Title: HUD Inspection Process and Enforcement Reform Act of 2019
Policy area: Housing and Community Development

Summary:
HUD Inspection Process and Enforcement Reform Act of 2019

[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4023 Introduced in House (IH)]

<DOC>






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 Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``HUD Inspection Process and 
Enforcement Reform Act of 2019''.

SEC. 2. REDUCTION IN GRADE OR PAY OR REMOVAL FOR MISCONDUCT OR 
              PERFORMANCE OF EMPLOYEES 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, Compensation, Authority, 
        and Duties of Personnel.--
            ``(1) In general.--The Secretary is authorized''; and
            (2) by adding at the end the following:
            ``(2) Reduction in grade or pay or removal for misconduct 
        or performance of employees.--
                    ``(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 
                                individual--
                                            ``(aa) holding in a 
                                        position described under 
                                        sections 5312 through 5316 of 
                                        title 5, United States Code 
                                        (relating to the Executive 
                                        Schedule);
                                            ``(bb) holding a position 
                                        as a limited term appointee, 
                                        limited emergency appointee, or 
                                        noncareer 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 accompany 
                        a position in a transfer of function; 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 paragraph--
                            ``(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.--
                            ``(i) In general.--Notwithstanding any 
                        other provision of law, under regulations 
                        prescribed by the Office of Personnel 
                        Management, the Secretary may, if the Secretary 
                        determines that the misconduct or performance 
                        of a covered employee warrants such action--
                                    ``(I) remove the covered employee 
                                from the civil service;
                                    ``(II) reduce the grade of the 
                                covered employee; or
                                    ``(III) reduce the pay of the 
                                covered employee.
                            ``(ii) Reduction in grade.--A covered 
                        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 
                                reduction in grade or pay or removal 
                                under this paragraph may be appealed to 
                                the Merit Systems Protection 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 removal.
                            ``(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 
                                assistance.--To the maximum extent 
                                practicable, the Secretary shall 
                                provide to the Merit Systems Protection 
                                Board, and to any administrative law 
                                judge to whom an appeal under this 
                                paragraph is referred, such information 
                                and assistance as may be necessary to 
                                ensure an appeal under this paragraph 
                                is expedited.
                                    ``(III) Finality.--Notwithstanding 
                                any other provision of law, including 
                                section 7703 of title 5, United States 
                                Code, the decision of an administrative 
                                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 requirement 
                                under subclause (I), the reduction in 
                                grade or pay or removal is final. In 
                                such a case, the Merit Systems 
                                Protection Board shall, within 14 days 
                                after the date that such reduction in 
                                grade or pay or removal is final, 
                                submit to Congress a report that 
                                explains the reasons why a decision was 
                                not issued in accordance with such 
                                requirement.
                                    ``(V) No stays.--The Merit Systems 
                                Protection Board or administrative law 
                                judge may not stay any reduction in 
                                grade or pay or removal action under 
                                this paragraph.
                                    ``(VI) Effect of appeal of 
                                removal.--During the period beginning 
                                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 administrative law 
                                judge issues a final decision on such 
                                appeal, the covered employee may not 
                                receive any pay, awards, bonuses, 
                                incentives, allowances, differentials, 
                                student loan repayments, special 
                                payments, or benefits.
                            ``(v) Whistleblower protection.--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 alleged prohibited personnel 
                        practice described in section 2302(b) of title 
                        5, United States Code, the Secretary may not 
                        reduce the grade or pay or remove the covered 
                        employee under this paragraph without 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 
paragraph) appointed before, on, or after the date of enactment 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 period 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 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 removal under 
        section 3592 or 3595 of this title'' and 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 STANDARDS 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 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.
            ``(22) 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 a Uniform 
                        Physical Condition Standards (in this paragraph 
                        referred to as `UPCS') inspection score of not 
                        more than 30;
                            ``(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; or
                            ``(iii) the project receives a UPCS 
                        inspection score of more than 30 and less than 
                        59 and has received consecutive scores of less 
                        than 60 on UPCS inspections.
                    ``(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 paragraph (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), (ii), or (iii) of subparagraph (A), 
                        the Secretary shall notify the entity and 
                        provide an opportunity for response not later 
                        than 15 days after the date on which the 
                        results of the UPCS inspection are issued.
                            ``(ii) Plan and notice of default.--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 
                                tenants of the property, the local 
                                government, any mortgagees, and any 
                                contract administrator of the project 
                                with a Notice of Default with a 
                                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 
                        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 deficiencies 
                        in the project, the Secretary may--
                                    ``(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; 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.
                            ``(ii) Other assistance.--To the extent the 
                        Secretary determines, in consultation with the 
                        tenants 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, 
                        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 a UPCS 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--
                                    ``(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.
            ``(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 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. 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 report 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 average REAC-
        inspected scores for all inspected properties.
    (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.
                                 <all>