[House Report 108-165]
[From the U.S. Government Publishing Office]



108th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 1st Session                                                    108-165

======================================================================



 
    HOPE VI PROGRAM REAUTHORIZATION AND SMALL COMMUNITY MAINSTREET 
                  REJUVENATION AND HOUSING ACT OF 2003

                                _______
                                

 June 19, 2003.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

  Mr. Oxley, from the Committee on Financial Services, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 1614]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Financial Services, to whom was referred the 
bill (H.R. 1614) to reauthorize the HOPE VI program for 
revitalization of severely distressed public housing and to 
provide financial assistance under such program for main street 
revitalization or redevelopment projects in smaller communities 
to support the development of affordable housing for low-income 
families in connection with such projects, and for other 
purposes, having considered the same, report favorably thereon 
with an amendment and recommend that the bill as amended do 
pass.

                                CONTENTS

                                                                   Page
Amendment........................................................     2
Purpose and Summary..............................................     4
Background and Need for Legislation..............................     4
Hearings.........................................................     7
Committee Consideration..........................................     8
Committee Votes..................................................     8
Committee Oversight Findings.....................................     8
Performance Goals and Objectives.................................     8
New Budget Authority, Entitlement Authority, and Tax Expenditures     8
Committee Cost Estimate..........................................     9
Congressional Budget Office Cost Estimate........................     9
Federal Mandates Statement.......................................    10
Advisory Committee Statement.....................................    11
Constitutional Authority Statement...............................    11
Applicability to Legislative Branch..............................    11
Section-by-Section Analysis......................................    11
Changes in Existing Law Made by the Bill, as Reported............    13

                               Amendment

  The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``HOPE VI Program Reauthorization and 
Small Community Mainstreet Rejuvenation and Housing Act of 2003''.

SEC. 2. HOPE VI PROGRAM REAUTHORIZATION.

  (a) Selection Criteria.-- Section 24(e)(2) of the United States 
Housing Act of 1937 (42 U.S.C. 1437v(e)(2)) is amended--
          (1) by striking the matter preceding subparagraph (A) and 
        inserting the following:
          ``(2) Selection criteria.--The Secretary shall establish 
        criteria for the award of grants under this section and shall 
        include among the factors--'';
          (2) in subparagraph (B), by striking ``large-scale'';
          (3) in subparagraph (D)--
                  (A) by inserting ``and ongoing implementation'' after 
                ``development''; and
                  (B) by inserting ``, except that the Secretary may 
                not award a grant under this section unless the 
                applicant has involved affected public housing 
                residents at the beginning and during the planning 
                process for the revitalization program, prior to 
                submission of an application'' before the semicolon at 
                the end;
          (4) in subparagraph (H), by striking ``and'' at the end;
          (5) by redesignating subparagraph (I) as subparagraph (M); 
        and
          (6) by inserting after subparagraph (H) the following new 
        subparagraphs:
                  ``(I) the extent to which the applicant can commence 
                and complete the revitalization plan expeditiously;
                  ``(J) the extent to which the plan minimizes 
                temporary or permanent displacement of current 
                residents of the public housing site who wish to remain 
                in or return to the revitalized community and provides 
                for community and supportive services to residents 
                prior to any relocation;
                  ``(K) the extent to which the plan sustains or 
                creates more project-based housing units available to 
                persons eligible for public housing in markets where 
                there is demand for the maintenance or creation of such 
                units;
                  ``(L) the extent to which the plan gives to existing 
                residents priority for occupancy in dwelling units in 
                the revitalized community; and''.
  (b) Definition of Severely Distressed Public Housing.--Section 
24(j)(2)(A)(iii) of the United States Housing Act of 1937 (42 U.S.C. 
1437v(j)(2)(A)(iii)) is amended--
          (1) in subclause (I)--
                  (A) by inserting ``or very low-income elderly or non-
                elderly disabled persons'' before the first comma; and
                  (B) by striking ``or'' at the end;
          (2) in subclause (II), by inserting ``or'' after the 
        semicolon at the end; and
          (3) by inserting at the end the following new subclause:
                          ``(III) is lacking in sufficient appropriate 
                        transportation, supportive services, economic 
                        opportunity, schools, civic and religious 
                        institutions, and public services, resulting in 
                        severe social distress in the project;''.
  (c) Authorization of Appropriations.-- Paragraph (1) of section 24(m) 
of the United States Housing Act of 1937 (42 U.S.C. 1437v(m)(1)) is 
amended by inserting before the period at the end the following: ``and 
such sums as may be necessary for each of fiscal years 2004 and 2005''.
  (d) Extension of Program.-- Section 24(n) of the United States 
Housing Act of 1937 (42 U.S.C. 1437v(n)) is amended by striking 
``September 30, 2004'' and inserting ``September 30, 2005''.

SEC. 3. HOPE VI GRANTS FOR ASSISTING AFFORDABLE HOUSING THROUGH MAIN 
                    STREET PROJECTS.

  (a)  Purposes.--Section 24(a) of the United States Housing Act of 
1937 (42 U.S.C. 1437v(a)) is amended by adding after and below 
paragraph (4) the following:
``It is also the purpose of this section to provide assistance to 
smaller communities for the purpose of facilitating the development of 
affordable housing for low-income families that is undertaken in 
connection with a main street revitalization or redevelopment project 
in such communities.''.
  (b) Grants for Assisting Affordable Housing Developed Through Main 
Street Projects in Smaller Communities.--Section 24 of the United 
States Housing Act of 1937 (42 U.S.C. 1437v) is amended--
          (1) by redesignating subsection (n) as subsection (o); and
          (2) by inserting after subsection (m) the following new 
        subsection:
  ``(n) Grants for Assisting Affordable Housing Developed Through Main 
Street Projects in Smaller Communities.--
          ``(1) Authority and use of grant amounts.--The Secretary may 
        make grants under this subsection to smaller communities. Such 
        grant amounts shall be used by smaller communities only to 
        provide assistance to carry out eligible affordable housing 
        activities under paragraph (3) in connection with an eligible 
        project under paragraph (2).
          ``(2) Eligible project.--For purposes of this subsection, the 
        term `eligible project' means a project that--
                  ``(A) the Secretary determines, under the criteria 
                established pursuant to paragraph (3), is a main street 
                project;
                  ``(B) is carried out within the jurisdiction of 
                smaller community receiving the grant; and
                  ``(C) involves the development of affordable housing 
                that is located in the commercial area that is the 
                subject of the project.
          ``(3) Main street projects.--The Secretary shall establish 
        requirements for a project to be consider a main street project 
        for purposes of this section, which shall require that the 
        project--
                  ``(A) has as its purpose the revitalization or 
                redevelopment of a historic or traditional commercial 
                area;
                  ``(B) involves investment, or other participation, by 
                the government for, and private entities in, the 
                community in which the project is carried out; and
                  ``(C) complies with such historic preservation 
                guidelines or principles as the Secretary shall 
                identify to preserve significant historic or 
                traditional architectural and design features in the 
                structures or area involved in the project.
          ``(4) Eligible affordable housing activities.--For purposes 
        of this subsection, the activities described in subsection 
        (d)(1) shall be considered eligible affordable housing 
        activities, except that--
                  ``(A) such activities shall be conducted with respect 
                to affordable housing rather than with respect to 
                severely distressed public housing projects; and
                  ``(B) eligible affordable housing activities under 
                this subsection shall not include the activities 
                described in subparagraphs (B) through (F) or (J) 
                through (L) of subsection (d)(1).
          ``(5) Maximum grant amount.--A grant under this subsection 
        for a fiscal year for a single smaller community may not exceed 
        $1,000,000.
          ``(6) Contribution requirement.--A smaller community applying 
        for a grant under this subsection shall be considered an 
        applicant for purposes of subsection (c) (relating to 
        contributions by applicants), except that--
                  ``(A) such supplemental amounts shall be used only 
                for carrying out eligible affordable housing 
                activities; and
                  ``(B) paragraphs (1)(B) and (3) shall not apply to 
                grants under this subsection.
          ``(7) Applications and selection.--
                  ``(A) Application.--Pursuant to subsection (e)(1), 
                the Secretary shall provide for smaller communities to 
                apply for grants under this subsection, except that the 
                Secretary may establish such separate or additional 
                criteria for applications for such grants as may be 
                appropriate to carry out this subsection.
                  ``(B) Selection criteria.--The Secretary shall 
                establish selection criteria for the award of grants 
                under this subsection, which shall be based on the 
                selection criteria established pursuant to subsection 
                (e)(2), with such changes as may be appropriate to 
                carry out the purposes of this subsection.
          ``(8) Cost limits.--The cost limits established pursuant to 
        subsection (f) shall apply to eligible affordable housing 
        activities assisted with grant amounts under this subsection.
          ``(9) Inapplicability of other provisions.--The provisions of 
        subsections (g) (relating to disposition and replacement of 
        severely distressed public housing), (h) (relating to 
        administration of grants by other entities), and (i) (relating 
        to withdrawal of funding) shall not apply to grants under this 
        subsection.
          ``(10) Reporting.--The Secretary shall require each smaller 
        community receiving a grant under this subsection to submit a 
        report regarding the use of all amounts provided under the 
        grant.
          ``(11) Definitions.--For purposes of this subsection, the 
        following definitions shall apply:
                  ``(A) Affordable housing.--The term `affordable 
                housing' means rental or homeownership dwelling units 
                that--
                          ``(i) are made available for initial 
                        occupancy subject to the same rules regarding 
                        level of income and income mix as dwelling 
                        units in public housing projects assisted with 
                        a grant under this section; and
                          ``(ii) are subject to the same rules 
                        regarding occupant contribution toward rent or 
                        purchase and terms of rental or purchase as 
                        dwelling units in public housing projects 
                        assisted with a grant under this section.
                  ``(B) Smaller community.--The term `smaller 
                community' means a unit of general local government (as 
                such term is defined in section 102 of the Housing and 
                Community Development Act of 1974 (42 U.S.C. 5302)) 
                that--
                          ``(i) has a population of 30,000 or fewer; 
                        and
                          ``(ii)(I) is not served by a public housing 
                        agency; or
                          ``(II) is served by a single public housing 
                        agency, which agency administers 100 or fewer 
                        public housing dwelling units.''.
  (c) Annual Report.--Section 24(l) of the United States Housing Act of 
1937 (42 U.S.C. 1437v(l)) is amended--
          (1) in paragraph (3), by striking ``; and'' and inserting ``, 
        including a specification of the amount and type of assistance 
        provided under subsection (n);'';
          (2) by redesignating paragraph (4) as paragraph (5); and
          (3) by inserting after paragraph (3) the following new 
        paragraph:
          ``(4) the types of projects funded, and number of affordable 
        housing dwelling units developed with, grants under subsection 
        (n); and''.
  (d) Funding.--Section 24(m) of the United States Housing Act of 1937 
(42 U.S.C. 1437v(m)) is amended by adding at the end the following new 
paragraph:
          ``(3) Set-aside for main street housing grants.--Of the 
        amount appropriated pursuant to paragraph (1) for any fiscal 
        year, the Secretary shall provide up to 5 percent for use only 
        for grants under subsection (n).''.

                          Purpose and Summary

    H.R. 1614, the HOPE VI Program Reauthorization and Small 
Community Mainstreet Rejuvenation and Housing Act of 2003, will 
reauthorize the HOPE VI program for revitalization of severely 
distressed public housing and provide financial assistance 
under that program for main street revitalization or 
redevelopment projects in smaller communities to support the 
development of affordable housing for low-income families in 
connection with those projects.

                  Background and Need for Legislation

    In 1989, Congress created the National Commission on 
Severely Distressed Public Housing to examine and establish a 
National Action Plan to eradicate severely distressed public 
housing by the year 2000. The Urban Revitalization 
Demonstration (URD) program, or HOPE VI, was an outgrowth of 
the Commission.
    HOPE VI has been an important part of the transformation of 
public housing and very distressed communities since 1993. 
Under the program, public housing authorities (PHAs) receive 
grants and then partner with private entities to create mixed-
finance and mixed-income affordable housing that revitalizes 
and redevelops neighborhoods. A HOPE VI property is developed 
and operated very differently from traditional public housing. 
For example, PHAs must contribute 5 percent of the grant amount 
and tenants must meet strict eligibility requirements.
    Activities permitted under HOPE VI include, but are not 
limited to: (1) the capital costs of demolition, major 
reconstruction, rehabilitation and other physical improvements; 
(2) replacement housing and management improvements; (3) 
planning and technical assistance; and (4) implementation of 
community service programs and supportive services or the 
planning for such activities.
    The HOPE VI program was modified and extended in each 
annual appropriation act from FY 1994 through FY 1999. It was 
authorized through FY 2002 by section 535 of the Quality 
Housing and Work Responsibility Act of 1998 (QHWRA), which 
established a new section 24 of the 1937 Act. That 
authorization was extended through 2004 by the FY 03 omnibus 
budget appropriations act (public law 108-7).
    The HOPE VI program can point to many successes over the 
years. In fact, a February 2000 HUD report found that: ``(1) 
HOPE VI is achieving its goals of community building; (2) HOPE 
VI is showing impressive results in helping residents move from 
welfare to work; (3) HOPE VI is helping residents move into the 
economic mainstream; (4) HOPE VI is dramatically reducing crime 
and violence in public housing; (5) HOPE VI is reducing the 
isolation of public housing residents; and (6) HOPE VI is 
leveraging significant investments in community improvements.'' 
(HOPE VI, Community Building Makes a Difference). A subsequent 
HUD report found that ``* * * the HOPE VI program works to 
expand housing opportunity, improve housing quality, and 
generate interest in properties throughout the neighborhood 
that surround HOPE VI developments.'' (HOPE VI: Best Practices 
and Lessons Learned 1992-2002, June 2002). Finally, in November 
2002, GAO reported that leveraging has increased over the life 
of the HOPE VI program (Public Housing: HOPE VI Leveraging Has 
Increased, but HUD Has Not Met Annual Reporting Requirements 
(GAO-03-91)).
    However, several critical questions have been raised 
regarding the mission and the administration of the program. 
First, as enacted, the HOPE VI program was originally designed 
to focus on the problems inherent to large urban areas with 
severely distressed public housing. HOPE VI grants are to be 
used to create mixed-income properties that would not only 
provide low-income affordable housing but would serve to 
revitalize whole neighborhoods. Many housing advocates maintain 
that the emphasis on mixed-income properties has resulted in 
major displacements of low-income tenants.
    Second, given the HOPE VI program's urban focus, large PHAs 
have received a majority of the grants. In fact, out of the 
more than 2,600 public housing authorities across the country, 
only 135 have received HOPE VI grants. Smaller communities face 
many of the same affordable housing challenges. Yet, many small 
or medium size communities have no chance of receiving public 
housing funds and many small communities do not even have a 
public housing authority. These communities struggle with low 
income housing needs and often have a disproportionate number 
of low-income families. Consequently, many believe that it is 
time to include smaller public housing authorities as eligible 
recipients of HOPE VI funds.
    Third, the HOPE VI program has faced management and 
administrative challenges. For example, there has traditionally 
been slow-turnaround in dispersing HOPE VI funds and a 
significantportion of the awarded grant money ($2.1 million of 
the $4.5 billion awarded as of December 1, 2002) remains in the 
pipeline. Although many of the projects are advancing to the goal in an 
acceptable manner, to date, only 18 of approximately 165 projects have 
been completed. In an effort to resolve this problem, HUD has made 
several changes to the program to require PHAs to have private funding 
in place prior to receiving a grant award.
    Finally, a new question has been raised on whether public 
housing authorities should have a monopoly on HOPE VI funds and 
grants. Many of the smaller communities are not serviced by 
public housing authorities, yet they are facing many of the 
same housing affordability and availability needs.
    The new affordable housing challenges and the questions 
surrounding the administration and mission of the HOPE VI 
program have led to a general agreement that the program is in 
need of reform. Consequently, the Committee held several 
hearings focusing on housing issues (including the performance 
of the HOPE VI program) in the 107th Congress, and included 
significant reforms to the HOPE VI program in H.R. 3995, the 
Housing Affordability for America Act, considered in the 107th 
Congress.
    The reforms included in H.R. 3995 made small PHAs eligible 
for HOPE VI grants and improved the accountability and 
management of the program. H.R. 3995 also included a provision 
to make small communities wishing to revitalize their downtown 
mainstreet eligible recipients of HOPE VI funds if they are 
planning to incorporate affordable housing for low income 
families.
    This legislation was approved by the Committee on September 
17, 2002, but never considered by the full House. While H.R. 
3995 was not considered by the full House, the House did 
unanimously approve H.R. 5499, HOPE VI Program Reauthorization 
Act of 2002, which included most of the changes to HOPE VI 
incorporated in H.R. 3995. However, this legislation was not 
considered by the Senate and was not enacted.
    In the 108th Congress, the Subcommittee on Community 
Opportunity heard testimony from the Department of Housing and 
Urban Development and other witnesses at a hearing on April 29, 
2003, entitled ``Strengthening and Rejuvenating Our Nation's 
Communities and the HOPE VI Program''. At that hearing, HUD 
expressed many of the same concerns regarding the mission and 
administration of the HOPE VI program. The President's FY 2004 
does not include additional funding for the HOPE VI program. 
Rather than providing additional funds, the Administration 
maintains that HUD should focus on dispersing existing HOPE VI 
funds, and that there are more efficient and effective ways to 
leverage funds and build affordable housing. Not withstanding 
the fact that the Administration has not included funds for 
HOPE VI in its FY 2004 budget, the Committee notes that the 
Department of Housing and Urban Development has instituted a 
series of working sessions to consider the future of the HOPE 
VI program. In addition, the Administration continues to 
highlight and extol the many successful HOPE VI projects across 
the country.
    H.R. 1614 reauthorizes HOPE VI through 2005 and expands the 
list of criteria for awarding grants under the program. These 
new criteria are designed to address the criticisms of major 
tenant displacement, and to expand the pool of public housing 
authorities eligible to receive HOPE VI grants to include small 
public housing authorities. In addition, H.R. 1614 includes 
technical and administrative changes designed to address the 
administrative concerns such as the slow-turnaround on HOPE VI 
grants.
    The bill also makes small communities eligible recipients 
of HOPE VI funds. HOPE VI grants would be awarded directly to 
small communities who would then partner with private 
developers and businesses to revitalize downtown areas. These 
projects include affordable housing as part of the project. 
This will help small towns with two problems--a lack of low 
income housing and degradation of historic mainstreet and town 
square areas. Under H.R. 1614, up to 5 percent of HOPE VI 
annual appropriations would be available for grants of up to $1 
million for affordable housing related to main street 
revitalization projects in small communities. The Committee 
believes that the impact of this investment will revitalize 
distressed rural downtowns and provide housing assistance where 
public and private investments have not kept pace with demand.
    Finally, H.R. 1614 includes provisions to address the 
administration of the program. The bill includes provisions 
that will make the program more cost effective and efficient by 
adding certain criteria that HUD must consider when evaluating 
grant applications. The FY 03 appropriation act included $574 
million for new HOPE VI grants. The cost effective measures 
included in H.R. 1614 could be applied to the $574 million if 
this bill is enacted quickly. Second, the bill authorizes such 
funds as may be necessary for the program for fiscal year 2004 
and 2005.
    As cited by the Administration, progress is often slow 
under the HOPE VI program. Much of this may be attributed to 
the fact that it takes time to put together a public-private 
financing package for a HOPE VI project. Next, large-scale 
demolition and construction must be completed in phases. 
Consequently, HOPE VI dollars often remain in the pipeline for 
extended periods of time. H.R. 1614 includes language that 
makes ``timeliness to commence and complete the plan'' a key 
criteria when determining grant awards.
    The HOPE VI program has been a valuable program in 
addressing many of this country's housing needs by revitalizing 
communities rather than simply building public housing. H.R. 
1614 reforms the HOPE VI program to ensure that smaller 
communities have access to important redevelopment and 
revitalization funds and makes the HOPE VI program a more cost 
effective and efficient program.

                                Hearings

    The Subcommittee on Housing and Community Opportunity held 
a hearing on April 29, 2003, at 2 p.m. entitled ``Strengthening 
and Rejuvenating Our Nation's Communities and the HOPE VI 
Program''. The hearing focused on the HOPE VI program and 
specifically, H.R. 1614, ``The HOPE VI Program Reauthorization 
and Small Community Main Street Rejuvenation and Housing Act of 
2003.'' The following witnesses testified: The Honorable 
Michael Liu, Assistant Secretary, Public and Indian Housing 
Department of Housing and Urban Development, Washington, DC; 
Ms. JoanWalker Frasier, President, Atlantic City Residents 
Advisory Board, Atlantic City, NJ and on behalf of Everywhere and Now 
Public Housing Residents Organizing Nationally Together (ENPHRONT); Ms. 
Renee Glover, Executive Director, Atlanta Public Housing, and 
President, Council of Large Public Housing Authorities, Washington, DC; 
Mr. Thom Guzman, Director, Iowa Downtown Resource Center, Des Moines, 
IA; Mr. Howard Husock, Alfred Taubman Center for State and Local 
Government, John F. Kennedy School of Government, Harvard University, 
Cambridge, MA; Mr. Kevin E. Marchman, Executive Director, National 
Organization of African-Americans in Housing, Washington, DC; Dr. Susan 
Popkin, Urban Institute, Washington, DC; Mr. Brian Tracey, Market 
Executive, Bank of America on behalf of the National Association of 
Affordable Housing Lenders, Washington, DC; Lisa Zukoff, Executive 
Director, Wheeling West Virginia Public Housing Authority on behalf of 
National Association of Housing and Redevelopment Officials, 
Washington, DC.

                        Committee Consideration

    The Subcommittee on Housing and Community Opportunity met 
in open session on May 1, 2003, and approved H.R. 1614 for full 
Committee consideration, as amended, by a voice vote.
    The Committee on Financial Services met in open session on 
May 21, 2003, and ordered H.R. 1614 reported to the House with 
a favorable recommendation, with an amendment, by a voice vote.

                            Committee Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the motion to report legislation and amendments thereto. No 
record votes were taken in conjunction with the consideration 
of this legislation. A motion by Mr. Oxley to report the bill 
to the House with a favorable recommendation was agreed to by a 
voice vote.

                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee made findings that are 
reflected in this report.

                    Performance Goals and Objectives

    Pursuant to clause 3(c)(4) of rule XIII of the Rules of the 
House of Representatives, the Committee establishes the 
following performance related goals and objectives for this 
legislation:
    H.R. 1614 makes changes to the HOPE VI program that will 
enhance HUD's ability to meet its strategic goals and mission 
as defined in its Annual Performance Plan; to increase 
homeownership opportunities; to promote decent affordable 
housing; and to strengthen communities. The HOPE VI program as 
reformed by H.R. 1614 will provide capital and resources to 
improve economic conditions in distressed communities; by 
expanding access to affordable rental housing and improving the 
physical quality and management accountability of public and 
assisted housing.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee adopts as its 
own the estimate of budget authority, entitlement authority, or 
tax expenditures or revenues contained in the cost estimate 
prepared by the Director of the Congressional Budget Office 
pursuant to section 402 of the Congressional Budget Act of 
1974.

                        Committee Cost Estimate

    The Committee adopts as its own the cost estimate prepared 
by the Director of the Congressional Budget Office pursuant to 
section 402 of the Congressional Budget Act of 1974.

                  Congressional Budget Office Estimate

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
provided by the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                      Washington, DC, May 23, 2003.
Hon. Michael G. Oxley,
Chairman, Committee on Financial Services,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 1614, the HOPE VI 
Program Reauthorization and Small Community Mainstreet 
Rejuvenation and Housing Act of 2003.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Chad Chirico.
            Sincerely,
                                       Douglas Holtz-Eakin,
                                                          Director.
    Enclosure.

H.R. 1614--HOPE VI Program Reauthorization and Small Community 
        Mainstreet Rejuvenation and Housing Act of 2003

    Summary: H.R. 1614 would reauthorize the HOPE VI 
Revitalization for Severely Distressed Public Housing Program 
and would authorize the appropriation of such sums as may be 
necessary for each of fiscal years 2004 and 2005. The bill also 
would require the Department of Housing and Urban Development 
(HUD) to provide up to 5 percent of amounts appropriated for 
the HOPE VI program to assist smaller communities in the 
development of affordable housing for low-income families that 
is undertaken in connection with a main street revitalization 
or redevelopment project.
    CBO estimates that the bill would authorize total 
appropriations of $1.2 billion over the 2004-2008 period, 
assuming that annual levels are adjusted to keep pace with 
inflation. CBO estimates that appropriation of those amounts 
would result in additional outlays of $553 million over that 
period. Enacting H.R. 1614 would non affect direct spending or 
revenues.
    H.R. 1614 contains non intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA) 
and would impose no costs on state, local, or tribal 
governments.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of H.R. 1614 is shown in the following table. 
The costs of this legislation fall within budget function 600 
(income security).

----------------------------------------------------------------------------------------------------------------
                                                                     By fiscal year, in millions of dollars--
                                                                 -----------------------------------------------
                                                                   2003    2004    2005    2006    2007    2008
----------------------------------------------------------------------------------------------------------------
                                        SPENDING SUBJECT TO APPROPRIATION

HOPE VI Spending Under Current Law:
    Budget Authority \1\........................................     570       0       0       0       0       0
    Estimated Outlays...........................................     508     542     546     481     373     264
Proposed Changes:
    HOPE VI Program Reauthorization:
        Estimated Authorization Level...........................       0     580     591       0       0       0
        Estimated Outlays.......................................       0       0      12      87     193     234
    HOPE VI Grants for Assisting Affordable Housing Through Main
     Street Projects:
        Estimated Authorization Level...........................       0      31      31       0       0       0
        Estimated Outlays.......................................       0       0       1       5      10      12
        Total Proposed Changes:
            Estimated Authorization Level.......................       0     610     622       0       0       0
            Estimated Outlays...................................       0       0      12      92     203     246
HOPE VI Spending Under H.R. 1614:
    Estimated Authorization Level \1\...........................     570     610     622       0       0       0
    Estimated Outlays...........................................     508     542     558     573     576     510
----------------------------------------------------------------------------------------------------------------
\1\ The 2003 level is the amount appropriated for that year for the HOPE VI program.

Basis of estimate

            Hope VI program reauthorization
    Section 2 would authorize the appropriation of such sums as 
necessary for the HOPE VI program in 2004 and 2005. In 2003, 
$570 million was appropriated for this program. Assuming 
appropriation of similar amounts after adjusting for inflation, 
CBO estimates that implementing this section would cost $526 
million through 2008.
            HOPE VI grants for assisting affordable housing through 
                    main street projects
    Section 3 would authorize HUD to provide up to 5 percent of 
the amount appropriated for the HOPE VI program for use by 
smaller communities (population below 30,000) for affordable 
housing activities in conjunction with the revitalization of a 
traditional commercial area. Assuming the appropriation of the 
necessary amounts, CBO estimates that implementing section 3 
would cost $28 million through 2008.
    Intergovernmental and private-sector impact: H.R. 1614 
contains no intergovernmental or private-sector mandates as 
defined in UMRA and would impose no costs on state, local, or 
tribal governments.
    Estimate prepared by: Federal Costs: Chad Chirico; Impact 
on State, Local, and Tribal Governments: Tori Heid Hall; and 
Impact on the Private Sector: Kate Bloniarz.
    Estimated approved by: Peter H. Fontaine, Deputy Assistant 
Director for Budget Analysis.

                       Federal Mandates Statement

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                   Constitutional Authority Statement

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee finds that the 
Constitutional Authority of Congress to enact this legislation 
is provided by Article 1, section 8, clause 1 (relating to the 
defense and general welfare of the United States), and clause 3 
(relating to the power to regulate foreign and interstate 
commerce).

                  Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

             Section-by-Section Analysis of the Legislation


Section 1. Short title

    This section provides the short title of the legislation, 
the ``HOPE VI Program Reauthorization and Small Community 
Mainstreet Rejuvenation and Housing Act of 2003''.

Section 2. HOPE VI Program reauthorization

    This section amends selection criteria in section 24(2) of 
the Housing Act of 1937 (42 U.S.C. 1437v(2)). First the bill 
changes the descriptive paragraph from ``selection criteria'' 
to simply criteria. Second, the bill strikes the word ``large-
scale'' from the type of projects that may be redeveloped or 
modernized, opening opportunity for smaller communities to gain 
access to the funds. Third, the bill adds on-going 
implementation to the development of revitalization programs, 
making follow-through possible.
    Fourth, the bill adds four criteria to be considered by 
HUD: (1) timeliness to commence and complete the plan, (2) 
minimization of displacement of current residents who want to 
stay or return to the project, (3) sustaining or creating more 
project-based housing units to satisfy the demand of eligible 
persons, and (4) giving priority to existing residents to 
occupy the revitalized community dwelling units.
    Fifth, the bill expands the definition of severely 
distressed housing to include those buildings or developments 
that include (1) very low-income elderly or non-elderly 
disabled persons, and (2) areas lacking sufficient affordable 
housing, transportation, supportive services, economic 
opportunity, schools, civic and religious institutions, and 
public services resulting in severe social distress. Finally, 
the bill requires that the Public Housing Authority (HOPE VI 
applicant) involve the affected public housing residents in the 
beginning and during the planning process
    The bill continues authorization in section 24(m) for FY 
2004 and 2005 and extends the sunset date in section 24(n) from 
September 30, 2004 to September 30, 2005.

Section 3. HOPE VI grants for assisting affordable housing through main 
        street projects

    The bill amends section 24(a) of the Housing Act of 1937 
(42 U.S.C. 1437v(a)) by adding the new purpose of assisting 
smaller communities to provide affordable low-income housing as 
part of main street revitalization or redevelopment projects.
    The bill adds a new section 24(n) to authorize main street 
grants to smaller communities for eligible affordable housing 
activities in the community's commercial area. The main street 
grant must be focused on joint public/private revitalization or 
redevelopment of a historic or traditional commercial area. 
Eligible activities must focus on affordable housing rather 
than severely distressed public housing. This limited focus 
precludes all of the eligible activities for severely 
distressed public housing in 42 U.S.C. 1437v(d) except: (a) 
architectural and engineering work; (b) economic development 
activities; (c) necessary management improvements; and (d) 
leveraging other resources. Also, severely distressed public 
housing requirements regarding disposition and replacement, 
administration by other entities, and withdrawal of funding do 
not apply to these grants.
    In addition, the bill provides that the maximum annual 
grant amount to a community may not exceed $1 million. To this 
end, the bill creates an annual set-aside of up to 5 percent of 
an authorized appropriation under 42 U.S.C. 1437v(n)(1). In 
addition, the small community contribution requirement must be 
devoted to carrying out eligible affordable housing activities. 
However, the supportive services condition and the exemption 
for tenant-based assistance or simple demolition in 42 U.S.C. 
1437v(c) do not apply to these grants. The Secretary of HUD 
must develop selection criteria for this type of affordable 
housing grant, including cost limits and reporting requirements 
for these activities. The bill modifies annual reports in 
section 24(l) of the Housing Act of 1937 (42 U.S.C. 1437v(l)) 
by changing the general reference to this section on severely 
distressed housing with a specific reference to the new 
subsection (n) created in (b) above and by adding to the report 
the types of projects and number of affordable units developed 
using grants under subsection (n) created in (b) above.
    The bill provides two definitions for this program. First, 
the term ``affordable housing'' is defined as rental or home-
ownership units that are made available for initial occupancy 
subject to the same rules regarding level of income and income 
mix as dwelling units in public housing projects assisted with 
a grant under this section; and are subject to the same rules 
regarding occupant contribution toward rent or purchase and 
terms of rental or purchase as dwelling units in public housing 
projects assisted with a grant under this section.
    Second, the term ``smaller community'' means a unit of 
general local government (as defined in section 102 of the 
Housing Community Development Act of 1974 (42 U.S.C. 5302)) 
that has a population of 30,000 or fewer; and is not served by 
a public housing agency; or is a single agency that administers 
100 or fewer public housing dwelling units.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

          SECTION 24 OF THE UNITED STATES HOUSING ACT OF 1937


SEC. 24. DEMOLITION, SITE REVITALIZATION, REPLACEMENT HOUSING, AND 
                    TENANT-BASED ASSISTANCE GRANTS FOR PROJECTS.

  (a) Purposes.--The purpose of this section is to provide 
assistance to public housing agencies for the purposes of--
          (1) * * *

           *       *       *       *       *       *       *

It is also the purpose of this section to provide assistance to 
smaller communities for the purpose of facilitating the 
development of affordable housing for low-income families that 
is undertaken in connection with a main street revitalization 
or redevelopment project in such communities.

           *       *       *       *       *       *       *

  (e) Application and Selection.--
          (1) * * *
          [(2) Selection criteria.--The Secretary shall 
        establish selection criteria for the award of grants 
        under this section and shall include such factors as--]
          (2) Selection criteria.--The Secretary shall 
        establish criteria for the award of grants under this 
        section and shall include among the factors--
                  (A) * * *
                  (B) the capability and record of the 
                applicant public housing agency, or any 
                alternative management entity for the agency, 
                for managing [large-scale] redevelopment or 
                modernization projects, meeting construction 
                timetables, and obligating amounts in a timely 
                manner;

           *       *       *       *       *       *       *

                  (D) the extent of involvement of residents, 
                State and local governments, private service 
                providers, financing entities, and developers, 
                in the development and ongoing implementation 
                of a revitalization program for the project, 
                except that the Secretary may not award a grant 
                under this section unless the applicant has 
                involved affected public housing residents at 
                the beginning and during the planning process 
                for the revitalization program, prior to 
                submission of an application;

           *       *       *       *       *       *       *

                  (H) the extent of the need for, and the 
                potential impact of, the revitalization 
                program; [and]
                  (I) the extent to which the applicant can 
                commence and complete the revitalization plan 
                expeditiously;
                  (J) the extent to which the plan minimizes 
                temporary or permanent displacement of current 
                residents of the public housing site who wish 
                to remain in or return to the revitalized 
                community and provides for community and 
                supportive services to residents prior to any 
                relocation;
                  (K) the extent to which the plan sustains or 
                creates more project-based housing units 
                available to persons eligible for public 
                housing in markets where there is demand for 
                the maintenance or creation of such units;
                  (L) the extent to which the plan gives to 
                existing residents priority for occupancy in 
                dwelling units in the revitalized community; 
                and
                  [(I)] (M) such other factors as the Secretary 
                considers appropriate.

           *       *       *       *       *       *       *

  ( j) Definitions.--For purposes of this section, the 
following definitions shall apply:
          (1) * * *
          (2) Severely distressed public housing.--The term 
        ``severely distressed public housing'' means a public 
        housing project (or building in a project)--
                  (A) that--
                          (i) * * *

           *       *       *       *       *       *       *

                          (iii)(I) is occupied predominantly by 
                        families who are very low-income 
                        families with children or very low-
                        income elderly or non-elderly disabled 
                        persons, are unemployed, and dependent 
                        on various forms of public assistance; 
                        [or]
                          (II) has high rates of vandalism and 
                        criminal activity (including drug-
                        related criminal activity) in 
                        comparison to other housing in the 
                        area; or
                          (III) is lacking in sufficient 
                        appropriate transportation, supportive 
                        services, economic opportunity, 
                        schools, civic and religious 
                        institutions, and public services, 
                        resulting in severe social distress in 
                        the project;

           *       *       *       *       *       *       *

  (l) Annual Report.--The Secretary shall submit to the 
Congress an annual report setting forth--
          (1) * * *

           *       *       *       *       *       *       *

          (3) the amount and type of financial assistance 
        provided under and in conjunction with this section[; 
        and], including a specification of the amount and type 
        of assistance provided under subsection (n);
          (4) the types of projects funded, and number of 
        affordable housing dwelling units developed with, 
        grants under subsection (n); and
          [(4)] (5) the recommendations of the Secretary for 
        statutory and regulatory improvements to the program 
        established by this section.
  (m) Funding.--
          (1) Authorization of appropriations.--There are 
        authorized to be appropriated for grants under this 
        section $574,000,000 for fiscal year 2003 and such sums 
        as may be necessary for each of fiscal years 2004 and 
        2005.

           *       *       *       *       *       *       *

          (3) Set-aside for main street housing grants.--Of the 
        amount appropriated pursuant to paragraph (1) for any 
        fiscal year, the Secretary shall provide up to 5 
        percent for use only for grants under subsection (n).
  (n) Grants for Assisting Affordable Housing Developed Through 
Main Street Projects in Smaller Communities.--
          (1) Authority and use of grant amounts.--The 
        Secretary may make grants under this subsection to 
        smaller communities. Such grant amounts shall be used 
        by smaller communities only to provide assistance to 
        carry out eligible affordable housing activities under 
        paragraph (3) in connection with an eligible project 
        under paragraph (2).
          (2) Eligible project.--For purposes of this 
        subsection, the term ``eligible project'' means a 
        project that--
                  (A) the Secretary determines, under the 
                criteria established pursuant to paragraph (3), 
                is a main street project;
                  (B) is carried out within the jurisdiction of 
                smaller community receiving the grant; and
                  (C) involves the development of affordable 
                housing that is located in the commercial area 
                that is the subject of the project.
          (3) Main street projects.--The Secretary shall 
        establish requirements for a project to be consider a 
        main street project for purposes of this section, which 
        shall require that the project--
                  (A) has as its purpose the revitalization or 
                redevelopment of a historic or traditional 
                commercial area;
                  (B) involves investment, or other 
                participation, by the government for, and 
                private entities in, the community in which the 
                project is carried out; and
                  (C) complies with such historic preservation 
                guidelines or principles as the Secretary shall 
                identify to preserve significant historic or 
                traditional architectural and design features 
                in the structures or area involved in the 
                project.
          (4) Eligible affordable housing activities.--For 
        purposes of this subsection, the activities described 
        in subsection (d)(1) shall be considered eligible 
        affordable housing activities, except that--
                  (A) such activities shall be conducted with 
                respect to affordable housing rather than with 
                respect to severely distressed public housing 
                projects; and
                  (B) eligible affordable housing activities 
                under this subsection shall not include the 
                activities described in subparagraphs (B) 
                through (F) or (J) through (L) of subsection 
                (d)(1).
          (5) Maximum grant amount.--A grant under this 
        subsection for a fiscal year for a single smaller 
        community may not exceed $1,000,000.
          (6) Contribution requirement.--A smaller community 
        applying for a grant under this subsection shall be 
        considered an applicant for purposes of subsection (c) 
        (relating to contributions by applicants), except 
        that--
                  (A) such supplemental amounts shall be used 
                only for carrying out eligible affordable 
                housing activities; and
                  (B) paragraphs (1)(B) and (3) shall not apply 
                to grants under this subsection.
          (7) Applications and selection.--
                  (A) Application.--Pursuant to subsection 
                (e)(1), the Secretary shall provide for smaller 
                communities to apply for grants under this 
                subsection, except that the Secretary may 
                establish such separate or additional criteria 
                for applications for such grants as may be 
                appropriate to carry out this subsection.
                  (B) Selection criteria.--The Secretary shall 
                establish selection criteria for the award of 
                grants under this subsection, which shall be 
                based on the selection criteria established 
                pursuant to subsection (e)(2), with such 
                changes as may be appropriate to carry out the 
                purposes of this subsection.
          (8) Cost limits.--The cost limits established 
        pursuant to subsection (f) shall apply to eligible 
        affordable housing activities assisted with grant 
        amounts under this subsection.
          (9) Inapplicability of other provisions.--The 
        provisions of subsections (g) (relating to disposition 
        and replacement of severely distressed public housing), 
        (h) (relating to administration of grants by other 
        entities), and (i) (relating to withdrawal of funding) 
        shall not apply to grants under this subsection.
          (10) Reporting.--The Secretary shall require each 
        smaller community receiving a grant under this 
        subsection to submit a report regarding the use of all 
        amounts provided under the grant.
          (11) Definitions.--For purposes of this subsection, 
        the following definitions shall apply:
                  (A) Affordable housing.--The term 
                ``affordable housing'' means rental or 
                homeownership dwelling units that--
                          (i) are made available for initial 
                        occupancy subject to the same rules 
                        regarding level of income and income 
                        mix as dwelling units in public housing 
                        projects assisted with a grant under 
                        this section; and
                          (ii) are subject to the same rules 
                        regarding occupant contribution toward 
                        rent or purchase and terms of rental or 
                        purchase as dwelling units in public 
                        housing projects assisted with a grant 
                        under this section.
                  (B) Smaller community.--The term ``smaller 
                community'' means a unit of general local 
                government (as such term is defined in section 
                102 of the Housing and Community Development 
                Act of 1974 (42 U.S.C. 5302)) that--
                          (i) has a population of 30,000 or 
                        fewer; and
                          (ii)(I) is not served by a public 
                        housing agency; or
                          (II) is served by a single public 
                        housing agency, which agency 
                        administers 100 or fewer public housing 
                        dwelling units.
  [(n)] (o) Sunset.--No assistance may be provided under this 
section after September 30, [2004] 2005.

                                
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