Below is a section-by-section description of the public housing authorization bill Congress passed earlier this month. The summary was prepared by the House of Representatives' housing subcommittee staff under the guidance of Representative Rick Lazio (R-NY), the subcommittee's chairman. PHADA thanks Representative Lazio and his staff for permission to publish this important information. President Clinton signed the legislation into law on October 21.


"The Quality Housing and Work Responsibility Act of 1998"

Subtitle Summary of Major Provisions

The short title of the bill is the Quality Housing and Work Responsibility Act of 1998. The bill removes disincentives for residents to work and become self-sufficient, provides rental protection for low-income residents, deregulates the operation of public housing authorities, authorizes the creation of mixed-finance public housing projects, and gives more power and flexibility to local governments and communities to operate housing programs.

Generally provisions are effective for Fiscal Year 1999. Specific provisions are made effective for Fiscal Year 2000 primarily due to budgetary impact.


Declaration of Policy and Public Housing Agency Organization. States that it is the policy of the United States to assist States and political subdivisions of States to remedy unsafe housing conditions and housing shortages and to vest in public housing agencies (PHAs) the maximum amount of responsibility and flexibility in program administration. Recognizes that the Federal Government cannot through direct action alone provide for the housing of every citizen, but must promote the independent and collective actions of private citizens to develop housing and strengthen neighborhoods.

Requires that the board of directors (commissioners) of a PHA include at least one resident of assisted housing (who may be elected by the residents, if provided in the PHA plan.) Exceptions to the requirement are (1) where the PHA is required by State law to have a salaried, full-time Board of Directors, or (2) where a PHA oversees less than 300 public housing dwelling units and no resident has agreed to serve on the Board.

Minimum Rent. Provides that a public housing authority may establish minimum rental contributions of not more than $50 per month. Establishes certain mandatory financial hardship exemptions from the requirement.

Determination of Adjusted Income and Median Income. Defines "adjusted income" for purposes of this Act to mean the difference between the income of the members of the family residing in a dwelling unit or the person on a lease and the amount of any income exclusions - some of which are mandatory - for the family as determined by HUD. Mandatory exclusions are for: (1) elderly and disabled families ($400); (2) medical expenses;(3) child care expenses; (4) allowance for minors residing in the household; (5)certain child support payments; (6) spousal support expenses, (7) earned income of minors. PHAs may establish other permissive exclusions, such as for excessive travel expenses, for example.

A twelve-month mandatory income disregard is established for persons who have been unemployed for 1 or more years and who obtain employment, whose income increases as a result of participation in a family self-sufficiency or job training program, or who was within six months assisted under any State program for temporary assistance for needy families (TANF).

Family Self-Sufficiency Program. Transition provisions which maintain the Family Self-Sufficiency requirements for vouchers currently used by PHAs in such programs, maintaining current obligations but eliminating program requirements prospectively.

Public Housing Agency Plans. Requires each PHA to submit a plan, composed of an initial five-year plan showing the PHA's statement of needs and goals for that period (updated every five years), and a more detailed operating plan, which shall be submitted annually. The contents of the annual plan (which may be submitted as part of a comprehensive housing affordability strategy) must include, among other things, information on the housing needs of the locality, population served, method of rent determination, operations, capital improvements, unmet housing needs of families with income less than 30 percent of median, homeownership efforts, and efforts to coordinate the program with local welfare agencies and providers and other items. One or more resident advisory boards must be established by the PHA, and the plan must be developed in consultation with the resident advisory boards. The Secretary may grant waivers from some of these requirements for PHAs managing less than 250 units.

Community service and family self-sufficiency requirements. Requires adult residents of public housing to contribute no less than 8 hours of work per month within the community in which the adult resides, or to participate on an ongoing basis in an economic self-sufficiency or job-training program. Annual leases are required in public housing. Annual compliance reviews are required for the work requirement, and leases shall not be renewed unless a resident is in compliance with the work requirements. Exceptions from community work are provided for working families, senior citizens, disabled families, persons attending school or vocational training, or physically impaired persons. PHAs may administer work requirements through resident groups or third-party nonprofit organizations.

Income Targeting. Forty percent (40 percent) of public housing units are reserved for families whose income do not exceed 30 percent of area median income ("AMI"). Seventy-five percent (75 percent) of Section 8 vouchers shall be reserved for those whose income does not exceed 30 percent AMI. A PHA shall be able to reduce targeting requirements in its public housing program, with regard to specific projects that are located in poverty census tracts, by offsetting increases (on a one-for-one basis) in Section 8 targeting ("fungibility"). A floor of 30 percent is established in public housing, so that a reduction in public housing targeting levels will not result in less than 30 percent of public housing being reserved for those at or below 30 percent of area median income. Current law requirements are maintained for Section 8 Project-Based projects, but targeting is reduced to the same as in public housing (40 percent of those under 30 percent of AMI). Targeting changes are effective upon enactment of the Act.

PHAs are prohibited from concentrating the poorest families only in certain developments. A PHA is required to submit with its annual plan an admissions policy, for review by HUD, designed to encourage income-mixing of residents. PHAs may offer incentives in connection with such admission plans. Certain income and eligibility restrictions may be waived by an authority that provides units to police officers, law enforcement and security personnel.

Repeal of Federal Preferences. Permanently repeals imposition of federal preferences. Appropriations acts have repealed such provisions annually.

Joint Ventures and Consortia of Public Housing Agencies. Authorizes PHAs to enter into consortia with other PHAs, or into joint ventures with third parties, to administer public housing programs or the provision of supportive or social services to public housing residents.

Public Housing Agency Mortgages and Security Interests. Authorizes PHAs to mortgage or grant security interests in any public housing project or property of the PHA, subject to terms and conditions prescribed by the Secretary. No action taken may result in any liability to the Federal Government.


Public Housing Capital and Operating Funds. Provides general parameters for developing capital and operating funds for distribution of funding to PHAs. Funding for the Capital Fund is $3 billion for FY 99 and such sums as may be appropriated annually thereafter through FY 2003. Funding for the Operating Fund is $2.818 billion for FY 99 and such sums as may be appropriated annually thereafter through FY 2003. Mandates that such formulas include a factor that would reward superior performance by PHAs.

Beginning in FY 2000 and thereafter, PHAs shall have the ability to use up to 20 percent of their capital grants for PHA operations. Beginning in FY99 and thereafter, PHAs with less than 250 units are afforded full flexibility between operating and capital funds.

PHAs that receive income from non-rental sources may retain and use such amounts for the benefit of low-income housing purposes without any decrease in the amounts otherwise received by the PHAs under this section.

Total Development Costs. Deletes from the calculation of total developments costs the cost associated with demolition of public housing projects, or the cost of remediation of environmental hazards associated with public housing units. Excludes HOME and CDBG funding from total development cost limitations.

Family Choice of Rental Payment. Families residing in public housing will have a choice as to whether they would rather pay a flat rent for a unit, to be established by the public housing authority for each unit in its inventory, or to pay no more than 30 percent of the family's adjusted income as rent. The purpose is to allow public housing authorities to create rental structures that would reflect the asset value of the unit, similar to the private rental market and which would remove disincentives to families obtaining employment and achieving self-sufficiency, while maintaining income protections for the residents.

Site-Based Waiting Lists. A PHA is given authority to establish site-based waiting lists notwithstanding any other HUD handbooks or regulation, provided such site-based waiting list is in compliance with civil rights laws.

Pet Ownership. Residents of public housing may own one or more common household pets subject to the reasonable requirements of the public housing agency and in accordance with state and local laws and regulations.

Conversion of Public Housing to Vouchers. Permits public housing authorities, in accordance with the PHA plan, to move toward a voucher program for certain buildings after a cost-benefit analysis of maintaining and modernizing the building as well as an evaluation of available affordable housing. Mandates that a one-time cost assessment be done of every public housing project within two years of the date of enactment of the Act to determine the relative costs of converting the project to vouchers versus maintaining it as public housing.

Transfer of Management of Certain Developments to Residents. Allows residents or non-profit resident management corporations to assume the responsibility of managing or purchasing a development. Allows a public housing authority to contract with resident management corporations to manage one or more developments.

Homeownership. Authorizes PHAs to design homeownership programs for sale of public housing units to public housing residents, to entities for resale to residents or other low-income persons, or directly to low-income persons. There is a down payment requirement, the amount of which is determined by the PHA, for the purchase of any unit to be provided by purchasing family. Resale restrictions are imposed on purchasers for five years after sale to prevent purely speculative purchases. Homeownership programs under this section are not subject to the demolition or disposition requirements. Allows high-performing PHAs to use proceeds from disposition of scattered-site public housing to purchase replacement scattered-site housing which will be considered public housing.

Required Conversion to Tenant-Based Assistance. Contains mandatory conversion provision requiring PHAs to provide housing assistance in form of vouchers in lieu of continuing to subsidize certain distressed developments. Requires notification of tenants in public housing developments subject to conversion and provides them tenant-based housing assistance or occupancy in a unit operated or assisted by the PHA. Authorizes the Secretary to determine whether a PHA has failed to comply with this subsection and, in such case, to withdraw funding from the development.

Mixed-Finance Public Housing. Provides authority for PHAs to develop mixed-financed projects, which may include projects containing some public housing units with non-assisted market rate units. PHAs may provide assistance to such developments from operating or capital funds, in accordance with regulations established by the Secretary of HUD, in the form of grants, loans, guarantees, or other forms of investment in the project. Allows PHAs to deposit certain grant funds in escrow accounts for use as collateral in connection with certain tax credit development financing.


Merger of Certificate and Voucher Programs. Merges and consolidates the Section 8 certificate and voucher programs. Allows PHAs to establish a set of local preferences based on local housing needs and priorities. The screening and selection of tenants shall be the responsibility of the owner. PHAs are given the power to terminate contracts with owners who fail to evict tenants that engage in activity which threatens the health, safety or peaceful enjoyment of the premises of other tenants or that is drug-related or violent criminal activity.

Administrative Fees. For FY99, sets administrative fees for public housing authorities at 7.65 percent of grant amount for the first 600 units at fair market rent for a two bedroom and 7.0 percent of the grant amount for all units excess of 600. The Secretary may increase this fee in certain circumstances.

Advance Notice to Tenants of Expiration, Termination or Owner Non-renewal or Assistance Contracts. Authorizes a Section 8 owner and HUD to enter into a five-year renewal agreement, whereby the owner agrees to continue in the program each year for five years provided funds are appropriated. Owners who enter into five-year agreements with HUD are not required to provide annual notice to tenants. For owners who have not entered into five-year renewal agreements with HUD, they shall provide to tenants which shall include certain required information.

Homeownership Option. Allows public housing authorities to use funds under this title to assist low-income families trying to attain homeownership through lease-purchase programs. HUD is authorized to establish a demonstration homeownership program.

Authorizations. Contains a specific authorization for FY 2000 and 2001 of an amount sufficient to fund 100,000 incremental vouchers under this section for each of those years; authorizes such sums for FY 99 through FY 2003 for relocation and replacement housing, witness relocation, and other uses.


Flexible Grant Program. Provides localities with substandard PHAs a "home-rule flexibility option" that would allow them great latitude to design and implement creative solutions to local problems. Jurisdictions with PHAs that rank in the lower 40 percent of HUD assessment scores are eligible to develop alternative housing programs and apply for waivers from certain existing program rules. PHAs classified as "high performers" under HUD assessment scores would be excluded from eligibility. HUD has discretion to approve programs from up to 100 jurisdictions over four years (through 2002). HUD would enter into "performance agreements" with the jurisdictions setting forth specific performance goals.


Study of Alternative Methods for Evaluating Public Housing Agencies. Requires that a study be conducted of alternative methods to evaluate the performance of public housing agencies. HUD is to contract if possible with the National Academy of Public Administration (NAPA) to conduct the study. The findings are to be reported to Congress 12 months after execution of the contract.

Expansion of Powers for Dealing with PHAs in Substantial Default. Authorizes the Secretary to (a) solicit competitive proposals from other entities to manage all or part of the authority's assets, (b) take possession of all or part of the authority's assets, (c) require the authority to make other arrangements to mange its assets, or (d) petition for the appointment of a receiver for the authority, upon a substantial default by a housing authority of certain obligations. Mandates that after two years of being designated as a "troubled" PHA, the Secretary shall take one of the prescribed actions unless HUD determines that the PHA has improved its performance by more than 50 percent as measured by HUD assessment scores. The Secretary may provide emergency assistance to a successor entity of an authority. Allows an appointed receiver to abrogate contracts that impede correction of the default or improvement of the authorities classification, demolish and dispose of assets in accordance with this title, and create new public housing authorities in consultation with the Secretary.

Audits. Provides that the Secretary may withhold amounts from assistance otherwise payable to a PHA for purposes of paying the reasonable costs of conducting an independent audit of the PHA.


Provisions Applicable to Public Housing and Section 8 Assistance. Provide that the National Crime Information Center, police departments, state law enforcement agencies designated as registration agencies under a state registration program, or other law enforcement agencies shall provide to the PHA upon its request information regarding the criminal background of an adult applicant for housing assistance. An applicant must be given an opportunity to dispute any such information. PHAs may be charged a reasonable fee for provision of the information.

Screening of Applicants. Provides that a family is ineligible for federally-assisted housing for three years if evicted by reason of drug-related criminal activity or for a reasonable time (as may be determined by the PHA) for other criminal activity. A PHA or owner of federally-assisted housing shall establish standards prohibiting admission of persons or families who the PHA reasonably determines to be using an illegal substance or whose use of illegal substances or alcohol would interfere with the health, safety, or right to peaceful enjoyment of the premises by other residents.

A PHA or owner of federally-assisted housing may deny admission to any applicant household that, during a reasonable period prior to applying for housing assistance, had engaged in any criminal activity. A PHA or federally-assisted housing owner may require that an applicant household prior to admission authorize the PHA to obtain any relevant criminal records from the National Crime Information Center, police departments, and other law enforcement agencies.

Termination of Tenancy and Assistance for Illegal Drug Users and Alcohol Abusers. Requires a PHA or owner of federally-assisted housing to establish safeguards and lease provisions allowing termination of assistance to residents who the PHA or owner determines to be engaging in the use of a controlled substance or whose illegal use of a controlled substance interferes with the health, safety, or right to peaceful enjoyment of the premises by other residents.

Ineligibility of Dangerous Sex Offenders. Requires that owners prohibit admission to federally-assisted housing to any household that includes any individual who is subject to a lifetime registration requirement under a State sex offender registration program.


Repeals Relating to Public housing and Section 8 Programs. Repeals numerous obsolete individual public housing grant programs and authorities.

Amendments to Public and Assisted Housing Drug Elimination Act of 1990. Amends certain provisions of the Anti-Drug Abuse Act of 1988, which allows the Secretary of HUD to make grants for use in eliminating crime in and around public housing and other federally assisted low-income housing projects. An authorization of $310 million is provided for FY 1999, and such sums as may be appropriated through FY 2003.

Treatment of Occupancy Standards. Prohibits HUD establishing a national occupancy standard. Mandates that HUD publish by Notice in the Federal Register the contents of a HUD memo (the "Keating Memorandum") setting forth HUD's standards for enforcement with respect to discrimination complaints involving familial status.

Income Eligibility for HOME and CDBG Programs. The HUD Secretary shall within 90 days of enactment of the Act grant for not less than 10 jurisdictions exceptions to the limitations based on percentage of median income applicable to those jurisdictions under the HOME and CDBG programs.

Use of Assisted Housing by Aliens. Make certain technical drafting corrections to the Illegal Immigration Reform and Immigrant Responsibility Act of 1996 (the Immigration Reform Act.) The corrections are necessary to prevent a PHA from having the option not to enforce the provisions of the Immigration Reform Act contrary to the intent of Congress.

Protection of Senior Homeowners Under Reverse Mortgage Program. Permanently authorizes HUD's reverse mortgage program and establishes a limit of 150,000 mortgages. Requires that the Secretary consult with consumer groups to identify alternative approaches to providing consumer information regarding home equity conversion mortgages. Provides that HUD shall develop restrictions to prevent the elderly from being defrauded by third-party financial advisors. The Secretary is required to issue rules that would ensure that the mortgagor does not fund any unnecessary or excessive costs of obtaining the mortgage, including costs for estate planning, financial advice, or other related services.

Native American Housing Assistance. Makes technical amendments to the Native American Housing Act of 1996.

Amendments to Rural Housing Programs. Simplifies and expands Single Family Loan Guarantee Homeownership Program by basing homeownership opportunity solely on individual income, up to 115 percent of Area Median Income rather than area loan limits. Authorizes a permanent extension of underserved areas program that requires a 5 percent set aside of rural housing programs for undeserved areas. Preference [current law] for these areas will be given to projects where poverty is 28 percent or greater and where 13 percent of the housing is substandard.

Authorizes permanent extension of Section 515 program (Rural Multifamily Direct Loan Program) of rental housing for very low, low and moderate income families, the elderly and disabled in rural areas through direct government loans to eligible borrowers to construct or to acquire and rehabilitate rental housing.

Authorizes permanent extension of nonprofit entities that requires that 9 percent of Sec. 515 funds be allocated to non-profit groups.

Authorizes permanent extension of Sec. 538 program (Rural Multifamily Loan Guarantee Program) to allow the USDA Secretary to guarantee eligible loans for the development of rural rental housing.

Requires the USDA Secretary to guarantee rural multifamily loans (Sec. 538) where funds from tax-exempt bond financing are involved and therefore expands the base of funds a group may use to leverage funding for rural multifamily housing.

Expands non-profit participation in Sec.514—Farm labor housing by making limited dividend partnerships, controlled by non-profit corporations, eligible for farmworker housing loans and therefore expands the base of funds a group may use to provide farmworker housing.

Eases rules on Farm-Labor Housing and Rental Assistance by permitting seasonally operated farmworker housing projects to be funded on an operating basis and therefore eases paperwork burden by permitting project rents to be based on the area income on farmworkers rather than individual income.

Reauthorization of National Flood Insurance Program. Authorizes homeowner's flood insurance by extending authorization of the National Flood Insurance Program (NFIP) for homeowners through FY2001

Extends emergency implementation of NFIP to the end of 2001 by allowing certain communities lower flood premiums while in the middle of implementing mitigation and other flood control plans that ultimately reduce the community's risk for flooding.

Assistance for Self-Help Housing Providers. Expands competition of Self-Help Housing Program (SHOP) by requiring HUD to make self-help housing program nationally and regionally competitive. [Program provides funds for infrastructure and land acquisition to groups who sponsor self-help housing programs. Program started in FY1996 with $40 million, assisting over 4,000 homes at an average government cost of $10,000 to provide homeownership.]

Extends time to complete FY96 SHOP projects by extending from 24 months to a total of 36 months the time grantees may use funds under this program to build housing. Extends SHOP program for FY1999 and FY2000 by granting two year extension.

Special Mortgage Insurance Assistance. Updates underutilized FHA program for high-risk borrowers by providing limited mortgage insurance for high-risk borrowers who participate in CDFI led pre-and post-purchasing counseling for mortgages under $70,000 and requires participation through a certified CDFI who will share in any losses incurred.

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