[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[S. 1299 Enrolled Bill (ENR)]

<DOC>

        S.1299

                       One Hundred Third Congress

                                 of the

                        United States of America


                          AT THE SECOND SESSION

          Begun and held at the City of Washington on Tuesday,
 the twenty-fifth day of January, one thousand nine hundred and ninety-
                                  four


                                 An Act

  
 
  To amend section 203 of the Housing and Community Development 
Amendments of 1978 to provide for the disposition of multifamily 
properties owned by the Secretary of Housing and Urban Development, to 
provide for other reforms in programs administered by the Secretary, and 
to make certain technical amendments, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

    (a) Short Title._This Act may be cited as the ``Multifamily Housing 
Property Disposition Reform Act of 1994''.
    (b) Table of Contents._

Sec. 1. Short title and table of contents.

             TITLE I_MULTIFAMILY PROPERTY DISPOSITION REFORM

Sec. 101. Multifamily property disposition.
Sec. 102. Repeal of State agency multifamily property disposition 
          demonstration.
Sec. 103. Preventing mortgage defaults on multifamily housing projects.
Sec. 104. Interest rates on assigned mortgages.
Sec. 105. Authorization of appropriations.

                     TITLE II_OTHER PROGRAM REFORMS

             Subtitle A_Home Investment Partnerships Program

Sec. 201. Participation by State agencies or instrumentalities.
Sec. 202. Simplification of program-wide income targeting for rental 
          housing.
Sec. 203. Homeownership units.
Sec. 204. Simplification of matching requirements.
Sec. 205. Repeal of separate audit requirement.
Sec. 206. Environmental review requirements.
Sec. 207. Use of CDBG funds for HOME program expenses.
Sec. 208. Flexibility of HOME program for disaster areas.
Sec. 209. Applicability and regulations.

                  Subtitle B_HOPE Homeownership Program

Sec. 221. Matching requirement under HOPE for homeownership of single 
          family homes program.

              Subtitle C_Community Development Block Grants

Sec. 231. Section 108 eligible activities.
Sec. 232. Economic development grants.
Sec. 233. Guarantee of obligations backed by section 108 loans.
Sec. 234. Flexibility of CDBG program for disaster areas.

                     TITLE III_TECHNICAL AMENDMENTS

Sec. 301. Definition of ``families''.
Sec. 302. Elimination of requirement to identify CIAP replacement needs.
Sec. 303. Project-based accounting.
Sec. 304. Operating subsidy adjustments for anticipated fraud 
          recoveries.
Sec. 305. Environmental review provisions.
Sec. 306. Correction of FHA multifamily mortgage limits.
Sec. 307. Amendments to FHA multifamily risk-sharing and housing finance 
          agency pilot programs.
Sec. 308. Subsidy layering review.

            TITLE I_MULTIFAMILY PROPERTY DISPOSITION REFORM

SEC. 101. MULTIFAMILY PROPERTY DISPOSITION.

    (a) Findings._The Congress finds that_
        (1) the portfolio of multifamily housing project mortgages 
    insured by the FHA is severely troubled and at risk of default, 
    requiring the Secretary to increase loss reserves from 
    $5,500,000,000 in 1991 to $11,900,000,000 in 1992 to cover 
    estimated future losses;
        (2) the inventory of multifamily housing projects owned by the 
    Secretary has more than quadrupled since 1989, and, by the end of 
    1994, may exceed 69,000 units;
        (3) the cost to the Federal Government of owning and 
    maintaining multifamily housing projects escalated to $288,000,000 
    in fiscal year 1993;
        (4) the inventory of multifamily housing projects subject to 
    mortgages held by the Secretary has increased dramatically, to more 
    than 2,400 mortgages, and approximately half of these mortgages, 
    with approximately 219,000 units, are delinquent;
        (5) the inventory of insured and formerly insured multifamily 
    housing projects is deteriorating, potentially endangering tenants 
    and neighborhoods; and
        (6) the current statutory framework governing the disposition 
    of multifamily housing projects effectively impedes the 
    Government's ability to dispose of properties, protect tenants, and 
    ensure that projects are maintained over time.
    (b) Management and Disposition of Multifamily Housing Projects._
Section 203 of the Housing and Community Development Amendments of 1978 
(12 U.S.C. 1701z-11) is amended to read as follows:

``SEC. 203. MANAGEMENT AND DISPOSITION OF MULTIFAMILY HOUSING PROJECTS.

    ``(a) Goals._The Secretary of Housing and Urban Development shall 
manage or dispose of multifamily housing projects that are owned by the 
Secretary or that are subject to a mortgage held by the Secretary in a 
manner that_
        ``(1) is consistent with the National Housing Act and this 
    section;
        ``(2) will protect the financial interests of the Federal 
    Government; and
        ``(3) will, in the least costly fashion among reasonable 
    available alternatives, address the goals of_
            ``(A) preserving certain housing so that it can remain 
        available to and affordable by low-income persons;
            ``(B) preserving and revitalizing residential 
        neighborhoods;
            ``(C) maintaining existing housing stock in a decent, safe, 
        and sanitary condition;
            ``(D) minimizing the involuntary displacement of tenants;
            ``(E) maintaining housing for the purpose of providing 
        rental housing, cooperative housing, and homeownership 
        opportunities for low-income persons;
            ``(F) minimizing the need to demolish multifamily housing 
        projects;
            ``(G) supporting fair housing strategies; and
            ``(H) disposing of such projects in a manner consistent 
        with local housing market conditions.
In determining the manner in which a project is to be managed or 
disposed of, the Secretary may balance competing goals relating to 
individual projects in a manner that will further the purposes of this 
section.
    ``(b) Definitions._For purposes of this section:
        ``(1) Multifamily housing project._The term `multifamily 
    housing project' means any multifamily rental housing project which 
    is, or prior to acquisition by the Secretary was, assisted or 
    insured under the National Housing Act, or was subject to a loan 
    under section 202 of the Housing Act of 1959.
        ``(2) Subsidized project._The term `subsidized project' means a 
    multifamily housing project that, immediately prior to the 
    assignment of the mortgage on such project to, or the acquisition 
    of such mortgage by, the Secretary, was receiving any of the 
    following types of assistance:
            ``(A) Below market interest rate mortgage insurance under 
        the proviso of section 221(d)(5) of the National Housing Act.
            ``(B) Interest reduction payments made in connection with 
        mortgages insured under section 236 of the National Housing 
        Act.
            ``(C) Direct loans made under section 202 of the Housing 
        Act of 1959.
            ``(D) Assistance in the form of_
                ``(i) rent supplement payments under section 101 of the 
            Housing and Urban Development Act of 1965,
                ``(ii) additional assistance payments under section 
            236(f)(2) of the National Housing Act,
                ``(iii) housing assistance payments made under section 
            23 of the United States Housing Act of 1937 (as in effect 
            before January 1, 1975), or
                ``(iv) housing assistance payments made under section 8 
            of the United States Housing Act of 1937 (excluding 
            payments made for tenant-based assistance under section 8),
        if (except for purposes of section 183(c) of the Housing and 
        Community Development Act of 1987) such assistance payments are 
        made to more than 50 percent of the units in the project.
        ``(3) Formerly subsidized project._The term `formerly 
    subsidized project' means a multifamily housing project owned by 
    the Secretary that was a subsidized project immediately prior to 
    its acquisition by the Secretary.
        ``(4) Unsubsidized project._The term `unsubsidized project' 
    means a multifamily housing project owned by the Secretary that is 
    not a subsidized project or a formerly subsidized project.
        ``(5) Affordable._A unit shall be considered affordable if_
            ``(A) for units occupied_
                ``(i) by very low-income families, the rent does not 
            exceed 30 percent of 50 percent of the area median income, 
            as determined by the Secretary, with adjustments for 
            smaller and larger families; and
                ``(ii) by low-income families other than very low-
            income families, the rent does not exceed 30 percent of 80 
            percent of the area median income, as determined by the 
            Secretary, with adjustments for smaller and larger 
            families; or
            ``(B) the unit, or the family residing in the unit, is 
        receiving assistance under section 8 of the United States 
        Housing Act of 1937.
        ``(6) Low-income families and very low-income families._The 
    terms `low-income families' and `very low-income families' shall 
    have the meanings given the terms in section 3(b) of the United 
    States Housing Act of 1937.
        ``(7) Preexisting tenant._The term `preexisting tenant' means, 
    with respect to a multifamily housing project acquired pursuant to 
    this section by a purchaser other than the Secretary at foreclosure 
    or after sale by the Secretary, a family that resides in a unit in 
    the project immediately before the acquisition of the project by 
    the purchaser.
        ``(8) Market area._The term `market area' means a market area 
    determined by the Secretary.
        ``(9) Secretary._The term `Secretary' means the Secretary of 
    Housing and Urban Development.
    ``(c) Disposition of Property._
        ``(1) Disposition to purchasers._In carrying out this section, 
    the Secretary may dispose of a multifamily housing project owned by 
    the Secretary on a negotiated, competitive bid, or other basis, on 
    such terms as the Secretary deems appropriate considering the low-
    income character of the project and consistent with the goals in 
    subsection (a), only to a purchaser determined by the Secretary to 
    be capable of_
            ``(A) satisfying the conditions of the disposition plan 
        developed under paragraph (2) for the project;
            ``(B) implementing a sound financial and physical 
        management program that is designed to enable the project to 
        meet anticipated operating and repair expenses to ensure that 
        the project will remain in decent, safe, and sanitary condition 
        and in compliance with any standards under applicable State or 
        local laws, rules, ordinances, or regulations relating to the 
        physical condition of the housing and any such standards 
        established by the Secretary;
            ``(C) responding to the needs of the tenants and working 
        cooperatively with tenant organizations;
            ``(D) providing adequate organizational, staff, and 
        financial resources to the project; and
            ``(E) meeting such other requirements as the Secretary may 
        determine.
    ``(2) Disposition plan._
            ``(A) In general._Prior to the sale of a multifamily 
        housing project that is owned by the Secretary, the Secretary 
        shall develop an initial disposition plan for the project that 
        specifies the minimum terms and conditions of the Secretary for 
        disposition of the project, the initial sales price that is 
        acceptable to the Secretary, and the assistance that the 
        Secretary plans to make available to a prospective purchaser in 
        accordance with this section.
            ``(B) Market-wide plans._In developing the initial 
        disposition plan under this subsection for a multifamily 
        housing project located in a market area in which at least 1 
        other multifamily housing project owned by the Secretary is 
        located, the Secretary may coordinate the disposition of all 
        such multifamily housing projects located within the same 
        market area to the extent and in such manner as the Secretary 
        determines appropriate to carry out the goals under subsection 
        (a).
            ``(C) Sales price._The initial sales price shall be 
        reasonably related to the intended use of the project after 
        sale, any rehabilitation requirements for the project, the 
        rents for units in the project that can be supported by the 
        market, the amount of rental assistance available for the 
        project under section 8 of the United States Housing Act of 
        1937, the occupancy profile of the project (including family 
        size and income levels for tenant families), and any other 
        factors that the Secretary considers appropriate.
            ``(D) Community and tenant input._In carrying out this 
        section, the Secretary shall develop procedures_
                ``(i) to obtain appropriate and timely input into 
            disposition plans from officials of the unit of general 
            local government affected, the community in which the 
            project is situated, and the tenants of the project; and
                ``(ii) to facilitate, where feasible and appropriate, 
            the sale of multifamily housing projects to existing tenant 
            organizations with demonstrated capacity, to public or 
            nonprofit entities that represent or are affiliated with 
            existing tenant organizations, or to other public or 
            nonprofit entities.
            ``(E) Technical assistance._To carry out the procedures 
        developed under subparagraph (D), the Secretary may provide 
        technical assistance, directly or indirectly, and may use 
        amounts available for technical assistance under the Emergency 
        Low Income Housing Preservation Act of 1987, subtitle C of the 
        Low-Income Housing Preservation and Resident Homeownership Act 
        of 1990, subtitle B of title IV of the Cranston-Gonzalez 
        National Affordable Housing Act, or this section, for the 
        provision of technical assistance under this paragraph. 
        Recipients of technical assistance funding under the provisions 
        referred to in this subparagraph shall be permitted to provide 
        technical assistance to the extent of such funding under any of 
        such provisions or under this subparagraph, notwithstanding the 
        source of the funding.
        ``(3) Foreclosure sale._In carrying out this section, the 
    Secretary shall_
            ``(A) prior to foreclosing on any mortgage held by the 
        Secretary on any multifamily housing project, notify both the 
        unit of general local government in which the property is 
        located and the tenants of the property of the proposed 
        foreclosure sale; and
            ``(B) dispose of a multifamily housing project through a 
        foreclosure sale only to a purchaser that the Secretary 
        determines is capable of implementing a sound financial and 
        physical management program that is designed to enable the 
        project to meet anticipated operating and repair expenses to 
        ensure that the project will remain in decent, safe, and 
        sanitary condition and in compliance with any standards under 
        applicable State or local laws, rules, ordinances, or 
        regulations relating to the physical condition of the housing 
        and any such standards established by the Secretary.
    ``(d) Management and Maintenance of Properties._
        ``(1) Contracting for management services._In carrying out this 
    section, the Secretary may_
            ``(A) contract for management services for a multifamily 
        housing project that is owned by the Secretary (or for which 
        the Secretary is mortgagee in possession) with for-profit and 
        nonprofit entities and public agencies (including public 
        housing authorities) on a negotiated, competitive bid, or other 
        basis at a price determined by the Secretary to be reasonable, 
        with a manager the Secretary has determined is capable of_
                ``(i) implementing a sound financial and physical 
            management program that is designed to enable the project 
            to meet anticipated operating and maintenance expenses to 
            ensure that the project will remain in decent, safe, and 
            sanitary condition and in compliance with any standards 
            under applicable State or local laws, rules, ordinances, or 
            regulations relating to the physical condition of the 
            project and any such standards established by the 
            Secretary;
                ``(ii) responding to the needs of the tenants and 
            working cooperatively with tenant organizations;
                ``(iii) providing adequate organizational, staff, and 
            financial resources to the project; and
                ``(iv) meeting such other requirements as the Secretary 
            may determine; and
            ``(B) require the owner of a multifamily housing project 
        that is subject to a mortgage held by the Secretary to contract 
        for management services for the project in the manner described 
        in subparagraph (A).
        ``(2) Maintenance of projects owned by secretary._In the case 
    of multifamily housing projects that are owned by the Secretary (or 
    for which the Secretary is mortgagee in possession), the Secretary 
    shall_
            ``(A) to the greatest extent possible, maintain all such 
        occupied projects in a decent, safe, and sanitary condition and 
        in compliance with any standards under applicable State or 
        local laws, rules, ordinances, or regulations relating to the 
        physical condition of the housing and any such standards 
        established by the Secretary;
            ``(B) to the greatest extent possible, maintain full 
        occupancy in all such projects; and
            ``(C) maintain all such projects for purposes of providing 
        rental or cooperative housing.
        ``(3) Projects subject to a mortgage held by secretary._In the 
    case of any multifamily housing project that is subject to a 
    mortgage held by the Secretary, the Secretary shall require the 
    owner of the project to carry out the requirements of paragraph 
    (2).
    ``(e) Required Assistance._In disposing of multifamily housing 
property under this section, consistent with the goal of section 
203(a)(3)(A), the Secretary shall take, separately or in combination 
with other actions under this subsection or subsection (f), one or more 
of the following actions:
        ``(1) Contract with owner for project-based assistance._In the 
    case of multifamily housing projects that are acquired by a 
    purchaser other than the Secretary at foreclosure or after sale by 
    the Secretary, the Secretary may enter into contracts under section 
    8 of the United States Housing Act of 1937 (to the extent budget 
    authority is available) with owners of the projects, subject to the 
    following requirements:
            ``(A) Subsidized or formerly subsidized projects receiving 
        mortgage-related assistance._In the case of a subsidized or 
        formerly subsidized project referred to in subparagraphs (A) 
        through (C) of subsection (b)(2)_
                ``(i) the contract shall be sufficient to assist at 
            least all units covered by an assistance contract under any 
            of the authorities referred to in subsection (b)(2)(D) 
            before acquisition or foreclosure, unless the Secretary 
            acts pursuant to the provisions of subparagraph (C);
                ``(ii) the contract shall provide that, when a vacancy 
            occurs in any unit in the project requiring project-based 
            rental assistance pursuant to this subparagraph that is 
            occupied by a family who is not eligible for assistance 
            under such section 8, the owner shall lease the available 
            unit to a family eligible for assistance under such section 
            8; and
                ``(iii) the Secretary shall take actions to ensure that 
            any unit in any such project that does not otherwise 
            receive project-based assistance under this subparagraph 
            remains available and affordable for the remaining useful 
            life of the project, as defined by the Secretary; to carry 
            out this clause, the Secretary may require purchasers to 
            establish use or rent restrictions maintaining the 
            affordability of such units.
            ``(B) Subsidized or formerly subsidized projects receiving 
        rental assistance._In the case of a subsidized or formerly 
        subsidized project referred to in subsection (b)(2)(D) that is 
        not subject to subparagraph (A)_
                ``(i) the contract shall be sufficient to assist at 
            least all units in the project that are covered, or were 
            covered immediately before foreclosure on or acquisition of 
            the project by the Secretary, by an assistance contract 
            under any of the provisions referred to in such subsection, 
            unless the Secretary acts pursuant to provisions of 
            subparagraph (C); and
                ``(ii) the contract shall provide that, when a vacancy 
            occurs in any unit in the project requiring project-based 
            rental assistance pursuant to this subparagraph that is 
            occupied by a family who is not eligible for assistance 
            under such section 8, the owner shall lease the available 
            unit to a family eligible for assistance under such section 
            8.
            ``(C) Exceptions._
                ``(i) Authority._In lieu of providing project-based 
            assistance under section 8 of the United States Housing Act 
            of 1937 in accordance with subparagraph (A)(i) or (B)(i) 
            for a project, the Secretary may, for certain units in 
            unsubsidized projects located within the same market area 
            as the project otherwise required to be assisted with such 
            project-based assistance_

                    ``(I) require use and rent restrictions providing 
                that such units shall be available to and affordable by 
                very low-income families for the remaining useful life 
                of the project (as defined by the Secretary), or
                    ``(II) provide project-based assistance under 
                section 8 for such units to be occupied by only very 
                low-income persons,

            but only if the requirements under clause (ii) are met.
                ``(ii) Requirements._The requirements under this clause 
            are that_

                    ``(I) upon the disposition of the project otherwise 
                required to be assisted with project-based assistance 
                under subparagraph (A)(i) or (B)(i), the Secretary 
                shall make available tenant-based assistance under 
                section 8 to low-income families residing in units 
                otherwise required to be assisted with such project-
                based assistance; and
                    ``(II) the number of units subject to use 
                restrictions or provided assistance under clause (i) 
                shall be at least equivalent to the number of units 
                otherwise required to be assisted with project-based 
                assistance under section 8 in accordance with 
                subparagraph (A)(i) or (B)(i).

            ``(D) Unsubsidized projects._Notwithstanding actions taken 
        pursuant to subparagraph (C), in the case of unsubsidized 
        projects, the contract shall be sufficient to provide_
                ``(i) project-based rental assistance for all units 
            that are covered, or were covered immediately before 
            foreclosure or acquisition, by an assistance contract 
            under_

                    ``(I) the new construction and substantial 
                rehabilitation program under section 8(b)(2) of the 
                United States Housing Act of 1937 (as in effect before 
                October 1, 1983);
                    ``(II) the property disposition program under 
                section 8(b) of such Act;
                    ``(III) the project-based certificate program under 
                section 8 of such Act;
                    ``(IV) the moderate rehabilitation program under 
                section 8(e)(2) of such Act;
                    ``(V) section 23 of such Act (as in effect before 
                January 1, 1975);
                    ``(VI) the rent supplement program under section 
                101 of the Housing and Urban Development Act of 1965; 
                or
                    ``(VII) section 8 of the United States Housing Act 
                of 1937, following conversion from assistance under 
                section 101 of the Housing and Urban Development Act of 
                1965; and

                ``(ii) tenant-based assistance under section 8 of the 
            United States Housing Act of 1937 for families that are 
            preexisting tenants of the project in units that, 
            immediately before foreclosure or acquisition of the 
            project by the Secretary, were covered by an assistance 
            contract under the loan management set-aside program under 
            section 8(b) of the United States Housing Act of 1937.
        ``(2) Annual contribution contracts for tenant-based 
    assistance._In the case of multifamily housing projects that are 
    acquired by a purchaser other than the Secretary at foreclosure or 
    after sale by the Secretary, the Secretary may enter into annual 
    contribution contracts with public housing agencies to provide 
    tenant-based assistance under section 8 of the United States 
    Housing Act of 1937 on behalf of all low-income families who are 
    otherwise eligible for assistance in accordance with subparagraph 
    (A), (B), or (D) of paragraph (1) on the date that the project is 
    acquired by the purchaser, subject to the following requirements:
            ``(A) Requirement of sufficient affordable housing in 
        area._The Secretary may not take action under this paragraph 
        unless the Secretary determines that there is available in the 
        area an adequate supply of habitable, affordable housing for 
        very low-income families and other low-income families using 
        tenant-based assistance.
            ``(B) Limitation for subsidized and formerly subsidized 
        projects._The Secretary may not take actions under this 
        paragraph in connection with units in subsidized or formerly 
        subsidized projects for more than 10 percent of the aggregate 
        number of units in such projects disposed of by the Secretary 
        in any fiscal year.
        ``(3) Other assistance._
            ``(A) In general._In accordance with the authority provided 
        under the National Housing Act, the Secretary may provide other 
        assistance pursuant to subsection (f) to the owners of 
        multifamily housing projects that are acquired by a purchaser 
        other than the Secretary at foreclosure, or after sale by the 
        Secretary, on terms that ensure that_
                ``(i) at least the units in the project otherwise 
            required to receive project-based assistance pursuant to 
            subparagraphs (A), (B), or (D) of paragraph (1) are 
            available to and affordable by low-income persons; and
                ``(ii) for the remaining useful life of the project, as 
            defined by the Secretary, there shall be in force such use 
            or rent restrictions as the Secretary may prescribe.
            ``(B) Very low-income tenants._If, as a result of actions 
        taken pursuant to this paragraph, the rents charged to any very 
        low-income families residing in the project who are otherwise 
        required (pursuant to subparagraph (A), (B), or (D) of 
        paragraph (1)) to receive project-based assistance under 
        section 8 of the United States Housing Act of 1937 exceed the 
        amount payable as rent under section 3(a) of the United States 
        Housing Act of 1937, the Secretary shall provide tenant-based 
        assistance under section 8 of such Act to such families.
    ``(f) Discretionary Assistance._In addition to the actions required 
under subsection (e) for a subsidized, formerly subsidized, or 
unsubsidized multifamily housing project, the Secretary may, pursuant 
to the disposition plan and the goals in subsection (a), take one or 
more of the following actions:
        ``(1) Discounted sales price._In accordance with the authority 
    provided under the National Housing Act, the Secretary may reduce 
    the selling price of the project. Such reduced sales price shall be 
    reasonably related to the intended use of the property after sale, 
    any rehabilitation requirements for the project, the rents for 
    units in the project that can be supported by the market, the 
    amount of rental assistance available for the project under section 
    8 of the United States Housing Act of 1937, the occupancy profile 
    of the project (including family size and income levels for tenant 
    families), and any other factors that the Secretary considers 
    appropriate.
        ``(2) Use and rent restrictions._The Secretary may require 
    certain units in a project to be subject to use or rent 
    restrictions providing that such units will be available to and 
    affordable by low- and very low-income persons for the remaining 
    useful life of the property, as defined by the Secretary.
        ``(3) Short-term loans._The Secretary may provide short-term 
    loans to facilitate the sale of a multifamily housing project if_
            ``(A) authority for such loans is provided in advance in an 
        appropriation Act;
            ``(B) such loan has a term of not more than 5 years;
            ``(C) the Secretary determines, based upon documentation 
        provided to the Secretary, that the borrower has obtained a 
        commitment of permanent financing to replace the short-term 
        loan from a lender who meets standards established by the 
        Secretary; and
            ``(D) the terms of such loan are consistent with prevailing 
        practices in the marketplace or the provision of such loan 
        results in no cost to the Government, as defined in section 502 
        of the Congressional Budget Act of 1974.
        ``(4) Up-front grants._If the Secretary determines that action 
    under this paragraph is more cost-effective than establishing rents 
    pursuant to subsection (h)(2), the Secretary may utilize the budget 
    authority provided for contracts issued under this section for 
    project-based assistance under section 8 of the United States 
    Housing Act of 1937 to (in addition to providing project-based 
    section 8 rental assistance) provide up-front grants for the 
    necessary cost of rehabilitation and other related development 
    costs.
        ``(5) Tenant-based assistance._The Secretary may make available 
    tenant-based assistance under section 8 of the United States 
    Housing Act of 1937 to families residing in a multifamily housing 
    project that do not otherwise qualify for project-based assistance.
        ``(6) Alternative uses._
            ``(A) In general._Notwithstanding any other provision of 
        law, after providing notice to and an opportunity for comment 
        by preexisting tenants, the Secretary may allow not more than_
                ``(i) 10 percent of the total number of units in 
            multifamily housing projects that are disposed of by the 
            Secretary during any fiscal year to be made available for 
            uses other than rental or cooperative uses, including low-
            income homeownership opportunities, or in any particular 
            project, community space, office space for tenant or 
            housing-related service providers or security programs, or 
            small business uses, if such uses benefit the tenants of 
            the project; and
                ``(ii) 5 percent of the total number of units in 
            multifamily housing projects that are disposed of by the 
            Secretary during any fiscal year to be used in any manner, 
            if the Secretary and the unit of general local government 
            or area-wide governing body determine that such use will 
            further fair housing, community development, or 
            neighborhood revitalization goals.
            ``(B) Displacement protection._The Secretary may take 
        actions under subparagraph (A) only if_
                ``(i) tenant-based rental assistance under section 8 of 
            the United States Housing Act of 1937 is made available to 
            each eligible family residing in the project that is 
            displaced as a result of such actions; and
                ``(ii) the Secretary determines that sufficient 
            habitable, affordable rental housing is available in the 
            market area in which the project is located to ensure use 
            of such assistance.
        ``(7) Transfer for use under other programs of secretary._
            ``(A) In general._Notwithstanding the provisions of 
        subsection (e), the Secretary may, pursuant to an agreement 
        under subparagraph (B), transfer a multifamily housing project_
                ``(i) to a public housing agency for use of the project 
            as public housing; or
                ``(ii) to an entity eligible to own or operate housing 
            assisted under section 202 of the Housing Act of 1959 or 
            under section 811 of the Cranston-Gonzalez National 
            Affordable Housing Act for use as supportive housing under 
            either of such sections.
            ``(B) Requirements for agreement._An agreement providing 
        for the transfer of a project described in subparagraph (A) 
        shall_
                ``(i) contain such terms, conditions, and limitations 
            as the Secretary determines appropriate, including 
            requirements to ensure use of the project as public 
            housing, supportive housing under section 202 of the 
            Housing Act of 1959, or supportive housing under section 
            811 of the Cranston-Gonzalez National Affordable Housing 
            Act, as applicable; and
                ``(ii) ensure that no tenant of the project will be 
            displaced as a result of actions taken under this 
            paragraph.
        ``(8) Rebuilding._Notwithstanding any provision of section 8 of 
    the United States Housing Act of 1937, the Secretary may provide 
    project-based assistance in accordance with subsection (e) of this 
    section to support the rebuilding of a multifamily housing project 
    rebuilt or to be rebuilt (in whole or in part and on-site, off-
    site, or in a combination of both) in connection with disposition 
    under this section, if the Secretary determines that_
            ``(A) the project is not being maintained in a decent, 
        safe, and sanitary condition;
            ``(B) rebuilding the project would be less expensive than 
        substantial rehabilitation;
            ``(C) the unit of general local government in which the 
        project is located approves the rebuilding and makes a 
        financial contribution or other commitment to the project; and
            ``(D) the rebuilding is a part of a local neighborhood 
        revitalization plan approved by the unit of general local 
        government.
    The provisions of subsection (j)(2) shall apply to any tenants of 
    the project who are displaced.
        ``(9) Emergency assistance funds._The Secretary may make 
    arrangements with State agencies and units of general local 
    government of States receiving emergency assistance under part A of 
    title IV of the Social Security Act for the provision of assistance 
    under such Act on behalf of eligible families who would reside in 
    any multifamily housing projects.
    ``(g) Protection for Unassisted Very Low-Income Tenants._For each 
multifamily housing project disposed of under this section, the 
Secretary shall require that, for any very low-income family who is a 
preexisting tenant of the project who (upon disposition) would be 
required to pay rent in an amount in excess of 30 percent of the 
adjusted income (as such term is defined in section 3(b) of the United 
States Housing Act of 1937) of the family_
        ``(1) for a period of 2 years beginning upon the date of the 
    acquisition of the project by the purchaser under such disposition, 
    the rent for the unit occupied by the family may not be increased 
    above the rent charged immediately before acquisition;
        ``(2) such family shall be considered displaced for purposes of 
    the preferences for assistance under sections 6(c)(4)(A)(i), 
    8(d)(1)(A)(i), and 8(o)(3)(B) of the United States Housing Act of 
    1937; and
        ``(3) notice shall be provided to such family, not later than 
    the date of the acquisition of the project by the purchaser_
            ``(A) of the requirements under paragraphs (1) and (2); and
            ``(B) that, after the expiration of the period under 
        paragraph (1), the rent for the unit occupied by the family may 
        be increased.
    ``(h) Contract Requirements._Contracts for project-based rental 
assistance under section 8 of the United States Housing Act of 1937 
provided pursuant to this section shall be subject to the following 
requirements:
        ``(1) Contract term._The contract shall have a term of 15 
    years, except that the term may be less than 15 years_
            ``(A) to the extent that the Secretary finds that, based on 
        the rental charges and financing for the multifamily housing 
        project to which the contract relates, the financial viability 
        of the project can be maintained under a contract having such a 
        term; except that the Secretary shall require that the amount 
        of rent payable by tenants of the project for units assisted 
        under such contract shall not exceed the amount payable for 
        rent under section 3(a) of the United States Housing Act of 
        1937 for a period of at least 15 years; or
            ``(B) if such assistance is provided_
                ``(i) under a contract authorized under section 6 of 
            the HUD Demonstration Act of 1993; and
                ``(ii) pursuant to a disposition plan under this 
            section for a project that is determined by the Secretary 
            to be otherwise in compliance with this section.
        ``(2) Contract rent._The Secretary shall establish the contract 
    rents under such contracts at levels that, together with other 
    resources available to the purchasers, provide sufficient amounts 
    for the necessary costs of rehabilitating and operating the 
    multifamily housing project and do not exceed the percentage of the 
    existing housing fair market rentals for the market area in which 
    the project assisted under the contract is located as determined by 
    the Secretary under section 8(c) of the United States Housing Act 
    of 1937.
    ``(i) Right of First Refusal for Local and State Government 
Agencies._
        ``(1) Notification._Not later than 30 days after the Secretary 
    acquires title to a multifamily housing project, the Secretary 
    shall notify the appropriate unit of general local government 
    (including public housing agencies) and State agency or agencies 
    designated by the chief executive officer of the State in which the 
    project is located of such acquisition of title and that, for a 
    period beginning upon such notification that does not exceed 90 
    days, such unit of general local government and agency or agencies 
    shall have the exclusive right under this subsection to make bona 
    fide offers to purchase the project.
        ``(2) Right of first refusal._During the 90-day period, the 
    Secretary may not sell or offer to sell the multifamily housing 
    project other than to a party notified under paragraph (1), unless 
    the unit of general local government and the designated State 
    agency or agencies notify the Secretary that they will not make an 
    offer to purchase the project. The Secretary shall accept a bona 
    fide offer to purchase the project made during such period if it 
    complies with the terms and conditions of the disposition plan for 
    the project or is otherwise acceptable to the Secretary.
        ``(3) Procedure._The Secretary shall establish any procedures 
    necessary to carry out this subsection.
    ``(j) Displacement of Tenants and Relocation Assistance._
        ``(1) In general._Whenever tenants will be displaced as a 
    result of the demolition of, repairs to, or conversion in the use 
    of, a multifamily housing project that is owned by the Secretary 
    (or for which the Secretary is mortgagee in possession), the 
    Secretary shall identify tenants who will be displaced, and shall 
    notify all such tenants of their pending displacement and of any 
    relocation assistance that may be available. In the case of a 
    multifamily housing project that is subject to a mortgage held by 
    the Secretary, the Secretary shall require the owner of the project 
    to carry out the requirements of this paragraph, if the Secretary 
    has authorized the demolition of, repairs to, or conversion in the 
    use of such multifamily housing project.
        ``(2) Rights of displaced tenants._The Secretary shall ensure 
    for any such tenant (who continues to meet applicable qualification 
    standards) the right_
            ``(A) to return, whenever possible, to a repaired or 
        rebuilt unit;
            ``(B) to occupy a unit in another multifamily housing 
        project owned by the Secretary;
            ``(C) to obtain housing assistance under the United States 
        Housing Act of 1937; or
            ``(D) to receive any other available similar relocation 
        assistance as the Secretary determines to be appropriate.
    ``(k) Mortgage and Project Sales._
        ``(1) In general._The Secretary may not approve the sale of any 
    loan or mortgage held by the Secretary (including any loan or 
    mortgage owned by the Government National Mortgage Association) on 
    any subsidized project or formerly subsidized project, unless such 
    sale is made as part of a transaction that will ensure that such 
    project will continue to operate at least until the maturity date 
    of such loan or mortgage, in a manner that will provide rental 
    housing on terms at least as advantageous to existing and future 
    tenants as the terms required by the program under which the loan 
    or mortgage was made or insured prior to the assignment of the loan 
    or mortgage on such project to the Secretary.
        ``(2) Sale of certain projects._The Secretary may not approve 
    the sale of any subsidized project_
            ``(A) that is subject to a mortgage held by the Secretary, 
        or
            ``(B) if the sale transaction involves the provision of any 
        additional subsidy funds by the Secretary or a recasting of the 
        mortgage,
    unless such sale is made as part of a transaction that will ensure 
    that the project will continue to operate, at least until the 
    maturity date of the loan or mortgage, in a manner that will 
    provide rental housing on terms at least as advantageous to 
    existing and future tenants as the terms required by the program 
    under which the loan or mortgage was made or insured prior to the 
    proposed sale of the project.
        ``(3) Mortgage sales to state and local governments._
    Notwithstanding any provision of law that requires competitive 
    sales or bidding, the Secretary may carry out negotiated sales of 
    mortgages held by the Secretary, without the competitive selection 
    of purchasers or intermediaries, to units of general local 
    government or State agencies, or groups of investors that include 
    at least one such unit of general local government or State agency, 
    if the negotiations are conducted with such agencies, except that_
            ``(A) the terms of any such sale shall include the 
        agreement of the purchasing agency or unit of local government 
        or State agency to act as mortgagee or owner of a beneficial 
        interest in such mortgages, in a manner consistent with 
        maintaining the projects that are subject to such mortgages for 
        occupancy by the general tenant group intended to be served by 
        the applicable mortgage insurance program, including, to the 
        extent the Secretary determines appropriate, authorizing such 
        unit of local government or State agency to enforce the 
        provisions of any regulatory agreement or other program 
        requirements applicable to the related projects; and
            ``(B) the sales prices for such mortgages shall be, in the 
        determination of the Secretary, the best prices that may be 
        obtained for such mortgages from a unit of general local 
        government or State agency, consistent with the expectation and 
        intention that the projects financed will be retained for use 
        under the applicable mortgage insurance program for the life of 
        the initial mortgage insurance contract.
        ``(4) Sale of mortgages covering unsubsidized projects._
    Notwithstanding any other provision of law, the Secretary may sell 
    mortgages held on projects that are not subsidized or formerly 
    subsidized projects on such terms and conditions as the Secretary 
    may prescribe.
        ``(5) Mortgage sale demonstration._The Secretary may carry out 
    a demonstration to test the feasibility of restructuring and 
    disposing of troubled multifamily mortgages held by the Secretary 
    through the establishment of partnerships with public, private, and 
    nonprofit entities.
        ``(6) Project sale demonstration._The Secretary may carry out a 
    demonstration to test the feasibility of disposing of troubled 
    multifamily housing projects that are owned by the Secretary 
    through the establishment of partnerships with public, private, and 
    nonprofit entities.
    ``(l) Report to Congress._Not later than June 1 of each year, the 
Secretary shall submit to the Congress a report describing the status 
of multifamily housing projects owned by or subject to mortgages held 
by the Secretary, on an aggregate basis, which highlights the 
differences, if any, between the subsidized and the unsubsidized 
inventory. The report shall include_
        ``(1) the average and median size of the projects;
        ``(2) the geographic locations of the projects, by State and 
    region;
        ``(3) the years during which projects were assigned to the 
    Department, and the average and median length of time that projects 
    remain in the HUD-held inventory;
        ``(4) the status of HUD-held mortgages;
        ``(5) the physical condition of the HUD-held and HUD-owned 
    inventory;
        ``(6) the occupancy profile of the projects, including the 
    income, family size, race, and ethnic origin of current tenants, 
    and the rents paid by such tenants;
        ``(7) the proportion of units that are vacant;
        ``(8) the number of projects for which the Secretary is 
    mortgagee in possession;
        ``(9) the number of projects sold in foreclosure sales;
        ``(10) the number of HUD-owned projects sold;
        ``(11) a description of actions undertaken pursuant to this 
    section, including a description of the effectiveness of such 
    actions and any impediments to the disposition or management of 
    multifamily housing projects;
        ``(12) a description of the extent to which the provisions of 
    this section and actions taken under this section have displaced 
    tenants of multifamily housing projects;
        ``(13) a description of any of the functions performed in 
    connection with this section that are contracted out to public or 
    private entities or to States; and
        ``(14) a description of the activities carried out under 
    subsection (i) during the preceding year.''.
    (c) Clarification of Federal Preferences._
        (1) Public housing tenancy._Section 6(c)(4)(A)(i) of the United 
    States Housing Act of 1937 (42 U.S.C. 1437d(c)(4)(A)(i)) is amended 
    by inserting after ``displaced'' the following: ``(including 
    displacement because of disposition of a multifamily housing 
    project under section 203 of the Housing and Community Development 
    Amendments of 1978)''.
        (2) Section 8 assistance._Section 8(d)(1)(A)(i) of the United 
    States Housing Act of 1937 (42 U.S.C. 1437f(d)(1)(A)(i)) is amended 
    by inserting after ``displaced'' the following: ``(including 
    displacement because of disposition of a multifamily housing 
    project under section 203 of the Housing and Community Development 
    Amendments of 1978)''.
        (3) Voucher assistance._The first sentence of section 
    8(o)(3)(B) of the United States Housing Act of 1937 (42 U.S.C. 
    1437f(o)(3)(B)) is amended by inserting after ``displaced'' the 
    following: ``(including displacement because of disposition of a 
    multifamily housing project under section 203 of the Housing and 
    Community Development Amendments of 1978)''.
    (d) Definition of Owner._Section 8(f)(1) of the United States 
Housing Act of 1937 (42 U.S.C. 1437f(f)(1)) is amended by inserting 
``an agency of the Federal Government,'' after ``cooperative,''.
    (e) Amendment to National Housing Act._Title V of the National 
Housing Act (12 U.S.C. 1731a et seq.) is amended by adding at the end 
the following new section:


       ``partial payment of claims on multifamily housing projects

    ``Sec. 541. (a) Authority._Notwithstanding any other provision of 
law, if the Secretary is requested to accept assignment of a mortgage 
insured by the Secretary that covers a multifamily housing project (as 
such term is defined in section 203(b) of the Housing and Community 
Development Amendments of 1978) and the Secretary determines that 
partial payment would be less costly to the Federal Government than 
other reasonable alternatives for maintaining the low-income character 
of the project, the Secretary may request the mortgagee, in lieu of 
assignment, to_
        ``(1) accept partial payment of the claim under the mortgage 
    insurance contract; and
        ``(2) recast the mortgage, under such terms and conditions as 
    the Secretary may determine.
    ``(b) Repayment._As a condition to a partial claim payment under 
this section, the mortgagor shall agree to repay to the Secretary the 
amount of such payment and such obligation shall be secured by a second 
mortgage on the property on such terms and conditions as the Secretary 
may determine.''.
    (f) Effective Date._The Secretary shall issue interim regulations 
necessary to implement the amendments made by subsections (b) through 
(d) not later than 90 days after the date of the enactment of this Act. 
Such interim regulations shall take effect upon issuance and invite 
public comment on the interim regulations. The Secretary shall issue 
final regulations to implement such amendments after opportunity for 
such public comment, but not later than 12 months after the date of 
issuance of such interim regulations.

SEC. 102. REPEAL OF STATE AGENCY MULTIFAMILY PROPERTY DISPOSITION 
              DEMONSTRATION.

    Section 184 of the Housing and Community Development Act of 1987 
(12 U.S.C. 1701z-11 note) is hereby repealed.

SEC. 103. PREVENTING MORTGAGE DEFAULTS ON MULTIFAMILY HOUSING PROJECTS.

    (a) Multifamily Housing Planning and Investment Strategies._
        (1) Preparation of assessments for independent entities._
    Section 402(a) of the Housing and Community Development Act of 1992 
    (12 U.S.C. 1715-1a note) is amended by adding at the end the 
    following new sentence: ``The assessment shall be prepared by an 
    entity that does not have an identity of interest with the 
    owner.''.
        (2) Timing of submission of needs assessments._Section 402(b) 
    of the Housing and Community Development Act of 1992 (12 U.S.C. 
    1715z-1a note) is amended to read as follows:
    ``(b) Timing._To ensure that assessments for all covered 
multifamily housing properties will be submitted on or before the 
conclusion of fiscal year 1997, the Secretary shall require the owners 
of such properties, including covered multifamily housing properties 
for the elderly, to submit the assessments for the properties in 
accordance with the following schedule:
        ``(1) For fiscal year 1994, 10 percent of the aggregate number 
    of such properties.
        ``(2) For each of fiscal years 1995, 1996, and 1997, an 
    additional 30 percent of the aggregate number of such 
    properties.''.
        (3) Review of comprehensive needs assessments._Section 404(d) 
    of the Housing and Community Development Act of 1992 (12 U.S.C. 
    1715-1a note) is amended to read as follows:
    ``(d) Review._
        ``(1) In general._The Secretary shall review each comprehensive 
    needs assessment for completeness and adequacy before the 
    expiration of the 90-day period beginning on the receipt of the 
    assessment and shall notify the owner of the property for which the 
    assessment was submitted of the findings of such review.
        ``(2) Incomplete or inadequate assessments._If the Secretary 
    determines that the assessment is substantially incomplete or 
    inadequate, the Secretary shall_
            ``(A) notify the owner of the portion or portions of the 
        assessment requiring completion or other revision; and
            ``(B) require the owner to submit an amended assessment to 
        the Secretary not later than 30 days after such 
        notification.''.
        (4) Repeal of notice provision._Section 404 of the Housing and 
    Community Development Act of 1992 (12 U.S.C. 1715-1a note) is 
    amended by striking subsection (f).
        (5) Publication._Section 404 of the Housing and Community 
    Development Act of 1992 (12 U.S.C. 1715z-1a note), as amended by 
    paragraph (4) of this subsection, is further amended by inserting 
    after subsection (e) the following new subsection:
    ``(f) Publication of Method for Receiving Capital Needs 
Assessment._The Secretary shall cause to be published in the Federal 
Register the method by which the Secretary determines which capital 
needs assessments will be received each year in accordance with section 
402(b) and subsection (d) of this section.''.
        (6) Funding._Title IV of the Housing and Community Development 
    Act of 1992 (12 U.S.C. 1715z-1a note) is amended by adding at the 
    end the following new section:

``SEC. 409. FUNDING.

    ``(a) Allocation of Assistance._Based upon needs identified in 
comprehensive needs assessments, and subject to otherwise applicable 
program requirements, including selection criteria, the Secretary may 
allocate the following assistance to owners of covered multifamily 
housing projects and may provide such assistance on a noncompetitive 
basis:
        ``(1) Operating assistance and capital improvement assistance 
    for troubled multifamily housing projects pursuant to section 201 
    of the Housing and Community Development Amendments of 1978, except 
    for assistance set aside under section 201(n)(1).
        ``(2) Loan management assistance available pursuant to section 
    8 of the United States Housing Act of 1937.
    ``(b) Operating Assistance and Capital Improvement Assistance._In 
providing assistance under subsection (a) the Secretary shall use the 
selection criteria set forth in section 201(n) of the Housing and 
Community Development Amendments of 1978.
    ``(c) Amount of Assistance._The Secretary may fund all or only a 
portion of the needs identified in the capital needs assessment of an 
owner selected to receive assistance under this section.''.
    (b) Flexible Subsidy Program._
        (1) Deletion of utility cost requirements._Section 201(i) of 
    the Housing and Community Development Amendments of 1978 (12 U.S.C. 
    1715z-1a(i)) is hereby repealed.
        (2) Repeal of mandatory contribution from owner._Section 
    201(k)(2) of the Housing and Community Development Amendments of 
    1978 (12 U.S.C. 1715z-1a(k)(2)) is amended by striking ``, except 
    that'' and all that follows and inserting a period.
        (3) Funding._Section 201(n) of the Housing and Community 
    Development Amendments of 1978 (42 U.S.C. 1715z-1a(n)) is amended 
    to read as follows:
    ``(n) Allocation of Assistance._
        ``(1) Set-aside._In providing, and contracting to provide, 
    assistance for capital improvements under this section, in each 
    fiscal year the Secretary shall set aside an amount, as determined 
    by the Secretary, for projects that are eligible for incentives 
    under section 224(b) of the Emergency Low Income Housing 
    Preservation Act of 1987, as such section existed before the date 
    of enactment of the Cranston-Gonzalez National Affordable Housing 
    Act. The Secretary may make such assistance available on a 
    noncompetitive basis.
        ``(2) General rules for allocation._Except as provided in 
    paragraph (3), with respect to assistance under this section not 
    set aside for projects under paragraph (1), the Secretary_
            ``(A) may award assistance on a noncompetitive basis; and
            ``(B) shall award assistance to eligible projects on the 
        basis of_
                ``(i) the extent to which the project is physically or 
            financially troubled, as evidenced by the comprehensive 
            needs assessment submitted in accordance with title IV of 
            the Housing and Community Development Act of 1992; and
                ``(ii) the extent to which such assistance is necessary 
            and reasonable to prevent the default of federally insured 
            mortgages.
        ``(3) Exceptions._The Secretary may make exceptions to 
    selection criteria set forth in paragraph (2)(B) to permit the 
    provision of assistance to eligible projects based upon_
            ``(A) the extent to which such assistance is necessary to 
        prevent the imminent foreclosure or default of a project whose 
        owner has not submitted a comprehensive needs assessment 
        pursuant to title IV of the Housing and Community Development 
        Act of 1992;
            ``(B) the extent to which the project presents an imminent 
        threat to the life, health, and safety of project residents; or
            ``(C) such other criteria as the Secretary may specify by 
        regulation or by notice printed in the Federal Register.
        ``(4) Considerations._In providing assistance under this 
    section, the Secretary shall take into consideration_
            ``(A) the extent to which there is evidence that there will 
        be significant opportunities for residents (including a 
        resident council or resident management corporation, as 
        appropriate) to be involved in the management of the project 
        (except that this paragraph shall have no application to 
        projects that are owned as cooperatives); and
            ``(B) the extent to which there is evidence that the 
        project owner has provided competent management and complied 
        with all regulatory and administrative requirements.''.
        (4) Repeal._Section 201 of the Housing and Community 
    Development Amendments of 1978 (12 U.S.C. 1715z-1a) is amended_
            (A) by striking subsection (o); and
            (B) by redesignating subsection (p) as subsection (o).
    (c) Implementation and Effective Dates for Subsections (a) and 
(b)._
        (1) In general._Except as provided in paragraph (2), the 
    amendments made by subsections (a) and (b) shall apply with respect 
    to amounts made available for fiscal year 1994 and fiscal years 
    thereafter.
        (2) Exception._Section 201(n)(1) of the Housing and Community 
    Development Amendments of 1978 (as added by the amendment made by 
    subsection (b)(3) of this section) shall take effect on the date of 
    enactment of this Act.
        (3) Notice._The Secretary shall, by notice published in the 
    Federal Register, establish any requirements necessary to implement 
    the amendments made by subsections (a) and (b). The notice shall 
    invite public comments and, not later than 12 months after the date 
    on which the notice is published, the Secretary shall issue final 
    regulations based on the initial notice, taking into consideration 
    any public comments received.
    (d) Streamlined Refinancing._As soon as practicable, the Secretary 
shall implement a streamlined refinancing program under the authority 
provided in section 223 of the National Housing Act to prevent the 
default of mortgages insured by the FHA which cover multifamily housing 
projects, as defined in section 203(b) of the Housing and Community 
Development Amendments of 1978.
    (e) GAO Study on Prevention of Default._
        (1) In general._Not later than April 1, 1995, the Comptroller 
    General of the United States shall submit to the Committee on 
    Banking, Finance and Urban Affairs of the House of Representatives 
    and the Committee on Banking, Housing, and Urban Affairs of the 
    Senate a report that evaluates the adequacy of loan loss reserves 
    in the General Insurance and Special Risk Insurance Funds and 
    presents recommendations for the Secretary to prevent losses from 
    occurring.
        (2) Contents._The report submitted under paragraph (1) shall_
            (A) evaluate the factors considered in arriving at loss 
        estimates and determine whether other factors should be 
        considered;
            (B) determine the relative benefit of creating a new, 
        actuarially sound insurance fund for all new multifamily 
        housing insurance commitments; and
            (C) recommend alternatives to the Secretary's current 
        procedures for preventing the future default of multifamily 
        housing project mortgages insured under title II of the 
        National Housing Act.
    (f) GAO Study on Actuarial Soundness of Certain Insurance 
Programs._
        (1) In general._Not later than April 1, 1995, the Comptroller 
    General of the United States shall submit to the Committee on 
    Banking, Housing, and Urban Affairs of the Senate and the Committee 
    on Banking, Finance and Urban Affairs of the House of 
    Representatives a report that evaluates, in connection with the 
    General Insurance Fund, the role and performance of the nursing 
    home, hospital, and retirement service center insurance programs.
        (2) Contents._The reports submitted under paragraph (1) shall_
            (A) evaluate the strategic importance of these insurance 
        programs to the mission of the FHA;
            (B) evaluate the impact of these insurance programs upon 
        the financial performance of the General Insurance Fund;
            (C) assess the potential losses expected under these 
        programs through fiscal year 1999;
            (D) evaluate the risk of these programs to the General 
        Insurance Fund in connection with changes in national health 
        care policy;
            (E) assess the ability of the FHA to manage these programs; 
        and
            (F) make recommendations for any necessary changes.
    (g) Risk Assessment._
        (1) Special risk insurance fund._Section 238(c) of the National 
    Housing Act (12 U.S.C. 1715z-3(c)) is amended by adding at the end 
    the following new paragraph:
        ``(3) The Secretary shall undertake an annual assessment of the 
    risks associated with each of the insurance programs comprising the 
    Special Risk Insurance Fund, and shall present findings from such 
    review to the Congress in the FHA Annual Management Report.''.
        (2) General insurance fund._Section 519 of the National Housing 
    Act (12 U.S.C. 1735c) is amended by adding at the end the following 
    new subsection:
    ``(g) Risk Assessment._The Secretary shall undertake an annual 
assessment of the risks associated with each of the insurance programs 
comprising the General Insurance Fund, and shall present findings from 
such review to the Congress in the FHA Annual Management Report.''.
    (h) Alternative Uses for Prevention of Default._
        (1) In general._Subject to notice to and comment by existing 
    tenants, to prevent the imminent default of a multifamily housing 
    project subject to a mortgage insured under title II of the 
    National Housing Act, the Secretary may authorize the mortgagor to 
    use the project for purposes not contemplated by or permitted under 
    the regulatory agreement, if_
            (A) such other uses are acceptable to the Secretary;
            (B) such other uses would be otherwise insurable under 
        title II of the National Housing Act;
            (C) the outstanding principal balance on the mortgage 
        covering such project is not increased;
            (D) any financial benefit accruing to the mortgagor shall, 
        subject to the discretion of the Secretary, be applied to 
        project reserves or project rehabilitation; and
            (E) such other use serves a public purpose.
        (2) Displacement protection._The Secretary may take actions 
    under paragraph (1) only if_
            (A) tenant-based rental assistance under section 8 of the 
        United States Housing Act of 1937 is made available to each 
        eligible family residing in the project that is displaced as a 
        result of such actions; and
            (B) the Secretary determines that sufficient habitable, 
        affordable (as such term is defined in section 203(b) of the 
        Housing and Community Development Amendments of 1978) rental 
        housing is available in the market area in which the project is 
        located to ensure use of such assistance.
        (3) Implementation._The Secretary shall, by notice published in 
    the Federal Register, which shall take effect upon publication, 
    establish such requirements as may be necessary to implement the 
    amendments made by this subsection. The notice shall invite public 
    comments and, not later than 12 months after the date on which the 
    notice is published, the Secretary shall issue final regulations 
    based on the initial notice, taking into account any public 
    comments received.

SEC. 104. INTEREST RATES ON ASSIGNED MORTGAGES.

    Section 7(i)(5) of the Department of Housing and Urban Development 
Act (42 U.S.C. 3535(i)(5)) is amended by striking the first semicolon, 
and all that follows through ``as determined by the Secretary''.

SEC. 105. AUTHORIZATION OF APPROPRIATIONS.

    (a) Special Risk Insurance Fund._Section 238(b) of the National 
Housing Act (12 U.S.C. 1715z-3(b)) is amended by striking the fifth 
sentence.
    (b) General Insurance Fund._Section 519 of the National Housing Act 
(12 U.S.C. 1735c) is amended_
        (1) by striking subsection (f); and
        (2) by redesignating subsection (g) (as added by section 
    103(g)(2) of this Act) as subsection (f).
    (c) Multifamily Insurance Fund Appropriations._Title V of the 
National Housing Act (12 U.S.C. 1731a et seq.) is amended by adding 
after section 541 (as added by section 101(e) of this Act) the 
following new section:

``SEC. 542. AUTHORIZATION OF APPROPRIATIONS FOR GENERAL AND SPECIAL 
              RISK INSURANCE FUNDS.

    ``There are authorized to be appropriated such sums as may be 
necessary for each of fiscal years 1994 and 1995, to be allocated in 
any manner that the Secretary determines appropriate, for the following 
costs incurred in conjunction with programs authorized under the 
General Insurance Fund, as provided by section 519, and the Special 
Risk Insurance Fund, as provided by section 238:
        ``(1) The cost to the Government, as defined in section 502 of 
    the Congressional Budget Act, of new insurance commitments.
        ``(2) The cost to the Government, as defined in section 502 of 
    the Congressional Budget Act, of modifications to existing loans, 
    loan guarantees, or insurance commitments.
        ``(3) The cost to the Government, as defined in section 502 of 
    the Congressional Budget Act, of loans provided under section 
    203(f) of the Housing and Community Development Amendments of 1978.
        ``(4) The costs of the rehabilitation of multifamily housing 
    projects (as defined in section 203(b) of the Housing and Community 
    Development Amendments of 1978) upon disposition by the 
    Secretary.''.

                     TITLE II_OTHER PROGRAM REFORMS
            Subtitle A_Home Investment Partnerships Program

SEC. 201. PARTICIPATION BY STATE AGENCIES OR INSTRUMENTALITIES.

    Section 104(2) of the Cranston-Gonzalez National Affordable Housing 
Act (42 U.S.C. 12704(2)) is amended_
        (1) by striking ``and'' after ``Columbia,''; and
        (2) by inserting before the period at the end the following: 
    ``, or any agency or instrumentality thereof that is established 
    pursuant to legislation and designated by the chief executive 
    officer to act on behalf of the State with regard to the provisions 
    of this Act''.

SEC. 202. SIMPLIFICATION OF PROGRAM-WIDE INCOME TARGETING FOR RENTAL 
              HOUSING.

    Section 214(1) of the Cranston-Gonzalez National Affordable Housing 
Act (42 U.S.C. 12744(1)) is amended_
        (1) in subparagraph (A)_
            (A) by striking ``such funds are invested with respect to 
        dwelling units that are occupied by'' and inserting ``(i) the 
        families receiving such rental assistance are''; and
            (B) by striking ``, and'' and inserting ``, or (ii) the 
        dwelling units assisted with such funds are occupied by 
        families having such incomes; and''; and
        (2) in subparagraph (B)_
            (A) by striking ``such funds are invested with respect to 
        dwelling units that are occupied by'' and inserting ``(i) the 
        families receiving such rental assistance are''; and
            (B) by inserting before the semicolon at the end the 
        following: ``, or (ii) the dwelling units assisted with such 
        funds are occupied by such households''.

SEC. 203. HOMEOWNERSHIP UNITS.

    (a) Removal of First-Time Homebuyer Requirement._Section 215(b) of 
the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 
12745(b)) is amended_
        (1) by striking paragraph (3); and
        (2) by redesignating paragraphs (4) and (5) as paragraphs (3) 
    and (4), respectively.
    (b) Simplification of Resale Provisions._Section 215(b)(3)(B) of 
the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 
12745(b)(3)(B)), as so redesignated by subsection (a) of this section, 
is amended by striking ``subsection'' and inserting ``title''.

SEC. 204. SIMPLIFICATION OF MATCHING REQUIREMENTS.

    Section 220(a) of the Cranston-Gonzalez National Affordable Housing 
Act (42 U.S.C. 12750(a)) is amended to read as follows:
    ``(a) Contribution._Each participating jurisdiction shall make 
contributions to housing that qualifies as affordable housing under 
this title that total, throughout a fiscal year, not less than 25 
percent of the funds drawn from the jurisdiction's HOME Investment 
Trust Fund in such fiscal year. Such contributions shall be in addition 
to any amounts made available under section 216(3)(A)(ii).''.

SEC. 205. REPEAL OF SEPARATE AUDIT REQUIREMENT.

    Section 283 of the Cranston-Gonzalez National Affordable Housing 
Act (42 U.S.C. 12833) is amended_
        (1) by striking the section designation and heading and 
    inserting the following:

``SEC. 283. AUDITS BY COMPTROLLER GENERAL.'';

        (2) by striking subsection (a);
        (3) in subsection (b)_
            (A) by striking ``(b) Audits by the Comptroller General._
        '';
            (B) by redesignating paragraphs (1) and (2) as subsections 
        (a) and (b), respectively; and
            (C) by moving subsections (a) and (b), as so redesignated 
        by subparagraph (B), 2 ems to the left so that such subsections 
        are flush with the left margin; and
        (4) in subsection (a), as so redesignated by paragraph (3)(B), 
    by striking the second sentence.

SEC. 206. ENVIRONMENTAL REVIEW REQUIREMENTS.

    Section 288 of the Cranston-Gonzalez National Affordable Housing 
Act (42 U.S.C. 12838) is amended_
        (1) in subsection (a)_
            (A) in the first sentence, by striking ``participating 
        jurisdictions'' and inserting ``jurisdictions, Indian tribes, 
        or insular areas''; and
            (B) by adding at the end the following new sentences: ``The 
        regulations shall provide_
        ``(1) for the monitoring of the environmental reviews performed 
    under this section;
        ``(2) in the discretion of the Secretary, to facilitate 
    training for the performance of such reviews; and
        ``(3) for the suspension or termination of the assumption under 
    this section.
The Secretary's duty under the preceding sentence shall not be 
construed to limit or reduce any responsibility assumed by a State or 
unit of general local government with respect to any particular release 
of funds.'';
        (2) in the first sentence of subsection (b), by striking 
    ``participating jurisdiction'' and inserting ``jurisdiction, Indian 
    tribe, or insular area'';
        (3) in subsection (c)(4)(B), by striking ``participating 
    jurisdiction'' and inserting ``jurisdiction, Indian tribe, or 
    insular area''; and
        (4) in subsection (d), by striking ``Assistance to a State._In 
    the case of assistance to States'' and inserting the following: 
    ``Assistance to Units of General Local Government From a State._In 
    the case of assistance to units of general local government from a 
    State''.

SEC. 207. USE OF CDBG FUNDS FOR HOME PROGRAM EXPENSES.

    (a) Administrative Expenses._Section 105(a)(13) of the Housing and 
Community Development Act of 1974 (42 U.S.C. 5305(a)(13)) is amended by 
inserting after ``charges related to'' the following: ``(A) 
administering the HOME program under title II of the Cranston-Gonzalez 
National Affordable Housing Act; and (B)''.
    (b) Project Delivery Costs._Section 105(a)(21) of the Housing and 
Community Development Act of 1974 (42 U.S.C. 5305(a)(21)) is amended_
        (1) by inserting ``in connection with tenant-based rental 
    assistance and affordable housing projects assisted under title II 
    of the Cranston-Gonzalez National Affordable Housing Act'' after 
    ``housing counseling''; and
        (2) by striking ``authorized'' and all that follows through 
    ``any law'' and inserting ``assisted under title II of the 
    Cranston-Gonzalez National Affordable Housing Act''.

SEC. 208. FLEXIBILITY OF HOME PROGRAM FOR DISASTER AREAS.

    Title II of the Cranston-Gonzalez National Affordable Housing Act 
(42 U.S.C. 12721 et seq.) is amended by adding at the end the following 
new section:

``SEC. 290. SUSPENSION OF REQUIREMENTS FOR DISASTER AREAS.

    ``For funds designated under this title by a recipient to address 
the damage in an area for which the President has declared a disaster 
under title IV of the Robert T. Stafford Disaster Relief and Emergency 
Assistance Act, the Secretary may suspend all statutory requirements 
for purposes of assistance under this title for that area, except for 
those related to public notice of funding availability, 
nondiscrimination, fair housing, labor standards, environmental 
standards, and low-income housing affordability.''.

SEC. 209. APPLICABILITY AND REGULATIONS.

    The amendments made by this title shall apply with respect to any 
amounts made available to carry out title II of the Cranston-Gonzalez 
National Affordable Housing Act after the date of the enactment of this 
Act and any amounts made available to carry out such title before such 
date of enactment that remain uncommitted on such date. The Secretary 
shall issue any regulations necessary to carry out the amendments made 
by this title not later than the expiration of the 45-day period 
beginning on the date of the enactment of this Act.

                 Subtitle B_HOPE Homeownership Program

SEC. 221. MATCHING REQUIREMENT UNDER HOPE FOR HOMEOWNERSHIP OF SINGLE 
              FAMILY HOMES PROGRAM.

    Section 443(c)(1) of the Cranston-Gonzalez National Affordable 
Housing Act (42 U.S.C. 12893(c)(1)) is amended by striking ``33 
percent'' and inserting ``25 percent''.

             Subtitle C_Community Development Block Grants

SEC. 231. SECTION 108 ELIGIBLE ACTIVITIES.

    The first sentence of section 108(a) of the Housing and Community 
Development Act of 1974 (42 U.S.C. 5308(a)) is amended_
        (1) by striking ``or'' after ``section 105(a);''; and
        (2) by inserting before the period the following: ``; (5) the 
    acquisition, construction, reconstruction, or installation of 
    public facilities (except for buildings for the general conduct of 
    government); or (6) in the case of colonias (as such term is 
    defined in section 916 of the Cranston-Gonzalez National Affordable 
    Housing Act), public works and site or other improvements''.

SEC. 232. ECONOMIC DEVELOPMENT GRANTS.

    (a) Grants._
        (1) In general._Section 108 of the Housing and Community 
    Development Act of 1974 (42 U.S.C. 5308) is amended by adding at 
    the end the following new subsection:
    ``(q) Economic Development Grants._
        ``(1) Authorization._The Secretary may make grants in 
    connection with notes or other obligations guaranteed under this 
    section to eligible public entities for the purpose of enhancing 
    the security of loans guaranteed under this section or improving 
    the viability of projects financed with loans guaranteed under this 
    section.
        ``(2) Eligible activities._Assistance under this subsection may 
    be used only for the purposes of and in conjunction with projects 
    and activities assisted under subsection (a).
        ``(3) Applications._Applications for assistance under this 
    subsection may be submitted only by eligible public entities, and 
    shall be in the form and in accordance with the procedures 
    established by the Secretary. Eligible public entities may apply 
    for grants only in conjunction with requests for guarantees under 
    subsection (a).
        ``(4) Selection criteria._The Secretary shall establish 
    criteria for awarding assistance under this subsection. Such 
    criteria shall include_
            ``(A) the extent of need for such assistance;
            ``(B) the level of distress in the community to be served 
        and in the jurisdiction applying for assistance;
            ``(C) the quality of the plan proposed and the capacity or 
        potential capacity of the applicant to successfully carry out 
        the plan; and
            ``(D) such other factors as the Secretary determines to be 
        appropriate.''.
        (2) Conforming amendment._Title I of the Housing and Community 
    Development Act of 1974 (42 U.S.C. 5301 et seq.) is amended_
            (A) in section 101(c) in the second sentence, by inserting 
        ``or a grant'' after ``guarantee''; and
            (B) in section 104(b)(3), by inserting ``or a grant'' after 
        ``guarantee''.
    (b) Use of UDAG Recaptures._Section 119(o) of the Housing and 
Community Development Act of 1974 (42 U.S.C. 5318(o)) is amended by 
inserting before the period the following: ``, except that amounts 
available to the Secretary for use under this subsection as of October 
1, 1993, and amounts released to the Secretary pursuant to subsection 
(t) may be used to provide grants under section 108(q).''.
    (c) UDAG Retention Program._
        (1) Amendment._Section 119 of the Housing and Community 
    Development Act of 1974 (42 U.S.C. 5318) is amended by adding at 
    the end the following new subsection:
    ``(t) UDAG Retention Program._If a grant or a portion of a grant 
under this section remains unexpended upon the issuance of a notice 
implementing this subsection, the grantee may enter into an agreement, 
as provided under this subsection, with the Secretary to receive a 
percentage of the grant amount and relinquish all claims to the balance 
of the grant within 90 days of the issuance of notice implementing this 
subsection (or such later date as the Secretary may approve). The 
Secretary shall not recapture any funds obligated pursuant to this 
section during a period beginning on the date of enactment of the 
Multifamily Housing Property Disposition Reform Act of 1994 until 90 
days after the issuance of a notice implementing this subsection. A 
grantee may receive as a grant under this subsection_
        ``(1) 33 percent of such unexpended amounts if_
            ``(A) the grantee agrees to expend not less than one-half 
        of the amount received for activities authorized pursuant to 
        section 108(q) and to expend such funds in conjunction with a 
        loan guarantee made under section 108 at least equal to twice 
        the amount of the funds received; and
            ``(B)(i) the remainder of the amount received is used for 
        economic development activities eligible under title I of this 
        Act; and
            ``(ii) except when waived by the Secretary in the case of a 
        severely distressed jurisdiction, not more than one-half of the 
        costs of activities under subparagraph (B) are derived from 
        such unexpended amounts; or
        ``(2) 25 percent of such unexpended amounts if_
            ``(A) the grantee agrees to expend such funds for economic 
        development activities eligible under title I of this Act; and
            ``(B) except when waived by the Secretary in the case of a 
        severely distressed jurisdiction, not more than one-half of the 
        costs of such activities are derived from such unexpended 
        amount.''.
        (2) Implementation._Not later than 10 days after the date of 
    enactment of this Act, the Secretary shall, by notice published in 
    the Federal Register, which shall take effect upon publication, 
    establish such requirements as may be necessary to implement the 
    amendments made by this subsection.

SEC. 233. GUARANTEE OF OBLIGATIONS BACKED BY SECTION 108 LOANS.

    Section 108 of the Housing and Community Development Act of 1974 
(42 U.S.C. 5308) is amended by adding after subsection (q) (as added by 
section 232(a)(1) of this Act) the following new subsection:
    ``(r) Guarantee of Obligations Backed by Loans._
        ``(1) Authority._The Secretary may, upon such terms and 
    conditions as the Secretary considers appropriate, guarantee the 
    timely payment of the principal of and interest on such trust 
    certificates or other obligations as may_
            ``(A) be offered by the Secretary or by any other offeror 
        approved for purposes of this subsection by the Secretary; and
            ``(B) be based on and backed by a trust or pool composed of 
        notes or other obligations guaranteed or eligible for guarantee 
        by the Secretary under this section.
        ``(2) Full faith and credit._To the same extent as provided in 
    subsection (f), the full faith and credit of the United States is 
    pledged to the payment of all amounts that may be required to be 
    paid under any guarantee made by the Secretary under this 
    subsection.
        ``(3) Subrogation._If the Secretary pays a claim under a 
    guarantee made under this section, the Secretary shall be 
    subrogated for all the rights of the holder of the guaranteed 
    certificate or obligation with respect to such certificate or 
    obligation.
        ``(4) Effect of laws._No State or local law, and no Federal 
    law, shall preclude or limit the exercise by the Secretary of_
            ``(A) the power to contract with respect to public 
        offerings and other sales of notes, trust certificates, and 
        other obligations guaranteed under this section upon such terms 
        and conditions as the Secretary deems appropriate;
            ``(B) the right to enforce any such contract by any means 
        deemed appropriate by the Secretary; and
            ``(C) any ownership rights of the Secretary, as applicable, 
        in notes, certificates, or other obligations guaranteed under 
        this section, or constituting the trust or pool against which 
        trust certificates, or other obligations guaranteed under this 
        section, are offered.''.

SEC. 234. FLEXIBILITY OF CDBG PROGRAM FOR DISASTER AREAS.

    Title I of the Housing and Community Development Act of 1974 (42 
U.S.C. 5301 et seq.) is amended by adding at the end the following new 
section:

``SEC. 122. SUSPENSION OF REQUIREMENTS FOR DISASTER AREAS.

    ``For funds designated under this title by a recipient to address 
the damage in an area for which the President has declared a disaster 
under title IV of the Robert T. Stafford Disaster Relief and Emergency 
Assistance Act, the Secretary may suspend all requirements for purposes 
of assistance under section 106 for that area, except for those related 
to public notice of funding availability, nondiscrimination, fair 
housing, labor standards, environmental standards, and requirements 
that activities benefit persons of low- and moderate-income.''.

                     TITLE III_TECHNICAL AMENDMENTS

SEC. 301. DEFINITION OF ``FAMILIES''.

    The first sentence of section 3(b)(3)(B) of the United States 
Housing Act of 1937 (42 U.S.C. 1437a(b)(3)(B)) is amended by striking 
``means families with children'' and inserting ``includes families with 
children and''.

SEC. 302. ELIMINATION OF REQUIREMENT TO IDENTIFY CIAP REPLACEMENT 
              NEEDS.

    Section 14 of the United States Housing Act of 1937 (42 U.S.C. 
1437l) is amended_
        (1) in subsection (d)_
            (A) by striking paragraph (2);
            (B) in paragraph (4), in the matter preceding subparagraph 
        (A)_
                (i) by striking ``and replacements,''; and
                (ii) by striking ``(1), (2), and (3)'' and inserting 
            ``(1) and (2)''; and
            (C) by redesignating paragraphs (3) and (4) as paragraphs 
        (2) and (3), respectively; and
        (2) in subsection (f)(1)_
            (A) in subparagraph (A), by striking ``(d)(4)(A)'' and 
        inserting ``(d)(3)(A)'';
            (B) by striking subparagraph (B);
            (C) in subparagraph (C), by striking ``(d)(4)'' and 
        inserting ``(d)(3)'';
            (D) in subparagraph (D)_
                (i) by striking ``(1), (2), and (3)'' and inserting 
            ``(1) and (2)''; and
                (ii) by striking ``(d)(4)'' and inserting ``(d)(3)''; 
            and
            (E) by redesignating subparagraphs (C) and (D), as so 
        amended, as subparagraphs (B) and (C), respectively;
        (3) in subsection (g), by striking ``(d)(4)'' and inserting 
    ``(d)(3)''; and
        (4) in subsection (h)(2), by striking ``(d)(4)'' and inserting 
    ``(d)(3)''.

SEC. 303. PROJECT-BASED ACCOUNTING.

    Section 6(c)(4)(E) of the United States Housing Act of 1937 (42 
U.S.C. 1437d(c)(4)(E)) is amended by striking ``250'' and inserting 
``500''.

SEC. 304. OPERATING SUBSIDY ADJUSTMENTS FOR ANTICIPATED FRAUD 
              RECOVERIES.

    Section 9(a) of the United States Housing Act of 1937 (42 U.S.C. 
1437g(a)) is amended by adding at the end the following new paragraph:
    ``(4) Adjustments to a public housing agency's operating subsidy 
made by the Secretary under this section shall reflect actual changes 
in rental income collections resulting from the application of section 
904 of the Stewart B. McKinney Homeless Assistance Amendments Act of 
1988.''.

SEC. 305. ENVIRONMENTAL REVIEW PROVISIONS.

    (a) Lead-Based Paint Hazard Reduction._Section 1011 of the Housing 
and Community Development Act of 1992 (42 U.S.C. 4852) is amended_
        (1) by redesignating subsection (o) as subsection (p); and
        (2) by inserting after subsection (n) the following new 
    subsection:
    ``(o) Environmental Review._
        ``(1) In general._For purposes of environmental review, 
    decisionmaking, and action pursuant to the National Environmental 
    Policy Act of 1969 and other provisions of law that further the 
    purposes of such Act, a grant under this section shall be treated 
    as assistance under the HOME Investment Partnership Act, 
    established under title II of the Cranston-Gonzalez National 
    Affordable Housing Act, and shall be subject to the regulations 
    promulgated by the Secretary to implement section 288 of such Act.
        ``(2) Applicability._This subsection shall apply to_
            ``(A) grants awarded under this section; and
            ``(B) grants awarded to States and units of general local 
        government for the abatement of significant lead-based paint 
        and lead dust hazards in low- and moderate-income owner-
        occupied units and low-income privately owned rental units 
        pursuant to title II of the Departments of Veterans Affairs and 
        Housing and Urban Development, and Independent Agencies 
        Appropriations Act, 1992 (Public Law 102-139, 105 Stat. 
        736).''.
    (b) Programs Under United States Housing Act of 1937._Title I of 
the United States Housing Act of 1937 (42 U.S.C. 1437 et seq.) is 
amended by adding at the end the following new section:

``SEC. 26. ENVIRONMENTAL REVIEWS.

    ``(a) In General._
        ``(1) Release of funds._In order to assure that the policies of 
    the National Environmental Policy Act of 1969 and other provisions 
    of law which further the purposes of such Act (as specified in 
    regulations issued by the Secretary) are most effectively 
    implemented in connection with the expenditure of funds under this 
    title, and to assure to the public undiminished protection of the 
    environment, the Secretary may, under such regulations, in lieu of 
    the environmental protection procedures otherwise applicable, 
    provide for the release of funds for projects or activities under 
    this title, as specified by the Secretary upon the request of a 
    public housing agency (including an Indian housing authority) under 
    this section, if the State or unit of general local government, as 
    designated by the Secretary in accordance with regulations, assumes 
    all of the responsibilities for environmental review, 
    decisionmaking, and action pursuant to such Act, and such other 
    provisions of law as the regulations of the Secretary may specify, 
    which would otherwise apply to the Secretary with respect to the 
    release of funds.
        ``(2) Implementation._The Secretary, after consultation with 
    the Council on Environmental Quality, shall issue such regulations 
    as may be necessary to carry out this section. Such regulations 
    shall specify the programs to be covered.
    ``(b) Procedure._The Secretary shall approve the release of funds 
subject to the procedures authorized by this section only if, not less 
than 15 days prior to such approval and prior to any commitment of 
funds to such projects or activities, the public housing agency 
(including an Indian housing authority) has submitted to the Secretary 
a request for such release accompanied by a certification of the State 
or unit of general local government which meets the requirements of 
subsection (c). The Secretary's approval of any such certification 
shall be deemed to satisfy the Secretary's responsibilities under the 
National Environmental Policy Act of 1969 and such other provisions of 
law as the regulations of the Secretary specify insofar as those 
responsibilities relate to the release of funds which are covered by 
such certification.
    ``(c) Certification._A certification under the procedures 
authorized by this section shall_
        ``(1) be in a form acceptable to the Secretary;
        ``(2) be executed by the chief executive officer or other 
    officer of the State or unit of general local government who 
    qualifies under regulations of the Secretary;
        ``(3) specify that the State or unit of general local 
    government under this section has fully carried out its 
    responsibilities as described under subsection (a); and
        ``(4) specify that the certifying officer_
            ``(A) consents to assume the status of a responsible 
        Federal official under the National Environmental Policy Act of 
        1969 and each provision of law specified in regulations issued 
        by the Secretary insofar as the provisions of such Act or other 
        such provision of law apply pursuant to subsection (a); and
            ``(B) is authorized and consents on behalf of the State or 
        unit of general local government and himself or herself to 
        accept the jurisdiction of the Federal courts for the purpose 
        of enforcement of his or her responsibilities as such an 
        official.
    ``(d) Approval by States._In cases in which a unit of general local 
government carries out the responsibilities described in subsection 
(c), the Secretary may permit the State to perform those actions of the 
Secretary described in subsection (b) and the performance of such 
actions by the State, where permitted by the Secretary, shall be deemed 
to satisfy the Secretary's responsibilities referred to in the second 
sentence of subsection (b).''.
    (c) Special Projects._
        (1) In general._
            (A) Release of funds._In order to assure that the policies 
        of the National Environmental Policy Act of 1969 and other 
        provisions of law which further the purposes of such Act (as 
        specified in regulations issued by the Secretary) are most 
        effectively implemented in connection with the expenditure of 
        funds for special projects appropriated under an appropriations 
        Act for the Department of Housing and Urban Development, such 
        as special projects under the head ``Annual Contributions for 
        Assisted Housing'' in title II of the Departments of Veterans 
        Affairs and Housing and Urban Development, and Independent 
        Agencies Appropriations Act, 1993, and to assure to the public 
        undiminished protection of the environment, the Secretary of 
        Housing and Urban Development may, under such regulations, in 
        lieu of the environmental protection procedures otherwise 
        applicable, provide for the release of funds for particular 
        special projects upon the request of recipients of special 
        projects assistance, if the State or unit of general local 
        government, as designated by the Secretary in accordance with 
        regulations, assumes all of the responsibilities for 
        environmental review, decisionmaking, and action pursuant to 
        such Act, and such other provisions of law as the regulations 
        of the Secretary specify, that would otherwise apply to the 
        Secretary were the Secretary to undertake such special projects 
        as Federal projects.
            (B) Implementation._The Secretary shall issue regulations 
        to carry out this subsection only after consultation with the 
        Council on Environmental Quality. Such regulations shall_
                (i) provide for monitoring of the performance of 
            environmental reviews under this subsection;
                (ii) in the discretion of the Secretary, provide for 
            the provision or facilitation of training for such 
            performance; and
                (iii) subject to the discretion of the Secretary, 
            provide for suspension or termination by the Secretary of 
            the assumption under subparagraph (A).
            (C) Responsibilities of state or unit of general local 
        government._The Secretary's duty under subparagraph (B) shall 
        not be construed to limit any responsibility assumed by a State 
        or unit of general local government with respect to any 
        particular release of funds under subparagraph (A).
        (2) Procedure._The Secretary shall approve the release of funds 
    for projects subject to the procedures authorized by this 
    subsection only if, not less than 15 days prior to such approval 
    and prior to any commitment of funds to such projects, the 
    recipient submits to the Secretary a request for such release, 
    accompanied by a certification of the State or unit of general 
    local government which meets the requirements of paragraph (3). The 
    Secretary's approval of any such certification shall be deemed to 
    satisfy the Secretary's responsibilities under the National 
    Environmental Policy Act of 1969 and such other provisions of law 
    as the regulations of the Secretary specify insofar as those 
    responsibilities relate to the releases of funds for special 
    projects to be carried out pursuant thereto which are covered by 
    such certification.
        (3) Certification._A certification under the procedures 
    authorized by this subsection shall_
            (A) be in a form acceptable to the Secretary;
            (B) be executed by the chief executive officer or other 
        officer of the State or unit of general local government who 
        qualifies under regulations of the Secretary;
            (C) specify that the State or unit of general local 
        government under this subsection has fully carried out its 
        responsibilities as described under paragraph (1); and
            (D) specify that the certifying officer_
                (i) consents to assume the status of a responsible 
            Federal official under the National Environmental Policy 
            Act of 1969 and each provision of law specified in 
            regulations issued by the Secretary insofar as the 
            provisions of such Act or other such provision of law apply 
            pursuant to paragraph (1); and
                (ii) is authorized and consents on behalf of the State 
            or unit of general local government and himself or herself 
            to accept the jurisdiction of the Federal courts for the 
            purpose of enforcement of the responsibilities as such an 
            official.
        (4) Approval by states._In cases in which a unit of general 
    local government carries out the responsibilities described in 
    paragraph (1), the Secretary may permit the State to perform those 
    actions of the Secretary described in paragraph (2) and the 
    performance of such actions by the State, where permitted by the 
    Secretary, shall be deemed to satisfy the Secretary's 
    responsibilities referred to in the second sentence of paragraph 
    (2).

SEC. 306. CORRECTION OF FHA MULTIFAMILY MORTGAGE LIMITS.

    The National Housing Act (12 U.S.C. 1701 et seq.) is amended in 
sections 207(c)(3), 213(b)(2), 220(d)(3)(B)(iii), and 234(e)(3) by 
striking ``$59,160'' each place it appears and inserting ``$56,160''.

SEC. 307. AMENDMENTS TO FHA MULTIFAMILY RISK-SHARING AND HOUSING 
              FINANCE AGENCY PILOT PROGRAMS.

    (a) Risk-Sharing Pilot Program._Section 542(b) of the Housing and 
Community Development Act of 1992 (12 U.S.C. 1707 note) is amended_
        (1) by striking paragraphs (1) and (2) and inserting the 
    following new paragraphs:
        ``(1) In general._The Secretary shall carry out a pilot program 
    in conjunction with qualified participating entities to determine 
    the effectiveness of Federal credit enhancement for loans for 
    affordable multifamily housing through a system of risk-sharing 
    agreements with such entities.
        ``(2) Program requirements._
            ``(A) In general._In carrying out the pilot program under 
        this subsection, the Secretary shall enter into risk-sharing 
        agreements with qualified participating entities.
            ``(B) Mortgage insurance and reinsurance._Agreements under 
        subparagraph (A) may provide for (i) mortgage insurance through 
        the Federal Housing Administration of loans for affordable 
        multifamily housing originated by or through, or purchased by, 
        qualified participating entities, and (ii) reinsurance, 
        including reinsurance of pools of loans, on affordable 
        multifamily housing. In entering into risk-sharing agreements 
        under this subsection covering mortgages, the Secretary may 
        give preference to mortgages that are not already in the 
        portfolios of qualified participating entities.
            ``(C) Risk apportionment._Agreements entered into under 
        this subsection between the Secretary and a qualified 
        participating entity shall specify the percentage of loss that 
        each of the parties to the agreement will assume in the event 
        of default of the insured or reinsured multifamily mortgage. 
        Such agreements shall specify that the qualified participating 
        entity and the Secretary shall share any loss in accordance 
        with the risk-sharing agreement.
            ``(D) Reimbursement capacity._Agreements entered into under 
        this subsection between the Secretary and a qualified 
        participating entity shall provide evidence acceptable to the 
        Secretary of the capacity of such entity to fulfill any 
        reimbursement obligations made pursuant to this subsection. 
        Evidence of such capacity which may be considered by the 
        Secretary may include_
                ``(i) a pledge of the full faith and credit of a 
            qualified participating entity to fulfill any obligations 
            entered into by the entity;
                ``(ii) reserves pledged or otherwise restricted by the 
            qualified participating entity in an amount equal to an 
            agreed upon percentage of the loss assumed by the entity 
            under subparagraph (C);
                ``(iii) funds pledged through a State or local 
            guarantee fund; or
                ``(iv) any other form of evidence mutually agreed upon 
            by the Secretary and the qualified participating entity.
            ``(E) Underwriting standards._The Secretary shall allow any 
        qualified participating entity to use its own underwriting 
        standards and loan terms and conditions for purposes of 
        underwriting loans to be insured under this subsection, except 
        as provided in this section, without further review by the 
        Secretary, except that the Secretary may impose additional 
        underwriting criteria and loan terms and conditions for 
        contractual agreements where the Secretary retains more than 50 
        percent of the risk of loss. Any financing permitted on 
        property insured under this subsection other than the first 
        mortgage shall be expressly subordinate to the insured 
        mortgage.
            ``(F) Authority of secretary._The Secretary, upon request 
        of a qualified participating entity, may insure or reinsure and 
        make commitments to insure or reinsure under this section any 
        mortgage, advance, loan, or pool of mortgages otherwise 
        eligible under this section, pursuant to a risk-sharing 
        agreement providing that the qualified participating entity 
        will carry out (under a delegation or otherwise, and with or 
        without compensation, but subject to audit, exception, or 
        review requirements) such credit approval, appraisal, 
        inspection, issuance of commitments, approval of insurance of 
        advances, cost certification, servicing, property disposition, 
        or other functions as the Secretary shall approve as consistent 
        with the purpose of this section. All appraisals of property 
        for mortgage insurance under this section shall be completed by 
        a Certified General Appraiser in accordance with the Uniform 
        Standards of Professional Appraisal Practice.
            ``(G) Disclosure of records._Qualified participating 
        entities shall make available to the Secretary or the 
        Secretary's designee, at the Secretary's request, such 
        financial and other records as the Secretary deems necessary 
        for purposes of review and monitoring for the program under 
        this section.'';
        (2) in paragraph (4), by striking ``financial institutions and 
    entities to be eligible to enter into reinsurance agreements'' and 
    inserting ``eligibility under this subsection of qualified 
    participating entities'';
        (3) by striking paragraph (8) and inserting the following new 
    paragraph:
        ``(11) Implementation._The Secretary shall take any 
    administrative actions necessary to initiate the pilot program 
    under this subsection.''; and
        (4) by inserting after paragraph (7) the following new 
    paragraphs:
        ``(8) Prohibition on ginnie mae securitization._The Government 
    National Mortgage Association shall not securitize any multifamily 
    loans insured or reinsured under this subsection.
        ``(9) Qualification as affordable housing._Multifamily housing 
    securing loans insured or reinsured under this subsection shall 
    qualify as affordable only if the housing is occupied by families 
    and bears rents not greater than the gross rent for rent-restricted 
    residential units as determined under section 42(g) of the Internal 
    Revenue Code of 1986.
        ``(10) Certification of subsidy layering compliance._The 
    requirements of section 102(d) of the Department of Housing and 
    Urban Development Reform Act of 1989 may be satisfied in connection 
    with a commitment to insure a mortgage under this subsection by a 
    certification by a housing credit agency (including an entity 
    established by a State that provides mortgage insurance) to the 
    Secretary that the combination of assistance within the 
    jurisdiction of the Secretary and other government assistance 
    provided in connection with a property for which a mortgage is to 
    be insured shall not be any greater than is necessary to provide 
    affordable housing.''.
    (b) Housing Finance Agency Pilot Program._Section 542(c) of the 
Housing and Community Development Act of 1992 (12 U.S.C. 1707 note) is 
amended_
        (1) in paragraph (1), by inserting after ``qualified housing 
    finance agencies'' the following: ``(including entities established 
    by States that provide mortgage insurance)'';
        (2) in paragraph (2)_
            (A) in subparagraph (C), by striking the last sentence and 
        inserting the following: ``Such agreements shall specify that 
        the qualified housing finance agency and the Secretary shall 
        share any loss in accordance with the risk-sharing 
        agreement.''; and
            (B) by adding at the end the following new subparagraph:
            ``(F) Disclosure of records._Qualified housing finance 
        agencies shall make available to the Secretary such financial 
        and other records as the Secretary deems necessary for program 
        review and monitoring purposes.'';
        (3) in paragraph (7)_
            (A) by striking ``very low-income''; and
            (B) by striking ``(2)''; and
        (4) by adding at the end the following new paragraphs:
        ``(9) Environmental and other reviews._
            ``(A) Environmental reviews._
                ``(i) In general._(I) In order to assure that the 
            policies of the National Environmental Policy Act of 1969 
            and other provisions of law which further the purposes of 
            such Act (as specified in regulations issued by the 
            Secretary) are most effectively implemented in connection 
            with the insurance of mortgages under subsection (c)(2), 
            and to assure to the public undiminished protection of the 
            environment, the Secretary may, under such regulations, in 
            lieu of the environmental protection procedures otherwise 
            applicable, provide for agreements to endorse for insurance 
            mortgages under subsection (c)(2) upon the request of 
            qualified housing finance agencies under this subsection, 
            if the State or unit of general local government, as 
            designated by the Secretary in accordance with regulations, 
            assumes all of the responsibilities for environmental 
            review, decisionmaking, and action pursuant to such Act, 
            and such other provisions of law as the regulations of the 
            Secretary may specify, that would otherwise apply to the 
            Secretary with respect to the insurance of mortgages on 
            particular properties.
                ``(II) The Secretary shall issue regulations to carry 
            out this subparagraph only after consultation with the 
            Council on Environmental Quality. Such regulations shall, 
            among other matters, provide_

                    ``(aa) for the monitoring of the performance of 
                environmental reviews under this subparagraph;
                    ``(bb) subject to the discretion of the Secretary, 
                for the provision or facilitation of training for such 
                performance; and
                    ``(cc) subject to the discretion of the Secretary, 
                for the suspension or termination by the Secretary of 
                the qualified housing finance agency's responsibilities 
                under subclause (I).

                ``(III) The Secretary's duty under subclause (II) shall 
            not be construed to limit any responsibility assumed by a 
            State or unit of general local government with respect to 
            any particular property under subclause (I).
                ``(ii) Procedure._The Secretary shall approve a 
            mortgage for the provision of mortgage insurance subject to 
            the procedures authorized by this paragraph only if, not 
            less than 15 days prior to such approval, prior to any 
            approval, commitment, or endorsement of mortgage insurance 
            on the property on behalf of the Secretary, and prior to 
            any commitment by the qualified housing finance agency to 
            provide financing under the risk-sharing agreement with 
            respect to the property, the qualified housing finance 
            agency submits to the Secretary a request for such 
            approval, accompanied by a certification of the State or 
            unit of general local government that meets the 
            requirements of clause (iii). The Secretary's approval of 
            any such certification shall be deemed to satisfy the 
            Secretary's responsibilities under the National 
            Environmental Policy Act of 1969 and such other provisions 
            of law as the regulations of the Secretary specify insofar 
            as those responsibilities relate to the provision of 
            mortgage insurance on the property that is covered by such 
            certification.
                ``(iii) Certification._A certification under the 
            procedures authorized by this paragraph shall_

                    ``(I) be in a form acceptable to the Secretary;
                    ``(II) be executed by the chief executive officer 
                or other officer of the State or unit of general local 
                government who qualifies under regulations of the 
                Secretary;
                    ``(III) specify that the State or unit of general 
                local government under this section has fully carried 
                out its responsibilities as described under clause (i); 
                and
                    ``(IV) specify that the certifying officer consents 
                to assume the status of a responsible Federal official 
                under the National Environmental Policy Act of 1969 and 
                under each provision of law specified in regulations 
                issued by the Secretary insofar as the provisions of 
                such Act or such other provisions of law apply pursuant 
                to clause (i), and is authorized and consents on behalf 
                of the State or unit of general local government and 
                himself or herself to accept the jurisdiction of the 
                Federal courts for the purpose of enforcement of the 
                responsibilities as such an official.

                ``(iv) Approval by states._In cases in which a unit of 
            general local government carries out the responsibilities 
            described in clause (i), the Secretary may permit the State 
            to perform those actions of the Secretary described in 
            clause (ii) and the performance of such actions by the 
            State, where permitted by the Secretary, shall be deemed to 
            satisfy the Secretary's responsibilities referred to in the 
            second sentence of clause (ii).
            ``(B) Lead-based paint poisoning prevention._In carrying 
        out the requirements of section 302 of the Lead-Based Paint 
        Poisoning Prevention Act, the Secretary may provide by 
        regulation for the assumption of all or part of the Secretary's 
        duties under such Act by qualified housing finance agencies, 
        for purposes of this section.
            ``(C) Certification of subsidy layering compliance._The 
        requirements of section 102(d) of the Department of Housing and 
        Urban Development Reform Act of 1989 may be satisfied in 
        connection with a commitment to insure a mortgage under this 
        subsection by a certification by a housing credit agency 
        (including an entity established by a State that provides 
        mortgage insurance) to the Secretary that the combination of 
        assistance within the jurisdiction of the Secretary and other 
        government assistance provided in connection with a property 
        for which a mortgage is to be insured shall not be any greater 
        than is necessary to provide affordable housing.
        ``(10) Definitions._For purposes of this subsection, the 
    following definitions shall apply:
            ``(A) Mortgage._The term `mortgage' means a first mortgage 
        on real estate that is_
                ``(i) owned in fee simple; or
                ``(ii) subject to a leasehold interest that_

                    ``(I) has a term of not less than 99 years and is 
                renewable; or
                    ``(II) has a remaining term that extends beyond the 
                maturity of the mortgage for a period of not less than 
                10 years.

            ``(B) First mortgage._The term `first mortgage' means a 
        single first lien given to secure advances on, or the unpaid 
        purchase price of, real estate, under the laws of the State in 
        which the real estate is located, together with the credit 
        instrument, if any, secured thereby. Any other financing 
        permitted on property insured under this section must be 
        expressly subordinate to the insured mortgage.
            ``(C) Unit of general local government; state._The terms 
        `unit of general local government' and `State' have the same 
        meanings as in section 102(a) of the Housing and Community 
        Development Act of 1974.''.
    (c) Definitions._Section 544 of the Housing and Community 
Development Act of 1992 (12 U.S.C. 1707 note) is amended_
        (1) by striking paragraph (1) and inserting the following new 
    paragraph:
        ``(1) The term `multifamily housing' means housing 
    accommodations on the mortgaged property that are designed 
    principally for residential use, conform to standards satisfactory 
    to the Secretary, and consist of not less than 5 rental units on 1 
    site. These units may be detached, semidetached, row house, or 
    multifamily structures.''; and
        (2) by adding at the end the following new paragraph:
        ``(5) The term `qualified participating entity' means an entity 
    approved by the Secretary for participation in the pilot program 
    under this subsection, which may include_
            ``(A) the Federal National Mortgage Association;
            ``(B) the Federal Home Loan Mortgage Corporation;
            ``(C) State housing finance and mortgage insurance 
        agencies; and
            ``(D) the Federal Housing Finance Board.''.

SEC. 308. SUBSIDY LAYERING REVIEW.

    Section 911 of the Housing and Community Development Act of 1992 
(42 U.S.C. 3545 note) is amended_
        (1) by striking subsection (a) and inserting the following new 
    subsection:
    ``(a) Certification of Subsidy Layering Compliance._The 
requirements of section 102(d) of the Department of Housing and Urban 
Development Reform Act of 1989 may be satisfied in connection with a 
project receiving assistance under a program that is within the 
jurisdiction of the Department of Housing and Urban Development and 
under section 42 of the Internal Revenue Code of 1986 by a 
certification by a housing credit agency to the Secretary, submitted in 
accordance with guidelines established by the Secretary, that the 
combination of assistance within the jurisdiction of the Secretary and 
other government assistance provided in connection with a property for 
which assistance is to be provided within the jurisdiction of the 
Department of Housing and Urban Development and under section 42 of the 
Internal Revenue Code of 1986 shall not be any greater than is 
necessary to provide affordable housing.''; and
        (2) by striking subsection (c) and inserting the following new 
    subsection:
    ``(c) Revocation by Secretary._If the Secretary determines that a 
housing credit agency has failed to comply with the guidelines 
established under subsection (a), the Secretary_
        ``(1) may inform the housing credit agency that the agency may 
    no longer submit certification of subsidy layering compliance under 
    this section; and
        ``(2) shall carry out section 102(d) of the Department of 
    Housing and Urban Development Reform Act of 1989 relating to 
    affected projects allocated a low-income housing tax credit 
    pursuant to section 42 of the Internal Revenue Code of 1986.''.







                               Speaker of the House of Representatives.







                            Vice President of the United States and    
                                               President of the Senate.