any Coverdell education savings account under 
section 530 of the Internal Revenue Code of 
1986 or any qualified tuition program under 
section 529 of such Code. 
‘‘(E) 
RECORDKEEPING.—The 
Secretary 
may not require a public housing agency or 
owner to maintain records of any amounts ex-
cluded from income pursuant to this subpara-
graph. 
‘‘(5) ADJUSTED INCOME.—The term ‘adjusted 
income’ means, with respect to a family, the amount 
(as determined by the public housing agency or 
owner) of the income of the members of the family 
residing in a dwelling unit or the persons on a lease, 
after any deductions from income as follows: 
‘‘(A) ELDERLY
AND
DISABLED
FAMI-
LIES.—$525 in the case of any family that is 
an elderly family or a disabled family, except 
that the amount specified in this subparagraph 
(as it may have been previously adjusted) shall 
be adjusted for inflation annually by the Sec-
retary in accordance with an inflationary index 
selected by the Secretary. 
‘‘(B) DEPENDENTS.—In the case of any 
family, $525 for each member who— 
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‘‘(i) is less than 18 years of age or at-
tending school or vocational training on a 
full-time basis; or 
‘‘(ii) is a person who is 18 years of 
age or older, resides in the household, and 
is certified as disabled and unable to work 
by the public housing agency of jurisdic-
tion, 
except that the amount specified in this sub-
paragraph (as it may have been previously ad-
justed) shall be adjusted for inflation annually 
by the Secretary in accordance with an infla-
tionary index selected by the Secretary. 
‘‘(C) CHILD CARE.—The amount, if any, 
that exceeds 5 percent of annual family income 
that is used to pay for unreimbursed child care 
expenses, which shall include child care for pre-
school-age children, for before- and after-care 
for children in school, and for other child care 
necessary to enable a member of the family to 
be employed or further his or her education. 
‘‘(D) HEALTH AND MEDICAL EXPENSES.— 
The amount, if any, by which 10 percent of an-
nual family income is exceeded by the sum of— 
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‘‘(i) in the case of any elderly or dis-
abled family, any unreimbursed health and 
medical care expenses; and 
‘‘(ii) any unreimbursed reasonable at-
tendant care and auxiliary apparatus ex-
penses for each handicapped member of 
the family, if determined necessary by the 
public housing agency or owner to enable 
any member of such family to be employed. 
The Secretary may provide hardship exemptions 
for impacted families by regulation, if the Sec-
retary determines calculated rents endanger 
families unable to pay such amount because of 
financial hardship. Such regulations shall be 
promulgated in consultation with tenant organi-
zations, industry participants, and the Sec-
retary of Health and Human Services, with an 
adequate comment period provided for inter-
ested parties. 
‘‘(E) PERMISSIVE DEDUCTIONS.—Such ad-
ditional deductions as a public housing agency 
may, at its discretion, establish, except that the 
Secretary shall establish procedures to ensure 
that such deductions do not materially increase 
Federal expenditures. 
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The Secretary shall annually calculate the amounts 
of the deductions under subparagraphs (A) and (B), 
as such amounts may have been previously cal-
culated, by applying an inflationary factor as the 
Secretary shall, by regulation, establish, except that 
the actual deduction determined for each year shall 
be established by rounding such amount to the next 
lowest multiple of $25.’’. 
(d) HOUSING CHOICE VOUCHER PROGRAM.—Section 
8(o) of the United States Housing Act of 1937 (42 U.S.C. 
1437f(o)) is amended— 
(1) in paragraph (1)(D), by inserting before the 
period at the end the following: ‘‘, except that a pub-
lic housing agency may establish a payment stand-
ard of not more than 120 percent of the fair market 
rent where necessary as a reasonable accommodation 
for a person with a disability, without approval of 
the Secretary. A public housing agency may use a 
payment standard that is greater than 120 percent 
of the fair market rent as a reasonable accommoda-
tion for a person with a disability, but only with the 
approval of the Secretary. In connection with the use 
of any increased payment standard established or 
approved pursuant to either of the preceding two 
sentences as a reasonable accommodation for a per-
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son with a disability, the Secretary may not estab-
lish additional requirements regarding the amount of 
adjusted income paid by such person for rent’’; and 
(2) in paragraph (5)— 
(A) in the paragraph heading, by striking 
‘‘ANNUAL REVIEW’’ and inserting ‘‘REVIEWS’’; 
(B) in subparagraph (A)— 
(i) by striking ‘‘the provisions of’’ and 
inserting ‘‘paragraphs (6) and (7) of sec-
tion 3(a) and to’’; and 
(ii) by striking ‘‘and shall be con-
ducted upon the initial provision of hous-
ing assistance for the family and thereafter 
not less than annually’’; and 
(C) in subparagraph (B), by striking the 
second sentence. 
(e) 
ENHANCED
VOUCHER
PROGRAM.—Section 
8(t)(1)(D) of the United States Housing Act of 1937 (42 
U.S.C. 1437f(t)(1)(D)) is amended by striking ‘‘income’’ 
each place such term appears and inserting ‘‘annual ad-
justed income’’. 
(f) PROJECT-BASED HOUSING.—Paragraph (3) of 
section 8(c) of the United States Housing Act of 1937 
(42 U.S.C. 1437f(c)(3)) is amended by striking the last 
sentence. 
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(g) IMPACT ON PUBLIC HOUSING REVENUES.— 
(1) ADJUSTMENTS TO OPERATING FORMULA.— 
If the Secretary of Housing and Urban Development 
determines that the application of subsections (a) 
through (e) of this section results in a material and 
disproportionate reduction in the rental income of 
certain public housing agencies during the first year 
in which such subsections are implemented, the Sec-
retary may make appropriate adjustments in the for-
mula income for such year of those agencies experi-
encing such a reduction. 
(2) HUD REPORTS ON REVENUE AND COST IM-
PACT.—In each of the first two years after the first 
year in which subsections (a) through (e) are imple-
mented, the Secretary of Housing and Urban Devel-
opment shall submit a report to Congress identifying 
and calculating the impact of changes made by such 
subsections and section 104 of this Act on the reve-
nues and costs of operating public housing units, the 
voucher program for rental assistance under section 
8 of the United States Housing Act of 1937, and 
the program under such section 8 for project-based 
rental assistance. If such report identifies a material 
reduction in the net income of public housing agen-
cies nationwide or a material increase in the costs of 
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funding the voucher program or the project-based 
assistance program, the Secretary shall include in 
such report recommendations for legislative changes 
to reduce or eliminate such a reduction. 
(h) EFFECTIVE DATE.—The Secretary of Housing 
and Urban Development shall issue notice or regulations 
to implement this section and this section shall take effect 
after such issuance, except that this section may only take 
effect upon the commencement of a calendar year. 
SEC. 103. LIMITATION ON PUBLIC HOUSING TENANCY FOR 
OVER-INCOME FAMILIES. 
Subsection (a) of section 16 of the United States 
Housing Act of 1937 (42 U.S.C. 1437n(a)) is amended 
by adding at the end the following new paragraph: 
‘‘(5) LIMITATIONS ON TENANCY FOR OVER-IN-
COME FAMILIES.— 
‘‘(A) LIMITATIONS.—Except as provided in 
subparagraph (C), in the case of any family re-
siding in a dwelling unit of public housing 
whose income for the most recent two consecu-
tive years has exceeded 120 percent of the me-
dian income for the area, as determined pursu-
ant to an income review conducted pursuant to 
section 3(a)(6), the public housing agency 
shall— 
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‘‘(i) notwithstanding any other provi-
sion of this Act, charge such family as 
monthly rent for the unit occupied by such 
family an amount equal to the sum of— 
‘‘(I) the applicable fair market 
rental established under section 8(c) 
for a dwelling unit in the same mar-
ket area of the same size; and 
‘‘(II) the amount of the monthly 
subsidy provided under this Act for 
the dwelling unit, which shall include 
any amounts from the Operating 
Fund and Capital Fund under section 
9 used for the unit, as determined by 
the agency in accordance with regula-
tions that the Secretary shall issue to 
carry out this subclause; or 
‘‘(ii) terminate the tenancy of such 
family in public housing not later than 6 
months after the income determination de-
scribed in subparagraph (A). 
‘‘(B) NOTICE.—In the case of any family 
residing in a dwelling unit of public housing 
whose income for a year has exceeded 120 per-
cent of the median income for the area, upon 
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the conclusion of such year the public housing 
agency shall provide written notice to such fam-
ily of the requirements under subparagraph 
(A). 
‘‘(C) 
EXCEPTION.—Subparagraph 
(A) 
shall not apply to a family occupying a dwelling 
unit in public housing pursuant to paragraph 
(5) of section 3(a) (42 U.S.C. 1437a(a)(5)).’’. 
SEC. 104. LIMITATION ON ELIGIBILITY FOR ASSISTANCE 
BASED ON ASSETS. 
Section 16 of the United States Housing Act of 1937 
(42 U.S.C. 1437n) is amended by inserting after sub-
section (d) the following new subsection: 
‘‘(e) ELIGIBILITY FOR ASSISTANCE BASED ON AS-
SETS.— 
‘‘(1) LIMITATION ON ASSETS.—Subject to para-
graph (3) and notwithstanding any other provision 
of this Act, a dwelling unit assisted under this Act 
may not be rented and assistance under this Act 
may not be provided, either initially or at each recer-
tification of family income, to any family— 
‘‘(A) whose net family assets exceed 
$100,000, as such amount is adjusted annually 
by applying an inflationary factor as the Sec-
retary considers appropriate; or 
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‘‘(B) who has a present ownership interest 
in, a legal right to reside in, and the effective 
legal authority to sell, real property that is suit-
able for occupancy by the family as a residence, 
except that the prohibition under this subpara-
graph shall not apply to— 
‘‘(i) any property for which the family 
is receiving assistance under subsection (y) 
or (o)(12) of section 8 of this Act; 
‘‘(ii) any person that is a victim of do-
mestic violence; or 
‘‘(iii) any family that is offering such 
property for sale. 
‘‘(2) NET FAMILY ASSETS.— 
‘‘(A) IN GENERAL.—For purposes of this 
subsection, the term ‘net family assets’ means, 
for all members of the household, the net cash 
value of all assets after deducting reasonable 
costs that would be incurred in disposing of real 
property, savings, stocks, bonds, and other 
forms of capital investment. Such term does not 
include interests in Indian trust land, equity in 
property for which the family is receiving assist-
ance under subsection (y) or (o)(12) of section 
8, equity accounts in homeownership programs 
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of the Department of Housing and Urban De-
velopment, or Family Self Sufficiency accounts. 
‘‘(B) EXCLUSIONS.—Such term does not 
include— 
‘‘(i) the value of personal property, ex-
cept for items of personal property of sig-
nificant value, as the Secretary may estab-
lish or the public housing agency may de-
termine; 
‘‘(ii) the value of any retirement ac-
count; 
‘‘(iii) real property for which the fam-
ily does not have the effective legal author-
ity necessary to sell such property; 
‘‘(iv) any amounts recovered in any 
civil action or settlement based on a claim 
of malpractice, negligence, or other breach 
of duty owed to a member of the family 
and arising out of law, that resulted in a 
member of the family being disabled; 
‘‘(v) the value of any Coverdell edu-
cation savings account under section 530 
of the Internal Revenue Code of 1986 or 
any qualified tuition program under sec-
tion 529 of such Code; and 
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