II 118TH CONGRESS 1ST SESSION S. 1389 To reform rural housing programs, and for other purposes. IN THE SENATE OF THE UNITED STATES MAY 1, 2023 Ms. SMITH (for herself and Mr. ROUNDS) introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs A BILL To reform rural housing programs, and for other purposes. 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; TABLE OF CONTENTS. 3 (a) SHORT TITLE.—This Act may be cited as the 4 ‘‘Rural Housing Service Reform Act of 2023’’. 5 (b) TABLE OF CONTENTS.—The table of contents of 6 this Act is as follows: 7 Sec. 1. Short title; table of contents. TITLE I—STREAMLINING AND UPDATES Sec. 101. Application of multifamily mortgage foreclosure procedures to multi- family mortgages held by the Secretary of Agriculture. Sec. 102. Study on rural housing loans for housing for low- and moderate-in- come families. VerDate Sep 11 2014 04:12 May 10, 2023 Jkt 039200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6211 E:\BILLS\S1389.IS S1389 kjohnson on DSK79L0C42PROD with BILLS 2 •S 1389 IS Sec. 103. Authorization of appropriations for staffing needs and information technology upgrades. TITLE II—RURAL HOUSING PRESERVATION AND REVITALIZATION Sec. 201. Permanent establishment of housing preservation and revitalization program. Sec. 202. Eligibility for rural housing vouchers. Sec. 203. Amount of voucher assistance. Sec. 204. Rental assistance contract authority. Sec. 205. Funding for multifamily technical improvements. TITLE III—NATIVE CDFI RELENDING Sec. 301. Native CDFI relending program. TITLE IV—SECTION 504 LOANS AND GRANTS Sec. 401. Modifications to loans and grants for minor improvements to farm housing and buildings. TITLE V—RURAL COMMUNITY DEVELOPMENT INITIATIVE GRANTS Sec. 501. Rural Community Development Initiative. TITLE VI—ANNUAL REPORT Sec. 601. Annual report on rural housing programs. TITLE VII—RURAL HOUSING VOUCHER PROGRAM Sec. 701. Adjustment to rural development voucher amount. TITLE VIII—TRANSFERS TO NONPROFIT ORGANIZATIONS Sec. 801. Transfer of elderly rural housing projects. TITLE IX—TERM OF DIRECT LOANS MADE BY THE RURAL HOUSING SERVICE Sec. 901. Extension of loan term. TITLE I—STREAMLINING AND 1 UPDATES 2 SEC. 101. APPLICATION OF MULTIFAMILY MORTGAGE 3 FORECLOSURE PROCEDURES TO MULTI- 4 FAMILY MORTGAGES HELD BY THE SEC- 5 RETARY OF AGRICULTURE. 6 The Multifamily Mortgage Foreclosure Act of 1981 7 (12 U.S.C. 3701 et seq.) is amended— 8 VerDate Sep 11 2014 04:12 May 10, 2023 Jkt 039200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S1389.IS S1389 kjohnson on DSK79L0C42PROD with BILLS 3 •S 1389 IS (1) in section 363 (12 U.S.C. 3702)— 1 (A) in paragraph (2)— 2 (i) in subparagraph (D), by striking 3 ‘‘and’’ at the end; 4 (ii) in subparagraph (E), by striking 5 the period at the end and inserting ‘‘; or’’; 6 and 7 (iii) by adding at the end the fol- 8 lowing: 9 ‘‘(F) section 514, 515, or 538 of the Hous- 10 ing Act of 1949 (42 U.S.C. 1484, 1485, 11 1490p).’’; and 12 (B) in paragraph (10)— 13 (i) by striking ‘‘means the Secretary’’ 14 and inserting the following: ‘‘means— 15 ‘‘(A) the Secretary’’; 16 (ii) in subparagraph (A), as so des- 17 ignated, by striking the period at the end 18 and inserting ‘‘, with respect to a multi- 19 family mortgage described in subparagraph 20 (A), (B), (C), (D), or (E) of paragraph 21 (2); and’’; and 22 (iii) by adding at the end the fol- 23 lowing: 24 VerDate Sep 11 2014 04:12 May 10, 2023 Jkt 039200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S1389.IS S1389 kjohnson on DSK79L0C42PROD with BILLS 4 •S 1389 IS ‘‘(B) the Secretary of Agriculture, with re- 1 spect to a multifamily mortgage described in 2 paragraph (2)(F).’’. 3 SEC. 102. STUDY ON RURAL HOUSING LOANS FOR HOUSING 4 FOR LOW- AND MODERATE-INCOME FAMI- 5 LIES. 6 Not later than 6 months after the date of enactment 7 of this Act, the Secretary of Agriculture shall conduct a 8 study and submit to Congress a publicly available report 9 on the loan program under section 521 of the Housing 10 Act of 1949 (42 U.S.C. 1490a), including— 11 (1) the total amount provided by the Secretary 12 in subsidies under such section 521; 13 (2) how much of the subsidies are being recap- 14 tured; and 15 (3) the amount of time and costs associated 16 with recapturing those subsidies. 17 SEC. 103. AUTHORIZATION OF APPROPRIATIONS FOR 18 STAFFING NEEDS AND INFORMATION TECH- 19 NOLOGY UPGRADES. 20 There is authorized to be appropriated to the Sec- 21 retary of Agriculture such sums as may be necessary for 22 increased staffing needs and information technology up- 23 grades to support all preservation efforts of the Rural 24 Housing Service. 25 VerDate Sep 11 2014 04:12 May 10, 2023 Jkt 039200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S1389.IS S1389 kjohnson on DSK79L0C42PROD with BILLS 5 •S 1389 IS TITLE II—RURAL HOUSING 1 PRESERVATION AND REVI- 2 TALIZATION 3 SEC. 201. PERMANENT ESTABLISHMENT OF HOUSING PRES- 4 ERVATION AND REVITALIZATION PROGRAM. 5 Title V of the Housing Act of 1949 (42 U.S.C. 1471 6 et seq.) is amended by adding at the end the following: 7 ‘‘SEC. 545. HOUSING PRESERVATION AND REVITALIZATION 8 PROGRAM. 9 ‘‘(a) ESTABLISHMENT.—The Secretary shall carry 10 out a program under this section for the preservation and 11 revitalization of multifamily rental housing projects fi- 12 nanced under section 515 or both sections 514 and 516. 13 ‘‘(b) NOTICE OF MATURING LOANS.— 14 ‘‘(1) TO OWNERS.—On an annual basis, the 15 Secretary shall provide written notice to each owner 16 of a property financed under section 515 or both 17 sections 514 and 516 that will mature within the 4- 18 year period beginning upon the provision of the no- 19 tice, setting forth the options and financial incen- 20 tives that are available to facilitate the extension of 21 the loan term or the option to decouple a rental as- 22 sistance contract pursuant to subsection (f). 23 ‘‘(2) TO TENANTS.— 24 VerDate Sep 11 2014 04:12 May 10, 2023 Jkt 039200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S1389.IS S1389 kjohnson on DSK79L0C42PROD with BILLS 6 •S 1389 IS ‘‘(A) IN GENERAL.—For each property fi- 1 nanced under section 515 or both sections 514 2 and 516, not later than the date that is 2 years 3 before the date that the loan will mature, the 4 Secretary shall provide written notice to each 5 household residing in the property that informs 6 them of the date of the loan maturity, the pos- 7 sible actions that may happen with respect to 8 the property upon that maturity, and how to 9 protect their right to reside in federally assisted 10 housing after that maturity. 11 ‘‘(B) LANGUAGE.—Notice under this para- 12 graph shall be provided in plain English and 13 shall be translated to other languages in the 14 case of any property located in an area in which 15 a significant number of residents speak such 16 other languages. 17 ‘‘(c) LOAN RESTRUCTURING.—Under the program 18 under this section, in any circumstance in which the Sec- 19 retary proposes a restructuring to an owner or an owner 20 proposes a restructuring to the Secretary, the Secretary 21 may restructure such existing housing loans, as the Sec- 22 retary considers appropriate, for the purpose of ensuring 23 that those projects have sufficient resources to preserve 24 VerDate Sep 11 2014 04:12 May 10, 2023 Jkt 039200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S1389.IS S1389 kjohnson on DSK79L0C42PROD with BILLS 7 •S 1389 IS the projects to provide safe and affordable housing for low- 1 income residents and farm laborers, by— 2 ‘‘(1) reducing or eliminating interest; 3 ‘‘(2) deferring loan payments; 4 ‘‘(3) subordinating, reducing, or reamortizing 5 loan debt; and 6 ‘‘(4) providing other financial assistance, in- 7 cluding advances, payments, and incentives (includ- 8 ing the ability of owners to obtain reasonable re- 9 turns on investment) required by the Secretary. 10 ‘‘(d) RENEWAL OF RENTAL ASSISTANCE.— 11 ‘‘(1) IN GENERAL.—When the Secretary pro- 12 poses to restructure a loan or agrees to the proposal 13 of an owner to restructure a loan pursuant to sub- 14 section (c), the Secretary shall offer to renew the 15 rental assistance contract under section 521(a)(2) 16 for a 20-year term that is subject to annual appro- 17 priations, provided that the owner agrees to bring 18 the property up to such standards that will ensure 19 maintenance of the property as decent, safe, and 20 sanitary housing for the full term of the rental as- 21 sistance contract. 22 ‘‘(2) ADDITIONAL RENTAL ASSISTANCE.—With 23 respect to a project described in paragraph (1), if 24 rental assistance is not available for all households 25 VerDate Sep 11 2014 04:12 May 10, 2023 Jkt 039200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S1389.IS S1389 kjohnson on DSK79L0C42PROD with BILLS 8 •S 1389 IS in the project for which the loan is being restruc- 1 tured pursuant to subsection (c), the Secretary may 2 extend such additional rental assistance to unas- 3 sisted households at that project as is necessary to 4 make the project safe and affordable to low-income 5 households. 6 ‘‘(e) RESTRICTIVE USE AGREEMENTS.— 7 ‘‘(1) REQUIREMENT.—As part of the preserva- 8 tion and revitalization agreement for a project, the 9 Secretary shall obtain a restrictive use agreement 10 that obligates the owner to operate the project in ac- 11 cordance with this title. 12 ‘‘(2) TERM.— 13 ‘‘(A) NO EXTENSION OF RENTAL ASSIST- 14 ANCE CONTRACT.—Except when the Secretary 15 enters into a 20-year extension of the rental as- 16 sistance contract for a project, the term of the 17 restrictive use agreement for the project shall 18 be consistent with the term of the restructured 19 loan for the project. 20 ‘‘(B) EXTENSION OF RENTAL ASSISTANCE 21 CONTRACT.—If the Secretary enters into a 20- 22 year extension of the rental assistance contract 23 for a project, the term of the restrictive use 24 agreement for the project shall be for 20 years. 25 VerDate Sep 11 2014 04:12 May 10, 2023 Jkt 039200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S1389.IS S1389 kjohnson on DSK79L0C42PROD with BILLS 9 •S 1389 IS ‘‘(C) TERMINATION.—The Secretary may 1 terminate the 20-year use restrictive use agree- 2 ment for a project before the end of the term 3 of the agreement if the 20-year rental assist- 4 ance contract for the project with the owner is 5 terminated at any time for reasons outside the 6 control of the owner. 7 ‘‘(f) DECOUPLING OF RENTAL ASSISTANCE.— 8 ‘‘(1) RENEWAL OF RENTAL ASSISTANCE CON- 9 TRACT.—If the Secretary determines that a matur- 10 ing loan for a project cannot reasonably be restruc- 11 tured in accordance with subsection (c) because it is 12 not financially feasible or the owner does not agree 13 with the proposed restructuring, and the project was 14 operating with rental assistance under section 521, 15 the Secretary may renew the rental assistance con- 16 tract, notwithstanding any provision of section 521, 17 for a term, subject to annual appropriations, of not 18 less than 10 years but not more than 20 years. 19 ‘‘(2) ADDITIONAL RENTAL ASSISTANCE.—With 20 respect to a project described in paragraph (1), if 21 rental assistance is not available for all households 22 in the project for which the loan is being restruc- 23 tured pursuant to subsection (c), the Secretary may 24 extend such additional rental assistance to unas- 25 VerDate Sep 11 2014 04:12 May 10, 2023 Jkt 039200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S1389.IS S1389 kjohnson on DSK79L0C42PROD with BILLS 10 •S 1389 IS sisted households at that project as is necessary to 1 make the project safe and affordable to low-income 2 households. 3 ‘‘(3) RENTS.—Any agreement to extend the 4 term of the rental assistance contract under section 5 521 for a project shall obligate the owner to con- 6 tinue to maintain the project as decent, safe and 7 sanitary housing and to operate the development in 8 accordance with this title, except that rents shall be 9 based on the lesser of— 10 ‘‘(A) the budget-based needs of the project; 11 or 12 ‘‘(B) the operating cost adjustment factor 13 as a payment standard as provided under sec- 14 tion 524 of the Multifamily Assisted Housing 15 Reform and Affordability Act of 1997 (42 16 U.S.C. 1437 note). 17 ‘‘(4) CONDITIONS FOR APPROVAL.— 18 ‘‘(A) PLAN.—Before the approval of a 19 rental assistance contract authorized under this 20 section, the Secretary shall require the owner to 21 submit to the Secretary a plan that identifies fi- 22 nancing sources and a timetable for renovations 23 and improvements determined to be necessary 24 VerDate Sep 11 2014 04:12 May 10, 2023 Jkt 039200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S1389.IS S1389 kjohnson on DSK79L0C42PROD with BILLS 11 •S 1389 IS by the Secretary to maintain and preserve the 1 project. 2 ‘‘(B) AUTOMATIC APPROVAL.—If a plan 3 submitted under subparagraph (A) is not acted 4 upon by the Secretary within 30 days of the 5 submission, the rental assistance contract is 6 automatically approved for not more than a 1- 7 year period. 8 ‘‘(g) MULTIFAMILY HOUSING TRANSFER TECHNICAL 9 ASSISTANCE.—Under the program under this section, the 10 Secretary may provide grants to qualified nonprofit orga- 11 nizations and public housing agencies to provide technical 12 assistance, including financial and legal services, to bor- 13 rowers under loans under this title for multifamily housing 14 to facilitate the acquisition of such multifamily housing 15 properties in areas where the Secretary determines there 16 is a risk of loss of affordable housing. 17 ‘‘(h) TRANSFER OF RENTAL ASSISTANCE.—After the 18 loan or loans for a rental project originally financed under 19 section 515 or both sections 514 and 516 have matured 20 or have been prepaid and the owner has chosen not to 21 restructure the loan pursuant to subsection (c)— 22 ‘‘(1) a tenant residing in the project shall have 23 18 months before loan maturation or prepayment to 24 transfer the rental assistance assigned to the unit of 25 VerDate Sep 11 2014 04:12 May 10, 2023 Jkt 039200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S1389.IS S1389 kjohnson on DSK79L0C42PROD with BILLS 12 •S 1389 IS the tenant to another rental project originally fi- 1 nanced under section 515 or both sections 514 and 2 516, and such tenants will have priority for admis- 3 sion over other applicants; and 4 ‘‘(2) the owner of the initial project may rent 5 the previous unit of the tenant to a new tenant with- 6 out income restrictions. 7 ‘‘(i) ADMINISTRATIVE EXPENSES.—Of any amounts 8 made available for the program under this section for any 9 fiscal year [Text truncated for display. 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