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Sec. 1. Short title and table of contents.
Sec. 2. Implementation.
TITLE I—PERFORMANCE FUNDS
Sec. 10. Findings and purposes.
SUBTITLE A—COMMUNITY DEVELOPMENT BLOCK GRANT PERFORMANCE
FUND
Sec. 11. Definition of consolidated plan.
Sec. 12. Authorizations.
Sec. 13. Statement of activities and review.
Sec. 14. Eligible activities.
Sec. 15. Allocation and distribution of funds.
Sec. 16. Technical assistance and special activities.
Sec. 17. Guarantee of loans.
Sec. 18. Challenge grant fund.
Sec. 19. Reporting requirements.
Sec. 20. Termination of existing programs.
SUBTITLE B—HOME PERFORMANCE FUND
Sec. 21. Definitions; findings and purposes; program administration.
Sec. 22. Amendments to the comprehensive housing affordability strategy.
Sec. 23. Authorization.
Sec. 24. Eligible uses of investment.
Sec. 25. Income targeting.
Sec. 26. Qualification as affordable housing.
Sec. 27. Reallocation.
Sec. 28. Allocation of resources.
Sec. 29. HOME investment trust funds.
Sec. 30. Repayment of investment; matching requirements.
Sec. 31. Distribution of assistance.
Sec. 32. Performance review and sanctions.
Sec. 33. Challenge grant fund.
Sec. 34. Tenant and participant protections.
Sec. 35. Loan guarantees.
Sec. 36. Housing education, organizational, and other support.
Sec. 37. Priorities for capacity development.
Sec. 38. Conditions of contracts.
Sec. 39. Other assistance.
Sec. 40. Termination of existing programs.
TITLE II—DEVELOPING COMMUNITIES INITIATIVE
Sec. 51. Basic authority.
Sec. 52. Funding.
Sec. 53. Program administration.
Sec. 54. Records, reports, and audits.
Sec. 55. Definitions.
TITLE III—MISCELLANEOUS PROGRAMS
Sec. 61. Use of technical assistance funds by or for HUD staff.
Sec. 62. HUD research and development.
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Sec. 63. Fair housing initiatives program.
Sec. 64. Lead-based paint target housing hazard reduction program.
SEC. 2. IMPLEMENTATION.
(a) IN
GENERAL.—Notwithstanding 42 U.S.C.
3535(o) or 24 CFR part 10, the Secretary shall issue such
regulations as may be necessary to implement any provi-
sion of this Act, and any amendment made by this Act,
in accordance with section 552 or 553 of title 5, United
States Code, as determined by the Secretary.
(b) USE OF EXISTING RULES.—In implementing any
provision of this Act, the Secretary may, in the Secretary’s
discretion, provide for the use of existing rules to the ex-
tent appropriate, without the need for further rulemaking.
TITLE I—PERFORMANCE FUNDS
SEC. 10. FINDINGS AND PURPOSES.
(a) FINDINGS.—The Congress finds that—
(1) the effectiveness of Federal housing assist-
ance and community development efforts has been
diminished by the proliferation of dozens of sepa-
rate, duplicative programs which are generally com-
plex and overly prescriptive; and
(2) the current system impedes the ability of
communities to respond to housing and community
development needs in a coordinated way, places an
intolerable administrative burden on program recipi-
ents, and inhibits innovation and flexibility.
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(b) PURPOSES.—The purposes of this title are—
(1) to redefine the Federal Government’s rela-
tionship with communities across the Nation by con-
solidating housing assistance and community devel-
opment programs into a small number of perform-
ance-based funds thereby allowing greater discretion,
coordination, and innovation in the application of
Federal assistance by community, local, and State
leaders;
(2) to devolve responsibility in a manner which
maximizes choice and dignity for families, promotes
community participation, expands the commitment
to America’s most vulnerable populations, complies
with Federal fair housing and civil rights laws, and
upholds the values of work and homeownership;
(3) to enhance performance-based accountabil-
ity of States and localities consistent with the fore-
going national ideals and to reward them with chal-
lenge grants and other benefits for their successes;
and
(4) to establish an orderly and rational schedule
of transition to the new consolidated, performance-
based program structure.
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Subtitle A—Community Development Block
Grant Performance Fund
SEC. 11. DEFINITION OF CONSOLIDATED PLAN.
Section 102(a) of the Housing and Community De-
velopment Act of 1974 is amended by adding the following
new paragraph at the end:
‘‘(24) The term ‘consolidated plan’ means the
single comprehensive plan that the Secretary pre-
scribes for submission by jurisdictions that consoli-
dates and fulfills the requirements of—
‘‘(A) the comprehensive housing afford-
ability strategy under title I of the Cranston-
Gonzalez National Affordable Housing Act;
‘‘(B) the community development plan
under section 104 of this Act; and
‘‘(C) the submission requirements for for-
mula funding under—
‘‘(i) the Community Development
Block Grant Performance Fund under this
title;
‘‘(ii) the HOME Performance Fund
(authorized by title II of the Cranston-
Gonzalez National Affordable Housing Act,
as amended by the Community Develop-
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ment Block Grant Performance Fund and
HOME Performance Fund Act of 1996);
‘‘(iii) the Homeless Assistance Per-
formance Fund (authorized by title IV of
the Steward B. McKinney Homeless As-
sistance Act, as amended by the Homeless
Assistance Performance Fund Act of
1996); and
‘‘(iv) the AIDS Housing Opportunity
Act (authorized by subtitle D of title VIII
of the Cranston-Gonzalez National Afford-
able Housing Act).
A jurisdiction’s consolidated plan shall be coordi-
nated and consistent with a public housing agency’s
five-year comprehensive plan, if any, required under
section 14(e) of the United States Housing Act of
1937.’’.
SEC. 12. AUTHORIZATIONS.
The second sentence of section 103 of the Housing
and Community Development Act of 1974 is amended to
read as follows: ‘‘For purposes of assistance under section
106, 
there 
are 
authorized 
to 
be 
appropriated
$4,600,000,000 for fiscal year 1997 and such sums as
may be necessary for fiscal years 1998, 1999, and 2000.
In addition, for the purpose of establishing the challenge
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grant fund under section 112, there are authorized to be
appropriated 
$300,000,000 
for 
fiscal 
year 
1997,
$100,000,000 of which shall be for challenge grants au-
thorized under section 112, and $200,000,000 of which
shall be for grants for enterprise communities and
empowerment zones designated after October 1, 1996
under section 1391 of the Internal Revenue Code of 1986,
and such sums as may be necessary for fiscal years 1998,
1999, and 2000.’’.
SEC. 13. STATEMENT OF ACTIVITIES AND REVIEW.
(a) CONTENT OF STATEMENT.—Section 104(a)(1) of
the Housing and Community Development Act of 1974
is amended by striking the last sentence and inserting the
following: ‘‘In the case of States receiving grants pursuant
to section 106(d), the statement of projected use of funds
shall consist of the method by which the States will dis-
tribute funds, if any, to units of general local government
and the proposed community development activities, if
any. The final statement shall include specific perform-
ance measures and benchmarks provided by the grantee
in developing the consolidated plan referred to in sub-
section (b)(4). The Secretary shall work with grantees to
develop benchmarks and measures that can enable per-
formance to be compared among jurisdictions.’’.
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(b) CONSOLIDATED PLAN.—Section 104(b)(4) of
such Act is amended by adding after ‘‘has developed’’ the
following: ‘‘the consolidated plan, which shall also in-
clude’’.
(c) CERTIFICATION.—Section 104(c) of such Act is
amended to read as follows:
‘‘(c) A grant may be made under section 106(b) or
section 106(d) only if the unit of general local government
or the State certifies that it is following a current consoli-
dated plan.’’.
(d) PERFORMANCE REPORT.—Section 104(e) of such
Act is amended—
(1) by inserting before the period at the end of
the first sentence the following: ‘‘and the perform-
ance of the grantee as measured against the grant-
ee’s specific performance measures and bench-
marks’’;
(2) by striking the fifth and sixth sentences;
(3) in paragraph (1)—
(A) by striking ‘‘section 106(d)(z)(B)’’ and
inserting ‘‘section 106(d), where applicable’’;
and
(B) by striking ‘‘housing assistance plan’’
and inserting ‘‘consolidated plan that includes a
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comprehensive housing affordability strategy’’;
and
(4) in paragraph (2), by adding ‘‘where applica-
ble,’’ after ‘‘section 106(d),’’.
(e) PROGRAM INCOME.—Section 104(j) of such Act
is amended by adding the following sentence at the end:
‘‘The Secretary shall also exclude from consideration as
program income any other amounts, if the Secretary de-
termines that there is good cause for such exclusion and
that the use of such funds will further the purposes of
the Act.’’.
(f) CONFORMING.—Section 104(m)(1) of such Act is
amended by striking ‘‘subsection (b), (d)(1), or (d)(2)(B)
of section 106’’ and inserting ‘‘section 106 (b) or (d)’’.
SEC. 14. ELIGIBLE ACTIVITIES.
(a) ELIGIBLE ACTIVITIES.—Section 105(a) of the
Housing and Community Development Act of 1974 is
amended—
(1) by striking paragraph (4) and inserting the
following:
‘‘(4) clearance (including removal of toxic mate-
rials and other contaminants from properties), dem-
olition, removal, reconstruction, and rehabilitation
(including rehabilitation that improves energy effi-
ciency) of buildings and improvements (including in-
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terim assistance, and financing public or private ac-
quisition for reconstruction or rehabilitation, and re-
construction or rehabilitation of privately owned
properties, including the renovation of closed school
buildings);’’;
(2) by striking paragraph (14) and inserting
the following:
‘‘(14) provision of assistance including loans
(both interim and long-term) and grants for eco-
nomic revitalization activities which are carried out
by public or private nonprofit entities, including job
creation activities by public agencies or nonprofit en-
tities to enable families on welfare to become self-
sufficient;’’;
(3) by striking ‘‘and’’ at the end of paragraph
(24);
(4) by striking the period at the end of para-
graph (25) and inserting ‘‘; and’’; and
(5) by adding at the end the following:
‘‘(26) provision of services designed to further
the objectives of the Fair Housing Act, which may
include services relating to the provision of housing
opportunities without regard to race, color, religion,
sex, national origin, familial status, or disability; and
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other fair housing enforcement, education, and out-
reach activities;’’.
(b) LOW/MOD BENEFIT.—Section 105(c) of such Act
is amended by adding at the end the following new para-
graph:
‘‘(5) Any activity carried out under subsection
(a)(26) shall be presumed to benefit persons of low
and moderate income.’’.
SEC. 15. ALLOCATION AND DISTRIBUTION OF FUNDS.
(a) ENTITLEMENT REALLOCATION.—Section 106(c)
of such Act is amended—
(1) by striking paragraph (1) and inserting the
following:
‘‘(1) Any amounts allocated to a metropolitan
city or an urban county pursuant to the preceding
provisions of this section which are not received by
the city or county for a fiscal year because of failure
to meet the requirements of section 104(a), (b), (c),
or (d), or which become available as a result of ac-
tions under section 104(e) or 111, shall be reallo-
cated to the challenge grant fund under section
112.’’; and
(2) by striking paragraphs (2) and (4) and re-
designating paragraph (3) as paragraph (2).
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(b) CONFORMING.—Section 106(d)(1) of such Act is
amended by striking ‘‘paragraphs (1) and (2)’’ and insert-
ing ‘‘paragraph (1)’’.
(c) USE OF FUNDS.—Section 106(d)(2)(A) of such
Act is amended—
(1) by adding after ‘‘allocated under paragraph
(1)’’ the following: ‘‘shall be used by the State to
carry out community development activities in non-
entitlement areas of the State if the unit of general
local government concurs in such action, or’’; and
(2) by striking the third and fourth sentences.
(d) STATE ADMINISTRATION.—Section 106(d)(3) of
such Act is amended—
(1) in subparagraph (A)—
(A) in the first sentence, by striking ‘‘If
the 
State 
receives 
and 
distributes 
such
amounts’’ and inserting the following: ‘‘To the
extent the State distributes such amounts it re-
ceives’’; and
(B) in the third sentence—
(i) by inserting ‘‘and distributed’’
after ‘‘received’’; and
(ii) by striking ‘‘and its administrative
expenses under section 810 of this Act’’;
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(2) in subparagraph (C), by striking ‘‘to
amounts allocated to all States under paragraph (1)
for the succeeding fiscal year’’ and inserting ‘‘to the
challenge grant fund under section 112’’;
(3) by redesignating paragraph (6) as para-
graph (7); and
(4) by redesignating paragraph (5) the second
place it appears as paragraph (6).
(e) CONFORMING.—Section 106(d)(7) of such Act, as
redesignated, is amended by inserting immediately after
‘‘amounts received by’’ the first place it appears the fol-
lowing: ‘‘a State or’’.
(f) PERMANENT EXTENSION OF COLONIAS AUTHOR-
ITY.—Section 916(f) of the Cranston-Gonzalez National
Affordable Housing Act is hereby repealed.
SEC. 16. TECHNICAL ASSISTANCE AND SPECIAL ACTIVI-
TIES.
(a) SET-ASIDE.—Section 107(a)(1) of the Housing
and Community Development Act of 1974 is amended to
read as follows:
‘‘(a)(1) IN GENERAL.—Of the total amount provided
in appropriation Acts under the second sentence of section
103, the Secretary may set aside up to $45,500,000 for
each fiscal year to make grants under subsections (b)(1),
(b)(2), (b)(3), (b)(5), and (c)(1), provide technical assist-
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ance under subsection (b)(4), and carry out activities in
connection with management information systems under
subsection (c)(2).’’.
(b) TECHNICAL ASSISTANCE.—Section 107(b) of
such Act is amended—
(1) by adding ‘‘and’’ after the semicolon at the
end of paragraph (4);
(2) by striking ‘‘; and’’ at the end of paragraph
(6) and inserting a period; and
(3) by striking paragraphs (5) and (7) and re-
designating paragraph (6) as paragraph (5).
(c) WORK STUDY AND MANAGEMENT INFORMATION
SYSTEMS.—Section 107(c) of such Act is amended—
(1) by inserting ‘‘(1)’’ after ‘‘(c)’’;
(2) in paragraph (1), as redesignated by para-
graph (1) of this subsection, by inserting after ‘‘edu-
cation,’’ the following ‘‘including Hispanic-serving
institutions,’’; and
(3) by inserting a new paragraph at the end to
read as follows:
‘‘(2) For fiscal year 1997 and fiscal year 1998, from
the amount set aside under subsection (a)(1), the Sec-
retary is authorized to set aside an amount up to 0.4 per-
cent of the total amount provided in appropriation Acts
under the second sentence of section 103, but not less
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than $18,000,000, to develop, implement, and refine man-
agement information systems in order to establish a na-
tional database on local needs and priorities, and to pro-
vide grantees and community members with software to
plan and track performance.’’.
SEC. 17. GUARANTEE OF LOANS.
(a) CONFORMING.—The heading of section 108 of the
Housing and Community Development Act of 1974 is
amended to read as follows: ‘‘GUARANTEE OF LOANS’’.
(b) ELIGIBLE ACTIVITIES AND FUNDING AUTHOR-
ITY.—Section 108 of such Act is amended—
(1) in the first sentence of subsection (a), by
striking ‘‘the purposes of financing’’ and all that fol-
lows up to the period and inserting ‘‘any activities
eligible under section 105’’;
(2) in the fifth sentence of subsection (a), by
striking ‘‘$2,000,000,000 for fiscal year 1993 and
$2,000,000,000 for fiscal year 1994’’ and inserting
the following: ‘‘$2,000,000,000 for fiscal year 1997
and such sums as may be necessary for fiscal year
1998 and subsequent fiscal years’’; and
(3) 
in 
subsection 
(k)(1), 
by 
striking
‘‘$4,500,000,000’’ and inserting ‘‘$6,000,000,000’’.
(c) FEDERAL FINANCING BANK FINANCING.—Sec-
tion 108(l) of such Act is hereby repealed.
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1 Section 108(q) would be redesignated as section 108(o).
(d) CONFORMING.—Section 108(h) of such Act is
amended by striking ‘‘subsection (j)’’ and inserting ‘‘sub-
section (i)’’.
(e) CONFORMING.—Section 108 of such Act, as
amended by subsection (c), is amended by redesignating
subsections (j) through (r) as subsections (i) through (p).
SEC. 18. CHALLENGE GRANT FUND.
(a) BASIC AUTHORITY.—Section 112 of the Housing
and Community Development Act of 1974 is amended to
read as follows:
‘‘CHALLENGE GRANT FUND
‘‘SEC. 112. (a) BASIC AUTHORITY.—Of the amount
approved in an appropriation Act under section 103 for
grants in any year under this section and from amounts
reallocated pursuant to sections 106(c)(1) and (d)(3)(C),
the Secretary is authorized to make grants from a chal-
lenge grant fund—
‘‘(1) for job creation activities and projects to
grantees under this title; or
‘‘(2) in accordance with section 108(o) 1.
‘‘(b) ELIGIBILITY FOR AWARDS.—To be eligible for
consideration for an award from the challenge grant fund,
a grantee shall at minimum—
‘‘(1) meet the requirements of this title, as de-
termined by the Secretary under section 104(e);
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‘‘(2) meet or exceed performance measures and
benchmarks included in its consolidated plan for ac-
tivities under this title, including any activities
under this section, which measures and benchmarks
shall reflect performance levels of grantees deter-
mined by the Secretary to be similarly situated; and
‘‘(3) demonstrate it has expended grant funds
on a timely basis.
‘‘(c) SUBMISSION REQUIREMENTS.—The Secretary
shall establish submission requirements for grantees to in-
clude in their consolidated plans.
‘‘(d) ELIGIBLE ACTIVITIES.—Challenge grants under
this subsection shall be limited to activities and projects
which—
‘‘(1) spur community economic revitalization in
low-income areas, including—
‘‘(A) projects which clean up brownfields
and other environmentally deteriorated areas
for which funds can be used under section
105(a)(4), and
‘‘(B) projects and activities that serve as a
catalyst for new investment and development in
nearby areas, and create jobs for neighborhood
residents; and
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‘‘(2) link low-income persons to job opportuni-
ties, including job training, education, transpor-
tation, and child care.
‘‘(e) SELECTION CRITERIA.—The Secretary shall
award grants under this section pursuant to a competition
in which the following selection criteria shall be used—
‘‘(1) the grantee’s performance in expending
funds in a timely manner;
‘‘(2) the extent to which the grantee has met or
exceeded the performance measures and benchmarks
established in its consolidated plan, and the extent
to which those measures and benchmarks were ambi-
tious compared to those of other comparable juris-
dictions;
‘‘(3) the extent of low-income targeting by the
grantee, with particular emphasis on job creation for
persons of low-income;
‘‘(4) the extent to which the grantee applies
and leverages its community development grants to
job creation and to implementing neighborhood in-
vestment strategies to revitalize distressed neighbor-
hoods;
‘‘(5) the extent to which the jurisdiction uses
the challenge grant to gain access to regional re-
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‘‘(5) STATES AND UNITS OF GENERAL LOCAL
GOVERNMENT.—After 
reserving 
amounts 
under
paragraphs (1) through (4), the Secretary shall allo-
cate funds approved in an appropriations Act to
carry out this title pursuant to the first sentence of
section 205 by formula as provided in subsection (b).
Of the funds made available under the preceding
sentence, the Secretary shall initially allocate 60 per-
cent among units of general local government and
40 percent among States.’’.
(b) CRITERIA FOR DIRECT REALLOCATION.—Section
217 of such Act is amended by striking subsection (c) and
redesignating subsection (d) as subsection (c).
(c) REALLOCATIONS.—Section 217(c) of such Act, as
redesignated by subsection (b), is amended—
(1) by striking paragraph (1) and redesignating
the remaining paragraphs accordingly; and
(2) by amending paragraph (2), as redesig-
nated, to read as follows:
‘‘(2) LIMITATION.—Unless otherwise specified
in this subtitle, any funds from a State which are
added to the challenge grant fund shall be awarded
only to participating States, and any funds added to
such fund from units of general local government