.) In total, CBO estimates that in
order to comply with this provision PHAs would have to hire
more than 1,100 new personnel and that additional costs would
total about $35 million per year (assuming salary and benefits
of $30,000 per full-time staff member).
S. 462 would also require each PHA to submit a Public
Housing Agency Plan to HUD. PHAs currently provide much of the
information that would be required by HUD in one form or
another. PHAs would be required to submit some new information
and to aggregateexisting information from various reports into
a new document (possibly in a new format). CBO expects that most PHAs
would comply with the requirement by hiring consultants or additional
staff with costs varying between $5,000 and $10,000 per agency. Smaller
housing agencies would likely incur costs at the higher end of the
range because of limited staff resources. More than two-thirds of the
nation's approximately 3,400 PHAs fall into this group. CBO estimates
total compliance costs to be approximately $30 million in the first
year. A portion of these costs could continue into future years if PHAs
hire permanent staff to meet these requirements.
Other provisions in S. 462 would provide PHAs with
additional flexibility in administering their programs. One of
these provisions would address the income mix of public housing
residents and would allow PHAs to increase their rental income
by selecting tenants for admission with slightly higher income
levels than are allowed under current law. Information
available to CBO from public housing organizations indicates
that increases in rental income to PHAs would be modest, at
least in the short term.
Estimated impact on the private sector: Section 301 of the
bill would impose a requirement on physicians as well as
private and public medical centers, clinics, and other types of
medical facilities. In particular, at the request of a public
housing agency, those entities would be required to provide the
PHA with information relating to a housing applicant's illegal
use of controlled substances and their abuse of alcohol. The
physicians and other entities would be able to charge the PHAs
a fee for this information, however, so the net cost of the
mandate to private-sector entities would be virtually zero.
Estimate prepared by: Federal Costs: Carla Pedone and
Susanne Mehlman. Impact on State, Local, and Tribal
Governments: Marc Nicole. Impact on the Private Sector: Bruce
Vavrichek.
Estimate approved by: Robert A. Sunshine, Deputy Assistant
Director for Budget Analysis.
ADDITIONAL VIEWS OF SENATOR ALLARD
I believe that the Public Housing Reform and Responsibility
Act is sound legislative policy. It contains provisions that
allow for necessary reforms to public housing programs and aims
to redistribute the power out of the federal government.
I have proposed an amendment to the legislation that moves
more power away from bureaucracies. My amendment would give
states the option to take over their housing programs--similar
to the welfare reform that was enacted last Congress. States
would receive funds in the form of block grants for public
housing and housing assistance. States would then have the
option of converting their housing program to vouchers or some
other method of housing assistance for low income families.
Vouchers are very popular, which is demonstrated by the 1.5
million families who are currently using vouchers or
certificates. Vouchers empower individuals and would promote
competition within Public Housing Authorities and within the
community, thereby lowering costs and improving conditions for
the residents. Vouchers or other alternatives can be less
expensive than the current public housing program; they can
save the government money, and improve conditions for the
tenants.
The public housing system is in need of dramatic
restructuring and reform. I will continue to work with the
Committee toward this end.
Wayne Allard.
ADDITIONAL VIEWS OF SENATOR ENZI
I appreciate the consideration of the amendments I proposed
to this Public Housing Reform bill. This bill includes several
important provisions that will put rural and urban Public
Housing Agencies on equal footing. The added provisions address
the uniqueness of rural housing problems.
I feel we have made S. 462 more flexible with the
incorporation of my amendment that allows the small, rural PHAs
some exceptions to the resident requirement on the Board of
Directors. The rural Public Housing Authorities that have less
than 300 units need the flexibility to form their plan
according to their own needs. This addition to the bill was
needed because some small housing authorities are unable to
find a resident who will sit as a member on the Board of
Directors because of either resident disinterest or the high
resident turnover rate in some developments.
I am also pleased to see included in the managers amendment
the resident option to either work or participate in self-
sufficiency programs. This option allows the residents the
opportunity to acquire the job skills necessary to enter the
job market. Conforming the exceptions of this requirement to
the existing welfare laws should also make it simpler and less
burdensome for the PHAs to enforce.
The factor that enhances a community the most is
homeownership. With homeownership comes responsibility and
pride in the community. Since the ultimate goal for public
housing residents is the ownership of a home, then we should
include more opportunities for the residents to achieve that
goal. I believe we can tie the community service requirement to
the purchase of a home for public housing residents. A
homeownership credit would be an incredible incentive for
residents to comply with the service requirement, and we could
reward residents with an increased credit for their
``overtime'' service if they work more than the requirement.
This ``sweat equity'' approach would give residents a reason to
comply with the service requirement and take care of their
property. The service performed by the public housing residents
would then have a two-fold purpose of contributing to the goals
of the local community and assisting the residents in
homeownership. I urge the Chairman to continue to pursue means
by which public housing residents can achieve the goal of
homeownership.
I also want to see the committee address the minimum rent
requirement so it will not be an appropriations issue every
year. The Subcommittee on Housing Opportunity and Community
Development has requested that HUD provide information on the
impact an increased minimum rent has on those in public
housing. HUD has not provided the subcommittee with this impact
information yet, but evidence exists that a 25 dollar minimum
rent can hinder the operations of a public housing agency. The
Brooke Amendment can burden a public housing agency in a high
energy cost state like Wyoming. If the PHAs are not allowed to
set minimum rent above $25, their survival capabilities are
limited since they are required by the Brooke Amendment to pay
the utilities if the resident cannot afford it. This can
actually result in a negative rent for the Public Housing
Agencies.
We have made great progress towards less burdensome
regulations and requirements with this housing bill. Let's not
stop here. I feel there is more to be done to provide the
incentive and ability for residents to move from dependency to
homeownership.
Michael B. Enzi.
ADDITIONAL VIEWS OF SENATOR REED
As we enter an era in which the federal government is
limited in its ability to provide or assist in the provision of
affordable housing, we must ensure the integrity of existing
programs that assist low- and moderate-income citizens. The
Community Development Block Grant (CDBG) program is one such
example.
Since its establishment in 1974, the CDBG program has
provided federal block grants to states and local communities
for investment in community development initiatives to benefit
low- and moderate-income individuals. Specifically, CDBG funds
have been used for housing rehabilitation, public works
projects, economic development, public services, acquisition
and clearance of property, and urban renewal. Recent studies
have shown that CDBG has achieved its intended purpose--between
FY93 and FY96, 93.7% of CDBG funds were used on activities
benefitting people with incomes below 80% of the area median.
Despite the tremendous success of the CDBG program, it has
been documented that some states and localities have used
program funds for an unintended purpose--to steal jobs from
other areas, a practice commonly referred to as ``job
pirating.'' States and local governments can use CDBG money to
pirate jobs in a number of ways. They can offer low or zero
percent loans to corporations, which are subsidized with CDBG
funds. They can also pay for the costs of site preparation,
street improvements, or lighting.
Perhaps the most egregious example of job pirating occurred
in Milwaukee, Wisconsin, where it was revealed that Briggs &
Stratton, an engine manufacturer, used $855,000 in CDBG money
to subsidize the expansion of plants in Missouri and Kentucky
which led to the relocation of 2000 jobs. In another example,
$500,000 in CDBG funds were used to subsidize the relocation of
an athletic helmet manufacturing plant from Knoxville,
Tennessee to Salem, Illinois, resulting in the loss of 50 jobs.
The most disturbing aspect of the job pirating issue is
that money is being shifted away from the intended
beneficiaries--low- and moderate-income people--to corporations
that are not in need of a subsidy. In the era of NAFTA, where
many manufacturing jobs are being moved abroad, we cannot
afford to allow our states to use federal community development
money to subsidize the movement of precious manufacturing jobs
from one state to another. Federal community development money
should not be allowed to subsidize a ``race to the bottom.''
In the 104th Congress, bipartisan legislation was
introduced in the House and Senate to prohibit localities from
using CDBG funds to subsidize job relocation. This legislation
followed the recommendation of the White House Conference on
Small Business which called on Congress to ban the use of
federal funds for luring jobs from one area to another. This
legislation would also have made the CDBG program consistent
with every single other federal economic development grant
program, each of which has anti-piracy provisions.
As the Senate prepares to consider S. 462 on the floor, I
strongly urge my colleagues to adopt provisions prohibiting the
use of CDBG monies for job pirating. Such provisions will
ensure that CDBG funds reach communities that are most in need
of assistance and will provide parity with other federal grant
programs that prohibit piracy. This issue is of particular
urgency as the federal government continues to reduce
assistance to low-income communities, and I hope my colleagues
will be compelled to support my efforts to include anti-piracy
provisions in S. 462.
Jack Reed.