I
107TH CONGRESS
1ST SESSION
H. R. 286
To provide for the construction and renovation of child care facilities, and
for other purposes.
IN THE HOUSE OF REPRESENTATIVES
JANUARY 30, 2001
Mrs. MCCARTHY of New York (for herself and Mr. GILMAN) introduced the
following bill; which was referred to the Committee on Financial Services
A BILL
To provide for the construction and renovation of child care
facilities, 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.
This Act may be cited as the ‘‘Child Care Construc-
tion and Renovation Act’’.
SEC. 
2. 
USE 
OF 
COMMUNITY 
DEVELOPMENT 
BLOCK
GRANTS TO ESTABLISH CHILD CARE FACILI-
TIES.
Section 105(a) of the Housing and Community De-
velopment Act of 1974 (42 U.S.C. 5305(a)) is amended—
(1) in paragraph (22), by striking ‘‘and’’ at the
end;
(2) in paragraph (23), by striking the period at
the end and inserting a semicolon;
(3) in paragraph (24), by striking ‘‘and’’ at the
end;
(4) in paragraph (25), by striking the period at
the end and inserting ‘‘; and’’; and
(5) by adding at the end the following:
‘‘(26) the construction and renovation of child
care facilities.’’.
SEC. 3. INSURANCE FOR MORTGAGES ON NEW AND REHA-
BILITATED CHILD CARE FACILITIES.
Title II of the National Housing Act (12 U.S.C. 1707
et seq.) is amended by adding at the end the following:
‘‘SEC. 257. MORTGAGE INSURANCE FOR CHILD CARE FA-
CILITIES.
‘‘(a) DEFINITIONS.—In this section:
‘‘(1) CHILD CARE FACILITY.—The term ‘child
care facility’—
‘‘(A) means a public or private facility
that—
‘‘(i) has as its purpose the care and
development of—
‘‘(I) children who are less than
16 years of age; or
‘‘(II) school-age children and
youth during non-school hours; and
‘‘(ii) is operated in accordance with all
applicable State and local laws and regula-
tions; and
‘‘(B) does not include any facility for
school-age children that is primarily for use
during normal school hours.
‘‘(2) 
EQUIPMENT.—The 
term 
‘equipment’
includes—
‘‘(A) machinery, utilities, and built-in
equipment, and any necessary enclosure or
structure to house them; and
‘‘(B) any other items necessary for the
functioning of a particular facility as a child
care facility, including necessary furniture,
books, and curricular and program materials.
‘‘(3) 
FIRST
MORTGAGE.—The 
term 
‘first
mortgage’—
‘‘(A) means such classes of first liens as
are commonly given to secure advances (includ-
ing advances during construction) on, or the
unpaid purchase price of, real estate under the
laws of the State in which the real estate is lo-
cated, together with the credit instrument or in-
struments (if any) secured thereby; and
‘‘(B) includes any mortgage in the form of
1 or more trust mortgages or mortgage inden-
tures or deeds of trust, securing notes, bonds,
or other credit instruments, that, by the same
instrument or by a separate instrument, creates
a security interest in initial equipment, whether
or not attached to the realty.
‘‘(4) MORTGAGE.—The term ‘mortgage’ means
a first mortgage on real estate in fee simple, or on
the interest of either the lessor or lessee thereof
under a lease having a period of not less than 7
years to run beyond the maturity date of the mort-
gage.
‘‘(5) MORTGAGOR.—The term ‘mortgagor’ has
the meaning given the term in section 207(a).
‘‘(b) INSURANCE OF MORTGAGES.—In order to facili-
tate the establishment and rehabilitation of child care fa-
cilities, the Secretary may—
‘‘(1) insure a mortgage that is secured by a
property or project that is—
‘‘(A) a new child care facility, including a
new addition to an existing child care facility
(regardless of whether the existing facility is
being rehabilitated); or
‘‘(B) a substantially rehabilitated child
care facility, including equipment to be used in
the operation of the facility; and
‘‘(2) make a commitment to insure any mort-
gage described in paragraph (1) before the date of
execution or disbursement of the mortgage.
‘‘(c) TERMS AND CONDITIONS.—
‘‘(1) ELIGIBLE CHILD CARE FACILITIES.—Each
mortgage insured under this section shall be secured
by a child care facility for which a certification of
compliance has been issued by the Secretary under
section 258(c) during the 12-month period preceding
the date on which the commitment to insure the
mortgage is issued under this section.
‘‘(2) APPROVED MORTGAGOR.—
‘‘(A) IN
GENERAL.—Each mortgage in-
sured under this section shall be executed by a
mortgagor approved by the Secretary.
‘‘(B) REGULATION.—The Secretary may—
‘‘(i) require an approved mortgagor
who executes a mortgage under subpara-
graph (A) to be regulated with respect to
charges and methods of financing and, if
the mortgagor is a corporate entity, with
respect to capital structure and rate of re-
turn; and
‘‘(ii) as an aid to the regulation of any
mortgagor under clause (i), make such
contracts with and acquire for not more
than $100 such stock or interest in such
mortgagor as the Secretary considers to be
necessary.
‘‘(C) STOCK OR INTEREST.—Any stock or
interest purchased under subparagraph (B)(ii)
shall be—
‘‘(i) paid for out of the General Insur-
ance Fund; and
‘‘(ii) redeemed by the mortgagor at
par upon the termination of all obligations
of the Secretary under the insurance.
‘‘(3) PRINCIPAL OBLIGATION.—Each mortgage
insured under this section shall involve a principal
obligation in an amount not to exceed 90 percent of
the estimated value of the property or project, or 95
percent of the estimated value of the property or
project in the case of a mortgagor that is a private
nonprofit corporation or association (as defined pur-
suant to section 221(d)(3)), including—
‘‘(A) equipment to be used in the operation
of the facility when the proposed improvements
are completed and the equipment is installed; or
‘‘(B) a solar energy system (as defined in
subparagraph (3) of the last paragraph of sec-
tion 2(a)) or residential energy conservation
measures (as defined in subparagraphs (A)
through (G) and (I) of section 210(11) of the
National Energy Conservation Policy Act), in
cases in which the Secretary determines that
such measures are in addition to those required
under the minimum property standards and will
be cost-effective over the life of the measure.
‘‘(4) AMORTIZATION
AND
INTEREST.—Each
mortgage insured under this section shall—
‘‘(A) provide for complete amortization by
periodic payments under such terms as the Sec-
retary shall prescribe;
‘‘(B) have a maturity date satisfactory to
the Secretary, but in no event longer than 25
years; and
‘‘(C) bear interest at such rate as may be
agreed upon by the mortgagor and the mort-
gagee, and the Secretary shall not issue any
regulations or establish any terms or conditions
tion Association (or any subsequent edition specified
by the Secretary of Health and Human Services).
‘‘(2) LOAN REQUIREMENTS.—To be eligible for
insurance under this subsection a loan shall—
‘‘(A) not exceed the estimate by the Sec-
retary of the reasonable cost of the equipment
fully installed;
‘‘(B) bear interest at such rate as may be
agreed upon by the mortgagor and the mort-
gagee;
‘‘(C) have a maturity date satisfactory to
the Secretary;
‘‘(D) be made by a financial institution or
other mortgagee approved by the Secretary as
eligible for insurance under section 2 or a mort-
gagee approved under section 203(b)(1);
‘‘(E) comply with other such terms, condi-
tions, and restrictions as the Secretary may
prescribe; and
‘‘(F) be made with respect to a child care
facility for which a certification of compliance
has been issued by the Secretary under section
258(c) during the 12-month period preceding
the date on which the commitment to insure is
issued under this subsection.