(A) in clause (i), by striking ‘‘and ap-
proved by the Secretary’’; and
(B) by striking clause (iii) and inserting
the following new clause:
‘‘(iii) at the election of such agency, is—
‘‘(I) not less than the average monthly
amount of debt service and operating expenses
attributable to dwelling units of similar size in
public housing projects owned and operated by
such agency;
‘‘(II) not less than the reasonable rental
value of the unit, as determined by the agency;
or
‘‘(III) not less than the local market rent
determined by the agency for comparable units
of similar size pursuant to the procedures pre-
scribed by the Secretary for determining rent
reasonableness under the program for rental
certificate assistance under section 8(b).’’;
(2) by redesignating subparagraph (B) as sub-
paragraph (D); and
(3) by inserting after subparagraph (A) the fol-
lowing new subparagraphs:
‘‘(B) Any ceiling rents established by a public housing
agency pursuant to this paragraph may be adjusted by
the agency.
‘‘(C)(i) Any ceiling rents established pursuant to
subclause (I) or (III) of subparagraph (A)(iii) shall take
effect at the discretion of the public housing agency.
‘‘(ii) Any ceiling rents established pursuant to
subclause (II) of subparagraph (A)(iii) may not take effect
before the issuance of regulations to carry out such
subclause, which shall be issued by the Secretary not later
than 180 days after the date of the enactment of the Rent
Reform and Empowerment Act of 1995.
‘‘(iii) Before the effectiveness of regulations under
clause (ii), an agency shall determine the reasonable rental
value of unit for purposes of subclause (II) of subpara-
graph (A)(iii) based upon (I) in a project of 50 or more
units for which such ceiling rents are being established,
the 95th percentile of rents paid for all units in the
project, (II) in a group of comparable projects for which
such ceiling rents are being established that consists of
a total of 50 or more units, all units in the projects, and
(III) in a group of at least 50 comparable units for which
such ceiling rents are being established, all units in the
group.’’.
SEC. 3. EXCLUSIONS FROM ADJUSTED INCOME.
Section 3(b)(5) of the United States Housing Act of
1937 (42 U.S.C. 1437a(b)(5)) is amended—
(1) in subparagraph (C)—
(A) by striking ‘‘and’’ before ‘‘(ii)’’; and
(B) by inserting before the semicolon at
the end the following; ‘‘; and (iii) to the extent
documented by the family, the amount paid by
the family for health insurance coverage and
any other nonreimbursed out-of-pocket medical
expenses for any members of the family resid-
ing in the household who, at the time, are not
receiving or approved to receive any assistance
for health care from the Federal Government or
any State government, except that this clause
shall apply only to families residing in public
housing’’;
(2) in subparagraph (E), by inserting before the
semicolon at the end the following: ‘‘, except that in
the case of a family residing in public housing the
amount excluded under this subparagraph shall be
20 percent of the earned income of the family re-
maining after excluding any amounts pursuant to
subparagraph (H)’’;
(3) in subparagraph (F), by striking ‘‘and’’ at
the end;
(4) in subparagraph (G), by striking the period
at the end and inserting a semicolon; and
(5) by adding at the end the following new sub-
paragraphs:
‘‘(H) in the case of a family residing in public
housing, any earned income of any formerly depend-
ent child who is a member of the family residing in
the family’s dwelling unit during the period begin-
ning on the date of the first redetermination of the
rent for and family composition of the family that
occurs after the child reaches 18 years of age and
ending upon the date of the first such redetermina-
tion occurring after he or she reaches 21 years of
age, except that, effective during and after the first
fiscal year that commences after the expiration of
the 4-year period beginning on the date of the enact-
ment of the Rent Reform and Empowerment Act of
1995, amounts earned by a child may not be ex-
cluded under this subparagraph unless (i) the child
is enrolled in and attending high school (or a recog-
nized equivalency program), or has received a high
school diploma (or the recognized equivalent there-
of), or (ii) the public housing agency has determined
that requiring the child to comply with clause (i)
would significantly interfere with the sole source of
financial support of the family or would otherwise
create a significant hardship for the family of the
child; and
‘‘(I) in the case of 2-parent families with chil-
dren (as defined by the Secretary by regulation) who
reside in public housing, an amount (in addition to
any amounts excluded under subparagraphs (E) and
(H)) not to exceed 10 percent of any earned income
of the family.’’.
SEC. 4. EXCLUSION OF EARNED INCOME OF RESIDENTS
WHO OBTAIN EMPLOYMENT FROM RENT DE-
TERMINATIONS.
(a) IN GENERAL.—Section 3(a) of the United States
Housing Act of 1937 (42 U.S.C. 1437a(a)) is amended—
(1) in the third sentence of paragraph (1), by
striking ‘‘paragraph (2)’’ and inserting ‘‘paragraphs
(2) and (3)’’; and
(2) by adding at the end the following new
paragraph:
‘‘(3) OPTIONAL EXCLUSION
OF EARNED INCOME
FROM
RENT
DETERMINATION
FOR
FAMILIES
PRE-
VIOUSLY UNEMPLOYED.—Notwithstanding any other pro-
vision of law, a public housing agency may provide (at the
option of a public housing agency) that, for all units in
public housing administered by the agency, the rent pay-
able under subsection (b) for any such unit occupied by
a family whose income increases as a result of employment
of a member of the family who was previously unemployed
for 1 or more years, may not—
‘‘(A) be increased as a result of the increased
income due to such employment during the period
that begins upon the commencement of such employ-
ment and ends upon the second annual redetermina-
tion of the rent for and family composition of the
family occurring thereafter;
‘‘(B) during any 12-month period occurring
during the 36 months succeeding the expiration of
the period under subparagraph (A) for the family,
be increased due to the continued employment of
such family member by more than one-third of the
difference between (i) the rent being paid by the
family upon expiration of such period, and (ii) the
amount of rent that the family would pay but for
the applicability of this paragraph; and
‘‘(C) in any case, exceed the amount determined
under paragraph (1) or (2).’’.
SEC. 5. EXCLUSION FROM INCOME OF EARNINGS FROM
JOB TRAINING AND SELF-SUFFICIENCY PRO-
GRAMS.
Section 3 of the United States Housing Act of 1937
(42 U.S.C. 1437a) is amended—
(1) in subsection (b)(4), by inserting before the
period at the end the following: ‘‘, and except that
the earnings of and benefits to any public housing
resident resulting from enrollment and participation
in a program providing employment training and
supportive services in accordance with the Family
Support Act of 1988, section 22 of this Act, the Job
Training Partnership Act, subtitle D of title IV of
the Cranston-Gonzalez National Affordable Housing
Act, part F of title IV of the Social Security Act,
or any comparable Federal, State, or local law shall
not be considered as income for the purposes of de-
termining a limitation on the amount of rent paid by
the resident during the period that the resident en-
rolls and participates in such program’’; and
(2) by striking the undesignated paragraph at
the end of subsection (c)(3) (as added by section
515(b) of the Cranston-Gonzalez National Afford-
able Housing Act).
SEC. 6. APPLICABILITY.
Notwithstanding the amendments made by this Act,
any resident of public housing participating in the pro-
gram under the authority contained in the undesignated
paragraph at the end of section 3(c)(3) of the United
States Housing Act of 1937 (as added by section 515(b)
of the Cranston-Gonzalez National Affordable Housing
Act (Public Law 101–625; 104 Stat. 4199)), as such para-
graph existed before the date of enactment of this Act,
shall continue to be governed by such authority.
SEC. 7. PERFORMANCE FUNDING SYSTEM.
Section 9(a)(3)(B) of the United States Housing Act
of 1937 (42 U.S.C. 1437g(a)(3)(B)) is amended—
(1) in clause (iv), by striking ‘‘and’’ at the end;
(2) in clause (v), by striking the period at the
end and inserting a semicolon; and
(3) by adding at the end the following new
clause:
‘‘(vi) the amount of any reduced revenue result-
ing from the exclusion of income of public housing
residents pursuant to section 3(b)(5)(E) shall be cal-
culated and included in the amount of the payment
received under this section by the public housing
agency administering the public housing in which
such residents reside;’’.
SEC. 8. EFFECTIVE DATE.
The amendments under this Act shall be made and
shall take effect on the earlier of—
(1) the date of the effectiveness of the regula-
tions under section 9; or
(2) the expiration of the 120-day period begin-
ning on the date of the enactment of this Act.
SEC. 9. REGULATIONS.
The Secretary shall issue any final regulations nec-
essary to implement the amendments made by this Act,
which shall take effect not later than the expiration of the
120-day period beginning on the date of the enactment
of this Act. The regulations shall be issued after notice
and opportunity for public comment in accordance with
the procedures under section 553 of title 5, United States
Code, applicable to substantive rules (notwithstanding
subsections (a)(2), (b)(B), and (d)(3) of such section).
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