HUD Inspection Oversight Act of 2021

I 117TH CONGRESS 1ST SESSION H. R. 3279 To provide physical standards and reform the inspection process for housing assisted under section 8 of the United States Housing Act of 1937, and for other purposes. IN THE HOUSE OF REPRESENTATIVES MAY 17, 2021 Mr. LAWSON of Florida (for himself, Ms. ADAMS, and Mrs. DEMINGS) intro- duced the following bill; which was referred to the Committee on Finan- cial Services A BILL To provide physical standards and reform the inspection process for housing assisted under section 8 of the United States Housing Act of 1937, and for other pur- poses. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘HUD Inspection Over- 4 sight Act of 2021’’. 5 VerDate Sep 11 2014 02:30 Jul 01, 2021 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H3279.IH H3279 pbinns on DSKJLVW7X2PROD with BILLS 2 •HR 3279 IH SEC. 2. ENFORCEMENT OF PHYSICAL CONDITION STAND- 1 ARDS AND TENANT PROTECTION. 2 Section 8(c) of the United States Housing Act of 3 1937 (42 U.S.C. 1437f(c)) is amended by adding at the 4 end the following: 5 ‘‘(9) MAINTENANCE OF PROPERTY.—Any entity 6 receiving housing assistance payments with respect 7 to dwelling units covered by a housing assistance 8 payments contract shall— 9 ‘‘(A) maintain decent, safe, and sanitary 10 conditions at those dwelling units, as deter- 11 mined by the Secretary; and 12 ‘‘(B) comply with any standards under ap- 13 plicable State or local laws, rules, ordinances, or 14 regulations relating to the physical condition of 15 those dwelling units. 16 ‘‘(10) ENFORCEMENT OF PHYSICAL CONDITION 17 STANDARDS.— 18 ‘‘(A) IN GENERAL.—The Secretary shall 19 take action under subparagraph (C) against an 20 entity with a housing assistance payments con- 21 tract for project-based assistance with respect 22 to a multifamily housing project if— 23 ‘‘(i) the project receives an inspection 24 score of not more than 60; or 25 VerDate Sep 11 2014 02:30 Jul 01, 2021 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H3279.IH H3279 pbinns on DSKJLVW7X2PROD with BILLS 3 •HR 3279 IH ‘‘(ii) the entity fails to certify in writ- 1 ing to the Secretary within 3 days of re- 2 ceiving the score under clause (i) that all 3 exigent health and safety deficiencies iden- 4 tified by the inspector at the project have 5 been corrected. 6 ‘‘(B) APPLICABILITY.—Subparagraph (A) 7 shall— 8 ‘‘(i) apply with respect to insured and 9 noninsured projects with dwelling units re- 10 ceiving assistance under this section other 11 than under subsection (o)(13); and 12 ‘‘(ii) not apply to dwelling units re- 13 ceiving assistance with capital or operating 14 funds under section 9. 15 ‘‘(C) NOTIFICATION AND ENFORCE- 16 MENT.— 17 ‘‘(i) IN GENERAL.—If an entity vio- 18 lates clause (i) or (ii) of subparagraph (A), 19 within 15 days after the results of the in- 20 spection the Secretary shall issue the enti- 21 ty a Notice of Default, which shall provide 22 for a reasonable period to cure all project 23 deficiencies and for the entity to provide 24 VerDate Sep 11 2014 02:30 Jul 01, 2021 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H3279.IH H3279 pbinns on DSKJLVW7X2PROD with BILLS 4 •HR 3279 IH any response determined appropriate by 1 the Secretary. 2 ‘‘(ii) PLAN AND NOTICE OF DE- 3 FAULT.—If violations remain at a project 4 after the expiration of the cure period pre- 5 scribed by the Secretary in the Notice of 6 Default pursuant to clause (i), the Sec- 7 retary shall— 8 ‘‘(I) develop a remediation plan, 9 separate from the Notice of Default, 10 and in consultation with tenants or le- 11 gitimate tenant organizations, or both, 12 not later than 45 days after the expi- 13 ration of the cure period prescribed by 14 the Secretary in the Notice of Default, 15 to bring the project into compliance; 16 ‘‘(II) provide the owner with the 17 remediation plan with a specified 18 timetable, determined by the Sec- 19 retary, for correcting all project defi- 20 ciencies, and 21 ‘‘(III) provide the tenants of the 22 property, legitimate tenant organiza- 23 tions, the local government, any mort- 24 gagees, and any contract adminis- 25 VerDate Sep 11 2014 02:30 Jul 01, 2021 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H3279.IH H3279 pbinns on DSKJLVW7X2PROD with BILLS 5 •HR 3279 IH trator of the project with the Notice 1 of Default and the remediation plan 2 with the specified timetable, deter- 3 mined by the Secretary, for correcting 4 all deficiencies. 5 ‘‘(iii) WITHDRAWAL OF NOTICE OF 6 DEFAULT.—If an appeal submitted by the 7 entity results in an inspection score of not 8 less than 60, the Secretary may withdraw 9 a Notice of Default issued under clause 10 (ii)(II). 11 ‘‘(iv) PENALTIES.—If, at the end of 12 the timetable described in clause (ii)(II), 13 the entity fails to fully correct all defi- 14 ciencies in the project, the Secretary shall 15 take one or more of the following actions, 16 and provide additional notice of those ac- 17 tions to the owner, the tenants of the prop- 18 erty, legitimate tenant organizations, the 19 local government, any mortgagees, and any 20 contract administrator: 21 ‘‘(I) Require immediate replace- 22 ment of project management with a 23 management agent approved by the 24 Secretary. 25 VerDate Sep 11 2014 02:30 Jul 01, 2021 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H3279.IH H3279 pbinns on DSKJLVW7X2PROD with BILLS 6 •HR 3279 IH ‘‘(II) Impose civil money pen- 1 alties, which shall be used solely for 2 the purpose of supporting safe and 3 sanitary conditions at the property, as 4 designated by the Secretary, with pri- 5 ority given to the tenants of the prop- 6 erty affected by the penalty. 7 ‘‘(III) Abate the housing assist- 8 ance payments contract under this 9 section, including partial abatement, 10 as determined by the Secretary, until 11 all deficiencies have been corrected. 12 ‘‘(IV) Pursue transfer of the 13 project to an owner, approved by the 14 Secretary under established proce- 15 dures, which will be obligated to 16 promptly make all required repairs 17 and to accept renewal of the housing 18 assistance payments contract as long 19 as such renewal is offered. 20 ‘‘(V) Transfer the existing hous- 21 ing assistance payments contract 22 under this section to another project 23 or projects and owner or owners. 24 VerDate Sep 11 2014 02:30 Jul 01, 2021 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H3279.IH H3279 pbinns on DSKJLVW7X2PROD with BILLS 7 •HR 3279 IH ‘‘(VI) Pursue exclusionary sanc- 1 tions, including suspensions or 2 debarments from Federal programs. 3 ‘‘(VII) Seek judicial appointment 4 of a receiver to manage the property 5 and cure all project deficiencies or 6 seek a judicial order of specific per- 7 formance requiring the owner to cure 8 all project deficiencies. 9 ‘‘(VIII) Work with the owner, 10 lender, or other related party to sta- 11 bilize the property in an attempt to 12 preserve the property through compli- 13 ance, transfer of ownership, or an in- 14 fusion of capital provided by a third- 15 party that requires time to effectuate. 16 ‘‘(IX) Take any other regulatory 17 or contractual remedies available as 18 deemed necessary and appropriate by 19 the Secretary. 20 ‘‘(D) CONTRACTS.— 21 ‘‘(i) IN GENERAL.—The Secretary 22 shall take appropriate steps to ensure that 23 project-based contracts remain in effect, 24 subject to the exercise of contractual 25 VerDate Sep 11 2014 02:30 Jul 01, 2021 Jkt 019200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H3279.IH H3279 pbinns on DSKJLVW7X2PROD with BILLS 8 •HR 3279 IH abatement remedies to assist relocation of 1 tenants for major threats to health and 2 safety after written notice to and informed 3 consent of the affected tenants and use of 4 other remedies under this paragraph. 5 ‘‘(ii) OTHER ASSISTANCE.—To the ex- 6 tent the Secretary determines, in consulta- 7 tion with the tenants, legitimate tenant or- 8 ganizations, and the local government, that 9 a property is not feasible for continued 10 rental assistance payments under this sec- 11 tion or other housing programs, based on 12 consideration of the costs of rehabilitating 13 and operating the property and all avail- 14 able Federal, State, and local resources, in- 15 cluding rent adjustments under section 16 524 of the Multifamily Assisted Housing 17 Reform and Affordability Act of 1997 (42 18 U.S.C. 1437f note) and environmental con- 19 ditions that cannot be remedied in a cost- 20 effective fashion, the Secretary may, in 21 consultation with the tenants of the prop- 22 erty and any legitimate tenant organiza- 23 tions, contract for project-based rental as- 24 sistance payments with an owner or owners 25 VerDate Sep 11 2014 02:30 Jul 01, 2021 Jkt 019200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H3279.IH H3279 pbinns on DSKJLVW7X2PROD with BILLS 9 •HR 3279 IH of other existing housing properties, or 1 provide other rental assistance. 2 ‘‘(E) REPORT.— 3 ‘‘(i) IN GENERAL.—The Secretary 4 shall, on a quarterly basis, issue a publicly 5 available report on all properties covered 6 by this paragraph that— 7 ‘‘(I) are assessed through the 8 Real Estate Assessment Center; and 9 ‘‘(II)(aa) have an inspection 10 score of less than 60; or 11 ‘‘(bb) received an unsatisfactory 12 management and occupancy review 13 during the 36-month period preceding 14 the report. 15 ‘‘(ii) CONTENTS.—Each report issued 16 under clause (i) shall include specific infor- 17 mation, disaggregated by the property to 18 which it relates, regarding— 19 ‘‘(I) the enforcement actions 20 being taken to address the physical 21 conditions of the properties covered in 22 the report, including imposition of 23 civil money penalties and termination 24 of subsidies, and identify properties 25 VerDate Sep 11 2014 02:30 Jul 01, 2021 Jkt 019200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H3279.IH H3279 pbinns on DSKJLVW7X2PROD with BILLS 10 •HR 3279 IH that have those conditions multiple 1 times; 2 ‘‘(II) actions that the Depart- 3 ment of Housing and Urban Develop- 4 ment is taking to protect tenants of 5 those properties; and 6 ‘‘(III) any administrative or leg- 7 islative recommendations to further 8 improve the living conditions at each 9 property covered under a housing as- 10 sistance payments contract. 11 ‘‘(11) TENANT PROTECTION.— 12 ‘‘(A) IN GENERAL.—The Secretary may 13 provide tenant-based assistance for dwelling 14 units covered under a project-based assistance 15 subsidy contract if— 16 ‘‘(i) the owner of the dwelling units 17 has received a Notice of Default; and 18 ‘‘(ii) the dwelling units pose an immi- 19 nent health and safety risk to the tenants 20 of those dwelling units. 21 ‘‘(B) REIMBURSEMENTS.—To the extent 22 that the Secretary determines that dwelling 23 units described in subparagraph (A) are not 24 feasible for continued rental assistance pay- 25 VerDate Sep 11 2014 02:30 Jul 01, 2021 Jkt 019200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H3279.IH H3279 pbinns on DSKJLVW7X2PROD with BILLS 11 •HR 3279 IH ments or transfer of the project-based assist- 1 ance subsidy contract associated with those 2 dwelling units to another project or projects 3 and owner or owners, any remaining amounts 4 associated with those dwelling units shall be re- 5 captured and used to reimburse amounts used 6 for tenant-based assistance under subparagraph 7 (A).’’. 8 SEC. 3. STANDARDS FOR PHYSICAL CONDITION AND MAN- 9 AGEMENT OF HOUSING RECEIVING ASSIST- 10 ANCE PAYMENTS. 11 Section 8 of the United States Housing Act of 1937 12 (42 U.S.C. 1437f) is amended by inserting after sub- 13 section (v) the following: 14 ‘‘(w) STANDARDS FOR PHYSICAL CONDITION AND 15 MANAGEMENT OF HOUSING RECEIVING ASSISTANCE PAY- 16 MENTS.— 17 ‘‘(1) STANDARDS FOR PHYSICAL CONDITION 18 AND MANAGEMENT OF HOUSING.—Any entity receiv- 19 ing assistance payments under this section shall 20 maintain decent, safe, and sanitary conditions, as 21 determined by the Secretary, for any structure cov- 22 ered under a housing assistance payment contract. 23 ‘‘(2) SURVEY OF TENANTS.— 24 VerDate Sep 11 2014 02:30 Jul 01, 2021 Jkt 019200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H3279.IH H3279 pbinns on DSKJLVW7X2PROD with BILLS 12 •HR 3279 IH ‘‘(A) IN GENERAL.—The Secretary shall, 1 on a semiannual basis, conduct a survey of the 2 tenants of each structure covered under a hous- 3 ing assistance payment contract for the purpose 4 of identifying consistent or persistent problems 5 with the physical condition of the structure or 6 performance of the manager of the structure. 7 ‘‘(B) CONFIDENTIALITY.—The Secretary 8 shall ensure that the surveys pursuant to sub- 9 paragraph (A) are conducted in an anonymous 10 manner such that the identities of tenants iden- 11 tifying such problems through such survey are 12 not disclosed. 13 ‘‘(3) REMEDIATION.—If a consistent or per- 14 sistent problem with the structure or the manage- 15 ment of the structure covered under a housing as- 16 sistance payment contract is identified— 17 ‘‘(A) by the Secretary pursuant a survey 18 conducted under paragraph (2), the Secretary 19 shall undertake remediation for the structure or 20 manager; or 21 ‘‘(B) by the Performance-Based Contract 22 Administrator based on any other observation 23 made by the Administrator during the normal 24 course of business, the Administrator shall refer 25 VerDate Sep 11 2014 02:30 Jul 01, 2021 Jkt 019200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\H3279.IH H3279 pbinns on DSKJLVW7X2PROD with BILLS 13 •HR 3279 IH the structure or manager to the Secretary for 1 remediation. 2 ‘‘(4) PENALTY FOR FAILURE TO UPHOLD 3 STANDARDS.— 4 ‘‘(A) IN GENERAL.—The Secretary may 5 impose a penalty on any owner of a structure 6 covered under a housing assistance payment 7 contract if the Secretary finds that the struc- 8 ture or manager of the structure— 9 ‘‘(i) did not satisfactorily meet the re- 10 quirements under paragraph (1); or 11 ‘‘(ii) is repeatedly referred to the Sec- 12 retary for remediation by a Performance- 13 Based Contract Administrator through the 14 process established under paragraph (3). 15 ‘‘(B) AMOUNT.—A penalty imposed under 16 subparagraph (A) shall be in an amount equal 17 to not less than 1 percent of the annual budget 18 authority the owner is allocated under a hous- 19 ing assistance payment contract. 20 ‘‘(C) USE OF AMOUNTS.—Any amounts 21 collected under this paragraph shall be used 22 solely for the purpose of supporting safe and 23 sanitary conditions at applicable structures or 24 for tenant relocation, as designated by the Sec- 25 VerDate Sep 11 2014 [Text truncated for display. 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