[Congressional Record Volume 140, Number 36 (Friday, March 25, 1994)]
[House]
[Page H]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]
[Congressional Record: March 25, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]
HOUSING AND COMMUNITY DEVELOPMENT ACT OF 1993
Mr. FORD. Mr. President, I ask that the Chair lay before the Senate a
message from the House of Representatives on S. 1299, a bill to reform
requirements for the disposition of multifamily property owned by the
Secretary of Housing and Urban Development, enhance program
flexibility, authorize a program to combat crime, and for other
purposes.
The PRESIDENT pro tempore laid before the Senate the following
message from the House of Representatives:
Resolved, That the bill from the Senate (S. 1299) entitled
``An Act to reform requirements for the disposition of
multifamily property owned by the Secretary of Housing and
Urban Development, enhance program flexibility, authorize a
program to combat crime, and for other purposes'', do pass
with the following amendments:
Strike out all after the enacting clause and insert:
SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the
``Multifamily Housing Property Disposition Reform Act of
1994''.
(b) Table of Contents.--
Sec. 1. Short title and table of contents.
TITLE I--MULTIFAMILY PROPERTY DISPOSITION REFORM
Sec. 101. Multifamily property disposition.
Sec. 102. Repeal of State agency multifamily property disposition
demonstration.
Sec. 103. Preventing mortgage defaults on multifamily housing projects.
Sec. 104. Interest rates on assigned mortgages.
Sec. 105. Authorization of appropriations.
TITLE II--OTHER PROGRAM REFORMS
Subtitle A--Home Investment Partnerships Program
Sec. 201. Participation by State agencies or instrumentalities.
Sec. 202. Simplification of program-wide income targeting for rental
housing.
Sec. 203. Homeownership units.
Sec. 204. Simplification of matching requirements.
Sec. 205. Repeal of separate audit requirement.
Sec. 206. Environmental review requirements.
Sec. 207. Use of CDBG funds for HOME program expenses.
Sec. 208. Flexibility of HOME program for disaster areas.
Sec. 209. Applicability and regulations.
Subtitle B--HOPE Homeownership Program
Sec. 221. Matching requirement under HOPE for homeownership of single
family homes program.
Subtitle C--Community Development Block Grants
Sec. 231. Section 108 eligible activities.
Sec. 232. Economic development grants.
Sec. 233. Guarantee of obligations backed by section 108 loans.
Sec. 234. Flexibility of CDBG program for disaster areas.
TITLE III--TECHNICAL AMENDMENTS
Sec. 301. Definition of ``families''.
Sec. 302. Elimination of requirement to identify CIAP replacement
needs.
Sec. 303. Project-based accounting.
Sec. 304. Operating subsidy adjustments for anticipated fraud
recoveries.
Sec. 305. Environmental review provisions.
Sec. 306. Correction of FHA multifamily mortgage limits.
Sec. 307. Amendments to FHA multifamily risk-sharing and housing
finance agency pilot programs.
Sec. 308. Subsidy layering review.
TITLE I--MULTIFAMILY PROPERTY DISPOSITION REFORM
SEC. 101. MULTIFAMILY PROPERTY DISPOSITION.
(a) Findings.--The Congress finds that--
(1) the portfolio of multifamily housing project mortgages
insured by the FHA is severely troubled and at risk of
default, requiring the Secretary to increase loss reserves
from $5,500,000,000 in 1991 to $11,900,000,000 in 1992 to
cover estimated future losses;
(2) the inventory of multifamily housing projects owned by
the Secretary has more than quadrupled since 1989, and, by
the end of 1994, may exceed 69,000 units;
(3) the cost to the Federal Government of owning and
maintaining multifamily housing projects escalated to
$288,000,000 in fiscal year 1993;
(4) the inventory of multifamily housing projects subject
to mortgages held by the Secretary has increased
dramatically, to more than 2,400 mortgages, and approximately
half of these mortgages, with approximately 219,000 units,
are delinquent;
(5) the inventory of insured and formerly insured
multifamily housing projects is deteriorating, potentially
endangering tenants and neighborhoods; and
(6) the current statutory framework governing the
disposition of multifamily housing projects effectively
impedes the Government's ability to dispose of properties,
protect tenants, and ensure that projects are maintained over
time.
(b) Management and Disposition of Multifamily Housing
Projects.--Section 203 of the Housing and Community
Development Amendments of 1978 (12 U.S.C. 1701z-11) is
amended to read as follows:
``SEC. 203. MANAGEMENT AND DISPOSITION OF MULTIFAMILY HOUSING
PROJECTS.
``(a) Goals.--The Secretary of Housing and Urban
Development shall manage or dispose of multifamily housing
projects that are owned by the Secretary or that are subject
to a mortgage held by the Secretary in a manner that--
``(1) is consistent with the National Housing Act and this
section;
``(2) will protect the financial interests of the Federal
Government; and
``(3) will, in the least costly fashion among reasonable
available alternatives, address the goals of--
``(A) preserving certain housing so that it can remain
available to and affordable by low-income persons;
``(B) preserving and revitalizing residential
neighborhoods;
``(C) maintaining existing housing stock in a decent, safe,
and sanitary condition;
``(D) minimizing the involuntary displacement of tenants;
``(E) maintaining housing for the purpose of providing
rental housing, cooperative housing, and homeownership
opportunities for low-income persons;
``(F) minimizing the need to demolish multifamily housing
projects;
``(G) supporting fair housing strategies; and
``(H) disposing of such projects in a manner consistent
with local housing market conditions.
In determining the manner in which a project is to be managed
or disposed of, the Secretary may balance competing goals
relating to individual projects in a manner that will further
the purposes of this section.
``(b) Definitions.--For purposes of this section:
``(1) Multifamily housing project.--The term `multifamily
housing project' means any multifamily rental housing project
which is, or prior to acquisition by the Secretary was,
assisted or insured under the National Housing Act, or was
subject to a loan under section 202 of the Housing Act of
1959.
``(2) Subsidized project.--The term `subsidized project'
means a multifamily housing project that, immediately prior
to the assignment of the mortgage on such project to, or the
acquisition of such mortgage by, the Secretary, was receiving
any of the following types of assistance:
``(A) Below market interest rate mortgage insurance under
the proviso of section 221(d)(5) of the National Housing Act.
``(B) Interest reduction payments made in connection with
mortgages insured under section 236 of the National Housing
Act.
``(C) Direct loans made under section 202 of the Housing
Act of 1959.
``(D) Assistance in the form of--
``(i) rent supplement payments under section 101 of the
Housing and Urban Development Act of 1965,
``(ii) additional assistance payments under section
236(f)(2) of the National Housing Act,
``(iii) housing assistance payments made under section 23
of the United States Housing Act of 1937 (as in effect before
January 1, 1975), or
``(iv) housing assistance payments made under section 8 of
the United States Housing Act of 1937 (excluding payments
made for tenant-based assistance under section 8),
if (except for purposes of section 183(c) of the Housing and
Community Development Act of 1987) such assistance payments
are made to more than 50 percent of the units in the project.
``(3) Formerly subsidized project.--The term `formerly
subsidized project' means a multifamily housing project owned
by the Secretary that was a subsidized project immediately
prior to its acquisition by the Secretary.
``(4) Unsubsidized project.--The term `unsubsidized
project' means a multifamily housing project owned by the
Secretary that is not a subsidized project or a formerly
subsidized project.
``(5) Affordable.--A unit shall be considered affordable
if--
``(A) for units occupied--
``(i) by very low-income families, the rent does not exceed
30 percent of 50 percent of the area median income, as
determined by the Secretary, with adjustments for smaller and
larger families; and
``(ii) by low-income families other than very low-income
families, the rent does not exceed 30 percent of 80 percent
of the area median income, as determined by the Secretary,
with adjustments for smaller and larger families; or
``(B) the unit, or the family residing in the unit, is
receiving assistance under section 8 of the United States
Housing Act of 1937.
``(6) Low-income families and very low-income families.--
The terms `low-income families' and `very low-income
families' shall have the meanings given the terms in section
3(b) of the United States Housing Act of 1937.
``(7) Preexisting tenant.--The term `preexisting tenant'
means, with respect to a multifamily housing project acquired
pursuant to this section by a purchaser other than the
Secretary at foreclosure or after sale by the Secretary, a
family that resides in a unit in the project immediately
before the acquisition of the project by the purchaser.
``(8) Market area.--The term `market area' means a market
area determined by the Secretary.
``(9) Secretary.--The term `Secretary' means the Secretary
of Housing and Urban Development.
``(c) Disposition of Property.--
``(1) Disposition to purchasers.--In carrying out this
section, the Secretary may dispose of a multifamily housing
project owned by the Secretary on a negotiated, competitive
bid, or other basis, on such terms as the Secretary deems
appropriate considering the low-income character of the
project and consistent with the goals in subsection (a), only
to a purchaser determined by the Secretary to be capable of--
``(A) satisfying the conditions of the disposition plan
developed under paragraph (2) for the project;
``(B) implementing a sound financial and physical
management program that is designed to enable the project to
meet anticipated operating and repair expenses to ensure that
the project will remain in decent, safe, and sanitary
condition and in compliance with any standards under
applicable State or local laws, rules, ordinances, or
regulations relating to the physical condition of the housing
and any such standards established by the Secretary;
``(C) responding to the needs of the tenants and working
cooperatively with tenant organizations;
``(D) providing adequate organizational, staff, and
financial resources to the project; and
``(E) meeting such other requirements as the Secretary may
determine.
``(2) Disposition plan.--
``(A) In general.--Prior to the sale of a multifamily
housing project that is owned by the Secretary, the Secretary
shall develop an initial disposition plan for the project
that specifies the minimum terms and conditions of the
Secretary for disposition of the project, the initial sales
price that is acceptable to the Secretary, and the assistance
that the Secretary plans to make available to a prospective
purchaser in accordance with this section.
``(B) Market-wide plans.--In developing the initial
disposition plan under this subsection for a multifamily
housing project located in a market area in which at least 1
other multifamily housing project owned by the Secretary is
located, the Secretary may coordinate the disposition of all
such multifamily housing projects located within the same
market area to the extent and in such manner as the Secretary
determines appropriate to carry out the goals under
subsection (a).
``(C) Sales price.--The initial sales price shall be
reasonably related to the intended use of the project after
sale, any rehabilitation requirements for the project, the
rents for units in the project that can be supported by the
market, the amount of rental assistance available for the
project under section 8 of the United States Housing Act of
1937, the occupancy profile of the project (including family
size and income levels for tenant families), and any other
factors that the Secretary considers appropriate.
``(D) Community and tenant input.--In carrying out this
section, the Secretary shall develop procedures--
``(i) to obtain appropriate and timely input into
disposition plans from officials of the unit of general local
government affected, the community in which the project is
situated, and the tenants of the project; and
``(ii) to facilitate, where feasible and appropriate, the
sale of multifamily housing projects to existing tenant
organizations with demonstrated capacity, to public or
nonprofit entities that represent or are affiliated with
existing tenant organizations, or to other public or
nonprofit entities.
``(E) Technical assistance.--To carry out the procedures
developed under subparagraph (D), the Secretary may provide
technical assistance, directly or indirectly, and may use
amounts available for technical assistance under the
Emergency Low Income Housing Preservation Act of 1987,
subtitle C of the Low-Income Housing Preservation and
Resident Homeownership Act of 1990, subtitle B of title IV of
the Cranston-Gonzalez National Affordable Housing Act, or
this section, for the provision of technical assistance under
this paragraph. Recipients of technical assistance funding
under the provisions referred to in this subparagraph shall
be permitted to provide technical assistance to the extent of
such funding under any of such provisions or under this
subparagraph, notwithstanding the source of the funding.
``(3) Foreclosure sale.--In carrying out this section, the
Secretary shall--
``(A) prior to foreclosing on any mortgage held by the
Secretary on any multifamily housing project, notify both the
unit of general local government in which the property is
located and the tenants of the property of the proposed
foreclosure sale; and
``(B) dispose of a multifamily housing project through a
foreclosure sale only to a purchaser that the Secretary
determines is capable of implementing a sound financial and
physical management program that is designed to enable the
project to meet anticipated operating and repair expenses to
ensure that the project will remain in decent, safe, and
sanitary condition and in compliance with any standards under
applicable State or local laws, rules, ordinances, or
regulations relating to the physical condition of the housing
and any such standards established by the Secretary.
``(d) Management and Maintenance of Properties.--
``(1) Contracting for management services.--In carrying out
this section, the Secretary may--
``(A) contract for management services for a multifamily
housing project that is owned by the Secretary (or for which
the Secretary is mortgagee in possession) with for-profit and
nonprofit entities and public agencies (including public
housing authorities) on a negotiated, competitive bid, or
other basis at a price determined by the Secretary to be
reasonable, with a manager the Secretary has determined is
capable of--
``(i) implementing a sound financial and physical
management program that is designed to enable the project to
meet anticipated operating and maintenance expenses to ensure
that the project will remain in decent, safe, and sanitary
condition and in compliance with any standards under
applicable State or local laws, rules, ordinances, or
regulations relating to the physical condition of the project
and any such standards established by the Secretary;
``(ii) responding to the needs of the tenants and working
cooperatively with tenant organizations;
``(iii) providing adequate organizational, staff, and
financial resources to the project; and
``(iv) meeting such other requirements as the Secretary may
determine; and
``(B) require the owner of a multifamily housing project
that is subject to a mortgage held by the Secretary to
contract for management services for the project in the
manner described in subparagraph (A).
``(2) Maintenance of projects owned by secretary.--In the
case of multifamily housing projects that are owned by the
Secretary (or for which the Secretary is mortgagee in
possession), the Secretary shall--
``(A) to the greatest extent possible, maintain all such
occupied projects in a decent, safe, and sanitary condition
and in compliance with any standards under applicable State
or local laws, rules, ordinances, or regulations relating to
the physical condition of the housing and any such standards
established by the Secretary;
``(B) to the greatest extent possible, maintain full
occupancy in all such projects; and
``(C) maintain all such projects for purposes of providing
rental or cooperative housing.
``(3) Projects subject to a mortgage held by secretary.--In
the case of any multifamily housing project that is subject
to a mortgage held by the Secretary, the Secretary shall
require the owner of the project to carry out the
requirements of paragraph (2).
``(e) Required Assistance.--In disposing of multifamily
housing property under this section, consistent with the goal
of section 203(a)(3)(A), the Secretary shall take, separately
or in combination with other actions under this subsection or
subsection (f), one or more of the following actions:
``(1) Contract with owner for project-based assistance.--In
the case of multifamily housing projects that are acquired by
a purchaser other than the Secretary at foreclosure or after
sale by the Secretary, the Secretary may enter into contracts
under section 8 of the United States Housing Act of 1937 (to
the extent budget authority is available) with owners of the
projects, subject to the following requirements:
``(A) Subsidized or formerly subsidized projects receiving
mortgage-related assistance.--In the case of a subsidized or
formerly subsidized project referred to in subparagraphs (A)
through (C) of subsection (b)(2)--
``(i) the contract shall be sufficient to assist at least
all units covered by an assistance contract under any of the
authorities referred to in subsection (b)(2)(D) before
acquisition or foreclosure, unless the Secretary acts
pursuant to the provisions of subparagraph (C);
``(ii) the contract shall provide that, when a vacancy
occurs in any unit in the project requiring project-based
rental assistance pursuant to this subparagraph that is
occupied by a family who is not eligible for assistance under
such section 8, the owner shall lease the available unit to a
family eligible for assistance under such section 8; and
``(iii) the Secretary shall take actions to ensure that any
unit in any such project that does not otherwise receive
project-based assistance under this subparagraph remains
available and affordable for the remaining useful life of the
project, as defined by the Secretary; to carry out this
clause, the Secretary may require purchasers to establish use
or rent restrictions maintaining the affordability of such
units.
``(B) Subsidized or formerly subsidized projects receiving
rental assistance.--In the case of a subsidized or formerly
subsidized project referred to in subsection (b)(2)(D) that
is not subject to subparagraph (A)--
``(i) the contract shall be sufficient to assist at least
all units in the project that are covered, or were covered
immediately before foreclosure on or acquisition of the
project by the Secretary, by an assistance contract under any
of the provisions referred to in such subsection, unless the
Secretary acts pursuant to provisions of subparagraph (C);
and
``(ii) the contract shall provide that, when a vacancy
occurs in any unit in the project requiring project-based
rental assistance pursuant to this subparagraph that is
occupied by a family who is not eligible for assistance under
such section 8, the owner shall lease the available unit to a
family eligible for assistance under such section 8.
``(C) Exceptions.--
``(i) Authority.--In lieu of providing project-based
assistance under section 8 of the United States Housing Act
of 1937 in accordance with subparagraph (A)(i) or (B)(i) for
a project, the Secretary may, for certain units in
unsubsidized projects located within the same market area as
the project otherwise required to be assisted with such
project-based assistance--
``(I) require use and rent restrictions providing that such
units shall be available to and affordable by very low-income
families for the remaining useful life of the project (as
defined by the Secretary), or
``(II) provide project-based assistance under section 8 for
such units to be occupied by only very low-income persons,
but only if the requirements under clause (ii) are met.
``(ii) Requirements.--The requirements under this clause
are that--
``(I) upon the disposition of the project otherwise
required to be assisted with project-based assistance under
subparagraph (A)(i) or (B)(i), the Secretary shall make
available tenant-based assistance under section 8 to low-
income families residing in units otherwise required to be
assisted with such project-based assistance; and
``(II) the number of units subject to use restrictions or
provided assistance under clause (i) shall be at least
equivalent to the number of units otherwise required to be
assisted with project-based assistance under section 8 in
accordance with subparagraph (A)(i) or (B)(i).
``(D) Unsubsidized projects.--Notwithstanding actions taken
pursuant to subparagraph (C), in the case of unsubsidized
projects, the contract shall be sufficient to provide--
``(i) project-based rental assistance for all units that
are covered, or were covered immediately before foreclosure
or acquisition, by an assistance contract under--
``(I) the new construction and substantial rehabilitation
program under section 8(b)(2) of the United States Housing
Act of 1937 (as in effect before October 1, 1983);
``(II) the property disposition program under section 8(b)
of such Act;
``(III) the project-based certificate program under section
8 of such Act;
``(IV) the moderate rehabilitation program under section
8(e)(2) of such Act;
``(V) section 23 of such Act (as in effect before January
1, 1975);
``(VI) the rent supplement program under section 101 of the
Housing and Urban Development Act of 1965; or
``(VII) section 8 of the United States Housing Act of 1937,
following conversion from assistance under section 101 of the
Housing and Urban Development Act of 1965; and
``(ii) tenant-based assistance under section 8 of the
United States Housing Act of 1937 for families that are
preexisting tenants of the project in units that, immediately
before foreclosure or acquisition of the project by the
Secretary, were covered by an assistance contract under the
loan management set-aside program under section 8(b) of the
United States Housing Act of 1937.
``(2) Annual contribution contracts for tenant-based
assistance.--In the case of multifamily housing projects that
are acquired by a purchaser other than the Secretary at
foreclosure or after sale by the Secretary, the Secretary may
enter into annual contribution contracts with public housing
agencies to provide tenant-based assistance under section 8
of the United States Housing Act of 1937 on behalf of all
low-income families who are otherwise eligible for assistance
in accordance with subparagraph (A), (B), or (D) of paragraph
(1) on the date that the project is acquired by the
purchaser, subject to the following requirements:
``(A) Requirement of sufficient affordable housing in
area.--The Secretary may not take action under this paragraph
unless the Secretary determines that there is available in
the area an adequate supply of habitable, affordable housing
for very low-income families and other low-income families
using tenant-based assistance.
``(B) Limitation for subsidized and formerly subsidized
projects.--The Secretary may not take actions under this
paragraph in connection with units in subsidized or formerly
subsidized projects for more than 10 percent of the aggregate
number of units in such projects disposed of by the Secretary
in any fiscal year.
``(3) Other assistance.--
``(A) In general.--In accordance with the authority
provided under the National Housing Act, the Secretary may
provide other assistance pursuant to subsection (f) to the
owners of multifamily housing projects that are acquired by a
purchaser other than the Secretary at foreclosure, or after
sale by the Secretary, on terms that ensure that--
``(i) at least the units in the project otherwise required
to receive project-based assistance pursuant to subparagraphs
(A), (B), or (D) of paragraph (1) are available to and
affordable by low-income persons; and
``(ii) for the remaining useful life of the project, as
defined by the Secretary, there shall be in force such use or
rent restrictions as the Secretary may prescribe.
``(B) Very low-income tenants.--If, as a result of actions
taken pursuant to this paragraph, the rents charged to any
very low-income families residing in the project who are
otherwise required (pursuant to subparagraph (A), (B), or (D)
of paragraph (1)) to receive project-based assistance under
section 8 of the United States Housing Act of 1937 exceed the
amount payable as rent under section 3(a) of the United
States Housing Act of 1937, the Secretary shall provide
tenant-based assistance under section 8 of such Act to such
families.
``(f) Discretionary Assistance.--In addition to the actions
required under subsection (e) for a subsidized, formerly
subsidized, or unsubsidized multifamily housing project, the
Secretary may, pursuant to the disposition plan and the goals
in subsection (a), take one or more of the following actions:
``(1) Discounted sales price.--In accordance with the
authority provided under the National Housing Act, the
Secretary may reduce the selling price of the project. Such
reduced sales price shall be reasonably related to the
intended use of the property after sale, any rehabilitation
requirements for the project, the rents for units in the
project that can be supported by the market, the amount of
rental assistance available for the project under section 8
of the United States Housing Act of 1937, the occupancy
profile of the project (including family size and income
levels for tenant families), and any other factors that the
Secretary considers appropriate.
``(2) Use and rent restrictions.--The Secretary may require
certain units in a project to be subject to use or rent
restrictions providing that such units will be available to
and affordable by low- and very low-income persons for the
remaining useful life of the property, as defined by the
Secretary.
``(3) Short-term loans.--The Secretary may provide short-
term loans to facilitate the sale of a multifamily housing
project if--
``(A) authority for such loans is provided in advance in an
appropriation Act;
``(B) such loan has a term of not more than 5 years;
``(C) the Secretary determines, based upon documentation
provided to the Secretary, that the borrower has obtained a
commitment of permanent financing to replace the short-term
loan from a lender who meets standards established by the
Secretary; and
``(D) the terms of such loan are consistent with prevailing
practices in the marketplace or the provision of such loan
results in no cost to the Government, as defined in section
502 of the Congressional Budget Act of 1974.
``(4) Up-front grants.--If the Secretary determines that
action under this paragraph is more cost-effective than
establishing rents pursuant to subsection (h)(2), the
Secretary may utilize the budget authority provided for
contracts issued under this section for project-based
assistance under section 8 of the United States Housing Act
of 1937 to (in addition to providing project-based section 8
rental assistance) provide up-front grants for the necessary
cost of rehabilitation and other related development costs.
``(5) Tenant-based assistance.--The Secretary may make
available tenant-based assistance under section 8 of the
United States Housing Act of 1937 to families residing in a
multifamily housing project that do not otherwise qualify for
project-based assistance.
``(6) Alternative uses.--
``(A) In general.--Notwithstanding any other provision of
law, after providing notice to and an opportunity for comment
by preexisting tenants, the Secretary may allow not more
than--
``(i) 10 percent of the total number of units in
multifamily housing projects that are disposed of by the
Secretary during any fiscal year to be made available for
uses other than rental or cooperative uses, including low-
income homeownership opportunities, or in any particular
project, community space, office space for tenant or housing-
related service providers or security programs, or small
business uses, if such uses benefit the tenants of the
project; and
``(ii) 5 percent of the total number of units in
multifamily housing projects that are disposed of by the
Secretary during any fiscal year to be used in any manner, if
the Secretary and the unit of general local government or
area-wide governing body determine that such use will further
fair housing, community development, or neighborhood
revitalization goals.
``(B) Displacement protection.--The Secretary may take
actions under subparagraph (A) only if--
``(i) tenant-based rental assistance under section 8 of the
United States Housing Act of 1937 is made available to each
eligible family residing in the project that is displaced as
a result of such actions; and
``(ii) the Secretary determines that sufficient habitable,
affordable rental housing is available in the market area in
which the project is located to ensure use of such
assistance.
``(7) Transfer for use under other programs of secretary.--
``(A) In general.--Notwithstanding the provisions of
subsection (e), the Secretary may, pursuant to an agreement
under subparagraph (B), transfer a multifamily housing
project--
``(i) to a public housing agency for use of the project as
public housing; or
``(ii) to an entity eligible to own or operate housing
assisted under section 202 of the Housing Act of 1959 or
under section 811 of the Cranston-Gonzalez National
Affordable Housing Act for use as supportive housing under
either of such sections.
``(B) Requirements for agreement.--An agreement providing
for the transfer of a project described in subparagraph (A)
shall--
``(i) contain such terms, conditions, and limitations as
the Secretary determines appropriate, including requirements
to ensure use of the project as public housing, supportive
housing under section 202 of the Housing Act of 1959, or
supportive housing under section 811 of the Cranston-Gonzalez
National Affordable Housing Act, as applicable; and
``(ii) ensure that no tenant of the project will be
displaced as a result of actions taken under this paragraph.
``(8) Rebuilding.--Notwithstanding any provision of section
8 of the United States Housing Act of 1937, the Secretary may
provide project-based assistance in accordance with
subsection (e) of this section to support the rebuilding of a
multifamily housing project rebuilt or to be rebuilt (in
whole or in part and on-site, off-site, or in a combination
of both) in connection with disposition under this section,
if the Secretary determines that--
``(A) the project is not being maintained in a decent,
safe, and sanitary condition;
``(B) rebuilding the project would be less expensive than
substantial rehabilitation;
``(C) the unit of general local government in which the
project is located approves the rebuilding and makes a
financial contribution or other commitment to the project;
and
``(D) the rebuilding is a part of a local neighborhood
revitalization plan approved by the unit of general local
government.
The provisions of subsection (j)(2) shall apply to any
tenants of the project who are displaced.
``(9) Emergency assistance funds.--The Secretary may make
arrangements with State agencies and units of general local
government of States receiving emergency assistance under
part A of title IV of the Social Security Act for the
provision of assistance under such Act on behalf of eligible
families who would reside in any multifamily housing
projects.
``(g) Protection for Unassisted Very Low-Income Tenants.--
For each multifamily housing project disposed of under this
section, the Secretary shall require that, for any very low-
income family who is a preexisting tenant of the project who
(upon disposition) would be required to pay rent in an amount
in excess of 30 percent of the adjusted income (as such term
is defined in section 3(b) of the United States Housing Act
of 1937) of the family--
``(1) for a period of 2 years beginning upon the date of
the acquisition of the project by the purchaser under such
disposition, the rent for the unit occupied by the family may
not be increased above the rent charged immediately before
acquisition;
``(2) such family shall be considered displaced for
purposes of the preferences for assistance under sections
6(c)(4)(A)(i), 8(d)(1)(A)(i), and 8(o)(3)(B) of the United
States Housing Act of 1937; and
``(3) notice shall be provided to such family, not later
than the date of the acquisition of the project by the
purchaser--
``(A) of the requirements under paragraphs (1) and (2); and
``(B) that, after the expiration of the period under
paragraph (1), the rent for the unit occupied by the family
may be increased.
``(h) Contract Requirements.--Contracts for project-based
rental assistance under section 8 of the United States
Housing Act of 1937 provided pursuant to this section shall
be subject to the following requirements:
``(1) Contract term.--The contract shall have a term of 15
years, except that the term may be less than 15 years--
``(A) to the extent that the Secretary finds that, based on
the rental charges and financing for the multifamily housing
project to which the contract relates, the financial
viability of the project can be maintained under a contract
having such a term; except that the Secretary shall require
that the amount of rent payable by tenants of the project for
units assisted under such contract shall not exceed the
amount payable for rent under section 3(a) of the United
States Housing Act of 1937 for a period of at least 15 years;
or
``(B) if such assistance is provided--
``(i) under a contract authorized under section 6 of the
HUD Demonstration Act of 1993; and
``(ii) pursuant to a disposition plan under this section
for a project that is determined by the Secretary to be
otherwise in compliance with this section.
``(2) Contract rent.--The Secretary shall establish the
contract rents under such contracts at levels that, together
with other resources available to the purchasers, provide
sufficient amounts for the necessary costs of rehabilitating
and operating the multifamily housing project and do not
exceed the percentage of the existing housing fair market
rentals for the market area in which the project assisted
under the contract is located as determined by the Secretary
under section 8(c) of the United States Housing Act of 1937.
``(i) Right of First Refusal for Local and State Government
Agencies.--
``(1) Notification.--Not later than 30 days after the
Secretary acquires title to a multifamily housing project,
the Secretary shall notify the appropriate unit of general
local government (including public housing agencies) and
State agency or agencies designated by the chief executive
officer of the State in which the project is located of such
acquisition of title and that, for a period beginning upon
such notification that does not exceed 90 days, such unit of
general local government and agency or agencies shall have
the exclusive right under this subsection to make bona fide
offers to purchase the project.
``(2) Right of first refusal.--During the 90-day period,
the Secretary may not sell or offer to sell the multifamily
housing project other than to a party notified under
paragraph (1), unless the unit of general local government
and the designated State agency or agencies notify the
Secretary that they will not make an offer to purchase the
project. The Secretary shall accept a bona fide offer to
purchase the project made during such period if it complies
with the terms and conditions of the disposition plan for the
project or is otherwise acceptable to the Secretary.
``(3) Procedure.--The Secretary shall establish any
procedures necessary to carry out this subsection.
``(j) Displacement of Tenants and Relocation Assistance.--
``(1) In general.--Whenever tenants will be displaced as a
result of the demolition of, repairs to, or conversion in the
use of, a multifamily housing project that is owned by the
Secretary (or for which the Secretary is mortgagee in
possession), the Secretary shall identify tenants who will be
displaced, and shall notify all such tenants of their pending
displacement and of any relocation assistance that may be
available. In the case of a multifamily housing project that
is subject to a mortgage held by the Secretary, the Secretary
shall require the owner of the project to carry out the
requirements of this paragraph, if the Secretary has
authorized the demolition of, repairs to, or conversion in
the use of such multifamily housing project.
``(2) Rights of displaced tenants.--The Secretary shall
ensure for any such tenant (who continues to meet applicable
qualification standards) the right--
``(A) to return, whenever possible, to a repaired or
rebuilt unit;
``(B) to occupy a unit in another multifamily housing
project owned by the Secretary;
``(C) to obtain housing assistance under the United States
Housing Act of 1937; or
``(D) to receive any other available similar relocation
assistance as the Secretary determines to be appropriate.
``(k) Mortgage and Project Sales.--
``(1) In general.--The Secretary may not approve the sale
of any loan or mortgage held by the Secretary (including any
loan or mortgage owned by the Government National Mortgage
Association) on any subsidized project or formerly subsidized
project, unless such sale is made as part of a transaction
that will ensure that such project will continue to operate
at least until the maturity date of such loan or mortgage, in
a manner that will provide rental housing on terms at least
as advantageous to existing and future tenants as the terms
required by the program under which the loan or mortgage was
made or insured prior to the assignment of the loan or
mortgage on such project to the Secretary.
``(2) Sale of certain projects.--The Secretary may not
approve the sale of any subsidized project--
``(A) that is subject to a mortgage held by the Secretary,
or
``(B) if the sale transaction involves the provision of any
additional subsidy funds by the Secretary or a recasting of
the mortgage,
unless such sale is made as part of a transaction that will
ensure that the project will continue to operate, at least
until the maturity date of the loan or mortgage, in a manner
that will provide rental housing on terms at least as
advantageous to existing and future tenants as the terms
required by the program under which the loan or mortgage was
made or insured prior to the proposed sale of the project.
``(3) Mortgage sales to state and local governments.--
Notwithstanding any provision of law that requires
competitive sales or bidding, the Secretary may carry out
negotiated sales of mortgages held by the Secretary, without
the competitive selection of purchasers or intermediaries, to
units of general local government or State agencies, or
groups of investors that include at least one such unit of
general local government or State agency, if the negotiations
are conducted with such agencies, except that--
``(A) the terms of any such sale shall include the
agreement of the purchasing agency or unit of local
government or State agency to act as mortgagee or owner of a
beneficial interest in such mortgages, in a manner consistent
with maintaining the projects that are subject to such
mortgages for occupancy by the general tenant group intended
to be served by the applicable mortgage insurance program,
including, to the extent the Secretary determines
appropriate, authorizing such unit of local government or
State agency to enforce the provisions of any regulatory
agreement or other program requirements applicable to the
related projects; and
``(B) the sales prices for such mortgages shall be, in the
determination of the Secretary, the best prices that may be
obtained for such mortgages from a unit of general local
government or State agency, consistent with the expectation
and intention that the projects financed will be retained for
use under the applicable mortgage insurance program for the
life of the initial mortgage insurance contract.
``(4) Sale of mortgages covering unsubsidized projects.--
Notwithstanding any other provision of law, the Secretary may
sell mortgages held on projects that are not subsidized or
formerly subsidized projects on such terms and conditions as
the Secretary may prescribe.
``(5) Mortgage sale demonstration.--The Secretary may carry
out a demonstration to test the feasibility of restructuring
and disposing of troubled multifamily mortgages held by the
Secretary through the establishment of partnerships with
public, private, and nonprofit entities.
``(6) Project sale demonstration.--The Secretary may carry
out a demonstration to test the feasibility of disposing of
troubled multifamily housing projects that are owned by the
Secretary through the establishment of partnerships with
public, private, and nonprofit entities.
``(l) Report to Congress.--Not later than June 1 of each
year, the Secretary shall submit to the Congress a report
describing the status of multifamily housing projects owned
by or subject to mortgages held by the Secretary, on an
aggregate basis, which highlights the differences, if any,
between the subsidized and the unsubsidized inventory. The
report shall include--
``(1) the average and median size of the projects;
``(2) the geographic locations of the projects, by State
and region;
``(3) the years during which projects were assigned to the
Department, and the average and median length of time that
projects remain in the HUD-held inventory;
``(4) the status of HUD-held mortgages;
``(5) the physical condition of the HUD-held and HUD-owned
inventory;
``(6) the occupancy profile of the projects, including the
income, family size, race, and ethnic origin of current
tenants, and the rents paid by such tenants;
``(7) the proportion of units that are vacant;
``(8) the number of projects for which the Secretary is
mortgagee in possession;
``(9) the number of projects sold in foreclosure sales;
``(10) the number of HUD-owned projects sold;
``(11) a description of actions undertaken pursuant to this
section, including a description of the effectiveness of such
actions and any impediments to the disposition or management
of multifamily housing projects;
``(12) a description of the extent to which the provisions
of this section and actions taken under this section have
displaced tenants of multifamily housing projects;
``(13) a description of any of the functions performed in
connection with this section that are contracted out to
public or private entities or to States; and
``(14) a description of the activities carried out under
subsection (i) during the preceding year.''.
(c) Clarification of Federal Preferences.--
(1) Public housing tenancy.--Section 6(c)(4)(A)(i) of the
United States Housing Act of 1937 (42 U.S.C.
1437d(c)(4)(A)(i)) is amended by inserting after
``displaced'' the following: ``(including displacement
because of disposition of a multifamily housing project under
section 203 of the Housing and Community Development
Amendments of 1978)''.
(2) Section 8 assistance.--Section 8(d)(1)(A)(i) of the
United States Housing Act of 1937 (42 U.S.C.
1437f(d)(1)(A)(i)) is amended by inserting after
``displaced'' the following: ``(including displacement
because of disposition of a multifamily housing project under
section 203 of the Housing and Community Development
Amendments of 1978)''.
(3) Voucher assistance.--The first sentence of section
8(o)(3)(B) of the United States Housing Act of 1937 (42
U.S.C. 1437f(o)(3)(B)) is amended by inserting after
``displaced'' the following: ``(including displacement
because of disposition of a multifamily housing project under
section 203 of the Housing and Community Development
Amendments of 1978)''.
(d) Definition of Owner.--Section 8(f)(1) of the United
States Housing Act of 1937 (42 U.S.C. 1437f(f)(1)) is amended
by inserting ``an agency of the Federal Government,'' after
``cooperative,''.
(e) Amendment to National Housing Act.--Title V of the
National Housing Act (12 U.S.C. 1731a et seq.) is amended by
adding at the end the following new section:
``partial payment of claims on multifamily housing projects
``Sec. 541. (a) Authority.--Notwithstanding any other
provision of law, if the Secretary is requested to accept
assignment of a mortgage insured by the Secretary that covers
a multifamily housing project (as such term is defined in
section 203(b) of the Housing and Community Development
Amendments of 1978) and the Secretary determines that partial
payment would be less costly to the Federal Government than
other reasonable alternatives for maintaining the low-income
character of the project, the Secretary may request the
mortgagee, in lieu of assignment, to--
``(1) accept partial payment of the claim under the
mortgage insurance contract; and
``(2) recast the mortgage, under such terms and conditions
as the Secretary may determine.
``(b) Repayment.--As a condition to a partial claim payment
under this section, the mortgagor shall agree to repay to the
Secretary the amount of such payment and such obligation
shall be secured by a second mortgage on the property on such
terms and conditions as the Secretary may determine.''.
(f) Effective Date.--The Secretary shall issue interim
regulations necessary to implement the amendments made by
subsections (b) through (d) not later than 90 days after the
date of the enactment of this Act. Such interim regulations
shall take effect upon issuance and invite public comment on
the interim regulations. The Secretary shall issue final
regulations to implement such amendments after opportunity
for such public comment, but not later than 12 months after
the date of issuance of such interim regulations.
SEC. 102. REPEAL OF STATE AGENCY MULTIFAMILY PROPERTY
DISPOSITION DEMONSTRATION.
Section 184 of the Housing and Community Development Act of
1987 (12 U.S.C. 1701z-11 note) is hereby repealed.
SEC. 103. PREVENTING MORTGAGE DEFAULTS ON MULTIFAMILY HOUSING
PROJECTS.
(a) Multifamily Housing Planning and Investment
Strategies.--
(1) Preparation of assessments for independent entities.--
Section 402(a) of the Housing and Community Development Act
of 1992 (12 U.S.C. 1715-1a note) is amended by adding at the
end the following new sentence: ``The assessment shall be
prepared by an entity that does not have an identity of
interest with the owner.''.
(2) Timing of submission of needs assessments.--Section
402(b) of the Housing and Community Development Act of 1992
(12 U.S.C. 1715z-1a note) is amended to read as follows:
``(b) Timing.--To ensure that assessments for all covered
multifamily housing properties will be submitted on or before
the conclusion of fiscal year 1997, the Secretary shall
require the owners of such properties, including covered
multifamily housing properties for the elderly, to submit the
assessments for the properties in accordance with the
following schedule:
``(1) For fiscal year 1994, 10 percent of the aggregate
number of such properties.
``(2) For each of fiscal years 1995, 1996, and 1997, an
additional 30 percent of the aggregate number of such
properties.''.
(3) Review of comprehensive needs assessments.--Section
404(d) of the Housing and Community Development Act of 1992
(12 U.S.C. 1715-1a note) is amended to read as follows:
``(d) Review.--
``(1) In general.--The Secretary shall review each
comprehensive needs assessment for completeness and adequacy
before the expiration of the 90-day period beginning on the
receipt of the assessment and shall notify the owner of the
property for which the assessment was submitted of the
findings of such review.
``(2) Incomplete or inadequate assessments.--If the
Secretary determines that the assessment is substantially
incomplete or inadequate, the Secretary shall--
``(A) notify the owner of the portion or portions of the
assessment requiring completion or other revision; and
``(B) require the owner to submit an amended assessment to
the Secretary not later than 30 days after such
notification.''.
(4) Repeal of notice provision.--Section 404 of the Housing
and Community Development Act of 1992 (12 U.S.C. 1715-1a
note) is amended by striking subsection (f).
(5) Publication.--Section 404 of the Housing and Community
Development Act of 1992 (12 U.S.C. 1715z-1a note), as amended
by paragraph (4) of this subsection, is further amended by
inserting after subsection (e) the following new subsection:
``(f) Publication of Method for Receiving Capital Needs
Assessment.--The Secretary shall cause to be published in the
Federal Register the method by which the Secretary determines
which capital needs assessments will be received each year in
accordance with section 402(b) and subsection (d) of this
section.''.
(6) Funding.--Title IV of the Housing and Community
Development Act of 1992 (12 U.S.C. 1715z-1a note) is amended
by adding at the end the following new section:
``SEC. 409. FUNDING.
``(a) Allocation of Assistance.--Based upon needs
identified in comprehensive needs assessments, and subject to
otherwise applicable program requirements, including
selection criteria, the Secretary may allocate the following
assistance to owners of covered multifamily housing projects
and may provide such assistance on a noncompetitive basis:
``(1) Operating assistance and capital improvement
assistance for troubled multifamily housing projects pursuant
to section 201 of the Housing and Community Development
Amendments of 1978, except for assistance set aside under
section 201(n)(1).
``(2) Loan management assistance available pursuant to
section 8 of the United States Housing Act of 1937.
``(b) Operating Assistance and Capital Improvement
Assistance.--In providing assistance under subsection (a) the
Secretary shall use the selection criteria set forth in
section 201(n) of the Housing and Community Development
Amendments of 1978.
``(c) Amount of Assistance.--The Secretary may fund all or
only a portion of the needs identified in the capital needs
assessment of an owner selected to receive assistance under
this section.''.
(b) Flexible Subsidy Program.--
(1) Deletion of utility cost requirements.--Section 201(i)
of the Housing and Community Development Amendments of 1978
(12 U.S.C. 1715z-1a(i)) is hereby repealed.
(2) Repeal of mandatory contribution from owner.--Section
201(k)(2) of the Housing and Community Development Amendments
of 1978 (12 U.S.C. 1715z-1a(k)(2)) is amended by striking ``,
except that'' and all that follows and inserting a period.
(3) Funding.--Section 201(n) of the Housing and Community
Development Amendments of 1978 (42 U.S.C. 1715z-1a(n)) is
amended to read as follows:
``(n) Allocation of Assistance.--
``(1) Set-aside.--In providing, and contracting to provide,
assistance for capital improvements under this section, in
each fiscal year the Secretary shall set aside an amount, as
determined by the Secretary, for projects that are eligible
for incentives under section 224(b) of the Emergency Low
Income Housing Preservation Act of 1987, as such section
existed before the date of enactment of the Cranston-Gonzalez
National Affordable Housing Act. The Secretary may make such
assistance available on a noncompetitive basis.
``(2) General rules for allocation.--Except as provided in
paragraph (3), with respect to assistance under this section
not set aside for projects under paragraph (1), the
Secretary--
``(A) may award assistance on a noncompetitive basis; and
``(B) shall award assistance to eligible projects on the
basis of--
``(i) the extent to which the project is physically or
financially troubled, as evidenced by the comprehensive needs
assessment submitted in accordance with title IV of the
Housing and Community Development Act of 1992; and
``(ii) the extent to which such assistance is necessary and
reasonable to prevent the default of federally insured
mortgages.
``(3) Exceptions.--The Secretary may make exceptions to
selection criteria set forth in paragraph (2)(B) to permit
the provision of assistance to eligible projects based upon--
``(A) the extent to which such assistance is necessary to
prevent the imminent foreclosure or default of a project
whose owner has not submitted a comprehensive needs
assessment pursuant to title IV of the Housing and Community
Development Act of 1992;
``(B) the extent to which the project presents an imminent
threat to the life, health, and safety of project residents;
or
``(C) such other criteria as the Secretary may specify by
regulation or by notice printed in the Federal Register.
``(4) Considerations.--In providing assistance under this
section, the Secretary shall take into consideration--
``(A) the extent to which there is evidence that there will
be significant opportunities for residents (including a
resident council or resident management corporation, as
appropriate) to be involved in the management of the project
(except that this paragraph shall have no application to
projects that are owned as cooperatives); and
``(B) the extent to which there is evidence that the
project owner has provided competent management and complied
with all regulatory and administrative requirements.''.
(4) Repeal.--Section 201 of the Housing and Community
Development Amendments of 1978 (12 U.S.C. 1715z-1a) is
amended--
(A) by striking subsection (o); and
(B) by redesignating subsection (p) as subsection (o).
(c) Implementation and Effective Dates for Subsections (a)
and (b).--
(1) In general.--Except as provided in paragraph (2), the
amendments made by subsections (a) and (b) shall apply with
respect to amounts made available for fiscal year 1994 and
fiscal years thereafter.
(2) Exception.--Section 201(n)(1) of the Housing and
Community Development Amendments of 1978 (as added by the
amendment made by subsection (b)(3) of this section) shall
take effect on the date of enactment of this Act.
(3) Notice.--The Secretary shall, by notice published in
the Federal Register, establish any requirements necessary to
implement the amendments made by subsections (a) and (b). The
notice shall invite public comments and, not later than 12
months after the date on which the notice is published, the
Secretary shall issue final regulations based on the initial
notice, taking into consideration any public comments
received.
(d) Streamlined Refinancing.--As soon as practicable, the
Secretary shall implement a streamlined refinancing program
under the authority provided in section 223 of the National
Housing Act to prevent the default of mortgages insured by
the FHA which cover multifamily housing projects, as defined
in section 203(b) of the Housing and Community Development
Amendments of 1978.
(e) GAO Study on Prevention of Default.--
(1) In general.--Not later than April 1, 1995, the
Comptroller General of the United States shall submit to the
Committee on Banking, Finance and Urban Affairs of the House
of Representatives and the Committee on Banking, Housing, and
Urban Affairs of the Senate a report that evaluates the
adequacy of loan loss reserves in the General Insurance and
Special Risk Insurance Funds and presents recommendations for
the Secretary to prevent losses from occurring.
(2) Contents.--The report submitted under paragraph (1)
shall--
(A) evaluate the factors considered in arriving at loss
estimates and determine whether other factors should be
considered;
(B) determine the relative benefit of creating a new,
actuarially sound insurance fund for all new multifamily
housing insurance commitments; and
(C) recommend alternatives to the Secretary's current
procedures for preventing the future default of multifamily
housing project mortgages insured under title II of the
National Housing Act.
(f) GAO Study on Actuarial Soundness of Certain Insurance
Programs.--
(1) In general.--Not later than April 1, 1995, the
Comptroller General of the United States shall submit to the
Committee on Banking, Housing, and Urban Affairs of the
Senate and the Committee on Banking, Finance and Urban
Affairs of the House of Representatives a report that
evaluates, in connection with the General Insurance Fund, the
role and performance of the nursing home, hospital, and
retirement service center insurance programs.
(2) Contents.--The reports submitted under paragraph (1)
shall--
(A) evaluate the strategic importance of these insurance
programs to the mission of the FHA;
(B) evaluate the impact of these insurance programs upon
the financial performance of the General Insurance Fund;
(C) assess the potential losses expected under these
programs through fiscal year 1999;
(D) evaluate the risk of these programs to the General
Insurance Fund in connection with changes in national health
care policy;
(E) assess the ability of the FHA to manage these programs;
and
(F) make recommendations for any necessary changes.
(g) Risk Assessment.--
(1) Special risk insurance fund.--Section 238(c) of the
National Housing Act (12 U.S.C. 1715z-3(c)) is amended by
adding at the end the following new paragraph:
``(3) The Secretary shall undertake an annual assessment of
the risks associated with each of the insurance programs
comprising the Special Risk Insurance Fund, and shall present
findings from such review to the Congress in the FHA Annual
Management Report.''.
(2) General insurance fund.--Section 519 of the National
Housing Act (12 U.S.C. 1735c) is amended by adding at the end
the following new subsection:
``(g) Risk Assessment.--The Secretary shall undertake an
annual assessment of the risks associated with each of the
insurance programs comprising the General Insurance Fund, and
shall present findings from such review to the Congress in
the FHA Annual Management Report.''.
(h) Alternative Uses for Prevention of Default.--
(1) In general.--Subject to notice to and comment by
existing tenants, to prevent the imminent default of a
multifamily housing project subject to a mortgage insured
under title II of the National Housing Act, the Secretary may
authorize the mortgagor to use the project for purposes not
contemplated by or permitted under the regulatory agreement,
if--
(A) such other uses are acceptable to the Secretary;
(B) such other uses would be otherwise insurable under
title II of the National Housing Act;
(C) the outstanding principal balance on the mortgage
covering such project is not increased;
(D) any financial benefit accruing to the mortgagor shall,
subject to the discretion of the Secretary, be applied to
project reserves or project rehabilitation; and
(E) such other use serves a public purpose.
(2) Displacement protection.--The Secretary may take
actions under paragraph (1) only if--
(A) tenant-based rental assistance under section 8 of the
United States Housing Act of 1937 is made available to each
eligible family residing in the project that is displaced as
a result of such actions; and
(B) the Secretary determines that sufficient habitable,
affordable (as such term is defined in section 203(b) of the
Housing and Community Development Amendments of 1978) rental
housing is available in the market area in which the project
is located to ensure use of such assistance.
(3) Implementation.--The Secretary shall, by notice
published in the Federal Register, which shall take effect
upon publication, establish such requirements as may be
necessary to implement the amendments made by this
subsection. The notice shall invite public comments and, not
later than 12 months after the date on which the notice is
published, the Secretary shall issue final regulations based
on the initial notice, taking into account any public
comments received.
SEC. 104. INTEREST RATES ON ASSIGNED MORTGAGES.
Section 7(i)(5) of the Department of Housing and Urban
Development Act (42 U.S.C. 3535(i)(5)) is amended by striking
the first semicolon, and all that follows through ``as
determined by the Secretary''.
SEC. 105. AUTHORIZATION OF APPROPRIATIONS.
(a) Special Risk Insurance Fund.--Section 238(b) of the
National Housing Act (12 U.S.C. 1715z-3(b)) is amended by
striking the fifth sentence.
(b) General Insurance Fund.--Section 519 of the National
Housing Act (12 U.S.C. 1735c) is amended--
(1) by striking subsection (f); and
(2) by redesignating subsection (g) (as added by section
103(g)(2) of this Act) as subsection (f).
(c) Multifamily Insurance Fund Appropriations.--Title V of
the National Housing Act (12 U.S.C. 1731a et seq.) is amended
by adding after section 541 (as added by section 101(e) of
this Act) the following new section:
``SEC. 542. AUTHORIZATION OF APPROPRIATIONS FOR GENERAL AND
SPECIAL RISK INSURANCE FUNDS.
``There are authorized to be appropriated such sums as may
be necessary for each of fiscal years 1994 and 1995, to be
allocated in any manner that the Secretary determines
appropriate, for the following costs incurred in conjunction
with programs authorized under the General Insurance Fund, as
provided by section 519, and the Special Risk Insurance Fund,
as provided by section 238:
``(1) The cost to the Government, as defined in section 502
of the Congressional Budget Act, of new insurance
commitments.
``(2) The cost to the Government, as defined in section 502
of the Congressional Budget Act, of modifications to existing
loans, loan guarantees, or insurance commitments.
``(3) The cost to the Government, as defined in section 502
of the Congressional Budget Act, of loans provided under
section 203(f) of the Housing and Community Development
Amendments of 1978.
``(4) The costs of the rehabilitation of multifamily
housing projects (as defined in section 203(b) of the Housing
and Community Development Amendments of 1978) upon
disposition by the Secretary.''.
TITLE II--OTHER PROGRAM REFORMS
Subtitle A--Home Investment Partnerships Program
SEC. 201. PARTICIPATION BY STATE AGENCIES OR
INSTRUMENTALITIES.
Section 104(2) of the Cranston-Gonzalez National Affordable
Housing Act (42 U.S.C. 12704(2)) is amended--
(1) by striking ``and'' after ``Columbia,''; and
(2) by inserting before the period at the end the
following: ``, or any agency or instrumentality thereof that
is established pursuant to legislation and designated by the
chief executive officer to act on behalf of the State with
regard to the provisions of this Act''.
SEC. 202. SIMPLIFICATION OF PROGRAM-WIDE INCOME TARGETING FOR
RENTAL HOUSING.
Section 214(1) of the Cranston-Gonzalez National Affordable
Housing Act (42 U.S.C. 12744(1)) is amended--
(1) in subparagraph (A)--
(A) by striking ``such funds are invested with respect to
dwelling units that are occupied by'' and inserting ``(i) the
families receiving such rental assistance are''; and
(B) by striking ``, and'' and inserting ``, or (ii) the
dwelling units assisted with such funds are occupied by
families having such incomes; and''; and
(2) in subparagraph (B)--
(A) by striking ``such funds are invested with respect to
dwelling units that are occupied by'' and inserting ``(i) the
families receiving such rental assistance are''; and
(B) by inserting before the semicolon at the end the
following: ``, or (ii) the dwelling units assisted with such
funds are occupied by such households''.
SEC. 203. HOMEOWNERSHIP UNITS.
(a) Removal of First-Time Homebuyer Requirement.--Section
215(b) of the Cranston-Gonzalez National Affordable Housing
Act (42 U.S.C. 12745(b)) is amended--
(1) by striking paragraph (3); and
(2) by redesignating paragraphs (4) and (5) as paragraphs
(3) and (4), respectively.
(b) Simplification of Resale Provisions.--Section
215(b)(3)(B) of the Cranston-Gonzalez National Affordable
Housing Act (42 U.S.C. 12745(b)(3)(B)), as so redesignated by
subsection (a) of this section, is amended by striking
``subsection'' and inserting ``title''.
SEC. 204. SIMPLIFICATION OF MATCHING REQUIREMENTS.
Section 220(a) of the Cranston-Gonzalez National Affordable
Housing Act (42 U.S.C. 12750(a)) is amended to read as
follows:
``(a) Contribution.--Each participating jurisdiction shall
make contributions to housing that qualifies as affordable
housing under this title that total, throughout a fiscal
year, not less than 25 percent of the funds drawn from the
jurisdiction's HOME Investment Trust Fund in such fiscal
year. Such contributions shall be in addition to any amounts
made available under section 216(3)(A)(ii).''.
SEC. 205. REPEAL OF SEPARATE AUDIT REQUIREMENT.
Section 283 of the Cranston-Gonzalez National Affordable
Housing Act (42 U.S.C. 12833) is amended--
(1) by striking the section designation and heading and
inserting the following:
``SEC. 283. AUDITS BY COMPTROLLER GENERAL.'';
(2) by striking subsection (a);
(3) in subsection (b)--
(A) by striking ``(b) Audits by the Comptroller General.--
'';
(B) by redesignating paragraphs (1) and (2) as subsections
(a) and (b), respectively; and
(C) by moving subsections (a) and (b), as so redesignated
by subparagraph (B), 2 ems to the left so that such
subsections are flush with the left margin; and
(4) in subsection (a), as so redesignated by paragraph
(3)(B), by striking the second sentence.
SEC. 206. ENVIRONMENTAL REVIEW REQUIREMENTS.
Section 288 of the Cranston-Gonzalez National Affordable
Housing Act (42 U.S.C. 12838) is amended--
(1) in subsection (a)--
(A) in the first sentence, by striking ``participating
jurisdictions'' and inserting ``jurisdictions, Indian tribes,
or insular areas''; and
(B) by adding at the end the following new sentences: ``The
regulations shall provide--
``(1) for the monitoring of the environmental reviews
performed under this section;
``(2) in the discretion of the Secretary, to facilitate
training for the performance of such reviews; and
``(3) for the suspension or termination of the assumption
under this section.
The Secretary's duty under the preceding sentence shall not
be construed to limit or reduce any responsibility assumed by
a State or unit of general local government with respect to
any particular release of funds.'';
(2) in the first sentence of subsection (b), by striking
``participating jurisdiction'' and inserting ``jurisdiction,
Indian tribe, or insular area'';
(3) in subsection (c)(4)(B), by striking ``participating
jurisdiction'' and inserting ``jurisdiction, Indian tribe, or
insular area''; and
(4) in subsection (d), by striking ``Assistance to a
State.--In the case of assistance to States'' and inserting
the following: ``Assistance to Units of General Local
Government From a State.--In the case of assistance to units
of general local government from a State''.
SEC. 207. USE OF CDBG FUNDS FOR HOME PROGRAM EXPENSES.
(a) Administrative Expenses.--Section 105(a)(13) of the
Housing and Community Development Act of 1974 (42 U.S.C.
5305(a)(13)) is amended by inserting after ``charges related
to'' the following: ``(A) administering the HOME program
under title II of the Cranston-Gonzalez National Affordable
Housing Act; and (B)''.
(b) Project Delivery Costs.--Section 105(a)(21) of the
Housing and Community Development Act of 1974 (42 U.S.C.
5305(a)(21)) is amended--
(1) by inserting ``in connection with tenant-based rental
assistance and affordable housing projects assisted under
title II of the Cranston-Gonzalez National Affordable Housing
Act'' after ``housing counseling''; and
(2) by striking ``authorized'' and all that follows through
``any law'' and inserting ``assisted under title II of the
Cranston-Gonzalez National Affordable Housing Act''.
SEC. 208. FLEXIBILITY OF HOME PROGRAM FOR DISASTER AREAS.
Title II of the Cranston-Gonzalez National Affordable
Housing Act (42 U.S.C. 12721 et seq.) is amended by adding at
the end the following new section:
``SEC. 290. SUSPENSION OF REQUIREMENTS FOR DISASTER AREAS.
``For funds designated under this title by a recipient to
address the damage in an area for which the President has
declared a disaster under title IV of the Robert T. Stafford
Disaster Relief and Emergency Assistance Act, the Secretary
may suspend all statutory requirements for purposes of
assistance under this title for that area, except for those
related to public notice of funding availability,
nondiscrimination, fair housing, labor standards,
environmental standards, and low-income housing
affordability.''.
SEC. 209. APPLICABILITY AND REGULATIONS.
The amendments made by this title shall apply with respect
to any amounts made available to carry out title II of the
Cranston-Gonzalez National Affordable Housing Act after the
date of the enactment of this Act and any amounts made
available to carry out such title before such date of
enactment that remain uncommitted on such date. The Secretary
shall issue any regulations necessary to carry out the
amendments made by this title not later than the expiration
of the 45-day period beginning on the date of the enactment
of this Act.
Subtitle B--HOPE Homeownership Program
SEC. 221. MATCHING REQUIREMENT UNDER HOPE FOR HOMEOWNERSHIP
OF SINGLE FAMILY HOMES PROGRAM.
Section 443(c)(1) of the Cranston-Gonzalez National
Affordable Housing Act (42 U.S.C. 12893(c)(1)) is amended by
striking ``33 percent'' and inserting ``25 percent''.
Subtitle C--Community Development Block Grants
SEC. 231. SECTION 108 ELIGIBLE ACTIVITIES.
The first sentence of section 108(a) of the Housing and
Community Development Act of 1974 (42 U.S.C. 5308(a)) is
amended--
(1) by striking ``or'' after ``section 105(a);''; and
(2) by inserting before the period the following: ``; (5)
the acquisition, construction, reconstruction, or
installation of public facilities (except for buildings for
the general conduct of government); or (6) in the case of
colonias (as such term is defined in section 916 of the
Cranston-Gonzalez National Affordable Housing Act), public
works and site or other improvements''.
SEC. 232. ECONOMIC DEVELOPMENT GRANTS.
(a) Grants.--
(1) In general.--Section 108 of the Housing and Community
Development Act of 1974 (42 U.S.C. 5308) is amended by adding
at the end the following new subsection:
``(q) Economic Development Grants.--
``(1) Authorization.--The Secretary may make grants in
connection with notes or other obligations guaranteed under
this section to eligible public entities for the purpose of
enhancing the security of loans guaranteed under this section
or improving the viability of projects financed with loans
guaranteed under this section.
``(2) Eligible activities.--Assistance under this
subsection may be used only for the purposes of and in
conjunction with projects and activities assisted under
subsection (a).
``(3) Applications.--Applications for assistance under this
subsection may be submitted only by eligible public entities,
and shall be in the form and in accordance with the
procedures established by the Secretary. Eligible public
entities may apply for grants only in conjunction with
requests for guarantees under subsection (a).
``(4) Selection criteria.--The Secretary shall establish
criteria for awarding assistance under this subsection. Such
criteria shall include--
``(A) the extent of need for such assistance;
``(B) the level of distress in the community to be served
and in the jurisdiction applying for assistance;
``(C) the quality of the plan proposed and the capacity or
potential capacity of the applicant to successfully carry out
the plan; and
``(D) such other factors as the Secretary determines to be
appropriate.''.
(2) Conforming amendment.--Title I of the Housing and
Community Development Act of 1974 (42 U.S.C. 5301 et seq.) is
amended--
(A) in section 101(c) in the second sentence, by inserting
``or a grant'' after ``guarantee''; and
(B) in section 104(b)(3), by inserting ``or a grant'' after
``guarantee''.
(b) Use of UDAG Recaptures.--Section 119(o) of the Housing
and Community Development Act of 1974 (42 U.S.C. 5318(o)) is
amended by inserting before the period the following: ``,
except that amounts available to the Secretary for use under
this subsection as of October 1, 1993, and amounts released
to the Secretary pursuant to subsection (t) may be used to
provide grants under section 108(q).''.
(c) UDAG Retention Program.--
(1) Amendment.--Section 119 of the Housing and Community
Development Act of 1974 (42 U.S.C. 5318) is amended by adding
at the end the following new subsection:
``(t) UDAG Retention Program.--If a grant or a portion of a
grant under this section remains unexpended upon the issuance
of a notice implementing this subsection, the grantee may
enter into an agreement, as provided under this subsection,
with the Secretary to receive a percentage of the grant
amount and relinquish all claims to the balance of the grant
within 90 days of the issuance of notice implementing this
subsection (or such later date as the Secretary may approve).
The Secretary shall not recapture any funds obligated
pursuant to this section during a period beginning on the
date of enactment of the Multifamily Housing Property
Disposition Reform Act of 1994 until 90 days after the
issuance of a notice implementing this subsection. A grantee
may receive as a grant under this subsection--
``(1) 33 percent of such unexpended amounts if--
``(A) the grantee agrees to expend not less than one-half
of the amount received for activities authorized pursuant to
section 108(q) and to expend such funds in conjunction with a
loan guarantee made under section 108 at least equal to twice
the amount of the funds received; and
``(B)(i) the remainder of the amount received is used for
economic development activities eligible under title I of
this Act; and
``(ii) except when waived by the Secretary in the case of a
severely distressed jurisdiction, not more than one-half of
the costs of activities under subparagraph (B) are derived
from such unexpended amounts; or
``(2) 25 percent of such unexpended amounts if--
``(A) the grantee agrees to expend such funds for economic
development activities eligible under title I of this Act;
and
``(B) except when waived by the Secretary in the case of a
severely distressed jurisdiction, not more than one-half of
the costs of such activities are derived from such unexpended
amount.''.
(2) Implementation.--Not later than 10 days after the date
of enactment of this Act, the Secretary shall, by notice
published in the Federal Register, which shall take effect
upon publication, establish such requirements as may be
necessary to implement the amendments made by this
subsection.
SEC. 233. GUARANTEE OF OBLIGATIONS BACKED BY SECTION 108
LOANS.
Section 108 of the Housing and Community Development Act of
1974 (42 U.S.C. 5308) is amended by adding after subsection
(q) (as added by section 232(a)(1) of this Act) the following
new subsection:
``(r) Guarantee of Obligations Backed by Loans.--
``(1) Authority.--The Secretary may, upon such terms and
conditions as the Secretary considers appropriate, guarantee
the timely payment of the principal of and interest on such
trust certificates or other obligations as may--
``(A) be offered by the Secretary or by any other offeror
approved for purposes of this subsection by the Secretary;
and
``(B) be based on and backed by a trust or pool composed of
notes or other obligations guaranteed or eligible for
guarantee by the Secretary under this section.
``(2) Full faith and credit.--To the same extent as
provided in subsection (f), the full faith and credit of the
United States is pledged to the payment of all amounts that
may be required to be paid under any guarantee made by the
Secretary under this subsection.
``(3) Subrogation.--If the Secretary pays a claim under a
guarantee made under this section, the Secretary shall be
subrogated for all the rights of the holder of the guaranteed
certificate or obligation with respect to such certificate or
obligation.
``(4) Effect of laws.--No State or local law, and no
Federal law, shall preclude or limit the exercise by the
Secretary of--
``(A) the power to contract with respect to public
offerings and other sales of notes, trust certificates, and
other obligations guaranteed under this section upon such
terms and conditions as the Secretary deems appropriate;
``(B) the right to enforce any such contract by any means
deemed appropriate by the Secretary; and
``(C) any ownership rights of the Secretary, as applicable,
in notes, certificates, or other obligations guaranteed under
this section, or constituting the trust or pool against which
trust certificates, or other obligations guaranteed under
this section, are offered.''.
SEC. 234. FLEXIBILITY OF CDBG PROGRAM FOR DISASTER AREAS.
Title I of the Housing and Community Development Act of
1974 (42 U.S.C. 5301 et seq.) is amended by adding at the end
the following new section:
``SEC. 122. SUSPENSION OF REQUIREMENTS FOR DISASTER AREAS.
``For funds designated under this title by a recipient to
address the damage in an area for which the President has
declared a disaster under title IV of the Robert T. Stafford
Disaster Relief and Emergency Assistance Act, the Secretary
may suspend all requirements for purposes of assistance under
section 106 for that area, except for those related to public
notice of funding availability, nondiscrimination, fair
housing, labor standards, environmental standards, and
requirements that activities benefit persons of low- and
moderate-income.''.
TITLE III--TECHNICAL AMENDMENTS
SEC. 301. DEFINITION OF ``FAMILIES''.
The first sentence of section 3(b)(3)(B) of the United
States Housing Act of 1937 (42 U.S.C. 1437a(b)(3)(B)) is
amended by striking ``means families with children'' and
inserting ``includes families with children and''.
SEC. 302. ELIMINATION OF REQUIREMENT TO IDENTIFY CIAP
REPLACEMENT NEEDS.
Section 14 of the United States Housing Act of 1937 (42
U.S.C. 1437l) is amended--
(1) in subsection (d)--
(A) by striking paragraph (2);
(B) in paragraph (4), in the matter preceding subparagraph
(A)--
(i) by striking ``and replacements,''; and
(ii) by striking ``(1), (2), and (3)'' and inserting ``(1)
and (2)''; and
(C) by redesignating paragraphs (3) and (4) as paragraphs
(2) and (3), respectively; and
(2) in subsection (f)(1)--
(A) in subparagraph (A), by striking ``(d)(4)(A)'' and
inserting ``(d)(3)(A)'';
(B) by striking subparagraph (B);
(C) in subparagraph (C), by striking ``(d)(4)'' and
inserting ``(d)(3)'';
(D) in subparagraph (D)--
(i) by striking ``(1), (2), and (3)'' and inserting ``(1)
and (2)''; and
(ii) by striking ``(d)(4)'' and inserting ``(d)(3)''; and
(E) by redesignating subparagraphs (C) and (D), as so
amended, as subparagraphs (B) and (C), respectively;
(3) in subsection (g), by striking ``(d)(4)'' and inserting
``(d)(3)''; and
(4) in subsection (h)(2), by striking ``(d)(4)'' and
inserting ``(d)(3)''.
SEC. 303. PROJECT-BASED ACCOUNTING.
Section 6(c)(4)(E) of the United States Housing Act of 1937
(42 U.S.C. 1437d(c)(4)(E)) is amended by striking ``250'' and
inserting ``500''.
SEC. 304. OPERATING SUBSIDY ADJUSTMENTS FOR ANTICIPATED FRAUD
RECOVERIES.
Section 9(a) of the United States Housing Act of 1937 (42
U.S.C. 1437g(a)) is amended by adding at the end the
following new paragraph:
``(4) Adjustments to a public housing agency's operating
subsidy made by the Secretary under this section shall
reflect actual changes in rental income collections resulting
from the application of section 904 of the Stewart B.
McKinney Homeless Assistance Amendments Act of 1988.''.
SEC. 305. ENVIRONMENTAL REVIEW PROVISIONS.
(a) Lead-Based Paint Hazard Reduction.--Section 1011 of the
Housing and Community Development Act of 1992 (42 U.S.C.
4852) is amended--
(1) by redesignating subsection (o) as subsection (p); and
(2) by inserting after subsection (n) the following new
subsection:
``(o) Environmental Review.--
``(1) In general.--For purposes of environmental review,
decisionmaking, and action pursuant to the National
Environmental Policy Act of 1969 and other provisions of law
that further the purposes of such Act, a grant under this
section shall be treated as assistance under the HOME
Investment Partnership Act, established under title II of the
Cranston-Gonzalez National Affordable Housing Act, and shall
be subject to the regulations promulgated by the Secretary to
implement section 288 of such Act.
``(2) Applicability.--This subsection shall apply to--
``(A) grants awarded under this section; and
``(B) grants awarded to States and units of general local
government for the abatement of significant lead-based paint
and lead dust hazards in low- and moderate-income owner-
occupied units and low-income privately owned rental units
pursuant to title II of the Departments of Veterans Affairs
and Housing and Urban Development, and Independent Agencies
Appropriations Act, 1992 (Public Law 102-139, 105 Stat.
736).''.
(b) Programs Under United States Housing Act of 1937.--
Title I of the United States Housing Act of 1937 (42 U.S.C.
1437 et seq.) is amended by adding at the end the following
new section:
``SEC. 26. ENVIRONMENTAL REVIEWS.
``(a) In General.--
``(1) Release of funds.--In order to assure that the
policies of the National Environmental Policy Act of 1969 and
other provisions of law which further the purposes of such
Act (as specified in regulations issued by the Secretary) are
most effectively implemented in connection with the
expenditure of funds under this title, and to assure to the
public undiminished protection of the environment, the
Secretary may, under such regulations, in lieu of the
environmental protection procedures otherwise applicable,
provide for the release of funds for projects or activities
under this title, as specified by the Secretary upon the
request of a public housing agency (including an Indian
housing authority) under this section, if the State or unit
of general local government, as designated by the Secretary
in accordance with regulations, assumes all of the
responsibilities for environmental review, decisionmaking,
and action pursuant to such Act, and such other provisions of
law as the regulations of the Secretary may specify, which
would otherwise apply to the Secretary with respect to the
release of funds.
``(2) Implementation.--The Secretary, after consultation
with the Council on Environmental Quality, shall issue such
regulations as may be necessary to carry out this section.
Such regulations shall specify the programs to be covered.
``(b) Procedure.--The Secretary shall approve the release
of funds subject to the procedures authorized by this section
only if, not less than 15 days prior to such approval and
prior to any commitment of funds to such projects or
activities, the public housing agency (including an Indian
housing authority) has submitted to the Secretary a request
for such release accompanied by a certification of the State
or unit of general local government which meets the
requirements of subsection (c). The Secretary's approval of
any such certification shall be deemed to satisfy the
Secretary's responsibilities under the National Environmental
Policy Act of 1969 and such other provisions of law as the
regulations of the Secretary specify insofar as those
responsibilities relate to the release of funds which are
covered by such certification.
``(c) Certification.--A certification under the procedures
authorized by this section shall--
``(1) be in a form acceptable to the Secretary;
``(2) be executed by the chief executive officer or other
officer of the State or unit of general local government who
qualifies under regulations of the Secretary;
``(3) specify that the State or unit of general local
government under this section has fully carried out its
responsibilities as described under subsection (a); and
``(4) specify that the certifying officer--
``(A) consents to assume the status of a responsible
Federal official under the National Environmental Policy Act
of 1969 and each provision of law specified in regulations
issued by the Secretary insofar as the provisions of such Act
or other such provision of law apply pursuant to subsection
(a); and
``(B) is authorized and consents on behalf of the State or
unit of general local government and himself or herself to
accept the jurisdiction of the Federal courts for the purpose
of enforcement of his or her responsibilities as such an
official.
``(d) Approval by States.--In cases in which a unit of
general local government carries out the responsibilities
described in subsection (c), the Secretary may permit the
State to perform those actions of the Secretary described in
subsection (b) and the performance of such actions by the
State, where permitted by the Secretary, shall be deemed to
satisfy the Secretary's responsibilities referred to in the
second sentence of subsection (b).''.
(c) Special Projects.--
(1) In general.--
(A) Release of funds.--In order to assure that the policies
of the National Environmental Policy Act of 1969 and other
provisions of law which further the purposes of such Act (as
specified in regulations issued by the Secretary) are most
effectively implemented in connection with the expenditure of
funds for special projects appropriated under an
appropriations Act for the Department of Housing and Urban
Development, such as special projects under the head ``Annual
Contributions for Assisted Housing'' in title II of the
Departments of Veterans Affairs and Housing and Urban
Development, and Independent Agencies Appropriations Act,
1993, and to assure to the public undiminished protection of
the environment, the Secretary of Housing and Urban
Development may, under such regulations, in lieu of the
environmental protection procedures otherwise applicable,
provide for the release of funds for particular special
projects upon the request of recipients of special projects
assistance, if the State or unit of general local government,
as designated by the Secretary in accordance with
regulations, assumes all of the responsibilities for
environmental review, decisionmaking, and action pursuant to
such Act, and such other provisions of law as the regulations
of the Secretary specify, that would otherwise apply to the
Secretary were the Secretary to undertake such special
projects as Federal projects.
(B) Implementation.--The Secretary shall issue regulations
to carry out this subsection only after consultation with the
Council on Environmental Quality. Such regulations shall--
(i) provide for monitoring of the performance of
environmental reviews under this subsection;
(ii) in the discretion of the Secretary, provide for the
provision or facilitation of training for such performance;
and
(iii) subject to the discretion of the Secretary, provide
for suspension or termination by the Secretary of the
assumption under subparagraph (A).
(C) Responsibilities of state or unit of general local
government.--The Secretary's duty under subparagraph (B)
shall not be construed to limit any responsibility assumed by
a State or unit of general local government with respect to
any particular release of funds under subparagraph (A).
(2) Procedure.--The Secretary shall approve the release of
funds for projects subject to the procedures authorized by
this subsection only if, not less than 15 days prior to such
approval and prior to any commitment of funds to such
projects, the recipient submits to the Secretary a request
for such release, accompanied by a certification of the State
or unit of general local government which meets the
requirements of paragraph (3). The Secretary's approval of
any such certification shall be deemed to satisfy the
Secretary's responsibilities under the National Environmental
Policy Act of 1969 and such other provisions of law as the
regulations of the Secretary specify insofar as those
responsibilities relate to the releases of funds for special
projects to be carried out pursuant thereto which are covered
by such certification.
(3) Certification.--A certification under the procedures
authorized by this subsection shall--
(A) be in a form acceptable to the Secretary;
(B) be executed by the chief executive officer or other
officer of the State or unit of general local government who
qualifies under regulations of the Secretary;
(C) specify that the State or unit of general local
government under this subsection has fully carried out its
responsibilities as described under paragraph (1); and
(D) specify that the certifying officer--
(i) consents to assume the status of a responsible Federal
official under the National Environmental Policy Act of 1969
and each provision of law specified in regulations issued by
the Secretary insofar as the provisions of such Act or other
such provision of law apply pursuant to paragraph (1); and
(ii) is authorized and consents on behalf of the State or
unit of general local government and himself or herself to
accept the jurisdiction of the Federal courts for the purpose
of enforcement of the responsibilities as such an official.
(4) Approval by states.--In cases in which a unit of
general local government carries out the responsibilities
described in paragraph (1), the Secretary may permit the
State to perform those actions of the Secretary described in
paragraph (2) and the performance of such actions by the
State, where permitted by the Secretary, shall be deemed to
satisfy the Secretary's responsibilities referred to in the
second sentence of paragraph (2).
SEC. 306. CORRECTION OF FHA MULTIFAMILY MORTGAGE LIMITS.
The National Housing Act (12 U.S.C. 1701 et seq.) is
amended in sections 207(c)(3), 213(b)(2), 220(d)(3)(B)(iii),
and 234(e)(3) by striking ``$59,160'' each place it appears
and inserting ``$56,160''.
SEC. 307. AMENDMENTS TO FHA MULTIFAMILY RISK-SHARING AND
HOUSING FINANCE AGENCY PILOT PROGRAMS.
(a) Risk-Sharing Pilot Program.--Section 542(b) of the
Housing and Community Development Act of 1992 (12 U.S.C. 1707
note) is amended--
(1) by striking paragraphs (1) and (2) and inserting the
following new paragraphs:
``(1) In general.--The Secretary shall carry out a pilot
program in conjunction with qualified participating entities
to determine the effectiveness of Federal credit enhancement
for loans for affordable multifamily housing through a system
of risk-sharing agreements with such entities.
``(2) Program requirements.--
``(A) In general.--In carrying out the pilot program under
this subsection, the Secretary shall enter into risk-sharing
agreements with qualified participating entities.
``(B) Mortgage insurance and reinsurance.--Agreements under
subparagraph (A) may provide for (i) mortgage insurance
through the Federal Housing Administration of loans for
affordable multifamily housing originated by or through, or
purchased by, qualified participating entities, and (ii)
reinsurance, including reinsurance of pools of loans, on
affordable multifamily housing. In entering into risk-sharing
agreements under this subsection covering mortgages, the
Secretary may give preference to mortgages that are not
already in the portfolios of qualified participating
entities.
``(C) Risk apportionment.--Agreements entered into under
this subsection between the Secretary and a qualified
participating entity shall specify the percentage of loss
that each of the parties to the agreement will assume in the
event of default of the insured or reinsured multifamily
mortgage. Such agreements shall specify that the qualified
participating entity and the Secretary shall share any loss
in accordance with the risk-sharing agreement.
``(D) Reimbursement capacity.--Agreements entered into
under this subsection between the Secretary and a qualified
participating entity shall provide evidence acceptable to the
Secretary of the capacity of such entity to fulfill any
reimbursement obligations made pursuant to this subsection.
Evidence of such capacity which may be considered by the
Secretary may include--
``(i) a pledge of the full faith and credit of a qualified
participating entity to fulfill any obligations entered into
by the entity;
``(ii) reserves pledged or otherwise restricted by the
qualified participating entity in an amount equal to an
agreed upon percentage of the loss assumed by the entity
under subparagraph (C);
``(iii) funds pledged through a State or local guarantee
fund; or
``(iv) any other form of evidence mutually agreed upon by
the Secretary and the qualified participating entity.
``(E) Underwriting standards.--The Secretary shall allow
any qualified participating entity to use its own
underwriting standards and loan terms and conditions for
purposes of underwriting loans to be insured under this
subsection, except as provided in this section, without
further review by the Secretary, except that the Secretary
may impose additional underwriting criteria and loan terms
and conditions for contractual agreements where the Secretary
retains more than 50 percent of the risk of loss. Any
financing permitted on property insured under this subsection
other than the first mortgage shall be expressly subordinate
to the insured mortgage.
``(F) Authority of secretary.--The Secretary, upon request
of a qualified participating entity, may insure or reinsure
and make commitments to insure or reinsure under this section
any mortgage, advance, loan, or pool of mortgages otherwise
eligible under this section, pursuant to a risk-sharing
agreement providing that the qualified participating entity
will carry out (under a delegation or otherwise, and with or
without compensation, but subject to audit, exception, or
review requirements) such credit approval, appraisal,
inspection, issuance of commitments, approval of insurance of
advances, cost certification, servicing, property
disposition, or other functions as the Secretary shall
approve as consistent with the purpose of this section. All
appraisals of property for mortgage insurance under this
section shall be completed by a Certified General Appraiser
in accordance with the Uniform Standards of Professional
Appraisal Practice.
``(G) Disclosure of records.--Qualified participating
entities shall make available to the Secretary or the
Secretary's designee, at the Secretary's request, such
financial and other records as the Secretary deems necessary
for purposes of review and monitoring for the program under
this section.'';
(2) in paragraph (4), by striking ``financial institutions
and entities to be eligible to enter into reinsurance
agreements'' and inserting ``eligibility under this
subsection of qualified participating entities'';
(3) by striking paragraph (8) and inserting the following
new paragraph:
``(11) Implementation.--The Secretary shall take any
administrative actions necessary to initiate the pilot
program under this subsection.''; and
(4) by inserting after paragraph (7) the following new
paragraphs:
``(8) Prohibition on ginnie mae securitization.--The
Government National Mortgage Association shall not securitize
any multifamily loans insured or reinsured under this
subsection.
``(9) Qualification as affordable housing.--Multifamily
housing securing loans insured or reinsured under this
subsection shall qualify as affordable only if the housing is
occupied by families and bears rents not greater than the
gross rent for rent-restricted residential units as
determined under section 42(g) of the Internal Revenue Code
of 1986.
``(10) Certification of subsidy layering compliance.--The
requirements of section 102(d) of the Department of Housing
and Urban Development Reform Act of 1989 may be satisfied in
connection with a commitment to insure a mortgage under this
subsection by a certification by a housing credit agency
(including an entity established by a State that provides
mortgage insurance) to the Secretary that the combination of
assistance within the jurisdiction of the Secretary and other
government assistance provided in connection with a property
for which a mortgage is to be insured shall not be any
greater than is necessary to provide affordable housing.''.
(b) Housing Finance Agency Pilot Program.--Section 542(c)
of the Housing and Community Development Act of 1992 (12
U.S.C. 1707 note) is amended--
(1) in paragraph (1), by inserting after ``qualified
housing finance agencies'' the following: ``(including
entities established by States that provide mortgage
insurance)'';
(2) in paragraph (2)--
(A) in subparagraph (C), by striking the last sentence and
inserting the following: ``Such agreements shall specify that
the qualified housing finance agency and the Secretary shall
share any loss in accordance with the risk-sharing
agreement.''; and
(B) by adding at the end the following new subparagraph:
``(F) Disclosure of records.--Qualified housing finance
agencies shall make available to the Secretary such financial
and other records as the Secretary deems necessary for
program review and monitoring purposes.'';
(3) in paragraph (7)--
(A) by striking ``very low-income''; and
(B) by striking ``(2)''; and
(4) by adding at the end the following new paragraphs:
``(9) Environmental and other reviews.--
``(A) Environmental reviews.--
``(i) In general.--(I) In order to assure that the policies
of the National Environmental Policy Act of 1969 and other
provisions of law which further the purposes of such Act (as
specified in regulations issued by the Secretary) are most
effectively implemented in connection with the insurance of
mortgages under subsection (c)(2), and to assure to the
public undiminished protection of the environment, the
Secretary may, under such regulations, in lieu of the
environmental protection procedures otherwise applicable,
provide for agreements to endorse for insurance mortgages
under subsection (c)(2) upon the request of qualified housing
finance agencies under this subsection, if the State or unit
of general local government, as designated by the Secretary
in accordance with regulations, assumes all of the
responsibilities for environmental review, decisionmaking,
and action pursuant to such Act, and such other provisions of
law as the regulations of the Secretary may specify, that
would otherwise apply to the Secretary with respect to the
insurance of mortgages on particular properties.
``(II) The Secretary shall issue regulations to carry out
this subparagraph only after consultation with the Council on
Environmental Quality. Such regulations shall, among other
matters, provide--
``(aa) for the monitoring of the performance of
environmental reviews under this subparagraph;
``(bb) subject to the discretion of the Secretary, for the
provision or facilitation of training for such performance;
and
``(cc) subject to the discretion of the Secretary, for the
suspension or termination by the Secretary of the qualified
housing finance agency's responsibilities under subclause
(I).
``(III) The Secretary's duty under subclause (II) shall not
be construed to limit any responsibility assumed by a State
or unit of general local government with respect to any
particular property under subclause (I).
``(ii) Procedure.--The Secretary shall approve a mortgage
for the provision of mortgage insurance subject to the
procedures authorized by this paragraph only if, not less
than 15 days prior to such approval, prior to any approval,
commitment, or endorsement of mortgage insurance on the
property on behalf of the Secretary, and prior to any
commitment by the qualified housing finance agency to provide
financing under the risk-sharing agreement with respect to
the property, the qualified housing finance agency submits to
the Secretary a request for such approval, accompanied by a
certification of the State or unit of general local
government that meets the requirements of clause (iii). The
Secretary's approval of any such certification shall be
deemed to satisfy the Secretary's responsibilities under the
National Environmental Policy Act of 1969 and such other
provisions of law as the regulations of the Secretary specify
insofar as those responsibilities relate to the provision of
mortgage insurance on the property that is covered by such
certification.
``(iii) Certification.--A certification under the
procedures authorized by this paragraph shall--
``(I) be in a form acceptable to the Secretary;
``(II) be executed by the chief executive officer or other
officer of the State or unit of general local government who
qualifies under regulations of the Secretary;
``(III) specify that the State or unit of general local
government under this section has fully carried out its
responsibilities as described under clause (i); and
``(IV) specify that the certifying officer consents to
assume the status of a responsible Federal official under the
National Environmental Policy Act of 1969 and under each
provision of law specified in regulations issued by the
Secretary insofar as the provisions of such Act or such other
provisions of law apply pursuant to clause (i), and is
authorized and consents on behalf of the State or unit of
general local government and himself or herself to accept the
jurisdiction of the Federal courts for the purpose of
enforcement of the responsibilities as such an official.
``(iv) Approval by states.--In cases in which a unit of
general local government carries out the responsibilities
described in clause (i), the Secretary may permit the State
to perform those actions of the Secretary described in clause
(ii) and the performance of such actions by the State, where
permitted by the Secretary, shall be deemed to satisfy the
Secretary's responsibilities referred to in the second
sentence of clause (ii).
``(B) Lead-based paint poisoning prevention.--In carrying
out the requirements of section 302 of the Lead-Based Paint
Poisoning Prevention Act, the Secretary may provide by
regulation for the assumption of all or part of the
Secretary's duties under such Act by qualified housing
finance agencies, for purposes of this section.
``(C) Certification of subsidy layering compliance.--The
requirements of section 102(d) of the Department of Housing
and Urban Development Reform Act of 1989 may be satisfied in
connection with a commitment to insure a mortgage under this
subsection by a certification by a housing credit agency
(including an entity established by a State that provides
mortgage insurance) to the Secretary that the combination of
assistance within the jurisdiction of the Secretary and other
government assistance provided in connection with a property
for which a mortgage is to be insured shall not be any
greater than is necessary to provide affordable housing.
``(10) Definitions.--For purposes of this subsection, the
following definitions shall apply:
``(A) Mortgage.--The term `mortgage' means a first mortgage
on real estate that is--
``(i) owned in fee simple; or
``(ii) subject to a leasehold interest that--
``(I) has a term of not less than 99 years and is
renewable; or
``(II) has a remaining term that extends beyond the
maturity of the mortgage for a period of not less than 10
years.
``(B) First mortgage.--The term `first mortgage' means a
single first lien given to secure advances on, or the unpaid
purchase price of, real estate, under the laws of the State
in which the real estate is located, together with the credit
instrument, if any, secured thereby. Any other financing
permitted on property insured under this section must be
expressly subordinate to the insured mortgage.
``(C) Unit of general local government; state.--The terms
`unit of general local government' and `State' have the same
meanings as in section 102(a) of the Housing and Community
Development Act of 1974.''.
(c) Definitions.--Section 544 of the Housing and Community
Development Act of 1992 (12 U.S.C. 1707 note) is amended--
(1) by striking paragraph (1) and inserting the following
new paragraph:
``(1) The term `multifamily housing' means housing
accommodations on the mortgaged property that are designed
principally for residential use, conform to standards
satisfactory to the Secretary, and consist of not less than 5
rental units on 1 site. These units may be detached,
semidetached, row house, or multifamily structures.''; and
(2) by adding at the end the following new paragraph:
``(5) The term `qualified participating entity' means an
entity approved by the Secretary for participation in the
pilot program under this subsection, which may include--
``(A) the Federal National Mortgage Association;
``(B) the Federal Home Loan Mortgage Corporation;
``(C) State housing finance and mortgage insurance
agencies; and
``(D) the Federal Housing Finance Board.''.
SEC. 308. SUBSIDY LAYERING REVIEW.
Section 911 of the Housing and Community Development Act of
1992 (42 U.S.C. 3545 note) is amended--
(1) by striking subsection (a) and inserting the following
new subsection:
``(a) Certification of Subsidy Layering Compliance.--The
requirements of section 102(d) of the Department of Housing
and Urban Development Reform Act of 1989 may be satisfied in
connection with a project receiving assistance under a
program that is within the jurisdiction of the Department of
Housing and Urban Development and under section 42 of the
Internal Revenue Code of 1986 by a certification by a housing
credit agency to the Secretary, submitted in accordance with
guidelines established by the Secretary, that the combination
of assistance within the jurisdiction of the Secretary and
other government assistance provided in connection with a
property for which assistance is to be provided within the
jurisdiction of the Department of Housing and Urban
Development and under section 42 of the Internal Revenue Code
of 1986 shall not be any greater than is necessary to provide
affordable housing.''; and
(2) by striking subsection (c) and inserting the following
new subsection:
``(c) Revocation by Secretary.--If the Secretary determines
that a housing credit agency has failed to comply with the
guidelines established under subsection (a), the Secretary--
``(1) may inform the housing credit agency that the agency
may no longer submit certification of subsidy layering
compliance under this section; and
``(2) shall carry out section 102(d) of the Department of
Housing and Urban Development Reform Act of 1989 relating to
affected projects allocated a low-income housing tax credit
pursuant to section 42 of the Internal Revenue Code of
1986.''.
Amend the title so as to read: ``An Act to amend section 203 of the
Housing and Community Development Amendments of 1978 to provide for
the disposition of multifamily properties owned by the Secretary of
Housing and Urban Development, to provide for other reforms in
programs administered by the Secretary, and to make certain
technical amendments, and for other purposes.''.
Mr. SARBANES. Mr. President, I rise to speak in favor of S. 1299--the
Multifamily Property Disposition Reform Act of 1994. The Senate first
passed S. 1299 last November on a unanimous vote. On Tuesday this week,
the House also passed S. 1299, with amendments, by an overwhelming
majority. The bill we will pass today closely resembles the original
Senate-passed bill and I urge its adoption.
S. 1299 represents a major step forward in making the Department of
Housing and Urban Development [HUD] a more effective partner--with
State and local governments and the for-profit and nonprofit housing
providers--in the provision of decent, safe, and sanitary housing in
this country. This bill incorporates important improvements to HUD's
programs that will allow HUD Secretary Cisneros to move forward in
solving some of the more intractable problems confronting his
Department.
At the core of this legislation are reforms to the way in which HUD
disposes of properties it acquires as a result of defaults on FHA-
insured mortgages. The problems with the current HUD multifamily
property disposition statute are revealed by the basic statistics: the
HUD-owned inventory of multifamily properties quadrupled between 1989
and 1993 to over 31,000 units. By the end of this year, the HUD-owned
inventory will likely double again, to over 69,000 units.
The main impediment to the sale of these properties is a requirement
in current law that HUD provide 15-year Section 8 subsidies on most of
the units in its inventory upon disposition. However, the funding
levels necessary to meet these subsidy requirements have never been
met.
Existing law embodied a noble impulse: by requiring these subsidies
Congress hoped to create additional permanent units of affordable
housing. However, without adequate funding, the law only offered
tenants of HUD-owned properties a theoretical right to section 8
subsidies. Lacking funding for subsidies, HUD has become a perpetual
landlord. Unfortunately, the Department, by its own admission, is not
well suited to this role. As a result, many properties are
deteriorating under HUD's stewardship.
It is important, Mr. President, to remember that we are not just
talking about projects; we are talking about places that families call
home. The projects in HUD's inventory are often quite distressed. To a
certain extent, this legislation is about poor families living in
dilapidated apartment buildings. It is about neighborhoods blighted by
housing development gone sour.
The answer, of course, was to craft a solution that moves these
properties as promptly as possible into the hands of owners with the
resources to maintain this inventory in decent condition and, at the
same time, balance the need to protect existing residents from
displacement, preserve units as affordable housing, and provide a
reasonable return to the taxpayer. I believe that S. 1299 achieves this
balance.
It is important to point out that one of the key elements of this
bill is that every tenant who currently receives a HUD subsidy will
continue to receive a subsidy after disposition. In this legislation,
Congress not only mandates that subsidies be provided to all tenants
who were receiving a subsidy before their prior owner defaulted, but
provides HUD with workable tools which will facilitate the long-term
physical and financial viability of these projects. These new tools
include short-term loans, rehabilitation grants, rent restrictions, and
tenant-based assistance. Further, the bill will restrict rent increases
for a 24-month period on certain units occupied by very low-income
families as an additional protection against displacement.
Unfortunately, the problems in disposing of multifamily project are
only the tip of the iceberg: HUD owns and services mortgages with a
face value of over $7 billion. Some $6.2 billion of these mortgages are
delinquent--covering properties with over 219,000 units. The 1992 audit
of the FHA insurance funds required HUD to increase the loan reserves
on FHA insurance-in-force from $5.5 billion to $11.9 billion.
In response to the condition of the FHA portfolio, S. 1299 also
provides initiatives designed to prevent these projected losses from
occurring. For example, the legislation requires HUD to develop a
streamlined mortgage refinancing program to take advantage of current
flow interest rates. The legislation also more clearly ties existing
assistance programs to projects at risk of default. And, the
legislation gives HUD explicit authority to sell certain mortgages,
freeing HUD staff to focus on working out the troubled mortgages that
require greater attention.
In addition to the multifamily reforms, S. 1299 offers significant
enhancements to other important HUD programs. Local governments using
the HOME program are provided with greater flexibility to meet their
housing needs. Most notably, the bill removes bias against new
construction in the HOME program by creating a uniform 25 percent match
for all activities. S. 1299 also makes homeownership activities easier
by simplifying resale provisions and by removing a requirement that the
HOME program only assist first-time homebuyers.
S. 1299 makes the existing Community Development Block Grant Section
108 loan guarantee program more workable. The bill expands the
activities eligible under the program and creates a new grant program
that will increase the use of the program. These grants will be used to
reduce the risk of using CDBG to back section 108 projects, creating an
incentive for cities to use this underutilized economic development
tool.
There were a few important provisions in the Senate-passed bill that
the House was unable to accept at this time. These include rent reform
for public housing, the COMPAC crime prevention initiative, amendments
to be severely distressed public housing program, and civil money
penalties for certain owners and managers of HUD-assisted properties.
These reforms continue to be important and timely; however, they have
been postponed for consideration in the context of the larger housing
program reauthorization effort scheduled for later in this session.
In closing, I would like to thank my colleagues on the Senate Banking
Committee--Chairman Riegle, ranking member Senator D'Amato, and Senator
Bond, for their assistance in crafting this important piece of
legislation. I would also like to especially thank my colleagues on the
House side--Banking Committee Chairman Gonzalez and Congresswoman
Roukema--for their support and contributions to this legislation.
Thanks go also to Secretary Cisneros and his excellent team at HUD for
the time and energy that they put into this legislation. The successful
working relationship established in connection with this legislation
bodes well for the upcoming effort that will be required to reauthorize
our Nation's housing programs.
Finally, I would like to recognize the fine work of the Senate staff
who put in long hours of hard work to bring this bill to this point. I
would like to extend my personal thanks to the Senate Housing
Subcommittee majority staff--Paul Weech, Lori Bamberger, Cheryl Fox,
Robin Campbell, Kris Warren, Gina Ramos, and Eileen Gallagher--the
minority staff--Jon Kamarck and Fallie Calder--and also full Banking
Committee staff--Kevin Chavers and Jeannine Jacokes for their efforts.
Mr. RIEGLE. I would like to offer my strong support for S. 1299--the
Multifamily Housing Property Disposition Act of 1994. A similar version
of this bill was passed last year on November 18, 1993 with the support
of the full Senate. This package is essentially the same bill the
Senate passed with some important refinements added by the House when
it acted upon S. 1299. I believe this bill is critically important
because it responds to the multifamily crisis confronting the
Department of Housing and Urban Development [HUD].
Problems in HUD's multifamily portfolio have been of concern to the
Committee for a long period of time. Last year, the Committee held a
hearing on June 22 on this dire situation. Our witnesses testified that
HUD has experienced a significant increase in loan loss reserves for
1992 from $5.5 billion to $11.9 billion, in order to cover anticipated
losses from future defaults on mortgages insured by HUD. We also heard
how problems in HUD's multifamily programs are exacerbated by the
current rules governing property disposition.
S. 1299 addresses these issues by providing greater flexibility in
the disposition of HUD-owned multifamily properties while protecting
affordability and preservation objectives in current law. This bill
gives the department new tools to facilitate disposition. It increases
the department's flexibility in disposing of properties and expedites
the sales of properties. The expedited sales of HUD-owned properties
will reduce the costs of holding and maintaining the properties in the
inventory. This will free up HUD's resources to focus on preventing
defaults on currently insured mortgages. The bill also provides tools
designed to prevent such defaults from occurring and to minimize
losses.
Amendments made by the House to the Senate-passed S. 1299 strengthen
tenant protections by requiring restraints on rent increases for 2
years after disposition for certain very low-income residents. The
House also chose to postpone consideration of a provision included in
the Senate-passed bill that would have applied civil money penalties to
owners, general partners, and certain managing agents of HUD-assisted
properties in cases where such parties failed to adequately maintain
the properties.
The bill also includes several other important provisions that will
help create jobs for people living in economically-distressed
communities. It contains an economic development initiative which will
allow Community Development Block Grant recipients who use the section
108 Loan Guarantee Program to use grants to create viable economic
development projects. The bill includes a UDAG trade-in program. This
program will permit cities to trade in outstanding UDAG grants in
exchange for funds for other economic development projects.
In addition, the bill contains several technical amendments to the
HOME program and other technical changes which correct errors in recent
legislation.
This bill represents an important step in providing HUD with the
flexibility and tools it needs to confront the crisis in its
multifamily programs, in particular, and its management problems, in
general. I wish to commend Housing and Urban Affairs Subcommittee
Chairman Sarbanes and his ranking Republican member, Senator Bond, as
well as Senator D'Amato for the bipartisan spirit with which we have
worked to put this bill together.
I ask my colleagues to join me in supporting this important piece of
legislation.
Mr. BOND. Mr. President, I want to state my strong support for S.
1299, the Multifamily Housing Property Disposition Reform Act of 1994.
This bill was initially reported out of the Senate Committee on
Banking, Housing, and Urban Affairs by unanimous vote on October 19,
1993, and subsequently passed the Senate on November 19, 1993. This
bill with certain perfecting amendments has been since considered and
passed by the House on March 22, 1994, by a vote of 413 to 9.
S. 1299 is important legislation that addresses several critical
issues that are crucial to the ability of the Department of Housing and
Urban Development to carry out the requirements of a number of its
programs. In particular, S. 1299 will provide HUD with needed
flexibility in the disposition of its multifamily housing inventory,
provide HUD with needed authority to help prevent the default of HUD-
insured mortgages, make several reforms to the CDBG and HOME programs,
and make other noncontroversial technical amendments to HUD programs.
S. 1299 is designed, most importantly, to address a crisis in HUD's
FHA Multifamily Housing Property Disposition Program by providing HUD
with significant flexibility to dispose of an ever-growing inventory of
FHA insured multifamily housing projects which are acquired by HUD
through either foreclosure or by assignment.
HUD testified before the Senate Housing Subcommittee on June 22,
1993, that the FHA Multifamily Housing Property Disposition Program is
very costly to the Department and that section 203 of the Housing and
Community Development Amendments of 1978 limits severely the ability of
HUD to effectively and efficiently dispose of properties in its
multifamily housing property disposition inventory. As a practical
matter, HUD has construed section 203 of the 1978 amendments to require
HUD to provide 15-year project-based section 8 assistance for most of
the units in housing projects held by HUD in its multifamily housing
inventory. HUD does not and will not have enough 15-year project-based
section 8 assistance to meet the section 203 disposition requirements.
As a result, HUD has become an involuntary landlord which, by its own
admission, does not have the administrative capacity to maintain the
physical needs and housing quality standards of this housing.
In particular, the inventory of HUD-owned multifamily housing
projects has quadrupled since 1989, with the expectation that the
inventory could balloon to some 69,000 units by the end of 1994. The
cost of disposition of these units under the existing section 203 is
currently estimated at over $5.4 billion. Moreover, the inventory of
HUD-held multifamily housing has substantially increased to over 2,400
mortgages covering some 219,000 units. To cover these future estimated
losses, HUD was required to increase the insurance loss reserves from
$5.5 billion in 1991 to $11.9 billion in 1992.
These are significant and costly obligations. In response to these
concerns, I introduced with Senator D'Amato on July 22, 1993, S. 1279,
the FHA Multifamily Housing Flexible Disposition Act of 1993. S. 1279
would have provided HUD, for 18 months, with complete flexibility to
dispose of its multifamily housing property inventory while balancing
the need to maintain the low-income nature of the housing. S. 1299, as
amended, does not go as far as S. 1279. Nevertheless, S. 1299
responsibility addresses this crisis by providing HUD with significant
flexibility to dispose of these multifamily housing projects while
requiring HUD to continue to provide housing assistance or rent
affordability to, at a minimum, the low-income households already
receiving assistance. This new flexibility includes the use of section
8 project-based and tenant-based assistance, bridge loans to nonprofits
and public entities, rehabilitation grants, discounted sales prices,
and the use of rent restrictions in lieu of section 8 subsidies. I also
strongly support and urged adoption of a provision in the legislation
which would allow HUD to authorize demolition and to provide project-
based assistance for the rebuilding of certain projects which have not
been maintained in a decent, safe, and sanitary condition, and for
which rebuilding would be less expensive than substantial
rehabilitation. I believe this provision will be of tremendous benefit
Nation-wide to communities with very troubled and deteriorated
multifamily housing, I emphasize that the provisions of S. 1299 are
bipartisan, flexible, will help to guarantee good housing quality
standards, and, most importantly, will protect low-income households
already receiving housing assistance.
This bill also provides a number of modest changes to current housing
law to help HUD assess and minimize the risk of mortgage default with
regard to the FHA insured multifamily inventory. For example, the bill
would make several noncontroversial revisions to the Flexible Subsidy
Program to ensure that housing repair needs are better and more
appropriately addressed.
This bill also makes a number of noncontroversial changes to the HOME
Program which should help localities better use this program. In
particular the HOME match will be a flat 25-percent local match as
opposed to the current two tiered match, which includes a 30-percent
local match for new construction. S. 1299 also makes some positive
changes to the section 108 program to broaden its scope and assist
communities in using section 108 loan guarantees. Moreover, a provision
of mine is intended to provide communities which are declared Federal
disaster areas with more flexibility in using their annual HOME and
CDBG funding.
In conclusion, this bill is an excellent example of a bipartisan
solution to the costly problem of HUD's disposition of its multifamily
housing inventory. It also makes a number of other important, although
noncontroversial, housing policy decisions.
I urge my colleagues to support S. 1299.
Mr. SARBANES. The law governing HUD's disposition of multifamily
housing properties--that we are amending today--can be found in section
203 of the Housing and Community Development Amendments of 1978. S.
1299 amends and rewrites section 203 in its entirety, in order to
streamline its provisions and to provide HUD with certain conditioned
flexibility to dispose of the properties that it has acquired through
mortgage defaults.
Subsection (a) of the amended section 203 sets forth the goals that
Congress requires the Department to follow in disposing of the
properties it owns. In many instances, these goals may conflict, and
the status directs the Department of balance these competing goals to
the best of its ability and within available resources.
Subsection (e) of section 203, as amended by S. 1299, mandates
certain minimum subsidies and affordability requirements that the
Department must provide to certain tenants or units. In the opening
sentence of subsection (e), we have modified that requirement by a
reference to only one of the goals of the statute, and I wanted to make
it clear for the record why we included that modified language in this
bill.
The new subsection (e) begins: ``In disposing of multifamily housing
property under this section, consistent with the goal of section
203(a)(3)(A), the Secretary shall take separately, or in combination
with other actions under this subsection or subsection (f), one or more
of the following actions: * * *.'' Section 203(a)(3)(A) is a goal of
``preserving certain housing so that it can remain available to and
affordable by low-income persons.'' I would like to clarify that this
reference to the goal set forth in section 203(a)(3)(A) is in no way
intended to lessen the requirement that HUD provide section 8
assistance to any tenants or units so entitled under subsection (e).
With very limited exceptions, HUD must perform the analysis required by
subsection (e) for each and every property in its inventory to identify
which residents or units must receive assistance under the provisions
of the new law.
The reference to the single goal was included in this bill for two
reasons. First, the language will permit the Department to take
advantage of limited authorities set forth in paragraphs (f)(6),
(f)(7), and (f)(8) of the amended section 203. In these paragraphs, the
Department retains the discretionary authority to provide specific
alternative assistance to tenants or to undertake specific actions
which benefit tenants in lieu of providing assistance otherwise
required under subsection (e). Second, we were particularly concerned
that without this reference to preserving certain properties, the
Department would not be able to demolish and replace projects in those
isolated cases where such a strategy is necessary--where demolition is
dictated by health and safety concerns, where the cost of replacement
is less than the cost of rehabilitating an existing structure, or where
the structure, even after rehabilitation, would not be physically or
financially viable.
Mr. BOND. Will the Senate yield? I would like to express my agreement
with Senator from Maryland's interpretation. This language was not
added to lessen the requirement that the Department must balance all
the goals when disposing of any property it owns. Nor was it intended
to arbitrarily exempt certain properties from the section 8 assistance
required under subsection (e). The language was intended to reinforce
those alternative disposition tools, set forth in paragraphs (6), (7),
and (8) of subsection (f), that have been developed in this amended
statute. Of course, the statute requires the Secretary to identify
through regulation how these alternatives, as well as any demolition
authority, will be implemented.
In this context, I am particularly pleased that the bill we are
passing today includes a new provision, set forth in subsection (f)(8),
that will allow the Department to use the section 8 assistance
otherwise required under subsection (e) to rebuild projects that are
not habitable, as long as the rebuilding is less costly than
rehabilitation and current tenants are protected. I, for one, know this
tool will be particularly useful in Missouri; the Department has
identified other instances where certain projects have deteriorated to
the point where rebuilding would be appropriate.
Mr. SARBANES. I thank my colleague for his comments. A second point
of clarification may be needed with respect to S. 1299. Subsection
(203)(e)(2) allows the Secretary to substitute tenant-based section 8
rental assistance for project-based section 8 assistance in certain
circumstances. A similar provision exists under current law, and is
commonly known as the soft-market test. The changes made to this
section were not intended to reverse the requirement that this option
apply only in soft markets--as determined by the Secretary. Rather,
enhancements made to section 203(e)(2) were intended to ensure that the
Department additionally analyze whether households receiving tenant-
based assistant would be able to use such assistance successfully in
those soft markets.
Mr. BOND. That is also understanding. I thank the chairman of the
Senate Housing Subcommittee for that clarification of this provision.
Mr. FORD. Mr. President, I move that the Senate concur in the
amendments of the House.
The PRESIDENT pro tempore. The question is on agreeing to the motion.
The motion was agreed to.
Mr. FORD. Mr. President, I move to reconsider.
Mr. CRAIG. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
Mr. FORD. Mr. President, I further ask unanimous consent that the
Senator concur in the House amendment to the title, and that any
statements on this measure appear in the Record at the appropriate
place as though read.
The PRESIDENT pro tempore. Without objection, it is so ordered.
____________________