SEC. 102. SELECTION CRITERIA. 
Subsection (f) of section 202 of the Housing Act of 
1959 (12 U.S.C. 1701q(f)) is amended— 
(1) by striking ‘‘SELECTION CRITERIA.—’’ and 
inserting ‘‘INITIAL SELECTION CRITERIA AND PROC-
ESSING.—(1) SELECTION CRITERIA.—’’; 
(2) by redesignating paragraphs (1), (2), (3), 
(4), (5), (6), and (7) as subparagraphs (A), (B), (C), 
(D), (E), (G), and (H), respectively; 
(3) by inserting after subparagraph (E) (as so 
redesignated by paragraph (2) of this subsection) the 
following new subparagraph: 
‘‘(F) the extent to which the applicant has en-
sured that a service coordinator will be employed or 
otherwise retained for the housing, who has the mana-
gerial capacity and responsibility for carrying out 
the actions described in subparagraphs (A) and (B) 
of subsection (g)(2);’’; and 
(4) by adding at the end the following new para-
graph: 
‘‘(2) DELEGATED PROCESSING.— 
‘‘(A) In issuing a capital advance under this 
subsection for any project for which financing for the 
purposes described in the last two sentences of sub-
section (b) is provided by a combination of a capital 
advance under subsection (c)(1) and sources other 
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than this section, within 30 days of award of the cap-
ital advance, the Secretary shall delegate review and 
processing of such projects to a State or local housing 
agency that— 
‘‘(i) is in geographic proximity to the prop-
erty; 
‘‘(ii) has demonstrated experience in and 
capacity for underwriting multifamily housing 
loans that provide housing and supportive serv-
ices; 
‘‘(iii) may or may not be providing low-in-
come housing tax credits in combination with 
the capital advance under this section; and 
‘‘(iv) agrees to issue a firm commitment 
within 12 months of delegation. 
‘‘(B) The Secretary shall retain the authority to 
process capital advances in cases in which no State 
or local housing agency has applied to provide dele-
gated processing pursuant to this paragraph or no 
such agency has entered into an agreement with the 
Secretary to serve as a delegated processing agency. 
‘‘(C) An agency to which review and processing 
is delegated pursuant to subparagraph (A) may assess 
a reasonable fee which shall be included in the capital 
advance amounts and may recommend project rental 
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assistance amounts in excess of those initially award-
ed by the Secretary. The Secretary shall develop a 
schedule for reasonable fees under this subparagraph 
to be paid to delegated processing agencies, which 
shall take into consideration any other fees to be paid 
to the agency for other funding provided to the project 
by the agency, including bonds, tax credits, and other 
gap funding. 
‘‘(D) Under such delegated system, the Secretary 
shall retain the authority to approve rents and devel-
opment costs and to execute a capital advance within 
60 days of receipt of the commitment from the State 
or local agency. The Secretary shall provide to such 
agency and the project sponsor, in writing, the rea-
sons for any reduction in capital advance amounts or 
project rental assistance and such reductions shall be 
subject to appeal.’’. 
SEC. 103. DEVELOPMENT COST LIMITATIONS. 
Section 202(h)(1) of the Housing Act of 1959 (12 
U.S.C. 1701q(h)(1)) is amended, in the matter preceding 
subparagraph (A), by inserting ‘‘reasonable’’ before ‘‘devel-
opment cost limitations’’. 
SEC. 104. OWNER DEPOSITS. 
Section 202(j)(3)(A) of the Housing Act of 1959 (12 
U.S.C. 1701q(j)(3)(A)) is amended by inserting after the 
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period at the end the following: ‘‘Such amount shall be used 
only to cover operating deficits during the first three years 
of operations and shall not be used to cover construction 
shortfalls or inadequate initial project rental assistance 
amounts.’’. 
SEC. 105. DEFINITION OF PRIVATE NONPROFIT ORGANIZA-
TION. 
Subparagraph (B) of section 202(k)(4) of the Housing 
Act of 1959 (12 U.S.C. 1701q(k)(4)(B)) is amended by in-
serting before the semicolon the following: ‘‘; except that, 
in the case of any national organization that is the owner 
of multiple housing projects assisted under this section, the 
organization may comply with clause (i) of this subpara-
graph by having a local advisory board to the governing 
board of the organization the membership which is selected 
in the manner required under clause (i)’’. 
SEC. 106. PREFERENCES FOR HOMELESS ELDERLY. 
Subsection (j) of section 202 (12 U.S.C. 1701q(j)) is 
amended by adding at the end the following new paragraph: 
‘‘(9) PREFERENCES FOR HOMELESS ELDERLY.— 
The Secretary shall permit an owner of housing as-
sisted under this section to establish for, and apply to, 
the housing a preference in tenant selection for the 
homeless elderly, either within the application or after 
selection pursuant to subsection (f), but only if— 
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