Multifamily Housing Property Disposition Reform Act of 1994
PL 103-233 (S.1299), enacted 04/11/1994

108 STAT. 342 
PUBLIC LAW 103-233-APR. 11, 1994 
Public Law 103-283 
103d Congress 
An Act 
Apr. 11, 1994 
[S. 1299] 
Multifamily 
Housing 
Property 
Disposition 
Reform Act of 
1994. 
12 u s e 1701 
note. 
To amend section 203 of the Housing and Community Development Amendments 
of 1978 to provide for the disposition of multifamily properties owned by the 
Secretary of Housing and Urban Development, to provide for other reforms in 
programs administered by the Secretary, and to make certain technical amend-
ments, and for other purposes. 
Be it enacted by the Senate and House of Representatives of 
the United States of 
America in Congress assembled, 
SECTION 1. SHORT TITLE AND TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the "Multifamily 
Housing Property Disposition Reform Act of 1994". 
(b) TABLE OF CONTENTS.— 
Sec. 1. Short title and table of contents. 
TITLE I—MULTIFAMILY PROPERTY DISPOSITION REFORM 
Sec. 101. Multifamily property disposition. 
Sec. 102. Repeal of State agency multifamily property disposition demonstration. 
Sec. 103. Preventing mortgage defaults on multifamily housing projects. 
Sec. 104. Interest rates on assigned mortgages. 
Sec. 105. Authorization of appropriations. 
TITLE II—OTHER PROGRAM REFORMS 
Subtitle A—Home Investment Partnerships Program 
Sec. 201. Participation by State agencies or instrumentalities. 
Sec. 202. Simplification of program-wide income targeting for rental housing. 
Sec. 203. Homeownership units. 
Sec. 204. Simplification of matching requirements. 
Sec. 205. Repeal of separate audit requirement. 
Sec. 206. Environmental review requirements. 
Sec. 207. Use of CDBG fimds for HOME program expenses. 
Sec. 208. Flexibility of HOME program for disaster areas. 
Sec. 209. Applicability and regulations. 
Subtitle B—HOPE Homeownership Program 
Sec. 221. Matching requirement imder HOPE for homeownership of single family 
homes program. 
Subtitle C—Community Development Block Grants 
Sec. 231. Section 108 eligible activities. 
Sec. 232. Economic development grants. 
Sec. 233. Guarantee of obligations backed by section 108 loans. 
Sec. 234. Flexibility of CDBG program for disaster areas. 
TITLE III—TECHNICAL AMENDMENTS 
Sec. 301. Definition of "families". 
Sec. 302. Elimination of requirement to identify CIAP replacement needs. 
Sec. 303. Project-based accounting. 
Sec. 304. Operating subsidy adjustments for anticipated fraud recoveries. 
PUBLIC LAW 103-233—APR. 11, 1994 
108 STAT. 343 
Sec. 305. Environmental review provisions. 
Sec. 306. Correction of FHA multifamily mortgage limits. 
Sec. 307. Amendments to FHA multifamily risk-sharing and housing finance agen-
cy pilot programs. 
Sec. 308. Subsidy layering review. 
TITLE I—MULTIFAMILY PROPERTY 
DISPOSITION REFORM 
SEC. 101. MULTIFAMILY PROPERTY DISPOSITION. 
(a) FINDINGS.—The Congress finds that— 
12 USC I70iz-ii 
(1) the portfolio of multifamily housing project mortgages ^'^^• 
insured by the FHA is severely troubled and at risk of default, 
requiring 
the 
Secretary to increase loss reserves 
from 
$5,500,000,000 in 1991 to $11,900,000,000 in 1992 to cover 
estimated future losses; 
(2) the inventory of multifamily housing projects owned 
by the Secretary has more thsin quadrupled since 1989, and, 
by the end of 1994, may exceed 69,000 units; 
(3) the cost to the Federal Government of owning and 
maintaining 
multifamily 
housing 
projects 
escalated 
to 
$288,000,000 in fiscal year 1993; 
(4) the inventory of multifamily housing projects subject 
to mortgages held by the Secretary has increased dramatically, 
to more than 2,400 mortgages, and approximately half of these 
mortgages, with approximately 219,000 units, are delinquent; 
(5) the inventory of insured and formerly insured multifam-
ily housing projects is deteriorating, potentially endangering 
tenants and neighborhoods; and 
(6) the current statutory framework governing the disposi-
tion of multifamily housing projects effectively impedes the 
Grovemment's ability to dispose of properties, protect tenants, 
and ensure that projects are maintained over time. 
(b) MANAGEMENT AND DISPOSITION OF MULTIFAMILY HOUSING 
PROJECTS.—Section 203 of the Housing and Community Develop-
ment Amendments of 1978 (12 U.S.C. 1701z-ll) is amended to 
read as follows: 
"SEC. 203. MANAGEMENT AND DISPOSITION OF MULTIFAMILY HOUS-
ING PROJECTS. 
"(a) GOALS.—^The Secretary of Housing and Urban Development 
shall manage or dispose of multifamily housing projects that are 
owned by the Secretary or that are subject to a mortgage held 
by the Secretary in a manner that— 
"(1) is consistent with the National Housing Act and this 
section; 
"(2) will protect the finsuicial interests of the Federal 
Grovernment; and 
"(3) will, in the least costly fashion among reasonable avail-
able alternatives, address the goals of— 
"(A) preserving certain housing so that it can remain 
available to and affordable by low-income persons; 
"(B) preserving and revitalizing residential neighbor-
hoods; 
"(C) maintaining existing housing stock in a decent, 
safe, and sanitary condition; 
108 STAT. 344 
PUBLIC LAW 103-233—APR. 11, 1994 
"(D) minimizing the involuntary displacement of ten-
ants; 
"(E) maintaining housing for the purpose of providing 
rental housing, cooperative housing, and homeownership 
opportunities for low-income persons; 
"(F) minimizing the need to demolish multifamily hous-
ing projects; 
"(G) supporting fair housing strategies; £md 
"(H) disposing of such projects in a manner consistent 
with local housing market conditions. 
In determining the manner in which a project is to be managed 
or disposed of, the Secretary may balance competing goals relating 
to individual projects in a manner that will further the purposes 
of this section. 
"(b) DEFINITIONS.—For purposes of this section: 
"(1) MULTIFAMILY HOUSING PROJECT.—The term 'multifam-
ily housing project' means any multifamily rental housing 
project which is, or prior to acquisition by the Secretary was, 
assisted or insured under the National Housing Act, or was 
subject to a loan under section 202 of the Housing Act of 
1959. 
"(2) SUBSIDIZED PROJECT.—The term 'subsidized project' 
means a multifamily housing project that, immediately prior 
to the assignment of the mortgage on such project to, or the 
acquisition of such mortgage by, the Secretary, was receiving 
any of the following types of assistance: 
"(A) Below market interest rate mortgage insurance 
under the proviso of section 221(d)(5) of the National Hous-
ing Act. 
"(B) Interest reduction payments made in connection 
with mortgages insured under section 236 of the National 
Housing Act. 
"(C) Direct loans made under section 202 of the Hous-
ing Act of 1959. 
"(D) Assistance in the form of— 
"(i) rent supplement payments under section 101 
of the Housing and Urban Development Act of 1965, 
"(ii) additional assistance payments under section 
236(f)(2) of the National Housing Act, 
"(iii) housing assistance pajmaents made under sec-
tion 23 of the United States Housing Act of 1937 
(as in effect before January 1, 1975), or 
"(iv) housing assistance payments made under sec-
tion 8 of the United States Housing Act of 1937 (exclud-
ing payments made for tenant-based assistance under 
section 8), 
if (except for purposes of section 183(c) of the Housing 
and Community Development Act of 1987) such assistance 
payments are made to more than 50 percent of the units 
in the project. 
"(3) FORMERLY SUBSIDIZED PROJECT.—The term 'formerly 
subsidized project' means a multifamily housing project owned 
by the Secretary that was a subsidized project immediately 
prior to its acquisition by the Secretary. 
"(4) 
UNSUBSIDIZED 
PROJECT.—The term 
'unsubsidized 
project' means a multifamily housing project owned by the 
PUBLIC LAW 103-233—APR. 11, 1994 
108 STAT. 345 
Secretary that is not a subsidized project or a formerly sub-
sidized project. 
"(5) AFFORDABLE.—^A unit shall be considered affordable 
if— 
"(A) for units occupied— 
"(i) by very low-income families, the rent does not 
exceed 30 percent of 50 percent of the area median 
income, as determined by the Secretary, with adjust-
ments for smaller and larger families; and 
"(ii) by low-income families other than very low-
income families, the rent does not exceed 30 percent 
of 80 percent of the area median income, as determined 
by the Secretary, with adjustments for smaller and 
larger families; or 
"(B) the unit, or the family residing in the unit, is 
receiving assistance under section 8 of the United States 
Housing Act of 1937. 
"(6) 
LOW-INCOME FAMILIES AND VERY LOW-INCOME FAMI-
LIES.—^The terms 'low-income families' and 'very low-income 
families' shall have the meanings given the terms in section 
3(b) of the United States Housing Act of 1937. 
"(7) PREEXISTING TENANT.—^The term 'preexisting tenant' 
means, with respect to a multifamily housing project acquired 
pursuant to this section by a purchaser other than the Secretary 
at foreclosure or after sale by the Secretary, a family that 
resides in a unit in the project immediately before the acquisi-
tion of the project by the purchaser. 
"(8) MARKET AREA.—The term 'market area' means a mar-
ket area determined by the Secretary. 
"(9) SECRETARY.—^The term 'Secretary' means the Secretary 
of Housing and Urban Development. 
"(c) DISPOSITION OF PROPERTY.— 
"(1) DISPOSITION TO PURCHASERS.—In carrying out this sec-
tion, the Secretary may dispose of a multifamily housing project 
owned by the Secretary on a negotiated, competitive bid, or 
other basis, on such terms as the Secretary deems appropriate 
considering the low-income character of the project and consist-
ent with the goals in subsection (a), only to a purchaser deter-
mined by the Secretary to be capable of— 
"(A) satisfying the conditions of the disposition plan 
developed under paragraph (2) for the project; 
"(B) implementing a sound financial and physical 
management program that is designed to enable the project 
to meet anticipated operating and repair expenses to ensure 
that the project will remain in decent, safe, and sanitary 
condition and in compliance with any standards under 
applicable State or local laws, rules, ordingmces, or regula-
tions relating to the physical condition of the housing and 
any such standards established by the Secretary; 
"(C) responding to the needs of the tenants and working 
cooperatively with tenant organizations; 
"(D) providing adequate organizational, staff, and 
financial resources to the project; and 
"(E) meeting such other requirements as the Secretary 
may determine. 
"(2) DISPOSITION PLAN.— 
108 STAT. 346 
PUBLIC LAW 103-233—APR. 11, 1994 
"(A) IN GENERAL.—^Prior to the sale of a multifamily 
housing project that is owned by the Secretary, the Sec-
retary shall develop an initial disposition plan for the 
project that specifies the minimum terms and conditions 
of the Secretary for disposition of the project, the initial 
sales price that is acceptable to the Secretary, and the 
assistance that the Secretary plans to make available to 
a prospective purchaser in accordance with this section. 
"(B) MARKET-WIDE PLANS.—In developing the initial 
disposition plan under this subsection for a multifamily 
housing project located in a market area in which at least 
1 other multifamily housing project owned by the Secretary 
is located, the Secretary may coordinate the disposition 
of all such multifamily housing projects located within the 
same market area to the extent and in such manner as 
the Secretary determines appropriate to carry out the goals 
under subsection (a). 
"(C) SALES PRICE.—The initial sales price shall be 
reasonably related to the intended use of the project after 
sale, any rehabilitation requirements for the project, the 
rents for units in the project that can be supported by 
the market, the amount of rental assistance available for 
the project under section 8 of the United States Housing 
Act of 1937, the occupancy profile of the project (including 
family size and income levels for tenant families), and 
any other factors that the Secretary considers appropriate. 
"(D) COMMUNITY AND TENANT INPUT.—In carrying out 
this section, the Secretary shall develop procedures— 
"(i) to obtain appropriate and timely input into 
disposition plans from officials of the unit of general 
local government affected, the community in which 
the project is situated, and the tenants of the project; 
and 
"(ii) to facilitate, where feasible and appropriate, 
the sale of multifamily housing projects to existing 
, 
tenant organizations with demonstrated capacity, to 
public or nonprofit entities that represent or are affili-
ated with existing tenant orgeinizations, or to other 
public or nonprofit entities, 
"(E) TECHNICAL ASSISTANCE.—^To carry out the proce-
dures developed under subparagraph (D), the Secretary 
may provide technical assistance, directly or indirectly, and 
may use amounts available for technical assistance under 
the Emergency Low Income Housing Preservation Act of 
1987, subtitle C of the Low-Income Housing Preservation 
and Resident Homeownership Act of 1990, subtitle B of 
title IV of the Cranston-Gronzalez National Affordable Hous-
ing Act, or this section, for the provision of technical assist-
ance under this paragraph. Recipients of technical assist-
ance funding under the provisions referred to in this 
subparagraph shall be permitted to provide technical assist-
ance to the extent of such funding imder any of such 
provisions or under this subparagraph, notwithstanding 
the source of the funding. 
"(3) FojlECLOSURE SALE.—In carrying out this section, the 
Secretary shall— 
PUBLIC LAW 103-233—APR. 11, 1994 
108 STAT. 347 
"(A) prior to foreclosing on any mortgage held by the 
Secretary on any multifamily housing project, notify both 
the unit of general local government in which the property 
is located and the tenants of the property of the proposed 
foreclosure sale; and 
"(B) dispose of a multifamily housing project through 
a foreclosure sale only to a purchaser that the Secretary 
determines is capable of implementing a sound financial 
and physical management program that is designed to 
enable the project to meet anticipated operating and repair 
expenses to ensure that the project will remain in decent, 
safe, and sanitary condition and in compliance with any 
standards under applicable State or local laws, rules, ordi- 
^ 
nances, or regulations relating to the physical condition 
of the housing and any such standards established by the 
Secretary. 
"(d) MANAGEMENT AND MAINTENANCE OF PROPERTIES.— 
"(1) CONTRACTING FOR MANAGEMENT SERVICES.—In carry-
ing out this section, the Secretary may— 
"(A) contract for management services for a multifamily 
housing project that is owned by the Secretary (or for 
which the Secretary is mortgagee in possession) with for-
profit and nonprofit entities and public agencies (including 
Eublic housing authorities) on a negotiated, competitive 
id, or other basis at a price determined by the Secretary 
to be reasonable, with a manager the Secretary has deter-
mined is capable of— 
"(i) implementing a sound financial and physical 
management program that is designed to enable the 
project to meet anticipated operating and maintenance 
expenses to ensure that the project will remain in 
decent, safe, and ssmitary condition and in compliance 
with any standards under applicable State or local 
laws, rules, ordinances, or regulations relating to the 
physical condition of the project and any such stand-
ards estabUshed by the Secretary; 
"(ii) responding to the needs of the tenants and 
working cooperatively with tenant organizations; 
"(iii) providing adequate organizational, staff, and 
financial resources to the project; and 
"(iv) meeting such other requirements as the Sec-
retary may determine; and 
"(B) require the owner of a multifamily housing project 
that is subject to a mortgage held by the Secretary to 
contract for management services for the project in the 
manner described in subparagraph (A). 
"(2) MAINTENANCE OF PROJECTS OWNED BY SECRETARY.— 
In the case of multifamily housing projects that are owned 
by the Secretary (or for which the Secretary is mortgagee 
in possession), the Secretary shall— 
"(A) to the greatest extent possible, maintain all such 
occupied projects in a decent, safe, and sanitary condition 
and in compliance with any standards under applicable 
State or local laws, rules, ordinances, or regulations relat-
ing to the physical condition of the housing and any such 
standards established by the Secretary; 
108 STAT. 348 
PUBLIC LAW 103-233—APR. 11, 1994 
"(B) to the greatest extent possible, maintain full occu-
pancy in all such projects; and 
"(C) maintsiin all such projects for purposes of providing 
rental or cooperative housing. 
"(3) 
PROJECTS SUBJECT TO A MORTGAGE HELD BY SEC-
RETARY.—In the case of any multifamily housing project that 
is subject to a mortgage held by the Secretary, the Secretary 
shall require the owner of the project to carry out the require-
ments of paragraph (2). 
"(e) REQUIRED ASSISTANCE.—In disposing of multifamily hous-
ing property under this section, consistent with the goal of section 
203(a)(3XA), the Secretary shall take, separately or in combination 
with other actions under this subsection or subsection (f), one 
or more of the following actions: 
"(1) 
CONTRACT WITH OWNER FOR PROJECT-BASED ASSIST-
ANCE.—In the case of multifamily housing projects that are 
acquired by a purchaser other than the Secretary at foreclosure 
or after sale by the Secretary, the Secretary may enter into 
contracts under section 8 of the United States Housing Act 
of 1937 (to the extent budget authority is available) with owners 
of the projects, subject to the following requirements: 
"(A) 
SUBSIDIZED OR FORMERLY SUBSIDIZED PROJECTS 
RECEIVING MORTGAGE-RELATED ASSISTANCE.—In the case of 
a subsidized or formerly subsidized project referred to in 
subparagraphs (A) through (C) of subsection (b)(2)— 
"(i) the contract shall be sufficient to assist at 
least all units covered by an assistance contract under 
any of the authorities referred to in subsection (b)(2)(D) 
before acquisition or foreclosure, unless the Secretary 
acts pursuant to the provisions of subparagraph (C); 
"(ii) the contract shall provide that, when a 
vacancy occurs in any unit in the project requiring 
project-based 
rental 
assistance 
pursuant 
to 
this 
subparagraph that is occupied by a family who is not 
eligible for assisteuice under such section 8, the owner 
shall lease the available unit to a family eligible for 
assistance under such section 8; and 
"(iii) the Secretary shall take actions to ensure 
that any unit in any such project that does not other-
wise receive project-based 
assistance under 
this 
subparagraph remains available and affordable for the 
remaining useful life of the project, as defined by the 
Secretary; to carry out this clause, the Secretary may 
require purchasers to estabhsh use or rent restrictions 
maintaining the affordability of such units. 
"(B) 
SUBSIDIZED OR FORMERLY SUBSIDIZED PROJECTS 
RECEIVING RENTAL ASSISTANCE.—In the case of a subsidized 
or formerly subsidized project referred to in subsection 
(b)(2)(D) that is not subject to subparagraph (A)— 
"(i) the contract shall be sufficient to assist at 
least all imits in the project that are covered, or were 
covered immediately before foreclosure on or acquisi-
tion of the project by the Secretary, by an assistance 
contract under any of the provisions referred to in 
such subsection, unless the Secretary acts pursuant 
to provisions of subparagraph (C); and 
PUBLIC LAW 103-233—APR. 11, 1994 
108 STAT. 349 
"(ii) the contract shall provide that, when a 
vacancy occurs in any unit in the project requiring 
project-based 
rental 
assistance 
pursuant 
to 
this 
subparagraph that is occupied by a family who is not 
eligible for assistance under such section 8, the owner 
shall lease the available unit to a family eligible for 
assistance under such section 8. 
"(C) EXCEPTIONS.— 
"(i) AUTHORITY.—In lieu of providing project-based 
assistance under section 8 of the United States Hous-
ing Act of 1937 in accordance with subparagraph (A)(i) 
or (B)(i) for a project, the Secretary may, for certsdn 
units in unsubsidized projects located within the same 
market area as the project otherwise required to be 
assisted with such project-based assistance— 
"(I) require use and rent restrictions providing 
that such units shall be available to and affordable 
by very low-income families for the remaining use-
ful life of the project (as defined by the Secretary), 
or 
"(II) provide project-based assistance under 
section 8 for such units to be occupied by only 
very low-income persons, 
but only if the requirements under clause (ii) are met. 
"(ii) REQUIREMENTS.—^The requirements under this 
clause are that— 
"(I) upon the disposition of the project other-
wise required to be assisted with project-based 
assistance under subparagraph (A)(i) or (B)(i), the 
Secretary 
shsdl make 
available 
tenant-based 
assistance under section 8 to low-income families 
residing in units otherwise required to be assisted 
with such project-based assistance; and 
"(II) the number of units subject to use restric-
tions or provided assistance under clause (i) shall 
be at least equivalent to the number of units other-
wise required to be assisted with project-based 
assistance under section 8 in accordance with 
subparagraph (A)(i) or (B)(i). 
"(D) 
UNSUBSIDIZED 
PROJECTS.—Notwithstanding 
actions taken pursuant to subparagraph (C), in the case 
of unsubsidized projects, the contract shall be sufficient 
to provide— 
"(i) project-based rental assistance for all units 
that are covered, or were covered immediately before 
foreclosure or acquisition, by an assistance contract 
under— 
"(I) the new construction and substantial 
rehabilitation program under section 8(b)(2) of the 
United States Housing Act of 1937 (as in effect 
before October 1, 1983); 
"(II) the property disposition program under 
section 8(b) of such Act; 
"(III) the project-based certificate program 
under section 8 of such Act; 
"(IV) the moderate rehabilitation program 
under section 8(e)(2) of such Act; 
108 STAT. 350 
PUBLIC LAW 103-233—APR. 11, 1994 
"(V) section 23 of such Act (as in effect before 
January 1, 1975); 
"(Vl) the rent supplement program under sec-
tion 101 of the Housing and Urban Development 
Act of 1965; or 
"(VII) section 8 of the United States Housing 
Act of 1937, following conversion from assistance 
under section 101 of the Housing and Urban Devel-
opment Act of 1965; and 
"(ii) ten£int-based assistance under section 8 of 
the United States Housing Act of 1937 for families 
that are preexisting tenants of the project in units 
that, immediately before foreclosure or acquisition of 
the project by the Secretary, were covered by an assist-
ance contract under the loan management set-aside 
program under section 8(b) of the United States Hous-
ing Act of 1937. 
"(2) ANNUAL CONTRIBUTION CONTRACTS FOR TENANT-BASED 
ASSISTANCE.—In the case of multifamily housing projects that 
are acquired by a purchaser other than the Secretary at fore-
closure or after sale by the Secretary, the Secretary may enter 
into annual contribution contracts with public housing agencies 
to provide tenant-based assistance under section 8 of the United 
States Housing Act of 1937 on behalf of all low-income families 
who are otherwise eligible for assistance in accordance with 
subparagraph (A), (B), or (D) of paragraph (1) on the date 
that the project is acquired by the purchaser, subject to the 
following requirements: 
"(A) REQUIREMENT OF SUFFICIENT AFFORDABLE HOUS-
ING IN AREA.—The Secretary may not take action under 
this paragraph unless the Secretary determines that there 
is available in the area an adequate supply of habitable, 
affordable housing for very low-income families £uid other 
low-income families using tenant-based assistance. 
"(B) LIMITATION FOR SUBSIDIZED AND FORMERLY SUB-
SIDIZED PROJECTS.—^The Secretary may not take actions 
under this paragraph in connection with units in subsidized 
or formerly subsidized projects for more than 10 percent 
of the aggregate number of units in such projects disposed 
of by the Secretary in any fiscal year. 
"(3) OTHER ASSISTANCE.— 
"(A) IN GENERAL.—In accordance with the authority 
provided under the National Housing Act, the Secretary 
may provide other assistance pursuant to subsection (f) 
to the owners of multifamily housing projects that are 
acquired by a purchaser other than the Secretary at fore-
closure, or after sale by the Secretary, on terms that ensure 
t h a t ^ 
"(i) at least the units in the project otherwise 
required to receive project-based assistance pursuant 
to subparagraphs (A), (B), or (D) of paragraph (1) are 
available to and affordable by low-income persons; and 
"(ii) for the remaining useful life of the project, 
as defined by the Secretary, there shall be in force 
such use or rent restrictions as the Secretary m^ay 
prescribe. 
PUBLIC LAW 103-233—APR. 11, 1994 
108 STAT. 351 
"(B) VERY LOW-INCOME TENANTS.—If, as a result of 
actions taken pursuant to this paragraph, the rents charged 
to any very low-income families residing in the project 
who are otherwise required (pursuant to subparagraph (A), 
(B), or (D) of paragraph (1)) to receive project-based assist-
ance under section 8 of the United States Housing Act 
of 1937 exceed the amount payable as rent imder section 
3(a) of the United States Housing Act of 1937, the Secretary 
shall provide tenant-based assistance under section 8 of 
such Act to such families. 
"(f) DISCRETIONARY ASSISTANCE.—In addition to the actions 
required under subsection (e) for a subsidized, formerly subsidized, 
or unsubsidized multifamily housing project, the Secretary may, 
pursuant to the disposition plan and the goals in subsection (a), 
take one or more of the following actions: 
"(1) DISCOUNTED SALES PRICE.—In accordance with the 
authority provided under the National Housing Act, the Sec-
retary may reduce the selling price of the project. Such reduced 
sales price shall be reasonably related to the intended use 
of the property after sale, any rehabilitation requirements for 
the project, the rents for units in the project that can be 
supported by the market, the amount of rental assistance avail-
able for the project under section 8 of the United States Housing 
Act of 1937, the occupancy profile of the project (including 
family size and income levels for tenant families), and any 
other factors that the Secretary considers appropriate. 
"(2) USE AND RENT RESTRICTIONS.—The Secretary may 
require certain units in a project to be subject to use or rent 
restrictions providing that such units will be available to and 
affordable by low- and very low-income persons for the remain-
ing useful life of the property, as defined by the Secretary. 
"(3) SHORT-TERM LOANS.—The Secretary may provide short-
term loans to faciUtate the sale of a multifamily housing project 
if— 
"(A) authority for such loans is provided in advance 
in an appropriation Act; 
"(B) such loan has a term of not more than 5 years; 
"(C) the Secretsiry determines, based upon documenta-
tion provided to the Secretary, that the borrower has 
obtained a commitment of permanent financing to replace 
the short-term loan from a lender who meets standards 
established by the Secretary; and 
"(D) the terms of such loan are consistent with prevail-
ing practices in the marketplace or the provision of such 
loan results in no cost to the Government, as defined in 
section 502 of the Congressional Budget Act of 1974. 
"(4) UP-FRONT GRANTS.—If the Secretary determines that 
action under this paragraph is more cost-effective 
than 
establishing rents pursuant to subsection (h)(2), the Secretary 
may utilize the budget authority provided for contracts issued 
under this section for project-based assistance under section 
8 of the United States Housing Act of 1937 to (in addition 
to providing project-based section 8 rental assistance) provide 
up-front grants for the necessary cost of rehabilitation and 
other related development costs. 
"(5) TENANT-BASED ASSISTANCE.—^The Secretary may make 
available tenant-based assistance under section 8 of the United 
108 STAT. 352 
PUBLIC LAW 103-233—APR. 11, 1994 
States Housing Act of 1937 to families residing in a multifamily 
housing project that do not otherwise quaUfy for project-based 
assistance. 
"(6) ALTERNATIVE USES.— 
"(A) IN GENERAL.—^Notwithstanding any other provi-
sion of law, after providing notice to and an opportunity 
for comment by preexisting tenants, the Secretary may 
allow not more than— 
"(i) 10 percent of the total number of units in 
multifamily housing projects that are disposed of by 
the Secretary during any fiscal year to be made avail-
able for uses other than rental or cooperative uses, 
including low-income homeownership opportunities, or 
in any particular project, community space, office space 
for tenant or housing-related service providers or secu-
rity programs, or small business uses, if such uses 
benefit the tenants of the project; and 
"(ii) 5 percent of the total number of units in 
multifamily housing projects that are disposed of by 
the Secretary during any fiscal year to be used in 
any manner, if the Secretary and the unit of general 
loc£d government or area-wide governing body deter-
mine that such use will further fair housing, commu-
nity development, or neighborhood revitalization goals. 
"(B) DISPLACEMENT PROTECTION.—The Secretary 
may 
take actions under subparagraph (A) only if— 
"(i) tenant-based rental assistance under section 
8 of the United States Housing Act of 1937 is made 
available to each eligible family residing in the project 
that is displaced as a result of such actions; and 
"(ii) the Secretary determines that sufficient habit-
able, affordable rental housing is available in the mar-
ket area in which the project is located to ensure 
use of such assistance. 
"(7) TRANSFER FOR USE UNDER OTHER PROGRAMS OF SEC-
RETARY.— 
"(A) IN GENERAL.—^Notwithstanding the provisions of 
subsection (e), the Secretary may, pursuant to an agree-
ment under subparagraph (B), transfer a multifamily hous-
ing project— 
"(i) to a public housing agency for use of the project 
as public housing; or 
"(ii) to an entity eligible to own or operate housing 
assisted under section 202 of the Housing Act of 1959 
or under section 811 of the Cranston-Gonzalez National 
Affordable Housing Act for use as supportive housing 
under either of such sections. 
"(B) REQUIREMENTS FOR AGREEMENT.—^An agreement 
providing for the transfer of a project described in subpara-
graph (A) shall— 
"(i) contain such terms, conditions, and limitations 
as the Secretary determines appropriate, including 
requirements to ensure use of the project as public 
housing, supportive housing under section 202 of the 
Housing Act of 1959, or supportive housing under sec-
tion 811 of the Cranston-Gonzalez National Affordable 
Housing Act, as applicable; and 
PUBLIC LAW 103-233—APR. 11, 1994 
108 STAT. 353 
"(ii) ensure that no tenant of the project will be 
displaced as a result of actions taken under this para-
graph, 
"(8) REBUILDING.—^Notwithstanding any provision of section 
8 of the United States Housing Act of 1937, the Secretary 
may provide project-based assistance in accordance with sub-
section (e) of this section to support the rebuilding of a multi-
family housing project rebuilt or to be rebuilt (in whole or 
in part and on-site, off-site, or in a combination of both) in 
connection with disposition under this section, if the Secretary 
determines that— 
"(A) the project is not being maintained in a decent, 
safe, and sanitary condition; 
"(B) rebuilding the project would be less expensive 
than substantial rehabilitation; 
"(C) the unit of general local government in which 
the project is located approves the rebuilding and makes 
a financial contribution or other commitment to the project; 
and 
"(D) the rebuilding is a part of a local neighborhood 
revitalization plan approved by the unit of general local 
government. 
The provisions of subsection (j)(2) shedl apply to any tenants 
of the project who are displaced. 
"(9) EMERGENCY ASSISTANCE FUNDS.—^The Secretary may 
make arrangements with State agencies and units of general 
local government of States receiving emergency assistance 
under part A of title IV of the Social Security Act for the 
provision of assistance under such Act on behalf of eligible 
families who would reside in any multifamily housing projects. 
"(g) 
PROTECTION FOR UNASSISTED VERY LOW-INCOME TEN-
ANTS.—^For each multifamily housing project disposed of under this 
section, the Secretary shall require that, for any very low-income 
family who is a preexisting tensuit of the project who (upon disposi-
tion) would be required to pay rent in an amount in excess of 
30 percent of the adjusted income (as such term is defined in 
section 3(b) of the United States Housing Act of 1937) of the 
family— 
"(1) for a period of 2 years beginning upon the date of 
the acquisition of the project by the purchaser under such 
disposition, the rent for the unit occupied by the family may 
not be increased above the rent charged immediately before 
acquisition; 
"(2) such family shall be considered displaced for purposes 
of the preferences for assistance under sections 6(c)(4)(A)(i), 
8(d)(l)(A)(i), and 8(o)(3)(B) of the United States Housing Act 
of 1937; and 
"(3) notice shall be provided to such family, not later than 
the date of the acquisition of the project by the purchaser— 
"(A) of the requirements under paragraphs (1) and 
(2); and 
"(B) that, after the expiration of the period under para-
graph (1), the rent for the unit occupied by the family 
may be increased. 
"(h) CONTRACT REQUIREMENTS.—Contracts for project-based 
rental assistance under section 8 of the United States Housing 
108 STAT. 354 
PUBLIC LAW 103-233—APR. 11, 1994 
Act of 1937 provided pursuant to this section shall be subject 
to the following requirements: 
"(1) CONTRACT TERM.—The contract shall have a term of 
15 years, except that the term may be less than 15 years— 
"(A) to the extent that the Secretary finds that, based 
on the rental charges and financing for the multifamily 
housing project to which the contract relates, the financial 
viability of the project can be maintained under a contract 
having such a term; except that the Secretary shall require 
that the amount of rent payable by tenants of the project 
for units assisted under such contract shall not exceed 
the amount payable for rent under section 3(a) of the 
United States Housing Act of 1937 for a period of at least 
15 years; or 
"(B) if such assistance is provided— 
"(i) under a contract authorized under section 6 
of the HUD Demonstration Act of 1993; and 
"(ii) pursuant to a disposition plan under this sec-
tion for a project that is determined by the Secretary 
to be otherwise in compliance with this section. 
"(2) CONTRACT RENT.—The Secretary shall estabUsh the 
contract rents under such contracts at levels that, together 
with other resources available to the purchasers, provide suffi-
cient amounts for the necessary costs of rehabilitating and 
operating the multifamily housing project and do not exceed 
the percentage of the existing housing fair market rentals for 
the market area in which the project assisted under the contract 
is located as determined by the Secretary under section 8(c) 
of the United States Housing Act of 1937. 
"(i) RIGHT OF FIRST REFUSAL FOR LOCAL AND STATE GOVERN-
MENT AGENCIES.— 
"(1) NOTIFICATION.—Not later than 30 days afl;er the Sec-
retary acquires title to a multifamily housing project, the Sec-
retary shall notify the appropriate unit of general local govern-
ment (including public housing agencies) and State agency or 
agencies designated by the chief executive officer of the State 
in which the project is located of such acquisition of title and 
that, for a period beginning upon such notification that does 
not exceed 90 days, such unit of general local government 
and agency or agencies shall have the exclusive right under 
this subsection to make bona fide offers to purchase the project. 
"(2) RIGHT OF FIRST REFUSAL.—During the 90-day period, 
the Secretary may not sell or offer to sell the multifamily 
housing project other than to a party notified under paragraph 
(1), unless the unit of general local government and the des-
ignated State agency or agencies notify the Secretary that 
they will not make an offer to purchase the project. The Sec-
retary shall accept a bona fide offer to purchase the project 
made during such period if it complies with the terms and 
conditions of the disposition plan for the project or is otherwise 
acceptable to the Secretary. 
"(3) PROCEDURE.—^The Secretary shsQl establish any proce-
dures necessary to carry out this subsection, 
"(j) DISPLACEMENT OF TENANTS AND RELOCATION ASSISTANCE.— 
"(1) IN GENERAL.—^Whenever tenants will be displaced as 
a result of the demolition of, repairs to, or conversion in the 
use of, a multifamily housing project that is owned by the 
PUBLIC LAW 103-233—APR. 11, 1994 
108 STAT. 355 
Secretary (or for which the Secretary is mortgagee in posses-
sion), the Secretary shall identify tenants who will be displaced, 
and shall notify all such tenants of their pending displacement 
and of any relocation assistance that may be available. In 
the case of a multifamily housing project that is subject to 
a mortgage held by the Secretary, the Secretary shall require 
the owner of the project to carry out the requirements of this 
paragraph, if the Secretary has authorized the demolition of, 
repairs to, or conversion in the use of such multifamily housing 
project. 
"(2) RIGHTS OF DISPLACED TENANTS.—The Secretary shall 
ensure for any such tenant (who continues to meet applicable 
qualification standards) the right— 
"(A) to return, whenever possible, to a repaired or 
rebuilt unit; 
"(B) to occupy a unit in another multifamily housing 
project owned by the Secretary; 
"(C) to obtain housing assistance under the United 
States Housing Act of 1937; or 
"(D) to receive any other available similar relocation 
assistance as the Secretary determines to be appropriate, 
"(k) MORTGAGE AND PROJECT SALES.— 
"(1) IN GENERAL.—The Secretary may not approve the sale 
of any loan or mortgage held by the Secretary (including any 
loan or mortgage owned by the Government National Mortgage 
Association) on any subsidized project or formerly subsidized 
project, unless such sale is made as part of a transaction 
that will ensure that such project will continue to operate 
at least until the maturity date of such loan or mortgage, 
in a manner that will provide rental housing on terms at 
least as advantageous to existing and future tenants as the 
terms required by the program under which the loan or mort-
gage was made or insured prior to the assignment of the 
loan or mortgage on such project to the Secretary. 
"(2) SALE OF CERTAIN PROJECTS.—The Secretary may 
not 
approve the ssde of any subsidized project— 
"(A) that is subject to a mortgage held by the Secretary, 
or 
"(B) if the sale transaction involves the provision of 
any additional subsidy funds by the Secretary or a recasting 
of the mortgage, 
unless such sale is made as part of a transaction that will 
ensure that the project will continue to operate, at least until 
the maturity date of the loan or mortgage, in a manner that 
will provide rental housing on terms at least as advantageous 
to existing and future tenants as the terms required by the 
program under which the loan or mortgage was made or insured 
prior to the proposed sale of the project. 
"(3) 
MORTGAGE SALES TO STATE AND LOCAL GOVERN-
MENTS.—Notwithstanding any provision of law that requires 
competitive sales or bidding, the Secretary may carry out nego-
tiated sales of mortgages held by the Secretary, without the 
competitive selection of purchasers or intermediaries, to units 
of general local government or State agencies, or groups of 
investors that include at least one such unit of general local 
government or State agency, if the negotiations are conducted 
with such agencies, except that— 
108 STAT. 356 
PUBLIC LAW 103-233—APR. 11, 1994 
"(A) the terms of any such sale shall include the agree-
ment of the purchasing agency or unit of local government 
or State agency to act as mortgagee or owner of a beneficial 
interest in such mortgages, in a manner consistent with 
maintsdning the projects that are subject to such mortgages 
for occupgincy by the general tenant group intended to 
be served by the applicable mortgage insurance program, 
including, to the extent the Secretary determines appro-
priate, authorizing such unit of local government or State 
agency to enforce the provisions of any regulatory agree-
ment or other program requirements applicable to the 
related projects; and 
"(B) the sales prices for such mortgages shall be, in 
the determination of the Secretary, the best prices that 
may be obtained for such mortgages from a unit of general 
local government or State agency, consistent with the 
expectation and intention that the projects financed will 
be retained for use under the applicable mortgage insur-
ance program for the life of the initial mortgage insurance 
contract. 
"(4) 
SALE 
OF 
MORTGAGES 
COVERING 
UNSUBSIDIZED 
PROJECTS.—^Notwithstanding any other provision of law, the 
Secretary may sell mortgages held on projects that are not 
subsidized or formerly subsidized projects on such terms and 
conditions as the Secretary may prescribe. 
"(5) MORTGAGE SALE DEMONSTRATION.—^The Secretary may 
carry out a demonstration to test the feasibility of restructuring 
and disposing of troubled multifamily mortgages held by the 
Secretary through the establishment of partnerships with pub-
lic, private, and nonprofit entities. 
"(6) PROJECT SALE DEMONSTRATION.—The Secretary may 
carry out a demonstration to test the feasibility of disposing 
of troubled multifamily housing projects that are owned by 
the Secretary through the establishment of partnerships with 
public, private, and nonprofit entities. 
"(1) REPORT TO CONGRESS.—^Not later than June 1 of each 
year, the Secretary shall submit to the Congress a report describing 
the status of multifamily housing projects owned by or subject 
to mortgages held by the Secretary, on an aggregate basis, which 
highlights the differences, if any, between the subsidized and the 
imsubsidized inventory. The report shall include— 
"(1) the average and median size of the projects; 
"(2) the geographic locations of the projects, by State and 
region; 
"(3) the years during which projects were assigned to the 
Department, and the average and median length of time that 
projects remain in the HUD-held inventory; 
"(4) the status of HUD-held mortgages; 
"(5) the physical condition of the HUD-held and HUD-
owned inventory; 
"(6) the occupancy profile of the projects, including the 
income, family size, race, and ethnic origin of current tenants, 
and the rents paid by such tenants; 
"(7) the proportion of units that are vacant; 
"(8) the number of projects for which the Secretary is 
mortgagee in possession; 
"(9) the number of projects sold in foreclosure sales; 
PUBLIC LAW 103-233—APR. 11, 1994 
108 STAT. 357 
"(10) the number of HUD-owned projects sold; 
"(11) a description of actions undertaken pursuant to this 
section, including a description of the effectiveness of such 
actions and any impediments to the disposition or management 
of multifamily housing projects; 
"(12) a description of the extent to which the provisions 
of this section and actions taken under this section have dis-
placed tenants of multifamily housing projects; 
"(13) a description of any of the functions performed in 
connection with this section that are contracted out to public 
or private entities or to States; and 
"(14) a description of the activities carried out under sub-
section (i) during the preceding year.". 
(c) CLARIFICATION OF FEDERAL PREFERENCES.— 
(1) PUBLIC HOUSING TENANCY.—Section 6(c)(4)(A)(i) of the 
United States Housing Act of 1937 (42 U.S.C. 1437d(c)(4)(A)(i)) 
is amended by inserting after "displaced" the following: "(includ-
ing displacement because of disposition of a multifamily housing 
project under section 203 of the Housing and Community Devel-
opment Amendments of 1978)". 
(2) SECTION 8 ASSISTANCE.—Section 8(d)(l)(A)(i) of the 
United States Housing Act of 1937 (42 U.S.C. 1437fi:d)(l)(A)(i)) 
is amended by inserting after "displaced" the following: "(includ-
ing displacement because of disposition of a multifamily housing 
project under section 203 of the Housing and Community Devel-
opment Amendments of 1978)". 
(3) VOUCHER ASSISTANCE.—The first sentence of section 
8(o)(3)(B) of the United States Housing Act of 1937 (42 U.S.C. 
1437f(o)(3)(B)) is amended by inserting after "displaced" the 
following: "(including displacement because of disposition of 
a multifamily housing project under section 203 of the Housing 
and Community Development Amendments of 1978)". 
(d) DEFINITION OF OWNER.—Section 8(f)(1) of the United States 
Housing Act of 1937 (42 U.S.C. 1437fi:f)(l)) is amended by inserting 
"an agency of the Federal Government," after "cooperative,". 
(e) AMENDMENT TO NATIONAL HOUSING ACT.—^Title V of the 
National Housing Act (12 U.S.C. 1731a et seq.) is amended by 
adding at the end the following new section: 
"PARTIAL PAYMENT OF CLAIMS ON MULTIFAMILY HOUSING PROJECTS 
"SEC. 541. (a) AUTHORITY.—Notwithstanding any other provi- 12 USC I735f-19. 
sion of law, if the Secretary is requested to accept assignment 
of a mortgage insured by the Secretary that covers a multifamily 
housing project (as such term is defined in section 203(b) of the 
Housing and Community Development Amendments of 1978) and 
the Secretary determines that partial payment would be less costly 
to the Federal Grovernment than other reasonable alternatives for 
maintaining the low-income character of the project, the Secretary 
may request the mortgagee, in lieu of assignment, to— 
"(1) accept partial pa3anent of the claim under the mortgage 
insurance contract; and 
"(2) recast the mortgage, under such terms and conditions 
as the Secretary may determine. 
"(b) REPAYMENT.—^As a condition to a partisd claim payment 
under this section, the mortgagor shall agree to repay to the Sec-
retary the amount of such payment and such obligation shall be 
108 STAT. 358 
PUBLIC LAW 103-233—APR. 11, 1994 
Regulations. 
12 use 
lOTOlz-ll note. 
12 use 1715z-la 
note. 
12 use 1715z-la 
note. 
secured by a second mortgage on the property on such terms and 
conditions as the Secretary may determine. . 
(f) EFFECTIVE DATE.—The Secretary shall issue interim regula-
tions necessary to implement the amendments made by subsections 
(b) through (d) not later than 90 days after the date of tne enactment 
of this Act. Such interim regulations shall take effect upon issuance 
and invite public comment on the interim regulations. The Secretary 
shall issue final regulations to implement such amendments sifter 
opportunity for such public comment, but not later than 12 months 
after the date of issuance of such interim regulations. 
SEC. 102. REPEAL OF STATE AGENCY MULTIFAMILY PROPERTY DIS-
POSITION DEMONSTRATION. 
Section 184 of the Housing and Community Development Act 
of 1987 (12 U.S.C. 1701Z-11 note) is hereby repealed. 
SEC. 103. PREVENTING MORTGAGE DEFAULTS ON MULTIFAMILY HOUS-
ING PROJECTS. 
(a) MULTIFAMILY HOUSING PLANNING AND INVESTMENT STRATE-
GIES.— 
(1) PREPARATION OF ASSESSMENTS FOR INDEPENDENT ENTI-
TIES.—-Section 402(a) of the Housing and Community Develop-
ment Act of 1992 (12 U.S.C. 1715-la note) is amended by 
adding at the end the following new sentence: "The assessment 
shall be prepared by an entity that does not have an identity 
of interest with the owner.". 
(2) TIMING OF SUBMISSION OF NEEDS ASSESSMENTS.—Section 
402(b) of the Housing and Community Development Act of 
1992 (12 U.S.C. 1715z-la note) is amended to read as follows: 
"(b) TIMING.—^To ensure that assessments for all covered multi-
family housing properties will be submitted on or before the conclu-
sion of fiscal year 1997, the Secretary shall require the owners 
of such properties, including covered multifamily housing properties 
for the elderly, to submit the assessments for the properties in 
accordance with the following schedule: 
"(1) For fiscal year 1994, 10 percent of the aggregate num-
ber of such properties. 
"(2) For each of fiscal years 1995, 1996, and 1997, an 
additional 30 percent of the aggregate number of such prop-
erties.". 
(3) REVIEW OF COMPREHENSIVE NEEDS ASSESSMENTS.—Sec-
tion 404(d) of the Housing and Community Development Act 
of 1992 (12 U.S.C. 1715-la note) is amended to read as follows: 
"(d) REVIEW.— 
"(1) IN GENERAL.—^The Secretary shall review each com-
prehensive needs assessment for completeness and adequacy 
before the expiration of the 90-day period beginning on the 
receipt of the assessment and shall notify the owner of the 
property for which the assessment was submitted of the find-
ings of such review. 
"(2) INCOMPLETE OR INADEQUATE ASSESSMENTS.—If the Sec-
retary determines that the assessment is substantially incom-
plete or inadequate, the Secretary shall— 
"(A) notify the owner of the portion or portions of 
the assessment requiring completion or other revision; and 
"(B) require the owner to submit an amended assess-
ment to the Secretary not later than 30 days after such 
notification.". 
PUBLIC LAW 103-233—APR. 11, 1994 
108 STAT. 359/ 
(4) REPEAL OF NOTICE PROVISION.—Section 404 of the Hous-
ing and Community Development Act of 1992 (12 U.S.C. 1715-
la note) is amended by striking subsection (f). 
(5) PUBLICATION.—Section 404 of the Housing and Commu-
nity Development Act of 1992 (12 U.S.C. 1715z-la note), as 
amended by paragraph (4) of this subsection, is further amend-
ed by inserting after subsection (e) the following new subsection: 
"(f) PUBLICATION OF METHOD FOR RECEIVING CAPITAL NEEDS 
ASSESSMENT.—The Secretary shall cause to be published in the 
Federal Register the method by which the Secretsiry determines 
which capital needs assessments will be received each year in 
accordance with section 402(b) and subsection (d) of this section.". 
(6) FUNDING.—Title IV of the Housing and Community 
Development Act of 1992 (12 U.S.C. 1715z-la note) is amended 
by adding at the end the following new section: 
-SEC. 409. FUNDING. 
"(a) ALLOCATION OF ASSISTANCE.—^Based upon needs identified 
in comprehensive needs assessments, and subject to otherwise 
appHcable program requirements, including selection criteria, the 
Secretary may allocate the following assistance to owners of covered 
multifamily housing projects and may provide such assistance on 
a noncompetitive basis: 
"(1) Operating assistance and capital improvement assist-
ance for troubled multifamily housing projects pursuant to sec-
tion 201 of the Housing and Community Development Amend-
ments of 1978, except for assistance set aside under section 
201(n)(l). 
"(2) Loan management assistance available pursuant to 
section 8 of the United States Housing Act of 1937. 
"(b) OPERATING ASSISTANCE AND CAPITAL IMPROVEMENT ASSIST-
ANCE.—In providing assistance under subsection (a) the Secretary 
shall use the selection criteria set forth in section 201(n) of the 
Housing and Community Development Amendments of 1978. 
"(c) AMOUNT OF ASSISTANCE.—The Secretary may fund all or 
only a portion of the needs identified in the capital needs assessment 
of an owner selected to receive assistance under this section.", 
(b) FLEXIBLE SUBSIDY PROGRAM.— 
(1) DELETION OF UTILITY COST REQUIREMENTS.—Section 
201(i) of the Housing and Community Development Amend-
ments of 1978 (12 U.S.C. 1715z-la(i)) is hereby repealed. 
(2) REPEAL OF MANDATORY CONTRIBUTION FROM OWNER.— 
Section 201(k)(2) of the Housing and Community Development 
Amendments of 1978 (12 U.S.C. 1715z-la(k)(2)) is amended 
by striking ", except that" and all that follows Eind inserting 
a period. 
(3) FUNDING.—Section 201(n) of the Housing and Commu-
nity Development Amendments of 1978 (42 U.S.C. 1715z-la(n)) 
is amended to read as follows: 
"(n) ALLOCATION OF ASSISTANCE.— 
"(1) SET-ASIDE.—In providing, and contracting to provide, 
assistance for capital improvements under this section, in each 
fiscal year the Secretary shall set aside an amount, as deter-
mined by the Secretary, for projects that are eligible for incen-
tives under section 224(b) of the Emergency Low Income Hous-
ing Preservation Act of 1987, as such section existed before 
the date of enactment of the Cranston-Gonzalez National 
12 u s e 1715z-la 
note. 
Federal 
Register, 
publication. 
12 u s e 1715z-la. 
79-194 O—95-13 : QL 3 Part 1 
108 STAT. 360 
PUBLIC LAW 103-233—APR. 11, 1994 
Affordable Housing Act. The Secretary may make such assist-
ance available on a noncompetitive basis. 
"(2) GENERAL RULES FOR ALLOCATION.—Except as provided 
in paragraph (3), with respect to assistance under this section 
not set aside for projects under paragraph (1), the Secretary— 
"(A) may award assistance on a noncompetitive basis; 
and 
"(B) shall award assistance to eligible projects on the 
basis of— 
"(i) the extent to which the project is physically 
or financially troubled, as evidenced by the comprehen-
sive needs assessment submitted in accordance with 
title IV of the Housing and Community Development 
Act of 1992; and 
**(ii) the extent to which such assistance is nec-
essary and reasonable to prevent the default of feder-
ally insured mortgages. 
"(3) EXCEPTIONS.—The Secretary may make exceptions to 
selection criteria set forth in paragraph (2)(B) to permit the 
provision of assistance to eligible projects based upon— 
"(A) the extent to which such assistance is necessary 
to prevent the imminent foreclosure or default of a project 
whose owner has not submitted a comprehensive needs 
assessment pursuant to title IV of the Housing and 
Commimity Development Act of 1992; 
"(B) the extent to which the project presents an 
imminent threat to the life, health, and s£ifety of project 
residents; or 
"(C) such other criteria as the Secretary may specify 
by regulation or by notice printed in the Federal Register. 
"(4) CONSIDERATIONS.—In providing assistance imder this 
section, the Secretary shall take into consideration— 
"(A) the extent to which there is evidence that there 
will be significant opportunities for residents (including 
a resident council or resident management corporation, 
as appropriate) to be involved in the management of the 
project (except that this paragraph shall have no applica-
tion to projects that are owned as cooperatives); and 
"(B) the extent to which there is evidence that the 
project owner has provided competent management and 
compUed with all regulatory and administrative require-
ments.". 
(4) REPEAL.—Section 201 of the Housing and Community 
Development Amendments of 1978 (12 U.S.C. 1715z-la) is 
amended— 
(A) by striking subsection (o); and 
(B) by redesignating subsection (p) as subsection (o). 
12 u s e 1715z-la 
(c) IMPLEMENTATION AND EFFECTIVE DATES FOR SUBSECTIONS 
"°te. 
(a)AND(b).— 
(1) IN GENERAL.—^Except as provided in paragraph (2), the 
amendments made by subsections (a) and (b) shall apply with 
respect to amounts made available for fiscal year 1994 and 
fiscal years thereafter. 
(2) EXCEPTION.—Section 201(nXl) of the Housing and 
Commiuiity Development Amendments of 1978 (as added by 
the amenchnent made by subsection (b)(3) of this section) shaU 
take effect on the date of enactment of this Act. 
PUBLIC LAW 103-233—APR. 11, 1994 
108 STAT. 361 
12 u s e 1715n 
note. 
Reports. 
(3) NOTICE.—^The Secretary shall, by notice published in Federal 
the Federal Register, establish any requirements necessary to ^®fp^^r.' 
implement the amendments made by subsections (a) and (b). ^" 
The notice shall invite public comments and, not later than Regulations. 
12 months after the date on which the notice is published, 
the Secretary shall issue final regulations based on the initial 
notice, taking into consideration any public comments received. 
(d) STREAMLINED REFINANCING.—As soon as practicable, the 
Secretary shall implement a streamUned refinancing program under 
the authority provided in section 223 of the National Housing 
Act to prevent the default of mortgages insured by the FHA which 
cover multifamily housing projects, as defined in section 203(b) 
of the Housing and Community Development Amendments of 1978. 
(e) GAO STUDY ON PREVENTION OF DEFAULT.— 
(1) IN GENERAL.—^Not later than April 1, 1995, the 
Comptroller General of the United States shall submit to the 
Committee on Banking, Finance and Urban Affairs of the House 
of Representatives and the Committee on Banking, Housing, 
and Urban Affairs of the Senate a report that evaluates the 
adequacy of loan loss reserves in the General Insurance and 
Special Risk Insurance Funds and presents recommendations 
for the Secretary to prevent losses from occurring. 
(2) CONTENTS.—^The report submitted under paragraph (1) 
shall— 
(A) evaluate the factors considered in arriving at loss 
estimates and determine whether other factors should be 
considered; 
(B) determine the relative benefit of creating a new, 
actuarially sound insurance fund for all new multifamOy 
housing insurance commitments; and 
(C) recommend alternatives to the Secretary's current 
procedures for preventing the future default of multifamily 
housing project mortgages insured under title II of the 
National Housing Act. 
(f) GAO STUDY ON ACTUARIAL SOUNDNESS OF CERTAIN INSUR-
ANCE PROGRAMS.— 
(1) IN GENERAL.—^Not later than April 1, 1995, the 
Comptroller General of the United States shall submit to the 
Committee on Banking, Housing, and Urban Affairs of the 
Senate and the Committee on Bemking, Finance and Urban 
Affairs of the House of Representatives a report that evaluates, 
in connection with the General Insurance Fund, the role and 
performance of the nursing home, hospital, and retirement 
service center insurance programs. 
(2) CONTENTS.—^The reports submitted under paragraph 
(1) shall— 
(A) evaluate the strategic importance of these insur-
ance programs to the mission of the FHA; 
(B) evaluate the impact of these insurance programs 
upon the financial performance of the General Insurance 
Fund; 
(C) assess the potential losses expected under these 
programs through fiscal year 1999; 
(D) evaluate the risk of these programs to the General 
Insurance Fund in connection with changes in national 
health care policy; 
Reports. 
108 STAT. 362 
PUBLIC LAW 103-233—APR. 11, 1994 
Reports. 
Reports. 
12 u s e 1715z-la 
note. 
Federal 
Register, 
publication. 
Effective date. 
Regulations. 
(E) assess the ability of the FHA to manage these 
programs; and 
(F) make recommendations for any necessary changes, 
(g) RISK ASSESSMENT.— 
(1) SPECIAL RISK INSURANCE FUND.—Section 238(c) of the 
National Housing Act (12 U.S.C. 1715z-3(c)) is amended by 
adding at the end the following new paragraph: 
"(3) The Secretary shall undertake an annual assessment 
of the risks associated with each of the insurance programs 
comprising the Special Risk Insurance Fund, and shall present 
findings from such review to the Congress in the FHA Annual 
Management Report.". 
(2) GENERAL INSURANCE FUND.—Section 519 of the National 
Housing Act (12 U.S.C. 1735c) is amended by adding at the 
end the following new subsection: 
"(g) RISK ASSESSMENT.—The Secretary shall undertake an 
annual assessment of the risks associated with each of the insurance 
programs comprising the General Insurance Fund, and shall present 
findings from such review to the Congress in the FHA Annual 
Management Report.". 
(h) ALTERNATIVE USES FOR PREVENTION OF DEFAULT.— 
(1) IN GENERAL.—Subject to notice to and comment by 
existing tenants, to prevent the imminent default of a multifam-
ily housing project subject to a mortgage insured under title 
II of the National Housing Act, the Secretary may authorize 
the mortgagor to use the project for purposes not contemplated 
by or permitted under the regulatory agreement, if— 
(A) such other uses are acceptable to the Secretary; 
(B) such other uses would be otherwise insurable imder 
title II of the National Housing Act; 
(C) the outstanding principal balance on the mortgage 
covering such project is not increased; 
(D) any financial benefit accruing to the mortgagor 
shall, subject to the discretion of the Secretary, be applied 
to project reserves or project rehabilitation; and 
, (E) such other use serves a public purpose. 
(2) DISPLACEMENT PROTECTION.—The Secretary may take 
actions under paragraph (1) only if— 
(A) tenant-based rental assistance under section 8 of 
the United States Housing Act of 1937 is made available 
to each eligible family residing in the project that is dis-
placed as a result of such actions; and 
(B) the Secretary determines that sufficient habitable, 
affordable (as such term is defined in section 203(b) of 
the Housing and Community Development Amendments 
of 1978) rental housing is available in the market area 
in which the project is located to ensure use of such assist-
ance. 
(3) IMPLEMENTATION.—The Secretary shall, by notice pub-
lished in the Federal Register, which shall take effect upon 
publication, establish such requirements as may be necessary 
to implement the amendments made by this subsection. The 
notice shall invite public comments and, not later than 12 
months after the date on which the notice is published, the 
Secretary shall issue final regulations based on the initial 
notice, taking into account any pubUc comments received. 
PUBLIC LAW 103-233—APR. 11, 1994 
108 STAT. 363 
SEC. 104. INTEREST RATES ON ASSIGNED MORTGAGES. 
Section 7(iX5) of the Department of Housing and Urban Devel-
opment Act (42 U.S.C. 3535(i)(5)) is amended by striking the first 
semicolon, and all that follows through "as determined by the 
Secretary". 
SEC. 105. AUTHORIZATION OF APPROPRIATIONS. 
(a) SPECIAL RISK INSURANCE FUND.—Section 238(b) of the 
National Housing Act (12 U.S.C. 1715z-3(b)) is amended by striking 
the fifth sentence. 
(b) GENERAL INSURANCE FUND.—Section 519 of the National 
Housing Act (12 U.S.C. 1735c) is amended— 
(1) by striking subsection (f); and 
(2) by redesignating subsection (g) (as added by section 
103(g)(2) of this Act) as subsection (f). 
(c) MULTIFAMILY INSURANCE FUND APPROPRIATIONS.—Title V 
of the National Housing Act (12 U.S.C. 1731a et seq.) is amended 
by adding after section 541 (as added by section 101(e) of this 
Act) the following new section: 
"SEC 542. AUTHORIZATION OF APPROPRIATIONS FOR GENERAL AND 12 USC 1735f-20. 
SPECIAL RISK INSURANCE FUNDS. 
'There are authorized to be appropriated such sums as may 
be necessary for each of fiscal years 1994 and 1995, to be allocated 
in any manner that the Secretary determines appropriate, for the 
following costs incurred in conjunction with programs authorized 
under the (General Insurance Fund, as provided by section 519, 
and the Special Risk Insurance Fund, as provided by section 238: 
"(1) The cost to the Grovemment, as defined in section 
502 of the Congressional Budget Act, of new insurance commit-
ments. 
"(2) The cost to the Government, as defined in section 
502 of the Congressional Budget Act, of modifications to existing 
loans, loan guarantees, or insurance commitments. 
"(3) The cost to the (Jovemment, as defined in section 
502 of the Congressional Budget Act, of loans provided under 
section 203(f) of the Housing and Community Development 
Amendments of 1978. 
"(4) The costs of the rehabilitation of multifamily housing 
projects (as defined in section 203(b) of the Housing and 
Community Development Amendments of 1978) upon disposi-
tion by the Secretary.". 
TITLE II—OTHER PROGRAM REFORMS 
Subtitle A—^Home Investment Partnerships 
Program 
SEC. 201. PARTICIPATION BY STATE AGENCIES OR INISTRUMENTAL-
ITIES. 
Section 104(2) of the Cranston-Gonzalez National Affordable 
Housing Act (42 U.S.C. 12704(2)) is amended— 
(1) by striking "and" after "Columbia,"; and 
(2) by inserting before the period at the end the following: 
", or any agency or instrumentality thereof that is established 
pursuant to legislation and designated by the chief executive 
108 STAT. 364 
PUBLIC LAW 103-233—APR. 11, 1994 
officer to act on behalf of the State with regard to the provisions 
of this Act". 
SEC. 202. SIMPLIFICATION OF PROGRAM-WIDE INCOME TARGETING 
FOR RENTAL HOUSING. 
Section 214(1) of the Cranston-Gronzalez National Affordable 
Housing Act (42 U.S.C. 12744(1)) is amended— 
(1) in subparagraph (A)— 
(A) by striking "such funds are invested with respect 
to dwelling units that are occupied by" and inserting "(i) 
the families receiving such rental assistance are"; and 
(B) by striking ", and" and inserting ", or (ii) the 
dwelling units assisted with such funds are occupied by 
families having such incomes; and"; and 
(2) in subparagraph (B)— 
(A) by striking "such funds are invested with respect 
to dwelling units that are occupied by" and inserting "(i) 
the families receiving such rental assistance are"; and 
(B) by inserting before the semicolon at the end the 
following: ", or (ii) the dwelling units assisted with such 
funds are occupied by such households". 
SEC. 203. HOMEOWNERSHIP UNITS. 
(a) REMOVAL OF FIRST-TIME HOMEBUYER REQUIREMENT.—Sec-
tion 215(b) of the CrEuiston-Gonzalez National Affordable Housing 
Act (42 U.S.C. 12745(b)) is amended— 
(1) by striking paragraph (3); and 
(2) by redesignating paragraphs (4) and (5) as paragraphs 
(3) and (4), respectively. 
(b) 
SIMPLIFICATION 
OF 
RESALE 
PROVISIONS.—Section 
215(b)(3XB) of the Cranston-Gronzalez National Affordable Housing 
Act (42 U.S.C. 12745(b)(3)(B)), as so redesignated by subsection 
(a) of this section, is amended by striking "subsection" and inserting 
"title". 
SEC. 204. SIMPLIFICATION OF MATCHING REQUIREMENTS. 
Section 22(Xa) of the Cranston-Gonzalez National Affordable 
Housing Act (42 U.S.C. 12750(a)) is amended to read as follows: 
"(a) CONTRIBUTION.—Each participating jurisdiction shall make 
contributions to housing that qualifies as affordable housing under 
this title that total, throughout a fiscal year, not less than 25 
percent of the funds drawn from the jurisdiction's HOME Invest-
ment Trust Fund in such fiscal year. Such contributions shall 
be in addition to any amounts made available under section 
216(3)(A)(ii).". 
SEC. 205. REPEAL OF SEPARATE AUDIT REQUIREMENT. 
Section 283 of the Cranston-Gonzalez National Affordable Hous-
ing Act (42 U.S.C. 12833) is amended— 
(1) by striking the section designation and heading and 
inserting the following: 
"SEC. 283. AUDITS BY COMPTROLLER GENERAL."; 
(2) by striking subsection (a); 
(3) in subsection (b)— 
(A) by striking "(b) AUDITS BY THE COMPTROLLER GEN-
ERAL.—": 
PUBLIC LAW 103-233—APR. 11, 1994 
108 STAT. 365 
(B) by redesignating paragraphs (1) and (2) as sub-
sections (a) and (b), respectively; and 
(C) by moving subsections (a) and (b), as so redesig-
nated by subparagraph (B), 2 ems to the left so that such 
subsections are flush with the left margin; and 
(4) in subsection (a), as so redesignated by paragraph (3)(B), 
by striking the second sentence. 
SEC. 206. ENVIRONMENTAL REVIEW REQUIREMENTS. 
Section 288 of the Cranston-Gonzalez National Affordable Hous-
ing Act (42 U.S.C. 12838) is amended— 
(1) in subsection (a)— 
(A) in the first sentence, by striking "participating 
jurisdictions" and inserting "jurisdictions, Indian tribes, 
or insular areas"; and 
(B) by adding at the end the following new sentences: 
"The regulations shall provide— 
Regulations. 
"(1) for the monitoring of the environmental reviews per-
formed under this section; 
"(2) in the discretion of the Secretary, to facilitate training 
for the performance of such reviews; and 
"(3) for the suspension or termination of the assumption 
under this section. 
The Secretary's duty under the preceding sentence shall not be 
construed to limit or reduce any responsibility assumed by a State 
or unit of general local government with respect to any particular 
release of funds."; 
(2) in the first sentence of subsection (b), by striking 
"participating jurisdiction" and inserting "jurisdiction, Indian 
tribe, or insular area"; 
(3) in subsection (c)(4)(B), by striking "participating juris-
diction" and inserting "jurisdiction, Indian tribe, or insular 
area"; and 
(4) in subsection (d), by striking "ASSISTANCE TO A STATE.— 
In the case of assistance to States" and inserting the following: 
"ASSISTANCE TO UNITS OF GENERAL LOCAL GOVERNMENT FROM 
A STATE.—In the case of assistance to units of general local 
government from a State". 
SEC. 207. USE OF CDBG FUNDS FOR HOME PROGRAM EXPENSES. 
(a) ADMINISTRATIVE EXPENSES.—Section 105(a)(13) of the Hous-
ing and 
Community Development Act of 1974 (42 U.S.C. 
5305(a)(13)) is amended by inserting after "charges related to" 
the following: "(A) administering the HOME program under title 
II of the Crsuiston-Gonzalez National Affordable Housing Act; and 
(B)". 
(b) PROJECT DELIVERY COSTS.—Section 105(a)(21) of the Hous-
ing and 
Community 
Development Act of 1974 (42 U.S.C. 
5305(a)(21)) is amended— 
(1) by inserting "in connection with tenant-based rental 
assistance and affordable housing projects assisted under title 
II of the Cranston-Gonzalez National Affordable Housing Act" 
after "housing counseling"; and 
(2) by striking "authorized" and all that follows through 
"any law" and inserting "assisted under title II of the Cranston-
Gonzalez Nationsd Affordable Housing Act". 
108 STAT. 366 
PUBLIC LAW 103-233—APR. 11, 1994 
SEC. 208. FLEXmiLITY OF HOME PROGRAM FOR DISASTER AREAS. 
Title II of the Cranston-Gonzalez National Affordable Housing 
Act (42 U.S.C. 12721 et seq.) is amended by adding at the end 
the following new section: 
42 use 12840. 
«SEC. 290. SUSPENSION OF REQUIREMENTS FOR DISASTER AREAS. 
"For funds designated under this title by a recipient to address 
the damage in an area for which the President has declared a 
disaster under title IV of the Robert T. Stafford Disaster Relief 
and Emergency Assistance Act, the Secretary may suspend all 
statutory requirements for purposes of assistance under this title 
for that area, except for those related to public notice of funding 
availability, nondiscrimination, fair housing, labor standards, 
environmental standards, and low-income housing affordabiUty.". 
42 use 5301 
SEC. 209. APPLICABILITY AND REGULATIONS. 
The amendments made by this title shall apply with respect 
to any amounts made available to carry out title II of the Cranston-
Gronzalez National Affordable Housing Act after the date of the 
enactment of this Act and any amounts made available to carry 
out such title before such date of enactment that remain uncommit-
ted on such date. The Secretary shall issue any regulations nec-
essary to carry out the amendments made by this title not later 
than the expiration of the 45-day period beginning on the date 
of the enactment of this Act. 
Subtitle B—HOPE Homeownership 
Program 
SEC. 221. MATCHING REQUIREMENT UNDER HOPE FOR HOMEOWNER-
SHIP OF SINGLE FAMILY HOMES PROGRAM. 
Section 443(c)(1) of the Cranston-Gonzalez National Affordable 
Housing Act (42 U.S.C. 12893(c)(1)) is amended by striking "33 
percent and inserting "25 percent". 
Subtitle C—Community Development 
Block Grants 
SEC. 231. SECTION 108 ELIGIBLE ACTIVITIES. 
The first sentence of section 108(a) of the Housing and Commu-
nity Development Act of 1974 (42 U.S.C. 5308(a)) is amended— 
(1) by striking "or" after "section 105(a);"; and 
(2) by inserting before the period the following: "; (5) the 
acquisition, construction, reconstruction, or installation of pub-
lic facilities (except for buildings for the general conduct of 
government); or (6) in the case of colonias (as such term is 
defined in section 916 of the Cranston-Gonzalez National 
Affordable Housing Act), pubUc works and site or other 
improvements". 
SEC. 
232. 
ECONOMIC 
DEVELOPMENT 
GRANTS. 
(a) GRANTS.— 
(1) IN GENERAL.—Section 108 of the Housing and Commu-
nity Development Act of 1974 (42 U.S.C. 5308) is amended 
by adding at the end the following new subsection: 
PUBLIC LAW 103-233—APR. 11, 1994 
108 STAT. 367 
"(q) ECONOMIC DEVELOPMENT GRANTS.— 
"(1) AUTHORIZATION.—^The Secretary may make grants in 
connection with notes or other obligations guaranteed under 
this section to eligible public entities for the purpose of enhanc-
ing the security of loans guaranteed under this section or 
improving the viability of projects financed with loans guaran-
teed under this section. 
"(2) ELIGIBLE ACTIVITIES.—^Assistance imder this subsection 
may be used only for the purposes of and in conjunction with 
projects and activities assisted under subsection (a). 
"(3) APPLICATIONS.—^Applications for assistance under this 
subsection may be submitted only by eligible public entities, 
and shall be in the form and in accordance with the procedures 
established by the Secretary. Eligible public entities may apply 
for grants only in conjunction with requests for guarantees 
under subsection (a). 
"(4) SELECTION CRITERLV.-The Secretary shall estabhsh 
criteria for awarding assistance under this subsection. Such 
criteria shall include— 
"(A) the extent of need for such assistance; 
"(B) the level of distress in the community to be served 
and in the jurisdiction applying for assistance; 
"(C) the quality of the plan proposed and the capacity 
or potential capacity of the appUcant to successfully carry 
out the plan; and 
"(D) such other factors as the Secretary determines 
to be appropriate.". 
(2) CONFORMING AMENDMENT.—Title I of the Housing and 
Community Development Act of 1974 (42 U.S.C. 5301 et seq.) 
is amended— 
(A) in section 101(c) in the second sentence, by insert- 42 use 5301. 
ing "or a grant" after "guarantee"; and 
(B) in section 104(b)(3), by inserting "or a grant" after 42 USC 5304. 
"guarantee". 
(b) USE OF UDAG RECAPTURES.—Section 119(o) of the Housing 
and Community Development Act of 1974 (42 U.S.C. 5318(o)) is 
amended by inserting before the period the following: ", except 
that amounts available to the Secretary for use under this sub-
section as of October 1, 1993, and amounts released to the Secretary 
pursuant to subsection (t) may be used to provide grants imder 
section 108(q).". 
(c) UDAG RETENTION PROGRAM.— 
(1) AMENDMENT.—Section 119 of the Housing and Commu-
nity Development Act of 1974 (42 U.S.C. 5318) is amended 
by adding at the end the following new subsection: 
"(t) UDAG RETENTION PROGRAM.—If a grant or a portion of 
a grant under this section remains unexpended upon the issuance 
of a notice implementing this subsection, the grsuitee may enter 
into an agreement, as provided under this subsection, with the 
Secretary to receive a percentage of the grant amount and relin-
quish all claims to the balance of the grant within 90 days of 
the issuance of notice implementing this subsection (or such later 
date as the Secretary may approve). The Secretary shall not recap-
ture any funds obligated pursuant to this section during a period 
beginning on the date of enactment of the Multifamily Housing 
Property Disposition Reform Act of 1994 until 90 days sifter the 
108 STAT. 368 
PUBLIC LAW 103-233—APR. 11, 1994 
Federal 
Register, 
publication. 
Effective date. 
42 u s e 5318 
note. 
issuance of a notice implementing this subsection. A grantee may 
receive as a grant under this subsection— 
"(1) 33 percent of such unexpended amounts if— 
"(A) the grantee agrees to expend not less than one-
half of the amount received for activities authorized pursu-
£int to section 108(q) and to expend such funds in conjunc-
tion with a loan guarantee made under section 108 at 
least equal to twice the amount of the funds received; 
and 
"(B)(i) the remainder of the amoimt received is used 
for economic development activities eUgible under title I 
of this Act; and 
"(ii) except when waived by the Secretary in the case 
of a severely distressed jurisdiction, not more than one-
half of the costs of activities under subparagraph (B) are 
derived from such unexpended amounts; or 
"(2) 25 percent of such unexpended amounts if— 
"(A) the grantee agrees to expend such funds for eco-
nomic development activities eligible under title I of this 
Act; and 
"(B) except when waived by the Secretary in the case 
of a severely distressed jurisdiction, not more than one-
half of the costs of such activities are derived from such 
unexpended amount.". 
(2) IMPLEMENTATION.—Not later than 10 days after the 
date of enactment of this Act, the Secretary shall, by notice 
published in the Federal Register, which shall take effect upon 
publication, establish such requirements as may be necessary 
to implement the amendments made by this subsection. 
SEC. 233. GUARANTEE OF OBLIGATIONS BACKED BY SECTION 108 
LOANS. 
Section 108 of the Housing and Community Development Act 
of 1974 (42 U.S.C. 5308) is amended by adding after subsection 
(q) (as added by section 232(a)(1) of this Act) the following new 
subsection: 
"(r) GUARANTEE OF OBLIGATIONS BACKED BY LOANS.— 
"(1) AUTHORITY.—^The Secretmy may, upon such terms and 
conditions as the Secretary considers appropriate, guarantee 
the timely payment of the principal of and interest on such 
trust certificates or other obligations as may— 
"(A) be offered by the Secretary or by any other offeror 
approved for purposes of this subsection by the Secretary; 
and 
"(B) be based on and backed by a trust or pool com-
posed of notes or other obligations guaranteed or eligible 
for guarantee by the Secretary under this section. 
"(2) FULL FAITH AND CREDIT.—To the same extent as pro-
vided in subsection (f), the full faith and credit of the United 
States is pledged to the payment of all amounts that may 
be required to be paid under any guarantee made by the 
Secretary luider this subsection. 
"(3) SUBROGATION.—^If the Secretary pays a claim under 
a guarantee made under this section, the Secretary shall be 
subrogated for all the rights of the holder of the guaranteed 
certificate or obligation with respect to such certificate or obliga-
tion. 
PUBLIC LAW 103-233—APR. 11, 1994 
108 STAT. 369 
"(4) EFFECT OF LAWS.—NO State or local law, and no Fed-
eral law, shall preclude or limit the exercise by the Secretary 
of— 
"(A) the power to contract with respect to public offer-
ings and other sales of notes, trust certificates, and other 
obligations guaranteed under this section upon such terms 
and conditions as the Secretary deems appropriate; 
"(B) the right to enforce any such contract by any 
means deemed appropriate by the Secretary; and 
"(C) any ownership rights of the Secretary, 
as 
applicable, in notes, certificates, or other obHgations 
guaranteed under this section, or constituting the trust 
or pool against which trust certificates, or other obligations 
guaranteed under this section, are offered.". 
SEC. 234. FLEXIBILITY OF CDBG PROGRAM FOR DISASTER AREAS. 
Title I of the Housing and Community Development Act of 
1974 (42 U.S.C. 5301 et seq.) is amended by adding at the end 
the following new section: 
"SEC. 122. SUSPENSION OF REQUIREMENTS FOR DISASTER AREAS. 
42 USC 5321. 
"For funds designated under this title by a recipient to address 
the damage in an area for which the President has declared a 
disaster under title IV of the Robert T. Stafford Disaster Relief 
and Emergency Assistance Act, the Secretary may suspend all 
requirements for purposes of assistance under section 106 for that 
area, except for those related to public notice of funding availability, 
nondiscrimination, fair housing, labor standards, environmental 
standards, and requirements that activities benefit persons of low-
and moderate-income.". 
TITLE III—TECHNICAL AMENDMENTS 
SEC. 301. DEFINITION OF "FAMILIES". 
The first sentence of section 3(b)(3XB) of the United States 
Housing Act of 1937 (42 U.S.C. 1437a(bX3XB)) is amended by 
striking "means families with children" and inserting "includes 
famiUes with children and". 
SEC. 302. ELIMINATION OF REQUIREMENT TO IDENTIFY CIAP 
REPLACEMENT NEEDS. 
Section 14 of the United States Housing Act of 1937 (42 U.S.C. 
14371) is amended— 
(1) in subsection (d)— 
(A) by striking paragraph (2); 
(B) in paragraph (4), in the matter preceding subpara-
graph (A)— 
(i) by striking "and replacements,"; and 
(ii) by striking "(1), (2), and (3)" and inserting 
"(1) and (2)"; and 
(C) by redesignating paragraphs (3) and (4) as para-
graphs (2) and (3), respectively; and 
(2) in subsection (f)(1)— 
(A) in subparagraph (A), by striking "(d)(4XA)" and 
inserting "(dX3)(A)"; 
(B) by stiiking subparagraph (B); 
108 STAT. 370 
PUBLIC LAW 103-233—APR. 11, 1994 
(C) in subparagraph (C), by striking "(dX4)" and insert-
ing "(dXaf; 
(D) in subparagraph (D)— 
(i) by striking "(1), (2), and (3)" and inserting "(1) 
and (2)"; and 
(ii) by striking "(d)(4)" and inserting "(d)(3)"; and 
(E) by redesignating subparagraphs (C) and (D), as 
so amended, as subparagraphs (B) and (C), respectively; 
(3) in subsection (g), by striking "(d)(4)" and inserting 
"(d)(3)"; and 
(4) in subsection (h)(2), by striking "(d)(4)" and inserting 
"(d)(3)". 
SEC. 303. PROJECT-BASED ACCOUNTING. 
Section .6(c)(4)(E) of the United States Housing Act of 1937 
(42 U.S.C. 1437d(c)(4)(E)) is amended by striking "250" and insert-
ing "500". 
SEC. 304. OPERATING SUBSIDY ADJUSTMENTS FOR ANTICIPATED 
FRAUD RECOVERIES. 
Section 9(a) of the United States Housing Act of 1937 (42 
U.S.C. 1437g(a)) is amended by adding at the end the following 
new paragraph: 
"(4) Adjustments to a public housing agency's operating subsidy 
made by the Secretary under this section shall reflect actual 
changes in rental income collections resulting from the application 
of section 904 of the Stewart B. McKinney Homeless Assistance 
Amendments Act of 1988.". 
SEC. 305. ENVIRONMENTAL REVIEW PROVISIONS. 
(a) LEAD-BASED PAINT HAZARD REDUCTION.—Section 1011 of 
the Housing and Community Development Act of 1992 (42 U.S.C. 
4852) is amended— 
(1) by redesignating subsection (o) as subsection (p); and 
(2) by inserting after subsection (n) the following new sub-
section: 
"(o) ENVIRONMENTAL REVIEW.— 
"(1) IN GENERAL.—^For purposes of environmental review, 
decisionmaking, and action pursuant to the National Environ-
mental Policy Act of 1969 and other provisions of law that 
further the purposes of such Act, a grant under this section 
shall be treated as assistance under the HOME Investment 
Partnership Act, established under title II of the Cranston-
Gronzalez National Affordable Housing Act, and shall be subject 
to the regulations promulgated by the Secretary to implement 
^ 
section 288 of such Act. 
Grants. 
"(2) APPLICABILITY.—^This subsection shall apply to— 
"(A) grants awarded under this section; and 
"(B) grants awarded to States and units of general 
local government for the abatement of significant lead-
based paint and lead dust hazards in low- and moderate-
income owner-occupied units and low-income privately 
owned rental units pursuant to title II of the Departments 
of Veterans Affairs and Housing and Urban Development, 
and Independent Agencies Appropriations Act, 1992 (Public 
Law 102-139,105 Stat. 736).". 
PUBLIC LAW 103-233—APR. 11, 1994 
108 STAT. 371 
(b) PROGRAMS UNDER U^fITED STATES HOUSING ACT OF 1937.— 
Title I of the United States Housing Act of 1937 (42 U.S.C. 1437 
et seq.) is amended by adding at the end the following new section: 
"SEC. 26. ENVIRONMENTAL REVIEWS. 
42 USC 1437x. 
"(a) IN GENERAL.— 
"(1) RELEASE OF FUNDS.—In order to assure that the poU-
cies of the National Environmental Policy Act of 1969 and 
other provisions of law which further the purposes of such 
Act (as specified in regulations issued by the Secretary) are 
most effectively implemented in connection with the expendi-
ture of funds under this title, and to assure to the public 
undiminished protection of the environment, the Secretary may, 
under such regulations, in lieu of the environmental protection 
procedures otherwise applicable, provide for the release of funds 
for projects or activities under this title, as specified by the 
Secretary upon the request of a public housing agency (includ-
ing an Indian housing authority) under this section, if the 
State or unit of general local government, as designated by 
the Secretary in accordance with regulations, assumes all of 
the responsibilities for environmental review, decisionmaking, 
and action pursuant to such Act, and such other provisions 
of law as the regulations of the Secretary may specify, which 
would otherwise apply to the Secretary with respect to the 
release of funds. 
"(2) IMPLEMENTATION.—The Secretary, after consultation Regulations. 
with the Coimcil on Environmental Quality, shall issue such 
regulations as may be necessary to carry out this section. 
Such regulations shall specify the programs to be covered. 
"(b) PROCEDURE.—^The Secretary shall approve the release of 
funds subject to the procedures authorized by this section only 
if, not less than 15 days prior to such approval and prior to any 
commitment of funds to such projects or activities, the public hous-
ing agency (including an Indian housing authority) has submitted 
to the Secretary a request for such release accompanied by a certifi-
cation of the State or unit of general local government which meets 
the requirements of subsection (c). The Secretary's approval of 
any such certification shall be deemed to satisfy the Secretary's 
responsibilities under the National Environmental Policy Act of 
1969 and such other provisions of law as the regulations of the 
Secretary specify insofar as those responsibilities relate to the 
release of funds which are covered by such certification. 
"(c) CERTIFICATION.—^A certification under the procedures 
authorized by this section shall— 
"(1) be in a form acceptable td the Secretary; 
"(2) be executed by the chief executive officer or other 
officer of the State or unit of general local government who 
qualifies under regulations of the Secretary; 
"(3) specify that the State or unit of general local govern-
ment imder this section has fully carried out its responsibilities 
as described under subsection (a); and 
"(4) specify that the certifying officer— 
"(A) consents to assume the status of a responsible 
Federal official under the National Environmental Policy 
Act of 1969 and each provision of law specified in regula-
tions issued by the Secretary insofar as the provisions 
108 STAT. 372 
PUBLIC LAW 103-233—APR. 11, 1994 
of such Act or other such provision of law apply pursuant 
to subsection (a); and 
"(B) is authorized and consents on behalf of the State 
or unit of general local government and himself or herself 
to accept the jurisdiction of the Federal courts for the 
purpose of enforcement of his or her responsibilities as 
such an official. 
"(d) APPROVAL BY STATES.—In cases in which a unit of general 
local government carries out the responsibilities described in sub-
section (c), the Secretary may permit the State to perform those 
actions of the Secretary described in subsection (b) and the perform-
ance of such actions by the State, where permitted by the Secretary, 
shall be deemed to satisfy the Secretary's responsibilities referred 
to in the second sentence of subsection (b).". 
42 u s e 3547. 
(c) SPECIAL PROJECTS.— 
(1) I N GENERAL.— 
(A) RELEASE OF FUNDS.—In order to assure that the 
policies of the National Environmental Policy Act of 1969 
and other provisions of law which further the purposes 
of such Act (as specified in regulations issued by the Sec-
retary) are most effectively implemented in connection with 
the expenditure of funds for special projects appropriated 
under an appropriations Act for the Department of Housing 
and Urban Development, such as special projects under 
the head "Annual Contributions for Assisted Housing" in 
title II of the Departments of Veterans Affairs and Housing 
and Urban Development, and Independent Agencies Appro-
priations 
Act, 
1993, and 
to assure 
to the 
pubhc 
undiminished protection of the environment, the Secretary 
of Housing and Urban Development may, under such regu-
lations, in lieu of the environmental protection procedures 
otherwise applicable, provide for the release of funds for 
particular special projects upon the request of recipients 
of special projects assistance, if the State or unit of general 
local government, as designated by the Secretary in accord-
ance with regulations, assumes all of the responsibilities 
for environmental review, decisionmaking, and action 
pursuant to such Act, and such other provisions of law 
as the regulations of the Secretary specify, that would 
otherwise apply to the Secretary were the Secretary to 
undertake such special projects as Federal projects. 
Regulations. 
(B) IMPLEMENTATION.—^The Secretary shall issue regu-
lations to carry out this subsection only after consultation 
with the Council on Environmental Quality. Such regula-
tions shall— 
(i) provide for monitoring of the performance of 
environmental reviews under this subsection; 
(ii) in the discretion of the Secretary, provide for 
the provision or facilitation of training for such 
performance; and 
(iii) subject to the discretion of the Secretary, pro-
vide for suspension or termination by the Secretary 
of the assumption under subparagraph (A). 
(C) RESPONSIBILITIES OF STATE OR UNIT OF GENERAL 
LOCAL GOVERNMENT.—^The Secretary's duty under subpara-
graph (B) shall not be construed to limit any responsibility 
assumed by a State or unit of general local government 
PUBLIC LAW 103-233—APR. 11, 1994 
108 STAT. 373 
with respect to any particular release of funds under 
subparagraph (A). 
(2) PROCEDURE.—^The Secretary shall approve the release 
of funds for projects subject to the procedures authorized bv 
this subsection only if, not less than 15 days prior to such 
approval and prior to any commitment of funds to such projects, 
the recipient submits to the Secretary a request for such 
release, accompanied by a certification of the State or unit 
of general local government which meets the requirements of 
paragraph (3). The Secretary's approval of any such certification 
shall be deemed to satisfy the Secretarj^s responsibilities under 
the National Environmental Policy Act of 1969 and such other 
provisions of law as the regulations of the Secretary specify 
insofar as those responsibilities relate to the releases of funds 
for special projects to be carried out pursuant thereto which 
are covered by such certification. 
(3) CERTIFICATION.—^A certification under the procedures 
authorized by this subsection shall— 
(A) be in a form acceptable to the Secretaiy; 
(B) be executed by the chief executive officer or other 
officer of the State or unit of general local government 
who qualifies under regulations of the Secretary; 
(C) specify that the State or unit of general local 
government under this subsection has fully carried out 
its responsibilities as described under paragraph (1); and 
(D) specify that the certifjdng officer— 
(i) consents to assume the status of a responsible 
Federal official under the National Environ mental Pol-
icy Act of 1969 and each provision of law specified 
in regulations issued by the Secretary insofar as the 
provisions of such Act or other such provision of law 
apply pursuant to paragraph (1); and 
(ii) is authorized and consents on behalf of the 
State or unit of general local government and himself 
or herself to accept the jurisdiction of the Federal 
courts for the purpose of enforcement of the responsibil-
ities as such an omcial. 
(4) APPROVAL BY STATES.—^In cases in which a unit of 
general local government carries out the responsibilities 
described in paragraph (1), the Secretary may permit the State 
to perform those actions of the Secretary described in paragraph 
(2) and the performance of such actions by the State, where 
germitted by the Secretary, shall be deemed to satisfy the 
ecretary's responsibilities referred to in the second sentence 
of paragraph (2). 
SEC. 306. CORRECTION OF FHA MULTIFAMILY MORTGAGE LIMITS. 
The National Housing Act (12 U.S.C. 1701 et seq.) is amended 
in sections 207(c)(3), 213(b)(2), 220(d)(3)(B)(iii), and 234(e)(3) by 12USC1713, 
striking "$59,160" each place it appears and inserting "$56,160". JJJg' ^'^^^^' 
SEC. 307. AMENDMENTS TO FHA MULTIFAMILY RISK-SHARING AND 
HOUSING FINANCE AGENCY PILOT PROGRAMS. 
(a) RISK-SHARING PILOT PROGRAM.—Section 542(b) of the Hous-
ing and Community Development Act of 1992 (12 U.S.C. 1707 
note) is amended— 
(1) by striking paragraphs (1) and (2) and inserting the 
following new paragraphs: 
108 STAT. 374 
PUBLIC LAW 103-233—APR. 11, 1994 
Contracts. 
"(1) IN GENERAL.—^The Secretary shall cany out a pilot 
program in conjunction with qualified participating entities 
to determine the effectiveness of Federal credit enhancement 
for loans for affordable multifamily housing through a system 
of risk-sharing agreements with such entities. 
"(2) PROGRAM REQUIREMENTS.— 
"(A) IN GENERAL.—In carrying out the pilot program 
under this subsection, the Secretary shall enter into risk-
sharing agreements with qualified participating entities. 
"(B) MORTGAGE INSURANCE AND HEiNSURANCE.^Agree-
ments under subparagraph (A) may provide for (i) mortgage 
insurance through the Federal Housing Administration of 
loans for affordable multifamily housing originated by or 
through, or purchased by, qualified participating entities, 
and (ii) reinsurance, including reinsurance of pools of loans, 
on affordable multifamily housing. In entering into risk-
sharing agreements under this subsection covering mort-
gages, the Secretary may give preference to mortgages 
that are not already in the portfolios of quaUfied participat-
ing entities. 
"(C) RISK APPORTIONMENT.—^Agreements entered into 
under this subsection between the Secretary and a qualified 
participating entity shall specify the percentage of loss 
that each of the parties to the agreement will assume 
in the event of default of the insured or reinsured multifam-
ily mortgage. Such agreements shall specify that the quali-
fied participating entity and the Secretary shall share any 
loss in accordance with the risk-sharing agreement. 
"(D) REIMBURSEMENT CAPACITY.—Agreements entered 
into under this subsection between the Secretary and a 
quaUfied participating entity shall provide evidence accept-
able to the Secretary of the capacity of such entity to 
fulfill any reimbursement obUgations made pursuant to 
this subsection. Evidence of such capacity which may be 
considered by the Secretary may include— 
"(i) a pledge of the full faith and credit of a quali-
fied participating entity to fulfill any obligations 
entered into by the entity; 
**(ii) reserves pledged or otherwise restricted by 
the qualified participating entity in an amount equal 
to an agreed upon percentage of the loss assumed 
by the entity under subparagraph (C); 
"(iii) funds pledged through a State or local 
guarantee fund; or 
"(iv) any other form of evidence mutually agreed 
upon by the Secretary and the qualified participating 
entity. 
"(E) UNDERWRITING STANDARDS.—The Secretary shall 
allow any qualified participating entity to use its own 
underwriting standards and loan terms and conditions for 
purposes of underwriting loans to be insured under this 
subsection, except as provided in this section, without fur-
ther review by the Secretary, except that the Secretary 
mav impose additional underwriting criteria and loan terms 
ana conditions for contractual agreements where the Sec-
retary retains more than 50 percent of the risk of loss. 
Any financing permitted on property insured under this 
PUBLIC LAW 103-233—APR. 11, 1994 
108 STAT. 375 
subsection other than the first mortgage shall be expressly 
subordinate to the insured mortgage. 
"(F) AUTHORITY OF SECRETARY.—The Secretary, upon 
request of a qualified participating entity, may insure or 
reinsure and make commitments to insure or reinsure 
under this section any mortgage, advance, loan, or pool 
of mortgages otherwise eligible under this section, pursuant 
to a risk-sharing agreement providing that the qualified 
participating entity will carry out (under a delegation or 
otherwise, and with or without compensation, but subject 
to audit, exception, or review requirements) such credit 
approval, appraisal, inspection, issuance of commitments, 
approval of insurance of advances, cost certification, servic-
ing, property disposition, or other functions as the Sec-
retary shall approve as consistent with the purpose of 
this section. All appraisals of property for mortgage insur-
ance under this section shall be completed by a Certified 
General Appraiser in accordance with the Uniform Stand-
ards of Professional Appraisal Practice. 
"(G) DISCLOSURE OF RECORDS.—Qualified participating 
entities shall make available to the Secretary or the Sec-
retary's designee, at the Secretary's request, such financial 
and other records as the Secretary deems necessary for 
purposes of review and monitoring for the program under 
this section."; 
(2) in paragraph (4), by striking "financial institutions and 
entities to be eligible to enter into reinsurance agreements" 
and inserting "eligibility under this subsection of qualified 
participating entities"; 
(3) by striking paragraph (8) and inserting the following 
new paragraph: 
"(11) IMPLEMENTATION.—The Secretary shall take any 
administrative actions necessary to initiate the pilot program 
under this subsection."; and 
(4) by inserting after paragraph (7) the following new para-
graphs: 
"(8) PROHIBITION ON GINNIE MAE SECURITIZATION.—The 
Grovemment National Mortgage Association shall not securitize 
any multifamily loans insured or reinsured under this sub-
section. 
"(9) QUALIFICATION AS AFFORDABLE HOUSING.—Multifamily 
housing securing loans insured or reinsured under this sub-
section shall qualify as affordable only if the housing is occupied 
by families and bears rents not greater than the gross rent 
for rent-restricted residential units as determined under section 
42(g) of the Internal Revenue Code of 1986. 
"(10) CERTIFICATION OF SUBSIDY LAYERING COMPLIANCE.— 
The requirements of section 102(d) of the Department of Hous-
ing and Urban Development Reform Act of 1989 may be satis-
fied in connection with a commitment to insure a mortgage 
under this subsection by a certification by a housing credit 
agency (including an entity established by a State that provides 
mortgage insurance) to the Secretary that the combination 
of assistance within the jurisdiction of the Secretary and other 
government assistance provided in connection with a property 
for which a mortgage is to be insured shall not be any greater 
than is necessary to provide affordable housing.". 
108 STAT. 376 
PUBLIC LAW 103-233—APR. 11, 1994 
(b) HOUSING FINANCE AGENCY PILOT PROGRAM.—Section 542(c) 
of the Housing and Commiinity Development Act of 1992 (12 U.S.C. 
1707 note) is amended— 
(1) in paragraph (1), by inserting after "quaHfied housing 
finance agencies" the following: "(including entities established 
by States that provide mortgage insurancer; 
(2) in paragraph (2)— 
(A) in subparagraph (C), by striking the last sentence 
and inserting the following: "Such agreements shall specify 
that the qualified housing finance agency and the Secretary 
shall share any loss in accordance with the risk-sharing 
agreement."; and 
(B) by adding at the end the following new subpara-
graph: 
"(F) 
DISCLOSURE 
OF RECORDS.—Qualified 
housing 
finance agencies shall make available to the Secretary such 
financial and other records as the Secretary deems nec-
essary for program review and monitoring purposes."; 
(3) in paragraph (7)— 
(A) by striking "very low-income"; and 
(B) by striking "(2)''; and 
(4) by adding at the end the following new paragraphs: 
"(9) ENVIRONMENTAL AND OTHER REVIEWS.— 
"(A) ENVIRONMENTAL REVIEWS.— 
"(i) IN GENERAL.—<I) In order to assure that the 
policies of the National Environmental Policy Act of 
1969 and other provisions of law which further the 
purposes of such Act (as specified in regulations issued 
by the Secretary) are most effectively implemented 
in connection with the insurance of mortgages under 
subsection 
(c)(2), and 
to assure 
to the 
public 
undiminished protection of the environment, the Sec-
retary may, under such regulations, in lieu of the 
environmental 
protection 
procedures 
otherwise 
applicable, provide for agreements to endorse for insur-
ance mortgages under subsection (c)(2) upon the 
request of qualified housing finance agencies under 
this subsection, if the State or unit of general local 
government, as designated by the Secretary in accord-
ance with regulations, assumes all of the responsibil-
ities for environmental review, decisionmaking, and 
action pursuant to such Act, and such other provisions 
of law as the regulations of the Secretary may specify, 
that would otherwise apply to the Secretary with 
respect to the insurance of mortgages on particular 
properties. 
Regulations. 
"(II) The Secretary shall issue regulations to carry 
out this subparagraph only after consultation with the 
Council on Environmental Quality. Such regulations 
shall, among other matters, provide— 
"(aa) for the monitoring of the performance 
of environmental reviews under this subparagraph; 
"(bb) subject to the discretion of the Secretary, 
for the provision or facilitation of training for such 
performance; and 
"(cc) subject to the discretion of the Secretary, 
for the suspension or termination by the Secretary 
PUBLIC LAW 103-233—APR. 11, 1994 
108 STAT. 377 
of the qualified housing finance agency's respon-
sibilities under subclause (I). 
"(Ill) The Secretary's duty under subclause (II) 
shall not be construed to limit any responsibility 
assumed by a State or unit of general local government 
with respect to any particular property under subclause 
(I). 
"(ii) PROCEDURE.—^The Secretary shall approve a 
mortgage for the provision of mortgage insurance sub-
ject to the procedures authorized by this paragraph 
only if, not less than 15 days prior to such approval, 
prior to any approval, commitment, or endorsement 
of mortgage insurance on the property on behalf of 
the Secretary, and prior to any commitment by the 
qualified housing finance agency to provide financing 
under the risk-sharing agreement with respect to the 
property, the qualified housing finance agency submits 
to the Secretary a request for such approval, accom-
panied by a certification of the State or unit of general 
local government that meets the requirements of clause 
(iii). The Secretar/s approval of any such certification 
shall be deemed to satisfy the Secretar/s responsibil-
ities under the National Environmental Policy Act of 
1969 and such other provisions of law as the regula-
tions of the Secretary specify insofar as those respon-
sibilities relate to the provision of mortgage insurance 
on the property that is covered by such certification, 
"(iii) (CERTIFICATION.—^A certification under the 
procedures authorized by this paragraph shall— 
"(I) be in a form acceptable to the Secretory; 
"(II) be executed by the chief executive officer 
or other officer of the Stote or unit of general 
local government who quaUfies under regulations 
of the Secretary; 
"(III) specify that the State or unit of general 
local government under this section has fuUy car-
ried out its responsibilities as described under 
clause (i); and 
"(IV) specify that the certifying officer consents 
to assume the stotus of a responsible Federal offi-
cial under the National Environmental PoUcy Act 
of 1969 and under each provision of law specified 
in regulations issued by the Secretary insofar as 
the provisions of such Act or such other provisions 
of law apply pursuant to clause (i), and is author-
ized and consents on behalf of the State or unit 
of general local government and himself or herself 
to accept the jurisdiction of the Federal courts 
for the purpose of enforcement of the responsibil-
ities as such an official. 
"(iv) APPROVAL BY STATES.—^In cases in which a 
unit of general local government carries out the respon-
sibilities described in clause (i), the Secreteiry may 
permit the State to perform those actions of the Sec-
retary described in clause (ii) and the performance 
of such actions by the State, where permitted by the 
Secretary, shall be deemed to satisfy the Secretary's 
108 STAT. 378 
PUBLIC LAW 103-233—APR. 11, 1994 
responsibilities referred to in the second sentence of 
clause (ii), 
"(B) 
LEAD-BASED PAINT POISONING PREVENTION.—In 
carrying out the requirements of section 302 of the Lead-
Based Paint Poisoning Prevention Act, the Secretary may 
provide by regulation for the assumption of all or part 
of the Secretary's duties under such Act by qualified hous-
ing finance agencies, for purposes of this section. 
"(C) 
CERTIFICATION OF SUBSIDY LAYERING COMPLI-
ANCE.—^The requirements of section 102(d) of the Depart-
ment of Housing and Urban Development Reform Act of 
1989 may be satisfied in connection with a commitment 
to insure a mortgage under this subsection by a certification 
by a housing credit agency (including an entity established 
by a State that provides mortgage insurance) to the Sec-
retary that the combination of assistance within the juris-
diction of the Secretary and other government assistance 
provided in connection with a property for which a mort-
gage is to be insured shall not be any greater than is 
necessary to provide affordable housing. 
"(10) DEFINITIONS.—For purposes of this subsection, the 
following definitions shall apply: 
"(A) MORTGAGE.—^The term 'mortgage' means a first 
mortgage on real estate that is— 
"(i) owned in fee simple; or 
"(ii) subject to a leasehold interest that— 
"(I) has a term of not less than 99 years and 
is renewable; or 
"(II) has a remaining term that extends beyond 
the maturity of the mortgage for a period of not 
less than 10 years. 
"(B) 
FIRST 
MORTGAGE.—The term 'first mortgage' 
means a single first hen given to secure advances on, 
or the unpgdd purchase price of, real estate, under the 
laws of the State in wnich the real estate is located, 
together with the credit instrument, if any, secured thereby. 
Any other financing permitted on property insured under 
this section must be expressly subordinate to the insured 
mortgage. 
"(C) UNIT OF GENERAL LOCAL GOVERNMENT; STATE.— 
The terms 'unit of general local government' and 'State' 
have the same meanings as in section 102(a) of the Housing 
and Community Development Act of 1974.". 
(c) DEFINITIONS.—Section 544 of the Housing and Community 
Development Act of 1992 (12 U.S.C. 1707 note) is amended— 
(1) by striking paragraph (1) and inserting the following 
new paragraph: 
"(1) TTie term 'multifamily housing' means housing accom-
modations on the mortgaged property that are designed prin-
cipally for residential use, conform to standards satisfactory 
to the Secretary, and consist of not less than 5 rental units 
on 1 site. These units may be detached, semidetached, row 
house, or multifamily structures."; and 
(2) by adding at the end the following new paragraph: 
"(5) The term 'qualified participating entity' means an 
entity approved by the Secretary for participation in the pilot 
program under this subsection, which may include— 
PUBLIC LAW 103-233—APR. 11, 1994 
108 STAT. 379 
"(A) the Federal National Mortgage Association; 
"(B) the Federal Home Loan Mortgage Corporation; 
"(C) State housing finance and mortgage insurance 
agencies; and 
"(D) the Federal Housing Finance Board.". 
SEC. 308. SUBSIDY LAYERING REVIEW. 
Section 911 of the Housing and Community Development Act 
of 1992 (42 U.S.C. 3545 note) is amended— 
(1) by striking subsection (a) and inserting the following 
new subsection: 
"(a) CERTIFICATION OF SUBSIDY LAYERING COMPLIANCE.—The 
requirements of section 102(d) of the Department of Housing and 
Urban Development Reform Act of 1989 may be satisfied in connec-
tion with a project receiving assistance under a program that is 
within the jurisdiction of the Department of Housing and Urban 
Development and under section 42 of the Internal Revenue Code 
of 1986 by a certification by a housing credit agency to the Sec-
retary, submitted in accordance with guidelines established by the 
Secretary, that the combination of assisteince within the jurisdiction 
of the Secretary and other government assistance provided in 
connection with a property for which assistance is to be provided 
within the jurisdiction of the Department of Housing and Urban 
Development and imder section 42 of the Internal Revenue Code 
of 1986 shall not be any greater than is necessary to provide 
affordable housing."; and 
(2) by striking subsection (c) and inserting the following 
new subsection: 
"(c) REVOCATION BY SECRETARY.—If the Secretary determines 
that a housing credit agency has failed to comply with the guideUnes 
established under subsection (a), the Secretary— 
"(1) may inform the housing credit agency that the agency 
may no longer submit certification of subsidy layering compU-
ance under this section; and 
"(2) shall carry out section 102(d) of the Department of 
Housing and Urban Development Reform Act of 1989 relating 
to affected projects allocated a low-income housing tax credit 
pursuant to section 42 of the Internal Revenue Code of 1986.". 
Approved April 11, 1994. 
LEGISLATIVE HISTORY—S. 1299 (H.R. 4067): 
SENATE REPORTS: No. 103-174 (Comm. on Banking, Housing, and Urban Affairs). 
CONGRESSIONAL RECORD: 
Vol. 139 (1993): Nov. 18, considered and passed Senate. 
Vol. 140 (1994): Mar. 21, 22, H.R. 4067 considered and passed House; S. 1299, 
amended, passed in lieu. 
Mar. 25, Senate concurred in House amendments.