A bill to authorize the Secretary of Housing and Urban Development to encourage States and units of general local government to upgrade housing for certain lower income families.

Directs the Secretary of Housing and Urban Development to establish a demonstration project under which the Secretary will make grants to at least 20 State and local governments to: (1) upgrade lower income housing; and (2) coordinate efforts of the Department of Health and Human Services (HHS) and the Department of Housing and Urban Development to provide lower income housing.

Directs governments applying for such grants to submit administrative programs that include plans for: (1) coordinating the use of grant funds and HHS assistance for shelter costs under the aid for families with dependent children programs; (2) coordinating local housing and social service delivery systems to improve the quality of lower income housing; and (3) implementing a schedule of shelter allowances based on building quality. Restricts the use of grant funds. Requires that grant recipients agree to (1) match 15 percent of the grant funds; (2) permit audits of their use of such funds; and (3) maintain a program designed to assure that all Federal expenditures for lower income housing are coordinated and utilized at the local level for similar goals and according to similar standards.

Requires the Secretary to report to Congress concerning any conclusions and legislative recommendations resulting from such demonstration project. Authorizes appropriations for FY 1983.