H. Rept. 107-640 - HOUSING AFFORDABILITY FOR AMERICA ACT OF 2002107th Congress (2001-2002)
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107th Congress Rept. 107-640 HOUSE OF REPRESENTATIVES 2d Session Part 1 ====================================================================== HOUSING AFFORDABILITY FOR AMERICA ACT OF 2002 _______ September 4, 2002.--Ordered to be printed _______ Mr. Sensenbrenner, from the Committee on the Judiciary, submitted the following R E P O R T [To accompany H.R. 3995] [Including cost estimate of the Congressional Budget Office] The Committee on the Judiciary, to whom was referred the bill (H.R. 3995) to amend and extend certain laws relating to housing and community opportunity, and for other purposes, having considered the same, reports favorably thereon without amendment and recommends that the bill do pass. CONTENTS Page Purpose and Summary.............................................. 1 Background and Need for the Legislation.......................... 2 Hearings......................................................... 3 Committee Consideration.......................................... 3 Vote of the Committee............................................ 3 Committee Oversight Findings..................................... 3 Performance Goals and Objectives................................. 3 New Budget Authority and Tax Expenditures........................ 4 Congressional Budget Office Cost Estimate........................ 4 Constitutional Authority Statement............................... 14 Section-by-Section Analysis and Discussion....................... 15 Changes in Existing Law Made by the Bill, as Reported............ 17 Markup Transcript................................................ 17 Purpose and Summary H.R. 3995 improves access to affordable housing for more Americans by amending specified housing-related Acts in the following areas: (1) home investment partnerships; (2) Federal Housing Administration mortgage insurance for single and multifamily housing, and health care facilities; (3) supportive housing for elderly and disabled families; (4) section 8 rental housing assistance; (5) public housing; (6) Hope VI revitalization assistance; (7) homeless housing programs; (8) Native American housing; (9) housing impact analysis; (10) community development block grants; (11) housing counseling programs; (12) housing opportunities for persons with AIDS; and (13) Government National Mortgage Association guarantee fees. Background and Need for the Legislation The legislation, introduced on March 19, 2002 by Representative Marge Roukema (R-NJ), was referred to the Financial Services Committee and to the Judiciary Committee. Title VIII of H.R. 3995 is the only title within the jurisdiction of the Judiciary Committee. Housing is one of the Nation's most heavily regulated industries. Currently, Federal agencies are required to conduct certain economic analyses when promulgating new rules.\1\ However, there is no such requirement that any analysis be conducted to determine a rule's impact on housing affordability. The rising cost of housing threatens the attainment of home ownership for an increasing number of Americans. A recent study found that nearly one out of every seven American households paid at least half their income for housing and/or lived in substandard conditions in 1999.\2\ Title VIII is intended to heighten agency and public awareness of the significant costs to housing affordability caused by Federal regulations, and to lessen the adverse impact such regulations may have on achieving home ownership. --------------------------------------------------------------------------- \1\ See, e.g., 5 U.S.C. Sec. 604 (2002) (regulatory flexibility analysis of proposed rules considering their effect on small entities); 42 U.S.C. Sec. 1302 (2002) (impact analysis of Medicare and Medicaid rules and regulations on small rural hospitals); and 42 U.S.C. Sec. 7617 (2002) (economic impact statements of air pollution and control rules on small business, consumer costs and energy use). \2\ Four Windows: A Metropolitan Perspective on Affordable Housing Policy in America, 2001, NHC Senior Executive Roundtable Series (Nat'l Housing Conf., Wash., D.C.), April, 2002, at 1, 4. --------------------------------------------------------------------------- Title VIII requires agencies, when promulgating any proposed or final rule for notice and comment, to issue a housing impact analysis when that rule has a significant economic impact on housing affordability. ``Significant,'' as it applies to impact, is defined as increasing consumers' cost of housing by more than $100,000,000 per year. As drafted, section 803 directs an agency, when publishing general notice of proposed rulemaking for any proposed rule, to prepare and make available for public comment an initial housing impact analysis. Section 804 provides that such analysis describe and, where feasible, estimate the extent to which the proposed rule would increase the cost or reduce the supply of housing or land for residential development. Section 805 directs an agency to prepare a final housing impact analysis when promulgating a final rule. Under section 805, each final housing impact analysis must summarize and assess the issues, analyses and alternatives to the proposed rule raised during the comment period, and must state any changes made in the proposed rule as a result of such comments. Final housing impact analyses must also describe and estimate the extent of the rule's impact on housing affordability. Agencies promulgating proposed or final rules which do not have a significant deleterious impact on housing affordability are exempt from the reporting requirements of sections 804 and 805, provided the agency publishes with the rule a certification and supporting factual statement to that effect in the Federal Register. Section 809 also provides procedures for the delay in completion or waiver of initial housing impact analyses upon publication in the Federal Register of a certification and written finding by the head of the respective agency that the final rule is being promulgated in response to an emergency. Final housing impact analyses may be delayed, but not waived, under Section 809, for a period of not more than 180 days after the date of publication in the Federal Register of a final rule. In such instances, the head of the agency must publish in the Federal Register a certification and written finding that the final rule is being promulgated in response to an emergency. The provisions of title VIII will lead to rules which make affordable housing less burdensome to acquire and accessible to more Americans. Recognizing the need for such legislation, the House in the 106th Congress passed overwhelmingly a bill containing language nearly identical to title VIII.\3\ Title VIII of H.R. 3995 is virtually identical to H.R. 2753, which was introduced by Representative Mark Green (R-WI) on August 2, 2001, and referred to the Judiciary Committee. --------------------------------------------------------------------------- \3\ H.R. 1776, the ``American Homeownership and Economic Opportunity Act of 2000,'' was approved by the House on April 6, 2000 by a vote of 417 to 8. The Senate referred the bill to the Committee on Banking, Housing, and Urban Affairs on April 7, 2000. After referral of H.R. 1776 to the Subcommittee on Housing and Transportation, no further action was taken by the Senate. --------------------------------------------------------------------------- Hearings The were no hearings held on H.R. 3995. Committee Consideration On July 16, 2002, the Subcommittee on Commercial and Administrative Law met in open session and ordered favorably reported H.R. 3995, without amendment, by voice vote, a quorum being present. On July 23, 2002, the Judiciary Committee met in open session and ordered favorably reported H.R. 3995 without amendment, by voice vote, a quorum being present. Vote of the Committee There were no recorded votes on H.R. 3995. Committee Oversight Findings In compliance with clause 3(c)(1) of rule XII of the Rules of the House of Representatives, the Committee reports that the findings and recommendations of the Committee, based on oversight activities under clause 2(b)(1) of rule X of the Rules of the House of Representatives, are incorporated in the descriptive portions of this report. Performance Goals and Objectives Title VIII of H.R. 3995, the portion of the legislation within the jurisdiction of the Judiciary Committee, does not authorize funding. Therefore, clause 3(c) of rule XIII of the Rules of the House in inapplicable. New Budget Authority and Tax Expenditures Clause 3(c)(2) of House rule XIII is inapplicable because this legislation does not provide new budgetary authority or increased tax expenditures. Congressional Budget Office Cost Estimate In compliance with clause 3(c)(3) of rule XIII of the Rules of the House of Representatives, the Committee sets forth, with respect to bill, H.R. 3995, the following estimate and comparison prepared by the Director of the Congressional Budget Office under section 402 of the Congressional Budget Act of 1974: U.S. Congress, Congressional Budget Office, Washington, DC, August 21, 2002. Hon. F. James Sensenbrenner, Jr., Chairman, Committee on the Judiciary, House of Representatives, Washington, DC. Dear Mr. Chairman: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 3995, the Housing Affordability for America Act of 2002. If you wish further details on this estimate, we will be pleased to provide them. The CBO staff contact is Chad Chirico, who can be reached at 226-2820. Sincerely, Dan L. Crippen, Director. Enclosure cc: Honorable John Conyers, Jr. Ranking Member H.R. 3995--Housing Affordability for America Act of 2002. SUMMARY H.R. 3995 would amend and extend certain laws relating to housing opportunity and community development. The bill would seek to increase the availability of affordable housing and expand homeownership opportunities across the country. H.R. 3995 would authorize appropriations to fund both new initiatives and existing housing programs. CBO estimates that implementing this legislation would cost about $12.6 billion over the next 5 years, assuming appropriation of the necessary amounts. CBO estimates that enacting the bill also would increase direct spending by $34 million over the 2003-2008 period. Therefore, pay-as-you-go procedures would apply. The increase in direct spending would stem from the bill's authority to use certain unobligated funds for new grants related to elderly housing. H.R. 3995 contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act (UMRA) and would impose no costs on State, local, or tribal governments. ESTIMATED COST TO THE FEDERAL GOVERNMENT The estimated budgetary impact of H.R. 3995 is summarized in Table 1. The costs of this legislation would fall within budget functions 370 (mortgage and housing credit), 450 (community and regional development), and 600 (income security). The 2002 level is the amount appropriated for that year for the Certificate Fund, HOME Investment Partnership Program, Housing for Special Populations, HOPE VI, Homeless Assistance Grants, Housing Opportunities for Persons with AIDS, Assistance for Self-Help Housing Providers, and includes offsetting collections generated by the Federal Housing Administration's single-family program and the Government National Mortgage Association's single-family Mortgage-Backed Security program. The 2003-2007 levels are the 2002 amounts adjusted for inflation except for programs with expiring authorizations. BASIS OF ESTIMATE For this estimate, CBO assumes that H.R. 3995 will be enacted near the beginning of fiscal year 2003 and that the amounts necessary to implement the bill will be appropriated for each fiscal year. The costs by provision are shown in Table 2, which is followed by a description of the estimated costs. SPENDING SUBJECT TO APPROPRIATION Title I: Home Investment Partnerships Program. CBO estimates that implementing title I would cost $4.3 billion over the 2003-2007 period, assuming appropriation of the necessary amounts. Affordable Housing Production and Preservation. Section 101 would establish a housing production and preservation program for rental housing affordable to very low-income families. Funding for this program would be derived from any unobligated Certificate Fund balances appropriated for fiscal year 2004 or any subsequent fiscal year (the Certificate Fund provides funding for Section 8 rental assistance contracts). The bill would provide grants to participating State and local jurisdictions through the HOME Investment Partnership program. Families occupying units produced through this program would be required to pay not more than 40 percent of their adjusted monthly income toward rent. Assuming the availability of future appropriations and the enactment of section 403 of this bill, CBO estimates that approximately $1.1 billion would be available for recapture from the Certificate Fund between 2005 and 2007 (as a result of tenant-based voucher utilization rates below 100 percent). Data provided by the Department of Housing and Urban Development (HUD) indicate that units currently produced through the HOME program cost an average of $90,000. Assuming that participating jurisdictions would provide the required 25 percent match of program funding, CBO estimates that implementing this provision would provide enough funding over the 2005-2007 period to produce approximately 15,400 units of affordable housing, which would increase outlays by $236 million over that period. Eligibility of Room Additions for Use for Grandparents and Grandchildren. Section 106 would allow participating local jurisdictions to provide HOME Investment Partnership funds to low-income families to build an additional room or add a cottage to an existing dwelling for an elderly relative if it is necessary to avoid the relative's placement in an institutionalized setting. Based on data published by the Centers for Disease Control and Prevention and the Agency for Healthcare Research and Quality, CBO assumes that nearly a million elderly individuals from families eligible to receive assistance under this provision are admitted into nursing home facilities each year. About one in six of these individuals require help with fewer than three activities of daily living (ADLs), which would make them suitable candidates for home care. Results from a 1991 survey conducted by the American Association of Retired Persons indicate that 44 percent of families would prefer to care for frail or disabled family members at home. Assuming appropriation of the necessary amounts, CBO estimates that this provision would allow about 72,000 of these elderly individuals to avoid placement in an institutionalized setting each year at a cost of approximately $10,000 per grant. CBO notes that this reduction in nursing home placement could result in Medicaid savings if the beds not used by this population are not filled by previously unmet demand. (Any such change in Medicaid spending can not be attributed to H.R. 3995, however, because the grants that might lead to the savings are contingent upon appropriation action.) In addition, based on data published by the National Alliance for Caregiving, CBO assumes that by 2007 roughly 10 percent of the 1.4 million low-income households that are involved in caregiving for frail elderly relatives requiring some help (individuals with one or two ADLs) also would receive funding through this provision. This estimate is highly uncertain because the legislative language would provide little guidance to HUD on how to limit eligibility. If HUD were to target funding to families with frail relatives most likely to be admitted to nursing homes, participation would be lower than the CBO estimate. However, given the lack of predictability of nursing home admissions, the regulations might become less restrictive than CBO assumes. In total, CBO estimates that section 106 would authorize the appropriation of about $7 billion over the 2003-2007 period, with estimated outlays of about $4 billion over that period. Title II: FHA Mortgage Insurance. CBO estimates that implementing title II would cost $3 million in 2003 but save $24 million over the 2003-2007 period. Simplification of Down Payment. Section 221 would permanently change the process the Federal Housing Administration (FHA) uses to determine the amount of a down payment that is necessary for mortgages on the single-family homes that it insures. Under current law, the down payment is calculated using a formula established in a 1996 pilot program. Under this formula, the maximum mortgage amount that FHA could insure would be determined as a fixed percentage of the home value. Authority to use this formula is scheduled to terminate on December 31, 2002, but section 221would make its use permanent. Based on information from FHA, CBO estimates that continuing the use of the current down-payment formula would slightly increase the cost of guaranteeing FHA loans because it would lead to a small increase in the loan-to-value (LTV) ratios of about 15 percent of the loans guaranteed each year after 2002. The LTV ratio indicates how much equity a borrower initially has in the home, and serves as a good predictor of the likelihood of default. On average, borrowers with less equity (that is, higher LTV ratios) have higher default rates than borrowers with more equity. We estimate that this provision would increase the cost of guaranteeing some loans, resulting in a cost of $6 million in 2003 and $40 million over the 2003-2007 period. The estimated changes in FHA's loan subsidy costs--which are treated as discretionary spending-- would be recorded in each year as new loans are disbursed. Reduced Down-Payment Requirements. Section 222 would reduce the down-payment requirements for federally insured mortgages for teachers and public safety officers. Enacting this provision could enable certain teachers and public safety officers to purchase homes within their work regions with an FHA guarantee, by permitting a down payment as low as 1 percent of the mortgage amount instead of the 3 percent minimum down payment that is currently required. In addition, for each year that the loan is held and the borrower continues to work in the designated school district or public safety jurisdiction, FHA would defer 20 percent of the up-front cost of obtaining the loan. Normally, FHA charges a fee of 1.5 percent of the loan amount as the up-front cost of obtaining an FHA loan guarantee. The budgetary impact of this new loan program would depend on how many households would use this provision to help them become homeowners and how long these homeowners would remain in their homes. Based on information from associations, private investment firms, banks, FHA, and industry experts, CBO expects that about 10,000 loans (with a face value of about $1 billion) would be guaranteed after the program is fully implemented in 2004. CBO expects that demand for this program would grow to almost 20,000 loans by 2007. CBO expects that this new program would be profitable (and thus generate negative subsidies), though not as profitable as the current single-family program where fees are not waived or reduced and default rates are slightly lower. We estimate that this new program would have a subsidy rate of about negative 0.75 percent, compared to a subsidy rate of negative 2.53 percent for FHA's single-family program in 2003 and negative 2.4 percent in subsequent years. CBO estimates that implementing the program would result in additional offsetting collections of $2 million in 2003 and $41 million over the 2003-2007 period. In addition, because the majority of FHA-insured loans are eventually included in the Government National Mortgage Association (GNMA) Mortgage-Backed Securities (MBS) program, CBO estimates that implementing this provision would result in additional collections to GNMA of $1 million in 2003 and $23 million over the 2003-2007 period. Title III: Supportive Housing for Elderly and Disabled Families. CBO estimates that implementing title III would cost $60 million over the 2003-2007 period, assuming the appropriation of the necessary amounts. Section 302 would add Section 811 Supportive Housing for the Disabled to the list of federally assisted housing programs that are eligible to receive grants to provide service coordinators. Service coordinators assist residents in obtaining needed supportive services from community agencies. In fiscal year 2002, 6.4 percent of the total allocation for the Section 202 elderly housing program was earmarked for service coordinators. Assuming a similar ratio, CBO estimates that section 302 of H.R. 3995 would authorize $82 million for the 2003-2007 period, with outlays of $60 million over that period. Title IV: Section 8 Rental Housing Assistance Program. CBO estimates that implementing title IV would cost $2.7 billion over the 2003-2007 period, assuming appropriation of the necessary amounts. Thrifty Production Vouchers. Section 401 would establish a project-based voucher program to be used for the production or substantial rehabilitation of affordable housing. The provision would allow public housing agencies (PHAs) to use tenant-based vouchers for these purposes and would cap the payment standard for assisted units at 75 percent of the public housing agency's payment standard for a unit of the same size. The provision also would require HUD to increase the number of vouchers allocated to PHAs by the number of additional families that can be assisted by the agencies as a result of the cap on the payment standard for those units. Assuming that these vouchers would be used in conjunction with the housing production and preservation program in section 101, CBO estimates that 2,500 additional vouchers would be allocated to PHAs over the 2003- 2007 period. These additional vouchers would result in increased administrative fees paid to public housing agencies, costing approximately $2 million over the same period. Flexibility to Assist Hard-to-House Families. Section 403 would allow public housing authorities to use up to 5 percent of amounts allocated to the agency each year for purposes that directly support the agency's housing choice voucher program (the program that provides tenant-based vouchers to low income- families). These funds could be used for housing counseling programs, down-payment assistance, rental security deposits, and other activities that assist eligible families in obtaining suitable dwelling units. Currently, many PHAs are not able to utilize their full allotments each year because some tenant- based vouchers cannot be placed. Assuming the availability of appropriations, CBO estimates that this authority would increase outlays by $2.6 billion over the 2003-2007 period. PHA Administrative Fees. Section 405 would authorize the Secretary of HUD to pay incentive fees to public housing agencies that succeed in achieving high or substantially improved performances on specified program requirements. Based on information provided by HUD, CBO assumes that one-third of all units are administered by public housing authorities that have been rated as ``high performers'' under the Section 8 Management Assessment Program and, therefore, would be likely recipients of the incentive fees. Assuming an administrative fee bonus of 3 percent, CBO estimates that this provision would require the appropriation of $63 million over the 2003-2007 period, with outlays of $60 million over that period. Extension of Project-Based Section 8 Contract Renewals. Section 408 would amend the Multifamily Assisted Housing Reform and Affordability Act of 1997 to allow rents for properties subsidized through the moderate rehabilitation program to be renewed at market rates. Under current law, rents are renewed at the lesser of adjusted existing rents, fair market rents, or market rents. Based on data provided by HUD, State housing agencies, and public housing agencies, CBO estimates that almost half of the 52,000 moderate rehabilitation units subsidized by HUD currently have contract rents that are below market for comparable units. Average monthly rents for such units are estimated to be approximately $50 below the market rate. CBO estimates that allowing contract rents on these units to be marked up to market upon contract expiration would require the appropriation of $61 million over the 2003-2007 period, with outlays of $54 million over that period. Title V: Public Housing. CBO estimates that implementing title V would cost $532 million over the 2003-2007 period, assuming appropriation of the necessary amounts. Third-Party Public Housing Assessment System. Section 503 would give HUD the authority to develop a prototype of an alternative evaluation system for assessing the overall performance of housing authorities. The bill would require HUD to enter into a contract with an outside entity to develop the prototype assessment system. CBO estimates that this provision would cost approximately $1 million in fiscal year 2003. HOPE VI Authorization of Appropriations. Section 522 would authorize the appropriation of such sums as necessary for the HOPE VI program through 2004. In 2002, $574 million was appropriated for this program. Assuming inflation-adjusted appropriations, CBO estimates that the bill would authorize $1.2 billion for the 2003-2004 period, with outlays totaling $531 million through 2007. Title VI: Homeless Housing Programs. CBO estimates that implementing title VI would cost about $1.7 billion over the 2003-2007 period, assuming inflation-adjusted appropriations. Title VI would extend the authorizations for the following programs through 2004 for such sums as may be necessary: LInteragency Council on the Homeless (estimated outlays of $2 million over the 2003-2007 period); LFederal Emergency Management Agency food and shelter program (estimated outlays of $283 million over the 2003-2007 period); LEmergency shelter grants program (estimated outlays of $188 million over the 2003-2007 period); LSupportive housing program (estimated outlays of $950 million over the 2003-2007 period); LSection 8 assistance for single room occupancy dwellings (estimated outlays of $19 million over the 2003-2007 period); and LShelter plus care (estimated outlays of $299 million over the 2003-2007 period). Title VII: Reauthorization of Native American Housing and Self-Determination Act of 1996. Section 701 would authorize the appropriation of such sums as necessary through 2007 for Native American Housing Block Grants, title VI loan guarantees, and training and technical assistance. For 2002, $649 million was appropriated for these purposes. Assuming continued funding at that level and adjusting for inflation, CBO estimates that implementing this provision would cost $2.3 billion over the 2003-2007 period. Title IX: Other Housing Programs. CBO estimates that implementing title IX would cost $1.1 billion over the 2003- 2007 period, assuming appropriation of the necessary amounts. GNMA Guarantee Fee. GNMA is responsible for guaranteeing securities backed by pools of mortgages insured by the Federal Government. (These securities are known as mortgage-backed securities or MBS). For a fee charged to lenders or issuers of the securities, GNMA guarantees the timely payments of scheduled principal and interest due on the pooled mortgages that back their securities. Under current law, GNMA charges lenders or issuers an annual fee of 6 cents for every $100 (6 basis points) of guaranteed mortgage-backed securities backed by single-family loans. Furthermore, a fee increase to 9 basis points is scheduled to take effect on October 1, 2004. Section 901 would repeal that fee increase. CBO estimates that eliminating the fee increase would increase the subsidy rate associated with the single-family MBS program and increase the demand for the program. Based on information from GNMA, CBO estimates that the collection of lower fees would reduce the subsidy for the single-family MBS program from negative 0.56 percent to negative 0.37 percent. (As with the FHA single-family program, GNMA guarantee fees for the mortgage-backed securities more than offset the costs of expected defaults, resulting in net collections from the MBS program.) CBO expects that by extending the lower fee of 6 basis points, however, GNMA would remain more competitive with other MBS programs and continue to guarantee more than $100 billion worth of mortgage-backed securities, as it does under the current fee structure. Thus, while repealing the fee increase would result in a less profitable program, this loss would be partially offset by additional receipts stemming from an expected increase in demand for GNMA services of about 25 percent. On balance, CBO estimates that implementing this provision would cost $56 million in 2005 and $173 million over the 2005-2007 period. Assistance for Self-Help Housing Providers. Section 903 would authorize the appropriation of such sums as necessary for the Assistance for Self-Help Housing Providers program through 2007. For 2002, $22 million was appropriated for this program. Assuming continued funding at that level and adjusting for anticipated inflation, CBO estimates that implementing this provision would cost $69 million over the 2003-2007 period. Housing Opportunities for Persons with AIDS. Section 904 would authorize the appropriation of such sums as necessary through 2007 for the Housing Opportunities for Persons with Aids program. For 2002, $277 million was appropriated for this program. Assuming inflation-adjusted appropriations, CBO estimates that the bill would authorize $1.5 billion for the 2003-2007 period, with outlays of $820 million over that period. Direct Spending Section 301 would authorize the use of any amounts that remain unobligated as of September 30, 2002, for grants under section 202b of the Housing Act of 1959 to carry out a program to demonstrate the effectiveness of providing funds to be used for the repair, rehabilitation and modernization needs of section 236 elderly housing. Based on information provided by HUD, CBO estimates that the use of unobligated funds will increase outlays by $34 million over the 2003-2008 period. PAY-AS-YOU-GO CONSIDERATIONS The Balanced Budget and Emergency Deficit Control Act sets up pay-as-you-go procedures for legislation affecting direct spending or receipts. The changes in outlays that are subject to pay-as-you-go procedures are shown in the following table. For the purposes of enforcing pay-as-you-go procedures, only the effects through 2006 are counted. INTERGOVERNMENTAL AND PRIVATE-SECTOR IMPACT HR. 3995 contains no intergovernmental or private-sector mandates as defined in UMRA and would impose no costs on State, local, or tribal governments. Any significant costs to State, local, or tribal governments would result from complying with conditions of Federal aid. ESTIMATE PREPARED BY: Federal Costs: Housing Assistance Programs: Chad Chirico (226-2820) FHA and GNMA Subsidies: Susanne S. Mehlman (226-2860) Self-Help Housing Providers: Lanette Walker (226-2860) Impact on State, Local, and Tribal Governments: Greg Waring (225-3220) Impact on the Private Sector: Cecil McPherson (226-2949) ESTIMATE APPROVED BY: Peter H. Fontaine Deputy Assistant Director for Budget Analysis Constitutional Authority Statement Pursuant to clause 3(d)(1) of rule XII of the Rules of the House of Representatives, the Committee finds the authority for this legislation in article I, section 8, clause 3 of the Constitution. Section-by-Section Analysis and Discussion Section 801. Applicability. Except for certain agencies delineated by section 802, the requirements of this title shall apply to any proposed rule unless the agency promulgating the rule certifies that the proposed rule will not, if given force or effect as a final rule, have a significant deleterious impact on housing affordability. This certification must be published in the Federal Register at the time of publication of the general notice of proposed rulemaking for the rule. Section 801 also applies to any final rule, unless the agency promulgating the rule has certified that the rule will not have a significant deleterious impact on housing affordability. This certification must be published in the Federal Register at the time of publication of the final rule. Section 802. Exception for Certain Banking Rules. This title does not apply to any proposed or final rule relating to the safety and soundness of a federally insured depository institution; credit union, Federal home loan bank; government sponsored enterprise; a Farm Credit institution or foreign bank or their branches; agencies or their representative offices operating in the United States. Section 803. Statement of Proposed Rulemaking. Unless the agency has made a certification, the agency shall publish a general notice of proposed rulemaking for any proposed rule. The notice must state the text of the proposed rule and request any interested persons to submit to the agency any written analyses, views and any specific alternatives to the proposed rule. The agency must also provide an opportunity for interested persons to comment prior to promulgation of the final rule. In addition, the agency is required to prepare and make available an initial housing impact analysis in accordance with section 804. Section 804. Initial Housing Impact Analysis. For each proposed rule, the initial housing impact analysis shall consist of a description of the reasons an agency is taking that particular action, the objectives and legal basis for such rule, and a description of and, where feasible, of the estimate of the extent to which the proposed rule would increase the cost or reduce the supply of housing or land for residential development. The initial analysis must also include a description of the relevant Federal rules, which may be duplicative or conflict with the proposed rule. Section 805. Final Housing Impact Analysis. Whenever an agency promulgates a final rule after publication of a general notice of proposed rulemaking, the agency shall prepare a final housing impact analysis. Each final housing impact analysis shall contain a statement of the need for and objectives of the rule; a summary of the significant issues, analyses and alternatives to the proposed rule raised during the public comment period in response to the proposed rule and initial housing impact analysis; a summary of the agency assessment of the issues, analyses and alternatives, and a statement of any changes made in the proposed rule as a result of such comments; and a description of and an estimate of the extent to which the rule will impact housing affordability or an explanation of why no such estimate is available. The agency is required to make copies of the final housing impact analysis available to members of the public and shall publish in the Federal Register such analysis. Section 806. Avoidance of Duplicative or Unnecessary Analyses. An agency may perform the analyses required by sections 804 and 805 in conjunction with any other agenda or analyses required by any other law, executive order, or directive. In order to avoid unnecessary duplication, an agency may consider a series of closely related rules as one rule for purposes of sections 804 and 805 requirements. Section 807. Preparation of Analyses. In complying with sections 804 and 805, an agency may use either a quantifiable or numerical description of the effects of a proposed rule or alternatives to the proposed rule, or more general descriptive statement if quantification is not practicable or reliable. Section 808. Effect on Other Law. The requirements of sections 804 and 805 do not alter in any way otherwise applicable by law to agency action. Section 809. Procedure for Waiver or Delay of Completion. Section 804 compliance may be waived or delayed by publication in the Federal Register of a written finding that the final rule cannot be delayed and is being promulgated in response to an emergency. Section 805 compliance may be delayed, but not waived, for no more than 180 days after publication in the Federal Register of the final rule. Section 805 compliance may be delayed by publication in the Federal Register of a written finding that the final rule cannot be delayed and is being promulgated in response to an emergency. If the agency has not prepared a final housing impact analysis within 180 days from the date of publication of the final rule, such rule shall lapse and have no force or effect. Section 810. Definitions. (1) the term ``agency'' does not include Congress; the courts of the United States; the governments of the territories or possessions of the United States; the government of the District of Columbia; agencies composed of representatives of the parties or of representatives of organizations of the parties to the disputes determined by them; courts-martial and military commissions; or military authority exercised in the field in time of war. (2) the term ``families'' has the meaning given such term as in section 3 of the United States Housing Act of 1937. (3) the term ``housing affordability'' means the quantity of housing that is affordable to families having incomes that do not exceed 150 percent of the median income of families in the area in which the housing is located, adjusting for the size of the family. (4) the term ``rule'' means any rule for which the agency published a general notice of proposed rulemaking pursuant to section 553(b) of title 5, United States Code, or any other law for which an agency to state and local governments provides an opportunity for notice and public comment, with certain exceptions. (5) the term ``significant'' impact is defined as increasing consumer's costs of housing by more than $100,000,000 a year. Section 811. Development. No later than 1 year after enactment, the Secretary of Housing and Urban Development shall develop model initial and final housing impact analyses under this title which shall be published in the Federal Register. The model analyses shall define the primary elements of a housing impact analyses to instruct other agencies on how to carry out and develop the analyses required under sections 804 and 805. Section 812. Judicial Review. Any determination by an agency concerning the applicability of any provisions of this title shall not be subject to judicial review. Housing impact analyses prepared in accordance with this title are not subject to judicial review. Title VIII does not bar judicial review of any other impact statement required by any other law. Changes in Existing Law Made by the Bill, as Reported The bill was referred to this Committee for consideration of such provisions of the bill as fall within the jurisdiction of this Committee pursuant to clause 1(k) of rule X of the Rules of the House of Representatives. Such provisions under the consideration of this Committee, as reported by the Committee, does not make any changes in existing law. Markup Transcript BUSINESS MEETING TUESDAY, JULY 23, 2002 House of Representatives, Committee on the Judiciary, Washington, DC. The Committee met, pursuant to notice, at 10:00 a.m., in Room 2141, Rayburn House Office Building, Hon. F. James Sensenbrenner, Jr. [Chairman of the Committee] presiding. * * * * * * * The next item on the agenda is the adoption of H.R. 3995, the ``Housing Affordability for America Act of 2002.'' The Chair recognizes the gentleman from Georgia, Mr. Barr, Chairman of the Subcommittee on Commercial and Administrative Law. Mr. Barr. Mr. Chairman, the Subcommittee on Commercial and Administrative Law reports favorably on H.R. 3995. On March 19 of this year, Congresswoman Marge Roukema introduced H.R. 3995. Chairman Sensenbrenner. Without objection, H.R. 3995 will be considered as read and open for amendment at any point. [The bill, H.R. 3995, follows:] Chairman Sensenbrenner. The Chair recognizes the gentleman from Georgia, Mr. Barr, to strike the last word. Mr. Barr. Thank you, Mr. Chairman. Mr. Chairman, the Subcommittee on Commercial and Administrative Law reports favorably on H.R. 3995. On March 19 of this year, Congresswoman Marge Roukema introduced H.R. 3995, the ``Housing Affordability for America Act of 2002,'' and since its introduction, 73 Members have co-sponsored the bill. This bill concerns a topic that affects everyone: affordable housing for Americans. Homeownership is an investment in our neighborhoods and our society. It stabilizes and strengthens communities. Yet, while levels of homeownership are at an all-time high, the dream of affordable housing still remains out of reach for many Americans. This bill recognizes this problem and seeks to make the dream a reality for more Americans. The Financial Services Committee exercised its jurisdiction over all but one portion of this bill. Its Subcommittee on Housing and Community Opportunity held hearings and markup on H.R. 3995, and on July 10, the Committee approved the bill. The Judiciary Committee retains jurisdiction over title VIII of H.R. 3995. And on July 16th, the Subcommittee on Commercial and Administrative Law reported the bill to the full Committee by voice vote without amendment. That title is virtually identical to H.R. 2753, which was introduced on August 2 of last year by my distinguished colleague from Wisconsin, Mr. Green. Title VIII simply requires Federal agencies to prepare and publish a housing impact analysis when noticing proposed rules for public comment when those rules have an impact on housing affordability in excess of $100 million. Under title VIII, agencies publishing notice of proposed rulemaking for a proposed rule will be required to prepare an initial housing impact analysis. This analysis would include: one, reasons why the agency action is being considered; two, the objectives of and legal basis for the proposed rule; and, three, a description and an estimate of the extent to which the proposed rule would increase the cost or reduce the supply of housing or land for residential development. To accompany the promulgation of a final rule, title VIII would require a final housing impact analysis statement to summarize and assess the issues and alternatives raised during the public comment period. The final impact analysis would include a statement of any changes made in the proposed rule as a result of such comments and describe and estimate the extent to which the rule will impact housing affordability. Title VIII will not unduly burden agencies. Agencies which propose rules that will not have an economic impact on housing in excess of $100 million need not prepare impact analysis statements. In such cases, the head of the agency must simply provide a certification to that effect and a supporting factual statement for publication in the Federal Register. Title VIII also provides procedures for the delay of completion of an impact analysis and, in the case of proposed rules, for the waiver of the impact analyses when rules are being promulgated in response to an emergency. Our recognition of the need for housing impact analyses when promulgating agency rules is not new. In the 106th Congress, the House approved H.R. 1776, the ``American Homeownership and Economic Opportunity Act of 2000,'' a bill containing a more exacting version of the impact analysis requirements contained in title VIII. That bill was approved by a vote of 417 to 8 but did not come up for vote in the Senate. Title VIII of H.R. 3995 will hopefully lead to rules which make affordable housing less burdensome to acquire and more accessible to more Americans. It should be supported, and I urge its adoption. I yield back. Chairman Sensenbrenner. The gentleman from North Carolina, Mr. Watt, the Ranking Member. Mr. Watt. Thank you, Mr. Chairman. The part of this bill over which our Subcommittee and over which this full Committee has jurisdiction is very limited and noncontroversial. It will probably add some more paperwork at the Federal level, but with a valuable purpose. And I encourage my colleagues to support the bill and yield back. [The prepared statement of Ms. Jackson Lee follows:] Chairman Sensenbrenner. Are there amendments to title VIII of the bill? If there are not, the Chair notes the presence of a reporting quorum. The question occurs on the motion to report the bill H.R. 3995 favorably. Those in favor will say aye. Opposed, no. The ayes appear to have it. The ayes have it, and the motion to report favorably is agreed to. Without objection, the Chairman is authorized to move to go to conference pursuant to House rules. Without objection, the staff is directed to make any technical and conforming changes. And all Members will be given 2 days, as provided by the rules, in which to submit additional, dissenting, supplemental, or minority views.