Title: HUD Inspection Oversight Act of 2019
Policy area: Housing and Community Development

Summary:
HUD Inspection Oversight Act of 2019
This bill modifies inspection and oversight protocols under the Housing Choice Voucher Program, including by directing the Department of Housing and Urban Development (HUD) to take certain enforcement actions when a property's inspection score falls below a specified threshold. In recent years, language directing HUD to take specific actions in such circumstances has been included in annual appropriations bills.

[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3745 Introduced in House (IH)]

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116th CONGRESS
  1st Session
                                H. R. 3745

  To provide physical standards and reform the inspection process for 
 housing assisted under section 8 of the United States Housing Act of 
                     1937, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             July 12, 2019

   Mr. Lawson of Florida (for himself, Ms. Adams, Ms. Velazquez, Mr. 
Crist, Mr. Bishop of Georgia, Mr. Raskin, Ms. Norton, Mr. McGovern, Ms. 
 Pressley, Ms. Lee of California, Mrs. Carolyn B. Maloney of New York, 
 Ms. Garcia of Texas, Ms. Roybal-Allard, Mrs. Demings, Mr. Vargas, and 
  Mr. Lynch) introduced the following bill; which was referred to the 
                    Committee on Financial Services

_______________________________________________________________________

                                 A BILL


 
  To provide physical standards and reform the inspection process for 
 housing assisted under section 8 of the United States Housing Act of 
                     1937, 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 ``HUD Inspection Oversight Act of 
2019''.

SEC. 2. ENFORCEMENT OF PHYSICAL CONDITION STANDARDS AND TENANT 
              PROTECTION.

    Section 8(c) of the United States Housing Act of 1937 (42 U.S.C. 
1437f(c)) is amended by adding at the end the following:
            ``(9) Maintenance of property.--Any entity receiving 
        housing assistance payments with respect to dwelling units 
        covered by a housing assistance payments contract shall--
                    ``(A) maintain decent, safe, and sanitary 
                conditions at those dwelling units, as determined by 
                the Secretary; and
                    ``(B) comply with any standards under applicable 
                State or local laws, rules, ordinances, or regulations 
                relating to the physical condition of those dwelling 
                units.
            ``(10) Enforcement of physical condition standards.--
                    ``(A) In general.--The Secretary shall take action 
                under subparagraph (C) against an entity with a housing 
                assistance payments contract for project-based 
                assistance with respect to a multifamily housing 
                project if--
                            ``(i) the project receives an inspection 
                        score of not more than 60; or
                            ``(ii) the entity fails to certify in 
                        writing to the Secretary within 3 days of 
                        receiving the score under clause (i) that all 
                        exigent health and safety deficiencies 
                        identified by the inspector at the project have 
                        been corrected.
                    ``(B) Applicability.--Subparagraph (A) shall--
                            ``(i) apply with respect to insured and 
                        noninsured projects with dwelling units 
                        receiving assistance under this section other 
                        than under subsection (o)(13); and
                            ``(ii) not apply to dwelling units 
                        receiving assistance with capital or operating 
                        funds under section 9.
                    ``(C) Notification and enforcement.--
                            ``(i) In general.--If an entity violates 
                        clause (i) or (ii) of subparagraph (A), within 
                        15 days after the results of the inspection the 
                        Secretary shall issue the entity a Notice of 
                        Default, which shall provide for a reasonable 
                        period to cure all project deficiencies and for 
                        the entity to provide any response determined 
                        appropriate by the Secretary.
                            ``(ii) Plan and notice of default.--If 
                        violations remain at a project after the 
                        expiration of the cure period prescribed by the 
                        Secretary in the Notice of Default pursuant to 
                        clause (i), the Secretary shall--
                                    ``(I) develop a remediation plan, 
                                separate from the Notice of Default, 
                                and in consultation with tenants or 
                                legitimate tenant organizations, or 
                                both, not later than 45 days after the 
                                expiration of the cure period 
                                prescribed by the Secretary in the 
                                Notice of Default, to bring the project 
                                into compliance;
                                    ``(II) provide the owner with the 
                                remediation plan with a specified 
                                timetable, determined by the Secretary, 
                                for correcting all project 
                                deficiencies, and
                                    ``(III) provide the tenants of the 
                                property, legitimate tenant 
                                organizations, the local government, 
                                any mortgagees, and any contract 
                                administrator of the project with the 
                                Notice of Default and the remediation 
                                plan with the specified timetable, 
                                determined by the Secretary, for 
                                correcting all deficiencies.
                            ``(iii) Withdrawal of notice of default.--
                        If an appeal submitted by the entity results in 
                        an 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 deficiencies 
                        in the project, the Secretary shall take one or 
                        more of the following actions, and provide 
                        additional notice of those actions to the 
                        owner, the tenants of the property, legitimate 
                        tenant organizations, the local government, any 
                        mortgagees, and any contract administrator:
                                    ``(I) Require immediate replacement 
                                of project management with a management 
                                agent approved by the Secretary.
                                    ``(II) Impose civil money 
                                penalties, which shall be used solely 
                                for the purpose of supporting safe and 
                                sanitary conditions at the property, as 
                                designated by the Secretary, with 
                                priority given to the tenants of the 
                                property affected by the penalty.
                                    ``(III) Abate the housing 
                                assistance 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 procedures, 
                                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 housing 
                                assistance payments contract under this 
                                section to another project or projects 
                                and owner or owners.
                                    ``(VI) Pursue exclusionary 
                                sanctions, including suspensions or 
                                debarments from Federal programs.
                                    ``(VII) Seek judicial appointment 
                                of a receiver to manage the property 
                                and cure all project deficiencies or 
                                seek a judicial order of specific 
                                performance requiring the owner to cure 
                                all project deficiencies.
                                    ``(VIII) Work with the owner, 
                                lender, or other related party to 
                                stabilize the property in an attempt to 
                                preserve the property through 
                                compliance, transfer of ownership, or 
                                an infusion of capital provided by a 
                                third-party that requires time to 
                                effectuate.
                                    ``(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.
                            ``(ii) Other assistance.--To the extent the 
                        Secretary determines, in consultation with the 
                        tenants, legitimate tenant organizations, and 
                        the local government, that a property is not 
                        feasible for continued rental assistance 
                        payments under this section or other housing 
                        programs, based on consideration of the costs 
                        of rehabilitating and operating the property 
                        and all available Federal, State, and local 
                        resources, including rent adjustments under 
                        section 524 of the Multifamily Assisted 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 and any legitimate 
                        tenant organizations, 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 available 
                        report on all properties covered by this 
                        paragraph that--
                                    ``(I) are assessed through the Real 
                                Estate Assessment Center; and
                                    ``(II)(aa) have an inspection 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 specific information, 
                        disaggregated by the property to which it 
                        relates, regarding--
                                    ``(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 Department 
                                of Housing and Urban Development is 
                                taking to protect tenants of those 
                                properties; and
                                    ``(III) any administrative or 
                                legislative recommendations to further 
                                improve the living conditions at each 
                                property covered under a housing 
                                assistance payments contract.
            ``(11) 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 imminent 
                        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 payments or transfer of the project-based 
                assistance 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 recaptured and used to 
                reimburse amounts used for tenant-based assistance 
                under subparagraph (A).''.

SEC. 3. STANDARDS FOR PHYSICAL CONDITION AND MANAGEMENT OF HOUSING 
              RECEIVING ASSISTANCE PAYMENTS.

    Section 8 of the United States Housing Act of 1937 (42 U.S.C. 
1437f) is amended by inserting after subsection (v) the following:
    ``(w) Standards for Physical Condition and Management of Housing 
Receiving Assistance Payments.--
            ``(1) Standards for physical condition and management of 
        housing.--Any entity receiving assistance payments under this 
        section shall maintain decent, safe, and sanitary conditions, 
        as determined by the Secretary, for any structure covered under 
        a housing assistance payment contract.
            ``(2) Survey of tenants.--
                    ``(A) In general.--The Secretary shall, on a 
                semiannual basis, conduct a survey of the tenants of 
                each structure covered under a housing assistance 
                payment contract for the purpose of identifying 
                consistent or persistent problems with the physical 
                condition of the structure or performance of the 
                manager of the structure.
                    ``(B) Confidentiality.--The Secretary shall ensure 
                that the surveys pursuant to subparagraph (A) are 
                conducted in an anonymous manner such that the 
                identities of tenants identifying such problems through 
                such survey are not disclosed.
            ``(3) Remediation.--If a consistent or persistent problem 
        with the structure or the management of the structure covered 
        under a housing assistance payment contract is identified--
                    ``(A) by the Secretary pursuant a survey conducted 
                under paragraph (2), the Secretary shall undertake 
                remediation for the structure or manager; or
                    ``(B) by the Performance-Based Contract 
                Administrator based on any other observation made by 
                the Administrator during the normal course of business, 
                the Administrator shall refer the structure or manager 
                to the Secretary for remediation.
            ``(4) Penalty for failure to uphold standards.--
                    ``(A) In general.--The Secretary may impose a 
                penalty on any owner of a structure covered under a 
                housing assistance payment contract if the Secretary 
                finds that the structure or manager of the structure--
                            ``(i) did not satisfactorily meet the 
                        requirements under paragraph (1); or
                            ``(ii) is repeatedly referred to the 
                        Secretary for remediation by a Performance-
                        Based Contract Administrator through the 
                        process established under paragraph (3).
                    ``(B) Amount.--A penalty imposed under subparagraph 
                (A) shall be in an amount equal to not less than 1 
                percent of the annual budget authority the owner is 
                allocated under a housing assistance payment contract.
                    ``(C) Use of amounts.--Any amounts collected under 
                this paragraph shall be used solely for the purpose of 
                supporting safe and sanitary conditions at applicable 
                structures or for tenant relocation, as designated by 
                the Secretary, with priority given to the tenants of 
                the structure that led to the penalty.
            ``(5) Applicability.--This subsection shall not apply to 
        any property assisted under subsection (o).''.
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