in the development of housing of which not less than 25 
percent of the single-family dwelling units are affordable 
dwelling units that meet the following requirements: 
(1) HOME OWNERSHIP.—Such affordable dwell-
ing units shall be made available only for purchase 
by the occupying family, which may include owner-
ship of a one-family unit in a condominium project 
and an undivided interest in the common areas or a 
membership interest and occupancy agreement in co-
operative housing project, and may not be made 
available for rental. 
(2) LOW- 
AND
MODERATE-INCOME
LIMITA-
TIONS; 
PRINCIPAL
RESIDENCE.—Such affordable 
dwelling units shall be available for purchase by a 
family who is a first-time homebuyer, for use only as 
the principal residence of such family, as follows: 
(A) LOW-INCOME
UNITS.—Not less than 
15 percent shall be available for purchase only 
by low-income families. 
(B) MODERATE-INCOME UNITS.—Not less 
than 10 percent shall be available for purchase 
only by moderate-income families. 
(3) AFFORDABILITY.—Such affordable dwelling 
units shall be made available for purchase at an ini-
tial purchase price that does not exceed such per-
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centage of the median purchase price for the area in 
which the housing is located, as the grantee unit of 
general local government shall provide, with adjust-
ments based on the size of the dwelling unit as the 
unit of general local government considers appro-
priate. 
(4) RESALE
RESTRICTIONS.—Such affordable 
dwelling units shall be subject to resale and recap-
ture restrictions that are established by the grantee 
unit of general local government and determined by 
the Secretary to comply with the requirements for 
such restrictions under section 215(b)(3) of the 
Cranston-Gonzalez National Affordable Housing Act 
(42 U.S.C. 12745(b)(3)). 
(5) PRIORITY
FOR
CERTAIN
POPULATIONS.— 
The grantee unit of general local government may 
require that priority be given, among prospective 
purchasers of such affordable dwelling units, to cer-
tain categories of low- and moderate-income families 
otherwise eligible to purchase such dwelling units, 
who may include elderly persons, members of the 
Armed Forces, teachers, first responders, other serv-
ice workers, persons displaced by natural disasters 
or governmental actions, nurses or other health care 
providers, or any other categories of eligible low-in-
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come families that the unit of general local govern-
ment considers appropriate. 
(6) LOCATION.—Except as provided in sub-
section (d), such affordable dwelling units shall be 
located together with and among the other dwelling 
units developed using amounts from a grant under 
this section. 
(d) INCREASE IN AFFORDABLE UNITS FOR FLEXI-
BILITY IN LOCATION.—A unit of general local government 
may provide that the affordable dwelling units developed 
using amounts from a grant under this section are located 
at a site separate from the site of other dwelling units 
developed using such grant amounts, but only if the unit 
of general local government requires that the percentage 
of affordable dwelling units developed using such grant 
amounts is greater than the percentage specified in sub-
section (c). 
(e) MIXED INCOME REQUIREMENTS.—Any housing 
constructed in whole or in part with amounts from a grant 
under this Act to a unit of general local government shall 
meet such requirements regarding income eligibility as 
such unit shall establish to ensure that the families pur-
chasing such housing include a broad range of incomes. 
(f) CODE COMPLIANCE.—All dwelling units in any 
housing constructed in whole or in part with amounts from 
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a grant under this Act shall comply with all applicable 
Federal, State, and local law, regulations, and require-
ments relating to housing construction, quality, and safe-
ty, including any requirements regarding earthquake- or 
windstorm-resistant construction. 
(g) COST LIMITS.— 
(1) IN GENERAL.—Each unit of general local 
government that receives a grant under this section 
shall establish limitations on the amount of grant 
funds that may be invested in housing constructed 
with such funds on a per unit basis. Such limits may 
be established on a market-by-market basis, with ad-
justments made for the number of bedrooms in a 
dwelling unit, and shall reflect the actual cost of new 
construction of housing that complies with sub-
section (f). Adjustments of such cost limitations may 
be made over time to reflect inflation. 
(2) CRITERIA.— The Secretary shall ensure 
that the cost limitations established by each unit of 
general local government— 
(A) provide for development of nonluxury 
housing with appropriate amenities; 
(B) facilitate compliance with the mixed- 
income requirement under subsection (e). 
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(h) DEVELOPMENT
INCENTIVES.—The Secretary 
may not make a grant under this section to a unit of gen-
eral local government unless the Secretary determines that 
such unit has provided one or both of the following incen-
tives with respect to any housing to be produced in whole 
or in part with such grant amounts: 
(1) EXCESS
DENSITY.—The unit of general 
local government has provided, for such housing, 
such exceptions to any requirements regarding the 
density of housing or dwelling units located in an 
area, so as to encourage the production of affordable 
dwelling units. 
(2) REGULATORY
FLEXIBILITY.—The unit of 
general local government has provided— 
(A) with respect to such housing, excep-
tions to existing regulatory requirements re-
garding housing location and construction de-
signed to encourage the production of afford-
able dwelling units, which may include pro-
viding for expedited obtaining of construction 
permits, reduced parking requirements, reduced 
setbacks from streets, narrower streets, and 
other reduced development restrictions; and 
(B) financial incentives designed to encour-
age the production of affordable dwelling units, 
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which may include reduced permit fees, pro-
viding subsidized construction loans, availability 
of publicly owned lands at reduced prices, pro-
viding mortgage financing for low- and mod-
erate-income families purchasing such housing, 
and tax exemptions for such families pur-
chasing such housing. 
(i) INCENTIVES.— 
(1) IN GENERAL.—Notwithstanding the limita-
tion under subsection (b)(2) on the portion of the 
development costs of housing to be constructed using 
grant amounts under this section that may be fund-
ed with such grant amounts, each unit of general 
local government that receives a grant under this 
section shall provide the following incentives: 
(A) TRANSPORTATION.—The unit of gen-
eral local government shall provide that the por-
tion of the development costs of any housing 
that may be so funded shall be increased by 
such percentage as the unit of general local gov-
ernment considers appropriate, subject to para-
graph (2), if the unit of general local govern-
ment determines that such housing is located 
within one-third of a mile of a mass transpor-
tation station (including any subway, rail, bus, 
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or other commuter transportation system sta-
tion) providing service during peak use periods 
on weekdays not less than every 15 minutes. 
(B) ENERGY
EFFICIENCY.—The unit of 
general local government shall provide that the 
portion of the development costs of any housing 
that may be so funded shall be increased by 
such percentage as the unit of general local gov-
ernment considers appropriate, subject to para-
graph (2), if the unit of general local govern-
ment determines that such housing complies 
with— 
(i) the standards established under 
the Energy Star Program under section 
324A of the Energy Policy and Conserva-
tion Act (42 U.S.C. 6294a); and 
(ii) the requirements to be eligible for 
a deduction under section 179D of the In-
ternal Revenue Code of 1986 (relating to 
energy efficient commercial buildings), ex-
cept that, for purposes of this paragraph, 
subsection (c) of such section shall be ap-
plied— 
(I) in the case of any housing 
that is single-family housing, multi-
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family housing of three or fewer sto-
ries above grade, or modular housing, 
by substituting Standard 90.2–2004 
of the American Society of Heating, 
Refridgerating, and Air Conditioning 
Engineers and the Illuminating Engi-
neering Society of North America for 
Standard 90.1–2001, each place such 
standard appears; and 
(II) in the case of any multi-
family housing of four stories or more 
above grade, by substituting Standard 
90.1–2004 of the American Society of 
Heating, Refridgerating, and Air Con-
ditioning Engineers and the Illu-
minating 
Engineering 
Society 
of 
North America for Standard 90.1– 
2001, each place such standard ap-
pears. 
(C) SOLAR ENERGY.—The unit of general 
local government shall provide that the portion 
of the development costs of any housing that 
may be so funded shall be increased by such 
percentage as the unit of general local govern-
ment considers appropriate, subject to para-
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graph (2), if the unit of general local govern-
ment determines that such housing complies 
with the requirements under section 48(a) of 
the Internal Revenue Code of 1986 for an en-
ergy credit, including by use of a passive, ac-
tive, or thermal solar energy system. 
(2) PERCENTAGE LIMITATION.—The aggregate 
increase for any housing by reason of the operation 
of subparagraphs (A) through (C) of paragraph (1) 
may not in any case exceed 15 percent. 
(j) HOME OWNERSHIP COUNSELING.—Amounts from 
a grant under this section may not be used for the develop-
ment of any housing unless the unit of general local gov-
ernment ensures, in accordance with such requirements as 
the Secretary shall establish— 
(1) that an affordable dwelling unit in such 
housing will not be sold to a low- or moderate-in-
come family unless the family has completed home 
ownership counseling under a program that meets 
the requirements under section 271(c)(2)(C) of the 
Cranston-Gonzalez National Affordable Housing Act 
(42 U.S.C. 12821(c)(2)(C)); and 
(2) that participation in such a program of 
home ownership counseling will be made available to 
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each such family at cost to such family not exceed-
ing $25. 
(k) REPORTING.— 
(1) TO SECRETARY.—Each unit of general local 
government that receives a grant under this section 
shall submit to the Secretary such reports as the 
Secretary shall require to determine the uses of 
grant amounts provided under this section and the 
effectiveness of such uses. Such reports shall contain 
such information as the Secretary considers nec-
essary to determine— 
(A) the quality and quantity of dwelling 
units and affordable dwelling units developed by 
a unit of general local government using grant 
amounts under this section; 
(B) the amount of time taken to develop 
such dwelling units; 
(C) the number of low- and moderate-in-
come families who have purchased such dwell-
ing units; 
(D) the amount of time that such families 
continue to reside in such dwelling units; 
(E) any benefits to employers and to com-
munities resulting from the development of 
such housing that is eligible for the incentive 
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under subsection (g)(1), including benefits re-
lating to reducing pollution and motor vehicle 
traffic; 
(F) any benefits to communities resulting 
from the development of any such housing that 
is eligible for the incentive under subsection 
(g)(2); and 
(G) the effects that provision of home own-
ership opportunities in such housing has had on 
the tax revenues of units of general local gov-
ernment. 
(2) TO CONGRESS.—The Secretary shall submit 
a report to the Congress not less than annually re-
garding the program under this section. Such report 
shall aggregate and summarize, for the entire pro-
gram, the information submitted in reports to the 
Secretary pursuant to paragraph (1). 
(l) DEFINITIONS.—For purposes of this section, the 
following definitions shall apply: 
(1) AFFORDABLE DWELLING UNIT.—The term 
‘‘affordable dwelling unit’’ means a dwelling unit 
produced in whole or in part with amounts from a 
grant under this section that meets the requirements 
of subsection (c). 
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(2) DEVELOPMENT COSTS.—The term ‘‘devel-
opment costs’’ means, with respect to housing to be 
produced with amounts from a grant under this sec-
tion, costs incurred for any or all undertakings nec-
essary for planning, land acquisition, demolition, 
construction, or equipment, including any necessary 
financing, and in otherwise carrying out the develop-
ment of such housing, as determined by the Sec-
retary. 
(3) LOW-INCOME FAMILY.—The term ‘‘low-in-
come family’’ means a family whose income does not 
exceed 80 percent of the median income for the 
area, as determined by the Secretary with adjust-
ments for smaller and larger families, except that 
the Secretary may establish income ceilings higher 
or lower than 80 percent of the median for the area 
on the basis of the Secretary’s findings that such 
variations are necessary because of prevailing levels 
of construction costs or unusually high or low family 
incomes. 
(4) MODERATE-INCOME
FAMILY.—The term 
‘‘moderate-income family’’ means a family who is 
not a low-income family and whose income does not 
exceed 125 percent of the median income for the 
area, as determined by the Secretary with adjust-
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ments for smaller and larger families, except that 
the Secretary may establish income ceilings higher 
or lower than 125 percent of the median for the area 
on the basis of the Secretary’s findings that such 
variations are necessary because of prevailing levels 
of construction costs or unusually high or low family 
incomes. 
(5) UNIT OF GENERAL LOCAL GOVERNMENT.— 
The term ‘‘unit of general local government’’ has the 
meaning given such term in section 104 of the Cran-
ston-Gonzalez National Affordable Housing Act (42 
U.S.C. 12704). 
(6) SECRETARY.—The term ‘‘Secretary’’ means 
the Secretary of Housing and Urban Development. 
(m) AUTHORIZATION OF APPROPRIATIONS.—There is 
authorized to be appropriated to the Secretary for grants 
under this section $125,000,000 for each of fiscal years 
2007 through 2014. 
(n) REGULATIONS.—The Secretary may issue any 
regulations necessary to carry out this section. 
Æ 
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