Affordable Housing Preservation Act of 2021
Bill: H.R.2851 | Sponsor: Rep. Omar, Ilhan (D-MN)
Policy area: Housing and Community Development

Summary:
Affordable Housing Preservation Act of 2021
This bill directs the Department of Housing and Urban Development (HUD) to implement a demonstration program for the establishment or preservation of limited- or zero-equity resident-controlled housing. Limited- or zero-equity resident-controlled housing (e.g., a housing cooperative) restricts the initial and resale price of shares of stock or membership interests in a residence so that the shares or interests remain affordable to families of certain incomes.
Specifically, HUD may assist nonprofit organizations to establish or preserve such housing through providing (1) mortgage insurance; and (2) grants for predevelopment costs, monitoring fees, technical assistance, gap funding, and intermediary financing.
Housing receiving such assistance must be governed by a board of directors elected by members of a limited- or zero-equity resident-controlled housing corporation with voting structured equitably among all members.
A limited- or zero-equity resident-controlled housing corporation may sell corporate shares in such housing to an eligible household for a purchase price that ensures dwelling units in the housing will remain affordable for at least 30 years to households earning less than a certain income.

To require the Secretary of Housing and Urban Development to carry out 
a demonstration program to evaluate the effectiveness of the Department 
 assisting nonprofit organizations to develop, acquire, rehabilitate, 
    convert, or preserve affordable housing that is governed by the 
           residents of such housing, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Affordable Housing Preservation Act 
of 2021''.

SEC. 2. RESIDENT-CONTROLLED HOUSING DEMONSTRATION PROGRAM.

    (a) Purpose.--The purposes of this section are--
            (1) to establish a demonstration program to evaluate the 
        effectiveness of assisting nonprofit organizations, that may 
        have nonprofit, for-profit, government, or intergovernmental 
        partners, to acquire, rehabilitate, construct, convert, or 
        preserve limited- or zero-equity resident-controlled 
        corporations, including manufactured home communities, as 
        affordable housing that is governed by a majority of the 
        residents of such housing;
            (2) to provide alternative homeownership opportunities to 
        those in the private market, which increase access to 
        homeownership for households at lower income levels;
            (3) to prevent displacement of existing residents through 
        converting to limited- or zero-equity resident-controlled 
        corporations or through preserving existing limited- or zero-
        equity resident-controlled corporations;
            (4) to create or preserve mixed-income housing corporations 
        to advance economic and racial diversity and inclusion; and
            (5) to evaluate the efficacy and promote the expansion of 
        limited- or zero-equity resident-controlled corporations 
        throughout the Nation that are stewarded and monitored by 
        nonprofit organizations to ensure compliance, sustainability of 
        corporations, resident governance, and that the affordability 
        of the resident-controlled housing lasts over time to serve 
        current and future income-eligible households.
    (b) Eligible Entities.--
            (1) In general.--Eligibility to participate in the program 
        under this section and for financial assistance under such 
        program shall be limited to only nonprofit organizations that--
                    (A) have such experience as the Secretary shall 
                require in developing, preserving, managing, financing, 
                or monitoring limited- or zero-equity resident-
                controlled corporations; and
                    (B) have submitted to the Secretary such 
                information and assurances as the Secretary shall 
                require to ensure that the organization will comply 
                with the purposes and requirements of this section and 
                will use assistance to address the local needs of 
                communities.
            (2) Partnerships.--Eligible entities may partner with, and 
        seek consultation from, for-profit, nonprofit, public, or 
        quasi-governmental entities on projects under the program.
    (c) Financial Assistance.--
            (1) Mortgage insurance.--Under the program under this 
        section, the Secretary of Housing and Urban Development may 
        insure, pursuant to section 213, 223(f), or 232 of the National 
        Housing Act (12 U.S.C. 1715e, 1715n(f), 1715w), a mortgage for 
        the development, acquisition, rehabilitation, or preservation 
        of eligible housing held by an eligible entity, except that the 
        Secretary may for purposes of the demonstration program under 
        this section waive, or specify alternative requirements for, 
        any provision of any statute or regulation that the Secretary 
        administers in connection with the mortgage insurance programs 
        under such sections if the Secretary determines that such 
        waiver or alternative requirement advances the demonstration 
        program.
            (2) Grants.--Under the program under this section, the 
        Secretary may provide a grant to an eligible entity 
        participating in the program for use for the following 
        purposes:
                    (A) Pre-development and other costs.--For up-front 
                and pre-development costs, including fees and expenses 
                to obtain financing, or for other costs during 
                development, such as capital required before shares to 
                residents are sold.
                    (B) Steward monitoring fee reserve.--For pre-
                funding a monitoring fee reserve under the program that 
                is paid by the limited- or zero-equity resident-
                controlled corporations to the nonprofit organization 
                to fund costs of compliance monitoring, which shall be 
                held in reserve in an amount sufficient to cover at 
                least three years of such monitoring costs.
                    (C) Technical assistance.--For nonprofit 
                organizations to provide technical assistance and 
                training to--
                            (i) nonprofit organizations developing the 
                        capacity to develop, convert, or preserve 
                        limited- or zero-equity resident-controlled 
                        corporations; and
                            (ii) limited- or zero-equity resident-
                        controlled corporations that are forming or 
                        already established.
                    (D) Gap funding.--For covering gap funding to 
                ensure limited- or zero-equity resident-controlled 
                corporations are affordable to below the targeted 
                income level.
                    (E) Intermediary financing.--For community 
                development financial institutions that are certified 
                by the Secretary of the Treasury, have demonstrated 
                expertise in financing limited- or zero-equity 
                resident-controlled corporations, and are qualified to 
                finance, provide training and technical assistance, and 
                ensure compliance with the program under this section, 
                for providing below market-rate loans and recoverable 
                grants to projects under the program.
    (d) Applicability of CDBG Program Requirements.--
            (1) In general.--Except as provided in paragraph (2), any 
        housing developed, acquired, converted, or preserve with 
        assistance under subsection (c) shall comply with the 
        requirements applicable under the community development block 
        grant program under title I of the Housing and Community 
        Development Act of 1974 (42 U.S.C. 5301 et seq.) to housing 
        that is assisted under such title.
            (2) Waivers.--In administering the program under this 
        section, the Secretary may waive, or specify alternative 
        requirements for, any provision of the community development 
        block grant program (except for requirements related to fair 
        housing, nondiscrimination, labor standards, and the 
        environment), if the Secretary finds that good cause exists for 
        the waiver or alternative requirement and such waiver or 
        alternative requirement would not be inconsistent with the 
        overall purpose of this section.
    (e) Governance.--Except in cases of noncompliance with any 
requirements under the demonstration program under this section, any 
housing developed, acquired, constructed, or preserved with assistance 
under subsection (c) shall be governed by a board of directors elected 
by the members of the limited- or zero-equity resident-controlled 
corporation with voting structured equitably among all members and as 
the eligible entity shall establish.
    (f) Role of Eligible Entity.--During a period not shorter than 30 
years that begins upon initial occupancy of any housing developed, 
acquired, constructed, converted, or preserved under the program under 
this section, the eligible entity that developed, acquired, 
constructed, or preserved such housing, or its consulting partner, 
shall take such actions as the Secretary shall require--
            (1) to ensure compliance with this section and the 
        regulations issued under this section;
            (2) to assist with elections of board of directors of the 
        limited- or zero-equity resident-controlled corporation;
            (3) to assist in preparing annual budgets for the housing 
        and other financial planning;
            (4) to establish a regulatory process for unit or share 
        sales and resales to ensure compliance; and
            (5) to perform such other functions as the Secretary shall 
        provide.
    (g) Sale.--A limited- or zero-equity resident-controlled 
corporation may sell corporate shares in housing assisted under the 
program under this section to an eligible household only for a purchase 
price that ensures dwelling units in the housing will remain affordable 
for at least 30 years to households having incomes that are less than 
the maximum income eligibility.
    (h) Applications; Priority.--
            (1) Applications.--To apply to participate in the program 
        under this section, an eligible entity shall submit to the 
        Secretary an application at such time, in such manner, and 
        containing such information as the Secretary may require.
            (2) Priority.--In selecting eligible entities to 
        participate in the program under this section and receive 
        financial assistance under such program, the Secretary give 
        priority based on the extent to which an eligible entity--
                    (A) will promote mixed-income development to 
                prevent the displacement of existing residents or 
                enable renters to become shareholders or members of the 
                limited-equity or zero-equity resident-controlled 
                housing corporation;
                    (B) will maximize the number of shares or 
                membership in the limited-equity or zero-equity 
                resident-controlled housing corporation that are 
                affordable to households whose initial incomes do not 
                exceed 80 percent of the median income of the area in 
                which the housing is located;
                    (C) demonstrates that the entity and any partners, 
                if applicable, have the capacity to develop, preserve, 
                manage, finance, and monitor limited- or zero-equity 
                resident-controlled housing corporations; and
                    (D) demonstrates the feasibility of the projects to 
                be assisted under the program given local market 
                conditions.
    (i) Restrictions on Screening.--
            (1) Prohibition.--A household applying to purchase a share 
        or membership in a limited- or zero-equity resident-controlled 
        housing corporation, which conveys a right to occupy a specific 
        dwelling unit assisted under the program under this section, 
        may not be denied such purchase or admission based on veteran 
        status of any member of the household or any status as any 
        other protected class under the Fair Housing Act.
            (2) Consideration of criminal and eviction history.--A 
        resident-controlled housing corporation shall not unreasonably 
        exclude applicants having a criminal history or eviction 
        history from occupancy in dwelling units assisted under the 
        program under this section.
    (j) Reporting.--The Secretary shall submit a report annually to the 
Congress regarding the activities conducted and the populations being 
served under the demonstration program under this section, 
disaggregated by race/ethnicity and income, and shall make each such 
report publicly available on a website of the Department.
    (k) Evaluations.--
            (1) In general.--The Secretary shall conduct evaluations of 
        the demonstration program under this section and report to the 
        Congress regarding such evaluations, as follows:
                    (A) Interim.--Not later than the expiration of the 
                4-year period beginning on the date of the enactment of 
                this Act, the Secretary shall complete an interim 
                evaluation of the program and submit a report regarding 
                such evaluation to the Congress.
                    (B) Final.--Not later than the expiration of the 8-
                year period beginning on the date of the enactment of 
                this Act, the Secretary shall complete a final 
                evaluation of the program and submit a report regarding 
                such evaluation to the Congress.
            (2) Requirements.--Each evaluation conducted pursuant to 
        this subsection shall be conducted in a robust manner and 
        involve rigorous research, shall identify the populations 
        served by the demonstration, and shall assess the effects of 
        the demonstration on such populations, including how affordable 
        housing was maintained in moderate- to low-income areas. The 
        final evaluation under paragraph (1)(B) shall include an 
        independent analysis and recommendations by the Department of 
        Housing and Urban Development regarding whether the program 
        could and should be expanded and established as a permanent 
        program and, if so, shall identify any actions, including 
        statutory and administrative actions, necessary to do so.
            (3) Public availability.--The Secretary shall make each 
        report required under paragraph (1) publicly available on a 
        website of the Department.
    (l) Implementation.--The Secretary shall, by notice, implement the 
demonstration program under this section, including its terms, 
procedures, requirements, and conditions, subject only to the 
availability of appropriations pursuant to subsection (n).
    (m) Definitions.--For purposes of this section, the following 
definitions shall apply:
            (1) Eligible entity.--The term ``eligible entity'' means an 
        entity eligible under subsection (b) for participation in the 
        demonstration program under this section.
            (2) Eligible housing.--The term ``eligible housing'' means 
        housing that complies with the requirements under subsection 
        (d).
            (3) Limited- or zero-equity resident-controlled 
        corporation.--The term ``limited- or zero-equity resident-
        controlled corporation'' means a cooperative-like corporation, 
        association, or consumer cooperative that, in a manner 
        acceptable to the Secretary, restricts the initial and resale 
        price of the shares of stock or membership interests in the 
        resident entity, which may include a manufactured home 
        community, so that the shares or interests remain fixed or 
        resale-restricted to remain affordable to families of 
        designated incomes. The corporation may or may not own the land 
        or improvements.
            (4) Manufactured home community.--The term `manufactured 
        home community' means a community comprised primarily of 
        manufactured homes (as such term is defined in section 603 of 
        the National Manufactured Housing Construction and Safety 
        Standards Act of 1974 (42 U.S.C. 5402)) that are used primarily 
        for residential purposes.
            (5) Secretary.--The term ``Secretary'' means the Secretary 
        of Housing and Urban Development.
    (n) Authorization of Appropriations for Grants.--There is 
authorized to be appropriated $200,000,000 for fiscal year 2022 for 
grants under subsection (c)(2), which shall remain available through 
the end of fiscal year 2025.
    (o) Regulations.--The Secretary may issue any regulations necessary 
to carry out the program under this section.
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