Rural Housing Preservation Act of 2007 - Amends the Housing Act of 1949 to require the Secretary of Agriculture to carry out a preservation program to provide financial incentives and other assistance to owners of Section 515 rural multifamily housing projects through long-term use agreements entered into between the project owners and the Secretary. (A Section 515 project is one involving housing and related facilities for elderly persons and families or other persons and families of low income.)
Authorizes the Secretary to give priority to applications for eligible projects located on tribal trust lands or other Indian areas, in colonias, or in other small, poor, low-income communities.
Requires the Secretary to prepare and approve a long-term viability plan for each eligible project for which the owner requests to participate. Allows the Secretary, subject to certain conditions, to offer a project owner a financial restructuring plan, based on the long-term viability plan, and specified project preservation incentives.
Specifies compliance requirements for rents for any eligible households residing in a dwelling unit in any preserved Section 515 project, including: (1) a disregard for certain earned income for residents; and (2) phase-in of rent increases.
Establishes conditions that makes certain project owners ineligible to participate in the preservation program.
Requires the Secretary to make rural preservation and rural tenant protection vouchers available to certain eligible households.
Requires the Secretary to give priority, in entering into contracts involving financing for new construction of a Section 515 project, for projects located in eligible rural areas needing affordable low-income rental housing because of prepayment of Section 515 loans.
[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4002 Introduced in House (IH)]
110th CONGRESS
1st Session
H. R. 4002
To establish a program to preserve rural multifamily housing assisted
under the Housing Act of 1949.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
October 30, 2007
Mr. Lincoln Davis of Tennessee (for himself and Mr. Davis of Kentucky)
introduced the following bill; which was referred to the Committee on
Financial Services
_______________________________________________________________________
A BILL
To establish a program to preserve rural multifamily housing assisted
under the Housing Act of 1949.
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 ``Rural Housing Preservation Act of
2007''.
SEC. 2. FINDINGS AND PURPOSES.
(a) Findings.--The Congress finds that--
(1) the average age of a multifamily housing project with a
loan under section 515 of the Housing Act of 1949 is 30 years,
and therefore much of the portfolio of such projects is aging
and in need of preservation, while the need for affordable
rural housing is increasing;
(2) section 515 projects house some of the poorest families
in rural America, with almost 60 percent of the units occupied
by senior citizens or persons with disabilities and an average
annual household income among all occupants of approximately
$10,000;
(3) in many small towns and communities, rental housing
financed by direct loans under section 515 is the only decent,
affordable rental housing available; and
(4) consequently, any preservation or disposition of the
multifamily housing portfolio with loans under section 515,
which houses approximately 465,000 low-income families and
seniors and farmworkers, should be handled with great care.
(b) Purposes.--The purposes of this Act are--
(1) to authorize the Secretary of Agriculture to carry out
a program that encourages the preservation of section 515
housing project developments for long-term affordable use and
the repair and revitalization of such properties;
(2) to provide for voucher assistance for tenants who live
in such projects that are preserved under this Act; and
(3) to provide voucher assistance for tenants who are
displaced from such projects as a result of prepayment or
foreclosure on a loan for the project.
SEC. 3. PRESERVATION OF MULTIFAMILY HOUSING.
(a) Preservation Program.--Title V of the Housing Act of 1949 (42
U.S.C. 1471 et seq.) is amended by adding at the end the following new
section:
``SEC. 544. PRESERVATION OF MULTIFAMILY HOUSING AND PROTECTION OF
TENANTS.
``(a) Preservation Program.--The Secretary shall, subject to the
availability of amounts appropriated, carry out a preservation program
in accordance with this section to provide financial incentives and
other assistance to owners of eligible projects through long-term use
agreements entered into between the project owners and the Secretary.
``(b) Applications to Participate.--
``(1) In general.--The Secretary shall accept applications
from owners of eligible projects to participate in the
preservation program under this section.
``(2) Priority.--In selecting among applications of
eligible projects to participate in the preservation program,
the Secretary may give priority to applications for such
projects that are located on tribal trust lands or other Indian
areas, in colonias (as such term is defined in section 916(e)
of the Cranston-Gonzalez National Affordable Housing Act (42
U.S.C. 5306 note), or in other small, poor, low-income
communities.
``(c) Long-Term Viability Plan.--
``(1) Requirement.--The Secretary shall prepare and approve
a long-term viability plan under this subsection with respect
to each eligible project for which the owner requests to
participate.
``(2) Contents.--Each long-term viability plan for an
eligible project shall include the following information:
``(A) Physical needs assessment.--A physical needs
assessment of the project that identifies and projects,
for the following 30 years--
``(i) all necessary repairs, improvements,
maintenance, and management standards for the
project, and when they will be made, in order
to meet the requirements of this title; and
``(ii) the costs associated with the items
referred to clause (i).
``(B) Financial plan.--A financial plan for the
project that--
``(i) reviews the financial stability of
the project;
``(ii) includes the loan restructuring
elements, rent adjustments, management and
operational efficiencies, and other financial
adjustments to the project that are necessary
to cover operating expenses for the project and
maintain an adequate financial reserve for the
future maintenance and capital needs of the
project;
``(iii) provides the project owner with a
long-term rate of return on equity of the
project owner, as determined by the Secretary,
commensurate to comparable rural multifamily
housing projects for which a tax credit is
provided under section 42 of the Internal
Revenue Code of 1986 (26 U.S.C. 42), and
provides that any return in excess of such rate
of return shall be made available to the
Secretary only for use under section 515;
``(iv) meets the physical needs for the
project determined under the physical needs
assessment;
``(v) ensures that rents available under
the plan are affordable to eligible households
in accordance with subsection (f); and
``(vi) addresses any costs associated with
any temporary tenant displacement resulting
from renovations or rehabilitation undertaken
as a result of participation of the project in
the preservation program.
``(3) Development through participating administrative
entities.--The Secretary may develop long-term viability plans
through the use of third-party participating administrative
entities, who may be a private contractor, a State housing
finance agency, or a nonprofit organization.
``(4) Preservation determination.--Based on the long-term
viability plan for an eligible project, the Secretary shall
determine whether to offer the project owner a financial
restructuring plan under subsection (d) and the financial
incentives to be included in any such plan offered.
``(5) Final review and comment.--Before a determination is
made under subparagraph (D) with respect to any long-term
viability plan prepared by the Secretary, the Secretary shall--
``(A) provide the project owner an opportunity to
review the plan and discuss the plan with the Secretary
or its agent;
``(B) make available to the tenants of the project
a copy of such plan and provide a period of not less
than 30 days for tenants to submit comments regarding
the plan to the Secretary; and
``(C) respond in writing to such comments.
``(6) Fees.--The Secretary may charge the project owner a
fee for preparation of the long-term viability plan.
``(7) Payment of fees.--If a long-term viability for a
project is approved, the payment of such fee may be
incorporated into a project owner's financial restructuring
plan for the project provided by the Secretary pursuant to
subsection (d).
``(d) Financial Restructuring Plan; Preservation Incentives.--Based
on the long-term viability plan for an eligible project, the Secretary
may offer a project owner a financial restructuring plan for the
project. Such a plan may include one or more of the following
preservation incentives:
``(1) Reduction or elimination of interest on the loan or
loans for the project made under section 515.
``(2) Partial or full deferral of payments due under such
loan or loans.
``(3) Forgiveness of such loan or loans.
``(4) Subordination of such loan or loans, subject to such
terms and conditions as the Secretary shall determine.
``(5) Reamortization of loan payments under such loan or
loans over extended terms.
``(6) A grant from the Secretary for the project.
``(7) Payment of project costs associated with developing
the long-term viability plan.
``(8) Opportunity for project owners to obtain further
investment equity from third parties.
``(9) A direct loan or guarantee of a loan for the project,
with a subsidized interest rate without regard to the value of
the project.
``(e) Long-Term Use Agreement.--
``(1) In general.--If the owner of an eligible project
agrees to the terms of a financial restructuring plan for the
project providing preservation benefits under subsection (d),
in exchange for such benefits, the Secretary and the project
owner shall enter into a long-term use agreement under this
subsection for the project.
``(2) Agreement.--A long-term use agreement for an eligible
project shall include--
``(A) the terms of the financial restructuring plan
for the project, including any preservation incentives
to be provided;
``(B) an agreement by the project owner--
``(i) to continue the property use
restrictions with respect to the project in
accordance with this title for a period of--
``(I) 30 years, or
``(II) the remaining term of any
loans under this title for the project,
whichever ends later;
``(ii) to comply with the long-term
viability plan for the project; and
``(iii) to comply with the rent terms under
subsection (f) for the project;
``(C) provisions terminating the agreement if any
material preservation incentives for the project to be
provided under the agreement are no longer available
and the Secretary determines that such unavailability
is not the fault of the owner;
``(D) any rent terms for the project pursuant to
subsection (f);
``(E) a covenant which runs with the land;
``(F) a representation and warranty by the owner to
provide safe, healthy, clean buildings pursuant to the
Secretary's guidelines;
``(G) provisions providing for rural preservation
voucher assistance under section 542(c) for low-income
households residing in the project who are eligible for
such vouchers; and
``(H) such other terms as the Secretary determines
are necessary to implement the purposes of this
section.
``(f) Rents Under Long-Term Use Agreement.--Rents for any eligible
households residing in dwelling units in any preserved project shall
comply with the following requirements:
``(1) Maximum household contribution to rent and
utilities.--The maximum household contribution to monthly rent
and utilities for any eligible household may not exceed 30
percent of the adjusted income of the eligible household.
``(2) Rent adjustments.--The rents for eligible projects
may be increased or decreased only on an annual basis and only
in accordance with standards incorporated in such agreement.
``(3) Lowest cost requirement.--In determining the terms of
a restructuring plan, and the type and amount of preservation
benefits under such plan to approve under this section for an
eligible project, the Secretary shall, to the extent
practicable, approve assistance that imposes the least cost to
the Secretary while meeting the requirements of the long-term
viability plan for the project.
``(g) Earned Income Disregard for Residents.--
``(1) In general.--Notwithstanding any other provision of
law, the amount of the contribution toward rent for a dwelling
unit payable, by any household described in paragraph (3), for
occupancy in a project funded with a loan under section 515 may
not be increased as a result of the increased income due to
employment during the 12-month period beginning on the date on
which the employment is commenced.
``(2) Phase-in of rent increases.--Upon the expiration of
the 12-month period referred to in paragraph (1), the
contribution toward rent payable by a household described in
paragraph (3) may be increased due to the continued employment
of the household member described in subparagraph (3)(B),
except that during the 12-month period beginning upon such
expiration the amount of the increase may not be greater than
50 percent of the amount of the total increase in contribution
toward rent that would be applicable but for this paragraph.
``(3) Eligible household.--A household described in this
paragraph is a household that--
``(A)(i) is an eligible household who resides in a
eligible project; or
``(ii) is provided rural preservation voucher
assistance pursuant to section 542(c); and
``(B)(i) whose income increases as a result of
employment of a member of the household who was
previously unemployed for 1 or more years;
``(ii) whose earned income increases during the
participation of a household member in any family self-
sufficiency or other job training program; or
``(iii) who is or was, within 6 months, assisted
under any State program for temporary assistance for
needy families funded under part A of title IV of the
Social Security Act (42 U.S.C. 601 et seq.) and whose
earned income increases.
``(h) Ineligibility.--
``(1) Procedure for determination.--The Secretary may
determine that a project owner is ineligible for participation
in the preservation program under this section in accordance
with the standards under paragraph (2).
``(2) Standards.--The Secretary may determine that a
project owner is ineligible if--
``(A) the project owner has a history of poor
management or maintenance of multifamily housing
properties;
``(B) the project owner is in default on a loan
made available under the section 515 housing program;
``(C) the Secretary is unable to enter into a long-
term use agreement for the project that is the subject
of the application with the project owner within a
reasonable time;
``(D) the project owner is suspended or debarred
from participating in Federal contracts or programs; or
``(E) the Secretary has other good cause for
withholding from the project owner the benefits made
available under this section.
``(3) Ineligibility because of action for prepayment.--A
project owner shall be ineligible for participation in the
preservation program under this section if the owner--
``(A) is a party to an ongoing civil action brought
to authorize the prepayment of the section 515 loan for
the eligible project, or is a party to a damages action
brought to recover damages caused by the passage of the
Emergency Low Income Housing Preservation Act of 1987
or amendments to such Act, for which a final judgment,
settlement agreement, or consent decree has not yet
been issued; or
``(B) was a party to a civil action brought to
authorize the prepayment of the section 515 loan for
the eligible project, or was a party to a damages
action brought to recover damages caused by the passage
of the Emergency Low Income Housing Preservation Act of
1987 or amendments to such Act, under which damages
were awarded to the project owner, and the owner has
not agreed to contribute at least 50 percent of such
damages, or $100,000, whichever is less, to carrying
out the financial restructuring plan and long-term use
agreement for the preserved project.
``(i) Definitions.--For purposes of this section, the following
definitions shall apply:
``(1) Eligible household.--The term `eligible household'
means a household that, under section 515, is eligible to
reside in a project funded with a loan made by the Secretary
under such section.
``(2) Eligible project.--The term `eligible project' means
a housing project funded with a loan made at any time by the
Secretary under section 515, the principal obligation of which
has not been fully repaid.
``(3) Project owner; owner.--The terms `project owner' and
`owner' mean, with respect to an eligible project, an
individual or entity, or principals thereof that own, or plan
to purchase, the project.
``(4) Preserved project.--The term `preserved project'
means an eligible project for which the Secretary and owner
have entered into agreement on a financial restructuring plan
for the project and into a long-term use agreement for the
project, under this section.
``(j) Annual Report.--The Secretary shall submit a report to the
Congress annually regarding the compliance of owners of eligible
projects participating in the preservation program under this section
with the requirements of such program, which shall identify and
describe any significant failures to comply.
``(k) Authorization of Appropriations.--There are authorized to be
appropriated for each of fiscal years 2008 through 2012 such sums as
may be necessary to carry out the preservation program under this
section.''.
SEC. 4. RURAL PRESERVATION AND RURAL TENANT PROTECTION VOUCHERS.
Section 542 of the Housing Act of 1949 (42 U.S.C. 1490r) is amended
by adding at the end the following new subsections:
``(c) Rural Preservation Vouchers.--In the case of a housing
project subject to a loan made under section 515 that is a preserved
project (as such term is defined in section 544(i)), the Secretary
shall, to the extent that amounts for assistance under this subsection
are provided in advance in appropriation Acts, make available voucher
assistance to each eligible household (as such term is defined in
section 544(i)) that is not assisted under the rental assistance
program under section 521 or the program for rental assistance under
section 8 of the United States Housing Act of 1937 (42 U.S.C. 1437f),
and is residing in the project upon the date that a long-term use
agreement is entered into pursuant to section 544(e) between the
project owner and the Secretary, voucher assistance upon such date, as
follows:
``(1) The amount of assistance provided under the voucher
shall be sufficient to allow such household to remain in the
project after it is preserved.
``(2) The percentage of adjusted income paid by the
eligible household for rent and utilities for the assisted
dwelling, pursuant to the voucher, shall not exceed 30 percent
of adjusted income of the eligible household.
``(3) The voucher assistance shall be available to the
eligible household only during the period in which the eligible
household resides in the preserved project and the long-term
use agreement remains in effect.
``(4) Upon termination of the participation of the eligible
household in the voucher program, the voucher shall remain
attached to the preserved project and shall be available for
use by another eligible household residing in the preserved
project.
``(d) Rural Tenant Protection Vouchers.--
``(1) In general.--In the case of a housing project subject
to a loan made under section 515 that is prepaid or foreclosed
upon, the Secretary shall, to the extent that amounts for
assistance under this subsection are provided in advance in
appropriation Acts, make available to each eligible household
(as such term is defined in section 544(i)) that is not
assisted under the rental assistance program under section 521
or the program for rental assistance under section 8 of the
United States Housing Act of 1937 (42 U.S.C. 1437f), and is
residing in a dwelling unit in the project upon the date that
the Secretary approves the prepayment or submits notice of
foreclosure to the project owner, as applicable, voucher
assistance upon such date, as follows:
``(A) Relocation vouchers.--In the case of any such
eligible household who must relocate from a project for
which the loan is being prepaid or foreclosed upon,
voucher assistance under this subsection shall be
subject to the terms of section 8(o) of the United
State Housing Act of 1937 (42 U.S.C. 1437(o)), except
that--
``(i) the percentage of adjusted income
paid by the eligible household for rent and
utilities for the assisted dwelling unit shall
not at any time exceed 30 percent of the
adjusted income of the eligible household; and
``(ii) a voucher provided pursuant to this
subparagraph shall be subject to the terms of
section 8(r) of such Act (relating to
portability), except that if an eligible
household uses the voucher to move to a
community other than the community in which the
project from which the family relocated
pursuant to such prepayment or foreclosure is
located, upon termination of the participation
of such eligible family in the voucher program,
the voucher shall be returned for use in the
community in which such project is located.
``(B) Enhanced vouchers.--In the case of any such
eligible household who remains in a project for which
the loan is prepaid or foreclosed upon, voucher
assistance under this subsection shall be subject to
the terms of section 8(t) of the United State Housing
Act of 1937 (42 U.S.C. 1437f(t)), except that--
``(i) the percentage of adjusted income
paid by the eligible household for rent and
utilities for the assisted dwelling unit shall
not at any time exceed 30 percent of the
adjusted income of the eligible household;
``(ii) the owner of the project may not
refuse to lease, to an eligible household for
whom voucher assistance under this subparagraph
is made available, any available appropriately
sized rental dwelling unit in the project;
``(iii) voucher assistance under this
subparagraph may be used only for dwelling
units in housing that is decent, safe, and
sanitary; and
``(iv) upon termination of participation of
such eligible family in the enhanced voucher
program, the voucher shall convert to a
relocation voucher under subparagraph (A) of
this paragraph, and shall be available with
respect to such project only to provide
assistance in accordance with the provisions of
such subparagraph.
``(e) Administration.--The Secretary may contract with a public
housing agency or a private or nonprofit organization to administer
vouchers authorized under subsections (c) and (d).
``(f) Renewal.--Vouchers under subsections (c) and (d) shall be
renewed annually, subject to the availability of appropriations for
such renewal.
``(g) Use of Savings.--Notwithstanding any other provision of law,
any amounts made available for voucher assistance under subsections (c)
and (d) that remain unused because of increases in the incomes of
household assisted under such vouchers shall be available to the
Secretary for eligible activities under this Act.
``(h) Applicability of Section 8 Program.--Except as specifically
provided otherwise in this section, to the maximum extent practicable,
the Secretary shall administer voucher assistance subsections (c) and
(d) in accordance with, but not subject to, regulations and
administrative guidance for housing vouchers administered by the
Secretary of Housing and Urban Development under section 8(o) of such
Act.
``(i) Authorization of Appropriations.--There is authorized to be
appropriated for voucher assistance under subsections (c) and (d) such
sums as may be necessary for each of fiscal years 2008 through 2012.''.
SEC. 5. PRIORITY FOR FINANCING.
Subsection (j) of section 515 of the Housing Act of 1949 (42 U.S.C.
1485(j)) is amended--
(1) by inserting ``(1)'' before ``For''; and
(2) by adding at the end the following new paragraph:
``(2) The Secretary may give priority, in entering into contracts
under this section involving financing for new construction of a
project, for projects located in eligible rural areas having a need for
affordable low-income rental housing due to prepayment of loans made or
insured under this section.''.
SEC. 6. CONFORMING AMENDMENT.
Section 537(b)(1) of the Housing Act of 1949 (42 U.S.C. 1490p-
1(b)(1)) is amended by inserting before the semicolon the following:
``and to administer the preservation program under section 544''.
SEC. 7. REGULATIONS.
The Secretary of Agriculture shall issue proposed regulations to
carry out the amendments made by this Act not later than the expiration
of the 90-day period beginning upon the date of the enactment of this
Act, and shall issue final regulations to carry out the amendments made
by this Act not later than the expiration of the 180-day period
beginning upon such date of enactment.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Financial Services.
Referred to the Subcommittee on Housing and Community Opportunity.
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