I

104TH CONGRESS

2D SESSION H. R. 3740

To consolidate the community and economic revitalization and affordable

housing programs of the Department of Housing and Urban Development

into two performance funds, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

JUNE 27, 1996

Mr. LAZIO of New York (by request) introduced the following bill; which was

referred to the Committee on Banking and Financial Services, and in addition to the Committee on Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such

provisions as fall within the jurisdiction of the committee concerned

A BILL

To consolidate the community and economic revitalization

and affordable housing programs of the Department of

Housing and Urban Development into two performance

funds, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

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

5 ‘‘Community Development Block Grant Performance

6 Fund and HOME Performance Fund Act of 1996’’.

7 (b) TABLE OF CONTENTS.
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Sec. 1. Short title and table of contents.

Sec. 2. Implementation.

TITLE I—PERFORMANCE FUNDS

Sec. 10. Findings and purposes.

SUBTITLE A—COMMUNITY DEVELOPMENT BLOCK GRANT PERFORMANCE

FUND

Sec. 11. Definition of consolidated plan.

Sec. 12. Authorizations.

Sec. 13. Statement of activities and review.

Sec. 14. Eligible activities.

Sec. 15. Allocation and distribution of funds.

Sec. 16. Technical assistance and special activities.

Sec. 17. Guarantee of loans.

Sec. 18. Challenge grant fund.

Sec. 19. Reporting requirements.

Sec. 20. Termination of existing programs.

SUBTITLE B—HOME PERFORMANCE FUND

Sec. 21. Definitions; findings and purposes; program administration.

Sec. 22. Amendments to the comprehensive housing affordability strategy.

Sec. 23. Authorization.

Sec. 24. Eligible uses of investment.

Sec. 25. Income targeting.

Sec. 26. Qualification as affordable housing.

Sec. 27. Reallocation.

Sec. 28. Allocation of resources.

Sec. 29. HOME investment trust funds.

Sec. 30. Repayment of investment; matching requirements.

Sec. 31. Distribution of assistance.

Sec. 32. Performance review and sanctions.

Sec. 33. Challenge grant fund.

Sec. 34. Tenant and participant protections.

Sec. 35. Loan guarantees.

Sec. 36. Housing education, organizational, and other support.

Sec. 37. Priorities for capacity development.

Sec. 38. Conditions of contracts.

Sec. 39. Other assistance.

Sec. 40. Termination of existing programs.

TITLE II—DEVELOPING COMMUNITIES INITIATIVE

Sec. 51. Basic authority.

Sec. 52. Funding.

Sec. 53. Program administration.

Sec. 54. Records, reports, and audits.

Sec. 55. Definitions.

TITLE III—MISCELLANEOUS PROGRAMS

Sec. 61. Use of technical assistance funds by or for HUD staff.

Sec. 62. HUD research and development.
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Sec. 63. Fair housing initiatives program.

Sec. 64. Lead-based paint target housing hazard reduction program.

1 SEC. 2. IMPLEMENTATION.

2 (a) IN GENERAL.—Notwithstanding 42 U.S.C.

3 3535(o) or 24 CFR part 10, the Secretary shall issue such

4 regulations as may be necessary to implement any provi5 sion of this Act, and any amendment made by this Act,

6 in accordance with section 552 or 553 of title 5, United

7 States Code, as determined by the Secretary.

8 (b) USE OF EXISTING RULES.—In implementing any

9 provision of this Act, the Secretary may, in the Secretary’s

10 discretion, provide for the use of existing rules to the ex11 tent appropriate, without the need for further rulemaking.

12 TITLE I—PERFORMANCE FUNDS

13 SEC. 10. FINDINGS AND PURPOSES.

14 (a) FINDINGS.—The Congress finds that—

15 (1) the effectiveness of Federal housing assist16 ance and community development efforts has been

17 diminished by the proliferation of dozens of sepa18 rate, duplicative programs which are generally com19 plex and overly prescriptive; and

20 (2) the current system impedes the ability of

21 communities to respond to housing and community

22 development needs in a coordinated way, places an

23 intolerable administrative burden on program recipi24 ents, and inhibits innovation and flexibility.
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1 (b) PURPOSES.—The purposes of this title are—

2 (1) to redefine the Federal Government’s rela3 tionship with communities across the Nation by con4 solidating housing assistance and community devel5 opment programs into a small number of perform6 ance-based funds thereby allowing greater discretion,

7 coordination, and innovation in the application of

8 Federal assistance by community, local, and State

9 leaders;

10 (2) to devolve responsibility in a manner which

11 maximizes choice and dignity for families, promotes

12 community participation, expands the commitment

13 to America’s most vulnerable populations, complies

14 with Federal fair housing and civil rights laws, and

15 upholds the values of work and homeownership;

16 (3) to enhance performance-based accountabil17 ity of States and localities consistent with the fore18 going national ideals and to reward them with chal19 lenge grants and other benefits for their successes;

20 and

21 (4) to establish an orderly and rational schedule

22 of transition to the new consolidated, performance23 based program structure.
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1 Subtitle A—Community Development Block

2 Grant Performance Fund

3 SEC. 11. DEFINITION OF CONSOLIDATED PLAN.

4 Section 102(a) of the Housing and Community De5 velopment Act of 1974 is amended by adding the following

6 new paragraph at the end:

7 ‘‘(24) The term ‘consolidated plan’ means the

8 single comprehensive plan that the Secretary pre9 scribes for submission by jurisdictions that consoli10 dates and fulfills the requirements of—

11 ‘‘(A) the comprehensive housing afford12 ability strategy under title I of the Cranston13 Gonzalez National Affordable Housing Act;

14 ‘‘(B) the community development plan

15 under section 104 of this Act; and

16 ‘‘(C) the submission requirements for for17 mula funding under—

18 ‘‘(i) the Community Development

19 Block Grant Performance Fund under this

20 title;

21 ‘‘(ii) the HOME Performance Fund

22 (authorized by title II of the Cranston23 Gonzalez National Affordable Housing Act,

24 as amended by the Community Develop-
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1 ment Block Grant Performance Fund and

2 HOME Performance Fund Act of 1996);

3 ‘‘(iii) the Homeless Assistance Per4 formance Fund (authorized by title IV of

5 the Steward B. McKinney Homeless As6 sistance Act, as amended by the Homeless

7 Assistance Performance Fund Act of

8 1996); and

9 ‘‘(iv) the AIDS Housing Opportunity

10 Act (authorized by subtitle D of title VIII

11 of the Cranston-Gonzalez National Afford12 able Housing Act).

13 A jurisdiction’s consolidated plan shall be coordi14 nated and consistent with a public housing agency’s

15 five-year comprehensive plan, if any, required under

16 section 14(e) of the United States Housing Act of

17 1937.’’.

18 SEC. 12. AUTHORIZATIONS.

19 The second sentence of section 103 of the Housing

20 and Community Development Act of 1974 is amended to

21 read as follows: ‘‘For purposes of assistance under section

22 106, there are authorized to be appropriated

23 $4,600,000,000 for fiscal year 1997 and such sums as

24 may be necessary for fiscal years 1998, 1999, and 2000.

25 In addition, for the purpose of establishing the challenge
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1 grant fund under section 112, there are authorized to be

2 appropriated $300,000,000 for fiscal year 1997,

3 $100,000,000 of which shall be for challenge grants au4 thorized under section 112, and $200,000,000 of which

5 shall be for grants for enterprise communities and

6 empowerment zones designated after October 1, 1996

7 under section 1391 of the Internal Revenue Code of 1986,

8 and such sums as may be necessary for fiscal years 1998,

9 1999, and 2000.’’.

10 SEC. 13. STATEMENT OF ACTIVITIES AND REVIEW.

11 (a) CONTENT OF STATEMENT.—Section 104(a)(1) of

12 the Housing and Community Development Act of 1974

13 is amended by striking the last sentence and inserting the

14 following: ‘‘In the case of States receiving grants pursuant

15 to section 106(d), the statement of projected use of funds

16 shall consist of the method by which the States will dis17 tribute funds, if any, to units of general local government

18 and the proposed community development activities, if

19 any. The final statement shall include specific perform20 ance measures and benchmarks provided by the grantee

21 in developing the consolidated plan referred to in sub22 section (b)(4). The Secretary shall work with grantees to

23 develop benchmarks and measures that can enable per24 formance to be compared among jurisdictions.’’.
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1 (b) CONSOLIDATED PLAN.—Section 104(b)(4) of

2 such Act is amended by adding after ‘‘has developed’’ the

3 following: ‘‘the consolidated plan, which shall also in4 clude’’.

5 (c) CERTIFICATION.—Section 104(c) of such Act is

6 amended to read as follows:

7 ‘‘(c) A grant may be made under section 106(b) or

8 section 106(d) only if the unit of general local government

9 or the State certifies that it is following a current consoli10 dated plan.’’.

11 (d) PERFORMANCE REPORT.—Section 104(e) of such

12 Act is amended—

13 (1) by inserting before the period at the end of

14 the first sentence the following: ‘‘and the perform15 ance of the grantee as measured against the grant16 ee’s specific performance measures and bench17 marks’’;

18 (2) by striking the fifth and sixth sentences;

19 (3) in paragraph (1)—

20 (A) by striking ‘‘section 106(d)(z)(B)’’ and

21 inserting ‘‘section 106(d), where applicable’’;

22 and

23 (B) by striking ‘‘housing assistance plan’’

24 and inserting ‘‘consolidated plan that includes a
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1 comprehensive housing affordability strategy’’;

2 and

3 (4) in paragraph (2), by adding ‘‘where applica4 ble,’’ after ‘‘section 106(d),’’.

5 (e) PROGRAM INCOME.—Section 104(j) of such Act

6 is amended by adding the following sentence at the end:

7 ‘‘The Secretary shall also exclude from consideration as

8 program income any other amounts, if the Secretary de9 termines that there is good cause for such exclusion and

10 that the use of such funds will further the purposes of

11 the Act.’’.

12 (f) CONFORMING.—Section 104(m)(1) of such Act is

13 amended by striking ‘‘subsection (b), (d)(1), or (d)(2)(B)

14 of section 106’’ and inserting ‘‘section 106 (b) or (d)’’.

15 SEC. 14. ELIGIBLE ACTIVITIES.

16 (a) ELIGIBLE ACTIVITIES.—Section 105(a) of the

17 Housing and Community Development Act of 1974 is

18 amended—

19 (1) by striking paragraph (4) and inserting the

20 following:

21 ‘‘(4) clearance (including removal of toxic mate22 rials and other contaminants from properties), dem23 olition, removal, reconstruction, and rehabilitation

24 (including rehabilitation that improves energy effi25 ciency) of buildings and improvements (including in-
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1 terim assistance, and financing public or private ac2 quisition for reconstruction or rehabilitation, and re3 construction or rehabilitation of privately owned

4 properties, including the renovation of closed school

5 buildings);’’;

6 (2) by striking paragraph (14) and inserting

7 the following:

8 ‘‘(14) provision of assistance including loans

9 (both interim and long-term) and grants for eco10 nomic revitalization activities which are carried out

11 by public or private nonprofit entities, including job

12 creation activities by public agencies or nonprofit en13 tities to enable families on welfare to become self14 sufficient;’’;

15 (3) by striking ‘‘and’’ at the end of paragraph

16 (24);

17 (4) by striking the period at the end of para18 graph (25) and inserting ‘‘; and’’; and

19 (5) by adding at the end the following:

20 ‘‘(26) provision of services designed to further

21 the objectives of the Fair Housing Act, which may

22 include services relating to the provision of housing

23 opportunities without regard to race, color, religion,

24 sex, national origin, familial status, or disability; and
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1 other fair housing enforcement, education, and out2 reach activities;’’.

3 (b) LOW/MOD BENEFIT.—Section 105(c) of such Act

4 is amended by adding at the end the following new para5 graph:

6 ‘‘(5) Any activity carried out under subsection

7 (a)(26) shall be presumed to benefit persons of low

8 and moderate income.’’.

9 SEC. 15. ALLOCATION AND DISTRIBUTION OF FUNDS.

10 (a) ENTITLEMENT REALLOCATION.—Section 106(c)

11 of such Act is amended—

12 (1) by striking paragraph (1) and inserting the

13 following:

14 ‘‘(1) Any amounts allocated to a metropolitan

15 city or an urban county pursuant to the preceding

16 provisions of this section which are not received by

17 the city or county for a fiscal year because of failure

18 to meet the requirements of section 104(a), (b), (c),

19 or (d), or which become available as a result of ac20 tions under section 104(e) or 111, shall be reallo21 cated to the challenge grant fund under section

22 112.’’; and

23 (2) by striking paragraphs (2) and (4) and re24 designating paragraph (3) as paragraph (2).
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1 (b) CONFORMING.—Section 106(d)(1) of such Act is

2 amended by striking ‘‘paragraphs (1) and (2)’’ and insert3 ing ‘‘paragraph (1)’’.

4 (c) USE OF FUNDS.—Section 106(d)(2)(A) of such

5 Act is amended—

6 (1) by adding after ‘‘allocated under paragraph

7 (1)’’ the following: ‘‘shall be used by the State to

8 carry out community development activities in non9 entitlement areas of the State if the unit of general

10 local government concurs in such action, or’’; and

11 (2) by striking the third and fourth sentences.

12 (d) STATE ADMINISTRATION.—Section 106(d)(3) of

13 such Act is amended—

14 (1) in subparagraph (A)—

15 (A) in the first sentence, by striking ‘‘If

16 the State receives and distributes such

17 amounts’’ and inserting the following: ‘‘To the

18 extent the State distributes such amounts it re19 ceives’’; and

20 (B) in the third sentence—

21 (i) by inserting ‘‘and distributed’’

22 after ‘‘received’’; and

23 (ii) by striking ‘‘and its administrative

24 expenses under section 810 of this Act’’;
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1 (2) in subparagraph (C), by striking ‘‘to

2 amounts allocated to all States under paragraph (1)

3 for the succeeding fiscal year’’ and inserting ‘‘to the

4 challenge grant fund under section 112’’;

5 (3) by redesignating paragraph (6) as para6 graph (7); and

7 (4) by redesignating paragraph (5) the second

8 place it appears as paragraph (6).

9 (e) CONFORMING.—Section 106(d)(7) of such Act, as

10 redesignated, is amended by inserting immediately after

11 ‘‘amounts received by’’ the first place it appears the fol12 lowing: ‘‘a State or’’.

13 (f) PERMANENT EXTENSION OF COLONIAS AUTHOR14 ITY.—Section 916(f) of the Cranston-Gonzalez National

15 Affordable Housing Act is hereby repealed.

16 SEC. 16. TECHNICAL ASSISTANCE AND SPECIAL ACTIVI17 TIES.

18 (a) SET-ASIDE.—Section 107(a)(1) of the Housing

19 and Community Development Act of 1974 is amended to

20 read as follows:

21 ‘‘(a)(1) IN GENERAL.—Of the total amount provided

22 in appropriation Acts under the second sentence of section

23 103, the Secretary may set aside up to $45,500,000 for

24 each fiscal year to make grants under subsections (b)(1),

25 (b)(2), (b)(3), (b)(5), and (c)(1), provide technical assist-
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1 ance under subsection (b)(4), and carry out activities in

2 connection with management information systems under

3 subsection (c)(2).’’.

4 (b) TECHNICAL ASSISTANCE.—Section 107(b) of

5 such Act is amended—

6 (1) by adding ‘‘and’’ after the semicolon at the

7 end of paragraph (4);

8 (2) by striking ‘‘; and’’ at the end of paragraph

9 (6) and inserting a period; and

10 (3) by striking paragraphs (5) and (7) and re11 designating paragraph (6) as paragraph (5).

12 (c) WORK STUDY AND MANAGEMENT INFORMATION

13 SYSTEMS.—Section 107(c) of such Act is amended—

14 (1) by inserting ‘‘(1)’’ after ‘‘(c)’’;

15 (2) in paragraph (1), as redesignated by para16 graph (1) of this subsection, by inserting after ‘‘edu17 cation,’’ the following ‘‘including Hispanic-serving

18 institutions,’’; and

19 (3) by inserting a new paragraph at the end to

20 read as follows:

21 ‘‘(2) For fiscal year 1997 and fiscal year 1998, from

22 the amount set aside under subsection (a)(1), the Sec23 retary is authorized to set aside an amount up to 0.4 per24 cent of the total amount provided in appropriation Acts

25 under the second sentence of section 103, but not less
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1 than $18,000,000, to develop, implement, and refine man2 agement information systems in order to establish a na3 tional database on local needs and priorities, and to pro4 vide grantees and community members with software to

5 plan and track performance.’’.

6 SEC. 17. GUARANTEE OF LOANS.

7 (a) CONFORMING.—The heading of section 108 of the

8 Housing and Community Development Act of 1974 is

9 amended to read as follows: ‘‘GUARANTEE OF LOANS’’.

10 (b) ELIGIBLE ACTIVITIES AND FUNDING AUTHOR11 ITY.—Section 108 of such Act is amended—

12 (1) in the first sentence of subsection (a), by

13 striking ‘‘the purposes of financing’’ and all that fol14 lows up to the period and inserting ‘‘any activities

15 eligible under section 105’’;

16 (2) in the fifth sentence of subsection (a), by

17 striking ‘‘$2,000,000,000 for fiscal year 1993 and

18 $2,000,000,000 for fiscal year 1994’’ and inserting

19 the following: ‘‘$2,000,000,000 for fiscal year 1997

20 and such sums as may be necessary for fiscal year

21 1998 and subsequent fiscal years’’; and

22 (3) in subsection (k)(1), by striking

23 ‘‘$4,500,000,000’’ and inserting ‘‘$6,000,000,000’’.

24 (c) FEDERAL FINANCING BANK FINANCING.—Sec25 tion 108(l) of such Act is hereby repealed.
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1 Section 108(q) would be redesignated as section 108(o).

1 (d) CONFORMING.—Section 108(h) of such Act is

2 amended by striking ‘‘subsection (j)’’ and inserting ‘‘sub3 section (i)’’.

4 (e) CONFORMING.—Section 108 of such Act, as

5 amended by subsection (c), is amended by redesignating

6 subsections (j) through (r) as subsections (i) through (p).

7 SEC. 18. CHALLENGE GRANT FUND.

8 (a) BASIC AUTHORITY.—Section 112 of the Housing

9 and Community Development Act of 1974 is amended to

10 read as follows:

11 ‘‘CHALLENGE GRANT FUND

12 ‘‘SEC. 112. (a) BASIC AUTHORITY.—Of the amount

13 approved in an appropriation Act under section 103 for

14 grants in any year under this section and from amounts

15 reallocated pursuant to sections 106(c)(1) and (d)(3)(C),

16 the Secretary is authorized to make grants from a chal17 lenge grant fund—

18 ‘‘(1) for job creation activities and projects to

19 grantees under this title; or

‘‘(2) in accordance with section 108(o) 1 20 .

21 ‘‘(b) ELIGIBILITY FOR AWARDS.—To be eligible for

22 consideration for an award from the challenge grant fund,

23 a grantee shall at minimum—

24 ‘‘(1) meet the requirements of this title, as de25 termined by the Secretary under section 104(e);
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1 ‘‘(2) meet or exceed performance measures and

2 benchmarks included in its consolidated plan for ac3 tivities under this title, including any activities

4 under this section, which measures and benchmarks

5 shall reflect performance levels of grantees deter6 mined by the Secretary to be similarly situated; and

7 ‘‘(3) demonstrate it has expended grant funds

8 on a timely basis.

9 ‘‘(c) SUBMISSION REQUIREMENTS.—The Secretary

10 shall establish submission requirements for grantees to in11 clude in their consolidated plans.

12 ‘‘(d) ELIGIBLE ACTIVITIES.—Challenge grants under

13 this subsection shall be limited to activities and projects

14 which—

15 ‘‘(1) spur community economic revitalization in

16 low-income areas, including—

17 ‘‘(A) projects which clean up brownfields

18 and other environmentally deteriorated areas

19 for which funds can be used under section

20 105(a)(4), and

21 ‘‘(B) projects and activities that serve as a

22 catalyst for new investment and development in

23 nearby areas, and create jobs for neighborhood

24 residents; and
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1 ‘‘(2) link low-income persons to job opportuni2 ties, including job training, education, transpor3 tation, and child care.

4 ‘‘(e) SELECTION CRITERIA.—The Secretary shall

5 award grants under this section pursuant to a competition

6 in which the following selection criteria shall be used—

7 ‘‘(1) the grantee’s performance in expending

8 funds in a timely manner;

9 ‘‘(2) the extent to which the grantee has met or

10 exceeded the performance measures and benchmarks

11 established in its consolidated plan, and the extent

12 to which those measures and benchmarks were ambi13 tious compared to those of other comparable juris14 dictions;

15 ‘‘(3) the extent of low-income targeting by the

16 grantee, with particular emphasis on job creation for

17 persons of low-income;

18 ‘‘(4) the extent to which the grantee applies

19 and leverages its community development grants to

20 job creation and to implementing neighborhood in21 vestment strategies to revitalize distressed neighbor22 hoods;

23 ‘‘(5) the extent to which the jurisdiction uses

24 the challenge grant to gain access to regional re-
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1 sources and to address regional economic revitaliza2 tion problems;

3 ‘‘(6) the extent to which proposed activities or

4 projects link low-income residents of distressed areas

5 with job opportunities that will enable them to enter

6 the mainstream regional economy;

7 ‘‘(7) the extent of leveraging of other public and

8 private resources, including loan guarantees under

9 section 108;

10 ‘‘(8) the extent to which the grantee has met or

11 exceeded its performance measures and benchmarks

12 established in its consolidated plan for other per13 formance funds under programs of the Secretary;

14 ‘‘(9) the extent to which the submission speci15 fies ambitious and realistic performance measures

16 and benchmarks for determining the success of the

17 challenge grant proposal; and

18 ‘‘(10) such other factors as the Secretary deter19 mines appropriate to achieve the objectives of this

20 section.

21 ‘‘(f) COMPLIANCE WITH PROGRAM REQUIRE22 MENTS.—For all or a portion of a grant under this sec23 tion, the Secretary may condition use of the grant, reduce

24 the amount of the grant, or cancel the grant, based on

25 whether the grantee has made measurable, objective
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1 progress in meeting the performance measures and bench2 marks established in the consolidated plan and has com3 plied with the requirements of the performance agreement

4 entered into under this section.’’.

5 SEC. 19. REPORTING REQUIREMENTS.

6 Section 113 of the Housing and Community Develop7 ment Act of 1974 is amended to read as follows:

8 ‘‘REPORTING REQUIREMENTS

9 ‘‘SEC. 113. The Secretary is authorized to require re10 cipients of assistance under this title to submit such re11 ports and other information as the Secretary determines

12 appropriate to carry out the responsibilities of the Sec13 retary under this title.’’.

14 SEC. 20. TERMINATION OF EXISTING PROGRAMS.

15 (a) IN GENERAL.—The following provisions of law

16 are repealed:

17 (1) Subtitle D of title IV of the Cranston-Gon18 zalez National Affordable Housing Act, effective on

19 October 1, 1997.

20 (2) Section 222 of the Housing and Urban21 Rural Recovery Act of 1983, effective on the date of

22 enactment of this Act.

23 (3) Section 123 of the Housing and Urban24 Rural Recovery Act of 1983, effective on the date of

25 enactment of this Act.
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1 (b) AUTHORITY TO PROVIDE ASSISTANCE.—On and

2 after the effective date of such repeal, the Secretary may

3 not make assistance available under any of the authorities

4 listed in subsection (a) (as they existed immediately before

5 such effective date), except pursuant to a legally binding

6 commitment entered into before that date.

7 (c) LAW GOVERNING.—Any amounts made available

8 under any authority listed in subsection (a) before such

9 effective date shall continue to be governed by the provi10 sions of such authority, as they existed immediately before

11 that date, except that each grantee may, in its discretion

12 pursuant to procedures established by the Secretary, pro13 vide for the use, in accordance with the provisions of title

14 I of the Housing and Community Development Act of

15 1974, of any such amounts that it has not obligated under

16 such authority.

17 (d) STATUS OF FUNDS.—Any amounts appropriated

18 under any authority listed in subsection (a) before such

19 effective date that are available for obligation immediately

20 before such date, or that become available for obligation

21 on or after that date, shall be transferred and added to

22 the amounts appropriated for title I of the Housing and

23 Community Development Act of 1974 and shall thereafter

24 be available for use in accordance with its provisions. Any

25 amounts so transferred shall remain available for obliga-
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1 tion only for the time periods for which such respective

2 amounts were available before such transfer.

3 Subtitle B—Home Performance Fund

4 SEC. 21. DEFINITIONS; FINDINGS AND PURPOSES; PRO5 GRAM ADMINISTRATION.

6 (a) DEFINITIONS.—Section 104 of the Cranston7 Gonzalez National Affordable Housing Act is amended by

8 inserting at the end the following new paragraph:

9 ‘‘(26) The term ‘consolidated plan’ means the

10 single comprehensive plan that the Secretary pre11 scribes for submission by jurisdictions that consoli12 dates and fulfills the requirements of—

13 ‘‘(A) the comprehensive housing afford14 ability strategy under this title;

15 ‘‘(B) the community development plan

16 under section 104 of the Housing and Commu17 nity Development Act of 1974; and

18 ‘‘(C) the submission requirements for for19 mula funding under—

20 ‘‘(i) the Community Development

21 Block Grant Performance Fund (author22 ized by title I of the Housing and Commu23 nity Development Act of 1974, as amended

24 by the Community Development Block
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1 Grant Performance Fund and HOME Per2 formance Fund Act of 1996);

3 ‘‘(ii) the HOME Performance Fund

4 (authorized by title II of this Act);

5 ‘‘(iii) the Homeless Assistance Per6 formance Fund (authorized by title IV of

7 the Stewart B. McKinney Homeless Assist8 ance Act, as amended by the Homeless As9 sistance Performance Fund Act of 1996);

10 and

11 ‘‘(iv) the AIDS Housing Opportunity

12 Act (authorized by subtitle D of title VIII

13 of this Act).

14 A jurisdiction’s consolidated plan shall be coordi15 nated and consistent with a public housing agency’s

16 five-year comprehensive plan, if any, required under

17 section 14(e) of the United States Housing Act of

18 1937.’’.

19 (b) FINDINGS AND PURPOSES.—

20 (1) Section 203 of such Act is amended by in21 serting after paragraph (2) the following new para22 graphs, and redesignating the remaining paragraphs

23 accordingly:

24 ‘‘(3) to enhance performance-based accountabil25 ity of States and localities consistent with the pur-
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1 poses of this title and to reward them with challenge

2 grants and other benefits for their successes;

3 ‘‘(4) to assist State and local governments in

4 providing housing for persons with special needs, in5 cluding persons with disabilities and the frail elderly,

6 to help these individuals live with dignity and inde7 pendence in their communities;’’.

8 (2) Section 203(8) of such Act, as redesignated,

9 is amended to read as follows:

10 ‘‘(8) to expand the capacity of community hous11 ing development organizations and other nonprofit

12 organizations to develop and manage decent, safe,

13 sanitary, and affordable housing;’’.

14 (c) PROGRAM ADMINISTRATION.—Section 204 of

15 such Act is amended by striking ‘‘through the Office of

16 the Assistant Secretary for Housing—FHA Commissioner

17 of the Department of Housing and Urban Development,’’.

18 SEC. 22. AMENDMENTS TO THE COMPREHENSIVE HOUSING

19 AFFORDABILITY STRATEGY.

20 Section 105(b) of such Act is amended—

21 (1) in paragraph (16), the first place it ap22 pears, by striking the period and inserting a semi23 colon;

24 (2) in paragraph (16), the second place it ap25 pears—
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1 (A) by redesignating such paragraph as

2 paragraph (17); and

3 (B) by striking ‘‘and’’ at the end;

4 (3) by moving the flush material that follows

5 paragraph (17), as redesignated, to the end of such

6 subsection;

7 (4) by striking ‘‘(17) for’’ and inserting ‘‘(18)

8 for’’;

9 (5) in paragraph (18), as redesignated, by

10 striking ‘‘and’’ at the end;

11 (6) by striking ‘‘(17) describe’’ and inserting

12 ‘‘(19) describe’’;

13 (7) by striking the period at the end of para14 graph (19), as redesignated, and inserting a semi15 colon; and

16 (8) by adding at the end the following new

17 paragraphs:

18 ‘‘(20) include specific performance measures

19 and benchmarks provided by the jurisdiction in de20 veloping the consolidated plan (the Secretary shall

21 work with jurisdictions to develop benchmarks and

22 measures that can enable performance to be com23 pared among jurisdictions); and

24 ‘‘(21) include other information or strategies as

25 may be specified by the Secretary.’’.
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1 SEC. 23. AUTHORIZATION.

2 Section 205 of such Act is amended to read as fol3 lows:

4 ‘‘SEC. 205. AUTHORIZATION.

5 ‘‘There are authorized to be appropriated to carry out

6 this title $1,400,000,000 for fiscal year 1997 and such

7 amounts as may be necessary for fiscal years 1998, 1999,

8 and 2000. In addition, for purposes of assistance under

9 section 223(c), there are authorized to be appropriated

10 $150,000,000 for fiscal year 1997 and such sums as may

11 be necessary for fiscal years 1998, 1999, and 2000.’’.

12 SEC. 24. ELIGIBLE USES OF INVESTMENT.

13 Section 212(a) of such Act is amended—

14 (1) by redesignating paragraph (5) as para15 graph (4); and

16 (2) in paragraph (4), as redesignated, by insert17 ing before the period the following: ‘‘, including

18 blood-lead level testing of children residing in hous19 ing assisted under this title, and for the education

20 of the public on the nature and causes of lead poi21 soning and measures to reduce exposure to lead, in22 cluding exposure due to residential lead-based paint

23 hazards’’.

24 SEC. 25. INCOME TARGETING.

25 Section 214 of such Act is amended—
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1 (1) in paragraph (1)(A), by striking ‘‘at the

2 time of occupancy or at the time funds are invested,

3 whichever is later,’’; and

4 (2) in paragraph (2), by striking ‘‘at the time

5 of occupancy or at the time funds are invested,

6 whichever is later’’.

7 SEC. 26. QUALIFICATION AS AFFORDABLE HOUSING.

8 Section 215 of such Act is amended—

9 (1) in subsection (a)(1)(B), by inserting ‘‘or

10 local’’ after ‘‘State’’; and

11 (2) by adding the following new subsection:

12 ‘‘(c) EXCEPTION TO GENERAL REQUIREMENTS.—

13 The Secretary may modify the qualifying rental housing

14 requirements and the qualifying homeownership require15 ments under subsections (a) and (b) for housing author16 ized under section 214(c).’’.

17 SEC. 27. REALLOCATION.

18 Section 216 of such Act is amended—

19 (1) by striking paragraph (5) and redesignating

20 the remaining paragraphs accordingly;

21 (2) in paragraph (5), as redesignated—

22 (A) by striking ‘‘previous 3 paragraphs’’

23 and inserting ‘‘previous 2 paragraphs’’;

24 (B) by striking subparagraph (A)(ii) and

25 inserting the following:
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1 ‘‘(ii) add the remainder to the challenge

2 grant fund under section 223(c).’’;

3 (C) by striking subparagraph (C)(ii) and

4 inserting the following:

5 ‘‘(ii) add the remainder to the challenge

6 grant fund under section 223(c).’’; and

7 (D) in subparagraph (D), by striking

8 ‘‘paragraphs (3), (4), and (5)’’ and inserting

9 ‘‘paragraphs (3) and (4)’’;

10 (3) in paragraph (7), as redesignated—

11 (A) in the first sentence, by striking

12 ‘‘paragraph (9)’’ and inserting ‘‘paragraph

13 (8)’’; and

14 (B) in the second sentence, by striking

15 ‘‘paragraphs (3) through (6)’’ and inserting

16 ‘‘paragraphs (3) through (5)’’;

17 (4) in paragraph (8), as redesignated—

18 (A) in the first sentence, by striking

19 ‘‘paragraph (10)’’ and inserting ‘‘paragraph

20 (9)’’; and

21 (B) in the second sentence, by striking

22 ‘‘paragraph (6)’’ and inserting ‘‘paragraph

23 (5)’’; and

24 (5) in paragraph (9), as redesignated, by strik25 ing ‘‘paragraph (9)’’ and inserting ‘‘paragraph (8)’’.
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1 SEC. 28. ALLOCATION OF RESOURCES.

2 (a) IN GENERAL.—Section 217(a) of such Act is

3 amended to read as follows:

4 ‘‘(a) IN GENERAL.—

5 ‘‘(1) INDIAN ALLOCATION.—For each fiscal

6 year, the Secretary shall reserve for grants to Indian

7 tribes 1.5 percent of the amounts approved in an ap8 propriations Act to carry out this title pursuant to

9 the first sentence of section 205. The Secretary shall

10 provide for distribution of amounts under this para11 graph to Indian tribes on the basis of a competition

12 conducted pursuant to specific criteria, established

13 by the Secretary, for the selection of Indian tribes

14 to receive such amounts. The Secretary may also re15 serve up to 1.5 percent of the total amount available

16 under section 242 for any fiscal year for capacity

17 building for Indian tribes in accordance with section

18 242.

19 ‘‘(2) INSULAR AREAS.—For each fiscal year, of

20 the amounts approved in an appropriations Act to

21 carry out this title pursuant to the first sentence of

22 section 205, the Secretary shall reserve for grants to

23 the Insular areas the greater of (A) $750,000, or

24 (B) 0.2 percent of the amounts appropriated. The

25 Secretary shall provide for the distribution of

26 amounts reserved under this paragraph among the
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1 Insular areas pursuant to specific criteria, estab2 lished by the Secretary, for such distribution.

3 ‘‘(3) CAPACITY BUILDING AND OTHER ASSIST4 ANCE.—For each fiscal year, of the amount ap5 proved in an appropriations Act to carry out this

6 title pursuant to the first sentence of section 205—

7 ‘‘(A) the greater of 2.5 percent of the

8 funds or $38,000,000 may be used for assist9 ance authorized under sections 233, 242, and

10 244 (a), and (c), and (d);

11 ‘‘(B) up to 0.5 percent of the funds, but

12 not less than $7,000,000 shall be available for

13 the development and operation of management

14 information systems authorized under section

15 244(b); and

16 ‘‘(C) beginning in fiscal year 1998, up to

17 $10,000,000 may be used for assistance for

18 childhood lead poisoning prevention activities

19 authorized under section 244(e).

20 ‘‘(4) LOAN GUARANTEES.—For each fiscal year,

21 such amounts as may be necessary for the cost to

22 the Government, as defined in section 502 of the

23 Congressional Budget Act, of guaranteed loans

24 under section 227 shall be taken from funds appro25 priated to carry out this title.
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1 ‘‘(5) STATES AND UNITS OF GENERAL LOCAL

2 GOVERNMENT.—After reserving amounts under

3 paragraphs (1) through (4), the Secretary shall allo4 cate funds approved in an appropriations Act to

5 carry out this title pursuant to the first sentence of

6 section 205 by formula as provided in subsection (b).

7 Of the funds made available under the preceding

8 sentence, the Secretary shall initially allocate 60 per9 cent among units of general local government and

10 40 percent among States.’’.

11 (b) CRITERIA FOR DIRECT REALLOCATION.—Section

12 217 of such Act is amended by striking subsection (c) and

13 redesignating subsection (d) as subsection (c).

14 (c) REALLOCATIONS.—Section 217(c) of such Act, as

15 redesignated by subsection (b), is amended—

16 (1) by striking paragraph (1) and redesignating

17 the remaining paragraphs accordingly; and

18 (2) by amending paragraph (2), as redesig19 nated, to read as follows:

20 ‘‘(2) LIMITATION.—Unless otherwise specified

21 in this subtitle, any funds from a State which are

22 added to the challenge grant fund shall be awarded

23 only to participating States, and any funds added to

24 such fund from units of general local government
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1 shall be awarded only to participating units of gen2 eral local government.’’.

3 SEC. 29. HOME INVESTMENT TRUST FUNDS.

4 (a) LINE OF CREDIT.—Section 218(b) of such Act

5 is amended—

6 (1) in paragraph (1), by striking ‘‘, and’’ and

7 inserting a semicolon;

8 (2) in paragraph (2), by striking the period and

9 inserting ‘‘; and’’; and

10 (3) by adding the following new paragraph:

11 ‘‘(3) funds awarded from the challenge grant

12 fund under section 223(c).’’.

13 (b) REDUCTIONS.—Section 218(c) of such Act is

14 amended—

15 (1) in paragraph (1), by striking the comma

16 and inserting a semicolon;

17 (2) in paragraph (2), by striking ‘‘, and’’ and

18 inserting a semicolon;

19 (3) in paragraph (3), by striking ‘‘section 224.’’

20 and inserting ‘‘section 223(b); and’’; and

21 (4) by adding at the end the following new

22 paragraph:

23 ‘‘(4) funds pledged for repayment of notes,

24 trust certificates, or other obligations guaranteed
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1 under section 227 which are drawn by the Secretary

2 in accordance with section 227(d) or (f).’’.

3 (c) EXPIRATION OF RIGHT TO DRAW FUNDS.—The

4 last sentence of section 218(g) of such Act is amended

5 by striking ‘‘shall reallocate the funds by formula in ac6 cordance with section 217(d)’’ and inserting ‘‘shall add the

7 funds to the challenge grant fund under section 223(c)’’.

8 SEC. 30. REPAYMENT OF INVESTMENT; MATCHING RE9 QUIREMENTS.

10 (a) REPAYMENT OF INVESTMENT.—Section 219 of

11 such Act is amended—

12 (1) in subsection (a), by striking ‘‘shall be re13 allocated in accordance with section 217(d)’’ and in14 serting ‘‘shall be added to the challenge grant fund

15 under section 223(c)’’; and

16 (2) in subsection (b), by striking ‘‘shall be re17 allocated in accordance with section 217(d)’’ and in18 serting ‘‘shall be added to the challenge grant fund

19 under section 223(c)’’.

20 (b) MATCHING REQUIREMENTS.—Section 220(a) of

21 such Act is amended by striking ‘‘fiscal’’ both places it

22 appears and inserting ‘‘program’’.

23 SEC. 31. DISTRIBUTION OF ASSISTANCE.

24 Section 222(b) of such Act is amended—
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1 (1) in the first sentence, by striking ‘‘Partici2 pating States’’ and inserting ‘‘(1) PARTICIPATING

3 STATES.—Participating States’’;

4 (2) by adding at the end the following new

5 paragraph:

6 ‘‘(2) ASSISTANCE FOR COLONIAS.—The States

7 of Texas, New Mexico, Arizona, and California shall

8 invest not less than an amount determined by the

9 Secretary (which amount shall be up to 10 percent

10 of the formula allocation amount) to meet the hous11 ing needs of the residents of colonias.’’; and

12 (3) by adding at the end the following new sub13 section:

14 ‘‘(c) ASSISTANCE TO MIGRANT FARMWORKERS.—

15 State and local participating jurisdictions with significant

16 migrant farmworker populations shall identify the housing

17 needs and other needs of these populations in their con18 solidated plan and set aside funding under this title to

19 address these needs.’’.

20 SEC. 32. PERFORMANCE REVIEW AND SANCTIONS.

21 Section 223 of such Act is amended—

22 (1) by amending the title to read as follows:
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1 ‘‘SEC. 223. REVIEW OF PERFORMANCE, PENALTIES FOR

2 MISUSE OF FUNDS, AND CHALLENGE GRANT

3 FUND.’’;

4 (2) by striking ‘‘If’’ and inserting ‘‘(b)

5 PENALITIES FOR MISUSE OF FUNDS.—If’’ before

6 ‘‘If the Secretary’’;

7 (3) in subsection (b)(3), as designated by para8 graph (2), by striking ‘‘or reallocations’’; and

9 (4) by adding the following new subsection be10 fore subsection (b) as designated by paragraph (2):

11 ‘‘(a) PERFORMANCE REVIEWS.—The Secretary shall,

12 at least on an annual basis, make such reviews as may

13 be necessary or appropriate to determine whether the par14 ticipating jurisdiction has carried out its activities in a

15 timely manner and whether it has carried out its activities

16 and its consolidated plan in accordance with its certifi17 cations, the requirements of this title, and other applicable

18 laws.’’.

19 SEC. 33. CHALLENGE GRANT FUND.

20 Section 223 of such Act, as amended by the previous

21 section, is further amended by adding the following new

22 subsection:

23 ‘‘(c) CHALLENGE GRANT FUND.—

24 ‘‘(1) IN GENERAL.—From amounts appro25 priated under the second sentence of section 205,

26 the Secretary shall make challenge grants to partici-
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1 pating jurisdictions pursuant to a performance

2 agreement. States may apply on behalf of units of

3 general local government that do not qualify as par4 ticipating jurisdictions. The purpose of the grants is

5 to support plans for the revitalization of neighbor6 hoods and other communities by providing assistance

7 for homeownership in homeownership zones.

8 ‘‘(2) ELIGIBILITY FOR AWARDS.—To be eligible

9 to apply for a challenge grant under paragraph (1),

10 a participating jurisdiction shall at minimum—

11 ‘‘(A) meet the requirements of this title, as

12 determined by the Secretary under subsection

13 (a);

14 ‘‘(B) meet or exceed performance measures

15 and benchmarks included in its consolidated

16 plan; and

17 ‘‘(C) have targeted in its consolidated plan

18 at least one distressed or declining, predomi19 nantly residential neighborhood as a home20 ownership zone (which may be an empowerment

21 zone, enterprise community, or other distressed

22 area) proposed for revitalization through home23 ownership as the principal catalyst for change,

24 with assistance under this subsection.
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1 ‘‘(3) SUBMISSION REQUIREMENTS.—The Sec2 retary shall establish submission requirements for

3 participating jurisdictions to include in their consoli4 dated plans. Each jurisdiction shall—

5 ‘‘(A) identify the location of and describe

6 the proposed homeownership zone, which shall

7 be within a concentrated area that is covered by

8 a comprehensive plan to revitalize the neighbor9 hood or other community and be consistent

10 with any requirements of the Secretary relating

11 to the zone’s characteristics, such as geography,

12 level of distress, degree of concentration, and

13 number of units;

14 ‘‘(B) identify how the activities to be car15 ried out under the revitalization plan will result

16 in visible improvement of, and have a major im17 pact on, the homeownership zone;

18 ‘‘(C) demonstrate that the applicant has

19 consulted with, and received the support of,

20 residents of the proposed homeownership zone

21 and that the residents will be continuously in22 volved throughout the implementation period;

23 ‘‘(D) describe a proposed local community

24 partnership, which shall—
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1 ‘‘(i) consist of public, nonprofit, and

2 other private sector partners that agree to

3 provide assistance to increase homeowner4 ship and provide other assistance to em5 power citizens and renew the neighborhood

6 or other community through the revitaliza7 tion plan; and

8 ‘‘(ii) include commitments from the

9 partners to carry out the plan;

10 ‘‘(E) specify performance measures and

11 benchmarks for determining the success of the

12 revitalization plan, including how soon after ap13 proval construction will start and be completed;

14 and

15 ‘‘(F) provide such other information as the

16 Secretary may require.

17 ‘‘(4) DISTRIBUTION OF AWARDS.—The Sec18 retary shall establish a competitive method for dis19 tributing challenge grants under this subsection.

20 ‘‘(5) SELECTION CRITERIA.—The Secretary

21 shall award challenge grants under this subsection

22 based on the following selection criteria:

23 ‘‘(A) The extent to which the jurisdiction

24 has met or exceeded the performance measures

25 and benchmarks established in its Consolidated
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1 Plan, and the extent to which those measures

2 and benchmarks were ambitious compared to

3 those of other comparable jurisdictions.

4 ‘‘(B) The extent to which the homeowner5 ship zone fits in with and furthers a larger

6 comprehensive plan for neighborhood revitaliza7 tion.

8 ‘‘(C) The extent to which there will be a

9 major impact on and visible improvement of the

10 zone.

11 ‘‘(D) The extent to which the jurisdiction

12 has consulted with and received the support of

13 residents of the proposed zone and the extent to

14 which it will continuously involve residents

15 throughout the implementation period.

16 ‘‘(E) The extent to which the jurisdiction

17 has committed to removing local administrative

18 impediments to the success of the zone pro19 posal.

20 ‘‘(F) The extent to which the proposal

21 specifies ambitious and realistic performance

22 measures and benchmarks for determining suc23 cess for activities under this subsection.
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1 ‘‘(G) The extent to which the jurisdiction

2 targets low-income families, including first-time

3 homebuyers.

4 ‘‘(H) The extent of leveraging through pri5 vate and public resources.

6 ‘‘(I) Other factors the Secretary deter7 mines appropriate.

8 ‘‘(6) ELIGIBLE ACTIVITIES.—A recipient of as9 sistance under this subsection may use grant

10 amounts only to provide homeownership assistance

11 in the homeownership zone. Homeownership assist12 ance may be used by participating jurisdictions—

13 ‘‘(A) to provide incentives to develop and

14 support affordable rental housing and home15 ownership affordability through the acquisition,

16 new construction, reconstruction, or moderate

17 or substantial rehabilitation of affordable hous18 ing, including real property acquisition, site im19 provement, conversion, demolition, and other

20 expenses, including financing costs, relocation

21 expenses of any displaced persons, families,

22 businesses, or organizations;

23 ‘‘(B) to provide for the payment of reason24 able administrative and planning costs;
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1 ‘‘(C) for other activities in support of

2 homeownership that are specified or approved

3 by the Secretary; and

4 ‘‘(D) to provide tenant-based rental assist5 ance.

6 ‘‘(7) ELIGIBLE FAMILIES.—Assistance may be

7 provided for families whose incomes do not exceed

8 115 percent of the median income for the area, as

9 determined by the Secretary with adjustments for

10 smaller and larger families, except that the Sec11 retary may establish income ceilings higher or lower

12 than 115 percent of the median for the area on the

13 basis of the Secretary’s findings that such variations

14 are necessary because of prevailing levels of con15 struction costs or unusually high or low family in16 comes.

17 ‘‘(8) TERM OF ASSISTANCE; COMPLIANCE WITH

18 PROGRAM REQUIREMENTS.—The Secretary may pro19 vide assistance to permit a jurisdiction to implement

20 its revitalization plan over a period of up to five

21 years. For all or a portion of a grant under this sec22 tion, the Secretary may condition use of the grant,

23 reduce the amount of the grant, or cancel the grant,

24 based on whether the jurisdiction has made measur25 able, objective progress in meeting the performance
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1 measures and benchmarks established in the consoli2 dated plan and has complied with the requirements

3 of the performance agreement entered into under

4 this section.’’.

5 SEC. 34. TENANT AND PARTICIPANT PROTECTIONS.

6 Section 225(b) of such Act is amended to read as

7 follows:

8 ‘‘(b) TERMINATION OF TENANCY.—An owner may

9 terminate the tenancy of a tenant of rental housing as10 sisted under this title in accordance with State law.’’.

11 SEC. 35. LOAN GUARANTEES.

12 Subtitle A of title II of such Act is amended by add13 ing at the end the following new section:

14 ‘‘SEC. 227. LOAN GUARANTEES.

15 ‘‘(a) GENERAL AUTHORITY.—The Secretary is au16 thorized, upon such terms and conditions as the Secretary

17 may prescribe, to guarantee and make commitments to

18 guarantee, only to such extent or in such amounts as pro19 vided in appropriations Acts, the notes or other obligations

20 issued by eligible participating jurisdictions or by public

21 agencies designated by and acting on behalf of eligible par22 ticipating jurisdictions for purposes of financing (includ23 ing credit enhancements and debt service reserves) the ac24 quisition, new construction, reconstruction, or moderate or

25 substantial rehabilitation of affordable housing (including
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1 real property acquisition, site improvement, conversion,

2 demolition), and other expenses (including financing costs

3 and relocation expenses of any displaced persons, families,

4 businesses, or organizations). Housing funded under this

5 section shall meet the requirements of this subtitle.

6 ‘‘(b) REQUIREMENTS.—Notes or other obligations

7 guaranteed under this section shall be in such form and

8 denominations, have such maturities, and be subject to

9 such conditions as may be prescribed by the Secretary.

10 The Secretary may not deny a guarantee under this sec11 tion on the basis of the proposed repayment period for

12 the note or other obligation, unless the period is more than

13 20 years or the Secretary determines that the period oth14 erwise causes the guarantee to constitute an unacceptable

15 financial risk.

16 ‘‘(c) LIMITATIONS ON TOTAL NOTES AND OBLIGA17 TIONS.—No guarantee or commitment to guarantee shall

18 be made with respect to any note or other obligation if

19 the total outstanding notes or obligations guaranteed

20 under this section on behalf of a participating jurisdiction

21 (excluding any amount defeased under a contract entered

22 into under subsection (e)(1)) would thereby exceed an

23 amount equal to 5 times the amount of the participating

24 jurisdiction’s latest allocation under section 217.
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1 ‘‘(d) USE OF PROGRAM FUNDS.—Notwithstanding

2 any other provision of this subtitle, funds allocated to the

3 participating jurisdiction under this subtitle (including

4 program income derived therefrom) are authorized for use

5 by the participating jurisdiction or by the Secretary, in

6 the payment of principal and interest due on the notes

7 or other obligations guaranteed pursuant to this section

8 and the payment of such servicing, underwriting, or other

9 issuance or collection charges as may be specified by the

10 Secretary.

11 ‘‘(e) SECURITY REQUIREMENTS.—To assure the full

12 repayment of notes or other obligations guaranteed here13 under, as well as the issuance or collection charges speci14 fied by the Secretary under subsection (d), and as a prior

15 condition for receiving such guarantees, the Secretary

16 shall require the participating jurisdiction (and its des17 ignated public agency issuer, if any) to—

18 ‘‘(1) enter into a contract, in a form acceptable

19 to the Secretary, for repayment of such notes or

20 other obligations and the other specified charges;

21 ‘‘(2) pledge as security for such repayment any

22 allocation for which the participating jurisdiction

23 may become eligible under this subtitle; and

24 ‘‘(3) furnish, at the discretion of the Secretary,

25 such other security as may be deemed appropriate
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1 by the Secretary in making such guarantees, which

2 may include increments in local tax receipts gen3 erated by the housing assisted under this section or

4 disposition proceeds from the sale of land or hous5 ing.

6 ‘‘(f) REPAYMENT AUTHORITY.—The Secretary is au7 thorized, notwithstanding any other provision of this sub8 title or any other Federal, State or local law, to apply allo9 cations pledged pursuant to subsection (e) to any repay10 ments due the United States as a result of such guaran11 tees.

12 ‘‘(g) GUARANTEES.—The full faith and credit of the

13 United States is pledged to the payment of all guarantees

14 made under this section. Any such guarantee made by the

15 Secretary shall be conclusive evidence of the eligibility of

16 the notes or other obligations for such guarantee with re17 spect to principal and interest, and the validity of any such

18 guarantee so made shall be incontestable in the hands of

19 a holder of the guaranteed obligations.

20 ‘‘(h) TAXABLE OBLIGATIONS.—Obligations guaran21 teed under this section shall be subject to Federal taxation

22 as provided in subsection (i).

23 ‘‘(i) TAX STATUS.—With respect to any obligation

24 guaranteed pursuant to this section, the interest paid on
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1 such obligation shall be included in gross income for the

2 purpose of the Internal Revenue Code of 1986.

3 ‘‘(j) MONITORING.—The Secretary shall monitor the

4 use of guarantees under this section by eligible participat5 ing jurisdictions. If the Secretary finds that 50 percent

6 of the aggregate guarantee authority for any fiscal year

7 has been committed, the Secretary may impose limitations

8 on the amount of guarantees any one participating juris9 diction may receive that year.

10 ‘‘(k) GUARANTEE OF TRUST CERTIFICATES.—

11 ‘‘(1) The Secretary is authorized, upon such

12 terms and conditions as the Secretary deems appro13 priate, to guarantee the timely payment of the prin14 cipal of and interest on such trust certificates or

15 other obligations as shall—

16 ‘‘(A) be offered by the Secretary or by any

17 other offeror approved for purposes of this sub18 section by the Secretary; and

19 ‘‘(B) be based on and backed by a trust or

20 pool composed of notes or other obligations

21 guaranteed or eligible for guarantee by the Sec22 retary under this section.

23 ‘‘(2) To the same extent as provided in sub24 section (g), the full faith and credit of the United

25 States is pledged to the payment of all amounts
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1 which may be required to be paid under any guaran2 tee by the Secretary under this subsection.

3 ‘‘(3) In the event the Secretary pays a claim

4 under a guarantee issued under this section, the

5 Secretary shall be subrogated fully to the rights sat6 isfied by such payment.

7 ‘‘(4) No State or local law, and no Federal law,

8 shall preclude or limit the exercise by the Secretary

9 of—

10 ‘‘(A) the power to contract with respect to

11 public offerings and other sales of notes, trust

12 certificates, and other obligations guaranteed

13 under this section, upon such terms and condi14 tions as the Secretary deems appropriate;

15 ‘‘(B) the right to enforce, by any means

16 deemed appropriate by the Secretary, any such

17 contract; and

18 ‘‘(C) the Secretary’s ownership rights, as

19 applicable, in notes, certificates or other obliga20 tions guaranteed under this section, or con21 stituting the trust or pool against which trust

22 certificates or other obligations guaranteed

23 under this section are offered.

24 ‘‘(l) AGGREGATE LIMITATION.—The total amount of

25 outstanding obligations guaranteed on a cumulative basis
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1 by the Secretary pursuant to subsection (a) shall not at

2 any time exceed $2,000,000,000.’’.

3 SEC. 36. HOUSING EDUCATION, ORGANIZATIONAL, AND

4 OTHER SUPPORT.

5 (a) IN GENERAL.—Section 233(a) of such Act is

6 amended by striking ‘‘The’’ and inserting ‘‘Of the amount

7 available for each fiscal year under section 217(a)(2)(A),

8 the’’.

9 (b) ELIGIBLE ACTIVITIES.—Section 233(b) of such

10 Act is amended by adding at the end the following new

11 paragraphs:

12 ‘‘(8) HOUSING PROJECT COSTS.—Assistance

13 under this section may be used for housing project

14 costs, in conjunction with other capacity building ac15 tivities under this section.

16 ‘‘(9) CAPACITY OF NONPROFITS.—Assistance

17 under this section may be used for building the ca18 pacity of new and existing nonprofit organizations.

19 ‘‘(10) ASSISTANCE TO NONPROFIT ORGANIZA20 TIONS.—Assistance under this section may be used

21 for funding operating and project expenses of new

22 and existing nonprofit organizations engaged in sta23 bilizing and revitalizing low-income neighborhoods or

24 areas in accordance with the jurisdiction’s consoli25 dated plan.
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1 ‘‘(11) OTHER.—Such other activities that the

2 Secretary determines further the purposes of the

3 subtitle.’’.

4 SEC. 37. PRIORITIES FOR CAPACITY DEVELOPMENT.

5 Section 242 of such Act is amended—

6 (1) by striking ‘‘To carry out section 241, the

7 Secretary’’ and inserting ‘‘(a) IN GENERAL.—To

8 carry out section 241, of the amount available for

9 each fiscal year under section 217(a)(2)(A), the Sec10 retary’’;

11 (2) in subsection (a), as redesignated—

12 (A) by striking ‘‘and’’ at the end of para13 graph (5);

14 (B) by striking the period at the end of

15 paragraph (6) and inserting ‘‘; and’’; and

16 (C) by adding at the end the following new

17 paragraph:

18 ‘‘(7) improve the ability of States and units of

19 general local government, Community Housing De20 velopment Organizations, and other nonprofit orga21 nizations, and for-profit developers of low-income

22 housing to carry out the provisions of this title and

23 other laws applicable to investments under this

24 title.’’; and
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1 (3) by adding at the end of subsection (a), as

2 designated by paragraph (1), the following new sub3 section:

4 ‘‘(b) SUSTAINABLE COMMUNITY DEVELOPMENT.—

5 Funds may also be provided for urban design and develop6 ment and implementation of comprehensive plans that

7 focus on local and metropolitan strategies which create

8 sustainable community development at the neighborhood,

9 city, and metropolitan level.’’.

10 SEC. 38. CONDITIONS OF CONTRACTS.

11 Section 243(a) of such Act is amended—

12 (1) in paragraph (4), by striking ‘‘or’’ after the

13 semicolon;

14 (2) in paragraph (5), by striking the period and

15 inserting ‘‘; or’’; and

16 (3) by adding at the end the following new

17 paragraph:

18 ‘‘(6) a public or private college or university.’’.

19 SEC. 39. OTHER ASSISTANCE.

20 Section 244 of such Act is amended—

21 (1) by amending the title to read as follows:

22 ‘‘SEC. 244. OTHER ASSISTANCE.’’;

23 (2) in the first sentence, by striking ‘‘The’’ and

24 inserting ‘‘(a) RESEARCH IN HOUSING AFFORD-
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1 ABILITY.—Of the amount available for each fiscal

2 year under section 217(a)(2)(A), the’’; and

3 (3) by inserting after subsection (a), as des4 ignated by paragraph (2), the following new sub5 sections:

6 ‘‘(b) PERFORMANCE DATA.—Of the amount available

7 for each fiscal year under section 217(a)(2)(B), the Sec8 retary is authorized to establish a national database on

9 local needs and program performance, to provide jurisdic10 tions with computer software to plan and track perform11 ance, and to provide other support or services to facilitate

12 the exchange of information under this subtitle among ju13 risdictions, community housing development organiza14 tions, other nonprofits, community members, and the Sec15 retary.

16 ‘‘(c) JOINT GRANTS TO EDUCATIONAL INSTITUTIONS

17 AND STATE AND LOCAL GOVERNMENTS.—Of the amount

18 available for each fiscal year under section 217(a)(2)(A),

19 the Secretary may use up to $5,000,000 to make grants

20 to States and units of general local government and insti21 tutions of higher education having a demonstrated capac22 ity to carry out eligible activities under this title, except

23 that the Secretary may make a grant under this sub24 section only to a State or unit of general local government

25 that jointly, with an institution of higher education, has
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1 prepared and submitted to the Secretary an application

2 for such grant, as the Secretary shall by regulation re3 quire.

4 ‘‘(d) COMMUNITY OUTREACH PARTNERSHIP ACT.—

5 Of the amount available for each fiscal year under section

6 217(a)(3)(A), the Secretary may use up to $7,500,000 to

7 carry out the Community Outreach Partnership Act of

8 1992.

9 ‘‘(e) LEAD ASSISTANCE.—Of the amount available

10 for each fiscal year beginning in fiscal year 1998 under

11 section 217(a)(3)(C), the Secretary is authorized to pro12 vide assistance to State and local governments to support

13 lead research, technical studies, and education materials,

14 concerning lead-based paint hazards, reduction and abate15 ment of lead-based paint hazards, and childhood lead poi16 soning prevention activities.’’.

17 SEC. 40. TERMINATION OF EXISTING PROGRAMS.

18 Section 289 of such Act is amended by adding at the

19 end the following new subsection:

20 ‘‘(d) HOME PERFORMANCE FUND REPEALERS.—

21 ‘‘(1) IN GENERAL.—The following provisions of

22 law are hereby repealed:

23 ‘‘(A) Title III, subtitle A, of the Cranston24 Gonzalez National Affordable Housing Act, ef25 fective on the date of enactment of this Act.
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1 ‘‘(B) Title IV, subtitles B and C, of the

2 Cranston-Gonzalez National Affordable Hous3 ing Act, effective on the date of enactment of

4 this Act.

5 ‘‘(C) Section 1011 of the Housing and

6 Community Development Act of 1992, effective

7 on October 1, 1997.

8 ‘‘(2) AUTHORITY TO PROVIDE ASSISTANCE.—

9 On and after the effective date of such repeal, the

10 Secretary may not make assistance available under

11 any of the authorities listed in paragraph (1) (as

12 they existed immediately before such effective date),

13 except pursuant to a legally binding commitment en14 tered into before that date.

15 ‘‘(3) LAW GOVERNING.—Any amounts made

16 available under any authority listed in paragraph (1)

17 before such effective date shall continue to be gov18 erned by the provisions of such authority, as they

19 existed immediately before that date, except that

20 each jurisdiction may, in its discretion pursuant to

21 procedures established by the Secretary, provide for

22 the use, in accordance with the provisions of this

23 title, of any such amounts that it has not obligated

24 under such authority. If the grantee under any of

25 these authorities is not the jurisdiction, the grantee
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1 may, pursuant to procedures established by the Sec2 retary, transfer such unobligated funds to the juris3 diction for use in accordance with the provisions of

4 this title or title I of the Housing and Community

5 Development Act of 1974.

6 ‘‘(4) STATUS OF FUNDS.—Any amounts appro7 priated under any authority listed in paragraph (1)

8 before such effective date that are available for obli9 gation immediately before such date, or that become

10 available for obligation on or after that date, shall

11 be transferred and added to, and shall thereafter be

12 available for the purposes of, the appropriation ac13 count for this title. Any amounts so transferred shall

14 remain available for obligation only for the time pe15 riods for which such respective amounts were avail16 able before such transfer.’’.

17 TITLE II—DEVELOPING COMMUNITIES

18 INITIATIVE

19 SEC. 51. BASIC AUTHORITY.

20 (a) PURPOSES.—The Secretary may provide assist21 ance in accordance with the provisions of this title to non22 profit organizations for the purposes of—

23 (1) stimulating public and private investment in

24 housing and community development for disadvan-
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1 taged and underserved individuals in target commu2 nities under subsection (b);

3 (2) making infrastructure, public health, and

4 safety improvements for such disadvantaged and un5 derserved individuals;

6 (3) providing supportive services for such dis7 advantaged and underserved individuals; and

8 (4) developing the capacity of community devel9 opment corporations to undertake community devel10 opment and affordable housing projects for such dis11 advantaged and underserved individuals.

12 (b) TARGET COMMUNITIES.—Assistance provided

13 under this title shall be used, as determined by the Sec14 retary in consultation with the Secretary of Agriculture,

15 to assist disadvantaged and underserved individuals in

16 communities requiring development due to factors such as

17 severe, unmet housing needs, substandard housing, inad18 equate roads and drainage, substandard or the absence

19 of water and sewer facilities, inadequate social support

20 services, and inadequate governmental funding, including

21 individuals such as—

22 (1) residents of colonias;

23 (2) farmworkers; and
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1 (3) Native Americans who are not being ade2 quately served by other programs, as determined by

3 the Secretary.

4 SEC. 52. FUNDING.

5 (a) AUTHORIZATION OF APPROPRIATIONS.—The first

6 sentence of section 106(a)(1) of the Housing and Commu7 nity Development Act of 1974 is amended by inserting be8 fore the period the following: ‘‘; and of such approved

9 amounts, the Secretary shall reserve $50,000,000 for fis10 cal year 1997 and such sums as may be necessary for fis11 cal years 1998, 1999, and 2000 for the Developing Com12 munities Initiative under title II of the Community Devel13 opment Block Grant Performance Fund and HOME Per14 formance Fund Act of 1996’’.

15 (b) TECHNICAL ASSISTANCE.—The Secretary may

16 use up to 2 percent of the amounts available for use under

17 this title in any fiscal year to provide technical assistance

18 (through grant awards or directly) in conjunction with the

19 administration of the program under this title.

20 (c) ALLOCATION OF FUNDING AMONG TARGET COM21 MUNITIES.—The Secretary shall publish a notice in the

22 Federal Register describing how the Secretary has deter23 mined to allocate assistance under this title among the tar24 get communities, taking into account their relative need

25 for assistance and other appropriate factors.
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1 (d) ALLOCATION OF ASSISTANCE FOR PLANNING AC2 TIVITIES.—Of the amounts available for use under this

3 title for each fiscal year, the Secretary may designate up

4 to 25 percent for planning activities under section 53 of

5 this Act.

6 (e) MATCHING REQUIREMENT.—The Secretary, in

7 consultation with the Secretary of Agriculture, shall estab8 lish the ratio of matching funds which a nonprofit organi9 zation shall provide from one or more sources other than

10 the Developing Communities Initiative for use to carry out

11 the activities specified in the application.

12 SEC. 53. PROGRAM ADMINISTRATION.

13 (a) APPLICATION AND SELECTION.—The Secretary,

14 in consultation with the Secretary of Agriculture, shall

15 prescribe procedures for the submission and selection of

16 applications from nonprofit organizations.

17 (b) ELIGIBLE ACTIVITIES.—Assistance under this

18 title may be used for—

19 (1) planning, including the cost of planning

20 community development (including water and sewage

21 facilities), housing activities, and social support serv22 ices; and

23 (2) implementation, including capacity building

24 of organizations in the target communities, the de25 velopment of affordable housing opportunities, the
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1 development of housing infrastructure, the construc2 tion of community facilities intended to be used to

3 provide supportive service activities, the establish4 ment of sinking funds, and the initial funding, not

5 to exceed two years, for supportive services.

6 (c) AUTHORITY OF SECRETARY.—The Secretary, in

7 consultation with the Secretary of Agriculture, may pre8 scribe such other requirements for providing assistance

9 under this title as the Secretary determines to be appro10 priate.

11 (d) LIMITATIONS.—

12 (1) TIME LIMIT ON COMPLETION OF ACTIVI13 TIES.—All activities carried out with assistance pro14 vided under this title shall be completed within two

15 years (or within three years where approved by the

16 Secretary for good cause) of the date of execution of

17 the grant agreement by the grantee.

18 (2) MAXIMUM AMOUNT OF ASSISTANCE.—

19 (A) PLANNING.—Assistance for planning

20 provided under this title may not exceed

21 $100,000 for each application.

22 (B) IMPLEMENTATION.—Assistance for im23 plementation provided under this title may not

24 exceed $2,000,000 for each application.
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1 SEC. 54. RECORDS, REPORTS, AND AUDITS.

2 (a) KEEPING OF RECORDS.—Each grantee shall keep

3 such records as may be reasonably necessary to disclose

4 the amounts and the disposition of amounts received

5 under this title and to ensure compliance with the require6 ments of this title.

7 (b) REPORTS.—Each grantee shall submit to the Sec8 retary a report, or series of reports, in a form and at a

9 time specified by the Secretary. Each report shall—

10 (1) describe the use of assistance made avail11 able under this title; and

12 (2) describe and analyze the effect of assisted

13 activities in addressing the objectives of this title.

14 (c) ACCESS TO DOCUMENTS BY THE SECRETARY.—

15 The Secretary shall have access for the purpose of audit

16 and examination to any books, documents, papers, and

17 records of each grantee that are pertinent to assistance

18 received in connection with, and the requirements of, this

19 title.

20 (d) ACCESS TO DOCUMENTS BY THE COMPTROLLER

21 GENERAL.—The Comptroller General of the United

22 States, or any of the duly authorized representatives of

23 the Comptroller General, shall have access for the purpose

24 of audit and examination to any books, documents, papers,

25 and records, of each grantee that are pertinent to assist26 ance received under, and the requirements of, this title.
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1 SEC. 55. DEFINITIONS.

2 As used in this title—

3 (1) The term ‘‘colonia’’ has the meaning given

4 the term in section 916(e) of the Cranston-Gonzalez

5 National Affordable Housing Act.

6 (2) The term ‘‘farmworkers’’ has the meaning

7 given the term in section 514 of the Rural Housing

8 Act.

9 (3) The term ‘‘grantee’’ means a nonprofit or10 ganization that receives assistance from the Sec11 retary under this title.

12 (4) The term ‘‘Indian tribe’’ or ‘‘tribe’’ means

13 any Indian tribe, band, nation, or other organized

14 group or community of Indians, including any Alas15 ka Native Village, which is recognized as eligible for

16 the special programs and services provided by the

17 United States to Indians because of their status as

18 Indians pursuant to the Indian Self-Determination

19 and Education Assistance Act of 1975 (Public Law

20 92–638), as amended.

21 (5) The term ‘‘Native American’’ means any

22 person who is a member of an Indian tribe.

23 (6) The term ‘‘nonprofit organization’’ means a

24 private organization—
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1 (A) no title of the net earnings of which

2 inures to benefits of any member, founder, con3 tributor, or individual;

4 (B) that has a voluntary board;

5 (C) that has an accounting system, or has

6 designated a fiscal agent in accordance with re7 quirements established by the Secretary; and

8 (D) that practices nondiscrimination in the

9 provision of assistance.

10 TITLE III—MISCELLANEOUS PROGRAMS

11 SEC. 61. USE OF TECHNICAL ASSISTANCE FUNDS BY OR

12 FOR HUD STAFF.

13 Section 7 of the Department of Housing and Urban

14 Development Act is amended by adding at the end the fol15 lowing new subsection:

16 ‘‘(t) The Secretary may transfer to any of the ac17 counts of the Department for salaries and expenses from

18 any other account from which funds may be drawn for

19 capacity building and technical assistance such amounts,

20 but not more than 10 percent of the amount available for

21 capacity building and technical assistance in any one ac22 count, as the Secretary determines are reasonable to reim23 burse such salaries and expenses account. Such reimburse24 ment shall be for expenditures for the costs of personal

25 services, travel, and transportation, and other object clas-
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1 sifications that are incurred for the capacity building,

2 technical assistance, training, and related activities pro3 vided by or to officials and employees of the Department

4 for a program that is funded from such other account and

5 in which the costs of capacity building and technical as6 sistance are otherwise eligible for expenditure. The author7 ity to transfer provided in this subsection shall be in addi8 tion to any other authority to transfer funds among ac9 counts that the Secretary may now or hereafter have.’’.

10 SEC. 62. HUD RESEARCH AND DEVELOPMENT.

11 The second sentence of section 501 of the Housing

12 and Urban Development Act of 1970 is amended to read

13 as follows: ‘‘There are authorized to be appropriated to

14 carry out this title $45,000,000 for fiscal year 1997 and

15 such sums as may be necessary for fiscal years 1998,

16 1999, and 2000.’’.

17 SEC. 63. FAIR HOUSING INITIATIVES PROGRAM.

18 Section 561(g) of the Housing and Community De19 velopment Act of 1987 is amended to read as follows:

20 ‘‘(g) AUTHORIZATION OF APPROPRIATIONS.—There

21 are authorized to be appropriated to carry out the provi22 sions of this section $15,000,000 for fiscal year 1997, and

23 such sums as may be necessary for fiscal years 1998,

24 1999, and 2000, of which—
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1 ‘‘(1) not less than $10,500,000 for fiscal year

2 1997 and such sums as may be necessary for fiscal

3 years 1998, 1999, and 2000 shall be for private en4 forcement initiatives authorized under subsection

5 (b), divided equally between activities specified under

6 subsection (b)(1) and those specified under sub7 section (b)(2);

8 ‘‘(2) not less than $2,700,000 for fiscal year

9 1997 and such sums as may be necessary for fiscal

10 years 1998, 1999, and 2000 shall be for fair housing

11 enforcement organizations authorized under sub12 section (c);

13 ‘‘(3) not less than $1,800,000 for fiscal year

14 1997 and such sums as may be necessary for fiscal

15 years 1998, 1999, and 2000 shall be for education

16 and outreach programs authorized under subsection

17 (d); and

18 ‘‘(4) such sums as may be necessary for fiscal

19 years 1998, 1999, and 2000 shall be for administra20 tive enforcement.’’.

21 SEC. 64. LEAD-BASED PAINT TARGET HOUSING HAZARD RE22 DUCTION PROGRAM.

23 The Residential Lead-Based Paint Hazard Reduction

24 Act of 1992 is amended—
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1 (1) by striking section 1011(p) and inserting in

2 lieu thereof the following:

3 ‘‘(p) AUTHORIZATION OF APPROPRIATIONS.—For the

4 purposes of carrying out this Act, there are authorized to

5 be appropriated $60,000,000 for fiscal year 1997.’’; and

6 (2) by striking section 1053 and inserting in

7 lieu thereof the following:

8 ‘‘SEC. 1053. AUTHORIZATION.

9 ‘‘Of the total amount approved in appropriation Acts

10 under section 1011(p), there shall be set aside to carry

11 out this part $10,000,000 for fiscal year 1997.’’.

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