[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[S. 2178 Introduced in Senate (IS)]







105th CONGRESS
  2d Session
                                S. 2178

To amend the National Housing Act to authorize the Secretary of Housing 
    and Urban Development to insure mortgages for the acquisition, 
     construction, or substantial rehabilitation of child care and 
  development facilities and to establish the Children's Development 
Commission to certify such facilities for such insurance, and for other 
                               purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             June 16, 1998

 Mr. Kohl (for himself and Mr. D'Amato) introduced the following bill; 
which was read twice and referred to the Committee on Banking, Housing, 
                           and Urban Affairs

_______________________________________________________________________

                                 A BILL


 
To amend the National Housing Act to authorize the Secretary of Housing 
    and Urban Development to insure mortgages for the acquisition, 
     construction, or substantial rehabilitation of child care and 
  development facilities and to establish the Children's Development 
Commission to certify such facilities for such insurance, 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.

    This Act may be cited as the ``Children's Development Commission 
Act''.

SEC. 2. CONGRESSIONAL FINDINGS.

    Congress finds the following:
            (1) The need for quality nursery schools, both full-time 
        and part-time child care centers and after-school programs, 
        after school programs, neighborhood-run mothers-day-out 
        programs, and family child care providers has grown among 
        working parents, and parents who stay at home, who want their 
        children to have access to early childhood education.
            (2) All parents should have access to safe, stimulating, 
        and educational early childhood education programs for their 
        children, whether such programs are carried out in a child care 
        center, a part-time nursery school (including a nursery school 
        operated by a religious organization), or a certified child 
        care provider's home.
            (3) The number of available enrollment opportunities for 
        children to receive quality child care services is not meeting 
        the demand for such services.
            (4) In 1995 there were about 21,000,000 children less than 
        6 years of age, of whom 31 percent were participating in 
        center-based child care services and 14 percent were receiving 
        child care in homes. Between 1992 and 2005 the participation of 
        women 24 to 54 years of age in the labor force is projected to 
        increase from 75 percent to 83 percent.
            (5) In States that have set up a mechanism to provide 
        capital improvements for child care facilities, the demand for 
        services of such facilities still has not been met.
            (6) The United States is behind other western, 
        industrialized countries when it comes to providing child care 
        services. In France, almost 100 percent of all children 3 to 5 
        years of age attend nursery school. In Germany this number is 
        65 to 70 percent. In Japan 90 percent of such children attend 
        some form of preschool care. In all of these countries early 
        childhood care has proven to increase children's development 
        and performance.

SEC. 3. INSURANCE FOR MORTGAGES ON NEW AND REHABILITATED CHILD CARE AND 
              DEVELOPMENT FACILITIES.

    Title II of the National Housing Act (12 U.S.C. 1707 et seq.) is 
amended by adding at the end the following:

     ``mortgage insurance for child care and development facilities

    ``Sec. 257. (a) Purpose.--The purpose of this section is to 
facilitate and assist in the provision and development of licensed 
child care and development facilities.
    ``(b) General Insurance Authority.--The Secretary may insure 
mortgages (including advances on such mortgages during construction) in 
accordance with the provisions of this section and upon such terms and 
conditions as the Secretary may prescribe and may make commitments for 
insurance of such mortgages before the date of their execution or 
disbursement thereon.
    ``(c) Eligible Mortgages.--To carry out the purpose of this 
section, the Secretary may insure any mortgage that covers a new child 
care and development facility, including a new addition to an existing 
child care and development facility (regardless of whether the existing 
facility is being rehabilitated), or a substantially rehabilitated 
child care and development facility, including equipment to be used in 
the operation of the facility, subject to the following conditions:
            ``(1) Approved mortgagor.--The mortgage shall be executed 
        by a mortgagor approved by the Secretary. The Secretary may, in 
        the discretion of the Secretary, require any such mortgagor to 
        be regulated or restricted as to charges and methods of 
        financing and, if the mortgagor is a corporate entity, as to 
        capital structure and rate of return. As an aid to the 
        regulation or restriction of any mortgagor with respect to any 
        of the foregoing matters, the Secretary may make such contracts 
        with and acquire for not more than $100 such stock or interest 
        in such mortgagor as the Secretary may consider necessary. Any 
        stock or interest so purchased shall be paid for out of the 
        General Insurance Fund, and shall be redeemed by the mortgagor 
        at par upon the termination of all obligations of the Secretary 
        under the insurance.
            ``(2) Principal obligation.--The mortgage shall involve a 
        principal obligation in an amount not to exceed 90 percent of 
        the estimated value of the property or project, or 95 percent 
        of the estimated value of the property or project in the case 
        of a mortgagor that is a private nonprofit corporation or 
        association (as such term is defined pursuant to section 
        221(d)(3)), including--
                    ``(A) equipment to be used in the operation of the 
                facility when the proposed improvements are completed 
                and the equipment is installed; or
                    ``(B) a solar energy system (as defined in 
                subparagraph (3) of the last paragraph of section 2(a)) 
                or residential energy conservation measures (as defined 
                in subparagraphs (A) through (G) and (I) of section 
                210(11) of the National Energy Conservation Policy 
                Act), in cases in which the Secretary determines that 
                such measures are in addition to those required under 
                the minimum property standards and will be cost-
                effective over the life of the measure.
            ``(3) Amortization and interest.--The mortgage shall--
                    ``(A) provide for complete amortization by periodic 
                payments under such terms as the Secretary shall 
                prescribe;
                    ``(B) have a maturity satisfactory to the 
                Secretary, but in no event longer than 25 years; and
                    ``(C) bear interest at such rate as may be agreed 
                upon by the mortgagor and the mortgagee, and the 
                Secretary shall not issue any regulations or establish 
                any terms or conditions that interfere with the ability 
                of the mortgagor and mortgagee to determine the 
                interest rate.
    ``(d) Certification by Children's Development Commission.--The 
Secretary may not insure a mortgage under this section unless the 
Children's Development Commission established under section 258 
certifies that the facility is in compliance, or will be in compliance 
not later than 12 months after such certification, with--
            ``(1) any laws, standards, and requirements applicable to 
        such facilities under the laws of the State, municipality, or 
        other unit of general local government in which the facility is 
        or is to be located; and
            ``(2) after the effective date of the standards and 
        requirements established under section 258(c)(2), such 
        standards and requirements.
    ``(e) Release.--The Secretary may consent to the release of a part 
or parts of the mortgaged property or project from the lien of any 
mortgage insured under this section upon such terms and conditions as 
the Secretary may prescribe.
    ``(f) Mortgage Insurance Terms.--The provisions of subsections (d), 
(e), (g), (h), (i), (j), (k), (l), and (n) of section 207 shall apply 
to mortgages insured under this section, except that all references in 
such subsections to section 207 shall be considered, for purposes of 
mortgage insurance under this section, to refer to this section.
    ``(g) Mortgage Insurance for Fire Safety Equipment Loans.--
            ``(1) Authority.--The Secretary may, upon such terms and 
        condition as the Secretary may prescribe, make commitments to 
        insure and insure loans made by financial institutions or other 
        approved mortgagees to child care and development facilities to 
        provide for the purchase and installation of fire safety 
        equipment necessary for compliance with the 1967 edition of the 
Life Safety Code of the National Fire Protection Association (or any 
subsequent edition specified by the Secretary of Health and Human 
Services).
            ``(2) Loan requirements.--To be eligible for insurance 
        under this subsection a loan shall--
                    ``(A) not exceed the Secretary's estimate of the 
                reasonable cost of the equipment fully installed;
                    ``(B) bear interest at such rate as may be agreed 
                upon by the mortgagor and the mortgagee;
                    ``(C) have a maturity satisfactory to the 
                Secretary;
                    ``(D) be made by a financial institution or other 
                mortgagee approved by the Secretary as eligible for 
                insurance under section 2 or a mortgagee approved under 
                section 203(b)(1);
                    ``(E) comply with other such terms, conditions, and 
                restrictions as the Secretary may prescribe; and
                    ``(F) be made with respect to a child care and 
                development facility that complies with the requirement 
                under subsection (d).
            ``(3) Insurance requirements.--The provisions of paragraphs 
        (5), (6), (7), (9), and (10) of section 220(h) shall apply to 
        loans insured under this subsection, except that all references 
        in such paragraphs to home improvement loans shall be 
        considered, for purposes of this subsection, to refer to loans 
        under this subsection. The provisions of subsections (c), (d), 
        and (h) of section 2 shall apply to loans insured under this 
        subsection, except that all references in such subsections to 
        `this section' or `this title' shall be considered, for 
        purposes of this subsection, to refer to this subsection.
    ``(h) Schedules and Deadlines.--The Secretary shall establish 
schedules and deadlines for the processing and approval (or provision 
of notice of disapproval) of applications for mortgage insurance under 
this section.
    ``(i) Definitions.--For the purposes of this section, the following 
definitions shall apply:
            ``(1) Child care and development facility.--The term `child 
        care and development facility' means a public facility, 
        proprietary facility, or facility of a private nonprofit 
        corporation or association that--
                    ``(A) has as its purpose the care and development 
                of children less than 12 years of age; and
                    ``(B) is licensed or regulated by the State in 
                which it is located (or, if there is no State law 
                providing for such licensing and regulation by the 
                State, by the municipality or other political 
                subdivision in which the facility is located).
        The term does not include facilities for school-age children 
        primarily for use during normal school hours. The term includes 
        facilities for training individuals to provide child care and 
        development services.
            ``(2) Equipment.--The term `equipment' includes machinery, 
        utilities, and built-in equipment and any necessary enclosures 
        or structures to house them, and any other items necessary for 
        the functioning of a particular facility as a child care and 
        development facility, including necessary furniture. Such term 
        includes books, curricular, and program materials.
            ``(3) Mortgage; first mortgage; mortgagee.--The term 
        `mortgage' means a first mortgage on real estate in fee simple, 
        or on the interest of either the lessor or lessee thereof under 
        a lease having a period of not less than 7 years to run beyond 
        the maturity date of the mortgage. The term `first mortgage' 
        means such classes of first liens as are commonly given to 
        secure advances (including advances during construction) 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 or instruments (if any) secured thereby, and 
        any mortgage may be in the form of one or more trust mortgages 
        or mortgage indentures or deeds of trust, securing notes, 
        bonds, or other credit instruments, and, by the same instrument 
        or by a separate instrument, may create a security interest in 
        initial equipment, whether or not attached to the realty. The 
        term `mortgagor' has the meaning given the term in section 
        207(a).
    ``(j) Limitation on Insurance Authority.--
            ``(1) Termination.--No mortgage may be insured under this 
        section or section 223(h) after September 30, 2005, except 
        pursuant to a commitment to insure issued on or before such 
        date.
            ``(2) Aggregate principal amount limitation.--The aggregate 
        principal amount of mortgages for which the Secretary enters 
        into commitments to insure under this section or section 
223(h) on or before the date under paragraph (1) may not exceed 
$2,000,000,000. If, upon the date under paragraph (1), the aggregate 
insurance authority provided under this paragraph has not been fully 
used, the Secretary of the Treasury shall submit a report to Congress 
evaluating the need for continued mortgage insurance under this 
section.''.
    ``(k) Regulations.--The Secretary shall issue any regulations 
necessary to carry out this section. In issuing such regulations, the 
Secretary shall consult with the Secretary of Health and Human Services 
with respect to any aspects of the regulations regarding child care and 
development facilities.''.

SEC. 4. INSURANCE FOR MORTGAGES FOR ACQUISITION OR REFINANCING DEBT OF 
              EXISTING CHILD CARE AND DEVELOPMENT FACILITIES.

    Section 223 of the National Housing Act (12 U.S.C. 1715n) is 
amended by adding at the end the following:
    ``(h) Mortgage Insurance for Purchase or Refinancing of Existing 
Child Care and Development Facilities.--
            ``(1) Authority.--Notwithstanding any other provision of 
        this Act, the Secretary may insure under any section of this 
        title a mortgage executed in connection with the purchase or 
        refinancing of an existing child care and development facility, 
        the purchase of a structure to serve as a child care and 
        development facility, or the refinancing of existing debt of an 
        existing child care and development facility.
            ``(2) Purchase of existing facilities and structures.--In 
        the case of the purchase under this subsection of an existing 
        child care and development facility or purchase of an existing 
        structure to serve as such a facility, the Secretary shall 
        prescribe any terms and conditions that the Secretary considers 
        necessary to ensure that--
                    ``(A) the facility or structure purchased continues 
                to be used as a child care and development facility; 
                and
                    ``(B) the facility complies with the same 
                requirements applicable under subsections (d) and (e) 
                of section 257 to facilities having mortgages insured 
                under such section.
            ``(3) Refinancing of existing facilities.--In the case of 
        refinancing of an existing child care and development facility, 
        the Secretary shall prescribe any terms and conditions that the 
        Secretary considers necessary to ensure that--
                    ``(A) the refinancing is used to lower the monthly 
                debt service costs (taking into account any fees or 
                charges connected with such refinancing) of the 
                existing facility;
                    ``(B) the proceeds of any refinancing will be 
                employed only to retire the existing indebtedness and 
                pay the necessary cost of refinancing on the existing 
                facility;
                    ``(C) the existing facility is economically viable; 
                and
                    ``(D) the facility complies with the same 
                requirements applicable under section 257(d) to 
                facilities having mortgages insured under such section.
            ``(4) Definitions.--For purposes of this subsection, the 
        terms defined in section 257(i) shall have the same meanings as 
        provided under such section.
            ``(5) Limitation on insurance authority.--The authority of 
        the Secretary to enter into commitments to insure mortgages 
        under this subsection is subject to the limitations under 
        section 257(j).''.

SEC. 5. CHILDREN'S DEVELOPMENT COMMISSION.

    Title II of the National Housing Act (12 U.S.C. 1707 et seq.) is 
amended by adding at the end (after section 257, as added by section 3 
of this Act) the following:

                  ``children's development commission

    ``Sec. 258. (a) Establishment.--There is hereby established a 
commission to be known as the Children's Development Commission.
    ``(b) Membership.--
            ``(1) Appointment.--The Commission shall be composed of 7 
        members appointed by the President, not later than the 
        expiration of the 3-month period beginning upon the enactment 
        of this section, by and with the advice and consent of the 
        Senate, as follows:
                    ``(A) 1 member shall be appointed from among 3 
                individuals recommended by the Secretary of Housing and 
                Urban Development or the Secretary's designee.
                    ``(B) 1 member shall be appointed from among 3 
                individuals recommended by the Secretary of Health and 
                Human Services or the Secretary's designee.
                    ``(C) 1 member shall be appointed from among 3 
                individuals recommended by the Secretary of the 
                Treasury or the Secretary's designee.
                    ``(D) 4 members shall be appointed from among 12 
                individuals recommended jointly by the Speaker of the 
House of Representatives, the Majority Leader of the Senate, Minority 
Leader of the House of Representatives, the Minority Leader of the 
Senate.
            ``(2) Qualifications of congressionally recommended 
        members.--Of the members appointed under paragraph (1)(D)--
                    ``(A) each shall be an individual who actively 
                participates or is employed in the field of child care 
                and has academic, licensing, or other credentials 
                relating to such participation or employment; and
                    ``(B) not more than 2 may be of the same political 
                party.
            ``(3) Terms.--Each appointed member of the Commission shall 
        serve for a term of 3 years.
            ``(4) Vacancies.--Any member appointed to fill a vacancy 
        occurring before the expiration of the term for which the 
        member's predecessor was appointed shall be appointed only for 
        the remainder of that term. A member may serve after the 
        expiration of that member's term until a successor has taken 
        office. A vacancy in the Commission shall be filled in the 
        manner in which the original appointment was made.
            ``(5) Chairperson.--The chairperson of the Commission shall 
        be designated by the President at the time of appointment.
            ``(6) Quorum.--A majority of the members of the Commission 
        shall constitute a quorum for the transaction of business.
            ``(7) Voting.--Each member of the Commission shall be 
        entitled to 1 vote, which shall be equal to the vote of every 
        other member of the Commission.
            ``(8) Prohibition on additional pay.--Members of the 
        Commission shall serve without compensation, but shall be 
        reimbursed for travel, subsistence, and other necessary 
        expenses incurred in the performance of their duties as members 
        of the Commission.
    ``(c) Functions.--The Commission shall carry out the following 
functions:
            ``(1) Certification of compliance.--The Commission shall 
        collect such information and make such determinations as may be 
        necessary to determine, for purposes of section 257(d), whether 
        child care and development facilities comply, or will be in 
        compliance within 12 months, with--
                    ``(A) any laws, standards, and requirements 
                applicable to such facilities under the laws of the 
                State, municipality, or other unit of general local 
                government in which the facility is or is to be 
                located, and
                    ``(B) after the effective date of the standards and 
                requirements established under paragraph (2), such 
                standards and requirements,
        and shall issue certifications of such compliance.
            ``(2) Establishment of standards.--
                    ``(A) Study.--Not later than 12 months after the 
                date on which appointment of initial membership of the 
                Commission is completed, the Commission, in 
                consultation with the Secretary of Housing and Urban 
                Development and the Secretary of Health and Human 
                Services, shall conduct a study to determine the laws, 
                standards, and requirements referred to in paragraph 
                (1)(A) that are applicable in each State. Taking into 
                consideration the findings of the study, the Secretary 
                shall establish standards and requirements regarding 
                child care and development facilities that are designed 
                to ensure that mortgage insurance is provided under 
                section 257 and section 223(h) only for safe, clean, 
                and healthy facilities that provide appropriate care 
                and development services for children.
                    ``(B) Publication.--The Commission shall issue 
                regulations providing for the standards and 
                requirements established under subparagraph (A) to take 
                effect, for purposes of sections 257(d)(2) and 
                223(h)(2)(B) and paragraph (1)(B) of this section, not 
                later than 18 months after the date of enactment of 
                this section.
            ``(3) Small purpose loans.--The Commission shall, to the 
        extent amounts are made available for such purpose pursuant to 
        subsection (i) and qualified requests are received, make loans, 
        directly or indirectly to providers of child care and 
        development facilities for reconstruction or renovation of such 
        facilities, subject to the following requirements:
                    ``(A) Loans under this paragraph shall be made only 
                for such facilities that are financially and 
                operationally viable, as determined under standards and 
                guidelines to be established by the Commission.
                    ``(B) The aggregate amount of loans made under this 
                paragraph to a single borrower may not exceed $50,000.
                    ``(C) A loan made under this paragraph may not have 
                a term to maturity exceeding 7 years.
                    ``(D) Loans under this paragraph shall bear 
                interest at rates and be made under such other 
                conditions and terms as the Commission shall provide.
            ``(4) Notification.--The Commission shall take such actions 
        as may be necessary to publicize the availability of the 
        programs for mortgage insurance under sections 257 and 223(h) 
        and loans under paragraph (3) of this subsection in a manner 
        that ensures that information concerning such programs will be 
        available to child care providers throughout the United States.
            ``(5) Liability insurance.--Not later than 12 months after 
        the date on which appointment of initial membership of the 
        Commission is completed, the Commission shall establish 
        standards and guidelines, applicable to mortgage insurance 
        under sections 257 and 223(h) and loans under paragraph (3) of 
        this subsection, requiring child care providers operating child 
        care and development facilities assisted under such provisions 
        to obtain and maintain liability insurance in such amounts and 
        subject to such requirements as the Commission considers 
        appropriate.
            ``(6) Research foundation.--Not later than 12 months after 
        the date of enactment of this section, the Commission shall 
        submit a report to Congress recommending a plan for 
        establishing and funding a foundation that is an entity 
        independent of the Commission (but which maintains association 
        with the Commission), the purpose of which shall be--
                    ``(A) to support research relating to child care 
                and development facilities;
                    ``(B) to fund pilot programs to test innovative 
                methods for improving child care; and
                    ``(C) to engage in activities and publish materials 
                to assist persons interested in mortgage insurance 
                under sections 257 and 223(h) and other assistance 
                provided by the Commission.
    ``(d) Nondiscrimination Requirement.--
            ``(1) In general.--The Commission may not certify under 
        subsection (c)(1) or carry out any activities of the Commission 
        with respect to any child care and development facility if the 
        provider of the facility discriminates on account of race, 
        color, religion (subject to paragraph (2)), national origin, 
        sex (to the extent provided in title IX of the Education 
        Amendments of 1972 (20 U.S.C. 1681 et seq.)), or handicapping 
        condition.
            ``(2) Facilities of religious organizations.--The 
        prohibition with respect to religion shall not apply to a child 
        care and development facility which is controlled by or which 
        is closely identified with the tenets of a particular religious 
        organization if the application of this subsection would not be 
        consistent with the religious tenets of such organization.
            ``(3) Certification.--As a condition of certification under 
        subsection (c)(1) and eligibility for a loan under subsection 
        (c)(3), the provider of a child care and development facility 
        shall certify to the Commission that the provider does not 
        discriminate, as required by the provisions of paragraph (1) of 
        this subsection.
    ``(e) Powers.--
            ``(1) Assistance from federal agencies.--The Commission may 
        secure directly from any department or agency of the Federal 
        Government such information as the Commission may require for 
        carrying out its functions. Upon request of the Commission, any 
        such department or agency shall furnish such information.
            ``(2) Assistance from general services administration.--The 
        Administrator of General Services shall provide to the 
        Commission, on a reimbursable basis, such administrative 
        support services as the Commission may request.
            ``(3) Assistance from department of housing and urban 
        development.--Upon the request of the Commission, the Secretary 
        of Housing and Urban Development shall, to the extent possible 
        and subject to the discretion of the Secretary, detail any of 
        the personnel of the Department of Housing and Urban 
        Development, on a nonreimbursable basis, to assist the 
        Commission in carrying out its functions under this section.
            ``(4) Mails.--The Commission may use the United States 
        mails in the same manner and under the same conditions as other 
        Federal agencies.
    ``(f) Staff.--
            ``(1) Executive director.--The Commission shall appoint an 
        executive director of the Board, who shall be compensated at a 
rate fixed by the Commission, but which shall not exceed the rate 
established for level I of the Executive Schedule under title 5, United 
States Code.
            ``(2) Other personnel.--In addition to the executive 
        director, the Commission may appoint and fix the compensation 
        of such personnel as the Commission considers necessary, in 
        accordance with the provisions of title 5, United States Code, 
        governing appointments to the competitive service, and the 
        provisions of chapter 51 and subchapter III of chapter 53 of 
        such title, relating to classification and General Schedule pay 
        rates.
    ``(g) Reports.--Not later than March 31 of each year, the 
Commission shall submit a report to the President and Congress 
regarding the operations and activities of the Commission during the 
preceding calendar year. Each annual report shall include a copy of the 
Commission's financial statements and such information and other 
evidence as is necessary to demonstrate that the activities of the 
Commission during the year for which the report is made. The Commission 
may also submit reports to Congress and the President at such other 
times as the Commission deems desirable.
    ``(h) Definitions.--For purposes of this section, the terms defined 
in section 257(i) shall have the same meanings as provided under such 
section.
    ``(i) Authorization of Appropriations.--There are authorized to be 
appropriated to the Commission to carry out this section $10,000,000 
for fiscal year 1999, to remain available until expended, of which not 
more than $2,500,000 shall be available for administrative costs of the 
Commission and the remainder of which shall be available only for loans 
under subsection (c)(3).''.

SEC. 6. STUDY OF AVAILABILITY OF SECONDARY MARKETS FOR MORTGAGES ON 
              CHILD CARE FACILITIES.

    (a) Study.--The Secretary of the Treasury shall conduct a study of 
the secondary mortgage markets to determine--
            (1) whether such a market exists for purchase of mortgages 
        eligible for insurance under sections 223(h) and 257 of the 
        National Housing Act (as added by this Act);
            (2) whether such a market would affect the availability of 
        credit available for development of child care and development 
        facilities or would lower development costs of such facilities; 
        and
            (3) the extent to which such a market or other activities 
        to provide credit enhancement for child care and development 
        facilities loans is needed to meet the demand for such 
        facilities.
    (b) Report.--The Secretary of the Treasury shall submit to Congress 
a report regarding the results of the study conducted under this 
section not later than the expiration of the 2-year period beginning on 
the date of enactment of this Act.
                                 <all>