I 
116TH CONGRESS 
1ST SESSION H. R. 4023 
To reform the inspection process of housing assisted by the Department 
of Housing and Urban Development, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
JULY 25, 2019 
Mr. FERGUSON introduced the following bill; which was referred to the 
Committee on Financial Services 
A BILL 
To reform the inspection process of housing assisted by the 
Department of Housing and Urban Development, and 
for other purposes. 
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 ‘‘HUD Inspection Proc-
ess and Enforcement Reform Act of 2019’’. 
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SEC. 2. REDUCTION IN GRADE OR PAY OR REMOVAL FOR 
MISCONDUCT OR PERFORMANCE OF EM-
PLOYEES OF THE DEPARTMENT OF HOUSING 
AND URBAN DEVELOPMENT. 
(a) IN GENERAL.—Section 7(c) of the Department 
of Housing and Urban Development Act (42 U.S.C. 
3535(c)) is amended— 
(1) by striking ‘‘The Secretary is authorized’’ 
and inserting the following: ‘‘EMPLOYMENT, COM-
PENSATION, AUTHORITY, AND DUTIES
OF PER-
SONNEL.— 
‘‘(1) IN GENERAL.—The Secretary is author-
ized’’; and 
(2) by adding at the end the following: 
‘‘(2) REDUCTION
IN
GRADE
OR
PAY
OR
RE-
MOVAL FOR MISCONDUCT OR PERFORMANCE OF EM-
PLOYEES.— 
‘‘(A) DEFINITIONS.—For purposes of this 
paragraph— 
‘‘(i) the term ‘covered employee’— 
‘‘(I) means an individual holding 
a position in the civil service in the 
Department; and 
‘‘(II) does not include any indi-
vidual— 
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‘‘(aa) holding in a position 
described under sections 5312 
through 5316 of title 5, United 
States Code (relating to the Ex-
ecutive Schedule); 
‘‘(bb) holding a position as a 
limited term appointee, limited 
emergency appointee, or non-
career appointee in the Senior 
Executive Service, as defined 
under paragraphs (5), (6), and 
(7), 
respectively, 
of 
section 
3132(a) of title 5, United States 
Code; or 
‘‘(cc) holding a position of a 
confidential or policy-determining 
character under schedule C of 
subpart C of part 213 of title 5, 
Code of Federal Regulations; 
‘‘(ii) the term ‘grade’ means a level of 
classification under a position classification 
system; 
‘‘(iii) the term ‘misconduct’ includes 
neglect of duty, malfeasance, or failure to 
accept a directed reassignment or to ac-
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company a position in a transfer of func-
tion; and 
‘‘(iv) the term ‘pay’ means the rate of 
basic pay fixed by law or administrative 
action for the position held by a covered 
employee. 
‘‘(B) 
ACTIONS
COVERED.—This 
para-
graph— 
‘‘(i) applies to a reduction in grade or 
pay or removal; and 
‘‘(ii) does not apply to— 
‘‘(I) a reduction in grade or pay 
or removal under section 7512 of title 
5, United States Code; 
‘‘(II) a reduction in grade or pay 
or removal under section 7521 of title 
5, United States Code; 
‘‘(III) a removal under section 
7532 of title 5, United States Code; 
or 
‘‘(IV) a removal under section 
3592, 3595, or 7543 of title 5, United 
States Code. 
‘‘(C) CAUSE AND PROCEDURE.— 
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‘‘(i) IN
GENERAL.—Notwithstanding 
any other provision of law, under regula-
tions prescribed by the Office of Personnel 
Management, the Secretary may, if the 
Secretary determines that the misconduct 
or performance of a covered employee war-
rants such action— 
‘‘(I) remove the covered employee 
from the civil service; 
‘‘(II) reduce the grade of the cov-
ered employee; or 
‘‘(III) reduce the pay of the cov-
ered employee. 
‘‘(ii) REDUCTION IN GRADE.—A cov-
ered employee subject to a reduction in 
grade under clause (i)(II) shall, beginning 
on the date that the reduction takes effect, 
receive the annual rate of pay applicable to 
the reduced grade. 
‘‘(iii) APPEAL PROCEDURES.— 
‘‘(I) IN
GENERAL.—Subject to 
subclause (II) and clause (iv), any re-
duction in grade or pay or removal 
under this paragraph may be appealed 
to the Merit Systems Protection 
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Board under section 7701 of title 5, 
United States Code. 
‘‘(II) TIME
FOR
APPEAL.—An 
appeal under subclause (I) may only 
be made if such appeal is made not 
later than 7 days after the date of 
such reduction in grade or pay or re-
moval. 
‘‘(iv) REVIEW ON APPEAL.— 
‘‘(I) IN GENERAL.—Upon receipt 
of an appeal under clause (iii), the 
Merit Systems Protection Board shall 
refer the appeal to an administrative 
law 
judge 
pursuant 
to 
section 
7701(b)(1) of title 5, United States 
Code. The administrative law judge 
shall expedite any such appeal under 
such section and, in any such case, 
shall issue a decision not later than 
45 days after the date that the Board 
receives the appeal. 
‘‘(II) INFORMATION AND ASSIST-
ANCE.—To the maximum extent prac-
ticable, the Secretary shall provide to 
the Merit Systems Protection Board, 
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and to any administrative law judge 
to whom an appeal under this para-
graph is referred, such information 
and assistance as may be necessary to 
ensure an appeal under this para-
graph is expedited. 
‘‘(III) FINALITY.—Notwithstand-
ing any other provision of law, includ-
ing section 7703 of title 5, United 
States Code, the decision of an admin-
istrative law judge under subclause (I) 
shall be final and shall not be subject 
to any further appeal. 
‘‘(IV) DELAYED
DECISION.—In 
any case in which the administrative 
law judge cannot issue a decision in 
accordance with the 45-day require-
ment under subclause (I), the reduc-
tion in grade or pay or removal is 
final. In such a case, the Merit Sys-
tems Protection Board shall, within 
14 days after the date that such re-
duction in grade or pay or removal is 
final, submit to Congress a report 
that explains the reasons why a deci-
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sion was not issued in accordance 
with such requirement. 
‘‘(V) NO STAYS.—The Merit Sys-
tems Protection Board or administra-
tive law judge may not stay any re-
duction in grade or pay or removal ac-
tion under this paragraph. 
‘‘(VI) EFFECT
OF
APPEAL
OF 
REMOVAL.—During the period begin-
ning on the date on which a covered 
employee appeals a removal from the 
civil service under this paragraph and 
ending on the date that the adminis-
trative law judge issues a final deci-
sion on such appeal, the covered em-
ployee may not receive any pay, 
awards, bonuses, incentives, allow-
ances, differentials, student loan re-
payments, special payments, or bene-
fits. 
‘‘(v) 
WHISTLEBLOWER
PROTEC-
TION.—In the case of a covered employee 
seeking corrective action (or on behalf of 
whom corrective action is sought) from the 
Office of Special Counsel based on an al-
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leged prohibited personnel practice de-
scribed in section 2302(b) of title 5, 
United States Code, the Secretary may not 
reduce the grade or pay or remove the cov-
ered employee under this paragraph with-
out the approval of the Special Counsel 
under section 1214(f) of title 5, United 
States Code.’’. 
(b) APPLICATION.—The authority under paragraph 
(2) of section 7(c) of the Department of Housing and 
Urban Development Act, as added by subsection (a), shall 
apply to any covered employee (as defined in such para-
graph) appointed before, on, or after the date of enact-
ment of this Act. 
(c) CONFORMING AMENDMENTS.—Title 5, United 
States Code, is amended— 
(1) in section 4303(f)— 
(A) in paragraph (3), by striking ‘‘or’’ at 
the end; 
(B) in paragraph (4), by striking the pe-
riod at the end and inserting ‘‘, or’’; and 
(C) by adding at the end the following: 
‘‘(5) the reduction in grade or removal of an 
employee under section 7(c)(2) of the Department of 
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Housing and Urban Development Act (42 U.S.C. 
3535(c)(2)).’’; 
(2) in section 7512— 
(A) in subparagraph (E), by striking ‘‘; 
or’’ and inserting a comma; 
(B) in subparagraph (F), by striking the 
period at the end and inserting ‘‘, or’’; and 
(C) by adding at the end the following: 
‘‘(G) a reduction in grade or pay or removal 
under section 7(c)(2) of the Department of Housing 
and 
Urban 
Development 
Act 
(42 
U.S.C. 
3535(c)(2)).’’; 
(3) in section 7521(b), in the matter following 
paragraph (5)— 
(A) in subparagraph (B), by striking ‘‘or’’ 
at the end; 
(B) in subparagraph (C), by striking the 
period at the end and inserting ‘‘; or’’; and 
(C) by adding at the end the following: 
‘‘(D) a reduction in grade or pay or removal 
under section 7(c)(2) of the Department of Housing 
and 
Urban 
Development 
Act 
(42 
U.S.C. 
3535(c)(2)).’’; and 
(4) in section 7542, by striking ‘‘or to a re-
moval under section 3592 or 3595 of this title’’ and 
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inserting ‘‘to a removal under section 3592 or 3595 
of this title, to an action under section 713 of title 
38, or to a reduction in grade or pay or removal 
under section 7(c)(2) of the Department of Housing 
and 
Urban 
Development 
Act 
(42 
U.S.C. 
3535(c)(2))’’. 
SEC. 3. ENFORCEMENT OF PHYSICAL CONDITION STAND-
ARDS AND TENANT PROTECTION. 
Section 8(o) of the United States Housing Act of 
1937 (42 U.S.C. 1437f(o)) is amended by adding at the 
end the following: 
‘‘(21) MAINTENANCE OF PROPERTY.—Any enti-
ty receiving housing assistance payments with re-
spect to dwelling units covered by a housing assist-
ance payments contract shall— 
‘‘(A) maintain decent, safe, and sanitary 
conditions at those dwelling units, as deter-
mined by the Secretary; and 
‘‘(B) comply with any standards under ap-
plicable State or local laws, rules, ordinances, or 
regulations relating to the physical condition of 
those dwelling units. 
‘‘(22) ENFORCEMENT OF PHYSICAL CONDITION 
STANDARDS.— 
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‘‘(A) IN
GENERAL.—The Secretary shall 
take action under subparagraph (C) against an 
entity with a housing assistance payments con-
tract for project-based assistance with respect 
to a multifamily housing project if— 
‘‘(i) the project receives a Uniform 
Physical Condition Standards (in this 
paragraph referred to as ‘UPCS’) inspec-
tion score of not more than 30; 
‘‘(ii) the entity fails to certify in writ-
ing to the Secretary within 3 days of re-
ceiving the score under clause (i) that all 
exigent health and safety deficiencies iden-
tified by the inspector at the project have 
been corrected; or 
‘‘(iii) the project receives a UPCS in-
spection score of more than 30 and less 
than 59 and has received consecutive 
scores of less than 60 on UPCS inspec-
tions. 
‘‘(B) APPLICABILITY.—Subparagraph (A) 
shall— 
‘‘(i) apply with respect to insured and 
noninsured projects with dwelling units re-
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ceiving assistance under this section other 
than under paragraph (13); and 
‘‘(ii) not apply to dwelling units re-
ceiving assistance with capital or operating 
funds under section 9. 
‘‘(C) 
NOTIFICATION
AND
ENFORCE-
MENT.— 
‘‘(i) IN GENERAL.—If an entity vio-
lates clause (i), (ii), or (iii) of subpara-
graph (A), the Secretary shall notify the 
entity and provide an opportunity for re-
sponse not later than 15 days after the 
date on which the results of the UPCS in-
spection are issued. 
‘‘(ii) PLAN
AND
NOTICE
OF
DE-
FAULT.—If violations remain at a project 
after the 15-day period described in clause 
(i), the Secretary shall— 
‘‘(I) develop a plan to bring the 
project into compliance not later than 
30 days after the date on which the 
results of the UPCS inspection are 
issued; and 
‘‘(II) provide the owner, the ten-
ants of the property, the local govern-
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ment, any mortgagees, and any con-
tract administrator of the project with 
a Notice of Default with a specified 
timetable, determined by the Sec-
retary, for correcting all deficiencies. 
‘‘(iii) WITHDRAWAL
OF
NOTICE
OF 
DEFAULT.—If an appeal submitted by the 
entity results in a UPCS inspection score 
of not less than 60, the Secretary may 
withdraw a Notice of Default issued under 
clause (ii)(II). 
‘‘(iv) PENALTIES.—If, at the end of 
the timetable described in clause (ii)(II), 
the entity fails to fully correct all defi-
ciencies in the project, the Secretary 
may— 
‘‘(I) require immediate replace-
ment of project management with a 
management agent approved by the 
Secretary; 
‘‘(II) impose civil money pen-
alties, which shall be used solely for 
the purpose of supporting safe and 
sanitary conditions at the property, as 
designated by the Secretary, with pri-
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ority given to the tenants of the prop-
erty affected by the penalty; 
‘‘(III) abate the housing assist-
ance payments contract under this 
section, including partial abatement, 
as determined by the Secretary, until 
all deficiencies have been corrected; 
‘‘(IV) pursue transfer of the 
project to an owner, approved by the 
Secretary under established proce-
dures, which will be obligated to 
promptly make all required repairs 
and to accept renewal of the housing 
assistance payments contract as long 
as such renewal is offered; 
‘‘(V) transfer the existing hous-
ing 
assistance 
payments 
contract 
under this section to another project 
or projects and owner or owners; 
‘‘(VI) pursue exclusionary sanc-
tions, including suspensions or debar-
ments from Federal programs; 
‘‘(VII) seek judicial appointment 
of a receiver to manage the property 
and cure all project deficiencies or 
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seek a judicial order of specific per-
formance requiring the owner to cure 
all project deficiencies; 
‘‘(VIII) work with the owner, 
lender, or other related party to sta-
bilize the property in an attempt to 
preserve the property through compli-
ance, transfer of ownership, or an in-
fusion of capital provided by a third 
party that requires time to effectuate; 
or 
‘‘(IX) take any other regulatory 
or contractual remedies available as 
deemed necessary and appropriate by 
the Secretary. 
‘‘(D) CONTRACTS.— 
‘‘(i) IN
GENERAL.—The Secretary 
shall take appropriate steps to ensure that 
project-based contracts remain in effect, 
subject to the exercise of contractual 
abatement remedies to assist relocation of 
tenants for major threats to health and 
safety after written notice to and informed 
consent of the affected tenants and use of 
other remedies under this paragraph. 
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‘‘(ii) OTHER ASSISTANCE.—To the ex-
tent the Secretary determines, in consulta-
tion with the tenants and the local govern-
ment, that a property is not feasible for 
continued 
rental 
assistance 
payments 
under this section or other housing pro-
grams, based on consideration of the costs 
of rehabilitating and operating the prop-
erty and all available Federal, State, and 
local resources, including rent adjustments 
under section 524 of the Multifamily As-
sisted Housing Reform and Affordability 
Act of 1997 (42 U.S.C. 1437f note) and 
environmental conditions that cannot be 
remedied in a cost-effective fashion, the 
Secretary may, in consultation with the 
tenants of the property, contract for 
project-based rental assistance payments 
with an owner or owners of other existing 
housing properties, or provide other rental 
assistance. 
‘‘(E) REPORT.— 
‘‘(i) IN
GENERAL.—The Secretary 
shall, on a quarterly basis, issue a publicly 
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available report on all properties covered 
by this paragraph that— 
‘‘(I) are assessed through the 
Real Estate Assessment Center; and 
‘‘(II)(aa) have a UPCS inspec-
tion score of less than 60; or 
‘‘(bb) received an unsatisfactory 
management and occupancy review 
during the 36-month period preceding 
the report. 
‘‘(ii) CONTENTS.—Each report issued 
under clause (i) shall include— 
‘‘(I) 
the 
enforcement 
actions 
being taken to address the physical 
conditions of the properties covered in 
the report, including imposition of 
civil money penalties and termination 
of subsidies, and identify properties 
that have those conditions multiple 
times; 
‘‘(II) actions that the Depart-
ment of Housing and Urban Develop-
ment is taking to protect tenants of 
those properties; and 
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‘‘(III) any administrative or leg-
islative recommendations to further 
improve the living conditions at each 
property covered under a housing as-
sistance payments contract. 
‘‘(23) TENANT PROTECTION.— 
‘‘(A) IN
GENERAL.—The Secretary may 
provide tenant-based assistance for dwelling 
units covered under a project-based assistance 
subsidy contract if— 
‘‘(i) the owner of the dwelling units 
has received a Notice of Default; and 
‘‘(ii) the dwelling units pose an immi-
nent health and safety risk to the tenants 
of those dwelling units. 
‘‘(B) REIMBURSEMENTS.—To the extent 
that the Secretary determines that dwelling 
units described in subparagraph (A) are not 
feasible for continued rental assistance pay-
ments or transfer of the project-based assist-
ance subsidy contract associated with those 
dwelling units to another project or projects 
and owner or owners, any remaining amounts 
associated with those dwelling units shall be re-
captured and used to reimburse amounts used 
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for tenant-based assistance under subparagraph 
(A).’’. 
SEC. 4. REPORTS ON REAL ESTATE ASSESSMENT CENTER 
INSPECTIONS. 
(a) HUD REPORT.—Not later than 90 days after the 
date of enactment of this Act, the Secretary of Housing 
and Urban Development shall issue a publicly available re-
port on the website of the Department of Housing and 
Urban Development (in this section referred to as the 
‘‘Department’’) regarding Real Estate Assessment Center 
(in this section referred to as ‘‘REAC’’) inspections of all 
properties assisted, insured, or both, under a program of 
the Department, which shall include— 
(1) the percentage of all inspected properties 
that received a REAC-inspected score of less than 
65 within the 48-month period preceding the report; 
(2) the number of properties in which the most 
recent REAC-inspected score represented a decline 
relative to the previous REAC-inspected score; 
(3) a list of the 10 metropolitan statistical 
areas with the lowest average REAC-inspected 
scores for all inspected properties; and 
(4) a list of the 10 States with the lowest aver-
age REAC-inspected scores for all inspected prop-
erties. 
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(b) GAO REPORT.—The Comptroller General of the 
United States shall issue a publicly available report on the 
website of the Government Accountability Office regarding 
areas in which REAC inspections of all properties assisted, 
insured, or both, under a program of the Department 
should be reformed and improved. 
Æ 
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