II 

112TH CONGRESS 

2D SESSION S. 3538 

To reform laws relating to small public housing agencies, and for other 

purposes. 

IN THE SENATE OF THE UNITED STATES 

SEPTEMBER 13, 2012 

Mr. JOHANNS (for himself and Mr. TESTER) introduced the following bill; 

which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs 

A BILL 

To reform laws relating to small public housing agencies, 

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 ‘‘Small Public Housing 

5 Agency Opportunity Act of 2012’’. 

6 SEC. 2. FINDINGS AND PURPOSE. 

7 (a) FINDINGS.—Congress finds the following: 

8 (1) Although small public housing agencies are 

9 numerous, they administer only a small fraction of 


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1 the financial resources provided under the Federal 

2 housing programs. 

3 (2) The oversight of small public housing agen4 cies by the Department of Housing and Urban De5 velopment is disproportionate to the financial risk 

6 the operations of these agencies pose to the Federal 

7 Government. 

8 (3) Small public housing agencies perform bet9 ter than larger agencies, as public housing agency 

10 performance is presently measured by the Federal 

11 Government. 

12 (4) The Department of Housing and Urban De13 velopment should deploy its administrative oversight 

14 resources in a manner that reflects relative risk to 

15 the Federal Government. 

16 (5) Regulatory and administrative burdens that 

17 may be reasonable for larger public housing agencies 

18 may not be so for smaller public housing agencies 

19 with more limited resources. 

20 (6) Eliminating unnecessary or unreasonable 

21 regulatory and administrative burdens will improve 

22 the effectiveness of small public housing agencies as 

23 providers of housing assistance to low income fami24 lies. 


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1 (7) Small public housing agencies and their 

2 residents would benefit from, and small public hous3 ing agencies should be afforded, maximum flexibility 

4 in the use of their resources. 

5 (8) Congress and the Department of Housing 

6 and Urban Development should reduce administra7 tive and regulatory burdens on small public housing 

8 agencies. 

9 (9) Public housing revitalization funding has 

10 been largely unavailable to small public housing 

11 agencies. 

12 (10) Congress should establish a program of as13 sistance to enable public housing revitalization ac14 tivities by small public housing agencies. 

15 (11) Small public housing agencies and their 

16 residents would benefit from conversion of their pub17 lic housing projects to projects assisted with project18 based section 8 rental assistance. 

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

20 (1) to assure the long-term viability and effec21 tiveness of the small public housing agencies and the 

22 housing assistance programs they operate; 

23 (2) to ensure that small public housing agencies 

24 are not subject to unnecessary Federal regulatory 

25 control and administrative requirements; 


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1 (3) to afford flexibility to small public housing 

2 agencies in the use of their resources; 

3 (4) to adjust Federal oversight requirements for 

4 small public housing agencies to better reflect finan5 cial risk to the Federal Government and the relative 

6 resources of such agencies; 

7 (5) to explore innovative approaches to simpli8 fying determination of income and tenant rents; and 

9 (6) to ensure that small public housing agencies 

10 have access to the resources necessary for the mod11 ernization and revitalization of their public housing 

12 stock. 

13 SEC. 3. SMALL PUBLIC HOUSING AGENCIES. 

14 (a) IN GENERAL.—Title I of the United States Hous15 ing Act of 1937 (42 U.S.C. 1437 et seq.) is amended by 

16 adding at the end the following: 

17 ‘‘SEC. 37. SMALL PUBLIC HOUSING AGENCIES. 

18 ‘‘(a) DEFINITIONS.—In this section, the following 

19 definitions shall apply: 

20 ‘‘(1) HOUSING VOUCHER PROGRAM.—The term 

21 ‘housing voucher program’ means a program for ten22 ant-based assistance under section 8. 

23 ‘‘(2) SMALL PUBLIC HOUSING AGENCY.— 

24 ‘‘(A) IN GENERAL.—The term ‘small pub25 lic housing agency’ means a public housing 


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1 agency for which the sum of the number of 

2 public housing dwelling units administered by 

3 the agency and the number of vouchers under 

4 section 8(o) administered by the agency is 550 

5 or fewer. 

6 ‘‘(B) TRANSITION.—A public housing 

7 agency that qualifies as an eligible small public 

8 housing agency but subsequently fails to meet 

9 the qualification criterion in subsection (a) shall 

10 remain an eligible small public housing agency 

11 for 3 additional years to provide for a transition 

12 to noneligible status in order to avoid disrup13 tion in the plans and projects undertaken by 

14 the agency. 

15 ‘‘(3) TROUBLED SMALL PUBLIC HOUSING AGEN16 CY.—The term ‘troubled small public housing agen17 cy’ means a small public housing agency designated 

18 by the Secretary as a troubled small public housing 

19 agency under subsection (c)(4). 

20 ‘‘(b) APPLICABILITY.—Except as otherwise provided 

21 in this section, a small public housing agency shall be sub22 ject to the same requirements as a public housing agency. 

23 ‘‘(c) PROGRAM INSPECTIONS AND EVALUATIONS.— 

24 ‘‘(1) PUBLIC HOUSING PROJECTS.— 

25 ‘‘(A) PHYSICAL INSPECTIONS.— 


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1 ‘‘(i) FREQUENCY.— 

2 ‘‘(I) INSPECTION BY THE SEC3 RETARY.—The Secretary shall carry 

4 out an inspection of the physical con5 dition of a small public housing agen6 cy’s public housing projects not more 

7 frequently than once every 3 years, 

8 unless the agency has been designated 

9 by the Secretary as troubled small 

10 public housing agency based on defi11 ciencies in the physical condition of its 

12 public housing projects. 

13 ‘‘(II) INSPECTION BY AGEN14 CIES.—A small public housing agency 

15 shall not be subject to section 6(f)(3), 

16 and the Secretary may not otherwise 

17 require the small public housing agen18 cy to inspect its public housing units. 

19 ‘‘(ii) STANDARDS.—The Secretary 

20 shall apply to small public housing agen21 cies the same standards for the acceptable 

22 condition of public housing projects that 

23 apply to projects assisted under section 8. 

24 ‘‘(B) FINANCIAL CONDITION.—The Sec25 retary shall determine the financial condition of 


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1 a small public housing agency’s public housing 

2 program solely on the basis of the ratio of cur3 rent assets to current liabilities. A ratio of at 

4 least 1 shall result in a determination that the 

5 financial condition of a small public housing 

6 agency is acceptable. 

7 ‘‘(C) MANAGEMENT CONDITION.— 

8 ‘‘(i) DETERMINATION.— 

9 ‘‘(I) IN GENERAL.—Except as 

10 provided in clause (ii), the Secretary 

11 shall determine the management con12 dition of a small public housing agen13 cy’s public housing program solely on 

14 the basis of the ratio of vacant unit 

15 months to eligible unit months. 

16 ‘‘(II) RATIO.—Except as pro17 vided in subclause (III), a ratio of not 

18 more than 10 percent shall result in a 

19 determination that the management 

20 condition of a small public housing 

21 agency is acceptable. 

22 ‘‘(III) EXCEPTION.—In deter23 mining the management condition of a 

24 program or project of a small public 

25 housing agency with an extremely low 


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1 number of public housing units, the 

2 Secretary may apply a ratio or stand3 ard that is different than the standard 

4 under this subparagraph. 

5 ‘‘(ii) CHANGING MARKET CONDI6 TIONS.—In determining the management 

7 condition of a small public housing agen8 cy’s public housing program, the Secretary 

9 shall take into consideration a demonstra10 tion by the small public housing agency 

11 that its inability to lease an adequate num12 ber of units is a result of changes in mar13 ket conditions. 

14 ‘‘(2) HOUSING VOUCHER PROGRAM.— 

15 ‘‘(A) PHYSICAL INSPECTION OF ASSISTED

16 UNITS.—A small public housing agency admin17 istering assistance under section 8(o) shall 

18 make periodic physical inspections of each as19 sisted dwelling unit not less frequently than 

20 once every 3 years, to determine whether the 

21 unit is maintained in accordance with the re22 quirements under section 8(o)(8)(A). 

23 ‘‘(B) MANAGEMENT ASSESSMENT.—The 

24 Secretary shall evaluate the management of a 

25 voucher program of a small public housing 


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1 agency solely on the basis of the lease-up rate 

2 or the budget utilization rate of the small public 

3 housing agency. A lease-up rate or budget utili4 zation rate of at least 90 percent shall result in 

5 a determination that the management of the 

6 voucher program is acceptable. 

7 ‘‘(3) HIGH-PERFORMING AGENCIES.—The Sec8 retary shall designate a small public housing agency 

9 as a high-performing agency if the Secretary deter10 mines that the small public housing agency exceeds 

11 the criteria for acceptability established under para12 graphs (1) and (2) by an extent established by the 

13 Secretary, by rule. 

14 ‘‘(4) TROUBLED SMALL PUBLIC HOUSING AGEN15 CIES.— 

16 ‘‘(A) PUBLIC HOUSING PROGRAM.—Not17 withstanding any other provision of law, the 

18 Secretary may designate a small public housing 

19 agency as a troubled small public housing agen20 cy with respect to the public housing program 

21 of the small public housing agency only if the 

22 Secretary determines that the agency— 

23 ‘‘(i) has failed— 

24 ‘‘(I) to maintain its public hous25 ing units in a satisfactory physical 


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1 condition, based upon an inspection 

2 conducted by the Secretary; and 

3 ‘‘(II) to correct deficiencies be4 fore the date that is 90 days after the 

5 date on which the Secretary verifies 

6 the inspection results; 

7 ‘‘(ii) does not have at the end of its 

8 fiscal year an acceptable ratio of current 

9 assets to current liabilities, as determined 

10 under paragraph (1)(B); 

11 ‘‘(iii) has failed to maintain an accept12 able average ratio of vacant unit months to 

13 eligible unit months during any calendar 

14 year, as determined under paragraph 

15 (1)(C), and that the failure is not the re16 sult of changes in market conditions; or 

17 ‘‘(iv) has failed to account for its reve18 nues and expenses, misappropriated Fed19 eral funds, or otherwise failed to comply 

20 with applicable Federal law. 

21 ‘‘(B) HOUSING VOUCHER PROGRAM.—Not22 withstanding any other provision of law, the 

23 Secretary may designate a small public housing 

24 agency as a troubled small public housing agen25 cy with respect to the housing voucher program 


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1 of the small public housing agency only if the 

2 Secretary determines that the agency— 

3 ‘‘(i) has failed to comply with the in4 spection requirements under paragraph 

5 (2)(A); 

6 ‘‘(ii) during the calendar year has 

7 failed to maintain an acceptable lease-up 

8 rate or budget utilization rate, as deter9 mined under paragraph (2)(B); or 

10 ‘‘(iii) has failed to account for its rev11 enues and expenses, misappropriated Fed12 eral funds, or otherwise failed to comply 

13 with applicable Federal law. 

14 ‘‘(C) APPEALS.— 

15 ‘‘(i) ESTABLISHMENT.—The Secretary 

16 shall establish an appeals process under 

17 which a small public housing agency may 

18 dispute a determination of deficiency. 

19 ‘‘(ii) OFFICIAL.—The appeals process 

20 established under clause (i) shall provide 

21 for a decision by an official who has not 

22 been involved, and is not subordinate to a 

23 person who has been involved, in the origi24 nal determination of deficiency. 

25 ‘‘(D) CORRECTIVE ACTION AGREEMENT.— 


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1 ‘‘(i) AGREEMENT REQUIRED.—Not 

2 later than 60 days after the date on which 

3 a small public housing agency is des4 ignated as a troubled public housing agen5 cy, the Secretary and the small public 

6 housing agency shall enter in to a correc7 tive action agreement under which the 

8 small public housing agency shall under9 take actions to correct the deficiencies 

10 upon which the designation is based. 

11 ‘‘(ii) TERMS OF AGREEMENT.—A cor12 rective action agreement entered into 

13 under clause (i) shall— 

14 ‘‘(I) have a term of 1 year, and 

15 shall be renewable at the option of the 

16 Secretary; 

17 ‘‘(II) provide, where feasible, for 

18 technical assistance to assist the pub19 lic housing agency in curing its defi20 ciencies; 

21 ‘‘(III) provide for— 

22 ‘‘(aa) reconsideration of the 

23 designation of the small public 

24 housing agency as a troubled 

25 small public housing agency not 


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1 less frequently than annually; 

2 and 

3 ‘‘(bb) termination of the 

4 agreement when the Secretary 

5 determines that the small public 

6 housing agency is no longer a 

7 troubled small public housing 

8 agency; and 

9 ‘‘(IV) provide that in the event of 

10 substantial noncompliance by the 

11 small public housing agency under the 

12 agreement, the Secretary may— 

13 ‘‘(aa) contract with another 

14 public housing agency or a pri15 vate entity to manage the public 

16 housing of the troubled small 

17 public housing agency; 

18 ‘‘(bb) withhold funds other19 wise distributable to the troubled 

20 small public housing agency; 

21 ‘‘(cc) assume possession of, 

22 and direct responsibility for, 

23 managing the public housing of 

24 the trouble small public housing 

25 agency; 


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1 ‘‘(dd) petition for the ap2 pointment of a receiver, in ac3 cordance with section 

4 6(j)(3)(A)(ii); and 

5 ‘‘(ee) exercise any other 

6 remedy available to the Secretary 

7 in the event of default under the 

8 public housing annual contribu9 tions contract entered into by the 

10 small public housing agency 

11 under section 5. 

12 ‘‘(E) EMERGENCY ACTIONS.—Nothing in 

13 this paragraph may be construed to prohibit the 

14 Secretary from taking any emergency action 

15 necessary to protect Federal financial resources 

16 or the health or safety of residents of public 

17 housing projects. 

18 ‘‘(d) REDUCTION OF ADMINISTRATIVE BURDENS.— 

19 ‘‘(1) REPORTS.— 

20 ‘‘(A) COMPARABILITY WITH SECTION 8 RE21 QUIREMENTS.—Notwithstanding any other pro22 vision of law, and except as otherwise provided 

23 in this section, the Secretary may not require a 

24 small public housing agency to submit any re25 port, plan, or other information with respect to 


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1 the public housing units, projects, or programs 

2 of the small public housing agency if the report, 

3 plan, or other information is not required to be 

4 submitted by the owner of a project assisted 

5 under section 8 that is covered by a mortgage 

6 insured by the Secretary. 

7 ‘‘(B) EXCEPTION FOR DESIGNATED HOUS8 ING FOR ELDERLY AND DISABLED FAMILIES.— 

9 A small public housing agency shall submit to 

10 the Secretary the plan required by section 7 in 

11 order to designate occupancy in public housing 

12 units in accordance with section 7. 

13 ‘‘(C) COMPLIANCE.—For purposes of de14 termining the benefits or funding available to a 

15 small public housing agency, the small public 

16 housing agency shall be deemed to be in compli17 ance with a requirement under Federal law to 

18 submit a report, plan, or other information with 

19 respect to the public housing units, projects, or 

20 programs of the small public housing agency if 

21 the small public housing agency submits the re22 ports, plans, or other information required 

23 under subparagraphs (A) and (B). 

24 ‘‘(2) COMMUNITY SERVICE.— 


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1 ‘‘(A) IN GENERAL.—Notwithstanding any 

2 other provision of law, a small public housing 

3 agency may elect to comply with the require4 ments under section 12(c)(3) through the use of 

5 tenant certifications. 

6 ‘‘(B) MONITORING OF COMPLIANCE.—The 

7 Secretary may not impose any administrative 

8 burden or requirement with respect to the mon9 itoring of compliance with section 12(c) on a 

10 small public housing agency that has made an 

11 election under subparagraph (A), except a re12 quirement to obtain tenant certifications and 

13 make the tenant certifications available to the 

14 Secretary. For purposes of this subparagraph, 

15 the term ‘administrative burden or requirement’ 

16 includes a requirement to review or verify infor17 mation contained in a tenant certification. 

18 ‘‘(C) DETERMINATION OF NONCOMPLI19 ANCE.—A small public housing agency may not 

20 make an election under subparagraph (A) if the 

21 Secretary determines that there is substantial 

22 noncompliance by the tenants at the small pub23 lic housing agency with the requirements of sec24 tion 12(c). 


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1 ‘‘(3) ECONOMIC OPPORTUNITY.—Section 3 of 

2 the Housing and Urban Development Act of 1968 

3 (12 U.S.C. 1701u) shall apply to a small public 

4 housing agency only to the extent that such section 

5 3 applies to the owner of a project assisted under 

6 section 8 of this Act. 

7 ‘‘(4) ASSET MANAGEMENT.—At the request of a 

8 small public housing agency or a public housing 

9 agency that administers not more than 400 public 

10 housing dwelling units, the Secretary shall exempt 

11 the small public housing agency or public housing 

12 agency from any asset management requirement 

13 otherwise imposed by the Secretary on public hous14 ing agencies. 

15 ‘‘(5) ENVIRONMENTAL REVIEWS.— 

16 ‘‘(A) EXEMPTION.—Notwithstanding any 

17 other provision of law, a small public housing 

18 agency shall be exempt from any environmental 

19 review requirements with respect to a develop20 ment or modernization project having a total 

21 cost of not more than $100,000. 

22 ‘‘(B) STREAMLINED PROCEDURES.—The 

23 Secretary shall, by rule, establish streamlined 

24 procedures for environmental reviews of small 

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1 ernization projects having a total cost of more 

2 than $100,000. 

3 ‘‘(e) FUNGIBILITY.— 

4 ‘‘(1) IN GENERAL.—Notwithstanding any other 

5 provision of law and subject to paragraph (2), a 

6 small public housing agency may— 

7 ‘‘(A) combine funds provided to the small 

8 public housing agency for voucher assistance 

9 under section 8(o), from the Capital Fund, and 

10 from the Operating Fund; and 

11 ‘‘(B) use the funds combined under sub12 paragraph (A) for any activity authorized under 

13 section 8(o) or subsection (d) or (e) of section 

14 9. 

15 ‘‘(2) LIMITATION.—In using funds combined 

16 under paragraph (A), a small public housing agency 

17 shall assist substantially the same number of low-in18 come families, with a comparable mix of families by 

19 family size, as it did in the year preceding its quali20 fication as a small public housing agency, with ap21 propriate adjustments made by the Secretary on the 

22 basis of any increase or decrease in the number of 

23 vouchers or units assisted. 


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1 ‘‘(f) PROJECT-BASED VOUCHERS.—With respect to a 

2 program carried out by a small public housing agency 

3 under section 8(o)— 

4 ‘‘(1) section 8(o)(13)(B) shall be applied by 

5 substituting ‘50 percent’ for ‘20 percent’; and 

6 ‘‘(2) section 8(o)(13)(C) shall not apply. 

7 ‘‘(g) CONVERSION TO SECTION 8.— 

8 ‘‘(1) IN GENERAL.—A small public housing 

9 agency may, subject to the availability of appropria10 tions and approval by the Secretary, convert all or 

11 a portion of the public housing units of the small 

12 public housing agency to project-based voucher as13 sistance under section 8(o)(13) or to project-based 

14 assistance under section 8. 

15 ‘‘(2) PROJECT-BASED VOUCHER ASSISTANCE.— 

16 ‘‘(A) INAPPLICABLE PROVISIONS.—Sub17 paragraphs (B), (C), and (D) of section 

18 8(o)(13) shall not apply to public housing units 

19 converted to project-based voucher assistance 

20 under paragraph (1). 

21 ‘‘(B) RENT CALCULATION FOR TAX-CREDIT

22 PROJECTS.—Rents for public housing units con23 verted to project-based voucher assistance 

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1 gard to whether or not a project is located in 

2 a qualified census tract. 

3 ‘‘(3) PROJECT-BASED ASSISTANCE.— 

4 ‘‘(A) INITIAL RENTS.— 

5 ‘‘(i) ESTABLISHMENT.—Initial rents 

6 for public housing units converted to sec7 tion 8 project-based assistance under para8 graph (1) shall be established, at the op9 tion of the small agency— 

10 ‘‘(I) at the comparable rent for 

11 unassisted units in the area; or 

12 ‘‘(II) on a budget basis. 

13 ‘‘(ii) BUDGET-BASED RENTS.—In ap14 proving a budget-based rent under clause 

15 (i)(II), the Secretary shall take into ac16 count the need to provide for sufficient re17 placement reserves to offset a reduction or 

18 elimination of capital subsidy funds for a 

19 project and for debt service on loans to 

20 fund capital improvements. 

21 ‘‘(B) RENT ADJUSTMENTS.—The Sec22 retary shall annually adjust the rents estab23 lished under subparagraph (A) using an oper24 ating cost adjustment factor established by the 

25 Secretary (which shall not result in a negative 


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1 adjustment) or, at the request of the owner, on 

2 a budget basis. 

3 ‘‘(C) TERM.—The term of any contract for 

4 assistance payments pursuant to this paragraph 

5 shall be the longer of 20 years or the remaining 

6 period during which the project would have 

7 been required to be operated as public housing 

8 (as calculated immediately prior to the conver9 sion). 

10 ‘‘(D) OTHER PROVISIONS.—Except as oth11 erwise provided in this subsection, a project 

12 converted under paragraph (1) shall be subject 

13 to the provisions of section 524 of the Multi14 family Assisted Housing Reform and Afford15 ability Act of 1997 (42 U.S.C. 1437f note). 

16 ‘‘(4) RELEASE OF ENCUMBRANCES.—At the 

17 time of conversion of a project under paragraph (1), 

18 the Secretary shall release the project from any ap19 plicable annual contributions contract and release 

20 and cancel of record all deeds of trust and other in21 struments encumbering the project in favor of the 

22 Federal Government. Upon conversion, a project 

23 shall no longer be subject to Federal laws and re24 quirements applicable solely to public housing 

25 projects. Administrative oversight of public housing 


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1 units converted to section 8 project-based assistance 

2 under paragraph (1) shall be transferred to the Of3 fice of Housing within the Department of Housing 

4 and Urban Development. 

5 ‘‘(5) TRANSFER OF FUNDS.—Upon conversion 

6 of a project under paragraph (1), the Secretary shall 

7 reprogram to the appropriate section 8 account— 

8 ‘‘(A) an amount of public housing Oper9 ating Fund budget authority equal to that 

10 which would otherwise be allocated to the con11 verted project; and 

12 ‘‘(B) an amount of public housing Capital 

13 Fund budget authority otherwise allocable to 

14 the small public housing agency with respect to 

15 the converted project. 

16 ‘‘(h) REPLACEMENT HOUSING FACTOR FUNDS.— 

17 During the first year of each 5-year period for which a 

18 small public housing agency qualifies for the addition of 

19 a replacement housing factor under section 905.10(i) of 

20 title 24, Code of Federal Regulations, the Secretary shall 

21 pay to the small public housing agency the portion of the 

22 total amount that the Secretary plans to make available 

23 to the small public housing agency from the Capital Fund 

24 established under section 9(d) during that 5-year period 


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1 that is attributable to the addition of the replacement 

2 housing factor.’’. 

3 (b) TECHNICAL AND CONFORMING AMENDMENTS.— 

4 Section 5A of the United States Housing Act of 1937 (42 

5 U.S.C. 1437c–1) is amended— 

6 (1) in subsection (b), by striking paragraph (3); 

7 (2) in subsection (e), by striking paragraph (4); 

8 and 

9 (3) in subsection (f), by striking paragraph (5). 

10 SEC. 4. RENT REFORM DEMONSTRATION PROJECT FOR 

11 SMALL PUBLIC HOUSING AGENCIES. 

12 (a) DEFINITIONS.—In this section, the following defi13 nitions shall apply: 

14 (1) EXTREMELY LOW-INCOME FAMILY.—The 

15 term ‘‘extremely low income family’’ means a family 

16 whose income does not exceed 30 percent of the me17 dian income for the area, as determined by the Sec18 retary with adjustments for smaller and larger fami19 lies, except the Secretary may establish income ceil20 ings higher or lower than 30 percent of the median 

21 income for the area on the basis of the Secretary’s 

22 findings that such variations are necessary because 

23 of unusually high or low family incomes in the area. 

24 (2) INCOME.—The term ‘‘income’’ shall have 

25 the meaning given that term by section 3(b)(4) of 


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

2 1437a(b)(4)). 

3 (3) LOW-INCOME FAMILY.—The term ‘‘low-in4 come family’’ means a family whose income does not 

5 exceed 80 percent of the median income for the 

6 area, as determined by the Secretary with adjust7 ments for smaller and larger families, except the 

8 Secretary may establish income ceilings higher or 

9 lower than 80 percent of the median incomes for the 

10 area on the basis of the Secretary’s findings that 

11 such variations are necessary because of unusually 

12 high or low family incomes in the area. 

13 (4) MEDIAN INCOME FOR THE AREA.—The 

14 term ‘‘median income for the area’’ means the me15 dian income of all families in a geographic area, as 

16 determined by the Secretary. 

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

18 the Secretary of Housing and Urban Development. 

19 (6) SMALL PUBLIC HOUSING AGENCY.—The 

20 term ‘‘small public housing agency’’ has the same 

21 meaning as in section 37(a) of the United States 

22 Housing Act of 1937, as added by this Act. 

23 (7) VERY LOW-INCOME FAMILY.—The term 

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1 come for the area, as determined by the Secretary 

2 with adjustments for smaller and larger families, ex3 cept the Secretary may establish income ceilings 

4 higher or lower than 50 percent of the median in5 come for the area on the basis of the Secretary’s 

6 findings that such variations are necessary because 

7 of unusually high or low family incomes in the area. 

8 (b) IN GENERAL.—The Secretary shall carry out a 

9 demonstration project to examine how various methods of 

10 determining rent in public housing affect— 

11 (1) the administrative burden on small public 

12 housing agencies; and 

13 (2) the residents of public housing. 

14 (c) SCOPE OF DEMONSTRATION PROJECT.— 

15 (1) REQUEST TO PARTICIPATE.—The Secretary 

16 shall select small public housing agencies to partici17 pate in the demonstration project from among small 

18 public housing agencies that request to participate in 

19 the project. 

20 (2) NUMBER.—The Secretary shall select not 

21 more than 20 percent of the total number of small 

22 public housing agencies to participate in the dem23 onstration project. 

24 (3) REPRESENTATION.—The Secretary shall se25 lect small public housing agencies representing a 


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1 broad range of geographic areas and urban and 

2 rural locations. 

3 (d) RENT-SETTING MECHANISMS.—A small public 

4 housing agency participating in the demonstration project 

5 shall select 1 or more of the following methods for estab6 lishing a family’s rent contribution for a dwelling unit in 

7 public housing: 

8 (1) TIERED SYSTEM.— 

9 (A) INITIAL RENTS.—A tiered system 

10 under which the amount of initial rent is as fol11 lows: 

12 (i) For an extremely low-income fam13 ily, an amount equal to 30 percent of 10 

14 percent of the median income for the area. 

15 (ii) For a very low-income family, an 

16 amount equal to 30 percent of 30 percent 

17 of the median income for the area. 

18 (iii) For a low-income family, an 

19 amount equal to 30 percent of 50 percent 

20 of the median income for the area. 

21 (B) SUBSEQUENT RENTS.—The rent deter22 mined in accordance with subparagraph (A) 

23 shall be adjusted annually by the small public 

24 housing agency on the basis of changes in area 


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1 median incomes and shall apply to the contin2 ued occupancy of an assisted family. 

3 (C) OVER-INCOME FAMILIES.—A family 

4 assisted under a tiered system established 

5 under subparagraph (A) whose income exceeds 

6 80 percent of the median income for the area 

7 shall pay a rent equal to the higher of 30 per8 cent of 80 percent of the median income for the 

9 area or the market rent for the unit as deter10 mined by the small public housing agency. 

11 (2) GROSS INCOME.— 

12 (A) INITIAL RENTS.—A method under 

13 which rent is established in an amount that var14 ies between 26 to 28 percent of a family’s in15 come, based on family characteristics as deter16 mined by the small public housing agency. 

17 (B) SUBSEQUENT RENTS.—The rent deter18 mined in accordance with subparagraph (A) 

19 shall be adjusted annually between income re20 certifications on the basis of factors selected by 

21 a small public housing agency that are most rel22 evant to the status of a resident. 

23 (C) MINIMUM RENT.—In establishing rents 

24 in accordance with subparagraph (A), a small 


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1 public housing agency may impose a minimum 

2 rent. 

3 (3) EXISTING RENT MECHANISMS.—A small 

4 public housing agency may use 1 or more of the 

5 above methods for determining rents in combination 

6 with the method for establishing rents pursuant to 

7 section 3 of the United States Housing Act of 1937 

8 (42 U.S.C. 1437a). 

9 (e) INCOME RECERTIFICATIONS.—Reviews of family 

10 income under paragraphs (1), (2), and (3) of subsection 

11 (d) shall be made at least once every 5 years, except a 

12 family may request a recertification and adjustment in 

13 rent at any time if the family income has changed by an 

14 amount established by the small public housing agency. 

15 In determining family income, the small public housing 

16 agency may use the income of the family as determined 

17 by the small public housing agency for the preceding year. 

18 (f) HARDSHIP EXCEPTION.—A small public housing 

19 agency shall adopt a hardship policy, comparable to the 

20 policy contained in section 3(a)(3)(B) of the United States 

21 Housing Act of 1937 (42 U.S.C. 1437a(a)(3)(B)), for use 

22 in connection with a minimum rent imposed under sub23 section (d)(2)(C) and in connection with rents established 

24 under paragraphs (1), (2), and (3) of subsection (d). 

25 (g) REPORTS.— 


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1 (1) IN GENERAL.—Not later than 5 years after 

2 the date of enactment of this Act, the Secretary 

3 shall submit to Congress a report on the results of 

4 the demonstration project carried out under this sec5 tion. 

6 (2) RECOMMENDATIONS FOR ACTION.—The re7 port submitted under paragraph (1) shall contain 

8 recommendations that Congress take 1 or more of 

9 the following actions: 

10 (A) Continue the demonstration project for 

11 a specified period of time. 

12 (B) Expand the number of participants in 

13 the demonstration project. 

14 (C) Apply the terms of the demonstration 

15 project to all small public housing agencies. 

16 (D) Change any of the terms of the dem17 onstration project. 

18 (E) Terminate the demonstration project. 

19 (3) RECOMMENDATIONS FOR PERMANENT LEG20 ISLATION.—The Secretary shall submit to Congress 

21 recommendations for permanent legislation that im22 plements rent reform for small public housing agen23 cies— 

24 (A) with the report required under para25 graph (1); or 


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1 (B) before the date on which the Secretary 

2 submits the report required under paragraph 

3 (1). 

4 SEC. 5. ENERGY CONSERVATION. 

5 Section 9(e)(2) of the United States Housing Act of 

6 1937 (42 U.S.C. 1437g(e)(2)) is amended by adding at 

7 the end the following: 

8 ‘‘(D) FREEZE OF CONSUMPTION LEV9 ELS.— 

10 ‘‘(i) IN GENERAL.—A small public 

11 housing agency, as defined in section 

12 37(a), may elect to be paid for its utility 

13 and waste management costs under the 

14 formula for a period, at the discretion of 

15 the small public housing agency, of up to 

16 20 years based on the small public housing 

17 agency’s average annual consumption dur18 ing the 3-year period preceding the year in 

19 which the election is made (hereafter re20 ferred to as ‘consumption base level’). 

21 ‘‘(ii) INITIAL ADJUSTMENT IN CON22 SUMPTION BASE LEVEL.—The Secretary 

23 shall make an initial one-time adjustment 

24 in the consumption base level to account 

25 for differences in the heating degree day 


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1 average over the most recent 20-year pe2 riod compared to the average in the con3 sumption base level. 

4 ‘‘(iii) ADJUSTMENTS IN CONSUMPTION

5 BASE LEVEL.—The Secretary shall make 

6 adjustments in the consumption base level 

7 to account for an increase or reduction in 

8 units, a change in fuel source, a change in 

9 resident controlled electricity consumption, 

10 or for other reasons. 

11 ‘‘(iv) SAVINGS.—All cost savings re12 sulting from an election made pursuant to 

13 this subparagraph shall accrue to the small 

14 agency and may be used for any public 

15 housing purpose at the discretion of the 

16 small public housing agency. 

17 ‘‘(v) THIRD PARTIES.—A small public 

18 housing agency making an election under 

19 this subparagraph may use, but shall not 

20 be required to use, the services of a third 

21 party in its energy conservation program. 

22 The small public housing agency shall have 

23 the sole discretion to determine the source, 

24 and terms and conditions, of any financing 

25 used for its program.’’. 


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1 SEC. 6. CONSORTIA. 

2 Not later than 180 days after the date of enactment 

3 of this Act, the Secretary of Housing and Urban Develop4 ment shall develop and deploy all electronic information 

5 systems necessary to accommodate full consolidated re6 porting by public housing agencies electing to operate in 

7 consortia under section 13(a) of the United States Hous8 ing Act of 1937 (42 U.S.C. 1437k(a)). 

9 SEC. 7. EFFECTIVE DATE. 

10 This Act, and the amendments made by this Act, 

11 shall take effect 60 days after the date of enactment of 

12 this Act. 

Æ 


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