II 

108TH CONGRESS 

2D SESSION S. 2692

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

persons, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

JULY 20, 2004

Mr. JEFFORDS (for himself, Mr. SARBANES, and Mrs. FEINSTEIN) introduced 

the following bill; which was read twice and referred to the Committee 

on Banking, Housing, and Urban Affairs 

A BILL

To authorize the Secretary of the Department of Housing 

and Urban Development to make grants to States for 

affordable housing for low-income persons, and for other 

purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE AND TABLE OF CONTENTS. 

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

5 Preservation Act of 2004’’. 

6 SEC. 2. MATCHING GRANT PROGRAM FOR AFFORDABLE 

7 HOUSING PRESERVATION. 

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

2 (A) the availability of low-income housing 

3 rental units has declined nationwide in the last 

4 several years; 

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

10 need; 

11 (C) the demand for affordable housing far 

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

14 (D) the efforts of nonprofit organizations 

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

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

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

21 through market rate conversion, deterioration, 

22 or demolition; 

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

24 encourage transfer of control of such properties 

25 to competent national, regional, and local non-
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•S 2692 IS 

1 profit entities and intermediaries, the missions 

2 of which involve maintaining the affordability of 

3 such properties; 

4 (G) such transfers may be inhibited by a 

5 shortage of such entities that are appropriately 

6 capitalized; and 

7 (H) the Nation would be well served by 

8 providing assistance to such entities to aid in 

9 accomplishing this purpose. 

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

11 are— 

12 (A) to continue the partnerships among 

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

16 that is affordable to low-income persons and 

17 families; 

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

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

22 of privately owned housing that is affordable to 

23 low-income families and persons; and 

24 (C) to minimize the involuntary displace25 ment of tenants who are currently residing in 
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•S 2692 IS 

1 such housing, many of whom are elderly or dis2 abled persons and families with children. 

3 (b) DEFINITIONS.—In this section: 

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

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

8 means a group of geographically contiguous localities 

9 that jointly submit an application under subsection 

10 (d). 

11 (3) ELIGIBLE AFFORDABLE HOUSING.—The 

12 term ‘‘eligible affordable housing’’ means housing 

13 that— 

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

15 (B) is insured or assisted under a program 

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

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

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

23 referred to in subparagraph (B). 

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

25 entities’’ means any entity that meets the require-
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•S 2692 IS 

1 ments of subsection (e)(6) and the rules issued 

2 under that subsection. 

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

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

5 general purpose political subdivision of a State, or a 

6 consortium thereof. 

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

10 limitation imposed by law, regulation, or regulatory 

11 agreement on rents for tenants of the project, rent 

12 contributions for tenants of the project, or income13 eligibility for occupancy in the project. 

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

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

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

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

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

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

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

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

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

23 includes assistance under any successor programs to 

24 the programs referred to in that section. 
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•S 2692 IS 

1 (9) QUALIFIED LIMITED LIABILITY COMPANY.— 

2 The term ‘‘qualified limited liability company’’ 

3 means a limited liability company with respect to 

4 which a credit is allowed under section 42 of the In5 ternal Revenue Code of 1986 with respect to the 

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

7 (c)(1) of such Code), in a qualified low-income build8 ing (as defined in section 42(c)(2) of such Code) for 

9 which grant funds received under this section shall 

10 be used. 

11 (10) QUALIFIED PARTNERSHIP.—The term 

12 ‘‘qualified partnership’’ means a limited partnership 

13 with respect to which a credit is allowed under sec14 tion 42 of the Internal Revenue Code of 1986 with 

15 respect to the partnership’s qualified basis (as de16 fined in section 42(c)(1) of such Code) in a qualified 

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

18 of such Code) for which grant funds received under 

19 this section shall be used. 

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

21 means the Secretary of the Department of Housing 

22 and Urban Development. 

23 (12) STATE.—The term ‘‘State’’ means each of 

24 the several States of the United States and the Dis25 trict of Columbia. 
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•S 2692 IS 

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

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

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

4 section to States and localities for low-income housing 

5 preservation and promotion. 

6 (d) APPLICATIONS.— 

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

8 seeks a grant under this section shall submit an ap9 plication (through appropriate State and local agen10 cies) to the Secretary. 

11 (2) CONTENTS.—Each application submitted 

12 pursuant to paragraph (1) shall contain any infor13 mation and certifications necessary for the Secretary 

14 to determine who is eligible to receive a grant under 

15 this section. 

16 (e) USE OF GRANTS.— 

17 (1) ELIGIBLE USES.— 

18 (A) IN GENERAL.—Grants awarded under 

19 this section may be used by States and local20 ities only for the purposes of providing assist21 ance— 

22 (i) for acquisition, rehabilitation, cap23 ital expenditures, and related development 

24 costs for a housing project that meets the 
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•S 2692 IS 

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

2 (5); or 

3 (ii) to eligible entities under para4 graph (6) for— 

5 (I) operational, working capital, 

6 and organizational expenses; and 

7 (II) predevelopment activities to 

8 acquire eligible affordable housing for 

9 the purpose of ensuring that the hous10 ing will remain affordable, as the Sec11 retary considers appropriate, for low12 income or very low-income families. 

13 (B) USE AGREEMENT.—A project receiving 

14 assistance under this paragraph shall be subject 

15 to an agreement (binding on any subsequent 

16 owner of such project) that ensures that the 

17 project will continue to operate, for a period of 

18 not less than 50 years after the date on which 

19 any assistance is made available under this 

20 paragraph, in a manner that will provide rental 

21 housing on terms at least as advantageous to 

22 existing and future tenants as the terms re23 quired by any program under which the project, 

24 if offered, was eligible for assistance, subject to 

25 available appropriations. 
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•S 2692 IS 

1 (C) SERVICE OF UNDER-SERVED AND

2 RURAL AREAS.—States receiving funds under 

3 this section shall ensure that, to the maximum 

4 extent practicable, that projects in under-served 

5 and rural areas in that State receive assistance. 

6 (2) PROJECTS WITH HUD-INSURED MORT7 GAGES.—A project meets the requirements of this 

8 paragraph if the project is financed by a loan or 

9 mortgage that is— 

10 (A) insured or held by the Secretary under 

11 section 221(d)(3) of the National Housing Act 

12 (12 U.S.C. 1715l(d)(3)) and receiving loan 

13 management assistance under section 8 of the 

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

15 1437f) due to a conversion from section 101 of 

16 the Housing and Urban Development Act of 

17 1965 (12 U.S.C. 1701s); 

18 (B) insured or held by the Secretary and 

19 bears interest at a rate determined under the 

20 proviso of section 221(d)(5) of the National 

21 Housing Act (12 U.S.C. 1715l(d)(5)); or 

22 (C) insured, assisted, or held by the Sec23 retary or a State or State agency under section 

24 236 of the National Housing Act (12 U.S.C. 

25 1715z–1). 
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1 (3) PROJECTS WITH SECTION 8 PROJECT-BASED

2 ASSISTANCE.—A project meets the requirements of 

3 this paragraph if the project is subject to a contract 

4 for project-based assistance. 

5 (4) PROJECTS PURCHASED BY RESIDENTS.—A 

6 project meets the requirements of this paragraph 

7 if— 

8 (A) the project is or was eligible low-in9 come housing (as defined in section 229 of the 

10 Low-Income Housing Preservation and Resi11 dent Homeownership Act of 1990 (12 U.S.C. 

12 4119)) or is or was a project assisted under 

13 section 613(b) of the Cranston-Gonzalez Na14 tional Affordable Housing Act (12 U.S.C. 

15 4125); 

16 (B) the project has been purchased by a 

17 resident council or resident-approved nonprofit 

18 organization for the housing, or is approved by 

19 the Secretary for such purchase, for conversion 

20 to homeownership housing under a resident 

21 homeownership program meeting the require22 ments of section 226 of the Low-Income Hous23 ing Preservation and Resident Homeownership 

24 Act of 1990 (12 U.S.C. 4116); and 
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1 (C) the owner of the project has entered 

2 into binding commitments (applicable to any 

3 subsequent owner) to extend— 

4 (i) project-based assistance for not 

5 less than 15 years (beginning on the date 

6 on which assistance is made available for 

7 the project by the State or locality under 

8 this section); and 

9 (ii) any low-income affordability re10 strictions applicable to the project in con11 nection with that assistance. 

12 (5) RURAL RENTAL ASSISTANCE PROJECTS.—A 

13 project meets the requirements of this paragraph 

14 if— 

15 (A) the project is a rural rental housing 

16 project financed under section 515 of the Hous17 ing Act of 1949 (42 U.S.C. 1485), or a farm 

18 labor housing development financed under sec19 tion 514 of the United States Housing Act of 

20 1949 (42 U.S.C. 1484); and 

21 (B) the restriction on the use of the 

22 project (as required under section 502 of the 

23 Housing Act of 1949 (42 U.S.C. 1472)) will ex24 pire not later than 12 months after the date on 

25 which assistance is made available for the 
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1 project by the State or locality under this sub2 section. 

3 (6) ELIGIBLE ENTITIES.— 

4 (A) IN GENERAL.—The Secretary shall es5 tablish, by regulation, standards for eligible en6 tities under this subsection. 

7 (B) REQUIREMENTS.—An eligible entity 

8 shall— 

9 (i) be a nonprofit organization (as de10 fined in section 104 of the Cranston-Gon11 zalez National Affordable Housing Act (42 

12 U.S.C. 12704)), or a qualified limited li13 ability company or a qualified partnership 

14 whose managing member or general part15 ner, respectively, is— 

16 (I) a nonprofit organization; or 

17 (II) a for-profit entity that is 

18 wholly owned by an eligible non-profit 

19 organization; 

20 (ii) have among its purposes, main21 taining the affordability to low-income or 

22 very low-income families of multifamily 

23 properties that are at risk of loss from the 

24 inventory of housing that is affordable to 

25 low-income or very low-income families; and 
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1 (iii) demonstrate to the Secretary— 

2 (I) the need for the types of as3 sistance described under paragraph 

4 (1)(A)(ii); 

5 (II) experience in providing as6 sistance described under that para7 graph; and 

8 (III) its ability to provide the as9 sistance described under that para10 graph. 

11 (7) FUNDING REQUIREMENTS.— 

12 (A) OPERATING SUPPORT.—Each State 

13 and locality awarded a grant under this section 

14 shall transfer at least 5 percent, but no more 

15 than 10 percent, of such grant to eligible enti16 ties for the purposes described under paragraph 

17 (1)(A)(ii)(I). 

18 (B) NONPROFIT PURCHASES.—Each State 

19 and locality awarded a grant under this section 

20 shall transfer at least 15 percent of such grant 

21 to eligible entities for the purposes described 

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

23 (8) RETURN OF UNUSED FUNDS.—If any 

24 amount of a grant awarded to a State or locality 

25 under this section has not been obligated 3 years 
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•S 2692 IS 

1 after the grant is awarded, such amount shall be re2 turned to the Secretary to be redistributed in ac3 cordance with this section the following fiscal year. 

4 (9) ADMINISTRATIVE COSTS.—A State or local5 ity that is awarded a grant under this section may 

6 use no more than 10 percent of such grant for costs 

7 associated with the administration of the grant. 

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

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

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

11 shall award to each State and locality approved for 

12 a grant under this section a grant in an amount 

13 based upon the proportion of the need for assistance 

14 of that State or locality under this section (as deter15 mined by the Secretary in accordance with para16 graph (2)) to the aggregate need among all States 

17 and localities approved for assistance under this sec18 tion for that fiscal year. 

19 (2) DETERMINATION OF NEED.—In deter20 mining the proportion of the need of a State or lo21 cality under paragraph (1), the Secretary shall con22 sider— 

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

24 State or locality that are eligible for assistance 

25 under subsection (e)(1)(A)(i) that are, due to 
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•S 2692 IS 

1 market conditions or other factors, at risk for 

2 prepayment, opt-out, or otherwise at risk of 

3 being lost to the inventory of affordable hous4 ing; and 

5 (B) the difficulty that residents of projects 

6 in the State or locality that are eligible for as7 sistance under subsection (e)(1)(A)(i) would 

8 face in finding adequate, available, decent, com9 parable, and affordable housing in neighbor10 hoods of comparable quality in the local market, 

11 if those projects were not assisted by the State 

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

13 (3) LIMITATIONS.— 

14 (A) MANDATORY ALLOCATION.—In any 

15 fiscal year, of the total amount appropriated 

16 under subsection (k)— 

17 (i) 40 percent shall be allocated for 

18 grants to States; and 

19 (ii) 60 percent shall be allocated for 

20 grants to localities. 

21 (B) MINIMUM GRANT AMOUNT.—Notwith22 standing subsection (g), a State receiving a 

23 grant under this section shall receive no less 

24 than .4 percent of the total amount appro25 priated under subsection (k) in any fiscal year. 
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1 (g) MATCHING REQUIREMENT.— 

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

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

4 or locality for any fiscal year may not exceed an 

5 amount that is twice the amount that the State or 

6 locality certifies, as the Secretary shall require, that 

7 the State or locality will contribute for such fiscal 

8 year, or has contributed since January 1, 2003, 

9 from non-Federal sources for the purposes described 

10 in subsection (e)(1). 

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

12 apply to any amounts to be used by a State or local13 ity for— 

14 (A) administrative costs under subsection 

15 (e)(9); and 

16 (B) operating support and working capital 

17 of nonprofit organizations under subsection 

18 (e)(7)(A). 

19 (3) TREATMENT OF PREVIOUS CONTRIBU20 TIONS.—Any portion of amounts contributed after 

21 January 1, 2003, that are counted for the purpose 

22 of meeting the requirement under paragraph (1) for 

23 a fiscal year may not be counted for that purpose 

24 for any subsequent fiscal year. 
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1 (4) TAX CREDITS AND PRIVATE ACTIVITY

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

3 credits allocated to the project under section 42 of 

4 the Internal Revenue Code of 1986, or proceeds 

5 from private activity bonds issued for qualified resi6 dential rental projects under section 142 of that 

7 Code, shall be considered funds from non-Federal 

8 sources for purposes of paragraph (1). 

9 (h) TREATMENT OF SUBSIDY LAYERING REQUIRE10 MENTS.—Neither subsection (g) nor any other provision 

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

12 credits allocated under section 42 of the Internal Revenue 

13 Code of 1986, in connection with housing assisted with 

14 amounts from a grant awarded under this section, to the 

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

16 of the Department of Housing and Urban Development 

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

18 of the Housing and Community Development Act of 1992 

19 (42 U.S.C. 3545 note). 

20 (i) REPORTS.— 

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

22 90 days after the last day of each fiscal year, each 

23 State and locality that receives a grant under this 

24 section during that fiscal year shall submit to the 

25 Secretary a report on the housing projects and eligi-
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1 ble entities assisted with amounts made available 

2 under the grant. 

3 (2) REPORTS TO CONGRESS.—Based on the re4 ports submitted under paragraph (1), the Secretary 

5 shall annually submit to Congress a report on the 

6 grants awarded under this section during the pre7 ceding fiscal year and the housing projects assisted 

8 and eligible entities with amounts made available 

9 under those grants. 

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

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

12 regulations to carry out this section. 

13 (k) AUTHORIZATION OF APPROPRIATIONS.—There 

14 are authorized to be appropriated for grants under this 

15 section such sums as may be necessary for each of fiscal 

16 years 2005, 2006, 2007, 2008, and 2009. 

17 SEC. 3. PRESERVATION PROJECTS. 

18 Section 524(e)(1) of the Multifamily Assisted Hous19 ing Reform and Affordability Act of 1997 (42 U.S.C. 

20 1437f note) is amended by striking ‘‘amounts are specifi21 cally’’ and inserting ‘‘sufficient amounts are’’. 

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