151
sufficient for the Secretary to designate the authority
under the categories established under section 431(a)(2).
(d) SINGLE AUDIT ACT COMPLIANCE.—An audit
under this section shall be made in a manner so that the
audit complies with the requirements for audits under
chapter 75 of title 31, United States Code.
(e) WITHHOLDING
OF AMOUNTS
FOR COSTS
OF
AUDIT.—If the Secretary determines that a local housing
and management authority has failed to take the actions
required to submit an audit under this section for a fiscal
year, the Secretary may—
(1) arrange for, and pay the costs of, the audit;
and
(2) withhold, from the total allocation for any
fiscal year otherwise payable to the authority under
this Act, amounts sufficient to pay for the reason-
able costs of conducting an acceptable audit, includ-
ing, if appropriate, the reasonable costs of account-
ing services necessary to place the authority’s books
and records in condition that permits an audit.
SEC. 433. ANNUAL CLASSIFICATION BY PERFORMANCE
CATEGORY.
The Secretary shall annually designate each local
housing and management authority according to the per-
formance categories under section 431(a)(2). In determin-
152
ing the classification of an authority, the Secretary shall
consider the most recent financial and performance audit
under section 432 of the authority and accreditation re-
ports under section 434(c) of the authority, but may not
undertake any audits and examinations of the authority.
SEC. 434. ACCREDITATION.
(a) REVIEW UPON EXPIRATION OF PREVIOUS AC-
CREDITATION.—The Accreditation Board shall perform a
comprehensive review of the performance of a local hous-
ing and management authority, in accordance with the
procedures established under section 431(b), before the
expiration of the term for which a previous accreditation
was granted under this subtitle.
(b) INITIAL EVALUATION.—
(1) IN GENERAL.—Before entering into an ini-
tial block grant contract under title II or an initial
grant agreement under title III with any local hous-
ing and management authority, the Board shall con-
duct a comprehensive evaluation of the capabilities
of the local housing and management authority.
(2) EXCEPTION.—Paragraph (1) shall not
apply to an initial block grant contract or grant
agreement entered into during the period beginning
upon the date of the enactment of this Act and end-
ing upon the date of the effectiveness of final regula-
153
tions establishing the standards, guidelines, and pro-
cedures required under section 431 or 432 with any
public housing agency that received amounts under
the United States Housing Act of 1937 during fiscal
year 1995.
(c) DETERMINATION AND REPORT.—Pursuant to a
review or evaluation under this section, the Board shall
determine whether the authority meets the requirements
for accreditation under section 431(a)(3), shall accredit
the authority if it meets such requirements, and shall sub-
mit a report on the results of the review or evaluation and
such determination to the Secretary and the authority.
(d) ACCREDITATION.—An accreditation under this
section shall expire at the end the term established by the
Board in granting the accreditation, which may not exceed
5 years. The Board may qualify an accreditation placing
conditions on the accreditation based on the future per-
formance of the authority.
SEC. 435. PERFORMANCE AGREEMENTS FOR TROUBLED
AUTHORITIES.
(a) IN GENERAL.—Upon designating a local housing
and management authority as a troubled authority under
section 431(a)(2)(C), the Secretary shall seek to enter into
a agreement with the authority providing for improving
the management performance of the authority.
154
(b) CONTENTS.—An agreement under this section
shall set forth—
(1) targets for improving performance, as meas-
ured by the guidelines and standards established
under section 431(a)(1) and other requirements
within a specified period of time, which shall include
targets to be met upon the expiration of the 12-
month period beginning upon entering into the
agreement;
(2) strategies for meeting such targets;
(3) sanctions for failure to implement such
strategies; and
(4) to the extent the Secretary deems appro-
priate, a plan for enhancing resident involvement in
the management of the local housing and manage-
ment authority.
(c) LOCAL ASSISTANCE IN IMPLEMENTATION.—The
Secretary and the local housing and management author-
ity shall, to the maximum extent practicable, seek the as-
sistance of local public and private entities in carrying out
an agreement under this section.
(d) 
DEFAULT
UNDER
PERFORMANCE
AGREE-
MENT.—Upon the expiration of the 12-month period be-
ginning upon entering into an agreement under this sec-
tion with a local housing and management authority, the
155
Secretary shall review the performance of the authority
in relation to the performance targets and strategies under
the agreement. If the Secretary determines that the au-
thority has failed to comply with the performance targets
established for the expiration of such period, the Sec-
retary—
(1) shall take the action authorized under sec-
tion 437(b)(2); and
(2) may withhold, from any metropolitan city or
urban county (as such terms are defined in section
102 of the Housing and Community Development
Act of 1974) within which any portion of the juris-
diction of the authority is located, any amounts allo-
cated for such city or county under section 106 of
such Act.
SEC. 436. OPTION TO DEMAND CONVEYANCE OF TITLE TO
OR POSSESSION OF PUBLIC HOUSING.
(a) AUTHORITY
FOR
CONVEYANCE.—A contract
under section 201 for block grants under title II (including
contracts which amend or supersede contracts previously
made (including contracts for contributions)) may provide
that upon the occurrence of a substantial default with re-
spect to the covenants or conditions to which the local
housing and management authority is subject (as such
substantial default shall be defined in such contract) or
156
upon designation of the authority as dysfunctional pursu-
ant to section 431(a)(2)(D), the local housing and man-
agement authority shall be obligated, at the option of the
Secretary, to—
(1) convey title in any case where, in the deter-
mination of the Secretary (which determination shall
be final and conclusive), such conveyance of title is
necessary to achieve the purposes of this Act; or
(2) deliver to the Secretary possession of the
development, as then constituted, to which such con-
tract relates.
(b) OBLIGATION TO RECONVEY.—Any block grant
contract under title II containing the provisions author-
ized in subsection (a) shall also provide that the Secretary
shall be obligated to reconvey or redeliver possession of
the development, as constituted at the time of
reconveyance or redelivery, to such local housing and man-
agement authority or to its successor (if such local housing
and management authority or a successor exists) upon
such terms as shall be prescribed in such contract, and
as soon as practicable after—
(1) the Secretary is satisfied that all defaults
with respect to the development have been cured,
and that the development will, in order to fulfill the
157
purposes of this Act, thereafter be operated in ac-
cordance with the terms of such contract; or
(2) the termination of the obligation to make
annual block grants to the authority, unless there
are any obligations or covenants of the authority to
the Secretary which are then in default.
Any prior conveyances and reconveyances or deliveries and
redeliveries of possession shall not exhaust the right to re-
quire a conveyance or delivery of possession of the develop-
ment to the Secretary pursuant to subsection (a) upon the
subsequent occurrence of a substantial default.
(c) CONTINUED GRANTS FOR REPAYMENT OF BONDS
AND NOTES UNDER 1937 ACT.—If—
(1) a contract for block grants under title II for
an authority includes provisions that expressly state
that the provisions are included pursuant to this
subsection, and
(2) the portion of the block grant payable for
debt service requirements pursuant to the contract
has been pledged by the local housing and manage-
ment authority as security for the payment of the
principal and interest on any of its obligations,
then—
(A) the Secretary shall (notwithstanding
any other provisions of this Act), continue to
158
make the block grant payments for the author-
ity so long as any of such obligations remain
outstanding; and
(B) the Secretary may covenant in such a
contract that in any event such block grant
amounts shall in each year be at least equal to
an amount which, together with such income or
other funds as are actually available from the
development for the purpose at the time such
block grant payments are made, will suffice for
the payment of all installments of principal and
interest on the obligations for which the
amounts provided for in the contract shall have
been pledged as security that fall due within the
next succeeding 12 months.
In no case shall such block grant amounts be in excess
of the maximum sum specified in the contract involved,
nor for longer than the remainder of the maximum period
fixed by the contract.
SEC. 437. REMOVAL OF INEFFECTIVE LHMA’S.
(a) CONDITIONS OF REMOVAL.—The actions speci-
fied in subsection (b) may be taken only upon—
(1) the occurrence of events or conditions that
constitute a substantial default by a local housing
and management authority with respect to (A) the
159
covenants or conditions to which the local housing
and management authority is subject, or (B) an
agreement entered into under section 435;
(2) designation of the authority as dysfunc-
tional pursuant to section 431(a)(2)(D);
(3) in the case only of action under subsection
(b)(1), failure of a local housing and management
authority to obtain reaccreditation upon the expira-
tion of the term of a previous accreditation granted
under this subtitle; or
(4) submission to the Secretary of a petition by
the residents of the public housing owned or oper-
ated by a local housing and management authority
that is designated as troubled or dysfunctional pur-
suant to section 431(a)(2).
(b) REMOVAL ACTIONS.—Notwithstanding any other
provision of law or of any block grant contract under title
II or any grant agreement under title III, in accordance
with subsection (a), the Secretary may—
(1) solicit competitive proposals from other local
housing and management authorities and private
housing management agents (which, in the discre-
tion of the Secretary, may be selected by existing
public housing residents through administrative pro-
cedures established by the Secretary) and, if appro-
160
priate, provide for such agents to manage all, or
part, of the housing administered by the local hous-
ing and management authority or all or part of the
other functions of the authority;
(2) take possession of the local housing and
management authority, including any developments
or functions of the authority under any section of
this Act;
(3) solicit competitive proposals from other local
housing and management authorities and private en-
tities with experience in construction management
and, if appropriate, provide for such authorities or
firms to oversee implementation of assistance made
available for capital improvements for public hous-
ing;
(4) require the authority to make other ar-
rangements acceptable to the Secretary and in the
best interests of the public housing residents and as-
sisted families under title III for managing all, or
part of, the public housing administered by the au-
thority or the functions of the authority; or
(5) if the Secretary determines that reasonable
opportunities for remedy using the actions under
paragraphs (1) through (4) have failed or are not
available, petition for the appointment of a receiver
161
for the local housing and management authority to
any district court of the United States or to any
court of the State in which any portion of the juris-
diction of the local housing and management author-
ity is located, that is authorized to appoint a receiver
for the purposes and having the powers prescribed
in this section.
(c) EMERGENCY ASSISTANCE.—The Secretary may
make available to receivers and other entities selected or
appointed pursuant to this section such assistance as is
fair and reasonable to remedy the substantial deteriora-
tion of living conditions in individual public housing devel-
opments or other related emergencies that endanger the
health, safety and welfare of public housing residents or
assisted families under title III.
(d) POWERS OF SECRETARY.—If the Secretary takes
possession of an authority, or any developments or func-
tions of an authority, pursuant to subsection (b)(2), the
Secretary—
(1) may abrogate contracts that substantially
impede correction of the substantial default or im-
provement of the classification;
(2) may demolish and dispose of assets of the
authority in accordance with subtitle E;
162
(3) where determined appropriate by the Sec-
retary, may require the establishment of one or more
new local housing and management authorities;
(4) may consolidate the authority into other
well-managed local housing and management au-
thorities with the consent of such well-managed au-
thorities;
(5) shall not be subject to any State or local
laws that, in the determination of the receiver, sub-
stantially impede correction of the substantial de-
fault or improvement of the classification; and
(6) shall have such additional authority as a
district court of the United States has the authority
to confer under like circumstances upon a receiver to
achieve the purposes of the receivership.
The Secretary may appoint, on a competitive or non-
competitive basis, an individual or entity as an administra-
tive receiver to assume the Secretary’s responsibility under
this paragraph for the administration of a local housing
and management authority. The Secretary may delegate
to the administrative receiver any or all of the powers of
the Secretary under this subsection. Regardless of any del-
egation under this subsection, an administrative receiver
may not require the establishment of one or more new
local housing and management authorities pursuant to
163
paragraph (3) unless the Secretary first approves such es-
tablishment. For purposes of this subsection, the term
‘‘local housing and management authority’’ includes any
developments or functions of a local housing and manage-
ment authority under any section of this title.
(e) RECEIVERSHIP.—
(1) REQUIRED APPOINTMENT.—In any proceed-
ing under subsection (b)(5), upon a determination
that a substantial default has occurred, and without
regard to the availability of alternative remedies, the
court shall appoint a receiver to conduct the affairs
of the local housing and management authority in a
manner consistent with this Act and in accordance
with such further terms and conditions as the court
may provide. The receiver appointed may be another
local housing and management authority, a private
management corporation, the Secretary, or any
other appropriate entity. The court shall have power
to grant appropriate temporary or preliminary relief
pending final disposition of the petition by the Sec-
retary.
(2) POWERS OF RECEIVER.—If a receiver is ap-
pointed for a local housing and management author-
ity pursuant to subsection (b)(5), in addition to the
164
powers accorded by the court appointing the re-
ceiver, the receiver—
(A) may abrogate contracts that substan-
tially impede correction of the substantial de-
fault or improvement of the classification;
(B) may demolish and dispose of assets of
the authority in accordance with subtitle E;
(C) where determined appropriate by the
Secretary, may require the establishment of one
or more new local housing and management au-
thorities, to the extent permitted by State and
local law; and
(D except as provided in subparagraph
(C), shall not be subject to any State or local
laws that, in the determination of the receiver,
substantially impede correction of the substan-
tial default or improvement of the classification.
For purposes of this paragraph, the term ‘‘local
housing and management authority’’ includes any
developments or functions of a local housing and
management authority under any section of this
title.
(3) TERMINATION.—The appointment of a re-
ceiver pursuant to this subsection may be termi-
nated, upon the petition of any party, when the