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sources and to address regional economic revitaliza-
tion problems;
‘‘(6) the extent to which proposed activities or
projects link low-income residents of distressed areas
with job opportunities that will enable them to enter
the mainstream regional economy;
‘‘(7) the extent of leveraging of other public and
private resources, including loan guarantees under
section 108;
‘‘(8) the extent to which the grantee has met or
exceeded its performance measures and benchmarks
established in its consolidated plan for other per-
formance funds under programs of the Secretary;
‘‘(9) the extent to which the submission speci-
fies ambitious and realistic performance measures
and benchmarks for determining the success of the
challenge grant proposal; and
‘‘(10) such other factors as the Secretary deter-
mines appropriate to achieve the objectives of this
section.
‘‘(f) 
COMPLIANCE
WITH
PROGRAM
REQUIRE-
MENTS.—For all or a portion of a grant under this sec-
tion, the Secretary may condition use of the grant, reduce
the amount of the grant, or cancel the grant, based on
whether the grantee has made measurable, objective
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progress in meeting the performance measures and bench-
marks established in the consolidated plan and has com-
plied with the requirements of the performance agreement
entered into under this section.’’.
SEC. 19. REPORTING REQUIREMENTS.
Section 113 of the Housing and Community Develop-
ment Act of 1974 is amended to read as follows:
‘‘REPORTING REQUIREMENTS
‘‘SEC. 113. The Secretary is authorized to require re-
cipients of assistance under this title to submit such re-
ports and other information as the Secretary determines
appropriate to carry out the responsibilities of the Sec-
retary under this title.’’.
SEC. 20. TERMINATION OF EXISTING PROGRAMS.
(a) IN GENERAL.—The following provisions of law
are repealed:
(1) Subtitle D of title IV of the Cranston-Gon-
zalez National Affordable Housing Act, effective on
October 1, 1997.
(2) Section 222 of the Housing and Urban-
Rural Recovery Act of 1983, effective on the date of
enactment of this Act.
(3) Section 123 of the Housing and Urban-
Rural Recovery Act of 1983, effective on the date of
enactment of this Act.
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(b) AUTHORITY TO PROVIDE ASSISTANCE.—On and
after the effective date of such repeal, the Secretary may
not make assistance available under any of the authorities
listed in subsection (a) (as they existed immediately before
such effective date), except pursuant to a legally binding
commitment entered into before that date.
(c) LAW GOVERNING.—Any amounts made available
under any authority listed in subsection (a) before such
effective date shall continue to be governed by the provi-
sions of such authority, as they existed immediately before
that date, except that each grantee may, in its discretion
pursuant to procedures established by the Secretary, pro-
vide for the use, in accordance with the provisions of title
I of the Housing and Community Development Act of
1974, of any such amounts that it has not obligated under
such authority.
(d) STATUS OF FUNDS.—Any amounts appropriated
under any authority listed in subsection (a) before such
effective date that are available for obligation immediately
before such date, or that become available for obligation
on or after that date, shall be transferred and added to
the amounts appropriated for title I of the Housing and
Community Development Act of 1974 and shall thereafter
be available for use in accordance with its provisions. Any
amounts so transferred shall remain available for obliga-
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tion only for the time periods for which such respective
amounts were available before such transfer.
Subtitle B—Home Performance Fund
SEC. 21. DEFINITIONS; FINDINGS AND PURPOSES; PRO-
GRAM ADMINISTRATION.
(a) DEFINITIONS.—Section 104 of the Cranston-
Gonzalez National Affordable Housing Act is amended by
inserting at the end the following new paragraph:
‘‘(26) 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 this title;
‘‘(B) the community development plan
under section 104 of the Housing and Commu-
nity Development Act of 1974; and
‘‘(C) the submission requirements for for-
mula funding under—
‘‘(i) the Community Development
Block Grant Performance Fund (author-
ized by title I of the Housing and Commu-
nity Development Act of 1974, as amended
by the Community Development Block
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Grant Performance Fund and HOME Per-
formance Fund Act of 1996);
‘‘(ii) the HOME Performance Fund
(authorized by title II of this Act);
‘‘(iii) the Homeless Assistance Per-
formance Fund (authorized by title IV of
the Stewart B. McKinney Homeless Assist-
ance Act, as amended by the Homeless As-
sistance Performance Fund Act of 1996);
and
‘‘(iv) the AIDS Housing Opportunity
Act (authorized by subtitle D of title VIII
of this 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.’’.
(b) FINDINGS AND PURPOSES.—
(1) Section 203 of such Act is amended by in-
serting after paragraph (2) the following new para-
graphs, and redesignating the remaining paragraphs
accordingly:
‘‘(3) to enhance performance-based accountabil-
ity of States and localities consistent with the pur-
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poses of this title and to reward them with challenge
grants and other benefits for their successes;
‘‘(4) to assist State and local governments in
providing housing for persons with special needs, in-
cluding persons with disabilities and the frail elderly,
to help these individuals live with dignity and inde-
pendence in their communities;’’.
(2) Section 203(8) of such Act, as redesignated,
is amended to read as follows:
‘‘(8) to expand the capacity of community hous-
ing development organizations and other nonprofit
organizations to develop and manage decent, safe,
sanitary, and affordable housing;’’.
(c) PROGRAM ADMINISTRATION.—Section 204 of
such Act is amended by striking ‘‘through the Office of
the Assistant Secretary for Housing—FHA Commissioner
of the Department of Housing and Urban Development,’’.
SEC. 22. AMENDMENTS TO THE COMPREHENSIVE HOUSING
AFFORDABILITY STRATEGY.
Section 105(b) of such Act is amended—
(1) in paragraph (16), the first place it ap-
pears, by striking the period and inserting a semi-
colon;
(2) in paragraph (16), the second place it ap-
pears—
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(A) by redesignating such paragraph as
paragraph (17); and
(B) by striking ‘‘and’’ at the end;
(3) by moving the flush material that follows
paragraph (17), as redesignated, to the end of such
subsection;
(4) by striking ‘‘(17) for’’ and inserting ‘‘(18)
for’’;
(5) in paragraph (18), as redesignated, by
striking ‘‘and’’ at the end;
(6) by striking ‘‘(17) describe’’ and inserting
‘‘(19) describe’’;
(7) by striking the period at the end of para-
graph (19), as redesignated, and inserting a semi-
colon; and
(8) by adding at the end the following new
paragraphs:
‘‘(20) include specific performance measures
and benchmarks provided by the jurisdiction in de-
veloping the consolidated plan (the Secretary shall
work with jurisdictions to develop benchmarks and
measures that can enable performance to be com-
pared among jurisdictions); and
‘‘(21) include other information or strategies as
may be specified by the Secretary.’’.
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SEC. 23. AUTHORIZATION.
Section 205 of such Act is amended to read as fol-
lows:
‘‘SEC. 205. AUTHORIZATION.
‘‘There are authorized to be appropriated to carry out
this title $1,400,000,000 for fiscal year 1997 and such
amounts as may be necessary for fiscal years 1998, 1999,
and 2000. In addition, for purposes of assistance under
section 223(c), there are authorized to be appropriated
$150,000,000 for fiscal year 1997 and such sums as may
be necessary for fiscal years 1998, 1999, and 2000.’’.
SEC. 24. ELIGIBLE USES OF INVESTMENT.
Section 212(a) of such Act is amended—
(1) by redesignating paragraph (5) as para-
graph (4); and
(2) in paragraph (4), as redesignated, by insert-
ing before the period the following: ‘‘, including
blood-lead level testing of children residing in hous-
ing assisted under this title, and for the education
of the public on the nature and causes of lead poi-
soning and measures to reduce exposure to lead, in-
cluding exposure due to residential lead-based paint
hazards’’.
SEC. 25. INCOME TARGETING.
Section 214 of such Act is amended—
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(1) in paragraph (1)(A), by striking ‘‘at the
time of occupancy or at the time funds are invested,
whichever is later,’’; and
(2) in paragraph (2), by striking ‘‘at the time
of occupancy or at the time funds are invested,
whichever is later’’.
SEC. 26. QUALIFICATION AS AFFORDABLE HOUSING.
Section 215 of such Act is amended—
(1) in subsection (a)(1)(B), by inserting ‘‘or
local’’ after ‘‘State’’; and
(2) by adding the following new subsection:
‘‘(c) EXCEPTION
TO GENERAL REQUIREMENTS.—
The Secretary may modify the qualifying rental housing
requirements and the qualifying homeownership require-
ments under subsections (a) and (b) for housing author-
ized under section 214(c).’’.
SEC. 27. REALLOCATION.
Section 216 of such Act is amended—
(1) by striking paragraph (5) and redesignating
the remaining paragraphs accordingly;
(2) in paragraph (5), as redesignated—
(A) by striking ‘‘previous 3 paragraphs’’
and inserting ‘‘previous 2 paragraphs’’;
(B) by striking subparagraph (A)(ii) and
inserting the following:
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‘‘(ii) add the remainder to the challenge
grant fund under section 223(c).’’;
(C) by striking subparagraph (C)(ii) and
inserting the following:
‘‘(ii) add the remainder to the challenge
grant fund under section 223(c).’’; and
(D) in subparagraph (D), by striking
‘‘paragraphs (3), (4), and (5)’’ and inserting
‘‘paragraphs (3) and (4)’’;
(3) in paragraph (7), as redesignated—
(A) in the first sentence, by striking
‘‘paragraph (9)’’ and inserting ‘‘paragraph
(8)’’; and
(B) in the second sentence, by striking
‘‘paragraphs (3) through (6)’’ and inserting
‘‘paragraphs (3) through (5)’’;
(4) in paragraph (8), as redesignated—
(A) in the first sentence, by striking
‘‘paragraph (10)’’ and inserting ‘‘paragraph
(9)’’; and
(B) in the second sentence, by striking
‘‘paragraph (6)’’ and inserting ‘‘paragraph
(5)’’; and
(5) in paragraph (9), as redesignated, by strik-
ing ‘‘paragraph (9)’’ and inserting ‘‘paragraph (8)’’.
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SEC. 28. ALLOCATION OF RESOURCES.
(a) IN GENERAL.—Section 217(a) of such Act is
amended to read as follows:
‘‘(a) IN GENERAL.—
‘‘(1) INDIAN
ALLOCATION.—For each fiscal
year, the Secretary shall reserve for grants to Indian
tribes 1.5 percent of the amounts approved in an ap-
propriations Act to carry out this title pursuant to
the first sentence of section 205. The Secretary shall
provide for distribution of amounts under this para-
graph to Indian tribes on the basis of a competition
conducted pursuant to specific criteria, established
by the Secretary, for the selection of Indian tribes
to receive such amounts. The Secretary may also re-
serve up to 1.5 percent of the total amount available
under section 242 for any fiscal year for capacity
building for Indian tribes in accordance with section
242.
‘‘(2) INSULAR AREAS.—For each fiscal year, of
the amounts approved in an appropriations Act to
carry out this title pursuant to the first sentence of
section 205, the Secretary shall reserve for grants to
the Insular areas the greater of (A) $750,000, or
(B) 0.2 percent of the amounts appropriated. The
Secretary shall provide for the distribution of
amounts reserved under this paragraph among the
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Insular areas pursuant to specific criteria, estab-
lished by the Secretary, for such distribution.
‘‘(3) CAPACITY BUILDING AND OTHER ASSIST-
ANCE.—For each fiscal year, of the amount ap-
proved in an appropriations Act to carry out this
title pursuant to the first sentence of section 205—
‘‘(A) the greater of 2.5 percent of the
funds or $38,000,000 may be used for assist-
ance authorized under sections 233, 242, and
244 (a), and (c), and (d);
‘‘(B) up to 0.5 percent of the funds, but
not less than $7,000,000 shall be available for
the development and operation of management
information systems authorized under section
244(b); and
‘‘(C) beginning in fiscal year 1998, up to
$10,000,000 may be used for assistance for
childhood lead poisoning prevention activities
authorized under section 244(e).
‘‘(4) LOAN GUARANTEES.—For each fiscal year,
such amounts as may be necessary for the cost to
the Government, as defined in section 502 of the
Congressional Budget Act, of guaranteed loans
under section 227 shall be taken from funds appro-
priated to carry out this title.
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shall be awarded only to participating units of gen-
eral local government.’’.
SEC. 29. HOME INVESTMENT TRUST FUNDS.
(a) LINE OF CREDIT.—Section 218(b) of such Act
is amended—
(1) in paragraph (1), by striking ‘‘, and’’ and
inserting a semicolon;
(2) in paragraph (2), by striking the period and
inserting ‘‘; and’’; and
(3) by adding the following new paragraph:
‘‘(3) funds awarded from the challenge grant
fund under section 223(c).’’.
(b) REDUCTIONS.—Section 218(c) of such Act is
amended—
(1) in paragraph (1), by striking the comma
and inserting a semicolon;
(2) in paragraph (2), by striking ‘‘, and’’ and
inserting a semicolon;
(3) in paragraph (3), by striking ‘‘section 224.’’
and inserting ‘‘section 223(b); and’’; and
(4) by adding at the end the following new
paragraph:
‘‘(4) funds pledged for repayment of notes,
trust certificates, or other obligations guaranteed
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under section 227 which are drawn by the Secretary
in accordance with section 227(d) or (f).’’.
(c) EXPIRATION OF RIGHT TO DRAW FUNDS.—The
last sentence of section 218(g) of such Act is amended
by striking ‘‘shall reallocate the funds by formula in ac-
cordance with section 217(d)’’ and inserting ‘‘shall add the
funds to the challenge grant fund under section 223(c)’’.
SEC. 30. REPAYMENT OF INVESTMENT; MATCHING RE-
QUIREMENTS.
(a) REPAYMENT OF INVESTMENT.—Section 219 of
such Act is amended—
(1) in subsection (a), by striking ‘‘shall be re-
allocated in accordance with section 217(d)’’ and in-
serting ‘‘shall be added to the challenge grant fund
under section 223(c)’’; and
(2) in subsection (b), by striking ‘‘shall be re-
allocated in accordance with section 217(d)’’ and in-
serting ‘‘shall be added to the challenge grant fund
under section 223(c)’’.
(b) MATCHING REQUIREMENTS.—Section 220(a) of
such Act is amended by striking ‘‘fiscal’’ both places it
appears and inserting ‘‘program’’.
SEC. 31. DISTRIBUTION OF ASSISTANCE.
Section 222(b) of such Act is amended—
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(1) in the first sentence, by striking ‘‘Partici-
pating States’’ and inserting ‘‘(1) PARTICIPATING
STATES.—Participating States’’;
(2) by adding at the end the following new
paragraph:
‘‘(2) ASSISTANCE FOR COLONIAS.—The States
of Texas, New Mexico, Arizona, and California shall
invest not less than an amount determined by the
Secretary (which amount shall be up to 10 percent
of the formula allocation amount) to meet the hous-
ing needs of the residents of colonias.’’; and
(3) by adding at the end the following new sub-
section:
‘‘(c) ASSISTANCE
TO MIGRANT FARMWORKERS.—
State and local participating jurisdictions with significant
migrant farmworker populations shall identify the housing
needs and other needs of these populations in their con-
solidated plan and set aside funding under this title to
address these needs.’’.
SEC. 32. PERFORMANCE REVIEW AND SANCTIONS.
Section 223 of such Act is amended—
(1) by amending the title to read as follows:
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‘‘SEC. 223. REVIEW OF PERFORMANCE, PENALTIES FOR
MISUSE OF FUNDS, AND CHALLENGE GRANT
FUND.’’;
(2) by striking ‘‘If’’ and inserting ‘‘(b)
PENALITIES
FOR MISUSE
OF FUNDS.—If’’ before
‘‘If the Secretary’’;
(3) in subsection (b)(3), as designated by para-
graph (2), by striking ‘‘or reallocations’’; and
(4) by adding the following new subsection be-
fore subsection (b) as designated by paragraph (2):
‘‘(a) PERFORMANCE REVIEWS.—The Secretary shall,
at least on an annual basis, make such reviews as may
be necessary or appropriate to determine whether the par-
ticipating jurisdiction has carried out its activities in a
timely manner and whether it has carried out its activities
and its consolidated plan in accordance with its certifi-
cations, the requirements of this title, and other applicable
laws.’’.
SEC. 33. CHALLENGE GRANT FUND.
Section 223 of such Act, as amended by the previous
section, is further amended by adding the following new
subsection:
‘‘(c) CHALLENGE GRANT FUND.—
‘‘(1) IN
GENERAL.—From amounts appro-
priated under the second sentence of section 205,
the Secretary shall make challenge grants to partici-
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pating jurisdictions pursuant to a performance
agreement. States may apply on behalf of units of
general local government that do not qualify as par-
ticipating jurisdictions. The purpose of the grants is
to support plans for the revitalization of neighbor-
hoods and other communities by providing assistance
for homeownership in homeownership zones.
‘‘(2) ELIGIBILITY FOR AWARDS.—To be eligible
to apply for a challenge grant under paragraph (1),
a participating jurisdiction shall at minimum—
‘‘(A) meet the requirements of this title, as
determined by the Secretary under subsection
(a);
‘‘(B) meet or exceed performance measures
and benchmarks included in its consolidated
plan; and
‘‘(C) have targeted in its consolidated plan
at least one distressed or declining, predomi-
nantly residential neighborhood as a home-
ownership zone (which may be an empowerment
zone, enterprise community, or other distressed
area) proposed for revitalization through home-
ownership as the principal catalyst for change,
with assistance under this subsection.
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‘‘(3) SUBMISSION
REQUIREMENTS.—The Sec-
retary shall establish submission requirements for
participating jurisdictions to include in their consoli-
dated plans. Each jurisdiction shall—
‘‘(A) identify the location of and describe
the proposed homeownership zone, which shall
be within a concentrated area that is covered by
a comprehensive plan to revitalize the neighbor-
hood or other community and be consistent
with any requirements of the Secretary relating
to the zone’s characteristics, such as geography,
level of distress, degree of concentration, and
number of units;
‘‘(B) identify how the activities to be car-
ried out under the revitalization plan will result
in visible improvement of, and have a major im-
pact on, the homeownership zone;
‘‘(C) demonstrate that the applicant has
consulted with, and received the support of,
residents of the proposed homeownership zone
and that the residents will be continuously in-
volved throughout the implementation period;
‘‘(D) describe a proposed local community
partnership, which shall—
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‘‘(i) consist of public, nonprofit, and
other private sector partners that agree to
provide assistance to increase homeowner-
ship and provide other assistance to em-
power citizens and renew the neighborhood
or other community through the revitaliza-
tion plan; and
‘‘(ii) include commitments from the
partners to carry out the plan;
‘‘(E) specify performance measures and
benchmarks for determining the success of the
revitalization plan, including how soon after ap-
proval construction will start and be completed;
and
‘‘(F) provide such other information as the
Secretary may require.
‘‘(4) DISTRIBUTION
OF
AWARDS.—The Sec-
retary shall establish a competitive method for dis-
tributing challenge grants under this subsection.
‘‘(5) SELECTION
CRITERIA.—The Secretary
shall award challenge grants under this subsection
based on the following selection criteria:
‘‘(A) The extent to which the jurisdiction
has met or exceeded the performance measures
and benchmarks established in its Consolidated
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Plan, and the extent to which those measures
and benchmarks were ambitious compared to
those of other comparable jurisdictions.
‘‘(B) The extent to which the homeowner-
ship zone fits in with and furthers a larger
comprehensive plan for neighborhood revitaliza-
tion.
‘‘(C) The extent to which there will be a
major impact on and visible improvement of the
zone.
‘‘(D) The extent to which the jurisdiction
has consulted with and received the support of
residents of the proposed zone and the extent to
which it will continuously involve residents
throughout the implementation period.
‘‘(E) The extent to which the jurisdiction
has committed to removing local administrative
impediments to the success of the zone pro-
posal.
‘‘(F) The extent to which the proposal
specifies ambitious and realistic performance
measures and benchmarks for determining suc-
cess for activities under this subsection.
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‘‘(G) The extent to which the jurisdiction
targets low-income families, including first-time
homebuyers.
‘‘(H) The extent of leveraging through pri-
vate and public resources.
‘‘(I) Other factors the Secretary deter-
mines appropriate.
‘‘(6) ELIGIBLE ACTIVITIES.—A recipient of as-
sistance under this subsection may use grant
amounts only to provide homeownership assistance
in the homeownership zone. Homeownership assist-
ance may be used by participating jurisdictions—
‘‘(A) to provide incentives to develop and
support affordable rental housing and home-
ownership affordability through the acquisition,
new construction, reconstruction, or moderate
or substantial rehabilitation of affordable hous-
ing, including real property acquisition, site im-
provement, conversion, demolition, and other
expenses, including financing costs, relocation
expenses of any displaced persons, families,
businesses, or organizations;
‘‘(B) to provide for the payment of reason-
able administrative and planning costs;
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‘‘(C) for other activities in support of
homeownership that are specified or approved
by the Secretary; and
‘‘(D) to provide tenant-based rental assist-
ance.
‘‘(7) ELIGIBLE FAMILIES.—Assistance may be
provided for families whose incomes do not exceed
115 percent of the median income for the area, as
determined by the Secretary with adjustments for
smaller and larger families, except that the Sec-
retary may establish income ceilings higher or lower
than 115 percent of the median for the area on the
basis of the Secretary’s findings that such variations
are necessary because of prevailing levels of con-
struction costs or unusually high or low family in-
comes.
‘‘(8) TERM OF ASSISTANCE; COMPLIANCE WITH
PROGRAM REQUIREMENTS.—The Secretary may pro-
vide assistance to permit a jurisdiction to implement
its revitalization plan over a period of up to five
years. For all or a portion of a grant under this sec-
tion, the Secretary may condition use of the grant,
reduce the amount of the grant, or cancel the grant,
based on whether the jurisdiction has made measur-
able, objective progress in meeting the performance
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measures and benchmarks established in the consoli-
dated plan and has complied with the requirements
of the performance agreement entered into under
this section.’’.
SEC. 34. TENANT AND PARTICIPANT PROTECTIONS.
Section 225(b) of such Act is amended to read as
follows:
‘‘(b) TERMINATION OF TENANCY.—An owner may
terminate the tenancy of a tenant of rental housing as-
sisted under this title in accordance with State law.’’.
SEC. 35. LOAN GUARANTEES.
Subtitle A of title II of such Act is amended by add-
ing at the end the following new section:
‘‘SEC. 227. LOAN GUARANTEES.
‘‘(a) GENERAL AUTHORITY.—The Secretary is au-
thorized, upon such terms and conditions as the Secretary
may prescribe, to guarantee and make commitments to
guarantee, only to such extent or in such amounts as pro-
vided in appropriations Acts, the notes or other obligations
issued by eligible participating jurisdictions or by public
agencies designated by and acting on behalf of eligible par-
ticipating jurisdictions for purposes of financing (includ-
ing credit enhancements and debt service reserves) the ac-
quisition, new construction, reconstruction, or moderate or
substantial rehabilitation of affordable housing (including
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sifications that are incurred for the capacity building,
technical assistance, training, and related activities pro-
vided by or to officials and employees of the Department
for a program that is funded from such other account and
in which the costs of capacity building and technical as-
sistance are otherwise eligible for expenditure. The author-
ity to transfer provided in this subsection shall be in addi-
tion to any other authority to transfer funds among ac-
counts that the Secretary may now or hereafter have.’’.
SEC. 62. HUD RESEARCH AND DEVELOPMENT.
The second sentence of section 501 of the Housing
and Urban Development Act of 1970 is amended to read
as follows: ‘‘There are authorized to be appropriated to
carry out this title $45,000,000 for fiscal year 1997 and
such sums as may be necessary for fiscal years 1998,
1999, and 2000.’’.
SEC. 63. FAIR HOUSING INITIATIVES PROGRAM.
Section 561(g) of the Housing and Community De-
velopment Act of 1987 is amended to read as follows:
‘‘(g) AUTHORIZATION OF APPROPRIATIONS.—There
are authorized to be appropriated to carry out the provi-
sions of this section $15,000,000 for fiscal year 1997, and
such sums as may be necessary for fiscal years 1998,
1999, and 2000, of which—