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September 27, 1999

H.R. 202 - Preserving Affordable Housing for Senior Citizens
and Families into the 21st Century Act

(Lazio (R) NY and 29 cosponsors)

The Administration supports the goals of H.R. 202 -- to strengthen and preserve housing assistance to low-income households and to support new forms of housing and health facilities for the elderly - and has no objection to House passage of the bill. The Administration, however, has concerns about certain provisions of the bill that are unnecessary, costly, or unclear and will work in the Senate to amend the bill to address these concerns. In particular, the bill needs to be amended to:
  • Delete subsidized housing provisions that would: (1) allow property owners to demand renewal of moderate rehabilitation contracts six months after they lapse; and (2) unreasonably restrict HUD's discretion in deciding when to permit an owner to retain excess income, thereby impeding HUD's ability to enforce fully its responsibility for ensuring the condition of the properties. In addition, the provision renewing rental assistance contracts at marked-up levels should be clarified to be subject to annual appropriations.

  • Delete or modify provisions that would weaken underwriting standards for hospital-based health care facilities currently eligible for FHA loan guarantees as well as those made newly eligible under the bill. The Administration does not object to giving FHA certain additional authority to guarantee loans for a broader range of health care facilities, but objects to increasing the risk and cost to FHA's General and Special Risk Insurance Fund.

  • Modify the bill's enhanced voucher provisions to allow HUD to set the payment standard at a reasonable rent level instead of being required to match market rents in all cases. Without this provision, property owners may have an incentive to opt out of project-based contracts, and HUD may be forced to pay unreasonably high rent levels. In addition, the bill needs to be modified to clarify that the requirement that the enhanced voucher payment standard increase as rents increase applies prospectively, not retroactively, for preservation project vouchers.

  • Modify the provisions of the bill that would authorize use of Section 811 funds for tenant-based assistance. The Administration generally supports this authorization; however, in order to provide the best mix of housing for the disabled, the Administration believes that at least 25 percent and up to 50 percent of funds for Section 811 housing assistance should be used for tenant-based rental assistance.

  • Delete the provision authorizing the forgiveness of debt of pre-1990 Section 202 elderly housing projects financed with direct Government loans. This provision would do nothing to address the needs of this aging housing stock and would require significant increases in appropriations to implement. Similarly, the provision authorizing the prepayment of these loans would be a significant drain on discretionary resources.

  • Modify the bill's provisions that would authorize conversion of HUD assisted housing units to assisted living facilities to meet many communities' needs for this new form of low-income housing. Although the Administration supports the authorization of such conversions, it objects to the bill's provisions allowing the use of scarce Federal resources for capital needs, unless it is related to the conversion of a project to an assisted living facility. In addition, the bill should specify an authorization of appropriations of $100 million annually during FYs 2000-2004, rather than authorize "such sums" appropriations.

  • Delete the provision establishing a Commission on Affordable Housing and Health Care Facility Needs in the 21st Century. This Commission is unnecessary in light of HUD's recently completed study on elderly housing and will divert limited research funding from more worthy projects.

  • Clarify provisions that could be construed as requiring implementation of this bill before important policy considerations and rulemaking procedures are completed.


H.R. 202 would affect direct spending and receipts; therefore, it is subject to the pay-as-you-go (PAYGO) requirements of the Omnibus Budget Reconciliation Act of 1999. The Office of Management and Budget's preliminary PAYGO estimates are under development.

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