S. 1299

One Hundred Third Congress

of the

United States of America

AT THE SECOND SESSION

Begun and held at the City of Washington on Tuesday,

the twenty-fifth day of January, one thousand nine hundred and ninety-four

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.

Be it enacted by the Senate and House of Representatives of

the United States of America in Congress assembled,

SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

(a) SHORT TITLE.—This Act may be cited as the ‘‘Multifamily

Housing Property Disposition Reform Act of 1994’’.

(b) TABLE OF CONTENTS.—

Sec. 1. Short title and table of contents.

TITLE I—MULTIFAMILY PROPERTY DISPOSITION REFORM

Sec. 101. Multifamily property disposition.

Sec. 102. Repeal of State agency multifamily property disposition demonstration. Sec. 103. Preventing mortgage defaults on multifamily housing projects. Sec. 104. Interest rates on assigned mortgages.

Sec. 105. Authorization of appropriations.

TITLE II—OTHER PROGRAM REFORMS

Subtitle A—Home Investment Partnerships Program

Sec. 201. Participation by State agencies or instrumentalities.

Sec. 202. Simplification of program-wide income targeting for rental housing. Sec. 203. Homeownership units.

Sec. 204. Simplification of matching requirements. Sec. 205. Repeal of separate audit requirement.

Sec. 206. Environmental review requirements.

Sec. 207. Use of CDBG funds for HOME program expenses.

Sec. 208. Flexibility of HOME program for disaster areas.

Sec. 209. Applicability and regulations.

Subtitle B—HOPE Homeownership Program

Sec. 221. Matching requirement under HOPE for homeownership of single family

homes program.

Subtitle C—Community Development Block Grants

Sec. 231. Section 108 eligible activities.

Sec. 232. Economic development grants.

Sec. 233. Guarantee of obligations backed by section 108 loans.

Sec. 234. Flexibility of CDBG program for disaster areas.

TITLE III—TECHNICAL AMENDMENTS

Sec. 301. Definition of ‘‘families’’.

Sec. 302. Elimination of requirement to identify CIAP replacement needs. Sec. 303. Project-based accounting. Sec. 304. Operating subsidy adjustments for anticipated fraud recoveries. Sec. 305. Environmental review provisions.

Sec. 306. Correction of FHA multifamily mortgage limits.
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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;
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‘‘(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.
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‘‘(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 lowincome 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
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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
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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 forprofit 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.
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‘‘(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
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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 restric- tions 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
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‘‘(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 SUB- SIDIZED 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
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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 shortterm 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
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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 SEC- RETARY.—

‘‘(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 sub-
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section (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
S. 1299—13

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
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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 GOVERN- MENTS.—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,
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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 HUDowned 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;
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‘‘(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 sub- section (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 provi- sion 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 regula- tions 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
S. 1299—17

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
S. 1299—18

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 Commu- nity 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—
S. 1299—19

‘‘(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,
S. 1299—20

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.—
S. 1299—21

(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
S. 1299—22

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’’.
S. 1299—23

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 sub- sections (a) and (b), respectively; and
S. 1299—24

(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 CranstonGonzalez National Affordable Housing Act’’.
S. 1299—25

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 CranstonGonzalez 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:
S. 1299—26

‘‘(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
S. 1299—27

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 onehalf 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 onehalf 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 onehalf 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.
S. 1299—28

‘‘(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 lowand 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 subpara- graph (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 para- graphs (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);
S. 1299—29

(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 CranstonGonzalez 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 leadbased paint and lead dust hazards in low- and moderateincome 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).’’.
S. 1299—30

(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
S. 1299—31

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
S. 1299—32

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:
S. 1299—33

‘‘(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 risksharing 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 risksharing 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
S. 1299—34

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.’’.
S. 1299—35

(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
S. 1299—36

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
S. 1299—37

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 LeadBased 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—
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‘‘(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.’’.

Speaker of the House of Representatives.

Vice President of the United States and

President of the Senate.