Multifamily Housing Property Disposition Reform Act of 1994

S. 1299

One Hundred Third Congress
of the
United States of America
AT T H E S E C O N D S E S S I O N
Begun and held at the City of Washington on Tuesday,
the twenty-fifth day of January, one thousand nine hundred and ninety-four

An Act
To amend section 203 of the Housing and Community Development Amendments
of 1978 to provide for the disposition of multifamily properties owned by the
Secretary of Housing and Urban Development, to provide for other reforms in
programs administered by the Secretary, and to make certain technical amendments, and for other purposes.

Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

(a) SHORT TITLE.—This Act may be cited as the ‘‘Multifamily
Housing Property Disposition Reform Act of 1994’’.
(b) TABLE OF CONTENTS.—
Sec. 1. Short title and table of contents.
Sec.
Sec.
Sec.
Sec.
Sec.

101.
102.
103.
104.
105.

TITLE I—MULTIFAMILY PROPERTY DISPOSITION REFORM
Multifamily property disposition.
Repeal of State agency multifamily property disposition demonstration.
Preventing mortgage defaults on multifamily housing projects.
Interest rates on assigned mortgages.
Authorization of appropriations.
TITLE II—OTHER PROGRAM REFORMS

Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.

201.
202.
203.
204.
205.
206.
207.
208.
209.

Subtitle A—Home Investment Partnerships Program
Participation by State agencies or instrumentalities.
Simplification of program-wide income targeting for rental housing.
Homeownership units.
Simplification of matching requirements.
Repeal of separate audit requirement.
Environmental review requirements.
Use of CDBG funds for HOME program expenses.
Flexibility of HOME program for disaster areas.
Applicability and regulations.

Subtitle B—HOPE Homeownership Program
Sec. 221. Matching requirement under HOPE for homeownership of single family
homes program.
Sec.
Sec.
Sec.
Sec.

231.
232.
233.
234.

Subtitle C—Community Development Block Grants
Section 108 eligible activities.
Economic development grants.
Guarantee of obligations backed by section 108 loans.
Flexibility of CDBG program for disaster areas.

Sec.
Sec.
Sec.
Sec.
Sec.
Sec.

301.
302.
303.
304.
305.
306.

TITLE III—TECHNICAL AMENDMENTS
Definition of ‘‘families’’.
Elimination of requirement to identify CIAP replacement needs.
Project-based accounting.
Operating subsidy adjustments for anticipated fraud recoveries.
Environmental review provisions.
Correction of FHA multifamily mortgage limits.

S. 1299—2
Sec. 307. Amendments to FHA multifamily risk-sharing and housing finance agency pilot programs.
Sec. 308. Subsidy layering review.

TITLE I—MULTIFAMILY PROPERTY
DISPOSITION REFORM
SEC. 101. MULTIFAMILY PROPERTY DISPOSITION.

(a) FINDINGS.—The Congress finds that—
(1) the portfolio of multifamily housing project mortgages
insured by the FHA is severely troubled and at risk of default,
requiring the Secretary to increase loss reserves from
$5,500,000,000 in 1991 to $11,900,000,000 in 1992 to cover
estimated future losses;
(2) the inventory of multifamily housing projects owned
by the Secretary has more than quadrupled since 1989, and,
by the end of 1994, may exceed 69,000 units;
(3) the cost to the Federal Government of owning and
maintaining multifamily housing projects escalated to
$288,000,000 in fiscal year 1993;
(4) the inventory of multifamily housing projects subject
to mortgages held by the Secretary has increased dramatically,
to more than 2,400 mortgages, and approximately half of these
mortgages, with approximately 219,000 units, are delinquent;
(5) the inventory of insured and formerly insured multifamily housing projects is deteriorating, potentially endangering
tenants and neighborhoods; and
(6) the current statutory framework governing the disposition of multifamily housing projects effectively impedes the
Government’s ability to dispose of properties, protect tenants,
and ensure that projects are maintained over time.
(b) MANAGEMENT AND DISPOSITION OF MULTIFAMILY HOUSING
PROJECTS.—Section 203 of the Housing and Community Development Amendments of 1978 (12 U.S.C. 1701z–11) is amended to
read as follows:
‘‘SEC. 203. MANAGEMENT AND DISPOSITION OF MULTIFAMILY HOUSING PROJECTS.

‘‘(a) GOALS.—The Secretary of Housing and Urban Development
shall manage or dispose of multifamily housing projects that are
owned by the Secretary or that are subject to a mortgage held
by the Secretary in a manner that—
‘‘(1) is consistent with the National Housing Act and this
section;
‘‘(2) will protect the financial interests of the Federal
Government; and
‘‘(3) will, in the least costly fashion among reasonable available alternatives, address the goals of—
‘‘(A) preserving certain housing so that it can remain
available to and affordable by low-income persons;
‘‘(B) preserving and revitalizing residential neighborhoods;
‘‘(C) maintaining existing housing stock in a decent,
safe, and sanitary condition;
‘‘(D) minimizing the involuntary displacement of tenants;

S. 1299—3
‘‘(E) maintaining housing for the purpose of providing
rental housing, cooperative housing, and homeownership
opportunities for low-income persons;
‘‘(F) minimizing the need to demolish multifamily housing projects;
‘‘(G) supporting fair housing strategies; and
‘‘(H) disposing of such projects in a manner consistent
with local housing market conditions.
In determining the manner in which a project is to be managed
or disposed of, the Secretary may balance competing goals relating
to individual projects in a manner that will further the purposes
of this section.
‘‘(b) DEFINITIONS.—For purposes of this section:
‘‘(1) MULTIFAMILY HOUSING PROJECT.—The term ‘multifamily housing project’ means any multifamily rental housing
project which is, or prior to acquisition by the Secretary was,
assisted or insured under the National Housing Act, or was
subject to a loan under section 202 of the Housing Act of
1959.
‘‘(2) SUBSIDIZED PROJECT.—The term ‘subsidized project’
means a multifamily housing project that, immediately prior
to the assignment of the mortgage on such project to, or the
acquisition of such mortgage by, the Secretary, was receiving
any of the following types of assistance:
‘‘(A) Below market interest rate mortgage insurance
under the proviso of section 221(d)(5) of the National Housing Act.
‘‘(B) Interest reduction payments made in connection
with mortgages insured under section 236 of the National
Housing Act.
‘‘(C) Direct loans made under section 202 of the Housing Act of 1959.
‘‘(D) Assistance in the form of—
‘‘(i) rent supplement payments under section 101
of the Housing and Urban Development Act of 1965,
‘‘(ii) additional assistance payments under section
236(f)(2) of the National Housing Act,
‘‘(iii) housing assistance payments made under section 23 of the United States Housing Act of 1937
(as in effect before January 1, 1975), or
‘‘(iv) housing assistance payments made under section 8 of the United States Housing Act of 1937 (excluding payments made for tenant-based assistance under
section 8),
if (except for purposes of section 183(c) of the Housing
and Community Development Act of 1987) such assistance
payments are made to more than 50 percent of the units
in the project.
‘‘(3) FORMERLY SUBSIDIZED PROJECT.—The term ‘formerly
subsidized project’ means a multifamily housing project owned
by the Secretary that was a subsidized project immediately
prior to its acquisition by the Secretary.
‘‘(4) UNSUBSIDIZED PROJECT.—The term ‘unsubsidized
project’ means a multifamily housing project owned by the
Secretary that is not a subsidized project or a formerly subsidized project.

S. 1299—4
‘‘(5) AFFORDABLE.—A unit shall be considered affordable
if—
‘‘(A) for units occupied—
‘‘(i) by very low-income families, the rent does not
exceed 30 percent of 50 percent of the area median
income, as determined by the Secretary, with adjustments for smaller and larger families; and
‘‘(ii) by low-income families other than very lowincome families, the rent does not exceed 30 percent
of 80 percent of the area median income, as determined
by the Secretary, with adjustments for smaller and
larger families; or
‘‘(B) the unit, or the family residing in the unit, is
receiving assistance under section 8 of the United States
Housing Act of 1937.
‘‘(6) LOW-INCOME FAMILIES AND VERY LOW-INCOME FAMILIES.—The terms ‘low-income families’ and ‘very low-income
families’ shall have the meanings given the terms in section
3(b) of the United States Housing Act of 1937.
‘‘(7) PREEXISTING TENANT.—The term ‘preexisting tenant’
means, with respect to a multifamily housing project acquired
pursuant to this section by a purchaser other than the Secretary
at foreclosure or after sale by the Secretary, a family that
resides in a unit in the project immediately before the acquisition of the project by the purchaser.
‘‘(8) MARKET AREA.—The term ‘market area’ means a market area determined by the Secretary.
‘‘(9) SECRETARY.—The term ‘Secretary’ means the Secretary
of Housing and Urban Development.
‘‘(c) DISPOSITION OF PROPERTY.—
‘‘(1) DISPOSITION TO PURCHASERS.—In carrying out this section, the Secretary may dispose of a multifamily housing project
owned by the Secretary on a negotiated, competitive bid, or
other basis, on such terms as the Secretary deems appropriate
considering the low-income character of the project and consistent with the goals in subsection (a), only to a purchaser determined by the Secretary to be capable of—
‘‘(A) satisfying the conditions of the disposition plan
developed under paragraph (2) for the project;
‘‘(B) implementing a sound financial and physical
management program that is designed to enable the project
to meet anticipated operating and repair expenses to ensure
that the project will remain in decent, safe, and sanitary
condition and in compliance with any standards under
applicable State or local laws, rules, ordinances, or regulations relating to the physical condition of the housing and
any such standards established by the Secretary;
‘‘(C) responding to the needs of the tenants and working
cooperatively with tenant organizations;
‘‘(D) providing adequate organizational, staff, and
financial resources to the project; and
‘‘(E) meeting such other requirements as the Secretary
may determine.
‘‘(2) DISPOSITION PLAN.—
‘‘(A) IN GENERAL.—Prior to the sale of a multifamily
housing project that is owned by the Secretary, the Secretary shall develop an initial disposition plan for the

S. 1299—5
project that specifies the minimum terms and conditions
of the Secretary for disposition of the project, the initial
sales price that is acceptable to the Secretary, and the
assistance that the Secretary plans to make available to
a prospective purchaser in accordance with this section.
‘‘(B) MARKET-WIDE PLANS.—In developing the initial
disposition plan under this subsection for a multifamily
housing project located in a market area in which at least
1 other multifamily housing project owned by the Secretary
is located, the Secretary may coordinate the disposition
of all such multifamily housing projects located within the
same market area to the extent and in such manner as
the Secretary determines appropriate to carry out the goals
under subsection (a).
‘‘(C) SALES PRICE.—The initial sales price shall be
reasonably related to the intended use of the project after
sale, any rehabilitation requirements for the project, the
rents for units in the project that can be supported by
the market, the amount of rental assistance available for
the project under section 8 of the United States Housing
Act of 1937, the occupancy profile of the project (including
family size and income levels for tenant families), and
any other factors that the Secretary considers appropriate.
‘‘(D) COMMUNITY AND TENANT INPUT.—In carrying out
this section, the Secretary shall develop procedures—
‘‘(i) to obtain appropriate and timely input into
disposition plans from officials of the unit of general
local government affected, the community in which
the project is situated, and the tenants of the project;
and
‘‘(ii) to facilitate, where feasible and appropriate,
the sale of multifamily housing projects to existing
tenant organizations with demonstrated capacity, to
public or nonprofit entities that represent or are affiliated with existing tenant organizations, or to other
public or nonprofit entities.
‘‘(E) TECHNICAL ASSISTANCE.—To carry out the procedures developed under subparagraph (D), the Secretary
may provide technical assistance, directly or indirectly, and
may use amounts available for technical assistance under
the Emergency Low Income Housing Preservation Act of
1987, subtitle C of the Low-Income Housing Preservation
and Resident Homeownership Act of 1990, subtitle B of
title IV of the Cranston-Gonzalez National Affordable Housing Act, or this section, for the provision of technical assistance under this paragraph. Recipients of technical assistance funding under the provisions referred to in this
subparagraph shall be permitted to provide technical assistance to the extent of such funding under any of such
provisions or under this subparagraph, notwithstanding
the source of the funding.
‘‘(3) FORECLOSURE SALE.—In carrying out this section, the
Secretary shall—
‘‘(A) prior to foreclosing on any mortgage held by the
Secretary on any multifamily housing project, notify both
the unit of general local government in which the property

S. 1299—6
is located and the tenants of the property of the proposed
foreclosure sale; and
‘‘(B) dispose of a multifamily housing project through
a foreclosure sale only to a purchaser that the Secretary
determines is capable of implementing a sound financial
and physical management program that is designed to
enable the project to meet anticipated operating and repair
expenses to ensure that the project will remain in decent,
safe, and sanitary condition and in compliance with any
standards under applicable State or local laws, rules, ordinances, or regulations relating to the physical condition
of the housing and any such standards established by the
Secretary.
‘‘(d) MANAGEMENT AND MAINTENANCE OF PROPERTIES.—
‘‘(1) CONTRACTING FOR MANAGEMENT SERVICES.—In carrying out this section, the Secretary may—
‘‘(A) contract for management services for a multifamily
housing project that is owned by the Secretary (or for
which the Secretary is mortgagee in possession) with forprofit and nonprofit entities and public agencies (including
public housing authorities) on a negotiated, competitive
bid, or other basis at a price determined by the Secretary
to be reasonable, with a manager the Secretary has determined is capable of—
‘‘(i) implementing a sound financial and physical
management program that is designed to enable the
project to meet anticipated operating and maintenance
expenses to ensure that the project will remain in
decent, safe, and sanitary condition and in compliance
with any standards under applicable State or local
laws, rules, ordinances, or regulations relating to the
physical condition of the project and any such standards established by the Secretary;
‘‘(ii) responding to the needs of the tenants and
working cooperatively with tenant organizations;
‘‘(iii) providing adequate organizational, staff, and
financial resources to the project; and
‘‘(iv) meeting such other requirements as the Secretary may determine; and
‘‘(B) require the owner of a multifamily housing project
that is subject to a mortgage held by the Secretary to
contract for management services for the project in the
manner described in subparagraph (A).
‘‘(2) MAINTENANCE OF PROJECTS OWNED BY SECRETARY.—
In the case of multifamily housing projects that are owned
by the Secretary (or for which the Secretary is mortgagee
in possession), the Secretary shall—
‘‘(A) to the greatest extent possible, maintain all such
occupied projects in a decent, safe, and sanitary condition
and in compliance with any standards under applicable
State or local laws, rules, ordinances, or regulations relating to the physical condition of the housing and any such
standards established by the Secretary;
‘‘(B) to the greatest extent possible, maintain full occupancy in all such projects; and
‘‘(C) maintain all such projects for purposes of providing
rental or cooperative housing.

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‘‘(3) PROJECTS SUBJECT TO A MORTGAGE HELD BY SECRETARY.—In the case of any multifamily housing project that
is subject to a mortgage held by the Secretary, the Secretary
shall require the owner of the project to carry out the requirements of paragraph (2).
‘‘(e) REQUIRED ASSISTANCE.—In disposing of multifamily housing property under this section, consistent with the goal of section
203(a)(3)(A), the Secretary shall take, separately or in combination
with other actions under this subsection or subsection (f), one
or more of the following actions:
‘‘(1) CONTRACT WITH OWNER FOR PROJECT-BASED ASSISTANCE.—In the case of multifamily housing projects that are
acquired by a purchaser other than the Secretary at foreclosure
or after sale by the Secretary, the Secretary may enter into
contracts under section 8 of the United States Housing Act
of 1937 (to the extent budget authority is available) with owners
of the projects, subject to the following requirements:
‘‘(A) SUBSIDIZED OR FORMERLY SUBSIDIZED PROJECTS
RECEIVING MORTGAGE-RELATED ASSISTANCE.—In the case of
a subsidized or formerly subsidized project referred to in
subparagraphs (A) through (C) of subsection (b)(2)—
‘‘(i) the contract shall be sufficient to assist at
least all units covered by an assistance contract under
any of the authorities referred to in subsection (b)(2)(D)
before acquisition or foreclosure, unless the Secretary
acts pursuant to the provisions of subparagraph (C);
‘‘(ii) the contract shall provide that, when a
vacancy occurs in any unit in the project requiring
project-based rental assistance pursuant to this
subparagraph that is occupied by a family who is not
eligible for assistance under such section 8, the owner
shall lease the available unit to a family eligible for
assistance under such section 8; and
‘‘(iii) the Secretary shall take actions to ensure
that any unit in any such project that does not otherwise receive project-based assistance under this
subparagraph remains available and affordable for the
remaining useful life of the project, as defined by the
Secretary; to carry out this clause, the Secretary may
require purchasers to establish use or rent restrictions
maintaining the affordability of such units.
‘‘(B) SUBSIDIZED OR FORMERLY SUBSIDIZED PROJECTS
RECEIVING RENTAL ASSISTANCE.—In the case of a subsidized
or formerly subsidized project referred to in subsection
(b)(2)(D) that is not subject to subparagraph (A)—
‘‘(i) the contract shall be sufficient to assist at
least all units in the project that are covered, or were
covered immediately before foreclosure on or acquisition of the project by the Secretary, by an assistance
contract under any of the provisions referred to in
such subsection, unless the Secretary acts pursuant
to provisions of subparagraph (C); and
‘‘(ii) the contract shall provide that, when a
vacancy occurs in any unit in the project requiring
project-based rental assistance pursuant to this
subparagraph that is occupied by a family who is not
eligible for assistance under such section 8, the owner

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shall lease the available unit to a family eligible for
assistance under such section 8.
‘‘(C) EXCEPTIONS.—
‘‘(i) AUTHORITY.—In lieu of providing project-based
assistance under section 8 of the United States Housing Act of 1937 in accordance with subparagraph (A)(i)
or (B)(i) for a project, the Secretary may, for certain
units in unsubsidized projects located within the same
market area as the project otherwise required to be
assisted with such project-based assistance—
‘‘(I) require use and rent restrictions providing
that such units shall be available to and affordable
by very low-income families for the remaining useful life of the project (as defined by the Secretary),
or
‘‘(II) provide project-based assistance under
section 8 for such units to be occupied by only
very low-income persons,
but only if the requirements under clause (ii) are met.
‘‘(ii) REQUIREMENTS.—The requirements under this
clause are that—
‘‘(I) upon the disposition of the project otherwise required to be assisted with project-based
assistance under subparagraph (A)(i) or (B)(i), the
Secretary shall make available tenant-based
assistance under section 8 to low-income families
residing in units otherwise required to be assisted
with such project-based assistance; and
‘‘(II) the number of units subject to use restrictions or provided assistance under clause (i) shall
be at least equivalent to the number of units otherwise required to be assisted with project-based
assistance under section 8 in accordance with
subparagraph (A)(i) or (B)(i).
‘‘(D)
UNSUBSIDIZED
PROJECTS.—Notwithstanding
actions taken pursuant to subparagraph (C), in the case
of unsubsidized projects, the contract shall be sufficient
to provide—
‘‘(i) project-based rental assistance for all units
that are covered, or were covered immediately before
foreclosure or acquisition, by an assistance contract
under—
‘‘(I) the new construction and substantial
rehabilitation program under section 8(b)(2) of the
United States Housing Act of 1937 (as in effect
before October 1, 1983);
‘‘(II) the property disposition program under
section 8(b) of such Act;
‘‘(III) the project-based certificate program
under section 8 of such Act;
‘‘(IV) the moderate rehabilitation program
under section 8(e)(2) of such Act;
‘‘(V) section 23 of such Act (as in effect before
January 1, 1975);
‘‘(VI) the rent supplement program under section 101 of the Housing and Urban Development
Act of 1965; or

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‘‘(VII) section 8 of the United States Housing
Act of 1937, following conversion from assistance
under section 101 of the Housing and Urban Development Act of 1965; and
‘‘(ii) tenant-based assistance under section 8 of
the United States Housing Act of 1937 for families
that are preexisting tenants of the project in units
that, immediately before foreclosure or acquisition of
the project by the Secretary, were covered by an assistance contract under the loan management set-aside
program under section 8(b) of the United States Housing Act of 1937.
‘‘(2) ANNUAL CONTRIBUTION CONTRACTS FOR TENANT-BASED
ASSISTANCE.—In the case of multifamily housing projects that
are acquired by a purchaser other than the Secretary at foreclosure or after sale by the Secretary, the Secretary may enter
into annual contribution contracts with public housing agencies
to provide tenant-based assistance under section 8 of the United
States Housing Act of 1937 on behalf of all low-income families
who are otherwise eligible for assistance in accordance with
subparagraph (A), (B), or (D) of paragraph (1) on the date
that the project is acquired by the purchaser, subject to the
following requirements:
‘‘(A) REQUIREMENT OF SUFFICIENT AFFORDABLE HOUSING IN AREA.—The Secretary may not take action under
this paragraph unless the Secretary determines that there
is available in the area an adequate supply of habitable,
affordable housing for very low-income families and other
low-income families using tenant-based assistance.
‘‘(B) LIMITATION FOR SUBSIDIZED AND FORMERLY SUBSIDIZED PROJECTS.—The Secretary may not take actions
under this paragraph in connection with units in subsidized
or formerly subsidized projects for more than 10 percent
of the aggregate number of units in such projects disposed
of by the Secretary in any fiscal year.
‘‘(3) OTHER ASSISTANCE.—
‘‘(A) IN GENERAL.—In accordance with the authority
provided under the National Housing Act, the Secretary
may provide other assistance pursuant to subsection (f)
to the owners of multifamily housing projects that are
acquired by a purchaser other than the Secretary at foreclosure, or after sale by the Secretary, on terms that ensure
that—
‘‘(i) at least the units in the project otherwise
required to receive project-based assistance pursuant
to subparagraphs (A), (B), or (D) of paragraph (1) are
available to and affordable by low-income persons; and
‘‘(ii) for the remaining useful life of the project,
as defined by the Secretary, there shall be in force
such use or rent restrictions as the Secretary may
prescribe.
‘‘(B) VERY LOW-INCOME TENANTS.—If, as a result of
actions taken pursuant to this paragraph, the rents charged
to any very low-income families residing in the project
who are otherwise required (pursuant to subparagraph (A),
(B), or (D) of paragraph (1)) to receive project-based assistance under section 8 of the United States Housing Act

S. 1299—10
of 1937 exceed the amount payable as rent under section
3(a) of the United States Housing Act of 1937, the Secretary
shall provide tenant-based assistance under section 8 of
such Act to such families.
‘‘(f) DISCRETIONARY ASSISTANCE.—In addition to the actions
required under subsection (e) for a subsidized, formerly subsidized,
or unsubsidized multifamily housing project, the Secretary may,
pursuant to the disposition plan and the goals in subsection (a),
take one or more of the following actions:
‘‘(1) DISCOUNTED SALES PRICE.—In accordance with the
authority provided under the National Housing Act, the Secretary may reduce the selling price of the project. Such reduced
sales price shall be reasonably related to the intended use
of the property after sale, any rehabilitation requirements for
the project, the rents for units in the project that can be
supported by the market, the amount of rental assistance available for the project under section 8 of the United States Housing
Act of 1937, the occupancy profile of the project (including
family size and income levels for tenant families), and any
other factors that the Secretary considers appropriate.
‘‘(2) USE AND RENT RESTRICTIONS.—The Secretary may
require certain units in a project to be subject to use or rent
restrictions providing that such units will be available to and
affordable by low- and very low-income persons for the remaining useful life of the property, as defined by the Secretary.
‘‘(3) SHORT-TERM LOANS.—The Secretary may provide shortterm loans to facilitate the sale of a multifamily housing project
if—
‘‘(A) authority for such loans is provided in advance
in an appropriation Act;
‘‘(B) such loan has a term of not more than 5 years;
‘‘(C) the Secretary determines, based upon documentation provided to the Secretary, that the borrower has
obtained a commitment of permanent financing to replace
the short-term loan from a lender who meets standards
established by the Secretary; and
‘‘(D) the terms of such loan are consistent with prevailing practices in the marketplace or the provision of such
loan results in no cost to the Government, as defined in
section 502 of the Congressional Budget Act of 1974.
‘‘(4) UP-FRONT GRANTS.—If the Secretary determines that
action under this paragraph is more cost-effective than
establishing rents pursuant to subsection (h)(2), the Secretary
may utilize the budget authority provided for contracts issued
under this section for project-based assistance under section
8 of the United States Housing Act of 1937 to (in addition
to providing project-based section 8 rental assistance) provide
up-front grants for the necessary cost of rehabilitation and
other related development costs.
‘‘(5) TENANT-BASED ASSISTANCE.—The Secretary may make
available tenant-based assistance under section 8 of the United
States Housing Act of 1937 to families residing in a multifamily
housing project that do not otherwise qualify for project-based
assistance.
‘‘(6) ALTERNATIVE USES.—
‘‘(A) IN GENERAL.—Notwithstanding any other provision of law, after providing notice to and an opportunity

S. 1299—11
for comment by preexisting tenants, the Secretary may
allow not more than—
‘‘(i) 10 percent of the total number of units in
multifamily housing projects that are disposed of by
the Secretary during any fiscal year to be made available for uses other than rental or cooperative uses,
including low-income homeownership opportunities, or
in any particular project, community space, office space
for tenant or housing-related service providers or security programs, or small business uses, if such uses
benefit the tenants of the project; and
‘‘(ii) 5 percent of the total number of units in
multifamily housing projects that are disposed of by
the Secretary during any fiscal year to be used in
any manner, if the Secretary and the unit of general
local government or area-wide governing body determine that such use will further fair housing, community development, or neighborhood revitalization goals.
‘‘(B) DISPLACEMENT PROTECTION.—The Secretary may
take actions under subparagraph (A) only if—
‘‘(i) tenant-based rental assistance under section
8 of the United States Housing Act of 1937 is made
available to each eligible family residing in the project
that is displaced as a result of such actions; and
‘‘(ii) the Secretary determines that sufficient habitable, affordable rental housing is available in the market area in which the project is located to ensure
use of such assistance.
‘‘(7) TRANSFER FOR USE UNDER OTHER PROGRAMS OF SECRETARY.—
‘‘(A) IN GENERAL.—Notwithstanding the provisions of
subsection (e), the Secretary may, pursuant to an agreement under subparagraph (B), transfer a multifamily housing project—
‘‘(i) to a public housing agency for use of the project
as public housing; or
‘‘(ii) to an entity eligible to own or operate housing
assisted under section 202 of the Housing Act of 1959
or under section 811 of the Cranston-Gonzalez National
Affordable Housing Act for use as supportive housing
under either of such sections.
‘‘(B) REQUIREMENTS FOR AGREEMENT.—An agreement
providing for the transfer of a project described in subparagraph (A) shall—
‘‘(i) contain such terms, conditions, and limitations
as the Secretary determines appropriate, including
requirements to ensure use of the project as public
housing, supportive housing under section 202 of the
Housing Act of 1959, or supportive housing under section 811 of the Cranston-Gonzalez National Affordable
Housing Act, as applicable; and
‘‘(ii) ensure that no tenant of the project will be
displaced as a result of actions taken under this paragraph.
‘‘(8) REBUILDING.—Notwithstanding any provision of section
8 of the United States Housing Act of 1937, the Secretary
may provide project-based assistance in accordance with sub-

S. 1299—12
section (e) of this section to support the rebuilding of a multifamily housing project rebuilt or to be rebuilt (in whole or
in part and on-site, off-site, or in a combination of both) in
connection with disposition under this section, if the Secretary
determines that—
‘‘(A) the project is not being maintained in a decent,
safe, and sanitary condition;
‘‘(B) rebuilding the project would be less expensive
than substantial rehabilitation;
‘‘(C) the unit of general local government in which
the project is located approves the rebuilding and makes
a financial contribution or other commitment to the project;
and
‘‘(D) the rebuilding is a part of a local neighborhood
revitalization plan approved by the unit of general local
government.
The provisions of subsection (j)(2) shall apply to any tenants
of the project who are displaced.
‘‘(9) EMERGENCY ASSISTANCE FUNDS.—The Secretary may
make arrangements with State agencies and units of general
local government of States receiving emergency assistance
under part A of title IV of the Social Security Act for the
provision of assistance under such Act on behalf of eligible
families who would reside in any multifamily housing projects.
‘‘(g) PROTECTION FOR UNASSISTED VERY LOW-INCOME TENANTS.—For each multifamily housing project disposed of under this
section, the Secretary shall require that, for any very low-income
family who is a preexisting tenant of the project who (upon disposition) would be required to pay rent in an amount in excess of
30 percent of the adjusted income (as such term is defined in
section 3(b) of the United States Housing Act of 1937) of the
family—
‘‘(1) for a period of 2 years beginning upon the date of
the acquisition of the project by the purchaser under such
disposition, the rent for the unit occupied by the family may
not be increased above the rent charged immediately before
acquisition;
‘‘(2) such family shall be considered displaced for purposes
of the preferences for assistance under sections 6(c)(4)(A)(i),
8(d)(1)(A)(i), and 8(o)(3)(B) of the United States Housing Act
of 1937; and
‘‘(3) notice shall be provided to such family, not later than
the date of the acquisition of the project by the purchaser—
‘‘(A) of the requirements under paragraphs (1) and
(2); and
‘‘(B) that, after the expiration of the period under paragraph (1), the rent for the unit occupied by the family
may be increased.
‘‘(h) CONTRACT REQUIREMENTS.—Contracts for project-based
rental assistance under section 8 of the United States Housing
Act of 1937 provided pursuant to this section shall be subject
to the following requirements:
‘‘(1) CONTRACT TERM.—The contract shall have a term of
15 years, except that the term may be less than 15 years—
‘‘(A) to the extent that the Secretary finds that, based
on the rental charges and financing for the multifamily
housing project to which the contract relates, the financial

S. 1299—13
viability of the project can be maintained under a contract
having such a term; except that the Secretary shall require
that the amount of rent payable by tenants of the project
for units assisted under such contract shall not exceed
the amount payable for rent under section 3(a) of the
United States Housing Act of 1937 for a period of at least
15 years; or
‘‘(B) if such assistance is provided—
‘‘(i) under a contract authorized under section 6
of the HUD Demonstration Act of 1993; and
‘‘(ii) pursuant to a disposition plan under this section for a project that is determined by the Secretary
to be otherwise in compliance with this section.
‘‘(2) CONTRACT RENT.—The Secretary shall establish the
contract rents under such contracts at levels that, together
with other resources available to the purchasers, provide sufficient amounts for the necessary costs of rehabilitating and
operating the multifamily housing project and do not exceed
the percentage of the existing housing fair market rentals for
the market area in which the project assisted under the contract
is located as determined by the Secretary under section 8(c)
of the United States Housing Act of 1937.
‘‘(i) RIGHT OF FIRST REFUSAL FOR LOCAL AND STATE GOVERNMENT AGENCIES.—
‘‘(1) NOTIFICATION.—Not later than 30 days after the Secretary acquires title to a multifamily housing project, the Secretary shall notify the appropriate unit of general local government (including public housing agencies) and State agency or
agencies designated by the chief executive officer of the State
in which the project is located of such acquisition of title and
that, for a period beginning upon such notification that does
not exceed 90 days, such unit of general local government
and agency or agencies shall have the exclusive right under
this subsection to make bona fide offers to purchase the project.
‘‘(2) RIGHT OF FIRST REFUSAL.—During the 90-day period,
the Secretary may not sell or offer to sell the multifamily
housing project other than to a party notified under paragraph
(1), unless the unit of general local government and the designated State agency or agencies notify the Secretary that
they will not make an offer to purchase the project. The Secretary shall accept a bona fide offer to purchase the project
made during such period if it complies with the terms and
conditions of the disposition plan for the project or is otherwise
acceptable to the Secretary.
‘‘(3) PROCEDURE.—The Secretary shall establish any procedures necessary to carry out this subsection.
‘‘(j) DISPLACEMENT OF TENANTS AND RELOCATION ASSISTANCE.—
‘‘(1) IN GENERAL.—Whenever tenants will be displaced as
a result of the demolition of, repairs to, or conversion in the
use of, a multifamily housing project that is owned by the
Secretary (or for which the Secretary is mortgagee in possession), the Secretary shall identify tenants who will be displaced,
and shall notify all such tenants of their pending displacement
and of any relocation assistance that may be available. In
the case of a multifamily housing project that is subject to
a mortgage held by the Secretary, the Secretary shall require
the owner of the project to carry out the requirements of this

S. 1299—14
paragraph, if the Secretary has authorized the demolition of,
repairs to, or conversion in the use of such multifamily housing
project.
‘‘(2) RIGHTS OF DISPLACED TENANTS.—The Secretary shall
ensure for any such tenant (who continues to meet applicable
qualification standards) the right—
‘‘(A) to return, whenever possible, to a repaired or
rebuilt unit;
‘‘(B) to occupy a unit in another multifamily housing
project owned by the Secretary;
‘‘(C) to obtain housing assistance under the United
States Housing Act of 1937; or
‘‘(D) to receive any other available similar relocation
assistance as the Secretary determines to be appropriate.
‘‘(k) MORTGAGE AND PROJECT SALES.—
‘‘(1) IN GENERAL.—The Secretary may not approve the sale
of any loan or mortgage held by the Secretary (including any
loan or mortgage owned by the Government National Mortgage
Association) on any subsidized project or formerly subsidized
project, unless such sale is made as part of a transaction
that will ensure that such project will continue to operate
at least until the maturity date of such loan or mortgage,
in a manner that will provide rental housing on terms at
least as advantageous to existing and future tenants as the
terms required by the program under which the loan or mortgage was made or insured prior to the assignment of the
loan or mortgage on such project to the Secretary.
‘‘(2) SALE OF CERTAIN PROJECTS.—The Secretary may not
approve the 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 as part of a transaction that will
ensure that the project will continue to operate, at least until
the maturity date of the loan or mortgage, in a manner that
will provide rental housing on terms at least as advantageous
to existing and future tenants as the terms required by the
program under which the loan or mortgage was made or insured
prior to the proposed sale of the project.
‘‘(3) MORTGAGE SALES TO STATE AND LOCAL GOVERNMENTS.—Notwithstanding any provision of law that requires
competitive sales or bidding, the Secretary may carry out negotiated sales of mortgages held by the Secretary, without the
competitive selection of purchasers or intermediaries, to units
of general local government or State agencies, or groups of
investors that include at least one such unit of general local
government or State agency, if the negotiations are conducted
with such agencies, except that—
‘‘(A) the terms of any such sale shall include the agreement of the purchasing agency or unit of local government
or State agency to act as mortgagee or owner of a beneficial
interest in such mortgages, in a manner consistent with
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,

S. 1299—15
including, to the extent the Secretary determines appropriate, authorizing such unit of local government or State
agency to enforce the provisions of any regulatory agreement or other program requirements applicable to the
related projects; and
‘‘(B) the sales prices for such mortgages shall be, in
the determination of the Secretary, the best prices that
may be obtained for such mortgages from a unit of general
local government or State agency, consistent with the
expectation and intention that the projects financed will
be retained for use under the applicable mortgage insurance program for the life of the initial mortgage insurance
contract.
‘‘(4) SALE OF MORTGAGES COVERING UNSUBSIDIZED
PROJECTS.—Notwithstanding any other provision of law, the
Secretary may sell mortgages held on projects that are not
subsidized or formerly subsidized projects on such terms and
conditions as the Secretary may prescribe.
‘‘(5) MORTGAGE SALE DEMONSTRATION.—The Secretary may
carry out a demonstration to test the feasibility of restructuring
and disposing of troubled multifamily mortgages held by the
Secretary through the establishment of partnerships with public, private, and nonprofit entities.
‘‘(6) PROJECT SALE DEMONSTRATION.—The Secretary may
carry out a demonstration to test the feasibility of disposing
of troubled multifamily housing projects that are owned by
the Secretary through the establishment of partnerships with
public, private, and nonprofit entities.
‘‘(l) REPORT TO CONGRESS.—Not later than June 1 of each
year, the Secretary shall submit to the Congress a report describing
the status of multifamily housing projects owned by or subject
to mortgages held by the Secretary, on an aggregate basis, which
highlights the differences, if any, between the subsidized and the
unsubsidized inventory. The report shall include—
‘‘(1) the average and median size of the projects;
‘‘(2) the geographic locations of the projects, by State and
region;
‘‘(3) the years during which projects were assigned to the
Department, and the average and median length of time that
projects remain in the HUD-held inventory;
‘‘(4) the status of HUD-held mortgages;
‘‘(5) the physical condition of the HUD-held and HUDowned inventory;
‘‘(6) the occupancy profile of the projects, including the
income, family size, race, and ethnic origin of current tenants,
and the rents paid by such tenants;
‘‘(7) the proportion of units that are vacant;
‘‘(8) the number of projects for which the Secretary is
mortgagee in possession;
‘‘(9) the number of projects sold in foreclosure sales;
‘‘(10) the number of HUD-owned projects sold;
‘‘(11) a description of actions undertaken pursuant to this
section, including a description of the effectiveness of such
actions and any impediments to the disposition or management
of multifamily housing projects;

S. 1299—16
‘‘(12) a description of the extent to which the provisions
of this section and actions taken under this section have displaced tenants of multifamily housing projects;
‘‘(13) a description of any of the functions performed in
connection with this section that are contracted out to public
or private entities or to States; and
‘‘(14) a description of the activities carried out under subsection (i) during the preceding year.’’.
(c) CLARIFICATION OF FEDERAL PREFERENCES.—
(1) PUBLIC HOUSING TENANCY.—Section 6(c)(4)(A)(i) of the
United States Housing Act of 1937 (42 U.S.C. 1437d(c)(4)(A)(i))
is amended by inserting after ‘‘displaced’’ the following: ‘‘(including displacement because of disposition of a multifamily housing
project under section 203 of the Housing and Community Development Amendments of 1978)’’.
(2) SECTION 8 ASSISTANCE.—Section 8(d)(1)(A)(i) of the
United States Housing Act of 1937 (42 U.S.C. 1437f(d)(1)(A)(i))
is amended by inserting after ‘‘displaced’’ the following: ‘‘(including displacement because of disposition of a multifamily housing
project under section 203 of the Housing and Community Development Amendments of 1978)’’.
(3) VOUCHER ASSISTANCE.—The first sentence of section
8(o)(3)(B) of the United States Housing Act of 1937 (42 U.S.C.
1437f(o)(3)(B)) is amended by inserting after ‘‘displaced’’ the
following: ‘‘(including displacement because of disposition of
a multifamily housing project under section 203 of the Housing
and Community Development Amendments of 1978)’’.
(d) DEFINITION OF OWNER.—Section 8(f)(1) of the United States
Housing Act of 1937 (42 U.S.C. 1437f(f)(1)) is amended by inserting
‘‘an agency of the Federal Government,’’ after ‘‘cooperative,’’.
(e) AMENDMENT TO NATIONAL HOUSING ACT.—Title V of the
National Housing Act (12 U.S.C. 1731a et seq.) is amended by
adding at the end the following new section:
‘‘PARTIAL

PAYMENT OF CLAIMS ON MULTIFAMILY HOUSING PROJECTS

‘‘SEC. 541. (a) AUTHORITY.—Notwithstanding any other provision of law, if the Secretary is requested to accept assignment
of a mortgage insured by the Secretary that covers a multifamily
housing project (as such term is defined in section 203(b) of the
Housing and Community Development Amendments of 1978) and
the Secretary determines that partial payment would be less costly
to the Federal Government than other reasonable alternatives for
maintaining the low-income character of the project, the Secretary
may request the mortgagee, in lieu of assignment, to—
‘‘(1) accept partial payment of the claim under the mortgage
insurance contract; and
‘‘(2) recast the mortgage, under such terms and conditions
as the Secretary may determine.
‘‘(b) REPAYMENT.—As a condition to a partial claim payment
under this section, the mortgagor shall agree to repay to the Secretary the amount of such payment and such obligation shall be
secured by a second mortgage on the property on such terms and
conditions as the Secretary may determine.’’.
(f) EFFECTIVE DATE.—The Secretary shall issue interim regulations necessary to implement the amendments made by subsections
(b) through (d) not later than 90 days after the date of the enactment
of this Act. Such interim regulations shall take effect upon issuance

S. 1299—17
and invite public comment on the interim regulations. The Secretary
shall issue final regulations to implement such amendments after
opportunity for such public comment, but not later than 12 months
after the date of issuance of such interim regulations.
SEC. 102. REPEAL OF STATE AGENCY MULTIFAMILY PROPERTY DISPOSITION DEMONSTRATION.

Section 184 of the Housing and Community Development Act
of 1987 (12 U.S.C. 1701z–11 note) is hereby repealed.
SEC. 103. PREVENTING MORTGAGE DEFAULTS ON MULTIFAMILY HOUSING PROJECTS.

(a) MULTIFAMILY HOUSING PLANNING

AND INVESTMENT

STRATE-

GIES.—

(1) PREPARATION OF ASSESSMENTS FOR INDEPENDENT ENTITIES.—Section 402(a) of the Housing and Community Development Act of 1992 (12 U.S.C. 1715–1a note) is amended by
adding at the end the following new sentence: ‘‘The assessment
shall be prepared by an entity that does not have an identity
of interest with the owner.’’.
(2) TIMING OF SUBMISSION OF NEEDS ASSESSMENTS.—Section
402(b) of the Housing and Community Development Act of
1992 (12 U.S.C. 1715z–1a note) is amended to read as follows:
‘‘(b) TIMING.—To ensure that assessments for all covered multifamily housing properties will be submitted on or before the conclusion of fiscal year 1997, the Secretary shall require the owners
of such properties, including covered multifamily housing properties
for the elderly, to submit the assessments for the properties in
accordance with the following schedule:
‘‘(1) For fiscal year 1994, 10 percent of the aggregate number of such properties.
‘‘(2) For each of fiscal years 1995, 1996, and 1997, an
additional 30 percent of the aggregate number of such properties.’’.
(3) REVIEW OF COMPREHENSIVE NEEDS ASSESSMENTS.—Section 404(d) of the Housing and Community Development Act
of 1992 (12 U.S.C. 1715–1a note) is amended to read as follows:
‘‘(d) REVIEW.—
‘‘(1) IN GENERAL.—The Secretary shall review each comprehensive needs assessment for completeness and adequacy
before the expiration of the 90-day period beginning on the
receipt of the assessment and shall notify the owner of the
property for which the assessment was submitted of the findings of such review.
‘‘(2) INCOMPLETE OR INADEQUATE ASSESSMENTS.—If the Secretary determines that the assessment is substantially incomplete or inadequate, the Secretary shall—
‘‘(A) notify the owner of the portion or portions of
the assessment requiring completion or other revision; and
‘‘(B) require the owner to submit an amended assessment to the Secretary not later than 30 days after such
notification.’’.
(4) REPEAL OF NOTICE PROVISION.—Section 404 of the Housing and Community Development Act of 1992 (12 U.S.C. 1715–
1a note) is amended by striking subsection (f).
(5) PUBLICATION.—Section 404 of the Housing and Community Development Act of 1992 (12 U.S.C. 1715z–1a note), as

S. 1299—18
amended by paragraph (4) of this subsection, is further amended by inserting after subsection (e) the following new subsection:
‘‘(f) PUBLICATION OF METHOD FOR RECEIVING CAPITAL NEEDS
ASSESSMENT.—The Secretary shall cause to be published in the
Federal Register the method by which the Secretary determines
which capital needs assessments will be received each year in
accordance with section 402(b) and subsection (d) of this section.’’.
(6) FUNDING.—Title IV of the Housing and Community
Development Act of 1992 (12 U.S.C. 1715z–1a note) is amended
by adding at the end the following new section:
‘‘SEC. 409. FUNDING.

‘‘(a) ALLOCATION OF ASSISTANCE.—Based upon needs identified
in comprehensive needs assessments, and subject to otherwise
applicable program requirements, including selection criteria, the
Secretary may allocate the following assistance to owners of covered
multifamily housing projects and may provide such assistance on
a noncompetitive basis:
‘‘(1) Operating assistance and capital improvement assistance for troubled multifamily housing projects pursuant to section 201 of the Housing and Community Development Amendments of 1978, except for assistance set aside under section
201(n)(1).
‘‘(2) Loan management assistance available pursuant to
section 8 of the United States Housing Act of 1937.
‘‘(b) OPERATING ASSISTANCE AND CAPITAL IMPROVEMENT ASSISTANCE.—In providing assistance under subsection (a) the Secretary
shall use the selection criteria set forth in section 201(n) of the
Housing and Community Development Amendments of 1978.
‘‘(c) AMOUNT OF ASSISTANCE.—The Secretary may fund all or
only a portion of the needs identified in the capital needs assessment
of an owner selected to receive assistance under this section.’’.
(b) FLEXIBLE SUBSIDY PROGRAM.—
(1) DELETION OF UTILITY COST REQUIREMENTS.—Section
201(i) of the Housing and Community Development Amendments of 1978 (12 U.S.C. 1715z–1a(i)) is hereby repealed.
(2) REPEAL OF MANDATORY CONTRIBUTION FROM OWNER.—
Section 201(k)(2) of the Housing and Community Development
Amendments of 1978 (12 U.S.C. 1715z–1a(k)(2)) is amended
by striking ‘‘, except that’’ and all that follows and inserting
a period.
(3) FUNDING.—Section 201(n) of the Housing and Community Development Amendments of 1978 (42 U.S.C. 1715z–1a(n))
is amended to read as follows:
‘‘(n) ALLOCATION OF ASSISTANCE.—
‘‘(1) SET-ASIDE.—In providing, and contracting to provide,
assistance for capital improvements under this section, in each
fiscal year the Secretary shall set aside an amount, as determined by the Secretary, for projects that are eligible for incentives under section 224(b) of the Emergency Low Income Housing Preservation Act of 1987, as such section existed before
the date of enactment of the Cranston-Gonzalez National
Affordable Housing Act. The Secretary may make such assistance available on a noncompetitive basis.
‘‘(2) GENERAL RULES FOR ALLOCATION.—Except as provided
in paragraph (3), with respect to assistance under this section
not set aside for projects under paragraph (1), the Secretary—

S. 1299—19
‘‘(A) may award assistance on a noncompetitive basis;
and
‘‘(B) shall award assistance to eligible projects on the
basis of—
‘‘(i) the extent to which the project is physically
or financially troubled, as evidenced by the comprehensive needs assessment submitted in accordance with
title IV of the Housing and Community Development
Act of 1992; and
‘‘(ii) the extent to which such assistance is necessary and reasonable to prevent the default of federally insured mortgages.
‘‘(3) EXCEPTIONS.—The Secretary may make exceptions to
selection criteria set forth in paragraph (2)(B) to permit the
provision of assistance to eligible projects based upon—
‘‘(A) the extent to which such assistance is necessary
to prevent the imminent foreclosure or default of a project
whose owner has not submitted a comprehensive needs
assessment pursuant to title IV of the Housing and
Community Development Act of 1992;
‘‘(B) the extent to which the project presents an
imminent threat to the life, health, and safety of project
residents; or
‘‘(C) such other criteria as the Secretary may specify
by regulation or by notice printed in the Federal Register.
‘‘(4) CONSIDERATIONS.—In providing assistance under this
section, the Secretary shall take into consideration—
‘‘(A) the extent to which there is evidence that there
will be significant opportunities for residents (including
a resident council or resident management corporation,
as appropriate) to be involved in the management of the
project (except that this paragraph shall have no application to projects that are owned as cooperatives); and
‘‘(B) the extent to which there is evidence that the
project owner has provided competent management and
complied with all regulatory and administrative requirements.’’.
(4) REPEAL.—Section 201 of the Housing and Community
Development Amendments of 1978 (12 U.S.C. 1715z–1a) is
amended—
(A) by striking subsection (o); and
(B) by redesignating subsection (p) as subsection (o).
(c) IMPLEMENTATION AND EFFECTIVE DATES FOR SUBSECTIONS
(a) AND (b).—
(1) IN GENERAL.—Except as provided in paragraph (2), the
amendments made by subsections (a) and (b) shall apply with
respect to amounts made available for fiscal year 1994 and
fiscal years thereafter.
(2) EXCEPTION.—Section 201(n)(1) of the Housing and
Community Development Amendments of 1978 (as added by
the amendment made by subsection (b)(3) of this section) shall
take effect on the date of enactment of this Act.
(3) NOTICE.—The Secretary shall, by notice published in
the Federal Register, establish any requirements necessary to
implement the amendments made by subsections (a) and (b).
The notice shall invite public comments and, not later than
12 months after the date on which the notice is published,

S. 1299—20
the Secretary shall issue final regulations based on the initial
notice, taking into consideration any public comments received.
(d) STREAMLINED REFINANCING.—As soon as practicable, the
Secretary shall implement a streamlined refinancing program under
the authority provided in section 223 of the National Housing
Act to prevent the default of mortgages insured by the FHA which
cover multifamily housing projects, as defined in section 203(b)
of the Housing and Community Development Amendments of 1978.
(e) GAO STUDY ON PREVENTION OF DEFAULT.—
(1) IN GENERAL.—Not later than April 1, 1995, the
Comptroller General of the United States shall submit to the
Committee on Banking, Finance and Urban Affairs of the House
of Representatives and the Committee on Banking, Housing,
and Urban Affairs of the Senate a report that evaluates the
adequacy of loan loss reserves in the General Insurance and
Special Risk Insurance Funds and presents recommendations
for the Secretary to prevent losses from occurring.
(2) CONTENTS.—The report submitted under paragraph (1)
shall—
(A) evaluate the factors considered in arriving at loss
estimates and determine whether other factors should be
considered;
(B) determine the relative benefit of creating a new,
actuarially sound insurance fund for all new multifamily
housing insurance commitments; and
(C) recommend alternatives to the Secretary’s current
procedures for preventing the future default of multifamily
housing project mortgages insured under title II of the
National Housing Act.
(f) GAO STUDY ON ACTUARIAL SOUNDNESS OF CERTAIN INSURANCE PROGRAMS.—
(1) IN GENERAL.—Not later than April 1, 1995, the
Comptroller General of the United States shall submit to the
Committee on Banking, Housing, and Urban Affairs of the
Senate and the Committee on Banking, Finance and Urban
Affairs of the House of Representatives a report that evaluates,
in connection with the General Insurance Fund, the role and
performance of the nursing home, hospital, and retirement
service center insurance programs.
(2) CONTENTS.—The reports submitted under paragraph
(1) shall—
(A) evaluate the strategic importance of these insurance programs to the mission of the FHA;
(B) evaluate the impact of these insurance programs
upon the financial performance of the General Insurance
Fund;
(C) assess the potential losses expected under these
programs through fiscal year 1999;
(D) evaluate the risk of these programs to the General
Insurance Fund in connection with changes in national
health care policy;
(E) assess the ability of the FHA to manage these
programs; and
(F) make recommendations for any necessary changes.
(g) RISK ASSESSMENT.—

S. 1299—21
(1) SPECIAL RISK INSURANCE FUND.—Section 238(c) of the
National Housing Act (12 U.S.C. 1715z–3(c)) is amended by
adding at the end the following new paragraph:
‘‘(3) The Secretary shall undertake an annual assessment
of the risks associated with each of the insurance programs
comprising the Special Risk Insurance Fund, and shall present
findings from such review to the Congress in the FHA Annual
Management Report.’’.
(2) GENERAL INSURANCE FUND.—Section 519 of the National
Housing Act (12 U.S.C. 1735c) is amended by adding at the
end the following new subsection:
‘‘(g) RISK ASSESSMENT.—The Secretary shall undertake an
annual assessment of the risks associated with each of the insurance
programs comprising the General Insurance Fund, and shall present
findings from such review to the Congress in the FHA Annual
Management Report.’’.
(h) ALTERNATIVE USES FOR PREVENTION OF DEFAULT.—
(1) IN GENERAL.—Subject to notice to and comment by
existing tenants, to prevent the imminent default of a multifamily housing project subject to a mortgage insured under title
II of the National Housing Act, the Secretary may authorize
the mortgagor to use the project for purposes not contemplated
by or permitted under the regulatory agreement, if—
(A) such other uses are acceptable to the Secretary;
(B) such other uses would be otherwise insurable under
title II of the National Housing Act;
(C) the outstanding principal balance on the mortgage
covering such project is not increased;
(D) any financial benefit accruing to the mortgagor
shall, subject to the discretion of the Secretary, be applied
to project reserves or project rehabilitation; and
(E) such other use serves a public purpose.
(2) DISPLACEMENT PROTECTION.—The Secretary may take
actions under paragraph (1) only if—
(A) tenant-based rental assistance under section 8 of
the United States Housing Act of 1937 is made available
to each eligible family residing in the project that is displaced as a result of such actions; and
(B) the Secretary determines that sufficient habitable,
affordable (as such term is defined in section 203(b) of
the Housing and Community Development Amendments
of 1978) rental housing is available in the market area
in which the project is located to ensure use of such assistance.
(3) IMPLEMENTATION.—The Secretary shall, by notice published in the Federal Register, which shall take effect upon
publication, establish such requirements as may be necessary
to implement the amendments made by this subsection. The
notice shall invite public comments and, not later than 12
months after the date on which the notice is published, the
Secretary shall issue final regulations based on the initial
notice, taking into account any public comments received.
SEC. 104. INTEREST RATES ON ASSIGNED MORTGAGES.

Section 7(i)(5) of the Department of Housing and Urban Development Act (42 U.S.C. 3535(i)(5)) is amended by striking the first

S. 1299—22
semicolon, and all that follows through ‘‘as determined by the
Secretary’’.
SEC. 105. AUTHORIZATION OF APPROPRIATIONS.

(a) SPECIAL RISK INSURANCE FUND.—Section 238(b) of the
National Housing Act (12 U.S.C. 1715z–3(b)) is amended by striking
the fifth sentence.
(b) GENERAL INSURANCE FUND.—Section 519 of the National
Housing Act (12 U.S.C. 1735c) is amended—
(1) by striking subsection (f); and
(2) by redesignating subsection (g) (as added by section
103(g)(2) of this Act) as subsection (f).
(c) MULTIFAMILY INSURANCE FUND APPROPRIATIONS.—Title V
of the National Housing Act (12 U.S.C. 1731a et seq.) is amended
by adding after section 541 (as added by section 101(e) of this
Act) the following new section:
‘‘SEC. 542. AUTHORIZATION OF APPROPRIATIONS FOR GENERAL AND
SPECIAL RISK INSURANCE FUNDS.

‘‘There are authorized to be appropriated such sums as may
be necessary for each of fiscal years 1994 and 1995, to be allocated
in any manner that the Secretary determines appropriate, for the
following costs incurred in conjunction with programs authorized
under the General Insurance Fund, as provided by section 519,
and the Special Risk Insurance Fund, as provided by section 238:
‘‘(1) The cost to the Government, as defined in section
502 of the Congressional Budget Act, of new insurance commitments.
‘‘(2) The cost to the Government, as defined in section
502 of the Congressional Budget Act, of modifications to existing
loans, loan guarantees, or insurance commitments.
‘‘(3) The cost to the Government, as defined in section
502 of the Congressional Budget Act, of loans provided under
section 203(f) of the Housing and Community Development
Amendments of 1978.
‘‘(4) The costs of the rehabilitation of multifamily housing
projects (as defined in section 203(b) of the Housing and
Community Development Amendments of 1978) upon disposition by the Secretary.’’.

TITLE II—OTHER PROGRAM REFORMS
Subtitle A—Home Investment Partnerships
Program
SEC. 201. PARTICIPATION BY STATE AGENCIES OR INSTRUMENTALITIES.

Section 104(2) of the Cranston-Gonzalez National Affordable
Housing Act (42 U.S.C. 12704(2)) is amended—
(1) by striking ‘‘and’’ after ‘‘Columbia,’’; and
(2) by inserting before the period at the end the following:
‘‘, or any agency or instrumentality thereof that is established
pursuant to legislation and designated by the chief executive
officer to act on behalf of the State with regard to the provisions
of this Act’’.

S. 1299—23
SEC. 202. SIMPLIFICATION OF PROGRAM-WIDE INCOME TARGETING
FOR RENTAL HOUSING.

Section 214(1) of the Cranston-Gonzalez National Affordable
Housing Act (42 U.S.C. 12744(1)) is amended—
(1) in subparagraph (A)—
(A) by striking ‘‘such funds are invested with respect
to dwelling units that are occupied by’’ and inserting ‘‘(i)
the families receiving such rental assistance are’’; and
(B) by striking ‘‘, and’’ and inserting ‘‘, or (ii) the
dwelling units assisted with such funds are occupied by
families having such incomes; and’’; and
(2) in subparagraph (B)—
(A) by striking ‘‘such funds are invested with respect
to dwelling units that are occupied by’’ and inserting ‘‘(i)
the families receiving such rental assistance are’’; and
(B) by inserting before the semicolon at the end the
following: ‘‘, or (ii) the dwelling units assisted with such
funds are occupied by such households’’.
SEC. 203. HOMEOWNERSHIP UNITS.

(a) REMOVAL OF FIRST-TIME HOMEBUYER REQUIREMENT.—Section 215(b) of the Cranston-Gonzalez National Affordable Housing
Act (42 U.S.C. 12745(b)) is amended—
(1) by striking paragraph (3); and
(2) by redesignating paragraphs (4) and (5) as paragraphs
(3) and (4), respectively.
RESALE
PROVISIONS.—Section
OF
(b)
SIMPLIFICATION
215(b)(3)(B) of the Cranston-Gonzalez National Affordable Housing
Act (42 U.S.C. 12745(b)(3)(B)), as so redesignated by subsection
(a) of this section, is amended by striking ‘‘subsection’’ and inserting
‘‘title’’.
SEC. 204. SIMPLIFICATION OF MATCHING REQUIREMENTS.

Section 220(a) of the Cranston-Gonzalez National Affordable
Housing Act (42 U.S.C. 12750(a)) is amended to read as follows:
‘‘(a) CONTRIBUTION.—Each participating jurisdiction shall make
contributions to housing that qualifies as affordable housing under
this title that total, throughout a fiscal year, not less than 25
percent of the funds drawn from the jurisdiction’s HOME Investment Trust Fund in such fiscal year. Such contributions shall
be in addition to any amounts made available under section
216(3)(A)(ii).’’.
SEC. 205. REPEAL OF SEPARATE AUDIT REQUIREMENT.

Section 283 of the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 12833) is amended—
(1) by striking the section designation and heading and
inserting the following:
‘‘SEC. 283. AUDITS BY COMPTROLLER GENERAL.’’;

(2) by striking subsection (a);
(3) in subsection (b)—
(A) by striking ‘‘(b) AUDITS BY THE COMPTROLLER GENERAL.—’’;
(B) by redesignating paragraphs (1) and (2) as subsections (a) and (b), respectively; and

S. 1299—24
(C) by moving subsections (a) and (b), as so redesignated by subparagraph (B), 2 ems to the left so that such
subsections are flush with the left margin; and
(4) in subsection (a), as so redesignated by paragraph (3)(B),
by striking the second sentence.
SEC. 206. ENVIRONMENTAL REVIEW REQUIREMENTS.

Section 288 of the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 12838) is amended—
(1) in subsection (a)—
(A) in the first sentence, by striking ‘‘participating
jurisdictions’’ and inserting ‘‘jurisdictions, Indian tribes,
or insular areas’’; and
(B) by adding at the end the following new sentences:
‘‘The regulations shall provide—
‘‘(1) for the monitoring of the environmental reviews performed under this section;
‘‘(2) in the discretion of the Secretary, to facilitate training
for the performance of such reviews; and
‘‘(3) for the suspension or termination of the assumption
under this section.
The Secretary’s duty under the preceding sentence shall not be
construed to limit or reduce any responsibility assumed by a State
or unit of general local government with respect to any particular
release of funds.’’;
(2) in the first sentence of subsection (b), by striking
‘‘participating jurisdiction’’ and inserting ‘‘jurisdiction, Indian
tribe, or insular area’’;
(3) in subsection (c)(4)(B), by striking ‘‘participating jurisdiction’’ and inserting ‘‘jurisdiction, Indian tribe, or insular
area’’; and
(4) in subsection (d), by striking ‘‘ASSISTANCE TO A STATE.—
In the case of assistance to States’’ and inserting the following:
‘‘ASSISTANCE TO UNITS OF GENERAL LOCAL GOVERNMENT FROM
A STATE.—In the case of assistance to units of general local
government from a State’’.
SEC. 207. USE OF CDBG FUNDS FOR HOME PROGRAM EXPENSES.

(a) ADMINISTRATIVE EXPENSES.—Section 105(a)(13) of the Housing and Community Development Act of 1974 (42 U.S.C.
5305(a)(13)) is amended by inserting after ‘‘charges related to’’
the following: ‘‘(A) administering the HOME program under title
II of the Cranston-Gonzalez National Affordable Housing Act; and
(B)’’.
(b) PROJECT DELIVERY COSTS.—Section 105(a)(21) of the Housing and Community Development Act of 1974 (42 U.S.C.
5305(a)(21)) is amended—
(1) by inserting ‘‘in connection with tenant-based rental
assistance and affordable housing projects assisted under title
II of the Cranston-Gonzalez National Affordable Housing Act’’
after ‘‘housing counseling’’; and
(2) by striking ‘‘authorized’’ and all that follows through
‘‘any law’’ and inserting ‘‘assisted under title II of the CranstonGonzalez National Affordable Housing Act’’.

S. 1299—25
SEC. 208. FLEXIBILITY OF HOME PROGRAM FOR DISASTER AREAS.

Title II of the Cranston-Gonzalez National Affordable Housing
Act (42 U.S.C. 12721 et seq.) is amended by adding at the end
the following new section:
‘‘SEC. 290. SUSPENSION OF REQUIREMENTS FOR DISASTER AREAS.

‘‘For funds designated under this title by a recipient to address
the damage in an area for which the President has declared a
disaster under title IV of the Robert T. Stafford Disaster Relief
and Emergency Assistance Act, the Secretary may suspend all
statutory requirements for purposes of assistance under this title
for that area, except for those related to public notice of funding
availability, nondiscrimination, fair housing, labor standards,
environmental standards, and low-income housing affordability.’’.
SEC. 209. APPLICABILITY AND REGULATIONS.

The amendments made by this title shall apply with respect
to any amounts made available to carry out title II of the CranstonGonzalez National Affordable Housing Act after the date of the
enactment of this Act and any amounts made available to carry
out such title before such date of enactment that remain uncommitted on such date. The Secretary shall issue any regulations necessary to carry out the amendments made by this title not later
than the expiration of the 45-day period beginning on the date
of the enactment of this Act.

Subtitle B—HOPE Homeownership
Program
SEC. 221. MATCHING REQUIREMENT UNDER HOPE FOR HOMEOWNERSHIP OF SINGLE FAMILY HOMES PROGRAM.

Section 443(c)(1) of the Cranston-Gonzalez National Affordable
Housing Act (42 U.S.C. 12893(c)(1)) is amended by striking ‘‘33
percent’’ and inserting ‘‘25 percent’’.

Subtitle C—Community Development
Block Grants
SEC. 231. SECTION 108 ELIGIBLE ACTIVITIES.

The first sentence of section 108(a) of the Housing and Community Development Act of 1974 (42 U.S.C. 5308(a)) is amended—
(1) by striking ‘‘or’’ after ‘‘section 105(a);’’; and
(2) by inserting before the period the following: ‘‘; (5) the
acquisition, construction, reconstruction, or installation of public facilities (except for buildings for the general conduct of
government); or (6) in the case of colonias (as such term is
defined in section 916 of the Cranston-Gonzalez National
Affordable Housing Act), public works and site or other
improvements’’.
SEC. 232. ECONOMIC DEVELOPMENT GRANTS.

(a) GRANTS.—
(1) IN GENERAL.—Section 108 of the Housing and Community Development Act of 1974 (42 U.S.C. 5308) is amended
by adding at the end the following new subsection:

S. 1299—26
‘‘(q) ECONOMIC DEVELOPMENT GRANTS.—
‘‘(1) AUTHORIZATION.—The Secretary may make grants in
connection with notes or other obligations guaranteed under
this section to eligible public entities for the purpose of enhancing the security of loans guaranteed under this section or
improving the viability of projects financed with loans guaranteed under this section.
‘‘(2) ELIGIBLE ACTIVITIES.—Assistance under this subsection
may be used only for the purposes of and in conjunction with
projects and activities assisted under subsection (a).
‘‘(3) APPLICATIONS.—Applications for assistance under this
subsection may be submitted only by eligible public entities,
and shall be in the form and in accordance with the procedures
established by the Secretary. Eligible public entities may apply
for grants only in conjunction with requests for guarantees
under subsection (a).
‘‘(4) SELECTION CRITERIA.—The Secretary shall establish
criteria for awarding assistance under this subsection. Such
criteria shall include—
‘‘(A) the extent of need for such assistance;
‘‘(B) the level of distress in the community to be served
and in the jurisdiction applying for assistance;
‘‘(C) the quality of the plan proposed and the capacity
or potential capacity of the applicant to successfully carry
out the plan; and
‘‘(D) such other factors as the Secretary determines
to be appropriate.’’.
(2) CONFORMING AMENDMENT.—Title I of the Housing and
Community Development Act of 1974 (42 U.S.C. 5301 et seq.)
is amended—
(A) in section 101(c) in the second sentence, by inserting ‘‘or a grant’’ after ‘‘guarantee’’; and
(B) in section 104(b)(3), by inserting ‘‘or a grant’’ after
‘‘guarantee’’.
(b) USE OF UDAG RECAPTURES.—Section 119(o) of the Housing
and Community Development Act of 1974 (42 U.S.C. 5318(o)) is
amended by inserting before the period the following: ‘‘, except
that amounts available to the Secretary for use under this subsection as of October 1, 1993, and amounts released to the Secretary
pursuant to subsection (t) may be used to provide grants under
section 108(q).’’.
(c) UDAG RETENTION PROGRAM.—
(1) AMENDMENT.—Section 119 of the Housing and Community Development Act of 1974 (42 U.S.C. 5318) is amended
by adding at the end the following new subsection:
‘‘(t) UDAG RETENTION PROGRAM.—If a grant or a portion of
a grant under this section remains unexpended upon the issuance
of a notice implementing this subsection, the grantee may enter
into an agreement, as provided under this subsection, with the
Secretary to receive a percentage of the grant amount and relinquish all claims to the balance of the grant within 90 days of
the issuance of notice implementing this subsection (or such later
date as the Secretary may approve). The Secretary shall not recapture any funds obligated pursuant to this section during a period
beginning on the date of enactment of the Multifamily Housing
Property Disposition Reform Act of 1994 until 90 days after the

S. 1299—27
issuance of a notice implementing this subsection. A grantee may
receive as a grant under this subsection—
‘‘(1) 33 percent of such unexpended amounts if—
‘‘(A) the grantee agrees to expend not less than onehalf of the amount received for activities authorized pursuant to section 108(q) and to expend such funds in conjunction with a loan guarantee made under section 108 at
least equal to twice the amount of the funds received;
and
‘‘(B)(i) the remainder of the amount received is used
for economic development activities eligible under title I
of this Act; and
‘‘(ii) except when waived by the Secretary in the case
of a severely distressed jurisdiction, not more than onehalf of the costs of activities under subparagraph (B) are
derived from such unexpended amounts; or
‘‘(2) 25 percent of such unexpended amounts if—
‘‘(A) the grantee agrees to expend such funds for economic development activities eligible under title I of this
Act; and
‘‘(B) except when waived by the Secretary in the case
of a severely distressed jurisdiction, not more than onehalf of the costs of such activities are derived from such
unexpended amount.’’.
(2) IMPLEMENTATION.—Not later than 10 days after the
date of enactment of this Act, the Secretary shall, by notice
published in the Federal Register, which shall take effect upon
publication, establish such requirements as may be necessary
to implement the amendments made by this subsection.
SEC. 233. GUARANTEE OF OBLIGATIONS BACKED BY SECTION 108
LOANS.

Section 108 of the Housing and Community Development Act
of 1974 (42 U.S.C. 5308) is amended by adding after subsection
(q) (as added by section 232(a)(1) of this Act) the following new
subsection:
‘‘(r) GUARANTEE OF OBLIGATIONS BACKED BY LOANS.—
‘‘(1) AUTHORITY.—The Secretary may, upon such terms and
conditions as the Secretary considers appropriate, guarantee
the timely payment of the principal of and interest on such
trust certificates or other obligations as may—
‘‘(A) be offered by the Secretary or by any other offeror
approved for purposes of this subsection by the Secretary;
and
‘‘(B) be based on and backed by a trust or pool composed of notes or other obligations guaranteed or eligible
for guarantee by the Secretary under this section.
‘‘(2) FULL FAITH AND CREDIT.—To the same extent as provided in subsection (f), the full faith and credit of the United
States is pledged to the payment of all amounts that may
be required to be paid under any guarantee made by the
Secretary under this subsection.
‘‘(3) SUBROGATION.—If the Secretary pays a claim under
a guarantee made under this section, the Secretary shall be
subrogated for all the rights of the holder of the guaranteed
certificate or obligation with respect to such certificate or obligation.

S. 1299—28
‘‘(4) EFFECT OF LAWS.—No State or local law, and no Federal law, shall preclude or limit the exercise by the Secretary
of—
‘‘(A) the power to contract with respect to public offerings and other sales of notes, trust certificates, and other
obligations guaranteed under this section upon such terms
and conditions as the Secretary deems appropriate;
‘‘(B) the right to enforce any such contract by any
means deemed appropriate by the Secretary; and
‘‘(C) any ownership rights of the Secretary, as
applicable, in notes, certificates, or other obligations
guaranteed under this section, or constituting the trust
or pool against which trust certificates, or other obligations
guaranteed under this section, are offered.’’.
SEC. 234. FLEXIBILITY OF CDBG PROGRAM FOR DISASTER AREAS.

Title I of the Housing and Community Development Act of
1974 (42 U.S.C. 5301 et seq.) is amended by adding at the end
the following new section:
‘‘SEC. 122. SUSPENSION OF REQUIREMENTS FOR DISASTER AREAS.

‘‘For funds designated under this title by a recipient to address
the damage in an area for which the President has declared a
disaster under title IV of the Robert T. Stafford Disaster Relief
and Emergency Assistance Act, the Secretary may suspend all
requirements for purposes of assistance under section 106 for that
area, except for those related to public notice of funding availability,
nondiscrimination, fair housing, labor standards, environmental
standards, and requirements that activities benefit persons of lowand moderate-income.’’.

TITLE III—TECHNICAL AMENDMENTS
SEC. 301. DEFINITION OF ‘‘FAMILIES’’.

The first sentence of section 3(b)(3)(B) of the United States
Housing Act of 1937 (42 U.S.C. 1437a(b)(3)(B)) is amended by
striking ‘‘means families with children’’ and inserting ‘‘includes
families with children and’’.
SEC.

302.

ELIMINATION OF REQUIREMENT
REPLACEMENT NEEDS.

TO

IDENTIFY

CIAP

Section 14 of the United States Housing Act of 1937 (42 U.S.C.
1437l) is amended—
(1) in subsection (d)—
(A) by striking paragraph (2);
(B) in paragraph (4), in the matter preceding subparagraph (A)—
(i) by striking ‘‘and replacements,’’; and
(ii) by striking ‘‘(1), (2), and (3)’’ and inserting
‘‘(1) and (2)’’; and
(C) by redesignating paragraphs (3) and (4) as paragraphs (2) and (3), respectively; and
(2) in subsection (f)(1)—
(A) in subparagraph (A), by striking ‘‘(d)(4)(A)’’ and
inserting ‘‘(d)(3)(A)’’;
(B) by striking subparagraph (B);

S. 1299—29
(C) in subparagraph (C), by striking ‘‘(d)(4)’’ and inserting ‘‘(d)(3)’’;
(D) in subparagraph (D)—
(i) by striking ‘‘(1), (2), and (3)’’ and inserting ‘‘(1)
and (2)’’; and
(ii) by striking ‘‘(d)(4)’’ and inserting ‘‘(d)(3)’’; and
(E) by redesignating subparagraphs (C) and (D), as
so amended, as subparagraphs (B) and (C), respectively;
(3) in subsection (g), by striking ‘‘(d)(4)’’ and inserting
‘‘(d)(3)’’; and
(4) in subsection (h)(2), by striking ‘‘(d)(4)’’ and inserting
‘‘(d)(3)’’.
SEC. 303. PROJECT-BASED ACCOUNTING.

Section 6(c)(4)(E) of the United States Housing Act of 1937
(42 U.S.C. 1437d(c)(4)(E)) is amended by striking ‘‘250’’ and inserting ‘‘500’’.
SEC. 304. OPERATING SUBSIDY ADJUSTMENTS FOR ANTICIPATED
FRAUD RECOVERIES.

Section 9(a) of the United States Housing Act of 1937 (42
U.S.C. 1437g(a)) is amended by adding at the end the following
new paragraph:
‘‘(4) Adjustments to a public housing agency’s operating subsidy
made by the Secretary under this section shall reflect actual
changes in rental income collections resulting from the application
of section 904 of the Stewart B. McKinney Homeless Assistance
Amendments Act of 1988.’’.
SEC. 305. ENVIRONMENTAL REVIEW PROVISIONS.

(a) LEAD-BASED PAINT HAZARD REDUCTION.—Section 1011 of
the Housing and Community Development Act of 1992 (42 U.S.C.
4852) is amended—
(1) by redesignating subsection (o) as subsection (p); and
(2) by inserting after subsection (n) the following new subsection:
‘‘(o) ENVIRONMENTAL REVIEW.—
‘‘(1) IN GENERAL.—For purposes of environmental review,
decisionmaking, and action pursuant to the National Environmental Policy Act of 1969 and other provisions of law that
further the purposes of such Act, a grant under this section
shall be treated as assistance under the HOME Investment
Partnership Act, established under title II of the CranstonGonzalez National Affordable Housing Act, and shall be subject
to the regulations promulgated by the Secretary to implement
section 288 of such Act.
‘‘(2) APPLICABILITY.—This subsection shall apply to—
‘‘(A) grants awarded under this section; and
‘‘(B) grants awarded to States and units of general
local government for the abatement of significant leadbased paint and lead dust hazards in low- and moderateincome owner-occupied units and low-income privately
owned rental units pursuant to title II of the Departments
of Veterans Affairs and Housing and Urban Development,
and Independent Agencies Appropriations Act, 1992 (Public
Law 102–139, 105 Stat. 736).’’.

S. 1299—30
(b) PROGRAMS UNDER UNITED STATES HOUSING ACT OF 1937.—
Title I of the United States Housing Act of 1937 (42 U.S.C. 1437
et seq.) is amended by adding at the end the following new section:
‘‘SEC. 26. ENVIRONMENTAL REVIEWS.

‘‘(a) IN GENERAL.—
‘‘(1) RELEASE OF FUNDS.—In order to assure that the policies of the National Environmental Policy Act of 1969 and
other provisions of law which further the purposes of such
Act (as specified in regulations issued by the Secretary) are
most effectively implemented in connection with the expenditure of funds under this title, and to assure to the public
undiminished protection of the environment, the Secretary may,
under such regulations, in lieu of the environmental protection
procedures otherwise applicable, provide for the release of funds
for projects or activities under this title, as specified by the
Secretary upon the request of a public housing agency (including an Indian housing authority) under this section, if the
State or unit of general local government, as designated by
the Secretary in accordance with regulations, assumes all of
the responsibilities for environmental review, decisionmaking,
and action pursuant to such Act, and such other provisions
of law as the regulations of the Secretary may specify, which
would otherwise apply to the Secretary with respect to the
release of funds.
‘‘(2) IMPLEMENTATION.—The Secretary, after consultation
with the Council on Environmental Quality, shall issue such
regulations as may be necessary to carry out this section.
Such regulations shall specify the programs to be covered.
‘‘(b) PROCEDURE.—The Secretary shall approve the release of
funds subject to the procedures authorized by this section only
if, not less than 15 days prior to such approval and prior to any
commitment of funds to such projects or activities, the public housing agency (including an Indian housing authority) has submitted
to the Secretary a request for such release accompanied by a certification of the State or unit of general local government which meets
the requirements of subsection (c). The Secretary’s approval of
any such certification shall be deemed to satisfy the Secretary’s
responsibilities under the National Environmental Policy Act of
1969 and such other provisions of law as the regulations of the
Secretary specify insofar as those responsibilities relate to the
release of funds which are covered by such certification.
‘‘(c) CERTIFICATION.—A certification under the procedures
authorized by this section shall—
‘‘(1) be in a form acceptable to the Secretary;
‘‘(2) be executed by the chief executive officer or other
officer of the State or unit of general local government who
qualifies under regulations of the Secretary;
‘‘(3) specify that the State or unit of general local government under this section has fully carried out its responsibilities
as described under subsection (a); and
‘‘(4) specify that the certifying officer—
‘‘(A) consents to assume the status of a responsible
Federal official under the National Environmental Policy
Act of 1969 and each provision of law specified in regulations issued by the Secretary insofar as the provisions

S. 1299—31
of such Act or other such provision of law apply pursuant
to subsection (a); and
‘‘(B) is authorized and consents on behalf of the State
or unit of general local government and himself or herself
to accept the jurisdiction of the Federal courts for the
purpose of enforcement of his or her responsibilities as
such an official.
‘‘(d) APPROVAL BY STATES.—In cases in which a unit of general
local government carries out the responsibilities described in subsection (c), the Secretary may permit the State to perform those
actions of the Secretary described in subsection (b) and the performance of such actions by the State, where permitted by the Secretary,
shall be deemed to satisfy the Secretary’s responsibilities referred
to in the second sentence of subsection (b).’’.
(c) SPECIAL PROJECTS.—
(1) IN GENERAL.—
(A) RELEASE OF FUNDS.—In order to assure that the
policies of the National Environmental Policy Act of 1969
and other provisions of law which further the purposes
of such Act (as specified in regulations issued by the Secretary) are most effectively implemented in connection with
the expenditure of funds for special projects appropriated
under an appropriations Act for the Department of Housing
and Urban Development, such as special projects under
the head ‘‘Annual Contributions for Assisted Housing’’ in
title II of the Departments of Veterans Affairs and Housing
and Urban Development, and Independent Agencies Appropriations Act, 1993, and to assure to the public
undiminished protection of the environment, the Secretary
of Housing and Urban Development may, under such regulations, in lieu of the environmental protection procedures
otherwise applicable, provide for the release of funds for
particular special projects upon the request of recipients
of special projects assistance, if the State or unit of general
local government, as designated by the Secretary in accordance with regulations, assumes all of the responsibilities
for environmental review, decisionmaking, and action
pursuant to such Act, and such other provisions of law
as the regulations of the Secretary specify, that would
otherwise apply to the Secretary were the Secretary to
undertake such special projects as Federal projects.
(B) IMPLEMENTATION.—The Secretary shall issue regulations to carry out this subsection only after consultation
with the Council on Environmental Quality. Such regulations shall—
(i) provide for monitoring of the performance of
environmental reviews under this subsection;
(ii) in the discretion of the Secretary, provide for
the provision or facilitation of training for such
performance; and
(iii) subject to the discretion of the Secretary, provide for suspension or termination by the Secretary
of the assumption under subparagraph (A).
(C) RESPONSIBILITIES OF STATE OR UNIT OF GENERAL
LOCAL GOVERNMENT.—The Secretary’s duty under subparagraph (B) shall not be construed to limit any responsibility
assumed by a State or unit of general local government

S. 1299—32
with respect to any particular release of funds under
subparagraph (A).
(2) PROCEDURE.—The Secretary shall approve the release
of funds for projects subject to the procedures authorized by
this subsection only if, not less than 15 days prior to such
approval and prior to any commitment of funds to such projects,
the recipient submits to the Secretary a request for such
release, accompanied by a certification of the State or unit
of general local government which meets the requirements of
paragraph (3). The Secretary’s approval of any such certification
shall be deemed to satisfy the Secretary’s responsibilities under
the National Environmental Policy Act of 1969 and such other
provisions of law as the regulations of the Secretary specify
insofar as those responsibilities relate to the releases of funds
for special projects to be carried out pursuant thereto which
are covered by such certification.
(3) CERTIFICATION.—A certification under the procedures
authorized by this subsection shall—
(A) be in a form acceptable to the Secretary;
(B) be executed by the chief executive officer or other
officer of the State or unit of general local government
who qualifies under regulations of the Secretary;
(C) specify that the State or unit of general local
government under this subsection has fully carried out
its responsibilities as described under paragraph (1); and
(D) specify that the certifying officer—
(i) consents to assume the status of a responsible
Federal official under the National Environmental Policy Act of 1969 and each provision of law specified
in regulations issued by the Secretary insofar as the
provisions of such Act or other such provision of law
apply pursuant to paragraph (1); and
(ii) is authorized and consents on behalf of the
State or unit of general local government and himself
or herself to accept the jurisdiction of the Federal
courts for the purpose of enforcement of the responsibilities as such an official.
(4) APPROVAL BY STATES.—In cases in which a unit of
general local government carries out the responsibilities
described in paragraph (1), the Secretary may permit the State
to perform those actions of the Secretary described in paragraph
(2) and the performance of such actions by the State, where
permitted by the Secretary, shall be deemed to satisfy the
Secretary’s responsibilities referred to in the second sentence
of paragraph (2).
SEC. 306. CORRECTION OF FHA MULTIFAMILY MORTGAGE LIMITS.

The National Housing Act (12 U.S.C. 1701 et seq.) is amended
in sections 207(c)(3), 213(b)(2), 220(d)(3)(B)(iii), and 234(e)(3) by
striking ‘‘$59,160’’ each place it appears and inserting ‘‘$56,160’’.
SEC. 307. AMENDMENTS TO FHA MULTIFAMILY RISK-SHARING AND
HOUSING FINANCE AGENCY PILOT PROGRAMS.

(a) RISK-SHARING PILOT PROGRAM.—Section 542(b) of the Housing and Community Development Act of 1992 (12 U.S.C. 1707
note) is amended—
(1) by striking paragraphs (1) and (2) and inserting the
following new paragraphs:

S. 1299—33
‘‘(1) IN GENERAL.—The Secretary shall carry out a pilot
program in conjunction with qualified participating entities
to determine the effectiveness of Federal credit enhancement
for loans for affordable multifamily housing through a system
of risk-sharing agreements with such entities.
‘‘(2) PROGRAM REQUIREMENTS.—
‘‘(A) IN GENERAL.—In carrying out the pilot program
under this subsection, the Secretary shall enter into risksharing agreements with qualified participating entities.
‘‘(B) MORTGAGE INSURANCE AND REINSURANCE.—Agreements under subparagraph (A) may provide for (i) mortgage
insurance through the Federal Housing Administration of
loans for affordable multifamily housing originated by or
through, or purchased by, qualified participating entities,
and (ii) reinsurance, including reinsurance of pools of loans,
on affordable multifamily housing. In entering into risksharing agreements under this subsection covering mortgages, the Secretary may give preference to mortgages
that are not already in the portfolios of qualified participating entities.
‘‘(C) RISK APPORTIONMENT.—Agreements entered into
under this subsection between the Secretary and a qualified
participating entity shall specify the percentage of loss
that each of the parties to the agreement will assume
in the event of default of the insured or reinsured multifamily mortgage. Such agreements shall specify that the qualified participating entity and the Secretary shall share any
loss in accordance with the risk-sharing agreement.
‘‘(D) REIMBURSEMENT CAPACITY.—Agreements entered
into under this subsection between the Secretary and a
qualified participating entity shall provide evidence acceptable to the Secretary of the capacity of such entity to
fulfill any reimbursement obligations made pursuant to
this subsection. Evidence of such capacity which may be
considered by the Secretary may include—
‘‘(i) a pledge of the full faith and credit of a qualified participating entity to fulfill any obligations
entered into by the entity;
‘‘(ii) reserves pledged or otherwise restricted by
the qualified participating entity in an amount equal
to an agreed upon percentage of the loss assumed
by the entity under subparagraph (C);
‘‘(iii) funds pledged through a State or local
guarantee fund; or
‘‘(iv) any other form of evidence mutually agreed
upon by the Secretary and the qualified participating
entity.
‘‘(E) UNDERWRITING STANDARDS.—The Secretary shall
allow any qualified participating entity to use its own
underwriting standards and loan terms and conditions for
purposes of underwriting loans to be insured under this
subsection, except as provided in this section, without further review by the Secretary, except that the Secretary
may impose additional underwriting criteria and loan terms
and conditions for contractual agreements where the Secretary retains more than 50 percent of the risk of loss.
Any financing permitted on property insured under this

S. 1299—34
subsection other than the first mortgage shall be expressly
subordinate to the insured mortgage.
‘‘(F) AUTHORITY OF SECRETARY.—The Secretary, upon
request of a qualified participating entity, may insure or
reinsure and make commitments to insure or reinsure
under this section any mortgage, advance, loan, or pool
of mortgages otherwise eligible under this section, pursuant
to a risk-sharing agreement providing that the qualified
participating entity will carry out (under a delegation or
otherwise, and with or without compensation, but subject
to audit, exception, or review requirements) such credit
approval, appraisal, inspection, issuance of commitments,
approval of insurance of advances, cost certification, servicing, property disposition, or other functions as the Secretary shall approve as consistent with the purpose of
this section. All appraisals of property for mortgage insurance under this section shall be completed by a Certified
General Appraiser in accordance with the Uniform Standards of Professional Appraisal Practice.
‘‘(G) DISCLOSURE OF RECORDS.—Qualified participating
entities shall make available to the Secretary or the Secretary’s designee, at the Secretary’s request, such financial
and other records as the Secretary deems necessary for
purposes of review and monitoring for the program under
this section.’’;
(2) in paragraph (4), by striking ‘‘financial institutions and
entities to be eligible to enter into reinsurance agreements’’
and inserting ‘‘eligibility under this subsection of qualified
participating entities’’;
(3) by striking paragraph (8) and inserting the following
new paragraph:
‘‘(11) IMPLEMENTATION.—The Secretary shall take any
administrative actions necessary to initiate the pilot program
under this subsection.’’; and
(4) by inserting after paragraph (7) the following new paragraphs:
‘‘(8) PROHIBITION ON GINNIE MAE SECURITIZATION.—The
Government National Mortgage Association shall not securitize
any multifamily loans insured or reinsured under this subsection.
‘‘(9) QUALIFICATION AS AFFORDABLE HOUSING.—Multifamily
housing securing loans insured or reinsured under this subsection shall qualify as affordable only if the housing is occupied
by families and bears rents not greater than the gross rent
for rent-restricted residential units as determined under section
42(g) of the Internal Revenue Code of 1986.
‘‘(10) CERTIFICATION OF SUBSIDY LAYERING COMPLIANCE.—
The requirements of section 102(d) of the Department of Housing and Urban Development Reform Act of 1989 may be satisfied in connection with a commitment to insure a mortgage
under this subsection by a certification by a housing credit
agency (including an entity established by a State that provides
mortgage insurance) to the Secretary that the combination
of assistance within the jurisdiction of the Secretary and other
government assistance provided in connection with a property
for which a mortgage is to be insured shall not be any greater
than is necessary to provide affordable housing.’’.

S. 1299—35
(b) HOUSING FINANCE AGENCY PILOT PROGRAM.—Section 542(c)
of the Housing and Community Development Act of 1992 (12 U.S.C.
1707 note) is amended—
(1) in paragraph (1), by inserting after ‘‘qualified housing
finance agencies’’ the following: ‘‘(including entities established
by States that provide mortgage insurance)’’;
(2) in paragraph (2)—
(A) in subparagraph (C), by striking the last sentence
and inserting the following: ‘‘Such agreements shall specify
that the qualified housing finance agency and the Secretary
shall share any loss in accordance with the risk-sharing
agreement.’’; and
(B) by adding at the end the following new subparagraph:
‘‘(F) DISCLOSURE OF RECORDS.—Qualified housing
finance agencies shall make available to the Secretary such
financial and other records as the Secretary deems necessary for program review and monitoring purposes.’’;
(3) in paragraph (7)—
(A) by striking ‘‘very low-income’’; and
(B) by striking ‘‘(2)’’; and
(4) by adding at the end the following new paragraphs:
‘‘(9) ENVIRONMENTAL AND OTHER REVIEWS.—
‘‘(A) ENVIRONMENTAL REVIEWS.—
‘‘(i) IN GENERAL.—(I) In order to assure that the
policies of the National Environmental Policy Act of
1969 and other provisions of law which further the
purposes of such Act (as specified in regulations issued
by the Secretary) are most effectively implemented
in connection with the insurance of mortgages under
subsection (c)(2), and to assure to the public
undiminished protection of the environment, the Secretary may, under such regulations, in lieu of the
environmental
protection
procedures
otherwise
applicable, provide for agreements to endorse for insurance mortgages under subsection (c)(2) upon the
request of qualified housing finance agencies under
this subsection, if the State or unit of general local
government, as designated by the Secretary in accordance with regulations, assumes all of the responsibilities for environmental review, decisionmaking, and
action pursuant to such Act, and such other provisions
of law as the regulations of the Secretary may specify,
that would otherwise apply to the Secretary with
respect to the insurance of mortgages on particular
properties.
‘‘(II) The Secretary shall issue regulations to carry
out this subparagraph only after consultation with the
Council on Environmental Quality. Such regulations
shall, among other matters, provide—
‘‘(aa) for the monitoring of the performance
of environmental reviews under this subparagraph;
‘‘(bb) subject to the discretion of the Secretary,
for the provision or facilitation of training for such
performance; and
‘‘(cc) subject to the discretion of the Secretary,
for the suspension or termination by the Secretary

S. 1299—36
of the qualified housing finance agency’s responsibilities under subclause (I).
‘‘(III) The Secretary’s duty under subclause (II)
shall not be construed to limit any responsibility
assumed by a State or unit of general local government
with respect to any particular property under subclause
(I).
‘‘(ii) PROCEDURE.—The Secretary shall approve a
mortgage for the provision of mortgage insurance subject to the procedures authorized by this paragraph
only if, not less than 15 days prior to such approval,
prior to any approval, commitment, or endorsement
of mortgage insurance on the property on behalf of
the Secretary, and prior to any commitment by the
qualified housing finance agency to provide financing
under the risk-sharing agreement with respect to the
property, the qualified housing finance agency submits
to the Secretary a request for such approval, accompanied by a certification of the State or unit of general
local government that meets the requirements of clause
(iii). The Secretary’s approval of any such certification
shall be deemed to satisfy the Secretary’s responsibilities under the National Environmental Policy Act of
1969 and such other provisions of law as the regulations of the Secretary specify insofar as those responsibilities relate to the provision of mortgage insurance
on the property that is covered by such certification.
‘‘(iii) CERTIFICATION.—A certification under the
procedures authorized by this paragraph shall—
‘‘(I) be in a form acceptable to the Secretary;
‘‘(II) be executed by the chief executive officer
or other officer of the State or unit of general
local government who qualifies under regulations
of the Secretary;
‘‘(III) specify that the State or unit of general
local government under this section has fully carried out its responsibilities as described under
clause (i); and
‘‘(IV) specify that the certifying officer consents
to assume the status of a responsible Federal official under the National Environmental Policy Act
of 1969 and under each provision of law specified
in regulations issued by the Secretary insofar as
the provisions of such Act or such other provisions
of law apply pursuant to clause (i), and is authorized and consents on behalf of the State or unit
of general local government and himself or herself
to accept the jurisdiction of the Federal courts
for the purpose of enforcement of the responsibilities as such an official.
‘‘(iv) APPROVAL BY STATES.—In cases in which a
unit of general local government carries out the responsibilities described in clause (i), the Secretary may
permit the State to perform those actions of the Secretary described in clause (ii) and the performance
of such actions by the State, where permitted by the
Secretary, shall be deemed to satisfy the Secretary’s

S. 1299—37
responsibilities referred to in the second sentence of
clause (ii).
‘‘(B) LEAD-BASED PAINT POISONING PREVENTION.—In
carrying out the requirements of section 302 of the LeadBased Paint Poisoning Prevention Act, the Secretary may
provide by regulation for the assumption of all or part
of the Secretary’s duties under such Act by qualified housing finance agencies, for purposes of this section.
‘‘(C) CERTIFICATION OF SUBSIDY LAYERING COMPLIANCE.—The requirements of section 102(d) of the Department of Housing and Urban Development Reform Act of
1989 may be satisfied in connection with a commitment
to insure a mortgage under this subsection by a certification
by a housing credit agency (including an entity established
by a State that provides mortgage insurance) to the Secretary that the combination of assistance within the jurisdiction of the Secretary and other government assistance
provided in connection with a property for which a mortgage is to be insured shall not be any greater than is
necessary to provide affordable housing.
‘‘(10) DEFINITIONS.—For purposes of this subsection, the
following definitions shall apply:
‘‘(A) MORTGAGE.—The term ‘mortgage’ means a first
mortgage on real estate that is—
‘‘(i) owned in fee simple; or
‘‘(ii) subject to a leasehold interest that—
‘‘(I) has a term of not less than 99 years and
is renewable; or
‘‘(II) has a remaining term that extends beyond
the maturity of the mortgage for a period of not
less than 10 years.
‘‘(B) FIRST MORTGAGE.—The term ‘first mortgage’
means a single first lien given to secure advances on,
or the unpaid purchase price of, real estate, under the
laws of the State in which the real estate is located,
together with the credit instrument, if any, secured thereby.
Any other financing permitted on property insured under
this section must be expressly subordinate to the insured
mortgage.
‘‘(C) UNIT OF GENERAL LOCAL GOVERNMENT; STATE.—
The terms ‘unit of general local government’ and ‘State’
have the same meanings as in section 102(a) of the Housing
and Community Development Act of 1974.’’.
(c) DEFINITIONS.—Section 544 of the Housing and Community
Development Act of 1992 (12 U.S.C. 1707 note) is amended—
(1) by striking paragraph (1) and inserting the following
new paragraph:
‘‘(1) The term ‘multifamily housing’ means housing accommodations on the mortgaged property that are designed principally for residential use, conform to standards satisfactory
to the Secretary, and consist of not less than 5 rental units
on 1 site. These units may be detached, semidetached, row
house, or multifamily structures.’’; and
(2) by adding at the end the following new paragraph:
‘‘(5) The term ‘qualified participating entity’ means an
entity approved by the Secretary for participation in the pilot
program under this subsection, which may include—

S. 1299—38
‘‘(A) the Federal National Mortgage Association;
‘‘(B) the Federal Home Loan Mortgage Corporation;
‘‘(C) State housing finance and mortgage insurance
agencies; and
‘‘(D) the Federal Housing Finance Board.’’.
SEC. 308. SUBSIDY LAYERING REVIEW.

Section 911 of the Housing and Community Development Act
of 1992 (42 U.S.C. 3545 note) is amended—
(1) by striking subsection (a) and inserting the following
new subsection:
‘‘(a) CERTIFICATION OF SUBSIDY LAYERING COMPLIANCE.—The
requirements of section 102(d) of the Department of Housing and
Urban Development Reform Act of 1989 may be satisfied in connection with a project receiving assistance under a program that is
within the jurisdiction of the Department of Housing and Urban
Development and under section 42 of the Internal Revenue Code
of 1986 by a certification by a housing credit agency to the Secretary, submitted in accordance with guidelines established by the
Secretary, that the combination of assistance within the jurisdiction
of the Secretary and other government assistance provided in
connection with a property for which assistance is to be provided
within the jurisdiction of the Department of Housing and Urban
Development and under section 42 of the Internal Revenue Code
of 1986 shall not be any greater than is necessary to provide
affordable housing.’’; and
(2) by striking subsection (c) and inserting the following
new subsection:
‘‘(c) REVOCATION BY SECRETARY.—If the Secretary determines
that a housing credit agency has failed to comply with the guidelines
established under subsection (a), the Secretary—
‘‘(1) may inform the housing credit agency that the agency
may no longer submit certification of subsidy layering compliance under this section; and
‘‘(2) shall carry out section 102(d) of the Department of
Housing and Urban Development Reform Act of 1989 relating
to affected projects allocated a low-income housing tax credit
pursuant to section 42 of the Internal Revenue Code of 1986.’’.

Speaker of the House of Representatives.

Vice President of the United States and
President of the Senate.