[Congressional Record Volume 141, Number 206 (Thursday, December 21, 1995)]
[Senate]
[Pages S19111-S19113]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. D'AMATO (for himself, Mr. Mack, Mr. Bond, Mr. Domenici, 
        Mr. Bennett, and Mr. Shelby):
  S. 1494. A bill to provide an extension for fiscal year 1996 for 
certain programs administered by the Secretary of Housing and Urban 
Development and the Secretary of Agriculture, and for other purposes; 
to the Committee on Banking, Housing, and Urban Affairs.


         the housing opportunity program extension act of 1995

  Mr. D'AMATO. Mr. President, I rise to introduce the Housing 
Opportunity Program Extension Act of 1995. I wish to thank Senators 
Mack, Bond, Shelby, Bennett, and Domenici for their cosponsorship of 
this much needed legislation.
  This important measure would provide short-term extensions of housing 
programs which have expired. This bill does not create new housing 
policy, but is a stopgap measure which would allow existing programs to 
continue until October 1, 1996. Next year, the Banking Committee and 
its Housing Subcommittees will continue its evaluation of proposals for 
reorganization and elimination of the Department of Housing and Urban 
Development. Omnibus housing legislation will be introduced in the 
Spring of 1996 which will reorganize, transfer or eliminate housing and 
community development programs. Some of the programs extended in this 
legislation will be reformed at that time. Modifications of these 
programs will be reserved until the Banking Committee has the 
opportunity for hearings and debate next year.
  The majority of the housing program extensions contained in this bill 
were passed by the Senate and House in the fiscal year 1996 Departments 
of Veterans Affairs and Housing and Urban Development, and Independent 
Agencies appropriations bill (H.R. 2099). If it were not for the recent 
veto of H.R. 2099, this legislation would not be necessary. However, 
the President's veto has placed our Nation's housing delivery system in 
serious jeopardy. It is imperative that we act to extend housing 
programs which would otherwise be suspended for an indefinite time 
period.
  This legislation would extend the following: Section 8 contract 
renewals; the Community Development Block Grant homeownership program; 
the Section 515 rural multifamily loan program; the Home Equity 
Conversion Mortgage program; and the Multifamily Housing Risk-Sharing 
programs.
  I look forward to working with all Members of the Senate on a 
bipartisan basis to ensure the swift passage of this much needed 
legislation. I urge my colleagues to protect the needy recipients of 
these effective housing programs by supporting the Housing Opportunity 
Program Extension Act of 1995. Mr. President, I ask unanimous consent 
that the text of the bill be printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

[[Page S19112]]


                                S. 1494

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE; DEFINITION.

       (a) Short Title.--This Act may be cited as the ``Housing 
     Opportunity Program Extension Act of 1995''.
       (b) Definition.--For purposes of this Act, the term 
     ``Secretary'' means the Secretary of Housing and Urban 
     Development.

     SEC. 2. SECTION 8 CONTRACT RENEWALS.

       (a) In General.--During fiscal year 1996, with respect to 
     any project that is determined by the Secretary to meet 
     housing quality standards under the United States Housing Act 
     of 1937 and to be otherwise in compliance with that Act, at 
     the request of the owner of the project, the Secretary shall 
     renew, for a period of 1 year, any contract for assistance 
     under section 8 of the United States Housing Act of 1937 that 
     expires or terminates during fiscal year 1996, at current 
     rent levels under the expiring of terminating contract.
       (b) Amendments to the National Housing Act.--Section 236(f) 
     of the National Housing Act (12 U.S.C. 1715z-1(f)) is 
     amended--
       (1) in paragraph (1), by striking the second sentence and 
     inserting the following: ``The rental charge for each 
     dwelling unit shall be at the basic rental charge, or such 
     greater amount, not to exceed the lesser of (i) the fair 
     market rental charge determined pursuant to this paragraph, 
     or (ii) the fair market rental established under section 8(c) 
     of the United States Housing Act of 1937 for existing housing 
     in the market area in which the housing is located, as 
     represents 30 percent of the tenant's adjusted income.''; and
       (2) by striking paragraph (6).

     SEC. 3. COMMUNITY DEVELOPMENT BLOCK GRANT ELIGIBLE 
                   ACTIVITIES.

       Notwithstanding the amendments made by section 907(b)(2) of 
     the Cranston-Gonzalez National Affordable Housing Act, 
     section 105(a)(25) of the Housing and Community Development 
     Act of 1974, as in existence on September 30, 1995, shall 
     apply to the use of assistance made available under title I 
     of the Housing and Community Development Act of 1974 during 
     fiscal year 1996.

     SEC. 4. EXTENSION OF RURAL HOUSING PROGRAMS.

       (a) Underserved Areas Set-Aside.--Section 509(f)(4)(A) of 
     the Housing Act of 1949 (42 U.S.C. 1479(f)(4)(A)) is 
     amended--
       (1) in the first sentence, by striking ``fiscal years 1993 
     and 1994'' and inserting ``fiscal year 1996''; and
       (2) in the second sentence, by striking ``each''.
       (b) Rural Multifamily Rental Housing.--Section 515(b)(4) of 
     the Housing Act of 1949 (42 U.S.C. 1485(b)(4)) is amended by 
     striking ``September 30, 1994'' and inserting ``September 30, 
     1996''.
       (c) Rural Rental Housing Fund for Non-profit Entities.--The 
     first of section 515(w)(1) of the Housing Act of 1949 (42 
     U.S.C. 1485(w)(1)) is amended by striking ``fiscal years 1993 
     and 1994'' and inserting ``fiscal year 1996''.

     SEC. 5. EXTENSION OF FHA MORTGAGE INSURANCE PROGRAM FOR HOME 
                   EQUITY CONVERSION MORTGAGES.

       (a) Extension of Program.--The first sentence of section 
     255(g) of the National Housing Act (12 U.S.C. 1715z-20(g)) is 
     amended by striking ``September 30, 1995'' and inserting 
     ``September 30, 1996''.
       (b) Limitation on Number of Mortgages.--The second sentence 
     of section 255(g) of the National Housing Act (12 U.S.C. 
     1715z-20(g)) is amended by striking ``25,000'' and inserting 
     ``30,000''.

     SEC. 6. EXTENSION OF MULTIFAMILY HOUSING FINANCE PROGRAMS.

       (a) Risk-Sharing Pilot Program.--The first sentence of 
     section 542(b)(5) of the Housing and Community Development 
     Act of 1992 (12 U.S.C. 1707 note) is amended by striking ``on 
     not more than 15,000 units over fiscal years 1993 and 1994'' 
     and inserting ``on not more than 7,500 units during fiscal 
     year 1996''.
       (b) Housing Finance Agency Pilot Program.--The first 
     sentence of section 542(c)(4) of the Housing and Community 
     Development Act of 1992 (12 U.S.C. 1707 note) is amended by 
     striking ``on not to exceed 30,000 units over fiscal years 
     1993, 1994, and 1995'' and inserting ``on not more than 
     10,000 units during fiscal year 1996''.

     SEC. 7. APPLICABILITY.

       This Act and the amendments made by this Act shall be 
     construed to have become effective on October 1, 1995.

  Mr. BOND. Mr. President, I am introducing with Senators D'Amato and 
Mack the Housing Opportunity Program Extenders Act of 1995. This 
legislation is designed to provide HUD and the Rural Housing and 
Community Development Service--commonly known as FmHA--with authority 
to continue certain housing programs which are strongly supported by 
the American public and which will generally be suspended if the 
administration continues to ignore responsible dialogue on housing 
issues and vetoes S. 2099, the VA/HUD fiscal year 1996 appropriations 
bill.
  I emphasize the importance of this bill and urge my colleagues to 
support this legislation. Most importantly, similar to the VA/HUD 
fiscal year 1996 appropriations bill, this bill would require HUD to 
renew expiring section 8 project-based contracts for fiscal year 1996 
for 1 year at current rents. There are some 900,000 FHA-insured units 
with section 8 project-based assistance contracts that are expiring 
over the next 10 years. Many of these section 8 contracts are currently 
subsidized at above market rents and fiscal responsibility requires 
that Congress contain the spiraling costs associated with this 
inventory. Moreover, under a recent HUD legal opinion, HUD may renew 
these expiring section 8 project-based contracts at no more than 120 
percent of fair market rents; this means that these section 8 projects 
could begin to default and face foreclosure by HUD during fiscal year 
1996.
  I believe it is critical that Congress reform and adjust the costs, 
including section 8 costs, of these assisted housing programs. However, 
in doing so, we must balance the cost of the expiring section 8 
contracts with the cost of foreclosure of these projects to the HUD 
insurance fund, as well as the significant social policy of the 
possible displacement of low-income housing residents and the 
disinvestment by project owners in these projects which could result in 
significant deterioration of this housing stock. Like the VA/HUD fiscal 
year 1996 appropriations bill, renewing these section 8 contracts for 1 
year will provide the Banking Committee with an opportunity to address 
these concerns through comprehensive legislation that will preserve 
this valuable housing resource as low-income housing at a reasonable 
cost to the Federal Government.
  Second, the legislation would extend the Home Equity Conversion 
Mortgage Program through fiscal year 1996, increasing the maximum 
number of units eligible for insurance from 25,000 to 30,000. This 
program is designed to allow the elderly to tap the accumulated equity 
in their homes for needed expenses without the risk of losing the 
housing as a principal residence. This is a successful program that is 
growing in popularity among the elderly population as an option to 
assist in providing continuing independence, both financially and 
through the continuing use of their homes as a principal resident.
  Third, the legislation would extend the homeownership program under 
the CDBG program as a continuing eligible activity through fiscal year 
1996. This program is widely supported by a number of communities 
throughout the Nation which use the program as an additional resource 
to expand homeownership opportunities.
  Fourth, the bill would extend the FHA multifamily risk-sharing 
programs for fiscal year 1996. These programs authorize HUD to enter 
into mortgage insurance agreements and partnerships with Fannie Mae and 
Freddie Mac and with State housing finance agencies for the creation of 
affordable multifamily housing. These are important programs which help 
to guarantee the availability of affordable rental housing in the 
Nation.
  Finally, the bill would extend the Rural Housing and Community 
Development Service's section 515 rural multifamily housing program for 
fiscal year 1996. Currently, fiscal year 1996 appropriations generally 
have limited the available funding for fiscal year 1996 to 
rehabilitation. However, there is a significant need for additional 
rural housing which is affordable. Moreover, section 515 projects are, 
in many cases, the only available and affordable low-income housing in 
rural areas. While there has been substantial criticism leveled at 
abuses in the section 515 program, the Rural Housing and Community 
Development Service has addressed a number of the failings in the 
program and the Banking Committee has pledged to review closely the 
section 515 program and address any concerns as part of a major housing 
and community development overhaul and reform bill.
  Mr. President, this legislation is bipartisan, simple, 
straightforward and necessary. I strongly urge my colleagues to support 
this legislation.
  Mr. MACK. Mr. President, I am pleased to join with Senator D'Amato as 
a cosponsor of this bill to extend for 1 year a number of housing 
activities under the jurisdiction of the Banking Committee. The fiscal 
year 1996 VA-HUD-Independent agencies appropriation bill extended the 
authority for a 

[[Page S19113]]
number of expired HUD programs and activities for 1 year to give the 
authorizing committee time to consider needed reforms in those programs 
and deal with them more permanently.
  Unfortunately, the President vetoed the appropriation bill, and these 
programs are in immediate jeopardy. This legislation is necessary to 
continue authorizations for activities that have broad support. I 
stress to my colleagues that this is emergency legislation that 
contains no programmatic reforms.
  First, and foremost, this bill would allow HUD to renew expiring 
section 8 rental assistance contracts at current rents for 1 year. HUD 
has taken the position that it currently has no authority for fiscal 
year 1996 to renew expiring section 8 contracts at above fair market 
rent [FMR]. Without language to allow contract renewals at above FMR, a 
large number of FHA-insured multifamily housing projects could face 
default this year. This extension will give the authorizing committee 
time to develop an orderly ``mark-to-market'' strategy to restructure 
the debt on these projects, end payments of excessive rental subsidies, 
and help bring HUD's budget under control.
  This bill also extends the Federal Housing Administration's mortgage 
insurance program Home Equity Conversion Mortgages. This popular 
demonstration program has allowed more than 14,000 elderly homeowners 
to tap into the equity in their homes, but mortgage authority for the 
program expired at the end of fiscal 1995. This extension will give us 
the time needed to pass legislation extending the program for another 5 
years and to enact reforms that will make the program more effective.
  The legislation extends the FHA section 515 rural rental housing loan 
program. This is the only program extension included that is not under 
the jurisdiction of the VA-HUD-Independent Agencies appropriations 
subcommittee. However, this is an important housing development program 
under the Banking Committee's jurisdiction, and there is currently a 
significant backlog of preapproved applications for section 515 loans.
  I am, however, concerned by reports issued by the General Accounting 
Office and others indicating that structural and financial management 
problems exist in the section 515 program. As chairman of the Housing 
Opportunity and Community Development Subcommittee, I intend to hold 
hearings on this and other rural housing programs early next year and 
to propose program reforms where needed. No further extensions of the 
section 515 program should be approved until the program has been 
thoroughly reviewed by the Banking Committee.
                                 ______