Housing and Community Development Act of 1987
PL 100-242 (S.825), enacted 02/05/1988

PUBLIC LAW 100-242—FEB. 5, 1988 
101 STAT. 1815 
Public Law 100-242 
100th Congress 
An Act 
To amend and extend certain laws relating to housing, community and neighborhood 
Feb. 5, 1988 
development and preservation, and related programs, and for other purposes. 
[S. 825] 
Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled, 
Housing and 
Community 
SECTION 1. SHORT TITLE AND TABLE OF CONTENTS. 
Development 
(a) SHORT TITLE.—This Act may be cited as the "Housing and 
^lu^lJslo'i 
Community Development Act of 1987". 
note. 
(b) TABLE OF CONTENTS.— 
Sec. 1. Short title and table of contents. 
Sec. 2. Findings and purpose. 
Sec. 3. Budget compliance. 
Sec. 4. Credit limitation. 
Sec. 5. Limitation on spending authority. 
TITLE I—HOUSING ASSISTANCE 
Subtitle A—Programs Under United States Housing Act of 1937 
PART 1—GENERAL PROVISIONS 
Sec. 101. Lower income housing authorization. 
Sec. 102. Tenant rental contributions. 
Sec. 103. Income eligibility for assisted housing. 
PART 2—PUBUC HOUSING 
Sec. 111. Discretionary preference for near elderly families in public housing 
projects designed for the elderly. 
Sec. 112. Grants for public housing development. 
Sec. 113. Limitation on public housing development and assurance of public hous-
ing quality standards. 
Sec. 114, Limitation on recapture of funding reservations. 
Sec. 115, Indian public housing. 
Sec. 116. Location of acquired housing. 
Sec. 117. Public housing child care grants. 
Sec. 118. Payments for operation of lower income housing projects. 
Sec. 119. Comprehensive improvement assistance program. 
Sec. 120. Comprehensive improvement assistance special purpose needs. 
Sec. 121. Public housing demolition and disposition. 
Sec. 122. Public housing resident maneigement. 
Sec. 123. Public housing homeownership and management opportunities. 
Sec. 124. Treatment of certain public housing development funds. 
Sec. 125. Energy efficient public housing demonstration. 
Sec. 126. Public housing comprehensive transition demonstration. 
PART 3—SECTION 8 ASSISTANCE AND OTHER PROGRAMS 
Sec. 141. Section 8 contracts for existing dwelling units. 
Sec. 142. Section 8 fair market rentals and contract rents. 
Sec. 143. Housing voucher program. 
Sec. 144. Administrative fees for section 8 certificate and housing voucher 
programs. 
Sec. 145. Portability of section 8 certificates and vouchers. 
Sec. 146. Prohibition of denial of section 8 certificates and vouchers to residents of 
public housing. 
Sec. 147. Nondiscrimination agfdnst section 8 certificate holders and voucher 
holders. 
Sec. 148. Project-based section 8 assistance. 
Sec. 149. Section 8 assistance for residents of rental rehabilitation projects. 
101 STAT. 1816 
PUBLIC LAW 100-242—FEB. 5, 1988 
Sec. 150. Rental rehabilitation grants. 
Sec. 151. Rental development grants. 
Sec. 152. Termination of rental development grant program. 
Subtitle B—Other Housing Assistance Programs 
Sec. 161. Housing for the elderly and handicapped. 
Sec. 162. Housing for the handicapped. 
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Sec. 163. Congregate services. 
Sec. 164. Modification of restriction on use of assisted housing by aliens. 
Sec. 165. Preventing fraud and abuse in Department of Housing and Urban Devel-
opment programs. 
Sec. 166. Annual report on characteristics of families in assisted housing. 
Sec. 167. Section 236 rental housing program. 
Sec. 168. Tenant eligibility determinations in rent supplement projects. 
Sec. 169. Counseling to tenants and homeowners. 
Sec. 170. Housing assistance technical amendments. 
Subtitle C—Multifamily Housing Management and Preservation 
Sec. 181. Management and preservation of HUD-owned multifamily housing 
projects. 
Sec. 182. Acquisition of insured multifamily housing projects. 
Sec. 183. Tenfmt participation in multifamily housing projects. 
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Sec. 184. Multifamily housing disposition partnership. 
Sec. 185. Multifamily housing capital improvements assistance. 
Sec. 186. Flexible subsidy program. 
TITLE n—PRESERVATION OF LOW INCOME HOUSING 
Subtitle A—General Provisions 
Sec. 201. Short title. 
Sec. 202. Findings and purpose. 
Sec. 203. Termination of certain provisions. 
Subtitle B—Prepayment of Mortgages Insured Under National Housing Act 
Sec. 221. General prepayment limitation. 
Sec. 222. Notice of intent. 
Sec. 223. Plan of action. 
Sec. 224. Incentives to extend low income use. 
Sec. 225. Criteria for approval of plan of action. 
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Sec. 226. Alternative State strategy. 
Sec. 227. Timetable for approval of plan of action. 
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Sec. 228. Modification of existing regulatory agreements. 
Sec. 229. Consultations with other interested parties. 
Sec. 230. Right of conversion to alternative prepayment system. 
Sec. 231. Insurance for second mortgage financing. 
Sec. 232. Report to Congress. 
Sec. 233. Definitions. 
Sec. 234. Regulations. 
Sec. 235. Effective date. 
Subtitle C—Rural Rental Housing Displacement Prevention 
Sec. 241. Prepajmient and refinancing procedures. 
Sec. 242. Equity recapture loans and loans to nonprofit organizations and public 
agencies. 
Sec. 243. Use of Rural Housing Insurance Fund. 
Subtitle D—Other Measures to Preserve Low Income Housing 
Sec. 261. Early prepayment. 
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Sec. 262. Section 8 assistance. 
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Sec. 263. Section 515 operating reserve and equity contribution requirements. 
TITLE III—RURAL HOUSING 
Sec. 301. Program authorizations. 
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Sec. 302. Eligibility requirements. 
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Sec. 303. Escrowing taxes and insurance. 
Sec. 304. Rural housing guaranteed loan demonstration. 
Sec. 305. Definition of domestic farm labor. 
Sec. 306. Conformance with low-income housing tax credit eligibility requirements. 
Sec. 307. Limitation of fees on rural rental housing loans. 
PUBLIC LAW 100-242—FEB. 5, 1988 
101 STAT. 1817 
Sec. 308. Rural area classification. 
Sec. 309. Procedures for reduction of interest credits. 
Sec. 810. Rural housing preservation grant program. 
Sec. 311. Rural rental rehabilitation demonstration. 
Sec. 312. Study of mortgage credit in rural areas. 
Sec. 313. Debt settlement authority of Secretary. 
Sec. 314. Manufactured housing. 
Sec. 315. Loan packaging by nonprofit organizations. 
Sec. 316. Rural housing technical amendments. 
TITLE IV—MORTGAGE INSURANCE AND SECONDARY MORTGAGE MARKET 
PROGRAMS 
Subtitle A—FHA Mortgage Insurance Programs 
Sec. 401. Insurance authority for FHA. 
Sec. 402. Amount to be insured under National Housing Act. 
Sec. 403. Limitation on Federal Housing Administration insurance premiums. 
Sec. 404. Increase in maximum mortgage amount under single family insurance 
program. 
Sec. 405. Change in definition of veteran. 
Sec. 406. Limitation on use of single family mortgage insurance by investors. 
Sec. 407. Actions to reduce losses under single family mortgage insurance program. 
Sec. 408. Insurance of graduated payment mortgeiges. 
Sec. 409. Refinancing mortgage insurance for hospitals, nursing homes, intermedi-
ate care facilities, and board and care homes. 
Sec. 410. Mortgage insurance for nursing homes, intermediate care facilities, and 
board and care homes. 
Sec. 411. Requirement of State approval for mortgage insurance for hospitals. 
Sec. 412. Mortgage insurance for public hospitals. 
Sec. 413. Mortgage insurance on Hawaiian home lands and Indian reservations. 
Sec. 414. Co-insurance program. 
Sec. 415. Increase in authority to insure adjustable rate single family mortgages. 
Sec. 416. Penalties for equity skimming. 
Sec. 417. Home equity conversion mortgage insurance demonstration. 
Sec. 418. Assurance of adequate processing of applications for loan and mortgage 
insurance. 
Sec. 419. Prohibition of lender requirements discouraging loans with lower princi-
pal amounts. 
Sec. 420. Repeal of requirement to publish prototype housing costs for 1- to 4-family 
dwelling units. 
Sec. 421. Double damages remedy for unauthorized use of multifamily housing 
project assets and income. 
Sec. 422. Miscellaneous mortgage insurance provisions. 
Sec. 423. Calculation of maximum mortgage amount under single family insurance 
program. 
Sec. 424. Approval of individual residential water purification or treatment units. 
Sec. 425. Regulation of rents in insured projects. 
Sec. 426. Mortgage limits for multifamily projects. 
Sec. 427. Operating loss loan insurance. 
Sec. 428. Interest charges on temporary mortgage assistance pajmients and assign-
ment or other assistance. 
Sec. 429. Mortgage insurance technical amendments. 
Sec. 430. Release of pool funds. 
Subtitle B—Secondary Mortgage Market Programs 
Sec. 441. Limitations on certain secondary mortgage market fees. 
Sec. 442. FNMA cumulative voting. 
Sec. 443. Permanent authority to purchase second mortgages on single-family 
properties. 
Sec. 444. Period for approval of actions of FNMA. 
Sec. 445. Prohibition of limitation on FHLMC mortgage operations. 
Sec. 446. Limitation on GNMA guarantees of mortgage-backed securities. 
TITLE V—COMMUNITY DEVELOPMENT AND MISCELLANEOUS PROGRAMS 
Subtitle A—Community and Neighborhood Development and Preservation 
Sec. 501. Community development authorizations. 
Sec. 502. Targeting of benefits to persons of low and moderate income. 
Sec. 503. City and county classifications. 
Sec. 504. Eligible activities. 
101 STAT. 1818 
PUBLIC LAW 100-242—FEB. 5, 1988 
Sec. 505. Statement of activities and review. 
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Sec. 506. Alleviation of lakefront flooding and erosion. 
Sec. 507. Housing assistance plans. 
Sec. 508. Citizen participation plan. 
Sec. 509. Conserving neighborhoods and housing by prohibiting displacement. 
Sec. 510. Limited new construction of housing under community development block 
grant program. 
Sec. 511. Availability of community development block grants for uniform emer-
gency telephone number systems. 
Sec. 512. State certiflcations for receiving community development block grants for 
nonentitlement areas. 
Sec. 513. Administrative expenses of States distributing funds to nonentitlement 
areas. 
Sec. 514. Community development block grant loan guarantees. 
Sec. 515. Urban development action grant selection criteria. 
Sec. 516. Prohibition on use of urban development action grants for business 
relocations. 
Sec. 517. Urban homesteading. 
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Sec. 518. Rehabilitation loans. 
Sec. 519. Loan cancellation. 
Sec. 520. Neighborhood reinvestment corporation. 
Sec. 521. Neighborhood development demonstration program. 
Sec. 522. Park Central New Community Project. 
Sec. 523. Community development projects labor standards. 
Sec. 524. Urban planning. 
Sec. 525. Community development technical amendments. 
Subtitle B—Flood and Crime Insurance Programs 
Sec. 541. Extension of flood insurance program. 
Sec. 542. Extension of crime insurance program. 
Sec. 543. Studies under national flood insurance program. 
Sec. 544. Schedule for payment of flood insurance for structures on land subject to 
imminent collapse or subsidence. 
Sec. 545. Flood and crime insurance technical amendments. 
Subtitle C—Miscellaneous Programa 
Sec. 561. Fair housing initiatives pr(^am. 
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Sec. 562. Collection of certain data. 
Sec. 563. Regulatory authority. 
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Sec. 564. R^arch and development. 
Sec. 565. Home mortgage disclosure. 
Sec. 566. Lead-based paint poisoning prevention. 
Sec. 567. Median area income. 
Sec. 568. Manufactured housing construction and safety standards. 
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Sec. 569. Nullification of right of redemption of single-family mortgagors. 
Sec. 570. Miscellaneous programs technical amendments. 
Sec. 571. Use of American materials and products. 
Sec. 572. Study of voluntary standards for modular homes. 
TITLE VI—NEHEMIAH HOUSING OPPORTUNITY GRANTS 
Sec. 601. Statement of purpose. 
Sec. 602. Definitions. 
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Sec. 603. Assistance to nonprofit organizations. 
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Sec. 604. Use of assistance. 
Sec. 605. Program requirements. 
Sec. 606. Terms and conditions of assistance. 
Sec. 607. Program selection criteria. 
Sec. 608. Distribution of assistance to nonprofit organizations. 
Sec. 609. Nehemiah Housing Opportunity Fund. 
Sec. 610. Report. 
Sec. 611. Regulations. 
Sec. 612. Authorization of appropriations. 
Sec. 613. Sunset. 
TITLE VII—ENTERPRISE ZONE DEVELOPMENT 
Sec. 701. Designation of enterprise zones. 
Sec. 702. Evaluation and reporting requirements. 
Sec. 703. Interaction with other Federal programs. 
Sec. 704. Waiver or modification of housing and community development rules in 
enterprise zones. 
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PUBLIC LAW 100-242—FEB. 5, 1988 
101 STAT. 1819 
Sec. 705. Coordination of housing and urban development programs in enterprise 
zones. 
Sec. 706. Coordination with CDBG and UDAG programs. 
SEC. 2. FINDINGS AND PURPOSE. 
42 USC 5301 
(a) FINDINGS.—The Congress finds that— 
(1) for the past 50 years, the Federal Government has taken 
the leading role in enabling the people of the Nation to be the 
best housed in the world, and recent reductions in Federal 
assistance have contributed to a deepening housing crisis for 
low- and moderate-income families; 
(2) the efforts of the Federal Government have included a 
system of specialized lending institutions, favorable tax policies, 
construction Eissistance, mortgage insurance, loan guarantees, 
secondary markets, and interest and rental subsidies, that have 
enabled people to rent or buy affordable, decent, safe, and 
sanitary housing; £ind 
(3) the tragedy of homelessness in urban and suburban 
communities across the Nation, involving a record number of 
people, dramatically demonstrates the lack of affordable resi-
dential shelter, and people living on the economic margins of 
our society (lower income families, the elderly, the working 
poor, and the deinstitutiongilized) have few available alter-
natives for shelter. 
Oa) PURPOSE.—The purpose of this Act, therefore, is— 
(1) to reaffirm the principle that decent and affordable shelter 
is a basic necessity, and the general welfare of the Nation and 
the hegilth and living standards of its people require the addi-
tion of new housing units to remedy a serious shortage of 
housing units for all Americans, particularly for persons of low 
and moderate income; 
(2) to make the distribution of direct and indirect housing 
assistance more equitable by providing Federal assistance for 
the less affluent people of the Nation; 
(3) to provide needed housing assistance for homeless people 
and for persons of low and moderate income who lack afford-
able, decent, safe, and sanitary housing; and 
(4) to reform existing programs to ensure that such assistance 
is delivered in the most efficient msinner possible. 
SEC. 3. BUDGET COMPLIANCE. 
42 USC 5301 
(a) IN GENERAL.—This Act and the amendments made by this Act 
may not be construed to provide for new budget authority, budget 
outlays, or new entitlement authority, for fiscal year 1988 in excess 
of the appropriate aggregate levels established by the concurrent 
resolution on the budget for such fiscal year for the programs 
authorized by this Act and the amendments made by this Act. 
OJ) DEFINITIONS.—For purposes of this section, the terms "budget 
authority", "budget outlays", "concurrent resolution on the 
budget", and "entitlement authority" have the meanings given such 
terms in section 3 of the Congressional Budget Act of 1974 (2 U.S.C. 
622). 
SEC. 4. CREDIT LIMITATION. 
42 USC 5301 
Any new credit authority (as defined in section 3 of the Congres-
sional Budget Act of 1974) which is provided by this Act, or by an 
amendment made by this Act, shall be effective only to such extent 
or in such amounts as are provided in appropriation Acts. 
101 STAT. 1820 
PUBLIC LAW 100-242—FEB. 5, 1988 
42 u s e 5301 
SEC. 5. LIMITATION ON SPENDING AUTHORITY. 
Any new spending authority (as defined in section 401(c) of the 
Congressional Budget Act of 1974) which is provided by this Act, or 
by an amendment made by this Act, shall be effective only to such 
extent or in such amounts as are provided in appropriation Acts. 
TITLE I—HOUSING ASSISTANCE 
Subtitle A—Programs Under United States 
Housing Act of 1937 
PART 1—GENERAL PROVISIONS 
SEC. 101. LOWER INCOME HOUSING AUTHORIZATION. 
(a) AGGREGATE BUDGET AUTHORITY.—Section 5(cX6) of the United 
42 use 1437c. 
States Housing Act of 1937 is amended by adding at the end the 
following new sentence: "The aggregate amount of budget authority 
that may be obligated for contracts for annual contributions for 
assistance under section 8, for contracts referred to in paragraphs 
(TXAXiv) and (7XBXiv), for grants for public housing, for comprehen-
sive improvement assistance, and for amendments to existing con-
tracts, is increased (to the extent approved in appropriation Acts) by 
$7,167,000,000 on October 1, 1987, and by $7,300,945,000 on Octo-
ber 1, 1988.". 
(b) UTIUZATION OF BUDGET AUTHORITY.—Section 5(cX7) of 
the 
United States Housing Act of 1937 is amended to read as follows: 
"(7XA) Using the additional budget authority provided under 
paragraph (6) and the balances of budget authority that become 
available during fiscal year 1988, the Secretary shall, to the extent 
approved in appropriations Acts, reserve authority to enter into 
obligations aggregating— 
"(i) for public housing grants under subsection (aX2), not more 
than $481,320,000, of which amount not more than $144,696,000 
shall be available for Indian housing; 
"(ii) for assistance under subsections (bXD and (o) of section 8, 
not more than $2,415,000,000; 
"(iii) for assistance under section 8(eX2), not more than 
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$400,000,000; 
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"(iv) for assistance under section 8 in connection with projects 
developed under section" 202 of the Housing Act of 1959, not 
more than $1,681,830,000; 
"(v) for comprehensive improvement assistance grants under 
section 14, not more than $1,700,000,000; 
"(vi) for assistance under section 8 for property disposition, 
not more than $301,700,000; and 
"(vii) for assistance under section 8 for loan management, not 
more than $187,150,000. 
"(B) Using the additional budget authority provided under para-
graph (6) and the balances of budget authority that become avsdlable 
.^,,, 
during fiscal year 1989, the Secretary shall, to the extent approved 
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in appropriations Acts, reserve authority to enter into obligations 
aggregating— 
"(i) for public housing grants under subsection (aX2), not more 
than $490,465,000, of which amount not more than $147,445,000 
shall be available for Indian housing; 
c,u tc ^wi; * ^i p? i» . ^ 
PUBLIC LAW 100-242—FEB. 5, 1988 
101 STAT. 1821 
z,. 
"(ii) for assistance under subsections (b)(1) and (o) of section 8, 
not more than $2,458,660,000; 
"(iii) for assistance under section 8(e)(2), not more than 
$407,600,000; 
"(iv) for assistance under section 8 in connection with projects 
developed under section 202 of the Housing Act of 1959, not 
more than $1,713,785,000; 
"(v) for comprehensive improvement gissistance grants under 
section 14, not more than $1,732,300,000; 
"(vi) for assistance under section 8 for property disposition, 
not more than $307,430,000; and 
"(vii) for assistance under section 8 for loan management, not 
more than $190,705,000. 
"(C)(i) Any amount available for the conversion of a project to 
assistance under section 8(b)(1), if not required for such purpose, 
shall be used for assistance under section 8(b)(1). 
"(ii) Any amount available for assistance under section 8 for 
property disposition, if not required for such purpose, shall be used 
for assistance under section 8(b)(1).". 
SEC. 102. TENANT RENTAL CONTRIBUTIONS. 
(a) ECONOMIC RENT.—Section 3(a) of the United States Housing 
Act of 1937 is amended— 
(1) by inserting "(1)" after "(a)"; 
(2) in the last sentence, by striking "A" and inserting the 
following: "Except as provided in paragraph (2), a"; 
(3) by redesignating paragraphs (1) through (3) as subpara-
graphs (A) through (C), respectively; and 
(4) by adding at the end the following new paragraph: 
"(2)(A) Any public housing agency may provide that each family 
residing in a public housing project owned and operated by such 
agency (or in lower income housing assisted under section 8 that 
contains more than 2,000 dwelling units) shall pay as monthly rent 
for not more than a 3-year period an amount determined by such 
agency to be appropriate that does not exceed a maximum amount 
that— 
"(i) is established by such agency and approved by the 
Secretary; 
"(ii) is not more than the amount payable as rent by such 
family under paragraph (1); and 
"(iii) is not less than the average monthly amount of debt 
service and operating expenses attributable to dwelling units of 
similar size in public housing projects owned and operated by 
such agency. 
"(B) The 3-year limitation established in subparagraph (A) shall 
not apply to any family residing in a public housing project adminis-
tered by an Indian public housing agency.". 
(b) UTILITY ALLOWANCE.— 
(1) The Comptroller General of the United States shall submit 
to the Congress not later than October 30,1988, a report regard-
ing the utility allowances provided to the residents of public 
housing and housing assisted under section 8 of the United 
States Housing Act of 1937. 
(2) The report shall include the following: 
(A) A description of the manner in which public housing 
agencies are currently calculating utility allowances. 
42 u s e 1437a. 
Indians. 
Reports. 
101 STAT. 1822 
PUBLIC LAW 100-242—FEB. 5, 1988 
Energy. 
42 u s e 1437n. 
Regulations. 
Contracts. 
Grants. 
,h' liG 5 including a national survey of the calculation methods 
used. 
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(B) An estimate of the number of residents of public 
housing and housing £issisted under section 8 of the United 
States Housing Act of 1937 paying more than 30 percent of 
monthly adjusted income for rent and utilities, including a 
separate estimate for each meter category. 
(C) Recommendations for revisions that may be made in 
current law to ensure that— 
(i) utility allowances will not differ solely because of 
the metering system of the dwelling unit; 
(ii) residents of public housing and housing assisted 
under section 8 of the United States Housing Act of 
1937 will not pay more than 30 percent of monthly 
adjusted income for rent and utilities; and 
(iii) such residents will have a strong incentive to 
conserve energy and reduce utility costs, and resi-
• 
dents who waste substantial amounts of energy will be 
penalized. 
(D) A description of administratively feasible methods of 
ensuring that utility allowances will reflect differences in 
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the size, location, and energy-conserving condition of dif-
ferent types of dwelling units and appliances. 
(E) An estimate of the costs that will be associated with 
any recommendation made under subparagraph (C). 
(3) In preparing the report under this subsection, the 
Comptroller General shall consult with the Secretary of Hous-
ing and Urban Development, other appropriate Federal offi-
cials, other knowledgeable individuals, and national and other 
organizations representing public housing agencies, local 
governments, tenants, and energy conservation interests. 
SEC. 103. INCOME ELIGIBILITY FOR ASSISTED HOUSING. 
(a) IMPLEMENTATION OF PERCENTAGE LIMITATIONS.—Section 16 of 
the United States Housing Act of 1937 is amended by adding at the 
end the following: 
"(c) In developing admission procedures implementing subsection 
O
t
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, the Secretary may not totally prohibit admission of lower income 
families other than very low-income families, and shall establish, as 
appropriate, differing percentage limitations on admission of lower 
income families in separate assisted housing programs that, when 
aggregated, will achieve the overall percentage limitation contained 
in subsection (b). The Secretary shall issue regulations to carry out 
this subsection not later than 60 days after the date of the enact-
ment of the Housing and Community Development Act of 1987.". 
O
t
)
) EXEMPTIONS FROM PERCENTAGE LIMITATIONS.—Section 16 of the 
United States Housing Act of 1937 (as amended by subsection (a) of 
this section) is further amended by adding at the end the following 
new subsection: 
"(d)(1) The limitations established in subsection (b) shall not apply 
to dwelling units made available under section 8 housing assistance 
contracts for the purpose of preventing displacement, or ameliorat-
ing the effects of displacement, including displacement caused by 
rents exceeding 30 percent of monthly adjusted family income, of 
lower income families from projects being rehabilitated with assist-
ance from rehabilitation grants under section 17 and the Secretary 
PUBLIC LAW 100-242—FEB. 5, 1988 
101 STAT. 1823 
shall not otherwise unduly restrict the use of payments under 
section 8 housing assistance contracts for this purpose. 
"(2) The limitations established in subsections (a) and (b) shall not 
Indians, 
apply to dwelling units assisted by Indian public housing agencies.". 
PART 2—PUBLIC HOUSING 
SEC. 111. DISCRETIONARY PREFERENCE FOR NEAR ELDERLY FAMILIES 
IN PUBLIC HOUSING PROJECTS DESIGNED FOR THE ELDERLY. 
Section 3G))(3) of the United States Housing Act of 1937 is amend- 
42 USC 1437a. 
ed by adding at the end the following new sentence: "In determining 
priority for admission to public housing projects designed for elderly 
families, the public housing agency shall give preference to such 
families. When the public housing agency determines (in accordance 
with regulations of the Secretary) that there are insufficient num-
bers of elderly families to fill all the units in such a project, the 
agency may give preference to families in which the head of house-
hold (or spouse) is at least 50 years of age but below the age of 62 
before those in which the head of household and spouse, if any, are 
below the age of 50.". 
SEC. 112. GRANTS FOR PUBLIC HOUSING DEVELOPMENT. 
(a) AUTHORITY TO PROVIDE GRANTS.—Section 5(a) of the United 
States Housing Act of 1937 is amended to read as follows: 
42 USC 1437c. 
"(a)(1) The Secretary may make annual contributions to public 
housing agencies to assist in achieving and maintaining the lower 
income character of their projects. The Secretary shall embody the 
Contracts, 
provisions for such annual contributions in a contract guaranteeing 
their payment. The contribution payable annually under this sec-
tion shall in no case exceed a sum equal to the annual amount of 
principal and interest payable on obligations issued by the public 
^ 
housing agency to finance the development or acquisition cost of the 
lower income project involved. Annual contributions payable under 
this section shall be pledged, if the Secretary so requires, as security 
for obligations issued by a public housing agency to assist the 
development or acquisition of the project to which annual contribu-
tions relate and shall be paid over a period not to exceed 40 years. 
"(2) The Secretary may make contributions (in the form of grants) 
Grants. 
to public housing agencies to cover the development cost of public 
housing projects. The contract under which such contributions shall Contracts, 
be made shall specify the amount of capital contributions required 
for each project to which the contract pertains, and that the terms 
and conditions of such contract shall remain in effect for a 40-year 
period. 
"(3) The amount of contributions that would be established for a 
newly constructed project by a public housing agency designed to 
accommodate a number of families of a given size and kind may be 
established under this section for a project by such public housing 
agency that would provide housing for the comparable number, 
sizes, and kinds of families through the acquisition and rehabilita-
tion, or use under lease, of structures that are suitable for lower 
income housing use and obtained in the local market.". 
(b) CONFORMING AMENDMENTS.— 
(1) Section 5 of the United States Housing Act of 1937 is 
amended— 
(A) by striking "ANNUAL" in the section heading; and 
(B) by striking "annual" in subsection (e)(2). 
101 STAT. 1824 
PUBLIC LAW 100-242—FEB. 5, 1988 
42 use I437d. 
(2) Section 6 of the United States Housing Act of 1937 is 
amended by striking "annual" the first place it appears in the 
first sentence of subsection (g), and each place it appears in 
subsection (d) and the first sentence of each of subsections (a) 
and (c). 
42 use 1437e. 
(3) Section 7 of the United States Housing Act of 1937 is 
amended by striking "annual" in the proviso in the first 
sentence. 
42 use 1437g. 
(4) Section 9(a)(2) of the United States Housing Act of 1937 is 
amended— 
(A) by striking "being assisted by an annual contributions 
contract authorized by section 5(c)" and inserting the fol-
lowing: "one developed pursuant to a contributions contract 
authorized by section 5'; and 
(B) by striking "any such annual" and inserting "any 
such". 
42 use 1437J. 
(5) Section 12 of the United States Housing Act of 1937 is 
amended by striking "annual". 
42 use 1437/. 
(6) Section 14 of the United States Housing Act of 1937 is 
amended— 
(A) by striking "receive assistance under section 5(c)" in 
subsection (cX2) and inserting "assisted under section 5"; 
y:^;:i; : ] 
and 
(B) by striking "annual" in each of paragraphs (2) and 
(4XC) of subsection (d). 
42 use 1437m. 
(7) Section 15 of the United States Housing Act of 1937 is 
amended by striking "with loans or debt service annual con-
tributions" in clause (2). 
42 use I437n. 
(8) Section 16(b) of the United States Housing Act of 1937 is 
amended by striking "annual". 
42 use I437p. 
(9) Section 18(c) of the United States Housing Act of 1937 is 
amended by striking "annual contributions authorized under 
section 5(c)' and inserting "contributions authorized under sec-
tion 5". 
SEC. 113. LIMITATION ON PUBLIC HOUSING DEVELOPMENT AND ASSUR-
ANCE OF PUBLIC HOUSING QUALITY STANDARDS. 
42 use 1437c. 
Section 5 of the United States Housing Act of 1937 is amended by 
adding at the end the following new subsection: 
"(JXD After September 30, 1987, in providing assistance under this 
Act to a public housing agency for public housing (other than for 
Indian families), the Secretary shall reserve funds for the develop-
ment of public housing only if— 
"(A) the Secretary determines that additional amounts are 
required to complete the development of dwelling units for 
which amounts are obligated on or before such date; 
"(B) the public housing agency certifies to the Secretary that 
85 percent of the public housing dwelling units of the public 
housing agency— 
"(i) are maintained in substantial compliance with the 
housing quality standards established by the Secretary 
under section 8(oX6); 
"(ii) will be so maintained upon completion of moderniza-
g. 
tion for which funding has been awarded; or 
"(iii) will be so maintained upon completion of moderniza-
, tion for which applications are pending that have been 
submitted in good faith under section 14 (or a comparable 
PUBLIC LAW 100-242—FEB. 5, 1988 
101 STAT. 1825 
State or local government program) and that there is a 
reasonable expectation, as determined by the Secretary in 
writing, that the applications would be approved; 
"(C) 
the 
public 
housing 
agency 
certifies 
that 
such 
development— 
8- 
"(i) will replace dwelling units that are disposed of or 
-y. :, ^i, 
demolished by the public housing agency, including dwell-
ing units disposed of or lost through sale to tenants or 
through units redesign; or 
"(ii) is required to comply with court orders or directions 
of the Secretary; 
"(D) the public housing agency certifies that it has demands 
for family housing not satisfied by the rental assistance pro-
grams established in subsection (b) or (o) of section 8 for which it 
plans to construct or acquire projects of not more than 100 
- > , 
units; or 
- ..t 
"(E) the Secretary makes such reservation under paragraph 
(2). 
"(2) Notwithstanding any other provision of law, not more than 20 
percent of the funds appropriated for development of public housing 
also may be committed by the Secretary for the substantial redesign, 
reconstruction, or redevelopment of existing public housing projects 
or units, which work shall be carried out pursuant to the rules and 
regulations applicable to the development of public housing.". 
SEC. 114. LIMITATION ON RECAPTURE OF FUNDING RESERVATIONS. 
Section 5 of the United States Housing Act of 1937 (as amended by 
section 113 of this Act) is further amended by adding at the end the 
following new subsection: 
"(k) After the reservation of public housing development funds to 
a public housing agency, the Secretary may not recapture any of the 
amounts included in such reservation due to the failure of a public 
housing agency to begin construction or rehabilitation, or to com-
plete acquisition, during the 30-month period following the date of 
such reservation. During such 30-month period, the public housing 
agency shall be permitted to change the site of the public housing 
project or reformulate the project, if not less than the original 
number of dwelling units are to be constructed, rehabilitated, or 
acquired. There shall be excluded from the computation of such 30-
month period any delay in the beginning of construction or re-
habilitation of such project caused by (1) the failure of the Secretary 
to process such project within a reasonable period of time; (2) any 
environmental review requirement; (3) any legal action affecting 
such project; or (4) any other factor beyond the control of the public 
housing agency.". 
SEC. 115. INDIAN PUBLIC HOUSING. 
Section 5 of the United States Housing Act of 1937 (as amended by 
section 114 of this Act) is further amended by adding at the end the 
following new subsection: 
"(1) The Secretary may not use £is a criterion for distributing 
assistance under this section the progress made by an Indian public 
housing agency in collecting rents owed by tenants unless— 
"(1) such criterion is used as 1 of several criteria that are Regulations. 
weighted proportionally and is established by regulations issued 
after public notice and opportunity to comment in accordance 
with section 553 of title 5, United States Code; or 
101 STAT. 1826 
PUBLIC LAW 100-242—FEB. 5, 1988 
"(2) the Secretary determines that the Indian public housing 
agency has demonstrated a pattern of substantial noncompli-
ance with requirements governing the collection of rents.". 
SEC. 116. LOCATION OF ACQUIRED HOUSING. 
42USC1437d. 
Section 6(h) of the United States Housing Act of 1937 is 
amended— 
(1) by inserting before "is" the following: "in the neighbor-
hood where the public housing agency determines the housing is 
needed"; and 
(2) by inserting "in such neighborhood" after "rehabilitation". 
SEC. 117. PUBLIC HOUSING CHILD CARE GRANTS. 
Section 222 of the Housing and Urban-Rural Recovery Act of 1983 
12 use 1701Z-6 
is amended to read as follows: 
note. 
"PUBUC HOUSING CHILD CARE DEMONSTRATION PROGRAM 
"SEC. 222. (a) PROGRAM AUTHORITY.— 
"(1) The Secretary of Housing and Urban Development shall, 
to the extent approved in appropriation Acts, carry out a dem-
onstration program of making grants to nonprofit organizations 
to assist such organizations in providing child care services in 
lower income housing projects for lower income families who 
reside in public housing. 
"(2) The Secretary shall design the program described in 
paragraph (1) to determine the extent to which the availability 
of child care services in lower income housing projects facili-
tates the employability of the parents or guardians of children 
residing in public housing. 
"(b) EuGiBiLiTY FOR ASSISTANCE.—The Secretary may make a 
grant to a nonprofit organization for child care services in a lower 
income housing project only i
f
— 
"(1) prior to receipt of assistance under this section, a child 
care services program is not in operation in the project; 
"(2) the public housing agency agrees to provide suitable 
facilities for the provision of child care services; 
"(3) the child care services program in the project will serve 
preschool children during the day, school children after school, 
or both, in order to permit the parents or guardians of such 
children to obtain, retain, or train for employment; 
"(4) the child care services program in the project is designed, 
to the extent practicable, to involve the participation of the 
parents of children benefiting from such program; 
Aged persons. 
"(5) the child care services program in the project is designed, 
to the extent practicable, to employ in part-time positions 
elderly individuals who reside in the lower income housing 
project involved; and 
"(6) the child care services program in the project complies 
with all applicable State and local laws, regulations, and 
ordinances. 
"(c) ALLOCATION OF ASSISTANCE.—In providing grants under this 
section, the Secretary shall— 
•'^' 
"(1) give priority to nonprofit organizations providing child 
care services in lower income housing projects in which reside 
the largest number of preschool and school children of lower 
income families; 
PUBLIC LAW 100-242—FEB. 5, 1988 
101 STAT. 1827 
"(2) seek to ensure a reasonable distribution of such grants 
between urban and rural areas and among nonprofit organiza-
tions providing child care services in lower income housing 
projects of varying sizes; and 
"(3) seek to provide such grants to the largest number of 
C 
nonprofit organizations practicable, considering the amount of 
funds available under this section and the financied require-
j^ 
ments of the particular child care services programs to be 
established in the lower income housing projects for which 
applications are submitted under this section. 
^^ 
' 
"(d) ADMINISTRATIVE PROVISIONS.— 
"(1) Applications for grants under this section shall be made 
by nonprofit organizations (in consultation with public housing 
agencies) in such form, and according to such procedures, as the 
Secretary may prescribe. 
"(2) Any nonprofit organization receiving a grant under this 
section may use such grant only for operating expenses and 
minor renovations of facilities necessary to the provision of 
child care services under this section. 
"(3) The Secretary shall conduct periodic evaluations of each 
child care services program assisted under this section for 
purposes of— 
"(A) determining the effectiveness of such program in 
providing child care services and permitting the parents or 
guardians of children residing in public housing to obtain, 
retain, or train for employment; and 
"(B) ensuring compliance with the provisions of this 
? « - . . . ; 
section. 
"(4) No provision of this section may be construed to authorize 
the Secretary to establish any health, safety, educational, or 
other standards with respect to child care services or facilities 
assisted with grants received under this section. Such services 
and facilities shall comply with all applicable State and local 
? 
laws, regulations, and ordinances, and all requirements estab-
, 
lished by the Secretary of Health and Human Services for child 
care services and facilities. 
"(e) REPORT TO CONGRESS.—Not later than the expiration of the 3-
year period following the date of the enactment of the Housing and 
Community Development Act of 1987, the Secretary shall prepare 
and submit to the Congress a detailed report setting forth the 
findings and conclusions of the Secretary as a result of cariying out 
the demonstration program established in this section. Sucn report 
shall include any recommendations of the Secretary with respect to 
the establishment of a permanent program of assisting child care 
services in lower income housing projects. 
"(f) DEFINITIONS.—For purposes of this section: 
"(1) The term 'lower income families' has the meaning given 
such term in section 3(bX2) of the United States Housing Act of 
1937. 
"(2) The terms 'lower income housing project' and 'public 
housing'have the meanings given such terms in section 3(bXl) 
of the United States Housing Act of 1937. 
"(3) The term 'public housing agency' has the meaning given 
such term in section 3(bX6) of the United States Housing Act of 
1937. 
"(4) The term 'Secretary' means the Secretary of Housing and 
Urban Development. 
101 STAT. 1828 
PUBLIC LAW 100-242—FEB. 5, 1988 
42 use 1437g. 
Insurance. 
Contracts. 
Energy. 
Utilities. 
"(g) AUTHORIZATION OF APPROPRIATIONS.—Of the total amount 
approved in appropriation Acts under section 103 of the Housing 
and Community Development Act of 1974, there shall be set aside to 
carry out this section $5,000,000 for fiscal year 1988 and $5,210,000 
for fiscal year 1989.". 
SEC. 118. PAYMENTS FOR OPERATION OF LOWER INCOME HOUSING 
PROJECTS. 
(a) PERFORMANCE FUNDING SYSTEM.—Section 9(a) of the United 
States Housing Act of 1937 is amended— 
(1) by striking the last sentence of paragraph (1); and 
(2) by adding at the end the following new paragraph: 
"(3XA) For purposes of making payments under this section, the 
Secretary shall utilize a performance funding system that is 
substantially based on the system defined in regulations and in 
effect on the date of the enactment of the Housing and Community 
Development Act of 1987 (as modified by this paragraph), and that 
establishes standards for costs of operation and reasonable projec-
tions of income, taking into account the character and location of 
the project and the characteristics of the families served, in accord-
ance with a formula representing the operations of a prototype well-
managed project. Such performance funding system shall be estab-
lished in consultation with public housing agencies and their 
associations, be contained in a regulation promulgated by the Sec-
retary prior to the start of any fiscal year to which it applies, and 
remain in effect for the duration of such fiscal year without change. 
Notwithstanding the preceding sentences, the Secretary shall revise 
the performance funding system by June 15, 1988, to accurately 
reflect the increase in insurance costs incurred by public housing 
agencies. 
"(B) Under the performance funding system established under 
this paragraph— 
"(i) in the first year that the reductions occur, any public 
housing agency shall share equally with the Secretary any cost 
reductions due to the differences between projected and actual 
utility rates attributable to actions taken by the agency which 
lead to such reductions; 
"(ii) in the case of any public housing agency that receives 
financing (from a person other than the Secretary) or enters 
into a performance contract to undertake energy conservation 
improvements in a public housing project, under which pay-
ment does not exceed the cost of the energy saved as a result of 
the improvements during a negotiated contract period of not 
more than 12 years that is approved by the Secretary— 
"(I) the public housing agency shall retain 100 percent of 
any cost avoidance due to differences between projected and 
actual utility consumption (adjusted for heating degree 
days) attributable to tne improvements, until the term of 
the financing agreement is completed, at which time the 
annual utility expense level 3-year rolling beise procedures 
shcdl be applied using— 
"(a) in the first year following the end of the contract 
period, the energy use during the 2 years prior to 
installation of the energy conservation improvements 
and the last contract year; 
%,f^ 
._, 
"(b) in the second year following the end of the 
^'' "
* ' 
' 
contract period, the energy use during the 1 year prior 
PUBLIC LAW 100-242—FEB. 5, 1988 
101 STAT. 1829 
to installation of the energy conservation improve-
ments and the 2 years following the end of the contract 
period; and 
"(c) in the third year following the end of the con-
tract period, the energy use in the 3 years following the 
end of the contract period; or 
"(II) the Secretary shall provide an additional operating 
subsidy above the current allowable utility expense level 
ijjjt. 
equivalent to the cost of the energy saved as a result of the 
* f Si 
improvements and sufficient to cover payments for the 
'* 
improvements through the term of the contract or agree-
ment; 
"(iii) there shall be a formal review process for the purpose of 
providing such revisions (either increases or reductions) to the 
allowable expense level of a public housing agency as 
necessary— 
"(I) to correct inequities and abnormalities that exist in 
the base year expense level of such public housing agency; 
"(II) to accurately reflect changes in operating cir-
cumstances since the initial determination of such base 
year expense level; and 
"(III) to ensure that the allowable expense limit ac-
curately reflects the higher cost of operating the project in 
an economically distressed unit of local government and the 
i
;
^
^
: 
lower cost of operating the project in an economically pros-
perous unit of local government; and 
"(iv) if a public housing agency redesigns or substantially 
rehabilitates a public housing project so that 2 or more dwelling 
units are combined to create a single larger dwelling unit, the 
payments received under this section shall not be reduced solely 
because of the resulting reduction in the number of dwelling 
units if not less than the same number of individuals will reside 
in the new larger dwelling unit £is resided in the dwelling units 
'•^* ^ 
^
^ 
that were combined to form such larger dwelling unit.". 
(b) AUTHORIZATION OF APPROPRIATIONS.—Section 9(c) of the United 
States Housing Act of 1937 is amended to read as follows: 
42 USC 1437g. 0 
"(c) There are authorized to be appropriated for purposes of 
^ 
providing annual contributions under this section $1,500,000,000 for 
fiscal year 1988 and $1,530,000,000 for fiscal year 1989.". 
(c) TIME OF PAYMENT.—Section 9 of the United States Housing Act 
of 1937 is amended by adding at the end the following new 
subsection: 
"(e) In the case of any public housing agency that submits its 
budget for any fiscal year of such agency to the Secretary in a timely 
manner in accordance with the regulations issued by the Secretary 
under this section, assistance to be provided to such agency under 
this section for such fiscal year shall commence not later than the 
1st month of such fiscal year, and shall be paid in accordance with 
such payment schedule as may be agreed upon by the Secretary and 
such agency.". 
(d) USE OF OPERATING SUBSIDIES TO REMEDY P H A NONCOMPLIANCE 
WITH AUDIT RESPONSIBILITIES.—Section 9(a)(1) of the United States 
Housing Act of 1937 is amended by adding at the end the following 
new sentences: "If the Secretary determines that a public housing 
agency has failed to take the actions required to submit an accept-
able audit on a timely basis in accordance with chapter 75 of title 31, 
United States Code, the Secretary may arrange for, and pay the 
101 STAT. 1830 
PUBLIC LAW 100-242—FEB. 5, 1988 
costs of, the audit. In such circumstances, the Secretary may with-
hold, from assistance otherwise payable to the agency under this 
section, amounts sufficient to pay for the reasonable costs of 
conducting an acceptable audit, including, when appropriate, the 
reasonable costs of accounting services necessary to place the 
agency's books and records in auditable condition.". 
SEC. 119. COMPREHENSIVE IMPROVEMENT ASSISTANCE PROGRAM. 
42 use 1
4
3
7
Z 
(a) PURPOSE OF AMENDMENTS.—It is the purpose of the amend-
iiote. 
ments made by this section— 
(1) to provide assistance on a reliable and more predictable 
basis to public housing agencies in furtherance of their plans to 
enable them to operate, upgrade, modernize, and rehabilitate 
public housing projects financed under the United States Hous-
ing Act of 1937 to ensure their continued availability for the 
benefit of lower income families as decent, safe, and sanitary 
rental housing at affordable rents; 
(2) to provide considerable discretion to public housing agen-
cies to decide the specific improvements, the manner of their 
execution, and the timing of the expenditure of funds in the 
modernization of projects under section 14 of the United States 
Housing Act of 1937; 
(3) to significantly simplify the program of Federal assistance 
for capital improvements in public housing projects; 
(4) to provide increased opportunities and incentives for more 
efficient management of public housing projects; and 
(5) to afford public housing agencies greater control in plan-
ning and expending funds under the United States Housing Act 
of 1937 for the modernization, rehabilitation, maintenance, and 
improvement of public housing projects to benefit lower income 
families. 
(b) AUTHORITY TO PROVIDE FINANCIAL ASSISTANCE.—Section 140b) 
42 use 1437Z. 
of the United States Housing Act of 1937 is amended— 
(A) by inserting "(1)" after the subsection designation; and 
(B) by adding at the end the following new paragraph: 
Grants. 
"(2) The Secretary may make contributions (in the form of grants) 
Contracts. 
to public housing agencies under this section. The contract under 
which the contributions shall be made shall specify that the terms 
and conditions of the contract shall remain in effect for a 20-year 
period for any project receiving the benefit of a grant under the 
contract.". 
(c) APPUCATIONS BY P H A ' S MANAGING LESS THAN 500 UNITS.— 
Section 14(d) of the United States Housing Act of 1937 is amended in 
the matter preceding paragraph (1) by inserting after "subsection 
(b)" the following: "to a public housing agency that owns or operates 
less than 500 public housing dwelling units". 
(d) COMPREHENSIVE PLANS.—Section 14 of the United States Hous-
ing Act of 1937 is amended— 
(1) by redesignating subsection (e) as subsection (f); and 
(2) by inserting after subsection (d) the following new subsec-
tion: 
"(eXD No financial assistance may be made available under this 
section to a public housing agency that owns or operates 500 or more 
public housing dwelling units unless the Secretary approves (or has 
approved before the effective date of this subsection) a 5-year com-
prehensive plan submitted by the public housing agency, except that 
PUBLIC LAW 100-242—FEB. 5, 1988 
101 STAT. 1831 
the Secretary may provide such assistance if it is necessary to 
correct conditions that constitute an immediate threat to the health 
or safety of tenants. The comprehensive plan shall contain— 
"(A) a comprehensive assessment o
f
— 
"(i) the current physical condition of each public housing 
,j.C; 
project owned or operated by the public housing agency; 
"(ii) the physical improvements necessary for each such 
project to permit the project— 
"(I) to be rehabilitated to a level at least equal to the 
modernization standards specified in the Moderniza-
tion Handbook of the Department of Housing and 
Urban Development in effect on the date of the enact-
.j.; * : 
ment of the Housing and Community Development Act 
of 1987, as well as the modernization standards estab-
lished by the Secretary and in effect at the time of the 
preparation of the comprehensive plan; and 
, 
"(II) to comply with life-cycle cost-effective energy 
Energy. 
['' 
conservation performance standards established by the 
„ >.; 
Secretary to reduce operating costs over the estimated 
life of the building; and 
"(iii) the replacement needs of equipment systems and 
structural elements that will be required to be met (assum-
ing routine and timely maintenance is performed) during 
the 5-year period covered by the comprehensive plan; 
"(B) a comprehensive assessment of the improvements needed 
to upgrade the management and operation of the public housing 
agency and of each such project so that decent, safe, and 
sanitary living conditions will be provided such projects, which 
assessment shall include at least an identification of needs 
related to— 
"(i) the management, financial, and accounting control 
systems of the public housing agency that are related to 
such projects; 
"(ii) the adequacy and qualifications of personnel appro-
priate to be employed by the public housing agency (in the 
mauEigement and operation of such projects) for each 
significant category of employment; and 
"(iii) the improvement of the efficacy of— 
"(I) tenant programs and services in such projects; 
"(II) the security of each such project and its tenants; 
"(III) policies and procedures of the public housing 
Eigency for the selection and eviction of tenants in such 
projects; and 
"(IV) other policies and procedures of the public 
housing agency relating to such projects, as specified by 
the Secretary; 
"(C) an analysis, made on a project-by-project basis in accord-
ance with standards and criteria prescribed by the Secretary, 
demonstrating that completion of the improvements and 
replacements identified under subpargigraphs (A) and (B) will 
reasonably ensure the long-term physical and social viability of 
each such project at a reasonable cost; 
"(D) an action plan for making the improvements and 
replacements identified under subparagraphs (A) and (B) that 
are determined under the analysis described in subparagraph 
(C) to reasonably ensure long-term viability of each such project 
at a regisonable cost, which action plan shall include at least a 
101 STAT. 1832 
PUBLIC LAW 100-242—FEB. 5, 1988 
schedule, in order of priority established by the public housing 
agency, of the actions that are to be completed over a period of 5 
years from the date of approval of the comprehensive plan by 
the Secretary (or any longer period reasonably needed to make 
the improvements and replacements, considering the scope of 
the improvements and replacements and the amount of funding 
provided) and that are necessary— 
"(i) to make the improvements and replacements identi-
fied under subparagraph (A) for each project expected to 
receive capital improvements or replacements (with prior-
ity to improvements and replacements required to correct 
any life threatening condition); and 
"(ii) to upgrade the management and operation of the 
public housing agency and its public housing projects as 
described in subparagraph (B); 
State and local 
"(E) a statement, to be signed by the chief local government 
governments. 
official (or Indian tribal official, if appropriate), certifying 
Indians. 
t h a t -
'll) the comprehensive plan was developed by the public 
housing agency in consultation with appropriate local 
government officials (or Indian tribal officials) and with 
tenants of the housing projects (or tenants of the Indian 
housing projects) eligible for assistance under this section, 
which shall include at least one public hearing that shall be 
held prior to the initial adoption of any plan by the public 
housing agency for use of such assistance, and afford ten-
ants and interested parties an opportunity to summarize 
their priorities and concerns, to ensure their due consider-
ation in the planning process of the public housing agency; 
and 
"(ii) the comprehensive plan is consistent with the assess-
ment of the community of its lower income housing needs 
and that the unit of general local government (or Indian 
tribe) will cooperate in the provision of tenant programs 
and services (as defined in section 3(cX2)); 
"(F) a statement, to be signed by the chief public housing 
official, certifying that the public housing agency will carry out 
the comprehensive plan in conformity with title VI of the Civil 
Rights Act of 1964, title VIII of the Act of April 11, 1968 
(commonly known £is the Civil Rights Act of 1968), and section 
504 of the Rehabilitation Act of 1973; 
"(G) a preliminary estimate of the total cost of the items 
identified in subparagraphs (A) and (B), including a preliminary 
estimate of the funds that will be required during each year 
covered by the comprehensive plan to accomplish the work 
pursuant to the action plan; and 
"(H) such other information £is the Secretary may require. 
"(2XA) The Secretary shall approve a comprehensive plan 
unless— 
"(i) the comprehensive plan is incomplete in significant 
matters; 
"(ii) on the bsisis of available significant facts and data 
pertaining to the physical and operational condition of the 
public housing projects of the public housing agency or the 
management and operations of the public housing agency, the 
Secretary determines that the identification by the public 
PUBLIC LAW 100-242—FEB. 5, 1988 
101 STAT. 1833 
?
' 
housing agency of needs is plainly inconsistent with such facts 
and data; 
"(iii) on the basis of the comprehensive plan, the Secretary 
determines that the action plan described in paragraph (IXD) is 
plainly inappropriate to meeting the needs identified in the 
comprehensive plan, or that the public housing agency has 
failed to denionstrate that completion of improvements and 
* 
replacements identified under subparagraphs (A) and (B) of 
paragraph (1) will reasonably ensure long-term viability of one 
or more public housing projects to which they relate at a 
"
* 
reasonable cost; or 
sh i<* 
* 
"(iv) there is evidence available to the Secretary that tends to 
' 
challenge in a substantial manner any certification contained in 
the comprehensive plan. 
"(B) The comprehensive plan shall be considered to be approved, 
unless the Secretary notifies the public housing agency in writing 
within 75 calendar days of submission that the Secretary has dis-
approved the comprehensive plan as submitted, indicating the rea-
sons for disapproval and modifications required to make the com-
prehensive plan approvable. 
"(3)(A) Each public housing agency that owns or operates 500 or 
more public housing dwelling units shall, after being advised by the 
Secretary of the estimated assistance it will receive under this 
section in any fiscal year, submit to the Secretary, at a date deter-
mined by the Secretary, an annual statement of the activities and 
expenditures projected to be undertaken, in whole or in part, by 
such assistance during the 12-month period immediately following 
the execution of the contract for such assistance. The Secretary, in 
establishing the funding for a public housing agency for any fiscal 
year, shall review the relative needs for restoring public housing 
shown by the approved comprehensive plans in the regional or area 
office of the Department of Housing and Urban Development for 
such agency. As long as the activities and expenditures are consist-
ent with the approved plan, the public housing agency shall have 
total discretion in expending assistance for any activity or work set 
forth in the plan. The annual statement shall include a certification 
by the public housing agency that the proposed activities and 
expenditures are consistent with the approved comprehensive plan 
of the public housing agency. The annual statement also shall 
include a certification that the public housing agency has provided 
the tenants of the public housing affected by the planned activities 
the opportunity to review the annual statement and comment on it, 
and that such comments have been taken into account in formulat-
ing the annual statement as submitted to the Secretary. 
"(B) A public housing agency may propose an amendment to its 
comprehensive plan under paragraph (1) in any annual statement. 
Any such proposed amendment shall be reviewed in accordance 
with paragraph (2), and shall include a certification that (i) the 
proposed amendment has been made publicly available for comment 
prior to its submission; (ii) affected tenants have been given suffi-
cient time to review and comment on it; and (iii) such comments 
have been taken into consideration in the preparation and submis-
sion of the amendment. A public housing agency shall have a right 
to amend its comprehensive plan and related statements to extend 
the time for performance whenever the Secretary has not provided 
the amount of assistance set forth in the plan or heis not provided 
- ' ' "
^
* 
the assistance in a timely manner. 
101 STAT. 1834 
PUBLIC LAW 100-242—FEB. 5, 1988 
"(C) The Secretary shall approve the annual statement and any 
amendment to it or the comprehensive plan unless the Secretary 
determines that the statement or amendment is plainly inconsistent 
with the activities specified in the comprehensive plan. The state-
ment or amendment shall be considered to be approved, unless 
the Secretary notifies the public housing agency in writing before 
the expiration of the 75-day period following its submission that 
the Secretary has disapproved it as submitted, indicating the rea-
sons for disapproval and the modifications required to make it 
approvable. 
Reports. 
'(4XA) Each public housing agency that owns or operates 500 or 
more public housing dwelling units shall submit to the Secretary, on 
a date determined by the Secretary, a performance and evaluation 
report concerning the use of funds made available under this sec-
tion. The report of the public housing agency shall include an 
assessment by the public housing agency of the relationship of such 
use of funds made available under this section, as well as the use of 
other funds, to the needs identified in the comprehensive plan of the 
public housing agency and to the purposes of this section. The public 
housing agency shall certify that the report has been made available 
for review and comment by affected tenants prior to its submission 
to the Secretary. 
"(B) The Secretary shall, at least on an annual basis, make such 
reviews as may be necessary or appropriate to determine whether 
each public housing agency receiving assistance under this section— 
"(i) has carried out its activities under this section in a timely 
manner and in accordance with its comprehensive plan; 
"(ii) hgis a continuing capacity to carry out its comprehensive 
plan in a timely manner; 
"(iii) has satisfied, or has made reasonable progress towards 
satisfying, such performance standards as shall be prescribed by 
the Secretary, and has made reasonable progress in carrying 
out modernization projects approved under this section. 
"(C) Each public housing agency that owns or operates 500 or 
more public housing dwelling units and receives assistance under 
this section shall have an audit made in accordance with chapter 75 
of title 31, United States Code. The Secretary, the Inspector General 
of the Department of Housing and Urban Development, and the 
Comptroller General of the United States shall have access to all 
books, documents, papers, or other records that are pertinent to the 
activities carried out under this section in order to make audit 
examinations, excerpts, and transcripts. 
"(D) The comprehensive plan, any amendments to the comprehen-
sive plan, and the annual statement shall, once approved by the 
Secretary, be binding upon the Secretary and the public housing 
agency. The Secretary may order corrective action only if the public 
housing agency does not comply with subparagraph (A) or (B) or if 
an audit under subparagraph (C) reveals findings that the Secretary 
reasonably believes require such corrective action. The Secretary 
may withhold funds under this section only if the public housing 
agency fails to take such corrective action after notice and a reason-
able opportunity to do so. In administering this section, the Sec-
retary shall, to the greatest extent possible, respect the professional 
judgment of the administrators of the public housing agency.", 
(e) EuGiBLE COSTS.—Section 14(f) of the United States Housing Act 
42 use 1437/. 
of 1937 (as so redesignated by this section) is amended— 
(1) by inserting "(1)" after the subsection designation; 
PUBLIC LAW 100-242—FEB. 5, 1988 
101 STAT. 1835 
Health and 
medical care. 
Safety. 
42 use 1437/. 
(2) in the matter preceding paragraph (1), by inserting after 
"public housing agency" the following: "that owns or operates 
less than 500 public housing dwelling units"; 
(3) by redesignating paragraphs (1) through (4) as subpara-
graphs (A) through (D); and 
(4) by adding at the end the following new paragraph: 
"(2) A public housing agency that owns or operates 500 or more 
public housing dwelling units may use financial assistance received 
under subsection (b) only— 
"(A) to undertake activities described in its approved com-
prehensive plan under subsection (e)(1) or its annual statement 
under subsection (e)(3); 
"(B) to correct conditions that constitute an immediate threat 
to the health or safety of tenants and to meet special purpose 
needs described in section 14(iXl)(D), whether or not the need 
for such correction is indicated in its comprehensive plan or 
annual statement; and 
"(C) to prepare a comprehensive plan under subsection (eXD, Reports. 
including reasonable costs that may be necessary to assist 
tenants in participating in the planning process in a meaningful 
way, an annual statement under subsection (e)(3), an annual 
performance and evaluation report under subsection (e)(4)(A), 
and an audit under subsection (e)(4)(C).". 
(f) ALLOCATION OF ASSISTANCE.—Section 14 of the United States 
Housing Act is amended by adding at the end the following new 
subsection: 
"(k)(l) Until the Congress establishes by law a revised method for 
allocating assistance under this section, assistance shall be allocated 
under this section in substantial accordance with the allocation 
method in effect on the date of the enactment of the Housing and 
Community Development Act of 1987. 
"(2) Not later than 1 year after the date of the enactment of the 
Housing and Community Development Act of 1987, the Secretary 
shall— 
"(A) complete the study of the need for public housing mod-
ernization initiated pursuant to the Department of Housing and 
Urban Development-Independent Agencies Appropriation Act, 
1984 (Public Law 98-45) and any other studies that are necessary 
to evaluate the current condition and capital requirements of 
public housing as well as the future need for rehabilitation and 
replacement of public housing facilities; 
"(B) submit to the Congress proposed methods for determin-
ing the relative allocation of funds between activities to correct 
existing deficiencies and the annual accrual of resources to 
meet future needs; 
"(C) submit to the Congress proposed alternatives for allocat-
ing funds among public housing agencies to correct existing 
deficiencies, including formulas for distributing funds to public 
housing agencies, to regional and field offices of the Department 
of Housing and Urban Development, or to States, as well as 
such other allocation methods as the Secretary may wish to 
recommend; 
"(D) provide the Congress with— 
"(i) an analysis of data and other information used to 
develop recommendations for measuring existing defi-
ciencies, future needs, and anticipated emergencies; 
101 STAT. 1836 
PUBLIC LAW 100-242—FEB. 5, 1988 
"(ii) an analysis of the bases underlying each of the 
proposed allocation methods; and 
"(iii) a comparison of proposed allocations to previous 
-•'I 
allocations under this section; 
"(E) propose to the Congress criteria for distinguishing capital 
replacement activities that are routine from those that are not 
routine; 
"(F) propose to the Congress alternative methods— 
"(i) to allocate funds to public housing agencies to meet 
predictable routine modernization and regular capital 
replacement expenses; and 
"(ii) provide for unpredictable, infrequent, or extraor-
dinary future capital replacement needs through a fund 
administered on a national, regional. State, or local level or 
through such other methods as the Secretary may rec-
ommend; 
"(G) consult at least on a quarterly basis with organizations 
and individuals representing public housing agencies, local 
government, and tenants regarding progress on the studies 
referred to in subparagraph (A) and the development of alter-
natives for improving this section; and 
"(H) estimate, for not less than the 200 largest public housing 
agencies, the amount that will be received annually under each 
such alternative allocation system and compare such amounts 
to funds received in prior years under this section.". 
(g) ANNUAL REPORT.—Section 14 of the United States Housing Act 
(as amended by subsection (f) of this section) is further amended by 
adding at the end the following new subsection: 
"(1) The Secretary shall include in the annual report under section 
8 of the Department of Housing and Urban Development Act— 
"(1) a description of the allocation, distribution, and use of 
assistance under this section on a regional basis and on the 
basis of public housing agency size; and 
"(2) a national compilation of the total funds requested in 
comprehensive plans for all public housing agencies owning or 
operating 500 or more public housing dwelling units.". 
(h) REGULATIONS.—Section 14 of the United States Housing Act (as 
amended by subsection (g) of this section) is further amended by 
adding at the end the following new subsection: 
"(m) Subject to subsection (k)(l), the Secretary may issue any 
regulations that are necessary to carry out this section.", 
(i) CONFORMING AMENDMENTS.— 
(1) Section 14(d) of the United States Housing Act of 1937 is 
amended in the matter preceding paragraph (1) by striking 
"subsection (eX4)" and inserting "subsection (fK4)". 
(2) Section 14(iXl) of the United States Housing Act of 1937 is 
amended in the matter preceding subparagraph (A) by inserting 
"(f) " after "(e) ". 
(3) Section 14(f) of the United States Housing Act of 1937 (as 
so redesignated by this section) is amended by striking 
"annual". 
(4) Section 14(g) of the United States Housing Act of 1937 is 
amended by inserting "or (e)" after "subsection (d)(4)". 
(5) Section 14(hX2) of the United States Housing Act of 1937 is 
amended by inserting "or (e)" after "subsection (dX4)". 
PUBLIC LAW 100-242—FEB. 5, 1988 
101 STAT. 1837 
(6) Section 14(i) of the United States Housing Act of 1937 is 42 USC 1437/. 
amended by striking "subsections (c), (d), (e), (g), and (h)" and 
inserting "subsections (c) through (h)". 
SEC. 120. COMPREHENSIVE IMPROVEMENT ASSISTANCE SPECIAL PUR-
POSE NEEDS. 
Section 14(i)(l)(D) of the United States Housing Act of 1937 is 
amended— 
(1) by inserting "(i)" after "(D)"; 
(2) by redesignating clauses (i) and (ii) and clauses (I) and (II), 
respectively; 
(3) by striking the period at the end and inserting "; and"; and 
(4) by adding at the end the following new clause: 
"(ii) physical improvement needs eligible under this subpara-
graph shall include replacing or repairing major equipment 
systems or structural elements, upgrading security, increasing 
accessibility for elderly families and handicapped families (as 
such terms are defined in section 3(b)(3)), reducing the number 
of vacant substandard units, and increasing the energy effi-
ciency of the units, except that the Secretary may make finan-
cial assistance available under this clause only if the Secretary 
determines that the physical improvements are necessary and 
sufficient to extend substantially the useful life of the project.". 
SEC. 121. PUBLIC HOUSING DEMOLITION AND DISPOSITION. 
(a) DETERMINATION OF INFEASIBILITY OF MODIFICATIONS.—Section 
18(a)(1) of the United States Housing Act of 1937 is amended by 42 USC I437p. 
striking "or" after "purposes," and inserting "and". 
(b) 
DEVELOPMENT AND APPROVAL OF REPLACEMENT HOUSING 
PLAN.—Section 18(b) of the United States Housing Act of 1937 is 
amended— 
(1) by striking "and" at the end of paragraph (1); 
(2) by striking the period at the end of paragraph (2) and 
inserting "; and"; and 
(3) by adding at the end the following new paragraph: 
"(3) the public housing agency has developed a plan for the 
provision of an additional decent, safe, sanitary, and affordable 
dwelling unit for each public housing dwelling unit to be demol-
ished or disposed under such application, which plan— 
"(A) provides for the provision of such additional dwelling 
i vi r < ; 
y,,^ 
units through— 
"(i) the acquisition or development of additional 
public housing dwelling units; 
"(ii) the use of 15-year project-based assistance under 
section 8; 
"(iii) the use of not less than 15-year project-based 
: 
-• 
assistance under other Federal programs; 
"(iv) the acquisition or development of dwelling units State and local 
assisted under a State or local government program governments, 
that provides for project-based assistance comparable Contracts, 
in terms of eligibility, contribution to rent, and length 
of assistance contract (not less than 15 years) to assist-
ance under section 8(b)(1); 
"(v) the use of 15-year tenant-based assistance under 
section 8 (excluding vouchers under section 8(o)); or 
"(vi) any combination of such methods; 
101 STAT. 1838 
PUBLIC LAW 100-242—FEB. 5, 1988 
Vi ''• '. 
•-• 
"(B) if it provides for the use of tenant-based assistance 
under section 8, may be approved— 
"(i) only after a finding by the Secretary that replace-
ment with project-based assistance is not feasible, and 
* ' 
the supply of private rental housing actually available 
to those who would receive such assistance under the 
A T 
u 
plan is sufficient for the total number of certificates 
and vouchers available in the community after im-
plementation of the plan and that such supply is likely 
tf. . 
to remain available for the full 15-year term of the 
assistance; and 
,;r- 
"(ii) only if such finding is based on objective 
information, which shall include rates of participation 
by landlords in the section 8 program, size, conditions 
and rent levels of available rental housing as compared 
to section 8 standards, the supply of vacant existing 
housing meeting the section 8 quality standards with 
rents at or below the fair market rent or the likelihood 
of adjusting the fair market rent, the number of eli-
gible families waiting for public housing or housing 
assistance under section 8, and the extent of discrimi-
nation against the types of individuals or families to be 
served by the assistance; 
State and local 
"(C) is approved by the unit of general local government 
governments. 
in which the project is located; 
"(D) includes a schedule for completing the plan within a 
. ^
^ 
period consistent with the size of the proposed demolition or 
" 
^ 
disposition, except that the schedule shall in no event 
exceed 6 years; 
' " : 
"(E) includes a method of ensuring that the same number 
of individuals and families will be provided housing; 
"(F) provides for the payment of the relocation expenses 
f 
, 
of each tenant to be displaced and ensures that the rent 
'''"^^ 
paid by the tenant following relocation will not exceed the 
amount permitted under this Act; and 
"(G) prevents the taking of any action to demolish or 
"-' 
dispose of any unit until the tenant of the unit is relocated 
to decent, safe, sanitary, and affordable housing that is, to 
the extent practicable, of the tenant's choice.". 
(c) FUNDING OF REPLACEMENT HOUSING PLAN.—Section 18(c) of the 
42 use I437p. 
United States Housing Act of 1937 is amended— 
(1) by inserting "(1)" after the subsection designation; and 
(2) by adding at the end the following new paragraphs: 
"(2) The Secretary shall, upon approving a plan under subsection 
(b)(3), agree to commit (subject to the availability of future ap-
propriations) the funds necessary to carry out the plan over the 
approved schedule of the plan. 
"(3) The Secretary shall, in allocating assistance for the acquisi-
tion or development of public housing or for moderate rehabilitation 
under section 8(eX2), give consideration to housing that replaces 
demolished public housing units in accordance with a plan under 
subsection (b)(3).". 
(d) APPLICABIUTY.—Section 18 of the United States Housing Act of 
1937 is amended by striking subsection (d) and inserting the follow-
ing new subsection: 
"(d) A public housing agency shall not take any action to demolish 
or dispose of a public housing project or a portion of a public housing 
PUBLIC LAW 100-242—FEB. 5, 1988 
101 STAT. 1839 
project without obtaining the approval of the Secretary and satisfy-
ing the conditions specified in subsections (a) and (b).". 
SEC. 122. PUBLIC HOUSING RESIDENT MANAGEMENT. 
The United States Housing Act of 1937 is amended by adding at 
the end the following new section: 
"PUBUC HOUSING RESIDENT MANAGEMENT 
"SEC. 20. (a) PURPOSE.—The purpose of this section is to encourage 
increased resident management of public housing projects, as a 
means of improving existing living conditions in public housing 
projects, by providing increased flexibility for public housing 
projects that are managed by residents by— 
"(1) permitting the retention, and use for certain purposes, of 
any revenues exceeding operating and project costs; and 
"(2) providing funding, from amounts otherwise available, for 
technical assistance to promote formation and development of 
resident management entities. 
For purposes of this section, the term 'public housing project' in-
cludes one or more contiguous buildings or an area of contiguous 
row houses the elected resident councils of which approve the 
establishment of a resident management corporation and otherwise 
meet the requirements of this section. 
"Oo) PROGRAM REQUIREMENTS.— 
"(1) RESIDENT COUNCIL.—As a condition of entering into a 
resident management program, the elected resident council of a 
public housing project shall approve the establishment of a 
resident management corporation. When such approval is made 
by the elected resident council of a building or row house area, 
the resident management program shall not interfere with the 
rights of other families residing in the project or harm the 
efficient operation of the project. The resident management 
corporation and the resident council may be the same organiza-
tion, if the organization complies with the requirements ap-
plicable to both the corporation and council. The corporation 
shall be a nonprofit corporation organized under the laws of the 
State in which the project is located, and the tenants of the 
project shall be the sole voting members of the corporation. If 
there is no elected resident council, a majority of the households 
of the public housing project shall approve the establishment of 
a resident council to determine the feasibility of establishing a 
resident management corporation to manage the project. 
"(2) PuBUC HOUSING MANAGEMENT SPECIAUST.—The resident 
council of a public housing project, in cooperation with the 
public housing agency, shall select a qualified public housing 
management specialist to assist in determining the feasibility 
of, and to help establish, a resident management corporation 
and to provide training and other duties agreed to in the daily 
operations of the project. 
"(3) BONDING AND INSURANCE.—Before assuming any manage-
ment responsibility for a public housing project, the resident 
management corporation shall provide fidelity bonding and 
insurance, or equivalent protection, in accordance with regula-
tions and requirements of the Secretary and the public housing 
agency. Such bonding and insurance, or its equivalent, shall be 
adequate to protect the Secretary and the public housing agency 
Corporations. 
42 u s e 1437r. 
101 STAT. 1840 
PUBLIC LAW 100-242—FEB. 5, 1988 
Contracts. 
^au Hi 
m 
Reports. 
against loss, theft, embezzlement, or fraudulent acts on the part 
of the resident management corporation or its employees. 
"(4) MANAGEMENT RESPONSIBIUTIES.—A resident management 
corporation that qualifies under this section, and that supplies 
insurance and bonding or equivalent protection sufficient to the 
Secretary and the public housing agency, shall enter into a 
contract with the public housing agency establishing the respec-
tive management rights and responsibilities of the corporation 
and the public housing agency. Such contract shall be consistent 
with the requirements of this Act applicable to public housing 
projects and may include specific terms governing management 
i' 
personnel and compensation, access to public housing project 
8
* 
records, submission of and adherence to budgets, rent collection 
procedures, tenant income verification, tenant eligibility deter-
'^^ minations, tenant eviction, the acquisition of supplies and 
materials, and such other matters as may be appropriate. The 
contract shall be treated £is a contracting out of services and shall 
be subject to any provision of a collective bargaining agreement 
regarding contracting out to which the public housing agency is 
subject. 
"(5) ANNUAL AUDIT.—The books and records of a resident 
management corporation operating a public housing project 
shall be audited annually by a certified public accountant. A 
written report of each audit shall be forwarded to the public 
housing agency and the Secretary. 
"(c) COMPREHENSIVE IMPROVEMENT ASSISTANCE.—Public housing 
projects managed by resident management corporations may be 
provided with comprehensive improvement assistance under section 
14 for purposes of renovating such projects in accordance with such 
section. If such renovation activities (including the planning and 
architectural design of the rehabilitation) are administered by a 
resident management corporation, the public housing agency in-
volved may not retain, for any administrative or other reason, any 
portion of the assistance provided pursuant to this subsection unless 
otherwise provided by contract. 
"(d) WAIVER OF FEDERAL REQUIREMENTS.— 
"(1) WAIVER OF REGULATORY REQUIREMENTS.—Upon the re-
quest of any resident management corporation and public hous-
ing agency, and after notice and an opportunity to comment is 
afforded to the affected tenants, the Secretary may waive (for 
both the resident management corporation and the public hous-
s 
ing agency) any requirement established by the Secretary (and 
not specified in any statute) that the Secretary determines to 
unnecessarily increase the costs or restrict the income of a 
public housing project. 
"(2) WAIVER TO PERMIT EMPLOYMENT.—Upon the request of 
any resident management corporation, the Secretary may, sub-
ject to applicable collective bargaining agreements, permit resi-
st 
dents of such project to volunteer a portion of their labor. 
"(3) REPORT ON ADDITIONAL WAIVERS.—Not later than 6 
months after the date of the enactment of the Housing and 
Community Development Act of 1987, the Secretary shall 
submit to the Congress a report setting forth any additional 
waivers of Federal law that the Secretary determines are nec-
essary or appropriate to carry out the provisions of this section. 
In preparing the report, the Secretary shall consult with resi-
dent management corporations and public housing agencies. 
PUBLIC LAW 100-242—FEB. 5, 1988 
101 STAT. 1841 
"(4) EXCEPTIONS.—The Secretary may not waive under this 
subsection any requirement with respect to income eligibility 
for purposes of section 16, rental payments under section 3(a), 
tenant or applicant protections, employee organizing rights, or 
rights of employees under collective bargaining agreements. 
"(e) OPERATING SUBSIDY AND PROJECT INCOME.— 
"(1) CALCULATION OF OPERATING SUBSIDY.—Notwithstanding 
any provision of section 9 or any regulation under such section, 
and subject to the exception provided in paragraph (3), the 
portion of the operating subsidy received by a public housing 
agency under section 9 that is allocated to a public housing 
project managed by a resident management corporation shall 
not be less than the public housing agency per unit monthly 
amount provided in the previous year as determined on an 
individual project basis. 
"(2) CONTRACT REQUIREMENTS.—Any contract for management 
of a public housing project entered into by a public housing 
agency and a resident management corporation shall specify 
the amount of income expected to be derived from the project 
itself (from sources such as rents and charges) and the amount 
of income funds to be provided to the project from the other 
sources of income of the public housing agency (such as operat-
ing subsidy under section 9, interest income, administrative 
fees, and rents). 
"(3) CALCULATION OF TOTAL INCOME.— 
"(A) Subject to subparagraph (B), the amount of funds 
provided by a public housing agency to a public housing 
; 
project managed by a resident management corporation 
may not be reduced during the 3-year period beginning on 
the date of enactment of the Housing and Community 
Development Act of 1987 or on any later date on which a 
resident management corporation is first established for 
tmim 
the project. 
'• •-'*''*•' '''^^-
"(B) If the total income of a public housing agency 
(including the operating subsidy provided to the public 
housing agency under section 9) is reduced or increased, the 
" 
income provided by the public housing agency to a public 
housing project managed by a resident management cor-
poration shall be reduced or increased in proportion to the 
reduction or increase in the total income of the public 
housing agency, except that any reduction in operating 
.; 
subsidy that occurs as a result of fraud, waste, or 
mismanagement by the public housing agency shall not 
affect the funds provided to the resident management 
corporation. 
^^; 
"(4) RETENTION OF EXCESS REVENUES.— 
"(A) Any income generated by a resident management 
corporation of a public housing project that exceeds the 
income estimated for purposes of this subsection shall be 
excluded in subsequent years in calculating (i) the operat-
^* 
ing subsidies provided to the public housing agency under 
section 9; and (ii) the funds provided by the public housing 
, . -
agency to the resident management corporation. 
' 
" 
"(B) Any revenues retained by a resident management 
corporation under subparagraph (A) shall be used for pur-
poses of improving the maintenance and operation of the 
public housing project, for establishing business enterprises 
101 STAT. 1842 
PUBLIC LAW 100-242—FEB. 5, 1988 
Corporations. 
that employ residents of public housing, or for acquiring 
additional dwelling units for lower income families. 
"(f) RESIDENT 
MANAGEMENT 
TECHNICAL 
ASSISTANCE 
AND 
TRAINING.— 
"(1) FINANCIAL ASSISTANCE.—To the extent budget authority is 
available for section 14, the Secretary shall provide financial 
assistance to resident management corporations or resident 
councils that obtain, by contract or otherwise, technical assist-
ance for the development of resident management entities, 
including the formation of such entities, the development of the 
management capability of newly formed or existing entities, the 
identification of the social support needs of residents of public 
housing projects, and the securing of such support. 
"(2) LIMITATION ON ASSISTANCE.—The financial assistance pro-
vided under this subsection with respect to any public housing 
project may not exceed $100,000. 
"(3) FUNDING.—Of the amounts available for financial assist-
ance under section 14, the Secretary may use to carry out this 
subsection not more than $2,500,000 for fiscal year 1988 and not 
more than $2,500,000 for fiscal year 1989. 
"(g) ASSESSMENT AND REPORT BY THE SECRETARY.—Not later than 3 
years after the date of the enactment of the Housing and Commu-
nity Development Act of 1987, the Secretary shall— 
"(1) conduct an evaluation and assessment of resident 
management, and particularly of the effect of resident manage-
ment on living conditions in public housing; and 
"(2) submit to the Congress a report setting forth the findings 
of the Secretary as a result of the evaluation and assessment 
and including any recommendations the Secretary determines 
to be appropriate.". 
SEC. 123. PUBLIC 
HOUSING 
HOMEOWNERSHIP 
AND 
MANAGEMENT 
OPPORTUNITIES. 
The United States Housing Act of 1937 (as amended by section 122 
of this Act) is further amended by adding at the end the following 
new section: 
PUBUC HOUSING HOMEOWNERSHIP AND MANAGEMENT OPPORTUNITIES 
42 u s e 1437s. 
" S E C . 21. (a) HOMEOWNERSHIP OPPORTUNITIES IN GENERAL.—Lower 
income families residing in a public housing project shall be pro-
vided with the opportunity to purchase the dwelling units in the 
project through a qualifying resident management corporation as 
follows: 
"(1) FORMATION OF RESIDENT MANAGEMENT CORPORATION.—As 
a condition for public housing homeownership— 
"(A) the adult residents of a public housing project shall 
have formed a resident management corporation in accord-
ance with regulations and requirements of the Secretary 
prescribed under this section and section 20; 
Contracts. 
"(B) the resident management corporation shall have 
entered into a contract with the public housing agency 
establishing the respective management rights and respon-
sibilities of the resident management corporation and the 
public housing agency; and 
PUBLIC LAW 100-242—FEB. 5, 1988 
101 STAT. 1843 
"(C) the resident management corporation shall have 
demonstrated its ability to manage public housing effec-
tively and efficiently for a period of not less than 3 years. 
"(2) HOMEOWNERSHIP ASSISTANCE.— 
"(A) The Secretary may provide comprehensive improve-
ment assistance under section 14 to a public housing project 
in which homeownership activities under this section are 
conducted. 
"(B) The Secretary, and the public housing agency 
owning and operating a public housing project, shall pro-
vide such training, technical assistance, and educational 
assistance as the Secretary determines to be necessary to 
prepare the families residing in the project, and any resi-
dent management corporation established under paragraph 
(1), for homeownership. 
"(C) This paragraph shall not have effect after Septem- Termination 
her 30, 1990. 
date. 
"(3) CONDITIONS OF PURCHASE BY A RESIDENT MANAGEMENT 
CORPORATION.— 
"(A) A resident management corporation may purchase 
from a public housing agency one or more multifamily 
buildings in a public housing project following a determina-
tion by the Secretary that— 
"(i) the resident management corporation has met 
the conditions of paragraph (1); 
"(ii) the resident management corporation has ap-
plied for and is prepared to undertake the ownership, 
management, and maintenance of the building or 
buildings with continued assistance from the Secretary; 
"(iii) the public housing agency has held one or more 
public hearings to obtain the views of citizens regard-
ing the proposed purchase and, in consultation with the 
Secretary, has certified that the purchase will not 
interfere with the rights of other families residing in 
public housing, will not harm the efficient operation of 
other public housing, and is in the interest of the 
community; 
"(iv) the public housing agency has certified that it 
has and will implement a plan to replace public hous-
ing units sold under this section within 30 months of 
the sale, which plan shall provide for replacement of 
100 percent of the units sold under this section by— 
"(I) production, acquisition, or rehabilitation of 
vacant public housing units by the public housing 
agency; and 
"(II) acquisition by the resident management 
corporation of nonpublicly owned, decent, and af-
fordable housing units, which the resident manage-
ment corporation shall operate as rental housing 
subject to tenant income and rent limitations com-
parable to the limitations applicable to public 
housing; and 
"(v) the building or buildings meet the minimum 
safety and livability standards applicable under section 
14, and the physical condition, management, and oper-
ation of the building or buildings are sufficient to 
91-194 O - 90 - 18 : QL.3 Part 3 
101 STAT. 1844 
PUBLIC LAW 100-242—FEB. 5, 1988 
Termination 
date. 
.33? 
?.v 
permit affordable homeownership by the families resid-
s 
ing in the project. 
V 
"(B) The price of a building purchased under the preced-
ing sentence shall be approved by the Secretary, in con-
sultation with the public housing agency and resident 
management corporation, taking into account the fair 
;. H
s r 
market value of the property, the ability of resident fami-
lies to afford and maintain the property, and such other 
factors as the Secretary determines to be consistent with 
increasing the supply of dwelling units affordable to very 
low income families. 
"(C) This paragraph shall not have effect after Septem-
ber 30, 1990. 
"(4) CONDITIONS OF RESALE.— 
"(A)(i) A resident management corporation may sell a 
'fxm-cs dwelling unit or ownership rights in a dwelling unit only to 
a lower income family residing in, or eligible to reside in, 
I'iiaMs public housing and only if the Secretary determines that 
the purchase will not interfere with the rights of other 
families residing in the housing project or harm the effi-
cient operation of the project, and the family will be able to 
„. . ^ purchase and maintain the property. 
"(ii) The sale of dwelling units or ownership rights in 
j<^m fc dwelling units under clause (i) shall be made to families in 
the following order of priority: 
"(I) a lower income family residing in the public 
.
4 
housing project in which the dwelling unit is located; 
fi 
"(ID a lower income family residing in any public 
housing project within the jurisdiction of the public 
housing agency having jurisdiction with respect to the 
project in which the dwelling unit is located; 
"(III) a lower income family receiving Federal hous-
ing assistance and residing in the jurisdiction of such 
public housing agency; and 
"(IV) a lower income family on the waiting list of 
9 • > 
such public housing agency for public housing or assist-
ance under section 8, with priority given in the order in 
r- t« '> 
which the family appears on the waiting list. 
"(iii) Each resident management corporation shall pro-
vide each family described in clause (ii) with a notice of the 
eligibility of the family to purchase a dwelling unit under 
this paragraph. 
"(B) A purchase under subparagraph (A) may be made 
under any of the following arrangements: 
"(i) Limited dividend cooperative ownership. 
f» 
"(ii) Condominium ownership, 
"(iii) Fee simple ownership. 
"(iv) Shared appreciation with a public housing 
agency providing financing under paragraph (6). 
"(v) Any other arrangement determined by the Sec-
n di I 
ii 
retary to be appropriate. 
"(C) Property purchased under this section shall be resold 
only to the resident management corporation, a lower 
income family residing in or eligible to reside in public 
housing or housing assisted under section 8, or to the public 
housing agency. 
PUBLIC LAW 100-242—FEB. 5, 1988 
101 STAT. 1845 
"(D) In no case may the owner receive consideration for 
Regulations, 
nis or her interest in the property that exceeds the total 
of— 
"(i) the contribution to equity paid by the owner; 
"(ii) the value, £is determined by such means as the 
Secretary shall determine through regulation, of any 
improvements installed at the expense of the owner 
during the owner's tenure as owner; and 
"(iii) the appreciated value determined by an infla-
tion allowance at a rate which may be based on a cost 
of living index, an income index, or market index as 
determined by the Secretary through regulation and 
agreed to by the purchaser and the resident manage-
ment corporation or the public housing agency, which-
ever is appropriate, at the time of initial sale, and 
applied against the contribution to equity; the resident 
management corporation or the public housing agency 
may, at the time of initial sale, enter into an agreement 
with the owner to set a maximum amount which this 
appreciation may not exceed. 
"(E) Upon sale, the resident management corporation or 
the public housing agency, whichever is appropriate, shall 
ensure that subsequent owners are bound by the same 
limitations on resale and further restrictions on equity 
appreciation. 
"(5) USE OF PROCEEDS.—Notwithstanding any other provision 
of this Act or other law to the contrary, proceeds from the sale 
of a building or buildings under paragraph (3) and amounts 
recaptured under paragraph (4) shall be paid to the public 
housing agency and shall be retained and used by the public 
housing agency only to increase the number of public housing 
units available for occupancy. The resident management cor-
poration shall keep and make available to the public housing 
agency and the Secretary all records necessary to calculate 
accurately payments due the local housing agency under this 
section. The Secretary shall not reduce or delay payments 
under other provisions of law £is a result of amounts made 
available to the local housing agency under this section. 
"(6) FINANCING.—When financing for the purchase of the 
property is not otherwise available for purposes of assisting any 
purchase by a family or resident management corporation 
under this section, the public housing agency involved may 
make a loan on the security of the property involved to the 
family or resident management corporation at a rate of interest 
that shall not be lower than 70 percent of the market interest 
rate for conventional mortgages on the date on which the loan 
is made. 
"(7) ANNUAL CONTRIBUTIONS.—Notwithstanding the purchase 
of a building in a public housing project under this section, the 
Secretary shall continue to pay annual contributions with re-
spect to the project. Such contributions may not exceed the 
maximum contributions authorized in section 5(a). 
"(8) OPERATING SUBSIDIES.—Operating subsidies shall not be 
available with respect to a building after the date of its sale by 
the public housing agency. 
'(b) PROTECTION OP NONPURCHASING FAMILIES.— 
101 STAT. 1846 
PUBLIC LAW 100-242—FEB. 5, 1988 
"(1) EVICTION PROHIBITION.—No family residing in a dwelling 
unit in a public housing project may be evicted by reason of the 
sale of the project to a resident management corporation under 
this section. 
"(2) TENANTS RIGHTS.—Families renting a dwelling unit pur-
chased by a resident management corporation shall have all 
rights provided to tenants of public housing under this Act. 
"(3) RENTAL ASSISTANCE.—If any family resides in a dwelling 
unit in a building purchased by a resident management corpora-
tion, and the family decides not to purchase the dwelling unit, 
the Secretary shall offer to provide to the family (at the option 
of the family) a certificate under section 8(b)(1) or a housing 
voucher under section 8(o) for as long as the family continues to 
reside in the building. The Secretary may adjust the fair market 
rent for such certificate to take into account conditions under 
which the building was purchased. 
"(4) RENTAL AND RELOCATION ASSISTANCE.—If any family re-
sides in a dwelling unit in a public housing project in which 
other dwelling units are purchased under this section, and the 
family decides not to purchase the dwelling unit, the Secretary 
shall offer (to be selected by the family, at its option)— 
"(A) to assist the family in relocating to a comparable 
appropriate sized dwelling unit in another public housing 
project, and to reimburse the family for their cost of reloca-
tion; and 
"(B) to provide to the family the financial assistance 
necessary to permit the family to stay in the dwelling unit 
or to move to another comparable dwelling unit and to pay 
no more for rent than required under subparagraph (A), (B), 
or (Oof section 3(a)(1). 
"(c) FINANCIAL ASSISTANCE FOR PUBLIC HOUSING AGENCIES.—The 
Secretary shall provide to public housing agencies such financial 
assistance as is necessary to permit such agencies to carry out the 
provisions of this section. 
"(d) ADDITIONAL HOMEOWNERSHIP AND MANAGEMENT OPPORTUNI-
TIES.—This section shall not apply to the turnkey III, the mutual 
help, or any other homeownership program established under sec-
tion 5(h) or section 6(c)(4)(D) and in existence before the date of the 
enactment of the Housing and Community Development Act of 1987. 
"(e) REGULATIONS.—The Secretary shall issue such regulations as 
may be necessary to carry out the provisions of this section. Such 
regulations may establish any additional terms and conditions for 
homeownership or resident management under this section that are 
determined by the Secretary to be appropriate. 
"(f) ANNUAL REPORT.—The Secretary shall annually submit to the 
Congress a report setting forth— 
"(1) the number, type, and cost of units sold; 
"(2) the income, race, gender, children, and other characteris-
tics of families purchasing or moving and not purchasing; 
"(3) the amount and type of financial assistance provided; 
"(4) the need for subsidy to ensure continued affordability and 
meet future maintenance and repair costs; 
"(5) any need for the development of additional public hous-
ing dwelling units as a result of the sale of public housing 
V 
dwelling units under this section; 
"(6) recommendations of the Secretary for additional budget 
authority to carry out such development; 
_ 
. 
PUBLIC LAW 100-242—FEB. 5, 1988 
101 STAT. 1847 
"(7) recommendations of the Secretary to ensure decent 
homes and decent neighborhoods for lower income families; and 
"(8) the recommendations of the Secretary for statutory and 
regulatory improvements to the program. 
"(g) LIMITATION.—Any authority of the Secretary under this sec- Contracts. 
tion to provide financial assistance, or to enter into contracts to 
provide financial assistance, shall be effective only to such extent or 
in such amounts as are or have been provided in advance in an 
appropriation Act.". 
SEC. 124. TREATMENT OF CERTAIN PUBLIC HOUSING DEVELOPMENT 
FUNDS. 
(a) FORGIVENESS OP CERTAIN INTEREST.—Notwithstanding any Pennsylvania. 
other provision of law or other requirement, any interest accruing 
on any excess funds advanced to the Housing Authority of the City 
of Pittsburgh, in the State of Pennsylvania, for development of the 
public housing project numbered PA-1-22 shall be forgiven, and any 
such interest paid to the Secretary of Housing and Urban Develop-
ment before the date of the enactment of this Act shall be returned 
to such City. 
(b) FORGIVENESS OP CERTAIN PAYMENTS.—Notwithstanding any 
Michigan. 
other provision of law or other requirement, the Secretary of Hous-
ing and Urban Development may not require the Bay City Housing 
Commission in the State of Michigan to pay any amount relating to 
ineligible costs incurred with respect to the public housing develop-
ment grant numbered Michigan 24-7, awarded in 1974, under the 
United States Housing Act of 1937. 
(c) SUBJECT TO APPROPRIATIONS.—This section shall be effective 
only to the extent approved in appropriation Acts. 
SEC. 125. ENERGY EFFICIENT PUBLIC HOUSING DEMONSTRATION. 
(a) EsTABUSHMENT.—The Secretary of Housing and Urban Devel-
opment shall establish a demonstration program through the 
assistance of an appropriate technology transfer organization that 
specializes in producing detailed energy-efficient designs and in 
conducting locad and statewide, public participation tests for energy 
efficient, 
needs-oriented housing. The appropriate 
technology 
organization shall carry out the demonstration working through 
and with public housing agencies to build and test a variety of 
energy-efficient housing designs in 100 separate housing units in 4 
different States that meet local lower income housing needs (includ-
ing single parent, disabled, and elderly concerns) through a compos-
ite ranging from single to 12-plex units in the cluster approach on 
vacant lots and open areas. 
Ob) REPORT.—As soon as practicable following September 30,1988, 
the Secretary of Housing and Urban Development shall submit to 
the Congress a report setting forth the findings and recommenda-
tions of the Secretary as a result of the demonstration under this 
section. 
(c) FUNDING.—Of the budget authority authorized to be provided 
for the development of public housing, there is authorized to be 
appropriated to carry out this section $4,700,000 for fiscal year 1988. 
SEC. 126. PUBLIC HOUSING COMPREHENSIVE TRANSITION DEMONSTRA- 
42 USC 1437f 
TION. 
note. 
(a) EsTABUSHMENT OP DEMONSTRATION PROGRAM.—The Secretary 
of Housing and Urban Development (in this section referred to as 
42 USC 1437k 
note. 
101 STAT. 1848 
PUBLIC LAW 100-242—FEB. 5, 1988 
North Carolina. 
Education. 
Drugs and drug 
abuse. 
the "Secretary") shall carry out a program to demonstrate the 
effectiveness of providing a comprehensive program of services to 
participating public housing residents in order to ensure the success-
ful transition of such residents to private housing. In carrying out 
the demonstration program, the Secretary shall consult with the 
heads of other appropriate Federal agencies to design and imple-
ment procedures to carry out the transition from public housing. 
(b) SCOPE OF DEMONSTRATION PROGRAM.—The Secretary shall 
carry out the demonstration program with respect to public housing 
administered by the Housing Authority of the City of Charlotte, in 
the State of North Carolina. The Secretary may also carry out the 
demonstration program with respect to public housing administered 
by not more than 10 additional public housing agencies. 
(c) REQUIREMENTS OF DEMONSTRATION PROGRAM.—The demonstra-
tion program shall consist of the following requirements: 
(1) CONTRACT OF PARTICIPATION.—Each participating public 
housing agency may enter into a voluntary contract with any 
family that is to commence residence in a public housing project 
administered by the public housing agency. The contract shall 
be made part of the lease, shall set forth the provisions of the 
demonstration program, and shall specify the resources to be 
made available to the participating family and the respon-
sibilities of the participating family. 
(2) REMEDIATION PHASE.— 
(A) During not to exceed the first 2 years of residence of a 
participating family in public housing, the public housing 
agency shall ensure the provision of remediation services to 
„ *,,; 
the family in accordance with the terms and conditions of 
the contract of participation, which may include— 
(i) remedial education; 
. ,. 
' 
(ii) completion of high school; 
(iii) job training and preparation; 
(iv) substance abuse treatment and counseling; 
(v) training in homemaking skills and parenting; and 
(vi) training in money management. 
(B) During the remediation phase, the amount of rent 
charged the family may not be increased on the basis of any 
increase in earned income of the family. 
(3) TRANSITION PHASE.— 
(A) During not to exceed a 5-year period following comple-
tion of the remediation stage— 
(i) the head of the femily shall be required to have 
full-time employment; and 
(ii) the public housing agency shall ensure the provi-
J 
sion of counseling for the family with respect to 
homeownership, money management, and problem 
solving. 
(B) During the transition phase, the amount of rent 
charged the family— 
]" 
(i) may be increased on the basis of any increase in 
-
r 
family income; and 
(ii) may not be decreased on the basis of any decrease 
,^,, 
in earned income due to voluntary termination of 
'*"* 
employment. 
(4) ENCOURAGEMENT OF SAVINGS.—The public housing agency 
shall take appropriate actions (including the establishment of 
an escrow savings account) to encourage each participating 
PUBLIC LAW 100-242—FEB. 5, 1988 
101 STAT. 1849 
' 
family to save funds during the remediation and transition 
phases. 
(5) EFFECT OF INCREASES IN FAMILY INCOME.— 
(A) Any increase in the earned income of a family during 
participation in the demonstration program under this sec-
tion may not be considered as income or a resource for the 
' * ' ^ 
purpose of denying the eligibility of, or reducing the 
amount of benefits payable to, the family under any other 
Federal law, unless the income of the family increases at 
any time to not less than 50 percent of the median income 
of the area (as determined by the Secretary with adjust-
ments for smaller and larger families). 
(B) If at any time during the participation of a family in 
the demonstration program the income of the family in- 
w< /^ 
creases to not less than 80 percent of the median income of 
the area (as determined by the Secretary with adjustments 
for smaller and larger families), the participation of the 
family in the demonstration program shall terminate. 
(6) COMPLETION OF TRANSITION.—Each family participating in 
the demonstration program shall be required to complete the 
transition out of public housing during a period of not more 
than 7 years. The public housing agency shall extend the period 
for any family that requests an extension for good cause. 
(d) REPORTS TO CONGRESS.— 
(1) INTERIM REPORT.—Not later than 2 years after the date of 
the enactment of this Act, the Secretary shall submit to the 
Congress an interim report evaluating the effectiveness of the 
demonstration program under this section. 
(2) FINAL REPORT.—Not later than 60 days after the termi-
nation of the demonstration program under subsection (f), the 
Secretary shall submit to the Congress a final report evaluat-
ing the effectiveness of the demonstration program under this 
"
" 
section. 
(e) REGULATIONS.—The Secretary shall issue such regulations as 
may be necessary to carry out this section. 
(f) TERMINATION OF DEMONSTRATION PROGRAM.—The demonstra-
tion program under this section shall terminate upon the expiration 
of the 7-year period beginning on the date of the enactment of this 
Act. 
PART 3—SECTION 8 ASSISTANCE AND OTHER 
PROGRAMS 
SEC. 141. SECTION 8 CONTRACTS FOR EXISTING DWELLING UNITS 
Section 8(b)(1) of the United States Housing Act of 1937 is 42USCl437f. 
amended by inserting after the first sentence the following new 
sentence: "The Secretary shall enter into a separate annual con-
tributions contract with each public housing agency to obligate the 
authority approved each year, beginning with the authority ap-
proved in appropriations Acts for fiscal year 1988 (other than 
amendment authority to increase assistance payments being made 
using authority approved prior to the appropriations Acts for fiscal 
year 1988), and such annual contributions contract (other than for 
annual contributions under subsection (o)) shall bind the Secretary 
to make such authority, and any amendments increasing such 
101 STAT. 1850 
PUBLIC LAW 100-242—FEB. 5, 1988 
authority, available to the public housing agency for a specified 
period.". 
SEC. 142. SECTION 8 FAIR MARKET RENTALS AND CONTRACT RENTS. 
(a) ANNUAL ADJUSTMENT.—Section 8(cXl) of the United States 
42 use 1437f. 
Housing Act of 1937 is amended by inserting before the last sentence 
the following new sentence: "Each fair market rental in effect under 
this subsection shall be adjusted to be effective on October 1 of each 
year to reflect changes, based on the most recent available data 
trended so the rentals will be current for the year to which they 
apply, of rents for existing or newly constructed rental dwelling 
units, as the case may be, of various sizes and types in the market 
area suitable for occupancy by persons assisted under this section.". 
New York. 
(b) CALCULATION FOR CERTAIN CoUNTY.—Section 8(cXl) of t h e 
United States Housing Act of 1937 is amended by adding at the end 
the following new sentence: "The Secretary shall establish separate 
fair market rentals under this paragraph for Westchester County in 
the State of New York.". 
(c) COMPARABILITY.— 
(1) Section 8(c)(1) of the United States Housing Act of 1937 (as 
amended by subsection (b) of this section) is further amended by 
adding at the end the following new sentence: "If units assisted 
under this section are exempt from local rent control while they 
are so assisted or otherwise, the maximum monthly rent for 
such units shall be reasonable in comparison with other units in 
the market area that are exempt from local rent control.". 
(2) Section 8(cX2XC) of the United States Housing Act of 1937 
is amended— 
(A) by striking "assisted and comparable unassisted 
units" and inserting the following: "assisted units and un-
assisted units of similar quality and age in the same market 
area"; and 
(B) by adding at the end the following new sentence: "If 
' 
' 
the Secretary or appropriate State agency does not com-
plete and submit to the project owner a comparability study 
' ' 
not later than 60 days before the anniversary date of the 
assistance contract under this section, the automatic 
annual adjustment factor shall be applied.". 
(d) PROHIBITION ON REDUCTION OF CERTAIN CONTRACT RENTS.— 
Section 8(cX2XC) of the United States Housing Act of 1937 (as 
amended by subsection (c) of this section) is further amended by 
adding at the end the following new sentence: "The Secretary may 
not reduce the contract rents in effect on or after April 15, 1987, for 
newly constructed, substantially rehabilitated, or moderately re-
habilitated projects assisted under this section (including projects 
assisted under this section as in effect prior to November 30, 1983), 
unless the project has been refinanced in a manner that reduces the 
periodic payments of the owner.". 
(e) REPEAL OF LIMIT ON (CONTRACT RENT INCREASES.—Section 8(cX2) 
of the United States Housing Act of 1937 is amended by striking 
subparagraph (D). 
SEC. 143. HOUSING VOUCHER PROGRAM. 
(a) OPERATION.—Section 8(o) of the United States Housing Act of 
1937 is amended— 
PUBLIC LAW 100-242—FEB. 5, 1988 
101 STAT. 1851 
(1) in the first sentence of paragraph (1), by striking "In" and 
all that follows through "demonstration program" and inserting 
"The Secretary may provide assistance"; 
(2) by striking paragraph (4); and 
(3) by redesignating paragraphs (5) through (8) as paragraphs 
(4) through (7), respectively. 
G
>
) FLEXIBILITY TO ADJUST ASSISTANCE PAYMENTS.—Section 8(o)(6) 
of the United States Housing Act of 1937 (as so redesignated by 
42 USC I437f. 
subsection (a) of this section) is amended— 
(1) in subparagraph (A), by striking "as frequently as twice 
during any five-year period" and inserting ' annually"; and 
(2) by striking subparagraph (D). 
(c) USE OF VOUCHERS IN CONNECTION WITH COOPERATIVE AND 
MUTUAL HOUSING.—Section 8(o)(7) of the United States Housing Act 
of 1937 (as so redesignated by subsection (a) of this section) is 
amended by striking "not to exceed 5 per centum of the amount of. 
(d) ADJUSTMENT POOLS.—Section 8(o) of the United States Housing 
Act of 1937 (as amended by subsection (a) of this section) is further 
amended by adding at the end the following new paragraph: 
"(8) The Secretary may set aside up to 5 percent of the budget 
authority available under this subsection as an adjustment pool. The 
Secretary shall use amounts in the adjustment pool for adjustments 
pursuant to paragraph (6)(A) to ensure continued affordability 
where the Secretary determines additional assistance for this pur-
pose is necessarv, based on documentation submitted by a public 
housing agency.'. 
SEC. 144. ADMINISTRATIVE FEES FOR SECTION 8 CERTIFICATE AND 
HOUSING VOUCHER PROGRAMS. 
Section 8 of the United States Housing Act of 1937 is amended by 
adding at the end the following new subsection: 
"(q)(l) The Secretary shall establish a fee for the costs incurred in 
administering the certificate and housing voucher programs under 
subsections (b) and (o). The amount of the fee for each month for 
Contracts. 
which a dwelling unit is covered by an assistance contract shall be 
8.2 percent of the fair market rental established under subsection 
(c)(1) for a 2-bedroom existing rental dwelling unit in the market 
i 
area of the public housing agency. The Secretary may increase the 
fee if necessary to reflect the higher costs of administering small 
programs and programs operating over large geographic areas. 
"(2XA) The Secretary shall also establish reasonable fees (as deter-
mined by the Secretary) for— 
"(i) the costs of preliminary expenses (not to exceed $275) that 
the public housing agency documents it has incurred in connec-
tion with new allocations of assistance under the certificate and 
housing voucher programs under subsections (b) and (o); 
"(ii) the costs incurred in assisting families who experience 
difficulty (as determined by the Secretary) in obtaining appro-
priate housing under the programs; and 
"(iii) extraordinary costs approved by the Secretary. 
"(B) The method used to calculate fees under subparagraph (A) 
shall be the same for the certificate and housing voucher programs 
under subsections (b) and (o) and shall take into account local cost 
differences. 
"(3) The Secretary may establish or increase a fee in accordance 
with this subsection only to such extent or in such amounts as are 
provided in appropriation Acts.". 
^iih 
101 STAT. 1852 
PUBLIC LAW 100-242—FEB. 5, 1988 
SEC. 145. PORTABILITY OF SECTION 8 CERTIFICATES AND VOUCHERS. 
Section 8 of the United States Housing Act of 1937 (as amended by 
section 144 of this Act) is further amended by adding at the end the 
following new subsection: 
"(rXD Any family assisted under subsection O
t
>
) or (o) may receive 
such assistance to rent an eligible dwelling unit if the dwelling unit 
to which the family moves is within the same, or a contiguous, 
* *' 
metropolitan statistical area as the metropolitan statistical area 
within which is located the area of jurisdiction of the public housing 
agency approving such assistance. 
"(2) The public housing agency having authority with respect to 
the dwelling unit to which a family moves under this subsection 
shall have the responsibility of carrying out the provisions of this 
subsection with respect to the family. If no public housing agency 
has authority with respect to the dwelling unit to which a family 
moves under this subsection, the public housing agency approving 
the assistance shall have such responsibility. 
"(3) In providing assistance under subsection (b) or (o) for any 
fiscal year, the Secretary shall give consideration to any reduction 
in the number of resident families incurred by a public housing 
agency in the preceding fiscal year as a result of the provisions of 
this subsection. 
"(4) The provisions of this subsection may not be construed to 
restrict any authority of the Secretary under any other provision of 
law to provide for the portability of assistance under this section.". 
SEC. 146. PROHIBITION OF DENIAL OF SECTION 8 CERTIFICATES AND 
VOUCHERS TO RESIDENTS OF PUBLIC HOUSING. 
Section 8 of the United States Housing Act of 1937 (as amended by 
section 145 of this Act) is further amended by adding at the end the 
following new subsection: 
"(s) In selecting families for the provision of assistance under this 
section (including subsection (o)), a public housing agency may not 
> 
exclude or penalize a family solely because the family resides in a 
public housing project.". 
Contracts. 
SEC. 147. NONDISCRIMINATION AGAINST SECTION 8 CERTIFICATE HOLD-
ERS AND VOUCHER HOLDERS. 
Section 8 of the United States Housing Act of 1937 (as amended by 
section 146 of this Act) is further amended by adding at the end the 
following new subsection: 
"(tXD No owner who has entered into a contract for housing 
assistance pajonents under this section on behalf of any tenant in a 
multifamily housing project shall refuse— 
"(A) to lease any available dwelling unit in any multifamily 
housing project of such owner that rents for an amount not 
greater than the fair market rent for a comparable unit, as 
determined by the Secretary under this section, to a holder of a 
certificate of eligibility under this section a proximate cause of 
which is the status of such prospective tenant as a holder of 
such certificate, and to enter into a housing assistance pay-
ments contract respecting such unit; or 
"(B) to lease any available dwelling unit in any multifamily 
housing project of such owner to a holder of a voucher under 
subsection (o), and to enter into a voucher contract respecting 
such unit, a proximate cause of which is the status of such 
prospective tenant £is holder of such voucher. 
PUBLIC LAW 100-242—FEB. 5, 1988 
101 STAT. 1853 
"(2) For purposes of this subsection, the term 'multifamily housing 
project' means a residential building containing more than 4 dwell-
ing units.". 
SEC. 148. PROJECT-BASED SECTION 8 ASSISTANCE. 
Section 8(d)(2) of the United States Housing Act of 1937 is amend- 
42 USC I437f. 
ed by inserting before the period at the end of the last sentence the 
following: ", except that the Secretary shall permit the public 
housing agency to approve such attachment with respect to not 
more than 15 percent of the assistance provided by the public 
housing agency if the requirements of clause (B) are met". 
SEC. 149. SECTION 8 ASSISTANCE FOR RESIDENTS OF RENTAL RE-
HABILITATION PROJECTS. 
Section 8 of the United States Housing Act of 1937 (as amended by 
section 147 of this Act) is further amended by adding at the end the 
following new subsection: 
"(u) In the case of lower income families living in rental projects 
rehabilitated under section 17 of this Act or section 533 of the 
Housing Act of 1949 before rehabilitation— 
"(1) certificates or vouchers under this section shall be made 
for families who are required to move out of their units because 
of the physical rehabilitation activities or because of overcrowd-
ing; and 
'(2) at the discretion of each public housing agency or other 
agency administering the allocation of assistance, certificates or 
vouchers under this section may be made for families who 
would have to pay more than 30 percent of their adjusted 
income for rent after rehabilitation whether they choose to 
remain in, or to move from, the project.". 
SEC. 150. RENTAL REHABILITATION GRANTS. 
(a) AUTHORIZATION OF APPROPRIATIONS.—Section 17(a)(3) of the 
United States Housing Act of 1937 is amended to read as follows: 
42 USC l437o. 
"(3) AUTHORIZATION.—There are authorized to be appropriated for 
rental rehabilitation under this section $125,000,000 for each of the 
fiscal years 1988 and 1989, of which $1,500,000 shall be available 
each fiscal year for technical assistance, including the collection, 
processing, and dissemination of program information useful for 
local and national program management.". 
(b) EuGiBLE PROPERTY.—Section 17(a)(1)(A) of the United States 
Housing Act of 1937 is amended by inserting after "property" the 
following: ", or of real property that will be privately owned upon 
the completion of rehabilitation,". 
(c) MAXIMUM GRANT AMOUNT.—Section 17(c)(2)(E) of the United 
States Housing Act of 1937 is amended by striking "$5,000 per unit" 
and inserting the following: "$5,000 per unit for a unit with no 
bedrooms, $6,500 per unit for a unit with 1 bedroom, $7,500 per unit 
for a unit with 2 bedrooms, and $8,500 per unit for a unit with 3 or 
more bedrooms,". 
(d) USE OF FUNDS.—Section 17(c) of the United States Housing 
Act of 1937 is amended by adding at the end the following new 
paragraph: 
"(4) USE OF FUNDS TO COMPLY WITH SEISMIC STANDARDS.—If a unit 
state and local 
of general local government has a local ordinance that requires governments. 
rehabilitation to meet seismic standards, the unit of local govern-
ment may use all rehabilitation assistance received under this 
101 STAT. 1854 
PUBLIC LAW 100-242—FEB. 5, 1988 
section to rehabilitate units with no bedroom or 1 bedroom, if the 
occupants of the units will have incomes that do not exceed 50 
percent of the median income of the area.". 
(e) ADMINISTRATIVE EXPENSES.—Section 17(h) of the United States 
42 use l437o. 
Housing Act of 1937 is amended by inserting before the period at the 
end the following: ", except that not more than 10 percent of any 
rehabilitation grant received under subsection (c) may be retained to 
cover administrative expenses incurred by any State administering 
resources made available under subsection (b) (which State shall 
share such amount with units of general local government admin-
istering the program with the State) and by any city or urban 
county receiving resources under subsection (b)". 
(f) ELIGIBILITY.—Section 17(k)(4) of the United States Housing Act 
of 1937 is amended— 
(1) by inserting "privately owned" before "real property"; 
(2) by inserting "(A)" after "includes"; and 
(3) by inserting before the semicolon at the end the following: 
T ", and (B) housing that is owned by a State or locally chartered, 
neighborhood based, nonprofit organization the primary pur-
pose of which is the provision and improvement of housing". 
SEC. 
1
5
1
. 
RENTAL 
DEVELOPMENT 
GRANTS. 
(a) AUTHORIZATION OF APPROPRIATIONS.—Section 17(a)(3) of the 
United States Housing Act of 1937 (as amended by section 150 of this 
Act) is further amended by adding at the end the following new 
sentence: "There are authorized to be appropriated for development 
f
rants under this section $75,000,000 for fiscal year 1988 and 
75,000,000 for fiscal year 1989.". 
(b) AREA ELIGIBILITY.—Section 17(d)(2) of the United States Hous-
ing Act of 1937 is amended by adding at the end the following new 
sentence: "Notwithstanding any other provision of law, the eligi-
bility requirements for development grants under this section shall 
be the requirements in effect under this subsection on October 17, 
0- vn.,, 
1986.". 
(c) GRANT AMOUNT.—Section 17(d)(4)(B) of the United States Hous-
ing Act of 1937 is amended by striking "refinancing costs and". 
(d) PROGRAM REQUIREMENTS.—Section 17(d)(4) of the United States 
Housing Act of 1937 is amended— 
(1) by inserting before the semicolon at the end of subpara-
graph (G) the following: ", except that the Secretary may extend 
such period by not more than 6 months if the commencement of 
such activities is delayed due to judicial or administrative 
proceedings"; 
(2) by striking "and" at the end of subparagraph (G); 
(3) by striking the period at the end of subparagraph (H) and 
inserting "; and"; and 
(4) by adding at the end the following new subparagraph: 
"(I) the owner of each assisted structure agrees to comply 
with the provisions of paragraph (8) until the 20-year period 
specified in paragraph (7) has ended.". 
(e) DEVELOPMENT COST.—Section 17(d) of the United States Hous-
ing Act of 1937 is amended by adding at the end the following new 
paragraph: 
"(10) DEVELOPMENT COST.— 
"(A) The Secretary shall include in the development cost of a 
project assisted under this subsection any developer's fee if such 
fee— 
PUBLIC LAW 100-242—FEB. 5, 1988 
101 STAT. 1855 
"(i) is included in a mortgage secured by the project; and 
"(ii) the lender is a State housing finance agency or the 
project is financed by bonds issued by a State housing 
finance agency or similar local entity. 
"(B) The amount of any developer's fee shall not be counted in 
calculating the maximum grant amount pursuant to paragraph 
(4)(B). 
"(C) This paragraph shall only be applicable to projects with 
respect to which a notice of project selection is received before 
the date of the enactment of the Housing and Community 
Development Act of 1987.". 
SEC. 152. TERMINATION OF RENTAL DEVELOPMENT GRANT PROGRAM. 
42 USC 1437o. 
(a) IN GENERAL.—Effective on October 1, 1989, the rental develop-
ment grant program under section 17(d) of the United States Hous-
ing Act of 1937 shall terminate. 
(b) SAVINGS PROVISION.—The provisions of subsection (a) shall not 
apply with respect to any housing development grant under section 
17(d) of the United States Housing Act of 1937 made pursuant to a 
reservation of funds made by the Secretary of Housing and Urban 
Development before October 1,1989. 
Subtitle B—Other Housing Assistance 
Programs 
SEC. 161. HOUSING FOR THE ELDERLY AND HANDICAPPED. 
(a) 
BORROWING 
AUTHORITY.—The 
first 
sentence of section 
202(aX4)(B)(i) of the Housing Act of 1959 is amended— 
12 USC I70lq. 
(1) by striking "and" the first place it appears; and 
(2) by inserting after "1984," the following: "and to such sums 
as may approved in appropriation Acts for fiscal years 1988 and 
1989,'\ 
(b) LOAN AUTHORITY.—Section 202(a)(4)(C) of the Housing Act of 
1959 is amended by adding at the end the following new sentence: 
"For fiscal years 1988 and 1989, not more than $621,701,000 and 
$630,000,000, respectively, may be approved in appropriation Acts 
for such loans.". 
(c) INTEREST RATE ON LOANS.— 
(1) CALCULATION OF RATE.—Section 202(aX3) of the Housing 
Act of 1959 is amended— 
(A) by inserting "(A)" after the paragraph designation; 
(B) by striking all that follows 
Secretary" the second 
place it appears through "loan is made" and inserting the 
following: "taking into consideration the average yield, 
during the 3-month period immediately preceding the fiscal 
year in which the loan is made, on the most recently issued 
30-year marketable obligations of the United States"; and 
(C) by adding at the end the following new subparagraph: 
"(B) At the option of the borrower, a loan under this section may 
be made and may be processed for a conditional or firm commitment 
either (i) at an interest rate not to exceed a rate and allowance 
determined by the Secretary in accordance with subparagraph (A) 
using the 1-month period immediately prior to the month in which 
the request for a commitment is submitted; or (ii) at an interest rate 
not to exceed a rate and allowance determined by the Secretary in 
101 STAT. 1856 
PUBLIC LAW 100-242—FEB. 5, 1988 
accordance with subparagraph (A) using the 3-month period imme-
diately preceding the fiscal year in which the request for a commit-
ment is submitted.". 
(2) MAXIMUM RATE.—Section 223(a) of the Housing and 
12 use I70lq 
Urban-Rural Recovery Act of 1983 is amended by striking para-
note, 
graph (2). 
(d) INTEREST RATE ON NOTES.—The second sentence of section 
12 use I70lq. 
202(aX4XB)(i) of the Housing Act of 1959 is amended to read as 
follows: "Such notes or other obligations shall bear interest at a rate 
determined by the Secretary of the Treasury taking into consider-
ation the average yield, during the 3-month period immediately 
preceding the fiscal year in which the loan is made, on the most 
o" Ai»• .
4 
recently issued 30-year marketable obligations of the United 
States.". 
(e) APPEAL OF CANCELLATION OF LOAN AUTHORITY.—Section 202 of 
the Housing Act of 1959 is amended by adding at the end the 
following new subsection: 
"(n) The Secretary shall notify the project sponsor not less than 30 
days prior to canceling any loan authority provided under this 
section. During the 30-day period following the receipt of a notice 
under paragraph (1), a sponsor may appeal the proposed cancella-
tion of loan authority. Such appeal, including review by the Sec-
retary, shall be completed not later than 45 days after the appeal is 
filed.'^. 
(f) PRIORITY.—Section 202(a) of the Housing Act of 1959 is amend-
ed by adding at the end the following new paragraph: 
"(8) In reviewing applications for loans under this section, the 
Secretary shall give a priority to any project that will provide 
housing designed to replace a structure that is owned by a public 
housing agency, contains not less than 100 dwelling units, is used for 
Termination 
housing only elderly families, and is to be demolished. The require-
date. 
^ ments of this paragraph shall not apply after September 30, 1988.". 
SEC. 162. HOUSING FOR THE HANDICAPPED. 
12 use I70iq 
(a) FINDINGS AND PURPOSE.— 
note. 
(1) The Congress finds that—. 
(A) housing for nonelderly handicapped families is as-
sisted under section 202 of the Housing Act of 1959 and 
section 8 of the United States Housing Act of 1937; 
(B) the housing programs under such sections are de-
n^,:..,v*} signed and implemented primarily to assist rental housing 
'"^ * 
for elderly and nonelderly families and are often inappro-
priate for dealing with the specialized needs of the phys-
ically impaired, the developmentally disabled, and the 
chronically mentally ill; 
(C) the development of housing for nonelderly handi-
capped families under such programs is often more expen-
sive than necessary, thereby reducing the number of such 
families that can be £issisted with available funds; 
(D) the program under section 202 of the Housing Act of 
1959 can continue to provide direct loans to finance group 
residences and independent apartments for nonelderly 
handicapped families, but can be made more efficient and 
less costly by the adoption of standards and procedures 
applicable only to housing for such families; 
(E) the cost containment policies currently being imple-
.i 
.,, f
. mented in the development of small group homes (i) do not 
PUBLIC LAW 100-242—FEB. 5, 1988 
101 STAT. 1857 
adequately reflect the necessity for building designs to meet 
the needs of the designated residents; and (ii) do not recog-
nize necessary State and local standards for the operation 
of such homes; 
(F) the use of the program under section 8 of the United 
States Housing Act of 1937 to assist rentals for housing for 
nonelderly handicapped families is time consuming and 
unnecessarily costly and, in some areas of the Nation, 
prevents the development of such housing; 
(G) the use of the program under section 8 of the United 
States Housing Act of 1937 to assist rentals for housing for 
nonelderly handicapped families should be replaced by a 
more appropriate subsidy mechanism; 
(H) both elderly and handicapped housing projects as-
sisted under section 202 of the Housing Act of 1959 will 
benefit from an increased emphasis on supportive services 
and a greater use of State and local funds; and 
(I) an improved program for nonelderly handicapped 
families will assist in providing shelter and supportive 
services for mentally ill persons who might otherwise be 
homeless. 
(2) The purpose of this section is to improve the direct loan 
program under section 202 of the Housing Act of 1959 to ensure 
that such program meets the special housing and related needs 
of nonelderly handicapped families, 
(b) HOUSING FOR HANDICAPPED FAMILIES.— 
(1) Section 202(h) of the Housing Act of 1959 is amended to 12 USC I70lq. 
read as follows: 
"(h)(1) Of the amounts made available in appropriation Acts for Loans. 
loans under subsection (a)(4XC) for any flscal year commencing after 
September 30, 1987, not less than 15 percent shall be available for 
loans for the development costs of housing for handicapped families. 
If the amount required for any such fiscal year for approvable 
applications for loan under this subsection is less than the amount 
available under this paragraph, the balance shall be made available 
for loans under other provisions of this section. 
"(2) The Secretary shall take such actions as may be necessary to 
ensure that— 
"(A) funds made available under this subsection will be used 
to support a variety of methods of meeting the needs primarily 
of nonelderly handicapped families by providing a variety of 
housing options, ranging from small group homes to independ-
ent living complexes; and 
"(B) housing for handicapped families assisted under this 
subsection will provide families occupying units in such housing 
with an assured range of services specified in subsection (f), will 
provide such families with opportunities for optimal independ-
ent living and participation in normal daily activities, and will 
facilitate access by such families to the community at large and 
to suitable employment opportunities within such community. 
"(3)(A) In allocating funds under this subsection, and in processing 
applications for loans under this section and assistance payments 
under paragraph (4), the Secretary shall adopt such distinct stand-
ards and procedures as the Secretary determines appropriate due to 
differences between housing for handicapped families and other 
housing assisted under this section. In adopting such standards, the 
Secretary shall ensure adequate participation by representatives of 
101 STAT. 1858 
PUBLIC LAW 100-242—FEB. 5, 1988 
Contracts. 
Loans. 
the disability community through the provisions available under the 
Federal Advisory Committee Act. 
"(B) The Secretary may, on a demonstration basis, determine the 
feasibility and desirability of reducing processing time and costs for 
housing for handicapped families by limiting project design to a 
Reports. 
small number of prototype designs. Any such demonstration shall be 
limited to the 3-year period following the date of the enactment of 
the Housing and Community Development Act of 1987, may only 
involve projects whose sponsors consent to participation in such 
demonstration, and shall be described in a report submitted by the 
Secretary to the Congress following completion of such demonstra-
tion. 
"(4)(A) The Secretary shall, to the extent approved in appropria-
tion Acts, enter into contracts with owners of housing for handi-
capped families receiving loans under, or meeting the requirements 
of, this section to make monthly payments to cover any part of the 
costs attributed to units occupied (or, as approved by the Secretary, 
held for occupancy) by lower income families that is not met from 
project income. The annual contract amount for any project shall 
not exceed the sum of the initial annual project rentals for all units 
and any initial utility allowances for such units, as approved by the 
Secretary. Any contract amounts not used by a project in any year 
shall remain available to the project until the expiration of the 
contract. The term of a contract entered into under this subpara-
graph shall be 240 months. The annual contract amount may be 
adjusted by the Secretary if the sum of the project income and the 
amount of assistance payments available under this subparagraph 
are inadequate to provide for reasonable project costs. In the case of 
an intermediate care facility in which there reside families assisted 
under title XIX of the Social Security Act, project income under this 
subparagraph shall include the same amount as if such families 
were being assisted under title XVI of the Social Security Act. 
"(B) The Secretary shall approve initial project rentals for any 
project assisted under this subsection based on the determination of 
the Secretary of the total actual necessary and reasonable costs of 
developing and operating the project, excluding the costs of the 
assured range of services under subsection (f), taking into consider-
ation the need to contain costs to the extent practicable and consist-
ent with the purposes of the project and this section. 
"(C) The Secretary shall require that, during the term of each 
contract entered into under subparagraph (A), all units in a project 
assisted under this subsection shall be made available for occupancy 
by lower income families, as such term is defined in section 3(bX2) of 
the United States Housing Act of 1937. The rent payment required 
of a lower income family shall be determined in accordance with 
section 3(a) of such Act, except that the gross income of a family 
occupying an intermediate care facility assisted under title XIX of 
the Social Security Act shall be the same amount as if the family 
were being assisted under title XVI of the Social Security Act. 
"(D) The Secretary shall coordinate the processing of an applica-
tion for a loan for housing for handicapped families under this 
section and the processing of an application for assistance payments 
under this paragraph for such housing.". 
12 use 170lq. 
(2) Section 202(d) of the Housing Act of 1959 is amended by 
adding at the end the following new paragraphs: 
PUBLIC LAW 100-242—FEB. 5, 1988 
101 STAT. 1859 
"(9) The term 'housing for handicapped families' means housing 
and related facilities to be occupied by handicapped families who are 
primarily nonelderly handicapped families. 
"(10) The term 'nonelderly handicapped families' means elderly or 
handicapped families, the head of which (and spouse, if any) is less 
than 62 years of age at the time of initial occupancy of a project 
assisted under this section.". 
(3) Section 202(cX3) of the Housing Act of 1959 is amended by 
inserting after "section" the following: "and designed for dwell-
ing use by 12 or more elderly or handicapped families", 
(c) SUPPORTIVE SERVICES FOR ELDERLY AND HANDICAPPED FAMI-
UES.—Section 202(f) of the Housing Act of 1959 is amended— 
(1) by inserting "(1)" after the subsection designation; and 
(2) by adding at the end the following new paragraph: 
"(2) Each applicant for a loan under this section for housing and 
related facilities shall submit with the application a supportive 
services plan describing— 
"(A) the category or categories of families such housing £uid 
facilities are intended to serve; 
"(B) the range of necessary services to be provided to the 
families occupying such housing; 
"(C) the manner in which such services will be provided to 
such families; and 
"(D) the extent of State and local funds available to assist in 
the provision of such services.". 
(d) TERMINATION OF SECTION 8 ASSISTANCE.—On and after the first 
date that amounts approved in an appropriation Act for any fiscal 
year become available for contracts under section 202(hX4XA) of the 
Housing Act of 1959, as amended by subsection (b) of this section, no 
project for handicapped (primarily nonelderly) families approved for 
such fiscal year pursuant to section 202 of such Act shall be provided 
assistance payments under section 8 of the United States Housing 
Act of 1937, except pursuant to a reservation for a contract to make 
such assistance pajrments that was made before the first date that 
amounts for contracts under such section 202(hX4XA) became 
avEiilable. 
(e) IMPLEMENTATION.—Not later than the expiration of the 120-day 
period following the date of the enactment of this Act, the Secretary 
of Housing and Urban Development shall, to the extent amounts are 
approved in an appropriation Act for use under section 202(hX4XA) 
of the Housing Act of 1959 for fiscal year 1988, publish in the 
Federal Register a notice of fund availability to implement the 
provisions of, and amendments made by, this section. The Secretary 
shall issue such rules as may be necessary to carry out such provi-
sions and amendments for fiscal year 1989 and thereafter. 
(f) EFFECTIVE DATE AND APPUCABIUTY.— 
(1) Except as otherwise provided in this section, the provisions 
of, and amendments made by, this section shall not apply with 
respect to projects with loans or loan reservations made under 
section 202 of the Housing Act of 1959 before the implementa-
tion date under subsection (e). 
(2) Notwithstanding paragraph (1), the Secretary shall apply 
the provisions of, and amendments made by, this section to any 
project if needed to facilitate the development of such project in 
a timely manner. 
12 u s e 1701q. 
Loans. 
State and local 
governments. 
Contracts. 
12 u s e 1701q 
note. 
Federal 
Register, 
publication. 
12 u s e 1701q 
note. 
12 u s e ITOlq 
note. 
101 STAT. 1860 
PUBLIC LAW 100-242—FEB. 5, 1988 
42 u s e 8010. 
42 use 8007. 
eontracts. 
State and local 
governments. 
Grants. 
42 use 1436a. 
o:r i 
SEC. 163. CONGREGATE SERVICES. 
(a) AUTHORIZATION OF APPROPRIATIONS.—Section 411(a) of the Con-
gregate Housing Services Act of 1978 is amended to read as follows: 
"(a) There are authorized to be appropriated to carry out this title 
$10,000,000 for each of the fiscal years 1988 and 1989.". 
0)) DELETION OF REFERENCE TO PROGRAM AS NONPERMANENT.— 
Section 408 of the Congregate Housing Services Act of 1978 is 
amended by striking subsection (c). 
(c) REPORT.—Section 408 of the Congregate Housing Services Act 
of 1978 (as amended by subsection (b) of this section) is further 
amended by adding at the end the following new subsection: 
"(c)(1) The Secretary shall contract with a university or qualified 
research institution to produce a report— 
"(A) documenting the number of elderly living in federally 
f i. assisted housing at risk of institutionalization; 
j: _
j 
"(B) studying and comparing alternative delivery systems in 
the States, including the congregate housing services pro-
: , gram, to provide services to older persons in assisted con-
gregate housing; 
. . 
"(C) assessing existing and potential financial resources at the 
" • Federal, State, and local levels for the support of congregate 
housing services; and 
"(D) making legislative recommendations as to the feasibility 
of permitting State housing agencies and other appropriate 
State agencies to participate and operate the program on a 
matching grant basis. 
"(2) The Secretary shall submit the report to the Congress not 
later than September 30,1988.". 
SEC. 164. MODIFICATION OF RESTRICTION ON USE OF ASSISTED HOUSING 
BY ALIENS. 
(a) AuENS ADMITTED FOR LAWFUL RESIDENCE.—Section 214(a) of 
the Housing and Community Development Act of 1980 is amended— 
(1) by striking "or" at the end of paragraph (4); 
(2) by striking the period at the end of paragraph (5) and 
inserting "; or"; and 
(3) by adding at the end the following new paragraph: 
"(6) an alien lawfully admitted for temporary or permanent 
residence under section 245A of the Immigration and National-
ity Act.". 
(b) PRESERVATION OF FAMILIES.—Section 214 of the Housing and 
Community Development Act of 1980 is amended by inserting after 
subsection (b) the following new subsection: 
"(c)(1) If, following completion of the applicable hearing process, 
financial assistance for any individual receiving such assistance on 
the date of the enactment of the Housing and Community Develop-
ment Act of 1987 is to be terminated, the public housing agency or 
other local governmental entity involved (in the case of public 
housing or assistance under section 8 of the United States Housing 
Act of 1937) or the Secretary of Housing and Urban Development (in 
the case of any other financial assistance) may, in its discretion, 
take one of the following actions: 
"(A) Permit the continued provision of financial assistance, if 
necessary to avoid the division of a family in which the head of 
household or spouse is a citizen of the United States, a national 
of the United States, or an alien resident of the United States 
described in any of paragraphs (1) through (6) of subsection (a). 
PUBLIC LAW 100-242—FEB. 5, 1988 
101 STAT. 1861 
For purposes of this paragraph, the term 'family' means a head 
of household, any spouse, any parents of the head of household, 
any parents of the spouse, and any children of the head of 
household or spouse. 
"(B) Defer the termination of financial assistance, if necessary 
to permit the orderly transition of the individual and any 
family members involved to other affordable housing. Any 
deferral under this subparagraph shall be for a 6-month period 
and may be renewed by the public housing agency or other 
entity involved for an aggregate period of 3 years. At the 
beginning of each deferral period, the public housing agency or 
other entity involved shall inform the individual and family 
members of their ineligibility for financial assistance and offer 
them other assistance in finding other affordable housing. 
"(2) Notwithstanding any other provision of law, the Secretary of 
Housing and Urban Development may not make financial assist-
ance available for the benefit o
f
— 
"(A) any alien who— 
"(i) has a residence in a foreign country that such alien 
has no intention of abandoning; 
"(ii) is a bona fide student qualified to pursue a full 
course of study; and 
"(iii) is admitted to the United States temporarily and 
solely for purposes of pursuing such a course of study at an 
established institution of learning or other recognized place 
of study in the United States, particularly designated by 
such alien and approved by the Attorney General after 
consultation with the Department of Education of the 
United States, which institution or place of study shall have 
agreed to report to the Attorney General the termination of 
attendance of each nonimmigrant student (and if any such 
institution of learning or place of study fails to make such 
}. , 
reports promptly the approval shall be withdrawn); and 
"(B) the alien spouse and minor children of any alien 
described in subparagraph (A), if accompanying such alien or 
following to join such alien.". 
(c) VERIFICATION PROCEDURES.—Section 214(d) of the Housing and 
Community Development Act of 1980 (as added by section 121(aX2) 
of the Immigration Reform and Control Act of 1986 (Public Law 99-
603)) is amended— 
(1) in paragraph (2), by inserting after "States" the following: 
", is not 62 years of age or older, and is receiving financial 
assistance on the date of the enactment of the Housing and 
Community Development Act of 1987"; 
(2) in paragraph (4), in the matter before subparagraph (A)— 
(A) by inserting after "States" the following: ", is not 62 
years of age or older, and is receiving financial assistance 
on the date of the enactment of the Housing and Commu-
nity Development Act of 1987"; and 
(B) by inserting "or recertification" after "application"; 
(3) in paragraph (4)(A)(i), by inserting after the comma the 
following: "or to appeal to the Immigration and Naturalization 
Service the verification determination of the Immigration and 
Naturalization Service under paragraph (3),"; 
(4) in paragraph (4)(B), by striking the matter before clause (i) 
and inserting the following: 
Immigration. 
42 u s e 1436a. 
101 STAT. 1862 
PUBLIC LAW 100-242—FEB. 5, 1988 
"(B) if any documents or additional information are 
submitted as evidence under subparagraph (A), or if appeal 
to i? 
is made to the Immigration and Naturalization Service 
with respect to the verification determination of the Service 
under paragraph (3)—"; 
(5) in paragraph (4XB)(i), by inserting "or additional informa-
tion" after "documents"; 
(6) in paragraph (4XBXii), by inserting "or appeal" after 
"verification"; 
(7) by inserting after paragraph (5) the following new 
paragraph: 
"(6) For purposes of paragraph (5XB), the applicable fair 
hearing process made available with respect to any individual 
shall include not less than the following procedural protections: 
"(A) The Secretary shall provide the individual with 
„ .
^ 
written notice of the determination described in paragraph 
(5) and of the opportunity for a hearing with respect to the 
determination. 
g,^ji, 
"(B) Upon timely request by the individual, the Secretary 
shall provide a hearing before an impartial hearing officer 
if/tj 
designated by the Secretary, at which hearing the individ-
ual may produce evidence of a satisfactory immigration 
K 
status. 
"(C) The Secretary shall notify the individual in writing 
' 
of the decision of the hearing officer on the appeal of the 
determination in a timely manner. 
"(D) Financial assistance may not be denied or termi-
nated until the completion of the hearing process."; and 
(8) by striking the last sentence and inserting the following: 
"For purposes of this subsection, the term 'Secretary' means the 
Secretary of Housing and Urban Development, a public housing 
agency, or another entity that determines the eligibility of an 
individual for financial assistance.". 
Immigration. 
(d) ENFORCEMENT PROCEDURES.—Section 214(e) of the Housing and 
Community Development Act of 1980 (as added by section 121(a)(2) 
of the Immigration Reform and Control Act of 1986 (Public Law 99-
42 use 1436a. 
603)) is amended— 
(1) in the matter before paragraph (1), by inserting "of Hous-
ing and Urban Development" after "Secretary"; 
,./ 
,j,, _ 
(2) in paragraph (2), by inserting after "(dX4XAXii)" the foUow-
,c^M «b ," 
jjjg. w^Qj. under any alternative system for verifying immigra-
tion status with the Immigration and Naturalization Service 
' 
authorized in the Immigration Reform and Control Act of 1986 
^ 
(Public Law 99-603))"; 
(3) in paragraph (3), by inserting after "(d)(4XBXii)" the follow-
, 
ing: "(or under any alternative system for verifying immigra-
tion status with the Immigration and Naturalization Service 
authorized in the Immigration Reform and Control Act of 1986 
(Public Law 99-603))"; and 
(4) in paragraph (4), by inserting after "(dX5XB)" the follow-
ing: "(or provided for under any alternative system for verifying 
immigration status with the Immigration and Naturalization 
Service authorized in the Immigration Reform and Control Act 
^ 
of 1986 (Public Law 99-603))". 
(e) VERIFICATION SYSTEM.—Section 214 of the Housing 
and 
Community Development Act of 1980 (as amended by section 
121(aX2) of the Immigration Reform and Control Act of 1986 (Public 
PUBLIC LAW 100-242—FEB. 5, 1988 
101 STAT. 1863 
Law 99-603)) is amended by adding at the end the following new 
subsection: 
"(f)(1) Notwithstanding any other provision of law, no agency or 
official of a State or local government shall have any liability for the 
design or implementation of the Federal verification system de-
scribed in subsection (d) if the implementation by the State or local 
agency or official is in accordance with Federal rules and regula-
tions. 
"(2) The verification system of the Department of Housing and 
Urban Development shall not supersede or affect any consent agree-
ment entered into or court decree or court order entered prior to the 
date of the enactment of the Housing and (Community Development 
Act of 1987.". 
(f) REIMBURSEMENT FOR COSTS OF IMPLEMENTATION.— 
(1) Section 214 of the Housing and Community Development 
Act of 1980 (as amended by subsection (e) of this section) 
is further amended by adding at the end the following new 
subsection: 
"(g) The Secretary of Housing and Urban Development is au-
thorized to pay to each public housing agency or other entity an 
amount equal to 100 percent of thQ costs incurred by the public 
housing agency or other entity in implementing and operating an 
immigration status verification system under subsection (d) (or 
under any alternative system for verifying immigration status with 
the Immigration and Naturalization Service authorized in the 
Immigration Reform and Control Act of 1986 (Public Law 99-603)).". 
(2) The United States Housing Act of 1937 (as amended by 
section 1210t))(6) of the Immigration Reform and Control Act of 
1986 (Public Law 99-603)) is amended by striking section 20. 
(g) 
TRANSITIONAL CERTIFICATION AND DOCUMENTATION PROVI-
SIONS.—In carrying out section 214 of the Housing and Community 
Development Act of 1980 during fiscal year 1988, the Secretary of 
Housing and Urban Development shall require, as a condition of 
providing financial assistance for the benefit of any individual, that 
such individual— 
(1) declare in writing, under penalty of perjury, whether or 
not such individual is a citizen or national of the United States; 
and 
(2) if not a citizen or national— 
. j^ 
(A) declare in writing, under penalty of perjury, the 
..^'",. 
immigration status of such individual, if such individual is 
"
" ' 
not less than 62 years of age "and is receiving financial 
assistance on the date of the enactment of the Housing and 
Community Development Act of 1987"; or 
(B) provide such documentation regarding the immigra-
tion status of such individual as the Secretary may require 
by regulation, 
(h) EFFECTIVE DATES.— 
(1) The provisions of, and amendments made by, subsections 
(a), (b), (e), (f), and (g) shall take effect on the date of the 
enactment of this Act. 
(2) The amendments made by subsections (c) £ind (d) shall take 
effect on October 1,1988. 
42 u s e 1436a. 
State and local 
governments. 
Immigration. 
42 u s e 1437r. 
42 u s e 1436a 
note. 
Immigration. 
42 u s e 1436a 
note. 
101 STAT. 1864 
PUBLIC LAW 100-242—FEB. 5, 1988 
42 use 3543. 
Loans. 
Grants. 
42 use 3536 
note. 
12 use 1715Z-1. 
12 use 1701s. 
12 use 1715Z-1. 
SEC. 1
6
5
. 
PREVENTING 
FRAUD 
AND 
ABUSE 
IN 
DEPARTMENT 
OF 
HOUSING 
AND 
URBAN 
DEVELOPMENT 
PROGRAMS. 
(a) DISCLOSURE OF SOCIAL SECURITY ACCOUNT NUMBER.—As a 
condition of initial or continuing eligibility for participation in any 
program of the Department of Housing and Urban Development 
involving loans, grants, interest or rental assistance of any kind, or 
mortgage or loan insurance, and to ensure that the level of benefits 
provided under such programs is proper, the Secretary of Housing 
and Urban Development may require that an applicant or partici-
pant (including members of tne household of an applicant or partici-
pant) disclose his or her social security account number or employer 
identification number to the Secretaiy. 
(b) DEFINITIONS.—For purposes of this section, the terms "ap-
plicant" and "participant" shall have such meanings as the Sec-
retary of Housing and Urban Development by regulation shall 
prescribe. Such terms shall not include persons whose involvement 
is only in their official capacity, such as State or local government 
officials or officers of lending institutions. 
SEC. 166. ANNUAL REPORT ON CHARACTERISTICS OF FAMILIES IN 
ASSISTED HOUSING. 
(a) IN GENERAL.—The Secretary of Housing and Urban Develop-
ment shall include in the annual report under section 8 of the 
Housing and Urban Development Act descriptions of the character-
istics of families assisted under each of the following programs of 
assistance: public housing, section 8 of the United States Housing 
Act of 1937 (other than subsection (o) of such section), section 8(o) of 
the United States Housing Act of 1937, and section 202 of the 
Housing Act of 1959. 
(b) SPECIFIC REQUIREMENTS.—The descriptions required in subsec-
tion (a) shall include information with respect to— 
(1) family size, including the number of children; 
(2) amount and sources of family income; 
i 
(3) the age, race, and sex of family members; and 
(4) whether the head of the family (or the spouse of such 
person) is a member of the armed forces. 
SEC. 167. SECTION 236 RENTAL HOUSING PROGRAM. 
(a) STATE-AIDED PROJECTS.— 
(1) Section 236(f)(4) of the National Housing Act is amended 
by striking "90 per centum" and inserting "100 percent". 
(2) Section 101(g) of the Housing and Urban Development Act 
of 1965 is amended by striking "90 per centum" and inserting 
"100 percent". 
Ot)) INSURING AUTHORITY.—Section 236(n) of the National Housing 
Act is amended by adding at the end the following new sentence: "A 
mortgage may be insured under this section after the date in the 
preceding sentence in order to refinance a mortgage insured under 
this section or to finance pursuant to subsection (jX3) the purchase, 
by a cooperative or nonprofit corporation or association, of a project 
assisted under this section.". 
SEC. 168. TENANT ELIGIBILITY DETERMINATIONS IN RENT SUPPLEMENT 
PROJECTS. 
Section 101 of the Housing and Urban Development Act of 1965 is 
amended— 
(1) by striking the second sentence of subsection (eXD; and 
PUBLIC LAW 100-242—FEB. 5, 1988 
101 STAT. 1865 
'• 
(2) by striking subsection (k) and inserting the following: 
"(k) In selecting individuals or families to be assisted under this 
section in accordance with the eligibility criteria and procedures 
>-. • J 
established under subsection (eXD, the project owner shall give 
preference to individuals or families who are occupying substandard 
housing, are paying more than 50 percent of family income for rent, 
or are involuntarily displaced at the time they are seeking housing 
assistance under this section.". 
SEC. 169. COUNSELING TO TENANTS AND HOMEOWNERS. 
(a) COUNSELING SERVICES.—Section 106(a)(3) of the Housing and 
Urban Development Act of 1968 is amended in the first sentence by 12 USC I70lx. 
striking all that follows the semicolon and inserting the following: 
"except that for each of the fiscal years 1988 and 1989 there are 
authorized to be appropriated $3,500,000 for such purposes.". 
(b) EMERGENCY HOMEOWNERSHIP COUNSELING.—Section 106 of the 
Housing and Urban Development Act of 1968 is amended by insert-
ing at the'end the following new subsection: 
"(c) GRANTS FOR HOMEOWNERSHIP COUNSELING ORGANIZATIONS.— 
"(1) IN GENERAL.—The Secretary of Housing and Urban 
, 
Development may make grants— 
"(A) to nonprofit organizations experienced in the provi-
sion of homeownership counseling to enable the organiza-
tions to provide homeownership counseling to eligible 
homeowners; and 
"(B) to assist in the establishment of nonprofit 
homeownership counseling organizations. 
"(2) PROGRAM REQUIREMENTS.— 
"(A) Applications for grants under this subsection shall 
be submitted in the form, and in accordance with the 
procedures, that the Secretary requires. 
"(B) The homeownership 
counseling 
organizations 
receiving assistance under this subsection shall use the 
assistance only to provide homeownership counseling to 
eligible homeowners. 
"(C) The homeownership 
counseling 
provided by 
homeownership counseling organizations receiving assist-
ance under this subsection shall include counseling with 
,^t 
respect to— 
"(i) financial management; 
"(ii) available community resources, including public 
:" 
; 
assistance programs, mortgage assistance programs, 
home repair assistance programs, utility assistance pro-
' V 
grams, food programs, and social services; and 
"(iii) employment training and placement. 
"(3) AVAILABILITY OF HOMEOWNERSHIP COUNSELING.—The Sec-
retary shall take any action that is necessary— 
"(A) to ensure the availability throughout the United 
States of homeownership counseling from homeownership 
counseling organizations receiving assistance under this 
' 
subsection, with priority to areas that— 
"(i) are experiencing high rates of home foreclosure 
- ' i 
and any other indicators of homeowner distress deter-
mined by the Secretary to be appropriate; and 
"(ii) are not already 
adequately 
served 
by 
homeownership counseling organizations; and 
101 STAT. 1866 
PUBLIC LAW 100-242—FEB. 5, 1988 
"(B) to inform the public of the availability of the 
homeownership counseling. 
Loans. 
"(4) ELIGIBILITY FOR COUNSELING.—A homeowner shall be eli-
gible for homeownership counseling under this subsection i
f
— 
"(A) the home loan is secured by property that is the 
principal residence (as defined by the Secretary) of the 
^
^ .. 
homeowner; 
"(B) the home loan is not assisted under title V of the 
Housing Act of 1949; and 
"(C) the homeowner is, or is expected to be, unable to 
- 
make payments, correct a home loan delinquency within a 
r 
reasonable time, or resume full home loan payments due to 
a reduction in the income of the homeowner because of^ 
"(i) an involuntary loss of, or reduction in, the 
employment of the homeowner, the self-employment of 
, 
the homeowner, or income from the pursuit of the 
occupation of the homeowner; or 
"(ii) any similar loss or reduction experienced by 
y 
any person who contributes to the income of the 
homeowner. 
Loans. 
"(5) NOTIFICATION OF AVAILABILITY OF HOMEOWNERSHIP COUN-
SEUNG REQUIREMENT.—The Creditor of a delinquent home loan 
shall notify an eligible homeowner of the availability of any 
homeownership counseling offered by the creditor. As a supple-
ment to the counseling provided by the creditor, the creditor 
shall notify the homeowner of the availability of 1 of the 
following: 
"(A) Homeownership counseling provided by nonprofit 
organizations approved by the Secretary and experienced in 
the provision of homeownership counseling. 
"(B) A list of the nonprofit organizations, approved by the 
Secretary and experienced in the provision of homeowner-
ship counseling, that can be obtained by calling a toll-free 
" 
telephone number at the Department of Housing and 
' 
Urban Development. 
"(C) Homeownership counseling provided by the Adminis-
' ' 
trator of Veterans' Affairs for loans insured or guaranteed 
under chapter 37 of title 38, United States Code. 
"(6) DEFINITIONS.—For purposes of this subsection: 
"(A) The term 'creditor' means a person or entity that is 
servicing a home loan on behalf of itself or another person 
or entity. 
"(B) The term 'eligible homeowner' means a homeowner 
: 
eligible for counseling under paragraph (4). 
"(C) The term 'home loan' means a loan secured by a 
mortgage or lien on residential property. 
"(D) The term 'homeowner' means a person who is obli-
gated under a home loan. 
"(E) The term 'residential property' means a 1-family 
residence, including a 1-family unit in a condominium 
project, a membership interest and occupancy agreement in 
a cooperative housing project, and a manufactured home 
and the lot on which the home is situated. 
"(7) REGULATIONS.—The Secretary shall issue any regulations 
that are necessary to carry out this subsection. 
"(8) 
AUTHORIZATION OF APPROPRIATIONS.—There 
are 
au-
thorized to be appropriated to carry out this subsection 
PUBLIC LAW 100-242—FEB. 5, 1988 
101 STAT. 1867 
$3,500,000 for each of the fiscal years 1988 and 1989. Any 
amount appropriated under this subsection shall remain avail-
able until expended. 
"(9) TERMINATION.—The provisions of this subsection shall not 
be effective after September 30,1989.". 
SEC. 170. HOUSING ASSISTANCE TECHNICAL AMENDMENTS. 
(a) SECTION 235 HOMEOWNERSHIP ASSISTANCE.—Section 235(i)(3)(C) 
of the National Housing Act is amended by inserting an opening 
12 USC I7l5z. 
parenthesis before "including". 
(b) RENTAL HOUSING FOR LOWER INCOME FAMILIES.—The last sen-
tence of section 236(iXl) of the National Housing Act is amended by 12 USC I7i5z-l. 
striking "(h)" and inserting "(fK4)". 
(c) DEFINITION OF DISABIUTY.—Section 303)(3XA) of the United 
States Housing Act of 1937 is amended— 
42 USC 1437a. 
(1) by striking "or" the first place it appears and inserting a 
comma; and 
(2) by striking "or in section 102 of the Developmental Disabil-
ities Services and Facilities Construction Amendments of 1970" 
and inserting the following: ", has a developmental disability as 
defined in section 102(7) of the Developmental Disabilities 
Assistance and Bill of Rights Act (42 U.S.C. 6001(7))". 
(d) LOWER INCOME HOUSING.— 
(1) The first sentence of section 6(a) of the United States 
Housing Act of 1937 is amended by inserting "The" before 42USC1437d. 
"Secretary". 
(2) Section 6(cX4)(A) of the United States Housing Act of 1937 
is amended— 
(A) by striking "or are paying more than 50 per centum of 
family income for rent"; and 
(B) by inserting ", are paying more than 50 percent of 
family income for rent," after "substandard housing". 
(3) Paragraphs (4) and (5) of section 6(k) of the United States 
Housing Act of 1937 are amended by striking "his" each place it 
appears and inserting "their". 
(e) HOUSING DEVELOPMENT GRANTS.—Section 17(dX7XA) of the 
United States Housing Act of 1937 is amended by striking "title" 42 USC 1437o. 
and inserting "subsection". 
(f) PUBLIC HOUSING DEMOUTION AND DISPOSITION.—Section 18(b) of 
the United States Housing Act of 1937 is amended in the matter 
42 USC I437p. 
preceding paragraph (1) by inserting "or" after "section". 
(g) HOUSING FOR THE ELDERLY AND HANDICAPPED.— 
(1) The third sentence of section 202(dX4) of the Housing Act 
of 1959 is amended by striking "is a developmentally disabled 12USC I70lq. 
individual as defined in section 102(5) of the Developmental 
Disabilities Services and Facilities Construction Amendments of 
1950" and inserting the following: "has a developmental disabil-
ity as defined in section 102(7) of the Developmental Disabilities 
Assistance and Bill of Rights Act (42 U.S.C. 6001(7))". 
(2) Section 202(f) of the Housing Act of 1959 is amended by 
striking "section 134" and inserting "section 133". 
(3) Section 202(1) of the Housing Act of 1959 is amended by 
striking "difference" and inserting "different". 
(h) RENT SUPPLEMENTS.—Section 101(jXlXD) of the Housing and 
Urban Development Act of 1965 is amended by striking "divided" 
12 USC I70ls. 
and inserting "dividend". 
101 STAT. 1868 
PUBLIC LAW 100-242—FEB. 5, 1988 
Subtitle C—Multifamily Housing Management 
and Preservation 
SEC. 181. MANAGEMENT AND PRESERVATION OF HUD-OWNED MULTI-
FAMILY HOUSING PROJECTS. 
(a) GOALS.—Section 203(a) of the Housing and Community Devel-
12USC1701Z-11. 
opment Amendments of 1978 is amended by striking "(a)" and all 
that follows through the semicolon at the end of paragraph (1) and 
inserting the following: 
„,-^. j , 
"(a) The Secretary of Housing and Urban Development (in this 
section referred to as the 'Secretary') 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 that is either 
delinquent, under a workout agreement, or being foreclosed upon by 
the Secretary, in a manner that is consistent with the National 
Housing Act and this section and that will, in the least costly 
fashion among the reasonable alternatives available, further the 
goals o
f
— 
"(1) preserving so that they are available to and affordable by 
low- and moderate-income persons— 
"(A) all units in multifamily housing projects that are 
subsidized projects or formerly subsidized projects; 
. , ^ , ,. 
"(B) in other multifamily housing projects owned by the 
M
. i' 
»
• 
Secretary, at least the units that are occupied by low- and 
,,„ 
moderate-income persons or vacant; and 
>tTj. 
,(^Q^ ^^ ^2j other multifamily housing projects, at least the 
units that are, on the date of assignment, occupied by low-
and moderate-income persons;". 
(b) MANAGEMENT SERVICES.—Section 203(b)(2) of the Housing and 
Community Development Amendments of 1978 is amended— 
(1) by inserting "(A)" after the paragraph designation; 
(2) by redesignating clauses (A) through (D) as clauses (i) 
through (iv), respectively; 
(3) by striking ", owned by the Secretary" and inserting the 
following: "subject to subsection (a) that is owned by the Sec-
fij . ^ 
retary (or for which the Secretary is mortgagee in possession)"; 
(4) by striking the period at the end and inserting "; and"; and 
(5) by adding at the end the following new subparagraph: 
-^ 
' «
• 
"(B) to require the owner of a multifamily housing project 
subject to subsection (a) that is not owned by the Secretary (and 
for which the Secretary is not mortgagee in possession), to 
contract for management services for the project in the manner 
K; 
' 
described in subparagraph (A).". 
(c) MAINTAINING OF PROJECTS.—Section 203(c) of the Housing and 
Community Development Amendments of 1978 is amended to read 
as follows: 
"(cXD In the case of multifamily housing projects subject to 
subsection (a) 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 occu-
pied projects in a decent, safe, and sanitary condition; 
"(B) to the greatest extent possible, maintain full occupancy 
in all such projects; and 
, itTi 
ii \: 
"(C) maintain all such projects for purposes of providing 
rental or cooperative housing for the longest feasible period. 
PUBLIC LAW 100-242—FEB. 5, 1988 
101 STAT. 1869 
"(2) In the case of any multifamily housing project subject to 
subsection (a) that is not owned by the Secretary (and for which the 
Secretary is not mortgagee in possession), the Secretary shall re-
quire the owner of the project to carry out the requirements of 
paragraph (1).". 
(d) FINANCIAL ASSISTANCE.—Section 203 of the Housing and 
Community Development Amendments of 1978 is amended— 
12 USC I70lz-ll. 
(1) by redesignating subsections (d) through (g) as subsections 
(e) through (h), respectively; and 
(2) by inserting after subsection (c) the following new sub-
section: 
"(d) In carrying out the goals specified in subsection (a)(1) the 
Secretary shall take not less than one of the following actions: 
"(1) Enter into contracts under section 8 of the United States Contracts. 
Housing Act of 1937, to the extent budget authority is available 
i '< 
for such section 8, with owners of multifamily housing projects 
that are acquired by a purchaser other than the Secretary at 
foreclosure or after sale by the Secretary. Such contracts shall 
provide assistance to the project involved for a period of not less 
than 15 years. Such contracts shall be sufficient to assist all 
units in subsidized or formerly subsidized projects, and all units 
in other projects that are occupied by lower income families 
eligible for assistance under such section 8 at the time of 
foreclosure or sale, as the case may be, and all units that are 
vacant at such time (which units shall be made available for 
such families as soon as possible). In order to make available to 
families any units in subsidized or formerly subsidized projects 
that are occupied by persons not eligible for assistance under 
such section 8, but that subsequently become vacant, the con-
tract shall also provide that when any such vacancy occurs the 
owner involved shall lease the available unit to a family eligible 
for assistance under such section 8. The Secretary shall provide 
such contracts at contract rents that, consistent with subsection 
(a), provide for the rehabilitation of such project and do not 
exceed the most recently adjusted fair market rents for substan-
tially rehabilitated units published by the Secretary in the 
Federal Register. 
"(2) In accordance with the authority provided under the 
National Housing Act, provide purchase-money mortgages, 
reduce the selling price, or provide other financial assistance to 
the owners of multifamily housing projects that are acquired by 
a purchaser other than the Secretary at foreclosure, or after 
sale by the Secretary, on terms that will ensure that, for a 
period of not less than 15 years (A) the project will remain 
available to and affordable by low- and moderate-income per-
sons; and (B) such persons shall pay not more than the amount 
payable as rent under section 3(a) of the United States Housing 
Act of 1937.". 
(e) RIGHT OF FIRST REFUSAL.—Section 203 of the Housing and 
Community Development Amendments of 1978 is amended— 
(1) by redesignating subsections (e) through (h) (as so redesig-
nated by this section) as subsections (f) through (i); and 
(2) by inserting before such subsection (f) the following new 
subsection: 
"(e) Upon receipt of a bona fide offer to purchase a project subject 
State and local 
to subsection (a), the Secretary shall notify the local government governments. 
and the State housing finance agency (or other agency or agencies 
Federal 
Register, 
publication. 
101 STAT. 1870 
PUBLIC LAW 100-242—FEB. 5, 1988 
designated by the Governor) of the proposed terms and conditions of 
the offer, including the assistance that the Secretary plans to make 
available to the prospective purchaser. The local government and 
the designated State agency shall have 90 days to match the offer 
and purchase the project. In administering the right of first refusal 
provided in this subsection, the Secretary shall offer assistance to 
the local government or designated State agency on terms and 
conditions at least as favorable as made available to the prospective 
purchaser. Notwithstanding any other provision of law to the con-
trary, a local government (including a public housing agency) or 
designated State agency may purchase a subsidized project or for-
merly subsidized project in accordance with this subsection.". 
(f) DISPLACEMENT PROTECTION.—Section 203(fKl) of the Housing 
and Community Development Amendments of 1978 (as so redesig-
12use iTOlz-ll. nated by this section) is amended— 
(1) by striking "ovnied by the Secretary" and inserting the 
following: "subject to subsection (a) that is owned by the Sec-
retary (or for which the Secretary is mortgagee in possession)"; 
and 
(2) by adding at the end the following new sentence: "In the 
case of a multifamily housing project subject to subsection (a) 
that is not owned by the Secretary (and for which the Secretary 
is not mortgagee in possession), the Secretary shall require the 
owner of the project to carry out the requirements of this 
paragraph.". 
(g) LIMITATIONS ON CERTAIN PROJECT, LOAN, AND MORTGAGE 
SALES.—Section 203 of the Housing and Community Development 
Amendments of 1978 is amended— 
(1) by redesignating subsections (h) and (i) (as so redesignated 
by this section) as subsections (i) and (j)j and 
(2) by inserting before such subsection (i) the following new 
subsection: 
"(hXD 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 mortgage was 
made or insured prior to the assignment of the loan or mortgage on 
such project to the Secretary. 
"(2) The Secretary may not approve the sale 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 £is part of a transaction that will ensure 
that such 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. 
State and local 
"(3) Notwithstanding any provision of law that may require 
governments. 
Competitive sales or bidding, the Secretary may carry out negotiated 
sales of subsidized or formerly subsidized mortgages held by the 
PUBLIC LAW 100-242—FEB. 5, 1988 
101 STAT. 1871 
Secretary, without the competitive selection of purchasers or 
intermediaries, to agencies of State or local government, or groups 
of investors that include at least 1 such agency of State or local 
government, if the negotiations are conducted with such agencies, 
except that— 
"(A) the terms of any such sale shall include the agreement of 
the purchasing agency or agencies of State or local government 
? 
to act as mortgagee or owner of a beneficial interest in such 
mortgages in a manner consistent with maintaining the projects 
that are subject to such mortgages for occupancy by the general 
tenant group intended to be served by the applicable mortgage 
insurance program, including, to the extent the Secretary deter-
mines appropriate, authorizing such agency of State or local 
government 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 price that may be 
obtained for such mortgages from an agency of State or local 
government, consistent with the expectation and intention that 
the projects financed will be retained for use under the ap-
plicable mortgage insurance program for the life of the initial 
mortgage insurance contract. . 
(h) DEFINITIONS.—Section 203(i) of the Housing and Community 
Development Amendments of 1978 (as so redesignated by this sec-
tion) is amended— 
12 USC I70lz-ll. 
(1) by inserting "(1)" after the subsection designation; and 
(2) by adding at the end the following new paragraphs: 
"(2) For the purpose of this section, the term 'subsidized project' 
means a multifamily housing project receiving any of the following 
assistance immediately prior to tne assignment of the mortgage on 
such project to, or the acquisition of such mortgage by, the 
Secretary: 
^ 
"(A) below market interest rate mortgage insurance under 
the proviso of section 221(dX5) of the National Housing Act; 
"(B) interest reduction pajonents made in connection with 
mortgages insured under section 236 of the National Housing 
Act; 
"(C) rent supplement payments under section 101 of the 
Housing and Urban Development Act of 1965; 
"(D) direct loans at below market interest rates, made under 
section 202 of the Housing Act of 1959 or to a multifamily 
housing project under section 312 of the Housing Act of 1964; or 
"(E) housing assistance payments made under section 23 of 
the United States Housing Act of 1937 (as in effect before 
January 1, 1975) or section 8 of the United States Housing Act 
of 1937 (other than subsection (b)(1) of such section), without 
regard to whether such payments are made to all or a portion of 
the units in the project. 
"(3) For the purpose of this section, the term 'formerly subsidized 
project' means a multifamily housing project owned by the Sec-
retary that was a subsidized project immediately prior to its acquisi-
tion by the Secretary.". 
SEC. 182. ACQUISITION OF INSURED MULTIFAMILY HOUSING PROJECTS. 
Section 207(k) of the National Housing Act is amended by insert- 
12 USC 1713. 
ing after the second sentence the following new sentence: "In deter-
101 STAT. 1872 
PUBLIC LAW 100-242—FEB. 5, 1988 
12 u s e 1715z-lb. 
Contracts. 
42 u s e 1437f 
note. 
State and local 
governments. 
12 u s e ITOlz-ll 
note. 
mining the amount to be bid, the Secretary shall act consistently 
with the goal established in section 203(a)(1) of the Housing and 
Community Development Amendments of 1978.". 
SEC. 183. TENANT PARTICIPATION IN MULTIFAMILY HOUSING PROJECTS. 
(a) APPLICABILITY.—Section 202(a) of the Housing and Community 
Development Amendments of 1978 is amended by inserting before 
the period at the end the following: "or section 202 of the Housing 
Act of 1959". 
(b) NOTICE AND COMMENT.—Section 202(b)(1) of the Housing and 
Community Development Amendments of 1978 is amended by strik-
ing "and the Secretary deems it appropriate" and inserting the 
following: "or where the Secretary proposes to sell a mortgage 
secured by a multifamily housing project". 
(c) NONDISCRIMINATION AGAINST SECTION 8 CERTIFICATE HOLDERS 
AND VOUCHER HOLDERS.—No owner of a subsidized project (as de-
fined in section 203(i)(2) of the Housing and Community Develop-
ment Amendments of 1978, as amended by section 181(h) of this Act) 
shall refuse— 
(1) to lease any available dwelling unit in any such project of 
such owner that rents for an amount not greater than the fair 
r 
market rent for a comparable unit, as determined by the Sec-
retary under section 8 of the United States Housing Act of 1937, 
to a holder of a certificate of eligibility under such section, a 
proximate cause of which is the status of such prospective 
tenant as a holder of such certificate, and to enter into a 
li/; housing assistance payments contract respecting such unit; or 
(2) to lease any available dwelling unit in any such project of 
•: such owner to a holder of a voucher under section 8(o) of such 
Act, and to enter into a voucher contract respecting such unit, a 
proximate cause of which is the status of such prospective 
tenant as holder of such voucher. 
SEC. 184. MULTIFAMILY HOUSING DISPOSITION PARTNERSHIP. 
(a) ESTABLISHMENT OF DEMONSTRATION PROGRAM.—The Secretary 
of Housing and Urban Development (referred to in this section as 
the "Secretary") shall carry out a program to demonstrate the 
effectiveness of disposing of distressed multifamily housing projects 
owned by the Department of Housing and Urban Development 
through a partnership with State housing finance agencies. The 
demonstration program may be carried out with not more than 4 
State housing finance agencies and shall be designed to determine 
the feasibility of entering into similar relationships with other State 
housing finance agencies. 
O
t
)
) REQUIREMENTS OF DEMONSTRATION PROGRAM.— 
(1) OPPORTUNITY TO PARTICIPATE IN SALE.—Not less than 30 
days before offering to sell any multifamily housing project that 
is located in a State participating in the demonstration program 
and that is subject to section 204 of the Housing and Commu-
nity Development Amendments of 1978, the Secretary shall— 
(A) notify the State housing finance agency of the plan of 
the Secretary to sell the project; and 
(B) provide the State housing finance agency with the 
option to provide the long-term financing for the sale of the 
project through the co-insurance program of the Secretary, 
if the project complies with the State laws applicable to the 
-;, ^ 
State housing finance agency. 1
, - . , , i^4^,,^,^ -.4,, ,^„.^-B,^ 
PUBLIC LAW 100-242—FEB. 5, 1988 
101 STAT. 1873 
(2) TERMS OF PARTICIPATION.—If the State housing finance 
Loans. 
agency agrees to participate in the sale of a project under this 
section, the terms of the sale shall be as follows: 
(A) The State housing finance agency shall provide a loan 
to the purchaser of the property. 
(B) The mortgage securing the loan shall be insured by 
the Secretary and the State housing finance agency under 
paragraph (3) or (4) of section 221(d) of the National Hous-
ing Act. 
(C) The terms and conditions of the loan shall be consist-
ent with the terms and conditions of the sale. 
(3) COOPERATIVE AGREEMENT.—Not later than the expiration 
of the 3-month period beginning on the date of the enactment of 
this Act, the Secretary shall enter into cooperative agreements 
with State housing finance agencies to carry out the demonstra-
tion program under this section. 
(c) TERMINATION OF DEMONSTRATION PROGRAM.— 
(1) IN GENERAL.—Except as provided in paragraph (2), the 
demonstration program under this section shall terminate upon 
the expiration of the 3-year period beginning on the date of the 
enactment of this Act. 
(2) CONTINUATION OF PROGRAM.— 
(A) The Secretary may continue the demonstration pro-
gram under this section after the termination date estab-
lished in paragraph (1) for such additional period as the 
Secretary determines to be appropriate. 
(B) The Secretary shall continue the demonstration pro-
gram under this section with respect to any project for 
which the Secretary notifies the State housing finance 
agency under subsection (b)(1)(A) before the termination 
date established in paragraph (1) or under subparagraph 
(A). 
(d) REPORT TO CONGRESS.—Not later than 6 months after the 
termination date established in subsection (c)(1), the Secretary shall 
submit to the Congress a report evaluating the effectiveness of the 
demonstration program under this section as a national model for 
the disposition of distressed multifamily housing projects owned by 
the Department of Housing and Urban Development. 
SEC. 185. MULTIFAMILY HOUSING CAPITAL IMPROVEMENTS ASSISTANCE. 
(a) PURPOSE.—Section 201(a) of the Housing and Community 
Development Amendments of 1978 is amended by inserting after 
"management," the following: "to permit capital improvements to 
be made to maintain certain projects as decent, safe, and sanitary 
housing,". 
(b) ELIGIBILITY.—Section 201(c)(1)(B) of the Housing and Commu-
nity Development Amendments of 1978 is amended by inserting 
after "is assisted under" the following: "section 23 of the United 
States Housing Act of 1937, as in effect immediately before Janu-
ary 1, 1975,". 
(c) BORROWER REQUIREMENTS.—Section 201(d) of the Housing and 
Community Development Amendments of 1978 is amended— 
(1) in paragraph (1), by inserting "or physical" after "main-
tain the financial"; and 
(2) in paragraph (6), by striking the final period, and inserting 
the following: "; except that the Secretary may excuse an owner 
from compliance with the plan requirement set forth in this 
12 use 
1715z-la. 
101 STAT. 1874 
PUBLIC LAW 100-242—FEB. 5, 1988 
12 use 
1715z-la. 
Loans. 
paragraph in any case in which such owner seeks only assist-
ance for capital improvements under this section.". 
(d) AMOUNT AND CONDITIONS OF ASSISTANCE.—Section 201(f) of the 
Housing and Community Development Amendments of 1978 is 
amended— 
(1) in paragraph (1), by inserting after "to any project" in the 
matter preceding subparagraph (A) the following: "(except a 
project assisted only for capital improvements)"; and 
(2) in paragraph (4), by inserting after "for any year" the 
following: "for a project (other than a project receiving assist-
ance only for capital improvements)". 
(e) REGULATIONS.—Section 201(g) of the Housing and Community 
Development Amendments of 1978 is amended by inserting before 
the period at the end the following: ", to the extent applicable.". 
(f) FLEXIBLE SUBSIDY FUND.—Section 201(j) of the Housing and 
Community Development Amendments of 1978 is amended to read 
as follows: 
"(j)(l) For purposes of carrying out the provisions of this section, 
there is hereby established in the Treasury of the United States a 
revolving fund, to be known as the Flexible Subsidy Fund. The Fund 
shall, to the extent approved in appropriation Acts, be available to 
the Secretary to provide assistance under this section (including 
assistance for capital improvements). 
"(2) The Fund shall consist of (A) any amount appropriated to 
carry out the purposes of this section;- (B) any amount repaid on any 
assistance provided under this section; (C) any amounts credited to 
the reserve fund described in section 236(g) of the National Housing 
Act; and (D) any other amount received by the Secretary under this 
section (including any amount realized under paragraph (3)). 
"(3) Any amounts in the Fund determined by the Secretary to be 
in excess of the amounts currently required to carry out the provi-
sions of this section shall be invested by the Secretary in obligations 
of, or obligations guaranteed as to both principal and interest by, the 
United States or any agency of the United States. 
"(4) The Secretary may use not more than $50,000,000 from the 
Fund in any fiscal year for purposes of providing assistance for 
capital improvements in accordance with this section.". 
(g) ASSISTANCE FOR CAPITAL IMPROVEMENTS.—Section 201 of the 
Housing and Community Development Amendments of 1978 is 
amended by adding at the end the following new subsections: 
"(k)(l) Assistance for capital improvements under this section 
shall include assistance for any major repair or replacement of a 
capital item in a multifamily housing project, including any such 
repair or replacement required as a result of deferred or inadequate 
maintenance. Capital improvements do not include maintenance of 
any such item. Assistance for capital improvements under this 
section shall be in the form of a loan. 
"(2) The owner of a project receiving assistance for capital 
improvements shall agree to contribute assistance to such project in 
such amounts, from such sources, and in such manner as the 
Secretary determines to be appropriate, except that— 
"(A) such contribution shall not be less than 20 percent of the 
total estimated cost of the capital improvements involved, 
unless the Secretary, upon application of the owner, determines 
that such contribution is financially infeasible and waives or 
;L reduces such contribution to the extent necessary; 
., . 
PUBLIC LAW 100-242—FEB. 5, 1988 
101 STAT. 1875 
"(B) the Secretary may not require an amount to be contrib-
uted, from the reserve funds established by the owner of such 
projects for the purpose of making capital improvements, in 
excess of 50 percent of the amount of such reserve funds on the 
date of such loan; and 
"(C) The Secretary shall waive the requirements of this para-
graph if such owner is a private nonprofit corporation or an 
association. 
"(3) The Secretary may provide assistance for capital improve-
ments under this section if the Secretary finds that the reserve 
funds established by the owner of a project for the purpose of 
making capital improvements are insufficient to finance both the 
capital improvements for which such assistance is to be used and 
other capital improvements that are reasonably expected to be 
required in the near future, and such insufficiency is not the result 
of the failure of such owner to comply with any standard established 
by the Secretary for management of such reserve funds. 
"(4) In providing, and contracting to provide, assistance for capital 
improvements under this section, the Secretary shall— 
"(A) give priority to projects that are eligible for incentives 
under section 224(b) of the Emergency Low Income Housing 
Preservation Act of 1987; and 
"(B) with respect to any amounts not required for projects 
under subparagraph (A), give priority among other projects 
based on the extent to which— 
"(i) the capital improvements for which such assistance is 
requested are immediately required; 
"(ii) the projects serve as the residences of lower income 
families, and the extent which other suitable housing is 
unavailable for such families in the areas in which such 
projects are located; 
"(iii) the capital improvements for which such assistance 
is requested involve the life, safety, or health of the resi-
dents of the project or involve major capital improvements 
in the projects; and 
"(iv) the projects demonstrate the greatest financial dis-
tress, while continuing to meet the requirements of 
subsection (dXD. 
"(1)(1) The principal amount of any sissistance for capital improve-
ments under this section that is provided to the owner of a project 
shall not exceed the difference between the contribution made by 
the owner in accordance with subsection (kX2) and the sum of— 
"(A) the amount determined by the Secretary to be necessary 
for such owner to make capital improvements with respect to 
capital items that have failed, or are likely to deteriorate 
seriously or fail in the near future, in such projects; 
"(B) the amount determined by the Secretary to be necessary 
to carry out a plan to upgrade the capital items being improved, 
and any other capital items determined by the Secretary to be 
associated with such capital items being improved and to re-
quire upgrading, to meet cost-effective energy efficiency stand-
ards prescribed by the Secretary; and 
"(C) the amount determined by the Secretary to be necessary 
to comply with the requirements of section 504 of the Re-
habilitation Act of 1973 (29 U.S.C. 794). 
"(2)(A) The term of any gissistance for capital improvements in the 
form of a loan under this section shall not exceed the remaining 
Safety. 
Health and 
medical care. 
Energy. 
Loans. 
91-194 O - 90 - 19 : QL.3 Part 3 
101 STAT. 1876 
PUBLIC LAW 100-242—FEB. 5, 1988 
term of the mortgage of the project with respect to which such loan 
is provided. 
"(B) Each loan for capital improvements provided under this 
section shall bear interest at a rate determined by the Secretary to 
be appropriate, except that— 
"(i) such rate shall not be more than 3 percentage points 
below a rate determined by the Secretary of the Treasury 
taking into consideration the average interest rate on all in-
terest bearing obligations of the United States then forming a 
part of the public debt, computed at the end of the fiscal year 
next preceding date on which the loan is made, adjusted to the 
nearest 1/8 of 1 percent, plus an allowance adequate in the 
judgment of the Secretary of Housing and Urban Development 
to cover administrative costs and probable losses under the 
program; and 
"(ii) such interest rate plus such allowance shall not exceed 6 
percent per annum nor be less than 3 percent per annum. 
"(C) Each loan for capital improvements provided under this 
section shall be considered to be a liability of the project involved, 
and shall not be dischargeable in any bankruptcy proceeding under 
section 727, 1141, or 1328(b) of title 11, United States Code. 
"(D) The Secretary may establish such additional conditions on 
loans provided under this section as the Secretary determines to be 
appropriate. 
"(E) The Secretary may provide more than one loan or assistance 
in any other form to any project under this section, if each loan or 
other assistance complies with the provisions of this section. 
Loans. 
"(m)(l) Increases in rental payments that may occur as a result of 
the debt service and other expenses of a loan for capital improve-
ments provided under this section for a project subject to a plan of 
action approved under subtitle B of the Emergency Low Income 
Housing Preservation Act of 1987 shall be governed by the rent 
agreements entered into under such subtitle. 
"(2) In order to minimize any increases in rental payments that 
may occur as a result of the debt service and other expenses of a 
loan for capital improvements provided under this section for a 
project not subject to paragraph (1) and that would be incurred by 
lower income residents of the project involved whose rental pay-
ments are, or would as a result of such expenses be, in excess of the 
amount allowable if section 3(a) of the United States Housing Act of 
1937 were applicable to such residents, the Secretary may take any 
or all of the following actions: 
"(A) Provide assistance with respect to such project under 
section 8(b)(1) of the United States Housing Act of 1937, to the 
extent amounts are available for such assistance and without 
regard to section 16 of such Act. 
"(B) Reduce the rate of interest charged on such loan to a rate 
of not less than 1 percent. 
"(C) Increase the term of such loan to a term that does not 
exceed the remaining term of the mortgage on such project. 
"(D) Increase the amount of assistance to be provided by the 
owner of such project under subsection (k)(2), if applicable, to an 
amount not to exceed 30 percent of the total estimated cost of 
the capital improvements involved.". 
PUBLIC LAW 100-242—FEB. 5, 1988 
101 STAT. 1877 
(h) CONFORMING AMENDMENT.—The section heading for section 
201 of the Housing and Community Development Amendments of 
1978 is amended by striking "OPERATING". 
SEC. 186. FLEXIBLE SUBSIDY PROGRAM. 
(a) USE OF SECTION 236 EXCESS RENTAL CHARGES.—Section 236(f)(3) 
of the National Housing Act is amended by striking "September 30, 
1985" and inserting "September 30,1989". 
(b) ASSISTANCE FOR CERTAIN HOUSING PROJECTS FOR ELDERLY OR 
HANDICAPPED FAMILIES.— 
(1) Section 201(a) of the Housing and Community Develop-
ment Amendments of 1978 is amended by inserting "the Hous-
ing Act of 1959," after "1937,". 
(2) Section 201(cXl)(A) of the Housing and Community Devel-
opment Amendments of 1978 is amended by inserting before the 
semicolon at the end the following: ", or received a loan under 
section 202 of the Housing Act of 1959 more than 15 years 
before the date on which assistance is made available under this 
section". 
12 use 
1715z-la. 
12 u s e 1715Z-1. 
TITLE II—PRESERVATION OF LOW 
INCOME HOUSING 
Subtitle A—General Provisions 
Emergency Low 
Income Housing 
Preservation Act 
of 1987. 
SEC. 201. SHORT TITLE. 
This title may be cited as the "Emergency Low Income Housing 
Preservation Act of 1987". 
SEC. 202. FINDINGS AND PURPOSE. 
(a) FINDINGS.—The Congress finds that— 
(1) in the next 15 years, more than 330,000 low income 
housing units insured or assisted under sections 221(d)(3) and 
236 of the National Housing Act could be lost as a result of the 
termination of low income affordability restrictions; 
(2) in the next decade, more than 465,000 low income housing 
units produced with assistance under section 8 of the United 
States Housing Act of 1937 could be lost as a result of the 
expiration of the rental assistance contracts; 
(3) some 150,000 units of rural low income housing financed 
under section 515 of the Housing Act of 1949 are threatened 
with loss as a result of the prepayment of mortgages by owners; 
(4) the loss of this privately owned and federally assisted 
housing, which would occur in a period of sharply rising rents 
on unassisted housing and extremely low production of addi-
tional low rent housing, would inflict unacceptable harm on 
current tenants and would precipitate a grave national crisis in 
the supply of low income housing that was neither anticipated 
nor intended when contracts for these units were entered into; 
(5) the loss of this affordable housing, to encourage the 
production of which the public has provided substantial benefits 
over past years, would irreparably damage hard-won progress 
toward such important and long-established national objectives 
as— 
12 u s e 1715/ 
note. 
12 u s e 1715/ 
note. 
} ' • . ' ' . 
\ l 
101 STAT. 1878 
PUBLIC LAW 100-242—FEB. 5, 1988 
(A) providing a more adequate supply of decent, safe, 
and sanitary housing that is affordable to low income 
Americans; 
(B) increasing the supply of housing affordable to low 
income Americans that is accessible to employment 
opportunities; and 
(C) expanding housing opportunities for all Americans, 
particularly members of disadvantaged minorities; 
(6) the provision of an adequate supply of low income housing 
has depended and will continue to depend upon a strong, long-
term partnership between the public and private sectors that 
accommodates a fair return on investment; 
(7) recent reductions in Federal housing assistance and tax 
benefits related to low income housing have increased the 
incentives for private industry to withdraw from the production 
and management of low income housing; 
(8) efforts to retain this housing must take account of specific 
financial and market conditions that differ markedly from 
project to project; 
(9) a major review of alternative responses to this threatened 
loss of affordable housing is now being undertaken by numerous 
private sector t£isk forces as well as State and local organiza-
tions; and 
(10) until the Congress can act on recommendations that will 
emerge from this review, interim measures are needed to avoid 
the irreplaceable loss of low income housing and irrevocable 
displacement of current tenants. 
(b) PURPOSE.—It is the purpose of this title— 
(1) to preserve and retain to the maximum extent practicable 
as housing affordable to low income families or persons those 
privately owned dwelling units that were produced for such 
purpose with Federal assistance; 
(2) to minimize the involuntary displacement of tenants cur-
rently residing in such housing; and 
(3) to continue the partnership between all levels of govern-
ment and the private sector in the production and operation of 
housing that is affordable to low income Americans. 
12 use 1715/ 
SEC. 203. TERMINATION OF CERTAIN PROVISIONS. 
"° • 
(a) IN GENERAL.—Effective upon the expiration of the 2-year 
period beginning on the date of the enactment of this Act— 
(1) subtitles B and D are repealed; and 
(2) each provision of law amended by subtitle B or D is 
amended to read as it would without such amendment. 
(b) SAVINGS PROVISION.—The repeal or amendment of any provi-
sion under subsection (a) shall have no effect on any action taken or 
authorized under the provision prior to such repeal or amendment. 
Subtitle B—Prepayment of Mortgages Insured 
Under National Housing Act 
12 use 1715/ 
SEC. 221. GENERAL PREPAYMENT LIMITATION. 
"° • 
(a) PRIOR APPROVAL OF PLAN OF ACTION.—An owner of eligible low 
income housing may prepay, and a mortgagee may accept prepay-
ment of, a mortgage on such housing only in accordance with a plan 
PUBLIC LAW 100-242—FEB. 5, 1988 
101 STAT. 1879 
of action approved by the Secretary of Housing and Urban Develop-
ment under this subtitle. 
(b) ALTERNATIVE PREPAYMENT MORATORIUM.—In the event any 
court of the United States or any State invalidates the requirements 
established in this subtitle, an owner of eligible low income housing 
located in the geographic area subject to the jurisdiction of such 
court may not prepay, and a mortgagee may not accept prepayment 
of, a mortgage on such housing during the 2-year period following 
the date of such invalidation. 
SEC. 222. NOTICE OF INTENT. 
An owner of eligible low income housing seeking to initiate 
prepayment or other changes in the status or terms of the mortgage 
or regulatory agreement shall file with the Secretary a notice of the 
intent of the owner in such form and manner as the Secretary shall 
prescribe. The owner shall simultaneously file the notice or intent 
with any appropriate State or local government agency for the 
jurisdiction within which the housing is located. 
SEC. 223. PLAN OF ACTION. 
(a) PREPARATION AND SUBMISSION.—Upon receipt of a notice of 
intent, the Secretary shall provide the owner with such information 
as the owner needs to prepare a plan of action, which information 
shall include a description of the Federal incentives authorized 
under this title. The owner shall submit the plan of action to the 
Secretary in such form and manner as the Secretary shall prescribe. 
The owner may simultaneously submit the plan of action to any 
appropriate State or local government agency for the jurisdiction 
within which the housing is located, which agency shall, in review-
ing the plan, consult with representatives of the tenants of the 
housing. 
(b) CONTENTS.—The plan of action shall include— 
(1) a description of any proposed changes in the status or 
terms of the mortgage or regulatory agreement, which may 
include a request for incentives to extend the low income use of 
the housing; 
(2) a description of any assistance that could be provided by 
State or local government agencies, as determined by prior 
consultation between the owner and any appropriate State or 
local agencies; 
(3) a description of any proposed changes in the low income 
affordability restrictions; 
(4) a description of any change in ownership that is related to 
prepayment; 
(5) an assessment of the effect of the proposed changes on 
existing tenants; 
(6) a statement of the effect of the proposed changes on the 
supply of housing affordable to lower and very low income 
families or persons in the community within which the housing 
is located and in the area that the housing could reasonably be 
expected to serve; and 
(7) any other information that the Secretary determines is 
necessary to achieve the purposes of this title. 
(c) REVISIONS.—The owner may from time to time revise and 
amend the plan of action as may be necessary to obtain approval of 
the plan under this subtitle. 
12 u s e 1715/ 
note. 
State and local 
governments. 
12 u s e 1715/ 
note. 
State and local 
governments. 
State and local 
governments. 
101 STAT. 1880 
PUBLIC LAW 100-242—FEB. 5, 1988 
12 use 1715Z 
SEC. 224. INCENTIVES TO EXTEND LOW INCOME USE. 
(a) AGREEMENTS BY SECRETARY.—After receiving a plan of action 
from an owner of eligible low income housing, the Secretary may 
enter into such agreements as are necessary to satisfy the criteria 
for approval under section 225. 
(b) PERMISSIBLE INCENTIVES.—Such agreements may include one 
or more of the following incentives that the Secretary, after taking 
into account local market conditions, determines to be necessary to 
achieve the purposes of this title: 
(1) An increase in the allowable distribution or other meas-
ures to increase the rate of return on investment. 
(2) Revisions to the method of calculating equity. 
(3) Increased access to residual receipts accounts or excess 
replacement reserves. 
(4) Provision of insurance for a second mortgage under section 
241(f) of the National Housing Act. 
(5) An increase in the rents permitted under an existing 
contract under section 8 of the United States Housing Act of 
1937, or (subject to the availability of amounts provided in 
appropriation Acts) additional assistance under such section 8 
or an extension of any project-based assistance attached to the 
housing. 
(6) Financing of capital improvements under section 201 of 
the Housing and Community Development Amendments of 
1978. 
(7) Other actions, authorized in other provisions of law, to 
facilitate a transfer or sale of the project to a qualified nonprofit 
organization, limited equity tenant cooperative, public agency, 
or other entity acceptable to the Secretary. 
(8) Other incentives authorized in law. 
12 use 1715/ 
SEC. 225. CRITERIA FOR APPROVAL OF PLAN OF ACTION. 
(a) PLAN OF ACTION INVOLVING TERMINATION OF LOW INCOME 
AFFORDABILITY RESTRICTIONS.—The Secretary may approve a plan of 
action that involves termination of the low income affordability 
restrictions only upon a written finding that— 
(1) implementation of the plan of action will not materially 
increase economic hardship for current tenants or involuntarily 
displace current tenants (except for good cause) where com-
parable and affordable housing is not readily available; and 
Safety. 
(2)(A) the Supply of vacant, comparable housing is sufficient to 
Health and 
ensure that such prepayment will not materially affect— 
medical care. 
^) ^j^^ availability of decent, safe, and sanitary housing 
affordable to lower income and very low-income families or 
persons in the area that the housing could reasonably be 
expected to serve; 
(ii) the ability of lower income and very low-income fami-
lies or persons to find affordable, decent, safe, and sanitary 
housing near employment opportunities; or 
Minorities. 
(iii) the housing opportunities of minorities in the 
community within which the housing is located; or 
State and local 
(B) the plan has been approved by the appropriate State 
governments. 
agency and any appropriate local government agency for the 
jurisdiction within which the housing is located as being in 
accordance with a State strategy approved by the Secretary 
under section 226, 
PUBLIC LAW 100-242—FEB. 5, 1988 
101 STAT. 1881 
(b) PLAN OF ACTION INCLUDING INCENTIVES.—The Secretary may 
approve a plan of action that includes incentives only upon finding 
that— 
(1) the package of incentives is necessary to provide a fair 
return on the investment of the owner; 
(2) due diligence has been given to ensuring that the packsige 
of incentives is, for the Federal Government, the least costly 
alternative that is consistent with the full achievement of the 
purposes of this title; and 
(3) binding commitments have been made to ensure that— 
(A) the housing will be retained as housing affordable for 
very low-income families or persons, lower income families 
or persons, and moderate income families or persons for the 
remaining term of the mortgage; 
(B) throughout such period, adequate expenditures will be 
made for maintenance and operation of the housing; 
(C) current tenants shall not be involuntarily displaced 
(except for good cause); 
(D) any increase in rent contributions for current tenants 
shall be to a level that does not exceed 30 percent of the 
adjusted income of the tenant or the fair market rent for 
comparable housing under section S(b) of the United States 
Housing Act of 1937, whichever is lower; 
(E)(i) any resulting increase in rents for current tenants 
(except for increases made necessary by increased operating 
costs)— 
(I) shall be phased in equally over a period of not less 
than 3 years, if such increase is 30 percent or more; and 
(II) shall be limited to not more than 10 percent per 
year if such increase is more than 10 percent but less 
than 30 percent; and 
(ii) assistance under section 8 of the United States Hous-
ing Act of 1937 shall be provided if necessary to mitigate 
any adverse affect on current income eligible tenants; and 
(F)(i) rents for units becoming available to new tenants 
shall be at levels approved by the Secretary that will 
ensure, to the extent practicable, that the units will be 
available and affordable to the same proportions of very 
low-income families or persons, lower income families or 
persons, and moderate income families or persons (includ-
ing families or persons whose incomes are 95 percent or 
more of area median income) as resided in the housing as of 
January 1,1987; and 
(ii) in approving rents under this paragraph, the Sec-
retary shall take into account any additional incentives 
provided under this subtitle and shall make provision for 
such annual rent adjustments as may be made necessary by 
future reasonable increases in operating costs. 
SEC. 226. ALTERNATIVE STATE STRATEGY. 
12 USC 1715/ 
(a) CRITERIA FOR APPROVAL.—The Secretary may approve a State 
strategy for purposes of section 225(a) only upon finding that it is a 
practicable statewide strategy that ensures at a minimum that— 
(1) current tenants will not be involuntarily displaced (except 
for good cause); 
101 STAT. 1882 
PUBLIC LAW 100-242—FEB. 5, 1988 
Minorities. 
(2) housing opportunities for minorities will not be adversely 
affected in the communities within which the housing is 
located; 
(3) any increase in rent for current tenants shall be to a level 
that does not exceed 30 percent of the adjusted income of the 
tenants or the fair market rent for comparable housing under 
section SOt)) of the United States Housing Act of 1937, whichever 
is lower, except that any increase not necessitated by increased 
operating costs shall be phased in equally over not less than 3 
years if such increase exceeds 10 percent; 
(4) housing approved under the State strategy will remain 
affordable to very low-income, lower income or moderate 
income families and persons for not less than the remaining 
term of the original mortgage, if the housing is to be made 
available for rental, or for not less than 40 years, if the housing 
is to be made available for homeownership; 
(5XA) not less than 80 of all units in eligible low income 
housing approved under the State strategy shall be retained as 
affordable to families or persons meeting the income eligibility 
standards for initial occupancy that applies to the housing on 
January 1,1987; and 
(B) not less than 60 percent of the units in any one project 
shall remain available and affordable to such families or per-
sons, within which not less than 20 percent of the units shall 
remain available and affordable to very low income families or 
persons as determined by the Secretary with adjustments for 
smaller and larger families; 
(6) expenditures for rehabilitation, maintenance and oper-
ation shall be at a level necessary to maintain the housing as 
decent, safe and sanitary for the period specified in paragraph 
(4); 
(7) not less than 25 percent of new assistance required to 
maintain low income affordability in accordance with this sec-
tion shall be provided through State and local actions, such as 
tax exempt financing, low-income tax credits. State or local tax 
concessions, and other incentives provided by the State or local 
governments; and 
(8) for each unit of eligible low income housing approved 
under the State strategy that is not retained as affordable to 
families or persons meeting the income eligibility standards for 
initial occupancy on January 1,1987, the State will provide with 
State funds 1 additional unit of comparable housing in the same 
market area that is available and affordable to such families or 
persons, and such units or funds shall be made available before 
the Secretary approves the State strategy. 
(b) ADDITIONAL REQUIREMENTS.— 
(1) The Secretary may not approve a State strategy until the 
State has entered into all of the agreements necessary to carry 
out the strategy. 
(2) Each State strategy shall include any other provision that 
the Secretary determines to be necessary to implement an 
approved State strategy. 
(c) IMPLEMENTATION AGREEMENTS.—The Secretary may enter into 
such agreements as are necessary to implement an approved State 
strategy, which agreements may include incentives that are au-
thorized in other provisions of this subtitle. 
PUBLIC LAW 100-242—FEB. 5, 1988 
101 STAT. 1883 
SEC. 227. TIMETABLE FOR APPROVAL OF PLAN OF ACTION 
(a) NOTIFICATION OF DEFICIENCIES.—Not later than 60 days after 
receipt of a plan of action, the Secretary shall notify the owner in 
writing of any deficiencies that prevent the plan of action from 
being approved. If deficiencies are found, such notice shall describe 
alternative ways in which the plan could be revised to meet the 
criteria for approval 
(bi NOTIFICATION OF APPROVAL.— 
(1) IN GENERAL.—Not later than 180 days after receipt of a 
plan of action, or such longer period as the owner requests, the 
Secretary shall notify the owner in writing whether the plan of 
action, including any revisions, is approved. If approval is with-
held, the notice shall describe— 
(A) the reasons for withholding approval; and 
(B) the actions that could be taken to meet the criteria for 
approval. 
(2) OPPORTUNITY TO REVISE.—The Secretary shall subse-
quently give the owner a reasonable opportunity to revise the 
plan of action and seek approval. 
SEC. 228. MODIFICATION OF EXISTING REGULATORY AGREEMENTS. 
(a) IN GENERAL.—If a plan of action cannot be approved within 
300 days after a plan of action is submitted, the Secretary may, upon 
the request of the owner, modify existing regulatory agreements 
to— 
(1) prevent involuntary displacement of current tenants 
(except for good cause); 
(2) ensure that adequate expenditures will be made for 
maintenance and operation of the housing; 
(3) extend any expiring project-based assistance on the hous-
ing for the term of the agreement; 
(4) permit an increase in the allowable distribution that could 
be accommodated by a rise in rents on occupied units to rise to a 
level no higher than 30 percent of the adjusted income of the 
current tenants, as determined by the Secretary, except that 
rents shall not exceed the fair market rent for comparable 
housing under section 8(b) of the United States Housing Act of 
1937 and any resulting increase in rents for current tenants 
shall be phased in equally over a period of no less than 3 years 
unless such increase is less than 10 percent; and 
(5) ensure that units becoming vacant during the term of the 
agreement are made available in accordance with section 
225(b)(6) 
lb) EXPIRATION.—Agreements entered into under this section shall 
expire upon the expiration of the 4-year period beginning on the 
date of the enactment of this Act. Upon the expiration of the 
agreements, the housing covered by the agreements shall be subject 
to any law then affecting low income affordability restrictions. 
SEC. 229. CONSULTATIONS WITH OTHER INTERESTED PARTIES. 
The Secretary shall confer with any appropriate State or local 
government agency to confirm any State or local assistance that is 
available to achieve the purposes of this title and shall give consider-
ation to the views of any such agency when making determinations 
under section 225 The Secretary shall also confer with appropriate 
interested parties that the Secretary believes could assist in the 
12 use 1715/ 
note. 
12 use 1715Z 
note. 
State and local 
governments. 
12 use 1715/ 
note. 
101 STAT. 1884 
PUBLIC LAW 100-242—FEB. 5, 1988 
development of a plan of action that best achieves the purposes of 
this title. 
12 use 1715/ 
SEC. 230. RIGHT OF CONVERSION TO ALTERNATIVE PREPAYMENT 
note- 
SYSTEM. 
Any agreement to extend low income affordability restrictions 
under section 225(b) shall, for 4 years from the date of the enact-
ment of this Act, provide the owner the right to convert to any 
system of incentives and restrictions provided in law during such 
period, with such adjustments as the Secretary determines are 
appropriate to compensate for the value of any benefits the owner 
had received under this title. 
SEC. 231. INSURANCE FOR SECOND MORTGAGE FINANCING. 
Loans. 
Section 241 of the National Housing Act is amended by adding at 
12 use 1715Z-6. the end the following new subsection: 
"(f)(1) Notwithstanding any other provision of this section, the 
Secretary may, upon such terms and conditions as the Secretary 
may prescribe, make a commitment to insure and insure equity 
loans made by financial institutions approved by the Secretary. For 
purposes of this section, the term 'equity loan' means a loan or 
advance of credit to the owner of eligible low income housing (as 
defined in section 233 of the Emergency Low Income Housing 
Preservation Act of 1987) that is made for the purpose of implement-
ing a plan of action approved under such Act. 
"(2) To be eligible for insurance under this subsection, an equity 
loan shall— 
"(A) be limited to an amount equal to 90 percent of the value 
of the equity in the project, as determined by the Secretary, and 
the Secretary, in making the determination, shall take into 
account that rental income for the project may rise within 
limits established 
by section 
225(b) of the 
Emergency 
Low Income Housing Preservation Act of 1987; 
"(B) have a maturity and provisions for amortization satisfac-
tory to the Secretary, bear interest at such rate as may be 
agreed upon by the mortgagor and mortgagee, and be secured in 
such manner as the Secretary may require; and 
"(C) contain such other terms, conditions, and restrictions as 
the Secretary may prescribe, including phased advances of 
equity loan proceeds to reflect project rent levels. 
"(3) A qualified nonprofit organization or limited equity tenant 
cooperative corporation, when purchasing an otherwise eligible 
project, may constitute an owner of eligible low income housing for 
purposes of receiving a loan insured under this subsection. 
"(4) The provisions of subsections (d), (ej, (g), (h), (i), 0
*
)
» (k), (1), and 
(n; of section 207 shall be applicable to loans insured under this 
section, except that— 
"(A) all references to the term 'mortgage' shall be construed 
to refer to the term 'loan' as used in this subsection; 
"(B) loans involving projects covered by a mortgage insured 
under section 236 shall be insured under and shall be the 
obligation of the Special Risk Insurance Fund; and 
"(C) with respect to any sale under foreclosure of a mortgage 
on the project that is senior to the equity loan insured under 
this subsection and when the equity loan is secured by a mort-
g£ige, the Secretary may— 
: * i
,
^ • -; 
PUBLIC LAW 100-242—FEB. 5, 1988 
101 STAT. 1885 
"(i) issue regulations providing that, in order to receive 
insurance benefits, the insured mortgagee shall either 
assign the equity loan to the Secretary or bid the amount 
necessary to acquire the project and convey title to the 
project to the Secretary, in which case the insurance bene-
fits paid by the Secretary shall include the amount bid by 
the mortgagee to satisfy the senior mortgage at the fore-
closure sale; and 
"(ii) if the equity loan has been assigned to the Secretary, 
bid, in addition to amounts authorized under section 207(k), 
any sum not in excess of the total unpaid indebtedness 
secured by such senior mortgage and the equity loan, plus 
taxes, insurance, foreclosure costs, fees, and other expenses. 
"(5) A mortgagee approved by the Secretary may not withhold 
consent to an equity loan on a property on which that mortgagee 
holds a mortgage.". 
SEC. 232. REPORT TO CONGRESS. 
12 USC 1715/ 
Not later than 1 year after the date of the enactment of this Act, 
the Secretary shall submit to the Congress a report setting forth the 
activities carried out under this subtitle. The report shall include a 
description of the plans of action approved under subsections (a) and 
(b) of section 225 and an analysis of the extent to which the plans 
retain housing affordable for very low-income families or persons, 
lower income families or persons, and moderate income families or 
persons. 
SEC. 233. DEFINITIONS. 
12 USC 1715/ 
For purposes of this subtitle: 
(1) The term "eligible low income housing" means any hous-
ing financed by a loan or mortgage— 
(A) that is— 
(i) insured or held by the Secretary under section 
221(d)(3) of the National Housing Act and assisted 
under section 101 of the Housing and Urban Develop-
ment Act of 1965 or section 8 of the United States 
Housing Act of 1937; 
(ii) insured or held by the Secretary and bears in-
terest at a rate determined under the proviso of section 
221(d)(5) of the National Housing Act; 
(iii) insured, assisted, or held by the Secretary under 
section 236 of the National Housing Act; or 
(iv) held by the Secretary and formerly insured under 
a program referred to in clause (i), (ii), or (iii); and 
(B) that, under regulation or contract in effect before the 
date of the enactment of this Act, is or will within 1 year 
become eligible for prepayment without prior approval of 
the Secretary. 
(2) The term "low income affordability restrictions" means 
limits imposed by regulation or regulatory agreement on tenant 
rents, rent contributions, or income eligibility in eligible low 
income housing. 
(3) The terms "lower income families or persons" and "very 
low-income families or persons" mean families or persons whose 
incomes do not exceed the respective levels established for lower 
income families and very low-income families under section 
3(b)(2) of the United States Housing Act of 1937. 
101 STAT. 1886 
PUBLIC LAW 100-242—FEB. 5, 1988 
12 use 1715/ 
note. 
12 use 1715Z 
note. 
(4) The term "moderate income families or persons" means 
families or persons whose incomes are between 80 percent and 
95 percent of median income for the area, as determined by the 
Secretary with adjustments for smaller and larger families, 
(5) The term "owner" means the current or subsequent owner 
or owners of eligible low income housing. 
(6) The term "Secretary" means the Secretary of Housing and 
Urban Development. 
(7) The term "termination of low income affordability restric-
tions" means any elimination or relaxation of low income 
affordability restrictions (other than those permitted under an 
approved plan of action under section 225(b)). 
SEC. 234. REGULATIONS. 
The Secretary shall issue final regulations to carry out this 
subtitle not later than 60 days after the date of the enactment of 
this Act. The Secretary shall provide for the regulations to take 
effect not later than 45 days after the date on which the regulations 
are issued. 
SEC. 235. EFFECTIVE DATE. 
The requirements of this subtitle shall apply to any project that is 
eligible low income housing on or after November 1,1987. 
Subtitle C—Rural Rental Housing 
Displacement Prevention 
42 use 1472. 
State and local 
governments. 
Loans. 
Contracts. 
SEC. 241. PREPAYMENT AND REFINANCING PROCEDURES. 
Section 502(c) of the Housing Act of 1949 is amended by adding at 
the end the following new paragraphs: 
"(3) NOTICE OF OFFER TO PREPAY.—Not less than 30 days after 
receiving an offer to prepay any loan made or insured under section 
514 or 515, the Secretary shall provide written notice of the offer or 
request to the tenants of the housing and related facilities involved, 
to interested nonprofit organizations, and to any appropriate State 
and local agencies. 
"(4)(A) AGREEMENT BY BORROWER TO EXTEND LOW INCOME USE.— 
Before accepting any offer to prepay, or requesting refinancing in 
accordance with subsection (b)(3) of, any loan made or insured under 
section 514 or 515 pursuant to a contract entered into before Decem-
ber 21, 1979, the Secretary shall make reasonable efforts to enter 
into an agreement with the borrower under which the borrower will 
make a binding commitment to extend the low income use of the 
assisted housing and related facilities involved for not less than the 
20-year period beginning on the date on which the agreement is 
executed. 
"(B) ASSISTANCE AVAILABLE TO BORROWER TO EXTEND LOW INCOME 
USE.—To the extent of amounts provided in appropriation Acts, the 
agreement under subparagraph (A) may provide for 1 or more of the 
following forms of assistance that the Secretary, after taking into 
account local market conditions, determines to be necessary to 
extend the low income use of the housing and related facilities 
involved: 
"(i) Increase in the rate of return on investment. 
PUBLIC LAW 100-242—FEB. 5, 1988 
101 STAT. 1887 
"(ii) Reduction of the interest rate on the loan through the 
provision of interest credits under section 521(aXlXB). 
"(iii) Additional rental assistance, or an increase in assistance 
Contracts. 
provided under existing contracts, under section 521(aX2) or 
under section 8 of the United States Housing Act of 1937. 
"(iv) An equity loan to the borrower under paragraphs (7) and 
(8) of section 515(b). 
"(v) Incremental rental assisteince in connection with loans 
under clauses (ii) and (iv) to the extent necessary to avoid 
increases in the rental pa)mients of current tenants not receiv-
ing rental assistance under section 521(a)(2) or under section 8 
of the United States Housing Act of 1937. 
"(C) APPROVAL OF ASSISTANCE.—The Secretary may approve assist-
ance under subparagraph (B) only if the Secretary determines that 
the combination of assistance provided— 
"(i) is necessary to provide a fair return on the investment of 
the borrower; and 
"(ii) is the least costly alternative for the Federal Govern-
ment that is consistent with carrying out the purposes of this 
subsection. 
"(5XA) OFFER TO SELL TO NONPROFIT ORGANIZATIONS AND PUBUC 
AGENCIES.— 
"(i) IN GENERAL.—If the Secretary determines after a reason-
able period that an agreement will not be entered into with a 
borrower under paragraph (4), the Secretary shall require the 
borrower (except as provided in subparagraph (G)) to offer to 
sell the assisted housing and related facilities involved to any 
qualified nonprofit organization or public agency at a fair 
market value determined by 2 independent appraisers, one of 
whom shall be selected by the Secretary and one of whom shall 
be selected by the borrower. If the 2 appraisers fail to agree on 
the fair market value, the Secretary and the borrower shall 
jointly select a third appraiser, whose appraisal shall be binding 
on the Secretary and the borrower. 
"(ii) PERIOD FOR WHICH REQUIREMENT APPLICABLE.—If, upon 
the expiration of 180 days after an offer is made to sell housing 
and related facilities under clause (i), no qualified nonprofit 
organization or public agency has made a bona fide offer to 
purchase, the Secretary may accept the offer to prepay, or may 
request refinancing in accordance with subsection (bX3) of, the 
loan. This clause shall apply only when funds are available for 
purposes of carrying out a transfer under this paragraph. 
"(B) QUAUFIED NONPROFIT ORGANIZATIONS AND PUBUC AGENCIES.— 
"(i) LOCAL NONPROFIT ORGANIZATION OR PUBUC AGENCY.—A 
local nonprofit organization or public agency may purchase 
housing and related facilities under this paragraph only if— 
"(I) the organization or agency is determined by the 
Contracts. 
Secretary to be capable of managing the housing and re-
lated facilities (either directly or through a contract) for the 
remaining useful life of the housing and related facilities; 
and 
"(II) the organization or agency has entered into an 
agreement that obligates it (and successors in interest 
thereof) to maintain the housing and related facilities as 
affordable for very low-income families or persons and low 
income families or persons for the remaining useful life of 
the housing and related facilities. 
101 STAT. 1888 
PUBLIC LAW 100-242—FEB. 5, 1988 
Loans. 
Loans. 
Loans. 
Contracts. 
"(ii) NATIONAL OR REGIONAL NONPROFIT ORGANIZATION.—If the 
Secretary determines that there is no local nonprofit organiza-
tion or public agency qualified to purchase the housing and 
related facilities involved, the Secretary shall require the 
borrower to offer to sell the assisted housing and related facili-
ties to an existing qualified national or regional nonprofit 
organization. 
"(C) FINANCING OF SALE.—To facilitate the sale described in 
subparagraph (A), the Secretary shall— 
"(i) to the extent provided in appropriation Acts, make an 
advance to the nonprofit organization or public agency whose 
offer to purchase is accepted under this paragraph to cover any 
direct costs (other than the purchase price) incurred by the 
organization or agency in purchasing and assuming responsibil-
ity for the housing and related facilities involved; 
"(ii) approve the assumption, by the nonprofit organization or 
public agency involved, of the loan made or insured under 
section 514 or 515; 
"(iii) to the extent provided in appropriation Acts, transfer 
any rental assistance payments that are received under section 
521(a)(2)(A), or under section 8 of the United States Housing Act 
of 1937, with respect to the housing and related facilities in-
volved; and 
"(iv) to the extent provided in appropriation Acts, provide a 
loan under section 515(c)(3) to the nonprofit organization or 
public agency whose offer to purchase is accepted under this 
paragraph to enable the organization or agency to purchase the 
housing and related facilities involved. 
"(D) RENT UMITATION AND ASSISTANCE.—The Secretary shall, to 
the extent provided in appropriation Acts, provide to each nonprofit 
organization or public agency purchasing housing and related facili-
ties under this paragraph financial assistance (in the form of 
monthly payments or forgiveness of debt) in an amount necessary to 
ensure that the monthly rent payment made by each low income 
family or person residing in the housing does not exceed the maxi-
mum rent permitted under section 521(aX2)(A). 
"(E) RESTRICTION ON SUBSEQUENT TRANSFERS.—Except as provided 
in subparagraph (B)(ii), the Secretary may not approve the transfer 
of any housing and related facilities purchased under this para-
graph during the remaining useful life of the housing and related 
facilities, unless the Secretary determines that— 
"(i) the transfer will further the provision of housing and 
related facilities for low income families or persons; or 
"(ii) there is no longer a need for such housing and related 
facilities by low income families or persons. 
"(F) GENERAL RESTRICTION ON PREPAYMENTS AND REFINANCINGS.-— 
Following the transfer of the maximum number of dwelling units 
set forth in subparagraph (H)(i) in any fiscal year or the maximum 
number of dwelling units for which budget authority is available in 
any fiscal year, the Secretary may not accept in such fiscal year any 
offer to prepay, or request refinancing in accordance with subsection 
(b)(3) of, any loan made or insured under section 514 or 515 pursuant 
to a contract entered into before December 21, 1979, except in 
accordance with subparagraph (G). The limitation established in 
this subparagraph shall not apply to an offer to prepay, or request to 
refinance, if, following the date on which such offer or request is 
made (or following the date of the enactment of the Housing and 
PUBLIC LAW 100-242—FEB. 5, 1988 
101 STAT. 1889 
Community Development Act of 1987, whichever occurs later) a 15-
month period expires during which no budget authority is available 
to carry out this paragraph. For purposes of this subparagraph, the 
Secretary shall allocate budget authority under this paragraph in 
the order in which offers to prepay, or request to refinance, are 
made. 
"(G) EXCEPTION.—This paragraph shall not apply to any offer to Loans. 
prepay, or any request to refinance in accordance with subsection 
(b)(3), any loan made or insured under section 514 or 515 pursuant to 
a contract entered into before December 21,1979, i
f
— 
"(i) the borrower enters into an agreement with the Secretary 
that obligates the borrower (and successors in 
interest 
thereof)— 
"(I) to utilize the assisted housing and related facilities 
for the purposes specified in section 514 or 515, as the case 
may be, for a period determined by the Secretary (but not 
less than the period described in paragraph (1)(B) calculated 
from the date on which the loan is made or insured); and 
"(II) upon termination of the period described in para-
graph (1)(B), to offer to sell the assisted housing and related 
facilities to a qualified nonprofit organization or public 
agency in accordance with this paragraph; or 
"(ii) the Secretary determines that housing opportunities of 
minorities will not be materially affected as a result of the 
prepayment or refinancing, and that— 
"(I) the borrower (and any successor in interest thereof) 
are obligated to ensure that tenants of the housing and 
related facilities financed with the loan will not be dis-
placed due to a change in the use of the housing, or to an 
increase in rental or other charges, as a result of the 
prepayment or refinancing; or 
"(II) there is an adequate supply of safe, decent, and 
affordable rental housing within the market area of the 
housing and related facilities and sufficient actions have 
been taken to ensure that the rental housing will be made 
available to each tenant upon displacement. 
"(H) FUNDING.— 
"(i) BUDGET UMITATION.—Not more than 5,000 dwelling units 
may be transferred under this paragraph in any fiscal year, and 
the budget authority that may be provided under this para-
graph for any fiscal year may not exceed the amounts required 
to carry out this paragraph with respect to such number. 
"(ii) REIMBURSEMENT OF RURAL HOUSING INSURANCE FUND.— 
There are authorized to be appropriated to the Rural Housing 
Insurance Fund such sums as may be necessary to reimburse 
the Fund for financial assistance provided under this para-
graph, paragraph (4), and section 517(jX7). 
"(I) DEFINITION.—For purposes of this paragraph, the term 'non-
profit organization' means any private organization— 
"(i) no part of the net earnings of which inures to the benefit 
of any member, founder, contributor, or individual; and 
"(ii) that is approved by the Secretary as to financial respon-
sibility. 
"(J) REGULATIONS.—Notwithstanding section 534, the Secretary 
shall issue final regulations to carry out this paragraph not later 
than 60 days after the date of the enactment of the Housing and 
Community Development Act of 1987. The Secretary shall provide 
101 STAT. 1890 
PUBLIC LAW 100-242—FEB. 5, 1988 
for the regulations to take effect not later than 45 days after the 
date on which the regulations are issued". 
SEC. 
242. EQUITY RECAPTURE LOANS AND LOANS TO NONPROFIT 
ORGANIZATIONS 
AND 
PUBLIC 
AGENCIES. 
42 use 1485. 
Section 515 of the Housing Act of 1949 is amended— 
(1) by redesignating subsections (c) through (p) as subsections 
(d) through (q), respectively; and 
(2) by inserting after subsection (b) the following: 
"(c) With respect to a loan made or insured under subsection (a) or 
(b), the Secretary is authorized to— 
"(1) make or insure an equity loan in the form of a supple-
mental loan for the purpose of equity takeout to the owner of 
housing financed with a loan made or insured under this section 
pursuant to a contract entered into before December 21, 1979, 
for the purpose of extending the affordability of the housing for 
low income families or persons and very low-income families or 
persons for not less than 20 years, except that such loan may 
not exceed 90 percent of the value of the equity in the project as 
determined by the Secretary; 
"(2) transfer and reamortize an existing loan in connection 
with assistance provided under paragraph (1); and 
"(3) make or insure a loan to enable a nonprofit organization 
or public agency to make a purchase described in section 
502(c)(5).". 
SEC. 243. USE OF RURAL HOUSING INSURANCE FUND. 
42 use 1487. 
Section 517(j) of the Housing Act of 1949 is amended— 
(1) by striking "and" at the end of paragraph (5); 
(2) by striking the period at the end of paragraph (6) and 
inserting "; and'; and 
(3) by adding at the end the following new paragraph: 
"(7) to provide advances and assistance required to carry out 
paragraphs (4) and (5) of section 502(c).". 
Subtitle D—Other Measures to Preserve Low 
Income Housing 
SEC. 261. EARLY PREPAYMENT. 
I2usei7i5z-15. 
Section 250(a)(1) of the National Housing Act is amended by 
striking "or" and all that follows through "needs" the last place it 
appears 
SEC. 262. SECTION 8 ASSISTANCE. 
(a) REQUIRED NOTICE.—Section 8(c) of the United States Housing 
42USei437f. 
Act of 1937 is amended by adding at the end the following new 
paragraph: 
Contracts. 
"(9) Not less than 1 year prior to terminating any contract under 
which assistance payments are received under this section (but not 
less than 90 days in the case of housing certificates or vouchers 
under subsection (b) or (o)), an owner shall provide written notice to 
the Secretary and the tenants involved of the proposed termination, 
specifying the reasons for the termination with sufficient detail to 
enable the Secretary to evaluate whether the termination is lawful 
and whether there are additional actions that can be taken by the 
Secretary to avoid the termination. The Secretary shall review the 
PUBLIC LAW 100-242—FEB. 5, 1988 
101 STAT. 1891 
owner's notice, shall consider whether there are additional actions 
that can be taken by the Secretary to avoid the termination, and 
shall ensure a proper adjustment of the contract rents for the 
project in conformity with the requirements of paragraph (2). The 
Secretary shall issue a written finding of the legality of the termi-
nation and the reasons for the termination, including the actions 
considered or taken to avoid the termination. For purposes of this 
paragraph, the term 'termination' means the expiration of the 
assistance contract or an owner's refusal to renew the assistance 
contract.". 
(b) ADJUSTMENT OF ALLOWABLE RENT.—Section 8(c) of the United 
States Housing Act of 1937 (as amended by subsection (a) of this 
section) is further amended by adding at the end the following new 
paragraph: 
"(10) If an owner provides notice of proposed termination under 
paragraph (9) and the contract rent is lower than the maximum 
monthly rent for units assisted under subsection Ot>)(l), the Secretary 
shall adjust the contract rent based on the maximum monthly rent 
for units assisted under subsection (b)(1) and the value of the lower 
income housing after rehabilitation.". 
(c) LOAN MANAGEMENT AND PROPERTY DISPOSITION PROGRAMS.— 
Section 8 of the United States Housing Act of 1937 (as amended by 
section 149 of this Act) is further amended by adding at the end the 
following new subsection: 
"(vXD Each contract entered into by the Secretary under this 
section for loan management assistance shall be for a term of 180 
months. 
"(2) The Secretary shall extend any expiring contract entered into 
under this section for loan management assistance or execute a new 
contract, if the owner agrees to continue providing housing for lower 
income families during the term of the contract.". 
SEC. 263. SECTION 515 OPERATING RESERVE AND EQUITY CONTRIBUTION 
REQUIREMENTS. 
Section 515 of the Housing Act of 1949 (as amended by section 
242) is further amended by adding at the end the following new 
subsection: 
"(r) The Secretary— 
"(1) may require that the initial operating reserve under this 
section may be in the form of an irrevocable letter of credit; and 
"(2) may not require more than a 3 percent contribution to 
equity.". 
TITLE III—RURAL HOUSING 
Contracts. 
Contracts. 
SEC. 301. PROGRAM AUTHORIZATIONS. 
(a) INSURANCE AND GUARANTEE AUTHORITY.—Section 513(aXl) of 
the Housing Act of 1949 is amended to read as follows: 
"(aXD The Secretary may, to the extent approved in appropriation 
Acts, insure and guarantee loans under this title during fiscal years 
1988 and 1989 in aggregate amounts not to exceed $1,775,395,000 
and $1,794,925,000, respectively, as follows: 
"(A) For insured or guaranteed loans under section 502 on 
behalf of borrowers receiving assistance under section 521(aXl) 
or receiving guaranteed loans pursuant to section 304 of the 
Housing 
and 
Community 
Development 
Act 
of 
1987, 
42 u s e 1483. 
101 STAT. 1892 
PUBLIC LAW 100-242—FEB. 5, 1988 
$1,104,000,000 for fiscal year 1988 and $1,116,144,000 for fiscal 
year 1989. 
"(B) For loans under section 504, $11,335,000 for fiscal year 
1988 and $11,460,000 for fiscal year 1989. 
"(C) For insured loans under section 514, $11,485,000 for fiscal 
year 1988 and $11,612,000 for fiscal year 1989. 
"(D) For insured loans under section 515, $647,000,000 for 
fiscal year 1988 and $654,117,000 for fiscal year 1989. 
"(E) For loans under section 523(b)(1)(B), $1,000,000 for fiscal 
year 1988 and $1,011,000 for fiscal year 1989. 
"(F) For site loans under section 524, $575,000 for fiscal year 
1988 and $581,000 for fiscal year 1989.". 
(b) AUTHORIZATION OF APPROPRIATIONS.—Section 5130t)) of 
the 
42 use 1483. 
Housing Act of 1949 is amended to read as follows: 
"(b) There are authorized to be appropriated for fiscal years 1988 
and 1989, and to remain available until expended, the following 
amounts: 
"(1) For grants under section 504, $13,113,000 for fiscal year 
1988 and $13,362,000 for fiscal year 1989. 
"(2) For purposes of section 509(c), $713,000 for fiscal year 
1988 and $727,000 for fiscal year 1989. 
"(3) Such sums as may be necessary to meet payments on 
notes or other obligations issued by the Secretary under section 
511 equal to— 
"(A) the aggregate of the contributions made by the 
Secretary in the form of credits on principal due on loans 
made pursuant to section 503; and 
"(B) the interest due on a similar sum represented by 
notes or other obligations issued by the Secretary. 
"(4) For financial assistance under section 516, $9,979,000 for 
fiscal year 1988 and $10,169,000 for fiscal year 1989. 
"(5) For grants under section 523(f), $8,392,000 for fiscal year 
1988 and $8,551,000 for fiscal year 1989. 
"(6) For grants under section 533, $20,078,000 for fiscal year 
1988 and $20,460,000 for fiscal year 1989.". 
(c) RENTAL ASSISTANCE PAYMENT CONTRACTS.—Section 513(c) of 
the Housing Act of 1949 is amended to read as follows: 
"(c)(1) The Secretary, to the extent approved in appropriation Acts 
for fiscal years 1988 and 1989, may enter into rental assistance 
payment 
contracts 
under 
section 
521(a)(2)(A) 
aggregating 
$275,310,000 for fiscal year 1988 and $280,000,000 for fiscal year 
1989. 
"(2) Any authority approved in appropriation Acts for fiscal year 
1988 or any succeeding fiscal year for rental assistance payment 
contracts under section 521(a)(2)(A) shall be used by the Secretary— 
"(A) to renew rental assistance payment contracts that expire 
during such fiscal year; 
"(B) to provide amounts required to continue rental assistance 
payments for the remaining period of an existing contract, in 
any case in which the original amount of rental assistance is 
used prior to the end of the term of the contract; and 
"(C) to make additional rental assistance payment contracts 
for existing or newly constructed dwelling units.". 
(d) SUPPLEMENTAL RENTAL ASSISTANCE CONTRACTS.—Section 513 of 
the Housing Act of 1949 is amended by adding at the end the 
following new subsection: 
PUBLIC LAW 100-242—FEB. 5, 1988 
101 STAT. 1893 
"(d) The Secretary, to the extent approved in appropriation Acts 
for fiscal years 1988 and 1989, may enter into 5-year supplemental 
rental assistance contracts under section 502(c)(5XD) aggregating 
$26,000,000 for fiscal year 1988 and $27,534,000 for fiscal year 1989.". 
(e) RENTAL HOUSING LOAN AUTHORITY.—Section 515(b)(4) of 
the 
Housing Act of 1949 is amended by striking "March 15, 1988" and 
inserting "September 30,1989". 
(f) MUTUAL AND SELF-HELP HOUSING GRANT AND LOAN AUTHOR-
ITY.—Section 523(f) of the Housing Act of 1949 is amended by 
striking "March 15, 1988" and inserting "September 30, 1989'\ 
(g) RURAL HOUSING VOUCHER DEMONSTRATION.—Section 513 of the 
Housing Act of 1949 (as amended by subsection (d) of this section) is 
further amended by adding at the end the following: 
"(e)(1) To such extent or in such amounts as are approved in 
appropriation Acts, the Secretary shall carry out a demonstration 
rural housing voucher program during fiscal years 1988 and 1989. 
For such purpose, the Secretary shall enter into contracts using a 
payment standard in accordance with section 8(o) of the United 
States Housing Act of 1937 covering up to 7,500 dwelling units 
located in rural areas in not more than 5 States during each such 
fiscal year. 
"(2) The Secretary may use the authority conferred by paragraph 
(1) in a State only if the State Farmers Home Administration 
Administrator certifies that— 
"(A) such Administrator has completed an inventory of the 
State's housing supply, including housing suitable for re-
habilitation, using currently available data; and 
"(B) there is an adequate supply of decent, safe, and sanitary 
housing available for occupancy by voucher holders in that 
State. 
"(3) In carrying out the voucher demonstration program under 
this subsection, the Secretary shall coordinate activities under this 
subsection with activities assisted under sections 515 and 533 of this 
title and under section 17 of the United States Housing Act of 1937. 
"(4) Funding for the voucher demonstration program under this 
subsection shall be from amounts in the Rural Housing Insurance 
Fund authorized for loans under sections 502 and section 515 in 
proportion to the amounts authorized for such loans. Any reduction 
in the amounts available for such loans shall be made from the total 
amounts available for such loans in all States.". 
SEC. 302. ELIGIBILITY REQUIREMENTS. 
(a) RESIDENT ALIENS.—Section 501 of the Housing Act of 1949 is 
amended by adding at the end the following new subsection: 
"(h)(1) The Secretary may not restrict the availability of assist-
ance under this title for any alien for whom assistance may not be 
restricted by the Secretary of Housing and Urban Development 
under section 214 of the Housing and Community Development Act 
of 1980. 
"(2) In carrying out any restriction established by the Secretary 
on the availability of assistance under this title for any alien, the 
Secretary shall follow procedures comparable to the procedures 
established in section 214 of the Housing and Community Develop-
ment Act of 1980.". 
(b) INCOME LEVELS.— 
(1) Section 501(b)(4) of the Housing Act of 1949 is amended by 
adding at the end the following new sentence: "Notwithstand-
42 u s e 1485. 
42 u s e 1490c. 
eontracts. 
State and local 
governments. 
42 u s e 1471. 
Virgin Islands. 
101 STAT. 1894 
PUBLIC LAW 100-242—FEB. 5, 1988 
Effective date. 
42 use 1471 
note. 
42 use 1471. 
Loans. 
42 use 1472 
note. 
State and local 
governments. 
ing the preceding sentence, the maximum income levels estab-
lished for purposes of this title for such families and persons in 
the Virgin Islands shall not be less than the highest such levels 
established for purposes of this title for such families and 
persons in American Samoa, Guam, the Northern Mariana 
Islands, and the Trust Territory of the Pacific Islands.". 
(2) The amendment made by paragraph (1) shall be applicable 
to any determination of eligibility for assistance under title V of 
the Housing Act of 1949 made on or after the date of the 
enactment of this Act. 
SEC. 
3
0
3
. 
ESCROWING 
TAXES 
AND 
INSURANCE. 
Section 501(e) of the Housing Act of 1949 is amended to read as 
follows: 
"(e) The Secretary shall establish procedures under which borrow-
ers under this title are required to make periodic payments for the 
purpose of taxes, insurance, and other necessary expenses as the 
Secretary may deem appropriate. Notwithstanding any other provi-
sion of law, such payments shall not be considered public funds. The 
Secretary shall direct the disbursement of the funds at the appro-
priate time or times for the purposes for which the funds were 
escrowed. If the prepayments made by the borrower are not suffi-
cient to pay the amount due, advances may be made by the Sec-
retary to pay the costs in full, which advances shall be charged to 
the account of the borrower, bear interest, and be payable in a 
timely fashion as determined by the Secretary. The Secretary shall 
notify a borrower in writing when loan payments are delinquent.". 
SEC. 
3
0
4
. 
RURAL 
HOUSING 
GUARANTEED 
LOAN 
DEMONSTRATION. 
(a) ESTABLISHMENT OF DEMONSTRATION.—The Secretary of Agri-
culture (referred to in this section as the "Secretary") shall carry 
out a rural housing guaranteed loan demonstration program under 
which the Secretary shall, to the extent of amounts provided in 
appropriation Acts, provide guaranteed loans in accordance with 
section 502, section 517(d), and the last sentence of section 
521(a)(1)(A), of the Housing Act of 1949. 
(b) AMOUNT AVAILABLE FOR DEMONSTRATION.— 
(1) There shall be available for guaranteed loans under this 
section for any fiscal year in each State an amount equal to 
whichever of the following is lower: 
(A) 10 percent of the total loan authority allocated under 
section 502 of the Housing Act of 1949 to the State for the 
fiscal year. 
(B) The average, during the preceding 3 fiscal years, of 
the funds allocated to the State under section 502 of the 
Housing Act of 1949 that have not been utilized. 
(2) Any amount made available under this subsection that is 
not used before the last 60 days of a fiscal year shall become 
available for assistance for low income families or persons 
under section 502 of the Housing Act of 1949. 
(c) ELIGIBILITY FOR LOANS.—Loans guaranteed pursuant to this 
section shall be made only to borrowers with moderate incomes that 
do not exceed the median income of the area, as determined by the 
Secretary, with adjustments for smaller and larger families. 
(d) REPORTS TO CONGRESS.—The Secretary shall submit to the 
Congress— 
PUBLIC LAW 100-242—FEB. 5, 1988 
101 STAT. 1895 
(1) as soon as practicable after September 30, 1989, an interim 
report setting forth the findings and recommendations of the 
Secretary as a result of the demonstration; and 
(2) £is soon as practicable after September 30, 1991, a final 
report setting forth the findings and recommendations of the 
Secretary as a result of the demonstration. 
(e) TERMINATION.—The Secretary may not provide any guaranteed 
loan under this section after September 30, 1991, except pursuant to 
a commitment entered into on or before such date. 
SEC. 305. DEFINITION OF DOMESTIC FARM LABOR. 
(a) INSURED LOAN PROGRAM.—Section 514(f)(3) of the Housing Act 
of 1949 is amended to read as follows: 
42 USC 1484. 
"(3) the term 'domestic farm labor' means any person (and the 
family of such person) who receives a substantial portion of his 
or her income from primary production of agricultural or 
aquacultural commodities or the handling of such commodities 
in the unprocessed stage, without respect to the source of 
employment, except that— 
"(A) such person shall be a citizen of the United States or 
a person legally admitted for permanent residence; 
"(B) such term includes any person (and the family of 
such person) who is retired or disabled, but who was domes-
tic farm labor at the time of retirement or becoming dis-
abled; and 
"(C) in applying this paragraph with respect to vacant 
units in farm labor housing, the Secretary shall make units 
available for occupancy in the following order of priority: 
"(i) to active farm laborers (and their families); 
"(ii) to retired or disabled farm laborers (and their 
families) who were active in the local farm labor 
market at the time of retiring or becoming disabled; 
and 
"(iii) to other retired or disabled farm laborers (and 
their families).". 
(b) GRANT PROGRAM.—Section 516(g) of the Housing Act of 1949 is 
42 USC i486. 
amended— 
(1) by striking "and" at the end of paragraph (2); 
(2) by striking the period at the end of paragraph (3) and 
inserting "; and'; and 
(3) by adding at the end the following new paragraph: 
"(4) the term 'domestic farm labor' has the meaning given 
such term in section 514(fK3).". 
SEC. 306. CONFORMANCE WITH LOW-INCOME HOUSING TAX CREDIT 
ELIGIBILITY REQUIREMENTS. 
Section 515(p) of the Housing Act of 1949 (as so redesignated by 
section 242 of this Act) is amended by adding at the end the 
following: 
"(4) In projects financed under this section, units that have been 
allocated a low-income housing tax credit by a housing credit agency 
pursuant to section 42 of the Internal Revenue Code of 1986 shall 
not be available for occupancy by persons or families other than 
persons or families with incomes not in excess of the qualifying 
income applicable to such units pursuant to subparagraph (A) or (B) 
of section 42(gXl) of such Code, except when the Secretary deter-
mines that the continued vacancy of units that have been unoccu-
101 STAT. 1896 
PUBLIC LAW 100-242—FEB. 5, 1988 
42 u s e 1490. 
California. 
Loans. 
42 u s e 1490a. 
42 u s e 1490m. 
Regulations. 
42 u s e 1490m 
note. 
Grants. 
pied for at least 6 months threatens the financial viability of the 
project.". 
SEC. 307. LIMITATION OF FEES ON RURAL RENTAL HOUSING LOANS. 
Section 515 of the Housing Act of 1949 (as amended by section 263 
of this Act) is further amended by adding at the end the following 
new subsection: 
"(s) No fee other than a late fee may be imposed by or for the 
Secretary or any other Federal agency on or with respect to a loan 
made or insured under this section.". 
SEC. 308. RURAL AREA CLASSIFICATION. 
(a) HOLD HARMLESS.—Section 520 of the Housing Act of 1949 
is 
amended by striking "March 15, 1988" in the last sentence and 
inserting "September 30,1989". 
(b) ELIGIBIUTY OF RURAL AREA PROXIMATE TO URBAN AREA.— 
Section 520 of the Housing Act of 1949 is amended in the first 
sentence by inserting before "part of or associated with" the follow-
ing: "(except in the case of Pajaro, in the State of California)". 
SEC. 309. PROCEDURES FOR REDUCTION OF INTEREST CREDITS. 
Section 521(a)(1)(B) of the Housing Act of 1949 is amended by 
adding at the end the following new sentence: "In the case of 
assistance provided under this subparagraph with respect to a loan 
under section 502, the Secretary may not reduce, cancel, or refuse to 
renew the assistance due to an increase in the adjusted income of 
the borrower if the reduction, cancellation, or nonrenewal will cause 
the borrower to be unable to reasonably afford the resulting pay-
ments required under the loan.". 
SEC. 
3
1
0
. 
RURAL 
HOUSING 
PRESERVATION 
GRANT 
PROGRAM. 
Section 533(h) of the Housing Act of 1949 is amended— 
(1) by inserting "(1)" after the subsection designation; and 
(2) by adding at the end the following new paragraph: 
"(2) The Secretary shall, not later than the expiration of the 30-
day period following the date of the enactment of the Housing and 
Community Development Act of 1987 issue regulations to carry out 
the program of grants under subsection (a)(2).". 
SEC. 3n. RURAL RENTAL REHABILITATION DEMONSTRATION. 
(a) ESTABLISHMENT OF DEMONSTRATION.—The Secretary of Hous-
ing and Urban Development (referred to in this section as the 
"Secretary") shall carry out a rural rental rehabilitation demonstra-
tion program in accordance with this section. 
(b) AVAILABILITY OF AMOUNTS.—For purposes of the demonstra-
tion program, any rental rehabilitation grant amount provided to a 
State under section 17 of the United States Housing Act of 1937 that 
is unutilized from any prior fiscal year shall be available for use in 
areas eligible for assistance under title V of the Housing Act of 1949. 
(c) REPORT TO CONGRESS.—The Secretary shall submit to the Con-
gress as soon as practicable after September 30, 1989, a report 
setting forth the findings and recommendations of the Secretary as 
a result of the demonstration program. The report shall include an 
evaluation of the following: 
(1) The effectiveness of the program in meeting the need for 
the rehabilitation of rental housing in rural areas. 
(2) The extent of participation by the owners of rental prop-
erties in the program. 
PUBLIC LAW 100-242—FEB. 5, 1988 
101 STAT. 1897 
Reports. 
Claims. 
Contracts. 
42 u s e 1480. 
(3) The cost of the program, 
(d) TERMINATION.—The authority provided in this section shall 
terminate after September 30, 1989. 
SEC. 312. STUDY OF MORTGAGE CREDIT IN RURAL AREAS. 
Loans. 
The Secretary of Housing and Urban Development shall conduct a 
study of the availability and use of funds (including mortgages and 
loans insured under title II of the National Housing Act, loans made 
or insured under title V of the Housing Act of 1949, and conven-
tional mortgages and loans) for the purchase and improvement of 
residential real property in rural areas, particularly in communities 
that have populations of not more than 2,500 individuals. Not later 
than April 1, 1988, the Secretary shall submit to the Congress a 
detailed report setting forth the findings of the Secretary as a result 
of the study. 
SEC. 
3
1
3
. 
DEBT 
SETTLEMENT 
AUTHORITY 
OF 
SECRETARY. 
Section 510(c) of the Housing Act of 1949 is amended to read as 
follows: 
"(c) compromise, adjust, reduce, or charge-off claims, and 
adjust, modify, subordinate, or release the terms of security 
instruments, leases, contracts, and agreements entered into or 
administered by the Secretary under this title, as circumstances 
may require, including the release of borrowers or others obli-
gated on a debt from personal liability with or without payment 
of any consideration at the time of the compromise, adjustment, 
reduction, or charge-off of any claim;". 
SEC. 314. MANUFACTURED HOUSING. 
Loans. 
Section 502(e) of the Housing Act of 1949 is amended by adding at 
42 USC 1472. 
the end the following: 
"(3) A loan that may be made or insured under this section with 
respect to a manufactured home on a permanent foundation, or a 
manufactured home on a permanent foundation and a lot, shall be 
repayable over the same period as would be applicable under section 
203(b) of the National Housing Act.". 
SEC. 315. LOAN PACKAGING BY NONPROFIT ORGANIZATIONS. 
Grants. 
Section 501 of the Housing Act of 1949 (as amended by section 302 
of this Act) is further amended by adding at the end the following 
new subsection: 
"(i) For the purposes of this title, the term 'development cost' shall 
include the packaging of loan and grant applications and actions 
related thereto by public and private nonprofit organizations tax 
exempt under the Internal Revenue Code of 1986.". 
SEC. 316. RURAL HOUSING TECHNICAL AMENDMENTS. 
(a) DEFINITIONS.—Section 5010t>)(3) of the Housing Act of 1949 is 
amended by striking "is a developmentally disabled individual as 
defined in section 102(7) of the Development Disabilities Services 
and Facilities Construction Act" and inserting the following: "has a 
developmental disability as defined in section 102(7) of the Devel-
opmental Disabilities Assistance and Bill of Rights Act (42 U.S.C. 
6001(7))". 
O
t
)
) FARM LABOR HOUSING.—Section 514(fKl) of the Housing Act of 
1949 is amended by striking "and" at the end. 
42 USC 1484. 
101 STAT. 1898 
PUBLIC LAW 100-242—FEB, 5, 1988 
42 use 1490a. 
42 use 1490b. 
42 use 1490f. 
42 u s e 1490m. 
(c) HOUSING FOR ELDERLY FAMILIES.—Section 515(p)(l) of the Hous-
ing Act of 1949 (as so redesignated by section 242 of this Act) is 
amended by striking "effective", 
(d) LOANS TO LOW- AND MODERATE-INCOME FAMILIES.—Section 
521(a) of the Housing Act of 1949 is amended— 
(1) in paragraph (IXA), by striking ", except" and all that 
follows through "charges"; and 
(2) in paragraph (2)(A), by striking "; or" and inserting ", or". 
(e) HOUSING FOR RURAL TRAINEES.—Section 522(a) of the Housing 
Act of 1949 is amended by striking the comma after "Health". 
(f) CONDOMINIUM HOUSING.— 
(1) Section 526(a) of the Housing Act of 1949 is amended by 
striking "and" the first place it appears. 
(2) Section 526(c) of the Housing Act of 1949 is amended by 
striking "and" the first place it appears. 
(g) HOUSING PRESERVATION GRANTS.— 
(1) Section 533(eXl)(B)(iii) of the Housing Act of 1949 is amend-
ed by inserting "to" before "refuse". 
(2) Section 533(g) of the Housing Act of 1949 is amended by 
striking "persons of low income and very low-income" and 
inserting "low income families or persons and very low-income 
families or persons". 
TITLE IV—MORTGAGE INSURANCE AND 
SECONDARY MORTGAGE MARKET PRO-
GRAMS 
Subtitle A—FHA Mortgage Insurance 
Programs 
SEC. 401. INSURANCE AUTHORITY FOR FHA. 
(a) REPEALS.—Each of the following provisions of law is repealed: 
12 use I715h. 
(1) Section 217 of the National Housing Act. 
(2) The fifth sentence of section 221(f) of the National Housing 
12 u s e 1715/. 
Act. 
(3) Section 244(d), and the last sentence of section 244(h), of 
12 use 1715Z-9. 
the National Housing Act. 
(4) The last sentence of section 245(a) of the National Housing 
12USei715z-10. 
Act. 
(5) The second sentence of section 809(f) of the National 
12 use I748h-l. 
Housing Act. 
(6) The second sentence of section 81(Kk) of the National 
12 use 1748h-2. 
Housing Act. 
(7) The second sentence of section 1002(a) of the Na-
12 use I749bb. 
tional Housing Act. 
(8) The second sentence of section 1101(a) of the National 
12 use I749aaa. 
Housing Act. 
(b) AMENDMENT.—The first sentence of section 2(a) of the National 
12 use 1703. 
Housing Act is amended by striking "and not later than March 15, 
1988,". 
(c) EXTENSION OF SECTION 235.—The last sentence of section 
235(hXl), section 235(m), and the last sentence of section 235(qXl), of 
PUBLIC LAW 100-242—FEB. 5, 1988 
101 STAT. 1899 
the National Housing Act are each amended by striking out 
"March 15,1988" and inserting in lieu thereof "September 30,1989". 
(d) TERMINATION OF SECTION 235.— 
(1) IN GENERAL.—Effective on October 1, 1989, the program 
under section 235 of the National Housing Act shall terminate. 
(2) SAVINGS PROVISION.—The provisions of paragraph (1) shall 
not affect— 
(A) any mortgage insurance commitment issued; or 
(B) any assistance pursuant to a reservation of funds 
made; 
under section 235 of the National Housing Act prior to Octo-
ber 1, 1989. 
SEC. 402. AMOUNT TO BE INSURED UNDER NATIONAL HOUSING ACT. 
Section 531 of the National Housing Act is amended— 
(1) by inserting "(a)" after "SEC. 531."; and 
(2) by adding at the end thereof the following: 
"(b) Notwithstanding any other provision of law and subject only 
to the absence of qualified requests for insurance, to the authority 
provided in this Act, and to the limitation in subsection (a), the 
Secretary shall enter into commitments to insure mortgages under 
this Act with an aggregate principal amount of $100,000,000,000 
during fiscal year 1988, and $104,000,000,000 during fiscal year 
1989.". 
SEC. 403. LIMITATION ON FEDERAL HOUSING ADMINISTRATION INSUR-
ANCE PREMIUMS. 
Section 203(c) of the National Housing Act is amended by adding 
at the end the following new sentence: "In the case of any mortgage 
secured by a 1- to 4-family dwelling, the total premium charge shall 
not exceed an amount equal to 3.8 percent of the original principal 
obligation of the mortgage if the Secretary requires (1) a single 
premium charge to cover the total premium obligation of the insur-
ance of the mortgage; or (2) a periodic premium charge over less 
than the term of the mortgage.". 
SEC. 404. INCREASE IN MAXIMUM MORTGAGE AMOUNT UNDER SINGLE 
FAMILY INSURANCE PROGRAM. 
Section 2O30t))(2)(A) of the National Housing Act is amended by 
striking "133 V
s per centum" and inserting "150 percent". 
SEC. 405. CHANGE IN DEFINITION OF VETERAN. 
The National Housing Act is amended— 
(1) by inserting before the period at the end of the first 
undesignated paragraph of section 2030oX3)(2) the following: ", 
except that persons enlisting in the armed forces after Septem-
ber 7, 1980, or entering active duty after October 16, 1981, shall 
have their eligibility determined in accordance with section 
3103A(d) of title 38, United States Code"; and 
(2) by inserting before the semicolon at the end of section 
220(d)(3XAXi) the following: ", except that persons enlisting in 
the armed forces after September 7, 1980, or entering active 
duty after October 16, 1981, shall have their eligibility deter-
mined in accordance with section 3103A(d) of title 38, United 
States Code". 
12 use 1715z. 
12 use 1715z 
note. 
12 use 1735f-9. 
12 use 1709. 
12 use 1715k. 
101 STAT. 1900 
PUBLIC LAW 100-242—FEB. 5, 1988 
SEC. 406. LIMITATION ON USE OF SINGLE FAMILY MORTGAGE INSUR-
ANCE BY INVESTORS. 
12 use 1709. 
(a) IN GENERAL.—Section 203 of the National Housing Act is 
amended by inserting the following new subsection before subsec-
tion (h): 
"(g)(1) The Secretary may insure a mortgage under this title that 
is secured by a 1- to 4-family dwelling, or approve a substitute 
mortgagor with respect to any such mortgage, only if the mortgagor 
is to occupy the dwelling as his or her principal residence or as a 
secondary residence, as determined by the Secretary. 
"(2) The occupancy requirement established in paragraph (1) shall 
apply only if the mortgage involves a principal obligation that 
exceeds, as appropriate, 75 percent o
f
— 
"(A) the appraised value of the dwelling; 
"(B) the estimate of the Secretary of the replacement cost of 
the property; 
"(C) the sum of the estimates of the Secretary of the cost of 
repair and rehabilitation and the value of the property before 
repair and rehabilitation; or 
"(D) the sum of the estimates of the Secretary of the cost of 
repair and rehabilitation and the amount (as determined by the 
Secretary) required to refinance existing indebtedness secured 
by the property, and, in the case of a property refinanced under 
section 220(dX3)(A), any existing indebtedness incurred in 
connection with improving, repairing, or rehabilitating the 
property. 
"(3) The occupancy requirement established in paragraph (1) shall 
not apply to any mortgagor (or co-mortgagor, as appropriate) that 
is— 
"(A) a public entity, £is provided in section 214 or 247; 
"(B) a private nonprofit or public entity, as provided in section 
221(h) or 235(j); 
"(C) an Indian tribe, as provided in section 248; 
"(D) a serviceperson who is unable to meet such requirement 
because of his or her duty eissignment, as provided in section 216 
or subsection (b)(4) or (f) of section 222; or 
"(E) a mortgagor or co-mortgagor under subsection (k). 
"(4) For purposes of this subsection, the term 'substitute mortga-
gor' means a person who, upon the release by a mortgagee of a 
previous mortgagor from personal liability on the mortgage note, 
assumes such liability and agrees to pay the mortgage debt.". 
(b) CONFORMING AMENDMENTS.— 
(1) Section 203(bX2) of the National Housing Act is amended— 
(A) in the first sentence, by striking "(whether" and all 
that follows through "purposes)"; and 
(B) in the second sentence, by striking the following: "to 
be occupied as a principal residence of the owner". 
(2) Section 203(b) of the National Housing Act is amended by 
striking paragraph (8). 
(3) Section 203(h) of the National Housing Act is amended by 
striking "is the owner and occupant and". 
(4) Section 203(i) of the National Housing Act is amended— 
(A) by striking the first proviso; and 
(B) by striking "further' the first place it appears. 
(5) The first sentence of section 203(oX2) of the National 
Housing Act is amended by striking "occupant". 
PUBLIC LAW 100-242—FEB. 5, 1988 
101 STAT. 1901 
(6) The first sentence of section 203(p)(2) of the National 
Housing Act is amended by striking "owner-occupant" and 
inserting "owner". 
(7) The fourth sentence of section 214 of the National Housing 
Act is amended by striking the following: "shall be the owner 
and occupant of the property or". 
(8) Section 216 of the National Housing Act is amended— 
(A) by striking "that the mortgagor be the occupant" and 
inserting "with respect to the occupancy of the mortgagor"; 
and 
(B) by striking "occupy the property" each place it ap-
pears and inserting "meet such requirement". 
(9) Section 220(d)(3XA) of the National Housing Act is 
amended— 
(A) by inserting "and" at the end of clause (i); 
(B) by striking clauses (ii) and (iii); 
(C) in clause (iv), by striking the following: "(except as 
provided in clause (iii))"; and 
(D) by redesignating clause (iv) as clause (ii). 
(10) Section 221(dX2) of the National Housing Act is 
amended— 
(A) by striking the colon at the end of subparagraph 
(A)(iv) and all that follows through "Provided 
further, 
That" the first place it appears, and inserting ", except 
that"; 
(B) by striking "Provided, That (i)" and all that follows 
through "(1) in' and inserting the following: "Provided, 
That (i)(l) in"; 
(C) by striking the penultimate proviso; and 
(D) in the last proviso, by striking the following: ", if the 
mortgagor is the owner and an occupant of the property 
such' and inserting "the". 
(11) Section 221(dX6)(ii) of the National Housing Act is 
amended by striking the following: "is an owner-occupant of the 
property and". 
(12) The first sentence of section 221(hX6) of the National 
Housing Act is amended by striking "and occupied". 
(13) Section 221(hX8) of the National Housing Act is amended 
by striking the following: "if one of the units is to be occupied by 
the owner'. 
(14) Subsections (bX4) and (f) of section 222 of the National 
Housing Act are amended by inserting "as a principal resi-
dence" after "occupies the property" each place it appears. 
(15) Section 223(a) of the National Housing Act is amended by 
inserting after "this Act," the first place it appears the follow-
ing: "other than the limitation in section 203(g),". 
(16) The first sentence of section 223(e) of the National Hous-
ing Act is amended by inserting after "title XI," the following: 
"other than the limitation in section 203(g),". 
(17) Section 234(c) of the National Housing Act is amended by 
striking the fourth sentence. 
(18) Section 235(iX3XA) of the National Housing Act is amend-
ed by striking the following: "one of the units of which is to be 
occupied by the owner and'. 
(19) Section 235(jX6) of the National Housing Act is amended 
by striking the following: "if one of the units is to be occupied by 
the owner'. 
12 use 1709. 
12 use 1715d. 
12 use 1715g. 
12 use 1715k. 
12 use 1715Z. 
12 use 1715m. 
12 use 1715n. 
12 use 1715y. 
12 use 1715z. 
101 STAT. 1902 
PUBLIC LAW 100-242—FEB. 5, 1988 
12 u s e 1709. 
12 use 1709 
note. 
12 use 1709 
note. 
12 use 1709 
note. 
12 u s e 1709 
note. 
(c) REPEAL OF VACATION AND SEASONAL HOME INSURANCE PRO-
GRAM.—Section 203 of the National Housing Act is amended by 
striking subsection (m). 
(d) APPLICABILITY.—The amendments made by this section shall 
apply only with respect to— 
(1) mortgages insured— 
(A) pursuant to a conditional commitment issued on or 
after the date of the enactment of this Act; or 
(B) in accordance with the direct endorsement program 
(24 CFR 200.163), if the approved underwriter of the mort-
gagee signs the appraisal report for the property on or after 
the date of the enactment of this Act; and 
(2) the approval of substitute mortgagors, referred to in the 
amendment made by subsection (a), if the original mortgagor 
was subject to such amendment. 
(e) TRANSITION PROVISIONS.—Any mortgage insurance provided 
under title II of the National Housing Act, as it existed immediately 
before the date of the enactment of this Act, shall continue to be 
governed (to the extent applicable) by the provisions specified in 
subsections (a) through (c), as such provisions existed immediately 
before such date. 
SEC. 407. ACTIONS TO REDUCE LOSSES UNDER SINGLE FAMILY MORT-
GAGE INSURANCE PROGRAM. 
(a) IN GENERAL.— 
(1) AMENDMENT TO SECTION 203.—Section 203 of the National 
Housing Act is amended by adding at the end the following new 
subsection: 
"(r) The Secretary shall take appropriate actions to reduce losses 
under the mortgage insurance program carried out under this sec-
tion. Such actions shall include— 
"(1) an annual review by the Secretary of the rate of early 
serious defaults and claims, in accordance with section 533; 
"(2) requiring reviews of the credit standing of each person 
seeking to assume a mortgage insured under this section (A) 
during the 12-month period following the date on which the 
mortgage is endorsed for insurance, or (B) during the 24-month 
period following the date on which the mortgage is endorsed for 
insurance in the case of an investor originated mortgage; and 
"(3) in any case where a mortgage is assumed after the period 
specified in paragraph (2), requiring that the original mortgagor 
be advised of the procedures by which he or she may be released 
from liability. 
In any case where the homeowner does not request a release from 
liability, the purchaser and the homeowner shall have joint and 
several liability for any default for a period of 5 years following the 
date of the assumption. After the close of such 5-year period, only 
the purchaser shall be liable for any default on the mortgage unless 
the mortgage is in default at the time of the expiration of the 5-year 
period.". 
(2) EFFECTIVE DATE.—The amendment made by paragraph (1) 
shall apply to mortgages endorsed for issuance on or after 
December 1,1986. 
(b) REPORTS BY MORTGAGEES.—Title V of the National Housing Act 
is amended by adding at the end thereof the following new section: 
PUBLIC LAW 100-242—FEB. 5, 1988 
101 STAT. 1903 
DIRECTION TO THE SECRETARY TO REQUIRE MORTGAGEES WITH ABOVE 
NORMAL RATES OF EARLY, SERIOUS DEFAULTS AND CLAIMS TO SUBMIT 
REPORTS AND TAKE CORRECTIVE ACTION 
"SEC. 533. (a) To reduce losses in connection with mortgage insur- 
12USC I735f-ll. 
ance programs under this Act, the Secretary shall review, at least 
once a year, the rate of early serious defaults and claims involving 
mortgagees approved under this Act. On the basis of this review, the 
Secretary shall notify each mortgagee which, as determined by the 
Secretary, had a rate of early serious defaults and claims during 
the preceding year which was higher than the normal rate for the 
geographic area or areas in which that mortgagee does business. In 
the notification, the Secretary shall require each mortgagee to 
submit a report, within a time determined by the Secretary, contain-
ing the mortgagee's (1) explanation for the above normal rate of 
early serious defaults and claims; (2) plan for corrective action, if 
applicable, both with regard to (A) mortgages in default; and (B) its 
mortgage-processing system in general; and (3) a timeframe within 
which this corrective action will be begun and completed. If the 
Secretary does not agree with this timeframe or plan, a mutually 
agreeable timeframe and plan will be determined. 
"(b) Failure of the mortgagee to submit a report required under 
subsection (a) within the time determined by the Secretary or to 
commence or complete the plan for corrective action within the 
timeframe agreed upon by the Secretary may be cause for suspen-
sion of the mortgagee from participation in programs under this 
Act.". 
SEC. 408. INSURANCE OF GRADUATED PAYMENT MORTGAGES. 
(a) AUTHORITY TO INSURE REFINANCING.—Section 223(a)(7) of the 
National Housing Act is amended in the first proviso by inserting 
12 USC I7l5n. 
after "except that" the following: "(A) the principal amount of any 
such refinancing mortgage may equal the outstanding balance of an 
existing mortgage insured pursuant to section 245, if the amount of 
the monthly payment due under the refinancing mortgage is less 
than that due under the existing mortgage for the month in which 
the refinancing mortgage is executed; and (B)". 
(b) TERMINATION OF AUTHORITY TO INSURE.—Section 245(b) of the 
National Housing Act is amended by adding at the end the following 
12 USC I7l5z-10. 
new sentence: "No loan or mortgage may be insured under this 
subsection after the date of the enactment of the Housing and 
Community Development Act of 1987, except pursuant to a commit-
ment to insure entered into on or before such date.". 
SEC. 409. REFINANCING MORTGAGE INSURANCE FOR HOSPITALS, NURS-
ING HOMES, INTERMEDIATE CARE FACILITIES, AND BOARD 
AND CARE HOMES. 
(a) STATE CERTIFICATION REQUIREMENT.—Section 223(f)(4)(D) of the 
National Housing Act is amended to read as follows: 
"(D) the applicable requirements for certificates, studies, and 
statements of section 232 (for the existing nursing home, inter-
mediate care facility, board and care home, or any combination 
thereof, proposed to be refinanced) or of section 242 (for the 
existing hospital proposed to be refinanced) have been met.". 
(b) REFINANCING INSURANCE FOR NURSING HOMES, INTERMEDIATE 
CARE FACILITIES, AND BOARD AND CARE HOMES.—Section 223(f) of the 
National Housing Act is amended— 
101 STAT. 1904 
PUBLIC LAW 100-242—FEB. 5, 1988 
12 use 1715n 
note. 
12 use 1715w. 
12 use 1715w 
note. 
(1) in paragraph (1), by inserting after "existing hospital" the 
following: "(or existing nursing home, existing intermediate 
care facility, existing board and care home, or any combination 
thereof)"; and 
(2) in paragraph (4) (other than in subparagraph (D)), by 
inserting after "existing hospital" each place it appears the 
following: "(or existing nursing home, existing intermediate 
care facility, existing board and care home, or any combination 
thereof)". 
(c) REGULATIONS.—The Secretary of Housing and Urban Develop-
ment shall issue such regulations as may be necessary to carry out 
the amendment made by this section by not later than the expira-
tion of the 90-day period following the date of the enactment of this 
Act. 
SEC. 410. MORTGAGE INSURANCE FOR NURSING HOMES, INTERMEDIATE 
CARE FACILITIES, AND BOARD AND CARE HOMES. 
(a) INSURANCE FOR PUBUC NURSING HOMES.—Section 232(b)(1) of 
the National Housing Act is amended by inserting "public facility," 
before "proprietary". 
(b) REQUIREMENT OF STATE APPROVAL.—Section 232(d)(4)(A) of the 
National Housing Act is amended by inserting at the end the 
following new sentences: "If no such State agency exists, or if the 
State agency exists but is not empowered to provide a certification 
that there is a need for the home or facility or combined home and 
facility as required in clause (i) of the first sentence, the Secretary 
shall not insure any mortgage under this section unless (i) the State 
in which the home or facility or combined home and facility is 
located has conducted or commissioned and paid for the preparation 
of an independent study of market need and feasibility that (I) is 
prepared in accordance with the principles established by the Amer-
ican Institute of Certified Public Accountants; (II) assesses, on a 
marketwide basis, the impact of the proposed home or facility or 
combined home and facility on, and its relationship to, other health 
care facilities and services, the percentage of excess beds, demo-
graphic projections, alternative health care delivery systems, and 
the reimbursement structure of the home, facility, or combined 
home and facility; (III) is addressed to and is acceptable to the 
Secretary in form and substance; and (IV) in the event the State 
does not prepare the study, is prepared by a financial consultant 
who is selected by the State or the applicant for mortgage insurance 
and is approved by the Secretary; and (ii) the State complies with 
the other provisions of this subparagraph that would otherwise be 
required to be met by a State agency designated in accordance with 
section 604(aXl) or section 1521 of the Public Health Service Act. 
The proposed mortgagor may reimburse the State for the cost of the 
independent feasibility study required in the preceding sentence. In 
the CEise of a small intermediate care facility for the mentally 
retarded or developmentally disabled, or a board and care home 
housing less than 10 individuals, the State program agency or 
agencies responsible for licensing, certifying, financing, or monitor-
ing the facility or home may, in lieu of the requirements of clause (i) 
of the third sentence, provide the Secretary with written support 
identifying the need for the facility or home.'. 
(c) REGULATIONS.—The Secretary of Housing and Urban Develop-
ment shall issue such regulations as may be necessary to carry out 
the amendments made by this section by not later than the expira-
PUBLIC LAW 100-242—FEB. 5, 1988 
101 STAT. 1905 
tion of the 90-day period following the date of the enactment of this 
Act. 
SEC. 411. REQUIREMENT OF STATE APPROVAL FOR MORTGAGE INSUR-
ANCE FOR HOSPITALS. 
(a) IN GENERAL.—Section 242(d)(4) of the National Housing Act is 
amended by inserting at the end the following new sentences: "If no 
such State agency exists, or if the State agency exists but is not 
empowered to provide a certification that there is a need for the 
hospital as set forth in clause (A) of the first sentence, the Secretary 
shall not insure any mortgage under this section unless (A) the State 
in which the hospital is located has conducted or commissioned and 
paid for the preparation of an independent study of market need 
and feasibility that (i) is prepared in accordance with the principles 
established by the American Institute of Certified Public Account-
ants; (ii) assesses, on a marketwide basis, the impact of the proposed 
hospital on, and its relationship to, other health care facilities and 
services, the percentage of excess beds, demographic projections, 
alternative health care delivery systems, and the reimbursement 
structure of the hospital; (iii) is addressed to and is acceptable to the 
Secretary in form and substance; and (iv) in the event the State does 
not prepare the study, is prepared by a financial consultant selected 
by the State and approved by the Secretary; and (B) the State 
complies with the other provisions of this paragraph that would 
otnerwise be required to be met by a State agency designated in 
accordance with section 604(a)(1) or section 1521 of the Public 
Health Service Act. The proposed mortgagor may reimburse the 
State for the cost of the independent feasibility study required in the 
preceding sentence.". 
(b) REGULATIONS.—The Secretary of Housing and Urban Develop-
ment shall issue such regulations as may be necessary to carry out 
the amendment made by this section by not later than the expira-
tion of the 90-day period following the date of the enactment of this 
Act. 
SEC. 412. MORTGAGE INSURANCE FOR PUBLIC HOSPITALS. 
(a) ELIMINATION OF ADDITIONAL COLLATERAL REQUIREMENTS FOR 
PUBLIC HOSPITALS.—Section 242(a) of the National Housing Act is 
amended by adding at the end the following: "Such assistance shall 
be provided regardless of the amount of public financial or other 
support a hospital may receive, and the Secretary shall neither 
require additional security or collateral to guarantee such support, 
nor impose more stringent eligibility or other requirements on 
publicly owned or supported hospitals.". 
(b) CREDIT FOR EXISTING EQUIPMENT AND IMPROVEMENTS.—Section 
242(d)(2) of the National Housing Act is amended by striking the 
matter preceding subparagraph (A) and inserting the following: 
"(2) The mortgage shall involve a principal obligation in the 
amount requested by the mortgagor if such amount does not exceed 
90 percent of the estimated replacement cost of the property or 
project including—". 
(c) CONTINUED USE OF LETTERS OF CREDIT.—Section 242(d) of the 
National Housing Act is amended by adding at the end the following 
new paragraph: 
"(6) To the extent that a private nonprofit or public facility 
mortgagor is required by the Secretary to provide cash equity in 
excess of the amount of the mortgage to complete the project, the 
12 u s e 1715Z-7. 
12 u s e 1715Z-7 
note. 
101 STAT. 1906 
PUBLIC LAW 100-242—FEB. 5, 1988 
mortgagor shall be entitled, at the option of the mortgagee, to fund 
the excess with a letter of credit. In such event, mortgage proceeds 
may be advanced to the mortgagor prior to any demand being made 
on the letter of credit.". 
(d) IMMEDIATE PROCESSING OF APPLICATIONS FOR PUBLIC HOS-
12 use 1715Z-7. 
PiTALS.—Section 242(f) of the National Housing Act is amended by 
adding at the end the following: "The Secretary shall begin imme-
diately to process applications of public facilities for mortgage insur-
ance under this section in accordance with regulations, guidelines, 
and procedures applicable to facilities of private nonprofit corpora-
tions and associations.". 
(e) REPORT ON INSURANCE UNDER SECTION 242.—The Comptroller 
General of the United States shall conduct a study of the long-term 
financial exposure of the Federal Government under the mortgage 
insurance program pursuant to section 242 of the National Housing 
Act. Not later than October 1, 1988, the Comptroller General of the 
United States shall transmit to the Congress a report setting forth 
the results of such study, including documentation of the long-term 
financial exposure determined in the course of such study and 
recommendations for such legislation as the Comptroller General 
deems appropriate. 
SEC. 413. MORTGAGE INSURANCE ON HAWAIIAN HOME LANDS AND 
INDIAN RESERVATIONS. 
(a) APPLICABILITY OF MORTGAGE INSURANCE ON HAWAIIAN HOME 
12 use 1715Z-12. 
LANDS.—Section 247(c)(1) of the National Housing Act is amended 
by inserting before the period at the end the following: "(or, in the 
case of an individual who succeeds a spouse or parent in an interest 
in a lease of Hawaiian home lands, such lower percentage as may be 
established for such succession under section 209 of the Hawaiian 
Homes Commission Act, 1920, or under the corresponding provision 
of the Constitution of the State of Hawaii adopted under section 4 of 
the Act entitled 'An Act to provide for the admission of the State of 
Hawaii into the Union', approved March 18, 1959 (73 Stat. 5))". 
Oa) MORTGAGE INSURANCE ON HAWAIIAN HOME LANDS AS OBUGA-
TIONS OF GENERAL INSURANCE FUND.—Section 247 of the National 
Housing Act is amended— 
(1) by redesignating subsection (c) as subsection (d); and 
(2) by inserting after subsection (b) the following new sub-
section: 
"(c) Notwithstanding any other provision of this Act, the insur-
ance of a mortgage using the authority contained in this section 
shall be the obligation of the General Insurance Fund established in 
section 519. The mortgagee shall be eligible to receive the benefits of 
insurance as provided in section 204 with respect to mortgages 
insured pursuant to this section, except that (1) all references in 
section 204 to the Mutual Mortgage Insurance Fund or the Fund 
shall be construed to refer to the General Insurance Fund; and (2) 
all references in section 204 to section 203 shall be construed to refer 
to the section under which the mortgage is insured.". 
(c) MORTGAGE INSURANCE ON INDIAN RESERVATIONS AS OBLIGA-
TIONS OF GENERAL INSURANCE FUND.—Section 248 of the National 
12 use 1715Z-13. 
Housing Act is amended— 
(1) in paragraphs (3) and (5) of subsection (f), by striking 
"insurance fund' each place it appears and inserting "General 
Insurance Fund"; 
PUBLIC LAW 100-242—FEB. 5, 1988 
101 STAT. 1907 
(2) by redesignating subsections (f), (g), and (h) as subsections 
(g), (h), and (i), respectively; and 
(3) by inserting after subsection (e) the following new sub-
section: 
"(f) Notwithstanding any other provision of this Act, the insur-
ance of a mortgage using the authority contained in this section 
shall be the obligation of the General Insurance Fund established in 
section 519. The mortgagee shall be eligible to receive the benefits of 
^ 
insurance as provided in section 204 with respect to mortgages 
insured pursuant to this section, except that (1) all references in 
section 204 to the Mutual Mortgage Insurance Fund or the Fund 
shall be construed to refer to the General Insurance Fund; and (2) 
all references in section 204 to section 203 shall be construed to refer 
to the section under which the mortgage is insured.". 
SEC. 414. CO-INSURANCE PROGRAM. 
(a) REPEALER.—Section 244 of the National Housing Act is 
12 use i7i5z-9. 
amended by striking subsection (c). 
O
t
)
) CO-INSURANCE AMENDMENTS.—Section 244 of the National 
Housing Act is amended— 
(1) in subsection (h), by striking "coinsurance" each place it 
appears and inserting "co-insurance"; and 
(2) by adding at the end the following new subsection: 
"(i) Any mortgagee which enters into a contract of co-insurance Contracts. 
under this section shall have the authority to assign its interest in 
any note or mortgage subject to a contract of co-insurance to a 
warehouse bank or other financial institution which provides in-
terim funding for a loan co-insured under this section, and to retain 
the co-insurance risk of such note or mortgage, upon such terms and 
conditions as the Secretary shall prescribe.". 
SEC. 415. INCREASE IN AUTHORITY TO INSURE ADJUSTABLE RATE 
SINGLE FAMILY MORTGAGES. 
(a) IN GENERAL.—Section 251(c) of the National Housing Act is I2usci7i5z-16. 
amended to read as follows: 
"(c) The aggregate number of mortgages and loans insured under Loans. 
this section in any fiscal year may not exceed 30 percent of the 
aggregate number of mortgages and loans insured by the Secretary 
under this title during the preceding fiscal year.". 
(h) CONFORMING AMENDMENTS.— 
(1) Section 245(c) of the National Housing Act is amended in 12 USC I7l5z-10. 
the last sentence by striking ", section 251,". 
(2) Section 252(g) of the National Housing Act is amended— 
l2USCl7l5z-l7. 
(A) by striking the first comma and inserting "and"; and 
(B) by striking ", and section 251". 
SEC. 416. PENALTIES FOR EQUITY SKIMMING. 
(a) PURCHASE OF DWELUNG SUBJECT TO LOAN IN DEFAULT.—Sec-
tion 912 of the Housing and Urban Development Act of 1970 is 
12 USC 1709-2. 
amended— 
(1) in parajgraph (1), bv inserting "(including condominiums 
and cooperatives)" after dwellings ; 
(2) in paragraph (2), by inserting after "due" the following: 
", regardless of whether the purchaser is obligated on the 
loan'; and 
(3) in the matter following paragraph (3)— 
(A) by striking "$5,000" and inserting "$250,000"; and 
91-194 O - 90 - 20 : QL.3 Part 3 
101 STAT. 1908 
PUBLIC LAW 100-242—FEB. 5, 1988 
(B) by striking "three" and inserting "5". 
(b) USE OF FUNDS DERIVED FROM PROPERTY SUBJECT TO LOAN IN 
DEFAULT.—Title II of the National Housing Act is amended by 
adding at the end the following new section: 
EQUITY SKIMMING PENALTY 
> fc 
12 use 1715Z-19. 
"SEC. 254. Whoever, as an owner, agent, or manager, or who is 
otherwise in custody, control, or possession of property that is 
security for a mortgage note that is insured, acquired, or held by the 
Secretary pursuant to section 203, 207, 213, 220, 221(d)(3), 221(d)(4), 
223(f), 231, 232, 234, 236, 238(c), 241, 242, 244, 608, or 810, or title XI, 
or is made pursuant to section 202 of the Housing Act of 1959, 
willfully uses or authorizes the use of any part of the rents, Eissets, 
proceeds, income or other funds derived from property covered by 
such mortgage note during a period when the mortgage note is in 
%
-
M ; • 
default or the project is in a nonsurplus cash position as defined by 
the regulatory agreement covering such property, for any purpose 
other than to meet actual or necessary expenses that include ex-
penses approved by the Secretary if such approval is required under 
the terms of the regulatory agreement, shall be fined not more than 
$250,000 or imprisoned not more than 5 years, or both.", 
(c) CONFORMING AMENDMENTS.—Section 239 of the National Hous-
12 use 1715Z-4. 
ing Act is amended— 
(1) by striking "INSURED" in the section heading; 
J-
(2) by striking "(a)" after "SEC. 239."; and 
(3) by striking subsection (b). 
SEC. 417. HOME 
EQUITY 
CONVERSION 
MORTGAGE 
INSURANCE 
DEMONSTRATION. 
(a) IN GENERAL.—Title II of the National Housing Act (as 
amended by section 416 of this Act) is further amended by adding at 
the end the following new section: 
"DEMONSTRATION PROGRAM OF INSURANCE OF HOME EQUITY 
CONVERSION MORTGAGES FOR ELDERLY HOMEOWNERS 
12 use 1715Z-20. 
"SEC. 255. (a) PURPOSE.—The purpose of this section is to authorize 
the Secretary to carry out a demonstration program of mortgage 
insurance designed— 
--;•. 
r 
"(1) to meet the special needs of elderly homeowners by 
reducing the effect of the economic hardship caused by the 
V J* 
J 
increasing costs of meeting health, housing, and subsistence 
needs at a time of reduced income, through the insurance of 
home equity conversion mortgages to permit the conversion of a 
portion of accumulated home equity into liquid assets; 
"(2) to encourage and increase the involvement of mortgagees 
and participants in the mortgage markets in the making and 
e?>r' > - 
> 
servicing of home equity conversion mortgages for elderly 
homeowners; and 
"(3) to require the evaluation of data to determine— 
"(A) the extent of the need and demand among elderly 
homeowners for insured and uninsured home equity 
conversion mortgages; 
"(B) the types of home equity conversion mortgages that 
best serve the needs and interests of elderly homeowners, 
S^' 
the Federal Government, and lenders; and 
>p,' 
•ixiUiKi 
PUBLIC LAW 100-242—FEB. 5, 1988 
101 STAT. 1909 
"(C) the appropriate scope and nature of participation by 
the Secretary in connection with home equity conversion 
mortgages for elderly homeowners. 
"(b) DEFINITIONS.—For purposes of this section: 
"(1) The terms 'elderly homeowner' and 'homeowner' mean 
any homeowner who is, or whose spouse is, at least 62 years of 
,.^. 
age or such higher age as the Secretary may prescribe. 
"(2) The terms 'mortgage', 'mortgagee', 'mortgagor', and 
'State' have the meanings given such terms in section 201. 
"(3) The term 'home equity conversion mortgage' means a 
first mortgage which provides for future payments to the 
homeowner based on accumulated equity and which a housing 
creditor (as defined in section 803(2) of the Garn-St Germain 
Institutions Act of 1982) is authorized to make (A) under any 
law of the United States (other than section 804 of such Act) or 
applicable agency regulations thereunder; (B) in accordance 
with section 804 of such Act, notwithstanding any State con-
stitution, law, or regulation; or (C) under any State constitution, 
law, or regulation, 
"(c) INSURANCE AUTHORITY.—The Secretary may, upon application 
by a mortgagee, insure any home equity conversion mortgage eli-
gible for insurance under this section and, upon such terms and 
conditions as the Secretary may prescribe, make commitments for 
the insurance of such mortgages prior to the date of their execution 
or disbursement to the extent that the Secretary determines such 
mortgages— 
"(1) have promise for improving the financial situation or 
otherwise meeting the special needs of elderly homeowners; 
"(2) will include appropriate safeguards for mortgagors to 
offset the special risks of such mortgages; and 
"(3) have a potential for acceptance in the mortgage market. 
"(d) ELIGIBILITY REQUIREMENTS.—To be eligible for insurance 
under this section, a mortgage shall— 
"(1) have been made to a mortgagee approved by the Sec-
retary as responsible and able to service the mortgage properly; 
"(2) have been executed by a mortgagor who— 
"(A) qualifies as an elderly homeowner; 
"(B) has received adequate counseling by a third party 
(other than the lender) as provided in subsection (f); and 
"(C) meets any additional requirements prescribed by the 
Secretary; 
"(3) be secured by a dwelling that is designed principally for a 
1-family residence and is occupied by the mortgagor and that 
«9jt&' 
has a value not to exceed the maximum dollar amount estab-
lished by the Secretary under section 203(b)(2) for a 1-family 
residence; 
"(4) provide that prepayment, in whole or in part, may be 
made without penalty at any time during the period of the 
> ',.-.•: 
mortgage; 
"(5) provide for a fixed or variable interest rate or future 
sharing between the mortgagor and the mortgagee of the appre-
ciation in the value of the property, as agreed upon by the 
mortgagor and the mortgagee; 
"(6) contain provisions for satisfaction of the obligation satis-
factory to the Secretary; 
"(7) provide that the homeowner shall not be liable for any 
difference between the net amount of the remaining indebted-
101 STAT. 1910 
PUBLIC LAW 100-242—FEB. 5, 1988 
ness of the homeowner under the mortgage and the amount 
recovered by the mortgagee from— 
"(A) the foreclosure sale; or 
"(B) the insurance benefits paid pursuant to subsection 
(i)(l)(C);and 
Taxes. 
"(8) Contain such terms and provisions with respect to insur-
ance, repairs, alterations, payment of taxes, default reserve, 
delinquency charges, foreclosure proceedings, anticipation of 
maturity, additional and secondary liens, and other matters as 
the Secretary may prescribe. 
"(e) DISCLOSURES BY MORTGAGEE.—The Secretary shall require 
each mortgagee of a mortgage insured under this section to make 
available to the homeowner— 
"(1) at the time of the loan application, a written list of the 
names and addresses of third-party information sources who are 
approved by the Secretary as responsible and able to provide 
the information required by subsection (f); 
"(2) at least 10 days prior to loan closing, a statement explain-
ing the homeowner's rights, obligations, and remedies with 
respect to temporary absences from the home, late payments, 
and payment default by the lender, all conditions requiring 
satisfaction of the loan obligation, and any other information 
that the Secretary may require; and 
"(3) on an annual basis (but not later than January 31 of each 
year), a statement summarizing the total principal amount paid 
to the homeowner under the loan secured by the mortgage, the 
total ,amount of deferred interest added to the principal, and the 
outstanding loan balance at the end of the preceding year. 
"(f) 
INFORMATION SERVICES FOR MORTGAGORS.—The Secretary 
shall provide or cause to be provided by entities other than the 
lender the information required in subsection (d)(2)(B). Such 
information shall be discussed with the mortgagor and shall 
include— 
"(1) options other than a home equity conversion mortgage 
that are available to the homeowner, including other housing, 
social service, health, and financial options; 
"(2) other home equity conversion options that are or may 
become available to the homeowner, such as sale-leaseback 
financing, deferred payment loans, and property tax deferral; 
"(3) the financial implications of entering into a home equity 
conversion mortgage; 
Taxes. 
"(4) a disclosure that a home equity conversion mortgage may 
have tax consequences, affect eligibility for assistance under 
Federal and State programs, and have an impact on the estate 
and heirs of the homeowner; and 
"(5) any other information that the Secretary may require. 
Termination 
"(g) LIMITATION ON INSURANCE AUTHORITY.—No mortgage m a y be 
date. 
insured under this section after September 30,1991, except pursuant 
to a commitment to insure issued on or before such date. The total 
number of mortgages insured under this section may not exceed 
2,500. In no case may the benefits of insurance under this section 
exceed the maximum dollar amount established under section 
203(b)(2) for a 1-family residence. 
"(h) ADMINISTRATIVE AUTHORITY.—The Secretary may— 
"(1) enter into such contracts and agreements with Federal, 
State, and local agencies, public and private entities, and such 
PUBLIC LAW 100-242—FEB. 5, 1988 
101 STAT. 1911 
other persons as the Secretary determines to be necessary or 
desirable to carry out the purposes of this section; and 
"(2) make such investigations and studies of data, and pubUsh 
and distribute such reports, as the Secretary determines to be 
appropriate. 
"(i) PROTECTION OF HOMEOWNER AND LENDER.— 
"(1) Notwithstanding any other provision of law, and in order 
to further the purposes of the demonstration program au-
thorized in this section, the Secretary shall take any action 
necessary— 
"(A) to provide any mortgagor under this section with 
funds to which the mortgagor is entitled under the insured 
• 
mortgage or ancillary contracts but that the mortgagor has 
not received because of the default of the party responsible 
for payment; 
"(B) to obtain repayment of disbursements provided 
under subparagraph (A) from any source; and 
., .,. 
"(C) to provide any mortgagee under this section with 
funds not to exceed the limitations in subsection (g) to 
which the mortgagee is entitled under the terms of the 
insured mortgage or ancillary contracts authorized in this 
section. 
"(2) Actions under paragraph (1) may include— 
"(A) disbursing funds to the mortgagor or mortgagee 
from the General Insurance Fund; 
"(B) accepting an assignment of the insured mortgage 
notwithstanding that the mortgagor is not in default under 
its terms, and calculating the amount and making the 
payment of the insurance claim on such assigned mortgage; 
'(C) requiring a subordinate mortgage from the mortga-
gor at any time in order to secure repayments of any funds 
advanced or to be advanced to the mortgagor; 
"(D) requiring a subrogation to the Secretary of the rights 
of any parties to the transaction against any defaulting 
parties; and 
"(E) imposing premium charges, 
"(j) SAFEGUARD TO PREVENT DISPLACEMENT OF HOMEOWNER.—The 
Secretary may not insure a home equity conversion mortgage under 
this section unless such mortgage provides that the homeowner's 
obligation to satisfy the loan obligation is deferred until the home-
owner's death, the sale of the home, or the occurrence of other 
events specified in regulations of the Secretary. For purposes of 
this subsection, the term 'homeowner' includes the spouse of a 
homeowner. 
"(k) REPORTS TO CONGRESS.— 
"(1) The Secretary shall, not later than September 30, 1989, 
submit an interim report to Congress describing— 
"(A) design and implementation of the demonstration; 
"(B) number and types of reverse mortgages written to 
date; 
"(C) profile of participant homeowner-borrowers, includ-
ing incomes, home equity, and regional distribution; and 
"(D) problems encountered in implementation, including 
impediments associated with State or Federal laws or regu-
lations governing taxes, insurance, securities, public bene-
fits, banking, and any other problems in implementation 
that the Secretary encounters. 
Reports. 
Contracts. 
Contracts. 
Loans. 
Taxes. 
Insurance. 
Securities. 
Banks and 
banking. 
101 STAT. 1912 
PUBLIC LAW 100-242—FEB. 5, 1988 
Insur£ince. 
Aged persons. 
"(2) Not later than March 30,1992, the Secretary shall submit 
to Congress a preliminary evaluation of the program authorized 
jail 
in this section. Such evaluation shall include an updated report 
on the matters referred to in paragraph (1) and shall in 
addition— 
"(A) describe the types of mortgages appropriate for 
inclusion in such program; 
"(B) describe any changes in the insurance programs 
under this title, or in other Federal regulatory provisions, 
determined to be appropriate; 
"(C) describe any risk created under such mortgages to 
mortgagors and mortgagees or the insurance programs 
under this title, and whether the risk is adequately covered 
by the premiums under the insurance programs; 
"(D) evaluate whether such program has improved the 
financial situation or otherwise met the special needs of 
participating elderly homeowners; 
"(E) evaluate whether such program has included appro-
priate safeguards for mortgagors to offset the special risks 
of such mortgages; and 
"(F) evaluate whether home equity conversion mortgages 
have a potential for acceptance in the mortgage markets. 
"(3) The preliminary evaluation shall incorporate comments 
and recommendations solicited by the Secretary from the Board 
of Governors of the Federal Reserve System, the Secretary of 
Health and Human Services, the Federal Council on Aging, 
Federal Home Loan Bank Board, the Comptroller of the Cur-
rency, and the National Credit Union Administration Board 
regarding any of the matters referred to in paragraph (1) or (2). 
t 
"(4) Following submission of the preliminary evaluation, the 
Secretary shall, on a biennial basis, submit to the Congress an 
updated report and evaluation covering the period since the 
most recent report under this subsection and shall include 
analysis of the repayment of the home equity conversion mort-
gages under this demonstration during such period.". 
12 use 1715Z-20 
(b) REGULATIONS.—The Secretary of Housing and Urban Develop-
note. 
ment shall— 
(1) not later than 6 months after the date of enactment of this 
Act, consult with lenders, insurers, and organizations and 
individuals with expertise in home equity conversion in develop-
ing proposed regulations implementing section 254 of the Na-
tional Housing Act; and 
(2) not later than 9 months after the date of the enactment of 
this Act, issue proposed regulations implementing section 254 of 
.
(
?
<
? 
the National Housing Act. 
SEC. 418. ASSURANCE OF ADEQUATE PROCESSING OF APPLICATIONS FOR 
LOAN AND MORTGAGE INSURANCE. 
Title V of the National Housing Act (as amended by section 407 of 
this Act) is amended by adding at the end the following new section: 
12 u s e 1735f-12. 
ASSURANCE OF ADEQUATE PROCESSING OF APPLICATIONS FOR LOAN 
AND MORTGAGE INSURANCE 
"SEC. 534. In order to ensure the adequate processing of applica-
tions for insurance of loans and mortgages under this Act, the 
PUBLIC LAW 100-242—FEB. 5, 1988 
101 STAT. 1913 
Secretary shall maintain not less than one office in each State to 
carry out the provisions of this Act.". 
SEC. 419. PROHIBITION OF LENDER REQUIREMENTS DISCOURAGING 
LOANS WITH LOWER PRINCIPAL AMOUNTS. 
(a) LOAN AMOUNT OF ORIGINAL LOANS.—Title V of the National 
Housing Act (as amended by sections 407 and 418 of this Act) is 
further amended by adding at the end the following new section: 
"PROHIBITION OF REQUIREMENT OF MINIMUM PRINCIPAL LOAN 
AMOUNT 
"SEC. 535. A mortgagee or lender may not require, as a condition 
12 use I735f-13. 
of providing a loan insured under this Act or secured by a mortgage 
insured under this Act, that the principal amount of the loan exceed 
a minimum amount established by the mortgagee or lender.". 
(b) LOAN AMOUNT OF REFINANCINGS.—Section 223(a)(7) of the 
National Housing Act (as amended by section 408 of this Act) is 12 use I7i5n. 
further amended by striking "; and (B)" and inserting the following: 
"; (B) a mortgagee may not require a minimum principal amount 
to be outstanding on the loan secured by the existing mortgage; 
and (C)". 
(c) STUDY OF OTHER LENDING PRACTICES.—During the 6-month 
period beginning on the date of the enactment of this Act, the 
Secretary of Housing and Urban Development shall conduct a study 
of the interest rates and discount points charged for mortgages and 
loans insured under the National Housing Act. The study shall be 
designed to identify any pattern or practice of charging higher 
interest rates or discount points for mortgages or loans with lower 
principal amounts than for mortgages or loans with the maximum 
principal amounts permitted for insurance under the National 
Housing Act. Not later than 3 months after the expiration of the 6- Reports. 
month period, the Secretary shall submit to the Congress a report 
setting forth the findings and recommendations of the Secretary. 
SEC. 420. REPEAL OF REQUIREMENT TO PUBLISH PROTOTYPE HOUSING 
COSTS FOR 1- TO 4-FAMILY DWELLING UNITS. 
The Housing and Community Development Act of 1977 is 
amended by striking section 904. 
SEC. 421. DOUBLE DAMAGES REMEDY FOR UNAUTHORIZED USE OF 
MULTIFAMILY HOUSING PROJECT ASSETS AND INCOME. 
(a) ACTION TO RECOVER ASSETS OR INCOME.— 
(1) The Secretary of Housing and Urban Development (re-
ferred to in this section as the "Secretary") may request the 
Attorney General to bring an action in a United States district 
court to recover any assets or income used by any person in 
violation of (A) a regulatory agreement that applies to a multi-
family project whose mortgage is insured or held by the Sec-
retary under title II of the National Housing Act; or (B) any 
applicable regulation. For purposes of this section, a use of 
assets or income in violation of the regulatory agreement or any 
applicable regulation shall include any use for which the docu-
mentation in the books and accounts does not establish that the 
use was made for a reasonable operating expense or necessary 
repair of the project and has not been maintained in accordance 
with the requirements of the Secretary and in reasonable condi-
tion for proper audit. 
42 use 3540. 
12 use 
1715z-4a. 
101 STAT. 1914 
PUBLIC LAW 100-242—FEB. 5, 1988 
(2) For purposes of a mortgage insured or held by the Sec-
retary under title II of the National Housing Act, the term "any 
person" shall mean any person or entity which owns a project, 
as identified in the regulatory agreement, including but not 
limited to any stockholder holding 25 percent or more interest 
of a corporation that owns the project; any beneficial owner 
under any business or trust; any officer, director, or partner of 
an entity owning the project; and any heir, assignee, successor 
in interest, or agent of any owner. 
(b) INITIATION OF PROCEEDINGS AND TEMPORARY RELIEF.—The 
Attorney General, upon request of the Secretary, shall have the 
exclusive authority to authorize the initiation of proceedings under 
this section. Pending final resolution of any action under this 
section, the court may grant appropriate temporary or preliminary 
relief, including restraining orders, injunctions, and acceptance of 
satisfactory performance bonds, to protect the interests of the Sec-
retary and to prevent use of assets or income in violation of the 
regulatory agreement and any applicable regulation and to prevent 
loss of value of the realty and personalty involved. 
(c) AMOUNT RECOVERABLE.—In any judgment favorable to the 
United States entered under this section, the Attorney General may 
recover double the value of the assets and income of the project that 
the court determines to have been used in violation of the regu-
latory agreement or any applicable regulation, plus all costs relating 
to the action, including but not limited to reasonable attorney and 
auditing fees. Notwithstanding any other provision of law, the 
Secretary may apply the recovery, or any portion of the recovery, to 
the project or to the applicable insurance fund under the National 
Housing Act. 
(d) TIME LIMITATION.—Notwithstanding any other statute of 
limitations, the Secretary may request the Attorney General to 
bring an action under this section at any time up to and including 6 
years after the latest date that the Secretary discovers any use of 
project assets and income in violation of the regulatory agreement 
or any applicable regulation. 
(e) CONTINUED AVAILABIUTY OF OTHER REMEDIES.—The remedy 
provided by this section is in addition to any other remedies avail-
able to the Secretary or the United States. 
SEC. 422. MISCELLANEOUS MORTGAGE INSURANCE PROVISIONS. 
(a) MORTGAGE INSURANCE FOR CONDOMINIUMS.—Section 234(e)(3) 
12 use I7l5y. 
of the National Housing Act is amended by inserting after '-design;" 
the following: "except that each of the foregoing dollar amounts is 
increased to the amount established for a comparable unit in section 
221(d)(3)(ii);". 
(b) MORTGAGE INSURANCE FOR CERTAIN PROPERTIES WITHIN AN 
12 use 1709. 
INDIAN RESERVATION.—Section 203(qXl) of the National Housing Act 
is amended by striking "Secretary may" and inserting "Secretary 
shall". 
SEC. 423. CALCULATION OF MAXIMUM MORTGAGE AMOUNT UNDER 
SINGLE FAMILY INSURANCE PROGRAM. 
Section 203(b)(2) of the National Housing Act is amended by 
inserting after the first sentence the following: "For purposes of the 
preceding sentence, the term 'area' means a county, or a metropoli-
tan statistical area as established by the Office of Management and 
Budget, whichever results in the higher dollar amount.". 
PUBLIC LAW 100-242—FEB. 5, 1988 
101 STAT. 1915 
SEC. 424. APPROVAL OF INDIVIDUAL RESIDENTIAL WATER PURIFI-
CATION OR TREATMENT UNITS. 
(a) IN GENERAL.—When the existing water supply does not meet 
12 USC I70iz-15. 
the minimum property standards established by the Department of 
Housing and Urban Development and a permanent alternative 
acceptable water supply is not available, a continuous supply of 
water may be provided through the use of approved residential 
water treatment equipment or a water purification unit that pro-
vides bacterially and chemically safe drinking water. 
(b) APPROVAL PROCESS.—A performance-based approval of the 
equipment or unit and the maintenance, monitoring, and replace-
ment plan for such equipment or unit shall be certified by field 
, ^, 
offices of the Department of Housing and Urban Development based 
upon general standards recognized by the Department as modified 
for local or regional conditions. As a part of such approved plan, a 
separate monthly escrow account may be required to be established 
through the lender to cover the cost of the approved yearly mainte-
nance and monitoring schedule and projected replacement of the 
equipment or unit. 
SEC. 425. REGULATION OF RENTS IN INSURED PROJECTS. 
After December 1, 1987, the Secretary of Housing and Urban 
l2USCl7l5z-lc. 
Development shall control rents and charges as they were controlled 
prior to April 19, 1983, for any multifamily housing project insured 
under the National Housing Act i
f
— 
(1) during the period of April 19, 1983, through December 1, 
1987, the project owner and the Secretary have not executed, 
and the project owner has not filed a written request with the 
Secretary to enter into, an amendment to the regulatory agree-
ment pursuant to regulations published by the Secretary on 
April 19, 1983, or June 4, 1986, electing to deregulate rents or 
utilize an alternative formula for determining the maximum 
allowable rents pursuant to regulations published by the Sec-
retary on April 19,1983, or June 4,1986; and 
(2)(A) the project was, as of December 1, 1987, receiving a 
housing assistance payment under a contract pursuant to sec-
tion 8 of the United States Housing Act of 1937 (other than 
under the existing housing certificate program of section 8(b)(1) 
of such Act); or 
(B) not less than 50 percent of the units in the project are 
occupied by lower income families (as defined in section 3(a)(2) 
of the United States Housing Act of 1937). 
SEC. 426. MORTGAGE LIMITS FOR MULTIFAMILY PROJECTS. 
(a) SECTION 207 LIMITS.—Section 207(cX3) of the National Housing 
Act is amended— 
12 USC 1713. 
(1) by striking out "$19,500", "$21,600", "$25,800", "$31,800", 
and "$36,000" and inserting in lieu thereof "$25,350", "$28,080", 
"$33,540", "$41,340", and "$46,800", respectively; and 
(2) by striking out "$22,500", "$25,200", "$30,900", "$38,700", 
and "$43,758" and inserting in lieu thereof "$29,250", "$32,760", 
"$40,170", "$50,310", and "$56,885", respectively. 
Ot)) SECTION 213 LIMITS.—Section 2130>)(2) of the National Housing 
Act is amended— 
12 USC I7i5e. 
(1) by striking out "$19,500", "$21,600", "$25,800", "$31,800", 
and "$36,000" and inserting in lieu thereof "$25,350", "$28,080", 
"$33,540", "$41,340", and "$46,800", respectively; and 
101 STAT. 1916 
PUBLIC LAW 100-242—FEB, 5, 1988 
(2) by striking out "$22,500", "$25,200", "$30,900", "$38,700", 
and "$43,758" and inserting in lieu thereof "$29,250", "$32,760", 
"$40,170", "$50,310", and "$56,885", respectively. 
' '^-^ 
(c) SECTION 220 LIMITS.—Section 220(d)(3)(B)(iii) of the National 
12 use 1715k. 
Housing Act is amended— 
(1) by striking out "$19,500", "$21,600", "$25,800", "$31,800", 
and "$36,000" and inserting in lieu thereof "$25,350", "$28,080", 
"$33,540", "$41,340", and "$46,800", respectively; and 
(2) by striking out "$22,500", "$25,200", "$30,900", "$38,700", 
and "$43,758" and inserting in lieu thereof "$29,250", "$32,760", 
"$40,170", "$50,310", and "$56,885", respectively. 
(d) SECTION 221(d)(3) LIMITS.—Section 221(d)(3)(ii) of the National 
12USC1715Z. 
Housing Act is amended by striking out "$21,563"; "$24,862"; 
"$29,984"; "$38,379"; "$42,756"; "$22,692"; "$26,012"; "$31,631"; 
"$40,919"; and "$44,917" and inserting in lieu thereof "$28,032"; 
"$32,321"; "$38,979"; "$49,893"; "$55,583"; "$29,500"; "$33,816"; 
"$41,120"; "$53,195"; and "$58,392", respectively. 
(e) SECTION 221(dX4) LIMITS.—Section 221(d)(4)(ii) of the National 
Housing Act of 1934 is amended by striking out "$19,406"; 
"$22,028"; "$26,625"; "$33,420"; "$37,870"; "$20,962"; "$24,030"; 
"$29,220"; "$37,800"; and "$41,494" and inserting in lieu thereof 
"$25,228"; "$28,636"; "$34,613"; "$43,446"; "$49,231"; "$27,251"; 
• -' - -^- "^ 
"$31,239"; "$37,986"; "$49,140"; and "$53,942", respectively. 
(f) SECTION 231 LIMITS.—Section 231(c)(2) of the National Housing 
12 use I7l5v. 
Act is amended— 
(1) by striking out "$18,450", "$20,625", "$24,630", "$29,640", 
and "$34,846" and inserting in lieu thereof "$23,985", "$26,813", 
"$32,019", "$38,532", and "$45,300", respectively; and 
(2) by striking out "$20,962", "$24,030", "$29,220", "$37,800", 
and "$41,494" and inserting in lieu thereof "$27,251", "$31,239", 
"$37,986", "$49,140", and "$53,942", respectively. 
(g) SECTION 234 LIMITS.—Section 234(e)(3) of the National Housing 
12 use I7l5y. 
Act is amended— 
(1) by striking out "$19,500", "$21,600", "$25,800", "$31,800", 
and "$36,000" and inserting in lieu thereof "$25,350", "$28,080", 
"$33,540", "$41,340", and "$46,800", respectively; and 
(2) by striking out "$22,500", "$25,200", "$30,900", "$38,700", 
and "$43,758" and inserting in lieu thereof "$29,250", "$32,760", 
"$40,170", "$50,310", and "$56,885", respectively. 
(h) LIMITS FOR MULTIFAMILY PROJECTS IN HIGH-COST AREAS.— 
Section 207(c)(3), the second proviso of section 21303)(2), the first 
proviso of section 220(d)(3)(BXiii), section 221(dX3Xii), section 
221(dX4Xii), section 231(cX2), and section 234(eX3) of the National 
Housing Act are each amended by striking "not to exceed 75 per 
centum and all that follows through "involved) in such an area" 
and inserting the following: "not to exceed 110 percent in any 
geographical area where the Secretary finds that cost levels so 
require and by not to exceed 140 percent where the Secretary 
determines it necessary on a project-by-project basis, but in no case 
may any such increase exceed 90 percent where the Secretary 
determines that a mortgage purchased or to be purchased by the 
Government National Mortgage Association in implementing its 
special assistance functions under section 305 of this Act (as such 
section existed immediately before November 30, 1983) is involved". 
SEC. 427. OPERATING LOSS LOAN INSURANCE. 
12 use I7i5n. 
Section 223(d) of the National Housing Act is amended— , t 
12 
use 
1713, 
1715e, 1715k, 
1715/, 1715v, 
1715y. 
PUBLIC LAW 100-242—FEB. 5, 1988 
101 STAT. 1917 
(1) by inserting "(D" after the subsection designation; 
(2) by striking the first and second sentences and inserting the 
following: 
"Notwithstanding any other provision of this Act, the Secretary is 
authorized to insure loans made to cover the operating losses of 
certain projects that have existing project mortgages insured by the 
Secretary. Insurance under this subsection shall be in the Sec-
retary's discretion and upon such terms and conditions as the 
Secretary may prescribe, and shall be provided in accordance with 
the provisions of this subsection. For purposes of this subsection, the 
term 'operating loss' means the amount by which the sum of the 
taxes, interest on the mortgage debt, mortgage insurance premiums, 
hazard insurance premiums, and the expense of maintenance and 
operation of the project covered by the mortgage, exceeds the 
income of the project. 
"(2) To be eligible for insurance pursuant to this paragraph— 
"(A) the existing project mortgage (i) shall have been insured 
by the Secretary at any time before or after the date of enact-
ment of the Housing and Community Development Act of 1987; 
and (ii) shall cover any property, other than a property upon 
which there is located a 1- to 4-family dwelling; 
"(B) the operating loss shall have occurred during the first 24 
months after the date of completion of the project, as deter-
mined by the Secretary; and 
"(C) the loan shall be in an amount not exceeding the operat-
ing loss. 
"(3) To be eligible for insurance pursuant to this paragraph— 
"(A) the existing project mortgage (i) shall have been insured 
by the Secretary at any time before or after the date of enact-
ment of the Housing and Community Development Act of 1987; 
(ii) shall cover any property, other than a property upon which 
there is located a 1- to 4-family dwelling; and (iii) shall not cover 
a subsidized project, as defined by the Secretary; 
"(B) the loan shall be in an amount not exceeding 80 per-
cent of the unreimbursed cash contributions made on or after 
March 18, 1987, by the project owner for the use of the project, 
during any period of consecutive months (not exceeding 24 
months) in the first 10 years after the date of completion of the 
project, as determined by the Secretary, except that in no event 
may the amount of the loan exceed the operating loss during 
such period; 
"(C) the loan shall be made within 10 years after the end of 
the period of consecutive months referred to in the preceding 
subparagraph; and 
"(D) the project shall meet all applicable underwriting and 
other requirements of the Secretary at the time the loan is to be 
made. 
"(4) Any loan insured pursuant to this subsection shall (A) bear 
interest at such rate as may be agreed upon by the mortgagor and 
mortgagee; (B) be secured in such manner as the Secretary shall 
require; (C) be limited to a term not exceeding the unexpired term of 
the original mortgage; and (D) be insured under the same section as 
the original mortgage. The Secretary may provide insurance pursu-
ant to paragraph (2) or (3), or pursuant to both such paragraphs, in 
connection with an existing project mortgage, except that the Sec-
retary may not provide insurance pursuant to both such paragraphs 
101 STAT. 1918 
PUBLIC LAW 100-242—FEB. 5, 1988 
in connection with the same period of months referred to in para-
graphs (2)(B) and (3)(B)." ; and 
(3) by inserting "(5)" before "A loan" at the beginning of the 
undesignated paragraph at the end. 
SEC. 428. INTEREST CHARGES ON TEMPORARY MORTGAGE ASSISTANCE 
PAYMENTS AND ASSIGNMENT OR OTHER ASSISTANCE. 
12 use I7l5u. 
Section 230(a)(5) of the National Housing Act is amended by 
striking the third sentence and inserting the following: "The in-
terest rate on payments made under this subsection shall be the rate 
established under section 1803(c) of title 38, United States Code. The 
interest rate to be charged shall be determined when the Secretary 
approves assistance under this subsection.". 
SEC. 429. MORTGAGE INSURANCE TECHNICAL AMENDMENTS. 
(a) ADMINISTRATIVE PROVISIONS.—The second sentence of section 1 
12 use 1702. 
of the National Housing Act is amended by striking the last comma. 
12 use I706d. 
Ot)) APPLICABUTY.—Section 9 of the National Housing Act is 
amended by inserting the following section heading: 
12 u s e 1709, 
1715Z-5. 
12 u s e 1715n. 
12 u s e 1715w. 
APPUCABILITY . 
(c) 
LOAN 
INSURANCE 
PROGRAMS.—Sections 
203(k)(3)(B) and 
241(b)(3) of the National Housing Act are amended— 
(1) by striking "mortgagor" each place it appears and insert-
ing "borrower"; and 
(2) by striking "mortgagee" each place it appears and insert-
ing "financial institution". 
(d) MISCELLANEOUS HOUSING INSURANCE.— 
(1) Section 223(a)(7) of the National Housing Act is amended— 
(A) in the first proviso, by striking "a rate not in excess of 
the maximum rate prescribed under the applicable section 
or title of this Act" and inserting the following: "such rate 
as may be agreed upon by the mortgagor and the 
'
^
"
^ 
mortgagee"; 
(B) in the second proviso, by striking "maturity, a prin-
cipal obligation, and an interest rate" and inserting the 
following: "maturity and a principal obligation"; and 
(C) by inserting before the semicolon at the end the 
following: ", and shall bear interest at such rate as may be 
agreed upon by the mortgagor and the mortgagee". 
(2) Section 223(d)(1) of the National Housing Act is amended 
by striking "bear interest (exclusive of premium charges for 
insurance) at not to exceed the per centum per annum currently 
permitted for mortgages insured under the section under which 
it is to be insured" and inserting the following: "bear interest at 
such rate as may be agreed upon by the mortgagor and the 
mortgagee". 
(e) INSURANCE FOR NURSING HOMES, INTERMEDIATE CARE FACIU-
TiES, AND B O A R D A N D C A R E H O M E S . — 
(1) Section 232(b) of the National Housing Act is amended— 
(A) by indenting as a separate paragraph (in the same 
manner as paragraph (1)) "(3) a nursing" and all that 
follows through "day; and"; 
(B) in such new paragraph (3)— 
(i) by inserting "the term" after the paragraph des-
,,,.,^,.., .,,,,. _ ignation;and 
.,,«.:.,.. ..^........ ....... ., ...,...-. .., 
...--.. 
PUBLIC LAW 100-242—FEB. 5, 1988 
101 STAT. 1919 
f.' 
(ii) by striking "and" at the end; 
(C) by redesignating the second paragraph (3) as para-
graph (4); and 
(D) by redesignating paragraph (4) as paragraph (5). 
(2) Section 232(i)(2)(B) of the National Housing Act is amended 
i 
to read as follows: 
"(B) bear interest at such rate as may be agreed upon by the 
mortgagor and the mortgagee;". 
(f) MuLTiFAMiLY ASSISTANCE.—Scction 236 of such Act is amended 
by striking out "(h)" in the last sentence of subsection (i)(l) and 
inserting in lieu thereof "(f)(4)". 
(g) CO-INSURANCE.— 
(1) Section 244(g) of the National Housing Act is amended— 
(A) by striking paragraph (2); and 
(B) by redesignating paragraphs (3) through (6) as para-
graphs (2) through (5), respectively. 
(2) Section 244(h) of the National Housing Act is amended by 
striking "coinsurance" each place it appears and inserting "co-
insurance". 
(h) INSURANCE ON HAWAIIAN HOME LANDS.—Section 247(a)(2) of 
the National Housing Act is amended by striking "Mortgagor" and 
inserting "mortgagor'. 
(i) INSURANCE ON INDIAN RESERVATIONS.—Section 248 of the 
Na-
tional Housing Act is amended— 
(1) in subsection (a)(1), by striking "lands" and inserting 
: 
"land"; 
(2) in subsection (a)(2), by striking "lands"; and 
(3) in subsection (d), by striking "tribal or trust land" and 
inserting "trust or otherwise restricted land". 
(j) SHARED APPRECIATION MORTGAGES.—Section 253 of the 
Na-
tional Housing Act is amended— 
(1) in subsection (b), by striking the fourth sentence and 
inserting the following: "For purposes of this section, the term 
'net appreciated value' means the amount by which the sales 
price of the property (less the mortgagor's selling costs) exceeds 
the actual project cost after completion, as approved by the 
Secretary."; 
(2) in the first sentence of subsection (c), by striking "204" and 
inserting "207"; and 
(3) in subsection (c), by striking the last sentence and insert-
ing the following: "The term 'original principal face amount of 
the mortgage' as used in section 207 shall not include the 
mortgagee's share of net appreciated value.". 
(k) DEFENSE HOUSING FOR IMPACTED AREAS.—The first sentence of 
section 810(h) of the National Housing Act is amended— 
(1) by striking "(exclusive of premium charges for insurance) 
at not to exceed the rate applicable to mortgages insured under 
section 207" and inserting the following: "at such rate as may 
be agreed upon by the mortgagor and the mortgagee"; and 
(2) by striking "not to exceed the rate applicable to mortgages 
insured under section 203" and inserting the following: "such 
rate as may be agreed upon by the mortgagor and the 
mortgagee". 
SEC. 430. RELEASE OF POOL FUNDS. 
(a) SECTION 236.—Section 236 of the National Housing Act is 
amended by adding at the end thereof the following: 
12 u s e 1715w. 
12 u s e 1715Z-1. 
12 u s e 1715Z-9. 
12 u s e 1715Z-12. 
12USei715z-13. 
12USei715z-18. 
12 u s e 1748h-2. 
State and local 
governments. 
Contracts. 
12 u s e 1715Z-1. 
101 STAT. 1920 
PUBLIC LAW 100-242—FEB. 5, 1988 
"(r) The Secretary shall, not later than 45 days after receipt of an 
application by the mortgagee, provide interest reduction and rental 
assistance payments for the benefit of projects assisted under this 
section whose mortgages were made by State or local housing 
f?: 
finance agencies or State or local government agencies for a term 
equal to the remaining mortgage term to maturity on projects 
assisted under this section to the extent o
f
— 
"(1) unexpended balances of amounts of authority as set forth 
?g -. r« 
in certain letter agreements between the Department of Hous-
ing and Urban Development and such State or local housing 
finance agencies or State or local government agencies, and 
"(2) existing allocation under section 236 contracts on projects 
' 
i ' 
whose mortgages were made by State or local housing finance 
agencies or State or local government agencies which are not 
being funded, to the extent of such excess allocation, for any 
purposes permitted under the provisions of this section, includ-
ing without limitation rent supplement and rental assistance 
pa3mient unit increases and mortgage increases for any eligible 
purpose under this section, including without limitation operat-
ing deficit loans. 
' - 
An application shall be eligible for assistance under the previous 
sentence only if the mortgagee submits the application within 548 
days after the effective date of this subsection, along with a certifi-
- • ' 
cation of the mortgagee that amounts hereunder are to be utilized 
only for the purpose of either (A) reducing rents or rent increases to 
tenants, or (B) making repairs or otherwise increasing the economic 
viability of a related project. Unexpended balances referred to in the 
first sentence of this subsection which remain after disposition of all 
such applications is favorably concluded shall be rescinded. The 
,
^ 
calculation of the amount of assistance to be provided under an 
' 
'^ 
interest reduction contract pursuant to this subsection shall be 
made on the basis of an assumed mortgage term equal to the lesser 
of a 40-year amortization period or the term of that part of the 
mortgage which relates to the additional assistance provided under 
this subsection, even though the additional assistance may be pro-
vided for a shorter period. The authority conferred by this subsec-
tion to provide interest reduction and rental assistance payments 
shall be available only to the extent approved in appropriation 
Acts.", 
(b) RENT SUPPLEMENT PROGRAM.—Section 101 of the Housing and 
12 use 1701s. 
Urban Development Act of 1965 is amended by adding at the end 
thereof the following: 
"(m) The Secretary shall, not later than 45 days after receipt of an 
js iiaiT 
^ 
application by the mortgagee, provide interest reduction and rental 
assistance payments for the benefit of projects assisted under this 
section whose mortgages were made by State or local housing 
finance agencies or State or local government agencies for a term 
equal to the remaining mortgage term to maturity on projects 
assisted under this section to the extent of— 
"(1) unexpended balances of amounts of authority as set forth 
in certain letter agreements between the Department of Hous-
ing and Urban Development and such State or local housing 
finance agencies or State or local government agencies, and 
"(2) existing allocation under section 236 contracts on projects 
whose mortgages were made by State or local housing finance 
I h. 
i ; 
agencies or State or local government agencies which are not 
PUBLIC LAW 100-242—FEB. 5, 1988 
101 STAT. 1921 
being funded, to the extent of such excess allocation, for any 
purposes permitted under the provisions of this section. 
An application shall be eligible for assistance under the previous 
sentence only if the mortgagee submits the application within 548 
days after the effective date of this subsection, along with a certifi- 
^ 
cation of the mortgagee that amounts are to be utilized hereunder 
for the purpose of either (A) reducing rents or rent increases to 
-5' 
^ 
tenants, or (B) making repairs or otherwise increasing the economic 
viability of a related project. Unexpended balances referred to in the 
first sentence of this subsection which remain after disposition of all 
such applications is favorably concluded shall be rescinded. The 
, 
,, 
authority conferred by this subsection to provide interest reduction 
"' 
and rental assistance payments shall be available only to the extent 
approved in appropriation Acts.". 
Subtitle B—Secondary Mortgage Market 
Programs 
«
? j 
SEC. 441. LIMITATIONS ON CERTAIN SECONDARY MORTGAGE MARKET 
FEES. 
(a) FEDERAL NATIONAL MORTGAGE ASSOCIATION.—Section 304 of 
the Federal National Mortgage Association Charter Act is amended 
12 USC 1719. 
by adding at the end the following new subsection: 
"(f) Except for fees paid pursuant to section 309(g), no fee or 
charge may be assessed or collected by the United States (including 
i.: 
any executive department, agency, or independent establishment of 
the United States) on or with regard to the purchase, acquisition, 
sale, pledge, issuance, guarantee, or redemption of any mortgage, 
asset, obligation, trust certificate of beneficial interest, or other 
security by the corporation. No provision of this subsection shall 
affect the purchase of any obligation by the Secretary of the Treas-
ury pursuant to subsection (c).". 
(b) FEDERAL HOME LOAN MORTGAGE CORPORATION.—Section 306 of 
the Federal Home Loan Mortgage Corporation Act is amended by 12 USC 1455. 
adding at the end the following new subsection: 
"(i) Except for fees paid pursuant to section 303(c) or 306(c), no fee 
or charge may be assessed or collected by the United States (includ-
ing any executive department, agency, or independent establish-
ment of the United States) on or with regard to the purchase, 
^r< 
acquisition, sale, pledge, issuance, guarantee, or redemption of any 
mortgage, asset, obligation, or other security by the Corporation. No 
provision of this subsection shall affect the purchase of any obliga-
tion by any Federal home loan bank pursuant to section 303(a).". 
SEC. 442. FNMA CUMULATIVE VOTING. 
Section 303(a) of the Federal National Mortgage Association Char-
ter Act is amended by inserting after the first sentence the following 
12 USC 1718. 
new sentence: "The corporation may eliminate such rights of cumu-
lative voting by a resolution adopted by its board of directors and 
approved by the holders of a majority of the shares of common stock 
voting in person or by proxy at the annual meeting, or other special 
meeting, at which such resolution is considered.". 
101 STAT. 1922 
PUBLIC LAW 100-242—FEB. 5, 1988 
12 use 1717. 
12 use 1454. 
12 u s e 1723a. 
12 use 1454. 
12 use 1721. 
Disadvantaged 
persons. 
SEC. 443. PERMANENT AUTHORITY TO PURCHASE SECOND MORTGAGES 
ON SINGLE-FAMILY PROPERTIES. 
(a) 
FEDERAL 
NATIONAL 
MORTGAGE 
ASSOCIATION.—Section 
302(b)(5)(A)(i) of the Federal National Mortgage Association Charter 
Act is amended by striking "through March 15,1988,". 
(b) 
FEDERAL HOME 
LOAN 
MORTGAGE CORPORATION.—Section 
305(a)(4)(A)(i) of the Federal Home Loan Mortgage Corporation Act 
is amended by striking "through March 15,1988, . 
SEC. 444. PERIOD FOR APPROVAL OF ACTIONS OF FNMA. 
Section 309(i) of the Federal National Mortgage Association Char-
ter Act is amended in the second sentence by inserting before the 
period at the end the following: ", but such 45-day period may not be 
extended for any other reason or for any period in addition to or 
other than such 15-day period". 
SEC. 445. PROHIBITION 
OF 
LIMITATION 
ON 
FHLMC 
MORTGAGE 
OPERATIONS. 
Section 305 of the Federal Home Loan Mortgage Corporation Act 
is amended by adding at the end the following new subsection: 
"(c) The Board of Directors may not impose any annual limitation 
on the maximum aggregate principal amount of mortgages pur-
chased by the Corporation.". 
SEC. 446. LIMITATION ON GNMA GUARANTEES OF MORTGAGE-BACKED 
SECURITIES. 
Section 306(g)(2) of the Federal National Mortgage Association 
Charter Act is amended to read as follows: 
"(2) Notwithstanding any other provision of law and subject only 
to the absence of qualified requests for guarantees, to the authority 
provided in this subsection, and to any funding limitation approved 
in appropriation Acts, the Association shall enter into commitments 
to issue guarantees under this subsection in an aggregate amount of 
$150,000,000,000 for fiscal year 1988, and $156,000,000,000 for fiscal 
year 1989.". 
TITLE V—COMMUNITY DEVELOPMENT 
AND MISCELLANEOUS PROGRAMS 
Subtitle A—Community and Neighborhood 
Development and Preservation 
SEC. 501. COMMUNITY DEVELOPMENT AUTHORIZATIONS. 
(a) COMMUNITY DEVELOPMENT BLOCK GRANTS.—The second sen-
tence of section 103 of the Housing and Community Development 
42 use 5303. 
Act of 1974 is amended to read as follows: "There are authorized to 
be appropriated for purposes of assistance under sections 106 and 
107 $3,000,000,000 for fiscal year 1988, and $3,000,000,000 for fiscal 
year 1989.". 
(b) DISCRETIONARY FUND.— 
(1) The first sentence of section 107(a) of the Housing and 
42 use 5307. 
Community Development Act of 1974 is amended to read as 
follows: "Of the total amount provided in appropriation Acts 
under section 103 for fiscal years 1988 and 1989, $60,000,000 
PUBLIC LAW 100-242—FEB. 5, 1988 
101 STAT. 1923 
may be set aside in each year in a special discretionary fund for 
grants under subsection (b).". 
(2) Section 107 of the Housing and Community Development 
Act of 1974 is amended— 
(A) by redesignating subsections (c) and (d) as subsections 
(d) and (e), respectively; and 
(B) by inserting after subsection 0^) the following new 
subsection: 
"(c) Of the amount set aside for use under subsection (h) in any 
fiscal year, the Secretary shall, to the extent approved in appropria-
tion Acts, make available not less than $3,000,000 in the form of 
grants to institutions of higher education, either directly or through 
areawide planning organizations or States, for the purpose of provid-
ing assistance to economically disadvantaged and minority students 
who participate in community development work study programs 
and are enrolled in full-time graduate or undergraduate programs 
in community and economic development, community planning, or 
community management.". 
(c) URBAN DEVELOPMENT ACTION GRANTS.—Section 119(a) of the 
Housing and Community Development Act of 1974 is amended by 
striking the second and last sentences and inserting the following 
new sentences: "There are authorized to be appropriated to carry 
out this section $225,000,000 for fiscal year 1988, and $225,000,000 
for fiscal year 1989. Any amount appropriated under this subsection 
shall remain available until expended.'. 
SEC. 502. TARGETING OF BENEFITS TO PERSONS OF LOW AND MODERATE 
INCOME. 
(a) PRIMARY OBJECTIVE.—Section 101(c) of the Housing and 
Community Development Act of 1974 is amended in the second 
sentence by striking "51 percent" and inserting "60 percent". 
(b) SPECIFIC OBJECTIVES.—Section 101(c)(6) of the Housing and 
Community Development Act of 1974 is amended by striking "to 
attract persons of higher income". 
(c) CERTIFICATION.—Section 104(b)(3) of the Housing and Commu-
nity Development Act of 1974 is amended by striking "51 percent" 
and inserting "60 percent". 
SEC. 503. CITY AND COUNTY CLASSIFICATIONS. 
(a) METROPOUTAN CITY.—Section 102(a)(4) of the Housing and 
Community Development Act of 1974 is amended— 
(1) in the second sentence, by striking "March 15, 1988" and 
inserting "September 30, 1989"; 
(2) by striking out the third sentence and inserting in lieu 
thereof the following: "Any unit of general local government 
that becomes eligible to be classified as a metropolitan city, and 
was not classified as a metropolitan city in the immediately 
preceding fiscal year, may, upon submission of written notifica-
tion to the Secretary, defer its classification as a metropolitan 
city for all purposes under this title, if it elects to have its 
population included in an urban county under subsection (d). 
Notwithstanding the second sentence of this paragraph, a city 
may elect not to retain its classification £is a metropolitan city 
for fiscal year 1988 or 1989."; and 
(3) by adding at the end thereof the following new sentence: 
"Any city classified as a metropolitan city pursuant to the first 
or second sentence of this paragraph, and that no longer quali-
42 use 5307. 
Grants. 
42 use 5318. 
42 use 5301. 
42 use 5304. 
State and local 
governments. 
42 use 5302. 
101 STAT. 1924 
PUBLIC LAW 100-242—FEB. 5, 1988 
fies as a metropolitan city under such first or second sentence in 
a fiscal year beginning after fiscal year 1989, shall retain its 
classification as a metropolitan city for such fiscal year and the 
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f J Si 
succeeding fiscal year, except that in such succeeding fiscal year 
(A) the amount of the grant to such city shall be 50 percent of 
the amount calculated under section 1060b); and (B) the remain-
ing 50 percent shall be added to the amount allocated under 
section 106(d) to the State in which the city is located and the 
:; 97€ 
city shall be eligible in such succeeding fiscal year to receive a 
distribution from the State allocation under section 106(d) as 
increased by this sentence.". 
O
t
>
) URBAN COUNTY.—Section 102(a)(6) of the Housing and Commu-
42 use 5302. 
nity Development Act of 1974 is amended to read as follows: 
"(6)(A) The term 'urban county' means any county within a 
metropolitan area which— 
"(i) is authorized under State law to undertake essential 
community development and housing assistance activities in its 
unincorporated areas, if any, which are not units of general 
local government, and 
'• -U uc J '*4 
"(ii) either— 
"(I) has a population of 200,000 or more (excluding the 
population of metropolitan cities therein) and has a 
combined population of 100,000 or more (excluding the 
i 
population of metropolitan cities therein) in such unincor-
porated areas and in its included units of general local 
government (and in the case of counties having a combined 
' 
population of less than 200,000, the areas and units of 
general local government must include the areas and units 
hm 
of general local government which in the aggregate have 
?
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: 5 : 
fenu 
the preponderance of the persons of low and moderate 
income who reside in the county) (a) in which it has author-
lit . 
ity to undertake essential community development and 
?! 
housing assistance activities and which do not elect to have 
their population excluded, or (b) with which it has entered 
.'i«i 
into cooperation agreements to undertake or to assist in the 
. ',« ^ 
4
^ 
undertaking of essential community development and hous-
ing assistance activities, or 
^ 
, + , 
"(II) has a population in excess of 100,000, a population 
*"'„ .., , , 
density of at least 5,000 persons per square mile, and 
,*ft^ 
contains within its boundaries no incorporated places as 
• 
defined by the United States Bureau of the Census. 
"(B) In order to permit an orderly transition of each county losing 
its classification as an urban county by reason of a decrease in 
population, any county classified as or deemed to be an urban 
county under this paragraph for purposes of receiving assistance 
under any section of this title for fiscal year 1983 or subsequent 
years shall retain such qualification for purposes of receiving such 
assistance through September 30, 1989, or for such longer period 
covered by a cooperation agreement entered into during fiscal year 
1984, except that the provisions of this subparagraph shall not apply 
with respect to any county losing its classification as an urban 
county by reason of the election of any unit of general local govern-
ment included in such county to have its population excluded under 
clause (iiXIXa) of subparagraph (A) or to not renew a cooperation 
agreement under clause (iiXDO)) of such subparagraph. 
"(C) Notwithstanding the combined population amount set forth 
in clause (ii) of subparagraph (A), a county shall also qualify as an 
PUBLIC LAW 100-242—FEB. 5, 1988 
101 STAT. 1925 
urban county lor purposes of assistance under section 106 if such 
county— 
"(i) complies with all other requirements set forth in the first 
sentence; 
"(ii) has, according to the most recent available decennial 
census data, a combined population between 190,000 and 
199,999, inclusive (excluding the population of metropolitan 
cities therein) in all its unincorporated areas that are not units 
of general local government and in all units of general local 
government located within such county; 
"(iii) had a population growth rate of not less than 15 percent 
during the most recent 10-year period measured by applicable 
censuses; and 
"(iv) has submitted data satisfactory to the Secretary that it 
has a combined population of not less than 200,000 (excluding 
the population of metropolitan cities therein) in all its unincor-
porated areas that are not units of general local government 
and in all units of general local government located within such 
county. 
"(D) Such term also includes a county that— 
"(i) has a combined population in excess of 175,000, has more 
Water. 
than 50 percent of the housing units of the area unsewered, and 
has an aquifer that was designated before March 1, 1987, a sole 
source aquifer by the Environmental Protection Agency; 
"(ii) has taken steps, which include at least one public ref-
erendum, to consolidate substantial public services with an 
adjoining metropolitan city, and in the opinion of the Secretary, 
, 
has consolidated these services with the city in an effort that is 
expected to result in the unification of the two governments 
within 6 years of the date of enactment of the Housing and 
Community Development Act of 1987; or 
"(iii) had a population between 180,000 and 200,000 on Octo-
ber 1, 1987, was eligible for assistance under section 119 of the 
Housing and Community Development Act of 1974 in fiscal year 
1986, and does not contain any metropolitan cities. 
"(E) Any county classified as an urban county pursuant to 
subparagraph (A), (B), or (C) of this paragraph, and that no longer 
qualifies as an urban county under such subparagraph in a fiscal 
year beginning after fiscal year 1989, shall retain its classification as 
an urban county for such fiscal year and the succeeding fiscal year, 
except that in such succeeding fiscal year (i) the amount of the grant 
to such an urban county shall be 50 percent of the amount cal-
culated under section 106(b); and (ii) the remaining 50 percent shall 
be added to the amount allocated under section 106(d) to the State in 
which the urban county is located and the urban county shall be 
eligible in such succeeding fiscal year to receive a distribution from 
the State allocation under section 106(d) as increased by this 
sentence.". 
(c) INCLUSION OF UNITS OF GENERAL LOCAL GOVERNMENT IN 
URBAN COUNTIES.—Section 102(d) of the Housing and Community 
Development Act of 1974 is amended by striking the last sentence. 
42 USC 5302. 
SEC. 504. ELIGIBLE ACTIVITIES. 
(a) ELIGIBLE ACTIVITIES.—Section 105(a)(15) of the Housing and 
Community Development Act of 1974 is amended by striking out 42 USC 5305. 
"grants" both places it appears and inserting in lieu thereof 
"assistance". 
101 STAT. 1926 
PUBLIC LAW 100-242—FEB. 5, 1988 
42 use 5305. 
(b) ENERGY UsE STRATEGIES.—Section 105(a)(16) of such Act is 
amended to read as follows: 
"(16) activities necessary to the development of energy use 
strategies related to a recipient's development goals, to assure 
that those goals are achieved with maximum energy efficiency, 
including items such as— 
"(A) an analysis of the manner in, and the extent to, 
which energy conservation objectives will be integrated into 
• b •
- 
local government operations, purchasing and service deliv-
ery, capital improvements budgeting, waste management, 
district heating and cooling, land use planning and zoning, 
and traffic control, parking, and public transportation func-
tions; and 
"(B) a statement of the actions the recipient will take to 
foster energy conservation and the use of renewable energy 
resources in the private sector, including the enactment 
and enforcement of local codes and ordinances to encourage 
or mandate energy conservation or use of renewable energy 
resources, financial and other assistance to be provided 
(principally for the benefit of low- and moderate-income 
"
* 
persons) to make energy conserving improvements to resi-
^ 
dential structures, and any other proposed energy conserva-
tion activities;". 
SEC. 505. STATEMENT OF ACTIVITIES AND REVIEW. 
Section 104(a)(1) of the Housing and Community Development Act 
42 use 5304. 
of 1974 is amended by striking out the last sentence. 
SEC. 506. ALLEVIATION OF LAKEFRONT FLOODING AND EROSION. 
Section 104(b)(3) of the Housing and Community Development Act 
of 1974 is amended— 
(1) by inserting "(A)" after "except that"; and 
(2) by inserting before the semicolon at the end the following: 
"; and (B) a grantee that borders on the Great Lakes and that 
experiences significant adverse financial and physical effects 
due to lakefront erosion or flooding may include in the projected 
use of funds activities that are clearly designed to alleviate the 
threat posed, and rectify the damage caused, by such erosion or 
flooding if such activities will principally benefit persons of low 
and moderate income and the grantee certifies that such activi-
ties are necessary to meet other needs having a particular 
urgency". 
SEC. 507. HOUSING ASSISTANCE PLANS. 
(a) HOUSING PRESERVATION.—Section 104(c)(1) of the Housing and 
Community Development Act of 1974 is amended— 
(1) by striking "and" at the end of subparagraph (B); 
(2) by striking the period at the end of subparagraph (C) and 
inserting "; and '; and 
(3) by adding at the end the following new subparagraph: 
''">'• 
"(D) specifies activities that will be undertaken annually to 
minimize displacement and preserve or expand the availability 
of housing for persons of low and moderate income, such as the 
preservation of single room occupancy housing and the develop-
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c
;
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ment by public and private nonprofit organizations of vacant 
properties that become available under in rem proceedings, and 
specifies separately the activities that will be undertaken for 
PUBLIC LAW 100-242—FEB. 5, 1988 
101 STAT. 1927 
persons of low income and the activities that will be undertaken 
for persons of moderate income.", 
(b) TECHNICAL AMENDMENTS.—Section 104(c)(1) of the Housing and 
Community Development Act of 1974 is amended— 
42 USC 5304. 
(1) by striking "lower income persons" each place it appears 
and inserting "persons of low and moderate income"; and 
(2) in subparagraph (C)(ii), by striking "low-income persons" 
and inserting "persons of low and moderate income". 
SEC. 508. CITIZEN PARTICIPATION PLAN. 
Grants. 
Section 104(a) of the Housing and Community Development Act of 
1974 is amended by adding at the end thereof the following: 
"(3) A grant under section 106 may be made only if the grantee 
certifies that it is following a detailed citizen participation plan 
which— 
"(A) provides for and encourages citizen participation, with 
particular emphasis on participation by persons of low and 
moderate income who are residents of slum and blight areas 
and of areas in which section 106 funds are proposed to be used, 
and in the case of a grantee described in section 106(a), provides 
for participation of residents in low and moderate income 
neighborhoods as defined by the local jurisdiction; 
"(B) provides citizens with reasonable and timely access to 
local meetings, information, and records relating to the 
grantee's proposed use of funds, as required by regulations of 
the Secretary, and relating to the actual use of funds under this 
title; 
"(C) provides for technical assistance to groups representative 
of persons of low and moderate income that request such assist-
ance in developing proposals with the level and type of assist-
ance to be determined by the grantee; 
"(D) provides for public hearings to obtain citizen views and to 
respond to proposals and questions at all stages of the commu-
nity development program, including at least the development 
of needs, the review of proposed activities, and review of pro-
gram performance, which hearings shall be held after adequate 
notice, at times and locations convenient to potential or actual 
beneficiaries, and with accommodation for the handicapped; 
"(E) provides for a timely written answer to written com-
plaints and grievances, within 15 working days where prac-
ticable; and 
"(F) identifies how the needs of non-English speaking resi-
dents will be met in the case of public hearings where a 
significant number of non-English speaking residents can be 
reasonably expected to participate. 
This paragraph may not be construed to restrict the responsibility 
or authority of the grantee for the development and execution of its 
community development program.". 
SEC. 509. CONSERVING NEIGHBORHOODS AND HOUSING BY PROHIBITING 
Grants. 
DISPLACEMENT. 
(a) IN GENERAL.—Section 104 of the Housing and Community 
Development Act of 1974 is amended— 
(1) by redesignating subsections (d) through (j) as subsections 
(e) through (k), respectively; and 
(2) by inserting after subsection (c) the following new 
subsection: 
101 STAT. 1928 
PUBLIC LAW 100-242—FEB. 5, 1988 
Grants. 
"(d)(1) A grant under section 106 or 119 may be made only if the 
grantee certifies that it is following a residential antidisplacement 
and relocation assistance plan. A grantee receiving a grant under 
f"? w;^ 
section 106(a) or section 119 shall so certify to the Secretary. A 
grantee receiving a grant under section 106(d) shall so certify to the 
State. 
"(2) The residential antidisplacement and relocation assistance 
plan shall in connection with a development project assisted under 
section 106 or 119— 
"(A) in the event of such displacement, provide that— 
-' 
"(i) governmental agencies or private developers shall 
provide within the same community comparable replace-
ment dwellings for the same number of occupants as could 
ii 
have been housed in the occupied and vacant occupiable 
low and moderate income dwelling units demolished or 
/- 
converted to a use other than for housing for low and 
moderate income persons, and provide that such replace-
ment housing may include existing housing assisted with 
project based assistance provided under section 8 of the 
5 
United States Housing Act of 1937; 
"(ii) such comparable replacement dwellings shall be de-
signed to remain affordable to persons of low and moderate 
income for 10 years from the time of initial occupancy; 
"(iii) relocation benefits shall be provided for all low or 
'' 
moderate income persons who occupied housing demolished 
or converted to a use other than for low or moderate income 
housing, including reimbursement for actual and reason-
- 
able moving expenses, security deposits, credit checks, and 
other moving-related expenses, including any interim living 
^ 
costs; and in the case of displaced persons of low and 
moderate income, provide either— 
"(I) compensation sufficient to ensure that, for a 5-
year period, the displaced families shall not bear, after 
relocation, a ratio of shelter costs to income that ex-
ceeds 30 percent; or 
"(II) if elected by a family, a lump-sum payment 
equal to the capitalized value of the benefits available 
under subclause (I) to permit the household to secure 
^ 
participation in a housing cooperative or mutual hous-
ing association; 
"(iv) persons displaced shall be relocated into comparable 
:' ••• 
replacement housing that is— 
'. 
f • 
"(I) decent, safe, and sanitary; 
"(II) adequate in size to accommodate the occupants; 
"(III) functionally equivalent; and 
iJ^ d'- *
• . 
"(IV) in an area not subject to unreasonably adverse 
':*r '•> 
environmental conditions; 
"(B) provide that persons displaced shall have the right to 
elect, as an alternative to the benefits under this subsection, to 
ji ii 
receive benefits under the Uniform Relocation Assistance and 
Real Property Acquisition Policies Act of 1970 (42 U.S.C. 4601 et 
seq.) if such persons determine that it is in their best interest to 
do so; and 
Claims. 
"(C) provide that where a claim for assistance under subpara-
graph (A)(iv) is denied by a grantee, the claimant may appeal to 
V 
the Secretary in the case of a grant under section 106 or 119 or 
to the appropriate State official in the case of a grant under 
PUBLIC LAW 100-242—FEB. 5, 1988 
101 STAT. 1929 
section 106(d), and that the decision of the Secretary or the 
State official shall be final unless a court determines the deci-
sion was arbitrary and capricious. 
"(3) Paragraphs (2)(AXi) and (2XA)(ii) shall not apply in any case in 
which the Secretary finds, on the basis of objective data, that there 
is available in the area an adequate supply of habitable affordable 
housing for low and moderate income persons. A determination 
•^''ik 
under this paragraph is final and nonreviewable.". 
(b) EFFECTIVE DATE.—The amendment made by subsection (a) 42 USC 5304 
shall take effect on October 1,1988. 
note. 
SEC. 510. LIMITED NEW CONSTRUCTION OF HOUSING UNDER COMMUNITY 
DEVELOPMENT BLOCK GRANT PROGRAM. 
Section 105(a) of the Housing and Community Development Act of 
1974 is amended— 
42 USC 5305. 
(1) by striking out "and" at the end of paragraph (17); 
(2) by striking out the period at the end of paragraph (18) and 
inserting in lieu thereof "; and"; and 
(3) by adding at the end thereof the following new paragraph: 
"(19) provision of assistance to facilitate substantial re-
construction of housing owned and occupied by low and mod-
erate income persons (A) where the need for the reconstruction 
was not determinable until after rehabilitation under this sec- 
35 ,, 
tion had already commenced, or (B) where the reconstruction is 
part of a neighborhood rehabilitation effort and the grantee (i) 
determines the housing is not suitable for rehabilitation, and (ii) 
demonstrates to the satisfaction of the Secretary that the cost of 
substantial reconstruction is significantly less than the cost of 
new construction and less than the fair market value of the 
property after substantial reconstruction.". 
SEC. 511. AVAILABILITY OF COMMUNITY DEVELOPMENT BLOCK GRANTS 
FOR UNIFORM EMERGENCY TELEPHONE NUMBER SYSTEMS. 
Section 105(c)(2) of the Housing and Community Development Act 
of 1974 is amended— 
(1) by inserting "(A)" after the paragraph designation; 
(2) by redesignating subparagraphs (A) and (B) as clauses (i) 
and (ii), respectively; and 
(3) by adding at the end thereof the following new subpara-
graph: 
"(B) The requirements of subparagraph (A) do not prevent the use 
of assistance under this title for the development, establishment, 
and operation for not to exceed 2 years after its establishment of a 
uniform emergency telephone number system if the Secretary deter-
mines that— 
"(i) such system will contribute substantially to the safety of 
the residents of the area served by such system; 
"(ii) not less than 51 percent of the use of the system will be 
by persons of low and moderate income; and 
"(iii) other Federal funds received by the grantee are not 
available for the development, establishment, and operation of 
such system due to the insufficiency of the amount of such 
funds, the restrictions on the use of such funds, or the prior 
commitment of such funds for other purposes by the grantee. 
The percentage of the cost of the development, establishment, and 
operation of such a system that may be paid from assistance under 
this title and that is considered to benefit low and moderate income 
101 STAT. 1930 
PUBLIC LAW 100-242—FEB. 5, 1988 
persons is the percentage of the population to be served that is made 
up of persons of low and moderate income.". 
SEC. 512. STATE CERTIFICATIONS FOR RECEIVING COMMUNITY DEVEL-
OPMENT BLOCK GRANTS FOR NONENTITLEMENT AREAS. 
Section 106(dX2) of the Housing and Community Development Act 
42 use 5306. 
of 1974 is amended— 
(1) in subparagraph (C), by striking "the Governor must cer-
^
" 
tify that the State" and inserting "the State must certify that 
it"; and 
(2) in subparagraph (D), by striking "the Governor of each 
State" and inserting "the State". 
SEC. 513. ADMINISTRATIVE EXPENSES OF STATES DISTRIBUTING FUNDS 
r 
TO NONENTITLEMENT AREAS. 
Section 106(d)(3)(A) of the Housing and Community Development 
Act of 1974 is amended by striking "$102,000" and inserting 
"$100,000". 
SEC. 514. COMMUNITY DEVELOPMENT BLOCK GRANT LOAN GUARAN-
TEES. 
(a) LIMITATION ON COMMITMENTS.—The last sentence of section 
42 use 5308. 
108(a) of the Housing and Community Development Act of 1974 is 
amended— 
(1) by striking "during fiscal year 1984"; and 
(2) by striking "$225,000,000" and inserting "$150,000,000 
during fiscal year 1988, and $153,000,000 during fiscal year 
1989". 
(b) PROHIBITION ON FEES.—Section 108 of the Housing and 
Community Development Act of 1974 is amended by adding at the 
end the following new subsection: 
"(m) No fee or charge may be imposed by the Secretary or any 
other Federal agency on or with respect to a guarantee made by the 
Secretary under this section after the date of the enactment of the 
Housing and Community Development Act of 1987.". 
(c) ELIGIBLE USES OF LOAN GUARANTEES.—Section 108(a) of the 
Housing and Community Development Act of 1974 is amended in 
the first sentence— 
(1) by inserting "(1)" after "purposes of financing"; and 
(2) by inserting before the period at the end the following: "; 
(2) housing rehabilitation; or (3) economic development activi-
ties permitted under paragraphs (14), (15), and (17) of section 
105(a)". 
SEC. 515. URBAN DEVELOPMENT ACTION GRANT SELECTION CRITERIA. 
(a) PROJECT QUALITY CRITERIA.—Section 119(dXl) of the Housing 
42 use 5318. 
and Community Development Act of 1974 is amended— 
(1) by inserting a dash before "(A)"; 
(2) by indenting subparagraphs (A) and (B) in the same 
manner as subparagraphs (C) and (D), as inserted by this subsec-
tion; 
(3) in subparagraph (A), by striking out "as the primary 
criterion,"; 
(4) by striking out "and" at the end of subparagraph (B); and 
(5) by striking out subparagraph (C) and inserting in lieu 
thereof the following new subparagraphs: 
Employment 
"(C) the following Other criteria: 
.-,>.- . r 
and 
unemployment. 
PUBLIC LAW 100-242—FEB. 5, 1988 
101 STAT. 1931 
"(i) the extent to which the grant will stimulate economic 
recovery by leveraging private investment; 
"(ii) the number of permanent jobs to be created and their 
relation to the amount of grant funds requested; 
"(iii) the proportion of permanent jobs accessible to lower 
income persons and minorities, including persons who are 
unemployed; 
"(iv) the extent to which the project will retain jobs that 
will be lost without the provision of a grant under this 
section; 
"(v) the extent to which the project will relieve the most 
pressing employment or residential needs of the applicant 
b y -
"(I) reemploying workers in a skill that has recently 
suffered a sharp increase in unemployment locally; 
"(II) retraining recently unemployed residents in 
^ 
new skills; 
"(III) providing training to increase the local pool of 
skilled labor; or 
"(IV) producing decent housing for low- and mod-
erate-income persons in cases where such housing is in 
severe shortage in the area of the applicant, except 
that an application shall be considered to produce hous-
ing for low- and moderate-income persons under this 
clause only if such application proposes that (a) not less 
than 51 percent of all funds available for the project 
shall be used for dwelling units and related facilities; 
and (b) not less than 30 percent of all funds used for 
dwelling units and related facilities shall be used for 
dwelling units to be occupied by persons of low and 
moderate income, or not less than 20 percent of all 
dwelling units made available to occupancy using such 
funds shall be occupied by persons of low and moderate 
income, whichever results in the occupancy of more 
dwelling units by persons of low and moderate income; 
"(vi) the impact of the proposed activities on the fiscal 
base of the city or urban county and its relation to the 
amount of grant funds requested; 
"(vii) the extent to which State or local Government 
State and local 
funding or special economic incentives have been commit- governments. 
ted; and 
"(viii) the extent to which the project will have a substan-
tial impact on physical and economic development of the 
city or urban county, the proposed activities are likely to be 
accomplished in a timely fashion with the grant amount 
available, and the city or urban county has demonstrated 
performance in housing and community development pro-
grams; and 
"(D) additional consideration for projects with the following 
characteristics: 
"(i) projects to be located within a city or urban county 
which did not receive a preliminary grant approval under 
this section during the 12-month period preceding the date 
on which applications are required to be submitted for the 
grant competition involved; and 
"(ii) twice the amount of the additional consideration 
provided under clause (i) for projects to be located in cities 
101 STAT. 1932 
PUBLIC LAW 100-242—FEB. 5, 1988 
: . , V or urban counties which did not receive a preliminary grant 
approval during the 24-month period preceding the date on 
T . 
which applications under this section are required to be 
submitted for the grant competition involved. 
If a city or urban county has submitted and has pending more 
than one application, the additional consideration provided by 
subparagraph (D) of the preceding sentence shall be available 
r only to the project in such city or urban county which received 
, ,: 
the highest number of points under subparagraph (C) of such 
sentence.". 
(b) SELECTION LIMITATIONS AND CRITERIA WEIGHT.—Section 119(d) 
42 use 5318. 
of the Housing and Community Development Act of 1974 is 
amended by adding at the end thereof the following new para-
graphs: 
"(3) The Secretary shall award points to each application as 
. follows: 
"(A) not more than 35 points on the basis of the criteria 
.;a ' referred to in paragraph (1)(A); 
"(B) not more than 35 points on the basis of the criteria 
referred to in paragraph (1)(B); 
"(C) not more than 33 points on the basis of the criteria 
referred to in paragraph (1)(C); and 
"(D)(i) 1 additional point on the basis of the criterion referred 
, 
to in paragraph (l)(D)(i); or 
"(ii) 2 additional points on the basis of the criterion referred 
to in paragraph (l)(D)(ii). 
"(4) The Secretary shall distribute grant funds under this section 
so that to the extent practicable during each funding cycle— 
"(A) 65 percent of the funds is first made available utilizing 
all of the criteria set forth in paragraph (1); and 
"(B) 35 percent of the funds is then made available solely on 
the basis of the factors referred to in subparagraphs (C) and (D) 
of paragraph (1). 
"(5)(A) Within 30 days of the start of each fiscal year, the Sec-
retary shall announce the number of competitions for grants to be 
; held in that fiscal year. The number of competitions shall be not less 
than two nor more than three.". 
"(B) Each competition for grants described in any clause of 
subparagraph (A) shall be for an amount equal to the sum o
f
— 
' . 
"(i) approximately the amount of the funds available for such 
grants for the fiscal year divided by the number of competitions 
for those funds; 
"(ii) any funds available for such grants in any previous 
competition that are not awarded; and 
"(iii) any funds available for such grants in any previous 
t 
competition that are recaptured. 
"(6) In an application under this subsection, an urban county may 
use data relating to the criteria under paragraph (1) that reflect 
distress conditions of census tracts within a radius of 15 miles of the 
proposed project and within that urban county and in metropolitan 
cities within that urban county, except that if any data reflecting 
conditions in a metropolitan city with a population of 100,000 or 
more are included, then data reflecting conditions in any metropoli-
tan city with a population of 75,000 or more may be used only with 
the consent of that metropolitan city.". 
(c) USE OF REPAID GRANT FUNDS.—Section 119(f) of the Housing 
, and Community Development Act of 1974 is amended by adding at 
PUBLIC LAW 100-242—FEB. 5, 1988 
101 STAT. 1933 
the end thereof the following: "In any case in which the project 
proposes the repayment to the applicant of the grant funds, such 
funds shall be made available by the applicant for economic develop-
ment activities that are eligible activities under this section or 
section 104. The applicant shall annually provide the Secretary with 
a statement of the projected receipt and use of repaid grant funds 
during the next year together with a report acceptable to the 
Secretary on the use of such funds during the most recent preceding 
,1^ 
full fiscal year of the applicant.". 
(d) NONDISCRIMINATION.—Section 119(r) of the Housing and 
Community Development Act of 1974 is amended to read as follows: 
42 USC 5318. 
"(r) In utilizing the discretion of the Secretary when providing 
Eissistance and applying selection criteria under this section, the 
Secretary may not discriminate against applications on the basis of 
(1) the type of activity involved, whether such activity is primarily 
housing, industrial, or commercial; or (2) the type of applicant, 
whether such applicant is a city or urban county.". 
(e) REPORTS OF COMPTROLLER GENERAL.— 
42 use 5318 
(1)(A) Not later than the expiration of the 1-year period 
note. 
following the date of enactment of this Act and every 3 years 
thereafter, the Comptroller General of the United States shall 
prepare and submit to the Congress a comprehensive report 
evaluating the eligibility standards and selection criteria ap-
plicable under section 119 of the Housing and Community 
Development Act of 1974. 
(B) Such report shall evaluate in detail the standards and 
j^ 
criteria specified in such section that measure the level or 
comparative degree of economic distress of cities and urban 
counties and the effect of the grants awarded on the basis of 
such standards and criteria on stimulating the maximum eco-
nomic development activity. 
(C) Such report shall also evaluate in detail the extent to 
which the economic and social data utilized by the Secretary in 
awarding grants under such section is current and accurate, 
and shall compare the data used by the Secretary with other 
available data. The Comptroller General shall make rec-
ommendations to the Congress on whether or not other data 
should be collected by the Federal Government in order to fairly 
and accurately distribute grants under such section based on 
the level or comparative degree of economic distress. The 
Comptroller General shall also make recommendations on 
whether or not existing data should be collected more fre-
quently in order to ensure that timely data is used to evaluate 
grant applications under such section. 
(2) Not later than the expiration of the 3-month period follow- Grants. 
ing the date of the final competition for grants for fiscal year 
1988 under section 119 of the Housing and Community Develop-
ment Act of 1974, the Comptroller General of the United States 
shall prepare and submit to the Congress a comprehensive 
report describing the effect of the amendments made by this 
section on— 
(A) the targeting of grant funds to cities and urban 
counties having the highest level or degree of economic 
distress; 
(B) the distribution of grants funds among regions of the 
... 
United States; 
(C) the number and types of projects receiving grants; 
101 STAT. 1934 
PUBLIC LAW 100-242—FEB. 5, 1988 
42 u s e 5318 
note. 
Federal 
Register, 
publication. 
42 u s e 5318 
note. 
Effective date. 
42 u s e 5318. 
Hawaii. 
(D) the per capita funding levels for each city, urban 
county, or identifiable community described in subsection 
(p) of such section 119, receiving assistance under such 
section 119; and 
(E) the stimulation of the maximum economic develop-
ment activity. 
(f) REGULATIONS.—The Secretary of Housing and Urban Develop-
ment shall issue such regulations as may be necessary to carry out 
the amendments made by this section. Such regulations shall be 
published for comment in the Federal Register not later than 60 
days after the date of enactment of this Act. The provisions of 
section 119(d)(1)(D), section 119(d)(3), and section 119(d)(4) of the 
Housing and Community Development Act of 1974, shall take effect 
on the date of enactment of this Act. 
(g) APPLICABILITY.— 
(1) IN GENERAL.—The amendments made by this section shall 
be applicable to the making of urban development action grants 
that have not received the preliminary approval of the Sec-
retary of Housing and Urban Development before the date on 
which final regulations issued by the Secretary under subsec-
tion (f) become effective. For the fiscal year in which the 
amendments made by this section become applicable, such 
amendments shall only apply with respect to the aggregate 
amount awarded for such grants on or after such effective date. 
(2) SUNSET OF URBAN COUNTY COMPETITION RULE.—Effective 
October 1, 1989, section 119(d)(6) of the Housing and Community 
Development Act of 1974 is repealed. 
(h) LIMITATION ON GRANT AMOUNTS.—Section 119 of the Housing 
and Community Development Act of 1974 is amended by adding at 
the end thereof the following: 
"(s) For fiscal years 1988 and 1989, the maximum grant amount 
for any project under this section is $10,000,000.". 
(i) CONSIDERATION OF CERTAIN COUNTIES AS CITIES UNDER URBAN 
DEVELOPMENT ACTION GRANT PROGRAM.—Section 119(n)(l) of the 
Housing and Community Development Act of 1974 is amended by 
adding at the end thereof the following new sentence: "Such term 
also includes the counties of Kauai, Maui, and Hawaii in the State of 
Hawaii.". 
SEC. 516. PROHIBITION ON USE OF URBAN DEVELOPMENT ACTION 
GRANTS FOR BUSINESS RELOCATIONS. 
(a) IN GENERAL.—Section 119(h) of the Housing and Community 
Development Act of 1974 is amended— 
(1) by inserting after the subsection designation the following: 
"(1) SPECULATIVE PROJECTS.—"; 
(2) by adding at the end of paragraph (1) (as so redesignated 
by paragraph (1) of this subsection) the following new sentence: 
"The provisions of this paragraph shall apply only to projects 
that do not have identified intended occupants."; and 
(3) by adding at the end the following new paragraphs: 
"(2) PROJECTS WITH IDENTIFIED INTENDED OCCUPANTS.—No assist-
ance may be provided or utilized under this section for any project 
with identified intended occupants that is likely to facilitate— 
"(A) a relocation of any operation of an industrial or commer-
^ cial plant or facility or other business establishment— 
PUBLIC LAW 100-242—FEB. 5, 1988 
101 STAT. 1935 
"(i) from any city, urban county, or identifiable commu-
nity described in subsection (p), that is eligible for assist-
ance under this section; and 
"(ii) to the city, urban county, or identifiable community 
described in subsection (p), in which the project is located; 
; 
o r 
, 
• i" 
> 
.f 
"(B) an expansion of any such operation that results in a 
reduction of any such operation in any city, county, or commu-
nity described in subparagraph (A)(i). 
"(3) SIGNIFICANT AND ADVERSE EFFECT.—The restrictions estab-
lished in paragraph (2) shall not apply if the Secretary determines 
that the relocation or expansion does not significantly and adversely 
affect the employment or economic base of the city, county, or 
community from which the relocation or expansion occurs. 
"(4) APPEAL OF ADVERSE DETERMINATION.—Following notice of 
intent to withhold, deny, or cancel assistance under paragraph (1) or 
(2), the Secretary shall provide a period of not less than 90 days in 
which the applicant can appeal to the Secretary the withholding, 
denial, or cancellation of assistance. Notwithstanding any other 
provision of this section, nothing in this section or in any legislative 
history related to the enactment of this section may be construed to 
permit an inference or conclusion that the policy of the Congress in 
the urban development action grant program is to facilitate the 
relocation of businesses from one area to another. 
"(5) ASSISTANCE FOR INDIVIDUALS ADVERSELY AFFECTED BY PROHIB-
ITED RELOCATIONS.— 
-i 
"(A) Any amount withdrawn by, recaptured by, or paid to the 
Secretary due to a violation (or a settlement of an alleged 
violation) of this subsection (or of any regulation issued or 
contractual provision entered into to carry out this subsection) 
by a project with identified intended occupants shall be made 
? 
available by the Secretary as a grant to the city, county, or 
community described in subsection (p), from which the oper-
ation of an industrial or commercial plant or facility or other 
business establishment relocated or in which the operation was 
reduced. 
"(B)(i) Any amount made available under this paragraph 
Employment 
shall be used by the grantee to assist individuals who were 
and 
employed by the operation involved prior to the relocation or unemployment, 
reduction and whose employment or terms of employment were 
adversely affected by the relocation or reduction. The assistance 
shall include job training, job retraining, and job placement. 
"(ii) If any amount made available to a grantee under this 
paragraph is more than is required to provide assistance under 
clause (i), the grantee shall use the excess amount to carry out 
community development activities eligible under section 105(a). 
"(C)(i) The provisions of this paragraph shall be applicable to 
any amount withdrawn by, recaptured by, or paid to the Sec-
retary under this section, including any amount withdrawn, 
recaptured, or paid before the effective date of this paragraph. 
"(ii) Grants may be made under this paragraph only to the 
extent of amounts provided in appropriation Acts. 
"(6) DEFINITION.—For purposes of this subsection, the term 'oper-
ation' includes any plant, equipment, facility, position, employment 
opportunity, production capacity, or product line. 
(7) REGULATIONS.—Not later than 60 days after the date of the 
enactment of the Housing and Community Development Act of 1987, 
101 STAT. 1936 
PUBLIC LAW 100-242—FEB. 5, 1988 
the Secretary shall issue such regulations as may be necessary to 
carry out the provisions of this subsection. Such regulations shall 
include specific criteria to be used by the Secretary in determining 
whether there is a significant and adverse effect under paragraph 
(3).". 
42 use 5318 
(b) APPLICABILITY.—Except as otherwise provided in section 
note. 
119(h)(5) of the Housing and Community Development Act of 1974 
(as added by subsection (a)), the amendments made by this section 
shall be applicable to urban development action grants that have 
not received the preliminary approval of the Secretary of Housing 
and Urban Development before the date of the enactment of this 
Act. 
SEC. 517. URBAN HOMESTEADING. 
*" 
" 
^ «* 
(a) EXTENSIONS.— 
(1) Section 810(h)(1) of the Housing and Community Develop-
12 use I706e. 
ment Act of 1974 is amended by striking out "1984 and 1985" 
•
s and inserting in lieu thereof "1988 and 1989". 
(2) Section 810(i)(l) of such Act is amended by striking out 
"1984 and 1985" and inserting in lieu thereof "1988 and 1989". 
(3) Section 810(j) of such Act is amended by striking out 
"December 31, 1985" and inserting in lieu thereof "December 1, 
1987". 
(b) STATE ADMINISTRATIVE EXPENSES.— 
(1) The second sentence of section 106(d)(3)(A) of the Housing 
42 use 5306. 
and Community Development Act of 1974 is amended— 
^r 
(A) by inserting immediately after "such expenses" the 
, 
c 
first time it appears the following: "and its administrative 
expenses under section 810 of this Act"; and 
(B) by inserting immediately after "such expenses" the 
second time it appears the following: "under this title". 
42 use 5307. 
(2) Section 107(b)(4) of such Act is amended by inserting before 
the first semicolon the following: "and section 810 of this Act". 
(c) SELECTION PROCEDURE.— 
(1) Section 8100t))(2) of the Housing and Community Develop-
12 use I706e- 
ment Act of 1974 is amended to read as follows: 
"(2) an equitable procedure for selecting recipients of home-
stead properties who have the capacity to make or cause to be 
*
' 
' 
made the repairs and improvements required under paragraph 
(3) of this subsection, which procedure shall— 
"(A) give special priority to applicants who are 'lower 
income families' as defined in section 30t>)(2) of the United 
e-.,. 
States Housing Act of 1937; 
"(B) exclude applicants who are currently homeowners; 
^ 
"(C) take into account the applicant's capacity to contrib-
--' 
ute a substantial amount of labor to the rehabilitation 
process, or to obtain assistance from private sources, 
community organizations, or other sources; and 
"(D) include other reasonable selection criteria.". 
(2) Section 8100t))(5) of such Act is amended by adding "and" 
after the semicolon. 
(3) Section 810(b)(6) of such Act is amended by striking out "; 
and" and inserting in lieu thereof a period. 
(4) Section 810(b)(7) of such Act is repealed. 
(d) TRANSFER OF PROPERTY TO QUALIFIED COMMUNITY ORGANIZA-
TIONS.—Section 810 of the Housing and Community Development 
Act of 1974 is amended— 
,.,,, 
, 
w 
, 
PUBLIC LAW 100-242—FEB. 5, 1988 
101 STAT. 1937 
^ 
(1) in subsection (a), by inserting "qualified community 
organization or" before "public agency designated"; 
(2) in subsection (b), by inserting "qualified community 
organization or" before "public agency designated"; 
(3) in subsection (b)(1), by inserting before the semicolon the 
following: "or in accordance with subsection (1) to qualified 
community organizations"; 
(4) in subsection (b)(3)(D), by inserting "qualified community 
organization or" before "public agency designated"; 
(5) in subsection (b)(5), by inserting "qualified community 
organization or" before "public agency designated"; 
(6) by redesignating subsection (k) as subsection (1); and 
(7) by inserting after subsection (j) the following new sub-
section: 
"(k) A unit of general local government or a State, or a public 
agency designated by a unit of general local government or a State, 
may transfer any real property that it receives under subsection (a) 
or purchases under subsection (i) to a qualified community organiza-
tion. Qualified community organizations shall be limited to 
organizations that— 
"(1) are incorporated and controlled by a board of directors 
whose members receive no compensation of any kind for the 
performance of their duties; 
"(2) are organized exclusively for charitable, educational, sci-
entific purposes, or the promotion of social welfare, and qualify 
as exempt organizations under paragraph (3) or (4) of section 
501(c) of the Internal Revenue Code of 1986; and 
"(3) agree to assist the applicable State or unit of general local 
government with the selection of homesteaders, the selection, 
inspection, and rehabilitation of the properties, and to perform 
such other functions as may be agreed between the State or unit 
of general local government and the qualified 
nonprofit 
. 
organization, including the acceptance of title to property from 
the relevant Federal agency and the direct conveyance of the 
property to the homesteaders subject to the terms and condi-
tions specified in this section.". 
(e) AUTHORIZATION OF APPROPRIATIONS.—The first sentence of sec-
tion 810(1) of the Housing and Community Development Act of 1974 
(as so redesignated by subsection (d) of this section) is amended to 
read as follows: "To reimburse the housing loan funds for properties 
transferred pursuant to this section, and to carry out subsections (c), 
(g), (h), and (i), there are authorized to be appropriated $12,000,000 
for fiscal year 1988, and $13,000,000 for fiscal year 1989.". 
SEC. 518. REHABILITATION LOANS. 
(a) EXTENSION OF LOAN AUTHORITY.—Section 312(h) of the Housing 
Act of 1964 is amended by striking "March 15, 1988" and inserting 
"September 30,1989". 
(b) PROHIBITION OF CERTAIN FEES.—Section 312(g) of the Housing 
Act of 1964 is amended by adding at the end the following new 
sentence: "No risk premium or loan fee may be imposed by or for 
the Secretary or any other Federal agency on or with respect to a 
loan made under this section after the date of the enactment of the 
Housing and Community Development Act of 1987.". 
(c) PROHIBITION OF LOAN SALES.—Section 312 of the Housing Act of 
1964 is amended by adding at the end the following new subsection: 
State and local 
governments. 
Real property. 
42 u s e 1452b. 
101 STAT. 1938 
PUBLIC LAW 100-242—FEB. 5, 1988 
"(1) The Secretary may not sell any loan made under this 
section.". 
SEC. 519. LOAN CANCELLATION. 
The Secretary of Housing and Urban Development shall cancel 
the indebtedness represented by loan number 070024914 under sec-
tion 312 of the Housing Act of 1964. The obligor on such loan is 
relieved of all liability to the Government for the outstanding 
principal balance on such loan, for the amount of accrued interest 
on such loan, and for any other fees and charges payable in connec-
tion therewith. This section shall be effective only to such extent or 
in such amounts as may be approved in appropriation Acts. 
SEC. 520. NEIGHBORHOOD REINVESTMENT CORPORATION. 
(a) COMPOSITION OF BOARD.—Section 604 of the Neighborhood 
42 use 8103. 
Reinvestment Corporation Act is amended— 
r : , 
(1) by inserting before the semicolon in subsection (a)(1) the 
following: "or a member of the Federal Home Loan Bank Board 
to be designated by the Chairman"; 
(2) by striking out subsection (a)(3) and inserting in lieu 
thereof the following: "(3) the Chairman of the Board of Gov-
*-' ernors of the Federal Reserve System, or a member of the Board 
of Governors of the Federal Reserve System to be designated by 
the Chairman;"; 
(3) by inserting before the semicolon in subsection (a)(4) the 
following: "or the appointive member of the Board of Directors 
of the Federal Deposit Insurance Corporation if so designated by 
the Chairman"; and 
(4) by striking out "Administrator" in subsection (a)(6) and 
inserting in lieu thereof the word "Chairman"; and by inserting 
after "Administration" the following: "or a member of the 
Board of the National Credit Union Administration to be des-
ignated by the Chairman.". 
(b) AUTHORIZATION OF APPROPRIATIONS.—Section 608(a) of the 
42 use 8107. 
Neighborhood Reinvestment Corporation Act is amended to read £is 
follows: 
"(a) There are authorized to be appropriated to the corporation to 
carry out this title $19,000,000 for fiscal year 1988, and $19,000,000 
for fiscal year 1989.". 
SEC. 521. NEIGHBORHOOD DEVELOPMENT DEMONSTRATION PROGRAM. 
Section 123(g) of the Housing and Urban-Rural Recovery Act of 
42 use 5318 
1983 is amended to read as follows: 
note. 
"(g) There are authorized to be appropriated to carry out this 
section $2,000,000 for fiscal year 1988, and $2,000,000 for fiscal year 
1989.". 
SEC. 522. PARK CENTRAL NEW COMMUNITY PROJECT. 
(a) HOUSING 
ASSISTANCE.—Section 213 of the Housing and 
12 use 1439. 
Community Development Act of 1974 is amended by adding at the 
end the following new subsection: 
Contracts. 
"(e) From budget authority made available in appropriation Acts 
for fiscal year 1988, the Secretary shall enter into an annual con-
tributions contract for a term of 180 months to obligate sufficient 
funds to provide assistance payments pursuant to section 8(b)(1) of 
the United States Housing Act of 1937 on behalf of 500 lower income 
families from budget authority made available for fiscal year 1988, 
PUBLIC LAW 100-242—FEB. 5, 1988 
101 STAT. 1939 
so long as such families occupy properties in the Park Central New 
Community Project or in adjacent areas that are recognized by the 
unit of general local government in which such Project is located as 
being included within the Park Central New Town In Town Project. 
If a lower income family receiving assistance payments pursuant to 
this subsection ceases to qualify for assistance payments pursuant to 
the provisions of section 8 of such Act or of this subsection during 
the 180-month term of the annual contributions contract, assistance 
payments shall be made on behalf of another lower income family 
who occupies a unit identified in the previous sentence.". 
(b) COMMUNITY DEVELOPMENT ASSISTANCE.—Section 107(a) of the 
Housing and Community Development Act of 1974 is amended by 42 USC 5307. 
adding at the end the following new sentence: "Of the amount set 
aside for grants under subsection (b) for fiscal year 1988, $5,000,000 
shall be made available by the Secretary for purposes of grants 
under subsection ODXD for the Park Central New Community 
Project.". 
SEC. 523. COMMUNITY DEVELOPMENT PROJECTS LABOR STANDARDS. 
Section 110 of the Housing and Community Development Act of 
1974 is amended bv striking 'is designed for residential use of eight 
42 USC 5310. 
or more families 
and insert "contains not less than 8 units". 
SEC. 524. URBAN PLANNING. 
Section 702 of the Housing Act of 1954 is amended— 
40 USC 462. 
(1) by striking subsections (c) and (h); and 
(2) by striking subsection (g) and inserting the following: 
ii i^ 
"(g) Effective upon the date of the enactment of the Housing and 
Community Development Act of 1987, and in accordance with such 
accounting and other procedures as the Secretary may prescribe, 
each advance made by the Secretary under this section that has any 
i 
principal amount outstanding shall be forgiven. The terms and Contracts. 
conditions of any contract, or any amendment to a contract, for such 
advance with respect to any promise to repay the advance shall be 
canceled.". 
SEC. 525. COMMUNITY DEVELOPMENT TECHNICAL AMENDMENTS. 
Section 123(e)(3) of the Housing and Urban-Rural Recovery Act of 
1983 is amended by striking "Act and inserting "section". 
42 USC 5318 
note. 
Subtitle B—Flood and Crime Insurance 
Programs 
SEC. 541. EXTENSION OF FLOOD INSURANCE PROGRAM. 
(a) GENERAL AUTHORITY.—Section 1319 of the National Flood 
Insurance Act of 1968 is amended by striking "March 15, 1988" and 42 USC 4026. 
inserting "September 30,1989". 
Ot)) EMERGENCY IMPLEMENTATION.—Section 1336(a) of the National 
Flood Insurance Act of 1968 is amended by striking "March 15, 42 USC 4056. 
1988" and inserting "September 30,1989". 
(c) ESTABUSHMENT OF FLOOD-RISK ZONES.—Section 1360(aX2) of the 
National Flood Insurance Act of 1968 is amended by striking 
42 USC 4101. 
"March 15,1988" and inserting "September 30,1989". 
(d) LIMITATION ON PREMIUMS.—The premium rates charged for 
42 use 4015 
flood insurance under any program established pursuant to the "ote. 
National Flood Insurance Act of 1968 may not be increased during 
91-194 O - 90 - 21: QL.3 Part 3 
101 STAT. 1940 
PUBLIC LAW 100-242—FEB. 5, 1988 
12 use 1749bbb. 
Termination 
date. 
12 use 
1749bbb-10c. 
42 use 4127. 
'Vi'j' 
eontracts. 
42 use 4013. 
the period beginning on the date of the enactment of this Act and 
ending on September 30, 1989, by more than a prorated annual rate 
of 10 percent. 
SEC. 542. EXTENSION OF CRIME INSURANCE PROGRAM. 
(a) GENERAL AUTHORITY.—Section 1201(b)(1) of the National Hous-
ing Act is amended by striking "March 15, 1988" in the matter 
preceding subparagraph (A) and inserting "September 30, 1989". 
Ot)) CONTINUATION OF EXISTING CONTRACTS.—Section 12010))(1)(A) 
of the National Housing Act is amended by striking "September 30, 
1986" and inserting "September 30,1990". 
(c) LIMITATION ON PREMIUMS.—The premium rates charged for 
crime insurance under any program established pursuant to part C 
of title XII of the National Housing Act may not be increased during 
the period beginning on the date of the enactment of this Act and 
ending on September 30, 1989, by more than a prorated annual rate 
of 5 percent. 
SEC. 543. STUDIES UNDER NATIONAL FLOOD INSURANCE PROGRAM. 
Section 1376(c) of the National Flood Insurance Act of 1968 is 
amended to read as follows: 
"(c) There are authorized to be appropriated for studies under this 
title $37,000,000 for fiscal year 1988, and $37,000,000 for fiscal year 
1989. Any amount appropriated under this subsection shall remain 
available until expended. . 
SEC. 544. SCHEDULE FOR PAYMENT OF FLOOD INSURANCE FOR STRUC-
TURES ON LAND SUBJECT TO IMMINENT COLLAPSE OR 
SUBSIDENCE. 
(a) IN GENERAL.—Section 1306 of the National Flood Insurance 
Act of 1968 is amended by adding at the end the following new 
subsection: 
"(c)(1) If any structure covered by a contract for flood insurance 
under this title and located on land that is along the shore of a lake 
or other body of water is certified by an appropriate State or local 
land use authority to be subject to imminent collapse or subsidence 
as a result of erosion or undermining caused by waves or currents of 
water exceeding anticipated cyclical levels, the Director shall (fol-
lowing final determination by the Director that the claim is in 
compliance with regulations developed pursuant to paragraph 
(6)(A)) pay amounts under such flood insurance contract for proper 
demolition or relocation as follows: 
« 
"(A) For proper demolition— 
"(i) Following final determination by the Director, 40 
percent of the value of the structure; and 
"(ii) Following demolition of the structure (including any 
bi 
septic containment system) prior to collapse, the remaining 
60 percent of the value of the structure and 10 percent of 
iB 
the value of the structure, or the actual cost of demolition, 
5 
whichever amount is less. 
"(B) For proper relocation (including removal of any septic 
containment system) if the owner chooses to relocate the 
structure— 
"(i) following final determination by the Director, prior to 
to 
collapse, up to 40 percent of the value of the structure; 
. '-• 
"(ii) the total payment under this subparagraph shall not 
- i 
exceed the actual cost of relocation. 
PUBLIC LAW 100-242—FEB. 5, 1988 
101 STAT. 1941 
"(2) If any structure subject to a final determination under para-
graph (1) collapses or subsides before the owner demolishes or 
relocates the structure and the Director determines that the owner 
has failed to take reasonable and prudent action to demolish or 
. o' 
relocate the structure, the Director shall not pay more than the 
amount provided in subparagraph (A)(i) with respect to the 
structure. 
"(3) For purposes of paying flood insurance pursuant to this 
subsection, the value of a structure shall be whichever of the 
\ Dcj i 
following is lowest: 
"(A) The fair market value of a comparable structure that is 
not subject to imminent collapse or subsidence, 
"(B) The price paid for the structure and any improvement to 
the structure, as adjusted for inflation in accordance with an 
index determined by the Director to be appropriate. 
"(C) The value of the structure under the flood insurance 
., .it. 
contract issued pursuant to this title. 
"(4)(A) The provisions of this subsection shall apply to contracts 
for flood insurance under this title that are in effect on, or entered 
into after, the date of the enactment of the Housing and Community 
^ 
Development Act of 1987. 
"(B) The provisions of this subsection shall not apply to any 
structure not subject to a contract for flood insurance under this 
title on the date of a certification under paragraph (1). 
"(C) The provisions of this subsection shall not apply to any 
structure unless the structure is covered by a contract for flood 
insurance under this title— 
"(i) on or before June 1,1988; 
"(ii) for a period of 2 years prior to certification under para-
graph (1); or 
"(iii) for the term of ownership if less than 2 years. 
"(D) The provisions of this subsection shall not apply to any 
New York. ' 
structure located in the area west of the groin field on the barrier 
island from Moriches Inlet to Shinnecock Inlet on the southern 
shore of Long Island of Suffolk County, New York. 
"(5) For any parcel of land on which a structure is subject to a 
final determination under paragraph (1), no subsequent flood insur-
ance coverage under this title or assistance under the Disaster 
s 
Relief Act of 1974 (except emergency assistance essential to save 
lives and protect property, public health and safety) shall be avail-
able for— 
"(A) any structure consisting of one to four dwelling units 
which is constructed or relocated at a point seaward of the 30-
year erosion setback; or 
"(B) any other structure which is constructed or relocated at a 
point seaward of the 60-year erosion setback. 
"(6)(A) The Director shall promulgate regulations and guidelines 
Regulations. 
to implement the provisions of this subsection. 
"(B) Prior to issuance of regulations regarding the State and local 
certifications pursuant to paragraph (1), all provisions of this sub-
section shall apply to any structure which is determined by the 
Director— 
"(i) to otherwise meet the requirements of this subsection; and 
"(ii) to have been condemned by a State or local authority and 
; 
to be subject to imminent collapse or subsidence as a result of 
I 
erosion or undermining caused by waves or currents of water 
exceeding anticipated cyclical levels. 
iOf 
6^^' 
101 STAT. 1942 
PUBLIC LAW 100-242—FEB. 5, 1988 
42 use 4013 
note. 
12 use 1749bbb. 
1
2 use 
1749bbb-8. 
12 use 
1749bbb-13. 
42 use 4017. 
42 use 4029. 
42 use 2414. 
"(7) No payments under this subsection may be made after 
September 30, 1989, except pursuant to a commitment made on or 
before such date.". 
(b) EFFECTIVE DATE.—The amendment made by this section shall 
become effective on the date of the enactment of this Act. 
SEC. 545. FLOOD AND CRIME INSURANCE TECHNICAL AMENDMENTS. 
(a) CRIME INSURANCE PROGRAM AUTHORITY.—Section 1201(b) of the 
National Housing Act is amended— 
(1) by striking paragraphs (2) and (3); 
(2) by striking "(bXD" and inserting "(b)"; and 
(3) by redesignating subparagraphs (A) through (C) as para-
graphs (1) through (3), respectively. 
(b) REINSURANCE AGREEMENTS.—Section 1222(c) of the National 
Housing Act is amended by striking "section 3679(a) of the Revised 
Statutes of the United States (31 U.S.C. 665(a))," and inserting 
"section 1341(a) of title 31, United States Code,". 
(c) NATIONAL INSURANCE DEVELOPMENT FUND.—Section 1243(d) of 
the National Housing Act is amended by striking "by law (sections 
102, 103, and 104 of the Government Corporation Control Act (31 
U.S.C. 847-849))" and inserting "by sections 9103 and 9104 of title 
31, United States Code,". 
(d) NATIONAL FLOOD INSURANCE FUND.—Section 1310(e) of the 
National Flood Insurance Act of 1968 is amended by inserting a 
comma after "Code". 
(e) FLOOD INSURANCE IN COLORADO RIVER FLOODWAY.—The Na-
tional Flood Insurance Act of 1968 is amended by inserting the 
following section heading for section 1322: "COLORADO RIVER 
FLOODWAY". 
(f) FEMA TREASURY BORROWINGS.—The third sentence of section 
15(e) of the Federal Flood Insurance Act of 1956 is amended by 
inserting a comma after "Code". 
Subtitle C—Miscellaneous Programs 
Grants. 
Contracts. 
State and local 
governments. 
42 use 3616 
note. 
Discrimination, 
prohibition. 
SEC. 561. FAIR HOUSING INITIATIVES PROGRAM. 
(a) IN GENERAL.—The Secretary of Housing and Urban Develop-
ment (in this section referred to as the "Secretary") may make 
grants to, or (to the extent of amounts provided in appropriation 
Acts) enter into contracts or cooperative agreements with, State or 
local governments or their agencies, public or private nonprofit 
organizations or institutions, or other public or private entities that 
are formulating or carrying out programs to prevent or eliminate 
discriminatory housing practices, to develop, implement, carry out, 
or coordinate— 
(1) programs or activities designed to obtain enforcement of 
the rights granted by title VIII of the Act of April 11, 1968 
(commonly referred to as the Civil Rights Act of 1968), or by 
State or local laws that provide rights and remedies for alleged 
discriminatory housing practices that are substantially equiva-
lent to the rights and remedies provided in such title VIII, 
through such appropriate judicial or administrative proceedings 
(including informal methods of conference, conciliation, and 
persuasion) as are available therefor; and 
, 
PUBLIC LAW 100-242—FEB. 5, 1988 
101 STAT. 1943 
(2) education and outreach programs designed to inform the 
Education. 
public concerning rights and obligations under the laws re-
ferred to in paragraph (1). 
O
t
)
) PROGRAM ADMINISTRATION.— 
(1) Not less than 30 days before providing a grant or entering 
into any contract or cooperative agreement to carry out activi-
ties authorized by this section, the Secretary shall submit 
notification of such proposed grant, contract, or cooperative 
agreement (including a description of the geographical distribu-
tion of such contracts) to the Committee on Banking, Housing, 
and Urban Affairs of the Senate and the Committee on Bank-
ing, Finance and Urban Affairs of the House of Representatives. 
(2) The Secretary shall provide to the Committee on Banking, Reports. 
Housing, and Urban Affairs of the Senate and the Committee 
on Banking, Finance and Urban Affairs of the House of Rep-
resentatives a quarterly report that summarizes the activities 
funded under this section and describes the geographical dis-
tribution of grants, contracts, or cooperative agreements funded 
under this section, 
(c) REGULATIONS.— 
(1) The Secretary shall issue such regulations as may be 
necessary to carry out the provisions of this section. 
(2) The Secretary shall, for use during the demonstration 
Discrimination, 
authorized in this section, establish guidelines for testing activi- prohibition, 
ties funded under the private enforcement initiative of the fair 
housing initiatives program. The purpose of such guidelines 
shall be to ensure that investigations in support of fair housing 
enforcement efforts described in subsection (a)(1) shall develop 
credible and objective evidence of discriminatory housing prac-
tices. Such guidelines shall apply only to activities funded under 
this section, shall not be construed to limit or otherwise restrict 
the use of facts secured through testing not funded under this 
section in any legal proceeding under Federal fair housing laws, 
and shall not be used to restrict individuals or entities, includ-
ing those participating in the fair housing initiatives program, 
from pursuing any right or remedy guaranteed by Federal law. 
Not later than 6 months after the end of the demonstration 
period authorized in this section, the Secretary shall submit to 
Congress the evaluation of the Secretary of the effectiveness of 
such guidelines in achieving the purposes of this section. 
(3) Such regulations shall include provisions governing ap-
plications for assistance under this section, and shall require 
each such application to contain— 
(A) a description of the assisted activities proposed to be 
undertaken by the applicant, together with the estimated 
v J 
costs and schedule for completion of such activities; 
(B) a description of the experience of the applicant in 
formulating or carrying out programs to prevent or elimi-
nate discriminatory housing practices; 
(C) available information, including studies made by or 
available to the applicant, indicating the nature and extent 
of discriminatory housing practices occurring in the general 
location where the applicant proposes to conduct its as- 
: * i
» 
sisted activities, and the relationship of such activities to 
such practices; 
(D) an estimate of such other public or private resources 
as may be available to cissist the proposed activities; 
101 STAT. 1944 
PUBLIC LAW 100-242—FEB. 5, 1988 
.oiniBoiilM ^tu <
a 
(E) a description of proposed procedures to be used by the 
-S2 B:W applicant for monitoring conduct and evaluating results of 
the proposed activities; and 
(F) any additional information required by the Secretary. 
(4) Regulations issued under this subsection shall not become 
effective prior to the expiration of 90 days after the Secretary 
transmits such regulations, in the form such regulations are 
intended to be published, to the Committee on Banking, Hous-
ing, and Urban Affairs of the Senate and the Committee on 
Banking, Finance and Urban Affairs of the House of Represent-
atives. 
i 
(5) The Secretary shall not obligate or expend any amount 
.•ftxi>H 
under this section before the effective date of the regulations 
required under this subsection. 
(d) AUTHORIZATION OF APPROPRIATIONS.—There are authorized to 
be appropriated to carry out the provisions of this section, including 
any program evaluations, $5,000,000 for fiscal year 1988, and 
$5,000,000 for fiscal year 1989, of which not more than $3,000,000 in 
each year shall be for the private enforcement initiative demonstra-
tion. Any amount appropriated under this section shall remain 
available until expended. 
(e) SUNSET.—The demonstration period authorized in this section 
,t 
shall end on September 30,1989. 
42 u s e 3608a. 
SEC. 562. COLLECTION OF CERTAIN DATA. 
(a) IN GENERAL.—To assess the extent of compliance with Federal 
fair housing requirements (including the requirements established 
under title VI of Public Law 88-352 and title VIII of Public Law 90-
284), the Secretary of Housing and Urban Development and the 
Secretary of Agriculture shall each collect, not less than annually, 
data on the racial and ethnic characteristics of persons eligible for, 
assisted, or otherwise benefiting under each community develop-
ment, housing assistance, and mortgage and loan insurance and 
guarantee program administered by such Secretary. Such data shall 
be collected on a building by building basis if the Secretary involved 
determines such collection to be appropriate. 
(b) REPORTS TO CONGRESS.—The Secretary of Housing and Urban 
Development and the Secretary of Agriculture shall each include in 
the annual report of such Secretary to the Congress a summary and 
evaluation of the data collected by such Secretary under subsection 
(a) during the preceding year. 
SEC. 563. REGULATORY AUTHORITY. 
(a) DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT.—Section 
42 use 3535. 
7(o) of the Department of Housing and Urban Development Act is 
amended by adding at the end thereof the following new paragraph: 
CI) The Secretary shall include with each rule or regulation 
required to be transmitted to the Committees under this subsection 
a detailed summary of all changes required by the Office of Manage-
ment and Budget that prohibit, modify, postpone, or disapprove such 
rule or regulation in whole or part.". 
O
t
)
) FARMERS HOME ADMINISTRATION.—Section 534 of the Housing 
42 use I490n. 
Act of 1949 is amended by adding at the end thereof the following 
new subsection: 
"(d) The Secretary shall include with each rule or regulation 
required to be transmitted to the Committees under this section a 
detailed summary of all changes required by the Office of Manage-
PUBLIC LAW 100-242—FEB. 5, 1988 
101 STAT. 1945 
ment and Budget that prohibit, modify, postpone, or disapprove such 
rule or regulation in whole or part.". 
SEC. 564. RESEARCH AND DEVELOPMENT. 
Section 501 of the Housing and Urban Development Act of 1970 is 12 USC I70lz-l. 
amended by striking the second and third sentences and inserting 
the following: "There are authorized to be appropriated to carry out 
this title $17,000,000 for fiscal year 1988, and $18,000,000 for fiscal 
year 1989.". 
SEC. 565. HOME MORTGAGE DISCLOSURE. 
(a) APPUCABILITY TO MORTGAGE BANKING AFFIUATES.— 
(1) Section 303(2) of the Home Mortgage Disclosure Act of 
1975 is amended— 
12 USC 2802. 
(A) by striking "or" the first place it appears; and 
(B) by inserting before the semicolon at the end the 
following: ", mortgage banking subsidiary of a bank holding 
company or savings and loan holding company, or savings 
and loan service corporation that originates or purchases 
mortgage loans". 
(2) Section 304 of the Home Mortgage Disclosure Act of 1975 is 12 USC 2803. 
amended by adding at the end the following new subsection: 
"(g) The requirements of subsections (a) and (b) shall not apply 
with respect to mortgage loans that are— 
"(1) made by any mortgage banking subsidiary of a bank 
holding company or savings and loan holding company or by 
any savings and loan service corporation that originates or 
purchases mortgage loans; and 
"(2) approved by the Secretary for insurance under title I or II 
of the National Housing Act.". 
(3) The first sentence of section 311 of the Home Mortgage 
Disclosure Act of 1975 is amended by inserting after "3060t>)" 
the following: "(and for each mortgagee making mortgage loans 
exempted under section 304(g))". 
(4) The amendments made by this subsection shall be ap-
plicable to calendar years beginning after December 31, 1986. 
(b) PERMANENT EXTENSION OF GENERAL AUTHORITY.—The Home 
Mortgage Disclosure Act of 1975 is amended by striking section 312. 
12 USC 2810. 
Effective date. 
12 USC 2802 
note. 
SEC. 566. LEAD-BASED PAINT POISONING PREVENTION. 
(a) DETECTION AND ABATEMENT PROCEDURES.—Section 302 of 
the 
Lead-Based Paint Poisoning Prevention Act is amended— 
(1) by inserting after the section designation the following: 
"(a) GENERAL REQUIREMENTS.—"; 
(2) in the second sentence, by striking "housing constructed 
m- 
prior to 1950" and inserting the following: "housing constructed 
or substantially rehabilitated prior to 1978"; 
(3) in clause (1) of the second sentence, by striking "paint 
which may contain lead and to which children may be exposed" 
and inserting the following: "accessible intact, intact, and 
nonintact interior and exterior painted surfaces that may con-
tain lead in any such housing in which any child who is less 
than 7 years of age resides or is expected to reside"; 
^
"
^ 
(4) in clause (2) of the second sentence, by inserting after 
"notification" the following: "(using a brochure developed after 
consultation with the National Institute of Building Sciences)"; 
!ii 
(5) by striking the third sentence; and 
12 USC 2811. 
Safety. 
42 USC 4822. 
Children and 
youth. 
101 STAT. 1946 
PUBLIC LAW 100-242—FEB. 5, 1988 
(6) by adding at the end the following new subsections: 
"(b) MEASUREMENT CRITERIA.—The procedures established by the 
Secretary under this section for the detection and abatement of lead-
bsised paint poisoning hazards in any housing, including housing 
i 
.'''; 
assisted under section 8 of the United States Housing Act of 1937— 
"(1) shall be based upon criteria that measure the condition of 
the housing; and 
•'ij 
"(2) shall not be based upon criteria that measure the health 
of the residents of the housing. 
"(c) INSPECTION REQUIREMENTS.—The Secretary shall require the 
inspection of all intact and nonintact interior and exterior painted 
surfaces of housing subject to this section for lead-based paint using 
an approved x-ray fluorescence analyzer or comparable approved 
' %:>«T; S; 
sampling or testing technique. A qualified inspector shall certify in 
writing the precise results of the inspection. If the results equal or 
exceed a level of 1.0 milligrams per centimeter squared, the results 
shall be provided to any potential purchaser or tenant of the hous-
ing. The Secretary shall periodically review and reduce the level 
below 1.0 milligram per centimeter squared to the extent that 
reliable technology makes feasible the detection of a lower level and 
X'A:I.':^J ^ 
medical evidence supports the imposition of a lower level. The 
requirements of this subsection shall apply as provided in subsection 
(d). 
"(d) ABATEMENT REQUIRED.— 
"(1) PuBUC HOUSING.—In the case of public housing assisted 
under section 9 of the United States Housing Act of 1937, the 
I 
Secretary shall require the inspection described in subsection (c) 
for— 
n 
"(A) each vacant dwelling prior to rerenting; 
"(B) a random sample of all occupied dwellings; and 
"(C) each dwelling in any housing in which there is a 
dwelling determined under subparagraph (A) or (B) to have 
lead-based paint hazards. 
The Secretary shall require the inspection of all housing subject 
... 
• 
to this paragraph prior to the expiration of 5 years from the 
date of the publication of final regulations pursuant to this 
subsection. The Secretary shall prioritize, within such 5-year 
period, inspections on the basis of vacancy, age of housing, or 
projected modernization or rehabilitation. The Secretary shall 
require abatement to eliminate the lead-based paint poisoning 
.^i' 
hazards in housing in which the test results equal or exceed the 
' 
V ' 
standard established by or under subsection (c). Final inspection 
•j; 
and certification after abatement shall be made by a qualified 
inspector. 
b> 
(2) HUD-OWNED PROPERTIES.— 
fe.; : 
"(A) ABATEMENT DEMONSTRATION PROGRAM.—In carrying 
out the requirements of this subsection with respect to 
tuiir . 
single-family and multifamily properties owned by the 
Department of Housing and Urban Development, the Sec-
retary shall utilize a sufficient variety of abatement meth-
ods in a sufficient number of areas and circumstances to 
J.' • -
i
» 
demonstrate their relative cost-effectiveness and their 
applicability to various types of housing. 
"(B) REPORT.—Not later than 18 months after 
the 
'^ ! 
effective date of the regulations issued to carry out this 
subsection, the Secretary shall transmit to the Congress the 
findings and recommendations of the Secretary as a result 
PUBLIC LAW 100-242—FEB. 5, 1988 
101 STAT. 1947 
of the demonstration program, including any recommenda-
tions of the Secretary for legislation to revise the require-
ments of this subsection. In preparing such report, the 
Secretary shall examine— 
"(i) the most reliable technology available for detect-
ing lead-b£ised paint; 
"(ii) the most efficient and cost-effective methods for 
abatement; 
"(iii) safety considerations in testing; 
"(iv) the overall accuracy and reliability of laboratory 
testing 
of 
physical 
samples, 
x-ray 
fluorescence 
' >• , : 
machines, and other available testing procedures; 
"(v) availability of qualified samplers and testers; 
and 
! 
"(vi) an estimate of the amount, characteristics, and 
i 
regional distribution of housing in the United States 
that contains lead-based paint hazards at differing 
u 
, 
levels of contamination. 
*'(3) REPORT REQUIRED.—Not later than 9 months after comple-
tion of the demonstration required by paragraph (2), the Sec-
retary shall, based on the demonstration, prepare and transmit 
I 
to the Congress, a comprehensive and workable plan, including 
any recommendations for changes in legislation, for the prompt 
and cost effective inspection and abatement of privately owned 
single family and multifamily housing, including housing as-
sisted under section 8 of the United States Housing Act of 1937. 
After the expiration of the 9-month period referred to in the 
preceding sentence, the Secretary may not obligate or expend 
.,; ".yj 
any funds or otherwise carry out activities related to any other 
policy development and research project until the report is 
transmitted. 
"(e) EXCEPTIONS.—The provisions of this section shall not apply 
to— 
"(1) housing for the elderly or handicapped, except for any 
dwelling in such housing in which any child who is less than 7 
: 
years of age resides or is expected to reside; 
"(2) any project for which an application for insurance is 
submitted under section 231, 232, 241, or 242 of the National 
Housing Act; or 
"(3) any 0-bedroom dwelling. 
Vf) FUNDING.—The Secretary shall carry out the provisions of this 
section utilizing available Federal funding sources. The Secretary 
shall use funds available for comprehensive improvement assistance 
under section 14 of the United States Housing Act of 1937 to carry 
out this section in public housing.", 
(hi REGULATIONS.— 
42 use 4822 
(1) PROPOSED REGULATIONS.—Not later than the expiration of note. 
the 60-day period following the date of the enactment of this 
Act, the Secretary of Housing and Urban Development shall 
publish proposed regulations to carry out the amendments 
made by this section. 
(2) FINAL REGULATIONS.—The Secretary shall publish final 
regulations to carry out the amendments made by this section, 
which shall become effective not later than the expiration of the 
120-day period following the date of the enactment of this Act. 
(3) REQUIRED CONSULTATIONS.—Before issuing proposed regu-
lations under this subsection, the Secretary shall consult with— 
101 STAT. 1948 
PUBLIC LAW 100-242—FEB. 5, 1988 
-K^ o
*
^ • 
(A) the National Institute of Building Sciences and the 
National Bureau of Standards with respect to the most cost-
effective methods of detecting and abating lead-based paint 
poisoning hazards; and 
-joejf;fr 
(B) public housing agencies to develop a cost-efficient plan 
^ 
, for detecting and abating lead-based paint poisoning haz-
lOi abort ards in dwelling assisted under section 8 of the United 
States Housing Act of 1937 and dwellings in public housing 
assisted under such Act. 
42 u s e 1437a 
SEC. 567. MEDIAN AREA INCOME. 
For purposes of calculating the median income for any area that 
is not within a metropolitan statistical area (as established by the 
Office of Management and Budget) for programs under title I of the 
Housing and Community Development Act of 1974, the United 
States Housing Act of 1937, the National Housing Act, or title V of 
the Housing Act of 1949, the Secretary of Housing and Urban 
Development or the Secretary of Agriculture (as appropriate) shall 
use whichever of the following is higher: 
(1) the median income of the county in which the area is 
located; or 
(2) the median income of the entire nonmetropolitan area of 
\ 
the State. 
Energy. 
SEC. 568. MANUFACTURED 
HOUSING 
CONSTRUCTION 
AND 
SAFETY 
STANDARDS. 
Section 604 of the National Manufactured Housing Construction 
42 use 5403. 
and Safety Standards Act of 1974 is amended by adding at the end 
the following new subsection: 
"(i)(l) The Federal manufactured home construction and safety 
standards established by the Secretary under this section shall 
include preemptive energy conservation standards in accordance 
with this subsection. 
"(2) The energy conservation standards established under this 
subsection shall be cost-effective energy conservation performance 
standards designed to ensure the lowest total of construction and 
operating costs. 
"(3) The energy conservation standards established under this 
subsection shall take into consideration the design and factory 
construction techniques of manufactured homes and shall provide 
for alternative practices that result in net estimated energy 
consumption equal to or less than the specified standards.". 
SEC. 569. NULLIFICATION OF RIGHT OF REDEMPTION OF SINGLE-FAMILY 
MORTGAGORS. 
12 use 1710. 
Section 204 of the National Housing Act is amended by adding at 
the end the following new subsection: 
"(1)(1) Whenever the Secretary or a contract mortgagee (pursuant 
to its contract with the Secretary) forecloses on a Secretary-held 
single family mortgage in any Federal or State court or pursuant to 
a power of sale in a mortgage, the purchaser at the foreclosure sale 
shall be entitled to receive a conveyance of title to, and possession of, 
the property, subject to the interests senior to the interests of the 
Secretary or the contract mortgagee, as the case may be. Notwith-
standing any State law to the contrary, there shall oe no right of 
redemption (including in all instances any right to possession oased 
upon any right of redemption) in the mortgagor or any other person 
PUBLIC LAW 100-242—FEB. 5, 1988 
101 STAT. 1949 
subsequent to the foreclosure sale in connection with a Secretary- 
,,,,.> ..- ^ 
held single family mortgage. The appropriate State official or the 
trustee, as the case may be, shall execute and deliver a deed or other 
appropriate instrument conveying title to the purchaser at the 
:{rr3»t «;: 
foreclosure sale, consistent with applicable procedures in the juris-
diction and without regard to any such right of redemption. 
"(2) The following actions shall be taken in order to verify title in 
the purchaser at the foreclosure sale: 
"(A) In the case of a judicial foreclosure in any Federal or 
"-'*' * • 
State court, there shall be included in the petition and in the 
judgment of foreclosure a statement that the foreclosure is in 
accordance with this subsection and that there is no right of 
redemption in the mortgagor or any other person. 
^ >
^ <i'< -" 
"(B) In the case of a foreclosure pursuant to a power of sale 
provision in the mortgage, the statement required in subpara-
graph (A) shall be included in the advertisement of the sale and 
either in the recitals of the deed or other appropriate in-
strument conveying title to the purchaser at the foreclosure sale 
,! 
or in an affidavit or addendum to the deed. 
"(3) For purposes of this subsection: 
"(A) The term 'contract mortgagee' means a person or entity 
under a contract with the Secretary that provides for the 
assignment of a single-family mortgage from the Secretary to 
the person or entity for the purpose of pursuing foreclosure. 
"(B) the term 'mortgage' means a deed of trust, mortgage, 
deed to secure debt, security agreement, or any other form of 
instrument under which any interest in property, real, per- 
i ''^ J >* •
-
sonal, or mixed, or any interest in property, including lease-
holds, life estates, reversionary interests, and any other estates 
under applicable State law, is conveyed in trust, mortgaged, 
encumbered, pledged, or otherwise rendered subject to a lien, 
for the purpose of securing the payment of money or the 
performance of an obligation. 
"(C) The term 'Secretary-held single family mortgage' means 
a single-family mortgage held by the Secretary or by a contract 
^ , 
mortgagee at the time of initiation of foreclosure that— 
"(i) was formerly insured by the Secretary under any 
section of this title; or 
"(ii) was taken by the Secretary as a purchase money 
. , 
mortgage in connection with the sale or other transfer of 
> • < -
> 
Secretary-owned property under any section of this title. 
"(D) The term 'single-family mortgage' means a mort-
gage that covers property on which is located a l-to-4 family 
residence.". 
i 
s'" 
SEC. 570. MISCELLANEOUS PROGRAMS TECHNICAL AMENDMENTS. 
(a) HUD ADMINISTRATIVE PROVISIONS.— 
(1) Section 502(a) of the Housing Act of 1948 is amended by 12 USC 1701c. 
striking the fourth sentence. 
(2) Section 502(b) of the Housing Act of 1948 is amended— 42 USC I404a. 
(A) by striking "United States Housing Authority" each 
place it appears and inserting "Secretary of Housing and 
Urban Development"; and 
(B) by striking "the Authority" each place it appears 
and inserting "the Secretary of Housing and Urban 
Development'. 
101 STAT. 1950 
PUBLIC LAW 100-242—FEB. 5, 1988 
12 use 1701c. 
(3) Section 502(cX2) of the Housing Act of 1948 is amended by 
adding "and" at the end. 
(b) ANNUAL REPORT OF SECRETARY.—Section 802 of the Housing 
12 use 1701o. 
Act of 1954 is amended by inserting the following section heading: 
"ANNUAL REPORT OF SECRETARY". 
(c) ENERGY CONSERVATION IN NEW BUILDINGS.—Section 303(11) of 
42 use 6832. 
the Energy Conservation Standards for New Buildings Act of 1976 is 
amended by striking "Secretary of Housing and Urban Develop-
ment" and inserting "Secretary of Energy". 
(d) WEATHERIZATION ASSISTANCE.—Section 412(9)(G) of the Energy 
42 use 6862. 
Conservation in Existing Buildings Act of 1976 is amended by 
striking the first comma after "determine". 
(e) SOLAR ENERGY AND ENERGY CONSERVATION BANK.—Sections 
506(0(1), 
509(b)(2)(E), 
509(c), 
515a))(l)(A)(iii), 
515(b)(1)(B), 
515(b)(l)(C)(ii), 515(b)(1)(D), and 515(b)(2) of the Solar Energy and 
12 use 3604, 
Energy Conservation Bank Act are amended— 
3607, 3613. 
(1) by striking "section 38" each place it appears and inserting 
"section 23"; 
(2) by striking "section 44C" each place it appears and insert-
ing "section 38 ; and 
(3) by striking "Internal Revenue Code of 1954" each place it 
appears and inserting "Internal Revenue Code of 1986". 
if) NATIONAL INSTITUTE OF BUILDING SCIENCES.— 
(1) Section 809(g)(4) of the Housing and Community Develop-
12 use 1701J-2. 
ment Act of 1974 is amended by striking "and its" and inserting 
"of its". 
(2) Section 809(h) of the Housing and Community Develop-
ment Act of 1974 is amended by striking "preceeding" in the 
last sentence and inserting "preceding". 
(g) REAL ESTATE SETTLEMENT PROCEDURES.—Section 8(c)(5) of the 
12 use 2607. 
Real Estate Settlement Procedures Act of 1974 is amended by 
striking "clause 4(B)" and inserting "clause (4)(B)". 
(h) HOME MORTGAGE DISCLOSURE.—Section 304(a)(1) of the Home 
12 use 2803. 
Mortgage Disclosure Act of 1975 is amended by striking "at at" and 
inserting "at", 
(i) STEWART B. MCKINNEY HOMELESS ASSISTANCE ACT.— 
(1) Section 422(1) of the Stewart B. McKinney Homeless 
42 use 11382. 
Assistance Act is amended by inserting "governmental entity," 
after "urban county,". 
42 use 11391. 
(2) Section 431(1) of such Act is amended by inserting "govern-
mental entity," after "urban county,". 
12 u s e 1735e-l. 
SEC. 571. USE OF AMERICAN MATERIALS AND PRODUCTS. 
In the administration of housing assistance programs, the Sec-
retary of Housing and Urban Development shall encourage the use 
J
. „ 
V 
of materials and products mined and produced in the United States. 
SEC. 5
7
2
. 
STUDY 
OF 
VOLUNTARY 
STANDARDS 
FOR 
MODULAR 
HOMES. 
(a) IN GENERAL.—In order to facilitate the construction and deliv-
ery of housing, the National Institute of Building Sciences shall 
prepare and submit to the Congress not later than 6 months after 
the date of the enactment of this Act a report describing feasible 
alternative systems for implementing one or more voluntary 
preemptive national codes for modular housing, including the 
method for inspecting the structures to ensure compliance with the 
Reports. 
PUBLIC LAW 100-242—FEB. 5, 1988 
101 STAT. 1951 
selected code or set of codes. Such codes may be national model 
codes and shall provide for periodic upgrading through recognized 
model code development procedures and the development of modu-
lar housing standards for construction, design, and performance 
that ensure quality, durability, and safety and are in accordance 
with life-cycle cost-effective energy conservation standards estab-
lished by the Secretary of Housing and Urban Development and 
designed to ensure the lowest total construction and operating costs 
over the estimated life of such housing. 
(b) DEFINITION.—For purposes of this section, the term "modular 
housing" means factory-built single-family and multifamily housing 
(including closed wall panelized housing) not subject to the require-
ments of the National Manufactured Housing Construction and 
Safety Standards Act of 1974. 
(c) GRANT.—From amounts appropriated pursuant to section 501 
of the Housing and Urban Development Act of 1970, the Secretary of 
Housing and Urban Development shall make a grant to the Na-
tional Institute of Building Sciences in an amount not to exceed 
$50,000 to cover the cost of the report under this section. 
TITLE VI—NEHEMIAH HOUSING 
OPPORTUNITY GRANTS 
SEC. 601. STATEMENT OF PURPOSE. 
12 USC 1715/ 
It is the purpose of this title— 
(1) to encourage homeownership by families in the United 
States who are not otherwise able to afford homeownership; 
(2) to undertake a concentrated effort to rebuild the depressed 
areas of the cities of the United States and to create sound and 
attractive neighborhoods; and 
(3) to increase the employment of neighborhood residents. 
SEC. 602. DEFINITIONS. 
12 USC 1715/ 
For purposes of this title: 
(1) The term "Fund" means the Nehemiah Housing Oppor-
tunity Fund established in section 609(a). 
(2) The term "home" means any 1- to 4-family dwelling. Such 
term includes any dwelling unit in a condominium project or 
cooperative project consisting of not more than 4 dwelling units, 
any town house, and any manufactured home. 
(3) The term "lower income families" has the meaning given 
such term in section 3(b)(2) of the United States Housing Act of 
1937. 
(4) The term "metropolitan statistical area" means a metro-
politan statistical area as established by the Office of Manage-
ment and Budget. 
(5) The term "nonprofit organization" means a private non-
profit corporation, or other private nonprofit legal entity, that is 
approved by the Secretary as to financial responsibility. 
(6) The term "Secretary" means the Secretary of Housing and 
Urban Development. 
(7) The term "State" means each of the several States, the 
District of Columbia, the Commonwealth of Puerto Rico, the 
Virgin Islands, Guam, American Samoa, the Northern Mariana 
101 STAT. 1952 
PUBLIC LAW 100-242—FEB. 5, 1988 
* Islands, the Trust Territory of the Pacific Islands, and any other 
territory or possession of the United States. 
(8) The term "substantial rehabilitation" means— 
(A) rehabilitation involving costs in excess of 60 percent 
of the maximum sale price of a home assisted under this 
title in the market area in which it is located; or 
(B) the 
rehabilitation 
of a 
vacant, 
uninhabitable 
structure. 
(9) The term "unit of general local government" means any 
borough, city, county, parish, town, township, village, or other 
general purpose political subdivision of a State. 
12 use 1715/ 
SEC. 603. ASSISTANCE TO NONPROFIT ORGANIZATIONS. 
(a) IN GENERAL.—The Secretary may provide assistance to non-
profit organizations to carry out Nehemiah housing opportunity 
programs in accordance with the provisions of this title. Such 
assistance shall be made in the form of grants. 
(b) APPLICATIONS.—Applications for assistance under this title 
shall be made in such form, and in accordance with such procedures, 
as the Secretary may prescribe. 
Loans. 
SEC. 604. USE OF ASSISTANCE. 
'^ 
m 
'¥ 
- 
? " 
12 use 1715/ 
note. 
(a) IN GENERAL.—Any nonprofit organization receiving assistance 
under this title shall use such assistance to provide loans to families 
purchasing homes constructed or substantially rehabilitated in 
• 
accordance with a Nehemiah housing opportunity program ap-
proved under this title. 
(h) SPECIFIC REQUIREMENTS.—Each loan made to a family under 
this section shall— 
(1) be secured by a second mortgage held by the Secretary on 
the property involved; 
(2) be in an amount not exceeding $15,000; 
(3) bear no interest; and 
(4) be repayable to the Secretary upon the sale, lease, or other 
- 
transfer of such property. 
12 use 1715/ 
SEC. 605. PROGRAM REQUIREMENTS. 
(a) IN GENERAL.—Assistance provided under this title may be used 
only in connection with a Nehemiah housing opportunity program 
of construction or substantial rehabilitation of homes. 
(b) FAMILY NEED.—Each family purchasing a home under this title 
shall— 
(1) have a family income on the date of such purchase that is 
not more than whichever of the following is higher: 
(A) the median income for a family of 4 persons in the 
metropolitan statistical area involved, except that if and to 
"^^l 
the extent that the unit of general local government dem-
•^S 
onstrates to the Secretary that such action is necessary to 
achieve or maintain neighborhood stability, not to exceed 
15 percent of the families in a project at any time during 
development or occupancy may have incomes up to 115 
percent of such median income; or 
bn< 
(B) the national median income for a family of 4 persons; 
and 
(2) not have owned a home during the 3-year period preceding 
such purchase. 
(c) DOWNPAYMENT.— 
PUBLIC LAW 100-242—FEB. 5, 1988 
101 STAT. 1953 
(1) Each family purchasing a home under this title shall make 
a downpayment of not less than 10 percent of the sale price of 
such home unless— 
(A) the nonprofit organization determines a higher down-
payment to be appropriate; or 
! 
(B) the first mortgage on the home is held by a State or 
unit of general local government under a home loan pro-
b n:; 
gram of the State or unit of general local government, and 
the program provides for a lower downpayment. 
(2) Any downpayment made under this subsection shall 
accrue interest from the date on which such downpayment is 
made through the date of settlement, at a rate not less than the 
passbook rate. Such interest shall be paid by the nonprofit 
organization involved to the family purchasing the home for 
which such downpayment was made. 
(d) LEASING PROHIBITION.—No family purchasing a home under 
this title may lease such home. 
SEC. 606. TERMS AND CONDITIONS OF ASSISTANCE. 
(a) LOCAL CONSULTATION.—No proposed Nehemiah housing oppor-
tunity program may be approved by the Secretary under this title 
unless the nonprofit organization involved demonstrates to the satis-
faction of the Secretary that— 
(1) it has consulted with and received the support of residents 
of the neighborhood in which such program is to be located; and 
(2) it has the approval of each unit of general local govern-
ment in which such program is to be located. 
0)) PROGRAM SCHEDULE.—Each nonprofit organization applying 
for assistance under this title shall submit to the Secretary an 
estimated schedule for completion of its proposed Nehemiah housing 
opportunity program, which schedule shall have been agreed to by 
each unit of general local government in which such program is to 
be located. 
(c) MINIMUM PARTICIPATION.—No nonprofit organization receiving 
assistance under this title may commence any construction or 
substantial rehabilitation (except with respect to homes to be con-
structed or substantially rehabilitated for the purpose of display) 
until not less than 25 percent of the homes to be constructed or 
substantially rehabilitated are contracted for sale to purchasers who 
intend to live in such homes and the required downpayments are 
made. 
(d) FINANCIAL FEASIBILITY.—The Secretary may not provide any 
assistance under this title to any nonprofit organization unless such 
nonprofit organization demonstrates the financial feasibility of its 
proposed Nehemiah housing opportunity program, including the 
availability of non-Federal public and private funds. 
(e) HOME QUALITY AND LOCATION.—A Nehemiah housing oppor-
tunity program may be approved under this title only if it provides 
that— 
(1) the number of homes to be constructed or substantially 
rehabilitated under such program will not be less than which-
ever of the following is less: 
(A) the greater of (i) 50 homes; or (ii) 0.25 percent of the 
number of existing dwelling units in the unit of general 
local government that provides the most assistance to such 
iii . 
program; or 
-^'.-.i 
(B) 250 homes; 
State and local 
governments. 
State and local 
governments. 
12 u s e 1715Z 
note. 
1101 STAT. 1954 
PUBLIC LAW 100-242—FEB. 5, 1988 
|Energy. 
•it 
C<j>ntracts. 
except that the Secretary may waive the requirements of this 
paragraph for any unit of general local government if the 
Governor of the State or the unit of general local government 
requests such waiver and certifies with supporting documenta-
tion that such requirements will prevent the State or the unit of 
general local government from being able to use such program 
effectively; 
(2) each home constructed or substantially rehabilitated 
under such program will comply with— 
(A)(i) applicable local building code standards; 
(ii) in any case in which there is not an applicable local 
building code, a nationally recognized model building code 
mutually 
agreed 
upon by the 
sponsoring 
nonprofit 
organization and the Secretary; or 
(iii) in the case of a manufactured home, the standards 
prescribed pursuant to title VI of the Housing and Commu-
nity Development Act of 1974 and the installation, struc-
tural, and site requirements that would apply under title II 
of the National Housing Act; and 
(B) the energy performance requirements established 
under section 526 of the National Housing Act or, in the 
case of manufactured housing, the energy conservation 
requirements prescribed in accordance with section 203(b) 
of the National Housing Act; 
(3) all homes constructed or substantially rehabilitated under 
such program will be located in census tracts, or identifiable 
neighborhoods within census tracts, in which the median family 
income is not more than 80 percent of the median family 
income of the area in which such program is to be located, as 
such median family income and area are determined for pur-
poses of assistance under section 8 of the United States Housing 
Act of 1937; 
(4) all homes constructed or substantially rehabilitated under 
such program will be concentrated in a single neighborhood and 
located on contiguous parcels of land, except that homes may be 
constructed or substantially rehabilitated in up to 4 identifiable 
neighborhoods that each consist of contiguous parcels of land 
if— 
(A) the unit of general local government in which the 
project is located certifies that land cannot be made avail-
able in a single neighborhood for a program of the size 
required by paragraph (1); 
(B) the nonprofit organization submits evidence satisfac-
tory to the Secretary that construction or substantial re-
habilitation in more than 1 identifiable neighborhood will 
result in cost reductions through economies of scale com-
parable to the cost reductions achieved by other programs 
eligible for assistance under this title; and 
(C) the nonprofit organization submits evidence satisfac-
tory to the Secretary that the program, bv itself or together 
with improvement efforts that are or will be undertaken in 
the identifiable neighborhoods by the unit of general local 
government or private entities, will result in a substantial 
improvement in the overall quality and long-term viability 
of the neighborhoods; and 
(5) sales contracts entered into under such program will 
contain provisions requiring repayment of any loan made under 
PUBLIC LAW 100-242—FEB. 5, 1988 
101 STAT. 1955 
this title upon the sale or other transfer of the home involved, 
unless the Secretary approves a transfer of such home without 
repayment (in which case the second mortgage held by the 
Secretary on such home shall remain in force until such loan is 
fully repaid). 
SEC. 607. PROGRAM SELECTION CRITERIA. 
12 USC 1715/ 
(a) IN GENERAL.—In selecting Nehemiah housing opportunity pro-
grams for assistance under this title from among eligible programs, 
the Secretary shall make such selection on the basis of the extent to 
which— 
(1) non-Federal public or private entities will contribute land 
necessary to make each program feasible; 
(2) non-Federal public and private financial or other contribu-
tions (including tax abatements, waivers of fees related to devel-
opment, waivers of construction, development, or zoning 
requirements, and direct financial contributions) will reduce the 
cost of homes constructed or substantially rehabilitated under 
each program; 
(3) each program will produce the greatest number of units 
for the least amount of assistance provided under this title, 
taking into consideration the cost differences among different 
market areas; 
(4) each program is located in a neighborhood of severe phys-
ical and economic blight (and, in determining the degree of 
physical blight, the Secretary shall consider the condition of the 
housing, other buildings, and infrastructure, in the neighbor-
hood of the proposed program); 
(5) each program uses construction methods that will reduce 
the cost per square foot below the average construction cost in 
the market area involved; and 
(6) each program provides for the involvement of local resi-
dents in the planning, and construction or substantial re-
habilitation, of homes. 
(b) EXCEPTION.—To the extent that non-Federal public entities are 
prohibited by the law of any State from making any form of 
contribution described in paragraph (1) or (2) of subsection (a), the 
i . -
^ • 
Secretary shall not consider such form of contribution in evaluating 
' 
such program. 
SEC. 608. DISTRIBUTION OF ASSISTANCE TO NONPROFIT ORGANIZA- 12 USC 1715/ 
TIONS. 
note. 
(a) RESERVATION OF AMOUNTS.—Following the selection of 
any 
Nehemiah housing opportunity program for assistance under this 
title, the Secretary shall reserve sufficient amounts in the Ne-
hemiah Housing Opportunity Fund for such assistance. 
(b) DISTRIBUTION OF ASSISTANCE.—Following the sale of any home 
constructed or substantially rehabilitated under a Nehemiah hous-
ing opportunity program selected for Eissistance under this title, the 
Secretary shall provide to the sponsoring nonprofit organization an 
amount equal to the amount of the loan made to the family purchas- 
,; i r y^^, 
ing such home. Such amount shall be provided not more than 30 
days after the sale of such home. 
(c) MAXIMUM ASSISTANCE.—The assistance provided to any non-
profit organization under this title may not exceed $15,000 per 
home. 
101 STAT. 1956 
PUBLIC LAW 100-242—FEB. 5, 1988 
12 use 1715Z 
SEC. 609. NEHEMIAH HOUSING OPPORTUNITY FUND. 
(a) EsTABUSHMENT.—There is established in the Treasury of the 
United States a revolving fund, to be known as the Nehemiah 
Housing Opportunity Fund. The Fund shall be available to the 
Secretary, to the extent approved in appropriation Acts, for pur-
poses of providing assistance under section 603. 
•'','., 
Ot)) ASSETS.—The Fund shall consist of— 
(1) any amount appropriated under section 612; 
(2) any amount received by the Secretary under section 
604(b)(4); and 
(3) any amount received by the Secretary under subsection (c). 
(c) ADMINISTRATION.—Any amount in the Fund determined by the 
Secretary to be in excess of the amount currently required to carry 
out the provisions of this title shall be invested by the Secretary in 
obligations of, or obligations guaranteed as to both principal and 
interest by, the United States or any agency of the United States. 
12 use 1715/ 
SEC. 610. REPORT. 
Not later than March 1, 1990, the Secretary shall prepare and 
submit to the Congress a comprehensive report setting forth the 
activities carried out under this title. Such report shall include— 
(1) an analysis of the characteristics of the families assisted 
under this title, including family size, number of children, 
family income, sources of family income, race, age, and sex; 
(2) an analysis of the market value of homes purchased under 
this title; 
(3) an analysis of the non-Federal public and private financial 
or other contributions made to reduce the cost of homes con-
structed or substantially rehabilitated under each program; 
(4) an analysis of the sales prices of homes under this title; 
(5) an analysis of the amounts of the grants made to programs 
under this title; and 
(6) any recommendations of the Secretary for modifications in 
the program established by this title in order to ensure the 
effective implementation of such program. 
12 use 1
7
1
5
Z 
SEC. 611. REGULATIONS. 
Not later than July 1, 1988, the Secretary shall issue final regula-
tions to carry out the provisions of this title. Any such regulations 
ki 
shall be issued in accordance with section 553 of title 5, United 
States Code, notwithstanding the provisions of subsection (a)(2) of 
such section. 
12 use 1715/ 
SEC. 612. AUTHORIZATION OF APPROPRIATIONS. 
There are authorized to be appropriated to carry out this title 
$25,000,000 for fiscal year 1988 and $100,000,000 for fiscal year 1989. 
Any amount appropriated under this section shall be deposited in 
the Nehemiah Housing Opportunity Fund, and shall remain avail-
able until expended. 
12 use 1715/ 
SEC. 613. SUNSET. 
No assistance may be provided under this title after September 30, 
1989, except pursuant to a commitment made on or before such date. 
PUBLIC LAW 100-242—FEB. 5, 1988 
101 STAT. 1957 
TITLE VII—ENTERPRISE ZONE 
DEVELOPMENT 
SEC. 701. DESIGNATION OF ENTERPRISE ZONES. 
State and local 
governments. 
(a) DESIGNATION OF ZONES.— 
42 use iisoi. 
(1) DEFINITION.—For purposes of this section, the term "enter-
prise zone" means any area that— 
(A) is nominated by one or more local governments and 
the State or States in which it is located for designation as 
an enterprise zone (in this section referred to as a "nomi-
nated area"); and 
(B) the Secretary of Housing and Urban Development 
designates as an enterprise zone, after consultation with— 
•eMfc 
(i) the Secretaries of Agriculture, Commerce, Labor, 
and the Treasury, the Director of the Office of Manage-
o
i H 
^ 
ment and Budget, and the Administrator of the Small 
Business Administration; and 
i A 
(ii) in the case of an area on an Indian reservation, 
the Secretary of the Interior. 
iiit 
(2) NUMBER OF DESIGNATIONS.— 
(A) IN GENERAL.—The Secretary of Housing and Urban 
Development may designate not more than 100 nominated 
areas as enterprise zones. 
(B) MINIMUM DESIGNATION IN RURAL AREAS.—Of the areas 
^ 
i/r 
designated under clause (i), not less than V
a shall be aresis 
that— 
(i) are within a local government jurisdiction or juris-
dictions with a population of less than 50,000 (as deter-
mined under the most recent census data available); 
(ii) are outside of a metropolitan statistical area (as 
designated by the Director of the Office of Management 
and Budget); or 
(iii) that are determined by the Secretary, after con-
sultation with the Secretary of Commerce, to be rural 
areas. 
(3) AREAS DESIGNATED BASED SOLELY ON DEGREE OF POVERTY.— 
(A) IN GENERAL.—Except as provided in subparagraph (B), 
the Secretary shall designate the nominated areas with the 
highest average ranking with respect to the criteria set 
forth in subparagraphs (C), (D), and (E) of subsection (c)(3). 
For purposes of the preceding sentence, an area shall be 
srf; 
ranked within each such criterion on the basis of the 
amount by which the area exceeds such criterion, with the 
area that exceeds such criterion by the greatest amount 
"'' 
given the highest ranking. 
(B) EXCEPTION WHERE INADEQUATE COURSE OF ACTION, 
«t 
ETC.—An area shall not be designated under subparagraph 
(A) if the Secretary determines that the course of action 
with respect to such area is inadequate. 
(C) SEPARATE APPLICATION TO RURAL AND OTHER AREAS.— 
Subparagraph (A) shall be applied separately with respect 
to areas described in paragraph (2)(B) and to other areas. 
(4) LIMITATION ON DESIGNATIONS.— 
(A) PUBLICATION OF REGULATIONS.—Before designating 
any area as an enterprise zone, the Secretary shall pre-
101 STAT. 1958 
PUBLIC LAW 100-242—FEB. 5, 1988 
scribe by regulation not later than 4 months following the 
date of the enactment of this Act, after consultation with 
the officials described in paragraph (1)(B)— 
(i) the procedures for nominating an area under para-
graph (1)(A); 
(ii) the parameters relating to the size and population 
characteristics of an enterprise zone; and 
'5Hiuf> 
(iii) the manner in which nominated areas will be 
evaluated based on the criteria specified in subsection 
.; /; 
(d). 
(B) TIME LIMITATIONS.—The Secretary shall designate 
nominated areas as enterprise zones only during the 24-
month period beginning on the 1st day of the 1st month 
following the month in which the effective date of the 
regulations described in subparagraph (A) occurs. 
(C) PROCEDURAL RULES.—The Secretary shall not make 
any designation under paragraph (1) unless— 
(i) the local governments and the State in which the 
nominated area is located have the authority— 
-,, 
. 
(I) to nominate such area for designation as an 
enterprise zone; 
(II) to make the State and local commitments 
under subsection (d); and 
(III) to provide assurances satisfactory to the 
Secretary that such commitments will be fulfilled; 
Regulations. 
(ii) a nomination therefor is submitted in such a 
manner and in such form, and contains such informa-
tion, as the Secretary shall by regulation prescribe; 
.jl 
(iii) the Secretary determines that any information 
furnished is reasonably accurate; and 
(iv) the State and local governments certify that no 
portion of the area nominated is already included in an 
enterprise zone or in an area otherwise nominated to 
be an enterprise zone. 
(5) NOMINATION PROCESS FOR INDIAN RESERVATIONS.—In the 
case of a nominated area on an Indian reservation, the reserva-
tion governing body (as determined by the Secretary of the 
Interior) shall be deemed to be both the State and local govern-
ments with respect to such area. 
(b) PERIOD FOR WHICH DESIGNATION Is IN EFFECT.— 
(1) IN GENERAL.—Any designation of an area as an enterprise 
zone shall remain in effect during the period beginning on the 
date of the designation and ending on the earliest of— 
(A) December 31 of the 24th calendar year following the 
calendar year in which such date occurs; 
(B) the termination date designated by the State and local 
governments as provided for in their nomination pursuant 
to subsection (a)(4)(C)(ii); or 
(C) the date the Secretary revokes such designation under 
paragraph (2). 
(2) REVOCATION OF DESIGNATION.—The Secretary, after con-
sultation with the officials described in subsection (aXlXB) and a 
hearing on the record involving officials of the State or local 
government involved, may revoke the designation of an area if 
the Secretary determines that the local government or the State 
in which it is located is not complying substantially with the 
State and local commitments pursuant to subsection (d). 
PUBLIC LAW 100-242—FEB. 5, 1988 
101 STAT. 1959 
(c) AREA AND ELIGIBILITY REQUIREMENTS.— 
(1) IN GENERAL.—The Secretary may make a designation of 
any nominated area under subsection (a)(1) only if it meets the 
requirements of paragraphs (2) and (3). 
(2) AREA REQUIREMENTS.—A nominated area meets the 
requirements of this paragraph if— 
(A) the area is within the jurisdiction of the local 
government; 
(B) the boundary of the area is continuous; and 
(C) the area— 
(i) has a population, as determined by the most 
recent census data available, of not less than— 
(I) 4,000 if any portion of such area (other than a 
rural area described in subsection (a)(2)(B)(i)) is 
located within a metropolitan statistical area (as 
designated by the Director of the Office of Manage-
ment and Budget) with a population of 50,000 or 
more; or 
(II) 1,000 in any other case; or 
(ii) is entirely within an Indian reservation (as deter-
mined by the Secretary of the Interior). 
(3) EuGiBiUTY REQUIREMENTS.—For purposes of paragraph (1), 
a nominated area meets the requirements of this paragraph if 
the State and local governments in which -it is located certify 
and the Secretary, after such review of supporting data as he 
deems appropriate, accepts such certification, that— 
(A) the area is one of pervasive poverty, unemployment, 
and general distress; 
(B) the area is located wholly within the jurisdiction of a 
local government that is eligible for Federal assistance 
under section 119 of the Housing and Community Develop-
ment Act of 1974, as in effect on the date of the enactment 
„, ;; 
of this Act; 
(C) the unemployment rate, as determined by the appro-
priate available data, was not less than 1.5 times the na-
tional unemployment rate for that period; 
(D) the poverty rate (as determined by the most recent 
census data available) for each populous census tract (or 
where not tracted, the equivalent county division as defined 
^ 
by the Bureau of the Census for the purpose of defining 
poverty areas) within the area was not less than 20 percent 
^ 
for the period to which such data relate; and 
, , 
(E) the area meets at least one of the following criteria: 
(i) Not less than 70 percent of the households living 
in the area have incomes below 80 percent of the 
median income of households of the local government 
(determined in the same manner as under section 
119(b)(2) of the Housing and Community Development 
Act of 1974). 
(ii) The population of the area decreased by 20 per-
cent or more between 1970 and 1980 (as determined 
from the most recent census available). 
(4) EUGIBIUTY REQUIREMENTS FOR RURAL AREAS.—For pur-
S
oses of paragraph (1), a nominated area that is a rural area 
escribed in subsection (a)(2XB) meets the requirements of para- 
* 
graph (3) if the State and local governments in which it is 
located certify and the Secretary, after such review of support-
101 STAT. 1960 
PUBLIC LAW 100-242—FEB. 5, 1988 
Employment 
and 
unemployment. 
Minorities. 
Gifts and 
property. 
Contracts. 
~iv 
ing data as he deems appropriate, accepts such certification, 
that the area meets— 
(A) the criteria set forth in subparagraphs (A) and (B) of 
paragraph (3); and 
(B) not less than one of the criteria set forth in the other 
subparagraphs of paragraph (3). 
(d) REQUIRED STATE AND LOCAL COMMITMENTS.— 
(1) IN GENERAL.—No nominated area shall be designated as an 
enterprise zone unless the local government and the State in 
which it is located agree in writing that, during any period 
during which the area is an enterprise zone, such governments 
will follow a specified course of action designated to reduce the 
various burdens borne by employers or employees in such area. 
A course of action shall not be treated as meeting the require-
ments of this paragraph unless the course of action include 
provisions described in not less than 4 of the subparagraphs of 
paragraph (2). 
(2) COURSE OF ACTION.—The course of action under paragraph 
(1) may be implemented by both such governments and private 
nongovernmental entities, may be funded from proceeds of any 
program administered by the Secretary of Housing and Urban 
Development or of any program administered by the Secretary 
of Agriculture under title V of the Housing Act of 1949, and 
may include, but is not limited to— 
(A) a reduction of tax rates or fees applying within the 
enterprise zone; 
" - 
(B) an increase in the level of public services, or in the 
efficiency of the delivery of public services, within the 
enterprise zone; 
(C) actions to reduce, remove, simplify, or streamline 
paperwork requirements within the enterprise zone; 
' 
(D) involvement in the program by public authorities or 
private entities, organizations, neighborhood associations, 
and community groups, particularly those within the nomi-
nated area, including a written commitment to provide jobs 
and job training for, and technical, financial, or other 
assistance to, employers, employees, and residents of the 
nominated area; 
(E) the giving of special preference to contractors owned 
and operated by members of any minority; and 
(F) the gift (or sale at below fair market value) of surplus 
land in the enterprise zone to neighborhood organizations 
agreeing to operate a business on the land. 
(3) RECOGNITION OF PAST EFFORTS.—In evaluating courses of 
action agreed to by any State or local government, the Secretary 
shall take into account the past efforts of such State or local 
government in reducing the various burdens borne by employ-
ers and employees in the area involved. 
., 
(4) PROHIBITION OF ASSISTANCE FOR BUSINESS RELOCATIONS.— 
(A) IN GENERAL.—The course of action implemented 
under paragraph (1) may not include any action to assist— 
(i) any establishment relocating from one area to 
another area; or 
(ii) any subcontractor whose purpose is to divest, or 
whose economic success is dependent upon divesting, 
any other contractor or subcontractor of any contract 
PUBLIC LAW 100-242—FEB. 5, 1988 
101 STAT. 1961 
jT«l^!UMI»: 
customarily performed by such other contractor or sub-
contractor. 
(B) EXCEPTION.—The limitations established in subpara-
graph (A) shall not be construed to prohibit assistance for 
the expansion of an existing business entity through the 
establishment of a new branch, affiliate, or subsidiary if the 
-,. 
Secretary— 
(i) finds that the establishment of the new branch, 
,. :,' 
affiliate, or subsidiary will not result in an increase in 
yr, ;. 
unemployment in the area of original location or in any 
other area where the existing business entity conducts 
business operations; and 
r. u .'- 
(ii) has no reason to believe that the new branch, 
affiliate, or subsidiary is being established with the 
intention of closing down the operations of the existing 
1. o 
business entity in the area of its original location or in 
any other area where the existing business entity con-
ducts business operations. 
(e) DEFINITIONS.—For purposes of this section: 
(1) GOVERNMENT.—If more than one government seeks to 
nominate an area as an enterprise zone, any reference to, or 
requirement of, this section shall apply to all such governments. 
(2) LOCAL GOVERNMENT.—The term "local government" 
means— 
;.; 
(A) any county, city, town, township, parish, village, or 
other general purpose political subdivision of a State; 
ui 
(B) any combination of political subdivisions described in 
subparagraph (A) recognized by the Secretary; and 
(C) the District of Columbia. 
(3) SECRETARY.—The term "Secretary" means the Secretary of 
Housing and Urban Development. 
(4) STATE.—The term "State" includes Puerto Rico, the Virgin 
Islands, Guam, American Samoa, the Northern Mariana Is-
lands, and any other possession of the United States. 
SEC. 702. EVALUATION AND REPORTING REQUIREMENTS. 
Not later than the close of the 4th calendar year after the year in 
which the Secretary of Housing and Urban Development first des-
ignates areas as enterprise zones, and at the close of each 4th 
calendar year thereafter, the Secretary shall prepare and submit 
to the Congress a report on the effects of such designation in 
accomplishing tne purposes of this title. 
SEC. 703. INTERACTION WITH OTHER FEDERAL PROGRAMS. 
(a) 
COORDINATION WITH RELOCATION ASSISTANCE.—The desig-
nation of an enterprise zone under section 701 shall not— 
(1) constitute approval of a Federal or federally assisted 
program or project (within the meaning of the Uniform Reloca-
tion Assistance and Real Property Acquisition Policy Act of 1970 
(42 U.S.C. 4601 et seq.)); or 
(2) entitle any person displaced from real property located in 
such zone to any rights or any benefits under such Act. 
(b) ENTERPRISE ZONES TREATED AS LABOR SURPLUS AREAS.—Any 
area that is designated as an enterprise zone under section 701 shall 
be treated for all purposes under Federal law as a labor surplus 
area. 
42 use 11502. 
42 u s e 11508. 
101 STAT. 1962 
PUBLIC LAW 100-242—FEB. 5, 1988 
42 u s e 11504. 
Discrimination, 
prohibition. 
Health and 
medical care. 
Safety. 
SEC. 704. WAIVER OR MODIFICATION OF HOUSING AND COMMUNITY 
DEVELOPMENT RULES IN ENTERPRISE ZONES. 
(a) IN GENERAL.—Upon the written request of the governments 
that designated and approved an area that has been designated as 
an enterprise zone under section 701, the Secretary of Housing and 
Urban Development (or, with respect to any rule issued under title 
V of the Housing Act of 1949, the Secretary of Agriculture) may, in 
order to further the job creation, community development, or eco-
nomic revitalization objectives of the zone, waive or modify all or 
part of any rule that the Secretary has authority to promulgate, as 
such rule pertains to the carrying out of projects, activities, or 
undertakings within the zone. 
Ot)) LIMITATION.—No provision of this section may be construed to 
authorize the Secretary to waive or modify any rule adopted to carry 
out a statute or Executive order that prohibits, or the purpose of 
which is to protect persons against, discrimination on the basis of 
race, color, religion, sex, marital status, national origin, age, or 
handicap. 
(c) SUBMISSION OF REQUESTS.—A request under subsection (a) shall 
specify the rule or rules to be waived or modified and the change 
proposed, and shall briefly describe why the change would promote 
the achievement of the job creation, community development, or 
economic revitalization objectives of the enterprise zone. If a request 
is made to the Secretary of Agriculture, the requesting governments 
shall send a copy of the request to the Secretary of Housing and 
Urban Development at the time the request is made. 
(d) CONSIDERATION OF REQUESTS.—In considering a request, the 
Secretary shall weigh the extent to which the proposed change is 
likely to further job creation, community development, or economic 
revitalization within the enterprise zone against the effect the 
change is likely to have on the underlying purposes of applicable 
statutes in the geographic area that would be affected by the 
change. The Secretary shall approve the request whenever the 
Secretary finds, in the discretion of the Secretary, that the public 
interest that the proposed change would serve in furthering such job 
creation, community development or economic revitalization out-
weighs the public interest that continuation of the rule unchanged 
would serve in furthering such underlying purposes. The Secretary 
shall not approve any request to waive or modify a rule if that 
waiver or modification would— 
»,., , 
(1) directly violate a statutory requirement; or 
(2) be likely to present a significant risk to the public health, 
including environmental health or safety. 
(e) NOTICE OF DISAPPROVAL.—If a request is disapproved, the 
Secretary shall inform the requesting governments in writing of the 
reasons therefor and shall, to the maximum extent possible, work 
with such governments to develop an alternative, consistent with 
the standards contained in subsection (d). 
(f) PERIOD FOR DETERMINATION.—The Secretary shall discharge 
the responsibilities of the Secretary under this section in an expedi-
tious manner, and shall make a determination on requests not later 
than 90 days after their receipt. 
(g) APPLICABLE PROCEDURES.—A waiver or modification of a rule 
under subsection (a) shall not be considered to be a rule, rule-
making, or regulation under chapter 5 of title 5, United States Code. 
To facilitate reaching a decision on any requested waiver or modi-
PUBLIC LAW 100-242—FEB. 5, 1988 
101 STAT. 1963 
Federal 
Register, 
publication. 
fication, the Secretary may seek the views of interested parties and, 
if the views are to be sought, determine how they should be obtained 
and to what extent, if any, they should be taken into account in 
considering the request. The Secretary shall publish a notice in the 
Federal Register stating any waiver or modification of a rule under 
this section. 
(h) EFFECT OF SUBSEQUENT AMENDMENT OF RULES.—In the event 
that the Secretary proposes to amend a rule for which a waiver or 
modification under this section is in effect, the Secretary shall not 
change the waiver or modification to impose additional require-
ments unless the Secretary determines, consistent with standards 
contained in subsection (d), that such action is necessary. 
(i) EXPIRATION OF WAIVERS AND MODIFICATIONS.—No waiver or 
modification of a rule under this section shall remain in effect for a 
longer period than the period for which the enterprise zone designa-
tion remains in effect for the area in which the waiver or modifica-
tion applies. 
(j) DEFINITIONS.—For purposes of this section: 
(1) RULE.—The term "rule" means— 
(A) any rule as defined in section 551(4) of title 5, United 
States Code; or 
(B) any rulemaking conducted on the record after oppor-
tunity for an agency hearing pursuant to sections 556 and 
557 of such title 5. 
(2) SECRETARY.—The term "Secretary" means the Secretary of 
Housing and Urban Development or, with respect to any rule 
issued under title V of the Housing Act of 1949, the Secretary of 
Agriculture. 
SEC. 705. COORDINATION OF HOUSING AND URBAN DEVELOPMENT PRO-
GRAMS IN ENTERPRISE ZONES. 
Section 3 of the Department of Housing and Urban Development 
Act is amended by adding at the end the following new subsection: 
42 USC 3532. 
"(d) The Secretary shall— 
"(1) promote the coordination of all programs under the 
jurisdiction of the Secretary that are carried on within an 
enterprise zone designated pursuant to section 701 of the Hous-
ing and Community Development Act of 1987; 
"(2) expedite, to the greatest extent possible, the consideration 
of applications for programs referred to in paragraph (1) 
/ 
through the consolidation of forms or otherwise; and 
"(3) provide, whenever possible, for the consolidation of peri- Reports, 
odic reports required under programs referred to in paragraph 
(1) into one summary report submitted at such intervals as may 
be designated by the Secretary.". 
101 STAT. 1964 
PUBLIC LAW 100-242—FEB. 5, 1988 
Grants. 
SEC. 706. COORDINATION WITH CDBG AND UDAG PROGRAMS. 
-r. i
^ 
It is the policy of the Congress that amounts provided under the 
community development block grant and urban development action 
grant programs under title I of the Housing and Community Devel-
"J 
opment Act of 1974 shall not be reduced in any fiscal year in which 
the provisions of this title are in effect. 
1 Approved February 5, 1988. 
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• 
LEGISLATIVE HISTORY—S. 825 (H.R. 4): 
HOUSE REPORTS: No. 100-122 and Pt. 2 accompanying H.R. 4 (Comm. on Banking, 
Finance and Urban Affairs) and No. 100-426 (Comm. of Confer-
Gnce). 
SENATE REPORTS: No. 100-21 (Comm. on Banking, Housing, and Urban Affairs). 
CONGRESSIONAL RECORD, Vol. 133 (1987): 
/ 
Mar. 30, 31, considered and passed Senate. 
June 10, 11, H.R. 4 considered and passed House. 
June 17, S. 825 considered and passed House, amended. 
Nov. 9, House agreed to conference report. 
Nov. 12, 13, 17, Senate considered conference report. 
Dec. 21, Senate concurred in House amendments with an amendment. House 
concurred in Senate amendment. 
WEEKLY COMPILATION OF PRESIDENTIAL DOCUMENTS, Vol. 24 (1988): 
Feb. 5, Presidential remarks.