II

107TH CONGRESS

1ST SESSION S. 1365

To authorize the Secretary of the Department of Housing and Urban Development to make grants to States for affordable housing for low-income

persons, and for other purposes.

IN THE SENATE OF THE UNITED STATES

AUGUST 3, 2001

Mr. JEFFORDS (for himself, Mr. KERRY, Mr. GRASSLEY, Mr. DAYTON, Mrs.

FEINSTEIN, Mr. SCHUMER, and Mr. SARBANES) 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 the Department of Housing

and Urban Development to make grants to States for

affordable housing for low-income persons, and for other

purposes.

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 AND TABLE OF CONTENTS.

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

5 Preservation Act of 2001’’.
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1 SEC. 2. MATCHING GRANT PROGRAM FOR AFFORDABLE

2 HOUSING PRESERVATION.

3 (a) FINDINGS AND PURPOSES.—

4 (1) FINDINGS.—Congress finds that—

5 (A) the availability of low-income housing

6 rental units has declined nationwide in the last

7 several years;

8 (B) as rents for low-income housing in9 crease and the development of new units of af10 fordable housing decreases, there are fewer pri11 vately owned, federally assisted affordable hous12 ing units available to low-income individuals in

13 need;

14 (C) the demand for affordable housing far

15 exceeds the supply of affordable housing, as evi16 denced by recent studies; and

17 (D) the efforts of nonprofit organizations

18 have significantly preserved and expanded ac19 cess to low-income housing.

20 (2) PURPOSES.—The purposes of this section

21 are—

22 (A) to continue the partnerships among

23 the Federal Government, State and local gov24 ernments, nonprofit organizations, and the pri25 vate sector in operating and assisting housing
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1 that is affordable to low-income persons and

2 families;

3 (B) to promote the preservation of afford4 able housing units by providing matching

5 grants to States and localities that have devel6 oped and funded programs for the preservation

7 of privately owned housing that is affordable to

8 low-income families and persons; and

9 (C) to minimize the involuntary displace10 ment of tenants who are currently residing in

11 such housing, many of whom are elderly or dis12 abled persons and families with children.

13 (b) DEFINITIONS.—In this section:

14 (1) CAPITAL EXPENDITURES.—The term ‘‘cap15 ital expenditures’’ includes expenditures for acquisi16 tion and rehabilitation.

17 (2) LOW-INCOME AFFORDABILITY RESTRIC18 TION.—The term ‘‘low-income affordability restric19 tion’’ means, with respect to a housing project, any

20 limitation imposed by law, regulation, or regulatory

21 agreement on rents for tenants of the project, rent

22 contributions for tenants of the project, or income23 eligibility for occupancy in the project.

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

25 ‘‘project-based assistance’’ has the same meaning as
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1 in section 16(c) of the United States Housing Act

2 of 1937 (42 U.S.C. 1437n(c)), except that the term

3 includes assistance under any successor programs to

4 the programs referred to in that section.

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

6 the Secretary of the Department of Housing and

7 Urban Development.

8 (5) STATE.—The term ‘‘State’’ means each of

9 the several States of the United States and the Dis10 trict of Columbia.

11 (c) AUTHORITY TO MAKE GRANTS.—The Secretary

12 shall, to the extent that amounts are made available in

13 advance under subsection (k), award grants under this

14 section to States and localities for low-income housing

15 preservation and promotion.

16 (d) APPLICATIONS.—

17 (1) IN GENERAL.—Any State or locality that

18 seeks a grant under this section shall submit an ap19 plication (through appropriate State and local agen20 cies) to the Secretary.

21 (2) CONTENTS.—Each application submitted

22 pursuant to paragraph (1) shall contain any infor23 mation and certifications necessary for the Secretary

24 to determine who is eligible to receive a grant under

25 this section.
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1 (e) USE OF GRANTS.—

2 (1) ELIGIBLE USES.—

3 (A) IN GENERAL.—Grants awarded under

4 this section may be used by States and local5 ities only for the purpose of providing assist6 ance for acquisition, rehabilitation, operating

7 costs, and capital expenditures for a housing

8 project that meets the requirements of para9 graph (2), (3), (4), or (5).

10 (B) FACTORS FOR CONSIDERATION.—In

11 selecting a housing project described in sub12 paragraph (A) for assistance under this

13 section—

14 (i) the State or locality shall take into

15 consideration—

16 (I) whether the assistance will be

17 used to transfer the project to a resi18 dent-endorsed nonprofit organization;

19 (II) whether the owner of the

20 project has extended the low-income

21 affordability restrictions on the

22 project for a period of more than 15

23 years;

24 (III) the extent to which the

25 project is consistent with the com-
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1 prehensive housing affordability strat2 egy approved in accordance with sec3 tion 105 of the Cranston-Gonzalez

4 National Affordable Housing Act (42

5 U.S.C. 12705) for the jurisdiction in

6 which the project is located;

7 (IV) the extent to which the

8 project location provides access to

9 transportation, jobs, shopping, and

10 other similar conveniences;

11 (V) the extent to which the

12 project meets fair housing goals under

13 applicable State and Federal laws;

14 (VI) the extent to which the

15 project serves specific needs that are

16 not otherwise met by the local market,

17 such as housing for the elderly or dis18 abled, or families with children;

19 (VII) the extent of local govern20 ment resources provided to the

21 project; and

22 (VIII) such other factors as the

23 Secretary or the State or locality may

24 establish; and
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1 (ii) States receiving funds shall ensure

2 that, to the maximum extent practicable,

3 projects in both urban and rural areas in

4 the State receive assistance.

5 (2) PROJECTS WITH HUD-INSURED MORT6 GAGES.—A project meets the requirements of this

7 paragraph only if—

8 (A) the project is financed by a loan or

9 mortgage that is—

10 (i) insured or held by the Secretary

11 under section 221(d)(3) of the National

12 Housing Act (12 U.S.C. 1715l(d)(3)) and

13 receiving loan management assistance

14 under section 8 of the United States Hous15 ing Act of 1937 (42 U.S.C. 1437f) due to

16 a conversion from section 101 of the Hous17 ing and Urban Development Act of 1965

18 (12 U.S.C. 1701s);

19 (ii) insured or held by the Secretary

20 and bears interest at a rate determined

21 under the proviso of section 221(d)(5) of

22 the National Housing Act (12 U.S.C.

23 1715l(d)(5)); or

24 (iii) insured, assisted, or held by the

25 Secretary or a State or State agency under
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1 section 236 of the National Housing Act

2 (12 U.S.C. 1715z–1);

3 (B) with respect to the mortgage referred

4 to in subparagraph (A), the project is subject to

5 an unconditional waiver of—

6 (i) all rights to any prepayment of the

7 mortgage; and

8 (ii) all rights to any voluntary termi9 nation of the mortgage insurance contract

10 for the mortgage; and

11 (C) the owner of the project has entered

12 into binding commitments (applicable to any

13 subsequent owner) to extend any low-income af14 fordability restrictions on the project that are

15 for less than 15 years, including any such re16 strictions imposed because of any contract for

17 project-based assistance for the project, for a

18 period of not less than 15 years (beginning on

19 the date on which assistance is made available

20 for the project by the State or locality under

21 this section).

22 (3) PROJECTS WITH SECTION 8 PROJECT-BASED

23 ASSISTANCE.—A project meets the requirements of

24 this paragraph only if—
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1 (A) the project is subject to a contract for

2 project-based assistance; and

3 (B) the owner of the project has entered

4 into binding commitments (applicable to any

5 subsequent owner)—

6 (i) to continue to renew the contract

7 for project-based assistance (if offered on

8 the same terms and conditions) until the

9 later of—

10 (I) the last day of the remaining

11 term of the mortgage; or

12 (II) the date that is 15 years

13 after the date on which assistance is

14 made available for the project by the

15 State or locality under this subsection;

16 and

17 (ii) to extend any low-income afford18 ability restrictions applicable to the project

19 in connection with the project-based assist20 ance.

21 (4) PROJECTS PURCHASED BY RESIDENTS.—A

22 project meets the requirements of this paragraph

23 only if the project—

24 (A) is or was eligible low-income housing

25 (as defined in section 229 of the Low-Income
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1 Housing Preservation and Resident Home2 ownership Act of 1990 (12 U.S.C. 4119)) or is

3 or was a project assisted under section 613(b)

4 of the Cranston-Gonzalez National Affordable

5 Housing Act (12 U.S.C. 4125);

6 (B) has been purchased by a resident

7 council or resident-approved nonprofit organiza8 tion for the housing, or is approved by the Sec9 retary for such purchase, for conversion to

10 homeownership housing under a resident home11 ownership program meeting the requirements of

12 section 226 of the Low-Income Housing Preser13 vation and Resident Homeownership Act of

14 1990 (12 U.S.C. 4116); and

15 (C) the owner of the project has entered

16 into binding commitments (applicable to any

17 subsequent owner) to extend project-based as18 sistance for not less than 15 years (beginning

19 on the date on which assistance is made avail20 able for the project by the State or locality

21 under this section) and to extend any low-in22 come affordability restrictions applicable to the

23 project in connection with that assistance.
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1 (5) RURAL RENTAL ASSISTANCE PROJECTS.—A

2 project meets the requirements of this paragraph

3 only if—

4 (A) the project is a rural rental housing

5 project financed under section 515 of the Hous6 ing Act of 1949 (42 U.S.C. 1485); and

7 (B) the restriction on the use of the

8 project (as required under section 502 of the

9 Housing Act of 1949 (42 U.S.C. 1472)) will ex10 pire not later than 12 months after the date on

11 which assistance is made available for the

12 project by the State or locality under this sub13 section.

14 (f) AMOUNT OF STATE AND LOCAL GRANTS.—

15 (1) IN GENERAL.—Subject to subsection (g), in

16 each fiscal year, the Secretary shall award to each

17 State and locality approved for a grant under this

18 section a grant in an amount based upon the propor19 tion of the need for assistance of that State or local20 ity under this section (as determined by the Sec21 retary in accordance with paragraph (2)) to the ag22 gregate need among all States and localities ap23 proved for assistance under this section for that fis24 cal year.
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1 (2) DETERMINATION OF NEED.—In deter2 mining the proportion of the need of a State or lo3 cality under paragraph (1), the Secretary shall

4 consider—

5 (A) the number of units in projects in the

6 State or locality that are eligible for assistance

7 under section 524(e)(1) of the Multifamily As8 sisted Housing Reform and Affordability Act of

9 1997 (42 U.S.C. 1437f note), as amended by

10 this Act, that, due to market conditions or

11 other factors, are at risk for prepayment, opt12 out, or otherwise at risk of being lost to the in13 ventory of affordable housing; and

14 (B) the difficulty that residents of projects

15 in the State or locality that are eligible for as16 sistance under subsection (e) would face in

17 finding adequate, available, decent, comparable,

18 and affordable housing in neighborhoods of

19 comparable quality in the local market, if those

20 projects were not assisted by the State or local21 ity under subsection (e).

22 (g) MATCHING REQUIREMENT.—

23 (1) IN GENERAL.—A grant under this section

24 to a State or locality for any fiscal year may not ex25 ceed an amount that is twice the amount that the
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1 State or locality certifies, as the Secretary shall re2 quire, that the State or locality will contribute for

3 such fiscal year, or has contributed since January 1,

4 2001, from non-Federal sources for the purposes de5 scribed in subsection (e)(1).

6 (2) TREATMENT OF PREVIOUS CONTRIBU7 TIONS.—Any portion of amounts contributed after

8 January 1, 2001, that are counted for the purpose

9 of meeting the requirement under paragraph (1) for

10 a fiscal year may not be counted for that purpose

11 for any subsequent fiscal year.

12 (3) TREATMENT OF TAX INCENTIVES.—Fifty

13 percent of the funds used for the project that are al14 locable to tax credits allocated under section 42 of

15 the Internal Revenue Code of 1986, revenue from

16 mortgage revenue bonds issued under section 143 of

17 that Code, or proceeds from the sale of tax-exempt

18 bonds by any State or local government entity shall

19 be considered non-Federal sources for purposes of

20 this subsection.

21 (h) TREATMENT OF SUBSIDY LAYERING REQUIRE22 MENTS.—Neither subsection (g) nor any other provision

23 of this section may be construed to prevent the use of tax

24 credits allocated under section 42 of the Internal Revenue

25 Code of 1986, in connection with housing assisted with
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1 amounts from a grant awarded under this section, to the

2 extent that such use is in accordance with section 102(d)

3 of the Department of Housing and Urban Development

4 Reform Act of 1989 (42 U.S.C. 3545(d)) and section 911

5 of the Housing and Community Development Act of 1992

6 (42 U.S.C. 3545 note).

7 (i) REPORTS.—

8 (1) REPORTS TO SECRETARY.—Not later than

9 90 days after the last day of each fiscal year, each

10 State and locality that receives a grant under this

11 section during that fiscal year shall submit to the

12 Secretary a report on the housing projects assisted

13 with amounts made available under the grant.

14 (2) REPORTS TO CONGRESS.—Based on the re15 ports submitted under paragraph (1), the Secretary

16 shall annually submit to Congress a report on the

17 grants awarded under this section during the pre18 ceding fiscal year and the housing projects assisted

19 with amounts made available under those grants.

20 (j) REGULATIONS.—Not later than 12 months after

21 the date of enactment of this Act, the Secretary shall issue

22 regulations to carry out this section.

23 (k) AUTHORIZATION OF APPROPRIATIONS.—There

24 are authorized to be appropriated for grants under this
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1 section such sums as may be necessary for each of fiscal

2 years 2002 through 2005.

3 SEC. 3. ASSISTANCE FOR NONPROFIT PURCHASERS PRE4 SERVING AFFORDABLE HOUSING.

5 (a) CONGRESSIONAL FINDINGS.—Congress finds

6 that—

7 (1) a substantial number of existing federally

8 assisted or federally insured multifamily properties

9 are at risk of being lost from the affordable housing

10 inventory of the Nation through market rate conver11 sion, deterioration, or demolition;

12 (2) it is in the interest of the Nation to encour13 age transfer of control of such properties to com14 petent national, regional, and local nonprofit entities

15 and intermediaries, the missions of which involve

16 maintaining the affordability of such properties;

17 (3) such transfers may be inhibited by a short18 age of such entities that are appropriately capital19 ized; and

20 (4) the Nation would be well served by pro21 viding assistance to such entities to aid in accom22 plishing this purpose.

23 (b) DEFINITIONS.—In this section:
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1 (1) ELIGIBLE AFFORDABLE HOUSING.—The

2 term ‘‘eligible affordable housing’’ means housing

3 that—

4 (A) consists of more than 4 dwelling units;

5 (B) is insured or assisted under a program

6 of the Department of Housing and Urban De7 velopment or the Department of Agriculture

8 under which the property is subject to limita9 tions on tenant rents, rent contributions, or in10 comes; and

11 (C) is at risk, as determined by the Sec12 retary, of termination of any of the limitations

13 referred to in subparagraph (B).

14 (2) ELIGIBLE ENTITIES.—The term ‘‘eligible

15 entities’’ means any entity that meets the require16 ments of subsection (d) and the rules issued under

17 that subsection.

18 (3) LOW-INCOME FAMILIES; VERY LOW-INCOME

19 FAMILIES.—The terms ‘‘low-income families’’ and

20 ‘‘very low-income families’’ have the meanings given

21 such terms in section 3(b) of the United States

22 Housing Act of 1937 (42 U.S.C. 1437a(b)).

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

24 the Secretary of the Department of Housing and

25 Urban Development.
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1 (c) GRANTS.—The Secretary may make grants, to

2 the extent that amounts are made available for such

3 grants, to eligible entities for use only for—

4 (1) operational, working capital, and organiza5 tional expenses of eligible entities; and

6 (2) activities by eligible entities to acquire eligi7 ble affordable housing for the purpose of ensuring

8 that the housing will remain affordable, as the Sec9 retary considers appropriate, for low-income or very

10 low-income families (including elderly persons).

11 (d) ELIGIBLE ENTITIES.—

12 (1) IN GENERAL.—The Secretary shall establish

13 by regulation, standards for eligible entities under

14 this subsection.

15 (2) REQUIREMENTS.—An eligible entity shall—

16 (A) be a nonprofit organization (as defined

17 in section 104 of the Cranston-Gonzalez Na18 tional Affordable Housing Act (42 U.S.C.

19 12704));

20 (B) have among its purposes, maintaining

21 the affordability to low-income or very low-in22 come families of multifamily properties that are

23 at risk of loss from the inventory of housing

24 that is affordable to low-income or very low-in25 come families; and
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1 (C) demonstrate to the Secretary—

2 (i) the need for the types of assistance

3 described in subsection (c);

4 (ii) experience in providing assistance

5 described in that subsection; and

6 (iii) its ability to provide the assist7 ance described in that subsection.

8 (e) AUTHORIZATION OF APPROPRIATIONS.—There

9 are authorized to be appropriated for grants under this

10 section, such sums as may be necessary for each of fiscal

11 years 2002 through 2005.

12 SEC. 4. PRESERVATION PROJECTS.

13 Section 524(e)(1) of the Multifamily Assisted Hous14 ing Reform and Affordability Act of 1997 (42 U.S.C.

15 1437f note) is amended by striking ‘‘amounts are specifi16 cally’’ and inserting ‘‘sufficient amounts are’’.

Æ