[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1311 Introduced in House (IH)]






109th CONGRESS
  1st Session
                                H. R. 1311

     To provide for the construction and renovation of child care 
                  facilities, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             March 15, 2005

    Mrs. McCarthy (for herself and Ms. Ros-Lehtinen) introduced the 
   following bill; which was referred to the Committee on Financial 
                                Services

_______________________________________________________________________

                                 A BILL


 
     To provide for the construction and renovation of child care 
                  facilities, 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 ``Child Care Construction and 
Renovation Act''.

SEC. 2. USE OF COMMUNITY DEVELOPMENT BLOCK GRANTS TO ESTABLISH CHILD 
              CARE FACILITIES.

    Section 105(a) of the Housing and Community Development Act of 1974 
(42 U.S.C. 5305(a)) is amended--
            (1) in paragraph (24), by striking ``and'' at the end;
            (2) in paragraph (25), by striking the period at the end 
        and inserting ``; and''; and
            (3) by adding at the end the following:
            ``(26) the construction and renovation of child care 
        facilities.''.

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

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

``SEC. 257. MORTGAGE INSURANCE FOR CHILD CARE FACILITIES.

    ``(a) Definitions.--In this section:
            ``(1) Child care facility.--The term `child care 
        facility'--
                    ``(A) means a public or private facility that--
                            ``(i) has as its purpose the care and 
                        development of--
                                    ``(I) children who are less than 16 
                                years of age; or
                                    ``(II) school-age children and 
                                youth during non-school hours; and
                            ``(ii) is operated in accordance with all 
                        applicable State and local laws and 
                        regulations; and
                    ``(B) does not include any facility for school-age 
                children that is primarily for use during normal school 
                hours.
            ``(2) Equipment.--The term `equipment' includes--
                    ``(A) machinery, utilities, and built-in equipment, 
                and any necessary enclosure or structure to house them; 
                and
                    ``(B) any other items necessary for the functioning 
                of a particular facility as a child care facility, 
                including necessary furniture, books, and curricular 
                and program materials.
            ``(3) First mortgage.--The term `first mortgage'--
                    ``(A) 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
                    ``(B) includes any mortgage in the form of 1 or 
                more trust mortgages or mortgage indentures or deeds of 
                trust, securing notes, bonds, or other credit 
                instruments, that, by the same instrument or by a 
                separate instrument, creates a security interest in 
                initial equipment, whether or not attached to the 
                realty.
            ``(4) Mortgage.--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.
            ``(5) Mortgagor.--The term `mortgagor' has the meaning 
        given the term in section 207(a).
    ``(b) Insurance of Mortgages.--In order to facilitate the 
establishment and rehabilitation of child care facilities, the 
Secretary may--
            ``(1) insure a mortgage that is secured by a property or 
        project that is--
                    ``(A) a new child care facility, including a new 
                addition to an existing child care facility (regardless 
                of whether the existing facility is being 
                rehabilitated); or
                    ``(B) a substantially rehabilitated child care 
                facility, including equipment to be used in the 
                operation of the facility; and
            ``(2) make a commitment to insure any mortgage described in 
        paragraph (1) before the date of execution or disbursement of 
        the mortgage.
    ``(c) Terms and Conditions.--
            ``(1) Eligible child care facilities.--Each mortgage 
        insured under this section shall be secured by a child care 
        facility for which a certification of compliance has been 
        issued by the Secretary under section 258(c) during the 12-
        month period preceding the date on which the commitment to 
        insure the mortgage is issued under this section.
            ``(2) Approved mortgagor.--
                    ``(A) In general.--Each mortgage insured under this 
                section shall be executed by a mortgagor approved by 
                the Secretary.
                    ``(B) Regulation.--The Secretary may--
                            ``(i) require an approved mortgagor who 
                        executes a mortgage under subparagraph (A) to 
                        be regulated with respect to charges and 
                        methods of financing and, if the mortgagor is a 
                        corporate entity, with respect to capital 
                        structure and rate of return; and
                            ``(ii) as an aid to the regulation of any 
                        mortgagor under clause (i), make such contracts 
                        with and acquire for not more than $100 such 
                        stock or interest in such mortgagor as the 
                        Secretary considers to be necessary.
                    ``(C) Stock or interest.--Any stock or interest 
                purchased under subparagraph (B)(ii) shall be--
                            ``(i) paid for out of the General Insurance 
                        Fund; and
                            ``(ii) redeemed by the mortgagor at par 
                        upon the termination of all obligations of the 
                        Secretary under the insurance.
            ``(3) Principal obligation.--Each mortgage insured under 
        this section 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 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.
            ``(4) Amortization and interest.--Each mortgage insured 
        under this section shall--
                    ``(A) provide for complete amortization by periodic 
                payments under such terms as the Secretary shall 
                prescribe;
                    ``(B) have a maturity date 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.
            ``(5) 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.
            ``(6) Mortgage insurance terms.--Subsections (d), (e), (g), 
        (h), (i), (j), (k), (l), and (n) of section 207 apply to any 
        mortgage insured under this section, except that all references 
        in such subsections to section 207 shall be construed, for 
        purposes of mortgage insurance under this section, to refer to 
        this section.
    ``(d) Mortgage Insurance for Fire Safety Equipment Loans.--
            ``(1) Authority.--The Secretary may, upon such terms and 
        conditions as the Secretary may prescribe, make commitments to 
        insure and insure loans made by financial institutions or other 
        approved mortgagees to child care 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 estimate by the Secretary 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 date 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 facility 
                for which a certification of compliance has been issued 
                by the Secretary under section 258(c) during the 12-
                month period preceding the date on which the commitment 
                to insure is issued under this subsection.
            ``(3) Insurance requirements.--
                    ``(A) Section 2.--Subsections (c), (d), and (h) of 
                section 2 shall apply to any loan insured under this 
                subsection, except that all references in such 
                subsections to `this section' or `this title' shall be 
                construed, for purposes of this subsection, to refer to 
                this subsection.
                    ``(B) Section 220.--Paragraphs (5), (6), (7), (9), 
                and (10) of section 220(h) shall apply to any loan 
                insured under this subsection, except that all 
                references in such paragraphs to home improvement loans 
                shall be construed, for purposes of this subsection, to 
                refer to loans under this subsection.
    ``(e) 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.
    ``(f) Limitation on Insurance Authority.--
            ``(1) Termination.--No mortgage may be insured under this 
        section or section 223(h) after September 30, 2007, except 
        pursuant to a commitment to insure issued on or before such 
        date.
            ``(2) Aggregate principal amount limitation.--
                    ``(A) In general.--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 described in paragraph (1) 
                may not exceed $2,000,000,000.
                    ``(B) Report.--If, on the date described in 
                paragraph (1), the aggregate insurance authority 
                provided under this paragraph has not been fully used, 
                the Secretary of the Treasury shall submit to Congress 
                a report evaluating the need for continued mortgage 
                insurance under this section.
    ``(g) Nondiscrimination Requirement.--
            ``(1) In general.--A child care facility receiving 
        assistance under this title may not discriminate on the basis 
        of race, color, or national origin (to the extent provided in 
        title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d et 
        seq.)), religion (subject to subparagraph (B)), national 
        origin, sex (to the extent provided in title IX of the 
        Education Amendments of 1972 (20 U.S.C. 1681 et seq.)), or 
        disability (to the extent provided in section 504 of the 
        Rehabilitation Act of 1973 (29 U.S.C. 794)), under any program 
        or activity receiving Federal financial assistance under this 
        title.
            ``(2) Facilities of religious organizations.--The 
        prohibition with respect to religion under paragraph (1) shall 
        not apply to a child care facility that is controlled by, or 
        that is closely identified with, the tenets of a particular 
        religious organization, if the application of this paragraph 
        would not be consistent with the religious tenets of such 
        organization.
    ``(h) Liability Insurance.--A child care provider operating a child 
care facility assisted under this section or section 223(h) shall 
obtain and maintain liability insurance in such amounts and subject to 
such requirements as the Secretary considers to be appropriate.
    ``(i) Small Purpose Loans.--
            ``(1) In general.--To the extent that amounts are made 
        available pursuant to subsection (l), the Secretary shall make 
        loans, directly or indirectly, to providers of child care 
        facilities for reconstruction or renovation of such facilities, 
        in accordance with this subsection.
            ``(2) Requirements.--A loan under this subsection--
                    ``(A) may be made only for a child care facility 
                that is financially and operationally viable, as 
                determined under standards established by the 
                Secretary;
                    ``(B) may not have a term to maturity exceeding 7 
                years;
                    ``(C) shall bear interest at a rate established by 
                the Secretary; and
                    ``(D) shall be subject to such other terms and 
                conditions as the Secretary may establish by 
                regulation.
            ``(3) Aggregate loan amount.--The aggregate amount of loans 
        under this subsection to a single provider may not exceed 
        $30,000.
    ``(j) Notification.--The Secretary shall take such actions as may 
be necessary to publicize the availability of the programs for mortgage 
insurance under this section and section 223(h), and the loan program 
under subsection (i) of this section, in a manner that ensures that 
information concerning such programs will be available to child care 
providers throughout the United States.
    ``(k) Regulations.--The Secretary shall--
            ``(1) issue any regulations necessary to carry out this 
        section; and
            ``(2) in carrying out paragraph (1), consult with the 
        Secretary of Health and Human Services with respect to any 
        aspects of the regulations regarding child care facilities.
    ``(l) Authorization of Appropriations.--There is authorized to be 
appropriated to carry out this section $30,000,000 for fiscal year 
2006, to remain available until expended, of which not more than 10 
percent may be used for loans under subsection (i).''.

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

    (a) In General.--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 Facilities.--
            ``(1) Definitions.--In this subsection, the terms that are 
        defined in section 257(a) have the same meanings as in that 
        section.
            ``(2) Authority.--Notwithstanding any other provision of 
        this Act, the Secretary may insure under any section of this 
        title a mortgage executed in connection with--
                    ``(A) the purchase or refinancing of an existing 
                child care facility;
                    ``(B) the purchase of a structure to serve as a 
                child care facility; or
                    ``(C) the refinancing of existing debt of an 
                existing child care facility.
            ``(3) Purchase of existing facilities and structures.--In 
        the case of the purchase under this subsection of an existing 
        child care 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 facility; and
                    ``(B) the facility receives a certification of 
                compliance under section 258(c).
            ``(4) Refinancing of existing facilities.--In the case of 
        refinancing of an existing child care 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 receives a certification of 
                compliance under section 258(c).
            ``(5) Limitation on insurance authority.--The authority of 
        the Secretary to enter into commitments to insure mortgages 
        under this subsection is subject to section 257(f).''.

SEC. 5. 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 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 loans for child care 
        facilities is needed to meet the demand for such facilities.
    (b) Report.--Not later than 2 years after the date of enactment of 
this Act, the Secretary of the Treasury shall submit to Congress a 
report regarding the results of the study conducted under this section.

SEC. 6. TECHNICAL AND FINANCIAL ASSISTANCE GRANTS.

    (a) Definitions.--In this section:
            (1) Child care facility.--The term ``child care facility'' 
        has the meaning given that term in section 257(a) of the 
        National Housing Act, as added by section 3.
            (2) Eligible intermediary.--The term ``eligible 
        intermediary'' means a intermediary organization that--
                    (A) is described in section 501(c)(3) of the 
                Internal Revenue Code of 1986;
                    (B) is exempt from taxation under section 501(a) of 
                such Code; and
                    (C) has demonstrated experience in--
                            (i) financing the construction and 
                        renovation of physical facilities;
                            (ii) providing technical and financial 
                        assistance to child care providers or other 
                        similar entities;
                            (iii) working with businesses (whether 
                        small or large); and
                            (iv) securing private sources for capital 
                        financing; and
            (3) Eligible recipient.--The term ``eligible recipient'' 
        means any--
                    (A) existing or start-up center-based or home-based 
                child care provider; and
                    (B) organization in the process of establishing a 
                center-based or home-based child care program or 
                otherwise seeking to provide child care services.
            (4) Equipment.--The term ``equipment'' has the meaning 
        given that term in section 257(a) of the National Housing Act, 
        as added by section 3.
    (b) Grant Authority.--The Secretary of Housing and Urban 
Development, in consultation with the Secretary of Health and Human 
Services, may award grants on a competitive basis in accordance with 
this section to eligible intermediaries for use in accordance with 
subsections (e) and (f).
    (c) Applications.--To be eligible to receive a grant under this 
section an eligible intermediary shall submit to the Secretary an 
application, in such form and containing such information as the 
Secretary may require.
    (d) Priority.--In awarding grants under this section the Secretary 
shall give a priority to applicants under subsection (c) that serve 
low-income or rural areas.
    (e) Use of Funds.--
            (1) Revolving loan fund.--Each eligible intermediary that 
        receives a grant under this section shall deposit the grant 
        amount into a child care revolving loan fund established by the 
        eligible intermediary.
            (2) Eligible assistance.--Subject to subsection (f), from 
        amounts deposited into the revolving loan fund under paragraph 
        (1), each eligible intermediary shall provide to eligible 
        recipients--
                    (A) financial assistance (in the form of loans, 
                grants, investments, guarantees, interest subsidies, 
                and other appropriate forms of assistance) for the 
                construction of new child care facilities, child care 
                facility planning, and acquisition or improvement of 
                child care facilities or equipment; and
                    (B) technical assistance in obtaining public or 
                private financing for such construction, planning, 
                acquisition, and improvement, including developing and 
                implementing financing resources, options, and plans 
                for such eligible recipients.
            (3) Loan repayments and investment proceeds.--Any amount 
        received by an eligible intermediary from an eligible recipient 
        in the form of loan principal repayment or investment proceeds 
        shall be deposited into the child care revolving fund of the 
        eligible intermediary for redistribution to other eligible 
        recipients in accordance with this section.
    (f) Allocation of Funds.--Of the amounts distributed from the 
revolving loan fund of an eligible intermediary under subsection (e)(2) 
in each fiscal year--
            (1) not less than 50 percent shall be used for financial 
        assistance pursuant to subparagraph (A) of subsection (e)(2), 
        except that the amount made available to any eligible recipient 
        under this paragraph may not exceed 40 percent of the total 
        costs incurred by that eligible recipient in connection with 
        the construction, planning, acquisition, or improvement 
        assisted; and
            (2) the amount remaining after distribution under paragraph 
        (1), shall be used to provide technical assistance pursuant to 
        subparagraph (B) of subsection (e)(2).
    (g) Davis Bacon Act.--The Act of March 3, 1931 (popularly known as 
the Davis-Bacon Act) shall apply to actions taken under this Act.
    (h) Authorization of Appropriations.--There is authorized to be 
appropriated to carry out this section $10,000,000 for each of fiscal 
years 2006 through 2010.
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