[Congressional Record Volume 140, Number 36 (Friday, March 25, 1994)]
[House]
[Page H]
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[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.

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