I
103D CONGRESS
2D SESSION
H. R. 5275
To establish a Federal Housing Trust Fund to provide decent, safe, and
affordable housing for low-income families lacking such housing.
IN THE HOUSE OF REPRESENTATIVES
OCTOBER 7, 1994
Mr. OWENS introduced the following bill; which was referred jointly to the
Committees on Ways and Means and Banking, Finance and Urban Affairs
A BILL
To establish a Federal Housing Trust Fund to provide de-
cent, safe, and affordable housing for low-income families
lacking such housing.
Be it enacted by the Senate and House of Representa-
tives 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
‘‘Federal Housing Trust Fund Act of 1994’’.
(b) TABLE OF CONTENTS.—The table of contents for
this Act is as follows:
Sec. 1. Short title and table of contents.
TITLE I—REDUCTION OF CERTAIN TAX BENEFITS FOR HIGHER
INCOME 
TAXPAYERS 
AND 
ESTABLISHMENT 
OF 
HOUSING
TRUST FUND
Sec. 101. Reduction of certain tax benefits for higher income taxpayers.
Sec. 102. Repeal of increase in basis of property acquired from a decedent;
phasein of capital gains tax on inherited property.
Sec. 103. Establishment of Housing Trust Fund.
TITLE II—ADMINISTRATION OF HOUSING TRUST FUND AND EN-
TITLEMENT PROGRAM FOR FORMULA GRANTS FOR AFFORD-
ABLE HOUSING
Sec. 201. Grants for eligible public entities.
Sec. 202. Eligible activities for use of grant amounts.
Sec. 203. Housing costs assistance program.
Sec. 204. Housing supply assistance program.
Sec. 205. Affordability.
Sec. 206. Eligible public entities.
Sec. 207. Requirements of eligible public entities.
Sec. 208. Trust Fund grant plans.
Sec. 209. Allocation of Trust Fund amounts for States, entitlement commu-
nities, and Indian tribes.
Sec. 210. Grant allotments.
Sec. 211. Maintenance of State and local effort.
Sec. 212. Compliance.
Sec. 213. Administrative expenses.
Sec. 214. Housing Trust Fund Program Advisory Committee.
Sec. 215. Administrator of Trust Fund in Department of Housing and Urban
Development.
Sec. 216. Definitions.
Sec. 217. Regulations.
TITLE I—REDUCTION OF CER-
TAIN 
TAX 
BENEFITS 
FOR
HIGHER INCOME TAXPAYERS
AND 
ESTABLISHMENT 
OF
HOUSING TRUST FUND
SEC. 101. REDUCTION OF CERTAIN TAX BENEFITS FOR
HIGHER INCOME TAXPAYERS.
(a) IN GENERAL.—Part I of subchapter B of chapter
1 of the Internal Revenue Code of 1986 (relating to defini-
tion of gross income, adjusted gross income, taxable in-
come, etc.) is amended by adding at the end the following
new section:
‘‘SEC. 69. LIMITATION ON CERTAIN TAX BENEFITS FOR
HIGHER INCOME TAXPAYERS.
‘‘(a) IN GENERAL.—In the case of an individual, the
limitations of this section apply if the taxpayer’s modified
adjusted gross income for the taxable year exceeds
$75,000.
‘‘(b) LIMITATIONS ON DEDUCTION FOR MORTGAGE
INTEREST AND PROPERTY TAXES.—In the case of a tax-
payer to whom this section applies for the taxable year—
‘‘(1) the amount of qualified residence interest
(as defined in section 163(h)(3)) which is allowed as
a deduction under section 163 shall not exceed the
applicable percentage of such interest, and
‘‘(2) the amount of real property taxes which is
allowed as a deduction under section 164 shall not
exceed the applicable percentage of such taxes.
‘‘(c) APPLICABLE PERCENTAGE.—For purposes of
this section—
‘‘(1) IN GENERAL.—The term ‘applicable per-
centage’ means 100 percent reduced (but not below
the 50 percent) by 3 percentage points for each
$1,000 by which the modified adjusted gross income
of the taxpayer for the taxable year exceeds
$75,000.
‘‘(2) PHASE-IN.—In the case of taxable years
beginning before January 1, 2000, paragraph (1)
shall be applied by substituting for ‘50 percent’ the
percentage determined in accordance with the follow-
ing table:
‘‘In the case of taxable
The percentage
years beginning in calendar year:
is:
1996 ..........................................................................
90 percent
1997 ..........................................................................
80 percent
1998 ..........................................................................
70 percent
1999 ..........................................................................
60 percent.
‘‘(d) MODIFIED ADJUSTED GROSS INCOME.—For
purposes of this section, the term ‘modified adjusted gross
income’ means adjusted gross income—
‘‘(1) determined without regard to this section,
sections 911, 931, and 933, and the deductions re-
ferred to in subsection (b), and
‘‘(2) increased by the amount of interest re-
ceived or accrued by the individual during the tax-
able year which is exempt from tax.
‘‘(e) COORDINATION WITH SECTION 68.—This sec-
tion shall be applied before section 68 with respect to the
deductions referred to in subsection (b).’’
(b) CONFORMING AMENDMENT.—The table of sec-
tions for such part I is amended by adding at the end
the following new item:
‘‘Sec. 69. Limitation on certain tax benefits for higher income
taxpayers.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1995.
SEC. 102. REPEAL OF INCREASE IN BASIS OF PROPERTY AC-
QUIRED FROM A DECEDENT; PHASEIN OF
CAPITAL GAINS TAX ON INHERITED PROP-
ERTY.
(a) IN GENERAL.—Section 1014 of the Internal Rev-
enue Code of 1986 (relating to basis of property acquired
from a decedent) is hereby repealed.
(b) BASIS TO BE DETERMINED UNDER RULES AP-
PLICABLE TO GIFTS.—Section 1015 of such Code (relat-
ing to basis of property acquired by gifts and transfers
in trusts) is amended by adding at the end the following
new subsection:
‘‘(f) PROPERTY ACQUIRED FROM OR PASSING FROM
A DECEDENT.—
‘‘(1) IN GENERAL.—Property acquired from a
decedent dying after December 31, 1995, or passed
from such a decedent shall be treated for purposes
of subsection (a) as acquired by gift for purposes of
this section.
‘‘(2) PROPERTY
ACQUIRED
FROM
A
DECE-
DENT.—Section 1014(b) (as in effect on the day be-
fore the date of the enactment of the Federal Hous-
ing Trust Fund Act of 1994) shall apply for pur-
poses of whether property is considered to have been
acquired from or to have passed from the decedent.
‘‘(3) INCREASE
IN
BASIS
FOR
ESTATE
TAX
PAID.—
‘‘(A) IN
GENERAL.—The basis of any
property which this subsection applies shall be
the basis determined under subsection (a) in-
creased by the portion of the aggregate death
tax adjustment which is allocated to the prop-
erty pursuant to this paragraph.
‘‘(B) LIMITATION.—The death tax adjust-
ment for any property shall not exceed—
‘‘(i) the net appreciation in such prop-
erty, multiplied by
‘‘(ii) the Federal marginal estate tax
rate.
‘‘(C) NET
APPRECIATION.—For purposes
of this paragraph, the net appreciation in value
of any property is the amount by which—
‘‘(i) the fair market value of such
property, exceeds
‘‘(ii) the initial basis of such property
increased by the minimum basis adjust-
ment of such property.
‘‘(4) AGGREGATE DEATH TAX ADJUSTMENT.—
In the case of any estate—
‘‘(A) IN GENERAL.—The aggregate death
tax adjustment is the product of—
‘‘(i) the aggregate net appreciation of
all properties which have net appreciation,
and
‘‘(ii) the Federal marginal estate tax
rate.
‘‘(B) LIMITATION.—The amount taken
into account under subparagraph (A)(i) shall
not exceed the taxable estate.
‘‘(C) FEDERAL
MARGINAL
ESTATE
TAX
RATE.—The term ‘Federal marginal estate tax
rate’ means the highest rate in the rate sched-
ule set forth in section 2001(c)—
‘‘(i) which is used in determining the
tentative tax under section 2001(b)(1) with
respect to the estate of the decedent, and
‘‘(ii) the amount subject to which is at
least $50,000.
In no event shall the Federal marginal estate
tax rate be less than 30 percent.
‘‘(5) ALLOCATION RULES.—The executor shall
allocate the adjustments under this subsection
among the properties on the return of the tax im-
posed by chapter 11.’’
(c) PHASE-IN OF CAPITAL GAINS TAX ON INHERITED
PROPERTY.—Subsection (h) of section 1 of such Code (re-
lating to maximum capital gains rate) is amended to read
as follows:
‘‘(h) MAXIMUM CAPITAL GAINS RATE.—
‘‘(1) IN GENERAL.—If a taxpayer has a net
capital gain for any taxable year, then the tax im-
posed by this section shall not exceed the sum of—
‘‘(A) a tax computed at the rates and in
the same manner as if this subsection had not
been enacted on the greater of—
‘‘(i) taxable income reduced by the
amount of the net capital gain, or
‘‘(ii) the amount of taxable income
taxed at a rate below 28 percent, plus
‘‘(B) a tax equal to the sum of—
‘‘(i) the applicable percentage of so
much of such net capital gain as is attrib-
utable to property acquired by the tax-
payer from a decedent dying after Decem-
ber 31, 1995 (or passed to the taxpayer
from such a decedent), and
‘‘(ii) 28 percent of the amount of the
taxable income in excess of the sum of the
amount determined under subparagraph
(A) and the net capital gain described in
clause (i) of this subparagraph.
‘‘(2) APPLICABLE PERCENTAGE.—For purposes
of paragraph (1), the term ‘applicable percentage’
means—
‘‘(A) 10 percent in the case of taxable
years ending during 1996,
‘‘(B) 15 percent in the case of taxable
years ending during 1997,
‘‘(C) 20 percent in the case of taxable
years ending during 1998, and
‘‘(D) 25 percent in the case of taxable
years ending during 1999.
‘‘(3) ELECTION
TO
MARK-TO-MARKET
PROP-
ERTY ACQUIRED FROM A DECEDENT.—If the tax-
payer elects this paragraph with respect to any prop-
erty described in paragraph (1)(B)(i), such property
shall be treated as sold (for its fair market value as
of the first day of the taxpayer year) and any gain
or loss shall be treated as received or accrued on
such day.’’
(d) CONFORMING AMENDMENTS.—
(1) The table of sections for part II of sub-
chapter O of chapter 1 of such Code is amended by
striking the item relating to section 1014.
(2) The heading of section 1015 of such Code
is amended to read as follows:
‘‘SEC. 1015. BASIS OF PROPERTY ACQUIRED BY GIFT, FROM
A DECEDENT, OR TRANSFERRED IN TRUST.’’
(3) The table of sections for part II of sub-
chapter O of chapter 1 of such Code is amended by
striking the item relating to section 1015 and insert-
ing the following new item:
‘‘Sec. 1015. Basis of property acquired by gift, from a decedent,
or transferred in trust.’’
(e) EFFECTIVE DATES.—
(1) CARRYOVER BASIS.—Except as provided in
paragraph (2), the amendments made by this section
shall apply to decedents dying after December 31,
1995.
(2) TAX
ON
INHERITED
PROPERTY.—The
amendment made by subsection (c) shall apply to
taxable years ending after December 31, 1995.
SEC. 103. ESTABLISHMENT OF HOUSING TRUST FUND.
(a) IN GENERAL.—Subchapter A of chapter 98 of the
Internal Revenue Code of 1986 (relating to trust funds)
is amended by adding at the end thereof the following new
section:
‘‘SEC. 9512. HOUSING TRUST FUND.
‘‘(a) CREATION OF TRUST FUND.—There is hereby
established in the Treasury of the United States a trust
fund to be known as the ‘Housing Trust Fund’, consisting
of such amounts as may be appropriated or credited to
such trust fund as provided in this section, section
9602(b) of this title, or section 201(e) or 212(a)(3)(B)
of the Federal Housing Trust Fund Act of 1994.
‘‘(b) CREDITS TO TRUST FUND.—There are hereby
appropriated to the Housing Trust Fund amounts equiva-
lent to the increase in income tax liability attributable to
section 69.
‘‘(c) EXPENDITURES FROM TRUST FUND.—Amounts
in the Housing Trust Fund are available each fiscal year
to the Secretary of Housing and Urban Development for
carrying out title II of the Federal Housing Trust Fund
Act of 1994, but shall not be available for any other pur-
pose.’’.
(b) CLERICAL AMENDMENT.—The table of sections
for such subchapter A is amended by adding at the end
thereof the following new item:
‘‘Sec. 9512. Housing Trust Fund.’’.
TITLE II—ADMINISTRATION OF
HOUSING TRUST FUND AND
ENTITLEMENT PROGRAM FOR
FORMULA GRANTS FOR AF-
FORDABLE HOUSING
SEC. 201. GRANTS FOR ELIGIBLE PUBLIC ENTITIES.
(a) IN GENERAL.—The Secretary of Housing and
Urban Development shall, for fiscal year 1995 and each
fiscal year thereafter, make a grant under this title to each
eligible public entity for which an allotment is made under
section 210. The amount of the grant for such an eligible
public entity shall be equal to the amount of the allotment
for the eligible public entity determined in accordance with
section 209.
(b) USE OF TRUST FUNDS.—Grants under this title
shall be made only using amounts from the Housing Trust
Fund established in section 9512 of the Internal Revenue
Code of 1986.
(c) ENTITLEMENT STATUS OF GRANTS.—
(1) IN GENERAL.—Subject to subsection (d),
each eligible public entity is entitled to payment of
the grant required by subsection (a) for fiscal year
1995 and each subsequent fiscal year.
(2) RULE OF CONSTRUCTION.—Paragraph (1)
may not be construed to establish, with respect to
this section, an entitlement of any individual to have
carried out on behalf of the individual any activity
authorized in this title.
(d) LIMITATIONS.—An entitlement is established pur-
suant to subsection (a) for a fiscal year for an eligible pub-
lic entity—
(1) only to the extent that there are amounts
in the Fund and only to the extent of the amount
of the allotment made under section 210 for the en-
tity; and
(2) only if the allotment for the entity has not
been terminated pursuant to section 212(c)(1).
(e) 
DURATION
OF
AVAILABILITY
OF
GRANT
AMOUNTS.—With respect to the 24-month period begin-
ning on the date on which a grant under subsection (a)
for a fiscal year becomes available to an eligible public en-
tity, any portion of the grant that is not obligated by the
entity before the expiration of such period shall be covered
into the Fund and be available for grants under such sub-
section for the following fiscal year.
(f) PAYMENT
OF GRANT AMOUNTS.—The grant
amounts for each eligible public entity shall be paid di-
rectly to the agency designated pursuant to section 206(2)
by the eligible public entity and shall be available only for
activities authorized under section 202.
SEC. 202. ELIGIBLE ACTIVITIES FOR USE OF GRANT
AMOUNTS.
(a) IN GENERAL.—Grant amounts provided under
this title for a fiscal year may be expended by the eligible
public entity receiving the grant only in accordance with
the Trust Fund grant plan for the entity for such year
approved by the Secretary under section 208 to carry
out—
(1) a housing costs assistance program under
section 203;
(2) a housing supply assistance program under
section 204; and
(3) administrative activities, to the extent pro-
vided in subsection (c).
(b) ALLOCATION
OF GRANT AMOUNTS BETWEEN
PROGRAMS.—
(1) IN GENERAL.—Except to the extent pro-
vided in subsection (a)(3) and paragraph (2) of this
subsection, from the grant amounts provided to an
eligible public entity for a fiscal year, the entity shall
use—
(A) the amount provided to the entity
under paragraph (1)(A), (2)(A), or (3)(A), as
applicable, of section 210(a) for carrying out
the housing costs assistance program under sec-
tion 203 of the entity; and
(B) the amount provided to the entity
under paragraph (1)(B), (2)(B), or (3)(B), as
applicable, of section 210(a) for carrying out
the housing supply assistance program under
section 204 of the entity.
(2) EXCEPTION.—If in any fiscal year any
grant amounts referred to in paragraph (1)(A) re-
main available for commitment for housing costs as-
sistance for eligible families 9 months after such
amounts are first made available to the eligible pub-
lic entity because of a lack of eligible families or the
failure of eligible families to obtain suitable dwelling
units, the eligible public entity may use such
amounts for carrying out the housing supply assist-
ance program of the entity.
(c) ADMINISTRATIVE EXPENSES.—
(1) LIMITATION.—An eligible public entity that
receives grant amounts for a fiscal year may use for
administrative expenses relating to carrying out the
housing costs assistance program and housing sup-
ply assistance program of the entity not more than
the applicable percentage of such amounts as the
Secretary shall establish by regulation for purposes
of this subsection. The Secretary may establish dif-
ferent percentage limitations based on the amount of
(2) The term ‘‘affordable’’ means, with respect
to a particular income group, that a dwelling unit
complies with the requirements established under
section 205(c) for the income group.
(3) The term ‘‘affordable housing’’ means hous-
ing that complies with the requirements established
under section 205(a).
(4) The term ‘‘city’’ has the meaning given the
term in section 102(a) of the Housing and Commu-
nity Development Act of 1974.
(5) The term ‘‘community housing development
organization’’ has the meaning given the term in
section 104 of the Cranston-Gonzalez National Af-
fordable Housing Act.
(6) The term ‘‘decent’’ means, with respect to
housing, that the housing is maintained in the condi-
tion required by the housing quality standards estab-
lished under section 8 of the United States Housing
Act of 1937 with respect to dwelling units assisted
under such section or in compliance with the re-
quirement under paragraph (2) of section 207(b), if
applicable.
(7) The term ‘‘eligible family’’ means a house-
hold, including a single person, for whom the fair
market rental of a dwelling unit of the size appro-