I
103D CONGRESS
2D SESSION
H. R. 5115
To improve the management of the project-based rental assistance program
under section 8 of the United States Housing Act of 1937.
IN THE HOUSE OF REPRESENTATIVES
SEPTEMBER 28, 1994
Mr. PETERSON of Minnesota introduced the following bill; which was referred
to the Committee on Banking, Finance and Urban Affairs
A BILL
To improve the management of the project-based rental as-
sistance program under section 8 of the United States
Housing Act of 1937.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Section 8 Project-
Based Program Management Improvement Act of 1994’’.
SEC. 2. CONGRESSIONAL FINDINGS.
The Congress finds that—
(1) approximately 30 percent of the multifamily
housing projects provided project-based assistance
under section 8 of the United States Housing Act of
1937 (in this section referred to as ‘‘assisted
projects’’) do not meet the housing quality standards
established by the Department of Housing and
Urban Development (in this section referred to as
the ‘‘Department’’), but do meet the standards for
classification as ‘‘troubled projects’’;
(2) of the current total of more than 20,000 as-
sisted projects, 10,000 are subject to mortgages in-
sured by the Department;
(3) the Department cannot identify which as-
sisted projects are troubled projects;
(4) the Department is not adequately inspecting
assisted projects nor ensuring that necessary repairs
are made to assisted projects;
(5) the Department is not taking aggressive en-
forcement action against the owners of such troubled
assisted projects;
(6) the Inspector General of the Department
has indicated that aggressive enforcement action is
not routinely taken against owners of such troubled
assisted projects but is taken only in rare cir-
cumstances;
(7) many of the administrative sanctions avail-
able to improve the conditions and operation of as-
to or exceeded 140 percent of the market rents for
dwelling units in the area of the project;
(12) in 1989 the Congress directed the Depart-
ment to issue regulations for conducting rent com-
parability reviews, which examine the difference be-
tween the rents charged for dwelling units assisted
by the Department and similar unassisted dwelling
units in the same neighborhood;
(13) although the Department issued a pro-
posed rule regarding rent comparability reviews in
1992, a final rule has not been issued before the
date of the enactment of this Act; and
(14) the Department has placed a moratorium
on conducting rent comparability reviews until the
publication of the final rule and, therefore, owners
of dwelling units assisted by the Department are
currently receiving automatic rent adjustments with-
out scrutiny by the Department and will continue to
receive such automatic adjustments until publication
of the final rule.
SEC. 3. IDENTIFICATION AND IMPROVEMENT OF TROU-
BLED PROJECTS.
(a) IN GENERAL.—Title IV of the Housing and Com-
munity Development Act of 1992 (42 U.S.C. 1715z–1a
note) is amended by adding at the end the following new
subtitle:
‘‘Subtitle B—Identification and Im-
provement of Troubled Projects
Receiving Project-Based Section
8 Assistance
‘‘SEC. 421. IDENTIFICATION.
‘‘Not later than 30 days after the commencement of
the analysis period (as such term is defined in section
426), the Secretary shall—
‘‘(1) review all housing projects (as such term
is defined in section 426) to determine which
projects meet the criteria established under section
422 for classification as troubled and severely trou-
bled housing projects;
‘‘(2) classify the housing projects meeting such
criteria as troubled and severely troubled, as appro-
priate; and
‘‘(3) submit to the Congress a list of the
projects classified as troubled and severely troubled.
‘‘SEC. 422. CRITERIA FOR CLASSIFICATION AS TROUBLED
AND 
SEVERELY 
TROUBLED 
HOUSING
PROJECTS.
‘‘(a) TROUBLED HOUSING PROJECTS.—A housing
project shall be classified as troubled if—
‘‘(1) the Secretary determines that financial as-
sistance for the project is necessary, in addition to
the assistance provided under the contract for
project-based assistance for the project, to enable
the project—
‘‘(A) to meet the financial obligations se-
cured by or relating to the project; or
‘‘(B) to provide the quality of housing and
services required under the contract for project-
based assistance for the project or the regu-
latory agreements relating to the project; and
‘‘(2) the project does not meet the criteria es-
tablished under subsection (b)(2).
‘‘(b) SEVERELY TROUBLED HOUSING PROJECT.—A
housing project shall be classified as severely troubled if
the Secretary determines that the project—
‘‘(1) meets the criteria for classification as a
troubled housing project; and
‘‘(2) meets such additional criteria, as the Sec-
retary shall establish, indicating severe financial or
physical problems with the project.
‘‘SEC. 423. FINANCIAL AND SOCIAL IMPACT ANALYSIS.
‘‘(a) SEVERELY TROUBLED PROJECTS.—Not later
than the conclusion of the 6th month of the analysis pe-
riod, the Secretary shall conduct a financial and social im-
pact analysis under this section for each severely troubled
housing project. During such 6-month period, the Sec-
retary shall complete such analyses for severely troubled
housing projects at a rate of not less than 1⁄6 of the total
number of severely troubled housing projects per month.
‘‘(b) TROUBLED PROJECTS.—Not later than the ex-
piration of the analysis period, the Secretary shall conduct
a financial and social impact analysis under this section
for each troubled housing project. During the 12-month
period beginning 6 months after the commencement of the
analysis period, the Secretary shall complete such analyses
for troubled housing projects at a rate of not less than
1⁄12 of the total number of troubled housing projects per
month.
‘‘(c) CONTENTS OF ANALYSIS.—Each financial and
social impact analysis conducted under this section for a
troubled or severely troubled housing project shall include
the following information regarding the project:
‘‘(1) BACKGROUND INFORMATION.—
‘‘(A) The number of units in the project,
the number of units in the project of each bed-
room size, the number of units in the project
assisted under the contract for project-based as-
sistance for the project, the amount of rent
charged for each dwelling unit in the project,
and the vacancy rate for dwelling units in the
project.
‘‘(B) The type and amount of assistance
provided monthly and annually for the project
under the contract for project-based assistance,
the original term of the contract, and the re-
maining term of the contract.
‘‘(C) Any actions previously taken or as-
sistance previously provided (in addition to as-
sistance under the contract for project-based
assistance) to assist the project.
‘‘(D) The rents for comparable unassisted
dwelling units in the area in which the project
is located.
‘‘(2) FINANCIAL INFORMATION.—
‘‘(A) If the project is subject to a mortgage
insured under the National Housing Act, the
program under which such insurance is pro-
vided, whether the loan secured by the mort-
gage is delinquent, in default, or current, and
if delinquent or in default, the amount of ar-
rears, outstanding balance, interest rate, and
remaining term of the delinquent or defaulted
loan.
of the project and of the extent of control by
the owner over the management of the project.
‘‘(D) An analysis of the economic incen-
tives and disincentives for investing additional
amounts of Federal assistance in the project.
‘‘(E) A description of the reasons for clas-
sification of the project as troubled or severely
troubled, as the case may be, and the reasons
why the owner failed to prevent the financial
and physical conditions of the project from
reaching a state requiring such classification.
‘‘(5) ADDITIONAL
INFORMATION.—Any other
information that the Secretary considers appro-
priate.
‘‘(d) PLAN FOR REMEDIAL ACTIONS.—Each financial
and social impact analysis conducted under this section
for a troubled or severely troubled housing project shall
include a plan of actions to be taken with respect to the
project to resolve or remedy the factors resulting in the
project being classified as troubled or severely troubled,
as the case may be, which shall include—
‘‘(1) a plan for implementing one or more of
the actions described in subsection (c)(3) that the
Secretary has determined are feasible, cost-effective,
legally viable, and available for the project;
‘‘(2) a description of the anticipated effects that
taking the actions pursuant to paragraph (1) will
have on—
‘‘(A) tenants of project;
‘‘(B) the community or neighborhood in
which the project is located; and
‘‘(C) the owner of the project; and
‘‘(3) a description of the reasons for selecting
the particular actions included in the plan pursuant
to paragraph (1).
‘‘(e) COMPLIANCE WITH PLAN OF ACTION.—
‘‘(1) IN GENERAL.—In making assistance avail-
able for a troubled or severely troubled housing
project, the Secretary shall comply with the plan of
actions established under subsection (d) for the
project (to the extent that amounts are available to
carry out such plan).
‘‘(2) SEVERELY
TROUBLED
PROJECTS.—Not
later than the conclusion of the 6th month of the
analysis period, the Secretary shall, for each severely
troubled housing project, initiate the actions in-
cluded (pursuant to subsection (d)(1)) in the plan of
actions established under subsection (d) for the
project (to the extent amounts for such actions are
available).
‘‘(3) TROUBLED PROJECTS.—Not later than the
expiration of the analysis period, the Secretary shall,
for each troubled housing project, initiate the actions
included (pursuant to subsection (d)(1)) in the plan
of actions established under subsection (d) for the
project (to the extent amounts for such actions are
available).
‘‘(f) SUBMISSION
OF ANALYSES
TO CONGRESS.—
Upon the conclusion of each month during the analysis
period, the Secretary shall submit to the Congress a copy
of each financial and social impact analysis completed dur-
ing such month.
‘‘(g) CRITERIA
FOR
CHOOSING
REMEDIAL
AC-
TIONS.—Not later than the expiration of the 30-day period
beginning on the date of the enactment of the Section 8
Project-Based Program Management Improvement Act of
1994, the Secretary shall establish, and submit to the
Congress, guidelines for determining which remedial ac-
tions described in subsection (c)(3) are to be included in
a plan of actions established under subsection (d) for a
troubled or severely troubled housing project.
‘‘SEC. 424. PROHIBITION OF ADDITIONAL ASSISTANCE BE-
FORE FINANCIAL AND SOCIAL IMPACT ANAL-
YSIS.
‘‘(a) PROHIBITION.—Notwithstanding any other pro-
vision of law, the Secretary may not provide assistance de-
scribed in subsection (b) for any housing project before
the completion of the financial and social impact analysis
for the project required under section 423.
‘‘(b) PROHIBITED
ASSISTANCE.—Assistance de-
scribed in this subsection is assistance provided—
‘‘(1) pursuant to a commitment to provide such
assistance made after the date of the enactment of
the Section 8 Project-Based Program Management
Improvement Act of 1994; and
‘‘(2) under—
‘‘(A) the loan management set-aside pro-
gram under section 8 of the United States
Housing Act of 1937;
‘‘(B) the flexible subsidy program under
section 201 of the Housing and Community De-
velopment Amendments of 1978; or
‘‘(C) section 8 of the United States Hous-
ing Act of 1937, in the form of—
‘‘(i) increases in maximum rents in
excess of the minimum amount required
under the existing contract for project-
based assistance for the project; or
‘‘(ii) additional amounts for the
project not required under the existing
contract for project-based assistance for
the project.
‘‘SEC. 425. REPORT REGARDING LEGISLATIVE CHANGES.
‘‘Not later than the expiration of the 12-month period
beginning on the date of the enactment of the Section 8
Project-Based Program Management Improvement Act of
1994, the Secretary shall submit a report to the Congress
describing any legislative provisions necessary or appro-
priate to assist the Secretary in carrying out the purposes
of this subtitle.
‘‘SEC. 426. DEFINITIONS.
‘‘For purposes of this subtitle, the following defini-
tions shall apply:
‘‘(1) ANALYSIS
PERIOD.—The term ‘analysis
period’ means the 18-month period beginning on the
first day of the first month that commences after
the date of the enactment of the Section 8 Project-
Based Program Management Improvement Act of
1994.
‘‘(2) HOUSING PROJECT.—The terms ‘housing
project’ and ‘project’ mean a multifamily housing
project for which project-based assistance is provided
pursuant to an existing contract for such assistance.
‘‘(3) PROJECT-BASED ASSISTANCE.—The term
‘project-based assistance’ means assistance provided
under section 8 of the United States Housing Act of
1937 that is attached to the structure pursuant to
subsection (d)(2) of such section.
‘‘(4) SECRETARY.—The term ‘Secretary’ means
the Secretary of Housing and Urban Development.
‘‘(5) 
SEVERELY
TROUBLED
HOUSING
PROJECT.—The term ‘severely troubled housing
project’ means a housing project that meets the cri-
teria established under section 422(b) and is classi-
fied by the Secretary as severely troubled pursuant
to section 421.
‘‘(6) TROUBLED HOUSING PROJECT.—The term
‘troubled housing project’ means a housing project
that meets the criteria established under section
422(a) and is classified by the Secretary as troubled
pursuant to section 421.
‘‘SEC. 427. REGULATIONS.
‘‘The Secretary may issue any regulations necessary
to carry out this subtitle.’’.
(b) CLERICAL AMENDMENTS.—Title IV of the Hous-
ing and Community Development Act of 1992 (42 U.S.C.
1715z–1a note) is amended
(1) in sections 401, 402(a), 403(a), 404(a), and
404(e), by striking ‘‘title’’ each place it appears and
inserting ‘‘subtitle’’; and
(2) by inserting after the title heading the fol-
lowing new subtitle heading:
‘‘Subtitle A—Comprehensive Needs
Assessments for Assisted Multi-
family Housing’’.
(c) CONFORMING AMENDMENT.—Section 201(n) of
the Housing and Community Development Amendments
of 1978 (12 U.S.C. 1715z–1a(n)) is amended by inserting
‘‘subtitle A of’’ before ‘‘title IV of the Housing and Com-
munity Development Act of 1992’’, each place it appears.
SEC. 4. TERMINATION AND REUSE OF SECTION 8 HAP CON-
TRACT BUDGET AUTHORITY.
Section 8 of the United States Housing Act of 1937
(42 U.S.C. 1437f) is amended by adding at the end the
following new subsection:
‘‘(z) TERMINATION OF PROJECT-BASED CONTRACTS
AND REUSE OF RECAPTURED BUDGET AUTHORITY.—
‘‘(1) GENERAL
AUTHORITY.—The Secretary
may reuse any budget authority that is recaptured
on account of the termination, in whole or in part,
of a housing assistance payments contract (other
than a contract for tenant-based assistance) to pro-
vide tenant-based assistance under this section to
families occupying units formerly assisted under the
terminated contract. Such assistance shall be made
available only pursuant to a contract for such assist-
ance entered into by the Secretary and a public
housing agency.
‘‘(2) FAMILIES
OCCUPYING
UNITS
FORMERLY
ASSISTED UNDER TERMINATED CONTRACT.—In pro-
viding tenant-based assistance pursuant to this sec-
tion, the Secretary shall make such assistance avail-
able first to families occupying units formerly as-
sisted under the terminated contract.
‘‘(3) NEW RENTS.—Rents established in con-
nection with a contract under this subsection shall
be established in accordance with subsection (c)(2),
but shall not exceed the amount of rent previously
paid under the terminated contract.
‘‘(4) BUDGET
SAVINGS.—To the extent that
new rents established under paragraph (3) are less
than the amount of rent previously paid under the
terminated contract, any budget authority remaining
shall be rescinded.’’.
SEC. 5. REPEAL OF PROHIBITION ON LOWERING SECTION
8 RENTS.
Section 8(c)(2)(C) of the United States Housing Act
of 1937 (42 U.S.C. 1437f(c)(2)(C)) is amended by strik-
ing the antepenultimate sentence.
SEC. 6. ISSUANCE OF FINAL REGULATIONS FOR COM-
PARABILITY REVIEWS.
The Secretary of Housing and Urban Development
shall issue final regulations to carry out the amendments
made by section 801(c) of the Department of Housing and
Urban Development Reform Act of 1989 (relating to an-
nual adjustment factors and comparability studies) not
later than the expiration of the 30-day period beginning
upon the date of the enactment of this Act. Such regula-
tions shall take effect upon the date of issuance.
SEC. 7. LIMITATIONS ON RENT INCREASES FOR NEW CON-
STRUCTION AND SUBSTANTIAL REHABILITA-
TION PROJECTS.
Section 8(c)(2) of the United States Housing Act of
1937 (42 U.S.C. 1437f(c)(2)) is amended by adding at
the end the following new subparagraph:
‘‘(D) With respect to housing constructed or substan-
tially rehabilitated pursuant to assistance provided under
subsection (b)(2) (as such section was in effect before Oc-
tober 1, 1983), notwithstanding the provisions of subpara-
graph (C), upon the refinancing of the project debt se-
cured by a mortgage on the housing the Secretary may
(in the sole discretion of the Secretary) provide for any
subsequent annual (or more frequent) adjustments to
maximum monthly rents for the project required under
subparagraph (A) to be made on the basis of—
‘‘(i) the reasonable formula established by the
Secretary pursuant to subparagraph (A); or
‘‘(ii) an operating budget submitted to the Sec-
retary by the owner of the housing reflecting actual
and necessary expenses of owning and maintaining
the housing.’’.
Æ
HR 5115 IH——2