Report text available as:

  • TXT
  • PDF   (PDF provides a complete and accurate display of this text.) Tip ?

110th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 1st Session                                                    110-463

======================================================================



 
       SECTION 202 SUPPORTIVE HOUSING FOR THE ELDERLY ACT OF 2007

                                _______
                                

December 4, 2007.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

 Mr. Frank of Massachusetts, from the Committee on Financial Services, 
                        submitted the following

                              R E P O R T

                        [To accompany H.R. 2930]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Financial Services, to whom was referred 
the bill (H.R. 2930) to amend section 202 of the Housing Act of 
1959 to improve the program under such section for supportive 
housing for the elderly, and for other purposes, having 
considered the same, report favorably thereon with an amendment 
and recommend that the bill as amended do pass.

                                CONTENTS

                                                                   Page
Amendment........................................................     2
Purpose and Summary..............................................     7
Background and Need for Legislation..............................     7
Hearings.........................................................    10
Committee Consideration..........................................    11
Committee Votes..................................................    11
Committee Oversight Findings.....................................    11
Performance Goals and Objectives.................................    11
New Budget Authority, Entitlement Authority, and Tax Expenditures    12
Committee Cost Estimate..........................................    12
Congressional Budget Office Estimate.............................    12
Federal Mandates Statement.......................................    17
Advisory Committee Statement.....................................    17
Constitutional Authority Statement...............................    17
Applicability to Legislative Branch..............................    17
Earmark Identification...........................................    17
Section-by-Section Analysis of the Legislation...................    17
Changes in Existing Law Made by the Bill, as Reported............    20

                               Amendment

    The amendment is as follows:
    Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

  (a) Short Title.--This Act may be cited as the ``Section 202 
Supportive Housing for the Elderly Act of 2007''.
  (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title and table of contents.

                   TITLE I--NEW CONSTRUCTION REFORMS

Sec. 101. Project rental assistance.
Sec. 102. Selection criteria.
Sec. 103. Development cost limitations.
Sec. 104. Owner deposits.
Sec. 105. Definition of private nonprofit organization.
Sec. 106. Preferences for homeless elderly.

                         TITLE II--REFINANCING

Sec. 201. Approval of prepayment of debt.
Sec. 202. Sources of refinancing.
Sec. 203. Use of unexpended amounts.
Sec. 204. Use of project residual receipts.
Sec. 205. Additional provisions.

                 TITLE III--ASSISTED LIVING FACILITIES

Sec. 301. Definition of assisted living facility.
Sec. 302. Monthly assistance payment under rental assistance.

  TITLE IV--FACILITATING AFFORDABLE HOUSING PRESERVATION TRANSACTIONS

Sec. 401. Use of sale or refinancing proceeds.

                   TITLE I--NEW CONSTRUCTION REFORMS

SEC. 101. PROJECT RENTAL ASSISTANCE.

  Paragraph (2) of section 202(c) of the Housing Act of 1959 (12 U.S.C. 
1701q(c)(2)) is amended--
          (1) by inserting after ``assistance.--'' the following: ``(A) 
        Initial project rental assistance contract.--'';
          (2) in the last sentence, by striking ``may'' and inserting 
        ``shall''; and
          (3) by adding at the end the following new subparagraph:
          ``(B) Renewal of and increases in contract amounts.--
                  ``(i) Expiration of contract term.--Upon the 
                expiration of each contract term, the Secretary shall 
                adjust the annual contract amount to provide for 
                reasonable project costs, and any increases, including 
                adequate reserves, supportive services, and service 
                coordinators, except that any contract amounts not used 
                by a project during a contract term shall not be 
                available for such adjustments upon renewal.
                  ``(ii) Emergency situations.--In the event of 
                emergency situations that are outside the control of 
                the owner, the Secretary shall increase the annual 
                contract amount, subject to reasonable review and 
                limitations as the Secretary shall provide.''.

SEC. 102. SELECTION CRITERIA.

  Subsection (f) of section 202 of the Housing Act of 1959 (12 U.S.C. 
1701q(f)) is amended--
          (1) by striking ``Selection Criteria.--'' and inserting 
        ``Initial Selection Criteria and Processing.--(1) Selection 
        criteria.--'';
          (2) by redesignating paragraphs (1), (2), (3), (4), (5), (6), 
        and (7) as subparagraphs (A), (B), (C), (D), (E), (G), and (H), 
        respectively;
          (3) by inserting after subparagraph (E) (as so redesignated 
        by paragraph (2) of this subsection) the following new 
        subparagraph:
          ``(F) the extent to which the applicant has ensured that a 
        service coordinator will be employed or otherwise retained for 
        the housing, who has the managerial capacity and responsibility 
        for carrying out the actions described in subparagraphs (A) and 
        (B) of subsection (g)(2);''; and
          (4) by adding at the end the following new paragraph:
  ``(2) Delegated Processing.--
          ``(A) In issuing a capital advance under this subsection for 
        any project for which financing for the purposes described in 
        the last two sentences of subsection (b) is provided by a 
        combination of a capital advance under subsection (c)(1) and 
        sources other than this section, within 30 days of award of the 
        capital advance, the Secretary shall delegate review and 
        processing of such projects to a State or local housing agency 
        that--
                  ``(i) is in geographic proximity to the property;
                  ``(ii) has demonstrated experience in and capacity 
                for underwriting multifamily housing loans that provide 
                housing and supportive services;
                  ``(iii) may or may not be providing low-income 
                housing tax credits in combination with the capital 
                advance under this section, and
                  ``(iv) agrees to issue a firm commitment within 12 
                months of delegation.
          ``(B) The Secretary shall retain the authority to process 
        capital advances in cases in which no State or local housing 
        agency has applied to provide delegated processing pursuant to 
        this paragraph or no such agency has entered into an agreement 
        with the Secretary to serve as a delegated processing agency.
          ``(C) An agency to which review and processing is delegated 
        pursuant to subparagraph (A) may assess a reasonable fee which 
        shall be included in the capital advance amounts and may 
        recommend project rental assistance amounts in excess of those 
        initially awarded by the Secretary. The Secretary shall develop 
        a schedule for reasonable fees under this subparagraph to be 
        paid to delegated processing agencies, which shall take into 
        consideration any other fees to be paid to the agency for other 
        funding provided to the project by the agency, including bonds, 
        tax credits, and other gap funding.
          ``(D) Under such delegated system, the Secretary shall retain 
        the authority to approve rents and development costs and to 
        execute a capital advance within 60 days of receipt of the 
        commitment from the State or local agency. The Secretary shall 
        provide to such agency and the project sponsor, in writing, the 
        reasons for any reduction in capital advance amounts or project 
        rental assistance and such reductions shall be subject to 
        appeal.''.

SEC. 103. DEVELOPMENT COST LIMITATIONS.

  Section 202(h)(1) of the Housing Act of 1959 (12 U.S.C. 1701q(h)(1)) 
is amended, in the matter preceding subparagraph (A), by inserting 
``reasonable'' before ``development cost limitations''.

SEC. 104. OWNER DEPOSITS.

  Section 202(j)(3)(A) of the Housing Act of 1959 (12 U.S.C. 
1701q(j)(3)(A)) is amended by inserting after the period at the end the 
following: ``Such amount shall be used only to cover operating deficits 
during the first three years of operations and shall not be used to 
cover construction shortfalls or inadequate initial project rental 
assistance amounts.''.

SEC. 105. DEFINITION OF PRIVATE NONPROFIT ORGANIZATION.

  Subparagraph (B) of section 202(k)(4) of the Housing Act of 1959 (12 
U.S.C. 1701q(k)(4)(B)) is amended by inserting before the semicolon the 
following: ``; except that, in the case of any national organization 
that is the owner of multiple housing projects assisted under this 
section, the organization may comply with clause (i) of this 
subparagraph by having a local advisory board to the governing board of 
the organization the membership of which is selected in the manner 
required under clause (i)''.

SEC. 106. PREFERENCES FOR HOMELESS ELDERLY.

  Subsection (j) of section 202 (12 U.S.C. 1701q(j)) is amended by 
adding at the end the following new paragraph:
          ``(9) Preferences for homeless elderly.--The Secretary shall 
        permit an owner of housing assisted under this section to 
        establish for, and apply to, the housing a preference in tenant 
        selection for the homeless elderly, either within the 
        application or after selection pursuant to subsection (f), but 
        only if--
                  ``(A) such preference is consistent with paragraph 
                (2) of this subsection; and
                  ``(B) the owner demonstrates that the supportive 
                services identified pursuant to subsection (e)(4), or 
                additional supportive services to be made available 
                upon implementation of the preference, will meet the 
                needs of the homeless elderly, maintain safety and 
                security for all tenants, and be provided on a 
                consistent, long-term, and economical basis.''.

                         TITLE II--REFINANCING

SEC. 201. APPROVAL OF PREPAYMENT OF DEBT.

  Subsection (a) of section 811 of the American Homeownership and 
Economic Opportunity Act of 2000 (12 U.S.C. 1701q note) is amended--
          (1) in the matter preceding paragraph (1), by inserting ``, 
        for which the Secretary's consent to prepayment is required'' 
        after ``Act)'';
          (2) in paragraph (1)--
                  (A) by inserting ``project-based'' before ``rental 
                assistance payments contract'';
                  (B) by inserting ``project-based'' before ``rental 
                housing assistance programs''; and
                  (C) by inserting ``, or any successor project-based 
                rental assistance program,'' after ``1701s))''; and
          (3) in paragraph (2)--
                  (A) by inserting ``(A)'' before ``a lower''; and
                  (B) by inserting before the period at the end the 
                following: ``, or (B) a transaction in which the 
                project owner will address the physical needs of the 
                project, but only if, as a result of the refinancing 
                (i) the rent charges for unassisted families residing 
                in the project do not increase or such families are 
                provided rental assistance under a senior preservation 
                rental assistance contract for the project pursuant to 
                subsection (e), and (ii) the overall cost for providing 
                rental assistance under section 8 for the project (if 
                any) does not increase''.

SEC. 202. SOURCES OF REFINANCING.

  The last sentence of section 811(b) of the American Homeownership and 
Economic Opportunity Act of 2000 (12 U.S.C. 1701q note) is amended--
          (1) by inserting after ``National Housing Act,'' the 
        following: ``or approving the standards used by authorized 
        lenders to underwrite a loan refinanced with risk sharing as 
        provided by section 542 of the Housing and Community 
        Development Act of 1992 (12 U.S.C. 1701 note),''; and
          (2) by striking ``may'' and inserting ``shall''.

SEC. 203. USE OF UNEXPENDED AMOUNTS.

  Subsection (c) of section 811 of the American Homeownership and 
Economic Opportunity Act of 2000 (12 U.S.C. 1701q note) is amended--
          (1) in the matter preceding paragraph (1), by inserting after 
        ``tenants,'' the following: ``or is used in the provision of 
        affordable rental housing and related social services for 
        elderly persons by the private nonprofit organization project 
        owner, private nonprofit organization project sponsor, or 
        private nonprofit organization project developer,'';
          (2) in paragraph (1), by striking ``not more than 15 percent 
        of'';
          (3) in paragraph (2), by inserting before the semicolon the 
        following; ``, including reducing the number of units and 
        reconfiguring units that are functionally obsolete, 
        unmarketable, or not economically viable'';
          (4) in paragraph (3), by striking ``or'' at the end;
          (5) in paragraph (4) by striking the period at the end and 
        inserting a semicolon; and
          (6) by adding at the end the following new paragraphs:
          ``(5) the payment to the project owner, sponsor, or third 
        party developer of a developer's fee in an amount not to 
        exceed--
                  ``(A) in the case of a project refinanced through a 
                State low income housing tax credit program, the fee 
                permitted by the low income housing tax credit program 
                as calculated by the State program as a percentage of 
                acceptable development cost as defined by that State 
                program; or
                  ``(B) in the case of a project refinanced through any 
                other source of refinancing, 15 percent of the 
                acceptable development cost; or
          ``(6) the payment of equity, if any, to--
                  ``(A) in the case of a sale, to the seller or the 
                sponsor of the seller, in an amount equal to the lesser 
                of the purchase price or the appraised value of the 
                property, as each is reduced by the cost of prepaying 
                any outstanding indebtedness on the property and 
                transaction costs of the sale; or
                  ``(B) in the case of a refinancing without the 
                transfer of the property, to the project owner or the 
                project sponsor, in an amount equal to the difference 
                between the appraised value of the property less the 
                outstanding indebtedness and total acceptable 
                development cost.
For purposes of paragraphs (5)(B) and (6)(B), the term ``acceptable 
development cost'' shall include, as applicable, the cost of 
acquisition, rehabilitation, loan prepayment, initial reserve deposits, 
and transaction costs.''.

SEC. 204. USE OF PROJECT RESIDUAL RECEIPTS.

  Paragraph (1) of section 811(d) of the American Homeownership and 
Economic Opportunity Act of 2000 (12 U.S.C. 1701q note) is amended--
          (1) by striking ``not more than 15 percent of''; and
          (2) by inserting before the period at the end the following: 
        ``or other purposes approved by the Secretary''.

SEC. 205. ADDITIONAL PROVISIONS.

  Section 811 of the American Homeownership and Economic Opportunity 
Act of 2000 (12 U.S.C. 1701q note) is amended by adding at the end the 
following new subsections:
  ``(e) Senior Preservation Rental Assistance Contracts.--
Notwithstanding any other provision of law, in connection with a 
prepayment plan for a project approved under subsection (a) by the 
Secretary or as otherwise approved by the Secretary, to prevent 
displacement of elderly residents of the project in the case of 
refinancing or recapitalization and to further preservation and 
affordability of such project, at the election of the private nonprofit 
organization owner of the project, the Secretary shall provide project-
based rental assistance for the project under a senior preservation 
rental assistance contract, as follows:
          ``(1) Assistance under the contract shall be made available 
        to the private nonprofit organization owner--
                  ``(A) for a term of at least 20 years, subject to 
                annual appropriations, and
                  ``(B) under the same rules governing project-based 
                rental assistance made available under section 8 of the 
                Housing Act of 1937.
          ``(2) Any projects for which a senior preservation rental 
        assistance contract is provided shall be subject to a use 
        agreement to ensure continued project affordability having a 
        term of the longer of (A) the term of the senior preservation 
        rental assistance contract, or (B) such term as is required by 
        the new financing.
  ``(f) Mortgage Sale Demonstration.--
          ``(1) In general.--The Secretary may sell mortgages 
        associated with loans made under section 202 of the Housing Act 
        of 1959 (as in effect before the enactment of the Cranston-
        Gonzalez National Affordable Housing Act) in accordance with 
        the relevant terms for sales of subsidized loans on multifamily 
        housing projects under section 203 of the Housing and Community 
        Development Amendments of 1978 (12 U.S.C. 1701z-11). For the 
        purpose of demonstrating the efficiency, effectiveness, 
        quality, and timeliness of asset management and regulatory 
        oversight of certain portfolios of such mortgages by State 
        housing finance agencies, the Secretary shall carry out a 
        demonstration program, in not more than three States, to sell 
        portfolios of such mortgages to State housing finance agencies 
        for a price not to exceed the unpaid principal balances of such 
        mortgages and otherwise in accordance with the requirements of 
        such section 203.
          ``(2) Limitations.--In carrying out the demonstration 
        program, the Secretary shall--
                  ``(A) prohibit State housing finance agencies from 
                giving preference to, or conditioning the approval of, 
                awards of subordinate debt funds, allocations of tax 
                credits, or tax exempt bonds based on the use of 
                financing for the first mortgage that is provided by 
                such State housing finance agency; and
                  ``(B) require such agencies to allow refinancing or 
                prepayment of loans made under section 202 of the 
                Housing Act of 1959 with a loan selected by the owners, 
                except that any use restrictions on the property for 
                which the loan was made shall remain in effect for the 
                duration provided under the original terms of such 
                loan.
  ``(g) Subordination or Assumption of Existing Debt.--In lieu of 
prepayment under this section of the indebtedness with respect to a 
project, the Secretary may approve--
          ``(1) in connection with new financing for the project, the 
        subordination of the loan for the project under section 202 of 
        the Housing Act of 1959 (as in effect before the enactment of 
        the Cranston-Gonzalez National Affordable Housing Act) and the 
        continued subordination of any other existing subordinate debt 
        previously approved by the Secretary to facilitate preservation 
        of the project as affordable housing, or
          ``(2) the assumption (which may include the subordination 
        described in paragraph (1)) of the loan for the project under 
        such section 202 in connection with the transfer of the project 
        with such a loan to a private nonprofit organization.
  ``(h) Flexible Subsidy Debt.--The Secretary shall waive the 
requirement that debt for a project pursuant to the flexible subsidy 
program under section 201 of the Housing and Community Development 
Amendments of 1978 (12 U.S.C. 1715z-1a) be prepaid in connection with a 
prepayment, refinancing, or transfer under this section of a project if 
such waiver is necessary for the financial feasibility of the 
transaction and is consistent with the long-term preservation of the 
project as affordable housing.
  ``(i) Prepayment When Secretary's Consent Not Required.--In 
connection with the prepayment under this section of a loan for which 
the Secretary's consent to prepayment is not required, at the project 
owner's election--
          ``(1) all tenants of the project shall be eligible for 
        enhanced vouchers in accordance with section 8(t) of the United 
        States Housing Act of 1937 (42 U.S.C. 1437f(t)); or
          ``(2) if the project will continue to be owned by a private 
        nonprofit organization owner, such private nonprofit 
        organization owner may enter into a senior preservation rental 
        assistance contract with the Secretary in accordance with 
        subsection (e).
  ``(j) Definition of Private Nonprofit Organization.--For purposes of 
this section, the term `private nonprofit organization' has the meaning 
given such term in section 202(k) of the Housing Act of 1959 (12 U.S.C. 
1701q(k)).''.

                 TITLE III--ASSISTED LIVING FACILITIES

SEC. 301. DEFINITION OF ASSISTED LIVING FACILITY.

  Section 202b(g) of the Housing Act of 1959 (12 U.S.C. 1701q-2(g)) is 
amended by striking paragraph (1) and inserting the following new 
paragraph:
          ``(1) the term `assisted living facility' means a facility 
        that--
                  ``(A) is owned by a private nonprofit organization; 
                and
                  ``(B)(i) is licensed and regulated by the State (or 
                if there is no State law providing for such licensing 
                and regulation by the State, by the municipality or 
                other political subdivision in which the facility is 
                located); or
                  ``(ii)(I) makes available, directly or through 
                recognized and experienced third party service 
                providers, to residents at the resident's request or 
                choice supportive services to assist the residents in 
                carrying out the activities of daily living, such as 
                bathing, dressing, eating, getting in and our of bed or 
                chairs, walking, going outdoors, toileting, laundry, 
                home management, preparing meals, shopping for personal 
                items, obtaining and taking medication, managing money, 
                using the telephone, or performing light of heavy 
                housework, and which may make available to residents 
                home health care service, such as nursing and therapy, 
                and certain health related services; and
                  ``(II) provides separate dwelling units for 
                residents, each of which may contain a full kitchen and 
                bathroom and which includes common rooms and other 
                facilities appropriate for the provision of supportive 
                services to the residents of the facility; and''.

SEC. 302. MONTHLY ASSISTANCE PAYMENT UNDER RENTAL ASSISTANCE.

  Clause (iii) of section 8(o)(18)(B) of the United States Housing Act 
of 1937 (42 U.S.C. 1437f(o)(18)(B)(iii)) is amended by inserting before 
the period at the end the following: ``, except that a family may be 
required at the time the family initially receives such assistance to 
pay rent in an amount exceeding 40 percent of the monthly adjusted 
income of the family by such an amount or percentage as the Secretary 
deems appropriate''.

  TITLE IV--FACILITATING AFFORDABLE HOUSING PRESERVATION TRANSACTIONS

SEC. 401. USE OF SALE OR REFINANCING PROCEEDS.

  Notwithstanding any other provision of law, in connection with the 
sale or refinancing of a multifamily housing project, or the transfer 
of an assistance contract on such a property, that requires the 
approval of the Secretary of Housing and Urban Development, the 
Secretary shall not impose any condition that restricts the amount or 
use of sale or refinancing proceeds, or requires the filing of a 
financial report, unless such condition is expressly authorized by an 
existing contract entered into between the Secretary (or the 
Secretary's designee) and the project owner before the imposition of a 
condition prohibited by this section or is a general condition for new 
financing with a mortgage insured by the Secretary. Any such condition 
previously imposed by the Secretary after January 1, 2005, shall, at 
the option of the project owner, be considered void and not 
enforceable, and any agreement containing such a condition shall be 
rescinded and may be reissued without the void condition.

                          Purpose and Summary

    H.R. 2930, the ``Section 202 Supportive Housing for the 
Elderly Act,'' facilitates the construction, rehabilitation and 
preservation of affordable, supportive housing for very-low 
income elderly persons. The goal of the bill is to streamline 
the development of new 202 housing units, while enabling owners 
of older Section 202 projects to rehabilitate and preserve 
their properties as affordable for very low-income elderly 
persons, while preserving the highest quality of housing and 
services available.

                  Background and Need for Legislation

    The ``Section 202 Supportive Housing for the Elderly Act of 
2007'' amends the Housing Act of 1959 (P.L. 86-372). At its 
inception, the Section 202 program provided low-interest, 50-
year construction loans to non-profit developers for the 
development of affordable housing projects for moderate income 
seniors. Currently, there are 292 projects with over 40,000 
units with active loans under this phase of the program.
    The Housing and Community Opportunity Development Act of 
1974 made several key changes to the program. The duration of 
loans was reduced from 50 to 40 years; section 8 project-based 
assistance was added to enable more low-income elderly 
households to participate in the program; the interest on loans 
was raised to the U.S. Treasury's cost of borrowing; new 
developments were required to support state and local support 
service plans; and 20-25 percent of program funds were to be 
used for non-metropolitan areas.
    In 1990, the Cranston-Gonzalez National Affordable Housing 
Act (P.L. 101-625) modified the program significantly, 
replacing loans with capital advance grants combined with a 
project rental assistance contract (PRAC) and establishing the 
program structure under which the program currently operates. 
Additionally, in 2000, the American Homeownership and Economic 
Opportunity Act (P.L. 106-569) provided detailed terms and 
conditions under which owners are allowed to prepay Section 202 
mortgages and refinance for the purpose of project 
rehabilitation and modernization. The bill also permits the use 
of private financing and Federal Low Income Housing Tax Credits 
in combination with Section 202 capital funds by permitting 
for-profit limited partnerships to own Section 202 properties, 
under the condition that the sole general partner be a private 
non-profit organization.
    The Committee believes that the Section 202 program, the 
only HUD affordable housing program exclusively serving 
seniors, provides a vital link between affordable housing and 
supportive services. Moreover, the demand for available, 
affordable housing for seniors will only increase as members of 
the ``baby boomer'' generation reach their 60s. According to A 
Quiet Crisis in America, a report by the Commission on 
Affordable Housing and Health Facility Needs for Seniors in the 
21st Century, the number of senior households will have grown 
by 53 percent by 2020. A recent AARP study of the nation's 
available Section 202 housing stock estimated that for every 
unit of Section 202 housing that became available in 2006, 
there were 10 seniors waiting. The need to produce more housing 
and preserve the existing housing stock is very real, and soon 
may be dire.
    Capital Advance New Construction. The American 
Homeownership and Economic Opportunity Act of 2000 permitted 
the combination of 202 capital advance funds with other 
financing sources, including Low-Income Housing Tax Credits. 
However, the Committee has received testimony from project 
sponsors stating that, due to HUD's interpretation of existing 
law, the underwriting process for mixed finance grants is 
prolonged and often results in increases in development costs 
and delays in bringing developments online. It is the intention 
of the Committee that this bill will encourage sponsors to 
combine financing sources by simplifying the grant underwriting 
process. For projects which combine Section 202 program funds 
with other sources of capital financing, the bill provides that 
the processing of the capital advance must be delegated to an 
experienced State or local housing finance agency, while 
projects that are financed solely by 202 grant funds will 
continue to be processed by HUD. Additionally, HUD will retain 
the ultimate authority to approve the project costs, and must 
provide written explanations of costs approved by the state or 
local housing finance agency which HUD subsequently disallows.
    The Committee believes that the provision of service 
coordinators is critical in linking residents of Section 202 
properties with supportive services. Therefore the bill amends 
the selection criteria by which new projects are evaluated to 
receive a grant by creating an additional preference for those 
proposed projects that will provide for a full or part-time 
service coordinator position.
    Additionally, the bill permits owners to establish, either 
in the application process or after grant selection, a 
preference in the tenant selection of homeless elderly persons.
    With regard to use of owner deposits, current HUD practice 
is to require that owners use these funds to meet development 
cost shortfalls. However the intended use of these funds is 
only to cover operating budget shortfalls during the first 
three years. The bill prevents HUD from forcing owners to use 
owner deposits to cover development shortfalls.
    The bill also provides protections for 202 owners to ensure 
that HUD operating assistance keeps pace with actual property 
costs. Current statute only permits, but does not require, 
payment of such cost increases and, in practice, many 202 
owners often are not granted needed cost increases. The bill 
would require HUD to make adjustments to operating assistance 
to cover reasonable cost increases, including, but not limited 
to, increases associated with service coordinators and 
emergency situations beyond the control of the owner.
    Refinancing of Loan Program Projects. The American 
Homeownership and Economic Opportunity Act of 2000 included 
provisions to streamline the prepayment of Section 202 loans, 
while providing safeguards for the affordability of units. 
However, many of these provisions, specifically where they 
serve to preserve existing housing stock, have not been fully 
implemented by HUD. The bill provides more explicit language to 
ensure that owners can take full advantage of provisions in the 
2000 Act, which provided more flexibility to owners to use 
refinancing proceeds. Many owners seek to enhance their 
supportive services or build community rooms in older 
developments. However, HUD has placed unwarranted limits on use 
of refinancing proceeds, often leaving owners few other options 
than waiting out the term of their mortgages, where no 
requirement for owners to keep units affordable remains. H.R. 
2930 provides, more explicitly, the authority to use 
refinancing proceeds with more flexibility, allowing owners to 
use proceeds for activities which aid the provision of 
affordable housing and expand available supportive services of 
developments.
    H.R. 2930 authorizes a new Section 8 project-based rental 
assistance program, or Senior Preservation Rental Assistance, 
to provide rental assistance to projects that currently do not 
receive any rental assistance. Projects built between 1959 and 
1974 did not require an accompanying rental subsidy, as the low 
3 percent interest rate enabled owners to charge very low 
rents. However as these projects age and require significant 
rehabilitation, owners will be forced to raise rents in order 
to cover cost or rehabilitation. A Senior Preservation Rental 
Assistance Contract will allow owners to finance the 
rehabilitation of their properties without raising the rent for 
elderly residents, which otherwise could risk their 
displacement, homelessness or premature institutionalization. 
Additionally, owners who choose to prepay a loan which does not 
require the approval of the HUD Secretary may protect the 
affordability of the project by either making all tenants 
eligible for enhanced vouchers or, if the owner maintains 
ownership of the property, the owner may enter into a Senior 
Preservation Rental Assistance Contract.
    In addition to the establishment of the Senior Preservation 
Rental Assistance contract, the bill enables owners who were 
previously ineligible to refinance their loan to address the 
substantial physical needs of a property. Current statute 
requires, as a condition of refinancing, that such new 
financing must result in a lower interest rate. However 
projects built between 1959 and 1974 have a 3 percent interest 
loan and therefore are unable to refinance at a lower rate. By 
removing the requirement that owners secure a lower interest 
rate, the bill would make such properties eligible for 
prepayment and enable them to address the rehabilitation needs 
of a project.
    Another barrier owners face when seeking to modernize and 
extend the functionality and affordability of a project is the 
reconfiguration of obsolete units. During the Subcommittee 
hearing, several witnesses testified to the need to reconfigure 
a large number of small, efficiency units, which are often 
vacant and no longer desirable for elderly households seeking 
to age in place. However, HUD practice has been to disallow 
reconfiguration, or to require owners to create new units to 
replace any unit that is combined or lost. H.R. 2930 allows 
owners to combine obsolete units to create larger units, for 
which a higher demand exists, therefore avoiding potential 
vacancies.
    The bill waives the requirement that owners repay flexible 
subsidy debt and permits HUD to subordinate the original HUD 
debt where such requirements would diminish the amount of 
proceeds that could be used for rehabilitation.
    The bill includes a mortgage sale demonstration program, 
the purpose of which is to examine whether state housing 
finance agencies might be able to more effectively administer 
section 202 loans, in contrast to how they are currently 
managed by HUD. The demonstration would authorize HUD to sell 
the Section 202 mortgage portfolios of three states to the 
State housing finance agencies. The purpose of the 
demonstration is to enable HUD to evaluate, in conjunction with 
State or local housing finance agencies, the benefits, costs, 
and effects of implementing the program on a broader scale.
    Facilitating Affordable Housing Preservation Transactions. 
During the course of the Subcommittee on Housing and Community 
Opportunity hearing on H.R. 2930, a number of witnesses 
testified on the need to extend the allowable uses of proceeds 
from sale or refinancing of loans for the Section 202 and 
related HUD programs that provide housing for elderly 
households, including the Section 236 and Section 221(d)(3) 
programs, which are also in need of rehabilitation and 
modernization. In an effort to limit the activities eligible 
for sale or refinancing proceeds, HUD practice has been to 
require sponsors to enter into contracts limiting the use of 
funds beyond the limitations already required by law. For 
owners seeking to rehabilitate existing properties or invest in 
developing new affordable housing units, these proceeds are a 
vital source of funds. The Committee believes that the bill, by 
prohibiting HUD from imposing further limitations and releasing 
owners who are restricted by existing contracts, will provide 
owners the flexibility to continue to provide affordable 
housing and supportive services through proceeds.
    Assisted Living Conversion Program. The Committee believes 
that the Section 202 program provides a foundation for the 
effective delivery of services by federally funded program 
partners. The American Homeownership and Economic Opportunity 
Act authorized grants to convert Section 202 units and 
buildings to assisted living, and grants have been appropriated 
each subsequent year for this purpose. However, the Committee 
believes that many meritorious projects are excluded from this 
Assisted Living Conversion Program because of overly 
restrictive limitations on eligible service providers. H.R. 
2930 broadens the definition of assisted living facility to 
include a broader range of service providers, while 
safeguarding a high quality of service provided to residents.

                                Hearings

    The Subcommittee on Housing and Community Opportunity held 
a hearing on September 6, 2007 entitled ``H.R. 2930, the 
Section 202 Supportive Housing for the Elderly Act of 2007''. 
The following witnesses testified:

                               PANEL ONE

           Mr. John Garvin, Senior Advisor to the 
        Assistant Secretary for the Office of Housing/Acting 
        Deputy Assistant Secretary for the Office of Multi-
        Family Housing

                               PANEL TWO

           Mr. David Lizarraga, President and Chief 
        Executive Officer, TELACU
           Mr. Thomas W. Slemmer, Chief Executive 
        Officer, National Church Residences
           Ms. Deje Kondon, Executive Director, 
        Presbyterian Homes & Housing
           Ms. Ellen Feingold, President, Jewish 
        Community Housing for the Elderly
           Mr. Michael Frigo, Administrator, Mayslake 
        Village
           Mr. Steve Protulis, President, Elderly 
        Housing Development and Operations Corporation
           Ms. Terry Allton, Vice President of Support 
        Services, National Church Residences

                        Committee Consideration

    The Committee on Financial Services met in open session on 
September 25, 2007, and ordered H.R. 2930, Section 202 
Supportive Housing for the Elderly Act of 2007, as amended, 
reported to the House by a voice vote.

                            Committee Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the motion to report legislation and amendments thereto. No 
record votes were taken with in conjunction with the 
consideration of this legislation. A motion by Mr. Frank to 
report the bill, as amended, to the House with a favorable 
recommendation was agreed to by a voice vote.
    During the consideration of the bill, the following 
amendment was considered:
    An amendment by Mr. Frank, No. 1, a manager's amendment 
making various technical and substantive changes, was agreed to 
by a voice vote.

                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee held a hearing and made 
findings that are reflected in this report.

                    Performance Goals and Objectives

    Pursuant to clause 3(c)(4) of rule XIII of the Rules of the 
House of Representatives, the Committee establishes the 
following performance related goals and objectives for this 
legislation:
    H.R. 2930 facilitates the construction, rehabilitation and 
preservation of affordable, supportive housing for very-low 
income elderly persons. The goal of the bill is to streamline 
the development of new 202 housing units, while enabling owners 
of older Section 202 projects to rehabilitate and preserve 
their properties as affordable for very low-income elderly 
persons, while preserving the highest quality of housing and 
services available.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee adopts as its 
own the estimate of new budget authority, entitlement 
authority, or tax expenditures or revenues contained in the 
cost estimate prepared by the Director of the Congressional 
Budget Office pursuant to section 402 of the Congressional 
Budget Act of 1974.

                        Committee Cost Estimate

    The Committee adopts as its own the cost estimate prepared 
by the Director of the Congressional Budget Office pursuant to 
section 402 of the Congressional Budget Act of 1974.

                  Congressional Budget Office Estimate

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
provided by the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                  Washington, DC, October 22, 2007.
Hon. Barney Frank,
Chairman, Committee on Financial Services,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 2930, the Section 
202 Supportive Housing for the Elderly Act of 2007.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Chad Chirico.
            Sincerely,
                                           Peter R. Orszag,
                                                          Director.
    Enclosure.

H.R. 2930--Section 202 Supportive Housing for the Elderly Act of 2007

    Summary: H.R. 2930 would amend the American Homeownership 
and Economic Opportunity Act of 2000 to increase the number of 
properties that are eligible to prepay loans issued under 
Section 202 of the Housing Act of 1959. The bill also would 
authorize a new demonstration program for the sale of loans 
made under Section 202 and allow the savings generated through 
the refinancing of Section 202 loans to be used for additional 
purposes. Finally, the bill would authorize a new program for 
project-based rental assistance for certain properties that are 
currently financed with a Section 202 loan.
    CBO estimates that enacting H.R. 2930 would increase direct 
spending by $94 million in 2008 because the bill would 
effectively modify the terms of existing federal loans--
reducing the present value of expected cash flows for such 
loans. We also estimate that implementing the bill would have a 
net discretionary cost of $212 million over the 2008-2012 
period, assuming appropriation of the necessary amounts.
    H.R. 2930 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA); 
any costs to state, local, or tribal governments would be 
incurred voluntarily.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of H.R. 2930 is shown in the following table. 
The costs of this legislation fall within budget functions 370 
(mortgage and housing credit) and 600 (income security).

------------------------------------------------------------------------
                                      By fiscal year, in millions of
                                                 dollars--
                                 ---------------------------------------
                                   2008    2009    2010    2011    2012
------------------------------------------------------------------------
                       CHANGES IN DIRECT SPENDING

Mortgage Sale Demonstration:
    Estimated Budget Authority..      88       0       0       0       0
    Estimated Outlays...........      88       0       0       0       0
Use of Unexpended Amounts:
    Estimated Budget Authority..       5       0       0       0       0
    Estimated Outlays...........       5       0       0       0       0
Refinancing:
    Estimated Budget Authority..       1       0       0       0       0
    Estimated Outlays...........       1       0       0       0       0
Total Changes in Direct
 Spending:
    Estimated Budget Authority..      94       0       0       0       0
    Estimated Outlays...........      94       0       0       0       0

              CHANGES IN SPENDING SUBJECT TO APPROPRIATION

Project-Based Rental Assistance:
    Estimated Authorization            0      23      52      78     111
     Level......................
    Estimated Outlays...........       0      14      40      68      98
Delegated Processing Fees:
    Estimated Authorization            0       2       3       5       5
     Level......................
    Estimated Outlays...........       0       1       2       4       5
Multifamily Loan Guarantees:
    Estimated Authorization            0      -5      -5      -5      -5
     Level......................
    Estimated Outlays...........       0      -5      -5      -5      -5
GNMA Offsetting Collections:
    Estimated Authorization            0       *       *       *       *
     Level......................
    Estimated Outlays...........       0       *       *       *       *
Total Changes in Spending
 Subject to Appropriation:
    Estimated Authorization            0      20      50      78     111
     Level......................
    Estimated Outlays...........       0      10      37      67     98
------------------------------------------------------------------------
Note: Components may not sum to totals because of rounding; GNMA =
  Government National Mortgage Association; * = between 0 and -$500,000.

    Basis of estimate: For this estimate, CBO assumes that H.R. 
2930 will be enacted in fiscal year 2008, that the full amounts 
authorized will be appropriated for each year, that outlays 
will follow historical patterns, and that appropriation laws 
necessary to implement the Federal Housing Administration (FHA) 
and Government National Mortgage Association (GNMA) programs 
will be enacted each year. Components of the estimated costs 
are described below.

Background

    The Section 202 Housing for the Elderly program was 
established as part of the Housing Act of 1959. The program 
currently makes capital grants and rental assistance available 
to nonprofit entities to develop housing that is affordable to 
very low-income elderly households. Prior to 1990, the 
Department of Housing and Urban Development (HUD) made direct 
loans to nonprofit developers, rather than capital grants, with 
an average term of 40 years for those loans. HUD holds about 
4,000 Section 202 loans with a total unpaid balance of over $5 
billion. The interest rates for those loans range from 3 
percent to 9 percent, with an average maturity date of 2025. 
Property owners who agree to operate their project until the 
maturity date of the original loan (under terms that are at 
least as advantageous to tenants as under the original loan 
agreement) may prepay their loans if such refinancing results 
in a lower interest rate and a reduction in debt service. The 
prepayment rate for Section 202 loans averages about 15 percent 
per year and most refinancing transactions involve FHA-insured 
loans; however, FHA insurance is not required.

Direct spending

    Because several provisions of the legislation would change 
the expected cash flows associated with existing federal loans 
made under the Section 202 program, those changes constitute a 
modification of the existing loans. Under credit reform 
procedures, the costs of loan modifications are estimated on a 
present-value basis and recorded as changes in direct spending 
in the year in which the legislation is enacted. In total, CBO 
estimates that enacting H.R. 2930 would increase direct 
spending by $94 million in 2008.
    Mortgage Sale Demonstration. Section 205 of H.R. 2930 would 
authorize HUD to sell mortgages associated with Section 202 
loans. It would require the department to carry out a 
demonstration program in not more than three states to sell 
portfolios of those mortgages to state housing finance agencies 
for a price not to exceed the unpaid principal balances of such 
mortgages. Based on HUD data, CBO estimates that the average 
outstanding principle balance is about $100 million per state 
and that HUD would select three states with average-size 
portfolios for the demonstration program by the end of 2009. 
Because the majority of those mortgages have interest rates 
that are above the federal cost of funds and are estimated to 
have low default rates, selling those mortgages at a price less 
than or equal to the unpaid principal balances would result in 
a loss to the government on a present-value basis. CBO 
estimates those loan sales would cost $88 million in 2008. The 
cost of the demonstration program could be higher or lower 
depending on the particular states selected.
    Use of Unexpended Amounts. Section 203 of the bill would 
expand the eligible uses for savings generated by refinancing 
Section 202 loans. Those new purposes include the 
reconfiguration or reduction in the number of rental units that 
are functionally obsolete and the payment of equity to the 
project owner or seller. This section also would eliminate the 
restriction on the amount of savings that owners can use to 
provide supportive services to elderly tenants as well as 
restrictions on the owners' ability to direct savings to other 
properties. Finally, the bill would allow HUD to waive the 
requirement that borrowers repay any debt incurred through the 
flexible subsidy program under section 201 of the Housing and 
Community Development Amendments of 1978 if such waiver is 
necessary for the financial feasibility of the transaction.
    Currently, about 15 percent of Section 202 loans are 
refinanced each year and fewer than 2 percent of property 
owners that apply for prepayment are denied. CBO estimates that 
these provisions would increase the prepayment rate by making 
such transactions more attractive to property owners and 
increase the likelihood that HUD would approve the 
transactions. Based on data provided by HUD, CBO estimates that 
several additional properties would have their loans prepaid 
each year. CBO estimates such prepayments would cost $5 million 
in 2008 on a present-value basis.
    Refinancing. Section 201 of the bill would allow owners of 
properties financed with a Section 202 loan to refinance if the 
new financing were used to address the physical needs of the 
project, even if the refinancing would not result in a lower 
interest rate. Loans made prior to 1974 have interest rates of 
approximately 3 percent, and borrowers may not prepay their 
debt under current law. Based on data provided by HUD, CBO 
estimates that HUD currently holds about 260 loans of this type 
with a total unpaid balance of about $190 million. Taken by 
itself, this section would result in direct spending savings, 
but enacted in conjunction with section 205, it would slightly 
increase direct spending.
    Section 205 of the bill would allow HUD to approve the 
subordination of existing debt in lieu of prepayment. When 
refinancing to address a property's physical needs, CBO expects 
that the owners of Section 202 properties would be more likely 
to subordinate those low-interest loans than to prepay them 
because the interest rates on those old loans are substantially 
lower than current market rates. Issuing new primary debt on 
top of the existing 3 percent loans would increase the risk of 
default for those loans. Based on data provided by HUD, CBO 
estimates that Section 202 loans have an annual default rate of 
0.25 percent. CBO expects that under section 205, the majority 
of those loans would be refinanced by 2012 and that the default 
rate for the subordinated loans would increase but remain below 
1 percent per year. CBO estimates that the increased default 
rates would cost $1 million in 2008 on a net-present-value 
basis.

Spending subject to appropriation

    CBO estimates that H.R. 2930 would authorize the net 
appropriation of $20 million in 2009 and $259 million over the 
2009-2012 period. CBO estimates that appropriation of those 
amounts would result in spending of $212 million over the next 
five years.
    Project-based Rental Assistance. Section 205 would 
authorize a new program for project-based rental assistance to 
be used in connection with the prepayment of a Section 202 
loan. This provision would primarily affect properties with 
loans made prior to 1974 that do not have existing rent 
subsidies on all units. Based on HUD data, CBO estimates that 
beginning in 2009 around 50 properties each year (averaging 80 
units per property) would receive such rental assistance at an 
average cost of about $5,300 per unit. Thus, by 2012, a 
cumulative total of about 200 properties would be assisted by 
the new program. Assuming appropriation of the necessary 
amounts, CBO estimates that providing project-based rental 
assistance to these properties would cost $14 million in 2009 
and $220 million over the 2009-2012 period.
    Delegated Processing Fees. Section 102 would require HUD to 
delegate the processing of certain capital grants to interested 
state or local housing agencies. The provision would direct HUD 
to develop a schedule of reasonable fees to be paid to the 
delegated processing agencies and would allow the fees to be 
included as part of the total capital grant amount. Based on 
information provided by HUD, industry groups, and state 
agencies, CBO assumes that the fee structure would be similar 
to those used for Participating Administrative Entities in the 
Section 8 Mark-to-Market program and for the underwriting of 
low-income housing tax credits. CBO estimates that, over time, 
about two-thirds of capital grants would be processed by state 
or local housing agencies and that those agencies would be paid 
a fee of about 1 percent of the grant value. Grants currently 
average a little more than $4 million per property. Assuming 
appropriation of the necessary amounts, CBO estimates that 
paying fees for the delegated processing of capital grants 
would cost $1 million in 2009 and $12 million over the 2009-
2012 period.
    Multifamily Loan Guarantees. As described above, H.R. 2930 
would increase the number of Section 202 loans that are 
refinanced each year. Although not required by law, most of the 
refinanced loans are likely to be insured by FHA's multifamily 
mortgage insurance or risk-sharing programs. The Federal Credit 
Reform Act of 1990 requires an appropriation of the subsidy 
costs and administrative costs associated with loan guarantees. 
The subsidy cost is the estimated long-term cost to the 
government of the loan guarantee, calculated on a present-value 
basis, excluding administrative costs. Under current law, HUD 
estimates that FHA's guarantees of multifamily loans will 
result in net offsetting collections (that is, negative outlays 
that are recorded as a credit against discretionary spending) 
because guarantee fees collected on those mortgages will more 
than offset the costs of expected defaults, calculated on a 
present-value basis. CBO estimates that the average subsidy 
cost for the multifamily programs that could be used to 
refinance Section 202 loans is -2 percent and that this 
legislation would result in about 50 additional loan guarantees 
each year. CBO estimates that implementing this legislation 
would result in additional offsetting collections of $5 million 
in 2009 and $20 million over the 2009-2012 period, contingent 
on enactment of appropriation bills that would establish 
authority to make loan guarantees by specifying annual loan 
commitment levels.
    GNMA Offsetting Collections. GNMA is responsible for 
guaranteeing securities backed by pools of mortgages that are 
insured by the federal government (known as the mortgage-backed 
securities, or MBS program). In exchange for a fee charged to 
lenders or issuers of the securities, GNMA guarantees the 
timely payment of scheduled principal and interest due on the 
pooled mortgages that back those securities. The Administration 
estimates that the value of the fees collected by GNMA will 
exceed the cost of loan defaults each year. Accordingly, under 
credit reform, the GNMA MBS program will have an estimated 
subsidy rate of -0.21 percent in 2008, resulting in net 
collections to the federal government.
    Because most FHA multifamily loan guarantees are included 
in GNMA's MBS program, CBO estimates that increasing the number 
of Section 202 loans refinanced with FHA insurance would result 
in additional GNMA collections over the 2008-2012 period, but 
they would total less than $500,000 per year. Those savings 
would affect discretionary spending because, like FHA, GNMA 
requires appropriation action to establish the total amount of 
its guarantees.
    Intergovernmental and private-sector impact: H.R. 2930 
contains no intergovernmental or private-sector mandates as 
defined in UMRA. The bill would benefit state, local, and 
tribal governments that participate in affordable housing 
projects and programs. Any costs those governments incur to 
comply with program requirements would be incurred voluntarily.
    Estimate prepared by: Federal Spending: Chad Chirico and 
Susanne S. Mehlman; Impact on State, Local, and Tribal 
Governments: Lisa Ramirez-Branum; Impact on the Private Sector: 
Keisuke Nakagawa.
    Estimate approved by: Peter H. Fontaine, Assistant Director 
for Budget Analysis.

                       Federal Mandates Statement

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                   Constitutional Authority Statement

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee finds that the 
Constitutional Authority of Congress to enact this legislation 
is provided by Article 1, section 8, clause 1 (relating to the 
general welfare of the United States) and clause 3 (relating to 
the power to regulate interstate commerce).

                  Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

                         Earmark Identification

    H.R. 2930 does not contain any congressional earmarks, 
limited tax benefits, or limited tariff benefits as defined in 
clause 9 of rule XXI.

             Section-by-Section Analysis of the Legislation


SHORT TITLE: SECTION 202 SUPPORTIVE HOUSING FOR THE ELDERLY ACT OF 2007

Title 1: New construction reforms

    Section 101. Project rental assistance. Requires the 
Secretary to adjust the annual contract amounts for renewal of 
Project Rental Assistance contracts to provide for reasonable 
project costs (including adequate reserves, service 
coordinators, and service cost) and to cover emergencies such 
as utility cost spikes. Prohibits the use of previously 
appropriated unspent contract funds from being applied to 
adjustments.
    Section 102. Selection Criteria. (a) Amends the Selection 
Criteria for grant selection to include the extent to which a 
project will provide a service coordinator. (b) Requires 
delegated processing for 202 projects which combine capital 
advance funds with other sources of financing and that have 
already been approved by HUD, for the purpose of issuing a 
capital advance, to a state or local agency which (1) is in 
geographic proximity to the property, (2) has demonstrated 
experience in underwriting multifamily housing loans that 
provide housing and supportive services, (3) may or may not be 
providing LIHTC in combination with the 202 capital advance and 
(4) agrees to issue a firm commitment within 12 months of 
delegation. (c) Waives the delegated underwriting requirement 
where no State or local agency has applied to provide delegated 
underwriting. (d) Permits the state or local agency to charge a 
reasonable fee for processing, which will be included in the 
capital advance amount. Require the Secretary to develop a 
schedule for reasonable fees to be paid for delegated 
underwriting. (e) Confirms HUD Secretary's authority to approve 
rents and development costs and requires that the Secretary 
execute a capital advance within 90 days of receipt of 
commitment.
    Section 103. Development Cost Limitations. Amends 
development cost limitations by adding the term ``reasonable'' 
to the phrase ``developments cost limitation.''
    Section 104. Owner Deposits. Amends use of owner deposits 
by limiting use to operating deficits during first three years, 
clarifying that deposits shall not be used to cover 
construction shortfalls.
    Section 105. Definition of Private Nonprofit Organization. 
Amends definition of ``owner'' to create an exception for 
national nonprofit organizations that run multiple projects. 
Such projects may use local advisory boards to meet the 
governing board requirement, except that the national 
organization will maintain responsibility for the operation of 
the housing.
    Section 106. Preferences for Homeless Elderly. Permits 
project sponsors to implement preferences for homeless elderly, 
where such persons meet all program eligibility requirements 
and the project provides supportive services to meet their 
needs.

Title II: Refinancing

    Section 201. Approval of Prepayment of Debt. Authorizes a 
202 project to seek new financing to permit the owner to 
address the physical needs of the project, even if the new 
financing does not result in a lower interest rate, on the 
condition that (1) HUD Section 8 costs do not increase, and (2) 
rent charges on tenants will not increase.
    Section 202. Sources of Refinancing. Authorizes new lenders 
to underwrite loans refinanced with risk sharing loans.
    Section 203. Use of Unexpended Amounts. Permits use of 
unexpended amounts to include uses in the provision of 
affordable rental housing and related social services for 
elderly persons by the private nonprofit organization's project 
owner, sponsor, or developer. Includes: (1) striking the 15 
percent limitation on supportive services; (2) covering the 
cost of reducing and reconfiguring obsolete units; (3) 
conditionally covering the payment of a developer's fee; and 
(4) in the case of sale or refinance, permitting equity 
payments to be calculated based on the appraised value of the 
project.
    Section 204. Use of Project Residual Receipts. Authorizes 
the use of residual receipts held for a project in connection 
with a prepayment or refinancing in excess of $500 per unit for 
activities to increase supportive services or other purposes 
approved by the Secretary.
    Section 205. Additional Provisions. (a) Authorizes Senior 
Preservation Rental Assistance Contracts. Senior Preservation 
Contracts would be made available to private nonprofit owners 
whose 202 loan predates the accompanying rental subsidy, for 
whom the cost of refinancing and rehabbing a project could 
otherwise significantly raise the rents. This contract would 
allow the sponsor to cover this cost increase with the project-
based assistance in conjunction with a refinancing and 
preservation transaction.
    (b) Authorizes a Mortgage Sale Demonstration in up to three 
states, in which the Secretary may sell 202 mortgages to state 
housing finance agencies (in accordance with Section 203 of the 
Housing and Community Development Amendments of 1978) for a 
price not to exceed the unpaid principal balance of the loans.
    (c)(1) Clarifies that HUD has authority to subordinate 202 
and other subordinate debt to new financing; and (2) authorizes 
HUD to approve assumption of 202 loans in connection with a 
transfer of a project with such a loan, to a private nonprofit 
organization.
    (d) Waives the required payment of a Flexible Subsidy loan 
upon prepayment or refinancing of a 202 loan, if such a waiver 
is necessary for the financial feasibility of the transaction 
or to preserve the long-term affordability of the project.
    (e) In connection with a prepayment where approval from the 
secretary is not required (1) enables all tenants to be 
eligible for enhanced vouchers, and (2) permits owners to enter 
into a Senior Preservation Contract with HUD, on the condition 
that the project will continue to be owned by a private 
nonprofit organization.
    (f) Confirms definition of private nonprofit organization 
as defined in section 202(k) of the Housing Act of 1959.

Title III: Assisted living facilities

    Section 301. Definition of Assisted Living Facility. Amends 
the definition of assisted living facility to make the 
requirement regarding project eligibility more flexible. The 
bill would require projects to be either (1) licensed and 
regulated by the State or local government, or (2)(a) make 
available directly a recognized and experienced third party 
service provider's supportive services to assist residents with 
the activities of daily living, and (b) provide separate 
dwelling units each of which includes a full kitchen and 
bathroom for residents. Under current law, a project must 
comply with all three of these requirements.
    Section 302. Monthly Assistance Payment Under Rental 
Assistance. Permits voucher holders in assisted living 
facilities to pay more than 40 percent of their income for 
rent, subject to HUD approval.

Title IV: Facilitating affordable housing preservation transactions

    Section 401. Use of Sale or Refinancing Proceeds. Prohibits 
HUD from imposing additional restrictions, other than those 
already required by law, in connection with a sale of 
refinancing of a multifamily housing project where HUD approval 
of prepayment is required.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

                          HOUSING ACT OF 1959




           *       *       *       *       *       *       *
TITLE II--HOUSING FOR THE ELDERLY OR HANDICAPPED

           *       *       *       *       *       *       *


SEC. 202. SUPPORTIVE HOUSING FOR THE ELDERLY.

  (a) * * *

           *       *       *       *       *       *       *

  (c) Forms of Assistance.--
          (1) * * *
          (2) Project rental assistance.--(A) Initial project 
        rental assistance contract._Contracts for project 
        rental assistance shall obligate the Secretary to make 
        monthly payments to cover any part of the costs 
        attributed to units occupied (or, as approved by the 
        Secretary, held for occupancy) by very low-income 
        elderly persons that is not met from project income. 
        The annual contract amount for any project shall not 
        exceed the sum of the initial annual project rentals 
        for all units so occupied and any initial utility 
        allowances for such units, as approved by the 
        Secretary. Any contract amounts not used by a project 
        in any year shall remain available to the project until 
        the expiration of the contract. The Secretary [may] 
        shall adjust the annual contract amount if the sum of 
        the project income and the amount of assistance 
        payments available under this paragraph are inadequate 
        to provide for reasonable project costs.
          (B) Renewal of and increases in contract amounts.--
                  (i) Expiration of contract term.--Upon the 
                expiration of each contract term, the Secretary 
                shall adjust the annual contract amount to 
                provide for reasonable project costs, and any 
                increases, including adequate reserves, 
                supportive services, and service coordinators, 
                except that any contract amounts not used by a 
                project during a contract term shall not be 
                available for such adjustments upon renewal.
                  (ii) Emergency situations.--In the event of 
                emergency situations that are outside the 
                control of the owner, the Secretary shall 
                increase the annual contract amount, subject to 
                reasonable review and limitations as the 
                Secretary shall provide.

           *       *       *       *       *       *       *

  (f) [Selection Criteria.--] Initial Selection Criteria and 
Processing._(1) Selection Criteria._The Secretary shall 
establish selection criteria for assistance under this section, 
which shall include--
          [(1)] (A) the ability of the applicant to develop and 
        operate the proposed housing;
          [(2)] (B) the need for supportive housing for the 
        elderly in the area to be served; , taking into 
        consideration the availability of public housing for 
        the elderly and vacancy rates in such facilities
          [(3)] (C) the extent to which the proposed size and 
        unit mix of the housing will enable the applicant to 
        manage and operate the housing efficiently and ensure 
        that the provision of supportive services will be 
        accomplished in an economical fashion;
          [(4)] (D) the extent to which the proposed design of 
        the housing will meet the special physical needs of 
        elderly persons;
          [(5)] (E) the extent to which the applicant has 
        demonstrated that the supportive services identified in 
        subsection (e)(4) will be provided on a consistent, 
        long-term basis;
          (F) the extent to which the applicant has ensured 
        that a service coordinator will be employed or 
        otherwise retained for the housing, who has the 
        managerial capacity and responsibility for carrying out 
        the actions described in subparagraphs (A) and (B) of 
        subsection (g)(2);
          [(6)] (G) the extent to which the proposed design of 
        the housing will accommodate the provision of 
        supportive services that are expected to be needed, 
        either initially or over the useful life of the 
        housing, by the category or categories of elderly 
        persons the housing is intended to serve; and
          [(7)] (H) such other factors as the Secretary 
        determines to be appropriate to ensure that funds made 
        available under this section are used effectively.
  (2) Delegated Processing.--
          (A) In issuing a capital advance under this 
        subsection for any project for which financing for the 
        purposes described in the last two sentences of 
        subsection (b) is provided by a combination of a 
        capital advance under subsection (c)(1) and sources 
        other than this section, within 30 days of award of the 
        capital advance, the Secretary shall delegate review 
        and processing of such projects to a State or local 
        housing agency that--
                  (i) is in geographic proximity to the 
                property;
                  (ii) has demonstrated experience in and 
                capacity for underwriting multifamily housing 
                loans that provide housing and supportive 
                services;
                  (iii) may or may not be providing low-income 
                housing tax credits in combination with the 
                capital advance under this section, and
                  (iv) agrees to issue a firm commitment within 
                12 months of delegation.
          (B) The Secretary shall retain the authority to 
        process capital advances in cases in which no State or 
        local housing agency has applied to provide delegated 
        processing pursuant to this paragraph or no such agency 
        has entered into an agreement with the Secretary to 
        serve as a delegated processing agency.
          (C) An agency to which review and processing is 
        delegated pursuant to subparagraph (A) may assess a 
        reasonable fee which shall be included in the capital 
        advance amounts and may recommend project rental 
        assistance amounts in excess of those initially awarded 
        by the Secretary. The Secretary shall develop a 
        schedule for reasonable fees under this subparagraph to 
        be paid to delegated processing agencies, which shall 
        take into consideration any other fees to be paid to 
        the agency for other funding provided to the project by 
        the agency, including bonds, tax credits, and other gap 
        funding.
          (D) Under such delegated system, the Secretary shall 
        retain the authority to approve rents and development 
        costs and to execute a capital advance within 60 days 
        of receipt of the commitment from the State or local 
        agency. The Secretary shall provide to such agency and 
        the project sponsor, in writing, the reasons for any 
        reduction in capital advance amounts or project rental 
        assistance and such reductions shall be subject to 
        appeal.

           *       *       *       *       *       *       *

  (h) Development Cost Limitations.--
          (1) In general.--The Secretary shall periodically 
        establish reasonable development cost limitations by 
        market area for various types and sizes of supportive 
        housing for the elderly by publishing a notice of the 
        cost limitations in the Federal Register. The cost 
        limitations shall reflect--
                  (A)  * * *

           *       *       *       *       *       *       *

  (j) Miscellaneous Provisions.--
          (1) * * *

           *       *       *       *       *       *       *

          (3) Owner deposit.--
                  (A) In general.--The Secretary shall require 
                an owner to deposit an amount not to exceed 
                $25,000 in a special escrow account to assure 
                the owner's commitment to the housing. Such 
                amount shall be used only to cover operating 
                deficits during the first three years of 
                operations and shall not be used to cover 
                construction shortfalls or inadequate initial 
                project rental assistance amounts.

           *       *       *       *       *       *       *

          (9) Preferences for homeless elderly.--The Secretary 
        shall permit an owner of housing assisted under this 
        section to establish for, and apply to, the housing a 
        preference in tenant selection for the homeless 
        elderly, either within the application or after 
        selection pursuant to subsection (f), but only if--
                  (A) such preference is consistent with 
                paragraph (2) of this subsection; and
                  (B) the owner demonstrates that the 
                supportive services identified pursuant to 
                subsection (e)(4), or additional supportive 
                services to be made available upon 
                implementation of the preference, will meet the 
                needs of the homeless elderly, maintain safety 
                and security for all tenants, and be provided 
                on a consistent, long-term, and economical 
                basis.
  (k) Definitions.--
          (1) * * *

           *       *       *       *       *       *       *

          (4) The term ``private nonprofit organization'' means 
        any incorporated private institution or foundation--
                  (A) * * *
                  (B) which has a governing board (i) the 
                membership of which is selected in a manner to 
                assure that there is significant representation 
                of the views of the community in which such 
                housing is located, and (ii) which is 
                responsible for the operation of the housing 
                assisted under this section; except that, in 
                the case of any national organization that is 
                the owner of multiple housing projects assisted 
                under this section, the organization may comply 
                with clause (i) of this subparagraph by having 
                a local advisory board to the governing board 
                of the organization the membership which is 
                selected in the manner required under clause 
                (i); and

           *       *       *       *       *       *       *


SEC. 202B. GRANTS FOR CONVERSION OF ELDERLY HOUSING TO ASSISTED LIVING 
                    FACILITIES.

  (a) * * *

           *       *       *       *       *       *       *

  (g) Definitions.--For the purposes of this section--
          [(1) the term ``assisted living facility'' has the 
        meaning given such term in section 232(b) of the 
        National Housing Act (12 U.S.C. 1715w(b)); and]
          (1) the term ``assisted living facility'' means a 
        facility that--
                  (A) is owned by a private nonprofit 
                organization; and
                  (B)(i) is licensed and regulated by the State 
                (or if there is no State law providing for such 
                licensing and regulation by the State, by the 
                municipality or other political subdivision in 
                which the facility is located); or
                  (ii)(I) makes available, directly or through 
                recognized and experienced third party service 
                providers, to residents at the resident's 
                request or choice supportive services to assist 
                the residents in carrying out the activities of 
                daily living, such as bathing, dressing, 
                eating, getting in and our of bed or chairs, 
                walking, going outdoors, toileting, laundry, 
                home management, preparing meals, shopping for 
                personal items, obtaining and taking 
                medication, managing money, using the 
                telephone, or performing light of heavy 
                housework, and which may make available to 
                residents home health care service, such as 
                nursing and therapy, and certain health related 
                services; and
                  (II) provides separate dwelling units for 
                residents, each of which may contain a full 
                kitchen and bathroom and which includes common 
                rooms and other facilities appropriate for the 
                provision of supportive services to the 
                residents of the facility; and

           *       *       *       *       *       *       *

                              ----------                              


SECTION 811 OF THE AMERICAN HOMEOWNERSHIP AND ECONOMIC OPPORTUNITY ACT 
                                OF 2000

SEC. 811. PREPAYMENT AND REFINANCING.

  (a) Approval of Prepayment of Debt.--Upon request of the 
project sponsor of a project assisted with a loan under section 
202 of the Housing Act of 1959 (as in effect before the 
enactment of the Cranston-Gonzalez National Affordable Housing 
Act), for which the Secretary's consent to prepayment is 
required, the Secretary shall approve the prepayment of any 
indebtedness to the Secretary relating to any remaining 
principal and interest under the loan as part of a prepayment 
plan under which--
          (1) the project sponsor agrees to operate the project 
        until the maturity date of the original loan under 
        terms at least as advantageous to existing and future 
        tenants as the terms required by the original loan 
        agreement or any project-based rental assistance 
        payments contract under section 8 of the United States 
        Housing Act of 1937 (or any other project-based rental 
        housing assistance programs of the Department of 
        Housing and Urban Development, including the rent 
        supplement program under section 101 of the Housing and 
        Urban Development Act of 1965 (12 U.S.C. 1701s)), or 
        any successor project-based rental assistance program, 
        relating to the project; and
          (2) the prepayment may involve refinancing of the 
        loan if such refinancing results in (A) a lower 
        interest rate on the principal of the loan for the 
        project and in reductions in debt service related to 
        such loan, or (B) a transaction in which the project 
        owner will address the physical needs of the project, 
        but only if, as a result of the refinancing (i) the 
        rent charges for unassisted families residing in the 
        project do not increase or such families are provided 
        rental assistance under a senior preservation rental 
        assistance contract for the project pursuant to 
        subsection (e), and (ii) the overall cost for providing 
        rental assistance under section 8 for the project (if 
        any) does not increase.
  (b) Sources of Refinancing.--In the case of prepayment under 
this section involving refinancing, the project sponsor may 
refinance the project through any third party source, including 
financing by State and local housing finance agencies, use of 
tax-exempt bonds, multi-family mortgage insurance under the 
National Housing Act, reinsurance, or other credit 
enhancements, including risk sharing as provided under section 
542 of the Housing and Community Development Act of 1992 (12 
U.S.C. 1707 note). For purposes of underwriting a loan insured 
under the National Housing Act, or approving the standards used 
by authorized lenders to underwrite a loan refinanced with risk 
sharing as provided by section 542 of the Housing and Community 
Development Act of 1992 (12 U.S.C. 1701 note), the Secretary 
[may] shall assume that any section 8 rental assistance 
contract relating to a project will be renewed for the term of 
such loan.
  (c) Use of Unexpended Amounts.--Upon execution of the 
refinancing for a project pursuant to this section, the 
Secretary shall make available at least 50 percent of the 
annual savings resulting from reduced section 8 or other rental 
housing assistance contracts in a manner that is advantageous 
to the tenants, or is used in the provision of affordable 
rental housing and related social services for elderly persons 
by the private nonprofit organization project owner, private 
nonprofit organization project sponsor, or private nonprofit 
organization project developer, including--
          (1) [not more than 15 percent of] the cost of 
        increasing the availability or provision of supportive 
        services, which may include the financing of service 
        coordinators and congregate services;
          (2) rehabilitation, modernization, or retrofitting of 
        structures, common areas, or individual dwelling units, 
        including reducing the number of units and 
        reconfiguring units that are functionally obsolete, 
        unmarketable, or not economically viable;
          (3) construction of an addition or other facility in 
        the project, including assisted living facilities (or, 
        upon the approval of the Secretary, facilities located 
        in the community where the project sponsor refinances a 
        project under this section, or pools shared resources 
        from more than one such project); [or]
          (4) rent reduction of unassisted tenants residing in 
        the project according to a pro rata allocation of 
        shared savings resulting from the refinancing[.];
          (5) the payment to the project owner, sponsor, or 
        third party developer of a developer's fee in an amount 
        not to exceed--
                  (A) in the case of a project refinanced 
                through a State low income housing tax credit 
                program, the fee permitted by the low income 
                housing tax credit program as calculated by the 
                State program as a percentage of acceptable 
                development cost as defined by that State 
                program; or
                  (B) in the case of a project refinanced 
                through any other source of refinancing, 15 
                percent of the acceptable development cost; or
          (6) the payment of equity, if any, to--
                  (A) in the case of a sale, to the seller or 
                the sponsor of the seller, in an amount equal 
                to the lesser of the purchase price or the 
                appraised value of the property, as each is 
                reduced by the cost of prepaying any 
                outstanding indebtedness on the property and 
                transaction costs of the sale; or
                  (B) in the case of a refinancing without the 
                transfer of the property, to the project owner 
                or the project sponsor, in an amount equal to 
                the difference between the appraised value of 
                the property less the outstanding indebtedness 
                and total acceptable development cost.
For purposes of paragraphs (5)(B) and (6)(B), the term 
``acceptable development cost'' shall include, as applicable, 
the cost of acquisition, rehabilitation, loan prepayment, 
initial reserve deposits, and transaction costs.
  (d) Use of Certain Project Funds.--The Secretary shall allow 
a project sponsor that is prepaying and refinancing a project 
under this section--
          (1) to use any residual receipts held for that 
        project in excess of $500 per individual dwelling unit 
        for [not more than 15 percent of] the cost of 
        activities designed to increase the availability or 
        provision of supportive services; and
          (2) to use any reserves for replacement in excess of 
        $1,000 per individual dwelling unit for activities 
        described in paragraphs (2) and (3) of subsection (c), 
        or (B) a transaction in which the project owner will 
        address the physical needs of the project, but only if, 
        as a result of the refinancing (i) the rent charges for 
        unassisted families residing in the project do not 
        increase or such families are provided rental 
        assistance under a senior preservation rental 
        assistance contract for the project pursuant to 
        subsection (e), and (ii) the overall cost for providing 
        rental assistance under section 8 for the project (if 
        any) does not increase.

           *       *       *       *       *       *       *

  (e) Senior Preservation Rental Assistance Contracts.--
Notwithstanding any other provision of law, in connection with 
a prepayment plan for a project approved under subsection (a) 
by the Secretary or as otherwise approved by the Secretary, to 
prevent displacement of elderly residents of the project in the 
case of refinancing or recapitalization and to further 
preservation and affordability of such project, at the election 
of the private nonprofit organization owner of the project, the 
Secretary shall provide project-based rental assistance for the 
project under a senior preservation rental assistance contract, 
as follows:
          (1) Assistance under the contract shall be made 
        available to the private nonprofit organization owner--
                  (A) for a term of at least 20 years, subject 
                to annual appropriations, and
                  (B) under the same rules governing project-
                based rental assistance made available under 
                section 8 of the Housing Act of 1937.
          (2) Any projects for which a senior preservation 
        rental assistance contract is provided shall be subject 
        to a use agreement to ensure continued project 
        affordability having a term of the longer of (A) the 
        term of the senior preservation rental assistance 
        contract, or (B) such term as is required by the new 
        financing.
  (f) Mortgage Sale Demonstration.--
          (1) In general.--The Secretary may sell mortgages 
        associated with loans made under section 202 of the 
        Housing Act of 1959 (as in effect before the enactment 
        of the Cranston-Gonzalez National Affordable Housing 
        Act) in accordance with the relevant terms for sales of 
        subsidized loans on multifamily housing projects under 
        section 203 of the Housing and Community Development 
        Amendments of 1978 (12 U.S.C. 1701z-11). For the 
        purpose of demonstrating the efficiency, effectiveness, 
        quality, and timeliness of asset management and 
        regulatory oversight of certain portfolios of such 
        mortgages by State housing finance agencies, the 
        Secretary shall carry out a demonstration program, in 
        not more than three States, to sell portfolios of such 
        mortgages to State housing finance agencies for a price 
        not to exceed the unpaid principal balances of such 
        mortgages and otherwise in accordance with the 
        requirements of such section 203.
          (2) Limitations.--In carrying out the demonstration 
        program, the Secretary shall--
                  (A) prohibit State housing finance agencies 
                from giving preference to, or conditioning the 
                approval of, awards of subordinate debt funds, 
                allocations of tax credits, or tax exempt bonds 
                based on the use of financing for the first 
                mortgage that is provided by such State housing 
                finance agency; and
                  (B) require such agencies to allow 
                refinancing or prepayment of loans made under 
                section 202 of the Housing Act of 1959 with a 
                loan selected by the owners, except that any 
                use restrictions on the property for which the 
                loan was made shall remain in effect for the 
                duration provided under the original terms of 
                such loan.
  (g) Subordination or Assumption of Existing Debt.--In lieu of 
prepayment under this section of the indebtedness with respect 
to a project, the Secretary may approve--
          (1) in connection with new financing for the project, 
        the subordination of the loan for the project under 
        section 202 of the Housing Act of 1959 (as in effect 
        before the enactment of the Cranston-Gonzalez National 
        Affordable Housing Act) and the continued subordination 
        of any other existing subordinate debt previously 
        approved by the Secretary to facilitate preservation of 
        the project as affordable housing, or
          (2) the assumption (which may include the 
        subordination described in paragraph (1)) of the loan 
        for the project under such section 202 in connection 
        with the transfer of the project with such a loan to a 
        private nonprofit organization.
  (h) Flexible Subsidy Debt.--The Secretary shall waive the 
requirement that debt for a project pursuant to the flexible 
subsidy program under section 201 of the Housing and Community 
Development Amendments of 1978 (12 U.S.C. 1715z-1a) be prepaid 
in connection with a prepayment, refinancing, or transfer under 
this section of a project if such waiver is necessary for the 
financial feasibility of the transaction and is consistent with 
the long-term preservation of the project as affordable 
housing.
  (i) Prepayment When Secretary's Consent Not Required.--In 
connection with the prepayment under this section of a loan for 
which the Secretary's consent to prepayment is not required, at 
the project owner's election--
          (1) all tenants of the project shall be eligible for 
        enhanced vouchers in accordance with section 8(t) of 
        the United States Housing Act of 1937 (42 U.S.C. 
        1437f(t)); or
          (2) if the project will continue to be owned by a 
        private nonprofit organization owner, such private 
        nonprofit organization owner may enter into a senior 
        preservation rental assistance contract with the 
        Secretary in accordance with subsection (e).
  (j) Definition of Private Nonprofit Organization.--For 
purposes of this section, the term ``private nonprofit 
organization'' has the meaning given such term in section 
202(k) of the Housing Act of 1959 (12 U.S.C. 1701q(k)).
                              ----------                               
-


           SECTION 8 OF THE UNITED STATES HOUSING ACT OF 1937

                    lower income housing assistance

  Sec. 8. (a)  * * *

           *       *       *       *       *       *       *

  (o) Voucher Program.--
          (1)  * * *

           *       *       *       *       *       *       *

          (18) Rental assistance for assisted living 
        facilities.--
                  (A)  * * *
                  (B) Rent calculation.--
                          (i)  * * *

           *       *       *       *       *       *       *

                          (iii) Monthly assistance payment.--
                        The monthly assistance payment for a 
                        family assisted under this paragraph 
                        shall be determined in accordance with 
                        paragraph (2) (using the rent and 
                        payment standard for the dwelling unit 
                        as determined in accordance with this 
                        subsection), except that a family may 
                        be required at the time the family 
                        initially receives such assistance to 
                        pay rent in an amount exceeding 40 
                        percent of the monthly adjusted income 
                        of the family by such an amount or 
                        percentage as the Secretary deems 
                        appropriate.

           *       *       *       *       *       *       *