CHOICE IN PUBLIC HOUSING MANAGEMENT.

SEC. 121. CHOICE IN PUBLIC HOUSING MANAGEMENT. (a) Purpose.—The purpose of this section is to encourage choice in management of distressed public housing projects by residents and increased resident management of public housing projects, as a means of improving living conditions in public housing projects, by providing for resident councils and resident management corporations to transfer the management of distressed projects to alternative managers. (b) Amendment to 1937 Act.—Title I of the United States Housing Act of 1937 (42 U.S.C. 1437 et seq.) is amended by adding after section 24 (as added by section 120 of this Act) the following new section: “SEC. 25. CHOICE IN PUBLIC HOUSING MANAGEMENT. “(a) Short Title.—This section may be cited as the ‘Choice in Public Housing Management Act of 1992’. “(b) Funding.— “(1) Rehabilitation and redevelopment grants.—From amounts reserved under section 14(k)(2) for each of fiscal years 1993 and 1994, the Secretary may reserve not more than $50,000,000 in each such fiscal year for activities under this section (which may include funding operating reserves for 106 STAT. 3702eligible housing transferred under this section). The Secretary may make grants to managers and ownership entities to rehabilitate eligible housing in accordance with this section, as appropriate. “(2) Technical assistance.—The Secretary may use up to 5 percent of the total amount reserved under paragraph (1) for any fiscal year to provide, by contract, technical assistance to residents of public housing and resident councils to help such residents and councils make informed choices about options for alternative management under this section. “(c) Program Authority.— “(1) Transfer of management.— “(A) In general.—The Secretary may approve not more than 25 applications submitted for fiscal years 1993 and 1994 by resident councils for the transfer of the management of distressed public housing projects, or one or more buildings within projects, that are owned or operated by troubled public housing agencies, from public housing agencies to alternative managers. “(B) Required votes.—An application for such trans-fer may be submitted and approved only if a majority of the members of the board of the resident council has voted in favor of the proposed transfer of management responsibilities, and a majority of the residents has also voted in favor of the transfer in an election supervised by a disinterested third party. “(C) Assistance of management specialist.—Any resident council seeking to transfer management of distressed public housing under this section shall, in coopera-tion with the public housing agency for such housing, select a qualified public housing management specialist to assist in identifying and acquiring a capable manager for the housing. “(2) Rehabilitation and capital improvements.—The Secretary may make rehabilitation grants and provide capital improvement funding under subsection (e) in connection with the transfer of eligible housing to a manager under this section. “(d) Operating Subsidies.— “(1) Authority to provide.—The Secretary may make operating subsidies under section 9 available to managers under this section. “(2) Amount of subsidy.—The Secretary shall establish the amount of the operating subsidies made available to a manager based on the share for the housing under section 9 as determined by the Secretary. “(3) Effect on pha grant.—Operating subsidies for any public housing agency transferring management under this section shall be reduced in accordance with the requirements of section 9. “(e) Rehabilitation Grants and Capital Improvement Funding.— “(1) Rehabilitation grants.—An application under sub-section (f) may request approval of amounts set aside under subsection (b) for the rehabilitation of eligible housing. The manager and the Secretary shall enter into a contract governing the use of any such assistance provided. “(2) Annual capital improvement funding.— 106 STAT. 3703 “(A) Authority to provide.—The Secretary may make funding for capital improvements available annually from amounts under section 14 to managers of eligible housing. In accordance with the contract entered into pursuant to subsection (h), each manager receiving such funding shall establish a capital improvements reserve account and deposit in the account each year an amount not less than the annual amount of comprehensive grant funds it receives. Amounts in the reserve account may be used only for capital improvements and replacements. “(B) Amount Of subsidy.—The Secretary shall establish the amount made available to a manager under paragraph (1) for capital improvements based on the share for the housing under the comprehensive grant formula and, to the extent practicable, the public housing agency’s comprehensive grant plan, in accordance with section 14, as determined by the Secretary. “(C) Limitation in the case of recent rehabilitation.—Where eligible housing has received rehabilitation funding under paragraph (1) or has otherwise been com-prehensively modernized within 3 years before the effective date of the contract between the Secretary and the manager for management of the eligible housing, only the accrual portion of the comprehensive grant formula amount shall available for payment to the manager. “(D) Effect on pha grant.—The formula amount of a comprehensive grant for a public housing agency transfer-ring the housing under this section shall be reduced in accordance with the requirements of section 14. “(3) Relationship to section u.—The provisions of section 14 shall apply with respect to rehabilitation grants under paragraph (1) or capital improvement funding under paragraph (2); except that the Secretary may waive the applicability of any of the provisions of such section where such provisions are not appropriate to the assistance under this subsection. “(f) Application.— “(1) Form and procedures.— “(A) In general.—To be eligible for approval for trans-fer of management from a public housing agency to a manager and for a grant under subsection (e), a resident council shall submit an application to the Secretary in such form and in accordance with such procedures as the Secretary shall establish. “(B) PHA comment on application.—A resident council submitting an application shall provide the public housing agency that owns or operates the housing involved a reasonable opportunity to comment on the application, as the Secretary shall prescribe. “(C) PHA proposal.—The public housing agency may present to the resident council a proposal for the continued management of the housing by the agency, and the resident council shall give reasonable consideration to any such proposal. “(2) Minimum requirements.— The Secretary shall require that an application contain— “(A) a description of the resident council and documentation of its authority; 106 STAT. 3704 “(B) documentation of the votes required under sub-section (c)(I)(B); “(C) a description of the proposed manager selected by the applicant (in accordance with procedures established or approved by the Secretary) and documentation of its capacity to manage the eligible housing; “(D) a plan for carrying out the manager’s responsibilities for managing the eligible housing; “(E) documentation that the project (or building or buildings) for which management transfer is proposed is eligible housing; “(F) documentation that each of the requirements under paragraph (1)(B) have been fulfilled; “(G) (i) if the application includes a request for a rehabilitation grant under subsection (e) (which shall be included in any application involving eligible housing that is 50 percent or more vacant), the basis for the estimate of the amount requested, including— “(I) the estimate of the eligible housing’s need under the public housing agency’s comprehensive plan (under section 14(e)(1); and “(II) an explanation, where appropriate, if an amount higher than the amount planned by the agency is being requested; or “(ii) if the application does not include a request for a rehabilitation grant under subsection (e), a demonstration that needs for capital improvements and replacement for the housing can reasonably be expected to be funded from funding for capital improvements under subsection (e); “(H) if the manager proposes to administer a program to enable residents to achieve economic independence and self-sufficiency, a description of the program and evidence of commitment of resources to the program; “(I) an analysis showing that the planned rehabilitation will result in the long-term viability of the housing at a reasonable cost; “(J) a certification that the manager 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; and “(K) such other information that the Secretary considers appropriate. “(g) Review and Approval by the Secretary.— “(1) Applications not requesting rehabilitation assistance.— In the case of applications for the transfer of management of public housing that do not include a request for rehabilitation assistance under subsection (e), the Secretary may approve an application that meets the requirements of subsection (f)(2) and this section. “(2) Applications requesting rehabilitation grants.— In the case of applications that include a request for rehabilitation assistance under subsection (e), the Secretary shall select applicants for approval based on a national competition. The Secretary shall, by regulation, establish selection criteria for the competition which provide for separate rating of applicants under this paragraph and of applicants under this section, 106 STAT. 3705and for selections from a single list of all applicants. The criteria shall include— “(A) the quality of the plan for rehabilitating the eligible housing; “(B) the extent of the capacity or potential capacity of the proposed manager to manage the housing and to carry out the rehabilitation program; “(C) the extent to which a program is proposed to enable residents to achieve economic independence and self-sufficiency; “(D) the extent to which the planned rehabilitation will result in the long-term viability of the housing at a reasonable cost; and “(E) such other criteria as the Secretary may require. “(h) Contract Between Secretary and Manager.— “(1) Terms.— After the Secretary approves an application, the Secretary shall enter into a contract with the manager for transfer of management of the eligible housing. In addition to other contract provisions required under this section, the contract shall— “(A) give the manager the right to receive operating subsidies under subsection (d) and capital improvement funding under subsection (e); “(B) require the manager to carry out all management responsibilities for the eligible housing, as provided in or required by the contract; “(C) require the manager to carry out, for the eligible housing, all management responsibilities applicable to public housing agencies owning or operating public housing projects, including (i) maintaining the units in decent, safe, and sanitary condition in accordance with any standards for public housing established or adopted by the Secretary, (ii) determining eligibility of applicants for occupancy of units subject to the requirements of this Act, (iii) terminating tenancy in accordance with the procedures applicable to the section 8 new construction program, and (iv) deter-mining the amount of rent paid for units in accordance with this Act; and “(D) permit, but not require, the manager to select applicants from the public housing waiting list maintained by the public housing agency. “(2) Extension, expiration, and termination.— “(A) In general.— The Secretary shall provide for a resident council that has entered into a contract under this subsection to— “(i) approve the renewal of the contract between the Secretary and the manager; or “(ii) disapprove renewal and submit an application to the Secretary, in accordance with subsection (f), proposing another manager, which may be the public housing agency. “(B) Default.— If the Secretary determines that a manager is in default of its responsibilities under the con-tract, the Secretary may require the resident council to submit another application proposing a different manager, which may be the public housing agency. “(i) Other Program Requirements.— 106 STAT. 3706 “(1) Cost limitations.—The Secretary may establish cost limitations on activities under this section. The amount of rehabilitation funds under subsection (e)(i) that may be approved may not exceed the per unit cost limit applicable to the comprehensive grant program under section 14. “(2) Demolition and disposition not permitted.—A manager may not demolish or dispose of eligible housing under this section. “(3) Capability of resident management corporations.— To be eligible to become a manager under this section, a resident management corporation— “(A) shall demonstrate to the Secretary its ability to manage public housing effectively and efficiently, as deter-mineo by the Secretary, which shall include evidence of its most recent financial audit; or “(B) shall arrange for operation of the housing by a qualified management entity. “(4) Limitations on pha liability.—A public housing agency shall not be liable for any act or failure to act by the manager or resident council. “(5) Bonding and insurance.—Before assuming any management responsibility for eligible housing, a manager shall obtain fidelity bonding and insurance, or equivalent protection, in accordance with regulations and requirements established by the Secretary. Such bonding and insurance, or its equivalent, shall be adequate to protect the Secretary and the public housing agency against loss, theft, embezzlement, or fraudulent acts on the part of the manager or its employees. “(6) Restriction on displacement before transfer.—A public housing agency may not involuntarily displace, as determined by the Secretary, any resident of eligible housing during the period beginning on the date that an application under subsection (f) is submitted by a resident council, and ending upon transfer of management of the housing or, if the application is disapproved, the date of the disapproval, “(j) Performance Review and Compliance.— “(1) Monitoring.—The Secretary shall monitor the performance of managers under this section and shall assess their management performance using the performance indicators established under section 6(j)(1). “(2) Records, reports, and audits of managers.— “(A) Keeping of records.—Each manager and resident council under this subtitle shall keep such records as may be reasonably necessary to disclose the amount and the disposition by the manager of the proceeds of assistance received under this section and to ensure compliance with the requirements of this section. “(B) Access to documents.— “(i) Secretary.—The Secretary shall have access for the purpose of audit and examination to any books, documents, papers, and records of a manager, resident council, and public housing agency that are pertinent to assistance received under, and to the requirements of, this section. “(ii) GAO.—The Comptroller General of the United States, and any duly authorized representatives of the Comptroller General, shall have access for the purpose 106 STAT. 3707of audit and examination to any books, documents, papers, and records of a manager and resident council that are pertinent to assistance received under, and to the requirements of, this section. “(C) Reporting requirements.—Each manager shall submit to the Secretary such reports as the Secretary deter-mines appropriate to carry out the Secretary’s responsibilities under this section, including an annual financial audit. “(D) Annual report.—The Secretary shall submit an annual report to the Congress evaluating management transfers under this section compared to other methods of dealing with severely distressed public housing. “(k) Nondiscrimination.—No person in the United States shall, on the grounds of race, color, national origin, religion, or sex, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under, any program or activity funded in whole or in part with funds made available under this section. Any prohibition against discrimination on the basis of age under the Age Discrimination Act of 1975 or with respect to an otherwise qualified handicapped individual as provided in section 504 of the Rehabilitation Act of 1973 shall also apply to any such program or activity. “(1) Relationship to Other Programs.— “(1) Homeownership.—After a transfer of management in accordance with this section, the eligible housing shall remain eligible for assistance under title III and for sale under section 5(h). Participation in a homeownership program shall be consistent with a contract between the Secretary and a manager. “(2) Self-sufficiency.—Where an application under sub-section (f) proposes a program to enable residents to achieve economic independence and self-sufficiency, consistent with the objectives of the program under section 23, and demonstrates that the manager has the capacity to carry out a self-sufficiency program, the Secretary may approve such a program. Where such a program is approved, the Secretary shall authorize the manager to adopt policies consistent with section 23(d) (relating to maximum rents and escrow savings accounts) and section 23(e) (relating to effect of increases in family income). “(m) Definitions.—For purposes of this section: “(1) The term ‘eligible housing’ means a public housing project, or one or more buildings within a project, that— “(A) is owned or operated by a troubled public housing agency; and “(B) has been identified as severely distressed under section 24 of this Act. In the case of an individual building, the building shall, in the determination of the Secretary, be sufficiently separable from the remainder of the project to make use of the building feasible for purposes of this section. “(2) The term ‘manager’ means one of the following entities that has entered into a contract with the Secretary for the management of eligible housing under this section: “(A) A public or private nonprofit organization (including, as determined by the Secretary, such an organization sponsored by the public housing agency). 106 STAT. 3708 “(B) A for-profit entity, if it has (i) demonstrated experience in providing low-income housing, and (ii) is participating in joint venture with an organization described in paragraph (3). “(C) A State or local government, including an agency or instrumentality thereof. “(D) A public housing agency (other than the public housing agency that owns the project). The term does not include a resident council. “(3) The term ‘private nonprofit organization’ means any private nonprofit organization (including a State or locally chartered nonprofit organization) that— “(A) is incorporated under State or local law; “(B) has no part of its net earnings inuring to the benefit of any member, founder, contributor, or individual; “(C) complies with standards of financial accountability acceptable to the Secretary; and “(D) has among its purposes significant activities related to the provision of decent housing that is affordable to low-income families. The term includes resident management corporations. “(4) The term ‘public housing agency has the meaning given such term in section 3(b), except that it does not include Indian housing authorities. “(5) The term ‘public nonprofit organization’ means any public nonprofit entity, except the public housing agency that owns the eligible housing. “(6) The term ‘resident council’ means any nonprofit organization or association that— “(A) is representative of the residents of the eligible 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 residents of the eligible housing. “(7) The term ‘resident management corporation’ means a resident management corporation established in accordance with the requirements of the Secretary under section 20. “(8) The term ‘troubled public housing agency1 means a public housing agency with 250 or more units that— “(A) has been designated as a troubled public housing agency for the current Federal fiscal year, and for the 2 preceding Federal fiscal years— “(i) under section 6(j)(2)(A)(i); or “(ii) before the implementation of such authority, under any other procedure for designating troubled public housing agencies that was used by the Secretary and is determined by the Secretary to be appropriate for purposes of this section; and “(B) has not met targets for improved performance under section 60)(2)(0).”.