II

106TH CONGRESS

2D SESSION S. 3033

To Delegate the Primary Responsibility for the Preservation and Expansion

of Affordable Low-Income Housing to States and Localities.

IN THE SENATE OF THE UNITED STATES

SEPTEMBER 12, 2000

Mr. BOND introduced the following bill; which was read twice and referred to

the Committee on Banking, Housing, and Urban Affairs

A BILL

To Delegate the Primary Responsibility for the Preservation

and Expansion of Affordable Low-Income Housing to

States and Localities.

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 ‘‘Housing Needs Act

5 of 2000’’.

6 SEC. 2. TABLE OF CONTENTS.

7 The table of Contents for this Act is as follows:

8 SEC. 3. FINDINGS AND PURPOSE.

9 (a) FINDINGS.—The Congress finds that—
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1 (1) the Nation has not made adequate progress

2 in maintaining and expanding the inventory of af3 fordable housing for low and very low-income fami4 lies, including persons with disabilities and seniors;

5 (2) despite continued economic expansion, worst

6 case housing needs have reached an all-time high of

7 5.4 million families, increasing by 4 percent between

8 1995 and 1997;

9 (3) the number of rental units which are afford10 able to extremely low-income families has decreased

11 by 5 percent since 1991, a loss of over 37,000 units;

12 (4) the Administration and the Department of

13 Housing and Urban Development has proposed in14 creased funding for incremental rental vouchers as

15 the primary solution to making additional housing

16 available for low-income and very low-income fami17 lies;

18 (5) while section 8 vouchers represent housing

19 choice as a matter of philosophy, in many cases fam20 ilies using vouchers have a difficult time finding

21 housing, especially in low vacancy market areas;

22 (6) in many cases, where section 8 vouchers are

23 used, the result is de facto redlining where low-in24 come families are relegated to the poorest and most
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1 distressed neighborhoods with limited opportunities

2 for transportation, employment and quality schools;

3 (7) section 8 vouchers do not produce addi4 tional new units of affordable low-income housing

5 since banks will not finance new construction with

6 one year termed portable assistance;

7 (8) the Department of Housing and Urban De8 velopment has not provided the necessary leadership

9 to assist in the development of needed affordable

10 housing;

11 (9) a large number of States and local govern12 ment have been successful in developing new tools

13 and opportunities for the development of additional

14 affordable housing for low-income families, including

15 the development of affordable mixed income housing

16 as part of State and local redevelopment strategies

17 for distressed communities; and

18 (10) State housing finance agencies have the

19 local experience and knowledge to maximize the de20 velopment of additional units of affordable low-in21 come housing and to preserve the existing stock of

22 low-income affordable housing.

23 (b) The purpose of this Act is to redirect the primary

24 responsibility for the preservation of existing affordable

25 low-income housing and the expansion of the inventory of
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1 affordable rental housing for very low-income and low-in2 come families from the Federal Government to State and

3 local governments through State housing finance agencies.

4 SEC. 4. DEFINITIONS.

5 For purposes of this Act, the following definitions

6 shall apply:

7 (1) The term ‘‘low-income families’’ shall have

8 the same meaning as provided under section 3(b)(2)

9 of the United States Housing Act of 1937.

10 (2) The term ‘‘project-based assistance’’ shall

11 have the meaning given such term in section

12 16(c)(6) of the United States Housing Act of 1937,

13 except that such term includes assistance under any

14 successor programs to the programs referred to in

15 such section.

16 (3) The term ‘‘public housing agency’’ shall

17 have the meaning given such term in section 3(b) of

18 the United States Housing Act of 1937.

19 (4) The term ‘‘Secretary’’ shall mean the Sec20 retary of Housing and Urban Development.

21 (5) The term ‘‘section 8 assistance’’ or ‘‘vouch22 er’’ shall have the meaning given such term in sec23 tion 8(f) of the United States Housing Act of 1937.

24 (6) The term ‘‘State’’ shall mean the United

25 States of the United States, the District of Colum-
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1 bia, the Commonwealth of Puerto Rico, the Com2 monwealth of the Northern Mariana Islands, Guam,

3 the Virgin Islands, America Samoa, and any other

4 territory of possession of the United States.

5 (7) The term ‘‘State housing finance agency’’

6 shall mean any State or local housing finance agency

7 that has been designated by a State to administer

8 this program.

9 (8) The term ‘‘very low-income families’’ shall

10 have the same meaning as provided under section

11 3(b) of the United States Housing Act of 1937.

12 TITLE I—PRODUCTION OF NEW HOUSING FOR

13 LOW AND VERY LOW-INCOME FAMILIES

14 SEC. 101. AUTHORITY.

15 The Secretary of Housing and Urban Development

16 shall make funds available to State housing finance agen17 cies as provided under section 102 for the rehabilitation

18 of existing low-income housing, for the development of new

19 affordable low-income housing units, and for the preserva20 tion of existing low-income housing units that are at risk

21 of becoming unavailable for low-income families.

22 SEC. 102. ALLOCATION OF RESOURCES.

23 (a) IN GENERAL.—The Secretary shall allocate funds

24 approved in appropriations Acts to State housing finance

25 agencies to carry out this Title. Subject to the require-
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1 ments of subsection (b) and as otherwise provided in this

2 subsection, each State housing finance agency shall be eli3 gible to receive an amount of funds equal to the proportion

4 of the per capita population of the State in relation to

5 the population of the United States which shall be deter6 mined on the basis of the most recent decennial census

7 for which data are available. For each fiscal year, the Sec8 retary shall reserve for grants to Indian tribes 1 percent

9 of the amount appropriated under the applicable appro10 priations Act. The Secretary shall provide for distribution

11 of amounts under this subsection to Indian tribes on the

12 basis of a competition conducted pursuant to specific cri13 teria developed after notice and public comment.

14 (b) MINIMUM STATE ALLOCATION.—If the allocation

15 under subsection (a), when applied to the funds approved

16 under this section in appropriations Acts for a fiscal year,

17 would result in funding of less than $5,000,000 to any

18 State housing finance agency, the allocation for such State

19 housing finance agency shall be $5,000,000 and the in20 crease shall be deducted pro rata from the allocation of

21 all other State housing finance agencies.

22 (c) CRITERIA FOR REALLOCATION.—The Secretary

23 shall reallocate any funds previously allocated to a State

24 housing finance agency for any fiscal year in which the

25 State housing finance agency fails to provide its match
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1 requirements or fails to submit an affordable housing ex2 pansion plan that is approved by the Secretary. All such

3 funds shall be reallocated pursuant to the formula pro4 vided under subsection (a).

5 SEC. 103. AFFORDABLE HOUSING EXPANSION PLAN.

6 (a) SUBMISSION OF AFFORDABLE HOUSING EXPAN7 SION PLAN.—The Secretary shall allocate funds under

8 section 102 to a State housing finance agency only if the

9 State housing finance agency has submitted an affordable

10 housing expansion plan, with annual updates, approved by

11 the Secretary and designed to meet the overall very low12 and low-income housing needs of both the rural and urban

13 areas of the State in which the State housing finance

14 agency is located. This plan shall be developed in conjunc15 tion with the housing strategies developed for the applica16 ble States and localities under section 105 of Cranston17 Gonzalez National Affordable Housing Act.

18 (b) CITIZEN PARTICIPATION.—Before submitting an

19 affordable housing expansion plan to the Secretary, a

20 State housing finance agency shall—

21 (1) make available to citizens of the State, pub22 lic agencies and other interested parties information

23 regarding the amount of assistance expected to be

24 made available under this Title and the range of in-
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1 vestment or other uses of such assistance that the

2 State housing finance agency may undertake;

3 (2) publish the proposed plan in a manner that,

4 in the determination of the Secretary, affords af5 fected citizens, public agencies, and other interested

6 parties a reasonable opportunity to review its con7 tents and to submit comments on the proposed plan;

8 (3) hold one or more public hearings to obtain

9 the views of citizens, public agencies, and other in10 terested parties on the housing needs of the State;

11 and

12 (4) provide citizens, public agencies, and other

13 interested parties with reasonable access to records

14 regarding the uses of any assistance that the State

15 housing finance agency may have received under this

16 Title during the preceding 5 years.

17 SEC. 104. ELIGIBLE USE OF FUNDS.

18 Funds made available under this title shall be used

19 for—

20 (1) the acquisition, new construction, recon21 struction, or moderate or substantial rehabilitation

22 of affordable housing for mixed income rental hous23 ing where the assistance provided under section 102

24 shall be used to assist units targeted to low and very
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1 low-income families, including the elderly and per2 sons with disabilities;

3 (2) the moderate and substantial rehabilitation

4 of rental housing units that are currently assisted

5 under State or Federal low-income housing pro6 grams;

7 (3) the preservation of Federal and State low8 income housing units that are at risk of being no

9 longer affordable to low-income families;

10 (4) the purchase and creation of land trusts to

11 allow low- and moderate-income families an oppor12 tunity to rent homes in areas of low-vacancy;

13 (5) conversion of public housing to assisted liv14 ing facilities for the elderly;

15 (6) conversion of section 202 elderly housing to

16 assisted living facilities for the elderly;

17 (7) conversion of HUD-owned or HUD-held

18 multifamily properties upon disposition to housing

19 for the elderly, housing for persons with disabilities

20 and to assisted living facilities for the elderly;

21 (8) creation of sinking funds to maintain re22 serves held by State housing finance agencies to pre23 serve the low-income character of the housing; and

24 (9) the creation of public/private partnerships

25 in which corporations and nonprofits are encouraged
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1 to develop partnerships for the creation of affordable

2 low-income housing.

3 SEC. 105. MATCHING REQUIREMENTS.

4 (a) IN GENERAL.—Each State housing finance agen5 cy shall make contributions for activities under this title

6 that total, throughout a fiscal year, not less than 75 per7 cent of the funds made available under this title.

8 (b) ALLOWABLE AMOUNTS.—

9 (1) APPLICATION TO HOUSING.—A contribution

10 shall be recognized for purposes of a match under

11 subsection (a) only if—

12 (A) made with respect to housing that

13 qualifies as affordable housing under section

14 107; or

15 (B) made with respect to any portion of a

16 project for which not less than 50 percent of

17 the units qualify as affordable housing under

18 section 107.

19 (2) FORM.—A contribution may be in the form

20 of—

21 (A) cash contributions from non-Federal

22 sources, which may not include funds from a

23 grant under section 106(b) or section 106(d) of

24 the Housing and Community Development Act

25 of 1974 or from the value of low income tax
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1 credits allocated pursuant to the Internal Rev2 enue Code;

3 (B) the value of taxes, fees or other

4 charges that are normally and customarily im5 posed but are waived, forgone, or deferred in a

6 manner that achieves affordability of housing

7 assisted under this title;

8 (C) the value of land or other real property

9 as appraised according to procedures acceptable

10 to the Secretary;

11 (D) the value of investment in on-site and

12 off-site infrastructure directly required for af13 fordable housing assisted under this title;

14 (E) the reasonable value of any site-prepa15 ration and construction materials and any do16 nated or voluntary labor in connection with the

17 site-preparation for, construction or rehabilita18 tion of affordable housing; and

19 (F) such other contributions to affordable

20 housing as the Secretary considers appropriate.

21 (3) ADMINISTRATIVE EXPENSES.—Contribu22 tions for administrative expenses may not be recog23 nized for purposes of this section.
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1 SEC. 106. DISTRIBUTION OF ASSISTANCE.

2 Each State housing finance agency shall ensure that

3 the development of new housing under this section is de4 signed to meet both urban and rural needs, and prioritize

5 funding, to the extent practicable, in conjunction with the

6 economic redevelopment of an area.

7 SEC. 107. ELIGIBLE AFFORDABLE HOUSING.

8 (a) PRODUCTION OF AFFORDABLE HOUSING.—In

9 the case of new construction, housing shall qualify for as10 sistance under this title only if the housing—

11 (1) has not less than 30 percent of the units as12 sisted under this title occupied by very low-income

13 families who pay as a contribution towards rent (not

14 including any Federal or State rental subsidy pro15 vided on behalf of the family) not more than 20 per16 cent of the adjusted income of a family whose in17 come equals 50 percent of the median income for the

18 area, as determined by the Secretary, with adjust19 ments for the number of bedrooms in the unit, ex20 cept that the Secretary may establish income ceilings

21 higher or lower than 50 percent of the median in22 come for the area on the basis of the Secretary’s

23 findings that variations are necessary because of the

24 prevailing levels of construction costs or fair market

25 rents, or unusually high or low family incomes;
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1 (2) except as provided under paragraph (1), re2 quires all units assisted under this title to be occu3 pied by households that are low-income families and

4 who pay no more than 30 percent of 100 percent of

5 the median income for an area; and

6 (3) will remain affordable under the require7 ments provided in paragraphs (1) and (2), according

8 to legally binding commitments satisfactory to the

9 Secretary, for not less than 40 years, without regard

10 to the term of the mortgage or to the transfer of

11 ownership, or for such period that the Secretary de12 termines is the longest feasible period of time con13 sistent with sound economics and the purposes of

14 this Act, including foreclosure where the responsi15 bility for maintaining the low-income character of

16 the property will be the responsibility of the State

17 housing finance agency.

18 SEC. 108. TENANT SELECTION.

19 An owner of any housing assisted under this Title

20 shall establish tenant selection procedures consistent with

21 the affordable housing expansion plan of the State housing

22 finance agency.
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1 SEC. 109. PROHIBITION ON USE OF FUNDS FOR SERVICE

2 COORDINATORS OR SUPPORTIVE SERVICES.

3 No funds under this Act may be used for service coor4 dinators or supportive services.

5 SEC. 110. PENALTIES FOR MISUSE OF FUNDS.

6 The Secretary shall recapture any assistance awarded

7 under this Title to the extent the assistance has been used

8 for impermissible purposes. To the extent the Secretary

9 identifies a pattern and practice regarding the misuse of

10 funds awarded under this Title, the Secretary shall deny

11 assistance to that State for up to 5 years, subject to notice

12 and an opportunity for judicial review.

13 SEC. 111. SUBSIDY LAYERING REQUIREMENTS.

14 The requirements of section 102(d) of the Depart15 ment of Housing and Urban Development Reform Act of

16 1989 may be satisfied in connection with assistance, in17 cluding a commitment to insure a mortgage, provided

18 under this Title by a certification of a State housing fi19 nance agency to the Secretary that the combination of as20 sistance within the jurisdiction of the Secretary and other

21 government assistance provided in connection with a prop22 erty assisted under this Title shall not be any greater than

23 is necessary to provide affordable housing.
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1 SEC. 112. MULTIFAMILY RISK-SHARING MORTGAGE INSUR2 ANCE PROGRAM.

3 The Secretary shall carry out a mortgage insurance

4 program through the Federal Housing Administration in

5 conjunction with State housing finance agencies to insure

6 multifamily mortgages for housing that qualifies under

7 this Title. This program shall be consistent with the re8 quirements established under section 542 of the Housing

9 and Community Development Act of 1992, except that

10 housing that meet the requirements of this Title shall be

11 eligible for mortgage insurance.

12 SEC. 113. REGULATIONS.

13 The Secretary shall issue notice and comment rule14 making with final regulations issued no later than 6

15 months after the date of enactment of this Act.

16 SEC. 114. AUTHORIZATION OF APPROPRIATIONS.

17 There is authorized to be appropriated

18 $1,000,000,000 for fiscal year 2000, of which no more

19 than 20 percent of such funds may be used for rehabilita20 tion needs and to preserve existing housing for low-income

21 uses.

22 TITLE II—SECTION 8 VOUCHER SUCCESS

23 DEMONSTRATION

24 SEC. 201. AUTHORITY.

25 The Secretary shall establish a voucher success dem26 onstration to permit public housing agencies to increase
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1 the payment standard for section 8 vouchers for an area

2 in excess of the payment standard established under sec3 tion 8(o)(B) of the United States Housing Act of 1937

4 to assist in helping low-income and very low-income fami5 lies obtain housing in tight rental markets. Except as oth6 erwise provided herein, all assistance provided under this

7 Title shall be subject to the requirements of the United

8 States Housing Act of 1937.

9 SEC. 202. ELIGIBILITY.

10 (a) VOUCHER SUCCESS PLAN.—Not less than annu11 ally, each public housing agency that seeks to participate

12 in the voucher success demonstration under section 201

13 shall submit to the Secretary a voucher success plan

14 that—

15 (1) demonstrates that the market area for

16 which the public housing agency is responsible is an

17 area, based on housing market indicators, such as

18 low vacancy rates or high absorption rates, where

19 there is not adequate available and affordable hous20 ing or where families with vouchers will not be able

21 to locate suitable units or use tenant-based assist22 ance successfully;

23 (2) identifies a payment standard in excess of

24 the payment standard established under section

25 8(o)(B) that will ensure that not less than 97 per-
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1 cent of families with vouchers will be able to obtain

2 suitable housing in that market area within 120

3 days;

4 (3) describes actions that the public housing

5 agency will take that will assist families with vouch6 ers, including seniors and persons with disabilities,

7 to identify and obtain suitable and available afford8 able housing that is close to transportation, employ9 ment opportunities, quality schools and appropriate

10 services; and

11 (4) shall include such other information and

12 commitments as deemed appropriate by the Sec13 retary.

14 (b) INCREASED PAYMENT STANDARD.—The Sec15 retary shall approve a payment standard for a market area

16 under this demonstration to no more than 150 percent of

17 the payment standard established under section 8(o)(B)

18 of the United States Housing Act of 1937. This payment

19 standard shall be published annually in the Federal Reg20 ister and adjusted annually to reflect changes in each mar21 ket area.

22 (c) PROCEDURES.—The Secretary shall establish re23 quirements and procedures for the submission and review

24 of voucher success plans, including requirements for tim-
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1 ing and form of submission, and for the contents and ap2 proval of such plans.

3 (d) REGULATIONS.—The Secretary shall issue in4 terim regulations no later than 3 months after the date

5 of enactment of this Act with final notice and public com6 ment regulations issued no later than 12 months after the

7 date of enactment of this Act.

8 (e) SAVINGS CLAUSE.—A family using a voucher ap9 proved as part of a demonstration under this Title shall

10 be eligible for an approved payment standard in excess

11 of the payment standard established under section 8(o)(d)

12 of the United States Housing Act of 1937 to the extent

13 the assisted family continues to reside in the same housing

14 in which the family was residing on the date in which the

15 housing was determined eligible for the increased payment

16 standard under this Title.

17 SEC. 203. LIMITATION ON FUNDING.

18 Except to the extent additional incremental vouchers

19 are provided in appropriations Acts, for purposes of this

20 section, each public housing agency shall be limited to the

21 section 8 funds allocated to that public housing agency

22 as of October 1, 2000, including appropriate amounts for

23 reserves, for purposes of implementing the voucher success

24 plan.
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1 TITLE III—PRESERVATION OF LOW-INCOME

2 HOUSING AND MISCELLANEOUS PROVISIONS

3 SEC. 301. SECTION 8 PROJECT-BASED FLEXIBILITY.

4 Section 8(o)(13) of the United States Housing Act

5 of 1937 is amended by—

6 (1) in paragraph (A)(ii), striking ‘‘15 percent’’

7 and inserting in lieu thereof ‘‘25 percent’’; and

8 (2) adding the following new paragraph (E) to

9 the end:

10 ‘‘(E) The Secretary shall establish expe11 dited procedures to allow public housing agen12 cies to enter into housing assistance payment

13 contracts with respect to existing structures.’’.

14 SEC. 302. DISPOSITION OF HUD-HELD AND HUD-OWNED

15 MULTIFAMILY PROJECTS.

16 Notwithstanding any other provision of law, the Sec17 retary of Housing and Urban Development shall maintain

18 any rental assistance payments attached to any dwelling

19 units under section 8 of the United States Housing Act

20 of 1937 for all multifamily properties owned by the Sec21 retary and multifamily properties held by the Secretary

22 for purposes of management and disposition of such prop23 erties. To the extent, the Secretary determines that a mul24 tifamily property owned by the Secretary or held by the

25 Secretary is not feasible for continued rental assistance
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1 payments under section 8, the Secretary may, in consulta2 tion with the tenants of that property, contract for project3 based rental assistance payments with an owner or owners

4 of other existing housing properties.

5 SEC. 303. FAMILY UNIFICATION PROGRAM.

6 Section 8(x)(2) of the United States Housing Act of

7 1937 is amended by—

8 (1) striking ‘‘any family (A) who is otherwise

9 eligible for such assistance, and (B)’’ and inserting

10 in lieu thereof: ‘‘(A) any family (i) who is otherwise

11 eligible for such assistance, and (ii)’’; and

12 (2) inserting before the period at the end: ‘‘(B)

13 for a period not to exceed 18 months, youths who

14 have attained at least 18 years of age and not more

15 than 21 years of age and who have left foster care

16 at age 16 or older’’.

17 SEC. 304. PERMANENT EXTENSION OF FHA MULTIFAMILY

18 MORTGAGE CREDIT DEMONSTRATIONS.

19 Section 542 of the Housing and Community Develop20 ment Act of 1992 is amended—

21 (1) by revising subsection (b)(5) to read as fol22 lows:

23 ‘‘(5) INSURANCE AUTHORITY.—Using any au24 thority provided in appropriation Acts to insure

25 mortgages under the National Housing Act, the Sec-
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1 retary may enter into commitments under this sub2 section for risk-sharing units.’’;

3 (2) by revising subsection (c)(4) to read as fol4 lows:

5 ‘‘(4) INSURANCE AUTHORITY.—Using any au6 thority provided in appropriation Acts to insure

7 mortgages under the National Housing Act, the Sec8 retary may enter into commitments under this sub9 section for risk-sharing units.’’;

10 (3) in the heading, by striking ‘‘Demonstra11 tions’’ and inserting ‘‘Programs’’;

12 (4) in the first sentence of subsection (a), by

13 striking ‘‘demonstrate the effectiveness of providing’’

14 and inserting ‘‘provide’’;

15 (5) in the second sentence of subsection (a), by

16 striking ‘‘demonstration’’;

17 (6) in subsection (b)(1), by striking ‘‘determine

18 the effectiveness of’’ and inserting ‘‘provide’’;

19 (7) in subsection (c)(1), by striking ‘‘test the

20 effectiveness of’’ and inserting ‘‘provide’’;

21 (8) by striking subsection (d); and

22 (9) by striking ‘‘pilot’’ and ‘‘PILOT’’ each

23 place it appears.

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