I 
109TH CONGRESS 
1ST SESSION H. R. 1311
To provide for the construction and renovation of child care facilities, and 
for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
MARCH 15, 2005
Mrs. MCCARTHY (for herself and Ms. ROS-LEHTINEN) 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 (24), by striking ‘‘and’’ at the 
end; 
(2) in paragraph (25), by striking the period at 
the end and inserting ‘‘; and’’; and 
(3) 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’ in-
cludes—
‘‘(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 mort-
gage’—
‘‘(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
that interfere with the ability of the mortgagor 
and mortgagee to determine the interest rate. 
‘‘(5) RELEASE.—The Secretary may consent to 
the release of a part or parts of the mortgaged prop-
erty or project from the lien of any mortgage in-
sured under this section upon such terms and condi-
tions as the Secretary may prescribe. 
‘‘(6) MORTGAGE
INSURANCE
TERMS.—Sub-
sections (d), (e), (g), (h), (i), (j), (k), (l), and (n) of 
section 207 apply to any mortgage insured under 
this section, except that all references in such sub-
sections to section 207 shall be construed, for pur-
poses of mortgage insurance under this section, to 
refer to this section. 
‘‘(d) MORTGAGE INSURANCE
FOR FIRE SAFETY 
EQUIPMENT LOANS.—
‘‘(1) AUTHORITY.—The Secretary may, upon 
such terms and conditions as the Secretary may pre-
scribe, make commitments to insure and insure 
loans made by financial institutions or other ap-
proved mortgagees to child care facilities to provide 
for the purchase and installation of fire safety equip-
ment necessary for compliance with the 1967 edition 
of the Life Safety Code of the National Fire Protec-
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.
‘‘(3) INSURANCE REQUIREMENTS.—
‘‘(A) SECTION
2.—Subsections (c), (d), 
and (h) of section 2 shall apply to any loan in-
sured under this subsection, except that all ref-
erences in such subsections to ‘this section’ or 
‘this title’ shall be construed, for purposes of 
this subsection, to refer to this subsection. 
‘‘(B) SECTION 220.—Paragraphs (5), (6), 
(7), (9), and (10) of section 220(h) shall apply 
to any loan insured under this subsection, ex-
cept that all references in such paragraphs to 
home improvement loans shall be construed, for 
purposes of this subsection, to refer to loans 
under this subsection. 
‘‘(e) SCHEDULES AND DEADLINES.—The Secretary 
shall establish schedules and deadlines for the processing 
and approval (or provision of notice of disapproval) of ap-
plications for mortgage insurance under this section. 
‘‘(f) LIMITATION ON INSURANCE AUTHORITY.—
‘‘(1) TERMINATION.—No mortgage may be in-
sured under this section or section 223(h) after Sep-
tember 30, 2007, except pursuant to a commitment 
to insure issued on or before such date. 
‘‘(2) AGGREGATE PRINCIPAL AMOUNT LIMITA-
TION.—
‘‘(A) IN GENERAL.—The aggregate prin-
cipal amount of mortgages for which the Sec-
retary enters into commitments to insure under 
this section or section 223(h) on or before the 
date described in paragraph (1) may not exceed 
$2,000,000,000. 
‘‘(B) REPORT.—If, on the date described 
in paragraph (1), the aggregate insurance au-
thority provided under this paragraph has not 
been fully used, the Secretary of the Treasury 
shall submit to Congress a report evaluating the 
need for continued mortgage insurance under 
this section. 
‘‘(g) NONDISCRIMINATION REQUIREMENT.—
‘‘(1) IN GENERAL.—A child care facility receiv-
ing assistance under this title may not discriminate 
on the basis of race, color, or national origin (to the 
extent provided in title VI of the Civil Rights Act of 
1964 (42 U.S.C. 2000d et seq.)), religion (subject to 
subparagraph (B)), national origin, sex (to the ex-
tent provided in title IX of the Education Amend-
ments of 1972 (20 U.S.C. 1681 et seq.)), or dis-
ability (to the extent provided in section 504 of the 
Rehabilitation Act of 1973 (29 U.S.C. 794)), under
any program or activity receiving Federal financial 
assistance under this title. 
‘‘(2) FACILITIES
OF
RELIGIOUS
ORGANIZA-
TIONS.—The prohibition with respect to religion 
under paragraph (1) shall not apply to a child care 
facility that is controlled by, or that is closely identi-
fied with, the tenets of a particular religious organi-
zation, if the application of this paragraph would not 
be consistent with the religious tenets of such orga-
nization. 
‘‘(h) LIABILITY INSURANCE.—A child care provider 
operating a child care facility assisted under this section 
or section 223(h) shall obtain and maintain liability insur-
ance in such amounts and subject to such requirements 
as the Secretary considers to be appropriate. 
‘‘(i) SMALL PURPOSE LOANS.—
‘‘(1) IN GENERAL.—To the extent that amounts 
are made available pursuant to subsection (l), the 
Secretary shall make loans, directly or indirectly, to 
providers of child care facilities for reconstruction or 
renovation of such facilities, in accordance with this 
subsection. 
‘‘(2) REQUIREMENTS.—A loan under this sub-
section—
‘‘(A) may be made only for a child care fa-
cility that is financially and operationally viable, 
as determined under standards established by 
the Secretary; 
‘‘(B) may not have a term to maturity ex-
ceeding 7 years; 
‘‘(C) shall bear interest at a rate estab-
lished by the Secretary; and 
‘‘(D) shall be subject to such other terms 
and conditions as the Secretary may establish 
by regulation. 
‘‘(3) AGGREGATE LOAN AMOUNT.—The aggre-
gate amount of loans under this subsection to a sin-
gle provider may not exceed $30,000. 
‘‘(j) NOTIFICATION.—The Secretary shall take such 
actions as may be necessary to publicize the availability 
of the programs for mortgage insurance under this section 
and section 223(h), and the loan program under sub-
section (i) of this section, in a manner that ensures that 
information concerning such programs will be available to 
child care providers throughout the United States. 
‘‘(k) REGULATIONS.—The Secretary shall—
‘‘(1) issue any regulations necessary to carry 
out this section; and
‘‘(2) in carrying out paragraph (1), consult with 
the Secretary of Health and Human Services with 
respect to any aspects of the regulations regarding 
child care facilities. 
‘‘(l) AUTHORIZATION OF APPROPRIATIONS.—There is 
authorized to be appropriated to carry out this section 
$30,000,000 for fiscal year 2006, to remain available until 
expended, of which not more than 10 percent may be used 
for loans under subsection (i).’’. 
SEC. 4. INSURANCE FOR MORTGAGES FOR ACQUISITION OR 
REFINANCING DEBT OF EXISTING CHILD 
CARE FACILITIES. 
(a) IN GENERAL.—Section 223 of the National 
Housing Act (12 U.S.C. 1715n) is amended by adding at 
the end the following: 
‘‘(h) MORTGAGE INSURANCE FOR PURCHASE OR RE-
FINANCING OF EXISTING CHILD CARE FACILITIES.—
‘‘(1) DEFINITIONS.—In this subsection, the 
terms that are defined in section 257(a) have the 
same meanings as in that section. 
‘‘(2) AUTHORITY.—Notwithstanding any other 
provision of this Act, the Secretary may insure 
under any section of this title a mortgage executed 
in connection with—
‘‘(A) the purchase or refinancing of an ex-
isting child care facility; 
‘‘(B) the purchase of a structure to serve 
as a child care facility; or 
‘‘(C) the refinancing of existing debt of an 
existing child care facility. 
‘‘(3) PURCHASE OF EXISTING FACILITIES AND 
STRUCTURES.—In the case of the purchase under 
this subsection of an existing child care facility or 
purchase of an existing structure to serve as such a 
facility, the Secretary shall prescribe any terms and 
conditions that the Secretary considers necessary to 
ensure that—
‘‘(A) the facility or structure purchased 
continues to be used as a child care facility; and 
‘‘(B) the facility receives a certification of 
compliance under section 258(c). 
‘‘(4) REFINANCING OF EXISTING FACILITIES.—
In the case of refinancing of an existing child care 
facility, the Secretary shall prescribe any terms and 
conditions that the Secretary considers necessary to 
ensure that—
‘‘(A) the refinancing is used to lower the 
monthly debt service costs (taking into account
any fees or charges connected with such refi-
nancing) of the existing facility; 
‘‘(B) the proceeds of any refinancing will 
be employed only to retire the existing indebted-
ness and pay the necessary cost of refinancing 
on the existing facility; 
‘‘(C) the existing facility is economically 
viable; and 
‘‘(D) the facility receives a certification of 
compliance under section 258(c). 
‘‘(5) LIMITATION ON INSURANCE AUTHORITY.—
The authority of the Secretary to enter into commit-
ments to insure mortgages under this subsection is 
subject to section 257(f).’’. 
SEC. 5. STUDY OF AVAILABILITY OF SECONDARY MARKETS 
FOR MORTGAGES ON CHILD CARE FACILI-
TIES. 
(a) STUDY.—The Secretary of the Treasury shall 
conduct a study of the secondary mortgage markets to de-
termine—
(1) whether such a market exists for purchase 
of mortgages eligible for insurance under sections 
223(h) and 257 of the National Housing Act (as 
added by this Act);
(2) whether such a market would affect the 
availability of credit available for development of 
child care facilities or would lower development costs 
of such facilities; and 
(3) the extent to which such a market or other 
activities to provide credit enhancement for loans for 
child care facilities is needed to meet the demand for 
such facilities. 
(b) REPORT.—Not later than 2 years after the date 
of enactment of this Act, the Secretary of the Treasury 
shall submit to Congress a report regarding the results 
of the study conducted under this section. 
SEC. 6. TECHNICAL AND FINANCIAL ASSISTANCE GRANTS. 
(a) DEFINITIONS.—In this section: 
(1) CHILD CARE FACILITY.—The term ‘‘child 
care facility’’ has the meaning given that term in 
section 257(a) of the National Housing Act, as 
added by section 3. 
(2) ELIGIBLE INTERMEDIARY.—The term ‘‘eli-
gible intermediary’’ means a intermediary organiza-
tion that—
(A) is described in section 501(c)(3) of the 
Internal Revenue Code of 1986; 
(B) is exempt from taxation under section 
501(a) of such Code; and
(C) has demonstrated experience in—
(i) financing the construction and ren-
ovation of physical facilities; 
(ii) providing technical and financial 
assistance to child care providers or other 
similar entities; 
(iii) working with businesses (whether 
small or large); and 
(iv) securing private sources for cap-
ital financing; and 
(3) ELIGIBLE RECIPIENT.—The term ‘‘eligible 
recipient’’ means any—
(A) existing or start-up center-based or 
home-based child care provider; and 
(B) organization in the process of estab-
lishing a center-based or home-based child care 
program or otherwise seeking to provide child 
care services. 
(4) EQUIPMENT.—The term ‘‘equipment’’ has 
the meaning given that term in section 257(a) of the 
National Housing Act, as added by section 3. 
(b) GRANT AUTHORITY.—The Secretary of Housing 
and Urban Development, in consultation with the Sec-
retary of Health and Human Services, may award grants 
on a competitive basis in accordance with this section to
eligible intermediaries for use in accordance with sub-
sections (e) and (f). 
(c) APPLICATIONS.—To be eligible to receive a grant 
under this section an eligible intermediary shall submit to 
the Secretary an application, in such form and containing 
such information as the Secretary may require. 
(d) PRIORITY.—In awarding grants under this sec-
tion the Secretary shall give a priority to applicants under 
subsection (c) that serve low-income or rural areas. 
(e) USE OF FUNDS.—
(1) REVOLVING
LOAN
FUND.—Each eligible 
intermediary that receives a grant under this section 
shall deposit the grant amount into a child care re-
volving loan fund established by the eligible inter-
mediary. 
(2) ELIGIBLE
ASSISTANCE.—Subject to sub-
section (f), from amounts deposited into the revolv-
ing loan fund under paragraph (1), each eligible 
intermediary shall provide to eligible recipients—
(A) financial assistance (in the form of 
loans, grants, investments, guarantees, interest 
subsidies, and other appropriate forms of assist-
ance) for the construction of new child care fa-
cilities, child care facility planning, and acquisi-
tion or improvement of child care facilities or 
equipment; and 
(B) technical assistance in obtaining public 
or private financing for such construction, plan-
ning, acquisition, and improvement, including 
developing and implementing financing re-
sources, options, and plans for such eligible re-
cipients. 
(3) LOAN REPAYMENTS AND INVESTMENT PRO-
CEEDS.—Any amount received by an eligible inter-
mediary from an eligible recipient in the form of 
loan principal repayment or investment proceeds 
shall be deposited into the child care revolving fund 
of the eligible intermediary for redistribution to 
other eligible recipients in accordance with this sec-
tion. 
(f) ALLOCATION OF FUNDS.—Of the amounts dis-
tributed from the revolving loan fund of an eligible inter-
mediary under subsection (e)(2) in each fiscal year—
(1) not less than 50 percent shall be used for 
financial assistance pursuant to subparagraph (A) of 
subsection (e)(2), except that the amount made 
available to any eligible recipient under this para-
graph may not exceed 40 percent of the total costs 
incurred by that eligible recipient in connection with
the construction, planning, acquisition, or improve-
ment assisted; and 
(2) the amount remaining after distribution 
under paragraph (1), shall be used to provide tech-
nical assistance pursuant to subparagraph (B) of 
subsection (e)(2). 
(g) DAVIS BACON ACT.—The Act of March 3, 1931 
(popularly known as the Davis-Bacon Act) shall apply to 
actions taken under this Act. 
(h) AUTHORIZATION OF APPROPRIATIONS.—There is 
authorized to be appropriated to carry out this section 
$10,000,000 for each of fiscal years 2006 through 2010.
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