[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4579 Introduced in House (IH)]

103d CONGRESS
  2d Session
                                H. R. 4579

 To amend title V of the Housing Act of 1949 to make necessary reforms 
               to the section 515 Rural Housing Program.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             June 14, 1994

      Mrs. Clayton (for herself, Mr. Clyburn, and Mr. Thompson of 
Mississippi) introduced the following bill; which was referred jointly 
 to the Committees on Banking, Finance and Urban Affairs and Ways and 
                                 Means

_______________________________________________________________________

                                 A BILL


 
 To amend title V of the Housing Act of 1949 to make necessary reforms 
               to the section 515 Rural Housing Program.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,
    Section 1. This Act may be cited as the ``Section 515 Rural Housing 
Reform''.
    Sec. 101. Title V of the Housing Act of 1949 (42 U.S.C. 1471 et 
seq.) is amended:
            (a) Section 502(c)(1) is amended by adding a new paragraph 
        (C) to read as follows:
                    ``(C) Effective May 26, 1994, the Secretary may not 
                accept an offer to prepay, or request refinancing in 
                accordance with subsection (b)(3) of, any loan made or 
                insured under section 515 pursuant to a contract 
                entered into before the enactment of the Department of 
                Housing and Urban Development Reform Act of 1989 for a 
                period of not less than two years from the date of 
                enactment of the Housing and Community Development Act 
                of 1994.
                    ``(D) The Secretary shall conduct either directly 
                or through a contract an independent assessment of 
                rural housing preservation provisions. Such assessment, 
                along with recommendations of changes in law and 
                regulation shall be submitted to relevant committees of 
                the Congress by May 31, 1996.''.
            (b) Section 502(c)(4)(C) is amended by revising it to read 
        as follows:
                    ``(C) Approval of assistance.--The Secretary may 
                approve assistance under subparagraph (B) only if the 
                restrictive period has expired for any loan made or 
                insured under section 514 or 515 of this title pursuant 
                to a contract entered into after December 21, 1979, but 
                before the date of enactment of the Department of 
                Housing and Urban Development Reform Act of 1989 and 
                the Secretary determines that the combination of 
                assistance provided.''.
    Sec. 201. Title V of the Housing Act of 1949 (42 U.S.C. 1471 et 
seq.) is amended:
            (a) Section 515(a)(2) is amended to change ``fifty'' to 
        read ``thirty''.
            (b) Section 515(b)(2) is amended to read ``provide for 
        amortization as if the term of the loan was for a period of not 
        to exceed fifty years and may allow for a balloon payment at 
        the end of the term of the loan. Such loan may be, in the 
        discretion of the Secretary, rescheduled for a period not to 
        exceed fifty years from the date of the original loan. The 
        amount of the unpaid principal and interest of the prior loan 
        rescheduled shall not create a new charge against any loan 
        levels authorized by law.''
    Sec. 301. Title V of the Housing Act of 1949 (42 U.S.C. 1471 et 
seq.) is amended: Section 515(t) is amended by deleting paragraphs (4) 
and (5) and renumbering paragraphs (6), (7), and (8) as paragraphs (4), 
(5), and (6) respectively.
    Sec. 401. Title V of the Housing Act of 1949 (U.S.C. 1471 et seq.) 
is amended: Section 510(d)(1) is amended to read ``prosecution and 
defense of any litigation under sections 515 shall be conducted, at the 
discretion of the Secretary, by''.
    Sec. 501. Section 6103(1)(7) of the Internal Revenue Code of 1986 
is amended by adding a new subparagraph (x) to read ``(x) any housing 
assistance program administered by the Department of Agriculture that 
involves initial and periodic review of an applicant's or participant's 
income and only for use by officers and employees of the Department of 
Agriculture with respect to the applicants and participants in such 
programs.''.
    Sec. 601. Section 536 of the Housing Act (42 U.S.C. 1471 et seq.) 
is amended by redesignating paragraphs (d), (e), (f), (g), (h), and (i) 
as paragraphs (e), (f), (g), (h), (i), and (j) respectively, adding a 
new paragraph (d), and amending the last sentence of redesignated 
paragraph (g) to read as follows:
    ``(d) Subsidy Layering.--The Secretary is authorized to establish a 
process for evaluating assistance provided under this title to ensure 
that excess assistance is not provided. In conducting such an 
evaluation, the Secretary shall utilize information received under 
paragraphs (b) and (c) of this section. To the extent practicable, the 
Secretary is authorized to make use of procedures, policies and 
regulations currently in use by the Department of Housing and Urban 
Development and may, to the extent practicable, develop memoranda of 
understanding with State housing agencies to implement the provisions 
of this section.
    ``(g) Limitation of Assistance.--* * *Notwithstanding the 
provisions of section 515(r), the Secretary may decrease the amount of 
assistance provided under this title if he/she determines that other 
assistance reported under paragraphs (b) and (c) will provide excess 
assistance and/or profits to the recipient.''.
    Sec. 701. Section 509(f) of the Housing Act of 1949 (U.S.C. 1471 et 
seq.), is amended to read as follows:
    ``(f) Underserved Housing.--
            ``(1) Designation of underserved area.--The Secretary shall 
        designate as targeted underserved areas 100 counties and 
        communities in each fiscal year that have severe, unmet housing 
        needs as determined by the Secretary. A county or community 
        shall be eligible for designation if, during the 5-year period 
        preceding the year in which the designation is made, it has 
        received an average amount of assistance that is substantially 
        lower than the average annual amount of assistance received 
        during that 5-year period by other counties and communities in 
        the State that are eligible for such assistance calculated on a 
        per capita basis, and has--
                    ``(A) 15 percent or more of its population at or 
                below the poverty level; and
                    ``(B) 5 percent of its population residing in 
                substandard housing.
        As used in this paragraph, the term `poverty level' has the 
        meaning given the term in section 102(a)(9) of the Housing and 
        Community Development Act of 1974.
            ``(2) Preferences.--In selecting projects to receive 
        assistance with amounts set aside under paragraph (6), the 
        Secretary shall give preference to any project located in a 
        county or community that has, at the time of designation and as 
        determined by the Secretary--
                    ``(A) 20 percent or more of its population at or 
                below poverty level; and
                    ``(B) 7 percent or more of its population residing 
                in substandard housing.
        In designating underserved areas under paragraph (1), in each 
        fiscal year the Secretary shall designate not less than 5 
        counties or communities that contain tribal allotted or Indian 
        trust land. In designating underserved areas under paragraph 
        (1), the Secretary shall not designate more than 10 counties or 
        communities in one State or Puerto Rico during each designation 
        cycle. If in selecting the 100 underserved areas there are more 
        than 10 counties or communities in one State or Puerto Rico 
        which meet the requirements of this paragraph, the Secretary 
        will select the 10 most underserved counties or communities 
        utilizing the highest combined percentages of populations below 
        the poverty level and households residing in substandard 
        housing. The remaining counties will be eligible for unused 
        funds as described in paragraph (6)(A).
            ``(3) Other underserved areas.--In addition to the 100 
        targeted counties and communities, the Secretary may also 
        designate other underserved areas that have a severe, unmet 
        housing need based upon objective requirements. Such objective 
        requirements may include counties and communities experiencing 
        trauma due to natural disasters or structural change; 
        communities that have remained consistently poor; colonias as 
        defined in paragraph (10) and communities that have experienced 
        long-term populations decline and job deterioration.
            ``(4) Underserved applicants.--The Secretary may also set-
        aside funds under paragraph (6) for applicants who have been 
        underserved. A class of applicants shall be eligible for 
        designation if, during the 5-year period preceding the year in 
        which the designation is made, the class received an average 
        annual amount of assistance under this title that is 
        substantially lower than the class proportionate percentage of 
        the rural population. Such underserved applicants may include 
        socially disadvantaged persons such as women, blacks, 
        Hispanics, Asian and Pacific Islanders, and Native Americans.
            ``(5) Outreach program and review.--
                    ``(A) Outreach.--The Secretary shall publicize the 
                availability to targeted underserved areas and 
                applicants of grants and loans under this title and 
                promote, to the maximum extent feasible, efforts to 
                apply for those grants and loans.
                    ``(B) Review.--Upon receipt of data from the 1990 
                decennial census, the Secretary shall conduct a review 
                of any designations made under paragraph (1) and 
                preferences given under paragraph (2) and the 
                eligibility of communities and counties for such 
                designation and preference, examining the effects of 
                such data on such eligibility. The Secretary shall 
                submit to Congress, not later than 9 months after the 
                availability of the data, a report regarding the 
                review, which shall include any recommendations of the 
                Secretary for modifications in the standards for 
                designation and preference. The Secretary shall also 
                submit a report to Congress at any time between 
                decennial census when recommendations for modification 
                will promote targeting of assistance for underserved 
                housing.
            ``(6) Set-aside for targeted underserved housing and 
        colonias.--
                    ``(A) In general.--The Secretary shall set aside 
                and reserve for assistance an amount not less than 5 
                percent but not greater than 10 percent in each fiscal 
                year of the aggregate amount of lending authority under 
                sections 502, 504, and 515. During each fiscal year, 
                the Secretary shall set aside an amount of section 521 
                rental assistance that is appropriate to provide 
                assistance with respect to the appropriate lending 
                authority set aside each year. The Secretary shall also 
                set aside a reasonable amount of assistance in other 
                programs under this title if he/she deems necessary to 
                provide for underserved housing. The Secretary shall 
                establish a procedure to reallocate any assistance set 
                aside in any fiscal year for targeted underserved areas 
                that has not been expended during a reasonable period 
                in such year for use in (i) colonias that have applied 
                for and are eligible for assistance under subparagraph 
                (B) or paragraph (9) and did not receive assistance, 
                and (ii) counties and communities eligible for 
                designation as targeted underserved areas but which 
                were not designated. The procedure shall also provide 
                that any assistance reallocated under the preceding 
                sentence that has not been expended by a reasonable 
                date established by the Secretary (which shall be after 
                the expiration of the period referred to in the 
                preceding sentence) shall be made available and 
                allocated under the laws and regulations relating to 
                such assistance, notwithstanding this subsection.
                    ``(B) Length of designation.--In designating 
                underserved areas under paragraph (1), each such area 
                shall remain designated for a period of two years; 
                except for counties which contain tribal allotted or 
                Indian trust land which shall remain designated for 
                three years.
                    ``(C) Priority for colonias.--
                            ``(i) Notwithstanding the designation of 
                        counties and communities as targeted 
                        underserved areas under paragraph (1) and the 
                        provisions of section 520, colonias shall be 
                        eligible for assistance with amounts reserved 
                        under subparagraph (A), as provided in this 
                        subparagraph.
                            ``(ii) In providing assistance from amounts 
                        reserved under this paragraph in each fiscal 
                        year, the Secretary shall give priority to any 
                        application for assistance to be used in, or in 
                        close proximity to, and serving the residents 
                        of, a colonia located in a State described 
                        under clause (iii). After the Secretary has 
                        provided assistance under the priority for 
                        colonias located in a State in amount equal to 
                        10 percent of the total amount of assistance 
                        allocated under this title to such State in the 
                        fiscal year or an average size loan, whichever 
                        is greater, the priority shall not apply to any 
                        applications for colonias in such State.
                            ``(iii) This paragraph shall apply to any 
                        State for the total amount of assistance 
                        allocated to it under this title during each of 
                        such 2 fiscal years.
            ``(7) List of underserved areas.--The Secretary shall 
        publish annually the current list of targeted underserved areas 
        in the Federal Register.
            ``(8) Project preparation assistance.--
                    ``(A) In general.--The Secretary shall make grants 
                to eligible applicants under subparagraph (D) to 
                promote the development of affordable housing in 
                targeted underserved areas and colonias.
                    ``(B) Use.--A grant under this subparagraph shall 
                not exceed an amount that the Secretary determines 
                equal to the customary and reasonable costs incurred in 
                preparing an application for a loan or a grant under 
                section 502, 504, 514, 515, or 524 or a grant under 
                section 516 or 533 (including preapplication planning, 
                site analysis, market analysis and other necessary 
                technical assistance). The Secretary shall adjust the 
                loan or grant amount under such sections to take 
                account of project preparation costs that have been 
                paid from grant proceeds under this paragraph and that 
                normally would be reimbursed with proceeds of the loan 
                or grant.
                    ``(C) Approval.--The Secretary shall approve a 
                properly submitted application or issue a written 
                statement indicating the reasons for disapproval not 
                later than 60 days after receipt of the application.
                    ``(D) Eligibility.--For purpose of this paragraph, 
                an eligible applicant may be a nonprofit organization 
                or corporation, a community housing development 
                organization, State, unit if general local government, 
                or agency of a State or unit of general local 
                government.
                    ``(E) Availability of funding.--Any amounts 
                appropriate to carry out this paragraph shall remain 
                available until expended.
            ``(9) Priority for colonias.--
                    ``(A) In general.--In providing assistance under 
                this title in any fiscal year described under paragraph 
                (B), each State in which colonias are located shall 
                give priority to any applications for assistance to be 
                used in a colonia. The priority under this subparagraph 
                shall not apply in such State after 5 percent of the 
                assistance available in such fiscal year has been 
                allocated for colonias qualifying for the priority.
                    ``(B) Covered years.--This paragraph shall apply to 
                any fiscal year following 2 fiscal years in which the 
                State did not obligate the total amount of assistance 
                allocated it under this title during each of such 2 
                fiscal years.
            ``(10) Definition of colonia.--For purposes of this 
        subsection, the term `colonia' means any identifiable community 
        that--
                    ``(A) is in the State of Arizona, California, New 
                Mexico or Texas;
                    ``(B) is in the area of the United States within 
                150 miles of the border between United States and 
                Mexico, except that the term does not include any 
                standard metropolitan statistical areas that has a 
                population exceeding 1,000,000;
                    ``(C) is determined to be a colonia on the basis of 
                objective criteria, including lack of potable water 
                supply, lack of adequate sewage systems, and lack of 
                decent, safe, and sanitary housing; and
                    ``(D) was in existence as a colonia before the date 
                of enactment of the Cranston-Gonzalez National 
                Affordable Housing Act.''.
    Sec. 801. Section 515(s) of the Housing Act of 1949 (U.S.C. 1471 et 
seq.), is amended to read as follows:
    ``(s) No fee other than a late fee or reasonable application fee 
not to exceed one-half of one percent of the proposed mortgage amount, 
may be imposed by or for the Secretary or any other Federal agency on 
or with respect to a loan made or insured under this section. Such 
application fee will be used, in part, to defray the cost of 
professional market studies obtained by the Secretary to determine 
market feasibility. Such application fee may be waived for non-profit 
applicants which are not receiving any tax credit benefits under 
section 42 of the Internal Revenue Code.''.

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