II

106TH CONGRESS

1ST SESSION S. 1318

To authorize the Secretary of Housing and Urban Development to award

grants to States to supplement State and local assistance for the preservation and promotion of affordable housing opportunities for low-income

families.

IN THE SENATE OF THE UNITED STATES

JULY 1, 1999

Mr. JEFFORDS (for himself, Mr. KERRY, Mr. GRAMS, Mr. SARBANES, and Mr.

WELLSTONE) introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs

A BILL

To authorize the Secretary of Housing and Urban Development to award grants to States to supplement State

and local assistance for the preservation and promotion

of affordable housing opportunities for low-income families.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Affordable Housing

5 Preservation Act of 1999’’.

6 SEC. 2. FINDINGS AND PURPOSES.

7 (a) FINDINGS.—Congress finds that—
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1 (1) availability of low-income housing rental

2 units has declined nationwide in the last several

3 years;

4 (2) as rents for low-income housing increase

5 and the development of new units of affordable

6 housing decreases, there are fewer privately owned,

7 federally assisted affordable housing units available

8 to low-income individuals in need;

9 (3) the demand for affordable housing far ex10 ceeds the supply of such housing, as evidenced by re11 cent studies; and

12 (4) the efforts of nonprofit organizations have

13 significantly preserved and expanded access to low14 income housing.

15 (b) PURPOSES.—The purposes of this Act are—

16 (1) to continue the partnerships among the

17 Federal Government, State and local governments,

18 nonprofit organizations, and the private sector in op19 erating and assisting housing that is affordable to

20 low-income persons and families;

21 (2) to promote the preservation of affordable

22 housing units by providing matching grants to

23 States that have developed and funded programs for

24 the preservation of privately owned housing that is

25 affordable to low-income families and persons; and
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1 (3) to minimize the involuntary displacement of

2 tenants who are currently residing in such housing,

3 many of whom are elderly or disabled persons and

4 families with children.

5 SEC. 3. DEFINITIONS.

6 In this Act:

7 (1) CAPITAL EXPENDITURES.—The term ‘‘cap8 ital expenditures’’ includes expenditures for acquisi9 tion and rehabilitation.

10 (2) LOW-INCOME AFFORDABILITY RESTRIC11 TIONS.—The term ‘‘low-income affordability restric12 tions’’ means, with respect to a housing project, any

13 limitations imposed by law, regulation, or regulatory

14 agreement on rents for tenants of the project, rent

15 contributions for tenants of the project, or income16 eligibility for occupancy in the project.

17 (3) PROJECT-BASED ASSISTANCE.—The term

18 ‘‘project-based assistance’’ has the meaning given

19 such term in section 16(c) of the United States

20 Housing Act of 1937 (42 U.S.C. 1437n(c)), except

21 that such term includes assistance under any suc22 cessor programs to the programs referred to in such

23 section.

24 (4) SECRETARY.—The term ‘‘Secretary’’ means

25 the Secretary of Housing and Urban Development.
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1 (5) STATE.—The term ‘‘State’’ means each of

2 the several States and the District of Columbia.

3 SEC. 4. AUTHORITY.

4 The Secretary shall, to the extent amounts are made

5 available in advance under section 12, award grants under

6 this Act to States for low-income housing preservation and

7 promotion.

8 SEC. 5. APPLICATIONS.

9 The Secretary shall provide for States (through ap10 propriate State agencies) to submit applications for grants

11 under this Act. The Secretary shall require the applica12 tions to contain any information and certifications nec13 essary for the Secretary to determine who is eligible to

14 receive such a grant.

15 SEC. 6. USE OF GRANTS.

16 (a) ELIGIBLE USES.—

17 (1) IN GENERAL.—Amounts from grants

18 awarded under this Act may be used by States only

19 for the purpose of providing assistance for acquisi20 tion, rehabilitation, operating costs, and capital ex21 penditures for a housing project that meets the re22 quirements under subsection (b), (c), (d), or (e).

23 (2) FACTORS FOR CONSIDERATION.—In select24 ing projects described in paragraph (1) for assist-
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1 ance with amounts from a grant awarded under this

2 Act, the State shall—

3 (A) take into consideration—

4 (i) whether the assistance will be used

5 to transfer the project to a resident-en6 dorsed nonprofit organization;

7 (ii) whether the owner of the project

8 has extended the low-income affordability

9 restrictions on the project for a period of

10 more than 15 years;

11 (iii) the extent to which the project is

12 consistent with the comprehensive housing

13 affordability strategy approved in accord14 ance with section 105 of the Cranston15 Gonzalez National Affordable Housing Act

16 (42 U.S.C. 12705) for the jurisdiction in

17 which the project is located;

18 (iv) the extent to which the project lo19 cation provides access to transportation,

20 jobs, shopping, and other similar conven21 iences;

22 (v) the extent to which the project

23 meets fair housing goals;

24 (vi) the extent to which the project

25 serves specific needs that are not otherwise
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1 met by the local market, such as housing

2 for the elderly or disabled, or families with

3 children;

4 (vii) the extent of local government re5 sources provided to the project; and

6 (viii) such other factors as the Sec7 retary or the State may establish; and

8 (B) ensure that, to the maximum extent

9 practicable, projects in both urban and rural

10 areas in the State receive assistance.

11 (b) PROJECTS WITH HUD-INSURED MORTGAGES.—

12 A project meets the requirements under this subsection

13 only if—

14 (1) the project is financed by a loan or mort15 gage that is—

16 (A) insured or held by the Secretary under

17 section 221(d)(3) of the National Housing Act

18 (12 U.S.C. 1715l(d)(3)) and receiving loan

19 management assistance under section 8 of the

20 United States Housing Act of 1937 (42 U.S.C.

21 1437f) due to a conversion from section 101 of

22 the Housing and Urban Development Act of

23 1965 (12 U.S.C. 1701s);

24 (B) insured or held by the Secretary and

25 bears interest at a rate determined under the
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1 proviso of section 221(d)(5) of the National

2 Housing Act (12 U.S.C. 1715l(d)(5)); or

3 (C) insured, assisted, or held by the Sec4 retary or a State or State agency under section

5 236 of the National Housing Act (12 U.S.C.

6 1715z–1);

7 (2) the project is subject to an unconditional

8 waiver of, with respect to the mortgage referred to

9 in paragraph (1)—

10 (A) all rights to any prepayment of the

11 mortgage; and

12 (B) all rights to any voluntary termination

13 of the mortgage insurance contract for the

14 mortgage; and

15 (3) if the low-income affordability restrictions

16 on the project are for less than 15 years, the owner

17 of the project has entered into binding commitments

18 (applicable to any subsequent owner) to extend those

19 restrictions, including any such restrictions imposed

20 because of any contract for project-based assistance

21 for the project, for a period of not less than 15 years

22 (beginning on the date on which assistance is made

23 available for the project by the State under this sec24 tion).
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1 (c) PROJECTS WITH SECTION 8 PROJECT-BASED AS2 SISTANCE.—A project meets the requirements under this

3 subsection only if—

4 (1) the project is subject to a contract for

5 project-based assistance; and

6 (2) the owner of the project has entered into

7 binding commitments (applicable to any subsequent

8 owner)—

9 (A) to continue to renew such contract (if

10 offered on the same terms and conditions) until

11 the later of—

12 (i) the last day of the remaining term

13 of the mortgage; or

14 (ii) the date that is 15 years after the

15 date on which assistance is made available

16 for the project by the State under this sec17 tion; and

18 (B) to extend any low-income affordability

19 restrictions applicable to the project in connec20 tion with such assistance.

21 (d) PROJECTS PURCHASED BY RESIDENTS.—A

22 project meets the requirements under this subsection only

23 if the project—

24 (1) is or was eligible low-income housing (as de25 fined in section 229 of the Low-Income Housing
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1 Preservation and Resident Homeownership Act of

2 1990 (42 U.S.C. 4119)) or is or was a project as3 sisted under section 613(b) of the Cranston-Gon4 zalez National Affordable Housing Act (12 U.S.C.

5 4125(b));

6 (2) has been purchased by a resident council or

7 resident-approved nonprofit organization for the

8 housing or is approved by the Secretary for such

9 purchase, for conversion to homeownership housing

10 under a resident homeownership program meeting

11 the requirements under section 226 of such Act (12

12 U.S.C. 4116); and

13 (3) the owner of the project has entered into

14 binding commitments (applicable to any subsequent

15 owner) to extend such assistance for not less than

16 15 years (beginning on the date on which assistance

17 is made available for the project by the State under

18 this section) and to extend any low-income afford19 ability restrictions applicable to the project in con20 nection with such assistance.

21 (e) RURAL RENTAL ASSISTANCE PROJECTS.—A

22 project meets the requirements of this section only if—

23 (1) the project is a rural rental housing project

24 financed under section 515 of the Housing Act of

25 1949 (42 U.S.C. 1485); and
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1 (2) the restriction on the use of the project (as

2 required under section 502 of the Housing Act of

3 1949 (42 U.S.C. 1472)) will expire not later than 12

4 months after the date on which assistance is made

5 available for the project by the State under this sec6 tion.

7 SEC. 7. AMOUNT OF STATE GRANTS.

8 (a) IN GENERAL.—Subject to section 8, in each fiscal

9 year, the Secretary shall award to each State approved

10 for a grant under this Act a grant in an amount based

11 upon the proportion of such State’s need for assistance

12 under this Act (as determined by the Secretary in accord13 ance with subsection (b)) to the aggregate need among

14 all States approved for such assistance for such fiscal

15 year.

16 (b) DETERMINATION OF NEED.—In determining the

17 proportion of a State’s need under subsection (a), the Sec18 retary shall consider—

19 (1) the number of units in projects in the State

20 that are eligible for assistance under section 6 that,

21 due to market conditions or other factors, are at risk

22 for prepayment, opt-out, or otherwise at risk of

23 being lost to the inventory of affordable housing;

24 and
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1 (2) the difficulty that residents of projects in

2 the State that are eligible for assistance under sec3 tion 6 would face in finding adequate, available, de4 cent, comparable, and affordable housing in neigh5 borhoods of comparable quality in the local market,

6 if those projects were not assisted by the State

7 under section 6.

8 SEC. 8. MATCHING REQUIREMENT.

9 (a) IN GENERAL.—The Secretary may not award a

10 grant under this Act to a State for any fiscal year in an

11 amount that exceeds twice the amount that the State cer12 tifies, as the Secretary shall require, that the State will

13 contribute for such fiscal year, or has contributed since

14 January 1, 1999, from non-Federal sources for the pur15 poses described in section 6(a).

16 (b) TREATMENT OF PREVIOUS CONTRIBUTIONS.—

17 Any portion of amounts contributed after January 1,

18 1999, that are counted for purposes of meeting the re19 quirement under subsection (a) for a fiscal year may not

20 be counted for such purposes for any subsequent fiscal

21 year.

22 (c) TREATMENT OF TAX INCENTIVES.—Fifty percent

23 of the funds used for the project that are allocable to tax

24 credits allocated under section 42 of the Internal Revenue

25 Code of 1986, revenue from mortgage revenue bonds
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1 issued under section 143 of such Code, or proceeds from

2 the sale of tax-exempt bonds by any State or local govern3 ment entity shall be considered non-Federal sources for

4 purposes of this section.

5 SEC. 9. TREATMENT OF SUBSIDY LAYERING REQUIRE6 MENTS.

7 Neither section 8 nor any other provision of this Act

8 may be construed to prevent the use of tax credits allo9 cated under section 42 of the Internal Revenue Code of

10 1986 in connection with housing assisted with amounts

11 from a grant awarded under this Act, to the extent that

12 such use is in accordance with section 102(d) of the De13 partment of Housing and Urban Development Reform Act

14 of 1989 (42 U.S.C. 3545(d)) and section 911 of the Hous15 ing and Community Development Act of 1992 (42 U.S.C.

16 3545 note).

17 SEC. 10. REPORTS.

18 (a) REPORTS TO SECRETARY.—Not later than 90

19 days after the last day of each fiscal year, each State that

20 receives a grant under this Act during that fiscal year

21 shall submit to the Secretary a report on the housing

22 projects assisted with amounts made available under the

23 grant.

24 (b) REPORTS TO CONGRESS.—Based on the reports

25 submitted under subsection (a), the Secretary shall annu-
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1 ally submit to Congress a report on the grants awarded

2 under this section during the preceding fiscal year and the

3 housing projects assisted with amounts made available

4 under those grants.

5 SEC. 11. REGULATIONS.

6 Not later than 12 months after the date of enactment

7 of this Act, the Secretary shall issue regulations to carry

8 out this Act.

9 SEC. 12. AUTHORIZATION OF APPROPRIATIONS.

10 There is authorized to be appropriated for grants

11 under this Act such sums as may be necessary for each

12 of fiscal years 2000 through 2004.

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