housing" is used in lieu of "low-rent housing" to reflect the provision

of homeownership opportunities for low-income families served by the

program.

Section 3 - Definitions

Section 3(1) would define "low-income housing" to mean decent, safe,

and sanitary dwellings within the financial reach of families of low income. Income limits and rents would be fixed by the public housing agency pursuant to State law, except as otherwise provided in the case of leased housing in private accommodations and in the case of public housing agencies which contract to receive operating subsidies under section 9 of the revised Act. The rent fixed by a public housing agency could not exceed one-fourth of the low-income family's income. Income would be defined for this purpose so as to exclude nonrecurring income and income of full-time students and to deduct $300 for each dependent and for each secondary wage earner, 5 percent of gross family income or 10 percent in the case of the elderly, and extraordinary medical expenses. This section is substantially the same as the present definition, including the 1969 and 1970 amendments with

respect to maximum rentals in public housing.

Section 3(2) would define the term "low-income families" to mean families who are in the lowest income group and who cannot afford to pay enough to cause private enterprise in their locality to build an adequate supply of housing for their use. It would define "families" so as to

include a single person in the case of elderly families and displaced families. It would modify the present definition of "elderly family" so as to permit

a single person who is 50 years of age or older to reside in public housing. Under present law a single person would have to be 62 years of age or older. As under present law, a single person who is disabled or handicapped would be eligible for occupancy without regard to the age limit.

Section 3(3) would define the terms "development" and "development cost

as under present law, except for minor changes to facilitate project financing and the deletion of an unnecessary provision concerning the cost of shared facilities.

Section 3(4) would substitute "operation" for the present term "administration" in order to conform to current usage in the public housing program. It would otherwise restate the present definition, including the provision which makes it clear that the cost of tenant programs and services are includable in operation of a project and eligible for subsidy assistance Section 3(5) would define "acquisition cost" to mean the amount

prudently required to be expended by a public housing agency in acquiring a low-income housing project.

Section 3(6) would define "public housing agency" to mean any State, county, municipality or other governmental entity or public body (or agency or instrumentality thereof) which is authorized to engage in or assist in the development or operation of low-income housing. This would amend the present provision so as to include public agencies which are authorized to assist in the development or operation of such housing.

Section 3(7) would define "State" to include the several States, the District of Columbia, the Commonwealth of Puerto Rico, the territories and possessions of the United States, the Trust Territory of the Pacific Island

and Indian tribes, bands, groups, and nations (including Alaska Indians, Aleuts, and Eskimos) of the United States.

Section 3(8) would define "Secretary" to mean the Secretary of Housing and Urban Development.

Section 3(9) would define "low-income housing project" or "project" to mean any project developed, acquired, or assisted under the Act and to mean the improvement of such housing. This is a new definition which would make it clear that the modernization of an existing project may constitute a separate project for purposes of assistance under the Act. Section 4

Loans for Low-Income Housing Projects

Subsection (a) would authorize the Secretary to make loans to public housing agencies to help finance or refinance the development, acquisition, or operation of low-income housing projects by such agencies. Such loans. would provide for an interest rate specified by the Secretary which is not less than a rate determined by the Secretary of the Treasury taking into consideration the current average market yield on outstanding marketable obligations of the United States with remaining periods to maturity comparable to the average maturities of such loans, plus one-eighth of one percent. The present requirement that such loans bear interest at a rate not less than the going Federal rate (and the definition of "going Federal rate") is deleted in order to afford greater flexibility.

Subsection (b) would authorize the Secretary to issue and have

outstanding at any one time notes and other obligations for purchase by the Secretary of the Treasury in an amount which could not, unless authorized by the President, exceed $1.5 billion.

Section 5 - Annual Contributions for Low-Income Housing Projects

Subsection (a) would authorize the Secretary to make annual contribution

to assist in achieving and maintaining the low-income character of their projects and to embody provisions for such contributions in a contract guaranteeing their payment. It would provide that the annual contribution payable under this section may not exceed the debt service payable on obligations issued by the public housing agency to finance the development or acquisition cost of the low-income project involved. The present requirement that annual contributions be fixed in uniform amounts and paid in such amounts over a fixed period of years would be deleted in order to afford greater flexibility in the private financing of public housing projects. The maximum limit based on debt service requirements would replac the present provision which limits annual contributions to an amount equal to the capital cost of the project multiplied by a percentage equal to the going Federal rate plus 2 percentage points. This limit now applies to the aggregate annual amount which can be provided for both debt service and operating subsidy requirements. Under the revised Act there would be a new subsidy structure which would provide for a separation between the authority to make annual contributions based on debt service requirements and the authority to make operating subsidy payments. This subsection would delete the present authorization to pay an additional annual subsidy of up to $120 per dwelling unit occupied by an elderly or handicapped family, a displaced family, a very large family, or a family of unusually low income as the purpose of these subsidies would be included under the broad operating subsidy authorization contained in section 9 of the revised Act.

Subsection (b) would authorize the Secretary to prescribe regulations

fixing the maximum contributions to be provided under different circumstances, giving consideration to cost, location, size, rent-paying ability of

prospective tenants or other factors bearing upon the need to achieve and

maintain low rentals.

Subsection (c) would authorize the Secretary to enter into contracts for annual contributions aggregating not more than $1,199,000,000 per year, which would be increased by $225 million on July 1, 1971, and by $150 million on July 1, 1972. The additional $150 million for fiscal year 1973 would be an increase to the present contract authorization.

This subsection

would also provide that of the aggregate amount authorized for annual contributions, an amount not to exceed $100 million per year may be used for the modernization of low-income housing projects. All payments of annual contributions shall be made out of any funds available for purposes of the Act, except that funds borrowed from the Treasury for the purpose of making loans may not be used for payments of annual contributions. subsection does not retain the present provision which requires that 30 percent of the contracts for annual contributions entered into pursuant to authority granted under the 1970 Act or a subsequent enactment shall be for units leased in private accommodations.

This

It does, however, require the

Secretary to assure that public housing agencies comply with certain requirements concerning the provision of low-income housing in private accommodations.

Subsection (d) would provide that any contract for loans or annual contributions may cover one or more low-income housing projects and, in

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