I
103D CONGRESS
2D SESSION
H. R. 4579
To amend title V of the Housing Act of 1949 to make necessary reforms
to the section 515 Rural Housing Program.
IN THE HOUSE OF REPRESENTATIVES
JUNE 14, 1994
Mrs. CLAYTON (for herself, Mr. CLYBURN, and Mr. THOMPSON of Mississippi)
introduced the following bill; which was referred jointly to the Committees
on Banking, Finance and Urban Affairs and Ways and Means
A BILL
To amend title V of the Housing Act of 1949 to make
necessary reforms to the section 515 Rural Housing
Program.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. This Act may be cited as the ‘‘Section
515 Rural Housing Reform’’.
SEC. 101. Title V of the Housing Act of 1949 (42
U.S.C. 1471 et seq.) is amended:
(a) Section 502(c)(1) is amended by adding a
new paragraph (C) to read as follows:
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‘‘(C) Effective May 26, 1994, the Sec-
retary may not accept an offer to prepay, or re-
quest refinancing in accordance with subsection
(b)(3) of, any loan made or insured under sec-
tion 515 pursuant to a contract entered into be-
fore the enactment of the Department of Hous-
ing and Urban Development Reform Act of
1989 for a period of not less than two years
from the date of enactment of the Housing and
Community Development Act of 1994.
‘‘(D) The Secretary shall conduct either di-
rectly or through a contract an independent as-
sessment of rural housing preservation provi-
sions. 
Such 
assessment, 
along 
with 
rec-
ommendations of changes in law and regulation
shall be submitted to relevant committees of the
Congress by May 31, 1996.’’.
(b) Section 502(c)(4)(C) is amended by revising
it to read as follows:
‘‘(C) APPROVAL
OF
ASSISTANCE.—The
Secretary may approve assistance under sub-
paragraph (B) only if the restrictive period has
expired for any loan made or insured under sec-
tion 514 or 515 of this title pursuant to a con-
tract entered into after December 21, 1979, but
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before the date of enactment of the Department
of Housing and Urban Development Reform
Act of 1989 and the Secretary determines that
the combination of assistance provided.’’.
SEC. 201. Title V of the Housing Act of 1949 (42
U.S.C. 1471 et seq.) is amended:
(a) Section 515(a)(2) is amended to change
‘‘fifty’’ to read ‘‘thirty’’.
(b) Section 515(b)(2) is amended to read ‘‘pro-
vide for amortization as if the term of the loan was
for a period of not to exceed fifty years and may
allow for a balloon payment at the end of the term
of the loan. Such loan may be, in the discretion of
the Secretary, rescheduled for a period not to exceed
fifty years from the date of the original loan. The
amount of the unpaid principal and interest of the
prior loan rescheduled shall not create a new charge
against any loan levels authorized by law.’’
SEC. 301. Title V of the Housing Act of 1949 (42
U.S.C. 1471 et seq.) is amended: Section 515(t) is amend-
ed by deleting paragraphs (4) and (5) and renumbering
paragraphs (6), (7), and (8) as paragraphs (4), (5), and
(6) respectively.
SEC. 401. Title V of the Housing Act of 1949 (U.S.C.
1471 et seq.) is amended: Section 510(d)(1) is amended
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to read ‘‘prosecution and defense of any litigation under
sections 515 shall be conducted, at the discretion of the
Secretary, by’’.
SEC. 501. Section 6103(1)(7) of the Internal Reve-
nue Code of 1986 is amended by adding a new subpara-
graph (x) to read ‘‘(x) any housing assistance program
administered by the Department of Agriculture that in-
volves initial and periodic review of an applicant’s or par-
ticipant’s income and only for use by officers and employ-
ees of the Department of Agriculture with respect to the
applicants and participants in such programs.’’.
SEC. 601. Section 536 of the Housing Act (42 U.S.C.
1471 et seq.) is amended by redesignating paragraphs (d),
(e), (f), (g), (h), and (i) as paragraphs (e), (f), (g), (h),
(i), and (j) respectively, adding a new paragraph (d), and
amending the last sentence of redesignated paragraph (g)
to read as follows:
‘‘(d) SUBSIDY LAYERING.—The Secretary is author-
ized to establish a process for evaluating assistance pro-
vided under this title to ensure that excess assistance is
not provided. In conducting such an evaluation, the Sec-
retary shall utilize information received under paragraphs
(b) and (c) of this section. To the extent practicable, the
Secretary is authorized to make use of procedures, policies
and regulations currently in use by the Department of
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Housing and Urban Development and may, to the extent
practicable, develop memoranda of understanding with
State housing agencies to implement the provisions of this
section.
‘‘(g) 
LIMITATION
OF
ASSISTANCE.—
* * * Notwithstanding the provisions of section 515(r),
the Secretary may decrease the amount of assistance pro-
vided under this title if he/she determines that other as-
sistance reported under paragraphs (b) and (c) will pro-
vide excess assistance and/or profits to the recipient.’’.
SEC. 701. Section 509(f) of the Housing Act of 1949
(U.S.C. 1471 et seq.), is amended to read as follows:
‘‘(f) UNDERSERVED HOUSING.—
‘‘(1) DESIGNATION OF UNDERSERVED AREA.—
The Secretary shall designate as targeted under-
served areas 100 counties and communities in each
fiscal year that have severe, unmet housing needs as
determined by the Secretary. A county or commu-
nity shall be eligible for designation if, during the 5-
year period preceding the year in which the designa-
tion is made, it has received an average amount of
assistance that is substantially lower than the aver-
age annual amount of assistance received during
that 5-year period by other counties and commu-
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nities in the State that are eligible for such assist-
ance calculated on a per capita basis, and has—
‘‘(A) 15 percent or more of its population
at or below the poverty level; and
‘‘(B) 5 percent of its population residing in
substandard housing.
As used in this paragraph, the term ‘poverty level’
has the meaning given the term in section 102(a)(9)
of the Housing and Community Development Act of
1974.
‘‘(2) PREFERENCES.—In selecting projects to
receive assistance with amounts set aside under
paragraph (6), the Secretary shall give preference to
any project located in a county or community that
has, at the time of designation and as determined by
the Secretary—
‘‘(A) 20 percent or more of its population
at or below poverty level; and
‘‘(B) 7 percent or more of its population
residing in substandard housing.
In designating underserved areas under paragraph
(1), in each fiscal year the Secretary shall designate
not less than 5 counties or communities that contain
tribal allotted or Indian trust land. In designating
underserved areas under paragraph (1), the Sec-
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procedure to reallocate any assistance set aside
in any fiscal year for targeted underserved
areas that has not been expended during a rea-
sonable period in such year for use in (i)
colonias that have applied for and are eligible
for assistance under subparagraph (B) or para-
graph (9) and did not receive assistance, and
(ii) counties and communities eligible for des-
ignation as targeted underserved areas but
which were not designated. The procedure shall
also provide that any assistance reallocated
under the preceding sentence that has not been
expended by a reasonable date established by
the Secretary (which shall be after the expira-
tion of the period referred to in the preceding
sentence) shall be made available and allocated
under the laws and regulations relating to such
assistance, notwithstanding this subsection.
‘‘(B) LENGTH OF DESIGNATION.—In des-
ignating underserved areas under paragraph
(1), each such area shall remain designated for
a period of two years; except for counties which
contain tribal allotted or Indian trust land
which shall remain designated for three years.
‘‘(C) PRIORITY FOR COLONIAS.—
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‘‘(i) Notwithstanding the designation
of counties and communities as targeted
underserved areas under paragraph (1)
and the provisions of section 520, colonias
shall 
be 
eligible 
for 
assistance 
with
amounts reserved under subparagraph (A),
as provided in this subparagraph.
‘‘(ii) In providing assistance from
amounts reserved under this paragraph in
each fiscal year, the Secretary shall give
priority to any application for assistance to
be used in, or in close proximity to, and
serving the residents of, a colonia located
in a State described under clause (iii).
After the Secretary has provided assistance
under the priority for colonias located in a
State in amount equal to 10 percent of the
total amount of assistance allocated under
this title to such State in the fiscal year or
an average size loan, whichever is greater,
the priority shall not apply to any applica-
tions for colonias in such State.
‘‘(iii) This paragraph shall apply to
any State for the total amount of assist-
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ance allocated to it under this title during
each of such 2 fiscal years.
‘‘(7) LIST OF UNDERSERVED AREAS.—The Sec-
retary shall publish annually the current list of tar-
geted underserved areas in the Federal Register.
‘‘(8) PROJECT PREPARATION ASSISTANCE.—
‘‘(A) IN
GENERAL.—The Secretary shall
make grants to eligible applicants under sub-
paragraph (D) to promote the development of
affordable housing in targeted underserved
areas and colonias.
‘‘(B) USE.—A grant under this subpara-
graph shall not exceed an amount that the Sec-
retary determines equal to the customary and
reasonable costs incurred in preparing an appli-
cation for a loan or a grant under section 502,
504, 514, 515, or 524 or a grant under section
516 or 533 (including preapplication planning,
site analysis, market analysis and other nec-
essary technical assistance). The Secretary shall
adjust the loan or grant amount under such
sections to take account of project preparation
costs that have been paid from grant proceeds
under this paragraph and that normally would
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be reimbursed with proceeds of the loan or
grant.
‘‘(C) APPROVAL.—The Secretary shall ap-
prove a properly submitted application or issue
a written statement indicating the reasons for
disapproval not later than 60 days after receipt
of the application.
‘‘(D) ELIGIBILITY.—For purpose of this
paragraph, an eligible applicant may be a non-
profit organization or corporation, a community
housing development organization, State, unit if
general local government, or agency of a State
or unit of general local government.
‘‘(E) AVAILABILITY
OF
FUNDING.—Any
amounts appropriate to carry out this para-
graph shall remain available until expended.
‘‘(9) PRIORITY FOR COLONIAS.—
‘‘(A) IN
GENERAL.—In providing assist-
ance under this title in any fiscal year described
under paragraph (B), each State in which
colonias are located shall give priority to any
applications for assistance to be used in a
colonia. The priority under this subparagraph
shall not apply in such State after 5 percent of
the assistance available in such fiscal year has
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been allocated for colonias qualifying for the
priority.
‘‘(B) COVERED
YEARS.—This paragraph
shall apply to any fiscal year following 2 fiscal
years in which the State did not obligate the
total amount of assistance allocated it under
this title during each of such 2 fiscal years.
‘‘(10) DEFINITION OF COLONIA.—For purposes
of this subsection, the term ‘colonia’ means any
identifiable community that—
‘‘(A) is in the State of Arizona, California,
New Mexico or Texas;
‘‘(B) is in the area of the United States
within 150 miles of the border between United
States and Mexico, except that the term does
not include any standard metropolitan statis-
tical areas that has a population exceeding
1,000,000;
‘‘(C) is determined to be a colonia on the
basis of objective criteria, including lack of po-
table water supply, lack of adequate sewage sys-
tems, and lack of decent, safe, and sanitary
housing; and
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‘‘(D) was in existence as a colonia before
the date of enactment of the Cranston-Gonzalez
National Affordable Housing Act.’’.
SEC. 801. Section 515(s) of the Housing Act of 1949
(U.S.C. 1471 et seq.), is amended to read as follows:
‘‘(s) No fee other than a late fee or reasonable appli-
cation fee not to exceed one-half of one percent of the pro-
posed mortgage amount, may be imposed by or for the
Secretary or any other Federal agency on or with respect
to a loan made or insured under this section. Such applica-
tion fee will be used, in part, to defray the cost of profes-
sional market studies obtained by the Secretary to deter-
mine market feasibility. Such application fee may be
waived for non-profit applicants which are not receiving
any tax credit benefits under section 42 of the Internal
Revenue Code.’’.
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