(1) by inserting after ‘‘ASSISTANCE.—’’ the fol-
lowing: ‘‘(A) INITIAL PROJECT RENTAL ASSISTANCE 
CONTRACT.—’’; 
(2) in the last sentence, by striking ‘‘may’’ and 
inserting ‘‘shall’’; and 
(3) by adding at the end the following new sub-
paragraph: 
‘‘(B) RENEWAL OF AND INCREASES IN CON-
TRACT AMOUNTS.— 
‘‘(i) EXPIRATION OF CONTRACT TERM.— 
Upon the expiration of each contract term, the 
Secretary shall adjust the annual contract 
amount to provide for reasonable project costs, 
and any increases, including adequate reserves, 
supportive services, and service coordinators, 
except that any contract amounts not used by 
a project during a contract term shall not be 
available for such adjustments upon renewal. 
‘‘(ii) EMERGENCY
SITUATIONS.—In the 
event of emergency situations that are outside 
the control of the owner, the Secretary shall in-
crease the annual contract amount, subject to 
reasonable review and limitations as the Sec-
retary shall provide.’’.
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 
managerial 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 
paragraph: 
‘‘(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 
subsection (b) is provided by a combination of a cap-
ital advance under subsection (c)(1) and sources
other than this section, within 30 days of award of 
the capital advance, the Secretary shall delegate re-
view 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 as-
sess a reasonable fee which shall be included in the 
capital advance amounts and may recommend
project rental assistance amounts in excess of those 
initially awarded 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 Sec-
retary shall retain the authority to approve rents 
and development costs and to execute a capital ad-
vance 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 reasons for any reduction in capital ad-
vance 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 ‘‘de-
velopment 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
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 con-
struction shortfalls or inadequate initial project rental as-
sistance amounts.’’. 
SEC. 105. DEFINITION OF PRIVATE NONPROFIT ORGANIZA-
TION. 
Subparagraph (B) of section 202(k)(4) of the Hous-
ing Act of 1959 (12 U.S.C. 1701q(k)(4)(B)) is amended 
by inserting 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 sec-
tion, the organization may comply with clause (i) of this 
subparagraph by having a local advisory board to the gov-
erning 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 para-
graph: 
‘‘(9) PREFERENCES
FOR
HOMELESS
ELDER-
LY.—The Secretary shall permit an owner of hous-
ing assisted under this section to establish for, and 
apply to, the housing a preference in tenant selection 
for the homeless elderly, either within the applica-