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
amount to be allocated under this paragraph, the
formula used for determining the distribution 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 601(b), except that the Secretary
shall establish a method for taking into consider-
ation allocation of amounts under the com-
prehensive improvement assistance 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 251 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. 205. 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 541 that a public housing agency
receiving grant amounts under this title has failed to com-
ply substantially with any provision of this title, the Sec-
retary 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
204;
(3) reduce the amount of future grant payments
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 III; 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 this title to
the agency in the full amount of the total allocation
under section 204 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 comply with the
provisions of this title.
Subtitle B—Admissions and
Occupancy Requirements
SEC. 221. 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 begin-
ning upon such production.
(b) OPERATING ASSISTANCE.—No portion of any pub-
lic 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-
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 203(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
203(a)(1) are conducted using amounts from a grant