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[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5039 Introduced in House (IH)]

109th CONGRESS
  2d Session
                                H. R. 5039

To establish a program to revitalize rural multifamily housing assisted 
                     under the Housing Act of 1949.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                             March 29, 2006

  Mr. Davis of Kentucky (for himself, Mr. Frank of Massachusetts, Mr. 
   Ney, Mr. Davis of Alabama, Mr. Gary G. Miller of California, Mr. 
   Hinojosa, and Mr. Renzi) introduced the following bill; which was 
            referred to the Committee on Financial Services

_______________________________________________________________________

                                 A BILL

 
To establish a program to revitalize rural multifamily housing assisted 
                     under the Housing Act of 1949.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Saving America's Rural Housing Act 
of 2006''.

SEC. 2. FINDINGS AND PURPOSES.

    (a) Findings.--The Congress finds that--
            (1) section 502(c) of the Housing Act of 1949 restricts the 
        rights of certain owners of projects for which loans were made 
        or insured under section 515 of such Act to prepay such loans;
            (2) expensive litigation against the Department of 
        Agriculture has cost the taxpayers of the United States 
        millions of dollars to date, funds that would be better spent 
        preserving affordable multifamily housing;
            (3) if such section 502(c) is partially repealed and the 
        prepayment restrictions are eliminated for multifamily housing 
        loans made before 1989 under section 515, it is expected, 
        according to a report, that approximately 10 percent of the 
        portfolio of such loans would be prepaid and those projects 
        would leave the program;
            (4) the average age of a multifamily housing project with a 
        section 515 loan is 28 years, and therefore much of the 
        portfolio of such projects is aging and in need of 
        revitalization, while the need for affordable rural housing is 
        increasing;
            (5) section 515 projects house some of the poorest families 
        in rural America, with almost 60 percent of the units occupied 
        by senior citizens or persons with disabilities and an average 
        annual household income among all occupants of approximately 
        $9,000;
            (6) in many small towns and communities, rental housing 
        financed by direct loans under section 515 is the only decent, 
        affordable rental housing available.; and
            (7) consequently, any revitalization or disposition of this 
        portfolio, which houses nearly 500,000 low-income families and 
        seniors, should be handled with great care.
    (b) Purposes.--The purposes of this Act are--
            (1) to authorize the Secretary of Agriculture to carry out 
        a program that encourages, to the extent practicable, the 
        retention of section 515 housing projects developments for 
        long-term use and the repair and preservation of such 
        properties, and ensures that the minimum number of residents 
        are displaced;
            (2) to repeal a portion of section 502(c) of the Housing 
        Act of 1949 to avoid further costly litigation against the 
        Department of Agriculture;
            (3) to preserve the availability of affordable rural 
        housing by providing a voluntary mechanism for owners of 
        multifamily rural housing projects with loans under section 515 
        to enter into loan restructuring agreements with the Secretary 
        to provide capital for revitalization activities; and
            (4) to provide for affordable rents for tenants who live in 
        such projects that are revitalized under this Act and to 
        protect tenants who live in such projects for which the loan is 
        prepaid.

SEC. 3. REVITALIZATION OF MULTIFAMILY HOUSING.

    (a) Revitalization Program.--Title V of the Housing Act of 1949 (42 
U.S.C. 1471 et seq.) is amended by adding at the end the following new 
section:

``SEC. 544. REVITALIZATION AND TENANT PROTECTION VOUCHERS.

    ``(a) Purpose.--The purposes of this section are--
            ``(1) to protect tenants who live in multifamily housing 
        projects that are subsidized under this title and, in the case 
        of prepayments of loans under section 515, to protect tenants 
        that are displaced when the projects cease being eligible 
        projects;
            ``(2) to strengthen the long-term viability of eligible 
        projects;
            ``(3) to promote the revitalization of rural multifamily 
        housing projects; and
            ``(4) to accomplish such several purposes--
                    ``(A) by providing a voluntary mechanism for 
                project owners to enter into loan restructuring 
                agreements with the Secretary to obtain new types of 
                financial assistance to rehabilitate and maintain the 
                projects; and
                    ``(B) by deregulating certain projects in a manner 
                that still provides measurable performance standards 
                and effective financing and rehabilitation of 
                multifamily housing.
    ``(b) Revitalization.--
            ``(1) In general.--The Secretary shall, subject to the 
        availability of amounts appropriated, carry out a 
        revitalization program in accordance with this subsection to 
        provide financial incentives and other assistance to owners of 
        eligible projects through voluntary long-term use agreements 
        entered into between the project owners and the Secretary.
            ``(2) Applications to participate.--The Secretary may 
        accept applications from owners of eligible projects to 
        participate in the revitalization program under this section.
            ``(3) Long-term viability plan.--
                    ``(A) Requirement.--The Secretary may prepare and 
                approve a long-term viability plan under this paragraph 
                with respect to each eligible project for which the 
                owner requests to participate.
                    ``(B) Contents.--Each long-term viability plan for 
                an eligible project shall include the following 
                information:
                            ``(i) Comprehensive needs assessment.--A 
                        comprehensive needs assessment of the project 
                        that identifies and projects, for the following 
                        20 years--
                                    ``(I) all necessary repairs, 
                                improvements, maintenance, and 
                                management standards for the project, 
                                and when they will be made, in order to 
                                meet the requirements of this title; 
                                and
                                    ``(II) the costs associated with 
                                the items referred to in this 
                                subparagraph (A).
                            ``(ii) Financial plan.--A financial plan 
                        for the project that--
                                    ``(I) reviews the financial 
                                stability of the project;
                                    ``(II) includes the loan 
                                restructuring elements, rent 
                                adjustments, management and operational 
                                efficiencies, and other financial 
                                adjustments to the project that are 
                                necessary to cover operating expenses 
                                for the project and maintain an 
                                adequate financial reserve for the 
                                future maintenance and capital needs of 
                                the project;
                                    ``(III) provides the project owner 
                                with a long-term rate of return on new 
                                capital, including any portion of low-
                                income housing tax credit proceeds used 
                                for hard construction costs, as 
                                determined by the Secretary, 
                                commensurate to comparable commercial 
                                multifamily housing projects;
                                    ``(IV) meets the comprehensive 
                                needs for the project determined under 
                                the comprehensive needs assessment; and
                                    ``(V) ensures that rents available 
                                under the plan are affordable to 
                                eligible households in accordance with 
                                paragraph (7).
                    ``(C) Development through participating 
                administrative entities.--The Secretary may develop 
                long-term viability plans through the use of third-
                party participating administrative entities, who may be 
                a private contractor, a State housing finance agency, 
                or a nonprofit organization.
                    ``(D) Revitalization determination.--Based on the 
                long-term viability plan for an eligible project, the 
                Secretary shall determine whether to offer the project 
                owner a financial restructuring plan under paragraph 
                (4) and the financial incentives to be included in any 
                such plan offered.
                    ``(E) Final review and comment.--With respect to 
                any long-term viability plan prepared by the Secretary, 
                the Secretary shall provide the project owner an 
                opportunity to review the plan and discuss the plan 
                with the Secretary or its agent before a determination 
                is made under subparagraph (D).
                    ``(F) Fees.--The Secretary may charge the project 
                owner a fee for preparation of the long-term viability 
                plan.
                    ``(G) Payment of fees.--If a long-term viability 
                for a project is approved, the payment of such fee may 
                be incorporated into a project owner's financial 
                restructuring plan for the project provided by the 
                Secretary pursuant to paragraph (4)
            ``(4) Financial restructuring plan; revitalization 
        incentives.--Based on the long-term viability plan for an 
        eligible project, the Secretary may offer a project owner a 
        financial restructuring plan for the project. Such a plan may 
        include one or more of the following revitalization incentives:
                    ``(A) Reduction or elimination of interest on the 
                loan for the project made under section 515.
                    ``(B) Partial or full deferral of payments due 
                under such loan.
                    ``(C) Forgiveness of such loan.
                    ``(D) Subordination of such loan, subject to such 
                terms and conditions as the Secretary shall determine.
                    ``(E) Reamortization of loan payments under such 
                loan over extended terms.
                    ``(F) A grant from the Secretary for the project.
                    ``(G) Payment of project costs associated with 
                developing the long-term viability plan.
                    ``(H) Opportunity for project owners to obtain 
                further investment equity from third parties in the 
                project.
                    ``(I) A direct loan or guarantee of a loan for the 
                project, with a subsidized interest rate without regard 
                to the value of the project.
            ``(5) Long-term use agreement.--
                    ``(A) In general.--If the owner of an eligible 
                project agrees to the terms of a financial 
                restructuring plan for the project providing 
                revitalization benefits under paragraph (4), in 
                exchange for such benefits, the Secretary and the 
                project owner shall enter into a long-term use 
                agreement under this paragraph for the project.
                    ``(B) Agreement.--A long-term use agreement for an 
                eligible project shall include--
                            ``(i) the terms of the financial 
                        restructuring plan for the project, including 
                        any revitalization incentives to be provided;
                            ``(ii) an agreement by the project owner--
                                    ``(I) to continue the property use 
                                restrictions with respect to the 
                                project in accordance with this title 
                                for a period of (aa) 20 years, or (bb) 
                                the remaining term of any loans under 
                                this title for the project, whichever 
                                ends later;
                                    ``(II) to comply with the long-term 
                                viability plan for the project;
                                    ``(III) to comply with the rent 
                                terms under paragraph (7) for the 
                                project; and
                                    ``(IV) to make value payments under 
                                paragraph (6) to the Secretary, and the 
                                terms of such payments;
                            ``(iii) provisions terminating the 
                        agreement if any revitalization incentives for 
                        the project to be provided under the agreement 
                        are no longer available and the Secretary 
                        determines that such unavailability is not the 
                        fault of the owner;
                            ``(iv) any rent terms for the project 
                        pursuant to paragraph (7);
                            ``(v) a covenant which runs with the land; 
                        and
                            ``(vi) such other terms as the Secretary 
                        determines are necessary to implement the 
                        purposes of this section.
            ``(6) Shared value agreements.--Each long-term use 
        agreement shall include a shared value agreement secured by the 
        property of the eligible project that is the subject of the 
        long-term use agreement, which shall determine how proceeds are 
        divided at the end of the term of the loan and shall require 
        the project owner, at the end of such loan term, to pay the 
        lesser of--
                    ``(A) the sum of--
                            ``(i) the amounts of any loan writedowns, 
                        write-offs, and interest subsidies provided in 
                        connection with the loan restructuring under 
                        this subsection, at the closing of 
                        revitalization;
                            ``(ii) any outstanding principal and 
                        interest; and
                            ``(iii) any non-loan funds provided by the 
                        Secretary under this subsection; or
                    ``(B) 75 percent of the appraised value of the 
                eligible project.
            ``(7) Rents under long-term use agreement.--In any eligible 
        project that is subject to a long-term use agreement, rents for 
        eligible households shall comply with the following 
        requirements:
                    ``(A) Minimum rent.--The Secretary, acting through 
                the director of the applicable local agency or office 
                of the Department responsible for carrying out the 
                programs under this title in such area, may provide 
                that each eligible household is charged a minimum 
                monthly rent in an amount determined by such local 
                director that does not in any case exceed $25. The 
                Secretary may allow exceptions to such minimum rent for 
                an eligible household or groups of eligible households 
                for demonstrated hardship, as determined by the 
                Secretary, which hardship exceptions, if allowed by the 
                Secretary, shall include the hardship exceptions 
                provided or established by the Secretary of Housing and 
                Urban Development, as appropriate, under subclauses (I) 
                through (V) of section 3(a)(3)(B)(i) of the United 
                States Housing Act of 1937 (42 U.S.C. 
                1437a(a)(3)(B)(i)).
                    ``(B) Maximum rent.--Notwithstanding any minimum 
                monthly rent established pursuant to subparagraph (A), 
                the amount of monthly rent charged to any eligible 
                household may not exceed 30 percent of the adjusted 
                income of the eligible household. Such local director 
                may take such actions as may be necessary to verify 
                tenant incomes for purposes of carrying out this 
                subparagraph.
                    ``(C) Rent adjustments.--The rents for eligible 
                households may be increased or decreased only on an 
                annual basis and only in accordance with standards 
                incorporated in such agreement. The Secretary shall 
                issue regulations establishing such standards, which 
                shall include standards for rents that are considered 
                affordable for eligible households for the area in 
                which a project is located and for establishing rents 
                that conform to such standards.
            ``(8) Lowest cost requirement.--In determining the terms of 
        a restructuring plan, and the type and amount of revitalization 
        benefits under such plan to approve under this subsection for 
        an eligible project, the Secretary shall, to the extent 
        practicable, approve assistance that imposes the least cost to 
        the Secretary while meeting the requirements of the long-term 
        viability plan for the project.
    ``(c) Homeownership Opportunities.--The owner of an eligible 
project may, in conjunction with revitalization of the project pursuant 
to this section, propose a sale to a tenant-based condominium or 
cooperative. Any such proposal shall be subject to a notice to tenants 
under terms that the Secretary shall establish.
    ``(d) Determination of Ineligibility.--
            ``(1) Procedure.--The Secretary may determine that a 
        project owner is ineligible for participation in the 
        revitalization program under this section in accordance with 
        the standards under paragraph (2).
            ``(2) Standards.-- The Secretary may determine that a 
        project owner is ineligible if--
                    ``(A) the project owner has a history of poor 
                management or maintenance of multifamily housing 
                properties;
                    ``(B) the project owner is in default on a loan 
                made available under the section 514 or 515 housing 
                program;
                    ``(C) the Secretary is unable to enter into a long-
                term use agreement for the project that is the subject 
                of the application with the project owner within a 
                reasonable time;
                    ``(D) the project owner is suspended or debarred 
                from participating in Federal contracts or programs; or
                    ``(E) the Secretary has other good cause for 
                withholding from the project owner the benefits made 
                available under this section.
    ``(e) Definitions.--For purposes of this section, the following 
definitions shall apply:
            ``(1) Eligible household.--The term `eligible household' 
        means a household that, under section 515, is eligible to 
        reside in a project funded with a loan made by the Secretary 
        under such section.
            ``(2) Eligible project.--The term `eligible project' means 
        a housing project funded with a loan made at any time by the 
        Secretary under section 515, the principal obligation of which 
        has not been fully repaid.
            ``(3) Project owner; owner.--The terms `project owner' and 
        `owner' mean, with respect to an eligible project, an 
        individual or entity, or principals thereof that own, or plan 
        to purchase, the project.''.
    (b) Priority for Section 515 Financing.--Subsection (j) of section 
515 of the Housing Act of 1949 (42 U.S.C. 1485(j)) is amended--
            (1) by inserting ``(1)'' before ``For''; and
            (2) by adding at the end the following new paragraph:
            ``(2) The Secretary may give priority, in entering into 
        contracts under this section involving financing for new 
        construction of a project, for projects located in areas having 
        a need for affordable low-income rental housing due to 
        prepayment of loans made or insured under this section.''.
    (c) Partial Repeal of Prepayment Restrictions; Administration of 
Prepayment Requests.--Section 502 of the Housing Act of 1949 (42 U.S.C. 
1472) is amended--
            (1) in subsection (c)--
                    (A) by striking ``or 515'' each place such term 
                appears; and
                    (B) in paragraph (5)(G)(i)(I), by striking ``, as 
                the case may be,''; and
            (2) by adding at the end the following new subsection:
    ``(i) Prepayment of Section 515 Multifamily Housing Loans.--
            ``(1) Administration.--
                    ``(A) Plan.--The Secretary shall develop a plan to 
                administer requests to prepay (not made in connection 
                with any revitalization under section 544) any loan 
                made under section 515. The plan shall provide for 
                administration of voucher assistance in accordance with 
                paragraph (3). The plan shall encourage and facilitate 
                owners of projects to maintain the projects, or to 
                transfer projects to owners who will maintain projects, 
                as housing affordable to low-income residents.
                    ``(B) Implementation.--The Secretary shall 
                implement this subsection not later than the expiration 
                of the 90-day period beginning on the date of the 
                enactment of the Saving America's Rural Housing Act of 
                2006. Notwithstanding that full implementation of this 
                subsection may not have been completed, the Secretary 
                may not delay the processing of any request to prepay a 
                loan made under section 515.
            ``(2) Notice of prepayment and sale.--As a condition of 
        prepayment of a loan made or insured under section 515, the 
        project owner shall, not less than 90 days before taking any 
        action to prepay the loan or sell the project for which the 
        loan was made, provide the following notices:
                    ``(A) Notice to tenants.--To the tenants of the 
                project, notice of the prepayment, as follows:
                            ``(i) The notice shall include information 
                        sufficient to inform tenants of the 
                        availability of vouchers pursuant to paragraph 
                        (3), actions tenants must take to receive 
                        voucher assistance, the date prepayment is 
                        expected to take place, a telephone number and 
                        electronic mail address at which to contact the 
                        owner of the project, and any limitations, use, 
                        and other terms the Secretary considers 
                        appropriate.
                            ``(ii) In the case of any prepayment 
                        involving transfer of the ownership of a 
                        project, the notice shall include the name of 
                        the transferee, the date that the transfer was 
                        agreed to, the date the transfer is to take 
                        place, and telephone numbers and electronic 
                        mail addresses at which to contact the 
                        transferor and transferee.
                    ``(B) Notice to secretary.--To the Secretary, 
                notice that the requirements under subparagraph (A) 
                have been met, which shall identify the date that 
                notice under such subparagraph was made and the names 
                or each tenant to which such notice was provided.
            ``(3) Rural tenant protection vouchers.--
                    ``(A) In general.--If the owner of a housing 
                project subject to a loan made under section 515 
                prepays the loan, the Secretary shall, to the extent 
                that amounts for assistance under this paragraph are 
                provided in advance in appropriation Acts, make voucher 
                assistance available to each low-income family who on 
                the date of prepayment is residing in a dwelling unit 
                in the project.
                    ``(B) Use.--A voucher under this paragraph for a 
                family may be used for rental of a dwelling unit in the 
                project that the family resides in on the date of the 
                prepayment referred to in subparagraph (A) or for a 
                dwelling unit elsewhere.
                    ``(C) Right to use.--In the case of a project for 
                which a loan made under section 515 is prepaid, the 
                owner of the project may not refuse to lease, to a 
                family for whom voucher assistance under this paragraph 
                is made available, any available rental dwelling unit 
                in the project a proximate cause of which is the status 
                of such family as a recipient of such assistance.
                    ``(D) Amount of assistance.--The amount of rental 
                assistance provided under a voucher under this 
                paragraph on behalf of a tenant shall be the amount by 
                which--
                            ``(i) the lesser of (I) the rent for the 
                        dwelling unit rented using such voucher, or 
                        (II) the rent for a comparable unit in the same 
                        market area as the housing project for which 
                        the loan was prepaid; exceeds
                            ``(ii) the lesser of (I) the amount of rent 
                        paid by the tenant for the dwelling unit 
                        occupied by the tenant at the time of the 
                        prepayment referred to in paragraph (1), or 
                        (II) the amount equal to 30 percent of the 
                        tenant's adjusted income (as such term is 
                        defined in section 3(b) of the United States 
                        Housing Act of 1937 (42 U.S.C. 1437a(b)).
                    ``(E) Rural affordable voucher.--For communities 
                with insufficient affordable housing alternatives, as 
                determined by the Secretary, voucher assistance under 
                this paragraph may be provided in accordance with 
                section 8(t)(1) of the United States Housing Act of 
                1937 (42 U.S.C. 1437f(t)(1)).
                    ``(F) Administration.--To the maximum extent 
                practicable, the Secretary shall administer voucher 
                assistance under this paragraph in accordance with 
                regulations and administrative guidance for housing 
                vouchers administered by the Secretary of Housing and 
                Urban Development under section 8 of such Act.
                    ``(G) Homeownership opportunities.--A voucher under 
                this paragraph may be used by a tenant to make payments 
                towards the purchase of a single-family home anywhere 
                in the United States, subject to subsidy limits for 
                vouchers under this title and the same limitations 
                applicable under section 8(y) of the United States 
                Housing Act of 1937 (42 U.S.C. 1437f(y) to the use of 
                tenant-based assistance under such section 8 for 
                homeownership.
            ``(4) Prepayment standards for pre-1989 loans.--In the case 
        of a loan made or insured under section 515 pursuant to a 
        contract entered into before December 15, 1989:
                    ``(A) In general.--Subject to subparagraph (B), the 
                Secretary shall approve any offer to prepay such a loan 
                that meets the following requirements:
                            ``(i) The borrower under the loan has not 
                        been provided any assistance to extend low-
                        income use pursuant to section 502(c)(4) of 
                        this Act, as such section was in effect before 
                        the date of the enactment of the Saving 
                        America's Rural Housing Act of 2006.
                            ``(ii) The loan was not at any time 
                        restricted by servicing actions, including 
                        transfers.
                            ``(iii) The 20-year period during which the 
                        project is subject to use restrictions under 
                        the loan has concluded.
                    ``(B) Prohibition.--The Secretary may not approve 
                any offer to prepay such a loan during the 20-year 
                period during which the project is subject to use 
                restrictions under the loan.
            ``(5) Sale restrictions.--During the period that begins 
        upon the owner providing notice to the Secretary under 
        paragraph (2)(B) and having a duration of 75 days, the owner 
        may not sell the property except to a purchaser who enters into 
        such binding agreements for purchase at market rates as the 
        Secretary considers necessary to continue the property use 
        restrictions with respect to the project in accordance with 
        this title for a period of 20 years. This paragraph may not be 
        construed to prohibit an owner, during such period, from 
        soliciting or receiving any offers of sale or purchase.
            ``(6) Database of potential buyers.--The Secretary shall 
        establish and maintain a database of potential buyers of 
        projects with loans made under section 515. Such database shall 
        include only persons who have expressed an interest to the 
        Secretary in purchasing such projects at fair market value and 
        maintaining the projects for use as affordable housing.''.

SEC. 4. CONFORMING AMENDMENTS TO TITLE V OF THE HOUSING ACT OF 1949.

    Title V of the Housing Act of 1949 is amended--
            (1) in section 502(b)(2) (42 U.S.C. 1472(b)(2))--
                    (A) by striking ``or 515''; and
                    (B) by inserting before the semicolon at the end 
                the following: ``and any prepayment of a loan made or 
                insured under section 515 shall be subject to the 
                provisions of subsection (i)''; and
            (2) in section 537(b)(1) (42 U.S.C. 1490p-1(b)(1)), by 
        inserting before the semicolon the following: `` and to 
        administer the revitalization program under section 544''.
                                 <all>
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