I
103D CONGRESS
2D SESSION
H. R. 4067
To amend section 203 of the Housing and Community Development Amend-
ments of 1978 to provide for the disposition of multifamily properties
owned by the Secretary of Housing and Urban Development, to provide
for other reforms in programs administered by the Secretary, and to
make certain technical amendments, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
MARCH 17, 1994
Mr. GONZALEZ introduced the following bill; which was referred to the
Committee on Banking, Finance and Urban Affairs
A BILL
To amend section 203 of the Housing and Community Devel-
opment Amendments of 1978 to provide for the disposi-
tion of multifamily properties owned by the Secretary
of Housing and Urban Development, to provide for other
reforms in programs administered by the Secretary, and
to make certain technical amendments, and for other
purposes.
Be it enacted by the Senate and House of 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
‘‘Multifamily Property Disposition Reform Act of 1994’’.
TITLE 
I—MULTIFAMILY 
PROP-
ERTY DISPOSITION REFORM
SEC. 101. MULTIFAMILY PROPERTY DISPOSITION.
(a) FINDINGS.—The Congress finds that—
(1) the portfolio of multifamily housing project
mortgages insured by the FHA is severely troubled
and at risk of default, requiring the Secretary to in-
crease loss reserves from $5,500,000,000 in 1991 to
$11,900,000,000 in 1992 to cover estimated future
losses;
(2) the inventory of multifamily housing
projects owned by the Secretary has more than
quadrupled since 1989, and, by the end of 1994,
may exceed 69,000 units;
(3) the cost to the Federal Government of own-
ing and maintaining multifamily housing projects es-
calated to $288,000,000 in fiscal year 1993;
(4) the inventory of multifamily housing
projects subject to mortgages held by the Secretary
has increased dramatically, to more than 2,400
mortgages, and approximately half of these mort-
gages, with approximately 219,000 units, are delin-
quent;
(5) the inventory of insured and formerly in-
sured multifamily housing projects is deteriorating,
potentially endangering tenants and neighborhoods;
and
(6) the current statutory framework governing
the disposition of multifamily housing projects effec-
tively impedes the Government’s ability to dispose of
properties, protect tenants, and ensure that projects
are maintained over time.
(b) MANAGEMENT AND DISPOSITION OF MULTIFAM-
ILY HOUSING PROJECTS.—Section 203 of the Housing
and Community Development Amendments of 1978 (12
U.S.C. 1701z–11) is amended to read as follows:
‘‘SEC. 203. MANAGEMENT AND DISPOSITION OF MULTIFAM-
ILY HOUSING PROJECTS.
‘‘(a) GOALS.—The Secretary of Housing and Urban
Development shall manage or dispose of multifamily hous-
ing projects that are owned by the Secretary or that are
subject to a mortgage held by the Secretary in a manner
that—
‘‘(1) is consistent with the National Housing
Act and this section;
‘‘(2) will protect the financial interests of the
Federal Government; and
‘‘(3) will, in the least costly fashion among rea-
sonable available alternatives, address the goals of—
‘‘(A) preserving certain housing so that it
can remain available to and affordable by low-
income persons;
‘‘(B) preserving and revitalizing residential
neighborhoods;
‘‘(C) maintaining existing housing stock in
a decent, safe, and sanitary condition;
‘‘(D) minimizing the involuntary displace-
ment of tenants;
‘‘(E) maintaining housing for the purpose
of providing rental housing, cooperative hous-
ing, and homeownership opportunities for low-
income persons;
‘‘(F) minimizing the need to demolish mul-
tifamily housing projects;
‘‘(G) supporting local fair housing strate-
gies; and
‘‘(H) disposing of such projects in a man-
ner consistent with local housing market condi-
tions.
The Secretary, in determining the manner in which a
project is to be managed or disposed of, may balance com-
peting goals relating to individual projects in a manner
that will further the purposes of this section.
‘‘(b) DEFINITIONS.—For purposes of this section:
‘‘(1) MULTIFAMILY
HOUSING
PROJECT.—The
term ‘multifamily housing project’ means any multi-
family rental housing project which is, or prior to
acquisition by the Secretary was, assisted or insured
under the National Housing Act, or was subject to
a loan under section 202 of the Housing Act of
1959.
‘‘(2) SUBSIDIZED
PROJECT.—The term ‘sub-
sidized project’ means a multifamily housing project
that, immediately prior to the assignment of the
mortgage on such project to, or the acquisition of
such mortgage by, the Secretary, was receiving any
of the following types of assistance:
‘‘(A) Below market interest rate mortgage
insurance 
under 
the 
proviso 
of 
section
221(d)(5) of the National Housing Act.
‘‘(B) Interest reduction payments made in
connection with mortgages insured under sec-
tion 236 of the National Housing Act.
‘‘(C) Direct loans made under section 202
of the Housing Act of 1959.
‘‘(D) Assistance in the form of—
‘‘(i) rent supplement payments under
section 101 of the Housing and Urban De-
velopment Act of 1965,
‘‘(ii) additional assistance payments
under section 236(f)(2) of the National
Housing Act,
‘‘(iii) housing assistance payments
made under section 23 of the United
States Housing Act of 1937 (as in effect
before January 1, 1975), or
‘‘(iv) housing assistance payments
made under section 8 of the United States
Housing Act of 1937 (excluding payments
made for tenant-based assistance under
section 8),
if (except for purposes of section 183(c) of the
Housing and Community Development Act of
1987) such assistance payments are made to
more than 50 percent of the units in the
project.
‘‘(3) FORMERLY
SUBSIDIZED
PROJECT.—The
term ‘formerly subsidized project’ means a multi-
family housing project owned by the Secretary that
was a subsidized project immediately prior to its
acquisition by the Secretary.
‘‘(4) 
UNSUBSIDIZED
PROJECT.—The 
term
‘unsubsidized project’ means a multifamily housing
project owned by the Secretary that is not a sub-
sidized project or a formerly subsidized project.
‘‘(5) AFFORDABLE.—A unit shall be considered
affordable if—
‘‘(A) for units occupied—
‘‘(i) by very low-income families, the
rent does not exceed 30 percent of 50 per-
cent of the area median income, as deter-
mined by the Secretary, with adjustments
for smaller and larger families; and
‘‘(ii) by low-income families other
than very low-income families, the rent
does not exceed 30 percent of 80 percent
of the area median income, as determined
by the Secretary, with adjustments for
smaller and larger families; or
‘‘(B) the unit, or the family residing in the
unit, is receiving assistance under section 8 of
the United States Housing Act of 1937.
‘‘(6) LOW-INCOME FAMILIES AND VERY LOW-IN-
COME FAMILIES.—The terms ‘low-income families’
and ‘very low-income families’ shall have the mean-
ings given the terms in section 3(b) of the United
States Housing Act of 1937.
‘‘(7) PREEXISTING
TENANT.—The term ‘pre-
existing tenant’ means, with respect to a multifamily
housing project acquired pursuant to this section by
a purchaser other than the Secretary at foreclosure
or after sale by the Secretary, a family that resides
in a unit in the project immediately before the acqui-
sition of the project by the purchaser.
‘‘(8) MARKET AREA.—The term ‘market area’
means a market area determined by the Secretary.
‘‘(9) SECRETARY.—The term ‘Secretary’ means
the Secretary of Housing and Urban Development.
‘‘(c) DISPOSITION OF PROPERTY.—
‘‘(1) DISPOSITION TO PURCHASERS.—The Sec-
retary may, in carrying out this section, dispose of
a multifamily housing project owned by the Sec-
retary on a negotiated, competitive bid, or other
basis, on such terms as the Secretary deems appro-
priate considering the low-income character of the
project and consistent with the goals in subsection
(a), only to a purchaser determined by the Secretary
to be capable of—
‘‘(A) satisfying the conditions of the dis-
position plan developed under paragraph (2) for
the project;
‘‘(B) implementing a sound financial and
physical management program that is designed
to enable the project to meet anticipated oper-
ating and repair expenses to ensure that the
project will remain in decent, safe, and sanitary
condition in compliance with any standards
under applicable State or local laws, rules, ordi-
nances, or regulations relating to the physical
condition of the housing and any such stand-
ards established by the Secretary;
‘‘(C) responding to the needs of the ten-
ants and working cooperatively with tenant or-
ganizations;
‘‘(D) providing adequate organizational,
staff, and financial resources to the project; and
‘‘(E) meeting such other requirements as
the Secretary may determine.
‘‘(2) DISPOSITION PLAN.—
‘‘(A) IN GENERAL.—Prior to the sale of a
multifamily housing project that is owned by
the Secretary, the Secretary shall develop an
initial disposition plan for the project that
specifies the minimum terms and conditions of
the Secretary for disposition of the project, the
initial sales price that is acceptable to the Sec-
retary, and the assistance that the Secretary
plans to make available to a prospective pur-
chaser in accordance with this section.
‘‘(B) MARKET-WIDE
PLANS.—In develop-
ing the initial disposition plan under this sub-
section for a multifamily housing project lo-
cated in a market area in which is located at
least 1 other multifamily housing project owned
by the Secretary, the Secretary shall coordinate
the disposition of all such multifamily housing
projects located within the same market area to
the extent and in such manner as the Secretary
determines appropriate to carry out the goals
under subsection (a).
‘‘(C) SALES PRICE.—The initial sales price
shall be reasonably related to the intended use
of the property after sale, any rehabilitation re-
quirements for the project, the rents for units
in the project that can be supported by the
market, the amount of rental assistance avail-
able for the project under section 8 of the Unit-
ed States Housing Act of 1937, and the occu-
pancy profile of the project (including family
size and income levels for tenant families).
‘‘(D) COMMUNITY AND TENANT INPUT.—
In carrying out this section, the Secretary shall
develop procedures—
‘‘(i) to obtain appropriate and timely
input into disposition plans from officials
of the unit of general local government af-
fected, the community in which the project
is situated, and the tenants of the project;
and
‘‘(ii) to facilitate, where feasible and
appropriate, the sale of multifamily hous-
ing projects to existing tenant organiza-
tions with demonstrated capacity, to public
or nonprofit entities that represent or are
affiliated with existing tenant organiza-
tions, or to other public or nonprofit enti-
ties.
‘‘(E) TECHNICAL ASSISTANCE.—To carry
out the procedures developed under subpara-
graph (D), the Secretary may provide technical
assistance, directly or indirectly, and may use
amounts available for technical assistance under
the Emergency Low Income Housing Preserva-
tion Act of 1987, subtitle C of the Low-Income
Housing Preservation and Resident Home-
ownership Act of 1990, subtitle B of title IV of
the Cranston-Gonzalez National Affordable
Housing Act, or this section, for the provision
of technical assistance under this paragraph.
Recipients of technical assistance funding under
the provisions referred to in this paragraph
shall be permitted to provide technical assist-
ance to the extent of such funding under any of
such provisions or under this paragraph, not-
withstanding the source of the funding.
‘‘(3) FORECLOSURE SALE.—In carrying out this
section, the Secretary shall—
‘‘(A) prior to foreclosing on any multifam-
ily housing project held by the Secretary, notify
both the unit of general local government in
which the property is located and the tenants of
the property of the proposed foreclosure sale;
and
‘‘(B) dispose of a multifamily housing
project through a foreclosure sale only to a pur-
chaser that the Secretary determines is capable
of implementing a sound financial and physical
management program that is designed to enable
the project to meet anticipated operating and
repair expenses to ensure that the project will
remain in decent, safe, and sanitary condition
in compliance with any standards under appli-
cable State or local laws, rules, ordinances, or
regulations relating to the physical condition of
the housing and any such standards established
by the Secretary;.
‘‘(d) MANAGEMENT AND MAINTENANCE OF PROP-
ERTIES.—
‘‘(1) CONTRACTING
FOR
MANAGEMENT
SERV-
ICES.—The Secretary may, in carrying out this sec-
tion—
‘‘(A) contract for management services for
a multifamily housing project that is owned by
the Secretary (or for which the Secretary is
mortgagee in possession) with for-profit and
nonprofit organizations and public agencies (in-
cluding public housing authorities) on a nego-
tiated, competitive bid, or other basis at a price
determined by the Secretary to be reasonable,
with a manager the Secretary has determined is
capable of—
‘‘(i) implementing a sound financial
and physical management program that is
designed to enable the project to meet an-
ticipated operating and maintenance ex-
penses to ensure that the project will re-
main in decent, safe, and sanitary condi-
tion in compliance with any standards
under applicable State or local laws, rules,
ordinances, or regulations relating to the
physical condition of the housing and any
such standards established by the Sec-
retary;
‘‘(ii) responding to the needs of the
tenants and working cooperatively with
tenant organizations;
‘‘(iii) providing adequate organiza-
tional, staff, and other resources to imple-
ment a management program determined
by the Secretary; and
‘‘(iv) meeting such other requirements
as the Secretary may determine; and
‘‘(B) require the owner of a multifamily
housing project that is subject to a mortgage
held by the Secretary to contract for manage-
ment services for the project in the manner de-
scribed in subparagraph (A).
‘‘(2) MAINTENANCE OF PROJECTS OWNED BY
THE SECRETARY.—In the case of multifamily hous-
ing projects that are owned by the Secretary (or for
which the Secretary is mortgagee in possession), the
Secretary shall—
‘‘(A) to the greatest extent possible, main-
tain all such occupied projects in a decent, safe,
and sanitary condition in compliance with any
standards under applicable State or local laws,
rules, ordinances, or regulations relating to the
physical condition of the housing and any such
standards established by the Secretary;
‘‘(B) to the greatest extent possible, main-
tain full occupancy in all such projects; and
‘‘(C) maintain all such projects for pur-
poses of providing rental or cooperative hous-
ing.
‘‘(3) PROJECTS
SUBJECT
TO
A
MORTGAGE
HELD BY SECRETARY.—In the case of any multifam-
ily housing project that is subject to a mortgage held
by the Secretary, the Secretary shall require the
owner of the project to carry out the requirements
of paragraph (2).
‘‘(e) REQUIRED ASSISTANCE.—In disposing of any
multifamily housing property under this section, the Sec-
retary shall take, separately or in combination with actions
under subsection (f), one or more of the following actions:
‘‘(1) CONTRACT WITH OWNER FOR PROJECT-
BASED
ASSISTANCE.—In the case of multifamily
housing projects that are acquired by a purchaser
other than the Secretary at foreclosure or after sale
by the Secretary, the Secretary may enter into con-
tracts under section 8 of the United States Housing
Act of 1937 (to the extent budget authority is avail-
able) with owners of the projects, subject to the
following requirements:
‘‘(A) SUBSIDIZED
OR
FORMERLY
SUB-
SIDIZED
PROJECTS
RECEIVING
MORTGAGE-RE-
LATED
ASSISTANCE.—In the case of a sub-
sidized or formerly subsidized project referred
to in subparagraphs (A) through (C) of sub-
section (b)(2)—
‘‘(i) the contract shall be sufficient to
assist at least all units covered by an as-
sistance contract under any of the authori-
ties referred to in subsection (b)(2)(D) be-
fore acquisition or foreclosure, unless the
Secretary acts pursuant to the provisions
of subparagraph (C);
‘‘(ii) the contract shall provide that,
when a vacancy occurs in any unit in the
project requiring project-based rental as-
sistance pursuant to this subparagraph
that is occupied by a family who is not eli-
gible for assistance under such section 8,
the owner shall lease the available unit to
a family eligible for assistance under such
section 8; and
‘‘(iii) the Secretary shall take actions
to ensure that any unit in any such project
that does not otherwise receive project-
based assistance under this subparagraph
remains available and affordable for the re-
maining useful life of the project, as de-
fined by the Secretary; to carry out this
clause, the Secretary may require pur-
chasers to establish use or rent restrictions
maintaining the affordability of such units.
‘‘(B) SUBSIDIZED
OR
FORMERLY
SUB-
SIDIZED PROJECTS RECEIVING RENTAL ASSIST-
ANCE.—In the case of a subsidized or formerly
subsidized project referred to in subsection
(b)(2)(D) that is not subject to subparagraph
(A)—
‘‘(i) the contract shall be sufficient to
assist at least all units in the project that
are covered, or were covered immediately
before foreclosure on or acquisition of the
project by the Secretary, by an assistance
contract under any of the provisions re-
ferred to in such subsection, unless the
Secretary acts pursuant to provisions of
subparagraph (C); and
‘‘(ii) the contract shall provide that,
when a vacancy occurs in any unit in the
project requiring project-based rental as-
sistance pursuant to this subparagraph
that is occupied by a family who is not eli-
gible for assistance under such section 8,
the owner shall lease the available unit to
a family eligible for assistance under such
section 8.
‘‘(C) EXCEPTIONS.—
‘‘(i) AUTHORITY.—In lieu of providing
project-based assistance under subpara-
graph (A)(i) or (B)(i) for a project, the
Secretary 
may, 
for 
certain 
units 
in
unsubsidized projects located within the
same market area as the project otherwise
required to be assisted with such project-
based assistance—
‘‘(I) require use restrictions pro-
viding that such units shall be avail-
able to and affordable by very low-in-
come families for the remaining useful
life of the project (as defined by the
Secretary), or
‘‘(II) provide project-based assist-
ance for units occupied by only very
low-income persons,
but only if the requirements under clause
(ii) are met.
‘‘(ii) REQUIREMENTS.—The require-
ments under this clause are that—
‘‘(I) upon the disposition of the
project otherwise required to be as-
sisted with project based assistance
under subparagraph (A)(i) or (B)(i),
low-income families residing in units
otherwise required to be assisted with
such project-based assistance shall be
provided 
tenant-based 
assistance
under section 8 of the United States
Housing Act of 1937; and
‘‘(II) the number of units subject
to use restrictions or provided assist-
ance under clause (i) shall be at least
equivalent to the number of units oth-
erwise required to be assisted with
project-based assistance under sub-
paragraph (A)(i) or (B)(i).
‘‘(D) UNSUBSIDIZED PROJECTS.—Notwith-
standing actions taken pursuant to subpara-
graph (C), in the case of unsubsidized projects,
the contract shall be sufficient to provide—
‘‘(i) project-based rental assistance for
all units that are covered, or were covered
immediately before foreclosure or acquisi-
tion, by an assistance contract under—
‘‘(I) the new construction and
substantial 
rehabilitation 
program
under section 8(b)(2) of the United
States Housing Act of 1937 (as in ef-
fect before October 1, 1983);
‘‘(II) the property disposition
program under section 8(b) of such
Act;
‘‘(III) the project-based certifi-
cate program under section 8 of such
Act;
‘‘(IV) the moderate rehabilitation
program under section 8(e)(2) of such
Act;
‘‘(V) section 23 of such Act (as
in effect before January 1, 1975);
‘‘(VI) the rent supplement pro-
gram under section 101 of the Hous-
ing and Urban Development Act of
1965; or
‘‘(VII) section 8 of the United
States Housing Act of 1937, following
conversion from assistance under sec-
tion 101 of the Housing and Urban
Development Act of 1965; and
‘‘(ii) tenant-based assistance under
section 8 of the United States Housing Act
of 1937 for families that are preexisting
tenants of the project in units that, imme-
diately before foreclosure or acquisition of
the project by the Secretary, were covered
by an assistance contract under the loan
management set-aside program under sec-
tion 8(b) of the United States Housing Act
of 1937 at such time.
‘‘(2) ANNUAL CONTRIBUTION CONTRACTS FOR
TENANT-BASED ASSISTANCE.—In the case of multi-
family housing projects that are acquired by a pur-
chaser other than the Secretary at foreclosure or
after sale by the Secretary, the Secretary may enter
into annual contribution contracts with public hous-
ing agencies to provide tenant-based assistance
under section 8 of the United States Housing Act of
1937 on behalf of all low-income families who are
otherwise eligible for assistance in accordance with
subparagraph (A), (B), or (D) of paragraph (1) on
the date that the project is acquired by the pur-
chaser, subject to the following requirements:
‘‘(A) REQUIREMENT
OF
SUFFICIENT
AF-
FORDABLE HOUSING IN AREA.—The Secretary
may not take action under this paragraph un-
less the Secretary determines that there is
available in the area an adequate supply of hab-
itable, affordable housing for very low-income
families and other low-income families using
such assistance.
‘‘(B) LIMITATION
FOR
SUBSIDIZED
AND
FORMERLY
SUBSIDIZED
PROJECTS.—The Sec-
retary may not take actions under this para-
graph in connection with units in subsidized or
formerly subsidized projects for more than 10
percent of the aggregate number of units in
such projects disposed of by the Secretary in
any fiscal year.
‘‘(3) OTHER ASSISTANCE.—
‘‘(A) IN
GENERAL.—In accordance with
the authority provided under the National
Housing Act, the Secretary may provide other
assistance pursuant to subsection (f) to the
owners of multifamily housing projects that are
acquired by a purchaser other than the Sec-
retary at foreclosure, or after sale by the Sec-
retary, on terms that ensure that—
‘‘(i) at least the units in the project
otherwise required to receive project-based
assistance pursuant to subparagraphs (A),
(B), or (D) of paragraph (1) are available
to and affordable by low-income persons;
and
‘‘(ii) for the remaining useful life of
the project, as defined by the Secretary,
there shall be in force such use or rent re-
strictions as the Secretary may prescribe.
‘‘(B) VERY LOW-INCOME TENANTS.—If, as
a result of actions taken pursuant to this para-
graph, the rents charged to any very low-income
families residing in the project who are other-
wise required (pursuant to subparagraph (A),
(B), or (D) of paragraph (1)) to receive project-
based assistance under section 8 of the United
States Housing Act of 1937 exceed the amount
payable as rent under section 3(a) of the Unit-
ed States Housing Act of 1937, the Secretary
shall provide assistance under section 8 of such
Act to such families.
‘‘(f) DISCRETIONARY ASSISTANCE.—In addition to
the actions required under subsection (e) for a subsidized,
formerly subsidized, or unsubsidized multifamily housing
project, the Secretary may, pursuant to the disposition
plan and the goals in subsection (a), take any of the fol-
lowing actions, separately or in combination:
‘‘(1) DISCOUNTED
SALES
PRICE.—In accord-
ance with the authority provided under the National
Housing Act, the Secretary may reduce the selling
price of the project. Such reduced sales price shall
be reasonably related to the intended use of the
property after sale, any rehabilitation requirements
for the project, the rents for units in the project that
can be supported by the market, the amount of rent-
al assistance available for the project under section
8 of the United States Housing Act of 1937, and
the occupancy profile of the project.
‘‘(2) USE AND RENT RESTRICTIONS.—The Sec-
retary may require certain units in a project to be
subject to use or rent restrictions providing that
such units will be available to and affordable by low-
and very low-income persons for the remaining use-
ful life of the property, as defined by the Secretary.
‘‘(3) SHORT-TERM LOANS.—The Secretary may
provide short-term loans to facilitate the sale of a
multifamily housing project if—
‘‘(A) authority for such loans is provided
in advance in an appropriation Act;
‘‘(B) such loan has a term of not more
than 5 years;
‘‘(C) the Secretary determines, based upon
documentation provided to the Secretary, that
the borrower has obtained a commitment of
permanent financing to replace the short-term
loan from a lender who meets standards estab-
lished by the Secretary; and
‘‘(D) the terms of such loan are consistent
with prevailing practices in the marketplace or
the provision of such loan results in no cost to
the Government, as defined in section 502 of
the Congressional Budget Act of 1974.
‘‘(4) UP-FRONT GRANTS.—If the Secretary de-
termines that action under this paragraph is more
cost-effective, the Secretary may utilize the budget
authority provided for contracts issued under this
section for project-based assistance under section 8
of the United States Housing Act of 1937 to (in ad-
dition to providing project-based section 8 rental
assistance)—
‘‘(A) provide up-front grants for the nec-
essary cost of rehabilitation and other related
development costs; or
‘‘(B) pay any cost to the Government, as
defined in section 502 of the Congressional
Budget Act of 1974, for loans made pursuant
to paragraph (3).
‘‘(5) TENANT-BASED
ASSISTANCE.—The Sec-
retary may make available tenant-based assistance
under section 8 of the United States Housing Act of
1937 to very low-income families residing in a multi-
family housing project that do not otherwise qualify
for project-based assistance.
‘‘(6) ALTERNATIVE USES.—
‘‘(A) IN GENERAL.—Notwithstanding any
other provision of law, after providing notice to
and an opportunity to comment by preexisting
tenants, the Secretary may allow not more than
10 percent of the total number of units in mul-
tifamily housing projects that are disposed of
by the Secretary during any single fiscal year to
be made available for—
‘‘(i) uses (other than rental or cooper-
ative uses) that benefit the tenants of the
project, including low-income homeowner-
ship opportunities, or in any particular
project, community space, office space for
tenant or housing-related service providers
or security programs, or small business
uses; or
‘‘(ii) any other uses, if the Secretary
and the unit of general local government or
area-wide governing body determine that
such use will further fair housing, commu-
nity development, or neighborhood revital-
ization goals.
‘‘(B) DISPLACEMENT
PROTECTION.—The
Secretary may take actions under subparagraph
(A) only if—
‘‘(i) tenant-based rental assistance
under section 8 of the United States Hous-
ing Act of 1937 is made available to each
eligible family residing in the project that
is displaced as a result of such actions; and
‘‘(ii) the Secretary determines that
sufficient habitable, affordable rental hous-
ing is available in the market area in which
the project is located to ensure use of such
assistance.
‘‘(7) TRANSFER FOR USE UNDER OTHER PRO-
GRAMS OF SECRETARY.—
‘‘(A) IN
GENERAL.—The Secretary may
transfer a multifamily housing project—
‘‘(i) to a public housing agency for use
of the project as public housing; or
‘‘(ii) to an entity eligible to own or op-
erate housing assisted under section 202 of
the Housing Act of 1959 or under section
811 of the Cranston-Gonzalez National Af-
fordable Housing Act for use as supportive
housing under either of such sections.
‘‘(B) REQUIREMENTS FOR AGREEMENT.—
An agreement providing for the transfer of a
project described in subparagraph (A) shall—
‘‘(i) contain such terms, conditions,
and limitations as the Secretary deter-
mines appropriate, including requirements
to ensure use of the project as public hous-
ing, supportive housing under section 202
of the Housing Act of 1959, or supportive
housing under section 811 of the Cran-
ston-Gonzalez National Affordable Housing
Act, as applicable; and
‘‘(ii) ensure that no tenant of the
project will be displaced as a result of ac-
tions taken under this paragraph.
‘‘(8) REBUILDING.—Notwithstanding any provi-
sion of section 8 of the United States Housing Act
of 1937 (42 U.S.C. 1437f), the Secretary may pro-
vide project-based assistance under such section for
a multifamily housing project rebuilt or to be rebuilt
(on-site, off-site, or in a combination of both) in con-
nection with disposition under this section, if the
Secretary determines—
‘‘(A) the project does not provide adequate
services;
‘‘(B) rebuilding the project is less expen-
sive than substantial rehabilitation of the
project or substantial rehabilitation would not
produce as long a physical life of the project as
would rebuilding;
‘‘(C) the unit of general local government
in which the project is located approves the re-
building and makes a financial contribution or
other commitment to the project;
‘‘(D) the rebuilding promotes racial and
low-income geographical deconcentration; and
‘‘(E) the rebuilding is a part of a local
neighborhood revitalization plan approved by
the unit of general local government.
‘‘(g) PROTECTION FOR UNASSISTED VERY LOW-IN-
COME TENANTS.—For each multifamily housing project
disposed of under this section, the Secretary shall require
that, for any very low-income family who is a preexisting
tenant of the project and for whom the rent (after disposi-
tion) for the unit occupied by the family is not afford-
able—
‘‘(1) for a period of 2 years beginning upon the
date of the acquisition of the project by the pur-
chaser under such disposition, the rent for the unit
occupied by the family may not be increased above
the rent charged immediately before acquisition;
‘‘(2) such family shall be considered displaced
for purposes of the preferences for assistance under
sections 6(c)(4)(A)(i), 8(d)(1)(A)(i), and 8(o)(3)(B)
of the United States Housing Act of 1937; and
‘‘(3) notice shall be provided to such family, not
later than the date of the acquisition of the project
by the purchaser—
‘‘(A) of the requirements under paragraphs
(1) and (2); and
‘‘(B) that, after the expiration of the pe-
riod under paragraph (1), the rent for the unit
occupied by the family may be increased.
‘‘(h) CONTRACT
REQUIREMENTS.—Contracts for
project-based rental assistance under section 8 of the
United States Housing Act of 1937 provided pursuant to
this section shall be subject to the following requirements:
‘‘(1) CONTRACT
TERM.—The contract shall
have a term of 15 years, except that the term may
be less than 15 years—
‘‘(A) to the extent that the Secretary finds
that, based on the rental charges and financing
for the multifamily housing project to which the
contract relates, the financial viability of the
project can be maintained under a contract hav-
ing such a term; or
‘‘(B) if such assistance is provided—
‘‘(i) under a contract authorized
under section 6 of the HUD Demonstra-
tion Act of 1993; and
‘‘(ii) pursuant to a disposition plan
under this section for a project that is de-
termined by the Secretary to be otherwise
in compliance with this section.
To the extent that units receive project-based assist-
ance for a contract term of less than 15 years, the
Secretary shall require that the amount of rent pay-
able by tenants of the project for such units shall
not exceed the amount payable for rent under sec-
tion 3(a) of the United States Housing Act of 1937
for a period of at least 15 years.
‘‘(2) CONTRACT RENT.—The Secretary shall es-
tablish the contract rents under such contracts at
levels that provide sufficient amounts for the nec-
essary costs of rehabilitating and operating the mul-
tifamily housing project and do not exceed the per-
centage of the existing housing fair market rentals
for the market area in which the project assisted
under the contract is located (as determined by the
Secretary under section 8(c) of the United States
Housing Act of 1937) as the Secretary may pre-
scribe.
‘‘(i) RIGHT OF FIRST REFUSAL FOR LOCAL AND
STATE GOVERNMENT AGENCIES.—During the period be-
ginning upon the Secretary acquiring title to a multifamily
housing project and ending 90 days after the Secretary
provides notice of such acquisition to the unit of general
local government for the area in which the project is lo-
cated (including any public housing agency for such area)
or an agency designated by the Governor of the State in
which the project is located, the Secretary may offer to
sell, make a commitment to sell, or sell the project only
to such unit of general local government (including any
such public housing agency) or such designated agency.
The Secretary shall establish any procedures necessary to
carry out this subsection.
‘‘(j) DISPLACEMENT OF TENANTS AND RELOCATION
ASSISTANCE.—
‘‘(1) IN GENERAL.—Whenever tenants will be
displaced as a result of the demolition of, repairs to,
or conversion in the use of, a multifamily housing
project that is owned by the Secretary (or for which
the Secretary is mortgagee in possession), the Sec-
retary shall identify tenants who will be displaced,
and shall notify all such tenants of their pending
displacement and of any relocation assistance that
may be available. In the case of a multifamily hous-
ing project that is subject to a mortgage held by the
Secretary, the Secretary shall require the owner of
the project to carry out the requirements of this
paragraph, if the Secretary has authorized the dem-
olition of, repairs to, or conversion in the use of such
multifamily housing project.
‘‘(2) RIGHTS
OF
DISPLACED
TENANTS.—The
Secretary shall ensure for any such tenant (who con-
tinues to meet applicable qualification standards)
the right—
‘‘(A) to return, whenever possible, to a re-
paired unit;
‘‘(B) to occupy a unit in another multifam-
ily housing project owned by the Secretary;
‘‘(C) to obtain housing assistance under
the United States Housing Act of 1937; or
‘‘(D) to receive any other available reloca-
tion assistance as the Secretary determines to
be appropriate.
‘‘(k) MORTGAGE AND PROJECT SALES.—
‘‘(1) IN GENERAL.—The Secretary may not ap-
prove the sale of any loan or mortgage held by the
Secretary (including any loan or mortgage owned by
the Government National Mortgage Association) on
any subsidized project or formerly subsidized
project, unless such sale is made as part of a trans-
action that will ensure that such project will con-
tinue to operate at least until the maturity date of
such loan or mortgage, in a manner that will provide
rental housing on terms at least as advantageous to
existing and future tenants as the terms required by
the program under which the loan or mortgage was
made or insured prior to the assignment of the loan
or mortgage on such project to the Secretary.
‘‘(2) SALE OF CERTAIN PROJECTS.—The Sec-
retary may not approve the sale of any subsidized
project—
‘‘(A) that is subject to a mortgage held by
the Secretary, or
‘‘(B) if the sale transaction involves the
provision of any additional subsidy funds by the
Secretary or a recasting of the mortgage,
unless such sale is made as part of a transaction
that will ensure that the project will continue to op-
erate, at least until the maturity date of the loan or
mortgage, in a manner that will provide rental hous-
ing on terms at least as advantageous to existing
and future tenants as the terms required by the pro-
gram under which the loan or mortgage was made
or insured prior to the proposed sale of the project.
‘‘(3) MORTGAGE SALES TO STATE AND LOCAL
GOVERNMENTS.—Notwithstanding any provision of
law that requires competitive sales or bidding, the
Secretary may carry out negotiated sales of mort-
gages held by the Secretary, without the competitive
selection of purchasers or intermediaries, to units of
general local government or State agencies, or
groups of investors that include at least one such
unit of general local government or State agency, if
the negotiations are conducted with such agencies,
except that—
‘‘(A) the terms of any such sale shall in-
clude the agreement of the purchasing agency
or unit of local government or State agency to
act as mortgagee or owner of a beneficial inter-
est in such mortgages, in a manner consistent
with maintaining the projects that are subject
to such mortgages for occupancy by the general
tenant group intended to be served by the appli-
cable mortgage insurance program, including,
to the extent the Secretary determines appro-
priate, authorizing such unit of local govern-
ment or State agency to enforce the provisions
of any regulatory agreement or other program
requirements applicable to the related projects;
and
‘‘(B) the sales prices for such mortgages
shall be, in the determination of the Secretary,
the best prices that may be obtained for such
mortgages from a unit of general local govern-
ment or State agency, consistent with the ex-
pectation and intention that the projects fi-
nanced will be retained for use under the appli-
cable mortgage insurance program for the life
of the initial mortgage insurance contract.
‘‘(4) 
SALE
OF
MORTGAGES
COVERING
UNSUBSIDIZED
PROJECTS.—Notwithstanding 
any
other provision of law, the Secretary may sell mort-
gages held on unsubsidized projects on such terms
and conditions as the Secretary may prescribe.
‘‘(5) MORTGAGE SALE DEMONSTRATION.—The
Secretary may carry out a demonstration to test the
feasibility of restructuring and disposing of troubled
multifamily mortgages held by the Secretary through
the establishment of partnerships between public,
private, and nonprofit entities.
‘‘(l) REPORT TO CONGRESS.—Not later than June 1
of each year, the Secretary shall submit to the Congress
a report describing the status of multifamily housing
projects owned by or subject to mortgages held by the Sec-
retary, on an aggregate basis, which highlights the dif-
ferences, if any, between the subsidized and the
unsubsidized inventory. The report shall include—
‘‘(1) the average and median size of the
projects;
‘‘(2) the geographic locations of the projects, by
State and region;
‘‘(3) the years during which projects were as-
signed to the Department, and the average and me-
dian length of time that projects remain in the
HUD-held inventory;
‘‘(4) the status of HUD-held mortgages;
‘‘(5) the physical condition of the HUD-held
and HUD-owned inventory;
‘‘(6) the occupancy profile of the projects, in-
cluding the income, family size, race, and ethnic ori-
gin of current tenants, and the rents paid by such
tenants;
‘‘(7) the proportion of units that are vacant;
‘‘(8) the number of projects for which the Sec-
retary is mortgagee in possession;
‘‘(9) the number of projects sold in foreclosure
sales;
‘‘(10) the number of HUD-owned projects sold;
‘‘(11) a description of actions undertaken pur-
suant to this section, including a description of the
effectiveness of such actions and any impediments to
the disposition or management of multifamily hous-
ing projects;
‘‘(12) a description of the extent to which the
provisions of this section and actions taken under
this section have displaced tenants of multifamily
housing projects;
‘‘(13) a description of any of the functions per-
formed in connection with this section that are con-
tracted out to public or private entities or to States;
and
‘‘(14) a description of the activities carried out
under subsection (i) during the preceding year.’’.
(c) CLARIFICATION OF FEDERAL PREFERENCES.—
(1) 
PUBLIC
HOUSING
TENANCY.—Section
6(c)(4)(A)(i) of the United States Housing Act of
1937 (42 U.S.C. 1437d(c)(4)(A)(i)) is amended by
inserting after ‘‘displaced’’ the following: ‘‘(including
displacement because of disposition of a multifamily
housing project under section 203 of the Housing
and 
Community 
Development 
Amendments 
of
1978)’’.
(2) 
SECTION
ASSISTANCE.—Section
8(d)(1)(A)(i) of the United States Housing Act of
1937 (42 U.S.C. 1437f(d)(1)(A)(i)) is amended by
inserting after ‘‘displaced’’ the following: ‘‘(including
displacement because of disposition of a multifamily
housing project under section 203 of the Housing
and 
Community 
Development 
Amendments 
of
1978)’’.
(d) DEFINITION OF OWNER.—Section 8(f)(1) of the
United States Housing Act of 1937 (42 U.S.C.
1437f(f)(1)) is amended by inserting ‘‘an agency of the
Federal Government,’’ after ‘‘cooperative,’’.
(e) AMENDMENT
TO NATIONAL HOUSING ACT.—
Title V of the National Housing Act (12 U.S.C. 1731a
et seq.) is amended by adding at the end the following
new section:
‘‘PARTIAL PAYMENT OF CLAIMS ON MULTIFAMILY
HOUSING PROJECTS
‘‘SEC. 541. (a) AUTHORITY.—Notwithstanding any
other provision of law, if the Secretary is requested to ac-
cept assignment of a mortgage insured by the Secretary
that covers a multifamily housing project (as such term
is defined in section 203(b) of the Housing and Commu-
nity Development Amendments of 1978) and the Sec-
retary determines that partial payment would be less cost-
ly to the Federal Government than other reasonable alter-
natives for maintaining the low-income character of the
project, the Secretary may request the mortgagee, in lieu
of assignment, to—
‘‘(1) accept partial payment of the claim under
the mortgage insurance contract; and
‘‘(2) recast the mortgage, under such terms and
conditions as the Secretary may determine.
‘‘(b) REPAYMENT.—As a condition to a partial claim
payment under this section, the mortgagor shall agree to
repay to the Secretary the amount of such payment and
such obligation shall be secured by a second mortgage on
the property on such terms and conditions as the Sec-
retary may determine.’’.
(f) EFFECTIVE DATE.—The Secretary shall issue in-
terim regulations necessary to implement the amendments
made by subsections (b) through (d) not later than 90
days after the date of the enactment of this Act. Such
interim regulations shall take effect upon issuance and in-
vite public comment on the interim regulations. The Sec-
retary shall issue final regulations to implement such
amendments after opportunity for such public comment,
but not later than 12 months after the date of issuance
of such interim regulations.
SEC. 102. USE OF EMERGENCY ASSISTANCE FUNDS FOR
RESIDENCY IN MULTIFAMILY HOUSING DIS-
POSITION PROJECTS.
Section 203(f) of the Housing and Community Devel-
opment Amendments of 1978 (12 U.S.C. 1701z–11), as
amended by section 101 of this Act, is further amended
by adding at the end the following new paragraph:
‘‘(9) EMERGENCY
ASSISTANCE
FUNDS.—The
Secretary may make arrangements with State agen-
cies and units of general local government of States
receiving emergency assistance under part A of title
IV of the Social Security Act for the provision of as-
sistance under such Act on behalf of eligible families
who would reside in any multifamily housing
projects.’’.
SEC. 103. REPEAL OF STATE AGENCY MULTIFAMILY PROP-
ERTY DISPOSITION DEMONSTRATION.
Section 184 of the Housing and Community Develop-
ment Act of 1987 (12 U.S.C. 1701z–11 note) is hereby
repealed.
SEC. 104. PREVENTING MORTGAGE DEFAULTS ON MULTI-
FAMILY HOUSING PROJECTS.
(a) MULTIFAMILY HOUSING PLANNING AND INVEST-
MENT STRATEGIES.—
(1) PREPARATION OF ASSESSMENTS FOR INDE-
PENDENT ENTITIES.—Section 402(a) of the Housing
‘‘(d) REVIEW.—
‘‘(1) IN GENERAL.—The Secretary shall review
each comprehensive needs assessment for complete-
ness and adequacy before the expiration of the 90-
day period beginning on the receipt of the assess-
ment and shall notify the owner of the property for
which the assessment was submitted of the findings
of such review.
‘‘(2) INCOMPLETE
OR
INADEQUATE
ASSESS-
MENTS.—If the Secretary determines that the as-
sessment is substantially incomplete or inadequate,
the Secretary shall—
‘‘(A) notify the owner of the portion or
portions of the assessment requiring completion
or other revision; and
‘‘(B) require the owner to submit an
amended assessment to the Secretary not later
than 30 days after such notification.’’.
(4) REPEAL
OF
NOTICE
PROVISION.—Section
404 of the Housing and Community Development
Act of 1992 (12 U.S.C. 1715–1a note) is amended
by striking subsection (f).
(5) PUBLICATION.—Section 404 of the Housing
and Community Development Act of 1992 (12
U.S.C. 1715z–1a note) is amended by inserting after
subsection (e) the following new subsection:
‘‘(f) PUBLICATION OF METHOD FOR RECEIVING CAP-
ITAL NEEDS ASSESSMENT.—The Secretary shall cause to
be published in the Federal Register the method by which
the Secretary determines which capital needs assessments
will be received each year in accordance with section
402(b) and subsection (d) of this section.’’.
(6) FUNDING.—Title IV of the Housing and
Community Development Act of 1992 (12 U.S.C.
1715z–1a note) is amended by adding at the end the
following new section:
‘‘SEC. 409. FUNDING.
‘‘(a) ALLOCATION
OF ASSISTANCE.—Based upon
needs identified in comprehensive needs assessments, and
subject to otherwise applicable program requirements, in-
cluding selection criteria, the Secretary may allocate the
following assistance to owners of covered multifamily
housing projects and may provide such assistance on a
noncompetitive basis:
‘‘(1) Operating assistance and capital improve-
ment assistance for troubled multifamily housing
projects pursuant to section 201 of the Housing and
Community Development Amendments of 1978, ex-
cept for assistance set aside under section 201(n)(1).
‘‘(2) Loan management assistance available
pursuant to section 8 of the United States Housing
Act of 1937.
‘‘(b) OPERATING ASSISTANCE
AND CAPITAL IM-
PROVEMENT ASSISTANCE.—In providing assistance under
subsection (a) the Secretary shall use the selection criteria
set forth in section 201(n) of the Housing and Community
Development Amendments of 1978.
‘‘(c) AMOUNT OF ASSISTANCE.—The Secretary may
fund all or only a portion of the needs identified in the
capital needs assessment of an owner selected to receive
assistance under this section.’’.
(b) FLEXIBLE SUBSIDY PROGRAM.—
(1) DELETION
OF
UTILITY
COST
REQUIRE-
MENTS.—Section 201(i) of the Housing and Com-
munity Development Amendments of 1978 (12
U.S.C. 1715z–1a(i)) is hereby repealed.
(2) REPEAL
OF
MANDATORY
CONTRIBUTION
FROM OWNER.—Section 201(k)(2) of the Housing
and Community Development Amendments of 1978
(12 U.S.C. 1715z–1a(k)(2)) is amended by striking
‘‘, except that’’ and all that follows and inserting a
period.
(3) FUNDING.—Section 201(n) of the Housing
and Community Development Amendments of 1978
(42 U.S.C. 1715z–1a(n)) is amended to read as
follows:
‘‘(n) ALLOCATION OF ASSISTANCE.—
‘‘(1) SET-ASIDE.—In providing, and contracting
to provide, assistance for capital improvements
under this section, in each fiscal year the Secretary
shall set aside an amount, as determined by the Sec-
retary, for projects that are eligible for incentives
under section 224(b) of the Emergency Low Income
Housing Preservation Act of 1987, as such section
existed before the date of enactment of the Cran-
ston-Gonzalez National Affordable Housing Act. The
Secretary may make such assistance available on a
noncompetitive basis.
‘‘(2) GENERAL RULES FOR ALLOCATION.—Ex-
cept as provided in paragraph (3), with respect to
assistance under this section not set aside for
projects under paragraph (1), the Secretary—
‘‘(A) may award assistance on a non-
competitive basis; and
‘‘(B) shall award assistance to eligible
projects on the basis of—
‘‘(i) the extent to which the project is
physically or financially troubled, as evi-
denced by the comprehensive needs assess-
ment submitted in accordance with title IV
of the Housing and Community Develop-
ment Act of 1992; and
‘‘(ii) the extent to which such assist-
ance is necessary and reasonable to pre-
vent the default of federally insured mort-
gages.
‘‘(3) EXCEPTIONS.—The Secretary may make
exceptions to selection criteria set forth in paragraph
(2) to permit the provision of assistance to eligible
projects based upon—
‘‘(A) the extent to which such assistance is
necessary to prevent the imminent foreclosure
or default of a project whose owner has not
submitted a comprehensive needs assessment
pursuant to title IV of the Housing and Com-
munity Development Act of 1992;
‘‘(B) the extent to which the project pre-
sents an imminent threat to the life, health,
and safety of project residents; or
‘‘(C) such other criteria as the Secretary
may specify by regulation or by notice printed
in the Federal Register.
‘‘(4) CONSIDERATIONS.—In providing assist-
ance under this section, the Secretary shall take into
consideration—
‘‘(A) the extent to which there is evidence
that there will be significant opportunities for
residents (including a resident council or resi-
dent management corporation, as appropriate)
to be involved in the management of the project
(except that this paragraph shall have no appli-
cation to projects that are owned as coopera-
tives); and
‘‘(B) the extent to which there is evidence
that the project owner has provided competent
management and complied with all regulatory
and administrative handbooks (including such
handbooks with respect to the comprehensive
servicing of multifamily projects as the Sec-
retary may issue).’’.
(4) REPEAL.—Section 201 of the Housing and
Community Development Amendments of 1978 (12
U.S.C. 1715z–1a) is amended—
(A) by striking subsection (o); and
(B) by redesignating subsection (p) as sub-
section (o).
(c) IMPLEMENTATION AND EFFECTIVE DATES FOR
SUBSECTIONS (a) AND (b).—
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by subsections (a)
and (b) shall apply with respect to amounts made
available for fiscal year 1995 and fiscal years there-
after.
(2) EXCEPTION.—Section 201(n)(1) of the
Housing and Community Development Amendments
of 1978 (as added by the amendment made by sub-
section (b)(3) of this section) shall take effect on the
date of enactment of this Act.
(3) NOTICE.—The Secretary shall, by notice
published in the Federal Register, establish any re-
quirements necessary to implement the amendments
made by subsections (a) and (b). The notice shall in-
vite public comments and, not later than 12 months
after the date on which the notice is published, the
Secretary shall issue final regulations based on the
initial notice, taking into consideration any public
comments received.
(d) STREAMLINED REFINANCING.—As soon as prac-
ticable, the Secretary shall implement a streamlined refi-
nancing program under the authority provided in section
223 of the National Housing Act to prevent the default
of mortgages insured by the FHA which cover multifamily
housing projects, as defined in section 203(b) of the Hous-
ing and Community Development Amendments of 1978.
(e) GAO STUDY ON PREVENTION OF DEFAULT.—
(1) IN GENERAL.—Not later than September 1,
1995, the Comptroller General of the United States
shall submit to the Committee on Banking, Finance
and Urban Affairs of the House of Representatives
and the Committee on Banking, Housing, and
Urban Affairs of the Senate a report that evaluates
the adequacy of loan loss reserves in the General In-
surance and Special Risk Insurance Funds and pre-
sents recommendations for the Secretary to prevent
losses from occurring.
(2) CONTENTS.—The report submitted under
paragraph (1) shall—
(A) evaluate the factors considered in ar-
riving at loss estimates and determine whether
other factors should be considered;
(B) determine the relative benefit of creat-
ing a new, actuarially sound insurance fund for
all new multifamily housing insurance commit-
ments; and
(C) recommend alternatives to the Sec-
retary’s current procedures for preventing the
future default of multifamily housing project
mortgages insured under title II of the National
Housing Act.
(f) GAO STUDY ON ACTUARIAL SOUNDNESS OF CER-
TAIN INSURANCE PROGRAMS.—
(1) IN
GENERAL.—Not later than April 1,
1995, the Comptroller General of the United States
shall submit to the Committee on Banking, Housing,
and Urban Affairs of the Senate and the Committee
on Banking, Finance and Urban Affairs of the
House of Representatives a report that evaluates, in
connection with the General Insurance Fund, the
role and performance of the nursing home, hospital,
and retirement service center insurance programs.
(2) CONTENTS.—The reports submitted under
paragraph (1) shall—
(A) evaluate the strategic importance of
these insurance programs to the mission of the
FHA;
(B) evaluate the impact of these insurance
programs upon the financial performance of the
General Insurance Fund;
(C) assess the potential losses expected
under these programs through fiscal year 1999;
(D) evaluate the risk of these programs to
the General Insurance Fund in connection with
changes in national health care policy;
(E) assess the ability of the FHA to man-
age these programs; and
(F) make recommendations for any nec-
essary changes.
(g) RISK ASSESSMENT.—
(1) SPECIAL RISK INSURANCE FUND.—Section
238(c) of the National Housing Act (12 U.S.C.
1715z–3(c)) is amended by adding at the end the
following new paragraph:
‘‘(3) The Secretary shall undertake an annual
assessment of the risks associated with each of the
insurance programs comprising the Special Risk In-
surance Fund, and shall present findings from such
review to the Congress in the FHA Annual Manage-
ment Report.’’.
(2) GENERAL INSURANCE FUND.—Section 519
of the National Housing Act (12 U.S.C. 1735c) is
amended by adding at the end the following new
subsection:
‘‘(g) RISK ASSESSMENT.—The Secretary shall under-
take an annual assessment of the risks associated with
each of the insurance programs comprising the General
Insurance Fund, and shall present findings from such re-
view to the Congress in the FHA Annual Management Re-
port.’’.
(h) ALTERNATIVE USES FOR PREVENTION OF DE-
FAULT.—
(1) IN GENERAL.—Subject to notice and com-
ment from existing tenants, to prevent the imminent
default of a multifamily housing project subject to a
mortgage insured under title II of the National
Housing Act, the Secretary may authorize the mort-
gagor to use the project for purposes not con-
templated by or permitted under the regulatory
agreement, if—
(A) such other uses are acceptable to the
Secretary;
(B) such other uses would be otherwise in-
surable under title II of the National Housing
Act;
(C) the outstanding principal balance on
the mortgage covering such project is not in-
creased;
(D) any financial benefit accruing to the
mortgagor shall, subject to the discretion of the
Secretary, be applied to project reserves or
project rehabilitation; and
(E) such other use serves a public purpose.
(2) DISPLACEMENT
PROTECTION.—The Sec-
retary may take actions under paragraph (1) only
if—
(A) tenant-based rental assistance under
section 8 of the United States Housing Act of
1937 is made available to each eligible family
residing in the project that is displaced as a re-
sult of such actions; and
(B) the Secretary determines that suffi-
cient habitable, affordable (as such term is de-
fined in section 203(b) of the Housing and
Community Development Amendments of 1978)
rental housing is available in the market area in
which the project is located to ensure use of
such assistance.
(3) IMPLEMENTATION.—The Secretary shall, by
notice published in the Federal Register, which shall
take effect upon publication, establish such require-
ments as may be necessary to implement the amend-
ments made by this subsection. The notice shall in-
vite public comments and, not later than 12 months
after the date on which the notice is published, the
Secretary shall issue final regulations based on the
initial notice, taking into account any public com-
ments received.
SEC. 105. INTEREST RATES ON ASSIGNED MORTGAGES.
Section 7(i)(5) of the Department of Housing and
Urban Development Act (42 U.S.C. 3535(i)(5)) is amend-
ed by striking the first semicolon, and all that follows
through ‘‘as determined by the Secretary’’.
SEC. 106. AUTHORIZATION OF APPROPRIATIONS.
(a) SPECIAL
RISK
INSURANCE
FUND.—Section
238(b) of the National Housing Act (12 U.S.C. 1715z–
3(b)) is amended by striking the fifth sentence.
(b) GENERAL INSURANCE FUND.—Section 519 of the
National Housing Act (12 U.S.C. 1735c) is amended—
(1) by striking subsection (f); and
(2) by redesignating subsection (g) (as added
by section 104(g)(2) of this Act) as subsection (f).
(c) MULTIFAMILY INSURANCE FUND APPROPRIA-
TIONS.—Title V of the National Housing Act (12 U.S.C.
1731a et seq.) is amended by adding at the end the follow-
ing new section:
‘‘SEC. 541. AUTHORIZATION OF APPROPRIATIONS FOR GEN-
ERAL AND SPECIAL RISK INSURANCE FUNDS.
‘‘There are authorized to be appropriated such sums
as may be necessary for each of fiscal years 1994 and
1995, to be allocated in any manner that the Secretary
determines appropriate, for the following costs incurred in
conjunction with programs authorized under the General
Insurance Fund, as provided by section 519, and the Spe-
cial Risk Insurance Fund, as provided by section 238:
‘‘(1) The cost to the Government, as defined in
section 502 of the Congressional Budget Act, of new
insurance commitments.
‘‘(2) The cost to the Government, as defined in
section 502 of the Congressional Budget Act, of
modifications to existing loans, loan guarantees, or
insurance commitments.
‘‘(3) The cost to the Government, as defined in
section 502 of the Congressional Budget Act, of
loans provided under section 203(f) of the Housing
and Community Development Amendments of 1978.
‘‘(4) The costs of the rehabilitation of multi-
family housing projects (as defined in section 203(b)
of the Housing and Community Development
Amendments of 1978) upon disposition by the Sec-
retary.’’.
TITLE II—OTHER PROGRAM
REFORMS
Subtitle A—Home Investment
Partnerships Program
SEC. 201. PARTICIPATION BY STATE AGENCIES OR INSTRU-
MENTALITIES.
Section 104(2) of the Cranston-Gonzalez National
Affordable Housing Act (42 U.S.C. 12704(2)) is amend-
ed—
(1) by striking ‘‘and’’ after ‘‘Columbia,’’; and
(2) by inserting before the period at the end the
following: ‘‘, and any agency or instrumentality
thereof that is established pursuant to legislation
and designated by the chief executive to act on be-
half of the State with regard to the provisions of
this Act’’.
SEC. 203. SIMPLIFICATION OF PROGRAM-WIDE INCOME
TARGETING FOR RENTAL HOUSING.
Section 214(1) of the Cranston-Gonzalez National
Affordable Housing Act (42 U.S.C. 12744(1)) is amend-
ed—
(1) in subparagraph (A)—
(A) by striking ‘‘such funds are invested
with respect to dwelling units that are occupied
by’’ and inserting ‘‘(i) the families receiving
such rental assistance are’’; and
(B) by striking ‘‘, and’’ and inserting ‘‘, or
(ii) the dwelling units assisted with such funds
are occupied by families having such incomes;
and’’; and
(2) in subparagraph (B)—
(A) by striking ‘‘such funds are invested
with respect to dwelling units that are occupied
by’’ and inserting ‘‘(i) the families receiving
such rental assistance are’’; and
(B) by inserting before the semicolon at
the end the following: ‘‘, or (ii) the dwelling
units assisted with such funds are occupied by
such households’’.
SEC. 204. HOMEOWNERSHIP UNITS.
(a) REMOVAL
OF FIRST-TIME HOMEBUYER RE-
QUIREMENT.—Section 215(b) of the Cranston-Gonzalez
National Affordable Housing Act (42 U.S.C. 12745(b)) is
amended—
(1) by striking paragraph (3); and
(2) by redesignating paragraphs (4) and (5) as
paragraphs (3) and (4), respectively.
(b) SIMPLIFICATION OF RESALE PROVISIONS.—Sec-
tion 215(b)(3)(B) of the Cranston-Gonzalez National Af-
fordable Housing Act (42 U.S.C. 12745(b)(3)(B)), as so
redesignated by subsection (a) of this section, is amended
by striking ‘‘subsection’’ and inserting ‘‘title’’.
SEC. 205. SIMPLIFICATION OF MATCHING REQUIREMENTS.
Section 220(a) of the Cranston-Gonzalez National
Affordable Housing Act (42 U.S.C. 12750(a)) is amended
to read as follows:
‘‘(a) CONTRIBUTION.—Each participating jurisdic-
tion shall make contributions to housing that qualifies as
affordable housing under this title that total, throughout
a fiscal year, not less than 25 percent of the funds drawn
from the jurisdiction’s HOME Investment Trust Fund in
such fiscal year. Such contributions shall be in addition
to 
any 
amounts 
made 
available 
under 
section
216(3)(A)(ii).’’.
SEC. 206. REPEAL OF SEPARATE AUDIT REQUIREMENT.
Section 283 of the Cranston-Gonzalez National Af-
fordable Housing Act (42 U.S.C. 12833) is amended—
(1) by striking the section designation and
heading and inserting the following:
‘‘SEC. 283. AUDITS BY COMPTROLLER GENERAL.’’;
(2) by striking subsection (a);
(3) in subsection (b)—
(A) by striking ‘‘(b) AUDITS
BY
THE
COMPTROLLER GENERAL.—’’;
(B) by redesignating paragraphs (1) and
(2) as subsections (a) and (b), respectively; and
(C) by moving subsections (a) and (b), as
redesignated by subparagraph (B), 2 ems to the
left so that such subsections are flush with the
left margin; and
(4) in subsection (a), as redesignated by para-
graph (3)(B), by striking the second sentence.
SEC. 207. ENVIRONMENTAL REVIEW REQUIREMENTS.
Section 288 of the Cranston-Gonzalez National Af-
fordable Housing Act (42 U.S.C. 12838) is amended—
(1) in subsection (a)—
(A) in the first sentence, by striking ‘‘par-
ticipating jurisdictions’’ and inserting ‘‘jurisdic-
tions, Indian tribes, or insular areas’’; and
(B) by adding at the end the following new
sentences: ‘‘The regulations shall provide—
‘‘(1) for the monitoring of the performance of
environmental reviews under this section;
‘‘(2) in the discretion of the Secretary, for the
provision or facilitation of training for the perform-
ance of such reviews; and
‘‘(3) for the suspension or termination of the
assumption under this section.
The Secretary’s duty under the preceding sentence shall
not be construed to limit or reduce any responsibility as-
sumed by a State or unit of general local government with
respect to any particular release of funds.’’;
(2) in the first sentence of subsection (b), by
striking ‘‘participating jurisdiction’’ and inserting
‘‘jurisdiction, Indian tribe, or insular area’’;
(3) in subsection (c)(4)(B), by striking ‘‘partici-
pating jurisdiction’’ and inserting ‘‘jurisdiction, In-
dian tribe, or insular area’’; and
(4) in subsection (d), by striking ‘‘ASSISTANCE
TO A STATE.—In the case of assistance to States’’
and inserting the following: ‘‘ASSISTANCE TO UNITS
OF
GENERAL
LOCAL
GOVERNMENT
FROM
A
STATE.—In the case of assistance to units of gen-
eral local government from a State’’.
SEC. 208. USE OF CDBG FUNDS FOR HOME PROGRAM EX-
PENSES.
(a) 
ADMINISTRATIVE
EXPENSES.—Section
105(a)(13) of the Housing and Community Development
Act of 1974 (42 U.S.C. 5305(a)(13)) is amended by in-
serting after ‘‘charges related to’’ the following: ‘‘(A) ad-
ministering the HOME program under title II of the
Cranston-Gonzalez National Affordable Housing Act; and
(B)’’.
(b) PROJECT DELIVERY COSTS.—Section 105(a)(21)
of the Housing and Community Development Act of 1974
(42 U.S.C. 5305(a)(21)) is amended—
(1) by inserting ‘‘in connection with tenant-
based rental assistance and affordable housing
projects assisted under title II of the Cranston-Gon-
zalez National Affordable Housing Act’’ after ‘‘hous-
ing counseling’’; and
(2) by striking ‘‘authorized’’ and all that follows
through ‘‘any law’’ and inserting ‘‘assisted under
title II of the Cranston-Gonzalez National Afford-
able Housing Act’’.
SEC. 209. FLEXIBILITY OF HOME PROGRAM FOR DISASTER
AREAS.
Title II of the Cranston-Gonzalez National Affordable
Housing Act (42 U.S.C. 12721 et seq.) is amended by
adding at the end the following new section:
‘‘SEC. 290. SUSPENSION OF REQUIREMENTS FOR DISASTER
AREAS.
‘‘For the duration of time during which an area has
been declared a disaster area by the President under title
IV of the Robert T. Stafford Disaster Relief and Emer-
gency Assistance Act, the Secretary may suspend all re-
quirements for purposes of assistance under this title for
that area, except for those related to public notice of fund-
ing availability, nondiscrimination, fair housing, labor
standards, environmental standards, and low-income hous-
ing affordability.’’.
SEC. 210. APPLICABILITY AND REGULATIONS.
The amendments made by this title shall apply with
respect to any amounts made available to carry out title
II of the Cranston-Gonzalez National Affordable Housing
Act after the date of the enactment of this Act and any
amounts made available to carry out such title before such
date of enactment that remain unobligated on such date.
The Secretary shall issue any regulations necessary to
carry out the amendments made by this title not later than
the expiration of the 45-day period beginning on the date
of the enactment of this Act.
Subtitle B—HOPE Homeownership
Program
SEC. 221. MATCHING REQUIREMENT UNDER HOPE FOR
HOMEOWNERSHIP OF SINGLE FAMILY HOMES
PROGRAM.
Section 443(c)(1) of the Cranston-Gonzalez National
Affordable Housing Act (42 U.S.C. 12893(c)(1)) is
amended by striking ‘‘33 percent’’ and inserting ‘‘25 per-
cent’’.
Subtitle C—Community
Development Block Grants
SEC. 231. SECTION 108 ELIGIBLE ACTIVITIES.
The first sentence of section 108(a) of the Housing
and Community Development Act of 1974 (42 U.S.C.
5308(a)) is amended—
(1) by striking ‘‘or’’ after ‘‘section 105(a);’’;
and
(2) by inserting before the period the following:
‘‘; (5) the acquisition, construction, reconstruction,
or installation of public facilities (except for build-
ings for the general conduct of government); or (6)
in the case of colonias, public works and site or
other improvements’’.
SEC. 232. GUARANTEE OF OBLIGATIONS BACKED BY SEC-
TION 108 LOANS.
Section 108 of the Housing and Community Develop-
ment Act of 1974 (42 U.S.C. 5308) is amended by adding
at the end the following new subsection:
‘‘(q) GUARANTEE
OF OBLIGATIONS BACKED
BY
LOANS.—
‘‘(1) AUTHORITY.—The Secretary may, upon
such terms and conditions as the Secretary considers
appropriate, guarantee the timely payment of the
principal of and interest on such trust certificates or
other obligations as may—
‘‘(A) be offered by the Secretary or by any
other offeror approved for purposes of this sub-
section by the Secretary; and
‘‘(B) be based on and backed by a trust or
pool composed of notes or other obligations
guaranteed or eligible for guarantee by the Sec-
retary under this section.
‘‘(2) FULL FAITH AND CREDIT.—To the same
extent as provided in subsection (f), the full faith
and credit of the United States is pledged to the
payment of all amounts that may be required to be
paid under any guarantee made by the Secretary
under this subsection.
‘‘(3) SUBROGATION.—If the Secretary pays a
claim under a guarantee made under this section,
the Secretary shall be subrogated fully to the rights
satisfied by such payment.
‘‘(4) EFFECT OF LAWS.—No State or local law,
and no Federal law, shall preclude or limit the exer-
cise by the Secretary of—
‘‘(A) the power to contract with respect to
public offerings and other sales of notes, trust
certificates, and other obligations guaranteed
under this section upon such terms and condi-
tions as the Secretary deems appropriate;
‘‘(B) the right to enforce any such contract
by any means deemed appropriate by the Sec-
retary; and
‘‘(C) any ownership rights of the Sec-
retary, as applicable, in notes, certificates, or
other obligations guaranteed under this section,
or constituting the trust or pool against which
trust certificates, or other obligations guaran-
teed under this section, are offered.’’.
SEC. 233. FLEXIBILITY OF CDBG PROGRAM FOR DISASTER
AREAS.
Title I of the Housing and Community Development
Act of 1974 (42 U.S.C. 5301 et seq.) is amended by add-
ing at the end the following new section:
‘‘SEC. 122. SUSPENSION OF REQUIREMENTS FOR DISASTER
AREAS.
‘‘For the duration of time during which an area has
been declared a disaster area by the President under title
IV of the Robert T. Stafford Disaster Relief and Emer-
gency Assistance Act, the Secretary may suspend all re-
quirements for purposes of assistance under section 106
for that area, except for those related to public notice of
funding availability, nondiscrimination, fair housing, labor
standards, environmental standards, and requirements
that activities benefit persons of low- and moderate-in-
come.’’.
TITLE III—TECHNICAL
AMENDMENTS
SEC. 301. DEFINITION OF ‘‘FAMILIES’’.
The first sentence of section 3(b)(3)(B) of the United
States Housing Act of 1937 (42 U.S.C. 1437a(b)(3)(B))
is amended by striking ‘‘means families with children’’ and
inserting ‘‘includes families with children and’’.
SEC. 302. ELIMINATION OF REQUIREMENT TO IDENTIFY
CIAP REPLACEMENT NEEDS.
Section 14 of the United States Housing Act of 1937
(42 U.S.C. 1437l) is amended—
(1) in subsection (d)—
(A) by striking paragraph (2);
(B) in paragraph (4), in the matter pre-
ceding subparagraph (A)—
(i) by striking ‘‘and replacements,’’;
and
(ii) by striking ‘‘(1), (2), and (3)’’ and
inserting ‘‘(1) and (2)’’; and
(C) by redesignating paragraphs (3) and
(4) as paragraphs (2) and (3), respectively; and
(2) in subsection (f)(1)—
(A) in subparagraph (A), by striking
‘‘(d)(4)(A)’’ and inserting ‘‘(d)(3)(A)’’;
(B) by striking subparagraph (B);
(C) in subparagraph (C), by striking
‘‘(d)(4)’’ and inserting ‘‘(d)(3)’’;
(D) in subparagraph (D)—
(i) by striking ‘‘(1), (2), and (3)’’ and
inserting ‘‘(1) and (2)’’; and
(ii) by striking ‘‘(d)(4)’’ and inserting
‘‘(d)(3)’’; and
(E) by redesignating subparagraphs (C)
and (D), as so amended, as subparagraphs (B)
and (C), respectively;
(3) in subsection (g), by striking ‘‘(d)(4)’’ and
inserting ‘‘(d)(3)’’; and
(4) in subsection (h)(2), by striking ‘‘(d)(4)’’
and inserting ‘‘(d)(3)’’.
SEC. 303. PROJECT-BASED ACCOUNTING.
Section 6(c)(4)(E) of the United States Housing Act
of 1937 (42 U.S.C. 1437d(c)(4)(E)) is amended by strik-
ing ‘‘250’’ and inserting ‘‘500’’.
SEC. 304. OPERATING SUBSIDY ADJUSTMENTS FOR ANTICI-
PATED FRAUD RECOVERIES.
Section 9(a) of the United States Housing Act of
1937 (42 U.S.C. 1437g(a)) is amended by adding at the
end the following new paragraph:
‘‘(4) Adjustments to a public housing agency’s oper-
ating subsidy made by the Secretary under this section
shall reflect actual changes in rental income collections re-
sulting from the application of section 904 of the Stewart
B. McKinney Homeless Assistance Amendments Act of
1988.’’.
SEC. 305. ENVIRONMENTAL REVIEW PROVISIONS.
(a) LEAD-BASED PAINT HAZARD REDUCTION.—Sec-
tion 1011 of the Housing and Community Development
Act of 1992 (42 U.S.C. 4852) is amended—
(1) by redesignating subsection (o) as sub-
section (p); and
(2) by inserting after subsection (n) the follow-
ing new subsection:
‘‘(o) ENVIRONMENTAL REVIEW.—
‘‘(1) IN GENERAL.—For purposes of environ-
mental review, decisionmaking, and action pursuant
to the National Environmental Policy Act of 1960
and other provisions of law that further the purposes
of such Act, a grant under this section shall be
treated as assistance under the HOME Investment
Partnership Act, established under title II of the
Cranston-Gonzalez National Affordable Housing
Act, and shall be subject to the regulations promul-
gated by the Secretary to implement section 288 of
such Act.
‘‘(2) APPLICABILITY.—This subsection shall
apply to—
‘‘(A) grants awarded under this section;
and
‘‘(B) grants awarded to States and units
of general local government for the abatement
of significant lead-based paint and lead dust
hazards in low- and moderate-income owner-oc-
cupied units and low-income privately owned
rental units pursuant to title II of the Depart-
ments of Veterans Affairs and Housing and
Urban Development, and Independent Agencies
Appropriations Act, 1992 (Public Law 102–
139, 105 Stat. 736).’’.
(b) PROGRAMS UNDER UNITED STATES HOUSING
ACT OF 1937.—Title I of the United States Housing Act
of 1937 (42 U.S.C. 1437 et seq.) is amended by adding
at the end the following new section:
‘‘SEC. 26. ENVIRONMENTAL REVIEWS.
‘‘(a) IN GENERAL.—
‘‘(1) RELEASE OF FUNDS.—In order to assure
that the policies of the National Environmental Pol-
icy Act of 1969 and other provisions of law which
further the purposes of such Act (as specified in reg-
ulations issued by the Secretary) are most effectively
implemented in connection with the expenditure of
funds under this title, and to assure to the public
undiminished protection of the environment, the Sec-
retary may, under such regulations, in lieu of the en-
vironmental protection procedures otherwise applica-
ble, provide for the release of funds for projects or
activities under this title, as specified by the Sec-
retary upon the request of a public housing agency
under this section, if the State or unit of general
local government, as designated by the Secretary in
accordance with regulations, assumes all of the re-
sponsibilities for environmental review, decisionmak-
ing, and action pursuant to such Act, and such other
provisions of law as the regulations of the Secretary
may specify, which would otherwise apply to the Sec-
retary with respect to the release of funds.
‘‘(2) IMPLEMENTATION.—The Secretary, after
consultation with the Council on Environmental
Quality, shall issue such regulations as may be nec-
essary to carry out this section. Such regulations
shall specify the programs to be covered.
‘‘(b) PROCEDURE.—The Secretary shall approve the
release of funds subject to the procedures authorized by
this section only if, not less than 15 days prior to such
approval and prior to any commitment of funds to such
projects or activities, the public housing agency has sub-
mitted to the Secretary a request for such release accom-
panied by a certification of the State or unit of general
local government which meets the requirements of sub-
section (c). The Secretary’s approval of any such certifi-
cation shall be deemed to satisfy the Secretary’s respon-
sibilities under the National Environmental Policy Act of
1969 and such other provisions of law as the regulations
of the Secretary specify insofar as those responsibilities
relate to the release of funds which are covered by such
certification.
‘‘(c) CERTIFICATION.—A certification under the pro-
cedures authorized by this section shall—
‘‘(1) be in a form acceptable to the Secretary;
‘‘(2) be executed by the chief executive officer
or other officer of the State or unit of general local
government who qualifies under regulations of the
Secretary;
shall be deemed to satisfy the Secretary’s responsibilities
referred to in the second sentence of subsection (b).’’.
(c) SPECIAL PROJECTS.—
(1) IN GENERAL.—
(A) RELEASE OF FUNDS.—In order to as-
sure that the policies of the National Environ-
mental Policy Act of 1969 and other provisions
of law which further the purposes of such Act
(as specified in regulations issued by the Sec-
retary) are most effectively implemented in con-
nection with the expenditure of funds for spe-
cial projects appropriated under an appropria-
tions Act for the Department of Housing and
Urban Development, such as special projects
under the head ‘‘Annual Contributions for As-
sisted Housing’’ in title II of the Departments
of Veterans Affairs and Housing and Urban
Development, and Independent Agencies Appro-
priations Act, 1993, and to assure to the public
undiminished protection of the environment, the
Secretary of Housing and Urban Development
may, under such regulations, in lieu of the envi-
ronmental protection procedures otherwise ap-
plicable, provide for the release of funds for
particular special projects upon the request of
recipients of special projects assistance, if the
State or unit of general local government, as
designated by the Secretary in accordance with
regulations, assumes all of the responsibilities
for environmental review, decisionmaking, and
action pursuant to such Act, and such other
provisions of law as the regulations of the Sec-
retary specify, that would otherwise apply to
the Secretary were the Secretary to undertake
such special projects as Federal projects.
(B) 
IMPLEMENTATION.—The 
Secretary
shall issue regulations to carry out this sub-
section only after consultation with the Council
on Environmental Quality. Such regulations
shall—
(i) provide for monitoring of the per-
formance of environmental reviews under
this subsection;
(ii) in the discretion of the Secretary,
provide for the provision or facilitation of
training for such performance; and
(iii) subject to the discretion of the
Secretary, provide for suspension or termi-
nation by the Secretary of the assumption
under subparagraph (A).
(C) RESPONSIBILITIES OF STATE OR UNIT
OF GENERAL LOCAL GOVERNMENT.—The Sec-
retary’s duty under subparagraph (B) shall not
be construed to limit any responsibility assumed
by a State or unit of general local government
with respect to any particular release of funds
under subparagraph (A).
(2) PROCEDURE.—The Secretary shall approve
the release of funds for projects subject to the proce-
dures authorized by this subsection only if, not less
than 15 days prior to such approval and prior to any
commitment of funds to such projects, the recipient
submits to the Secretary a request for such release,
accompanied by a certification of the State or unit
of general local government which meets the require-
ments of paragraph (3). The Secretary’s approval of
any such certification shall be deemed to satisfy the
Secretary’s responsibilities under the National Envi-
ronmental Policy Act of 1969 and such other provi-
sions of law as the regulations of the Secretary
specify insofar as those responsibilities relate to the
releases of funds for special projects to be carried
out pursuant thereto which are covered by such cer-
tification.
(3) CERTIFICATION.—A certification under the
procedures authorized by this subsection shall—
(A) be in a form acceptable to the sec-
retary;
(B) be executed by the chief executive offi-
cer or other officer of the State or unit of gen-
eral local government who qualifies under regu-
lations of the Secretary;
(C) specify that the State or unit of gen-
eral local government under this subsection has
fully carried out its responsibilities as described
under paragraph (1); and
(D) specify that the certifying officer—
(i) consents to assume the status of a
responsible Federal official under the Na-
tional Environmental Policy Act of 1969
and agrees to comply with each provision
of law specified in regulations issued by
the Secretary insofar as the provisions of
such Act or other such provision of law
apply pursuant to paragraph (1); and
(ii) is authorized and consents on be-
half of the State or unit of general local
government and himself or herself to ac-
cept the jurisdiction of the Federal courts
for the purpose of enforcement of the re-
sponsibilities as such an official.
(4) APPROVAL BY STATES.—In cases in which
a unit of general local government carries out the re-
sponsibilities described in paragraph (1), the Sec-
retary may permit the State to perform those ac-
tions of the Secretary described in paragraph (2)
and the performance of such actions by the State,
where permitted by the Secretary, shall be deemed
to satisfy the Secretary’s responsibilities referred to
in the second sentence of paragraph (2).
SEC. 306. CONTRACT RENEWAL FOR SECTION 23 CONVER-
SION PROJECTS.
(a) IN GENERAL.—Leased housing contracts under
section 23 of the United States Housing Act of 1937, as
such section existed before the date of enactment of the
Housing and Community Development Act of 1974,
that—
(1) were converted to section 8 contracts on
terms similar to or the same as the terms of the sec-
tion 8 new construction program, and
(2) expire during fiscal year 1994 or 1995,
shall be extended for a period not to exceed 5 years as
if the rents on such projects were established under the
section 8 new construction program, except that section
8(c)(2)(C) of the United States Housing Act of 1937 shall
not apply to such contracts.
(b) BUDGET COMPLIANCE.—To the extent that sub-
section (a) results in additional costs under this section,
such paragraph shall be effective only to the extent that
amounts to cover such additional costs are provided in ad-
vance in appropriation Acts.
SEC. 307. CORRECTION OF FHA MULTIFAMILY MORTGAGE
LIMITS.
The National Housing Act (12 U.S.C. 1701 et seq.)
is 
amended 
in 
sections 
207(c)(3), 
213(b)(2),
220(d)(3)(B)(iii), and 234(e)(3) by striking ‘‘$59,160’’
each place it appears and inserting ‘‘$56,160’’.
SEC. 308. AMENDMENTS TO FHA MULTIFAMILY RISK-SHAR-
ING AND HOUSING FINANCE AGENCY PILOT
PROGRAMS.
(a) 
RISK-SHARING
PILOT
PROGRAM.—Section
542(b) of the Housing and Community Development Act
of 1992 (12 U.S.C. 1707 note) is amended—
(1) by striking paragraphs (1) and (2) and in-
serting the following new paragraphs:
‘‘(1) IN GENERAL.—The Secretary shall carry
out a pilot program in conjunction with qualified
participating entities to determine the effectiveness
of Federal credit enhancement for loans for afford-
able multifamily housing through a system of risk-
sharing agreements with such entities.
‘‘(2) PROGRAM REQUIREMENTS.—
‘‘(A) IN GENERAL.—In carrying out the
pilot program under this subsection, the Sec-
retary shall enter into risk-sharing agreements
with qualified participating entities.
‘‘(B) MORTGAGE
INSURANCE
AND
REIN-
SURANCE.—Agreements under subparagraph
(A) may provide for (i) insurance through the
Federal Housing Administration of loans for af-
fordable multifamily housing originated by or
through, or purchased by, qualified participat-
ing entities, and (ii) reinsurance, including rein-
surance of pools of loans, on affordable multi-
family housing. In entering into risk-sharing
agreements under this subsection covering
mortgages, the Secretary may give preference to
mortgages that are not already in the portfolios
of qualified participating entities.
‘‘(C) RISK APPORTIONMENT.—Agreements
entered into under this subsection between the
Secretary and a qualified participating entity
shall specify the percentage of loss that each of
the parties to the agreement will assume in the
event of default of the insured or reinsured
multifamily mortgage. Such agreements shall
specify that the qualified participating entity
and the Secretary shall share any loss in ac-
cordance with the risk-sharing agreement.
‘‘(D) REIMBURSEMENT CAPACITY.—Agree-
ments entered into under this subsection be-
tween the Secretary and a qualified participat-
ing entity shall provide evidence acceptable to
the Secretary of the capacity of such entity to
fulfill any reimbursement obligations made pur-
suant to this subsection. Evidence of such ca-
pacity which may be considered by the Sec-
retary may include—
‘‘(i) a pledge of the full faith and
credit of a qualified participating entity to
fulfill any obligations entered into by the
entity;
‘‘(ii) reserves pledged or otherwise re-
stricted by the qualified participating en-
tity in an amount equal to an agreed upon
percentage of the loss assumed by the en-
tity under subparagraph (C);
‘‘(iii) funds pledged through a State
or local guarantee fund; or
‘‘(iv) any other form of evidence mu-
tually agreed upon by the Secretary and
the qualified participating entity.
‘‘(E) UNDERWRITING
STANDARDS.—The
Secretary shall allow any qualified participating
entity to use its own underwriting standards
and loan terms and conditions for purposes of
underwriting loans to be insured under this
subsection, except as provided in this section,
without further review by the Secretary, except
that the Secretary may impose additional un-
derwriting criteria and loan terms and condi-
tions for contractual agreements where the Sec-
retary retains more than 50 percent of the risk
of loss. Any financing permitted on property in-
sured under this subsection other than the first
mortgage shall be expressly subordinate to the
insured mortgage.
‘‘(F) AUTHORITY
OF
SECRETARY.—The
Secretary, upon request of a qualified partici-
pating entity, may insure or reinsure and make
commitments to insure or reinsure under this
section any mortgage, advance, loan, or pool of
mortgages otherwise eligible under this section,
pursuant to a risk-sharing agreement providing
that the qualified participating entity will carry
out (under a delegation or otherwise, and with
or without compensation, but subject to audit,
exception, or review requirements) such credit
approval, appraisal, inspection, issuance of com-
mitments, approval of insurance of advances,
cost certification, servicing, property disposi-
tion, or other functions as the Secretary shall
approve as consistent with the purpose of this
section. All appraisals of property for mortgage
insurance under this section shall be completed
by a Certified General Appraiser in accordance
with the Uniform Standards of Professional Ap-
praisal Practice.
‘‘(G) DISCLOSURE
OF
RECORDS.—Quali-
fied participating entities shall make available
to the Secretary or the Secretary’s designee, at
the Secretary’s request, such financial and
other records as the Secretary deems necessary
for purposes of review and monitoring for the
program under this section.
‘‘(H) INELIGIBILITY
OF
HOUSING
FOR
TRANSIENT
OR
HOTEL
PURPOSES.—Notwith-
standing any other provision of this section, no
new, existing, or rehabilitated multifamily hous-
ing with respect to which a mortgage is insured
or reinsured under this subsection shall be op-
erated for transient or hotel purposes. For pur-
poses of this paragraph, the term ‘rental for
transient or hotel purposes’ shall have such
meaning as prescribed by the Secretary, except
that rental for any period less than 30 days
shall constitute rental for such purposes.’’;
(2) in paragraph (4), by striking ‘‘financial in-
stitutions and entities to be eligible to enter into re-
insurance agreements’’ and inserting ‘‘eligibility
under this subsection of qualified participating enti-
ties’’;
(3) in the first sentence of paragraph (5), by
striking ‘‘1993 and 1994’’ and inserting ‘‘1995 and
1996’’;
(4) by striking paragraph (8) and inserting the
following new paragraph:
‘‘(11) IMPLEMENTATION.—The Secretary shall
take any administrative actions necessary to initiate
the pilot program under this subsection.’’; and
(5) by inserting after paragraph (7) the follow-
ing new paragraphs:
‘‘(8) 
PROHIBITION
ON
GINNIE
MAE
SECURITIZATION.—The Government National Mort-
gage Association shall not securitize any multifamily
loans insured or reinsured under this subsection.
‘‘(9) QUALIFICATION
AS
AFFORDABLE
HOUS-
ING.—Multifamily housing securing loans insured or
reinsured under this subsection shall qualify as af-
fordable only if the housing is occupied by families
and bears rents not greater than the gross rent for
rent-restricted residential units as determined under
section 42(g) of the Internal Revenue Code of 1986.
‘‘(10) CERTIFICATION
OF
SUBSIDY
LAYERING
COMPLIANCE.—In the case of projects allocated a
low-income housing tax credit pursuant to section 42
of the Internal Revenue Code of 1986, the require-
ments of section 102(d) of the Department of Hous-
ing and Urban Development Reform Act of 1989
may be satisfied in connection with a commitment to
insure a mortgage under this subsection by a certifi-
cation by a housing credit agency (including an en-
tity established by a State that provides mortgage
insurance) to the Secretary that the combination of
assistance within the jurisdiction of the Secretary
and other government assistance provided in connec-
tion with a property for which a mortgage is to be
insured shall not be any greater than is necessary to
provide affordable housing.’’.
(b) HOUSING FINANCE AGENCY PILOT PROGRAM.—
Section 542(c) of the Housing and Community Develop-
ment Act of 1992 (12 U.S.C. 1707 note) is amended—
(1) in paragraph (1), by inserting after ‘‘quali-
fied housing finance agencies’’ the following: ‘‘(in-
cluding entities established by States that provide
mortgage insurance)’’;
(2) in paragraph (2)—
(A) in subparagraph (C), by striking the
last sentence and inserting the following: ‘‘Such
agreements shall specify that the qualified
housing finance agency and the Secretary shall
share any loss in accordance with the risk-shar-
ing agreement.’’; and
(B) by adding at the end the following new
subparagraph:
‘‘(F) DISCLOSURE
OF
RECORDS.—Quali-
fied housing finance agencies shall make avail-
able to the Secretary such financial and other
records as the Secretary deems necessary for
program review and monitoring purposes.’’;
(3) in paragraph (7)—
(A) by striking ‘‘very low-income’’; and
(B) by striking ‘‘(2)’’; and
(4) by adding at the end the following new
paragraphs:
‘‘(9) ENVIRONMENTAL AND OTHER REVIEWS.—
‘‘(A) ENVIRONMENTAL REVIEWS.—
‘‘(i) IN GENERAL.—(I) In order to as-
sure that the policies of the National Envi-
ronmental Policy Act of 1969 and other
provisions of law which further the pur-
poses of such Act (as specified in regula-
tions issued by the Secretary) are most ef-
fectively implemented in connection with
the insurance of mortgages under sub-
section (c)(2), and to assure to the public
undiminished protection of the environ-
ment, the Secretary may, under such regu-
lations, in lieu of the environmental protec-
tion procedures otherwise applicable, pro-
vide for agreements to endorse for insur-
ance mortgages under subsection (c)(2)
upon the request of qualified housing fi-
nance agencies under this subsection, if the
State or unit of general local government,
as designated by the Secretary in accord-
ance with regulations, assumes all of the
responsibilities for environmental review,
decisionmaking, and action pursuant to
such Act, and such other provisions of law
as the regulations of the Secretary may
specify, that would otherwise apply to the
Secretary with respect to the insurance of
mortgages on particular properties.
‘‘(II) The Secretary shall issue regula-
tions to carry out this subparagraph only
after consultation with the Council on En-
vironmental 
Quality. 
Such 
regulations
shall, among other matters, provide—
‘‘(aa) for the monitoring of the
performance of environmental reviews
under this subparagraph;
‘‘(bb) subject to the discretion of
the Secretary, for the provision or fa-
cilitation of training for such perform-
ance; and
‘‘(cc) subject to the discretion of
the Secretary, for the suspension or
termination by the Secretary of the
qualified housing finance agency’s re-
sponsibilities under subclause (I).
‘‘(III) The Secretary’s duty under
subclause (II) shall not be construed to
limit any responsibility assumed by a State
or unit of general local government with
respect to any particular property under
subclause (I).
‘‘(ii) 
PROCEDURE.—The 
Secretary
shall approve a mortgage for the provision
of mortgage insurance subject to the proce-
dures authorized by this paragraph only if,
not less than 15 days prior to such ap-
proval, prior to any approval, commitment,
or endorsement of mortgage insurance on
the property on behalf of the Secretary,
and prior to any commitment by the quali-
fied housing finance agency to provide fi-
nancing under the risk-sharing agreement
with respect to the property, the qualified
housing finance agency submits to the Sec-
retary a request for such approval, accom-
panied by a certification of the State or
unit of general local government that
meets the requirements of clause (iii). The
Secretary’s approval of any such certifi-
cation shall be deemed to satisfy the Sec-
retary’s responsibilities under the National
Environmental Policy Act of 1969 and
such other provisions of law as the regula-
tions of the Secretary specify insofar as
those responsibilities relate to the provision
of mortgage insurance on the property that
is covered by such certification.
‘‘(iii) CERTIFICATION.—A certification
under the procedures authorized by this
paragraph shall—
‘‘(I) be in a form acceptable to
the Secretary;
‘‘(II) be executed by the chief ex-
ecutive officer or other officer of the
State or unit of general local govern-
ment who qualifies under regulations
of the Secretary;
‘‘(III) specify that the State or
unit of general local government
under this section has fully carried
out its responsibilities as described
under clause (i); and
‘‘(IV) specify that the certifying
officer consents to assume the status
of a responsible Federal official under
the National Environmental Policy
Act of 1969 and under each provision
of law specified in regulations issued
by the Secretary insofar as the provi-
sions of such Act or such other provi-
sions of law apply pursuant to clause
(i), and is authorized and consents on
behalf of the State or unit of general
local government and himself or her-
self to accept the jurisdiction of the
Federal courts for the purpose of en-
forcement of the responsibilities as
such an official.
‘‘(iv) 
APPROVAL
BY
STATES.—In
cases in which a unit of general local gov-
ernment carries out the responsibilities de-
scribed in clause (i), the Secretary may
permit the State to perform those actions
of the Secretary described in clause (ii)
and the performance of such actions by the
State, where permitted by the Secretary,
shall be deemed to satisfy the Secretary’s
responsibilities referred to in the second
sentence of clause (ii).
‘‘(B) LEAD-BASED PAINT POISONING PRE-
VENTION.—In carrying out the requirements of
section 302 of the Lead-Based Paint Poisoning
Prevention Act, the Secretary may provide by
regulation for the assumption of all or part of
the Secretary’s duties under such Act by quali-
fied housing finance agencies, for purposes of
this section.
‘‘(C) 
CERTIFICATION
OF
SUBSIDY
LAYERING COMPLIANCE.—The requirements of
section 102(d) of the Department of Housing
and Urban Development Reform Act of 1989
may be satisfied in connection with a commit-
ment to insure a mortgage under this sub-
section by a certification by a housing credit
agency (including an entity established by a
State that provides mortgage insurance) to the
Secretary that the combination of assistance
within the jurisdiction of the Secretary and
other government assistance provided in connec-
tion with a property for which a mortgage is to
be insured shall not be any greater than is nec-
essary to provide affordable housing.
‘‘(10) DEFINITIONS.—For purposes of this sub-
section, the following definitions shall apply:
‘‘(A) MORTGAGE.—The term ‘mortgage’
means a first mortgage on real estate that is—
‘‘(i) owned in fee simple; or
‘‘(ii) subject to a leasehold interest
that—
‘‘(I) has a term of not less than
99 years and is renewable; or
‘‘(II) has a remaining term that
extends beyond the maturity of the
mortgage for a period of not less than
10 years.
‘‘(B) FIRST MORTGAGE.—The term ‘first
mortgage’ means a single first lien given to se-
cure advances on, or the unpaid purchase price
of, real estate, under the laws of the State in
which the real estate is located, together with
the credit instrument, if any, secured thereby.
Any other financing permitted on property in-
sured under this section must be expressly sub-
ordinate to the insured mortgage.
‘‘(C) UNIT OF GENERAL LOCAL GOVERN-
MENT; STATE.—The terms ‘unit of general local
government’ and ‘State’ have the same mean-
ings as in section 102(a) of the Housing and
Community Development Act of 1974.’’.
(c) DEFINITION
OF ‘‘MULTIFAMILY HOUSING’’.—
Section 544(1) of the Housing and Community Develop-
ment Act of 1992 (12 U.S.C. 1707 note) is amended to
read as follows:
‘‘(1) The term ‘multifamily housing’ means
housing accommodations on the mortgaged property
that are designed principally for residential use, con-
form to standards satisfactory to the Secretary, and
consist of not less than 5 rental units on 1 site.
These units may be detached, semidetached, row
house, or multifamily structures.’’.
SEC. 309. SUBSIDY LAYERING REVIEW.
Section 911 of the Housing and Community Develop-
ment Act of 1992 (42 U.S.C. 3545 note) is amended—
(1) by striking subsection (a) and inserting the
following new subsection:
‘‘(a) CERTIFICATION OF SUBSIDY LAYERING COM-
PLIANCE.—The requirements of section 102(d) of the De-
partment of Housing and Urban Development Reform Act
of 1989 may be satisfied in connection with a project re-
ceiving assistance under a program that is within the ju-
risdiction of the Department of Housing and Urban Devel-
opment and under section 42 of the Internal Revenue
Code of 1986 by a certification by a housing credit agency
to the Secretary, submitted in accordance with guidelines
established by the Secretary, that the combination of as-
sistance within the jurisdiction of the Secretary and other
government assistance provided in connection with a prop-
erty for which assistance is to be provided within the juris-
diction of the Department of Housing and Urban Develop-
ment and under section 42 of the Internal Revenue Code
of 1986 shall not be any greater than is necessary to pro-
vide affordable housing.’’; and
(2) by striking subsection (c) and inserting the
following new subsection:
‘‘(c) REVOCATION BY SECRETARY.—If the Secretary
determines that a housing credit agency has failed to com-
ply with the guidelines established under subsection (a),
the Secretary—
‘‘(1) may inform the housing credit agency that
the agency may no longer submit certification of
subsidy layering compliance under this section; and
‘‘(2) shall carry out section 102(d) of the Hous-
ing and Urban Development Reform Act relating to
affected projects allocated a low-income housing tax
credit pursuant to section 42 of the Internal Reve-
nue Code of 1986.’’.
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