To make funding for the housing choice voucher program of the Department of Housing and Urban Development more reliable and predictable at the local level, and for other purposes.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Housing Choice Voucher Funding 
Fairness Act of 2006''.

SEC. 2. FUNDING ALLOCATION.

    Section 8 of the United States Housing Act of 1937 (42 U.S.C. 
1437f) is amended by adding at the end the following new subsections:
    ``(ff) Tenant-Based Contract Renewals.--
            ``(1) Allocation determination.--Notwithstanding any other 
        provision of law, for each calendar year funding cycle, the 
        Secretary shall allocate amounts made available for such 
        funding cycle for renewal of expiring annual contributions 
        contracts for tenant-based rental assistance for each public 
        housing agency (other than an agency with a special funding 
        agreement under the Moving To Work demonstration program) based 
        on the most recent leasing and cost data for such funding 
        cycle, as adjusted to reflect likely reasonable future costs--
                    ``(A) by applying local and regional annual 
                adjustment factors, as established for such calendar 
                year by the Secretary using the most recent data 
                available; and
                    ``(B) by applying such additional adjustments to 
                the most recent leasing and cost data for such funding 
                cycle, to compensate for changes in the number of 
                vouchers under lease or voucher costs, as the Secretary 
                may approve for a public housing agency, pursuant to 
                application by the agency and in accordance with 
                paragraph (3).
            ``(2) Most recent leasing and cost data.--For purposes of 
        this subsection, the term `most recent leasing and cost data' 
        means, for any calendar year funding cycle, leasing and per-
        voucher cost data for the most recent 12-month period for which 
        such verified data is available as of the time of the 
        allocation determination for such funding cycle, except that 
        such data shall not include data with respect to any units 
        leased in excess of the agency's authorized unit months. The 
        Secretary shall collect new leasing and per-voucher cost data 
        for use under this paragraph for each calendar year funding 
        cycle, which shall be verified data obtained from the Voucher 
        Management System.
            ``(3) Adjustments.--
                    ``(A) Authority.--Application and approval of 
                additional adjustments referred to in paragraph (1)(B) 
                for a calendar year shall be in accordance with such 
                limitations as the Secretary shall provide, which shall 
                include the use of objective and fair approval criteria 
                established by the Secretary that provide that--
                            ``(i) adjustment to the number of vouchers 
                        under lease shall be approved if a public 
                        housing agency demonstrates need for renewal of 
                        previously issued tenant protection vouchers or 
                        of other authorized vouchers to comply with 
                        court orders or to meet previous commitments to 
                        owners for project-based vouchers in projects 
                        ready for occupancy in such calendar year; and
                            ``(ii) adjustment of voucher costs shall be 
                        approved if an agency demonstrates--
                                    ``(I) rent increases;
                                    ``(II) utility rate changes;
                                    ``(III) known changes in subsidy 
                                costs due to enhanced vouchers under 
                                subsection (t), portability under 
                                subsection (r), increased average unit 
                                size, or approval of higher subsidy 
                                payments for people with disabilities 
                                due to reasonable accommodation;
                                    ``(IV) change in average tenant 
                                income, including adjustments needed 
                                for areas with seasonal employment if 
                                income variations are not adequately 
                                reflected in the period of data used by 
                                the Secretary; or
                                    ``(V) increase in number of 
                                families participating in the Family 
                                Self-Sufficiency program under section 
                                23 who are building escrow savings due 
                                to increased earnings.
                    ``(B) Denial of certain adjustments.--
                Notwithstanding subparagraph (A)(ii), the Secretary may 
                deny an adjustment referred to in subclause (I), (II), 
                or (III) of subparagraph (A)(ii) with respect to a 
                public housing agency if the agency is not complying 
                with subsection (o)(10)(A) (regarding rent 
                reasonableness).
                    ``(C) Amount of adjustments.--The aggregate amount 
                of such additional adjustments referred to in paragraph 
                (1)(B) for all public housing agencies for a calendar 
                year funding cycle shall not exceed 2 percent of the 
                total amount provided for such calendar year for 
                renewal of expiring annual contributions contracts for 
                tenant-based rental assistance. In any year in which 
                such total amount provided for such renewals is less 
                than the amount needed to provide each public housing 
                agency with the full adjustment amount determined for 
                the agency under this paragraph, each agency for which 
                such an adjustment is approved shall receive the same 
                percentage of the total amount approved for that 
                agency.
            ``(4) Proration.--To the extent necessary to stay within 
        the amount made available for a calendar year for renewal of 
        expiring annual contributions contracts for tenant-based rental 
        assistance, the Secretary shall prorate each public housing 
        agency's allocation otherwise established pursuant to this 
        subsection for such year, except that such proration shall not 
        apply to the renewal of enhanced vouchers under any provision 
        of law authorizing such assistance under section 8(t) of the 
        Act.
    ``(gg) Agency Reserves for Housing Choice Vouchers.--
            ``(1) Authority.--Each public housing agency may maintain a 
        reserve of amounts for tenant-based assistance in an amount not 
        to exceed four percent of the amount provided to the agency 
        under its annual contributions contract in effect at such time.
            ``(2) Annual replenishment.--To the extent that amounts are 
        expressly made available for use under this subsection, at the 
        beginning of the funding cycle for each calendar year, the 
        Secretary shall provide to the reserves of each public housing 
        agency an amount sufficient so that the aggregate amount of 
        such reserves are equal to two percent of the amount provided 
        to the agency under its annual contributions contract for such 
        calendar year.
            ``(3) Prohibition of recapture.--The Secretary may not 
        recapture any reserve amounts maintained by a public housing 
        agency pursuant to this subsection that do not exceed the four 
        percent limitation referred to in paragraph (1).
            ``(4) Use.--Amounts in the reserve of a public housing 
        agency under this subsection shall be available to the agency 
        for use for unmet needs for tenant-based rental assistance and 
        to support additional vouchers.
            ``(5) Use of recaptured reserve amounts.--Any reserve 
        amounts in excess of the four percent limitation referred to in 
        paragraph (1) that are recaptured by the Secretary shall be 
        available to the Secretary only for tenant-based contract 
        renewals under subsection (ff) and for replenishment of 
        reserves pursuant to paragraph (2) of this subsection.
    ``(hh) Budget Information.--The Secretary shall provide to the 
Congress, and make publicly available, the following information:
            ``(1) Budget information.--In the annual budget 
        justifications of the Department of Housing and Urban 
        Development, the Secretary shall include information 
        identifying, with respect to the upcoming calendar year funding 
        cycle for which such justifications are made--
                    ``(A) the number and percentage of authorized 
                vouchers leased in the most recent 12-month period for 
                which data is available and their average cost;
                    ``(B) the administrative fees earned by public 
                housing agencies in such most recent 12-month period;
                    ``(C) the funding allocated in such most recent 12-
                month period to public housing agencies with special 
                voucher funding agreements under the Moving to Work 
                demonstration program;
                    ``(D) the best estimate available for such upcoming 
                calendar year of the likely applicable weighted average 
                annual adjustment factor under subsection (ff)(1)(A); 
                and
                    ``(E) for such upcoming calendar year, an estimate 
                of adjustments required under subsection (ff)(1)(B) and 
                the number of vouchers that will be eligible for 
                renewal funding after the adjustments required by 
                subsection (ff)(3)(A)(i).
            ``(2) Updated information.--Not later than April 30 and 
        August 31 of each year, the Secretary shall provide updated 
        leasing and cost data and the final weighted average annual 
        adjustment factor under subsection (ff)(1)(A) that will be 
        applicable in the subsequent calendar year. In each year, the 
        Secretary shall provide revised updates, as appropriate, on a 
        timely basis before the enactment of the annual appropriations 
        Act for the Department of Housing and Urban Development.
            ``(3) Annual report.--The Secretary shall submit a report 
        annually on the extent to which public housing agencies are 
        providing the appropriate amount of subsidy for each family 
        assisted with tenant-based rental assistance, based on tenant 
        incomes and reasonable rents in the community and existing 
        policies of the Secretary. Each such report shall include data 
        from monitoring by the Quality Assurance Division of the 
        Department and shall compare current rates of correct subsidy 
        payments to such rates for the preceding year.
    ``(ii) Maximized Leasing.--
            ``(1) In general.--In each year, a public housing agency 
        may use amounts provided to the agency for tenant-based rental 
        assistance for such year to provide assistance on behalf of as 
        many families as the agency determines is possible, 
        notwithstanding the number of vouchers authorized for the 
        agency for such year for purposes of allocation of amounts.
            ``(2) Prohibition on consideration of overleasing data.-- 
        In determining the allocation baseline for vouchers or the 
        authorized level of vouchers for any public housing agency for 
        any year, the Secretary may not take into consideration the 
        extent to which the number of families assisted in the 
        preceding year by the agency exceeded such authorized level.
            ``(3) Prohibition of limitation on overleasing.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B) and notwithstanding any other 
                provision of law, the Secretary may not establish, 
                implement, carry out, or enforce any limitation on the 
                number of--
                            ``(i) families that may be assisted by a 
                        public housing agency with amounts provided to 
                        the agency for tenant-based rental assistance;
                            ``(ii) vouchers that an agency may fund 
                        using such amounts; or
                            ``(iii) units or unit-months that an agency 
                        may have under lease using such amounts
                    ``(B) Exception.--If the Secretary determines that 
                a public housing agency has engaged in financial 
                mismangement involving leasing in excess of the 
                agency's authorized level of vouchers, the prohibition 
                under subparagraph (A) shall not apply to such agency.
    ``(jj) Authorization of Appropriations for Tenant-Based 
Assistance.--There are authorized to be appropriated in each fiscal 
year such sums as may be necessary for tenant-based rental assistance 
for--
            ``(1) renewal of all expiring annual contributions 
        contracts for such assistance in accordance with subsection 
        (ff) in the amount necessary to avoid proration under paragraph 
        (3) of such subsection; and
            ``(2) restoring and replenishing all public housing 
        agency's reserves under subsection (gg) in the amount required 
        under paragraph (2) of such subsection for such year.''.

Summary: Housing Choice Voucher Funding Fairness Act of 2006 - Amends the United States Housing Act of 1937 to require the Secretary of Housing and Urban Development (HUD) to allocate certain funds for renewal of expiring annual contributions contracts for tenant-based rental assistance for each public housing agency based on the most recent leasing and cost data for certain funding cycles. Prescribes implementation guidelines, including agency reserves for housing choice vouchers. Requires the Secretary to provide to Congress and make publicly available specified budget information. Sets forth guidelines for maximized leasing that prohibit the Secretary from: (1) taking into consideration the extent to which the number of families assisted in the preceding year by an agency exceeded the authorized level. Or (2) establishing or enforcing any limitation on the number of families, vouchers, or units or unit-months that may be assisted with amounts provided for tenant-based rental assistance.