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(b) PERFORMANCE FUNDS.—
(1) IN GENERAL.—The Secretary shall establish
2 funds for the provision of grants to eligible public
housing agencies under this title, as follows:
(A) CAPITAL
FUND.—A capital fund to
provide capital and management improvements
to public housing developments.
(B) OPERATING
FUND.—An operating
fund for public housing operations.
(2) FLEXIBILITY OF FUNDING.—
(A) IN GENERAL.—A public housing agen-
cy may use up to 20 percent of the amounts
from a grant under this title that are allocated
and provided from the capital fund for activities
that are eligible under section 1203(a)(2) to be
funded with amounts from the operating fund.
(B) 
FULL
FLEXIBILITY
FOR
SMALL
PHA’S.—In the case of a public housing agency
that owns or operates less than 250 public
housing dwelling units and is (in the determina-
tion of the Secretary) operating and maintain-
ing its public housing in a safe, clean, and
healthy condition, the agency may use amounts
from a grant under this title for any eligible ac-
tivities under section 1203(a), regardless of the
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fund from which the amounts were allocated
and provided.
(c) AMOUNT OF GRANTS.—The amount of the grant
under this title for a public housing agency for a fiscal
year shall be the amount of the allocation for the agency
determined under section 1204, except as otherwise pro-
vided in this title and title XV.
(d) ELIGIBILITY.—A public housing agency shall be
an eligible public housing agency with respect to a fiscal
year for purposes of this title only if—
(1) the Secretary has entered into a block grant
contract with the agency;
(2) the agency has submitted a local housing
management plan to the Secretary for such fiscal
year;
(3) the plan has been determined to comply
with the requirements under section 1106 and the
Secretary has not notified the agency that the plan
fails to comply with such requirements;
(4) the agency is exempt from local taxes, as
provided under subsection (e), or receives a contribu-
tion, as provided under such subsection;
(5) no member of the board of directors or
other governing body of the agency, or the executive
director, has been convicted of a felony;
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(6) the agency has entered into an agreement
providing for local cooperation in accordance with
subsection (f); and
(7) the agency has not been disqualified for a
grant pursuant to section 1205(a) or title XV.
(e) PAYMENTS IN LIEU OF STATE AND LOCAL TAX-
ATION OF PUBLIC HOUSING DEVELOPMENTS.—
(1) EXEMPTION
FROM
TAXATION.—A public
housing agency may receive a block grant under this
title only if—
(A)(i) the developments of the agency (ex-
clusive of any portions not assisted with
amounts provided under this title) are exempt
from all real and personal property taxes levied
or imposed by the State, city, county, or other
political subdivision; and
(ii) the public housing agency makes pay-
ments in lieu of taxes to such taxing authority
equal to 10 percent of the sum, for units
charged in the developments of the agency, of
the difference between the gross rent and the
utility cost, or such lesser amount as is—
(I) prescribed by State law;
(II) agreed to by the local governing
body in its agreement under subsection (f)
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for local cooperation with the public hous-
ing agency or under a waiver by the local
governing body; or
(III) due to failure of a local public
body or bodies other than the public hous-
ing agency to perform any obligation under
such agreement; or
(B) the agency complies with the require-
ments under subparagraph (A) with respect to
public housing developments (including public
housing units in mixed-income developments),
but the agency agrees that the units other than
public housing units in any mixed-income devel-
opments (as such term is defined in section
1221(c)(2)) shall be subject to any otherwise
applicable real property taxes imposed by the
State, city, county or other political subdivision.
(2) EFFECT
OF
FAILURE
TO
EXEMPT
FROM
TAXATION.—Notwithstanding paragraph (1), a pub-
lic housing agency that does not comply with the re-
quirements under such paragraph may receive a
block grant under this title, but only if the State,
city, county, or other political subdivision in which
the development is situated contributes, in the form
of cash or tax remission, the amount by which the
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taxes paid with respect to the development exceed 10
percent of the gross rent and utility cost charged in
the development.
(f) LOCAL COOPERATION.—In recognition that there
should be local determination of the need for low-income
housing to meet needs not being adequately met by private
enterprise, the Secretary may not make any grant under
this title to a public housing agency unless the governing
body of the locality involved has entered into an agreement
with the agency providing for the local cooperation re-
quired by the Secretary pursuant to this title. The Sec-
retary shall require that each such agreement for local co-
operation shall provide that, notwithstanding any order,
judgment, or decree of any court (including any settlement
order), before making any amounts provided under a
grant under this title available for use for the production
of any housing or other property not previously used as
public housing, the public housing agency shall—
(1) notify the chief executive officer (or other
appropriate official) of the unit of general local gov-
ernment in which the public housing for which such
amounts are to be so used is located (or to be lo-
cated) of such use; and
(2) pursuant to the request of such unit of gen-
eral local government, provide such information as
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(A) procedures and systems to maintain
and ensure the efficient management and oper-
ation of public housing units;
(B) activities to ensure a program of rou-
tine preventative maintenance;
(C) anti-crime and anti-drug activities, in-
cluding the costs of providing adequate security
for public housing tenants;
(D) activities related to the provision of
services, including service coordinators for el-
derly persons or persons with disabilities and
including child care services for public housing
residents;
(E) activities to provide for management
and participation in the management of public
housing by public housing tenants;
(F) the costs associated with the operation
and management of mixed-income develop-
ments;
(G) the costs of insurance;
(H) the energy costs associated with public
housing units, with an emphasis on energy con-
servation;
(I) the costs of administering a public
housing community work program under section
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1105, including the costs of any related insur-
ance needs; and
(J) activities in connection with a home-
ownership program for public housing residents
under subtitle D, including providing financing
or assistance for purchasing housing, or the
provision of financial assistance to resident
management corporations or resident councils
to obtain training, technical assistance, and
educational assistance to promote homeowner-
ship opportunities.
(b) REQUIRED CONVERSION
OF ASSISTANCE
FOR
PUBLIC HOUSING TO RENTAL HOUSING ASSISTANCE.—
(1) REQUIREMENT.—A public housing agency
that receives grant amounts under this title shall
provide assistance in the form of rental housing as-
sistance under title XIII, or appropriate site revital-
ization or other appropriate capital improvements
approved by the Secretary, in lieu of assisting the
operation and modernization of any building or
buildings of public housing, if the agency provides
sufficient evidence to the Secretary that the building
or buildings—
(A) are on the same or contiguous sites;
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(B) consist of more than 300 dwelling
units;
(C) have a vacancy rate of at least 10 per-
cent for dwelling units not in funded, on-sched-
ule modernization programs;
(D) are identified as distressed housing for
which the public housing agency cannot assure
the long-term viability as public housing
through reasonable revitalization, density reduc-
tion, or achievement of a broader range of
household income; and
(E) have an estimated cost of continued
operation and modernization as public housing
that exceeds the cost of providing choice-based
rental assistance under title XIII for all fami-
lies in occupancy, based on appropriate indica-
tors of cost (such as the percentage of the total
development cost required for modernization).
Public housing agencies shall identify properties that
meet the definition of subparagraphs (A) through
(E) and shall consult with the appropriate public
housing residents and the appropriate unit of gen-
eral local government in identifying such properties.
(2) USE OF OTHER AMOUNTS.—In addition to
grant amounts under this title attributable (pursu-
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ant to the formulas under section 1204) to the
building or buildings identified under paragraph (1),
the Secretary may use amounts provided in appro-
priation Acts for choice-based housing assistance
under title XIII for families residing in such build-
ing or buildings or for appropriate site revitalization
or other appropriate capital improvements approved
by the Secretary.
(3) ENFORCEMENT.—The Secretary shall take
appropriate action to ensure conversion of any build-
ing or buildings identified under paragraph (1) and
any other appropriate action under this subsection,
if the public housing agency fails to take appropriate
action under this subsection.
(4) FAILURE OF PHA’S TO COMPLY WITH CON-
VERSION
REQUIREMENT.—If the Secretary deter-
mines that—
(A) a public housing agency has failed
under paragraph (1) to identify a building or
buildings in a timely manner,
(B) a public housing agency has failed to
identify one or more buildings which the Sec-
retary determines should have been identified
under paragraph (1), or
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(C) one or more of the buildings identified
by the public housing agency pursuant to para-
graph (1) should not, in the determination of
the Secretary, have been identified under that
paragraph,
the Secretary may identify a building or buildings
for conversion and take other appropriate action
pursuant to this subsection.
(5) CESSATION OF UNNECESSARY SPENDING.—
Notwithstanding any other provision of law, if, in
the determination of the Secretary, a building or
buildings meets or is likely to meet the criteria set
forth in paragraph (1), the Secretary may direct the
public housing agency to cease additional spending
in connection with such building or buildings, except
to the extent that additional spending is necessary
to ensure safe, clean, and healthy housing until the
Secretary determines or approves an appropriate
course of action with respect to such building or
buildings under this subsection.
(6) USE
OF
BUDGET
AUTHORITY.—Notwith-
standing any other provision of law, if a building or
buildings are identified pursuant to paragraph (1),
the Secretary may authorize or direct the transfer,
to the choice-based or tenant-based assistance pro-
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gram of such agency or to appropriate site revital-
ization or other capital improvements approved by
the Secretary, of—
(A) in the case of an agency receiving as-
sistance under the comprehensive improvement
assistance program, any amounts obligated by
the Secretary for the modernization of such
building or buildings pursuant to section 14 of
the United States Housing Act of 1937 (as in
effect immediately before the effective date of
the repeal under section 1601(b));
(B) in the case of an agency receiving pub-
lic housing modernization assistance by formula
pursuant to such section 14, any amounts pro-
vided to the agency which are attributable pur-
suant to the formula for allocating such assist-
ance to such building or buildings;
(C) in the case of an agency receiving as-
sistance for the major reconstruction of obsolete
projects, any amounts obligated by the Sec-
retary for the major reconstruction of such
building or buildings pursuant to section 5(j)(2)
of the United States Housing Act of 1937, as
in effect immediately before the effective date of
the repeal under section 1601(b); and
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(D) in the case of an agency receiving as-
sistance pursuant to the formulas under section
1204, any amounts provided to the agency
which are attributable pursuant to the formulas
for allocating such assistance to such building
or buildings.
(7) RELOCATION REQUIREMENTS.—Any public
housing agency carrying out conversion of public
housing under this subsection shall—
(A) notify the families residing in the pub-
lic housing development subject to the conver-
sion, in accordance with any guidelines issued
by the Secretary governing such notifications,
that—
(i) the development will be removed
from the inventory of the public housing
agency; and
(ii) the families displaced by such ac-
tion will receive choice-based housing as-
sistance or occupancy in a unit operated or
assisted by the public housing agency;
(B) ensure that each family that is a resi-
dent of the development is relocated to other
safe, clean, and healthy affordable housing,
which is, to the maximum extent practicable,
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housing of the family’s choice, including choice-
based assistance under title XIII (provided that
with respect to choice-based assistance, the pre-
ceding requirement shall be fulfilled only upon
the relocation of such family into such housing);
(C) provide any necessary counseling for
families displaced by such action to facilitate re-
location; and
(D) provide any reasonable relocation ex-
penses for families displaced by such action.
(8) TRANSITION.—Any amounts made available
to a public housing agency to carry out section 202
of the Departments of Veterans Affairs and Housing
and Urban Development, and Independent Agencies
Appropriations Act, 1996 (enacted as section 101(e)
of the Omnibus Consolidated Rescissions and Appro-
priations Act of 1996 (Public Law 104–134; 110
Stat. 1321–279)) may be used, to the extent or in
such amounts as are or have been provided in ad-
vance in appropriation Acts, to carry out this sec-
tion. The Secretary shall provide for public housing
agencies to conform and continue actions taken
under such section 202 in accordance with the re-
quirements under this section.
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(c) EXTENSION
OF
DEADLINES.—The Secretary
may, for a public housing agency, extend any deadline es-
tablished pursuant to this section or a local housing man-
agement plan for up to an additional 5 years if the Sec-
retary makes a determination that the deadline is imprac-
ticable.
(d) COMPLIANCE WITH PLAN.—The local housing
management plan submitted by a public housing agency
(including any amendments to the plan), unless deter-
mined under section 1107 not to comply with the require-
ments under section 1106, shall be binding upon the Sec-
retary and the public housing agency and the agency shall
use any grant amounts provided under this title for eligi-
ble activities under subsection (a) in accordance with the
plan. This subsection may not be construed to preclude
changes or amendments to the plan, as authorized under
section 1107 or any actions authorized by this division to
be taken without regard to a local housing management
plan.
(e) ELIGIBLE
ACTIVITIES
FOR
INCREASED
IN-
COME.—Any public housing agency that derives increased
nonrental or rental income, as referred to in subsection
(c)(2)(B) or (d)(1)(D) of section 1204 or pursuant to pro-
vision of mixed-income developments under section
1221(c)(2), may use such amounts for any eligible activity
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under paragraph (1) or (2) of subsection (a) of this section
or for providing choice-based housing assistance under
title XIII.
SEC. 1204. DETERMINATION OF GRANT ALLOCATION.
(a) IN GENERAL.—For each fiscal year, after reserv-
ing amounts under section 1111 from the aggregate
amount made available for the fiscal year for carrying out
this title, the Secretary shall allocate any remaining
amounts among eligible public housing agencies in accord-
ance with this section, so that the sum of all of the alloca-
tions for all eligible authorities is equal to such remaining
amount.
(b) ALLOCATION AMOUNT.—The Secretary shall de-
termine the amount of the allocation for each eligible pub-
lic housing agency, which shall be—
(1) for any fiscal year beginning after the en-
actment of a law containing the formulas described
in paragraphs (1) and (2) of subsection (c), the sum
of the amounts determined for the agency under
each such formula; or
(2) for any fiscal year beginning before the ex-
piration of such period, the sum of—
(A) the operating allocation determined
under subsection (d)(1) for the agency; and
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(B) the capital improvement allocation de-
termined under subsection (d)(2) for the agen-
cy.
(c) PERMANENT ALLOCATION FORMULAS FOR CAP-
ITAL AND OPERATING FUNDS.—
(1) ESTABLISHMENT OF CAPITAL FUND FOR-
MULA.—The formula under this paragraph shall
provide for allocating assistance under the capital
fund for a fiscal year. The formula may take into
account such factors as—
(A) the number of public housing dwelling
units owned or operated by the public housing
agency, the characteristics and locations of the
developments, and the characteristics of the
families served and to be served (including the
incomes of the families);
(B) the need of the public housing agency
to carry out rehabilitation and modernization
activities, and reconstruction, production, and
demolition activities related to public housing
dwelling units owned or operated by the public
housing agency, including backlog and projected
future needs of the agency;
(C) the cost of constructing and rehabili-
tating property in the area; and
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(D) the need of the public housing agency
to carry out activities that provide a safe and
secure environment in public housing units
owned or operated by the public housing agen-
cy.
(2) ESTABLISHMENT
OF
OPERATING
FUND
FORMULA.—
(A) IN GENERAL.—The formula under this
paragraph shall provide for allocating assistance
under the operating fund for a fiscal year. The
formula may take into account such factors
as—
(i) standards for the costs of operat-
ing and reasonable projections of income,
taking into account the characteristics and
locations of the public housing develop-
ments and characteristics of the families
served and to be served (including the in-
comes of the families), or the costs of pro-
viding comparable services as determined
in accordance with criteria or a formula
representing the operations of a prototype
well-managed public housing development;
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(ii) the number of public housing
dwelling units owned or operated by the
public housing agency;
(iii) the need of the public housing
agency to carry out anti-crime and anti-
drug activities, including providing ade-
quate security for public housing residents;
and
(iv) any record by the public housing
agency of exemplary performance in the
operation of public housing.
(B) INCENTIVE TO INCREASE INCOME.—
The formula shall provide an incentive to en-
courage public housing agencies to increase
nonrental income and to increase rental income
attributable to their units by encouraging occu-
pancy by families whose incomes have increase
while in occupancy and newly admitted families.
Any such incentive shall provide that the agen-
cy shall derive the full benefit of any increase
in nonrental or rental income, and such in-
crease shall not result in a decrease in amounts
provided to the agency under this title. In addi-
tion, an agency shall be permitted to retain,
from each fiscal year, the full benefit of such an
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increase in nonrental or rental income, except
to the extent that such benefit exceeds (i) 100
percent of the total amount of the operating al-
location for which the agency is eligible under
this section, and (ii) the maximum balance per-
mitted for the agency’s operating reserve under
this section and any regulations issued under
this section.
(C) TREATMENT OF UTILITY RATES.—The
formula shall not take into account the amount
of any cost reductions for a public housing
agency due to the difference between projected
and actual utility rates attributable to actions
that are taken by the agency which lead to such
reductions, as determined by the Secretary. In
the case of any public housing agency that re-
ceives financing from any person or entity other
than the Secretary or enters into a performance
contract to undertake energy conservation im-
provements in a public housing development,
under which the payment does not exceed the
cost of the energy saved as a result of the im-
provements during a reasonable negotiated con-
tract period, the formula shall not take into ac-
count the amount of any cost reductions for the
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agency due to the differences between projected
and actual utility consumption attributable to
actions that are taken by the agency which lead
to such reductions, as determined by the Sec-
retary. Notwithstanding the preceding 2 sen-
tences, after the expiration of the 10-year pe-
riod beginning upon the savings initially taking
effect, the Secretary may reduce the amount al-
located to the agency under the formula by up
to 50 percent of such differences.
(3) CONSIDERATION OF PERFORMANCE, COSTS,
AND OTHER FACTORS.—The formulas under para-
graphs (1) and (2) should each reward performance
and may each consider appropriate factors that re-
flect the different characteristics and sizes of public
housing agencies, the relative needs, revenues, costs,
and capital improvements of agencies, and the rel-
ative costs to agencies of operating a well-managed
agency that meets the performance targets for the
agency established in the local housing management
plan for the agency.
(4) DEVELOPMENT UNDER NEGOTIATED RULE-
MAKING PROCEDURE.—The formulas under this sub-
section shall be developed according to procedures
for issuance of regulations under the negotiated
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rulemaking procedure under subchapter III of chap-
ter 5 of title 5, United States Code, except that the
formulas shall not be contained in a regulation.
(5) REPORT.—Not later than the expiration of
the 12-month period beginning upon the enactment
of this Act, the Secretary shall submit a report to
the Congress containing the proposed formulas es-
tablished pursuant to paragraph (4) that meets the
requirements of this subsection.
(d) INTERIM ALLOCATION REQUIREMENTS.—
(1) OPERATING ALLOCATION.—
(A) APPLICABILITY
TO
APPROPRIATED
AMOUNTS.—Of any amounts available for allo-
cation under this subsection for a fiscal year,
an amount shall be used only to provide
amounts for operating allocations under this
paragraph for eligible public housing agencies
that bears the same ratio to such total amount
available for allocation that the amount appro-
priated for fiscal year 1997 for operating sub-
sidies under section 9 of the United States
Housing Act of 1937 bears to the sum of such
operating subsidy amounts plus the amounts
appropriated for such fiscal year for moderniza-
tion under section 14 of such Act.
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(B) DETERMINATION.—The operating allo-
cation under this paragraph for a public hous-
ing agency for a fiscal year shall be an amount
determined by applying, to the amount to be al-
located under this paragraph, the formula used
for determining the distribution of operating
subsidies for fiscal year 1997 to public housing
agencies (as modified under subparagraphs (C)
and (D)) under section 9 of the United States
Housing Act of 1937, as in effect immediately
before the effective date of the repeal under sec-
tion 1601(b).
(C) TREATMENT OF CHRONICALLY VACANT
UNITS.—The Secretary shall revise the formula
referred to in subparagraph (B) so that the for-
mula does not provide any amounts, other than
utility costs and other necessary costs (such as
costs necessary for the protection of persons
and property), attributable to any dwelling unit
of a public housing agency that has been vacant
continuously for 6 or more months. A unit shall
not be considered vacant for purposes of this
paragraph if the unit is unoccupied because of
rehabilitation or renovation that is on schedule.
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(D) TREATMENT
OF
INCREASES
IN
IN-
COME.—The Secretary shall revise the formula
referred to in subparagraph (B) to provide an
incentive to encourage public housing agencies
to increase nonrental income and to increase
rental income attributable to their units by en-
couraging occupancy by families whose incomes
have increased while in occupancy and newly
admitted families. Any such incentive shall pro-
vide that the agency shall derive the full benefit
of any increase in nonrental or rental income,
and such increase shall not result in a decrease
in amounts provided to the agency under this
title. In addition, an agency shall be permitted
to retain, from each fiscal year, the full benefit
of such an increase in nonrental or rental in-
come, except that such benefit may not be re-
tained if—
(i) the agency’s operating allocation
equals 100 percent of the amount for
which it is eligible under section 9 of the
United States Housing Act of 1937, as in
effect immediately before the effective date
of the repeal under section 1601(b) of this
Act; and
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(ii) the agency’s operating reserve bal-
ance is equal to the maximum amount per-
mitted under section 9 of the United
States Housing Act of 1937, as in effect
immediately before the effective date of the
repeal under section 1601(b) of this Act.
(2) CAPITAL IMPROVEMENT ALLOCATION.—
(A) APPLICABILITY
TO
APPROPRIATED
AMOUNTS.—Of any amounts available for allo-
cation under this subsection for a fiscal year,
an amount shall be used only to provide
amounts for capital improvement allocations
under this paragraph for eligible public housing
agencies that bears the same ratio to such total
amount available for allocation that the amount
appropriated for fiscal year 1997 for mod-
ernization under section 14 of the United
States Housing Act of 1937 bears to the sum
of such modernization amounts plus the
amounts appropriated for such fiscal year for
operating subsidies under section 9 of such Act.
(B) DETERMINATION.—The capital im-
provement allocation under this paragraph for
an eligible public housing agency for a fiscal
year shall be determined by applying, to the
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amount to be allocated under this paragraph,
the formula used for determining the distribu-
tion of modernization assistance for fiscal year
1997 to public housing agencies under section
14 of the United States Housing Act of 1937,
as in effect immediately before the effective
date of the repeal under section 1601(b), except
that the Secretary shall establish a method for
taking into consideration allocation of amounts
under the comprehensive improvement assist-
ance program.
(e) ELIGIBILITY OF UNITS ACQUIRED FROM PRO-
CEEDS OF SALES UNDER DEMOLITION OR DISPOSITION
PLAN.—If a public housing agency uses proceeds from the
sale of units under a homeownership program in accord-
ance with section 1251 to acquire additional units to be
sold to low-income families, the additional units shall be
counted as public housing for purposes of determining the
amount of the allocation to the agency under this section
until sale by the agency, but in any case no longer than
5 years.
SEC. 1205. SANCTIONS FOR IMPROPER USE OF AMOUNTS.
(a) IN GENERAL.—In addition to any other actions
authorized under this title, if the Secretary finds pursuant
to an audit under section 1541 that a public housing agen-
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cy receiving grant amounts under this title has failed to
comply substantially with any provision of this title, the
Secretary may—
(1) terminate payments under this title to the
agency;
(2) withhold from the agency amounts from the
total allocation for the agency pursuant to section
1204;
(3) reduce the amount of future grant pay-
ments under this title to the agency by an amount
equal to the amount of such payments that were not
expended in accordance with this title;
(4) limit the availability of grant amounts pro-
vided to the agency under this title to programs,
projects, or activities not affected by such failure to
comply;
(5) withhold from the agency amounts allocated
for the agency under title XIII; or
(6) order other corrective action with respect to
the agency.
(b) TERMINATION OF COMPLIANCE ACTION.—If the
Secretary takes action under subsection (a) with respect
to a public housing agency, the Secretary shall—
(1) in the case of action under subsection
(a)(1), resume payments of grant amounts under
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this title to the agency in the full amount of the
total allocation under section 1204 for the agency at
the time that the Secretary first determines that the
agency will comply with the provisions of this title;
(2) in the case of action under paragraph (2),
(5), or (6) of subsection (a), make withheld amounts
available as the Secretary considers appropriate to
ensure that the agency complies with the provisions
of this title; or
(3) in the case of action under subsection
(a)(4), release such restrictions at the time that the
Secretary first determines that the agency will com-
ply with the provisions of this title.
Subtitle B—Admissions and
Occupancy Requirements
SEC. 1221. LOW-INCOME HOUSING REQUIREMENT.
(a) PRODUCTION ASSISTANCE.—Any public housing
produced using amounts provided under a grant under
this title or under the United States Housing Act of 1937
shall be operated as public housing for the 40-year period
beginning upon such production.
(b) OPERATING ASSISTANCE.—No portion of any
public housing development operated with amounts from
a grant under this title or operating assistance provided
under the United States Housing Act of 1937 may be dis-
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posed of before the expiration of the 10-year period begin-
ning upon the conclusion of the fiscal year for which the
grant or such assistance was provided, except as provided
in this Act.
(c) 
CAPITAL
IMPROVEMENTS
ASSISTANCE.—
Amounts may be used for eligible activities under section
1203(a)(1) only for the following housing developments:
(1) LOW-INCOME
DEVELOPMENTS.—Amounts
may be used for a low-income housing development
that—
(A) is owned by public housing agencies;
(B) is operated as low-income rental hous-
ing and produced or operated with assistance
provided under a grant under this title; and
(C) is consistent with the purposes of this
title.
Any development, or portion thereof, referred to in
this paragraph for which activities under section
1203(a)(1) are conducted using amounts from a
grant under this title shall be maintained and used
as public housing for the 20-year period beginning
upon the receipt of such grant. Any public housing
development, or portion thereof, that received the
benefit of a grant pursuant to section 14 of the
United States Housing Act of 1937 shall be main-
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tained and used as public housing for the 20-year
period beginning upon receipt of such amounts.
(2) MIXED INCOME DEVELOPMENTS.—Amounts
may be used for eligible activities under section
1203(a)(1) for mixed-income developments, which
shall be a housing development that—
(A) contains dwelling units that are avail-
able for occupancy by families other than low-
income families;
(B) contains a number of dwelling units—
(i) which units are made available (by
master contract or individual lease) for oc-
cupancy only by low- and very low-income
families identified by the public housing
agency;
(ii) which number is not less than a
reasonable number of units, including re-
lated amenities, taking into account the
amount of the assistance provided by the
agency compared to the total investment
(including costs of operation) in the devel-
opment;
(iii) which units are subject to the
statutory and regulatory requirements of
the public housing program, except that
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the Secretary may grant appropriate waiv-
ers to such statutory and regulatory re-
quirements if reductions in funding or
other changes to the program make contin-
ued application of such requirements im-
practicable;
(iv) which units are specially des-
ignated as dwelling units under this sub-
paragraph, except the equivalent units in
the development may be substituted for
designated units during the period the
units are subject to the requirements of
the public housing program; and
(v) which units shall be eligible for as-
sistance under this title; and
(C) is owned by the public housing agency,
an affiliate controlled by it, or another appro-
priate entity.
Notwithstanding any other provision of this title, to
facilitate the establishment of socioeconomically
mixed communities, a public housing agency that
uses grant amounts under this title for a mixed in-
come development under this paragraph may, to the
extent that income from such a development reduces
the amount of grant amounts used for operating or
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other costs relating to public housing, use such re-
sulting savings to rent privately developed dwelling
units in the neighborhood of the mixed income devel-
opment. Such units shall be made available for occu-
pancy only by low-income families eligible for resi-
dency in public housing.
SEC. 1222. FAMILY ELIGIBILITY.
(a) IN GENERAL.—Dwelling units in public housing
may be rented only to families who are low-income families
at the time of their initial occupancy of such units.
(b) INCOME MIX WITHIN DEVELOPMENTS.—A public
housing agency may establish and utilize income-mix cri-
teria for the selection of residents for dwelling units in
public housing developments that limit admission to a de-
velopment by selecting applicants having incomes appro-
priate so that the mix of incomes of families occupying
the development at any time is proportional to the income
mix in the eligible population of the jurisdiction of the
agency at such time, as adjusted to take into consideration
the severity of housing need. Any criteria established
under this subsection shall be subject to the provisions of
subsection (c).
(c) INCOME MIX.—
(1) PHA INCOME MIX.—Of the public housing
dwelling units of a public housing agency made
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available for occupancy by eligible families, not less
than 35 percent shall be occupied by families whose
incomes at the time of occupancy do not exceed 30
percent of the area median income, as determined by
the Secretary with adjustments for smaller and larg-
er families, except that the Secretary, may for pur-
poses of this subsection, establish income ceilings
higher or lower than 30 percent of the median for
the area on the basis of the Secretary’s findings that
such variations are necessary because of unusually
high or low family incomes. This paragraph may not
be construed to create any authority on the part of
any public housing agency to evict any family resid-
ing in public housing solely because of the income of
the family or because of any noncompliance or over-
compliance with the requirement of this paragraph.
(2) PROHIBITION OF CONCENTRATION OF LOW-
INCOME FAMILIES.—A public housing agency may
not, in complying with the requirements under para-
graph (1), concentrate very low-income families (or
other families with relatively low incomes) in public
housing dwelling units in certain public housing de-
velopments or certain buildings within developments.
The Secretary may review the income and occupancy
characteristics of the public housing developments,
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and the buildings of such developments, of public
housing agencies to ensure compliance with the pro-
visions of this paragraph.
(3) FUNGIBILITY WITH CHOICE-BASED ASSIST-
ANCE.—If, during a fiscal year, a public housing
agency provides choice-based housing assistance
under title XIII for a number of low-income families,
who are initially assisted by the agency in such year
and have incomes described in section 1321(b) (re-
lating to income targeting), which exceeds the num-
ber of families that is required for the agency to
comply with the percentage requirement under such
section 1321(b) for such fiscal year, notwithstanding
paragraph (1) of this subsection, the number of pub-
lic housing dwelling units that the agency must oth-
erwise make available in accordance with such para-
graph to comply with the percentage requirement
under such paragraph shall be reduced by such ex-
cess number of families for such fiscal year.
(d) WAIVER OF ELIGIBILITY REQUIREMENTS FOR
OCCUPANCY BY POLICE OFFICERS.—
(1) AUTHORITY AND WAIVER.—To the extent
necessary to provide occupancy in public housing
dwelling units to police officers and other law en-
forcement or security personnel (who are not other-
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wise eligible for residence in public housing) and to
increase security for other public housing residents
in developments where crime has been a problem, a
public housing agency may, with respect to such
units and subject to paragraph (2)—
(A) waive—
(i) the provisions of subsection (a) of
this section and section 1225(a); and
(ii) the applicability of—
(I) any preferences for occupancy
established under section 1223;
(II) the minimum rental amount
established 
pursuant 
to 
section
1225(c) and any maximum monthly
rental amount established pursuant to
section 1225(b);
(III) any criteria relating to in-
come mix within developments estab-
lished under subsection (b);
(IV) the income mix require-
ments under subsection (c); and
(V) any other occupancy limita-
tions or requirements; and
(B) establish special rent requirements and
other terms and conditions of occupancy.
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(2) CONDITIONS OF WAIVER.—A public housing
agency may take the actions authorized in para-
graph (1) only if agency determines that such ac-
tions will increase security in the public housing de-
velopments involved and will not result in a signifi-
cant reduction of units available for residence by
low-income families.
SEC. 1223. PREFERENCES FOR OCCUPANCY.
(a) AUTHORITY TO ESTABLISH.—Each public hous-
ing agency may establish a system for making dwelling
units in public housing available for occupancy that pro-
vides preference for such occupancy to families having cer-
tain characteristics.
(b) CONTENT.—Each system of preferences estab-
lished pursuant to this section shall be based upon local
housing needs and priorities, as determined by the public
housing agency using generally accepted data sources, in-
cluding any information obtained pursuant to an oppor-
tunity for public comment as provided under section
1106(e) and under the requirements applicable to the
comprehensive housing affordability strategy for the rel-
evant jurisdiction.
(c) SENSE OF THE CONGRESS.—It is the sense of the
Congress that, to the greatest extent practicable, public
housing agencies involved in the selection of tenants under
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the provisions of this title should adopt preferences for in-
dividuals who are victims of domestic violence.
SEC. 1224. ADMISSION PROCEDURES.
(a) ADMISSION REQUIREMENTS.—A public housing
agency shall ensure that each family residing in a public
housing development owned or administered by the agency
is admitted in accordance with the procedures established
under this title by the agency and the income limits under
section 1222.
(b) NOTIFICATION OF APPLICATION DECISIONS.—A
public housing agency shall establish procedures designed
to provide for notification to an applicant for admission
to public housing of the determination with respect to such
application, the basis for the determination, and, if the
applicant is determined to be eligible for admission, the
projected date of occupancy (to the extent such date can
reasonably be determined). If an agency denies an appli-
cant admission to public housing, the agency shall notify
the applicant that the applicant may request an informal
hearing on the denial within a reasonable time of such
notification.
(c) SITE-BASED WAITING LISTS.—A public housing
agency may establish procedures for maintaining waiting
lists for admissions to public housing developments of the
agency, which may include (notwithstanding any other
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law, regulation, handbook, or notice to the contrary) a sys-
tem of site-based waiting lists whereby applicants may
apply directly at or otherwise designate the development
or developments in which they seek to reside. All such pro-
cedures shall comply with all provisions of title VI of the
Civil Rights Act of 1964, the Fair Housing Act, and other
applicable civil rights laws.
(d) CONFIDENTIALITY FOR VICTIMS OF DOMESTIC
VIOLENCE.—A public housing agency shall be subject to
the restrictions regarding release of information relating
to the identity and new residence of any family in public
housing that was a victim of domestic violence that are
applicable to shelters pursuant to the Family Violence
Prevention and Services Act. The agency shall work with
the United States Postal Service to establish procedures
consistent with the confidentiality provisions in the Vio-
lence Against Women Act of 1994.
(e) TRANSFERS.—A public housing agency may
apply, to each public housing resident seeking to transfer
from one development to another development owned or
operated by the agency, the screening procedures applica-
ble at such time to new applicants for public housing.
SEC. 1225. FAMILY CHOICE OF RENTAL PAYMENT.
(a) RENTAL CONTRIBUTION BY RESIDENT.—A fam-
ily residing in a public housing dwelling shall pay as
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monthly rent for the unit the amount determined under
paragraph (1) or (2) of subsection (b), subject to the re-
quirement under subsection (c). Each public housing agen-
cy shall provide for each family residing in a public hous-
ing dwelling unit owned or administered by the agency to
elect annually whether the rent paid by such family shall
be determined under paragraph (1) or (2) of subsection
(b).
(b) ALLOWABLE RENT STRUCTURES.—
(1) FLAT RENTS.—Each public housing agency
shall establish, for each dwelling unit in public hous-
ing owned or administered by the agency, a flat
rental amount for the dwelling unit, which shall—
(A) be based on the rental value of the
unit, as determined by the public housing agen-
cy; and
(B) be designed in accordance with sub-
section (e) so that the rent structures do not
create a disincentive for continued residency in
public housing by families who are attempting
to become economically self-sufficient through
employment or who have attained a level of self-
sufficiency through their own efforts.
The rental amount for a dwelling unit shall be con-
sidered to comply with the requirements of this
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paragraph if such amount does not exceed the actual
monthly costs to the public housing agency attrib-
utable to providing and operating the dwelling unit.
The preceding sentence may not be construed to re-
quire establishment of rental amounts equal to or
based on operating costs or to prevent public hous-
ing agencies from developing flat rents required
under this paragraph in any other manner that may
comply with this paragraph.
(2) INCOME-BASED RENTS.—The monthly rent-
al amount determined under this paragraph for a
family shall be an amount, determined by the public
housing agency, that does not exceed the greatest of
the following amounts (rounded to the nearest dol-
lar):
(A) 30 percent of the monthly adjusted in-
come of the family.
(B) 10 percent of the monthly income of
the family.
(C) If the family is receiving payments for
welfare assistance from a public agency and a
part of such payments, adjusted in accordance
with the actual housing costs of the family, is
specifically designated by such agency to meet
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the housing costs of the family, the portion of
such payments that is so designated.
Nothing in this paragraph may be construed to re-
quire a public housing agency to charge a monthly
rent in the maximum amount permitted under this
paragraph.
(c) MINIMUM RENTAL AMOUNT.—Notwithstanding
the method for rent determination elected by a family pur-
suant to subsection (a), each public housing agency shall
require that the monthly rent for each dwelling unit in
public housing owned or administered by the agency shall
not be less than a minimum amount (which amount shall
include any amount allowed for utilities), which shall be
an amount determined by the agency that is not less than
$25 nor more than $50.
(d) HARDSHIP PROVISIONS.—
(1) MINIMUM RENTAL.—
(A) IN
GENERAL.—Notwithstanding sub-
section (c), a public housing agency shall grant
an exemption from application of the minimum
monthly rental under such subsection to any
family unable to pay such amount because of fi-
nancial hardship, which shall include situations
in which (i) the family has lost eligibility for or
is awaiting an eligibility determination for a
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Federal, State, or local assistance program, in-
cluding a family that includes a member who is
an alien lawfully admitted for permanent resi-
dence under the Immigration and Nationality
Act who would be entitled to public benefits but
for title IV of the Personal Responsibility and
Work Opportunity Reconciliation Act of 1996;
(ii) the family would be evicted as a result of
the imposition of the minimum rent require-
ment under subsection (c); (iii) the income of
the family has decreased because of changed
circumstance, including loss of employment; and
(iv) a death in the family has occurred; and
other situations as may be determined by the
agency.
(B) WAITING PERIOD.—If a resident re-
quests a hardship exemption under this para-
graph and the public housing agency reasonably
determines the hardship to be of a temporary
nature, an exemption shall not be granted dur-
ing the 90-day period beginning upon the mak-
ing of a request for the exemption. A resident
may not be evicted during such 90-day period
for nonpayment of rent. In such a case, if the
resident thereafter demonstrates that the finan-
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cial hardship is of a long-term basis, the agency
shall retroactively exempt the resident from the
applicability of the minimum rent requirement
for such 90-day period.
(2) SWITCHING RENT DETERMINATION METH-
ODS.—Notwithstanding subsection (a), in the case of
a family that has elected to pay rent in the amount
determined under subsection (b)(1), a public housing
agency shall provide for the family to pay rent in the
amount determined under subsection (b)(2) during
the period for which such election was made if the
family is unable to pay the amount determined
under subsection (b)(1) because of financial hard-
ship, including—
(A) situations in which the income of the
family has decreased because of changed cir-
cumstances, loss of reduction of employment,
death in the family, and reduction in or loss of
income or other assistance;
(B) an increase, because of changed cir-
cumstances, in the family’s expenses for—
(i) medical costs;
(ii) child care;
(iii) transportation;
(iv) education; or
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(v) similar items; and
(C) such other situations as may be deter-
mined by the agency.
(e) ENCOURAGEMENT OF SELF-SUFFICIENCY.—The
rental policy developed by each public housing agency shall
encourage and reward employment and economic self-suf-
ficiency.
(f) INCOME REVIEWS.—Each public housing agency
shall review the income of each family occupying a dwell-
ing unit in public housing owned or administered by the
agency not less than annually, except that, in the case of
families that are paying rent in the amount determined
under subsection (b)(1), the agency shall review the in-
come of such family not less than once every 3 years.
(g) DISALLOWANCE
OF EARNED INCOME FROM
RENT DETERMINATIONS.—
(1) IN GENERAL.—Notwithstanding any other
provision of law, the rent payable under this section
by a family whose income increases as a result of
employment of a member of the family who was pre-
viously unemployed for 1 or more years (including a
family whose income increases as a result of the par-
ticipation of a family member in any family self-suf-
ficiency or other job training program) may not be
increased as a result of the increased income due to
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such employment during the 18-month period begin-
ning on the date on which the employment is com-
menced.
(2) PHASE-IN OF RENT INCREASES.—After the
expiration of the 18-month period referred to in
paragraph (1), rent increases due to the continued
employment of the family member described in para-
graph (1) shall be phased in over a subsequent 3-
year period.
(3) TRANSITION.—Notwithstanding the provi-
sions of paragraphs (1) and (2), any resident of
public housing participating in the program under
the authority contained in the undesignated para-
graph at the end of section 3(c)(3) of the United
States Housing Act of 1937 (as in effect before the
effective date of the repeal under section 1601(b) of
this Act) shall be governed by such authority after
such date.
(h) PHASE-IN OF RENT CONTRIBUTION INCREASES
AFTER EFFECTIVE DATE.—
(1) IN GENERAL.—Except as provided in para-
graph (2), for any family residing in a dwelling unit
in public housing upon the effective date of this divi-
sion, if the monthly contribution for rental of an as-
sisted dwelling unit to be paid by the family upon
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initial applicability of this title is greater than the
amount paid by the family under the provisions of
the United States Housing Act of 1937 immediately
before such applicability, any such resulting increase
in rent contribution shall be—
(A) phased in equally over a period of not
less than 3 years, if such increase is 30 percent
or more of such contribution before initial ap-
plicability; and
(B) limited to not more than 10 percent
per year if such increase is more than 10 per-
cent but less than 30 percent of such contribu-
tion before initial applicability.
(2) EXCEPTION.—The minimum rental amount
under subsection (c) shall apply to each family de-
scribed in paragraph (1) of this subsection, notwith-
standing such paragraph.
SEC. 1226. LEASE REQUIREMENTS.
In renting dwelling units in a public housing develop-
ment, each public housing agency shall utilize leases
that—
(1) do not contain unreasonable terms and con-
ditions;
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(2) obligate the public housing agency to main-
tain the development in compliance with the housing
quality requirements under section 1232;
(3) require the public housing agency to give
adequate written notice of termination of the lease,
which shall not be less than—
(A) the period provided under the applica-
ble law of the jurisdiction or 14 days, whichever
is less, in the case of nonpayment of rent;
(B) a reasonable period of time, but not to
exceed 14 days, when the health or safety of
other residents or public housing agency em-
ployees is threatened; and
(C) the period of time provided under the
applicable law of the jurisdiction, in any other
case;
(4) contain the provisions required under sec-
tions 1642 and 1643 (relating to limitations on oc-
cupancy in federally assisted housing); and
(5) specify that, with respect to any notice of
eviction or termination, notwithstanding any State
law, a public housing resident shall be informed of
the opportunity, prior to any hearing or trial, to ex-
amine any relevant documents, records or regula-
tions directly related to the eviction or termination.
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SEC. 1227. DESIGNATED HOUSING FOR ELDERLY AND DIS-
ABLED FAMILIES.
(a) AUTHORITY TO PROVIDE DESIGNATED HOUS-
ING.—
(1) IN GENERAL.—Subject only to provisions of
this section and notwithstanding any other provision
of law, a public housing agency for which the infor-
mation required under subsection (d) is in effect
may provide public housing developments (or por-
tions of developments) designated for occupancy by
(A) only elderly families, (B) only disabled families,
or (C) elderly and disabled families.
(2) PRIORITY FOR OCCUPANCY.—In determin-
ing priority for admission to public housing develop-
ments (or portions of developments) that are des-
ignated for occupancy as provided in paragraph (1),
the public housing agency may make units in such
developments (or portions) available only to the
types of families for whom the development is des-
ignated.
(3) ELIGIBILITY
OF
NEAR-ELDERLY
FAMI-
LIES.—If a public housing agency determines that
there are insufficient numbers of elderly families to
fill all the units in a development (or portion of a
development) designated under paragraph (1) for oc-
cupancy by only elderly families, the agency may
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provide that near-elderly families may occupy dwell-
ing units in the development (or portion).
(b) STANDARDS REGARDING EVICTIONS.—Except as
provided in subtitle C of title XVI, any tenant who is law-
fully residing in a dwelling unit in a public housing devel-
opment may not be evicted or otherwise required to vacate
such unit because of the designation of the development
(or portion of a development) pursuant to this section or
because of any action taken by the Secretary or any public
housing agency pursuant to this section.
(c) RELOCATION ASSISTANCE.—A public housing
agency that designates any existing development or build-
ing, or portion thereof, for occupancy as provided under
subsection (a)(1) shall provide, to each person and family
who agrees to be relocated in connection with such des-
ignation—
(1) notice of the designation and an explanation
of available relocation benefits, as soon as is prac-
ticable for the agency and the person or family;
(2) access to comparable housing (including ap-
propriate services and design features), which may
include choice-based rental housing assistance under
title XIII, at a rental rate paid by the tenant that
is comparable to that applicable to the unit from
which the person or family has vacated; and
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(3) payment of actual, reasonable moving ex-
penses.
(d) REQUIRED INCLUSIONS
IN LOCAL HOUSING
MANAGEMENT PLAN.—A public housing agency may des-
ignate a development (or portion of a development) for
occupancy under subsection (a)(1) only if the agency, as
part of the agency’s local housing management plan—
(1) establishes that the designation of the devel-
opment is necessary—
(A) to achieve the housing goals for the ju-
risdiction under the comprehensive housing af-
fordability strategy under section 105 of the
Cranston-Gonzalez National Affordable Hous-
ing Act; or
(B) to meet the housing needs of the low-
income population of the jurisdiction; and
(2) includes a description of—
(A) the development (or portion of a devel-
opment) to be designated;
(B) the types of tenants for which the de-
velopment is to be designated;
(C) any supportive services to be provided
to tenants of the designated development (or
portion);
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(D) how the design and related facilities
(as such term is defined in section 202(d)(8) of
the Housing Act of 1959) of the development
accommodate the special environmental needs
of the intended occupants; and
(E) any plans to secure additional re-
sources or housing assistance to provide assist-
ance to families that may have been housed if
occupancy in the development were not re-
stricted pursuant to this section.
For purposes of this subsection, the term ‘‘supportive
services’’ means services designed to meet the special
needs of residents. Notwithstanding section 1107, the Sec-
retary may approve a local housing management plan
without approving the portion of the plan covering des-
ignation of a development pursuant to this section.
(e) EFFECTIVENESS.—
(1) INITIAL 5-YEAR EFFECTIVENESS.—The in-
formation required under subsection (d) shall be in
effect for purposes of this section during the 5-year
period that begins upon notification under section
1107(a) of the public housing agency that the infor-
mation complies with the requirements under section
1106 and this section.
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(2) RENEWAL.—Upon the expiration of the 5-
year period under paragraph (1) or any 2-year pe-
riod under this paragraph, an agency may extend
the effectiveness of the designation and information
for an additional 2-year period (that begins upon
such expiration) by submitting to the Secretary any
information needed to update the information. The
Secretary may not limit the number of times a pub-
lic housing agency extends the effectiveness of a des-
ignation and information under this paragraph.
(3) TREATMENT
OF
EXISTING
PLANS.—Not-
withstanding any other provision of this section, a
public housing agency shall be considered to have
submitted the information required under this sec-
tion if the agency has submitted to the Secretary an
application and allocation plan under section 7 of
the United States Housing Act of 1937 (as in effect
before the effective date of the repeal under section
1601(b) of this Act) that has not been approved or
disapproved before such effective date.
(4) TRANSITION
PROVISION.—Any application
and allocation plan approved under section 7 of the
United States Housing Act of 1937 (as in effect be-
fore the effective date of the repeal under section
1601(b) of this Act) before such effective date shall
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be considered to be the information required to be
submitted under this section and that is in effect for
purposes of this section for the 5-year period begin-
ning upon such approval.
(f) INAPPLICABILITY OF UNIFORM RELOCATION AS-
SISTANCE AND REAL PROPERTY ACQUISITIONS POLICY
ACT OF 1970.—No resident of a public housing develop-
ment shall be considered to be displaced for purposes of
the Uniform Relocation Assistance and Real Property Ac-
quisitions Policy Act of 1970 because of the designation
of any existing development or building, or portion thereof,
for occupancy as provided under subsection (a) of this sec-
tion.
(g) USE OF AMOUNTS.—Any amounts appropriated
pursuant to section 10(b) of the Housing Opportunity
Program Extension Act of 1996 (Public Law 104–120)
may also be used, to the extent or in such amounts as
are or have been provided in advance in appropriation
Acts, for choice-based rental housing assistance under title
XIII for public housing agencies to implement this section.
Subtitle C—Management
SEC. 1231. MANAGEMENT PROCEDURES.
(a) SOUND MANAGEMENT.—A public housing agency
that receives grant amounts under this title shall establish
and comply with procedures and practices sufficient to en-
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sure that the public housing developments owned or ad-
ministered by the agency are operated in a sound manner.
(b) ACCOUNTING SYSTEM
FOR RENTAL COLLEC-
TIONS AND COSTS.—
(1) ESTABLISHMENT.—Each public housing
agency that receives grant amounts under this title
shall establish and maintain a system of accounting
for rental collections and costs (including adminis-
trative, utility, maintenance, repair, and other oper-
ating costs) for each project and operating cost cen-
ter (as determined by the Secretary).
(2) ACCESS TO RECORDS.—Each public housing
agency shall make available to the general public the
information required pursuant to paragraph (1) re-
garding collections and costs.
(3) EXEMPTION.—The Secretary may permit
authorities owning or operating fewer than 500
dwelling units to comply with the requirements of
this subsection by accounting on an agency-wide
basis.
(c) MANAGEMENT BY OTHER ENTITIES.—Except as
otherwise provided under this division, a public housing
agency may contract with any other entity to perform any
of the management functions for public housing owned or
operated by the public housing agency.
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SEC. 1232. HOUSING QUALITY REQUIREMENTS.
(a) IN GENERAL.—Each public housing agency that
receives grant amounts under this division shall maintain
its public housing in a condition that complies—
(1) in the case of public housing located in a ju-
risdiction which has in effect laws, regulations,
standards, or codes regarding habitability of residen-
tial dwellings, with such applicable laws, regulations,
standards, or codes; or
(2) in the case of public housing located in a ju-
risdiction which does not have in effect laws, regula-
tions, standards, or codes described in paragraph
(1), with the housing quality standards established
under subsection (b).
(b) FEDERAL HOUSING QUALITY STANDARDS.—The
Secretary shall establish housing quality standards under
this subsection that ensure that public housing dwelling
units are safe, clean, and healthy. Such standards shall
include requirements relating to habitability, including
maintenance, health and sanitation factors, condition, and
construction of dwellings, and shall, to the greatest extent
practicable, be consistent with the standards established
under section 1328(c). The Secretary shall differentiate
between major and minor violations of such standards.
(c) DETERMINATIONS.—Each public housing agency
providing housing assistance shall identify, in the local
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housing management plan of the agency, whether the
agency is utilizing the standard under paragraph (1) or
(2) of subsection (a).
(d) ANNUAL INSPECTIONS.—Each public housing
agency that owns or operates public housing shall make
an annual inspection of each public housing development
to determine whether units in the development are main-
tained in accordance with the requirements under sub-
section (a). The agency shall retain the results of such
inspections and, upon the request of the Secretary, the
Inspector General for the Department of Housing and
Urban Development, or any auditor conducting an audit
under section 1541, shall make such results available.
SEC. 1233. EMPLOYMENT OF RESIDENTS.
Section 3 of the Housing and Urban Development
Act of 1968 (12 U.S.C. 1701u) is amended—
(1) in subsection (c)(1)—
(A) in subparagraph (A)—
(i) by striking ‘‘public and Indian
housing agencies’’ and inserting ‘‘public
housing agencies and recipients of grants
under the Native American Housing As-
sistance and Self-Determination Act of
1996’’; and
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(ii) by striking ‘‘development assist-
ance’’ and all that follows through the end
and inserting ‘‘assistance provided under
title XII of the Housing Opportunity and
Responsibility Act of 1998 and used for
the housing production, operation, or cap-
ital needs.’’; and
(B) in subparagraph (B)(ii), by striking
‘‘managed by the public or Indian housing
agency’’ and inserting ‘‘assisted by the public
housing agency or the recipient of a grant
under the Native American Housing Assistance
and Self-Determination Act of 1996’’;
(2) in subsection (d)(1)—
(A) in subparagraph (A)—
(i) by striking ‘‘public and Indian
housing agencies’’ and inserting ‘‘public
housing agencies and recipients of grants
under the Native American Housing As-
sistance and Self-Determination Act of
1996’’; and
(ii) by striking ‘‘development assist-
ance’’ and all that follows through ‘‘section
14 of that Act’’ and inserting ‘‘assistance
provided under title XII of the Housing
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Opportunity and Responsibility Act of
1998 and used for the housing production,
operation, or capital needs’’; and
(B) in subparagraph (B)(ii), by striking
‘‘operated by the public or Indian housing agen-
cy’’ and inserting ‘‘assisted by the public hous-
ing agency or the recipient of a grant under the
Native American Housing Assistance and Self-
Determination Act of 1996’’;
(3) in subsections (c)(1)(A) and (d)(1)(A), by
striking ‘‘make their best efforts,’’ each place it ap-
pears and inserting ‘‘to the maximum extent that is
possible and’’;
(4) in subsection (c)(1)(A), by striking ‘‘to
give’’ and inserting ‘‘give’’; and
(5) in subsection (d)(1)(A), by striking ‘‘to
award’’ and inserting ‘‘award’’.
SEC. 1234. RESIDENT COUNCILS AND RESIDENT MANAGE-
MENT CORPORATIONS.
(a) RESIDENT COUNCILS.—The residents of a public
housing development may establish a resident council for
the development for purposes of consideration of issues re-
lating to residents, representation of resident interests,
and coordination and consultation with a public housing
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agency. A resident council shall be an organization or as-
sociation that—
(1) is nonprofit in character;
(2) is representative of the residents of the eli-
gible housing;
(3) adopts written procedures providing for the
election of officers on a regular basis; and
(4) has a democratically elected governing
board, which is elected by the residents of the eligi-
ble housing on a regular basis.
(b) RESIDENT MANAGEMENT CORPORATIONS.—
(1) ESTABLISHMENT.—The residents of a pub-
lic housing development may establish a resident
management corporation for the purpose of assum-
ing the responsibility for the management of the de-
velopment under section 1235 or purchasing a devel-
opment.
(2) REQUIREMENTS.—A resident management
corporation shall be a corporation that—
(A) is nonprofit in character;
(B) is organized under the laws of the
State in which the development is located;
(C) has as its sole voting members the
residents of the development; and
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(D) is established by the resident council
for the development or, if there is not a resident
council, by a majority of the households of the
development.
SEC. 1235. MANAGEMENT BY RESIDENT MANAGEMENT COR-
PORATION.
(a) AUTHORITY.—A public housing agency may enter
into a contract under this section with a resident manage-
ment corporation to provide for the management of public
housing developments by the corporation.
(b) CONTRACT.—A contract under this section for
management of public housing developments by a resident
management corporation shall establish the respective
management rights and responsibilities of the corporation
and the public housing agency. The contract shall be con-
sistent with the requirements of this division applicable
to public housing development and may include specific
terms governing management personnel and compensa-
tion, access to public housing records, submission of and
adherence to budgets, rent collection procedures, resident
income verification, resident eligibility determinations,
resident eviction, the acquisition of supplies and materials
and such other matters as may be appropriate. The con-
tract shall be treated as a contracting out of services.
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(c) BONDING
AND INSURANCE.—Before assuming
any management responsibility for a public housing devel-
opment, the resident management corporation shall pro-
vide fidelity bonding and insurance, or equivalent protec-
tion. Such bonding and insurance, or its equivalent, shall
be adequate to protect the Secretary and the public hous-
ing agency against loss, theft, embezzlement, or fraudulent
acts on the part of the resident management corporation
or its employees.
(d) BLOCK GRANT ASSISTANCE AND INCOME.—A
contract under this section shall provide for—
(1) the public housing agency to provide a por-
tion of the block grant assistance under this title to
the resident management corporation for purposes of
operating the public housing development covered by
the contract and performing such other eligible ac-
tivities with respect to the development as may be
provided under the contract;
(2) the amount of income expected to be de-
rived from the development itself (from sources such
as rents and charges);
(3) the amount of income to be provided to the
development from the other sources of income of the
public housing agency (such as interest income, ad-
ministrative fees, and rents); and
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(4) any income generated by a resident man-
agement corporation of a public housing develop-
ment that exceeds the income estimated under the
contract shall be used for eligible activities under
section 1203(a).
(e) CALCULATION OF TOTAL INCOME.—
(1) MAINTENANCE
OF
SUPPORT.—Subject to
paragraph (2), the amount of assistance provided by
a public housing agency to a public housing develop-
ment managed by a resident management corpora-
tion may not be reduced during the 3-year period be-
ginning on the date on which the resident manage-
ment corporation is first established for the develop-
ment.
(2) REDUCTIONS
AND
INCREASES
IN
SUP-
PORT.—If the total income of a public housing agen-
cy is reduced or increased, the income provided by
the public housing agency to a public housing devel-
opment managed by a resident management corpora-
tion shall be reduced or increased in proportion to
the reduction or increase in the total income of the
agency, except that any reduction in block grant
amounts under this title to the agency that occurs
as a result of fraud, waste, or mismanagement by
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the agency shall not affect the amount provided to
the resident management corporation.
SEC. 1236. TRANSFER OF MANAGEMENT OF CERTAIN HOUS-
ING TO INDEPENDENT MANAGER AT RE-
QUEST OF RESIDENTS.
(a) AUTHORITY.—The Secretary may transfer the re-
sponsibility and authority for management of specified
housing (as such term is defined in subsection (h)) from
a public housing agency to an eligible management entity,
in accordance with the requirements of this section, if—
(1) such housing is owned or operated by a
public housing agency that is designated as a trou-
bled agency under section 1533(a); and
(2) the Secretary determines that—
(A) such housing has deferred mainte-
nance, physical deterioration, or obsolescence of
major systems and other deficiencies in the
physical plant of the project;
(B) such housing is occupied predomi-
nantly by families with children who are in a
severe state of distress, characterized by such
factors as high rates of unemployment, teenage
pregnancy, single-parent households, long-term
dependency on public assistance and minimal
educational achievement;
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(C) such housing is located in an area such
that the housing is subject to recurrent vandal-
ism and criminal activity (including drug-relat-
ed criminal activity); and
(D) the residents can demonstrate that the
elements of distress for such housing specified
in subparagraphs (A) through (C) can be rem-
edied by an entity that has a demonstrated ca-
pacity to manage, with reasonable expenses for
modernization.
Such a transfer may be made only as provided in this sec-
tion, pursuant to the approval by the Secretary of a re-
quest for the transfer made by a majority vote of the resi-
dents for the specified housing, after consultation with the
public housing agency for the specified housing.
(b) BLOCK GRANT ASSISTANCE.—Pursuant to a con-
tract under subsection (c), the Secretary shall require the
public housing agency for specified housing to provide to
the manager for the housing, from any block grant
amounts under this title for the agency, fair and reason-
able amounts for operating costs for the housing. The
amount made available under this subsection to a manager
shall be determined by the Secretary based on the share
for the specified housing of the total block grant amounts
for the public housing agency transferring the housing,
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taking into consideration the operating and capital im-
provement needs of the specified housing, the operating
and capital improvement needs of the remaining public
housing units managed by the public housing agency, and
the local housing management plan of such agency.
(c) CONTRACT BETWEEN SECRETARY
AND MAN-
AGER.—
(1) REQUIREMENTS.—Pursuant to the approval
of a request under this section for transfer of the
management of specified housing, the Secretary shall
enter into a contract with the eligible management
entity.
(2) TERMS.— A contract under this subsection
shall contain provisions establishing the rights and
responsibilities of the manager with respect to the
specified housing and the Secretary and shall be
consistent with the requirements of this division ap-
plicable to public housing developments.
(d) COMPLIANCE WITH LOCAL HOUSING MANAGE-
MENT PLAN.—A manager of specified housing under this
section shall comply with the approved local housing man-
agement plan applicable to the housing and shall submit
such information to the public housing agency from which
management was transferred as may be necessary for such
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agency to prepare and update its local housing manage-
ment plan.
(e) DEMOLITION AND DISPOSITION BY MANAGER.—
A manager under this section may demolish or dispose of
specified housing only if, and in the manner, provided for
in the local housing management plan for the agency
transferring management of the housing.
(f) LIMITATION ON PHA LIABILITY.—A public hous-
ing agency that is not a manager for specified housing
shall not be liable for any act or failure to act by a man-
ager or resident council for the specified housing.
(g) TREATMENT OF MANAGER.—To the extent not
inconsistent with this section and to the extent the Sec-
retary determines not inconsistent with the purposes of
this division, a manager of specified housing under this
section shall be considered to be a public housing agency
for purposes of this title.
(h) DEFINITIONS.—For purposes of this section, the
following definitions shall apply:
(1) ELIGIBLE
MANAGEMENT
ENTITY.—The
term ‘‘eligible management entity’’ means, with re-
spect to any public housing development, any of the
following entities:
(A) NONPROFIT ORGANIZATION.—A public
or private nonprofit organization, which shall—
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(i) include a resident management
corporation or resident management orga-
nization and, as determined by the Sec-
retary, a public or private nonprofit orga-
nization sponsored by the public housing
agency that owns the development; and
(ii) not include the public housing
agency that owns the development.
(B) FOR-PROFIT ENTITY.—A for-profit en-
tity that has demonstrated experience in provid-
ing low-income housing.
(C) STATE
OR
LOCAL
GOVERNMENT.—A
State or local government, including an agency
or instrumentality thereof.
(D) PUBLIC HOUSING AGENCY.—A public
housing agency (other than the public housing
agency that owns the development).
The term does not include a resident council.
(2) MANAGER.—The term ‘‘manager’’ means
any eligible management entity that has entered into
a contract under this section with the Secretary for
the management of specified housing.
(3) NONPROFIT.—The term ‘‘nonprofit’’ means,
with respect to an organization, association, corpora-
tion, or other entity, that no part of the net earnings
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of the entity inures to the benefit of any member,
founder, contributor, or individual.
(4) PRIVATE NONPROFIT ORGANIZATION.—The
term ‘‘private nonprofit organization’’ means any
private organization (including a State or locally
chartered organization) that—
(A) is incorporated under State or local
law;
(B) is nonprofit in character;
(C) complies with standards of financial
accountability acceptable to the Secretary; and
(D) has among its purposes significant ac-
tivities related to the provision of decent hous-
ing that is affordable to low-income families.
(5) PUBLIC
HOUSING
AGENCY.—The term
‘‘public housing agency’’ has the meaning given such
term in section 1103(a).
(6) PUBLIC
NONPROFIT
ORGANIZATION.—The
term ‘‘public nonprofit organization’’ means any
public entity that is nonprofit in character.
(7) SPECIFIED HOUSING.—The term ‘‘specified
housing’’ means a public housing development or de-
velopments, or a portion of a development or devel-
opments, for which the transfer of management is
requested under this section. The term includes one
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or more contiguous buildings and an area of contig-
uous row houses, but in the case of a single building,
the building shall be sufficiently separable from the
remainder of the development of which it is part to
make transfer of the management of the building
feasible for purposes of this section.
SEC. 1237. RESIDENT OPPORTUNITY PROGRAM.
(a) PURPOSE.—The purpose of this section is to en-
courage increased resident management of public housing
developments, as a means of improving existing living con-
ditions in public housing developments, by providing in-
creased flexibility for public housing developments that are
managed by residents by—
(1) permitting the retention, and use for certain
purposes, of any revenues exceeding operating and
project costs; and
(2) providing funding, from amounts otherwise
available, for technical assistance to promote forma-
tion and development of resident management enti-
ties.
For purposes of this section, the term ‘‘public housing de-
velopment’’ includes one or more contiguous buildings or
an area of contiguous row houses the elected resident
councils of which approve the establishment of a resident
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management corporation and otherwise meet the require-
ments of this section.
(b) PROGRAM REQUIREMENTS.—
(1) RESIDENT COUNCIL.—As a condition of en-
tering into a resident opportunity program, the
elected resident council of a public housing develop-
ment shall approve the establishment of a resident
management corporation that complies with the re-
quirements of section 1234(b)(2). When such ap-
proval is made by the elected resident council of a
building or row house area, the resident opportunity
program shall not interfere with the rights of other
families residing in the development or harm the ef-
ficient operation of the development. The resident
management corporation and the resident council
may be the same organization, if the organization
complies with the requirements applicable to both
the corporation and council.
(2) PUBLIC HOUSING MANAGEMENT SPECIAL-
IST.—The resident council of a public housing devel-
opment, in cooperation with the public housing agen-
cy, shall select a qualified public housing manage-
ment specialist to assist in determining the feasibil-
ity of, and to help establish, a resident management
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corporation and to provide training and other duties
agreed to in the daily operations of the development.
(3) MANAGEMENT RESPONSIBILITIES.—A resi-
dent management corporation that qualifies under
this section, and that supplies insurance and bond-
ing or equivalent protection sufficient to the Sec-
retary and the public housing agency, shall enter
into a contract with the agency establishing the re-
spective management rights and responsibilities of
the corporation and the agency. The contract shall
be treated as a contracting out of services and shall
be subject to the requirements under section 1235
for such contracts.
(4) ANNUAL AUDIT.—The books and records of
a resident management corporation operating a pub-
lic housing development shall be audited annually by
a certified public accountant. A written report of
each such audit shall be forwarded to the public
housing agency and the Secretary.
(c) COMPREHENSIVE IMPROVEMENT ASSISTANCE.—
Public housing developments managed by resident man-
agement corporations may be provided with modernization
assistance from grant amounts under this title for pur-
poses of renovating such developments. If such renovation
activities (including the planning and architectural design
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of the rehabilitation) are administered by a resident man-
agement corporation, the public housing agency involved
may not retain, for any administrative or other reason,
any portion of the assistance provided pursuant to this
subsection unless otherwise provided by contract.
(d) WAIVER OF FEDERAL REQUIREMENTS.—
(1) 
WAIVER
OF
REGULATORY
REQUIRE-
MENTS.—Upon the request of any resident manage-
ment corporation and public housing agency, and
after notice and an opportunity to comment is af-
forded to the affected residents, the Secretary may
waive (for both the resident management corporation
and the public housing agency) any requirement es-
tablished by the Secretary (and not specified in any
statute) that the Secretary determines to unneces-
sarily increase the costs or restrict the income of a
public housing development.
(2) WAIVER TO PERMIT EMPLOYMENT.—Upon
the request of any resident management corporation,
the Secretary may, subject to applicable collective
bargaining agreements, permit residents of such de-
velopment to volunteer a portion of their labor.
(3) EXCEPTIONS.—The Secretary may not
waive under this subsection any requirement with re-
spect to income eligibility for purposes of section
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1222, family rental payments under section 1225,
tenant or applicant protections, employee organizing
rights, or rights of employees under collective bar-
gaining agreements.
(e) OPERATING ASSISTANCE AND DEVELOPMENT IN-
COME.—
(1) CALCULATION OF OPERATING SUBSIDY.—
The grant amounts received under this title by a
public housing agency used for operating fund activi-
ties under section 1203(a)(2) that are allocated to a
public housing development managed by a resident
management corporation shall not be less than per
unit monthly amount of such assistance used by the
public housing agency in the previous year, as deter-
mined on an individual development basis.
(2) CONTRACT REQUIREMENTS.—Any contract
for management of a public housing development en-
tered into by a public housing agency and a resident
management corporation shall specify the amount of
income expected to be derived from the development
itself (from sources such as rents and charges) and
the amount of income funds to be provided to the
development from the other sources of income of the
agency (such as assistance for operating activities
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under section 1203(a)(2), interest income, adminis-
trative fees, and rents).
(f) RESIDENT MANAGEMENT TECHNICAL ASSIST-
ANCE AND TRAINING.—
(1) FINANCIAL
ASSISTANCE.—To the extent
budget authority is available under this title, the
Secretary shall provide financial assistance to resi-
dent management corporations or resident councils
that obtain, by contract or otherwise, technical as-
sistance for the development of resident management
entities, including the formation of such entities, the
development of the management capability of newly
formed or existing entities, the identification of the
social support needs of residents of public housing
developments, and the securing of such support. In
addition, the Secretary may provide financial assist-
ance to resident management corporations or resi-
dent councils for activities sponsored by resident or-
ganizations for economic uplift, such as job training,
economic development, security, and other self-suffi-
ciency activities beyond those related to the manage-
ment of public housing. The Secretary may require
resident councils or resident management corpora-
tions to utilize public housing agencies or other
qualified organizations as contract administrators
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with respect to financial assistance provided under
this paragraph.
(2) LIMITATION ON ASSISTANCE.—The finan-
cial assistance provided under this subsection with
respect to any public housing development may not
exceed $100,000.
(3) PROHIBITION.—A resident management
corporation or resident council may not, before the
award to the corporation or council of a grant
amount under this subsection, enter into any con-
tract or other agreement with any entity to provide
such entity with amounts from the grant for provid-
ing technical assistance or carrying out other activi-
ties eligible for assistance with amounts under this
subsection. Any such agreement entered into in vio-
lation of this paragraph shall be void and unenforce-
able.
(4) FUNDING.—Of any amounts made available
under section 1282(1) for use under the capital
fund, the Secretary may use to carry out this sub-
section $15,000,000 for fiscal year 1998.
(5) 
LIMITATION
REGARDING
ASSISTANCE
UNDER HOPE GRANT PROGRAM.—The Secretary may
not provide financial assistance under this sub-
section to any resident management corporation or
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resident council with respect to which assistance for
the development or formation of such entity is pro-
vided under title III of the United States Housing
Act of 1937 (as in effect before the effective date of
the repeal under section 1601(b) of this Act).
(6) TECHNICAL
ASSISTANCE
AND
CLEARING-
HOUSE.—The Secretary may use up to 10 percent of
the amount made available pursuant to paragraph
(4)—
(A) to provide technical assistance, directly
or by grant or contract, and
(B) to receive, collect, process, assemble,
and disseminate information,
in connection with activities under this subsection.
(g) ASSESSMENT AND REPORT BY SECRETARY.—Not
later than 3 years after the date of the enactment of this
Act, the Secretary shall—
(1) conduct an evaluation and assessment of
resident management, and particularly of the effect
of resident management on living conditions in pub-
lic housing; and
(2) submit to the Congress a report setting
forth the findings of the Secretary as a result of the
evaluation and assessment and including any rec-
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ommendations the Secretary determines to be appro-
priate.
(h) APPLICABILITY.—Any management contract be-
tween a public housing agency and a resident management
corporation that is entered into after the date of the enact-
ment of the Stewart B. McKinney Homeless Assistance
Amendments Act of 1988 shall be subject to this section
and any regulations issued to carry out this section.
Subtitle D—Homeownership
SEC. 1251. RESIDENT HOMEOWNERSHIP PROGRAMS.
(a) IN GENERAL.—A public housing agency may
carry out a homeownership program in accordance with
this section and the local housing management plan of the
agency to make public housing dwelling units, public hous-
ing developments, and other housing projects available for
purchase by low-income families. An agency may transfer
a unit only pursuant to a homeownership program ap-
proved by the Secretary. Notwithstanding section 1107,
the Secretary may approve a local housing management
plan without approving the portion of the plan regarding
a homeownership program pursuant to this section. In the
case of the portion of a plan regarding the homeownership
program that is submitted separately pursuant to the pre-
ceding sentence, the Secretary shall approve or disapprove
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such portion not later than 60 days after the submission
of such portion.
(b) PARTICIPATING UNITS.—A program under this
section may cover any existing public housing dwelling
units or projects, and may include other dwelling units and
housing owned, operated, or assisted, or otherwise ac-
quired for use under such program, by the public housing
agency.
(c) ELIGIBLE PURCHASERS.—
(1) LOW-INCOME REQUIREMENT.—Only low-in-
come families assisted by a public housing agency,
other low-income families, and entities formed to fa-
cilitate such sales by purchasing units for resale to
low-income families shall be eligible to purchase
housing under a homeownership program under this
section.
(2) OTHER REQUIREMENTS.—A public housing
agency may establish other requirements or limita-
tions for families to purchase housing under a home-
ownership program under this section, including re-
quirements or limitations regarding employment or
participation in employment counseling or training
activities, criminal activity, participation in home-
ownership counseling programs, evidence of regular
income, and other requirements. In the case of pur-
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chase by an entity for resale to low-income families,
the entity shall sell the units to low-income families
within 5 years from the date of its acquisition of the
units. The entity shall use any net proceeds from the
resale and from managing the units, as determined
in accordance with guidelines of the Secretary, for
housing purposes, such as funding resident organiza-
tions and reserves for capital replacements.
(d) FINANCING AND ASSISTANCE.—A homeownership
program under this section may provide financing for ac-
quisition of housing by families purchasing under the pro-
gram or by the public housing agency for sale under this
program in any manner considered appropriate by the
agency (including sale to a resident management corpora-
tion).
(e) DOWNPAYMENT REQUIREMENT.—
(1) IN
GENERAL.—Each family purchasing
housing under a homeownership program under this
section shall be required to provide from its own re-
sources a downpayment in connection with any loan
for acquisition of the housing, in an amount deter-
mined by the public housing agency. Except as pro-
vided in paragraph (2), the agency shall permit the
family to use grant amounts, gifts from relatives,
contributions from private sources, and similar
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amounts as downpayment amounts in such pur-
chase.
(2) DIRECT FAMILY CONTRIBUTION.—In pur-
chasing housing pursuant to this section, each fam-
ily shall contribute an amount of the downpayment,
from resources of the family other than grants, gifts,
contributions, or other similar amounts referred to
in paragraph (1), that is not less than 1 percent of
the purchase price.
(f) OWNERSHIP INTERESTS.—A homeownership pro-
gram under this section may provide for sale to the pur-
chasing family of any ownership interest that the public
housing agency considers appropriate under the program,
including ownership in fee simple, a condominium interest,
an interest in a limited dividend cooperative, a shared ap-
preciation interest with a public housing agency providing
financing.
(g) RESALE.—
(1) AUTHORITY
AND
LIMITATION.—A home-
ownership program under this section shall permit
the resale of a dwelling unit purchased under the
program by an eligible family, but shall provide such
limitations on resale as the agency considers appro-
priate (whether the family purchases directly from
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the agency or from another entity) for the agency to
recapture—
(A) from any economic gain derived from
any such resale occurring during the 5-year pe-
riod beginning upon purchase of the dwelling
unit by the eligible family, a portion of the
amount of any financial assistance provided
under the program by the agency to the eligible
family; and
(B) after the expiration of such 5-year pe-
riod, only such amounts as are equivalent to the
assistance provided under this section by the
agency to the purchaser.
(2) CONSIDERATIONS.—The limitations referred
to in paragraph (1) may provide for consideration of
the aggregate amount of assistance provided under
the program to the family, the contribution to equity
provided by the purchasing eligible family, the period
of time elapsed between purchase under the home-
ownership program and resale, the reason for resale,
any improvements to the property made by the eligi-
ble family, any appreciation in the value of the prop-
erty, and any other factors that the agency considers
appropriate.
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(h) SALE OF CERTAIN SCATTERED-SITE HOUSING.—
A public housing agency that the Secretary has deter-
mined to be a high-performing agency may use the pro-
ceeds from the disposition of scattered-site public housing
under a homeownership program under this section to
purchase replacement scattered-site dwelling units, to the
extent such use is provided for in the local housing man-
agement plan for the agency approved under section 1107.
Any such replacement dwelling units shall be considered
public housing for purposes of this division.
(i) INAPPLICABILITY
OF
DISPOSITION
REQUIRE-
MENTS.—The provisions of section 1261 shall not apply
to disposition of public housing dwelling units under a
homeownership program under this section, except that
any dwelling units sold under such a program shall be
treated as public housing dwelling units for purposes of
subsections (e) and (f) of section 1261.
Subtitle 
E—Disposition, 
Demoli-
tion, and Revitalization of De-
velopments
SEC. 1261. REQUIREMENTS FOR DEMOLITION AND DISPOSI-
TION OF DEVELOPMENTS.
(a) AUTHORITY AND FLEXIBILITY.—A public hous-
ing agency may demolish, dispose of, or demolish and dis-
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pose of nonviable or nonmarketable public housing devel-
opments of the agency in accordance with this section.
(b) LOCAL HOUSING MANAGEMENT PLAN REQUIRE-
MENT.—A public housing agency may take any action to
demolish or dispose of a public housing development (or
a portion of a development) only if such demolition or dis-
position complies with the provisions of this section and
is in accordance with the local housing management plan
for the agency. Notwithstanding section 1107, the Sec-
retary may approve a local housing management plan
without approving the portion of the plan covering demoli-
tion or disposition pursuant to this section.
(c) PURPOSE OF DEMOLITION OR DISPOSITION.—A
public housing agency may demolish or dispose of a public
housing development (or portion of a development) only
if the agency provides sufficient evidence to the Secretary
that—
(1) the development (or portion thereof) is se-
verely distressed or obsolete;
(2) the development (or portion thereof) is in a
location making it unsuitable for housing purposes;
(3) the development (or portion thereof) has de-
sign or construction deficiencies that make cost-ef-
fective rehabilitation infeasible;
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(4) assuming that reasonable rehabilitation and
management intervention for the development has
been completed and paid for, the anticipated revenue
that would be derived from charging market-based
rents for units in the development (or portion there-
of) would not cover the anticipated operating costs
and replacement reserves of the development (or
portion) at full occupancy and the development (or
portion) would constitute a substantial burden on
the resources of the public housing agency;
(5) retention of the development (or portion
thereof) is not in the best interests of the residents
of the public housing agency because—
(A) developmental changes in the area sur-
rounding the development adversely affect the
health or safety of the residents or the feasible
operation of the development by the public
housing agency;
(B) demolition or disposition will allow the
acquisition, development, or rehabilitation of
other properties which will be more efficiently
or effectively operated as low-income housing;
or
(C) other factors exist that the agency de-
termines are consistent with the best interests
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portion of a development) only if the agency notifies and
confers regarding the demolition or disposition with—
(1) the residents of the development (or por-
tion); and
(2) appropriate local government officials.
(e) COUNSELING.—A public housing agency may de-
molish or dispose of a public housing development (or a
portion of a development) only if the agency provides any
necessary counseling for families displaced by such action
to facilitate relocation.
(f) USE OF PROCEEDS.—Any net proceeds from the
disposition of a public housing development (or portion of
a development) shall be used for—
(1) housing assistance for low-income families
that is consistent with the low-income housing needs
of the community, through acquisition, development,
or rehabilitation of, or homeownership programs for,
other low-income housing or the provision of choice-
based assistance under title XIII for such families;
(2) supportive services relating to job training
or child care for residents of a development or devel-
opments; or
(3) leveraging amounts for securing commercial
enterprises, on-site in public housing developments
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of the public housing agency, appropriate to serve
the needs of the residents.
(g) RELOCATION.—A public housing agency that de-
molishes or disposes of a public housing development (or
portion of a development thereof) shall ensure that—
(1) each family that is a resident of the devel-
opment (or portion) that is demolished or disposed
of is relocated to other safe, clean, healthy, and af-
fordable housing, which is, to the maximum extent
practicable, housing of the family’s choice, including
choice-based assistance under title XIII (provided
that with respect to choice-based assistance, the pre-
ceding requirement shall be fulfilled only upon the
relocation of the such family into such housing);
(2) the public housing agency does not take any
action to dispose of any unit until any resident to
be displaced is relocated in accordance with para-
graph (1); and
(3) each resident family to be displaced is paid
relocation expenses, and the rent to be paid initially
by the resident following relocation does not exceed
the amount permitted under section 1225(a).
(h) RIGHT OF FIRST REFUSAL FOR RESIDENT ORGA-
NIZATIONS
AND
RESIDENT
MANAGEMENT
CORPORA-
TIONS.—
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(1) IN
GENERAL.—A public housing agency
may not dispose of a public housing development (or
portion of a development) unless the agency has, be-
fore such disposition, offered to sell the property, as
provided in this subsection, to each resident organi-
zation and resident management corporation operat-
ing at the development for continued use as low-in-
come housing, and no such organization or corpora-
tion purchases the property pursuant to such offer.
A resident organization may act, for purposes of this
subsection, through an entity formed to facilitate
homeownership under subtitle D.
(2) TIMING.—Disposition of a development (or
portion thereof) under this section may not take
place—
(A) before the expiration of the period dur-
ing which any such organization or corporation
may notify the agency of interest in purchasing
the property, which shall be the 30-day period
beginning on the date that the agency first pro-
vides notice of the proposed disposition of the
property to such resident organizations and
resident management corporations;
(B) if an organization or corporation sub-
mits notice of interest in accordance with sub-
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paragraph (A), before the expiration of the pe-
riod during which such organization or corpora-
tion may obtain a commitment for financing to
purchase the property, which shall be the 60-
day period beginning upon the submission to
the agency of the notice of interest; or
(C) if, during the period under subpara-
graph (B), an organization or corporation ob-
tains such financing commitment and makes a
bona fide offer to the agency to purchase the
property for a price equal to or exceeding the
applicable offer price under paragraph (3).
The agency shall sell the property pursuant to any
purchase offer described in subparagraph (C).
(3) TERMS OF OFFER.—An offer by a public
housing agency to sell a property in accordance with
this subsection shall involve a purchase price that re-
flects the market value of the property, the reason
for the sale, the impact of the sale on the surround-
ing community, and any other factors that the agen-
cy considers appropriate.
(i) INFORMATION FOR LOCAL HOUSING MANAGE-
MENT PLAN.—A public housing agency may demolish or
dispose of a public housing development (or portion there-
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of) only if it includes in the applicable local housing man-
agement plan information sufficient to describe—
(1) the housing to be demolished or disposed of;
(2) the purpose of the demolition or disposition
under subsection (c) and why the demolition or dis-
position complies with the requirements under sub-
section (c), and includes evidence of the market
value of the development (or portion) required under
subsection (c);
(3) how the consultations required under sub-
section (d) will be made;
(4) how the net proceeds of the disposition will
be used in accordance with subsection (f);
(5) how the agency will relocate residents, if
necessary, as required under subsection (g); and
(6) that the agency has offered the property for
acquisition by resident organizations and resident
management corporations in accordance with sub-
section (h).
(j) SITE AND NEIGHBORHOOD STANDARDS EXEMP-
TION.—Notwithstanding any other provision of law, a
public housing agency may provide for development of
public housing dwelling units on the same site or in the
same neighborhood as any dwelling units demolished, pur-
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suant to a plan under this section, but only if such devel-
opment provides for significantly fewer dwelling units.
(k) TREATMENT OF REPLACEMENT UNITS.—
(1) PROVISION
OF
OTHER
HOUSING
ASSIST-
ANCE.—In connection with any demolition or dis-
position of public housing under this section, a pub-
lic housing agency may provide for other housing as-
sistance for low-income families that is consistent
with the low-income housing needs of the commu-
nity, including—
(A) the provision of choice-based assistance
under title XIII; and
(B) the development, acquisition, or lease
by the agency of dwelling units, which dwelling
units shall—
(i) be eligible to receive assistance
with grant amounts provided under this
title; and
(ii) be made available for occupancy,
operated, and managed in the manner re-
quired for public housing, and subject to
the other requirements applicable to public
housing dwelling units.
(2) TREATMENT
OF
INDIVIDUALS.—For pur-
poses of this subsection, an individual between the
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ages of 18 and 21, inclusive, shall, at the discretion
of the individual, be considered a family.
(l) USE OF NEW DWELLING UNITS.—A public hous-
ing agency demolishing or disposing of a public housing
development (or portion thereof) under this section shall
seek, where practical, to ensure that, if housing units are
provided on any property that was previously used for the
public housing demolished or disposed of, not less than
25 percent of such dwelling units shall be dwelling units
reserved for occupancy during the remaining useful life of
the housing by low-income families.
(m) PERMISSIBLE RELOCATION WITHOUT PLAN.—
If a public housing agency determines that because of an
emergency situation public housing dwelling units are se-
verely uninhabitable, the public housing agency may relo-
cate residents of such dwelling units before the submission
of a local housing management plan providing for demoli-
tion or disposition of such units.
(n) CONSOLIDATION
OF OCCUPANCY WITHIN
OR
AMONG BUILDINGS.—Nothing in this section may be con-
strued to prevent a public housing agency from consolidat-
ing occupancy within or among buildings of a public hous-
ing development, or among developments, or with other
housing for the purpose of improving living conditions of,
or providing more efficient services to, residents.
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(o) DE MINIMIS EXCEPTION TO DEMOLITION RE-
QUIREMENTS.—Notwithstanding any other provision of
this section, in any 5-year period a public housing agency
may demolish not more than the lesser of 5 dwelling units
or 5 percent of the total dwelling units owned and oper-
ated by the public housing agency, without providing for
such demolition in a local housing management plan, but
only if the space occupied by the demolished unit is used
for meeting the service or other needs of public housing
residents or the demolished unit was beyond repair.
SEC. 1262. DEMOLITION, SITE REVITALIZATION, REPLACE-
MENT HOUSING, AND CHOICE-BASED ASSIST-
ANCE GRANTS FOR DEVELOPMENTS.
(a) PURPOSES.—The purpose of this section is to
provide assistance to public housing agencies for the pur-
poses of—
(1) reducing the density and improving the liv-
ing environment for public housing residents of se-
verely 
distressed 
public 
housing 
developments
through the demolition of obsolete public housing de-
velopments (or portions thereof);
(2) revitalizing sites (including remaining public
housing dwelling units) on which such public hous-
ing developments are located and contributing to the
improvement of the surrounding neighborhood;
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(3) providing housing that will avoid or de-
crease the concentration of very low-income families;
and
(4) providing choice-based assistance in accord-
ance with title XIII for the purpose of providing re-
placement housing and assisting residents to be dis-
placed by the demolition.
(b) GRANT AUTHORITY.—The Secretary may make
grants available to public housing agencies as provided in
this section.
(c) CONTRIBUTION REQUIREMENT.—The Secretary
may not make any grant under this section to any appli-
cant unless the applicant certifies to the Secretary that
the applicant will supplement the amount of assistance
provided under this section with an amount of funds from
sources other than this section equal to not less than 5
percent of the amount provided under this section, includ-
ing amounts from other Federal sources, any State or
local government sources, any private contributions, and
the value of any in-kind services or administrative costs
provided.
(d) ELIGIBLE ACTIVITIES.—Grants under this sec-
tion may be used for activities to carry out revitalization
programs for severely distressed public housing, includ-
ing—
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(1) architectural and engineering work, includ-
ing the redesign, reconstruction, or redevelopment of
a severely distressed public housing development, in-
cluding the site on which the development is located;
(2) the demolition, sale, or lease of the site, in
whole or in part;
(3) covering the administrative costs of the ap-
plicant, which may not exceed such portion of the
assistance provided under this section as the Sec-
retary may prescribe;
(4) payment of reasonable legal fees;
(5) providing reasonable moving expenses for
residents displaced as a result of the revitalization of
the development;
(6) economic development activities that pro-
mote the economic self-sufficiency of residents under
the revitalization program;
(7) necessary management improvements;
(8) leveraging other resources, including addi-
tional housing resources, retail supportive services,
jobs, and other economic development uses on or
near the development that will benefit future resi-
dents of the site;
(9) replacement housing and housing assistance
under title XIII;
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(10) transitional security activities; and
(11) necessary supportive services, except that
not more than 10 percent of the amount of any
grant may be used for activities under this para-
graph.
(e) APPLICATION AND SELECTION.—
(1) APPLICATION.—An application for a grant
under this section shall contain such information
and shall be submitted at such time and in accord-
ance with such procedures, as the Secretary shall
prescribe.
(2) SELECTION CRITERIA.—The Secretary shall
establish selection criteria for the award of grants
under this section, which shall include—
(A) the relationship of the grant to the
local housing management plan for the public
housing agency and how the grant will result in
a revitalized site that will enhance the neighbor-
hood in which the development is located;
(B) the capability and record of the appli-
cant public housing agency, or any alternative
management agency for the agency, for manag-
ing large-scale redevelopment or modernization
projects, meeting construction timetables, and
obligating amounts in a timely manner;
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(C) the extent to which the public housing
agency could undertake such activities without
a grant under this section;
(D) the extent of involvement of residents,
State and local governments, private service
providers, financing entities, and developers, in
the development of a revitalization program for
the development; and
(E) the amount of funds and other re-
sources to be leveraged by the grant.
The Secretary shall give preference in selection to
any public housing agency that has been awarded a
planning grant under section 24(c) of the United
States Housing Act of 1937 (as in effect before the
effective date of the repeal under section 1601(b) of
this Act).
(f) COST LIMITS.—Subject to the provisions of this
section, the Secretary—
(1) shall establish cost limits on eligible activi-
ties under this section sufficient to provide for effec-
tive revitalization programs; and
(2) may establish other cost limits on eligible
activities under this section.
(g) DEMOLITION AND REPLACEMENT.—Any severely
distressed public housing demolished or disposed of pursu-
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ant to a revitalization plan and any public housing pro-
duced in lieu of such severely distressed housing, shall be
subject to the provisions of section 1261.
(h) ADMINISTRATION
BY OTHER ENTITIES.—The
Secretary may require a grantee under this section to
make arrangements satisfactory to the Secretary for use
of an entity other than the public housing agency to carry
out activities assisted under the revitalization plan, if the
Secretary determines that such action will help to effec-
tuate the purposes of this section.
(i) WITHDRAWAL OF FUNDING.—If a grantee under
this section does not proceed expeditiously, in the deter-
mination of the Secretary, the Secretary shall withdraw
any grant amounts under this section that have not been
obligated by the public housing agency. The Secretary
shall redistribute any withdrawn amounts to one or more
public housing agencies eligible for assistance under this
section or to one or more other entities capable of proceed-
ing expeditiously in the same locality in carrying out the
revitalization plan of the original grantee.
(j) DEFINITIONS.—For purposes of this section, the
following definitions shall apply:
(1) 
APPLICANT.—The 
term 
‘‘applicant’’
means—
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(A) any public housing agency that is not
designated as troubled pursuant to section
1533(a);
(B) any public housing agency or private
housing management agent selected, or receiver
appointed pursuant, to section 1545; and
(C) any public housing agency that is des-
ignated as troubled pursuant to section 1533(a)
that—
(i) is so designated principally for rea-
sons that will not affect the capacity of the
agency to carry out a revitalization pro-
gram;
(ii) is making substantial progress to-
ward eliminating the deficiencies of the
agency; or
(iii) is otherwise determined by the
Secretary to be capable of carrying out a
revitalization program.
(2) PRIVATE NONPROFIT CORPORATION.—The
term ‘‘private nonprofit organization’’ means any
private nonprofit organization (including a State or
locally chartered nonprofit organization) that—
(A) is incorporated under State or local
law;
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(B) has no part of its net earnings inuring
to the benefit of any member, founder, contrib-
utor, or individual;
(C) complies with standards of financial
accountability acceptable to the Secretary; and
(D) has among its purposes significant ac-
tivities related to the provision of decent hous-
ing that is affordable to very low-income fami-
lies.
(3) SEVERELY
DISTRESSED
PUBLIC
HOUS-
ING.—The term ‘‘severely distressed public housing’’
means a public housing development (or building in
a development) that—
(A) requires major redesign, reconstruction
or redevelopment, or partial or total demolition,
to correct serious deficiencies in the original de-
sign (including inappropriately high population
density), deferred maintenance, physical dete-
rioration or obsolescence of major systems and
other deficiencies in the physical plant of the
development;
(B) is a significant contributing factor to
the physical decline of and disinvestment by
public and private entities in the surrounding
neighborhood;
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(C)(i) is occupied predominantly by fami-
lies who are very low-income families with chil-
dren, are unemployed, and dependent on var-
ious forms of public assistance; and
(ii) has high rates of vandalism and crimi-
nal activity (including drug-related criminal ac-
tivity) in comparison to other housing in the
area;
(D) cannot be revitalized through assist-
ance under other programs, such as the public
housing block grant program under this title, or
the programs under sections 9 and 14 of the
United States Housing Act of 1937 (as in effect
before the effective date of the repeal under sec-
tion 1601(b) of this Act), because of cost con-
straints and inadequacy of available amounts;
and
(E) in the case of individual buildings, is,
in the Secretary’s determination, sufficiently
separable from the remainder of the develop-
ment of which the building is part to make use
of the building feasible for purposes of this sec-
tion.
(4) SUPPORTIVE
SERVICES.—The term ‘‘sup-
portive services’’ includes all activities that will pro-
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mote upward mobility, self-sufficiency, and improved
quality of life for the residents of the public housing
development involved, including literacy training, job
training, day care, and economic development activi-
ties.
(k) ANNUAL REPORT.—The Secretary shall submit
to the Congress an annual report setting forth—
(1) the number, type, and cost of public hous-
ing units revitalized pursuant to this section;
(2) the status of developments identified as se-
verely distressed public housing;
(3) the amount and type of financial assistance
provided under and in conjunction with this section;
and
(4) the recommendations of the Secretary for
statutory and regulatory improvements to the pro-
gram established by this section.
(l) FUNDING.—
(1) AUTHORIZATION
OF
APPROPRIATIONS.—
There are authorized to be appropriated for grants
under this section $500,000,000 for each of fiscal
years 1998, 1999, and 2000.
(2) TECHNICAL ASSISTANCE.—Of the amount
appropriated pursuant to paragraph (1) for any fis-
cal year, the Secretary may use not more than 0.50
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percent for technical assistance. Such assistance
may be provided directly or indirectly by grants, con-
tracts, or cooperative agreements, and shall include
training, and the cost of necessary travel for partici-
pants in such training, by or to officials of the De-
partment of Housing and Urban Development, of
public housing agencies, and of residents.
(m) SUNSET.—No assistance may be provided under
this section after September 30, 2000.
(n) TREATMENT
OF PREVIOUS SELECTIONS.—A
public housing agency that has been selected to receive
amounts under the notice of funding availability for fiscal
year 1996 amounts for the HOPE VI program (provided
under the heading ‘‘PUBLIC HOUSING DEMOLITION, SITE
REVITALIZATION, AND REPLACEMENT HOUSING GRANTS’’
in title II of the Departments of Veterans Affairs and
Housing and Urban Development, and Independent Agen-
cies Appropriations Act, 1996 (42 U.S.C. 1437l note) (en-
acted as section 101(e) of Omnibus Consolidated Rescis-
sions and Appropriations Act of 1996 (Public Law 104–
134; 110 Stat. 1321–269)) may apply to the Secretary
of Housing and Urban Development for a waiver of the
total development cost rehabilitation requirement other-
wise applicable under such program, and the Secretary
may waive such requirement, but only: (1) to the extent
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that a designated site for use of such amounts does not
have dwelling units that are considered to be obsolete
under Department of Housing and Urban Development
regulations in effect upon the date of the enactment of
this Act; and (2) if the Secretary determines that the pub-
lic housing agency will continue to comply with the pur-
poses of the program notwithstanding such waiver.
SEC. 1263. VOLUNTARY VOUCHER SYSTEM FOR PUBLIC
HOUSING.
(a) IN GENERAL.—A public housing agency may con-
vert any public housing development (or portion thereof)
owned and operated by the agency to a system of choice-
based rental housing assistance under title XIII, in ac-
cordance with this section.
(b) ASSESSMENT
AND PLAN REQUIREMENT.—In
converting under this section to a choice-based rental
housing assistance system, the public housing agency shall
develop a conversion assessment and plan under this sub-
section, in consultation with the appropriate public offi-
cials and with significant participation by the residents of
the development (or portion thereof), which assessment
and plan shall—
(1) be consistent with and part of the local
housing management plan for the agency;
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(2) describe the conversion and future use or
disposition of the public housing development, in-
cluding an impact analysis on the affected commu-
nity;
(3) include a cost analysis that demonstrates
whether or not the cost (both on a net present value
basis and in terms of new budget authority require-
ments) of providing choice-based rental housing as-
sistance under title XIII for the same families in
substantially similar dwellings over the same period
of time is less expensive than continuing public
housing assistance in the public housing develop-
ment proposed for conversion for the remaining use-
ful life of the development;
(4) identify the actions, if any, that the public
housing agency will take with regard to converting
any public housing development or developments (or
portions thereof) of the agency to a system of
choice-based rental housing assistance under title
XIII;
(5) require the public housing agency to—
(A) notify the families residing in the pub-
lic housing development subject to the conver-
sion, in accordance with any guidelines issued
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after the commencement of such demolition, disposition,
or revitalization, unless—
(1) upon the expiration of the 18-month period
beginning upon the approval of the plan under sec-
tion 1273 for the mixed-finance housing develop-
ment, the agency does not have binding commit-
ments for production or revitalization, or a construc-
tion contract, for such development;
(2) upon the expiration of the 4-year period be-
ginning upon the approval of the plan, the mixed-fi-
nance housing development is not substantially
ready for occupancy and is placed under the block
grant contract for the agency under section 1201; or
(3) the number of dwelling units in the mixed-
finance housing development that are made available
for occupancy only by low-income families is sub-
stantially less than the number of such dwelling
units in the public housing demolished, disposed of,
or revitalized.
The Secretary may extend the period under paragraph (1)
or (2) for a public housing agency if the Secretary deter-
mines that circumstances beyond the control of the agency
caused the agency to fail to meet the deadline under such
paragraph.