[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[S. 554 Introduced in Senate (IS)]
<DOC>
118th CONGRESS
1st Session
S. 554
To reform the inspection process of housing assisted by the Department
of Housing and Urban Development, and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
February 28, 2023
Mr. Rubio (for himself and Mr. Scott of Florida) introduced the
following bill; which was read twice and referred to the Committee on
Banking, Housing, and Urban Affairs
_______________________________________________________________________
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 Reform and Capital
Improvement Act of 2023''.
SEC. 2. DEFINITION.
In this Act, the term ``Secretary'' means the Secretary of Housing
and Urban Development.
SEC. 3. 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 on
which 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 on which 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.--
``(aa) In general.--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 shall be final.
``(bb) Explanation.--In a
case described in item (aa),
the Merit Systems Protection
Board shall, not later than 14
days after the date on which
the reduction in grade or pay
or removal becomes final,
submit to Congress a report
that explains the reasons why a
decision was not issued in
accordance with that
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 on which 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. 4. 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)), as amended by section 101(b)(2)(B) of division Q of the
Consolidated Appropriations Act, 2021 (Public Law 116-260; 134 Stat.
2163), is amended by adding at the end the following:
``(22) 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.
``(23) 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 45;
``(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 45 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--
``(aa) 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; and
``(bb) shall not be payable
out of project income;
``(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; title V of Public Law
105-65) 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 UPCS
inspections; 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--
``(I) include, for each property
covered by the report--
``(aa) the UPCS inspection
score and date of inspection;
and
``(bb) the ownership
interest and management of the
property;
``(II) identify--
``(aa) the enforcement
actions being taken to address
the physical conditions of the
properties covered by the
report, including imposition of
civil monetary penalties and
termination of subsidies; and
``(bb) properties that have
been identified multiple times
as having the physical
conditions described in item
(aa);
``(III) identify actions that the
Secretary is taking to--
``(aa) remediate all health
and safety concerns; and
``(bb) protect tenants of
the properties covered by the
report; and
``(IV) include any administrative
or legislative recommendations to
further improve the living conditions
at each property covered under a
housing assistance payments contract.
``(24) 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 the
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. 5. REPORTS ON REAL ESTATE ASSESSMENT CENTER INSPECTIONS.
(a) Annual HUD Report.--Not later than 90 days after the date of
enactment of this Act, and annually thereafter, the Secretary 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 during 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 with recommendations for how REAC inspections of
all properties assisted, insured, or both, under a program of the
Department should be reformed and improved.
SEC. 6. BUDGET-BASED RENTAL ADJUSTMENTS FOR CERTAIN PROPERTIES
RECEIVING PROJECT-BASED RENTAL ASSISTANCE THAT UNDERWENT
MARK-TO-MARKET.
(a) Definition.--In this section, the term ``eligible property''
means a property that--
(1) receives project-based rental assistance under section
8 of the United States Housing Act of 1937 (42 U.S.C. 1437f);
(2) underwent a mortgage restructuring under subtitle A of
the Multifamily Assisted Housing Reform and Affordability Act
of 1997 (42 U.S.C. 1437f note; title V of Public Law 105-65);
and
(3)(A) has been transferred to a different owner due to the
failure of a prior owner to meet Uniform Physical Condition
Standards;
(B) received a failing Uniform Physical Condition Standard
score under a prior owner; or
(C) requires substantial rehabilitation, including the
replacement of major systems, in order to ensure the long term
sustainability of the property, as determined by a capital
needs assessment and as approved by the Secretary.
(b) Authority.--The Secretary may, at the request of the owner of
the property, approve the adjustment of rent on a budget basis (within
the meaning of section 401.412(b) of title 24, Code of Federal
Regulations, or any successor regulation) for an eligible property if
the owner--
(1) demonstrates that--
(A) the available operating revenue is insufficient
to operate and maintain the property; and
(B) a rent adjustment is necessary to support
financing for rehabilitation; and
(2) submits a rehabilitation plan to extend the useful life
of the property for not less than 25 years, including
remediation of all existing health, sanitation, and safety
concerns.
(c) Reporting Requirement.--During the period during which a
property for which a budget-based rental adjustment is approved under
subsection (b) is being rehabilitated, the owner of the property shall
submit to the Secretary a quarterly report that includes--
(1) a description of the progress made on, and expenses
incurred for, capital improvements and debt service;
(2) a detailed list of outstanding improvements;
(3) the expected completion date for each outstanding
improvement described in paragraph (2); and
(4) any other information required by the Secretary.
SEC. 7. CODIFICATION OF UNIFORM PHYSICAL CONDITION STANDARDS INSPECTION
TIMELINES FOR UNITS RECEIVING PROJECT-BASED RENTAL
ASSISTANCE.
(a) Definition.--In this section, the term ``covered property''
means a property that receives project-based rental assistance under
section 8 of the United States Housing Act of 1937 (42 U.S.C. 1437f).
(b) Scoring and Ranking of Physical Condition.--The Secretary shall
score and rank the physical condition of covered properties in
accordance with this section.
(c) Methodology for Ranking.--
(1) In general.--The Secretary shall score each covered
property on the basis of a 100-point scale.
(2) Fractions.--In scoring a covered property under
paragraph (1), the Secretary shall round--
(A) a score that includes a fraction below one half
point to the next lower full point; and
(B) a score that includes a fraction of one half
point or higher to the next higher full point.
(d) Designations and Frequency of Inspections.--
(1) Standard 1 performing property.--The Secretary shall--
(A) designate a covered property that receives a
score of not less than 90 points on its physical
condition inspection as a standard 1 performing
property; and
(B) conduct a physical inspection of a standard 1
performing property once every 3 years.
(2) Standard 2 performing property.--The Secretary shall--
(A) designate a covered property that receives a
score of not less than 80 points and less than 90
points on its physical condition inspection as a
standard 2 performing property; and
(B) conduct a physical inspection of a standard 2
performing property once every 2 years.
(3) Standard 3 performing property.--The Secretary shall--
(A) designate a covered property that receives a
score of less than 80 points on its physical condition
inspection as a standard 3 performing property; and
(B) conduct a physical inspection of a standard 3
performing property every year.
(e) Special Requirements.--If a covered property receives a score
in the range of a standard 1 performing property or standard 2
performing property on its physical condition inspection and has been
cited by the Secretary as having an exigent health and safety
deficiency, the property--
(1) shall only shall be designated as a standard 1
performing property or standard 2 performing property,
respectively, if the owner resolves the deficiency; and
(2) shall be designated as a standard 3 performing property
if the owner does not resolve the deficiency.
(f) Authority To Delay Inspections.--
(1) In general.--Notwithstanding subsection (d), the
Secretary may delay the physical inspection of a covered
property that is undergoing a substantial rehabilitation.
(2) Definition.--For purposes of this subsection, the term
``substantial rehabilitation'', with respect to a covered
property, means a physical rehabilitation for the long-term
sustainability of the property where the costs of the
rehabilitation exceed 25 percent of the property's replacement
cost (calculated based on fair market value) after completion
of all required repairs, replacements, and improvements.
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