II 

109TH CONGRESS 

1ST SESSION S. 1834 

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 

OCTOBER 6, 2005 

Mr. JEFFORDS (for himself, Mr. SARBANES, and Mr. DAYTON) 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. 

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

5 Preservation Act of 2005’’. 

6 SEC. 2. MATCHING GRANT PROGRAM FOR AFFORDABLE 

7 HOUSING PRESERVATION. 

8 (a) FINDINGS AND PURPOSES.— 
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1 (1) FINDINGS.—Congress finds that— 

2 (A) the availability of low-income housing 

3 rental units has declined nationwide in the last 

4 several years; 

5 (B) as rents for low-income housing in6 crease and the development of new units of af7 fordable housing decreases, there are fewer pri8 vately owned, federally assisted affordable hous9 ing units available to low-income individuals in 

10 need; 

11 (C) the demand for affordable housing far 

12 exceeds the supply of affordable housing, as evi13 denced by recent studies; 

14 (D) the efforts of nonprofit organizations 

15 have significantly preserved and expanded ac16 cess to low-income housing; 

17 (E) a substantial number of existing feder18 ally assisted or federally insured multifamily 

19 properties are at risk of being lost from the af20 fordable housing inventory of the Nation 

21 through market rate conversion, deterioration, 

22 or demolition; 

23 (F) it is in the interest of the Nation to 

24 encourage transfer of control of such properties 

25 to competent national, regional, and local non-
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1 profit entities and intermediaries, the missions 

2 of which involve maintaining the affordability of 

3 such properties; 

4 (G) such transfers may be inhibited by a 

5 shortage of such entities that are appropriately 

6 capitalized; and 

7 (H) the Nation would be well served by 

8 providing assistance to such entities to aid in 

9 accomplishing this purpose. 

10 (2) PURPOSES.—The purposes of this Act 

11 are— 

12 (A) to continue the partnerships among 

13 the Federal Government, State and local gov14 ernments, nonprofit organizations, and the pri15 vate sector in operating and assisting housing 

16 that is affordable to low-income persons and 

17 families; 

18 (B) to promote the preservation of afford19 able housing units by providing matching 

20 grants to States and localities that have devel21 oped and funded programs for the preservation 

22 of privately owned housing that is affordable to 

23 low-income families and persons; and 

24 (C) to minimize the involuntary displace25 ment of tenants who are currently residing in 
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1 such housing, many of whom are elderly or dis2 abled persons and families with children. 

3 (b) DEFINITIONS.—In this Act: 

4 (1) CAPITAL EXPENDITURES.—The term ‘‘cap5 ital expenditures’’ includes expenditures for acquisi6 tion and rehabilitation. 

7 (2) CONSORTIUM.—The term ‘‘consortium’’ 

8 means a group of geographically contiguous localities 

9 that jointly submit an application under subsection 

10 (d). 

11 (3) ELIGIBLE AFFORDABLE HOUSING.—The 

12 term ‘‘eligible affordable housing’’ means housing 

13 that— 

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

15 (B) is insured or assisted under a program 

16 of the Department of Housing and Urban De17 velopment or the Department of Agriculture 

18 under which the property is subject to limita19 tions on tenant rents, rent contributions, or in20 comes; and 

21 (C) is at risk, as determined by the Sec22 retary, of termination of any of the limitations 

23 referred to in subparagraph (B). 

24 (4) ELIGIBLE ENTITIES.—The term ‘‘eligible 

25 entities’’ means any entity that meets the require-
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1 ments of subsection (e)(6) and the rules issued 

2 under that subsection. 

3 (5) LOCALITY.—The term ‘‘locality’’ means a 

4 city, town, township, county, parish, village, or other 

5 general purpose political subdivision of a State, or a 

6 consortium thereof. 

7 (6) LOW-INCOME AFFORDABILITY RESTRIC8 TION.—The term ‘‘low-income affordability restric9 tion’’ means, with respect to a housing project, any 

10 limitation imposed by law, regulation, or regulatory 

11 agreement on— 

12 (A) rents for tenants of the project; 

13 (B) rent contributions for tenants of the 

14 project; or 

15 (C) income-eligibility for occupancy in the 

16 project. 

17 (7) LOW-INCOME FAMILIES; VERY LOW-INCOME

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

19 ‘‘very low-income families’’ have the same meanings 

20 as in section 3(b) of the United States Housing Act 

21 of 1937 (42 U.S.C. 1437a(b)). 

22 (8) PROJECT-BASED ASSISTANCE.—The term 

23 ‘‘project-based assistance’’ has the same meaning as 

24 in section 16(c) of the United States Housing Act 

25 of 1937 (42 U.S.C. 1437n(c)), except that the term 
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1 includes assistance under any successor programs to 

2 the programs referred to in that section. 

3 (9) QUALIFIED LIMITED LIABILITY COMPANY.— 

4 The term ‘‘qualified limited liability company’’ 

5 means a limited liability company with respect to 

6 which a credit is allowed under section 42 of the In7 ternal Revenue Code of 1986 with respect to the 

8 company’s qualified basis (as defined in section 42 

9 (c)(1) of such Code), in a qualified low-income build10 ing (as defined in section 42(c)(2) of such Code) for 

11 which grant funds received under this section shall 

12 be used. 

13 (10) QUALIFIED PARTNERSHIP.—The term 

14 ‘‘qualified partnership’’ means a limited partnership 

15 with respect to which a credit is allowed under sec16 tion 42 of the Internal Revenue Code of 1986 with 

17 respect to the partnership’s qualified basis (as de18 fined in section 42(c)(1) of such Code) in a qualified 

19 low-income building (as defined in section 42(c)(2) 

20 of such Code) for which grant funds received under 

21 this section shall be used. 

22 (11) SECRETARY.—The term ‘‘Secretary’’ 

23 means the Secretary of Housing and Urban Develop24 ment. 
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1 (12) STATE.—The term ‘‘State’’ means each of 

2 the several States of the United States and the Dis3 trict of Columbia. 

4 (c) GRANTS.—The Secretary shall, to the extent that 

5 amounts are made available in advance under an appro6 priations Act, award grants under this section to States 

7 and localities for low-income housing preservation and 

8 promotion. 

9 (d) APPLICATIONS.— 

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

11 seeks a grant under this section shall submit an ap12 plication (through appropriate State and local agen13 cies) to the Secretary. 

14 (2) CONTENTS.—Each application submitted 

15 pursuant to paragraph (1) shall contain any infor16 mation and certifications necessary for the Secretary 

17 to determine who is eligible to receive a grant under 

18 this section. 

19 (e) USE OF GRANTS.— 

20 (1) ELIGIBLE USES.— 

21 (A) IN GENERAL.—Grants awarded under 

22 this section may be used by States and local23 ities only for the purposes of providing assist24 ance— 
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1 (i) for acquisition, rehabilitation, cap2 ital expenditures, and related development 

3 costs for a housing project that meets the 

4 requirements of paragraph (2), (3), (4), or 

5 (5); or 

6 (ii) to eligible entities under para7 graph (6) for— 

8 (I) operational, working capital, 

9 and organizational expenses; and 

10 (II) predevelopment activities to 

11 acquire eligible affordable housing for 

12 the purpose of ensuring that the hous13 ing will remain affordable, as the Sec14 retary considers appropriate, for low15 income or very low-income families. 

16 (B) USE AGREEMENT.—A project receiving 

17 assistance under this paragraph shall be subject 

18 to an agreement (binding on any subsequent 

19 owner of such project) that ensures that the 

20 project will continue to operate, for a period of 

21 not less than 50 years after the date on which 

22 any assistance is made available under this 

23 paragraph, in a manner that will provide rental 

24 housing on terms at least as advantageous to 

25 existing and future tenants as the terms re-
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1 quired by any program under which the project, 

2 if offered, was eligible for assistance, subject to 

3 available appropriations. 

4 (C) SERVICE OF UNDER-SERVED AND

5 RURAL AREAS.—States receiving funds under 

6 this section shall ensure that, to the maximum 

7 extent practicable, that projects in under-served 

8 and rural areas in that State receive assistance. 

9 (2) PROJECTS WITH HUD-INSURED MORT10 GAGES.—A project meets the requirements of this 

11 paragraph if the project is financed by a loan or 

12 mortgage— 

13 (A) that is— 

14 (i) insured or held by the Secretary 

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

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

17 (ii) receiving loan management assist18 ance under section 8 of the United States 

19 Housing Act of 1937 (42 U.S.C. 1437f) 

20 due to a conversion from section 101 of 

21 the Housing and Urban Development Act 

22 of 1965 (12 U.S.C. 1701s); 

23 (B) that is insured or held by the Sec24 retary and bears interest at a rate determined 

25 under the proviso of section 221(d)(5) of the 
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1 National Housing Act (12 U.S.C. 1715l(d)(5)); 

2 or 

3 (C) that is insured, assisted, or held by the 

4 Secretary or a State or State agency under sec5 tion 236 of the National Housing Act (12 

6 U.S.C. 1715z–1). 

7 (3) PROJECTS WITH SECTION 8 PROJECT-BASED

8 ASSISTANCE.—A project meets the requirements of 

9 this paragraph if the project is subject to a contract 

10 for project-based assistance. 

11 (4) PROJECTS PURCHASED BY RESIDENTS.—A 

12 project meets the requirements of this paragraph— 

13 (A) if— 

14 (i) the project is or was eligible low15 income housing (as defined in section 229 

16 of the Low-Income Housing Preservation 

17 and Resident Homeownership Act of 1990 

18 (12 U.S.C. 4119)); or 

19 (ii) the project is or was a project as20 sisted under section 613(b) of the Cran21 ston-Gonzalez National Affordable Housing 

22 Act (12 U.S.C. 4125); 

23 (B) if the project has been purchased by a 

24 resident council or resident-approved nonprofit 

25 organization for the housing, or is approved by 
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1 the Secretary for such purchase, for conversion 

2 to homeownership housing under a resident 

3 homeownership program meeting the require4 ments of section 226 of the Low-Income Hous5 ing Preservation and Resident Homeownership 

6 Act of 1990 (12 U.S.C. 4116); and 

7 (C) if the owner of the project has entered 

8 into binding commitments (applicable to any 

9 subsequent owner) to extend— 

10 (i) project-based assistance for not 

11 less than 15 years (beginning on the date 

12 on which assistance is made available for 

13 the project by the State or locality under 

14 this section); and 

15 (ii) any low-income affordability re16 strictions applicable to the project in con17 nection with that assistance. 

18 (5) RURAL RENTAL ASSISTANCE PROJECTS.—A 

19 project meets the requirements of this paragraph— 

20 (A) if— 

21 (i) the project is a rural rental hous22 ing project financed under section 515 of 

23 the Housing Act of 1949 (42 U.S.C. 

24 1485); or 
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1 (ii) the project is a farm labor housing 

2 development financed under section 514 of 

3 the United States Housing Act of 1949 

4 (42 U.S.C. 1484); and 

5 (B) if the restriction on the use of the 

6 project (as required under section 502 of the 

7 Housing Act of 1949 (42 U.S.C. 1472)) will ex8 pire not later than 12 months after the date on 

9 which assistance is made available for the 

10 project by the State or locality under this sub11 section. 

12 (6) ELIGIBLE ENTITIES.— 

13 (A) IN GENERAL.—The Secretary shall es14 tablish, by regulation, standards for eligible en15 tities under this subsection. 

16 (B) REQUIREMENTS.—An eligible entity 

17 shall— 

18 (i) be a nonprofit organization (as de19 fined in section 104 of the Cranston-Gon20 zalez National Affordable Housing Act (42 

21 U.S.C. 12704)), or a qualified limited li22 ability company or a qualified partnership 

23 the managing member or general partner 

24 of which, respectively, is— 

25 (I) a nonprofit organization; or 
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1 (II) a for-profit entity that is 

2 wholly owned by an eligible non-profit 

3 organization; 

4 (ii) have among its purposes, main5 taining the affordability to low-income or 

6 very low-income families of multifamily 

7 properties that are at risk of loss from the 

8 inventory of housing that is affordable to 

9 low-income or very low-income families; 

10 and 

11 (iii) demonstrate to the Secretary— 

12 (I) the need for the types of as13 sistance described under paragraph 

14 (1)(A)(ii); 

15 (II) experience in providing as16 sistance described under that para17 graph; and 

18 (III) its ability to provide the as19 sistance described under that para20 graph. 

21 (7) FUNDING REQUIREMENTS.— 

22 (A) OPERATING SUPPORT.—Each State 

23 and locality awarded a grant under this section 

24 shall transfer at least 5 percent, but not more 

25 than 10 percent, of such grant to eligible enti-
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1 ties for the purposes described under paragraph 

2 (1)(A)(ii)(I). 

3 (B) NONPROFIT PURCHASES.—Each State 

4 and locality awarded a grant under this section 

5 shall transfer at least 15 percent of such grant 

6 to eligible entities for the purposes described 

7 under paragraph (1)(A)(ii)(II). 

8 (8) RETURN OF UNUSED FUNDS.—If any 

9 amount of a grant awarded to a State or locality 

10 under this section has not been obligated 3 years 

11 after the grant is awarded, such amount shall be re12 turned to the Secretary to be redistributed in ac13 cordance with this section the following fiscal year. 

14 (9) ADMINISTRATIVE COSTS.—A State or local15 ity that is awarded a grant under this section may 

16 use not more than 10 percent of such grant for costs 

17 associated with the administration of the grant. 

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

19 (1) IN GENERAL.—Subject to paragraph (3) 

20 and subsection (g), in each fiscal year, the Secretary 

21 shall award to each State and locality approved for 

22 a grant under this section a grant in an amount 

23 based upon the proportion of the need for assistance 

24 of that State or locality under this section (as deter25 mined by the Secretary in accordance with para-
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1 graph (2)) to the aggregate need among all States 

2 and localities approved for assistance under this sec3 tion for that fiscal year. 

4 (2) DETERMINATION OF NEED.—In deter5 mining the proportion of the need of a State or lo6 cality under paragraph (1), the Secretary shall con7 sider— 

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

9 State or locality that are eligible for assistance 

10 under subsection (e)(1)(A)(i) that are, due to 

11 market conditions or other factors, at risk for— 

12 (i) prepayment; 

13 (ii) opt-out; or 

14 (iii) otherwise at risk of being lost to 

15 the inventory of affordable housing; and 

16 (B) the difficulty that residents of projects 

17 in the State or locality that are eligible for as18 sistance under subsection (e)(1)(A)(i) would 

19 face in finding adequate, available, decent, com20 parable, and affordable housing in neighbor21 hoods of comparable quality in the local market, 

22 if those projects were not assisted by the State 

23 or locality under subsection (e)(1)(A)(i). 

24 (3) LIMITATIONS.— 
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1 (A) MANDATORY ALLOCATION.—In any 

2 fiscal year, of the total amount appropriated to 

3 carry out this section— 

4 (i) 40 percent shall be allocated for 

5 grants to States; and 

6 (ii) 60 percent shall be allocated for 

7 grants to localities. 

8 (B) MINIMUM GRANT AMOUNT.—Notwith9 standing subsection (g), a State receiving a 

10 grant under this section shall receive no less 

11 than .4 percent of the total amount appro12 priated under subsection (k) in any fiscal year. 

13 (g) MATCHING REQUIREMENT.— 

14 (1) IN GENERAL.—Except as provided under 

15 paragraph (2), a grant under this section to a State 

16 or locality for any fiscal year may not exceed an 

17 amount that is twice the amount that the State or 

18 locality certifies, as the Secretary shall require, that 

19 the State or locality will contribute for such fiscal 

20 year, or has contributed since January 1, 2004, 

21 from non-Federal sources for the purposes described 

22 in subsection (e)(1). 

23 (2) LIMITATIONS.—Paragraph (1) shall not 

24 apply to any amounts to be used by a State or local25 ity for— 
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1 (A) administrative costs under subsection 

2 (e)(9); and 

3 (B) operating support and working capital 

4 of nonprofit organizations under subsection 

5 (e)(7)(A). 

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

8 January 1, 2004, 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 (4) TAX CREDITS AND PRIVATE ACTIVITY

13 BONDS.—Fifty percent of the annual amount of tax 

14 credits allocated to the project under section 42 of 

15 the Internal Revenue Code of 1986, or proceeds 

16 from private activity bonds issued for qualified resi17 dential rental projects under section 142 of that 

18 Code, shall be considered funds from non-Federal 

19 sources for purposes of paragraph (1). 

20 (h) TREATMENT OF SUBSIDY LAYERING REQUIRE21 MENTS.—Neither subsection (g) nor any other provision 

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

23 credits allocated under section 42 of the Internal Revenue 

24 Code of 1986, in connection with housing assisted with 

25 amounts from a grant awarded under this section, to the 
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1 extent that such use is in accordance with section 102(d) 

2 of the Department of Housing and Urban Development 

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

4 of the Housing and Community Development Act of 1992 

5 (42 U.S.C. 3545 note). 

6 (i) REPORTS.— 

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

8 90 days after the last day of each fiscal year, each 

9 State and locality that receives a grant under this 

10 section during that fiscal year shall submit to the 

11 Secretary a report on the housing projects and eligi12 ble entities assisted with amounts made available 

13 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 and eligible entities with amounts made available 

20 under those grants. 

21 (j) REGULATIONS.—Not later than 6 months after 

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

23 regulations to carry out this section. 

24 (k) AUTHORIZATION OF APPROPRIATIONS.—There 

25 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 2006 through 2010. 

3 SEC. 3. PRESERVATION PROJECTS. 

4 Section 524(e)(1) of the Multifamily Assisted Hous5 ing Reform and Affordability Act of 1997 (42 U.S.C. 

6 1437f note) is amended by striking ‘‘amounts are specifi7 cally’’ and inserting ‘‘sufficient amounts are’’. 

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