[House Report 110-106]
[From the U.S. Government Publishing Office]



110th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 1st Session                                                    110-106

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



 
         PRESERVATION APPROVAL PROCESS IMPROVEMENT ACT OF 2007

                                _______
                                

 April 23, 2007.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

 Mr. Frank of Massachusetts, from the Committee on Financial Services, 
                        submitted the following

                              R E P O R T

                        [To accompany H.R. 1675]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Financial Services, to whom was referred the 
bill (H.R. 1675) to suspend the requirements of the Department 
of Housing and Urban Development regarding electronic filing of 
previous participation certificates and regarding filing of 
such certificates with respect to certain low-income housing 
investors, having considered the same, report favorably thereon 
without amendment and recommend that the bill do pass.

                                CONTENTS

                                                                   Page
Purpose and Summary..............................................     2
Background and Need for Legislation..............................     2
Hearings.........................................................     2
Committee Consideration..........................................     2
Committee Votes..................................................     3
Committee Oversight Findings.....................................     3
Performance Goals and Objectives.................................     3
New Budget Authority, Entitlement Authority, and Tax Expenditures     3
Committee Cost Estimate..........................................     3
Congressional Budget Office Estimate.............................     3
Federal Mandates Statement.......................................     4
Advisory Committee Statement.....................................     4
Constitutional Authority Statement...............................     4
Applicability to Legislative Branch..............................     4
Earmark Identification...........................................     5
Section-by-Section Analysis of the Legislation...................     5

                          PURPOSE AND SUMMARY

    H.R. 1675, the Preservation Approval Process Improvement 
Act of 2007, removes regulatory hurdles in the approval process 
for participation in Department of Housing and Urban 
Development (HUD) affordable housing programs for privately 
owned multi-family rental housing. The approval process for 
participation in these programs is executed pursuant to the HUD 
2530 filing process, commonly known as the ``rule 2530.''
    The bill suspends a newly implemented mandatory electronic 
rule 2530 filing system at HUD until HUD eliminates unnecessary 
burdens and disincentives (many of which are caused by the 
electronic filing system) in proposed draft regulations for 
rule 2530, and HUD submits revised proposed regulations for 
rule 2530 to Congress. The bill also suspends disclosure 
requirements for passive investors participating in HUD multi-
family rental housing programs through the use of the low 
income housing tax credits.

                  BACKGROUND AND NEED FOR LEGISLATION

    The rule 2530 filing and approval process for participating 
in HUD multi-family rental housing programs has become over-
regulated. Under the 2530 process, ``owner'' participants in 
such programs, including the officers, directors, and 
stockholders of private companies participating, are required 
to submit, among other information, their names and social 
security number, as well as information on any prior 
participation with HUD, to assess whether these participants 
have previously carried out their obligations in constructing, 
maintaining, and operating the property built with HUD program 
money. The 2530 process also covers corporate ``passive 
investor'' participants who are not involved in the 
construction, maintenance, or operation of the property.
    When HUD instituted a mandatory electronic filing system 
for filing and processing the paperwork last summer, all 
flexibility in the process was lost. Owners and investors in 
HUD program deals have become caught up in a mandatory 
electronic filing system that prevents deals from moving 
forward by requesting too much information and not providing 
for any explanation of information that is not per se 
satisfactory. Passive investors with low income housing tax 
credits were investing less or not investing at all due to the 
onerous disclosure requirements--requirements that should only 
apply to the entities/people with actual operational control 
over the projects. H.R. 1675 addresses these two issues by 
suspending the mandatory electronic filing system until HUD 
works out the flaws and reports to Congress, and by suspending 
the disclosure requirements for passive investors.

                                HEARINGS

    No hearings were held on this legislation in the 110th 
Congress.

                        COMMITTEE CONSIDERATION

    The Committee on Financial Services met in open session on 
March 29, 2007, and ordered H.R. 1675 reported 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 with in conjunction with the 
consideration of this legislation. A motion by Mr. Frank 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 has held hearings and 
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. 1675, the Preservation Approval Process Improvement 
Act of 2007, reduces the regulatory burden for participation in 
HUD multi-family rental housing programs, with the goal to 
provide for an improved approval process (through rule 2530) 
for participants in HUD multi-family rental housing programs in 
order to preserve and create more affordable 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 new budget authority, entitlement 
authority, 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.

                        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, April 4, 2007.
Hon. Barney Frank,
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. 1675, the 
Preservation Approval Process Improvement Act of 2007.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Chad Chirico.
            Sincerely,
                                         Robert A. Sunshine
                                   (For Peter R. Orszag, Director).
    Enclosure.

H.R. 1675--Preservation Approval Process Improvement Act of 2007

    H.R. 1675 would suspend the Department of Housing and Urban 
Development's (HUD's) requirements regarding electronic filing 
of Previous Participation Certificates for certain investors in 
low-income housing. It would allow paper filing of such 
certificates until HUD revises its regulations for electronic 
filing.
    Previous Participation Certificates are completed by all 
parties applying to become principal investors in multifamily 
housing projects subsidized or insured by HUD. The certificates 
detail investors' previous involvement with multifamily 
projects subsidized or insured by HUD, the Department of 
Agriculture, or state and local housing finance agencies.
    CBO estimates that implementing H.R. 1675 would have no 
significant effect on the federal budget and would not affect 
direct spending or revenues.
    H.R. 1675 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act and 
would impose no costs on state, local, or tribal governments.
    The CBO staff contact for this estimate is Chad Chirico. 
This estimate was approved by Robert A. Sunshine, 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 
general welfare of the United States) and clause 3 (relating to 
the power to regulate 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.

                         EARMARK IDENTIFICATION

    H.R. 1675 does not contain any congressional earmarks, 
limited tax benefits, or limited tariff benefits as defined in 
clause 9 of rule XXI.

             SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION

Section 1. Short title

    This section establishes the short title of the bill, the 
``Preservation Approval Process Improvement Act of 2007''.

Section 2. Suspension of electronic filing requirement

    Requires the Department of Housing and Urban Development 
(``HUD'') to suspend the mandatory electronic filing system for 
participation in HUD multi-family rental housing programs 
(known as ``rule 2530'') until HUD addresses concerns regarding 
proposed regulations on rule 2530, and reports to Congress on 
changes to the proposed regulations.
    Requires HUD to suspend the disclosure requirements under 
rule 2530 for passive investors participating in HUD multi-
family rental housing programs through use of low income 
housing tax credits.