SEC-411 -- HOPE FOR PUBLIC AND INDIAN HOUSING HOMEOWNERSHIP. The United States Housing Act of 1937 is amended by adding at the end the following new title: "TITLE III-HOPE FOR PUBLIC AND INDIAN HOUSING HOMEOWNERSHIP "SEC. 301. PROGRAM AUTHORITY. "(a) In General.-The Secretary is authorized to make- "(1) planning grants to help applicants to develop homeownership programs in accordance with this title; and "(2) implementation grants to carry out homeownership programs in accordance with this title. "(b) Authority To Reserve Housing Assistance.-In connection with a grant under this title, the Secretary may reserve authority to provide assistance under section 8 of this Act to the extent necessary to provide replacement housing and rental assistance for a nonpurchasing tenant who resides in the project on the date the Secretary approves the application for an implementation grant, for use by the tenant in another project. "(c) Authorization of Appropriations.-There are authorized to be appropriated for grants under this title $68,000,000 for fiscal year 1991 and $380,000,000 for fiscal year 1992. Any amount appropriated pursuant to this subsection shall remain available until expended. "SEC. 302. PLANNING GRANTS. "(a) Grants.-The Secretary is authorized to make planning grants to applicants for the purpose of developing homeownership programs under this title. The amount of a planning grant under this section may not exceed $200,000, except that the Secretary may for good cause approve a grant in a higher amount. "(b) Eligible Activities.-Planning grants may be used for activities to develop homeownership programs (which may include programs for cooperative ownership), including- "(1) development of resident management corporations and resident councils; "(2) training and technical assistance for applicants related to development of a specific homeownership program; "(3) studies of the feasibility of a homeownership program; "(4) preliminary architectural and engineering work; "(5) tenant and homebuyer counseling and training; "(6) planning for economic development, job training, and self-sufficiency activities that promote economic self-sufficiency of homebuyers and homeowners under the homeownership program; "(7) development of security plans; and "(8) preparation of an application for an implementation grant under this title. "(c) Application.- "(1) Form and procedures.-An application for a planning grant shall be submitted by an applicant in such form and in accordance with such procedures as the Secretary shall establish. "(2) Minimum requirements.-The Secretary shall require that an application contain at a minimum- "(A) a request for a planning grant, specifying the activities proposed to be carried out, the schedule for completing the activities, the personnel necessary to complete the activities, and the amount of the grant requested; "(B) a description of the applicant and a statement of its qualifications; "(C) identification and description of the public housing project or projects involved, and a description of the composition of the tenants, including family size and income; "(D) a certification by the public official responsible for submitting the comprehensive housing affordability strategy under section 105 of the Cranston-Gonzalez National Affordable Housing Act that the proposed activities are consistent with the approved housing strategy of the State or unit of general local government within which the project is located (or, during the first 12 months after enactment of the Cranston-Gonzalez National Affordable Housing Act, that the application is consistent with such other existing State or local housing plan or strategy that the Secretary shall determine to be appropriate); and "(E) a certification that the applicant will comply with the requirements of the Fair Housing Act, title VI of the Civil Rights Act of 1964, section 504 of the Rehabilitation Act of 1973, and the Age Discrimination Act of 1975, and will affirmatively further fair housing. "(d) Selection Criteria.-The Secretary shall, by regulation, establish selection criteria for a national competition for assistance under this section, which shall include- "(1) the qualifications or potential capabilities of the applicant; "(2) the extent of tenant interest in the development of a homeownership program for the project; "(3) the potential of the applicant for developing a successful and affordable homeownership program and the suitability of the project for homeownership; "(4) national geographic diversity among projects for which applicants are selected to receive assistance; and "(5) such other factors that the Secretary shall require that (in the determination of the Secretary) are appropriate for purposes of carrying out the program established by this title in an effective and efficient manner. "SEC. 303. IMPLEMENTATION GRANTS. "(a) Grants.-The Secretary is authorized to make implementation grants to applicants for the purpose of carrying out homeownership programs approved under this title. "(b) Eligible Activities.-Implementation grants may be used for activities to carry out homeownership programs (including programs for cooperative ownership) that meet the requirements under this subtitle, including the following activities: "(1) Architectural and engineering work. "(2) Implementation of the homeownership program, including acquisition of the public housing project (not including scattered site single family housing of a public housing agency) from a public housing agency for the purpose of transferring ownership to eligible families in accordance with a homeownership program that meets the requirements under this title. "(3) Rehabilitation of any public housing project covered by the homeownership program, in accordance with standards established by the Secretary. "(4) Administrative costs of the applicant, which may not exceed 15 percent of the amount of assistance provided under this section. "(5) Development of resident management corporations and resident management councils, but only if the applicant has not received assistance under section 302 for such activities. "(6) Counseling and training of homebuyers and homeowners under the homeownership program. "(7) Relocation of tenants who elect to move. "(8) Any necessary temporary relocation of tenants during rehabilitation. "(9) Funding of operating expenses and replacement reserves of the project covered by the homeownership program, except that the amount of assistance for operating expenses shall not exceed the amount the project would have received if it had continued to receive such assistance under section 9, with adjustments comparable to those that would have been made under section 9. "(10) Implementation of a replacement housing plan. "(11) Legal fees. "(12) Defraying costs for the ongoing training needs of the recipient that are related to developing and carrying out the homeownership program. "(13) Economic development activities that promote economic self-sufficiency of homebuyers, residents, and homeowners under the homeownership program. "(c) Matching Funding.- "(1) In general.-Each recipient shall assure that contributions equal to not less than 25 percent of the grant amount made available under this section, excluding any amounts provided for post-sale operating expenses, shall be provided from non-Federal sources to carry out the homeownership program. "(2) Form.-Such contributions may be in the form of- "(A) cash contributions from non-Federal resources, which may not include Federal tax expenditures or funds from a grant made under section 106(b) or section 106(d) of the Housing and Community Development Act of 1974; "(B) payment of administrative expenses, as defined by the Secretary, from non-Federal resources, including funds from a grant made under section 106(b) or section 106(d) of the Housing and Community Development Act of 1974; "(C) the value of taxes, fees, or other charges that are normally and customarily imposed but are waived, foregone, or deferred in a manner that facilitates the implementation of a homeownership program assisted under this subtitle; "(D) the value of land or other real property as appraised according to procedures acceptable to the Secretary; "(E) the value of investment in on-site and off-site infrastructure required for a homeownership program assisted under this subtitle; or "(F) such other in-kind contributions as the Secretary may approve. Contributions for administrative expenses shall be recognized only up to an amount equal to 7 percent of the total amount of grants made available under this section. "(d) Application.- "(1) Form and procedure.-An application for an implementation grant shall be submitted by an applicant in such form and in accordance with such procedures as the Secretary shall establish. "(2) Minimum requirements.-The Secretary shall require that an application contain at a minimum- "(A) a request for an implementation grant, specifying the amount of the grant requested and its proposed uses; "(B) if applicable, an application for assistance under section 8 of this Act, which shall specify the proposed uses of such assistance and the period during which the assistance will be needed; "(C) a description of the qualifications and experience of the applicant in providing housing for low-income families; "(D) a description of the proposed homeownership program, consistent with section 304 and the other requirements of this title, which shall specify the activities proposed to be carried out and their estimated costs, identifying reasonable schedules for carrying it out, and demonstrating that the program will comply with the affordability requirements under section 304(b); "(E) identification and description of the public housing project or projects involved, and a description of the composition of the tenants, including family size and income; "(F) a description of and commitment for the resources that are expected to be made available to provide the matching funding required under subsection (c) and of other resources that are expected to be made available in support of the homeownership program; "(G) identification and description of the financing proposed for any (i) rehabilitation and (ii) acquisition (I) of the property, where applicable, by a resident council or other entity for transfer to eligible families, and (II) by eligible families of ownership interests in, or shares representing, units in the project; "(H) if the applicant is not a public housing agency, the proposed sales price, if any, the basis for such price determination, and terms to the applicant; "(I) the estimated sales prices, if any, and terms to eligible families; "(J) any proposed restrictions on the resale of units under a homeownership program; "(K) identification and description of the entity that will operate and manage the property; "(L) a certification by the public official responsible for submitting the comprehensive housing affordability strategy under section 105 of the Cranston-Gonzalez National Affordable Housing Act that the proposed activities are consistent with the approved housing strategy of the State or unit of general local government within which the project is located (or, during the first 12 months after enactment of the Cranston-Gonzalez National Affordable Housing Act, that the application is consistent with such other existing State or local housing plan or strategy that the Secretary shall determine to be appropriate); and "(M) a certification that the applicant will comply with the requirements of the Fair Housing Act, title VI of the Civil Rights Act of 1964, section 504 of the Rehabilitation Act of 1973, and the Age Discrimination Act of 1975, and will affirmatively further fair housing. "(e) Selection Criteria.-The Secretary shall establish selection criteria for a national competition for assistance under this section, which shall include- "(1) the ability of the applicant to develop and carry out the proposed homeownership program, taking into account the quality of any related ongoing program of the applicant, and the extent of tenant interest in the development of a homeownership program and community support; "(2) the feasibility of the homeownership program; "(3) the extent to which current tenants and other eligible families will be able to afford the purchase; "(4) the quality and viability of the proposed homeownership program, including the viability of the economic self-sufficiency plan; "(5) the extent to which funds for activities that do not qualify as eligible activities will be provided in support of the homeownership program; "(6) whether the approved comprehensive housing affordability strategy for the jurisdiction within which the public housing project is located includes the proposed homeownership program as one of the general priorities identified pursuant to section 105(b)(7) of the Cranston-Gonzalez National Affordable Housing Act; "(7) national geographic diversity among housing for which applicants are selected to receive assistance; and "(8) the extent to which a sufficient supply of affordable rental housing of the type assisted under this title exists in the locality, so that the implementation of the homeownership program will not appreciably reduce the number of such rental units available to residents currently residing in such units or eligible for residency in such units. "(f) Location Within Participating Jurisdictions.-The Secretary may approve applications for grants under this title only for public housing projects located within the boundaries of jurisdictions- "(1) which are participating jurisdictions under title III of the Cranston-Gonzalez National Affordable Housing Act; or "(2) on behalf of which the agency responsible for affordable housing has submitted a housing strategy or plan. "(g) Approval.-The Secretary shall notify each applicant, not later than 6 months after the date of the submission of the application, whether the application is approved or not approved. The Secretary may approve the application for an implementation grant with a statement that the application for the section 8 assistance for replacement housing and for residents of the project not purchasing units is conditionally approved, subject to the availability of appropriations in subsequent fiscal years. "SEC. 304. HOMEOWNERSHIP PROGRAM REQUIREMENTS. "(a) In General.-A homeownership program under this title shall provide for acquisition by eligible families of ownership interests in, or shares representing, at least one-half of the units in a public housing project under any arrangement determined by the Secretary to be appropriate, such as cooperative ownership (including limited equity cooperative ownership) and fee simple ownership (including condominium ownership), for occupancy by the eligible families. "(b) Affordability.-A homeownership program under this title shall provide for the establishment of sales prices (including principal, insurance, taxes, and interest and closing costs) for initial acquisition of the property from the public housing agency if the applicant is not a public housing agency, and for sales to eligible families, such that an eligible family shall not be required to expend more than 30 percent of the adjusted income of the family per month to complete a sale under the homeownership program. "(c) Plan.-A homeownership program under this title shall provide, and include a plan, for- "(1) identifying and selecting eligible families to participate in the homeownership program; "(2) providing relocation assistance to families who elect to move; "(3) ensuring continued affordability by tenants, homebuyers, and homeowners in the project; "(4) providing ongoing training and counseling for homebuyers and homeowners; and "(5) replacing units in eligible projects covered by a homeownership program. "(d) Acquisition and Rehabilitation Limitations.-Acquisition or rehabilitation of public housing projects under a homeownership program under this title may not consist of acquisition or rehabilitation of less than the whole public housing project (not including scattered site single family housing of a public housing agency) in a project consisting of more than 1 building. The provisions of this subsection may be waived upon a finding by the Secretary that the sale of less than all the buildings in a project is feasible and will not result in a hardship to any tenants of the project who are not included in the homeownership program. "(e) Financing.- "(1) In general.-The application shall identify and describe the proposed financing for (A) any rehabilitation, and (B) acquisition (i) of the project, where applicable, by an entity other than the public housing agency for transfer to eligible families, and (ii) by eligible families of ownership interests in, or shares representing, units in the project. Financing may include use of the implementation grant, sale for cash, or other sources of financing (subject to applicable requirements), including conventional mortgage loans and mortgage loans insured under title II of the National Housing Act. "(2) Prohibition against pledges.-Property transferred under this title shall not be pledged as collateral for debt or otherwise encumbered except when the Secretary determines that- "(A) such encumbrance will not threaten the long-term availability of the property for occupancy by low-income families; "(B) neither the Federal Government nor the public housing agency will be exposed to undue risks related to action that may have to be taken pursuant to paragraph (3); "(C) any debt obligation can be serviced from project income, including operating assistance; and "(D) the proceeds of such encumbrance will be used only to meet housing standards in accordance with subsection (f) or to make such additional capital improvements as the Secretary determines to be consistent with the purposes of this title. "(3) Opportunity to cure.-Any lender that provides financing in connection with a homeownership program under this subtitle shall give the public housing agency, resident management corporation, individual owner, or other appropriate entity a reasonable opportunity to cure a financial default before foreclosing on the property, or taking other action as a result of the default. "(f) Housing Quality Standards.-The application shall include a plan ensuring that the unit- "(1) will be free from any defects that pose a danger to health or safety before transfer of an ownership interest in, or shares representing, a unit to an eligible family; and "(2) will, not later than 2 years after the transfer to an eligible family, meet minimum housing standards established by the Secretary for the purposes of this title. "(g) Replacement Plan.-Public housing projects shall not be transferred under this title unless the Secretary has entered into a binding agreement with the local public housing agency to make available to such agency Federal funding assistance to provide an additional decent, safe, sanitary, and affordable dwelling unit as a replacement for each unit in a public housing project to be transferred. Such replacement housing may consist of- "(1) the development of new public housing units by the public housing agency in accordance with section 5; "(2) the rehabilitation of vacant public housing units by the public housing agency in accordance with section 14(n)(1); "(3) the use of 5-year, tenant-based rental assistance under section 8(b)(2) and section 8(o)(9); "(4) the use of a State or local program that is comparable to any of the Federal programs referred to in subparagraphs (A) through (C) as to housing standards, eligibility, and contribution to rent, and provides a term of assistance of not less than 5 years; "(5) where the applicant is a resident management corporation, resident council, or cooperative association, the acquisition of nonpublicly owned housing units, which the applicant shall operate as rental housing comparable to public housing as to term of assistance, housing standards, eligibility, and contribution to rent; or "(6) any combination of such methods. "(h) Protection of Non-Purchasing Families.- "(1) In general.-No tenant residing in a dwelling unit in a public housing project on the date the Secretary approves an application for an implementation grant may be evicted by reason of a homeownership program approved under this title. "(2) Replacement assistance.-If the tenant decides not to purchase a unit, or is not qualified to do so, the recipient shall, during the term of any operating assistance under the implementation grant, permit each otherwise qualified tenant to continue to reside in the project at rents that do not exceed levels consistent with section 3(a) of this Act or, if an otherwise qualified tenant chooses to move (at any time during the term of such operating assistance contract), the public housing agency shall, to the extent approved in appropriations Acts, offer such tenant (A) a unit in another public housing project, or (B) section 8 assistance for use in other housing. "(3) Relocation assistance.-The recipient shall also inform each such tenant that if the tenant chooses to move, the recipient will pay relocation assistance in accordance with the approved homeownership program. "(4) Other rights.-Tenants renting a unit in a project transferred under this title shall have all rights provided to tenants of public housing under this Act. "SEC. 305. OTHER PROGRAM REQUIREMENTS. "(a) Sale by Public Housing Agency to Applicant or Other Entity Required.-Where the Secretary approves an application providing for the transfer of the eligible project from the public housing agency to another applicant, the public housing agency shall transfer the project to such other applicant, in accordance with the approved homeownership program. "(b) Preferences.-In selecting eligible families for homeownership, the recipient shall give a first preference to otherwise qualified current tenants and a second preference to otherwise qualified eligible families who have completed participation in an economic self-sufficiency program specified by the Secretary. "(c) Cost Limitations.-The Secretary may establish cost limitations on eligible activities under this title, subject to the provisions of this title. "(d) Annual Contributions.-Notwithstanding the purchase of a public housing project under this section, or the purchase of a unit in a public housing project by an eligible family, the Secretary shall continue to pay annual contributions with respect to the project. Such contributions may not exceed the maximum contributions authorized in section 5(a). "(e) Operating Subsidies.-Operating subsidies under section 9 of this Act shall not be available with respect to a public housing project after the date of its sale by the public housing agency. "(f) Use of Proceeds From Sales to Eligible Families.-The entity that transfers ownership interests in, or shares representing, units to eligible families, or another entity specified in the approved application, shall use the proceeds, if any, from the initial sale for costs of the homeownership program, including operating expenses, improvements to the project, business opportunities for low-income families, supportive services related to the homeownership program, additional homeownership opportunities, and other activities approved by the Secretary. "(g) Restrictions on Resale by Homeowners.- "(1) In general.- "(A) Transfer permitted.-A homeowner under a homeownership program may transfer the homeowner's ownership interest in, or shares representing, the unit, except that a homeownership program may establish restrictions on the resale of units under the program. "(B) Right to purchase.-Where a resident management corporation, resident council, or cooperative has jurisdiction over the unit, the corporation, council, or cooperative shall have the right to purchase the ownership interest in, or shares representing, the unit from the homeowner for the amount specified in a firm contract between the homeowner and a prospective buyer. If such an entity does not have jurisdiction over the unit or elects not to purchase and if the prospective buyer is not a low-income family, the public housing agency or the implementation grant recipient shall have the right to purchase the ownership interest in, or shares representing, the unit for the same amount. "(C) Promissory note required.-The homeowner shall execute a promissory note equal to the difference between the market value and the purchase price, payable to the public housing agency or other entity designated in the homeownership plan, together with a mortgage securing the obligation of the note. "(2) 6 years or less.-In the case of a transfer within 6 years of the acquisition under the program, the homeownership program shall provide for appropriate restrictions to assure that an eligible family may not receive any undue profit. The plan shall provide for limiting the family's consideration for its interest in the property to the total of- "(A) the contribution to equity paid by the family; "(B) the value, as determined by such means as the Secretary shall determine through regulation, of any improvements installed at the expense of the family during the family's tenure as owner; and "(C) the appreciated value determined by an inflation allowance at a rate which may be based on a cost-of-living index, an income index, or market index as determined by the Secretary through regulation and agreed to by the purchaser and the entity that transfers ownership interests in, or shares representing, units to eligible families (or another entity specified in the approved application), at the time of initial sale, and applied against the contribution to equity. Such an entity may, at the time of initial sale, enter into an agreement with the family to set a maximum amount which this appreciation may not exceed. "(3) 6-20 years.-In the case of a transfer during the period beginning 6 years after the acquisition and ending 20 years after the acquisition, the homeownership program shall provide for the recapture by the Secretary or the program of an amount equal to the amount of the declining balance on the note described in paragraph (1)(C). "(4) Use of recaptured funds.-Fifty percent of any portion of the net sales proceeds that may not be retained by the homeowner under the plan approved pursuant to this subsection shall be paid to the entity that transferred ownership interests in, or shares representing, units to eligible families, or another entity specified in the approved application, for use for improvements to the project, business opportunities for low-income families, supportive services related to the homeownership program, additional homeownership opportunities, and other activities approved by the Secretary. The remaining 50 percent shall be returned to the Secretary for use under this subtitle, subject to limitations contained in appropriations Acts. Such entity shall keep and make available to the Secretary all records necessary to calculate accurately payments due the Secretary under this subsection. "(h) Third Party Rights.-The requirements under this title regarding quality standards, resale, or transfer of the ownership interest of a homeowner shall be judicially enforceable against the grant recipient with respect to actions involving rehabilitation, and against purchasers of property under this subsection or their successors in interest with respect to other actions by affected low-income families, resident management corporations, resident councils, public housing agencies, and any agency, corporation, or authority of the United States Government. The parties specified in the preceding sentence shall be entitled to reasonable attorney fees upon prevailing in any such judicial action. "(i) Dollar Limitation on Economic Development Activities.-Not more than an aggregate of $250,000 from amounts made available under sections 302 and 303 may be used for economic development activities under sections 302(b)(6) and 303(b)(9) for any project. "(j) Timely Homeownership.-Recipients shall transfer ownership of the property to tenants within a specified period of time that the Secretary determines to be reasonable. During the interim period when the property continues to be operated and managed as rental housing, the recipient shall utilize written tenant selection policies and criteria that are consistent with the public housing program and that are approved by the Secretary as consistent with the purpose of improving housing opportunities for low-income families. The recipient shall promptly notify in writing any rejected applicant of the grounds for any rejection. "(k) Capability of Resident Management Corporations and Resident Councils.-To be eligible to receive a grant under section 303, a resident management corporation or resident council shall demonstrate to the Secretary its ability to manage public housing by having done so effectively and efficiently for a period of not less than 3 years or by arranging for management by a qualified management entity. "(l) Records and Audit of Recipients of Assistance.- "(1) In general.-Each recipient shall keep such records as may be reasonably necessary to fully disclose the amount and the disposition by such recipient of the proceeds of assistance received under this title (and any proceeds from financing obtained in accordance with subsection (b) or sales under subsections (f) and (g)(4)), the total cost of the homeownership program in connection with which such assistance is given or used, and the amount and nature of that portion of the program supplied by other sources, and such other sources as will facilitate an effective audit. "(2) Access by the secretary.-The Secretary shall have access for the purpose of audit and examination to any books, documents, papers, and records of the recipient that are pertinent to assistance received under this title. "(3) Access by the comptroller general.-The Comptroller General of the United States, or any of the duly authorized representatives of the Comptroller General, shall also have access for the purpose of audit and examination to any books, documents, papers, and records of the recipient that are pertinent to assistance received under this title. "SEC. 306. DEFINITIONS. "For purposes of this title: "(1) The term `applicant' means the following entities that may represent the tenants of the project: "(A) A public housing agency (including an Indian housing authority). "(B) A resident management corporation, established in accordance with requirements of the Secretary under section 20. "(C) A resident council. "(D) A cooperative association. "(E) A public or private nonprofit organization. "(F) A public body, including an agency or instrumentality thereof. "(2) The term `eligible family' means- "(A) a family or individual who is a tenant in the public or Indian housing project on the date the Secretary approves an implementation grant; "(B) a low-income family; or "(C) a family or individual who is assisted under a housing program administered by the Secretary or the Secretary of Agriculture (not including any non-low income families assisted under any mortgage insurance program administered by either Secretary). "(3) The term `homeownership program' means a program for homeownership meeting the requirements under this title. "(4) The term `recipient' means an applicant approved to receive a grant under this title or such other entity specified in the approved application that will assume the obligations of the recipient under this title. "(5) The term `resident council' means any incorporated nonprofit organization or association that- "(A) is representative of the tenants of the housing; "(B) adopts written procedures providing for the election of officers on a regular basis; and "(C) has a democratically elected governing board, elected by the tenants of the housing. "SEC. 307. RELATIONSHIP TO OTHER HOMEOWNERSHIP OPPORTUNITIES. "The program authorized under this title shall be in addition to any other public housing homeownership and management opportunities, including opportunities under section 5(h) and title II of this Act. "SEC. 308. LIMITATION ON SELECTION CRITERIA. "In establishing criteria for selecting applicants to receive assistance under this title, the Secretary may not establish any selection criterion or criteria that grant or deny such assistance to an applicant (or have the effect of granting or denying assistance) based on the implementation, continuation, or discontinuation of any public policy, regulation, or law of any jurisdiction in which the applicant or project is located. "SEC. 309. ANNUAL REPORT The Secretary shall annually submit to the Congress a report setting forth- "(1) the number, type, and cost of public housing units sold pursuant to this title; "(2) the income, race, gender, children, and other characteristics of families participating (or not participating) in homeownership programs funded under this title; "(3) the amount and type of financial assistance provided under and in conjunction with this title; "(4) the amount of financial assistance provided under this title that was needed to ensure continued affordability and meet future maintenance and repair costs; and "(5) the recommendations of the Secretary for statutory and regulatory improvements to the program.".