[Congressional Record Volume 140, Number 32 (Monday, March 21, 1994)]
[House]
[Page H]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: March 21, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
      MULTIFAMILY HOUSING PROPERTY DISPOSITION REFORM ACT OF 1994

  Mr. GONZALEZ. Mr. Speaker, I move to suspend the rules and pass the 
bill (H.R. 4067) 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, as amended.
  The Clerk read as follows:

                               H.R. 4067

       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 local 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 
     goals 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.''.
  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Texas [Mr. Gonzalez] will be recognized for 20 minutes, and the 
gentlewoman from New Jersey [Mrs. Roukema] will be recognized for 20 
minutes.
  The Chair recognizes the gentleman from Texas [Mr. Gonzalez].
  Mr. GONZALEZ. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, today I rise to offer H.R. 4067, the Multifamily 
Property Disposition Reform Act of 1994, as amended. H.R. 4067, a 
bipartisan measure, amends the multifamily property disposition program 
administered by the Department of Housing and Urban Development and 
provides other technical changes and reforms. The property disposition 
reforms refine and simplify the reforms adopted by the House in H.R. 
3400, the Government Reform and Savings Act, last November. They strike 
a necessary and critical balance among the need to preserve affordable 
rental housing, protect low-income tenants from displacement and 
outlandish rent increases, accelerate the property disposition process 
and save the Federal Government perhaps as much as $475 million.
  These property disposition reforms provide HUD with the flexibility 
it needs to dispose of the backlog of multifamily property in the 
inventory and place disposition efforts within the context of local 
market conditions. The reforms also provide for the first time an array 
of incentives and tools for purchasers of inventory property.
  Although the number of families required to receive section 8 
assistance will be reduced as compared to current law, the reforms do 
provide meaningful displacement protection. Projects will not be sold 
without sufficient subsidy to remain viable over the long haul. And the 
bill requires a 2-year freeze on rents for unassisted very low-income 
tenants whose rents would exceed 30 percent adjusted income after 
disposition and a Federal preference for public housing and section 8 
assistance at the end of that 2-year period.
  I am confident that this approach will not only preserve and maintain 
affordable housing for low-income families, but will accelerate the 
property disposition process that has been at a virtual standstill to 
the real detriment of the low-income families now residing in inventory 
property. At the same time, there will be real budget savings.
  H.R. 4067 also includes reforms and technical changes to prevent 
future defaults in HUD's multifamily properties, to improve the usage 
of the home program funds and the section 108 loan guarantee funds, and 
to clarify several public housing provisions.
  H.R. 4067 enjoys the support, agreement, and encouragement of both 
sides of the aisle, both sides of the Capitol and the administration. I 
urge the adoption of H.R. 4067.
  I particularly want to thank Marge Roukema, Barney Frank, Richard 
Baker, and Joe Kennedy for their help in hammering out these 
provisions.

                              {time}  1230

  Mrs. ROUKEMA. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I rise in support of this suspension legislation 
although I do so with two reservations.
  First, while this legislation does address much needed changes to the 
Department of HUD's multi-family property disposition inventory, it 
does contain some 24 additional provisions which, while not 
controversial and in some cases are technical in nature, were added at 
the insistence of the administration and the other body. They clearly 
do not need to be addressed at this time.
  Second, I am extremely disappointed with the Department of HUD's 
deliberate foot-dragging with respect to the issuance of its rules 
allowing public housing authorities to designate elderly only housing.
  Two years ago, this Congress, recognizing the growing, and often 
dangerous, problem of mixing the elderly with the nonelderly mentally 
ill, handicapped and recovering drug addicts, passed important 
legislation permitting public housing authorities to designate housing 
for elderly only.
  Today, HUD still has not issued its regulations. This is a disgrace. 
It is unfair to our elderly population. It represents an inexcusable 
and unacceptable arrogance and a total disregard for the will of the 
Congress.
  If the chairman and I had not worked so long and hard on this 
property disposition effort, I would recommend the defeat of this bill 
until HUD complied with the law.
  Having said that, let me address the legislation at hand.
  As my colleagues may recall, last fall, both the House and the Senate 
passed legislation, H.R. 3400 and S. 1299 respectively, which among 
other things contained a very detailed reform of the multi-family 
property disposition program designed to help HUD reduce the size of 
its inventory and to help save taxpayer funds. H.R. 3400 was the 
Government Reform and Savings Act which the Senate failed to adopt and 
S. 1299 was an administration housing bill which the House did not 
consider.
  Since that time, and because of the importance of this issue, 
Chairman Gonzalez and I have been working with HUD and the Senate to 
remove provisions from both bills which many, including HUD, considered 
impediments to helping HUD sell these properties and to try and develop 
another bill which we could move on an expedited basis. The bill we are 
considering today represents our best effort to address this 
disposition crisis.
  The management and disposition of HUD's multifamily inventory is one 
of the most pressing problems facing the Agency today. According to the 
GAO, HUD has paid out $1.7 billion in claims on 441 properties from FHA 
insurance funds. These properties, now held in HUD's inventory, have 
incurred more than $288 million in holding costs in fiscal year 1993. 
In addition, there are continuing and additional costs of providing 
rental assistance to those properties HUD holds.
  HUD has, in effect, become a real estate management agency, because 
it has been forced to take over mortgages on low-income properties it 
has subsidized or insured over the past 20 years. HUD has also become a 
slumlord, in some cases, due to the condition of the projects taken 
over and because of HUD's inability to ensure the proper management of 
these properties.
  What has exacerbated the problem to date is that in 1987 Congress 
legislated stringent requirements on the sale of these properties in 
order to preserve and expand the inventory of affordable housing for 
low-income households.
  Unfortunately, and despite that noteworthy goal, two critical factors 
have inhibited HUD's ability to sell these properties.
  First, current law requires HUD to sell all properties it takes over, 
with long-term rental assistance, such as 15-year project based section 
8 assistance. This requirement is very costly.
  Second, to comply with this requirement, HUD would need an estimated 
$5.4 billion in 15-year section 8 budget authority over the next 5 
years to cover these projects. Current fiscal year 1994 appropriations 
for this program were $555 million, an amount which would dispose of 
only 6,733 units. Consider that at the end of 1993, HUD had over 31,000 
units in its inventory and holds over 2,400 mortgages which could fall 
into foreclosure.
  The result has been a real catch-22, and disposition gridlock. The 
law of unintended consequences had taken over.
  On the one hand, HUD must manage and rehabilitate projects for which 
it is not adequately staffed and for which it incurs an annual holding 
cost of some $288 million. And, the Congress has been reluctant to 
provide the necessary funds. On the other hand, HUD cannot sell the 
properties because private investors and real estate managers do not 
want to buy properties which must be 100 percent subsidized.

  The solution to this growing crises is complex. It must balance HUD's 
mission to provide affordable housing for low- and moderate-income 
families with the proper amount of flexibility to allow HUD to sell 
these properties in a effective and efficient manner.
  The legislation before us today must, therefore, be enacted in order 
to revise current law and give HUD the necessary flexibility and tools 
to limit the subsidy requirements for the disposition of the 
properties.
  H.R. 4067 would:
  Permit HUD to sell market rate properties to market rate tenants thus 
ensuring a proper return to the HUD insurance fund.
  Eliminate the requirement that HUD held properties be sold with long-
term rental assistance for every unit.
  It allows the Secretary to lower the sales price to expedite sales.
  It permits state and local governments to have a right of first 
refusal to purchase while permitting private sector and nonprofits to 
purchase properties as well.
  It permits the Secretary the flexibility to provide rehabilitation 
grants, short-term loans, bulk sales and other necessary tools to aid 
in disposition.
  It provides a series of tenant protection.
  This legislation also includes a few other housing-related issues 
which were passed as part of S. 1299 and which are either technical in 
nature or noncontroversial matters.
  These include changes to the HOME Investment Partnership Program, 
including:
  A change in the definition of a ``State'' to allow other designated 
State agencies to receive HOME funds.
  Establishment of a flat 25 percent match for all Home activities.
  A clarification of the first-time homebuyer provisions.
  Permitting recaptured HOME funds through housing sales to be used for 
any eligible program within HOME.
  The bill also includes changes to the Section 108 Loan Guarantee 
Program to allow HUD to pool notes to guarantee certain obligations, to 
extend eligible activities to include public facilities, and to 
authorize recaptured UDAG funds to be distributed as new grants for 
economic development.
  I urge the Members to support this legislation.
  Mr. YATES. Mr. Speaker, will the gentlewoman yield?
  Mrs. ROUKEMA. I yield to the gentleman from Illinois.
  Mr. YATES. Mr. Speaker, as I understand it, tenants who now enjoy 
section 8 housing will be required after 2 years to find new housing 
under section 8. Is that a correct interpretation?
  Mrs. ROUKEMA. Mr. Speaker, reclaiming my time, the rents may go up 
under this law, but they will still be level for section 8 housing. 
Would the chairman like to comment on that? They will still qualify. Is 
that not correct?
  Mr. GONZALEZ. If the gentlewoman will yield, if they have section 8, 
they will still continue.
  Mr. YATES. If the gentlewoman will yield further, will they be able 
to retain their present section 8 housing after a 2-year period?
  Mrs. ROUKEMA. Yes. They will retain their section 8 certificates.
  Mr. YATES. Providing they pay rent increases?
  Mr. GONZALEZ. Mr. Speaker, if the gentlewoman will yield further, not 
necessarily will they be paying rent increases.

                              {time}  1240

  Mrs. ROUKEMA. Reclaiming my time, Mr. Speaker, in response to our 
colleague, I must tell him that this is the most equitable treatment 
for all parties concerned. We cannot continue to hold these properties 
at great expense with nobody really benefiting in the end.
  I would conclude, Mr. Speaker, by saying that there are other 
provisions concerning the market values of the properties. I will not 
go into that now. It will be in the Record.
  But I believe, Mr. Speaker, whether the other technical amendments or 
the particular specifics of this legislation, they should have strong 
bipartisan support. They are noncontroversial and in the best interests 
of all our constituents.
  Mr. Speaker, I reserve the balance of my time.
  Mr. GONZALEZ. Mr. Speaker, I yield such time as he may consume to the 
gentleman from Illinois [Mr. Yates].
  Mr. YATES. Mr. Speaker, I thank the gentleman for yielding time to 
me.
  I was visited this morning by a group of section 8 tenants from my 
district. I understand that such tenants have come in from various 
urban communities all over the country, very much disturbed by this 
bill.
  The way it was explained to me by them, one, this bill has had no 
hearings. And they were not given the opportunity to express their 
opinions on the bill.
  Is that a correct statement?
  Mr. GONZALEZ. Mr. Speaker, will the gentleman yield?
  Mr. YATES. I yield to the gentleman from Texas.
  Mr. GONZALEZ. Mr. Speaker, no, it is not. We have had hearings. We 
certainly have had.
  Mr. YATES. The gentleman has held hearings on this?
  Mr. GONZALEZ. Mr. Speaker, if the gentleman will continue to yield, 
yes, we did.
  The gentleman will recall that in my introductory statement I 
mentioned that this reflected the bill we passed last year.
  In fact, I said, this amends the Multi-family Property Disposition 
Program administered by the Department of Housing and Urban 
Development. And it refines and simplifies the reforms adopted by H.R. 
3400, which we passed out last year.
  Let me say this: The record should show that the gentleman from 
Illinois has been one of the most faithful and strong supporters and 
knowledgeable Members of all of these assisted housing programs, 
particularly since he has quite a number of tenants affected in his 
district. I have been very happy to have received his support during 
the past years, when there were efforts to do the very thing the 
gentleman fears and that these groups fear.
  Unfortunately, I am afraid these groups did not properly prepare 
themselves to advance the cause. I am sure that is the reason I had not 
heard from my distinguished colleagues and beloved friend until this 
moment.
  Mr. YATES. Until this moment.
  Mr. GONZALEZ. Let me assure the gentleman that I would not have stood 
by and abided to see what the gentleman has helped the struggle for be 
cast aside, under no circumstances. I can assure the gentleman that 
this does anchor down the protections that we have in place in the laws 
that we have passed in the immediate past Congress.
  Mr. YATES. Mr. Speaker, may I say to the gentleman that I appreciate 
very much the words he has said about my interest in the problems of 
housing. Like the gentleman, who I know is very much interested in 
providing housing for those who can find no affordable housing on the 
market today because none is being built, no such housing is being 
built. It was represented to me by some of the tenants, and in good 
faith, I am sure, that no hearings had been held on this.
  Mr. GONZALEZ. I am sure.
  Mr. YATES. Let me get this clear. It was represented to me, upon my 
calling the office of one of the members of the gentleman's committee, 
that tenants who now occupy homes under section 8 would not be 
disturbed for 2 years but, after 2 years, they would be required to 
leave their apartments.
  Mr. GONZALEZ. Let me disabuse my colleague on that score. They would 
not.
  Let me add further, the HUD place between a hard rock and a hard 
place is that in the meanwhile these very dwellings will be 
deteriorating to such a point that they will be substandard, if they 
are not already, unless we refine the act. However, should there be any 
problem as HUD goes into this program, remember, we are still working 
on the extension of all of the authorization legislation on affordable 
housing, including this. We have got to extend every one of these bills 
before the end of this fiscal year.
  That is what we are involved in now, to the exclusion of almost 
everything else.
  So the gentleman can rest assured that in a dispassionate and calm 
fashion, the gentleman and I will be able to look this over and, if 
corrections are needed, by golly, we will place them in the 
authorization.
  Mr. YATES. So the chairman is making a statement that the information 
that I had received that section 8 tenants would be required to leave 
their section 8 homes at the end of 2 years under this legislation is 
not correct.
  Mr. GONZALEZ. Mr. Speaker, it is not correct. Let me repeat.
  Mr. YATES. They will not be, under this legislation, there is no 
provision that will require them to leave their homes.
  Mr. GONZALEZ. That is correct. That is right.
  Mrs. ROUKEMA. Mr. Speaker, will the gentleman yield?
  Mr. YATES. I yield to the gentlewoman from New Jersey.
  Mrs. ROUKEMA. Mr. Speaker, I would like to add the point, I agree 
with the explanation that the chairman has given, but I might also 
observe that the chairman has correctly pointed out that we have to 
look to the future of section 8 subsidies and how we can improve that 
program and enlarge it in the future. But as long as we are dealing 
with this terrible drain on the Treasury and on HUD's funds, they 
continue to drain funding and that serves no useful purpose. It brings 
no rewards or awards for low-income people or anyone else. And 
certainly it disadvantages the taxpayer. As long as we are continuing 
this present system, it will continue to inhibit us and hobble us for 
dealing with an expansion of section 8 subsidies in the future.
  I want to be clear this, legislation does not affect the existing 
section 8 subsidies. Under this program, they will continue.
  Mr. YATES. Inasmuch as I have the time, I would say to the 
gentlewoman, I recognize it as having a very substantial effect upon 
the problems of the Treasury and of housing. It is a drain. But these 
people have no place else to live.
  Mrs. ROUKEMA. Mr. Speaker, if the gentleman will continue to yield, 
they will stay in their subsidized apartments. They will not be 
evicted. They will maintain their section 8 subsidies, and they will 
continue the assistance under this program.
  Mr. YATES. I see. And will there be a diminution of section 8 
subsidies in the future under this legislation?
  Mrs. ROUKEMA. Mr. Speaker, the chairman has spoken to this question. 
We hope not. We are trying to find a way out of this dilemma.
  Mr. YATES. Mr. Speaker, will there be a lessening of the amount of 
section 8 housing that will be available under any of the provisions of 
this bill?
  Mr. GONZALEZ. Mr. Speaker, if the gentleman will continue to yield, 
it is not now nor is it contemplated there would be. Rather, we would 
like to see some enhancement in the use of section 8.
  Mr. YATES. Mr. Speaker, I thank the gentleman for his explanation. I 
will be meeting with people who visited me this morning later in the 
day. I want the opportunity to discuss with them at that time and to 
provide the assurances I have received from the chairman and from the 
gentlewoman from New Jersey.
  I may ask for a rollcall vote as a result, in order to do that, if 
the gentleman has no great objection to that. I am sure he does not, in 
view of his views on the legislation.
  Mr. GONZALEZ. Mr. Speaker, the gentleman is a free agent here, a 
Member. I hope he does meet with the folks he has described and explain 
to them the thrust of this legislation.
  Mr. YATES. Mr. Speaker, I thank the gentleman.
  Mrs. ROUKEMA. Mr. Speaker, I yield back the balance of my time.
  Mr. GONZALEZ. Mr. Speaker, I yield back the balance of my time.
  The SPEAKER pro tempore (Mr. Montgomery). The question is on the 
motion offered by the gentleman from Texas [Mr. Gonzalez] that the 
House suspend the rules and pass the bill, H.R. 4067, as amended.
  The question was taken.
  Mr. YATES. Mr. Speaker, I object to the vote on the ground that a 
quorum is not present and make the point of order that a quorum is not 
present.
  The SPEAKER pro tempore. Pursuant to clause 5 of rule I and the 
Chair's prior announcement, further proceedings on this motion will be 
postponed.
  The point of order of no quorum is considered withdrawn.

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