[House Report 110-464]
[From the U.S. Government Publishing Office]
110th Congress Report
HOUSE OF REPRESENTATIVES
1st Session 110-464
======================================================================
SECTION 515 RURAL HOUSING PROPERTY TRANSFER IMPROVEMENT ACT OF 2007
_______
December 4, 2007.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Frank of Massachusetts, from the Committee on Financial Services,
submitted the following
R E P O R T
[To accompany H.R. 3873]
[Including cost estimate of the Congressional Budget Office]
The Committee on Financial Services, to whom was referred
the bill (H.R. 3873) to expedite the transfer of ownership of
rural multifamily housing projects with loans made or insured
under section 515 of the Housing Act of 1949 so that such
projects are rehabilitated and preserved for use for affordable
housing, having considered the same, report favorably thereon
without amendment and recommend that the bill do pass.
CONTENTS
Page
Purpose and Summary.............................................. 2
Background and Need for Legislation.............................. 2
Hearings......................................................... 3
Committee Consideration.......................................... 3
Committee Votes.................................................. 3
Committee Oversight Findings..................................... 3
Performance Goals and Objectives................................. 3
New Budget Authority, Entitlement Authority, and Tax Expenditures 3
Committee Cost Estimate.......................................... 3
Congressional Budget Office Estimate............................. 3
Federal Mandates Statement....................................... 5
Advisory Committee Statement..................................... 5
Constitutional Authority Statement............................... 5
Applicability to Legislative Branch.............................. 5
Earmark Identification........................................... 5
Section-by-Section Analysis of the Legislation................... 5
Changes in Existing Law Made by the Bill, as Reported............ 6
Purpose and Summary
H.R. 3873, the Section 515 Rural Housing Property Transfer
Improvement Act of 2007, reforms the process by which the
United States Department of Agriculture (``USDA'') considers
applications for transferring Section 515 rural multifamily
housing projects from one owner to another. The bill also
provides for a review of the bureaucratic procedure within USDA
for rural housing projects specifically where such programs
involve low income housing tax credits.
Background and Need for Legislation
Section 515 of the Housing Act of 1949 is a direct loan
program administered by the USDA that provides for low interest
loans to construct and renovate rural multi family housing
projects. The program serves approximately 450,000 families in
approximately 16,000 buildings nationwide. The families that
live in Section 515 housing are low and very low income, most
living off less than $9,000 annually. When a transfer of
ownership occurs with a Section 515 property, it is generally
good for the residents because the building will receive new
sources of capital that result in building renovations.
Additionally, the building will most likely be subject to new
use restrictions, which will keep it affordable 20, or more,
years.
A transfer of ownership must be approved by the USDA.
Applications for transfer of ownership in Section 515
properties are processed and approved/denied by the USDA
through state Rural Development (RD) offices. The national
office within the USDA that administers rural housing is the
Rural Housing Service (RHS). The RHS currently does not have
control over processing such applications.
Applications to transfer ownership in a Section 515
property are not processed in a timely manner in some state RD
offices. Non-action or a lengthy delay on an application by a
state RD office often prevents the underwriting of the deal
from going forward. Both Section 515 project owners and tenants
desire that these deals move in a timely manner so that the
owners who desire to leave the Section 515 program can transfer
the properties to owners who want to operate the 515s. The
change in ownership is also good for the tenants because the
deals will likely provide for rehabilitation of the properties
and preservation of the properties through long-term use
restrictions.
H.R. 3878 transfers unprocessed completed applications to
the national RHS office for processing after so many days of
non-action by the state RD office. (After 45 days for a single
application, after 90 days for a portfolio application of 10 or
fewer properties, and after 120 days for a portfolio
application of 11 or more properties. The national office then
has, respectively, 30 days, 60 days, or 120 days to process the
application(s) transferred to its office.) Therefore, if a
state RD office does not act in a timely manner, it will loose
its control over the process. State RD offices that are
processing applications in a timely manner should not be
affected by the bill.
The bill also requires the USDA to make administrative and
procedural changes to expedite the approval of applications;
requires the USDA to consult with the IRS and HUD to better
coordinate LIHTC deals; and requires the USDA to report to
Congress on the requirements in the bill by July 1, 2008.
Hearings
No hearings were held on this legislation in the 110th
Congress.
Committee Consideration
The Committee on Financial Services met in open session on
October 31, 2007, and ordered H.R. 3873, the Section 515 Rural
Housing property Transfer Improvement Act of 2007, favorably
reported to the House by a voice vote.
Committee Votes
Clause 3(b) of rule XIII of the Rules of the House of
Representatives requires the Committee to list the record votes
on the motion to report legislation and amendments thereto. No
record votes were taken with in conjunction with the
consideration of this legislation. A motion by Mr. Frank to
report the bill to the House with a favorable recommendation
was agreed to by a voice vote.
Committee Oversight Findings
Pursuant to clause 3(c)(1) of rule XIII of the Rules of the
House of Representatives, the Committee has held hearings and
made findings that are reflected in this report.
Performance Goals and Objectives
Pursuant to clause 3(c)(4) of rule XIII of the Rules of the
House of Representatives, the Committee establishes the
following performance related goals and objectives for this
legislation:
H.R. 3873 reduces the regulatory burden for participants in
USDA housing programs with the goal of providing for an
improved approval process in order to preserve and create more
affordable housing in rural America.
New Budget Authority, Entitlement Authority, and Tax Expenditures
In compliance with clause 3(c)(2) of rule XIII of the Rules
of the House of Representatives, the Committee adopts as its
own the estimate of new budget authority, entitlement
authority, or tax expenditures or revenues contained in the
cost estimate prepared by the Director of the Congressional
Budget Office pursuant to section 402 of the Congressional
Budget Act of 1974.
Committee Cost Estimate
The Committee adopts as its own the cost estimate prepared
by the Director of the Congressional Budget Office pursuant to
section 402 of the Congressional Budget Act of 1974.
Congressional Budget Office Estimate
Pursuant to clause 3(c)(3) of rule XIII of the Rules of the
House of Representatives, the following is the cost estimate
provided by the Congressional Budget Office pursuant to section
402 of the Congressional Budget Act of 1974:
November 15, 2007.
Hon. Barney Frank,
Chairman, Committee on Financial Services,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 3873, the Section
515 Rural Housing Property Transfer Improvement Act of 2007.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Susanne S.
Mehlman.
Sincerely,
Peter R. Orszag.
Enclosure.
H.R. 3873--Section 515 Rural Housing Property Transfer Improvement Act
of 2007
Section 515 of the Housing Act of 1949 provides the Rural
Housing Service (RHS) within the Department of Agriculture with
the authority to make direct loans to developers to build
multifamily rental housing in rural areas that is affordable to
very low-income families, elderly people, and persons with
disabilities. Developers of those projects can apply to the
Secretary of Agriculture to transfer ownership or control of
such housing to another entity. Those transfers (which are
essentially sales), however, are made only if the Secretary
determines that the transfer would support housing assistance
for low-income people and would be in the best interest of the
residents.
H.R. 3873 would require RHS to make certain administrative
and procedural changes to improve its process for reviewing
requests for transfers of housing supported by section 515
loans. Based on information from RHS, CBO estimates that
implementing H.R. 3873 would cost about $1 million annually
over the 2008-2012 period, subject to appropriation of the
necessary amounts. Such funding would be used for additional
personnel and contract support.
In addition, CBO expects that some transfers of property
would happen more expeditiously under this legislation, which
could cause taxable events to occur sooner than they otherwise
would. Although faster processing of property transfers could
increase revenue from individual income taxes, CBO estimates
that the total effect on revenues for any fiscal year would be
less than $500,000; the effect over the 2008-2017 period also
would be less than $500,000.
H.R. 3873 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act and
would impose no costs on state, local, or tribal governments.
The CBO staff contact for this estimate is Susanne S.
Mehlman. This estimate was approved by Theresa Gullo, Deputy
Assistant Director for Budget Analysis.
Federal Mandates Statement
The Committee adopts as its own the estimate of Federal
mandates prepared by the Director of the Congressional Budget
Office pursuant to section 423 of the Unfunded Mandates Reform
Act.
Advisory Committee Statement
No advisory committees within the meaning of section 5(b)
of the Federal Advisory Committee Act were created by this
legislation.
Constitutional Authority Statement
Pursuant to clause 3(d)(1) of rule XIII of the Rules of the
House of Representatives, the Committee finds that the
Constitutional Authority of Congress to enact this legislation
is provided by Article 1, section 8, clause 1 (relating to the
general welfare of the United States) and clause 3 (relating to
the power to regulate interstate commerce).
Applicability to Legislative Branch
The Committee finds that the legislation does not relate to
the terms and conditions of employment or access to public
services or accommodations within the meaning of section
102(b)(3) of the Congressional Accountability Act.
Earmark Identification
H.R. 3873 does not contain any congressional earmarks,
limited tax benefits, or limited tariff benefits as defined in
clause 9 of rule XXI.
Section-by-Section Analysis of the Legislation
Section 1. Short title
This section establishes the short title of the bill, the
``Section 515 Rural Housing Property Transfer Improvement Act
of 2007.''
Section 2. Congressional findings
This section sets forth Congressional findings regarding
rural housing and Section 515, including the population served
by Section 515 projects, the desire of owners to transfer
Section 515 projects, and the need for the USDA to protect the
Section 515 portfolio.
Section 3. Transfers of Section 515 rural multifamily housing projects
This section requires the USDA to make administrative and
procedural changes to expedite the approval of applications for
transfer of ownership in Section 515 properties, and requires
the USDA to consult with the IRS and HUD to simplify the
coordination of rules, regulations, forms, and approval
requirements for housing projects assisted by low income
housing tax credits. The section requires State RD offices to
transfer unprocessed completed applications to the national RHS
office for processing after so many days of non-action by the
state RD office. (After 45 days for a single application, after
90 days for a portfolio application of 10 or fewer properties,
and after 120 days for a portfolio application of 11 or more
properties. The national office then has, respectively, 30
days, 60 days, or 120 days to process the application(s)
transferred to its office.)
Section 4. Report
This section requires the USDA to report to Congress by
July 1, 2008, regarding its actions to better coordinate with
the IRS and HUD on the regulatory and bureaucratic requirements
for USDA rural housing programs involving low income housing
tax credits. The report shall identify and describe
improvements in transferring ownership in Section 515
properties, and make recommendations on any necessary
legislative changes.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (new matter is
printed in italic and existing law in which no change is
proposed is shown in roman):
HOUSING ACT OF 1949
TITLE V--FARM HOUSING
* * * * * * *
DIRECT AND INSURED LOANS TO PROVIDE HOUSING AND RELATED FACILITIES FOR
ELDERLY PERSONS AND FAMILIES IN RURAL AREAS
Sec. 515. (a) * * *
* * * * * * *
(h)(1) Condition.--Project Transfers.--After the date of the
enactment of the Act entitled ``An Act making appropriations
for Agriculture, Rural Development, Food and Drug
Administration, and Related Agencies programs for the fiscal
year ending September 30, 1997, and for other purposes'', the
ownership or control of a project for which a loan is made or
insured under this section may be transferred only if the
Secretary determines that such transfer would further the
provision of housing and related facilities for low-income
families or persons and would be in the best interests of
residents and the Federal Government.
(2) Transfers for Preservation and Rehabilitation of
Projects.--
(A) In general.--The Secretary shall make such
administrative and procedural changes as may be
necessary to expedite the approval of applications to
transfer ownership of projects for which a loan is made
or insured under this section for the preservation,
continued use restriction, and rehabilitation of such
projects. Such changes may include changing approval
procedures, increasing staff and resources, improving
outreach to project sponsors regarding information that
is required to be submitted for such approvals,
changing approval authority between national offices
and the State and local offices, simplifying approval
requirements, establishing uniformity of transfer
requirements among State offices, and any other actions
which would expedite approvals.
(B) Consultation.--The Secretary of Agriculture shall
consult with the Commissioner of the Internal Revenue
Service and the Secretary of Housing and Urban
Development, and take such actions as are appropriate
in conjunction with such consultation, to simplify the
coordination of rules, regulations, forms (including
applications for transfers of project ownership), and
approval requirements for housing projects for which
assistance is provided by the Secretary of Agriculture
and under any low-income housing tax credits under
section 42 of the Internal Revenue Code of 1986 or tax-
exempt housing bonds. The Secretary of Agriculture
shall involve the State Rural Development offices of
Department of Agriculture and the Administrator of the
Rural Housing Service in the consultations under this
subparagraph as the Secretary considers appropriate.
(C) Preservation and rehabilitation.--The Secretary
shall actively facilitate transfers of the ownership of
projects that will result in the preservation,
continued use restriction, and rehabilitation of such
projects.
(D) Final authority over transfers.--The Office of
Rental Housing Preservation of the Rural Housing
Service, established under section 537 (42 U.S.C.
1490p-1), shall have final regulatory authority over
all transfers of properties for which a loan is made or
insured under this section, and such Office may, with
respect to such transfers, work with and seek
recommendations from the State Rural Development
offices of the Department of Agriculture.
(E) Deadlines for processing of transfer
applications.--
(i) Procedure.--If a complete application, as
determined by the Secretary, for a transfer of
ownership of a project or projects is not
processed, and approved or denied, by the State
Rural Development office to which it is
submitted before the applicable deadline under
clause (ii)--
(I) such State or local office shall
not have any further authority to
approve or deny the application;
(II) such State or local office shall
transfer the application in accordance
with subclause (III); and
(III) such application shall be
processed, and approved or denied, in
accordance with clause (iii) and only
by the Office of Rental Housing
Preservation, which may make the final
determination with the assistance of
other Rural Development employees.
(ii) Deadline for state and local offices.--
The applicable deadline under this clause for
processing, and approval or denial, of a
complete application for transfer of ownership
of a project, or projects, shall be the period
that begins upon receipt of the complete
application by the State Rural Development
office to which it is submitted and consists
of--
(I) in the case of an application for
transfer of ownership of a single
project, 45 days;
(II) in the case of an application
for transfer of ownership of multiple
projects, but not exceeding 10
projects, 90 days; and
(III) in the case of an application
for transfer of ownership of 11 or more
projects, 120 days.
(iii) Deadline for office of rental housing
preservation.--In the case of any complete
application for a transfer of ownership of a
project, or projects, that is transferred
pursuant to clause (i), shall be processed, and
approved or denied, before the expiration of
the period that begins upon receipt of the
complete application and consists of--
(I) in the case of an application for
transfer of ownership of a single
project, 30 days;
(II) in the case of an application
for transfer of ownership of multiple
projects, but not exceeding 10
projects, 60 days; and
(III) in the case of an application
for transfer of ownership of 11 or more
projects, 120 days.
(iv) Appeals.--Only decisions regarding
complete applications shall be appealable to
the National Appeals Division of the Department
of Agriculture.
* * * * * * *