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[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4679 Introduced in House (IH)]

108th CONGRESS
  2d Session
                                H. R. 4679

To authorize the Secretary of Housing and Urban Development to provide 
 assistance for privately owned low- and moderate-income housing with 
    expiring Federal subsidies to prevent displacement of low- and 
            moderate-income tenants, and for other purposes.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                             June 24, 2004

Mr. Frank of Massachusetts (for himself, Mr. Kanjorski, Ms. Waters, Mr. 
  Sanders, Mrs. Maloney, Mr. Gutierrez, Ms. Velazquez, Mr. Watt, Ms. 
  Carson of Indiana, Ms. Lee, Mr. Capuano, Mr. Crowley, Mr. Clay, Mr. 
 Israel, Mrs. McCarthy of New York, Mr. Baca, Mr. Lynch, Mr. Emanuel, 
    Mr. Scott of Georgia, and Mr. Davis of Alabama) introduced the 
   following bill; which was referred to the Committee on Financial 
                                Services

_______________________________________________________________________

                                 A BILL

 
To authorize the Secretary of Housing and Urban Development to provide 
 assistance for privately owned low- and moderate-income housing with 
    expiring Federal subsidies to prevent displacement of low- and 
            moderate-income tenants, and for other purposes.

    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 ``Displacement Prevention Act of 
2004''.

SEC. 2. FINDINGS AND PURPOSE.

    (a) Findings.--The Congress finds that--
            (1) there exists throughout the United States a need for 
        decent, safe, and affordable housing;
            (2) the General Accounting Office (GAO) estimates that--
                    (A) there are 11,267 multifamily properties, 
                serving approximately 914,441 households nationwide, 
                that are financed with mortgages subsidized by the 
                Department of Housing and Urban Development;
                    (B) 1,835 of these properties, which contain over 
                193,000 subsidized units, are financed with mortgages 
                insured under the below-market interest rate program 
                under section 221(d)(3) of the National Housing Act or 
                the interest reduction payments program under section 
                236 of such Act, and these properties will be lost by 
                2013 when the mortgages mature and the mortgage 
                subsidies and low-income affordability restrictions 
                related to those subsidies terminate; and
                    (C) as a result, owners of properties without 
                rental assistance will be permitted to raise the rents 
                in such properties to market levels, putting at risk 
                approximately 200,000 individuals in over 101,000 units 
                in properties having no other subsidy attached;
            (3) the GAO concludes that neither the Department of 
        Housing and Urban Development nor State or local agencies offer 
        incentives to owners to keep properties affordable upon 
        mortgage maturity;
            (4) the GAO also concludes that no incentives exist, such 
        as enhanced vouchers, to protect tenants in units without 
        rental assistance when HUD-subsidized mortgages mature;
            (5) the GAO further concludes that the Department of 
        Housing and Urban Development does not require owners to 
        provide written notice to tenants that the low-income 
        affordability restrictions will terminate when the HUD-
        subsidized mortgages mature;
            (6) when faced with similar crises in the past, the 
        Congress acted to provide incentives for owners to continue the 
        low-income affordability restrictions, thus ensuring that these 
        properties remain affordable to low- and moderate-income 
        households;
            (7) the Congress also acted to provide enhanced vouchers to 
        tenants living in multifamily units receiving assistance under 
        Federal low-income housing programs in cases in which the owner 
        prepaid the HUD-subsidized mortgage or opted out of the rental 
        assistance contract; and
            (8) the Congress also required owners to provide tenants 
        with written notice of their intent to prepay their HUD-
        subsidized mortgage or to opt-out of their section 8 rental 
        assistance contract.
    (b) Purpose.--It is the purpose of this Act--
            (1) to promote the preservation of affordable housing units 
        by providing assistance to owners to ensure that these dwelling 
        units remain affordable to low- and moderate-income households; 
        and
            (2) to minimize the involuntary displacement of low- and 
        moderate-income tenants who are currently residing in 
        multifamily properties that are currently receiving subsidies 
        under Federal low-income housing programs, many of whom are 
        elderly or disabled persons.

SEC. 3. FEDERAL ASSISTANCE AND EXTENSION OF AFFORDABILITY REQUIREMENTS.

    (a) Provision of Assistance.--
            (1) Authority.--The Secretary may use amounts made 
        available under subsection (e) to provide assistance under 
        subsections (b), (c), and (d) with respect to covered 
        multifamily housing properties.
            (2) Applications and selection criteria.--The Secretary 
        shall provide for owners of covered multifamily housing 
        properties to submit applications for assistance under 
        subsections (b), (c), and (d) for covered multifamily housing 
        properties. Subject to paragraph (3), the Secretary shall 
        establish criteria for selection of properties to receive 
        assistance under each of subsections (b), (c), and (d), which 
        shall take into consideration the need of a property for 
        assistance for the purpose under this Act for which the 
        assistance is made available.
            (3) Priority.--The criteria established pursuant to 
        paragraph (2) for selection of properties to receive assistance 
        under each of subsections (b), (c), and (d) shall provide 
        priority for selection of properties based on the following 
        factors:
                    (A) The proximity in time of the termination date 
                for the property.
                    (B) The extent to which the dwelling units in the 
                property are occupied by low-income families.
                    (C) The extent to which assurances by the owner of 
                the property provide that the affordability 
                restrictions for the property will be extended beyond 
                the period required under subsection (b)(4), (c)(5), or 
                (d)(6), as applicable.
                    (D) Such other factors as the Secretary may 
                provide.
    (b) Rehabilitation Assistance.--The Secretary may provide a grant 
under this subsection to the owner of the property, subject to the 
following requirements:
            (1) Purpose.--The assistance shall be provided for the 
        purpose of rehabilitating the property for continued use as 
        housing affordable to low- and moderate-income families.
            (2) Eligible use.--Amounts from the grant may be used only 
        for payment of nonrecurring maintenance and capital 
        improvements for the property, under such terms and conditions 
        as are determined by the Secretary.
            (3) Per unit amount limitations.--The amount from a grant 
        used with respect to a dwelling unit in the property may not 
        exceed the per unit dollar amount limitation as the Secretary 
        shall establish for purposes of this subsection for dwelling 
        units of the applicable size.
            (4) Required extension of affordability restrictions.--The 
        Secretary may provide assistance under this subsection for a 
        property only if the owner of the property enters into such 
        binding commitments as the Secretary may require, which shall 
        be applicable to any subsequent owner, to ensure that the 
        property will be operated, for a period of not less than 20 
        years that begins on the termination date for the property, in 
        accordance with all affordability restrictions that are 
        applicable to the property under the multifamily housing 
        subsidy program under which the property is assisted before the 
        termination date.
    (c) Assistance for Purchase by Nonprofit Entities.--The Secretary 
may provide a grant under this subsection to a nonprofit organization 
for acquisition of a covered multifamily housing property, subject to 
the following requirements:
            (1) Purpose.--The assistance shall be provided for the 
        purpose of facilitating acquisition of properties by nonprofit 
        organizations whose missions are to provide affordable housing 
        to low- and moderate-income families.
            (2) Eligible nonprofit organizations.--A grant under this 
        section may be made only to a nonprofit organization that 
        provides such assurances as the Secretary may require that the 
        organization--
                    (A) will acquire the property; and
                    (B) is capable of managing the property and related 
                facilities (either directly or through a contract) for 
                the remaining useful life of the property and related 
                facilities.
            (3) Eligible use.--Amounts from the grant may be used only 
        to cover any direct costs (other than the purchase price) 
        incurred by the nonprofit organization in purchasing and 
        assuming responsibility for the property and related facilities 
        involved.
            (4) Per unit amount limitations.--The amount from a grant 
        used with respect to a dwelling unit in the property may not 
        exceed the per unit dollar amount limitation as the Secretary 
        shall establish for purposes of this subsection for dwelling 
        units of the applicable size.
            (5) Required extension of affordability restrictions.--The 
        Secretary may provide assistance under this subsection for a 
        property only if the owner of the property enters into such 
        binding commitments as the Secretary may require, which shall 
        be applicable to any subsequent owner, to ensure that the 
        property will be operated, for the remaining useful life of the 
        property, in accordance with all affordability restrictions 
        that are applicable to the property under the multifamily 
        housing subsidy program under which the property is assisted 
        before the termination date.
    (d) Low- and Moderate-Income Affordability Assistance.--The 
Secretary may make assistance available under this subsection to the 
owner of a covered multifamily housing property, subject to the 
following requirements:
            (1) Purpose.--The assistance shall be provided for the 
        purpose of maintaining the affordability of dwelling units, in 
        properties located in strong rental markets, for low- and 
        moderate-income families residing in the property.
            (2) Eligibility.--Assistance may be made available for a 
        property only if--
                    (A) the property is located in an area in which the 
                Secretary determines, based on housing market 
                indicators, such as low vacancy rates or high 
                absorption rates, that there is not adequate available 
                and affordable housing; and
                    (B) the property is not owned by a nonprofit 
                organization whose purpose in owning the housing is to 
                provide affordable housing to low- or moderate-income 
                families.
            (3) Form and term.--The assistance shall be in the form of 
        an annual payment and shall be provided for such term as may be 
        agreed to by the Secretary and the owner of the property.
            (4) Prevention of duplicative subsidies.--Assistance may 
        not be provided for any dwelling unit in a property during any 
        period during which such unit is provided project-based or 
        tenant-based rental assistance of any kind from any source.
            (5) Amount and rent levels.--The Secretary shall determine 
        the amount of annual assistance provided for a property based 
        on rent levels, for the dwelling units in the property that are 
        subject to affordability restrictions pursuant to paragraph 
        (6), that are equal to the lesser of--
                    (A) comparable market rents for the market area in 
                which the property is located for dwelling units of the 
                applicable size; and
                    (B) 150 percent of the fair market rentals 
                established under section 8(c) of the United States 
                Housing Act of 1937 for the market area in which the 
                property is located for dwelling units of the 
                applicable size.
            (6) Required extension of affordability restrictions.--The 
        Secretary may provide assistance under this subsection for a 
        property only if the owner of the property enters into such 
        binding commitments as the Secretary may require, which shall 
        be applicable to any subsequent owner, to ensure that the 
        property will be operated, for a period not shorter than the 
        term of the assistance agreed to pursuant to paragraph (3) or 
        10 years, whichever is longer, that begins on the termination 
        date for the property, in accordance with all affordability 
        restrictions that are applicable to the property under the 
        multifamily housing subsidy program under which the property is 
        assisted before the termination date.
    (e) Funding.--For purposes of providing assistance under this 
section, the Secretary may make available--
            (1) $675,000,000 from the amounts made available under the 
        heading ``Rent Supplement'' in chapter VI of title I of the 
        Supplemental Appropriations Act, 1983 (Public Law 98-63; 97 
        Stat 320) for amendments to contracts under section 101 of the 
        Housing and Urban Development Act of 1965 (12 U.S.C. 1701s) and 
        section 236(f)(2) of the National Housing Act (12 U.S.C. 1715z-
        1(f)(2) in State-aided, noninsured rental housing projects, 
        that remain unobligated; and
            (2) such other sums from the amounts made available in any 
        fiscal year under the heading referred to in paragraph (1) that 
        remain or may become unobligated.

SEC. 4. ENHANCED VOUCHERS.

    (a) Requirement.--Upon the termination date for each assisted 
multifamily housing project, to the extent that amounts for assistance 
under this subsection are provided in advance in appropriation Acts, 
the Secretary shall make enhanced voucher assistance under section 8(t) 
of the United States Housing Act of 1937 (42 U.S.C. 1437f(t)) available 
on behalf of each family described in subsection (b).
    (b) Eligibility.--A family described in this subsection is a family 
who--
            (1)(A) is a low-income family; or
            (B) is a moderate-income family that is--
                    (i) an elderly family (as such term is used in 
                section 3(b) of the United States Housing Act of 1937 
                (42 U.S.C. 1437a(b));
                    (ii) a disabled family (as such term is used in 
                section 3(b) of the United States Housing Act of 1937 
                (42 U.S.C. 1437a(b)); or
                    (iii) residing in a low-vacancy area (as determined 
                by the Secretary); and
            (2) on such termination date, is residing in a dwelling 
        unit of the project that--
                    (A) immediately before such termination date was 
                assisted under the multifamily housing subsidy program 
                for the project; and
                    (B) is not assisted after such termination date 
                under section 8 of such Act or pursuant to assistance 
                under section 3 of this Act.
    (c) Eligibility Event.--Section 8(t)(2) of the United States 
Housing Act of 1937 (42 U.S.C. 1437f(t)(2)) is amended by adding after 
the period at the end the following new sentence: ``Such term includes, 
with respect to an assisted multifamily housing project (as such term 
is defined in section 7 of the Displacement Prevention Act of 2004), 
the occurrence of the termination date for the project.''.

SEC. 5. NOTIFICATION REQUIREMENT.

    (a) Timing.--An owner of an assisted multifamily housing property 
who intends to terminate or alter the affordability restrictions for 
the property on or after the termination date for the property shall, 
not less than nine months before such termination date, provide written 
notice of such termination date to the Secretary of Housing and Urban 
Development, the chief executive officer of the State and the unit of 
general local government (as such term is defined in section 104 of the 
Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 12704) in 
which the property is located, and each tenant of the project.
    (b) Contents.--The notice shall include--
            (1) a statement specifying any changes in the terms or 
        applicability of the affordability restrictions for the 
        property that the owner intends to make on or after the 
        termination date for the property;
            (2) a statement that, if the owner proceeds with such 
        intended changes and the Congress makes funds available, the 
        Department of Housing and Urban Development will provide 
        tenant-based rental assistance to all eligible residents, 
        enabling them to choose the place they wish to rent, which may 
        include the dwelling unit in which they currently reside; and
            (3) a statement that, if the Congress makes funds 
        available, the owner and the Secretary may yet agree to renewal 
        of assistance and affordability restrictions for the project, 
        thereby obviating the need for such tenant-based rental 
        assistance.
    (c) Failure to Provide Notice.--If the owner does not provide the 
notice required under this section, notwithstanding any inapplicability 
of the affordability restrictions for the project, the owner may not 
evict the tenants or increase the tenants' rent payments until such 
time as the owner has provided the notice and one year has elapsed.
    (d) Other Terms.--Any notice under this section shall comply with 
any additional requirements as the Secretary may establish.
    (e) Savings Provision.--This section may not be construed to annul, 
alter, affect, or preempt any provision of the law of a State or 
political subdivision thereof requiring notice regarding termination of 
assistance or affordability restrictions with respect to a multifamily 
housing project or to exempt any person from complying with such a law.

SEC. 6. ANNUAL AND SEMIANNUAL REVIEWS.

    (a) Annual Review.--To ensure compliance with this Act, the 
Secretary shall conduct an annual review on actions taken under this 
Act and the status of covered multifamily housing properties and submit 
a report to the Congress regarding each such annual review.
    (b) Semiannual Review.--Not less than semiannually during the 2-
year period beginning on the date of the enactment of this Act and not 
less than annually thereafter, the Secretary shall submit reports to 
the Committee on Financial Services of the House of Representatives and 
the Committee on Banking, Housing, and Urban Affairs of the Senate 
stating, for such periods, the total number of assisted multifamily 
housing properties for which notification has been provided under 
section 5 during such period, the total number of covered multifamily 
housing properties for which assistance has been provided under section 
3, and the type or types of such assistance provided.

SEC. 7. DEFINITIONS.

    For purposes of this Act:
            (1) Affordability restrictions.--The term ``affordability 
        restrictions'' means, with respect to a covered multifamily 
        housing property, limits imposed by regulation or regulatory 
        agreement on tenant rents, rent contributions, or income 
        eligibility.
            (2) Assisted multifamily housing property.--The term 
        ``assisted multifamily housing property'' means a multifamily 
        housing project for which assistance is provided under a 
        multifamily housing subsidy program.
            (3) Comparable properties.--The term ``comparable 
        properties'' means, with respect to a covered multifamily 
        housing property, properties in the same market area, where 
        practicable, that--
                    (A) are similar to the covered multifamily housing 
                property as to neighborhood (including risk of crime), 
                type of location, access, street appeal, age, property 
                size, apartment mix, physical configuration, property 
                and unit amenities, utilities, and other relevant 
                characteristics; and
                    (B) are not receiving project-based rental 
                assistance of any kind from any source.
            (4) Covered multifamily housing property.--The term 
        ``covered multifamily housing property'' means an assisted 
        multifamily housing project for which the termination date will 
        occur within the 10-year period beginning on the date of the 
        enactment of this Act.
            (5) Low-income family.--The term ``low-income family'' has 
        the meaning given such term in section 3(b) of the United 
        States Housing Act of 1937 (42 U.S.C. 1437a(b)).
            (6) Moderate-income family.--The term ``moderate-income 
        family'' has the meaning given such term in section 229 of the 
        Low-Income Housing Preservation and Resident Homeownership Act 
        of 1992 (12 U.S.C. 4119).
            (7) Multifamily housing subsidy program.--The term 
        ``multifamily housing subsidy program'' means--
                    (A) the below-market interest rate mortgage 
                insurance program under section 221(d)(3) of the 
                National Housing Act (12 U.S.C. 1715l(d)(3)); and
                    (B) the program for interest reduction payments 
                under section 236 of the National Housing Act (12 
                U.S.C. 1715z-1).
            (8) Nonprofit organization.--The term ``nonprofit 
        organization'' means any private organization that has no part 
        of its net earning inuring to the benefit of any member, 
        founder, contributor, or individual.
            (9) Secretary.--The term ``Secretary'' means the Secretary 
        of Housing and Urban Development.
            (10) Termination date.--The term ``termination date'' 
        means, with respect to an assisted or a covered multifamily 
        housing property, the date that--
                    (A) the mortgage for the property that is insured 
                under the below-market interest rate program under 
                section 221(d)(3) of the National Housing Act, or for 
                which interest reduction payments are made under 
                section 236 of such Act, matures; and
                    (B) the affordability restrictions applicable to 
                the property because of assistance for the property 
                pursuant to a multifamily housing subsidy program 
                terminate with respect to the property.

SEC. 8. REGULATIONS.

    The Secretary may issue any regulations necessary to carry out this 
Act.
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