SEC-522 -- PUBLIC HOUSING MIXED INCOME NEW COMMUNITIES STRATEGY 

 
DEMONSTRATION.
 
 (a) Establishment of Demonstration Program.-
 
 (1) In general.-The Secretary of Housing and Urban Development shall
carry out a program to demonstrate the effectiveness of promoting the
revitalization of troubled urban communities through the provision of
public housing in socioeconomically mixed settings combined with the
innovative use of public housing operating subsidies to stimulate the
development of new affordable housing in such communities.
 
 (2) Comprehensive services.-Housing units provided under the
demonstration program under this section shall be made available in
connection with a comprehensive program of services and incentives under
subsections (h) and (i), in order to prepare participating families for
successful transition to the private rental housing market and
homeownership within a reasonable period of time.
 
 (b) Coordinating Committee.-
 
 (1) Establishment.-For a public housing agency to be eligible for
designation or selection under subsection (d) for participation in the
demonstration program, the chief executive officer of each unit of
general local government in which the public housing agency is located
shall appoint a coordinating committee under this paragraph. The
coordinating committee shall participate in developing a plan for
implementing the demonstration program, review, monitor, and make
recommendations for improvements in activities under the demonstration
program, and ensure the coordination and delivery of services under
subsection (h).
 
 (2) Membership.-Each coordinating committee shall be composed of 12
members, who shall include, but may not be limited to, the following
individuals:
 
 (A) A representative of the chief executive officer of the applicable
unit of general local government.
 
 (B) A representative of the applicable public housing agency.
 
 (C) A representative of the regional administrator of the Department
of Housing and Urban Development.
 
 (D) A representative of a local resident management corporation.
 
 (E) Not less than 1 individual affiliated with a local agency that
administers programs in 1 of the following areas: health, human
services, substance abuse, education, economic and business development,
law enforcement, and housing.
 
 (F) A representative from among local businesses engaged in housing and
real estate.
 
 (G) A representative from among business engaged in real estate
financing.
 
 (3) Social service committees.-Each coordinating committee established
under this subsection shall establish a subcommittee on social services,
which shall, before any action is taken under subsection (e)(1) (with
respect to the demonstration program as carried out by the applicable
public housing agency), identify the specific services that are required
to successfully carry out the demonstration program.
 
 (c) Interagency Cooperation.-The Secretary shall coordinate with the
appropriate heads of other Federal agencies as necessary to coordinate
the implementation of the demonstration program and endeavor to ensure
the delivery of supportive services required under subsection (h).
 
 (d) Scope of Demonstration Program.-
 
 (1) Participating public housing agencies.-The Secretary shall carry
out the demonstration program with respect to public housing for
families administered by the Housing Authority of the City of Chicago,
in the State of Illinois. The Secretary may also carry out the
demonstration program with respect to public housing administered by not
more than 3 other public housing agencies.
 
 (2) Participating public housing units.-Over the term of the
demonstration, the demonstration may be applied to not more than 15
percent of the total number of public housing units for families
administered by each participating public housing agency.
 
 (3) Nondisplacement.-No person who is a tenant of public housing during
the term of the demonstration program may be involuntarily relocated or
displaced under the demonstration program.
 
 (e) Housing Development.-
 
 (1) Use of public housing operating subsidies.-For the purpose of
providing reasonable and necessary operating costs in connection with
the development of additional affordable housing, under the
demonstration program the Secretary shall amend the annual contributions
contract between the Secretary and each participating public housing
agency as the Secretary determines appropriate to permit the public
housing agency to utilize operating subsidy amounts allocated to the
agency under section 9 of the United States Housing Act of 1937 with
respect to newly constructed or rehabilitated housing units that are
privately developed and owned. Such units shall be reserved for use
under the demonstration program for occupancy by very low-income
families as provided under this subsection and subsection (g).
 
 (2) Lease terms.-Operating subsidy amounts shall be provided for the
operation of housing under paragraph (1) pursuant to a lease contract
between the owner of the housing and the public housing agency, which
shall specify-
 
 (A) the number of units to be leased exclusively to the public housing
agency for the term of the demonstration program, subject only to the
availability of amounts under paragraph (1) or other funds for such
purposes; and
 
 (B) the requirements under subsection (f)(6).
 
 (3) Transfer of amounts.-Operating subsidy amounts may be provided for
a unit of housing under paragraph (1) only after the execution of a
lease under subsection (f)(5) for 1 corresponding public housing unit.
 
 (4) Rental terms.-Units leased by a participating public housing agency
under this subsection shall be available only to very low-income
families that reside, or have been offered a unit, in public housing
administered by the public housing agency and that enter into a
voluntary contract under subsection (g)(1). The rental charge for each
unit shall be the amount equal to 30 percent of the adjusted income of
the resident family (as determined under section 3(b) of the United
States Housing Act of 1937), except that the rental charge may not
exceed a ceiling rent determined by the public housing agency in the
manner that monthly rent is determined under section 3(a)(2)(A) of such
Act.
 
 (5) Income mix.-Not more than 25 percent of the units in each privately
developed housing project under the demonstration program may be leased
by a public housing agency pursuant to a lease contract under paragraph
(2). The number of units under each such lease may not be less than the
number of public housing units that, notwithstanding the demonstration
program, would have been assisted with the operating subsidy amounts
made available under such contract, to ensure that there shall be no
loss of public housing units.
 
 (6) Coordination with other entities for development of housing.-A
participating public housing agency may seek the cooperation and receive
assistance from State, county, and local governments and the private
sector to develop housing for use under this subsection. Such assistance
may include, but is not limited to-
 
 (A) donations of land and write-downs and discounts on land by local
governments;
 
 (B) abatement of real estate taxes for specified periods by local,
county, or State governments;
 
 (C) assignment of community development block grant funds and loan
guarantees made available under title I of the Housing and Community
Development Act of 1974;
 
 (D) low interest rate financing through Federal Home Loan Bank
programs, State or Federal programs, and private lenders;
 
 (E) low-income housing tax credits from State and local governments;
and
 
 (F) mortgage revenue bonds from State or local governments.
 
 (7) Determination of location and number of units.-
 
 (A) In general.-A participating public housing agency and the
applicable unit of general local government shall jointly determine the
location of any newly constructed or rehabilitated housing to be
utilized under the demonstration program carried out by the public
housing agency and the number of units to be developed annually, with
approval of the legislative body of the local government.
 
 (B) Limitation on number of units.-The total number of newly
constructed or rehabilitated units that may be used under this
subsection in the demonstration program may not exceed-
 
 (i) for any participating public housing agency with not more than
5,000 public housing units, 15 percent of the number of units
administered by the agency;
 
 (ii) for any participating agency with more than 5,000 but not more
than 25,000 units, 10 percent of the number of units administered by the
agency; and
 
 (iii) for any participating agency with more than 25,000 units, 4
percent of the number of units administered by the agency.
 
 (f) Existing Public Housing.-
 
 (1) In general.-To facilitate the establishment of socioeconomically
mixed communities within existing public housing developments, under the
demonstration program the Secretary shall authorize participating public
housing agencies to lease units in existing public housing projects, as
provided in this subsection, to low-income families who are not very
low-income families, notwithstanding the provisions of section 16(b) of
the United States Housing Act of 1937.
 
 (2) Limitations on public housing residents.-
 
 (A) In general.-Except as provided in subparagraph (B), not more than
25 percent of the units in each public housing project in which units
are utilized under the demonstration program may be occupied by
low-income families who are not very low-income families. Not less than
75 percent of the units in each such public housing project shall be
occupied by very low-income families.
 
 (B) Exception.-Upon determining that a public housing agency has a
special need, the Secretary may provide for not more than 50 percent of
the units in a public housing project utilized under the demonstration
program to be occupied by low-income families who are not very
low-income families, and the remainder of the units to be occupied by
very low-income families. Such special need may include the need to
ensure the successful revitalization of troubled public housing through
establishing a socioeconomically mixed resident population.
 
 (3) Number of units.-The number of such units made available under this
subsection by a public housing agency may not exceed the number of units
provided under subsection (e) to participating families.
 
 (4) Rental terms.-The rent charged any family occupying a unit made
available under this subsection may not, at any time during the
demonstration period, exceed the ceiling rent level determined by the
public housing agency in the manner that monthly rent is determined
under section 3(a)(2)(A) of the United States Housing Act of 1937.
 
 (5) Lease.-A participating public housing agency shall enter into a
lease with each family occupying a public housing unit made available
under this subsection. The term of each lease shall be 1 year. Each
lease shall be renewable upon expiration for a period not to exceed 7
years. A public housing agency may extend the period as provided under
subsection (j)(1).
 
 (6) Vacancy.-If, at any time, a participating public housing agency is
unable to rent a unit made available under this subsection and the unit
has been vacant for a period of 6 months, the agency may-
 
 (A) cancel a lease for 1 unit of housing provided under subsection (e)
and recapture any operating subsidy amounts associated with the unit for
use with respect to the vacant public housing unit, upon which such
public housing unit shall be removed from participation in the
demonstration program and made generally available for occupancy as
provided under the United States Housing Act of 1937; and
 
 (B) provide the family residing in the housing unit provided under
subsection (e) (from which operating subsidy amounts have been
recaptured) with assistance under section 8(b) of such Act, subject to
the availability of such assistance pursuant to appropriations Acts and
notwithstanding any preferences for such assistance under section
8(d)(1)(A)(i) of such Act, and permit the family to remain in the unit.
 
 (g) Contracts With Participating Families.-
 
 (1) In general.-Under the demonstration program, a participating public
housing agency shall enter into a contract with each family that will
reside in a unit of privately developed housing leased to the agency
under subsection (e). Such family shall voluntarily enter into the
contract and shall meet the criteria established under paragraph (2).
The contract shall be made part of the lease executed between the family
and the public housing agency for such unit, shall set forth the
provisions of the demonstration program, and shall specify the resources
to be made available to the participating family and the
responsibilities of the participating family under the program. The
lease shall be for a term of 1 year and shall be renewable upon
expiration for a period not to exceed 7 years, except as provided under
subsection (j)(1).
 
 (2) Establishment of criteria.-Each public housing agency shall
establish criteria for participation of families in the demonstration
program. The criteria shall be based on factors that may reasonably be
expected to predict the family's ability to successfully complete the
requirements of the demonstration program. The criteria shall include-
 
 (A) the status and history of employment of family members;
 
 (B) enrollment of the children in the family in an educational program;
 
 (C) maintenance by the family of the family's previous dwelling;
 
 (D) ability of adult family members to complete training for long-term
employment;
 
 (E) the existence and seriousness of any criminal records of family
members; and
 
 (F) the status and history of substance abuse of family members.
 
 (3) Continued residence.-Continued residency of families in housing
provided under subsection (e) shall be contingent upon compliance with
standards established by the participating public housing agency, which
shall include-
 
 (A) all members of the family remaining drug-free;
 
 (B) no member of the family engaging in any criminal activity;
 
 (C) each child in the family remaining in an educational program until
receipt of a high school diploma or the equivalent thereof; and
 
 (D) family members participating in the support services and counseling
under subsection (h).
 
 (h) Provision of Supportive Services.-For the entire term of residency
of a participating family in housing provided under subsection (e), the
public housing agency shall ensure the availability of supportive
services and counseling to the family in accordance with the terms and
conditions of the contract of participation under subsection (g)(1). The
public housing agency shall provide for such services and counseling
through its own resources and through coordination with Federal, State,
and local agencies, community-based organizations, and private
individuals and entities. Services shall include the following:
 
 (1) Remedial education.
 
 (2) Education for completion of high school.
 
 (3) Job training and preparation.
 
 (4) Child care.
 
 (5) Substance abuse treatment and counseling.
 
 (6) Training in homemaking skills and parenting.
 
 (7) Family counseling.
 
 (8) Financial counseling services emphasizing planning for
homeownership, provided by local financial institutions under the
Community Reinvestment Act of 1977, provided under section 106 of the
Housing and Urban Development Act of 1968, or otherwise provided.
 
 (i) Economic Advancement of Participating Families.-
 
 (1) Employment.-Under the demonstration program, for the entire term
of residency of each participating family in housing provided under
subsection (e)-
 
 (A) the head of the family shall be required to be employed on a
full-time basis, except that if the head of the family becomes
unemployed, the public housing agency shall review the individual case
to determine if mitigating factors, such as involuntary loss of
employment, warrant continuing the family's participation in the
demonstration program; and
 
 (B) the public housing agency shall ensure the provision of counseling
to assist family members in gaining, advancing in, and retaining
employment.
 
 (2) Rent increases.-During the 1-year period beginning upon the
residency of a participating family in housing provided under subsection
(e), the amount of rent charged the participating family may not be
increased on the basis of any increase in the earned income of the
family, until such earned income exceeds 80 percent of the median family
income for the area.
 
 (3) Escrow savings accounts.-
 
 (A) Purpose and establishment.-To ensure that participating families
acquire the financial resources necessary to complete a successful
transition from assisted rental housing to homeownership or other
private housing, under the demonstration program each participating
public housing agency shall establish for each participating family an
interest-bearing escrow savings account held by the agency in the
family's name.
 
 (B) Periodic deposits.-For the entire term of a participating family's
residency in housing provided under subsection (e) the public housing
agency shall deposit in the account established for the family under
subparagraph (A) a percentage of the monthly rent charged the family,
which percentage shall be established in the contract of participation
under subsection (g)(1). Any rent increases charged because of increases
in the earned income of the family shall also be deposited into the
escrow account.
 
 (C) Access to amounts.-A participating family may withdraw amounts in
the family's escrow account only upon successful completion of
participation in the demonstration program, for purchase of a home, for
contribution toward college tuition, or other good cause determined by
the participating public housing agency. A participating family that has
committed violations referred to under subsection (j)(2)(B) shall
forfeit access to such amounts.
 
 (4) Treatment of increased income.-Any increase in the earned income
of a participating family during residency in housing provided under
subsection (e) may not be considered as income or a resource for the
purpose of the family for benefits, or amount of benefits payable to the
family, under any other Federal law, unless the income of the family
equals or exceeds 80 percent of the median income of the area (as
determined by the Secretary with adjustments for smaller and larger
families).
 
 (j) Conclusion of Participation.-
 
 (1) 7-year term.-Each family residing in housing provided under
subsection (e) or (f) shall terminate residency in housing not later
than the expiration of the 7-year period beginning on the commencement
of such residency. Notwithstanding the preceding sentence, a public
housing agency shall extend the period for any family that requests
extension of the period-
 
 (A) because the family is not prepared to enter a program for
homeownership or to secure any other form of private housing; or
 
 (B) for other good cause.
 
 (2) Incompletion.-
 
 (A) In general.-Except as provided in subparagraph (B), if a
participating family is unable to successfully fulfill the requirements
under the demonstration program, the public housing agency shall offer
the family a comparable public housing unit in a project administered
by the agency (notwithstanding any preference for residency in public
housing under section 6(c)(4)(A)(i) of the United States Housing Act of
1937), or assistance under section 8 of such Act (subject to
availability of amounts provided under appropriations Acts and
notwithstanding any preference for such assistance under section
8(d)(1)(A)(i) of such Act).
 
 (B) Exception.-Subparagraph (A) shall not apply to any participating
family that has committed serious or repeated violations of the terms
and conditions of the lease, violations of applicable Federal, State,
or local law or that has been exempted from such requirement by the
public housing agency for other good cause.
 
 (k) Reports to Congress.-
 
 (1) Interim report.-Upon the expiration of each 2-year period during
the term of the demonstration, the first such period beginning on the
date of the enactment of this Act, the Secretary shall submit to the
Congress a report evaluating the effectiveness of the demonstration
program under this section.
 
 (2) Final report.-Not later than the expiration of the 60-day period
beginning on the date of the termination of the demonstration program
under subsection (n), the Secretary shall submit to the Congress a final
report evaluating the effectiveness of the demonstration program under
this section. The report shall also include findings and recommendations
for any legislative action appropriate to establish a permanent program
based on the demonstration program.
 
 (l) Definitions.-For purposes of this section:
 
 (1) The term "coordinating committee" means a local coordinating
committee established under subsection (b)(1).
 
 (2) The term "demonstration program" means the program established
by the Secretary under this section.
 
 (3) The term "low-income family" means a family whose income does not
exceed 80 percent of the median income for the area, as determined by
the Secretary with adjustments for smaller and larger families, except
that the Secretary may establish income ceilings higher or lower than
80 percent of the median for the area on the basis of findings by the
Secretary that such variations are necessary because of prevailing
levels of construction costs or unusually high or low family incomes.
 
 (4) The term "operating subsidy amounts" means assistance for public
housing provided through the performance funding system under section
9 of the United States Housing Act of 1937.
 
 (5) The term "participating family" means a family that is residing
in a housing unit provided under subsection (e).
 
 (6) The term "participating public housing agency" means a public
housing agency with respect to which the Secretary carries out the
demonstration program under this section.
 
 (7) The terms "public housing agency", "public housing", and
"project" have the meanings given such terms under section 3(b) of the
United States Housing Act of 1937.
 
 (8) The term "Secretary" means the Secretary of Housing and Urban
Development.
 
 (9) The term "unit of general local government" means any city, town,
township, county, parish, village, or other general purpose political
subdivision of a State.
 
 (m) Regulations.-The Secretary shall issue any regulations necessary
to carry out this section not later than the expiration of the 90-day
period beginning on the date of the enactment of this Act.
 
 (n) Termination of Demonstration Program.-The demonstration program
under this section shall terminate upon the expiration of the 10-year
period beginning on the date of the enactment of this Act.