208
(2) COLLECTION OF RETROACTIVE CHANGES.—
In the case of any change in the rental contribution
of an assisted family that affects rental payments
previously made, the public housing agency shall col-
lect any additional amounts required to be paid by
the family under such change directly from the fam-
ily and shall refund any excess rental contribution
paid by the family directly to the family.
(d) 
PHASE-IN
OF
RENT
CONTRIBUTION
IN-
CREASES.—
(1) IN GENERAL.—Except as provided in para-
graph (2), for any family that is receiving tenant-
based rental assistance under section 8 of the Unit-
ed States Housing Act of 1937 upon the initial ap-
plicability of the provisions of this title to such fam-
ily, if the monthly contribution for rental of an as-
sisted dwelling unit to be paid by the family upon
such initial applicability is greater than the amount
paid by the family under the provisions of the Unit-
ed States Housing Act of 1937 immediately before
such applicability, any such resulting increase in
rent contribution shall be—
(A) phased in equally over a period of not
less than 3 years, if such increase is 30 percent
209
or more of such contribution before initial ap-
plicability; and
(B) limited to not more than 10 percent
per year if such increase is more than 10 per-
cent but less than 30 percent of such contribu-
tion before initial applicability.
(2) EXCEPTION.—The minimum rent contribu-
tion requirement under subsection (b)(1) shall apply
to each family described in paragraph (1) of this
subsection, notwithstanding such paragraph.
SEC. 323. RENTAL INDICATORS.
(a) IN GENERAL.—The Secretary shall establish and
issue rental indicators under this section periodically, but
not less than annually, for existing rental dwelling units
that are eligible dwelling units. The Secretary shall estab-
lish and issue the rental indicators by housing market area
(as the Secretary shall establish) for various sizes and
types of dwelling units.
(b) AMOUNT.—For a market area, the rental indica-
tor established under subsection (a) for a dwelling unit
of a particular size and type in the market area shall be
a dollar amount that reflects the rental amount for a
standard quality rental unit of such size and type in the
market area that is an eligible dwelling unit.
210
(c) EFFECTIVE DATE.—The Secretary shall cause
the proposed rental indicators established under sub-
section (a) for each market area to be published in the
Federal Register with reasonable time for public comment,
and such rental indicators shall become effective upon the
date of publication in final form in the Federal Register.
(d) ANNUAL ADJUSTMENT.—Each rental indicator in
effect under this section shall be adjusted to be effective
on October 1 of each year to reflect changes, based on
the most recent available data trended so that the indica-
tors will be current for the year to which they apply, in
rents for existing rental dwelling units of various sizes and
types in the market area suitable for occupancy by families
assisted under this title.
SEC. 324. LEASE TERMS.
Rental assistance may be provided for an eligible
dwelling unit only if the assisted family and the owner of
the dwelling unit enter into a lease for the unit that—
(1) provides for a single lease term of 12
months and continued tenancy after such term
under a periodic tenancy on a month-to-month basis;
(2) contains terms and conditions specifying
that termination of tenancy during the term of a
lease shall be subject to the provisions set forth in
sections 642 and 643; and
211
(3) is set forth in the standard form, which is
used in the local housing market area by the owner
and applies generally to any other tenants in the
property who are not assisted families, together with
any addendum necessary to include the many terms
required under this section.
A lease may include any addenda appropriate to set forth
the provisions under this title.
SEC. 325. TERMINATION OF TENANCY.
Each housing assistance payments contract shall pro-
vide that the owner shall conduct the termination of ten-
ancy of any tenant of an assisted dwelling unit under the
contract in accordance with applicable State or local laws,
including providing any notice of termination required
under such laws.
SEC. 326. ELIGIBLE OWNERS.
(a) OWNERSHIP ENTITY.—Rental assistance under
this title may be provided for any eligible dwelling unit
for which the owner is any public agency, private person
or entity (including a cooperative), nonprofit organization,
agency of the Federal Government, or public housing
agency.
(b) INELIGIBLE OWNERS.—
(1) IN GENERAL.—Notwithstanding subsection
(a), a public housing agency—
212
(A) may not enter into a housing assist-
ance payments contract (or renew an existing
contract) covering a dwelling unit that is owned
by an owner who is debarred, suspended, or
subject to limited denial of participation under
part 24 of title 24, Code of Federal Regula-
tions;
(B) may prohibit, or authorize the termi-
nation or suspension of, payment of housing as-
sistance under a housing assistance payments
contract in effect at the time such debarment,
suspension, or limited denial of participation
takes effect.
If the public housing agency takes action under sub-
paragraph (B), the agency shall take such actions as
may be necessary to protect assisted families who
are affected by the action, which may include the
provision of additional assistance under this title to
such families.
(2) PROHIBITION OF SALE OR RENTAL TO RE-
LATED
PARTIES.—The Secretary shall establish
guidelines to prevent housing assistance payments
for a dwelling unit that is owned by any spouse,
child, or other party who allows an owner described
in paragraph (1) to maintain control of the unit.
213
SEC. 327. SELECTION OF DWELLING UNITS.
(a) FAMILY CHOICE.—The determination of the
dwelling unit in which an assisted family resides and for
which housing assistance is provided under this title shall
be made solely by the assisted family, subject to the provi-
sions of this title and any applicable law.
(b) DEED RESTRICTIONS.—Housing assistance may
not be used in any manner that abrogates any local deed
restriction that applies to any housing consisting of 1 to
4 dwelling units. Nothing in this section may be construed
to affect the provisions or applicability of the Fair Hous-
ing Act.
SEC. 328. ELIGIBLE DWELLING UNITS.
(a) IN GENERAL.—A dwelling unit shall be an eligible
dwelling unit for purposes of this title only if the public
housing agency to provide housing assistance for the
dwelling unit determines that the dwelling unit—
(1) is an existing dwelling unit that is not lo-
cated within a nursing home or the grounds of any
penal, reformatory, medical, mental, or similar pub-
lic or private institution; and
(2) complies—
(A) in the case of a dwelling unit located
in a jurisdiction which has in effect laws, regu-
lations, standards, or codes regarding habit-
214
ability of residential dwellings, with such appli-
cable laws, regulations, standards, or codes; or
(B) in the case of a dwelling unit located
in a jurisdiction which does not have in effect
laws, regulations, standards, or codes described
in subparagraph (A), with the housing quality
standards established under subsection (c).
Each public housing agency providing housing assistance
shall identify, in the local housing management plan for
the agency, whether the agency is utilizing the standard
under subparagraph (A) or (B) of paragraph (2).
(b) DETERMINATIONS.—
(1) IN
GENERAL.—A public housing agency
shall make the determinations required under sub-
section (a) pursuant to an inspection of the dwelling
unit conducted before any assistance payment is
made for the unit.
(2) EXPEDITIOUS INSPECTION.—Inspections of
dwelling units under this subsection shall be made
before the expiration of the 15-day period beginning
upon a request by the resident or landlord to the
public housing agency. The performance of the agen-
cy in meeting the 15-day inspection deadline shall be
taken into account in assessing the performance of
the agency.
215
(c) FEDERAL HOUSING QUALITY STANDARDS.—The
Secretary shall establish housing quality standards under
this subsection that ensure that assisted dwelling units are
safe, clean, and healthy. Such standards shall include re-
quirements relating to habitability, including maintenance,
health and sanitation factors, condition, and construction
of dwellings, and shall, to the greatest extent practicable,
be consistent with the standards established under section
232(b). The Secretary shall differentiate between major
and minor violations of such standards.
(d) ANNUAL INSPECTIONS.—Each public housing
agency providing housing assistance shall make an annual
inspection of each assisted dwelling unit during the term
of the housing assistance payments contracts for the unit
to determine whether the unit is maintained in accordance
with the requirements under subsection (a)(2). The agency
shall retain the records of the inspection for a reasonable
time and shall make the records available upon request
to the Secretary, the Inspector General for the Depart-
ment of Housing and Urban Development, and any audi-
tor conducting an audit under section 541.
(e) INSPECTION GUIDELINES.—The Secretary shall
establish procedural guidelines and performance standards
to facilitate inspections of dwelling units and conform such
inspections with practices utilized in the private housing
216
market. Such guidelines and standards shall take into con-
sideration variations in local laws and practices of public
housing agencies and shall provide flexibility to authorities
appropriate to facilitate efficient provision of assistance
under this title.
(f) RULE OF CONSTRUCTION.—This section may not
be construed to prevent the provision of housing assistance
in connection with supportive services for elderly or dis-
abled families.
SEC. 329. HOMEOWNERSHIP OPTION.
(a) IN GENERAL.—A public housing agency providing
housing assistance under this title may provide home-
ownership assistance to assist eligible families to purchase
a dwelling unit (including purchase under lease-purchase
homeownership plans).
(b) REQUIREMENTS.—A public housing agency pro-
viding homeownership assistance under this section shall,
as a condition of an eligible family receiving such assist-
ance, require the family to—
(1) demonstrate that the family has sufficient
income from employment or other sources (other
than public assistance), as determined in accordance
with requirements established by the agency; and
(2) meet any other initial or continuing require-
ments established by the public housing agency.
217
(c) DOWNPAYMENT REQUIREMENT.—
(1) IN
GENERAL.—A public housing agency
may establish minimum downpayment requirements,
if appropriate, in connection with loans made for the
purchase of dwelling units for which homeownership
assistance is provided under this section. If the
agency establishes a minimum downpayment re-
quirement, the agency shall permit the family to use
grant amounts, gifts from relatives, contributions
from private sources, and similar amounts as down-
payment amounts in such purchase, subject to the
requirements of paragraph (2).
(2) DIRECT FAMILY CONTRIBUTION.—In pur-
chasing housing pursuant to this section subject to
a downpayment requirement, each family shall con-
tribute an amount of the downpayment, from re-
sources of the family other than grants, gifts, con-
tributions, or other similar amounts referred to in
paragraph (1), that is not less than 1 percent of the
purchase price.
(d) INELIGIBILITY UNDER OTHER PROGRAMS.—A
family may not receive homeownership assistance pursu-
ant to this section during any period when assistance is
being provided for the family under other Federal home-
ownership assistance programs, as determined by the Sec-
218
retary, including assistance under the HOME Investment
Partnerships Act, the Homeownership and Opportunity
Through HOPE Act, title II of the Housing and Commu-
nity Development Act of 1987, and section 502 of the
Housing Act of 1949.
SEC. 330. ASSISTANCE FOR RENTAL OF MANUFACTURED
HOMES.
(a) AUTHORITY.—Nothing in this title may be con-
strued to prevent a public housing agency from providing
housing assistance under this title on behalf of a low-in-
come family for the rental of—
(1) a manufactured home that is the principal
residence of the family and the real property on
which the home is located; or
(2) the real property on which is located a man-
ufactured home, which is owned by the family and
is the principal residence of the family.
(b) ASSISTANCE FOR CERTAIN FAMILIES OWNING
MANUFACTURED HOMES.—
(1) AUTHORITY.—Notwithstanding section 351
or any other provision of this title, a public housing
agency that receives amounts under a contract
under section 302 may enter into a housing assist-
ance payment contract to make assistance payments
219
under this title to a family that owns a manufac-
tured home, but only as provided in paragraph (2).
(2) LIMITATIONS.—In the case only of a low-in-
come family that owns a manufactured home, rents
the real property on which it is located, and to
whom housing assistance under this title has been
made available for the rental of such property, the
public housing agency making such assistance avail-
able shall enter into a contract to make housing as-
sistance payments under this title directly to the
family (rather than to the owner of such real prop-
erty) if—
(A) the owner of the real property refuses
to enter into a contract to receive housing as-
sistance payments pursuant to section 351(a);
(B) the family was residing in such manu-
factured home on such real property at the time
such housing assistance was initially made
available on behalf of the family;
(C) the family provides such assurances to
the agency, as the Secretary may require, to en-
sure that amounts from the housing assistance
payments are used for rental of the real prop-
erty; and
220
(D) the rental of the real property other-
wise complies with the requirements for assist-
ance under this title.
A contract pursuant to this subsection shall be sub-
ject to the provisions of section 351 and any other
provisions applicable to housing assistance payments
contracts under this title, except that the Secretary
may provide such exceptions as the Secretary consid-
ers appropriate to facilitate the provision of assist-
ance under this subsection.
Subtitle C—Payment of Housing
Assistance on Behalf of Assisted
Families
SEC. 351. HOUSING ASSISTANCE PAYMENTS CONTRACTS.
(a) IN GENERAL.—Each public housing agency that
receives amounts under a contract under section 302 may
enter into housing assistance payments contracts with
owners of existing dwelling units to make housing assist-
ance payments to such owners in accordance with this
title.
(b) PHA ACTING AS OWNER.—A public housing
agency may enter into a housing assistance payments con-
tract to make housing assistance payments under this title
to itself (or any agency or instrumentality thereof) as the
owner of dwelling units (other than public housing), and
221
the agency shall be subject to the same requirements that
are applicable to other owners, except that the determina-
tions under section 328(a) and 354(b) shall be made by
a competent party not affiliated with the agency, and the
agency shall be responsible for any expenses of such deter-
minations.
(c) PROVISIONS.—Each housing assistance payments
contract shall—
(1) have a term of not more than 12 months;
(2) require that the assisted dwelling unit may
be rented only pursuant to a lease that complies
with the requirements of section 324;
(3) comply with the requirements of sections
325, 642, and 643 (relating to termination of ten-
ancy);
(4) require the owner to maintain the dwelling
unit in accordance with the applicable standards
under section 328(a)(2); and
(5) provide that the screening and selection of
eligible families for assisted dwelling units shall be
the function of the owner.
SEC. 352. AMOUNT OF MONTHLY ASSISTANCE PAYMENT.
(a) UNITS HAVING GROSS RENT EXCEEDING PAY-
MENT STANDARD.—In the case of a dwelling unit bearing
a gross rent that exceeds the payment standard estab-
222
lished under section 353 for a dwelling unit of the applica-
ble size and located in the market area in which such as-
sisted dwelling unit is located, the amount of the monthly
assistance payment shall be the amount by which such
payment standard exceeds the amount of the resident con-
tribution determined in accordance with section 322(a)(1).
(b) SHOPPING
INCENTIVE
FOR
UNITS
HAVING
GROSS RENT NOT EXCEEDING PAYMENT STANDARD.—
In the case of an assisted family renting an eligible dwell-
ing unit bearing a gross rent that does not exceed the pay-
ment standard established under section 353 for a dwell-
ing unit of the applicable size and located in the market
area in which such assisted dwelling unit is located, the
following requirements shall apply:
(1) AMOUNT
OF
MONTHLY
ASSISTANCE
PAY-
MENT.—The amount of the monthly assistance pay-
ment for housing assistance under this title on be-
half of the assisted family shall be the amount by
which the gross rent for the dwelling unit exceeds
the amount of the resident contribution.
(2) ESCROW
OF
SHOPPING
INCENTIVE
SAV-
INGS.—An amount equal to 50 percent of the dif-
ference between payment standard and the gross
rent for the dwelling unit shall be placed in an inter-
est bearing escrow account on behalf of such family
223
on a monthly basis by the public housing agency.
Amounts in the escrow account shall be made avail-
able to the assisted family on an annual basis.
(3) DEFICIT REDUCTION.—The public housing
agency making housing assistance payments on be-
half of such assisted family in a fiscal year shall re-
serve from amounts made available to the agency for
assistance payments for such fiscal year an amount
equal to the amount described in paragraph (2). At
the end of each fiscal year, the Secretary shall re-
capture any such amounts reserved by public hous-
ing agencies and such amounts shall be covered into
the General Fund of the Treasury of the United
States.
For purposes of this section, in the case of a family receiv-
ing homeownership assistance under section 329, the term
‘‘gross rent’’ shall mean the homeownership costs to the
family as determined in accordance with guidelines of the
Secretary.
SEC. 353. PAYMENT STANDARDS.
(a) ESTABLISHMENT.—Each public housing agency
providing housing assistance under this title shall establish
payment standards under this section for various areas,
and sizes and types of dwelling units, for use in determin-
224
ing the amount of monthly housing assistance payment
to be provided on behalf of assisted families.
(b) USE
OF RENTAL INDICATORS.—The payment
standard for each size and type of housing for each market
area shall be an amount that is not less than 80 percent,
and not greater than 120 percent, of the rental indicator
established under section 323 for such size and type for
such area.
(c) REVIEW.—If the Secretary determines, at any
time, that a significant percentage of the assisted families
who are assisted by a public housing agency and are occu-
pying dwelling units of a particular size are paying more
than 30 percent of their adjusted incomes for rent, the
Secretary shall review the payment standard established
by the agency for such size dwellings. If, pursuant to the
review, the Secretary determines that such payment stand-
ard is not appropriate to serve the needs of the low-income
population of the jurisdiction served by the agency (taking
into consideration rental costs in the area), as identified
in the approved community improvement plan of the agen-
cy, the Secretary may require the public housing agency
to modify the payment standard.
SEC. 354. REASONABLE RENTS.
(a) ESTABLISHMENT.—The rent charged for a dwell-
ing unit for which rental assistance is provided under this
225
title shall be established pursuant to negotiation and
agreement between the assisted family and the owner of
the dwelling unit.
(b) REASONABLENESS.—
(1) DETERMINATION.—A public housing agency
providing rental assistance under this title for a
dwelling unit shall, before commencing assistance
payments for a unit (with respect to initial contract
rents and any rent revisions), determine whether the
rent charged for the unit exceeds the rents charged
for comparable units in the applicable private unas-
sisted market.
(2) UNREASONABLE RENTS.—If the agency de-
termines that the rent charged for a dwelling unit
exceeds such comparable rents, the agency shall—
(A) inform the assisted family renting the
unit that such rent exceeds the rents for com-
parable unassisted units in the market; and
(B) refuse to provide housing assistance
payments for such unit.
SEC. 355. PROHIBITION OF ASSISTANCE FOR VACANT
RENTAL UNITS.
If an assisted family vacates a dwelling unit for which
rental assistance is provided under a housing assistance
payments contract before the expiration of the term of the
226
lease for the unit, rental assistance pursuant to such con-
tract may not be provided for the unit after the month
during which the unit was vacated.
Subtitle D—General and
Miscellaneous Provisions
SEC. 371. DEFINITIONS.
For purposes of this title:
(1) ASSISTED DWELLING UNIT.—The term ‘‘as-
sisted dwelling unit’’ means a dwelling unit in which
an assisted family resides and for which housing as-
sistance payments are made under this title.
(2) ASSISTED
FAMILY.—The term ‘‘assisted
family’’ means an eligible family on whose behalf
housing assistance payments are made under this
title or who has been selected and approved for
housing assistance.
(3) CHOICE-BASED.—The term ‘‘choice-based’’
means, with respect to housing assistance, that the
assistance is not attached to a dwelling unit but can
be used for any eligible dwelling unit selected by the
eligible family.
(4) ELIGIBLE DWELLING UNIT.—The term ‘‘eli-
gible dwelling unit’’ means a dwelling unit that com-
plies with the requirements under section 328 for
consideration as an eligible dwelling unit.
227
(5) ELIGIBLE
FAMILY.—The term ‘‘eligible
family’’ means a family that meets the requirements
under section 321(a) for assistance under this title.
(6) HOMEOWNERSHIP ASSISTANCE.—The term
‘‘homeownership assistance’’ means housing assist-
ance provided under section 329 for the ownership
of a dwelling unit.
(7) HOUSING ASSISTANCE.—The term ‘‘housing
assistance’’ means choice-based assistance provided
under this title on behalf of low-income families for
the rental or ownership of an eligible dwelling unit.
(8) HOUSING
ASSISTANCE
PAYMENTS
CON-
TRACT.—The term ‘‘housing assistance payments
contract’’ means a contract under section 351 be-
tween a public housing agency (or the Secretary)
and an owner to make housing assistance payments
under this title to the owner on behalf of an assisted
family.
(9) PUBLIC
HOUSING
AGENCY.—The terms
‘‘public housing agency’’ and ‘‘agency’’ have the
meaning given such terms in section 103, except
that the terms include—
(A) a consortia of public housing agencies
that the Secretary determines has the capacity
and capability to administer a program for
228
housing assistance under this title in an effi-
cient manner;
(B) any other entity that, upon the effec-
tive date of this Act, was administering any
program for tenant-based rental assistance
under section 8 of the United States Housing
Act of 1937 (as in effect before the effective
date of the repeal under section 601(b) of this
Act), pursuant to a contract with the Secretary
or a public housing agency; and
(C) with respect to any area in which no
public housing agency has been organized or
where the Secretary determines that a public
housing agency is unwilling or unable to imple-
ment this title, or is not performing effec-
tively—
(i) the Secretary or another entity
that by contract agrees to receive assist-
ance amounts under this title and enter
into housing assistance payments contracts
with owners and perform the other func-
tions of public housing agency under this
title; or
(ii) notwithstanding any provision of
State or local law, a public housing agency
229
for another area that contracts with the
Secretary to administer a program for
housing assistance under this title, without
regard to any otherwise applicable limita-
tions on its area of operation.
(10) OWNER.—The term ‘‘owner’’ means the
person or entity having the legal right to lease or
sublease dwelling units. Such term includes any
principals, general partners, primary shareholders,
and other similar participants in any entity owning
a multifamily housing project, as well as the entity
itself.
(11) RENT.—The terms ‘‘rent’’ and ‘‘rental’’
include, with respect to members of a cooperative,
the charges under the occupancy agreements be-
tween such members and the cooperative.
(12) RENTAL ASSISTANCE.—The term ‘‘rental
assistance’’ means housing assistance provided
under this title for the rental of a dwelling unit.
SEC. 372. RENTAL ASSISTANCE FRAUD RECOVERIES.
(a) 
AUTHORITY
TO
RETAIN
RECOVERED
AMOUNTS.—The Secretary shall permit public housing
agencies administering housing assistance under this title
to retain, out of amounts obtained by the authorities from
tenants that are due as a result of fraud and abuse, an
230
amount (determined in accordance with regulations issued
by the Secretary) equal to the greater of—
(1) 50 percent of the amount actually collected;
or
(2) the actual, reasonable, and necessary ex-
penses related to the collection, including costs of in-
vestigation, legal fees, and collection agency fees.
(b) USE.—Amounts retained by an agency shall be
made available for use in support of the affected program
or project, in accordance with regulations issued by the
Secretary. If the Secretary is the principal party initiating
or sustaining an action to recover amounts from families
or owners, the provisions of this section shall not apply.
(c) RECOVERY.—Amounts may be recovered under
this section—
(1) by an agency through a lawsuit (including
settlement of the lawsuit) brought by the agency or
through court-ordered restitution pursuant to a
criminal proceeding resulting from an agency’s in-
vestigation where the agency seeks prosecution of a
family or where an agency seeks prosecution of an
owner;
(2) through administrative repayment agree-
ments with a family or owner entered into as a re-
sult of an administrative grievance procedure con-
231
ducted by an impartial decisionmaker in accordance
with section 110; or
(3) through an agreement between the parties.
SEC. 373. STUDY REGARDING GEOGRAPHIC CONCENTRA-
TION OF ASSISTED FAMILIES.
(a) IN GENERAL.—The Secretary shall conduct a
study of the geographic areas in the State of Illinois served
by the Housing Authority of Cook County and the Chicago
Housing Authority and submit to the Congress a report
and a specific proposal, which addresses and resolves the
issues of—
(1) the adverse impact on local communities
due to geographic concentration of assisted house-
holds under the tenant-based housing programs
under section 8 of the United States Housing Act of
1937 (as in effect upon the enactment of this Act)
and under this title; and
(2) facilitating the deconcentration of such as-
sisted households by providing broader housing
choices to such households.
The study shall be completed, and the report shall be sub-
mitted, not later than 90 days after the date of the enact-
ment of this Act.
232
(b) CONCENTRATION.—For purposes of this section,
the term ‘‘concentration’’ means, with respect to any area
within a census tract, that—
(1) 15 percent or more of the households resid-
ing within such area have incomes which do not ex-
ceed the poverty level; or
(2) 15 percent or more of the total affordable
housing stock located within such area is assisted
housing.
(c) EFFECTIVE DATE.—This section shall take effect
on the date of the enactment of this Act.
SEC. 374. STUDY REGARDING RENTAL ASSISTANCE.
The Secretary shall conduct a nationwide study of the
choice-based housing assistance program under this title
and the tenant-based rental assistance program under sec-
tion 8 of the United States Housing Act of 1937 (as in
effect pursuant to section 601(c) and 602(b)). The study
shall, for various localities—
(1) determine who are the providers of the
housing in which families assisted under such pro-
grams reside;
(2) describe and analyze the physical and demo-
graphic characteristics of the housing in which such
assistance is used, including, for housing in which at
least one such assisted family resides, the total num-
233
ber of units in the housing and the number of units
in the housing for which such assistance is provided;
(3) determine the total number of units for
which such assistance is provided;
(4) describe the durations that families remain
on waiting lists before being provided such housing
assistance; and
(5) assess the extent and quality of participa-
tion of housing owners in such assistance programs
in relation to the local housing market, including
comparing—
(A) the quality of the housing assisted to
the housing generally available in the same
market; and
(B) the extent to which housing is avail-
able to be occupied using such assistance to the
extent to which housing is generally available in
the same market.
The Secretary shall submit a report describing the results
of the study to the Congress not later than the expiration
of the 2-year period beginning on the date of the enact-
ment of this Act.
234
TITLE IV—HOME RULE
FLEXIBLE GRANT OPTION
SEC. 401. PURPOSE.
The purpose of this title is to give local governments
and municipalities the flexibility to design creative ap-
proaches for providing and administering Federal housing
assistance based on the particular needs of the commu-
nities that—
(1) give incentives to low-income families with
children where the head of household is working,
seeking work, or preparing for work by participating
in job training, educational programs, or programs
that assist people to obtain employment and become
economically self-sufficient;
(2) reduce cost and achieve greater cost-effec-
tiveness in Federal housing assistance expenditures;
(3) increase housing choices for low-income
families; and
(4) reduce excessive geographic concentration of
assisted families.
SEC. 402. FLEXIBLE GRANT PROGRAM.
(a) AUTHORITY AND USE.—The Secretary shall carry
out a program under which a jurisdiction may, upon the
application of the jurisdiction and the review and approval
of the Secretary, receive, combine, and enter into perform-
235
ance-based contracts for the use of amounts of covered
housing assistance in a period consisting of not less than
1 nor more than 5 fiscal years in the manner determined
appropriate by the participating jurisdiction—
(1) to provide housing assistance and services
for low-income families in a manner that facilitates
the transition of such families to work;
(2) to reduce homelessness;
(3) to increase homeownership among low-in-
come families; and
(4) for other housing purposes for low-income
families determined by the participating jurisdiction.
(b) INAPPLICABILITY
OF CATEGORICAL PROGRAM
REQUIREMENTS.—
(1) IN GENERAL.—Except as provided in para-
graph (2) and section 405, the provisions of this Act
regarding use of amounts made available under each
of the programs included as covered housing assist-
ance and the program requirements applicable to
each such program shall not apply to amounts re-
ceived by a jurisdiction pursuant to this title.
(2) APPLICABILITY OF CERTAIN LAWS.—This
title may not be construed to exempt assistance
under this Act from, or make inapplicable any provi-
sion of this Act or of any other law that requires
236
that assistance under this Act be provided in compli-
ance with—
(A) title VI of the Civil Rights Act of 1964
(42 U.S.C. 2000d et seq.);
(B) the Fair Housing Act (42 U.S.C. 3601
et seq.);
(C) section 504 of the Rehabilitation Act
of 1973 (29 U.S.C. 701 et seq.);
(D) title IX of the Education Amendments
of 1972 (86 Stat. 373 et seq.);
(E) the Age Discrimination Act of 1975
(42 U.S.C. 6101 et seq.);
(F) the Americans with Disabilities Act of
1990; or
(G) the National Environmental Policy Act
of 1969 and other provisions of law that further
protection of the environment (as specified in
regulations that shall be issued by the Sec-
retary).
(c) EFFECT ON PROGRAM ALLOCATIONS FOR COV-
ERED HOUSING ASSISTANCE.—The amount of assistance
received pursuant to this title by a participating jurisdic-
tion shall not be decreased, because of participation in the
program under this title, from the sum of the amounts
that otherwise would be made available for or within the
238
to this title shall be a low-income family. Each dwelling
unit assisted using amounts made available pursuant to
this title shall be available for occupancy only by families
that are low-income families at the time of their initial
occupancy of the unit.
(b) COMPLIANCE WITH ASSISTANCE PLAN.—A par-
ticipating jurisdiction shall provide assistance using
amounts received pursuant to this title in the manner set
forth in the plan of the jurisdiction approved by the Sec-
retary under section 406(a)(2).
(c) RENT POLICY.—A participating jurisdiction shall
ensure that the rental contributions charged to families
assisted with amounts received pursuant to this title—
(1) do not exceed the amount that would be
chargeable under title II to such families were such
families residing in public housing assisted under
such title; or
(2) are established, pursuant to approval by the
Secretary of a proposed rent structure included in
the application under section 406, at levels that are
reasonable and designed to eliminate any disincen-
tives for members of the family to obtain employ-
ment and attain economic self-sufficiency.
(d) HOUSING QUALITY STANDARDS.—
239
(1) COMPLIANCE.—A participating jurisdiction
shall ensure that housing assisted with amounts re-
ceived pursuant to this title is maintained in a con-
dition that complies—
(A) in the case of housing located in a ju-
risdiction which has in effect laws, regulations,
standards, or codes regarding habitability of
residential dwellings, with such applicable laws,
regulations, standards, or codes; or
(B) in the case of housing located in a ju-
risdiction which does not have in effect laws,
regulations, standards, or codes described in
paragraph (1), with the housing quality stand-
ards established under paragraph (2).
(2) FEDERAL HOUSING QUALITY STANDARDS.—
The Secretary shall establish housing quality stand-
ards under this paragraph that ensure that dwelling
units assisted under this title are safe, clean, and
healthy. Such standards shall include requirements
relating to habitability, including maintenance,
health and sanitation factors, condition, and con-
struction of dwellings, and shall, to the greatest ex-
tent practicable, be consistent with the standards es-
tablished under sections 232(b) and 328(c). The
240
Secretary shall differentiate between major and
minor violations of such standards.
(e) NUMBER OF FAMILIES ASSISTED.—A participat-
ing jurisdiction shall ensure that, in providing assistance
with amounts received pursuant to this title in each fiscal
year, not less than substantially the same total number
of eligible low-income families are assisted as would have
been assisted had the amounts of covered housing assist-
ance not been combined for use under this title.
(f) CONSISTENCY WITH WELFARE PROGRAM.—A
participating jurisdiction shall ensure that assistance pro-
vided with amounts received pursuant to this title is pro-
vided in a manner that is consistent with the welfare, pub-
lic assistance, or other economic self-sufficiency programs
operating in the jurisdiction by facilitating the transition
of assisted families to work, which may include requiring
compliance with the requirements under such welfare,
public assistance, or self-sufficiency programs as a condi-
tion of receiving housing assistance with amounts provided
under this title.
(g) TREATMENT OF CURRENTLY ASSISTED FAMI-
LIES.—
(1) CONTINUATION OF ASSISTANCE.—A partici-
pating jurisdiction shall ensure that each family that
was receiving housing assistance or residing in an
241
assisted dwelling unit pursuant to any of the pro-
grams included as covered housing assistance imme-
diately before the jurisdiction initially provides as-
sistance pursuant to this title shall be offered assist-
ance or an assisted dwelling unit under the program
of the jurisdiction under this title.
(2) PHASE-IN
OF
RENT
CONTRIBUTION
IN-
CREASES.—For any family that was receiving hous-
ing assistance pursuant to any of the programs in-
cluded as covered housing assistance immediately be-
fore the jurisdiction initially provides assistance pur-
suant to this title, if the monthly contribution for
rental of a dwelling unit assisted under this title to
be paid by the family upon initial applicability of
this title is greater than the amount paid by the
family immediately before such applicability, any
such resulting increase in rent contribution shall
be—
(A) phased in equally over a period of not
less than 3 years, if such increase is 30 percent
or more of such contribution before initial ap-
plicability; and
(B) limited to not more than 10 percent
per year if such increase is more than 10 per-
242
cent but less than 30 percent of such contribu-
tion before initial applicability.
(h) AMOUNT OF ASSISTANCE.—In providing housing
assistance using amounts received pursuant to this title,
the amount of assistance provided by a participating juris-
diction on behalf of each assisted low-income family shall
be sufficient so that if the family used such assistance to
rent a dwelling unit having a rent equal to the 40th per-
centile of rents for standard quality rental units of the
same size and type in the same market area, the contribu-
tion toward rental paid by the family would be affordable
(as such term is defined by the jurisdiction) to the family.
(i) PORTABILITY.—A participating jurisdiction shall
ensure that financial assistance for housing provided with
amounts received pursuant to this title may be used by
a family moving from an assisted dwelling unit located
within the jurisdiction to obtain a dwelling unit located
outside of the jurisdiction.
(j) PREFERENCES.—In providing housing assistance
using amounts received pursuant to this title, a participat-
ing jurisdiction may establish a system for making hous-
ing assistance available that provides preference for assist-
ance to families having certain characteristics. A system
of preferences established pursuant to this subsection shall
be based on local housing needs and priorities, as deter-
243
mined by the jurisdiction using generally accepted data
sources.
(k) COMMUNITY WORK REQUIREMENT.—
(1) APPLICABILITY
OF
REQUIREMENTS
FOR
PHA’S.—Except as provided in paragraph (2), par-
ticipating 
jurisdictions, 
families 
assisted 
with
amounts received pursuant to this title, and dwelling
units assisted with amounts received pursuant to
this title, shall be subject to the provisions of section
105 to the same extent that such provisions apply
with respect to public housing agencies, families re-
siding in public housing dwelling units and families
assisted under title III, and public housing dwelling
units and dwelling units assisted under title III.
(2) 
LOCAL
COMMUNITY
SERVICE
ALTER-
NATIVE.—Paragraph (1) shall not apply to a partici-
pating jurisdiction that, pursuant to approval by the
Secretary of a proposal included in the application
under section 406, is carrying out a local program
that is designed to foster community service by fami-
lies assisted with amounts received pursuant to this
title.
(l) INCOME TARGETING.—In providing housing as-
sistance using amounts received pursuant to this title in
any fiscal year, a participating jurisdiction shall ensure
244
that the number of families having incomes that do not
exceed 30 percent of the area median income that are ini-
tially assisted under this title during such fiscal year is
not less than substantially the same number of families
having such incomes that would be initially assisted in
such jurisdiction during such fiscal year under titles II
and III pursuant to sections 222(c) and 321(b)).
SEC. 405. APPLICABILITY OF CERTAIN PROVISIONS.
(a) PUBLIC HOUSING DEMOLITION AND DISPOSI-
TION REQUIREMENTS.—Section 261 shall continue to
apply to public housing notwithstanding any use of the
housing under this title.
(b) LABOR STANDARDS.—Section 112 shall apply to
housing assisted with amounts provided pursuant to this
title, other than housing assisted solely due to occupancy
by families receiving tenant-based assistance.
SEC. 406. APPLICATION.
(a) IN GENERAL.—The Secretary shall provide for
jurisdictions to submit applications to receive and use cov-
ered housing assistance amounts as authorized in this title
for periods of not less than 1 and not more than 5 fiscal
years. An application—
(1) shall be submitted only after the jurisdiction
provides for citizen participation through a public
hearing and, if appropriate, other means;
245
(2) shall include a plan developed by the juris-
diction for the provision of housing assistance with
amounts received pursuant to this title that takes
into consideration comments from the public hearing
and any other public comments on the proposed pro-
gram, and comments from current and prospective
residents who would be affected, and that includes
criteria for meeting each of the requirements under
section 404 and this title;
(3) shall describe how the plan for use of
amounts will assist in meeting the goals set forth in
section 401;
(4) shall propose standards for measuring per-
formance in using assistance provided pursuant to
this title based on the performance standards under
subsection (b)(2);
(5) shall propose the length of the period for
which the jurisdiction is applying for assistance
under this title;
(6) may include a request assistance for train-
ing and technical assistance to assist with design of
the program and to participate in a detailed evalua-
tion;
(7) shall—
246
(A) in the case of the application of any
jurisdiction within whose boundaries are areas
subject to any other unit of general local gov-
ernment, include the signed consent of the ap-
propriate executive official of such unit to the
application; and
(B) in the case of the application of a con-
sortia of units of general local government (as
provided under section 409(1)(B)), include the
signed consent of the appropriate executive offi-
cials of each unit included in the consortia;
(8) shall include information sufficient, in the
determination of the Secretary—
(A) to demonstrate that the jurisdiction
has or will have management and administra-
tive capacity sufficient to carry out the plan
under paragraph (2);
(B) to demonstrate that carrying out the
plan will not result in excessive duplication of
administrative efforts and costs, particularly
with respect to activities performed by public
housing agencies operating within the bound-
aries of the jurisdiction;
247
(C) to describe the function and activities
to be carried out by such public housing agen-
cies affected by the plan; and
(D) to demonstrate that the amounts re-
ceived by the jurisdiction will be maintained
separate from other funds available to the juris-
diction and will be used only to carry out the
plan; and
(9) shall include information describing how the
jurisdiction will make decisions regarding asset man-
agement of housing for low-income families under
programs for covered housing assistance or assisted
with grant amounts under this title.
A plan required under paragraph (2) to be included in
the application may be contained in a memorandum of
agreement or other document executed by a jurisdiction
and public housing agency, if such document is submitted
together with the application.
(b) REVIEW, APPROVAL, AND PERFORMANCE STAND-
ARDS.—
(1) REVIEW.—The Secretary shall review appli-
cations for assistance pursuant to this title and shall
approve or disapprove such applications within 60
days after their submission. The Secretary shall pro-
vide affected public housing agencies an opportunity
248
to review an application submitted under this sub-
section and to provide written comments on the ap-
plication, which shall be a period of not less than 30
days ending before the Secretary approves or dis-
approves the application. If the Secretary determines
that the application complies with the requirements
of this title, the Secretary shall offer to enter into
an agreement with jurisdiction providing for assist-
ance pursuant to this title and incorporating a re-
quirement that the jurisdiction achieve a particular
level of performance in each of the areas for which
performance standards are established under para-
graph (2). If the Secretary determines that an appli-
cation does not comply with the requirements of this
title, the Secretary shall notify the jurisdiction sub-
mitting the application of the reasons for such dis-
approval and actions that may be taken to make the
application approvable. Upon approving or dis-
approving an application under this paragraph, the
Secretary shall make such determination publicly
available in writing together with a written state-
ment of the reasons for such determination.
(2) PERFORMANCE
STANDARDS.—The Sec-
retary shall establish standards for measuring per-
formance of jurisdictions in the following areas:
249
(A) Success in moving dependent low-in-
come families to economic self-sufficiency.
(B) Success in reducing the numbers of
long-term homeless families.
(C) Decrease in the per-family cost of pro-
viding assistance.
(D) Reduction of excessive geographic con-
centration of assisted families.
(E) Any other performance goals that the
Secretary may prescribe.
(3) APPROVAL.—If the Secretary and a juris-
diction that the Secretary determines has submitted
an application meeting the requirements of this title
enter into an agreement referred to in paragraph
(1), the Secretary shall approve the application and
provide covered housing assistance for the jurisdic-
tion in the manner authorized under this title. The
Secretary may not approve any application for as-
sistance pursuant to this title unless the Secretary
and jurisdiction enter into an agreement referred to
in paragraph (1). The Secretary shall establish re-
quirements for the approval of applications under
this section submitted by public housing agencies
designated under section 533(a) as troubled, which
may include additional or different criteria deter-