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agency may use such amounts withheld to 
make repairs to the dwelling unit or to 
contract to have repairs made, except that 
a contract to make repairs may not be en-
tered into with the inspector for the dwell-
ing unit referred to in clause (i)(I). 
‘‘(iv) PROTECTION OF TENANTS.—An 
owner of a dwelling unit may not terminate 
the tenancy of any tenant or refuse to 
renew a lease for such unit because of the 
withholding of assistance pursuant to this 
subparagraph. During the period that as-
sistance is withheld pursuant to this sub-
paragraph, the tenant may terminate the 
tenancy by notifying the owner. 
‘‘(v) TERMINATION OF LEASE OR AS-
SISTANCE
PAYMENTS
CONTRACT.—If as-
sistance amounts under this section for a 
dwelling unit are withheld pursuant to 
clause (ii) and the owner does not correct 
the noncompliance within 60 days after the 
effective date of the determination of non-
compliance under clause (i), or such other 
reasonable period as the public housing 
agency may establish, and the agency does 
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not use its authority under clause (iii), the 
agency shall terminate the housing assist-
ance payments contract for the dwelling 
unit. 
‘‘(vi) RELOCATION.—If the public 
housing agency terminates the housing as-
sistance payments contract for a dwelling 
unit, the lease for any family residing in 
that unit shall terminate and the family 
may remain in the unit subject to a new 
lease as an unassisted family. The agency 
shall provide the family residing in such a 
dwelling unit a period of 90 days, begin-
ning upon termination of the contract, to 
lease a new residence to assist with the 
tenant-based rental assistance made avail-
able under this section for the family. If 
the family is unable to lease such a new 
residence during such period, the public 
housing agency shall extend the period 
during which the family may lease a new 
residence to be assisted with such assist-
ance or provide such family a preference 
for occupancy in a dwelling unit of public 
housing owned or operated by the agency 
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that first becomes available for occupancy 
after the expiration of such period. The 
agency shall provide reasonable assistance 
to the family in finding a new residence, 
including use of two months of any assist-
ance amounts withheld pursuant to clause 
(ii) for costs associated with relocation of 
the family to a new residence. 
‘‘(vii) LIMITATION
OF
LIABILITY
OF 
PUBLIC
HOUSING
AGENCIES.—A public 
housing agency that uses its authority 
under clause (iii) shall not, if the agency 
accomplishes the work through a con-
tractor that is licensed, bonded, and in-
sured in amounts and with coverage as re-
quired by the Secretary, be liable for any 
injury or damages that may result to per-
sons or to any property owned by the ten-
ant or owner. 
‘‘(viii) TENANT-CAUSED
DAMAGES.— 
If a public housing agency determines that 
any damage to a dwelling unit that results 
in a failure of the dwelling unit to comply 
with housing quality standards under sub-
paragraph (B), other than any damage re-
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sulting from ordinary use, was caused by 
the tenant, any member of the tenant’s 
household, or any guest or other person 
under the tenant’s control, the agency 
may, in the discretion of the agency, waive 
the applicability of this subparagraph, ex-
cept that this clause shall not exonerate a 
tenant from any liability otherwise existing 
under applicable law for damages to the 
premises caused by such tenant. 
‘‘(ix) APPLICABILITY.—This subpara-
graph shall apply to any dwelling unit for 
which a housing assistance payments con-
tract is entered into or renewed after the 
date of the effectiveness of the regulations 
implementing this subparagraph.’’. 
(b) REGULATIONS.—The Secretary of Housing and 
Urban Development shall issue any regulations necessary 
to carry out the amendment made by subsection (a)(3) 
not later than the expiration of the 12-month period begin-
ning upon the date of the enactment of this Act. Such 
regulations shall take effect not later than the expiration 
of the 90-day period beginning upon such issuance. This 
subsection shall take effect upon enactment of this Act. 
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SEC. 3. RENT REFORM AND INCOME REVIEWS. 
(a) RENT FOR PUBLIC HOUSING AND SECTION 8 
PROGRAMS.—Section 3 of the United States Housing Act 
of 1937 (42 U.S.C. 1437a(a)) is amended— 
(1) in subsection (a)— 
(A) in paragraph (1) by inserting ‘‘LOW- 
INCOME OCCUPANCY REQUIREMENT AND RENT-
AL PAYMENTS.—’’ after ‘‘(1)’’; 
(B) in paragraph (1)— 
(i) by striking ‘‘paragraph (2)’’ and 
inserting ‘‘paragraphs (2) and (3)’’; and 
(ii) by striking ‘‘paragraph (3)’’ and 
inserting ‘‘paragraph (4)’’; 
(C) in paragraph (2)(A)(i), by striking 
‘‘paragraph (3)’’ and inserting ‘‘paragraph 
(4)’’; 
(D) by redesignating paragraphs (4) and 
(5) as paragraphs (5) and (6), respectively; 
(E) by inserting after paragraph (2) the 
following new paragraph: 
‘‘(3) PHA AUTHORITY TO ESTABLISH ALTER-
NATIVE RENTS.— 
‘‘(A) RENT
FLEXIBILITY
FOR
PUBLIC 
HOUSING AND VOUCHER PROGRAM.—Subject to 
the requirements under subparagraph (B), a 
public housing agency may establish for public 
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housing and for families on whose behalf assist-
ance is provided under the program for tenant- 
based voucher assistance under section 8(o)— 
‘‘(i) a tenant rent structure in 
which— 
‘‘(I) the public housing agency 
establishes, based on the rental value 
of the unit, as determined by the pub-
lic housing agency— 
‘‘(aa) a ceiling rent for each 
dwelling unit that it owns and 
operates; and 
‘‘(bb) 
a 
ceiling 
on 
the 
amount of the tenant contribu-
tion toward rent required of a 
family provided tenant-based as-
sistance; and 
‘‘(II) such ceiling rent and tenant 
contribution are adjusted periodically 
on the basis of an inflation index or a 
recalculation of the rental value of the 
unit (which may be recalculated by 
unit or by building); 
‘‘(ii) an income-tiered tenant rent 
structure in which the amount of rent a 
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family shall pay is set and distributed on 
the basis of broad tiers of income and such 
tiers and rents are adjusted on the basis of 
an annual cost index except that families 
entering public housing shall not be offered 
a rent lower than the rent corresponding to 
their income tier; or 
‘‘(iii) a tenant rent structure in which 
the amount of rent a family shall pay is 
based on a percentage of family income, 
except that lower percentages may apply 
only with respect to earned income; such a 
rent structure may provide for an amount 
of rent based on a calculation of earned in-
come that provides for disregard of a high-
er percentage or higher dollar amount, or 
both, than provided for in paragraph 
(8)(B). 
‘‘(B) LIMITATION.—Notwithstanding the 
authority provided under subparagraph (A), the 
amount paid for rent (including the amount al-
lowed for tenant-paid utilities) by any family 
for a dwelling unit in public housing or for 
rental of a dwelling unit for which tenant-based 
voucher assistance under section 8(o) is pro-
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vided may not exceed the amount determined 
under subsection (a)(1) of this section or sec-
tion 8(o), respectively. The Secretary shall issue 
regulations and establish procedures to ensure 
compliance with this subparagraph. 
‘‘(C) ELDERLY FAMILIES AND DISABLED 
FAMILIES.—Notwithstanding any other provi-
sion of this Act, this paragraph shall not apply 
to elderly families and disabled families.’’; and 
(F) by adding at the end the following new 
paragraphs: 
‘‘(7) REVIEWS OF FAMILY INCOME.— 
‘‘(A) FREQUENCY.—Reviews of family in-
come for purposes of this section shall be 
made— 
‘‘(i) in the case of all families, upon 
the initial provision of housing assistance 
for the family; 
‘‘(ii) annually thereafter, except as 
provided in subparagraph (B)(i); 
‘‘(iii) upon the request of the family, 
at any time the income or deductions 
(under subsection (b)(5)) of the family 
change by an amount that is estimated to 
result in a decrease of $1,500 (or such 
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lower amount as the public housing agency 
may, at the option of the agency or owner, 
establish) or more in annual adjusted in-
come; and 
‘‘(iv) at any time the income or deduc-
tions (under subsection (b)(5)) of the fam-
ily change by an amount that is estimated 
to result in an increase of $1,500 or more 
in annual adjusted income, except that any 
increase in the earned income of a family 
shall not be considered for purposes of this 
clause (except that earned income may be 
considered if the increase corresponds to 
previous decreases under clause (iii)), ex-
cept that a public housing agency or owner 
may elect not to conduct such review in the 
last three months of a certification period. 
‘‘(B) FIXED-INCOME FAMILIES.— 
‘‘(i) SELF CERTIFICATION AND 3-YEAR 
REVIEW.—In the case of any family de-
scribed in clause (ii), after the initial re-
view of the family’s income pursuant to 
subparagraph (A)(i), the public housing 
agency or owner shall not be required to 
conduct a review of the family’s income 
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pursuant to subparagraph (A)(ii) for any 
year for which such family certifies, in ac-
cordance with such requirements as the 
Secretary shall establish, that the income 
of the family meets the requirements of 
clause (ii) of this subparagraph, except 
that the public housing agency or owner 
shall conduct a review of each such fam-
ily’s income not less than once every 3 
years. 
‘‘(ii) ELIGIBLE FAMILIES.—A family 
described in this clause is a family who has 
an income, as of the most recent review 
pursuant to subparagraph (A) or clause (i) 
of this subparagraph, of which 90 percent 
or more consists of fixed income, as such 
term is defined in clause (iii). 
‘‘(iii) FIXED INCOME.—For purposes 
of this subparagraph, the term ‘fixed in-
come’ includes income from— 
‘‘(I) the supplemental security in-
come program under title XVI of the 
Social Security Act, including supple-
mentary payments pursuant to an 
agreement for Federal administration 
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under section 1616(a) of the Social 
Security Act and payments pursuant 
to an agreement entered into under 
section 212(b) of Public Law 93–66; 
‘‘(II) Social Security payments; 
‘‘(III) Federal, State, local and 
private pension plans; and 
‘‘(IV) other periodic payments re-
ceived from annuities, insurance poli-
cies, retirement funds, disability or 
death benefits, and other similar types 
of periodic receipts. 
‘‘(C) IN GENERAL.—Reviews of family in-
come for purposes of this section shall be sub-
ject to the provisions of section 904 of the 
Stewart B. McKinney Homeless Assistance 
Amendments Act of 1988. 
‘‘(8) CALCULATION OF INCOME.— 
‘‘(A) USE OF PRIOR YEAR’S INCOME.—Ex-
cept as otherwise provided in this paragraph, in 
determining the income of a family for a year, 
a public housing agency or owner may use the 
income of the family as determined by the agen-
cy or owner for the preceding year, taking into 
consideration any redetermination of income 
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during such prior year pursuant to clause (iii) 
or (iv) of paragraph (7)(A). 
‘‘(B) EARNED INCOME.—For purposes of 
this section, the earned income of a family for 
a year shall be the amount of earned income by 
the family in the prior year minus an amount 
equal to 10 percent of the lesser of such prior 
year’s earned income or $10,000, except that 
the income of a family for purposes of section 
16 (relating to eligibility for assisted housing 
and income mix) shall be determined without 
regard to any reduction under this subpara-
graph. 
‘‘(C) INFLATIONARY
ADJUSTMENT
FOR 
FIXED INCOME FAMILIES.—If, for any year, a 
public housing agency or owner determines the 
income for any family described in paragraph 
(7)(B)(ii), or the amount of fixed income of any 
other family, based on the prior year’s income 
or fixed income, respectively, pursuant to sub-
paragraph (A), such prior year’s income or 
fixed income, respectively, shall be adjusted by 
applying an inflationary factor as the Secretary 
shall, by regulation, establish. 
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‘‘(D) OTHER INCOME.—If, for any year, a 
public housing agency or owner determines the 
income for any family based on the prior year’s 
income, with respect to prior year calculations 
of types of income not subject to subparagraph 
(B), a public housing agency or owner may 
make other adjustments as it considers appro-
priate to reflect current income. 
‘‘(E) SAFE
HARBOR.—A public housing 
agency or owner may, to the extent such infor-
mation is available to the public housing agency 
or owner, determine the family’s income for 
purposes of this section based on timely income 
determinations made for purposes of other 
means-tested Federal public assistance pro-
grams (including the program for block grants 
to States for temporary assistance for needy 
families under part A of title IV of the Social 
Security Act, a program for medicaid assistance 
under a State plan approved under title XIX of 
the Social Security Act, and the food stamp 
program as defined in section 3(h) of the Food 
Stamp Act of 1977). The Secretary shall, in 
consultation with other appropriate Federal 
agencies, develop procedures to enable public 
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