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Stanlbrd IMranh Ubrahes
iiiiiilini
3 6105 119 609 142
(COMMITTEE PRINT 98-sT
/^^
>S
t
COMPILATION OF THE DOMESTIC HOUSING
AND INTERNATIONAL RECOVERY AND
FINANCIAL STABILITY ACT OF 1983
SUBOOMMITTEE ON HOUSING AND
COMMUNiry DEVELOPMENT
OF THE
COMMITTEE ON BANKING. FINANCE
AND URBAN AFF.MRS
HOUSE OF REPRESENTATIVES
98th Congress, Second Session
SEPrEMBER iyf<4
PrlnlL-d roc Ih, »„ of th. Oramitut « Bnoling. Fliaii» onl Urtmn
AITnire
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[COMMITTEE PRINT 98-9]
COMPILATION OF THE DOMESTIC HOUSING
AND INTERNATIONAL RECOVERY AND
FINANCIAL STABILITY ACT OF 1983
SUBCOMMITTEE ON HOUSING AND
COMMUNITY DEVELOPMENT
COMMITTEE ON BANKING, FINANCE
AND URBAN AFFAIRS
HOUSE OF REPRESENTATIVES
98th Congress, Second Session
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HOUSE COMMITTEE ON BANKING. nNANCE AND URBAN AFFAIRS
FERNAND J. ST GERMAIN. Rhode IsUnd, Chaimuin
HENRY B. GONZALEZ. Texas
JOSEPH G. MINISH. New Jereey
PRANK ANNUNZIO, lllinoiB
FARREN J. MITCHELL, Maiyland
WALTER E. FAUNTROY, Difltrict of
Columbia
STEPHEN L. NEAL. North Carolina
JERBY M- PATTERSON, CBlifomia
CARROLL HUBBARD, Jr.. Kentucky
JOHN J. UFALCE. New York
NORMAN E. D' AMOURS, New Hampehin
STAN LUNDINE, New York
MARY ROSE OAKAR, Ohio
BRUCE F, VENTO. Minnesota
DOUG BARNARD. Jr., Georgia
ROBERT GARaA. New York
MIKE LOWRY, Washington
CHARLES E. SCHUMER. New York
BARNEY FRANK, MaBsachuBetts
BILL PATMAN. Texas
WILLIAM J. COYNE. Pennsylvania
BUDDY ROEMER, Louisiana
RICHARD H. LEHMAN, California
BRUCE A, MORRISON, Connecticut
JIM COOPER. Tenneasce
MARCY KAPTUR, Ohio
BEN ERDREICH, Alabama
SANDER M. LEVIN, Michigan
THOMAS R. CARPER, Delaware
ESTEBAN E. TORRES. Caliromia
OERALD D. KLECZKA. Wisconsin
CHALMERS P. WYUE. Ohio
STEWART B. McKlNNEY. Connecticut
GEORGE HANSEN. Idaho
JIM LEACH. Iowa
RON PAUL, Teias
ED BETHUNE, Arkansas
NORMAN D. SHUMWAY. California
STAN PARRIS, Virginia
BILL McCOLLUM, Honda
GEORGE C. WORTLEY, New York
MARGE ROUKEMA. New Jersey
BILL LOWEBY, California
DOUG BEREUTER, Nebraska
DAVID DREIEH. California
JOHN HILER. Indiana
THOMAS J. RIDGE. Pennsylvania
STEVE BARTLETT, Texas
JACK EDWARDS. AUbama
Subcommittee on Housing and CoMMUNirv Development
HENRY B, GONZALEZ, Texas. Chairman
STEWART B. McKINNEY, Connecticut
CHALMERS P. WTLIE, Ohio
Columbia JIM LEACH. Iowa
ED BETHUNE. Arkansas
MARGE ROUKEMA, New Jersey
GEORGE C. WORTLEY, New York
BILL McCOLLUM. Florida
BILL LOWERY. California
DOUG BEREUTER. Nebraska
DAVID DREIER, California
JOHN HILER, Indiana
THOMAS J. RIDGE, Pennsylvania
STEVE BARTLETT, Texas
JERRY M. PATTERSON, Califumia
STAN LUNDINE. New York
MARY ROSE OAKAR, Ohio
BRUCE F. VENTO, Minnesota
ROBERT GAROA, New York
MIKE LOWRY, Washington
FARREN J, MITCHELL, Maryland
CARROLL HUBBARD, Jr.. Kentucky
NORMAN E, FAMOURS. New Hampehin
CHARLES E. SCHUMER. New York
BARNEY FRANK, Massachusetts
WILLIAM J, COYNE. Pennsylvania
RICHARD H. LEHMAN, California
BRUCE A. MORRISON. Connecticut
JIM COOPER. Tennessee
MARCY KAPTUR, Ohio
BEN ERDREICH, Alabama
SANDER M. LEVIN. Michigan
THOMAS R. CARPER, Delaware
ESTEBAN E. TORRES, Califoniia
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LETTER OF TRANSMITTAL
August 1984.
To: All members of the Committee on Banking, Finance and Urban
Affairs.
Treuismitted herewith for the use of the Committee on Banking,
Finance and Urban Affairs is a compilation of the provisions con-
tained in Public Law 98-181, an act making supplemental appro-
priations for the fiscal year ending September 30, 1984, and for
other purpoees, that were added to this Appropriations Act by ac-
tions taken by the Senate Committee on Banking, Housing and
Urbsin Affairs and House Committee on Banking, Finance and
Urbfui Affairs, entitled "The Domestic Housing and International
Recovery and Financial Stability Act."
The congressional action on this legislation was an extraordinari-
ly unique process for a major piece of legislation: the Senate did
not take any floor action on the housing authorization portion of
the legislation; there v/aa no conference on the differing versions of
the housing authorization bills; separate pieces of legislation deal-
ing with the Export/Import Bank Act, authorization and appro-
priations for the International Monetary Fund, authorizations for
multUaterfil banks, and l^islation dealing with international lend-
ing supervision were added to this legislation. In addition the final
congressional action taken on this legislation was of an expedited
nature. The Senate added all of these provisions to a supplemental
appropriations bill as Jui amendment to an amendment in techni-
cal disagreement to H.R. 3959. The House of Representatives ap-
proved the total package eis part of the rule making in order the
immediate consideration of H.R. 3959, the Supplemental Appro-
priations Act of 1984. There was less than an hour of floor debate
on what was one of the most important and complicated pieces of
legislation in the first session of the 98th Congress,
Because of this unique process that we were forced to employ, I
am publishing this compendium of the major documents regarding
the many provisions of the Domestic Housing and International
Recovery and Financial Stability Act so that an accurate legislative
history can be available to the Members of Congress Emd the
public.
Sincerely,
Fernand J. St Germain,
Chairman.
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CONTENTS
Public Law 98-181
Summary of the portion of the act "The Domestic Housing and International
Recovery and Financial Stability Act of 1983"
Summary of Mf^or Issues Resolved between H.R. 1 and S. 1338
Summarv of L^ialative Actions on Eiport-Import Bank, International Mone-
tary Fund, International Lending Supervision, and Multilateral Develop-
ment Bank Portions of H.R. 3959
Statement by Chairman St Germain
Statement by Senator Gam
House Floor Debate on H-R. 1
House Committee Report 98-123
House Committee Report 98-123, part 2
Senate Committee Report 98-142
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PUBUC LAW 98-181— NOV. 30. 1983 97 STAT. 1153
Public Law 98-181
98th Congress
IT •Ddinc Savtvnbw M H
Be it rnacltd by tht SenaU and Houte of Rtprttentatiat* of tht
United Slatta of America in Congnta OMsembled, That the foUowing SupplFmrnUl
•urn* an eppniprUted, out of any money in the Treasury not Appnraraiior
othenriM appropriated, to provide nipplemental appropriationa for ^^
the fiacal year ending September 30, 1984, and for other purpoeea,
TTIIjE I
CHAPTER 1
DcPAKTIfKNT or HOVOINO AND UUAN DEWLOnUNT
Title I of the Department of Housing and Urtmn DeveliqHiient-
Ifidepandent A^nciee Appropriation Act, 19S4 (Public Uw 98-45),
is amended by inserting before tlM period at the end of the para-
graph under the beading "Housing tor the elderly or handicapped
nind" (97 Stat 219, 220) the following: ": Pnvided fuHher. TKat
notwithstanding section 202(aX3) of the Housing Act of 1959, loons
made in fiscal year 1984 shall bear an interest rate which does not
eiceoJ 9.2S per centum, including the allowance adequate in the
Judgment of the Secretary to cover administrative costs and prob-
able loMM under the program".
EucuTTVs Omcs or nn Pmbidcmt
For an additional amount for the "Council on Environmental
Quality and OfHce of Environmental Quality", $600,000 to conduct a
study to consider and define a National Center for Water Resources
RwtBrch. and a studv to define and plan a National Cnearinghouse
fbr Water Resourcea uformation.
Pd»XAL ESHKBaENCV MANAOSmNT Aginct
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PUBUC LAW 98-181— NOV. i
D UX^AL ASBtSTANCI
The Department of Houaing and Urban Development-Independent
A^nciee Appropriation Act, 1984, under the account. Federal Elmer-
mncy Management Agenej, State and Local AssUtance, it amended
by adding the following before the period: ": Provided further. That
notwithatanding any other provioion of taw for the fiscal year 19S4,
$55,000,000 ia available for contribution* to the States under section
205 of the Faderal Civil Defense Act of 1950, as amended (50 U S C.
App. 2286), for penonnel and administrative expenses".
For an emerKenn[ food distribution and shelter prcsram to be
carried out by tne Director of the Federal Emergency hunagement
KgtBCy. t30,000,000, such sum to remain available for obligation
until March 31, 19S4, and to be made available under the following
terms and conditions:
(1) The Director of the Federal Emergennf Management
Agency ahall, as soon as practicable afler the date of the
enactment of this Act, constitute a national board for the
purpose tX determining how the program ftmds are to be distrib-
uted to individual locuities. The national board shall consist of
■even member*. The United Way of America, the Salvation
Army, the National Council of Churches, the National Confer-
ence of Catholic Charities, the Council of Jewish Federations.
Incorporated, the American Red Cross, and the Federal Emer-
^ncy Management Agency shall each designate a representa-
tive to sit on the national board. The representative of tiie
Federal Emergency Management Agency shall serve as chair-
man of the national board.
(2) E^h locality designated by the national board to receive
funds shall constitute a local hoard for the purpose of determin-
ing how its funds will be distributed. The local board shall
consist, to the extent practicable, of representatives of the same
organizations as the national board except that the mayor or
appropriate head of government will replace the Federal Emer
gency Management Agency member.
(3) The Lhrector of the Federal Emergency Managemen.
Agency shall award a grant for $30,000,000 to the national
board within thirty days after the date of the enactment of this
Act for the purpose of providing emergency food and shelter to
needy individuals through private voluntary organisations.
(4) Eligible private voluntary organizations shall be nonprofit,
have a voluntary board, have an accounting system, and prac-
tice nondiscrimination.
(5) Participation in the program shall be based upon a private
voluntary organization's ability to deliver emergency food and
shelter to needy individuals and such other factors as are
determined by the local boards.
(6) Total administrative costs may not exceed 2 percent of the
total appropriation.
(7) As authorized by the Charter of the Commodity Credit
Cori>oration, the Corporation shall process and distribute sur-
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PUBUC LAW 98-181— NOV. 30, 1983
plus food own«d or to be purchased bj the Corporation under
the food distribution and emergenn shelter program in cooper-
ation with the Federal Emergency Management Agency.
National AKRONAtmcs and Spaci ADuiNisTaATiON
coNSntucnON o» FACtumM
For an additional amount for "Construction of facilitiea",
$20,000,000, to remain available until September 30, 1986, for partial
funding of the construction of facilitiea at the John P. Kennedy
Space Center for the Solid Rocket Booeter araembly and refurbish-
ment contractor and for warehousing to be used by the Shuttle
procesaing contractor Provided, That with the funds appropriated
under the "Space flight, control and data oommunicationa" account
in the 19S4 Housing and Urban Development-Independent Agencies
Appropriation Act (Public Law 98-45), NASA may enter into a
contract with Morton Thiokol, Inc., to amortiie the Thiokol Casting
Pit Covers over a twelve-year period for a total cost of not to exceed
$23,000,000 under the authority granted under Public Law 98-45.
VrrDUNS ADUINIBTmATION
JOBTRAININO
For an additional amount for payment d expenaea as authorized
by the Emergency Veterans' Jd) "n^ing Act of 1983 (Public Law
98-77), $75,000,000, to remain available untU September 30, 1986.
BHOST TTTLX AND TABLB OT CONTCNTB
SicnoN 1. (a) Titles I through XI of this Act may be cited as the
"Domestic Housing and International Recovery and Financial Sta-
biUty Act". «™„ .^
(b) Titles 1 through V of this Act may be dted as the "Housing and ^^[^
Urban-Rural Recovery Act of 1983". Stability Act
TABLE OF CONTENTS ^u*" ^^"^
Sk. 1. Short title and table of contmU. Houaingand
Urban-Rural
TITLE 1— COHHlJNrrY AND NQCHBORHOOD DEVELOPMENT AND Recovec? Act of
CONSERVATION 1983.
„ . ^ ^ ». „ .^ lauaciToi
Past a— Commuhttt wvaLomDrT Blocs Okaht Paooaui note.
Sec 101. Low and moderate ioeaoH banefll atijecljn.
Allocation and distribution cl funda.
Diacretionary fund.
Guarantee of loani.
Uie of (TanU lo Httle outatandiBf urban n
Tranaition pmriaion*.
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PUBUC LAW 98-181— NOV. 30, 1983
Sic 111. Urb*n dtnlepmant •etinn fnnt*.
Sk. Ill Vibm hnmtalmAint.
Ste. IZa. NtlchbiFluad^nlBfiDtiitdmcnatistiea.
Bkc. tZ4. RahabiliUtisB loua.
Bkc. tZS. NaiclibDrhaod RalnnMmmt Corporatian.
Sw. IZGRapHlm.
TITLE n-HOU3INO ASSISTANCE PROGRAMS
Sm. SOI. AUaedttao uid ina o( uciited beunnc ■uchorin.
Sk. 202. InenM in tiotla pr« genpucT tuDitaUso.
Sm. sot. Priarit]r Air boudi* M«M«n
Sac. sen. VoucbM- damHtntica.
Sm. 206. RMmnlarsKtioaBccntncta.
Sm 209. RcpMl of hw nntnictiin authoritj.
Sm. 210. KnglB ram occupucj baudnf.
8m. 211. Sharad hnaiiic for tta* Mnlj awl bundiapp^
Sm 212. PajnmM tor «antion s< Wnr in
Sm. 213. laeoow ■lir'^-'i-
Sm. 2M. DmdIiliM
Sk. 21G, FinaBdnc
Sm. 2il. CanBdentioB^utilltjr
•ntHB tt iiamy wFinwita Bit
houiuwdiild cuaonnonMnl
)( fiir tb> Mnit mid huiilica[
Sm 224. CoBgn^M m
Sm 225. Damoiiitntia.
6k. 226. SkUob Z3S hc„
Sm. Z2T. Pet ownenhip in
TITLE m-RENTAL HOUSING REHABILITATION AND PRODUCTION
Ssc sot. RenUI nlubiliUd« and dnalopBint cruM.
~" ~ ' rmiof uHikdnanU U the Hounnf and C
Act of 19T4.
c 302 CODfon
TITLE IV-PROORAM AMENDMENTS AND EXTENSIONS
Put a— Fdouu. Hounho ADHtHBTBAnim MamMOi bnubuici PaocaAUi
Subpart 1 — Central Authoritica and RaquireEneiila
Sm. 401. Eitflnnon of mortgiM iiuuranca pnrrama.
Sw. 402. Aniount to bi inund uncln- th* Natxna] Hoiuinf AcL
8«. 104. Eliminatton of nquiivToant lliat Fsdaral Houains Adniniatrabon iotenal
Sk. 40B. MiBiniuB prap«t]i i"—
Sm. 40C. Tim* of paymanl of :
Sm. 408. AiaipiDMnt of aaction £21(tll4) mortgafoa lo Govonmwnt National Mort-
Sec. 401. Termination of aaction 221 bur-baek pronaioB.
SubpHrl 2— ffincle-Pamil^ Man«ace Inninutca ProcTana
Sm. 41G. litla I inaurance (or augtinc manufactureil homaa.
Sm. 41G. Increaaed title I loan limiu Tor manulactured hooHa and Ma.
Sk. 411. Refinancing manufactund twmaa under titlt L
Sk. 418. CDunaelinc fo
8k. 418. Cooperativeli
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PUBUC LAW 9&-181-NOV. 30, 1983
Sac. t£l. Sii«l»Amil:r owrtfica in
Sb. 122. Singk hnulj nwrtgagviD
8*c 423. TnUnuit of FadenI Houno( Ai
[y priced sdcIb ^
Subjiwt 3— WuHifwiuly and Othar hSotlfg* lo
Bac 43L DtKrMionMfj authority to nyulala ronli or chama.
Sac. 432. Ramova] of nOnandng limitatiofia oo cotain multitBinily pnnacta.
Sac. 433 LunitAtion on pnpaynwnt at mortgagH on multifamlLjr raatal hooaini
daCion iDoctaa»4>*(A*d taairitHa pncram.
Sac. 4SZ. Goremmant NmIoih] Mortpfi ABOciation oomm
Sac. 48S. Spacial aaalitanee aod amaisann moftcan pureh
of tba Govamment National Hortgag* taodatii
TTTLB V-BURAL K0U8IN0
Sac. SOI. Short till*.
DaflBlboiw.
SaeticiD 502 amendmnita.
Sac. S03.
Sac. Mi.
Sac. GOG.
Sk. got. Ganorvl authorit* of tha SecnUry.
Sm. GM. AmHidmeat lo aeetion Ml.
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97 STAT. 1158
PUBUC LAW 98-181— NOV. 80. 1983
51G. Drdnilion of
SIS Slurvd hoati
GIT. RrnUl nxuO,
TITLE VI-EXPtWT IMFDRT BANK ACT AHENUIENTS OP I98S
fK ElipDrtfl dTflrr
T. Comiirtilivp ■
support of Unilol 9uia( nporta.
S«. 631. Miichinf eradi
Miichinf
Sk ESa Technical ar
P
Sm. B4I. Short title
S«. 642. SUtement or
S«. 613. NHolialine i
Sk. 6M. EstabliHhmci
Import 6a
Sk. 615. Eatabluliinri
Put C— Tin Aid Cbdht Eihibt Si
' ■ ii«< ud ciedit pnvnni
■ tisl aid cmdlt pracnm in
le United Slate* Eiport-
TTTLE VIEI-im'ERNATIONAl, MONETARY FUND
7. C^pM ins Fund
wing in United Statee credit i
c. 813. Report* U Coni
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PUBUC LAW 98-181— NOV. 30, 1983
TTTLB tX-WmtNATUmAL LBNDINO SUPERVISION
II. Short Utl..
' HI of ixUicj.
8m. MS. CapiUI tOtnamct.
Sk. 909. Fonffti loan vnluaUou.
Sm. 910. Gnanl ■utboritiH.
8m, 911.0X0 audit authoritx-
Sm. 912. Bqiul npnHDUtian for Cht FHtaral DtfiMlI iBMraon Corpon
TITLB X— MULTILATERAL DEVELOPMENT BANKS
Sac. 1001. Intar-AawricmiDmlaiiiDnitBuik.
Sk. 1006. Pnmiu] pncticH.
TTTLE Xl-nir APPROPRUTION
8m. 1101. IMP approprutkiii.
fiat llSZ.OD(idiU0Baf loUrnaliODBlfiiiueialQatam.
Part A— Oommunitt DKvSLOniBtT Block Gkamv Frookam
Sic 101. (a) Sactioa 101(c) of the Houainc and Communitr Derel-
opment Act of 1974 ii amended—
(1) in the fint Mntence, br inserting after "title" the follow-
ing: "and of the commum^ devek^inent program of each
grantee under thia title"; and
(2) in the tecood aentuiee, bj inaerting after the fint Mnma
the following: "not 1cm than 61 peroant of the aggregate of the
Federal aKistamce proirided under MCtion 106 anoT if ^>^Uci "
the fund* receiTcd ai a remit of a guarantee lu '
•haU be ueed for the eupport of actlrittee that bi
low and moderate income, and".
(b) Section 104a>X3) of such Act U ai
(1) by atriking out the first aemlcolon and Inserting in lieu
thereof", and"; and
(2) by inserting before the aemicotou at the eod thereof the
following: ", est^ that the aggregate use of Autds ncalvad
under section 106 and. if applicable, as a result of a guarantee
under saetkni 108, during a period ^edfied tnr the grantee of
not more than 8 years, snail princtpally benefit peraons of low
and moderate income in a manner that ensures that not leas
than El percent irf such funds are uaed for ectivitiee that benefit
such persons during such period".
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PUBUC LAW 98-181— NOV. 30. 1983
(1) br itrikinff out Uw wmioolon and all that fbllom through
"lat^iand
(2) tn adding at the end thereof the rollowing new lentencea:
"In oraer to permit an orderlr tranaition of each dty loaing ita
clawificatiop aa a metropolitan dtj bj r«aaon of the population
dataof tba 1960 decennial oenaua or raviaiona in the osaignation
of metnjxditan areaa or central citiea, an* city claanTied aa or
deemed bj law to he a metropolitan citj for purpcaee of BMiat-
anee under any aection of this title for fiacal year 1983 ahall
retain auch qualification for puipoaea of receiving auch aaaiat-
anoe for fiacal yean 1984 and 1986. Any unit of general local
govenunent that beoomea eligible to be cUwified aa a metropoli-
tan ci^ (br fiacal year 1984 or 1985 while ita population ia
included in an urban county for nich fiscal year mav. upon
of written notification to the
cal year may. i
Secretary, defe
42 use 143T1.
"(21) The
claMifkatimi aa a metropolitan city for all purpoaea under thia
title for fiacal yean 1984, 1985, and 1986 if auch unit of feneial
local government continuea to have ita population included in
■uch urban county under lufaeection (d).".
(b> Section 102(aKG)of auch Act iaammded by striking out the last
aentence and inaerting in lieu thereof the following new sentences:
"In order to permit an orderly tranaition of each county losing its
clavificBtion aa an urban county by reason irf a decreaae in popula-
tJOT, any coan^ classified aa ordeenwd to be an urban county under
this para^ra^ for purpoaea of reesiTuw assistanca under any see-
tiim of thia title tor fiacal year 1983 ahsdl retain such qualification
for purpoees of receiving auch aasistanee for fiscal yean 1984 and
19SS, or for such loiuer period covend by a cooperation agreement
entered into during fiscal year 19S4. Notwithstanding the combined
papulation amount aet forth in clauae (B) of the First sentence, a
county shall also quali^^ as an urban county for purposes of assist-
ance under section 106 if such county (A) compTiea with all other
requirements set forth in the first sentence: (Bl has, according to the
most recent available decennial census data, a oomtnned population
between 190,000 and 199,999, inclusive; (C) had a population growth
rata of not less than 16 percent dunng the moat recent 10-year
period measured by applicable cenwaea; and (D) haa submitted data
satisfactory to the Secretary that it haa a combined pt^nilation of
not leas than 200.000.".
(c) Section 102(a> ot such Act is amended by adding at the end
thmreof the following new paragraphs:
"(20) like terms 'peraons of low and moderate ii
low- and moderate-income persons' have U
term 'lower income families' in section i
States Hoiuing Act of 19ST. The term '
income' haa the meaning given the term 'venr low-mcome lami-
lies' in such section. For mirpoaea of such terms, the area
involved shall be determined in the same manner aa such area
is determined for purposes of assistance under aection S of such
term "buildings for the general conduct of govern-
IS dtf halls, count* administrative buildings. State
capital or ofRce building or other facilities in which the l^isla-
tive or general administrative affairs of the go^'emment ar«
conducted. Such term does not include such facilities aa neigh-
borhood ssrvice centers or special purpose buildings located in
low- and moderate-income areas thiit house varioua nonlegiala-
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PUBUC LAW 98-181— NOV. 30. 1983
tiv« functloni or MrvicM providMi l^ govnTUUMit it decentral-
ind loeatiouB.".
(d] Section 102 of (uch Act U amended b^ (trikinc out "Deput-
ment of Comowrce" •■ch place it appe«ra in pera^raidM (3), it), and
(9)af HihaectioDWandinmibMctionCbjaDdiiuMtuuf in lieu thereof
— •- -[t".
■ amended bj etriking out the last
(0 The lait Mntrace d aection 102(d) of euch Act ia amended bj
inaertiiwbefon the period at the end thereof the following ".except
where the unit of general local government loaea the deeignation of
metropolitan dtj".
inaeriin^ in lieu thereof tlw following: "Iliere m
VTATBUNT OF A
Site. 104. (a) Section 104(aKl) of the Houaing and Community
Develpment Act of 1974 u amended by adding at the end thereof the 42 U9C 5304.
following new aentenea; "In all eaaea, beginning in fiacal nai 1934,
the atatement reauired in tbi* eubaaction ahall mclude a aeecr^tion
of the uae of fundi made available under aacUon 106 in fiacal year 42 U9C SMS.
1982 and thereafter (or. beginning in (lacal year 1985. auch uaa lince
preparation of the lait itatament prepared punuant to thia aubaec-
tion) together with an aneaamant of the relationahip of auch uae to
the community development oliiectivce identiiM in the atatement
pimared pursuant to thia lubatctiwi for auch previoua fiacal yeaia
and to the raquirementa of aection 104(bX8).". '^"f. P 11^9.
<b) Section 104(aX2) of nich Act is amended—
(1) in the Tint aentence, by inaerting "in a timely manner"
after "ahall";
(2) in lubpaiagraph (A)—
(A) by inaerting after "citiiena" the following; "or, as
aii^wopriate, units of general locaJ government"; and
(B) tn inserting bMore the lonlcaloa at the end thereof
the falloiwing: ", including the ertimatad amount propoaed
to be used for activitiea that will benefit persons of low and
moderate income and the plana of the grantee for minJmia-
in^ diaplacMnant of peiaons aa a result of activities assisted
with such funds ana to assist peraona actually displaced as
a result of such activities";
(3) by striking out "and" at the end of subparagraph (BY,
(4) by striking out the period at the end of aiibparagraph (Q
and inserting in lieu thereof a semicolon;
(6) by inaerting after subparagraph (O the following new
Sul^ragrephK
"(D) provide citizens or, as appropriate, units of general local
government with reasonable access to records regarding the
pest use of funds received under section 106 by the grantee; and 42 U9C 5306.
"(E) provide citizens or, aa appropriate, units of gmeral local
government with reasonable notice of, and opportunity to com-
yGoot^le
97 STAT. 1162 PUBUC LAW 98-181— NOV. SO. 1983
(6) bj adding >t the end thereof the following new aentencc:
"A117 fmal itateiDent of BCtivitiM maj be modined or amended
tiata time to time by the grantae in accordance with the laine
proceduTN required in thii parteraph for the preparation and
■ubnuMian of lucb atatement.".
(c) Section 104(b) of nich Act ia amonded—
(1) bjr iiuMtiug before the Bemioolon at the end of pangrvph
(2) the following; ", and the grantee will affirmatiTely further
fair houaing";
(2) bj atrilung out "and" at the end of paragraph (3);
(3> m redesignating paragraph (4) as paragrapo (6); and
(4) bjr inamting an«r paragraph (3) the fbllowing new
paragrai^iB:
"w it haa developed a community development plan, for the
neriod (pecifM bv the grantee under paragraph (3), that identi-
■ communis oerekipmant and housing need* and speciTiee
tb riioTt- and Imu-tann commup'*- ••— ~i~— "* -»..~rfi~—
.__it have been devetoped in aecorda
tive and requiivmenta (^ this title;
"(6) the granlM will not attempt to recover any capital coat*
cf public impniveroenta aMisted in ii4iole or part unoer aectioa
106 Of with amount* nsttlting ttom a guarantaa under aectioa
108 1^ BMUMlng any amount i^ainst propertiea owned and
occupied by penmia m low and moderata Incmne, including any
fee charged or aaaeannent made as a condition of obtaining
access to such public improreroenU, nnless (A) funda received
under section IK are used to pay the proportion of such fee or
asaessBMnt that relates to the capital costa of such public
improvement* that are financed from revenue sources other
than under this title; or (B) for purpoae* of niTwinf any
amount against pn^Mrties owned and occupied by person* of
low and moderata mcome who are not persona 01 very low
income, ths grantee certifies to the Secretary that it lacks
sufTident f^inds received under section 106 to comply with the
requirements of subparagraph (A); and".
(d) Section 104(cKlXA} of such Act i* amended by inserting after
"community" the first [dace it appears the following: "(including the
number of vacant and alsandoned dwelling unite)".
(e) Section 104(d) of nich Act i* amended—
(1) by inserting "and evaluation" after "performance" in the
firatH -
(2) by inaerting "and to the requirements of subsection (bK3)"
afier ntbaecUon (a)" in the first sentence and
(3) by inserting after the first sentence the following; "Such
report shall also be made available to the dtisens in each
grantee's jurisdictlcm in sufficient time to permit such dtizena
to comment mi such report prior to it* submission, and in such
manner and at such times as the grantee m«or determine. Tlie
grantee's report shall indicate it* pragrammatic accomplish-
ments, the nature of and reason* for changes in Um grantee'*
program objective*, indication* of how the grantee would
change it* program* aa a result of it* eKperiences, and an
evaluation of the extent to which, ita funds were used for
activities that benefited low- and moderate-income person*. The
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PUBUC LAW 98-181— NOV. 30, 1983
nport tbmU indnde a ■lunnwi; of an^ camments nceivad by
th* grant** from citiiena in ita juriadiction T«ap«ctiiic ita pro-
frwB. Hw SacrMary ahall encouraca and awiat national aaaoci-
ationa oT gnmtaaa eligibla undar section 106(dX2XB), national
•Modationa of Statea, and national nainrintinni of units of
genaral local govsnunoit in nonsntitlamaBt araa* to develop
and noommand to the SacntaiT, within one year after the
•fUsctin date of this sentence, unlfenn recordkeeping, perfonn-
rMMTtins , and evaluation reporting, and auditing requin-
s for miat granleea, States, wid units of local mvanunsnt,
. letirelj. Based on the Secretary's approval of thsse raoom-
nMndatims, the Secretaij shall sstablish such requirements for
bj Insertinc after "pavnient" the following "and substantial dis-
burs«nenlB from sucii nmd must begin withm 180 days after receipt
of such pajrmant".
^ SectMU 104 of such Act b amended by adding st the end
thereof the following new subsection
"(i) Notwithstanding any other jiroTiaion of law, any unit of
ent may retain anv program incc~- '
. _ int made by the Sscretaiy, or ai
distributed by a State, under section 106 if (1) nich L _
raaliMd after the initial disbursement of the flindi received by nich
unit of general local govamment under such section; and (2) such
unit of genaral local govmment has agreed that while the unit of
general local government is particuoatinft in a communis develop-
meat program under this title it wiDutiliie the program income for
eligible community developntent activities in acowdanoe with tha
provi^ous of this title. A State may require as a condition of any
•mount distributed by such State under section 106(d) that a unit of
general local government shall nay to luch State any su^ income to
M uaed bf sum State to fund soditionBl eligible community develop-
BMDt activities, except that such State •hall waive such condition to
the extent such income is applied to continue the activi^ from
vrttlch such biaxne was derived.
"(j) Bach grantee shall provide for reasonable beueflta to any
person involuntarily and pemumently displaced as a result of tha
use of assistsnoe received under this title to scquire or subetantially
rriiabilitata proper^.".
Sk. 106. (a) Saction 10S(aX2) of the Housing and Community
Davalopmsnt Act of 1974 is amended to raad as fuiows:
(2) tha acquisition, oonstnietlon, reconstruction, or installa-.
tion (including deaign featuree and improvements with rcapect
to such construction, reconstruction, or instsUstiMi that pro-
mote energy efliciency) of public works, facilities (except Cor
buildings lor the general conduct of government), and vta or
other improvements;".
(bKDSacUon 105(aX8)of such Act is amended—
(A) by striking out "10" and inserting in lieu theraof "15";
(B) by inserting before the semicolon at the end theraof the
following: "unless such unit of general locsl government ussd
more than 16 percent of the assistance rseeived under this title
37-922 O - 84 - 2 '
yGoot^le
PUBLIC LAW 98-181— NOV. 30, 1983
(or fiBcal year 1983 for such activities (excluding any awiatance
received ourauant to Public Law 98-8). in nhich caae Buch unit
of general local government may use not more than the percent-
age or amount of such aamstance tued for such activitiea for
■ueh fiscal year, whichever method of calculation yields the
higher amount",
(2) Section 303(b) of the Housing and Community Development
Amendments of 1981 is amended hi striking out ", 1983. and 1984"
and inserting in lieu thereof "and 1983".
(c) Section 105{a)(U)of the Housing and Community Development
Act of I9T4 is amended by inserting after "public facilities" the
following: "(except for buildings for the general conduct of
government)".
(d) Section 105(aXt5) of such Act is amended by inserting the
following before the semicolon at the end thereof: ". including
grants to neighborhood-based nonprofit organizations, or other pri-
vate or public nonprofit organizations, for the purpose of assisting,
as pari; of neighborhood revitalization or other community develop-
ment, the development of shared housing opportunities (other than
by construction of new facilities) in which elderly families (as de-
fined in section 3(b)(3) of the United States Housing Act of 1937)
benefit as a result of living in a dwelling in which the facilities are
shared with others in a manner that effectively and efficiently
meets the bousing needs of the residents and thereby reduces their
cost of housing",
(•) Ssction 105 of such Act is amended by adding at the end
thereof the following new subsections
"(cXl) In any case in which an assisted activity described in
paragraph (14) or (17) of subsection (a) is identified as principally
Denenting persons of low and moderate income, such activity shall —
"(A) be carried out in a neighborhood consisting predomi-
nately of persons of low and moderate income and provide
services for such perwHis; or
"(B) involve facilities designed for use predominately t^ per-
sons of low and moderate income; or
"(C) involve employment of persons, a mtgority of whom are
persons of low and moderate income.
"(2) In any case in which an assisted activity described in subsec-
tion (a) is designed to serve an area generally and is clearly dssigned
to meet identified needs of persons of low and moderate income in
such area, such activity shall be ctHuidered to principally benefit
peisons of low and moderate income if (A) not less than 51 percent of
the residents of such area are persons of low and moderate income;
or (B) in any jurisdiction having no areas meeting the requirements
of subparagraph (A), the area served by such activity has a larger
proportion of^isons of low and moderate income than not less than
75 percent of^the other areas in the jurisdiction of the recipient.
"(3) Anv assisted activity under this title that involves the acquisi-
tion or rehabilitation of property to provide housing shall be consid-
ei«d to benefit persons of low and moderate income only to the
extent such housing will, upon completion, be occupied by such
ALLOCATION AND DISTIIIBiniON Or FUNDS
Sec. 106. (a) Section lD6(b) of the Housing and Community Devel-
opment Act of 1974 is amendsd by adding at the end thereof the
following new paragraph:
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PUBUC LAW 98-181— NOV. 80, 1988
"mA) Where deU era awulaUe. the emoimt determined under
peragreidi (I) for a metropoliten citjt that ha* been formed bjr the
COnKHidatUoi of me or more metropolitan citiea with an uihan
coun^ thall be equal to the ■um of the amounla that would have
been determined under paraKraph (1) for the metropolitan d^ oi
cities and the balance of the conaolidatad ■ ' " ~~~'
eonaolidatiou had not occurred. Thia paragrapE
anj oonaolklation that —
"(i) included aU metropcditan citiee that received grants under
thia aection for the fiacal year preceding auch conaolidation and
that wen located within the urban county;
"(ii) included the entire urban county that received a grant
under this section for the Tiacal year preceding such cons^ida-
"(iii) took place on or after January 1, 1983.
) The population growth rata uiall metropolit
' I lOaiaNlZ) dull be based oa the popuUtion of (i) 4ZUSC63D2.
a irfall metropolitan citiea reTerred
BMtropolitan dtiea other thJim consolidated governments the grant
fivr which ia determined under thia paragraph; and (ii) citiea that
were metn^iotilan citiea before tiieir inco^poratiou into eonsolidatad
governments. Foe purpeees of calculating the entitlement ehare tot
the balance of the conaolidBted government under thia paragraph,
the entire balance shall be considered to have been an urban
(b) section 106(cXlXB) of such Act is a _
"(B) In reallocating amounts reaulting from an action under
aection 104(d) ot aection 111, a city or county againatwhwn any
■udi actim was taken in a fiscal year shall be ezcluded from a
calculation of share for purpoaea of reallocating, in the eueoeed-
ing year, the amounts becoming available aa a reault of such
action; and".
(c) Section 106(c) of such Act ia amended by adding at the end
thereof the following new paragrai^;
"(3) Notmthatanmng the provisions of paragrBph (1), the Secre-
tary may upon reifueet transfer responsibility to any metropolitan
city for the administration of any amounta received, but not
obligated, by the urban county in wliich such city is located if (A)
such city was an included unit of general local goreroment in such
county prior to the qualification of such dty as a metropolitan dty,
(B) such amounts were designated and received hy such county for
use in such dty prior to the qualiffcation of such city aa a metr^wl>-
tan dty; and ICI such city and county agree to such transfer of
respmaibility for the administration of such amounts.".
(dXl) Section I06(dX2XA) of such Act is amended—
(A) by etrilung out "the State" and inserting in lieu thereof "a
Stata tnat has elected, in such manner and at such time as the
Secretary shaU preocribe"; and
(B) by inserting after clauae (ii) the following new Kntence:
"Any election to distribute funds made after the close of fiscal year
1984 ia permanent and final,".
(2) Section 106(dX2KB) of such Act is amended t» etriking out
"irtiere" and all that follows through the period at tae end thereof
and inaerting in lieu thereof the following: "if the State has not
elected to diatributa such amounts.".
(a) Section 106(dX2KO of auch Act is amended by striking out
dauaa (iii) and inaerting in lieu thereof the following new clauae:
yGoot^le
97 STAT. 1166 PUBUC LAW 98-181— NOV. 30, 1983
"tiii) will not nfuse to distribute iuch amounts to any unit of
Beneral local government on the basis of the particular eligible
activity selected by such unit of genera] \ocai government to
meet its community development needs, except that this clause
may not be considered to prevent a State from establishing
priorities in distributing such amounts on the basis of the
activities selected; and".
42 use 5306. {{) Section 106(dX2) of such Act is amended by adding at the end
thereof the following new subparagraph:
Ortirication. "(Dl To receive snd distribute amounts allocated under paragraph
(1). the Governor of each State shall certify that each unit of^neral
local government to be distributed funds will be required to identify
its community development and housing needs, including the needs
of low and moderate income persons, and the activities to be under-
taken to meet such needs.".
Payments (g) The Second and third sentences of section 106(dK3NAI of such
Act are amended to read as follows: "The State shall pay from its
own resources all administrative expenses incurred by the Stata in
carrying out its responsibilities under this title, except that frtKn th«
amounts received for distribution in nonentitlement areas, the Stat«
ma* deduct an amount to cover such expenses not to exceed the sum
of S102.000 plus SO percent of any such expenses in excess of
SIW.OOO. Amounts deducted in excess of (100,000 shall not exceed 2
percent of the amount so received.".
(hi Section ll>6(dX3) of such Act is amended by striking out
'Subparagraph (C) and inserting in lieu thereof the following:
"(C) Any amounts allocated for use in a State under paragraph (II
that are not received by the State for any Tiscal year because of
failure to meet the requirements of subsection (a) or (b) of sectKM
104, or that become available as a result of actions against the State
Anit. p. U6Z. under section 104(d) or 111, shall be added to amounts sllocat«d to
4£USC .S31]. all States under paragraph (1) for the succeeding fiscal year.
"(D) Any amounts allocated for use in a State under paragrqih (1)
that become available as a result of actions under section 104(d) or
111 against units of general local government in nonentitlement
areas of the State or as a result of the closeout of a grant made by.
the Secretary under this section in nonentitlement areas of the
State shall be added to amounts allocated to the State under para-
graph (1) for the fiscal year in which the amounts become ao
available".
(i) Section 106(d) of such Act is amended by adding at the end
thereof the following new paragraphs:
"(5) No amount may be distributed bv any State or the Secretary
under this subsection to any unit of general local government
located in a nonentitlement area unless such unit of general local
government certifies that —
"(A) it will minimize displacement of persons as a result of
activities assisted with such amounts:
"(B) its program will be conducted and administered in con-
42 use ZWKta formity with Public Law 88-352 and Public Uw 90-ZW, and
5"^ ., that it will afTirmatively further fair housing:
SZ Stal. 3. ■■((;) j( ^j] proYidg for opportunities for citizen participation,
hearings, and access to information with respect bo its commu-
nity development program that are comparable to those
42 use 5304 required of grantees under section 104(aX2); and
(D) it will not attempt to recover any capital costs of public
improvements assisted in whole or part under section 106 or
yGoot^le
PUBUC LAW 98-181— NOV. 80. 1983 97 STAT. 116
with amounts remilting fiom a guarantee under lection 108 by M Sul 91S.
— — '"g any amount against prapertiea owned and occupied by ^^ ^^^ 'St*^
perwnf of low and moderate income, including any fee charged
or awowment made as a condition of obtaining accew to nich
public imimtvemenla, unkaa (i) funds received under section 106 *2 USC 5306.
an ueed to pay the proportioB of such fee o . . .■ .
and oocuiried by persona of low and moderate income who are
not persons of very low income, the grantee certiAee to the
Secretary or such State, as the case may be, that it leeks
suf5dent funds received under section 106 to comply with the
requirements of clause (i).
"(6) Any activities conducted with amounts received by a unit of
general local government under this sufaeection shall be subject to
the applicable provisioii* of this title and other Federal law in the
same manner and to the same extent as activities conducted with
amounts received by a unit of general local government under
subsectioR (a).".
U) Section 106(0 of such Act is amMided to read as faOowK
"X If the total amount available for distribution in any fiscel year
to metrop^tan cities and urban counties under this section is
insufficient to provide the amounts to whidi metrcmolitan cities and
uiban counties would be entitled under sufaeection lb), and fimds are
not otherwise appropriated to meet the diefidency, the Secretary
shall meet the oeficiency through a pro rata reduction of aU
amounts determined under subsection (bX If the total amount avail-
able for distribution in any fiscal year to metropolitan cities and
urban counties under this section exceeds the amounts to which
metropolitan cities and urban counties would be entitled under
ion (b), the Secretary shall distribute the excess throush a
a increase of all amounts determined under subsection u>).".
Sic. lOT. (a) Section 107(a) of the Housing and (Community Devel-
opment Act of 1974 is amended by striking out the first sentence and
inserting in lieu thereof the following: "Of the total amount
aiqwDved in appropriation Acts under section 103 for each of the
fiscal yean 19S4, ldS6. and 1986, not mon than $68,200,000 for each
such fiscal year may be set aside in a special discretionary fund for
grants under subeection (b).".
(b) Section 107(bX4) of such Act is amended to read as follows:
"(4) to States, units c^ general local government, Indian
tribes, or areawida planning organizations for tJM purpose of
providing technical assistance in planning, developing, and
administering sssistanoe under this title; to groups assJgtated
by such governmental unite to assist them in carrying <._
assistance under this title; to qualified groupe for the purpcee of
assisting mon than one such governmental unit to carry out
Mdstance under this title; and to States and units of general
local government for implementing special projects otherwise
authoriied under this title; and the Secntary may also provide
technical assistance, directly or through contracts, to such fov-
emmental unite and groups; and",
(c) Section 107(b) of such Act is ai
yGoot^le
97 STAT. 1168
PUBUC LAW 9ft-181— NOV, 30, 1983
(I) by itriking out "and" at the end of paragraph (3); and
(!) by adding at the end thereof the following new paragraph:
"(5) to States and units of general local Kovemment for the
purpose of allocating amounta to any Buch Stale or unit of
Keral local government that is determined tnr the Secretary to
« received insufTicient amounta under section t06 as a result
of a miscalculation of its share of funds under such section.".
OUAKAirm OF LOANS
Sk. 108. (a) Section 108(a) of the Housing and Community Devel-
rent Act o( 1974 is amended by inserting after the first sentence
following new sentence: "A guarantee under this section may ba
used to assist a grantee in obtuning financing only if the grantae
has made efforts to obtain such financing without the use of such
guarantee and cannot complete such financing consistent with the
lion of the proeram plans without such
108(a) of such Act is amended by stritcinq
inserting in lieu thereof the following: "h
ing any other provision of law and subject only to the absence of
qualified applicants or propoeed activities, to the authority provided
in this section, and to any funding limitation approved in appropri-
ation Ada, the Secretary shall enter into commitmeitts during fiacal
year 1984 to guarantee notes and obligations under this section with
an aggregate principal amount of $225,000,000.".
ft) Section
USE or GRANTS TO SnTLI OUTSTANDING V
Sic. 109. Section 112 of the Housing and Community Development
Act of 1974 is amended by adding at the end thereof the following
new subsection:
"(c) Any unit of general local government may retain any pro-
gram income tltat is realized from a grant made by the Secretair
pursuant to subsection (a) or under title I of the Housing Act of 1949
if (1) iuch income was realized after the initial disburaement of the
grant funds by such unit of general local government- and (2) such
tmit of general local government agrees to utilize the prop«m
income for eligible community development activitiea in aceordaiice
with the provisions of this title.".
TKANamON PROVtaiONS
Sk. 110. (a) Section llG(b) of the Housing and (immunity Deval-
opment Act of 1974 b amended by—
(1) striking out "(in that fiscal vear)"; and
(2) striking out "in that year and inserting in lieu thereof
"for that year".
(b) The amendments made bv this section shall apply only to
funds available for fiscal year 1984 and thereafter.
Part B— Othm Prookams
1;RBAN DCVELOFHaNT ACTION GRANIS
Sk. 121. (a) Section U9(a) of the Housing and Community Devel-
opment Act of 1974 is amended by adding at the end thereof the
following new sentence: "There are authorized to be appropriated to
yGoot^le
PUBUC LAW 98-181— NOV. 80. 1983 97 STAT. 1169
carry out the proviMon* of thi* •ection not to exceed $440,000,000 for
each of the fiacal jeara 1984, 198&. and 1986, and an; amount
appropriated under this wntence ihall remain available until
expended.",
(bisection ll9(bXl)ofauch Act ia amended—
(1) in the last eentanee, by atriking out "where data are
available, the extent of unemployment and Job lag" anil inaert-
ing in lieu thereof the following: "the extent at unemplosnnent.
Job lag, or curplue labor"; and
(2) Dj adding at the end thereof the following new eentencea:
"Any dty that has ■ population of leaa than 60,000 peraoni and
ia not the central dty of a metropolitan tn», and that waa
•Unble for fiical year 1983 under thii paragraph fbr aaaiatance
unBer tbi* aection, ahall continue to be eli^ble foe such aanat-
ance until the Secretary reviaea the otandarda for eligibility for
auch citiee under this paragraph and includea the extent of
unemployment, job lag, or labor nirplus aa a itandaid of die-
tree* tor auch citiee. Tm Secretary ahall make auch reviaion ae
eoon aa practicable following the effective date of thia
(c) Subpara^apha (A) and (B) of aection 119(bK2) of eueh Act ar
each amended t^ inaerting "neighborhood etatiatica areea," aftei
"enumeration diatricta,".
(d) Section 1 19(cK3) of nich Act ia amended—
(1) by atriking out ", and (B)" and inaerting in lieu thereof ";
{B)":and
(2) by inaerting the following after "carried out" in dauae (By.
": and (O haa made available the analyaia deecribed in clauae
(B) to anji intereatad peraon or organization rending or located
In the neighborhood m which the propoaed activitiea are to be
carried out".
(e) Section 119(dXl) ofauch Act ia amended in the first aentance by
adding after the word "criteria" where it firat appeatv "for a
national competition".
(f) Section 119(i) of auch Act ia amended by adding at the end
thenof the fi^lowing new aentence: "The Semtair abiOl encourue
cooperation by geographically proximate dtiee of leea than 50,000
population by permitting eoneortia of auch citiee, which may alao
mclude county mvemmmta that are not urban countiea, to apply
for grantaon Dehalf of ad^ that ia otherwiae eligible fbr asaistance
under tiua lection. Any granta awarded to nich oonaortia ahall be
adminiatared in eompliaiice with eligil^ty requirementa applicable
to bidividual dtiea.".
<g) Section 119 of such Act ia amended by adding at the end
thereof the following new aubaectiona:
"<p> An unincorporated portion of an urban county that ia
a^roved by the Secretary aa an identifiable community for pur-
poeea of thia aection ia eligible for a grant under aubaection (bX2) if
auch portion meeta the eligibility requirementa contained in the
flrat aentance of eufaeection <bXl> uid the requirementa of aubaection
(bX2XB) (^n>lied to the population of the portion of tiie urban
county) and if it otherwiae eompliei with the proviaiona of thia
"(q) Of the amount! appropriated for purpoeee of thia aection for
any ftaeal year, not more than $2,600,000 may be need by the
Secretary to make technical aviatance granta to Statei or their
agendea, municipal technical adviaory aervices operated by univerai-
yGoot^le
PUBUC LAW 98-181— NOV. 30, 1983
tiea, or State aioociBtioni of counties or munieipalitica, to enaMe
nich entitiea to fwaiit units of general local government described in
■ubwction (i) in developing, appljnng for asiatance for, and imple-
menting pngnma eligiDle for aasutance un<kr thu tection.
"(r) In providing (mittanffi under this lection, the Secretarr may
not diacriminate amtms procrama on the baaii of the particular typ*
of activity involved, whether audi activity is primarily a neighbor-
hood, induatrial, or commercial activity.".
UmBAM HOURTIADDra
"and (g)" and all that foUowi throuf^ "19S3" and inserting in lieu
tberecrf the following: ", (f), Oi), and (i), there are authorised to be
appropriated not to exceed (12,000,000 for fiscal year 1984, and such
nuns as may be neceaearr for fiscal year 1985".
(b) Section 810(eK3) of such Act is amended by inserting "^ a
person legally entitled to reeide there" before the aemicolon.
(c) Section SlOCbXS) of such Act is amended—
(1) by striking out "three yean" in nibparagraph (A) and
inserting in lieu thereof "5 vean, except under such emergency
standard as may be prescrioed by the Secretary':
(21 by striking out subparagraph (B) and inaerting in lien
there<^the fo"
"(B) re ,..^
tial danger to health and safety within 1 year of the date of
such initial conveyance;": and
(S) by striking out "eighteen months after occupying the
property" in subparwrapn (O and inserting in lieu theiMtf "3
years aRer the date of initial conveyance".
(d) Section 810(b) of such Act is amended—
(1) by striking out "and" at the end of paragraph (5);
(2) by striking out the period at the end of paragraph (6) and
inserting in lieu thereof' : and"; and
(3) by adding at the end thereof the following new paragraph:
"(T) an equitable procedure for selecting the recipients at suck
properties that —
"(A) gives a special priority to applicants —
(i) whose current housing fails to meet standards ot
health and safety, including overcrowding:
"(ii) who currently pay in excess of 30 percent cf
their income for shelter, and
"(iii) who have little prospect of obtaining improved
bousing within the foreaeeable future through means
other uian homesteading;
"(B) excludes applicants mo are currently homeownera;
tion process, or to obtain assistance from orivate Bource*,
community organiiations, or other sources. .
(e) Section 810(1) of such Act is amended—
(1) by inaerting ", the Secretary of Agriculture," after "Secre-
tary'" each place it ai
itnking out
u thereof "residential properties": and
yGoot^le
PUBUC LAW 98-181— NOV. !
(3) bjr ■
, _ , Public «™»
J hours at the offices of such unit of BeDeral local
govemnient or public agency.",
(f) Section 810 of such Act is amended— 12 U9C no6s.
(1) in subsection <c), t^ inaerting "or (h)" after "nifaeection
(br-.
W bv redeei^nating nibeection (h) as subsection 00; and
(3) by inserting after subsscticm (g) the following new
"(hxi) Tm Secretary may, on a demonstration basis during fiscal
years 19S4 and 1985. convey to any unit of general local government
or public agency designated by such unit of general local govem-
perty—
h the Secretary holds title; and
"(B) that the Secretary detemiines to be suitable for a multi-
family homeateading prograni that complies with the require-
ments of paragraph (2);
for such consideration, if any, as mav be agreed upon between the
Secretary and such unit of general local government or public
agency.
"(2) Any multifamily homesteading program carried out by any
unit of general local government or public agency designated 1^ au^
such unit of general local government shall be consiaered a multi-
contains adequate assurances that —
"(A) tlie primary use of all nomeaieaa properuas loiwwmg
convenion or rehabilitation shall be residential; and
"(B) not leas than 75 percent of the rvaideutial occupants of
homwrtead properties following conversion or rehabilitation
shall be lower income families.
"(3) As ussd in this suhaectian and sufassction (i) the term 'lower
e meaning given such term in section 3AX2)
Ml SUtas Housing Act of 1937.
"(iXD The Secretary shaU uae not more than (1,000,000 of the
of the United SUtas Housing Act of 1937.
amounts appropriated under this section for each of the fiscal yean
t9S4 and 19S5 to undertake a program to demonstrate the feasioility
of providing assistance to State or local governments or their agen-
cies for the purchase of any real property that—
"(A) is improved bj* one- to four-family residence;
"(B) is not occupied by a person legally entitled to reside
tber^,
"(O is designated by a State or general unit of local govern-
ment for use in a single family homestead progivm; and
"(D) will be conv^red to lower income families under such
program upon condition that each such bmily agrees—
"(i) to occupy the property as a principal reaidence for a
period of not leas than 5 yeara, except under such
emergency standards as may be preocribed by the
"(ii) to repair all defects in the property that pose a
substantial oanger to health or safety within 1 year of the
date of the initiid conveyance; and
"(iii) to make such repairs and improvements to the
property as may be neceeaary Is meet applicable local
yGoot^le
PUBUC LAW 98-181— NOV, 30, 1983
Congrem,
ropertiM thitt
I u tax Iwnt,
"(j) The Secretary ■hall conduct a continuing evaluation of the
denuKwtnition prognuiw carried out under lubaectioni (h) and (i)
and ehall transmit to the Congress a report not later than December
31, 198S, containing a sununarr of his evaluation of all such pr^-
grama and his recommendationi for the future conduct of audi
programs.".
nei^bi
(C> developing, rehabilitating, or managing neighborhood
housing stock;
(D) developing delivery mechanisms for essential ■ervicea
that have lasting benefit to the neighborhood; or
(E) planning, promoting, or financing voluntary neighbor-
hood improvement efforta,
(2) The t£rm "eligible neighborhood development organinp
(A) an entity organized as a private, voluntary, nonpitifit
corporation under the laws of the State in which it
(B) an organization that is responsible to residents of its
neighborhood through a governing body, not lest than 51
per centum of the members of which are residents of t^
area served;
(C) an organization that has conducted businen for at
least three years prior to the date of application for
participation;
<D) an organization that operates within an area that
meets the requirements for Federal assistance under aeo-
tion 119 of the Housing and Community Development Act
afl»T4;and
(E) an organization that conducts one or more eligihla
neighborhood development activities that have as UMir
priina^br """"""""" '" ---■--'- • ■ —
Development Act of 1974.
(3) 'nie term "Secretary" means the Secretary of Houaingond
Urban Development.
(bXI) The Secretary shall carry out, in accordance with this
section, a demonstration program to determine the feasibility of
suppmting eligible neighborhood development activities by provid-
ing Federal matching funds to eligible neighborhood development
organizations on the oasis of the monetary support such organiza-
Ums have received from individuals, businesses, and nonprofit or
other organizations in their neighborhoods prior to receiving assist-
ance under this section.
yGoot^le
PUBUC LAW 98-181— NOV. 30, 1983
bood development oraaimatiotia for perticipation ti
tion program. Eligible oiganizationa may participate
B ^ear of the prograni, but Bhall be required to submit a
applicatiOD and to compete in the Belection proccM for each pnigram
year. Not more than 30 per centum of the grants may be for
multiyear awards.
(3) From the pool of eligible neighborhood develo[Hnent organiza-
tions submitting applications for participation in a ^ven program
year, the Secretai; shall select participating organisations in an
appropriate number through a competitive sMection process. To be
selected, an applicant shall —
(A) have demonatrated measurable achievements in one or
more of the activities specified in subeection (aX4):
(B) specify a buninew (dan for accomplishing one or more of
the activities specified in subsection <aX4y, and
(Q specify a strategy for achieving greater long term private
(cXl) The Secretary shall award grants under thia section among
the eligible neighborhood development organizations submitting ap-
plications for such grants on the basis of—
(A) the degree of economic distress of the neighborhood
involved;
(B) the extent to which the proposed activitiee will benefit
persons of low and moderate income;
<C) the ertent of neighborhood portidpetion in the proposed
activities, as indicated by the proportion of the households and
businesses in the neighborhood involved that are members of
the eligible neighborhood development organization involved;
(D) the extent of voluntary contributions availaUe for the
purpoM of subsection (eX4), except that the Secretary shall
waive the requirement of this subparagraph in the case of an
application submitted by a small eligible neighborhood develop-
ment organization, an application involving activities in a very
low-income neighboiiiood, or an application that is especially
meritorious.
(d) The Secretarv shall consult with an informal working group
representative of eligible neighborhood organizations with respect to
the implementation and evaluation of the program establislied in
this section. _
ecretary shall assign each partii
defined program year, during which time v
from indiviauals, busini '''
the nrnghborhood shall
<2} Siuqect to paragraph (3), at the end of each three-month period
oocurring during the program year, the Secretary shall pay to each
participating nei^borhood development organization Uie product
of—
(AJ the aggregate amount of voluntary contributions that
such onaniiation certifies to the satisfaction of the Secretary it
received during such three-month period; and
(B) the matdiing ratio established for such test neighborhoods
underperagraph (4).
(3) TV SeOTebsty shall pay not more than 150,000 under this Act
to any participating neighnorhood development organization during
a allele prognmi year.
mprofit or other organizations ii
whborhood shall be eligible for matching.
yGoot^le
97 STAT. 1174
FMenI matched
PUBUC LAW 98-181-NOV. 30, 1983
EvaJuation ai
12 use USZh.
■uch ratios shall b« established for neighborhooda having the small-
Mt number of households or the greatest degree of eoanonie
(6) The Secretary shall insure that—
(A) grant! and other forma of nnrittnnfr may be maae
available under this section only if the applicatioo cxmtains ■
certification l^ the unit of general local government within
which the neighborhood to m assisted is located that soeb
assistance is not inconsiBtent with the housing and communis
development plans of such unit, except that the failure of a unit
of general hical government to respond to a request for a
certiTication within thirty day* after the request is made shall
be deemed to be a certification; and
(B) eligible neighborhood development activities comply with
all applicable provisions of the Civil Rights Act of 1964.
(6) To carry out this section, the Secretary —
(A) may issue regulations as necessary;
(B) ritall utilize, to the fiiUest extent practicable, ral«vant
research previously conducted by Federal agencies, Stata and
local governments, and private organisations and peraoiiB;
(C) shall disseminate mformation about the klnos of activities,
forms of organizations, and fund-raising mechanisms awociatsd
with successful programs;
(D) shall unifertake any other activity the Secr«tarT rlaams
neceaaary to carry out this section, which shall induda aa
evaluation and report to Congress on the demonatrattan aad
may include the performance of research, planning, and
istration, either directly, or when in the Secretary's jut
such activity will be carried out more effectively, mora n
or at leas cost, by contract or grant; and
(E) may use not more than 5 per centum of the funds mfipifh
priated for administrative or other expenses in connectioa with
the demonstration.
(f) The Secretary shall submit to the Congress—
(1) not later than three months after the end of each fiscal
year in wliich payments are made under this section, an intsfia
report containing a summary of the activities carried out nndsr
this section during such fiscal year and any preliminaiy fliid-
insa or concluaions drawn from the demonstration program; and
W not Uter than March 15 of the year after the sod of the
last fiscal year in which such payments are made, a final report
containing a summary of all activities carried out under thta
aection, the evaluation required in subsection (eX6XD) and mnf
(indinga, conclusions, or reconunendationa for legislation drawa
from the demonstrati<m program.
(g) For purposes of carrying out this section, there are authorisad
*A 1^ BHAVAVSnBtAfl nH* »A ^ C9 /UVt AAA fjW AB^h rJ tU^ ^ '
o exceed $2,000,000 for each of the fbcal
-.1^
Stc 124. (a) Section 312(d) of the Housing Act of 1964 is a
by adding the following new sentence at the end thereof; "I^
Secretary may not esteJilish (1) any requirement that a oartain
yGoot^le
PUBUC LAW 98-181— NOV. 30, 1983 97 STAT. 1175
4t of antstance received under thi« eection be utilind for
ieulw tyft of dwelling unit; or (2) anjr primity for the
r meh awutance that iiDaMd on the reonpt or use of fiindi
oUcant or area under any other program of Federal aariat-
Bounng or eommuni^ devd<q»Mnt, other than the urban
■dine program eatablidted In aection 810 of the Houaing and
1^ Development Act of 1971". iz uac iToSa.
:ioa SiaCh) of auch Act b amended— ^"t. p. Ttf .
bjr atriking out "November 30, 1983" and inaerting in lieu '^ USC i46Zb-
mT "September 30, 1984"; and
br atnking out 'l)eeember 1, 1983" and inaerting ii
»rf"C
f "October 1. 1984".
S. Section 608(a) of the Neighborhood Reinveatment Corpo- *i VX SIDT.
Gt ia amended by itriking out "title" and all that follom
1982" and inaerting in lieu theretrf the following: "title not
1 116,612.000 for fiscal year 1984, and auch aumi as may be
r for fiacal year 1985".
& (oXl) Section 414 of the Houaing and Urban Development
89 her^yia repealed. 40USC«
.withstanding paragraph (1), the Secretary of Ibuaing and Pnqierty
•waloDment ami the Seeretai-v of Anictthuie mav dianoae °f?^:
4DUSC«
g paragraph (1), the Secretary of Houaing
and the Secretary of Agricuhuie may dii
r1 property pursuant to tm terma of tectioi
Ut a, prior to the date of the enactment of this Act, atber
f had requested the AdminiatrBtdr of 0«ieral Services to
■ndi property for such dispoaitioa.
wHhstwiding paragraph (D. sectioa 414(b) of such Act shall 10 uac 184b
to V^y, where applicable^ to all property tranaforred by '">*''
tcretary pursuant to section 414 of sudi Act, including
tioB 703((U of the Housing and Urban Development Act of
e of aection 706, of the
ifajr is repealed
"n 704. and
Act of 1961 hereby are repealed.
TFTIf n— HOUSINa ASSICTANCE PROGRAMS
LLOCATION AND Un Ot ASStffTKD HOUSINO AtrmOUTV
)1. (aXl) Section 213(aXl) of the Houaing and Communis
oent Act of 1974 is amended by adding at the end thereof
iwing: "Upon receiving an application fbr such housing
«, the Secretary shall Bsaure that tUnda made available
hh aection shall be utilized to the ttt'*'"'"" extant
4e to meet the needs and goals identified in the unit of local
ant's bousing assistance plan.".
tion 213(d) of such Act is amended by striking out para-
Jand (2) and inserting in lieu thereof the followino:
le Secretary shall allocate aaaiatance redwKed b
9, 14, 1
Be approved in aKmtpriation Acti
17 of the United sUlea Houaing A
yGoot^le
97 STAT. 1176 PUBUC LAW 98-181— NOV. 30, 1988
42 use 143Tb. 1937) the Hrat time it ia avmiloble for rMervation on the basis of a
'^o/""' formula which is contained in a r^pilation pnacribed by the Seer*-
P- ii»e. j^^_ ^j which ia baaed on the relatiTe need* of dilTerent States,
areas, and coninmnitiea as reflected in data ai to populatioa,
puveitji, housinB overcrowding, bouHng vacannea, amount of sub-
standard housinK, and other objectively measurable conditions speci-
fied in such reciuatiou. An; amounts allocated to a State or areaa or
communitiea within a State which are not likely to be utilised
within a (iacal year shall not be reallocated for use m another State
unless the Secretary determines that other areas or communities
within the same State cannot utilixe the amounts within that aame
fiscal year.
"(2) Not later than siztv days after approval in an appropriattoo
Act, the Secretary shall allocsde from the amounts available for use
in nonmetropolitan areas an amount ot authority for iiMiirtnnfm
42 use 143Tf under section S(d) of the United States Housing Act of 1937 deter-
mined in consultation with the Secretary of Agriculture for use in
Aai. p. 1250. connection with section 532 of the Housing Act of 1949 during the
fiscal year for which such authmi^ is approved. The amount d
assistaitce allocated to nonmetrt^xilitan areas purauant to this eec-
tion in anv fiscal year shall not be leas than 20 nor more tlian 25 per
centum of the total amount of luch aasutance.".
Sepott to (3j Hot later than March 1, 1984, the Secretary shall report to the
CongTHH. Congress on the impact of the last sentence of secUon 213(dX2) of the
Anit, p. 1175. HousingandCommunity Development Act of 1974.
42 use 1437c. (b) Section 5(c) of the United SUtes Housing Act of 1937 is
amended —
(1) by striking out the last sentence of paragraph (1);
(2) by striking out paragraphs (2) and (3) and redesignating
the remaining paragraphs accordingly; and
(3) b^ adding at the end thereof the following:
CoDvcnion "(5) During such period as the Secretary may preacribe for atMt-
approval j,,- constructjon, the Secretan may approve the canverww of
42 use 14371. public housing development autnority for uaa under section 14 or for
uae for the acquisition and rehabilitation of property to be uaad in
public housing, if the public housing sgency, afW consultation with
the unit of load government, certifies that such assistance would be
more effectively used for such purpose, and if the total number of
units assisted will not be less than 90 per centum of the units
covered by the original reservation.
t^'r?^ "(G) The aggregate amount of budget authority which may be
^ ™ i™*" obligated for contracts for annual contributions and for grants
ftefV[i96 ^"^^ section 17 u increased by {9,912,928,000 on October 1, 1983.
and by such sums as may be approved in appropriation Acts on
October 1, 1934.
"(TXA) Using the additional budget authority provided under
paragraph (6) and the balances of budget authority which becocna
available during fiscal year 1984, to the extent approved in appropri-
ations Acts, the Secretary may reaerve authority to enter into
obligations aggregating—
"(i> not to exceed (1,289,550,000 for public housing, of which
not to exceed $389,550,000 shall be available for Indian housing;
42 use 1437f. "(ij) not to exceed $1,926,400,000 for assistance under section 8
in connection with projects developed under section 202 of the
12 use tTDiq. Housing Act of 1959;
"(iii) not to exceed $1,550,000,000 for comprehensive improve-
a use 14371. ment aasistance under section 14;
yGoot^le
PUBUC LAW 98-181— NOV. 30. 1983
"(iv) not to excMd $2^17,160,000 for m
"(v) not to excMd $540,000,000 for aanrtance under section
8(eX6>. Aatp. 11S3.
"(vi) not to ezcMd $242,115,000 for aanatance under lection
8(0); Pot. p- 1181.
"(vii) not to exceed $160,000,000 for aariatance under section
17 with respect to rental rehabilitation: Poti. p- UK.
"(viii) not to exceed $200,000,000 with respect to rental devel-
opment under Mction 17; and
"(is) not to exceed $1,603,170,000 for additional Meiatsnce
under section 8. U USC i43Tr.
"(B) Usinx the additional budget authority provided under para-
graph (6) and the balances of budget authority which become
Available during fiscal year 1985, to the extent approved in apprc^ri-
ations Acts, the Secretary may reserve authority to enter into
obligations aggrefating—
"(i) not to exceed luch sums aa may be approved in an
appropriation Act for public housing, of which not to eiceed
such Buma as may be approved in an appropriation Act shall be
available for Indian housing
"(ii) not to exceed such sums as may be approved in an
appropriation Act for assistance under section B m connection
with proiects developed under section 202 of the Housing Act of
1959; lauscmiq.
"(ill) not to exceed such sums as may be approved in an
Bppiopriation Act for comprehensive improvement asaistance
under section 14; *i USC 1137i,
"(iv) not to exceed such sums as may be aM>roved in an
epmopriation Act for assistance under section 8(bKl); <2 USC I437f.
(v) not to exceed such sums as may be approved in an
apEvopriation Act for aMistance under seeUou 6(0X6^ Am p 1183.
(vi) not to exceed such sums as may be approved in an
aporopriation Act for assistance under section 8(a); Aa4 p. IISI.
(rii) not to exceed $150,000,000 for assistance under section
17 with respect to rental rehabilitation; ^^'- P- 'l^-
"(viii) not to exceed $116,000,000 with reopect to rental devel-
opnwnt under section 17; and
"(ix) not to exceed such sums as may be approved in an
Bpm^iriation Art for additional assistance under section 8. (2U3CI437f.
"(Cl The specific authorities under this paragraph are suttject to
miA a4JiiBtmenta as may be made under paragraph 15).".
(c) Section 6 of such Act is amended by ad&ig at the end thereof il use i43Td.
the following:
"(h) On or af
contract involv _ ...
agency demonstrates to the satisfkctlou of the Secretary that the
cost of new construction is lees than the cost of acquisition or
acquisition and rehabilitation, including any reserve nmd under
•uDSection (i), would be.
"(i) The Secretary may, upon application by a public housing Rtmm fiind.
■gen(7 in connection with the acquisition of housing for use as
puUic housing, establish and set aside a reaerve fund in an amount
not to exceed 30 per centum of the acquisition cost which shall be
•vailable for use for nu^jor repaiTe to such housing.
"(j) On or after October I.. 1983. in entering into commitments for UrgtKfamiix
the development at public housing, the Secretary thai] give a prioi^ hounng.
C«>t»
yGoot^le
PUBUC LAW 98-181— NOV. i
42 use 1437<1.
42 use 1437f.
INCRBASZ IN SDIOLB PCRBON OCCUPANCT UmTATION
Sic 202. Section 3(bX3> of the United State* Hounng Act of 1937
ia amended by adding at the end thereof the following new aentence:
"nw SecretaiT mar increase the limitation deacribM in the Mcond
■mtence of tnii paragraph to not more than 30 per centum if,
foUowing eonaultation witn the public housing agency invalved, the
Secretary deteiminea that the dwelling units involved are neither
being occupied, nor are likely to be occupied within the next 12
inontha, by families or persons described in clauses (A), (BJ, and (O,
due to Ute condition or location of nich dwelling units, and that such
dwelling units may be occupied if made available to •u~~'
described in clause (D).".
PKiouTT roR nouanto
Sk. 203. (a) Section 64cX4XA) of the United States Housing Act of
1937 ia amended by inserting "or are paying more than 60 per
centum of family income for rent" after "under this Act".
(bKl) Section 8(dXlXA) of such Act is amended by inserting ", m«
paying more than 50 per centum of family income for rent, ' after
subatandard housing*^.
(2) Section 8(eH2) of such Act ia amended by inserting ", aiv
paying more than 50 per centum of family income for rent," afler
substandard housing'^.
(3) Section lOKeHlXB) of the Housing and Uttan Develop
Act of 1965 b amended by inserting ", was paying n
centum of ismily ii *" " *" " " ■"'"
lopment
^ .. r-j— = aSOper
for rent," after "substandard housiog".
"(k) The Secretary shall by regulation require each public bousing
agency receiving assistance under this Act to establish and impla-
ment an administrative grievance procedure under which tmanta
wiU-
"(Dbeadvissdof the spedTic grounds of any proposed advarsa
puUic housing agency action;
"(2) have an opportunity for a hearing before an Impartial
par^ upcm timely request within any period applicable under
subsection (1)-,
"(3) have an opportunity to examine any documents or
records or regulations related to the proposed action;
"(4) be entitled to be repreaented by another person of his
choice at any hearing;
"(S) be entitled to ask questions of witnesses and have others
make stat^ents on his behalf; and
"(6) be entitled to receive a written decision by the public
bouidng agen^ on the [sopoaed action.
An Bgencjr may exclude from its procedure any grievance concvm-
ing an eviction or termination of tenancy in
■ ""^ ■ -" - * '-"-- - '«nantbegi
yGoot^le
PUBLIC LAW 98-181-NOV. 30, 1983 97 STAT. 1179
which the Secretaiy detomiiiiea provides the basic elements of due
"(1) Each public houaiiig agent? ahall utilize leaaee which — Imaim.
'\D do not contain unreaaonable term* and conditicns;
"(2) obligate the publk bousing agency to maintain the
project in a decent, sate, and sanitary condition;
VSl require the public housing agency to eiva adequate writ-
ten notice of tamunation of the lease which shall not be leea
than—
"(A) a reasonable time, but not to exceed 30 days, when
the health or safety of other tenants or public houaing
agency employees is thraatened:
"(B) 14 days in the case of nonpayment of rent; and
"(C) 30 days in any other cae^, end
"(4) require tli^t the public housing agency ma^ not terminate
the tenancy except for serious or repeated violation of the terms
or conditions of tne lease or for other good cause.".
axpoBTiNO uquiKCHsKTa
Sic 206. Section 6 of the United SUtes Housing Art of 1937 is AnUp^un.
amended by adduig at the end thereof the fbUowing; *^ "*^ '*"<'
"(m) The Secretary shall not impose any unneceMarily duplicative
or burdensome reporting requirements on tenants or public hearing
agencies aasiated under this Act".
AMKNDinNTB AJTSCTTNO TKNANT KENn OS CONTSIBUTtOm
•-. 206. (a) SecUon 3(a) of the United States Housing Act of 1987 42 USC 143I>-
(1) by inserting the (bUowing immediately after the first
sentence: "Reviews of family income ehall be made at least
annually."; and
(2) bv inaerting after "under this Act" in the final sentence
the following: 'Tother than a family assisted under section
8(o))".
(b) Section 3(b) of such Act is amended by striking out the period
at the end of paragraph (2) and inserting in lieu theretrf' the follow-
■•"^ ", except that tne Secretary m» establish income ceiling
" " ■ n of^thi " ' ■'
higher or lower than 60 per centum of^the median for the area on
the bans of the Secretary's findings that such varlat'
sary because of unusually high or low family incomes
the bans of the Secretary's findings that such variations are n
sary because of unusually high or low family incomes.",
(c) Section 3(bX5) of the United State* Houaing Act of 1937 is
amended to read as followK
"(5) Hm term 'adjusted income' means the Income which remains
after excluding —
"(A) $4B0 for each member of the family residing in the
household (other than the head of the household or his
spouse) who is under 18 yean of age or who is 16 years of
*S!6 or older and is disabled or handicapped or a lull-time
Student;
"(B) 1400 for an; elderly family;
"(Q medical expenses in excess of 3 per centum of annual
famiily income for any elderly family; and
"(D) child care expensea to the extent neceesary to enable
another member of the family to be employed or to furtiier
bis or her education,".
37-922 0-84-3
yGoot^le
97 STAT. 1180 PUBUC LAW 98-181-NOV. 30, 1983
tenant occupying houaing aaststcd under tlw muthoritie* amended hf
ibit Mction or nibaectiona ta) through (h) of Mctioo 322 of the
HouBing and Cominunitr Development Amendtnents of 1981 (bei*-
inafter referred to aa "asaiEted houaing") on or before the cflbctiTe
date of regulationa implementing this aection:
(A) Notwitbatandinc anv other proriaion of thia Mctioa or
flubeectiona (a) through (h) of eectiMi 3ZZ of the Houaing and
Communitr Development Amendmenta of 19S1, the Secretarx of
Houaing and Urban Development (hereinafter retierred to as the
"Secretarjr") may provide for delaTed appUcahilit^, or for atafed
implementation, of the procedurea for determining rente or
contributiona, ai appropriate, required by euch provisions if the
Secretary determines that immediate application of such prooe-
durea would be impracticable, would violate the tenna of eziat-
ing leases, or would result in extraordinary hardship for anj
class of tenants.
(B) The Secretary shall provide that the rent or contributioo,
as appropriate, required to be paid by a tenant shall not
increase aa a result of the amendments made by this aectioo and
■ufaaections (a) through (h) of aection 322 of the Houaing and
Community Development Amendments of 1981, and aa a result
of any other provision of Federal law or regulation, knr mora
than 10 per centum during any twelve-month period, unMi the
increase above 10 per centum is attributable to Jncieasaa ta
income which are unrelated to such amendmenta, law, or
rwulation.
(2) Tenants of assisted housing other than those referred to m
paragraph (I) shall be subject to mmiediate rent payment or cootri-
Dution determinations in accordance with applicable law and with-
out regard to the provisiona of para^jdi (1), but the Secretary shall
provide that the rent or contribution payable by any such tenant
who is occupying i™'*«*ar< housing on the eflective date of aiw
provision of Federal law or regulatim shall not increaae, as a raauR
of any such proviwon of Federal law or regulation, by more than 10
per centum during any twelve-month period, unleaa the increMe
above 10 per centum ia attributable to increases in income which ate
unrelated to such law or rtyulation,
(3) In the case of tenants receiving rental assistance under sactiaB
521(aXl) of the Housing Act of 1949 on the effective date of Oita
section whose assistance is converted to assistance under sectiroa 6 of
the United States Houaing Act of 1937 on or after such date, the
Secretary shall provide that the rent or contribution payable bj any
such teiunt shall not increase, as a result of such converskw, iff
more than 10 per centum during any twelve-month p ' '
the increaae ahove 10 per centum is attributable to
income which are unrelated to such conversion or to any p
of Federal law or regulation.
(4XA) Notwithatutding any other proviaion of law, in the a
the ConversicHt of any assistance under aection 101 of the Housioc
and Urban Development Act of 1965. section 236(fXZ) of the National
HoiMing Act, or section 23 of the United States Housing Act of 1937
,_..-_ .(.-.... . .1 . ._^_ _».,._ . J jjj yj^ Houaing and
*2 use lM7f.
D eflect before the date of the e
Community Development Act of 1974) to assistance under si
of the United States Housing Act ot 1937, any increase in ram
payments or contriliutiona reaulting from such conversion, and tma
yGoot^le
PUBUC LAW 98-181— NOV, 30, 1983 97 STAT. 1181
the Bmendmenla made b; thii aectioii of any tenant be)
■uch aaiiatance who ia uxty-two yean of age or older may not exceed
10 per centum per annum.
(B> In the CAM of any euch converaion or aaiifltance occurring on or
■iter October 1, 1981, and before the date of the enactment of thia
aection. the rental p^moenta due after anch date of enactment by
any tenant beneAtlng from aueh aasiatance who waa aiz^-two veara
of age or older on the date of mich convenion ahall be computed as if
the tenant's rental payment or contribution had, on the date of
convenuon, been the leaaer of the actual rental pej^ment or contribu-
tion required, or 25 per centum of the tenant's income.
(5) The limitations on increasee in rent contained in paraKrapha
(IXB), (2), (3), and (4) ahall remain in effect and mav not be changed
ir auperaeded exceiA by another provision of law which amende tnia
.}) Aa uiwd in thia Bubaection, the tarm "contribution" means an
amount repreaenting 30 per centum of a tenant's monthly adjusted
income, 10 per eenttun of the tanant's monthly income, or the
deaicnatad amount of welfare asristance, whichever amount ia used
to determine the monthly aasiatance payment for the tenant under
section 3(b) of the UnitMl SUtaa Ho««an« Act of 1937.
(7) The jnvrislons of sufaaectlons (a) uirou^ (h) of section 322 of
the Housua and Communi^ Development Amendmenta of 1981
shall be implemented and fully applicable to all affected tenants no
later than Ave veara following the date of enactment of auch amend-
ments, except tKat the Secretary m^ extend the time for implemen-
tation if the Secretary det«rmmes that full impleir"~*-"~ —"■•■*
Sh^ 207. Section 8 of the United SUtes Houwng Act of 1987 is « use imr
amended by adding at the end thereof the following: ""■ p i'^
"(oXl) In connection with the rental nhabilitation and develop- ^''^'^^
ment program under section 17 or the rural houaing preaervation ^:!r' iW
grant pn«ram under section 533 of the Housing Act of 1949, or for ^ ^' l^'
other purpoaes, the Secretary is authorized to CMiduct a demonstra- ^*^ ^
tion program using a payment standard in accordance with this
Bubaection. The payment standard shall be used to determine the
monthly assistance which may be paid for an* family, as provided in
paragr^h <2) of this aubaertion, and shall be baaed on the fair
market rental eatablished under mbaection (c).
"(2) The monthly asaistance payment for any family shall be the Monthly
amount l^ which the payment standard for the area exceeds SO per
centum m the family^ monthly a4juated income, except that such
monthly asnstance payment ahall not exceed the amount by which
the rent for the dwelling unit (including the amount allowed tor
utilitiee in the caae of a unit with aepvato utility metering) exceeds
10 per centum of the family's monthly income.
'\S) Assistance payments may be made only for (A) a family
determined to be a very low-income family at the time it initially
leoeivea assistance^ or (B) a family previously awisted under this
Act. in selecting funilies to be assuted, prefennce shall be given to
families which, at the time they are seeking assistance, occui^
substandard housing, are involuntarily displaced, or are paying
DKne than 50 per centum of family income for rent
yGoot^le
PUBUC LAW 98-181— NOV. 30. 1983
"») The Secretary ihAU uw wlNtentuair all of the authoritj to
enter into contracta under thia aubaection to maka aMiitanf fmr-
meota for familiea i«aidiiig in dwelling to be ichabilitatad wiUt
uaiataiKa under lection 17 and Tor families diaplaced ai a raault cf
rental houaiiu devehqiment asaisted under auch aection or aa a
raauk of actintiea oaaiated under aection 633 of the Hounns Act of
1»49.
"(5) If a family vacates a dwelling ujut befora tba expiration of «
leaae term, no aaajatanca payment may be made with respect ta thm
unit after the month durine which the unit was vacated.
"(6) A contract with a public bouaiiv agcn^ tar annual coatribit-
tima under this aubeectioo shall be for an initial term of vz^
months. The Secretary shall require (with respect to any unit) that
(A) the public bousini ^ency inspect the unit Mfera anjr assiitanca
payment ma; be made to determine that it meata houainc ooali^
standards for decent, safe, and eanitary houaing eatablishsd bj tliia
Secretary for the purpoae ol thia eection, and (B> the public houaiBi
■ e annual or more frequent inspection
■ any auc^ Miluiv
is promptlv corrected by the owner and the correction verified hj
the public nousing agency.
"(iXA) Tlie amount of assistance payments under this iiibaectioB
may, in the disoation of the public housinB agency, be adjusted aa
frequently as twice during any five-year period where ntcsssaiy to
assure continued affordability. The aggregate amount of adjust-
ments punuant to the preceding sentence may not exceed the
amount of any excess of the annual contributions provided for in the
contract over the amount of assistance paymenta actually paid
(including amounte which otherwise become available during the
contract period).
"(B) For the purpose of subparagraph (A), each contract with a
puUie houaing agency for annual contributions under this subaae-
tion shall prcwide annual contributions equal to 115 per centum of
the eatimatad aggregate amount of aaeistance required during tha
fintyear of the contract.
"(O Any amounts not needed for adjustments under subpara-
Kph (A) may be used to provide assistance payments for additMoal
lilies.
regarding the impact of such ad)uatmenta on Uie number of fkmiUea
"(8) A puUic housing agency may utilize not to exceed S par
centum of the amount of authority available under this subaeetuti
to provide assistance with respect to cooperative or mutual honain(
which has B resale structure which maintains affordability tor lower
income families where the agency determines such action will aMiat
in maintaining the affordability of such housing for such familiaa.".
KKNSWAL or SBCnON I CONTaACTS
Sac. 208. Section 8(dX2) of such Act ia amended by adding at the
end thereof the following: "A contract under thia section may not ba
attached to the structure except where the Secretary apecifieally
waives the foregoing limitation and the public houainf scncy
iqiprovea such action, and the owner agreea to rehabihtate tba
yGoot^le
PUBUC LAW 98-181— NOV. f
•tructura other than with Maistance under thii Act and otherwiM
compliM with the requirements or this section. The a^gngKte term
of such contract and any contract estenaion BUiy a'
180 months.".
e asKregat
Sk. Z09. (a) The United States Housing Act of 1937 is
(1) Section 8(b) is amended by striking out ",
atnicted, and subetanttolly nhabilitated".
(2) SecUon 8(bX2) is repealed.
(5) as paragrapha (1) and (2), respectively.
(4) SecUon m) of such Act ii repealed.
(5) Section 8 of such Act is amended by striking out subaeo-
tiona a) and (m).
(6) Section e(n) of such Act is amended by striking out "(eXS)
and eubeection (i)" and inserting in lieu thereof "(eX2)".
(b) Ute amendmenta made by auDeection (a) shall take effect on
October 1, 1983, except that the provisions repealed shall remain in
effect—
(1) with respect to any fiinda obligated for a viable prqiect
under aection 8 of the United States Hotwing Act of 1937 prior
to January 1, 1984; end
(2) with respect to any project financed under section 202 of
the Housing Act of 1969.
SINQLK BOOM OCCUPANCt UOtUtNO
Sic 210. SecUon 8(n) of the United States Houaiog Act of 1937 is
amended —
(1) by inaerting "subsection (bXD." before "subaection (aXS)";
(2) by inaerting a comma after "(eX5)";
(3] Iq' striking out "and" at the end of paragraph (1);
(4) Iqr striking out the period at the end of paragraph (2) and
inaerUng in lieu thereof ' : and"; and
(5) by inserting after paragraph (2) the following new
paragraph:
"(3) in the case of aaaiatance under subsection (bXl)_, the unit
of general local government in which the property is located
ana the local pubuc housing agency certi^ to the Secretary that
the property complies with local health and safety standards.".
Sic 211. Section 8 of the United Sutas
M (as defined in i
42 use 143Tf.
Certification.
Act of 1937 b « use l*aTf.
^ MistelderWfi
who elect to live in a shared houaiiw a ,
benefit as a remit of sharing the fociutiea <rf' a dwelling with others
in a manner that effecUvely and efficiently meets tneir housing
needs and thereby reduce* vmr cost of housing, the Secretary sbsfl
permit assistance provided under the euotlng housing and moderate
rehabilitation programs to be used by such families in such arrange-
ments. In carrying out this subeertion, the Secretary shall issue
yGoot^le
97 STAT. 118) PUBUC LAW 98-181— NOV. 80, 1983
n habitability Mandarda for the purpcae of unii
'unUiea wl "
sd housing
PAYM SNTS FOB OPKIMIION Of LOWKS INCOMI HOUBINO
_ . . . unitanr homing for such famUi
account the ipecial circumitances of shared houaing.".
Sic. 212. Section Wc) of the United SUtes Houaing Act of 1937 ii
(1) by Htriking out "and" after "October 1, 1980,"; and
(2) bjr inwTting before the period at the end thereof ths
following: ", not to exceed $1,600,000,000 on or after October 1,
1983, and by auch aumi aa may be neceeeary on or after October
1, 19M.".
Sk. 213. Section 16(b) of the United SUtea Housing Act of 1937 m
amended by striking out "10 per centum" and inserting in lien
thereof "26 per centum".
DEMOLITION AND DISPOSmON OP PUBUC HOUSINQ
"Sbc. 18. (a) He Secretary may not approve an application by a
public housing agency for permiaaiou, with or without financial
BMistsnce under Siia Act, to demolish or dispose of • public houMnc
project or a portion of a public houaing project unleaa the Secretuy
has determined that —
"(1) in the case of an application proposing demoUtioB of •
public housing prttject or a porti<» of a public houaing n~~"~*
the project or portion of the prqject ii obsolete aa '
condition, location, or other favors, ■"■n^g it v ___
housing puHMaee, or no reaaonable program of tnodiSeatkna ii
feasible to return the prqject or porticm of the project to useful
life; or in the case of an application proposiiu the demolitka tf
only a portion of a project, the demolition will help to aanire the
useful life of the remaining portion of the project; or
"(2) in the eaae of an appQcation propomng dlspoaltioa of raal
property of a public housing agency by mIb or other tranrfM' —
'XAXi) the property's retention is not in the bast intereata
of the tenants or the public housing agency becanae dercl-
opmental changes in the area surrounding the prqfact
adversely affect the health or aafetv of the tenants or tba
feasible operation of the project by the public houaing
agency, bMause disposition allow* the acquisition, devdcn-
ment, or rehabilitation of other properties which will M
more efFIciently or effiectivel^ operated aa lower income
housing projects and which will preaerve the total amount
of lower income housing stock available in the commwiit7,
or because of oUier factors which the Secretary ilnlmnihisa
are consistent with the best interests of the tenants and
public houMng agency and which are not inconsistent wHh
Other provisions of this Ac^ and
yGoot^le
PUBUC LAW 98-181— NOV. 30, 1983
"(ii) for propertr other than dwelling units, the property
ia excew to the need* of a project or the disposition is
incidental to, or doM not interfere with, continued oper-
ation oTa pK^BCt; and
"(B> the net proceeds of the disposition will be used for (i)
the payment of development coat for the project and for the
retirement of outstanding obli^tions uaued to finance
original development or nwdemuation of the project, and
(ii) to the extent that any proceeda remain after the Bp)>lica-
tion of |>rocecds in accordance with elauae (i), the provision
of housing assistance for lower incmne families through
such measures as modernization of lower income housing,
or the acquiaition, development, or rehabilitation of other
properties to operate as lower income housing.
"(b) The Secretary may not appnrn an application or furnish
assistance under this section under this Act unless —
"(1) the application from the public housing agency has been
developed in consultation with tenants and tenant councils, if
any, who will be affected by the demolition or dispoaition and
contains a certification by appropriate local government offi-
cials that the propoaed activity i* consistent with the applicable
housing assistance plan; and
"(2) ul tenants to be displaced as a result of the demolition or
disposition will be given assistance by the public housing agency
and are relocated to other decent, safe, sanitary, and alfordaUe
housing, which is, to the maximum extent practicable, housing
of their choice, including housing assisted under section 8 of this
Act
"(c> Notwithstanding any other provision of law. the Secretary is
authorised to make available financial aaaiatance for a|>plications
approved under this nction using available annual contributions
authoriied under section 6(c).
"(d) The provisions of this ssction shall not apply to the convey-
ance of units in a public bousiiw project for the purpose of providing
honeownership opportunities for lower income families capable of
assuming the resp(MuU>ilities of homeownership.".
(b) Section 6(f) and section 14(0 of such Act are repealed.
RNANCmO UM rTATTONS
"rtNANCWO UinTATIONS
regarding obligations financing public housing projects author-
ized by aection 6(c) if such obligationa are exempt from taxation
under section 11(b), or if such obligationa are inued under
eection i and such ofaligations are exempt from taxation; and
'UZi mav not enter into fontractji for neriodif naymenta to the
) the Bank of
aing obligationa (as described in the first sentonce of
16(b) of the Federal Financing Bank Act of 1973) iaaued
by local public housing agencies for purposes of financing public
houaing projects authorized by section 5(c) of this Act.".
yGoot^le
84
PUBUC LAW 98-181— NOV. 30, 1983
Sac. 216. "Hwre are authorized to be appropriated not to exoaad
(60,000,000 for fiacal year 1984 for th« Secretary to make granta l«
States, units of general local government, and Indian trttna, and
DonproTtt organizations which will operate programs oo bahalf of
mch units Of general local government and Indian tribet, for tlM
provision of shelter and eaaential services for individuals wbo mrm
subject to life-thrBBtening situations because of their \atk at hooa-
ing. Such granta shall be awarded on the basis of the «ct«nt of the
need for emergency housing in the mm where the prefect is, or wiU
be, located, taking into account regional variations in the cost of
providing shelter. Such grants ma^ be used to rehabilitate wriWing
structures in order to provide basic shelter, to maintain itructurM
providing such shelter, to pay for utilities and the fiimishing of audi
■belters, to inovide for any health and safety meaaurea that mn
required to protect the individuals using such shelter, and for any
activity described in section 105(a) of the Housing and Communis
Development Act of 19T4 that is consistent with the purposes of this
paragraph. A structure which is rehabilitated with awiitancs undtor
this paragraph shall be used for emer^nc^ housing for ■ period of
OPXKATINO ASSISTANCS rOR TKOUBLin UULTirAMILT KOUStNO
Sac. 217. (aXl) Section 201(b) of the Housing and (.
12 use Development Amendments of 1978 is amended £y inserting belbs*
ITlSi-la. the period at the end thereof the following: ", without ngaid to
whether such projects are insured under the National Housing Act".
(2) Section 201(b) of such Act is amended by inserting belm the
period at the end thereof the following: ", without regard to iriwtttsr
such projects are insured under the National Housing Act".
(3) Section 201(cXlXA) of such Act is amended by striking out tb«
first semicolon and all that follows through "1979".
(bXl) Section ZOl(a) of such Act is amended by striking out "or
under" and inserting in lieu thereof ", the United States Housing
Act of 1937, or".
(2) Section 201(cKl) of such Act is amended—
(A) by striking out "or" at the end of subparagraph (A);
(B) by redesignating subparagraph (B) as subparagraph (C);
(C) by inserting after subpersgraph (A) the following new
subparagraph:
"(B) is assisted under section 8 of the United States Housing
42. use l43Tf. Act of 1937 following conversion to such assistance from sssiM
12 use 17151-1 ance under section 23G of the National Housing Act or sactJasi
12 use nou, 42 101 of the Housing and Urban Development Act of 1966; or".
V_^.ii^.L.. . (c) Section 236(rx3) of the National Housing Act is aroendsd by
striking out "September 30, 1982" and inserting in lieu tbsraof
■ !r 30, 1985".
yGoot^le
PUBUC LAW 98-181— NOV. 30, 1983
Sic. 218. (s) Section 236(fl of the National Housing Act i« amended
by adding at the end thereof the following:
"(4) To ensure that eligible tenanta occupying that number of
unite with respect to which aasiatanee was being provided under thie
■ubeection immediately prior to the date of enactment of thia een-
tence receive the benefit of assiatance contracted for under para-
graph (2), the Secretary shall offer annually to amend contracts
entered into under thia Buboection with owner* of prq|ecta asaiated
but not subject to mortgagee insured under thia aection to provide
BufTicient paymenta to cover up to 90 per centum of the neceaaary
rent iiicreaaea and changes in the incomes of eligible tenants,
subject to the availability of authority for such purpoee under
section 6(c) of the United States Housing Act of 1937. The Secretary
shall take such actions as may be necessary to ensure that pay-
ments, including paymenta that reflect necessary rent ihcreasea and
changes in the incomes of tananta, are made on a timetv baaia for all
unita covered bv contracts entered into under paragraim (2).".
(b> Section 236(iXl) of such Act is amended by adding at the end
thereof the following new sentence: "The Secretary ahall utilize, to
the extent neceesary after September 30, 1984, any suthcHity under
thia section that is recapturea either aa the result of the conversion
of houaing projects covered l^ assistance under subsection ((K2) to
eoDtracta for assistance under section 8 of the United States Hous-
ing Act of 1937 or otherwise for the purpose of '"■^iny assistance
payments, including amendments as provided in 8ubaect—~ "■' — "^
respect to housing projects assisted, but not subject ti
insured, under this aection that remain covered by ai '
subsection (fX2).".
12USC171SI-I.
(h),with
irtgagea
S*C. 219. (a) Section 101(g) of the Housing and Urban Development
Act of I96S is amended by adding at the end thereof the following:
'To ensure that qualiTied tenants occupying that number of units
with respect to which assistance was being provided under thia
aection immediately prior to the date of enactment of this sentence
receive the beneHt of assistance contracted for under thia section,
the Secretary shall offer annually to amend contrw:ts entered into
with owners of projects sasisted under thia section but not subject to
mortgagea insured under title U of the National Housing Act to
provide sufTicient payments to cover up to 90 per centum of the
necessary rent increases and changes in the incomes of qualified
tenants, subject to the availability of authority for auch purpow
under section 5(c) of the United Sutes Housing Act of 1937. The
SeGTBtary shall take such actions as mav be neceaaary to ensure that
paymenta, including payments that reflect neceanry rent ii
and chanma in the incomes of tenants, are n '
for all uiuta covered by contracts entered intL .
(b) Section 101(1) of such Act is amended by adding at the end
thereof the following new sentence: "The Secretary shall utiliie, to
the extent necessary after ""' — »-— "" •""• .■.__-, 1._
this aection that is recapti
of housins prqiecta covered by
contracts Tor aasiatauce under sei
e made on a timely bada
42 use 143Tr.
ContncM tnd
paymtntM.
12 U9C 17011.
42 use 143Tf.
yGoot^le
PUBUC LAW 98-181— NOV. 30, 1983
respect to houainK projects HiUtad under thia section, but not
subject to mortewea insured under the National Housing Act, tlut
remain covered E^ aasistance under this section; and (2) if not
required to provide assistance under this section, and notwithstand-
UPOtT KKGAKDINO MOUSINC NHOHBOBHOOD STKATKOy
Sic. 220. Not later than the expiration of the one hundred twenQF-
day period following the date of the enactment of thia Act, l£m
Secretar? shall transmit to the CongresB a report with raapect to the
program established by the Secretary to provide assistance under
section 8 of the United Sutcs Housing Act of 1937 to uniU of
general local government in areas where concentrated housing and
community development block-grant assisted physical developmoit
and public service activities are conducted under title I of the
Housing and Community Development Act of 1974. Such report
shall include the following information for each unit of general kic«l
government selected to participate in such program:
(1) the total number of dwelling units located in such unit of
general local government that have been initially rcasrvcd bj
the Secretary for aaaistance under such program, and anj
subeeauent revision of such number
(2) tAe total amount of funds pledged by such unit of genetal
local government for all public improvements and services, amd
actual and future expenditure, in connection with such
located in such unit of
„ „ _._ _ _jen initially reserved by
the Secretary for assistance under such program, including the
number of units completed and occupied;
(4) the total number of dwelling units required to completa
each local program, as estimated by such unit of general local
government; and
(5) the total number of local programs considered completed
by such unit of general local government.
CONSmtKATION OF UnUTY PATMENTS MADK ST TENANTS
12 use ni5i-l.
12 U3C noii-6
42 use GOZ note Sac. 221. Notwithstanding any Other provision of law, for purpoMB
of determining eli^bility, or the amount of benefits payable, und^
42 use 601 el. chapter A of title IV of the Social Security Act. any utility payment,
'~ the utility allowance, made by a person living in a dwelling
unit in a lower income housing project assisted under the Unil
SUtca Housing Act of 1937 or section 236 of the National "
Act shall be considered to be a rental payment.
Sec. 222. (ai The Secretary of Housing and Urban Developtnsnt
Chereinsfter referred to as the "Secretary ') shell carry out a demon-
yGoot^le
PUBUC LAW 98-181— NOV. 30, 1983
familiss who mide in public houung. The Secretary ahaU deaigii
■uch program to determine the eitent to which the availability of
child c«t« Mrvices in lower income homing prqjecta facilitate* the
employability of the head* of such families and their ■pouaea.
(b) To carry out the demonstration under thia lection, the Seci:«-
taiy ahall authorize the uae (j public housing agency facilities
located in areas where —
(1) the units of general local govemnient have indicated that
funda under title I of the Housing and Community Development
Act of 1974 will be made available to make minor renovations to
the facilities to make them suitable for use as child care fadli-
tiea, and to suiqiort child care services in such facilities
(Z) the pubUc housing agency does not have a child care
service* program in operatton prior to the demonstration pro-
gram under this section;
<3) the propoaed child care servicea program will serve pre-
school children during th» day, elementary school children aAer
school, or both, in order to permit eligible perstms who head the
families id such children to obtain, retain, or train for
employment;
(4) the proposed child care service* program of such public
housing agency is designed, to the extent practicable, to involve
the participation of the parents of children benefiting from such
program, and to employ in part-time position* elderly individ-
uals who reside in the lower income housing project involved;
(5) the proposed child c
hmiaing agency will compl.
laws, regulations, and ordinances.
te) The Secretary shall conduct periodic evaluations of each child
care services demonstration carried out under this section for pur-
poses of determining the efTectivenees of such demonstration in
providing child care eervice* and permitting eligible persons who
head lower income families and their spousea residing in public
housing to obtain, retain, or train for employment
(d) Nothing in thia section may be construed as authorizing the
Secretanr to eetablish any health, saret:r, educational, or other
standara with respect to child care services or facilities assisted
with grants received under this section.
(e) Not later than the eipiration of the two-year period following
the date of enactment of this Act, the Secretary shall prepare and
submit to the Congress a detailed report setting forth the lindingB
and conclusions of the Secretary as a result of carrying out the
demonstration program established in this section. Such report shall
include any recommendation* of the Secretary with respect to the
establishment of a permanent program of using public housing
facilitiea to be used in providing child care service* in lower income
housing prqjects.
HOUSmO FOB THB tU>I>LV AND HAKDICAPPBD
Sk. 223. (aXl) Section 202(aX3) of the Housing Act of 1959 is
amended by inserting the following before the period at the end
thereof^ ", except that such interest rata plus such allowance shall
not exceed 9.25 per centum per annum".
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PUBUC LAW 98-181— NOV. 30, 1983
(2J The amentlinent made by peragraph (1) «h«ll apply onlj with
respect to loan agreementa entered into after Septeinlwr 80, 1962,
and prior to Octobsr 1, 1984.
(b) Section 202(aK4XBXi) of such Act ia amended—
(1) ty itriking out "and" after "1980," in tl
(2) by inaerting ", to (6,400,000,000 on October 1. 1988, and to
such mm aa may be approved in an appiopriation Act on
October 1. 1986," after "1981".
<c) Section 202(aX4XO of auch Act ia amended by atrikinc out
"$860,848,000" and "1982" in the ncond aentenee and insertiiiK IB
lieu tbereoT "1666,400,000" and "1984", respectively.
(d) Section 2D2(h) of auch Act ii amended—
(1) by rtriking out "1978" and inaerting in lieu thereof "1968";
(2) by inaerUng before the period at the end of tha firat
aentence the following: ", and persona deacribed in Wlbfiaf-
graplM (B) and (O of nibsection (dX4) who have been laleaaeJ
treai reaidBntial health treatment fiacilitiea";
(8{ in paragraph (1), by atriking out "handicapped paraon^
— i inaerting in lieu theiwrf "persona dfacribed in the bat
itenc* of this aubeection";
(4) in paragraph (2), by striking out "handicapped peraona"
and inanling in lieu thiBreof "peiaona deacribed in tbe firat
sentence of this subaection who are";
<5) in paragrairii (1), by striking out "and" at the end tfaecvo^
(6) in peragrai^ (2), by atriking out the period at tha and
thereof and inserting in lieu thereof "; and".
(e) Section 202 of audi Act ia amended by adding at tbe end
thereof the following new subaectiont:
EfTKiancy units. "(iXl) Unleas othMwise requested by the sponsor, « maaimum tt
25 per centum of the unite in a project financed under thia sectioB
may be eRiciency units, subject to a determination by the Saoaten
that auch units are appn^niato for the elderly or handicapcaq
population reaiding in tiie vicinity of such project or to be aervM iff
suchproiect.
"(2) The Secretary may require a aponaor of a housing prgjsct
Tmanced with a loan under this section to deposit en amount not to
exceed SiO,000 in a special escrow account to assure the commit-
ment and long-term management capabilities of such iponaor.
Per unit cart "(3) In eatuilishing per unit cost limitetions for purpoaea of this
liniitatigiu. section, the Secretary ahall take into account deaign flsaturea nacaa-
BBTV to meet the needs of elderly end handicapped reaidenia, and
sucn lunitationa shall reflect the cost of providing such feature*. Tlta
Secretary shall tdjuat the per unit cost limitetions in effect OB
January 1, 1983, not leas than once annually to reflect changes lit
the general level of construction coate.
p,^pj™„nt — ' •••■^1 > ■^- o • '
such loan, unless such fn^m^
ment or transfer is made as pert of a tranaaction that will enaora
that the project involved will continue to operate until the original
maturity date of auch loon in a manner that will provide rantal
housing for the elderly and handicapped on terms at least as
advantageous to existing and ftiture tenante aa the terms requir«d
by the original loan agraement entered into under this sectioa and
any other loan ogreemente entered into under other proviaioBa «f
law.
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PUBLIC LAW 98-181— NOV. 30. 1983 I
"<2) "Ri* Secretai> may not sell any mortga^ held by tb« Secre-
UiT as aecurity for s loan mode under this MCtion.
(kXl) In the proceea of MlecUng project* for loans under thie
BMtion, the Seci«ti>Ty shaU Mture tAe inclusion of special deaign
features and congregate space if neccMary to meet the special needs
"(2) lite Secretary liiall encourage the provision of small and
scattered site group homca and independent living fadlitiea tor
nonelderly handicapped persons and fainiliea.
"(1) The basis for selection of a contractor to be employed in the Selection
development or construction of ■ prtiject aasiBted under tnis section controctoi
shall M determined by the pnnect sponsor or borrower if the
development ccet of the project is less than $2,000,000, if the project
rentals will be leea than 110 per centum of the fair market lent
applicable to projects financed under this section, or if the iponsor of
the project is a labor organization,
"(m) Nothing in this section authorizes the Secretsir to prohibit
any sponsor man voluntarily providing fiinds from other sources fbr
amemtiea and other features of appropriate design and construction
suitable for inclusion in such project if the coet of such amenities is
(1) not financed with the loaii, and (2) not taken into account in
detennining the amount of Federal subsidy or of the rent contribu-
tion ^tenants.".
coNCBKiAn snvicB
Sbc 224. (a) Section 408 of the Congregate Housing Services Act of Iteport to
1978 is amended by adding at the end thereof the following new ^IS^B
"(c) Not Uter than March IS, 1984, the Secretary shall prepare
and submit to the Congress a nport evaluating the effects of any
changes in the administration of the congregate housing services
promm eetabUihed in this title which have occurred since January
1, 1983. Such report shall include an evaluation b^ the Secretary of
the reorganization or decentralisation c^ the administration (rfauch
program, and any Iwislative recommendations of the Secretary for
the establishment of ■ permanent congregate housing services pro-
gram and the reasons for such recommendations.".
(b) Section 411(a) of the Congregate Housing Services Act of 1978
is amended —
(1) by striking out "and" at the end of paragraph (3h
(Zi t^ striking out the period at the end oTparagraph (4); and
(3) by adding the following at the end therecrf:
"(5) for fwd year 1984. not to exceed (4.000.000; and
"(6) for fiscal year 1986, such sums as may be necessary.".
DmONSTmATION psoncT
Sbc. 225. (a) The Congreas finds that—
(1) the Department of Health and Human Servicee spends in
excess of (5,000.000.000 annually for housing in the form of
allowances for shelter for public assistance recipients;
(2) States adroiniaterin^ the Department of Health and
Human Servicee public sBsistAnce program often specify shelter
allowaneea that have little relationship to the coet or the quality
tS the housing in which public asBistance recipients live;
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PUBUC LAW 98-181— NOV. 30, 1983
(4) the older rental buildingi in which many public Mrirtane*
recipients live are in thoM netghborbooda that need tfaa airiat-
ance of the program* of the Department of Housing and Urti«B
Development for preservation and rehabilitation; and
<5} tAere ia the potential for improving houaing tax maaj
lower income famihea by coordinating State and local govttm-
ment etforia in order to awure that familiea TeceiTing public
awirtance paymenta from the Department of Health and
Human Services are able to live in decent, safe, and MAttaiy
housing.
(b) "Hie purpoee of this section, therefoie, is to provide asristanoa
to nnita or suieral local government and their deaiguated agendas
in order to aavelop a program that will —
(1) encourage the upgrading of housing occupied prinurilj by
lower income fMnilies, including familiea receiving aasiatliiica
under the aid for fainilies with dependent children pngraiii
established under title IV of the Social Securitv Act; and
(2) provide for better coordination at the local levd of tha
efforts to assist familiea receiving public assistance from tha
Department of Health and Human Servicea so that thoae tuai-
liea will be able to occupy affordable houaing that is decent,
safo, and sanitar ■ -■ - — •
fiinds provided I
Development.
(c) "nte Secretarjr of Housing and Urban Development (beieaflar
referred to in this section as the "Secretary") shall, to tlie e
approved in appropriation Acts, a
(d) In carrying out such project, tl ^ — ,-„_
to units of genera) local government, or designated agenciea tharvoC
to carry out adminiatrativa plans approved by the Secretair to
accordance with subsection (e), and the Secretary may make granta
to States to provide technical aaaiBtance for the purpoae of ■—'^^'^K
auch units of general local government to develop and cany o«n
auch plans.
(eXl) Grants may be mode to States and units of general local
government and agenciea thereof that apply for tlwro in a mawllT
and at a time determined t^ the Secretary and Utat, in the cat* of
units of general local government and their agencies, are selected On
the basis of an administrative plan deecribed in such anplicatian.
(2) No such administrative plan shall be selected bj the Secivtarj
unless it seta forth a plan for local government activities that mrm
designed to—
(A) require or encourage ownen of rental housing occupied taj
lower income families to bring such housing into compUaoea
with local housing cedes;
(B> provide tedmical aasistance, loans, or grants to asstat
owner* deecribed in subparagraph (A) to undertake cost«Jbo-
tiva improvements of such houidng;
(Q worit with ttie State to eetabluh and implement a acbednla
shelter allowancee for recipients ttf ai
Utle IV of the Social Secunty Act based on buUding quality that
will be applicable to buildings involved in thi* program; and
(D) coordinate local housing inspection, housing rehabilitatiaa
loan or grant assistance, rental aseiatance, and social servioa
prosranH for the puRMae of improving the qualitv and afford-
abiuty of housing for lower income fanuliee.
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PUBUC LAW 98-181— NOV. 30. 1983
(3) Foncb received from any grsnt made b; the Secretai; fai ■ unit
of gMWral local government ehall be nuule available for uw accord-
ing to th« adminiatrative plana and may be used for —
(A) technical aaaistance or finaJiciBi aaaiBtance to property
ownen to upgrade housing project* deecribed in paragraph
(2XA) of thii aufaoection;
(B) temporary rental aaaistance to families who live in build-
ing! aseiMed under this program and who are eligible for, but
are not receiving, assistance under section 8 of the United
States Housing Act of 1937, except that such fiuniltes shall not
include fomiliea receiving assistance under title TV at the Social
Security Act, and the amount of such rental assistance may not
exceed 20 per centum of each grant received under this section;
<Q housuig counseling and referral and other housing related
<D> expenses incurred in administering the program carried
out with funds received under this section, except that such
expsnsss may not exceed 10 per centum of the grant received
under this section; and
(E) other apprt^triate activities that are consistent with the
purpaaesof this section and that are approved by the Secretary.
(0 Any recipient of a grant from the Secretary under this section
■hall agree to—
(1) contribute to the program an amount equal to 15 per
centum of the funds received from the Secretary under this
section, and the Secretary shall permit the recipient to meet
this requirement by the contribution of the value of services
carried out specifically In connection wlUi the program assisted
under this tectim;
(2) permit the Secretary and the General Accounting Oflice to
audit its books in order to assure that the funds received under
this section are used in accordance with the section; and
(3) other terms and condi
the purpose of carrying o
<g) In making grants available under thia section, the Secretary
■hall select as recipients at least 20 units of general local govern-
ment (or their dewgnated agenciea). The selection of proposals for
funding shall be based on criteria that result in a selection of
pHtJeda that will enable the Secretary to carry out the purpose at
this section in an effective and efTicient manner and provide a
sufncient amount of data necessary to make an evaluation of the
demonstratunt project carried out under this section.
(hXU Not later than June 1. 1984. the Secretary shall transmit to
the Congress an interim report on the implementation of the demon-
stration under this section.
(2) Hm Secrtttary shall transmit, not Uter than October 1, 1985, to
both Hotises of the Congress a detailed report concerning the find-
ings and eonclusiona that have been resched by the Secretary as a
reault of carrying out this section, along with any legislative recom-
mendations that the Secretary determines are necessary.
(i) To carry out this section, there ere authorized to be appropri-
ated not to exceed $10,000,000 during fiscal year 1984, and not to
exceed (15,000,000 during fiscal year 19S5, to remain available until
expended.
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97 STAT. 1194
PUBLIC LAW 98-181— NOV. 30, 1983
BlCnON 135 HOmOWNSK
Sk. 226. (a) Section 23S(cXl) of the National Housiiig Act k
amended —
(1) b; itriking out "The" in the Tirst sentence and inaertinc in
lieu thereof "Subject to the second sentence of this paragnqih,
(2) by inserting after the first aentenee the following new
sentence: "Assistance paymentj punuant to an; naw canti*ct
entered into after September 30, 1963. that utilina authority
approved in appropriation Acta for an; fiscal year beginning
afUr such date may not be made for more than a lO-jear
(b) Section 235(c) of such Act ia amended by adding at the end
theieof the following new paragraph:
"(3XA) There hereby ia eotobliBhed in the Treasury of the United
States a fund, which, to the extent approved in approi»iatioD Acta,
maj be used by the Secretary for purposes of carrying out aubpar*-
graph (B). There shall be depoaitad into such fund (i) any aoaount
recaptured under paragraph (2); (ii) any authority to mmkt aMHt-
ance payments under subsection (a) that is committed for uM in ■
contract but is unused because the mortgage, loon, or advanca <f
credit involved is refinanced or because such assistance payments
are terminated or suapended for other reasons before the orii^n>l
termination date of such contract; and (iii) any amount received
under Hubparagraph (O.
"(B) In the case of any homeowner whose assistance payments are
terminated by reason of the 10-year limitation refernd to in para-
graph (1), and who is determined by the Secretary to be unsble to
assume the full payments due under the mortgage, loan, or advance
of credit involved, the Secratoiv shall, to the extent of tlte avaiUiil-
i^ of amounts in the hmd established in subparagraph (AX oontraM
to make, and make, continued assistance paymenla on behalf of aud>
homeowner. Such continued assistance payments shall be made in
an amount determined in accordance with the applicable provisions
of paragraph (1) or subaection (aX2X6) and for such period as the
Secretary determinea to be appropriate.
"(C) Any amounts in such fund determined by the Secretary to be
in ezceas of the amounta currently required to carry out the i»mi-
eioni of subparagraidi (B) shall be invested by the Secretary in
obligations of, or obligationa guaranteed aa to both prindpsl and
intereot by, the United States or any agency of the United Stotas.".
(c) Section 235(hXl>of such Act is amended—
(1) by striking out "and" after "1971," in the second smtenoK
(2) Iqr inserting the following before the period at the end M
such senten^: ", and by such sums as may be approved in an
appropriation Act on or after October I, 1983 (from the addi-
ticowl authority to enter into contracts made available on such
date under the first sentence of section 5(c)(1) of the United
Statee Housing Act of 1937)"; and
(3) by inserting the following new sentences after the second
sentence: 'The aggregate amount that may be obligated ovsr
the duration of the contracts entered into with the authtti^
provided on or after October 1, 1983, may not exceed such suns
of new budget authority as may be appropriated after ths date
of enactment of this sentence. The Secretary shall begin lliiin
new commitments and reservations to provide mortgage Insur-
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PUBUC LAW 98-181— NOV. 30, 1983
WK* and aMUtance Miymenta under this MCtion before tha
exparatSon of the SO^y period following the approval in any
M tlM anactment of Uiia aentence.".
Section 23S(U of nieh Act ia amended—
(Din paragraph (3XA>-
(A) br etriking the word "two-family" and inaerting
"thre^-family" in lieu thervof; and
(B) bv inaerting the worda "or a two-hmily" belbre the
word "dwelling" Uu first time it appeara;
<2) in paragraph (3XD)—
(A) ty inaerting the wordi "or three-familT" before the
word "dwellinr ;
(B) by striking the figure "(55,000" and
"S60/MW" in Uau^arwtf; and
(C) tnr atriking the figun "t61,260"
"166,260" in UeutharMf; and
™,^. ... . ind thereof the foUowing . _ .
... - ..,.. > mortgagea under thia aubaectioa, the
Secretary may not dray inaurance on the basia that a mortgage
inTcrivea a tw» to Uirae-tamily dwelling or ia to be tued to finance
subatantial rehabilitation rather than new CMistniction.
"(5) Aa a condition of insuring a mortgage o
" " "ill nqnire vat n
. ^ ._ ,_._, jenanta Ml the bi .___
of or dlglbUity for houaing assiatanee under any Federal. State or
local houaing assistance program and (B) to agree that during the
term of the mortgage each M the rental unita shall be occupied by.
or available for occupant by, persona and funilies whose incomea
do not exceed 100 per centum of the area median income.",
(e) Section 235(j) of such Act b amended—
(1) in paragraph (6) by striking out "two^amily" and inserting
"two- to three-hmily" m lieu thereof; and
(2) bjr adding at the end thereof the following new paragraph:
"&) In mauring eligible mortgagea under this subaection, the
Secretary may not deny insurance on the baaia that a mortgage
involvea a two- to thiee-family dwelling or ia to be used to fmonce
subatantial rehabiUtation rather than new conatruction.".
Sh:. 227. (a) No owner or manager of any federally oaaisted rental
houaing tat the elderly or handicapped may —
(1) aa a condition of tenancy or otherwise, prohibit or prevent
•ny tenant in such housing from owning conunon household
peti or having commm household pets hving in the dwelling
s^]^ff>^^^f^^^rtiftw^ of such tenant in siKh housing; or
O iMtrict or diacrijninate wainst any peraon in connection
with admiiaion to, or continued occupancy at, such houaing br
isaaiiii of the ownership of such pets mr, or the presence of sucn
psta In tlia dwelling accommodations m, such peraon.
(bKl) Not later than the expiration of the twelve-month period
following the data of the enactment of this Act, the Secretary of
Housiiig and Urban Developmrait and the Secretaiy of Agriculture
shall ewih Iwua such regulations aa may be necessary to ensure (A)
compliance with the proviaiona of subsection (a) with respect to any
37-922 0-84-4
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97 STAT. 1196 PUBUC LAW 98-181— NOV. 30. 1983
program of Matitanca wfMwd to In ■ubtftion (d) that to **—*■'*■-
terM by mieh SscrataiT; and (B) attaining th* goal of ptwidiac
daccnt, taf*, and lanitary houiiiu for the M»r\y or lwndkaii|M£
<2) Such ragulationa ■hall estafili^ piidaline* under wfaica As
owner or manamr of any faderallj' aaaist«d rental houiing fiv iba
i2uscnoi.
12USCUTI.
12 use nOlq.
T ntanmgtr of any federall)'
elderly or handicapped (A) may preacribe reaaonable rulaa far iht
keepiiw of peta bj tananta in auch homing; and (B> shall '-^nfiilt
with the tenant! of luch housing in prescribing such rulM. Sudi
nilea majr consider foctorv such as density of tenanta, net fin, ^p«
of peta, potentiei fuiancial obligsttDns of tenanta, ana standaroi tt
handicapped, or any local housing authority or other appn^niate
authority of the community where such housing is located, frcm
requiring the removal from any Buch housing of any |wt whoaa
conduct or condition ia duly determined to constitute a nuisance or a
threat to the health or safety of the other occupants of such bouiiBg
or of other peiaons in the community where such housing is locatea
yji V r .1.; .;_ .u- . ■"— lerallj awited t«Mrf
IS any rental
(2) is aaaiated under the
theNar -
the National Housing Act, or title V of the Houdng Act at IMI,
■ ' ■ " nated for c
section 202(dX4) <
Act of 1959.
RBNTAL REHABILITATION AND DEVKLOPMINT CI
"Sic. 17. (a) Phookam AuntourT,— <1) RcHABiLiTA'noN and
Development GaAifra,— The Secretary is authoriied—
"(A) to make rental rehabilitation grants to States and units
of general local government to help support the rriiabilitatioa
of privately owned real property to be used for primarily Resi-
dential rental purposes in accordance with subsection ley, and
"(B) to make develi^ment grants for new conatructioa or
•ubstsntiol rehabilitation in accordance with subsection (d}.
"(2) AtmnmiTT to Reserve Houbind AssmANCs.— In eonnsctioo
with a grant under this section, the Secretary may reserve authmi^
to provide housing assistance under section 8(o) to the extant
"(A) to provide housing sssistance to peisons displsced by
actiritiea under this section; or
"(B) to support the grantss's program.
"(3) Authorization.— To carry out the purposes of this ssctioa
the Secretary roar utilize not to eiceed S615.0(XI,000, as provided ia
section 5(c> for fiscsl years 1984 and 1985, of which amount —
yGoot^le
PUBUC LAW 98-181— NOV. 30. 1983 97 STAT. 1197
"UO Bot to MCMd 1160,000,000 shall be available in each tudl
TMT tbr mital rahabilitatioo, oT which $1,000,000 ^lall b«
available aadi year for technical pwFttfTi'''^ and
"S) not to mceed $200,000,000 for fiKal year 19S4. and
1115,000,000 for fiw«l year 1985. shaU be availdile for ilevelop-
mmatgrinU.
"(b) DtsnoBunoN or Rbntal Rbhabiutation Gkant Funim.— (1) ReguiBtion
FcMUiUiA Allocatiom.— Of the amount available in anj fiical year
for rehabilitation granta under this section, the Secretai? uiall
allocate amounta m rehabiUtation grants under iubaertioa (c) to
citiw having populationa of fifty thouaand or more, urban countiea,
and Stataa f<w use as provided in subsection (e), on the basis it m
formula which shall be contained La a regulatiixi propoaed bv the
Secralaiy not later than dx^ days after the effective date M this
section. Such regulatiMt •hoU be accmnpanied by the specifie fund
allocaticm for fbcal year 1984 for individual dtiee, urban counties,
and States which wmild result from the prt^Msed formula and any
Miuvtmenta under paragraph (2). "Hie formula contained in the
regulation shall take into account olgactivaly measurable omidi-
tiaas, including such foctors as low income renter population, over-
GTOirding of rental hounng, the extent of physically inadequate
housing stock, and such other otqectively measurable conditiMis as
the Secretary deems appropriate to reflect the need for anstance
umler this section, but excluding data relating to such facton which
pertain to areas eligible for aaaistance under title V of the Housing
Act of 1949.
"(2) AnruBnaNTS. — Before an allocation determined under para-
graph (I) for any fiscal year is made available for use, the Secretary
may a4iust the allocation as fotlowK
' (A) The Secretary is authorized to establish minimum alloca-
tion amounts for cities and urban counties, repreaenting pro-
gram levels below which, in the Secretary's detonnination,
conduct of a rental rehabilitation pragram would not be faoa-
iUe. lite amount of any allocation which is below this tHltilmum
shall be added to the afiocation for the State In which the dty or
county is located and shall be available in accordance with
•ufaeection (e).
"(B) Beginning with fiscal years after fiscal year 1984, the
Secretary la autnorlMd to ac|just the allocation for a city, urban
county, or State administering a rental rehabilitetion program
•• provided in subaectiwi (f), by up to 16 per centum above or
belowtheamount of such allocation, baaed on an annual review
of performance In carrying out activities under this section in a
tiindy maimer and in achieving the result that at least 80 per
centum of the unite rehahiliteted with assistance under this
section In all program years have rente which are and remain at
a levd iriiich WMild be affordoUe by lower income f amiliao. "nw
n of an adhistment under this subparagrafdt. 1^ Secre-
jhoU wtabUsh by reoulatit ■■ • -
■ of this ■ubparagraph.
iation performance criteria for pur-
"(3) Rkauacation.— After the allocation of rehabilitetion grant
amounta, tha Secretary is authoriied to reallocate such amounte
among granteea on Um basis of the Secretary's asweament of the
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PUBLIC LAW 98-181— NOV. i
tration of the Krantaes' rental rehabilitation progranu.
"(4) RacArruaz. — Any rental rehabilitation grant amounta whk^
are not obligatad at the end of any fiacal year ahall be *dded to the
amount availabls for allocation for such grants for the ■iirfwwiiiil
fucalyear.
"(C) G«ANTfl rOR MODCKATt RCHABILfTATION.— <1) PbOOMAM
DncKiraoN. — A rehabilitation grant may be made under tlua mo-
tioa on the boaif of aatiafactory information provided in ■ pttignm
deBCription which shall be submitted by the grantae at aiach tiam
and in such manner m the Secretary may prescribe and whi^ ahan
"(A) a deacription of the grantee's propoaed rental rehabil-
itation program, which shall consist of the activitiea ttth
grantee prapoaes to undertake for the fiscal year, including tha
grantee's anticipat«d schedule in carrying out those activitka,
or, in case of a State distributing resources as provided in
subsection (e), its proposed method of distributing the reaourccs,
which shall have been made available to the public;
"(B) a certification that the grantee's program was derelopMl
after consultation with the public;
"(O a statement of the procedures end standards which will
govern aclection of proposala by the grantee, which procedures
and standards shaA take into account the extent to wfaidi
the propoaal represents the efficient use of Federal r«aourc«e
and the extent to which the housing units involved will be
adequately maintained and operated with rents at the levels
"(D) an estimate of the effect of the proposed ptDgram on
neighborhood preservation;
"(E) evidence demonstrating the financial feasibility of the
proposed program, including Uie svailability of non-Federal and
private resources and including evidence that the prtyecta to be
selected for rehabilitation wOl be located in nei^iboriwods
where rents are generally affordable to lower income fsmjlins
trof thi
and that the character of the neighborhood indicates that au^
Its will not materially change over an extended period; and
'(F) such other information as the Secretaiy shall prescrjbs.
d under this section shall provide that —
"(A) grant assistance shall only be used to rehabititate rasl
property to be used for primarily residential rental purpoOBK
"(B) grants shall only be used to assist the rehabihtatiroa of
real property located in neighborhoods where the msdian
income does not exceed SO per centum of the median income Ibr
"<0 grant assistance for any structure shall not exceed 60 pw
centum of the total costs associated with the rehabilitation of
that structure, as determined by the Secretary, except that
where the Secretary determines that refinancing costs aitd tha
miecial nature of the project require a greater amount of anst*
ance, the grant amount shall be limited to not to exceed 60 per
centum of the development cost includinjg acquisition;
"(D) rehabilitation assisted under this section shall only bv
that which is necessary to corract substandard oonditiorw, to
yGoot^le
PUBUC LAW 98-181— NOV. 30, 1983
make aseatial impravemeiiU, and toirepair major ayBtemi in
danger of failure;
"(E) th« amount of rental rehabilitation aseistance provided
under thia lection for any itructure shall not exceed (5,000 per
unit except aa otherwise determined by the Secretary in areas
of high material and labor ceata where the grantee demon-
■trates that every appropriate itep haa been taken by the
grantee to contain the amount of assistance within the limit set
bj this paragraph and that an exception is neceoaary to conduct
a rehabilitation program while not exceeding the rehabilitation
■tandarda of aubparagraph (Dy,
"(F) a atructure may be aMisted under this section only if the
r«habilitation of nieh structure will not cauM the involuntary
ilies by families who are
"(G) the owner of each aaaiated structure agrees—
"(i) not to discriminate against projective tenants on the
basis of their receipt of or eligibility for housing assistance
under any Federal, State, or local housing assistance pro-
gram or. except fbr ■ structure for housing for the elderly,
on Um basis tliat the tenants have a minor child or children
who will be residing with them; and
"(ii) not to convert the unite to condominium ownership
(or in the case of a cooperative, to condominium ownership
or any form of cooperative ownierahip not eligible for assist-
ance under this section);
for at least 10 years beginning on the date on which the units in
the project are completed;
"(H) the State or unit of general local government that
receives the aanstance certifies to the aatisfaction of the Secre-
tafT that the assiatanoe will be made available in conformity
with Public Uw 88-352 and Public Law 90-2S4; and
"V) 100 per centum of the amount of assistance provided
tinder this sscticm shall be used ^ the grantee for the henefit of
law«r income families, except that such requirement shall be
reduced to (i) TO per centum if the grantee certifiea in accord-
ance with standards prescribed by the Secretary that such
reduction is necsMary, and that the grantei
propoasd program wuch complies with such requirez
eoiuttltation with the public regarding the inability to develop a
program which complies with such requirement, and (ii) tt
leas than 60 per centum where the Secretary determines that
such ftuther reduction it neceesary.
"(3} SiCXRAMAL RtSPONffBiUTT.— The Secretary shall aaeure
iMt—
"(A) an equitable share of the rehabilitation grants under this
secUOQ is used to assist in the provision of housing for families,
includioc Isirge families with children; and
"(B) a priority shall be ^ven to pnyects containing units in
substandard condition which are occupied iy very Imv-income
"(1) Tto of Assi8TiU4ca. — Development grant funds may be used
\^ the grantee to make grants or loans, provide intercat reduction
paymenta. or furnish other cnnparable assistance to support the
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97 STAT. 1200
PUBUC LAW 98-181— NOV. 30, 1983
>r eonatruction or aubMantial rehabilitation of real proporty to bt
primarily for residential rental purpOMa,
!) Abba EuaiBturv.— Tq be eligible for deve)opiD«nt giwili
T this aufaaoction. a project niiut be located in an an* uwt ii
'■(2)
under this subaection, a project n
experiencing a were shorta^ of decent rental houaing opmctinu-
tiea fbr famUiea and individuala without other reaaonabls ami
afTordable houaing altemativea in the private market Tt» Secra-
tary ahall iaaue reflations, conaistent with the precedinf ■nntanra.
that set forth minunum standard* for determining areM iilifihla far
aaaistance. Such standards shall be based on lAjectiTeW msaaurahli
conditions, end shall take into account tbe extent of poverto, At
extent of occupancy of physicalljr inadequate bounng bjr I
income families, the extent of houaing overc
lower income faroiliea, the level
vacancies, the extent of the lagb>_
production of rental housing, and other otqectiTetj msMurahle ol_
ditions specified by the Secretary conaistent with tha first tifiVfiifft
ies, the extent of houaing overcrowdiiw e^ariMtoed by
e families, the level and duration of rental *"«irrinf
e extent of the lag between the estimated Dead Ibr ana
this section and shall promptly transmit to the Confress auA
proposed r^ulations accompanied by a list of those aiaas whid
meet the mmimum etandarda contained in such regulations. Anr
unit of government located in an area which meeta such '«i"inHint
standards is eligible to submit an aiiplication for a rental hmMifig
development grant under this lection. Tbe Secretary tnaj also
consider an application for a project to be located in an area which
is not eligible under such atandardt where the Secretary iliil<ii Hihias
that a project involving assistance for other than moderate rahahib-
tation is necessary in order to meet special housing needs or la
advance a particular neighborhood preservation purpoae.
"(3) Ai-pucATiON.—A development grant may oe made under this
section oa the basis of information provided in an applicatioti wlikfe
shall be submitted by the grantee at such time and in such niannsr
as the Secretary may prescribe. In addition to information relati^
to the selection criteria set forth in paragraph (5). the andicatiaa
,-_,.__-a to undertake for the fiscal year, including a
tion of the grantee's anticipated schedule in carrying out Ihnsn
activities;
"(B) a certiTicatton that the grantee's program waa davelopad
after consultation with the public;
"(Q a statement of the procedures and standards whi^ will
govern selection of proposals by the grantee, which procedures
and standards shall take into account the extent to which tha
proposal represents the eflident use of Federal reeourcea and
the extent to which the housiiw units involved will ba ade-
quately maintained and operated with rents maintained at th*
levels proposed;
'""' " """ e of the effect of the j:
T information as the Secretary shall preaeribe.
"(4) Program Rbquirxments.— A rental development proeram
assisted under this section shall provide that —
"allbeuaed
'■(AJffranl
le used for I
residential rental purpoaes only;
« used to develop real property to
yGoot^le
PUBUC LAW 98-181— NOV. 30, 1983
"(B) grant SMutance for anj atructure Bhall not exceed 50 per
centum of the total coata aModated with the nhahilitatioo or
development id that ■tnicture, aa determined l^ the Secretai7,
«xc«pt that where the Secretary detonninea that re&nancin(
ooeta and the ipecial natun of the prefect require a grttlMt
■mount of Meiitanoe, the grant amount ihall be limited to not
to exceed 50 per centum of the development coet including
•oquiaitioB;
ffZ a structure may be aaaiatad under thia lection only if the
development of such structure wiU not cause the involuntary
diaplaoement of very low-income familiee by familiee who are
"(i) not to discriminate against prospective i
baais vX their receipt of or eligibiuty for hout ^
under any Federal, State, or local houvng anistance pro-
gram ur, except for a itructure for houaing for the elderly,
on the basis that the tenants have a minor child or childrm
who will be residing with them; and
"(u) not to convert the uniti to condominiuni ownership
(or in the case d a cooperative, to condominium ownership
or any form of cooperative vmierahip not eligible for assist'
~ ~ « under tliia section);
_ the 2(^year perio * '
units in the project are available for oocupency;
"(E) the owner of each assisted structure agree* that, during
the 2l>Tear period beginning on the date on which 50 per
centum of the units in the structure are occupied or completed,
at least 20 per centum of the units the constniction or aufaetan-
tial f«lkabilitation of which is provided fbr under tlie application
■hall be occupied, or available for occupancy by, persons and
families whose incomes do not exceed 80 per centum of the area
median income;
"(F) the structure—
"(i) will have a value after rehabilitation or ctmstruction
that is not more than the amount of a mortgage on the
structure that could be insured under section 207 of the
National Housing Act; and I2U8C1713.
"W is secured by a mortgage which beaia a rate of
interest and contains such other terms and conditions ai
the Secrotary detenninea are reasonable;
"(G) the grantee must commence construction ur substantial
rehabilitation activities not later than 24 monthi after notice of
"(H) the State or unit of general kcal government that
receives the assistance certifies to the satisfaction of the Secre-
tary that the aMiatance will be made available in conformity
wiOi PubUe Uw 8B-SE2 and Public I^w 90-284. «2 use 2aaaB
"(6) PaoracT SiLacTiON.— In selecting project* to receive develop- ""*•; 82 Sut 73
lent grant*, the Secretary ahall make such aelection on the basis of
yGoot^le
97 STAT, 1202 PUBLIC LAW 98-181— NOV, 30, 1983
"(B) of non-Federal public and privat« financial or other
eontributiona that reduce the amount of aaaifltance ttmetmmtf
under thii lection;
"(C) to which the project or project! contributa to neighbor-
hood develiqnnent and mitigate diiplacement;
"(D) to which the applicant haa eatabliahed « latia&Ktocy
record of performance in meeting aasiated hounng needi ukd
haa the capadty to undertake the prap«m in a timelji mauMi;
"(E) to which the awistonoe requeated will provide the maxi-
mum number of units for the least coat to the Federal Govern-
ment, taking into consideration the extent to which assjatanco
provided wm be recaptured and cost differences amooi dilto-
ent areas, among financing altemativea, snd among the typas of
projects and tenants being served;
"(F) to which the grantee will establish a mechanism to
assure the maintenance of affordable rentals for lower income
families;
"(G) to which the applicant has demonstrated the financial
feasibility of the proposed program, including the availabili^ ot
non-Federal and private resources; and
"(H) to which an equitable share of the development grant
funds under this section will be used to assist in the provision of
housing for families, including large families with children.
"(6) Paioarrm.— In selecting projects for grants under this suboee-
tion, the Secretary shall give s priority to proposals involnni
"(A) which exceed the minimum requirements of paragraph
(*XE); and
"(B) in areas when the waiting lists for housing sssistanoa
are relatively long and where families holding certifkatM
42 use usrr under section 8 require sn excessive length of time to find
housing.
"(7) BNroscBMKNT OF Phograh RcquiRCMCNTV,— <A) The granlae
shall take appropriate legal action to enforce compliance with the
requirements of this subsection by the owner of any assisted prop-
erty or his or her successors in interest during the 20-year period
banning on the dale on which 50 per centum of the units ara
VioLation, occupied or are completed. For any violation of such sgreements, the
payment, owner or his or her successors in interest shall make a payment to
the grantee of an amount that equals the total amount <u assist anca
provided under this title with respect to such project, plus interest
thereon (without compounding), for each year and any fraction
thereof that the assistance was outstanding, at a rate determined far
the Secretarv taking into account the average yield on outatandinc
** marketable long-term obligations of the United Stales during the
month preceding the date on which the assistance was made avidl-
able. The amount of such assistance (and accrued interest) which is
required to be r^taid shall be reduced l>y 10 per centum for each ftill
year in excess of 10 years which intervened between the commanca-
ment of the period and the violstion. Any amounts recovered by the
grantee shall be used to furnish assistance under this section.
"(B) Notwithstanding any other provision of law. any »"'f*afn^
provided under this subsection shall constitute a debt, which is
payable in the case of any failure to carry out the agreements, and
yGoot^le
PUBLIC LAW 98-181— NOV. 30, 1983 97 STAT. 1203
*WKAJ Rent Pkovuionb. — Rents charged for unita available for
occupancy br lower income familiee in any project assisted under
tbii aubwctioa (hall be approved by the grantee. In approving such
rants, the gTaot«e ihall provide that the renta of such unita are not
more than 30 per centum of the adjusted income of a family whose
inoMne equab SO per centum of the median income for the area, as
datarmined by tiie Secretat; with a^juatmenta for smaller and
larger families. Not less than 30 days prior written ttotice of any Increue
inoneaaa in ranta shall be provided to bucb tenants. noiificaixHi.
"(B) Any schedule of rants submitted by an owner to the grantee
for approval shall be dawned to be approved unless the grantee
tnfonm the ownar, within 60 days aner receiving such a:hedule,
that such idtBdule is diaapprovad.
"(91 Gbant Amount.— The amount of a devetopment grant pro-
vided under this subaection shall not be more than that amount
which will provide decent rental or cooperative housing of modest
design which is affordable for familiee and individuals witiiout other
faasooable and affordable housing alternatives in the privata
market, including an amount necessary to achieve compliance with
raph(8XA).
"(a) Statx Pboobam .— (1) Except as provided in paragraph (2), the
State shall administer resources made available under subsection
(bX2) for any fiscal year. These resources shall only be used to carry
out activities under tiiis section in cities with populations of lev
than flfty thousand and in urban counties and cities whoae allocft-
tions are less than the minimum allocation amount established
under subsection (b)(2), but may not be used in areas which are
eligible for aMiitance under Utle V of the Housing Act of 1949. The
Sts^ mar use all or part of theae resources (A) to carry out its own
rental ruiabilitation prcgram, or (B) to distribute them to units of
general local government. A city with a population over fifty thou-
sand may, with the agreement of the State government, elect to
contract with the State to administer the grant program under this
section in any fiscal year.
"(2) Statca may elect not to administer rteources made available
under subsection (bX2) of this section. lUs election shall be made in
such manner and before such time as the Secretary may prescribe.
"nm Secretary shall administer the resources available to any State
exarcidng audi an election in accordance with r^ulations and
_ — i..-.^ preacribed by Om Secretary, including the administra-
tiaa of nant programs of cities with populations over (Ufy thousand
which elect not to administer their own program. Such regulations
shall, to the maximum extent practicable, he comparable to those
for cities and uihan counties receiving resources under Bubsectim
shall, to the maximum extent practicable, he comparable to those
fort ' ■■ ^ ■■ *. . .__^,__
(b).
"(8) A State may apply for and receive, on behalf of a unit of local
gavenunent located in that State and with the concurrence of that
unit of general local government, a rental development grant to he
I land in accardance with the provisions of subsection (d).
"(4) In any case in which the State is a grantee under any
provision of this section, the Secretary shall require that the State
take such actitma as may be appropriate to assure compliance with
tba program requirements, owner agreementa, and other provisions
of this section.
"(f) Amjcaaiurr or Rm^vmEHttm oa AoaEXHEins.— Require-
menla imposed by or agreements made with States and units of
genml local government regarding rents in structurea assisted
yGoot^le
97 STAT. 1204 PUBLIC LAW 98-181— NOV. 30, 1983
under this •ection (including requirements relating to th* ranti
which may be charged after rehabilitation) ihall not Bpplj to ■
structure aniited under this tection unlew <1) such roquireoHats
are impoaed or agreements are entered into puiauant to a State law
or local ordinance of general applicability which was enactad and in
effect in that jurisdiction prior to the dat« of anactntent of this
section, and (2) such requirements or a^reementd would apply gaxr-
ally to structurea not aasiatad under this aaction.
*2 use H37i.
related naeistance as the Secretary determines to be a|
"(h) ADMiNmxATTVi EkpcNSis. — Grantees receiving aaHataost
under this section shall not deduct therefrom any amounts to oowr
administrative expensea incurred by them in carrying out tlisc
renxHiaibilities under this section.
(i) PUSKRVATION, EnVIBONMKNTAL PoUCT, AND LaBOK StA»>
AMne.'-il) The Secretary shall establish procedurea whidi aupiNKl
national historic preservation objectives and which assuro that, t
any retiabilitation or development proposed to be assisted iinifcir Ob
section would affect property which is included on the NaUoMl
Register of Historic Placta or which is eligible for inclusion on ths
National Register of Historic Places, such activity ahoD not be
undertaken unless (A) it will reasonably meet the standanla issoad
by the SecretaiT of the Interior and the appropriate Slate hktork
preservation oflicer is afforded the opportunity to commMit on tfai
specific rehabilitation or development program, or <B) the Adviaarr
Council on Historic Preservation is afforded an opptntunity to can-
ment on cases for which the grantee of assistanc*, in consuItatiMi
with the State historic preservation ofTicer, determines that the
proposed activity cannot reasonably meet such standards or would
adveiady aTTect historic property as defined therein.
"(2) The Secretary's award and grantee's use of reeourcea mads
available under this secUon shall be subject to section 104(0 of tl«
Housing and Community Development Act of 1974.
"(3) A structure assisted under this section shall bs treated aa a
prttjeet subject to a mortgage insured under section !90 at the
National Housing Act for the purpose of section 212 of audi Act
"(j) FiNANCtNO.-^ubJect to terms and conditions that are pte-
scrttiBd by the Secretary and are consistent with the purpose and
other provisions of this section, any obligation issued hj
local housing agency for the purpose of financing the deve'
a project or projects assisted under this section is hereby i
obligation that meets the requirements of, and has ('
(including the benefit of interest earned with respect t< .._ ..
tion being exempt from Federal taxation) associated with, an el
tion described in section 11(b).
"(k) Oaruimont. — For the purpose of this section —
"(1) the term 'rehabilitation grant' means a grant to th
moderate rehabflitation;
1 'development grant' means a grant to tit
yGoot^le
PUBUC LAW 98-181— NOV. 30, 1983
iriiich liM * nsale rtructure which enablei the cooperative to
imuntain aflbrdability (or lower income families; and
"(5) the term 'grantee' meaiu—
"M any ci^ or urban county receiving reaourcee undo"
tiusMCtion;
"(B) may State administering a rental rehabilitation or
1 — 1 . . _ y^^^ jj, Bubaection (f); and
... _ il government which receives
aaiistance from the Secretary as provided in suhaection
(fX2).
Hie Secretary shall encourage eooperetion by units of ftatral local
government m the administration of grwitB under this section by
permitting oonaortia of geographically proiimBta units of generd
local gmemnient to apply for anistanca on behalf of their members,
ioclucung eatabliahment of eligibility imder subsection (til for consor-
tia whose combined populations exceed fifty thousand end which
can otherwiae meet the requirements of such subaaction. Any
amounts made available to such a consortium shall be deducted
fh«i the allocation to the State in whidi the units of general local
govnnment ore located.
"(I) Rivmr ANn Aimtr— The Secretary shall, at least on an
annimt basis, moke such reviews and audits as may be nscesaary or
appropriate to detennine—
"(1) when the grantee is a unit of general local Eoyemment
or a State carrving out its own program as provided in sufaaec-
tion (fXl), whetner the grantee has carried out its activitiea in a
tinely manner and in accordance with the requirements of this
■action, and has a continuing capacity to carry out those activi-
ties in a timely manner; and
"O where the grantee is a State distributing resources made
■vailabla under this section to units of genera] local government
as prorided in subsection (eK2), iriwther the State (A) has
disteibuted such resources in a timely mannar and in accord-
ance with the requirements of this section, and (B) has made
Bud) reviews and audits of the units of general local govern-
ment ss may be necessary mr appropriate to determine whether
they have satisfied the performance criteria described in para-
n additior
(1>.
[ditini to the a4)UBtmenta baaed on peiflannanee authorixed by
" 1 (bN2), the Secretary may ai^ust, reduce, or withdraw
Sb available to States and units of general local govsm-
t assistance ondar this ssction, or take other action as
appro^iato in acctwdance with the tindinn of theae reviews and
audita except that resources already expended on eligible actiritiea
riiall not be rvcaptured or deducted from future reeources made
available to the grantee. Any amounts which become available as a
rasnlt of actions under this paragraph shall be reallocated in the
jear in iriiidi they become availanle to such grantee or franteea as
the SeCTBtary may deb
"(m) P^woxHANCB :
198S and each fiscal year tl „.
the Secretary a performance report concerning the activities carried
out pursuant to this asction, together with an mans rut by the
grantee of the relstionship of theae activitiee to the objectives M this
■ection. Soch report shall contain an analysia of the program's cost
effectiveneas, the ^pe and income level* of tananta who benefit from
the rehabilitatian program, any tenant displacement reeulUitg from
yGoot^le
PUBLIC LAW 98-181— NOV. 30, 1988
the progTam, and any other information the Sacratarj tamr raqiiin.
To facilitate this reporting requirement, each gc«Dt«e ■hall raqoin
owner* of property rehabilitated under this lectioa to pravide vert-
e data and other pertinent tenant demograpUc infbrfpa-
uon 33 prescrib«d by the Secretan' (to include boiuMioU iua uuf
race) or to otherwiae arranm for the collection of tuch infomwtki
on an annual baaia. The Sacretar? ahall atipulat* tha fbrmat idi
such data collection to eseure that nich information cut ba agpe
gat«d at the national level to allow coogTewionaJ orend^t.
"(n) RapORT TO Concriss.— Prior to the beginning M Sk*! ^m
1985 and each fucal year thereafter, the Secretat; ihall pnmdtl
report to the Con^resa aa to the ovenll progKW of grantoM k
meeting the objectives of thia aection. Such report ahall induda ■
analyiia of program coata. aervicca delivered, oenefieiariM, and tb
extent to whicn lower income tenant* have been displ«cad •• I
result of rehabilitation assisted under this aection,".
DTVKLOMtnn ACT OP 19T4
BCOmUVNTTY
Stc. 302. (a) Section 105(a) of the Housing and CMumiini^ Daivil-
opment Art of 197* is amended—
(1) by striking out "and" at the end of clause (16);
(2) by atriking out the period at the end of claua* (IT) and
inserting in lieu thereof ": and"; and
(3) by adding at the end thereof the following:
"(16) the rehabilitation or development of hounng aaairtad
under section IT of the United States Housing Act «f IMT.'.
(b) Section 107(d) of auch Act ia amended—
(1) by striking out "unless the apjilicant" in para^aph (1) and
(c) Section 817 of such Act ia amended —
(1) by atriking out "and" after "1966,"; and
(2) tw inserting after "and 1970" the following: ", m
17 of the United Statea Housing Act of 1937".
HINO IkMINOUKtm Tl
■ NATIONAL KOUBDro ACT
iMurance. Sic. 303. (a) Section 244 of the National Housing Act is ■
12 use ni5i-9. Qy piMing at the end thereof the following:
"(h) Notwithstanding any other provision of this taction, in Ika
Poll, p. IZOT. case of a mortgage insured under section 223(f) secured by puitsi^
which ia to be rehabilitated or developed under section IT of Ika
Anil, p. 119S. United States Housing Art of 1937, auch coinsurance maj infliiii
provisions that —
"(1} insurance benefits shall equal the aum of (A) 90 pOT
centum of the mortgage on the date of institution of foracloMBa
proceedings (or on the date of acquisition of the propartjr othsr-
wise after default), and <B) 90 per centum of intereM arravia cm
the date benefits are paid;
"(2) the mortgagee shall remit to the Secretary, for cradit tu
the General Insurance Fund, 90 per centum of any p
the property, including sale proceeds, net of the n
yGoot^le
PUBUC LAW 98-181— NOV. 30. 1983
actual and reawnable ooats Tclatad to the property and the
enforcwmeat of aacurity;
"(31 pajToent of such benefits shall be made in caah unless the
mortgagee tubinita a written request for debenture pnyment;
"(4) the underwriter of coinsurance may reinsure 10 par
centum of the mortgage amount with a private mortgage insur-
ance company or with a State mortgage iniuranoe agency.
No commitment for insurance pursuant to tUa subaection may be
taaued on or after Octeber 1. 1985.".
da) Section 223(f) of such Act ii amended by adding at the end
thnneof tba followiiw:
"W In the caae of any purchase or reflnancitig under this subeee-
tion ioToIving property to be rehabilitated or developed under aec-
tion IT of the United States Housing Act of 1937. the Secretary
"(A) include rehabilitation or develcnproent ooata of not to
•xcead $20,000 per unit, except that the Secretary may increaae
Buch amount t^ not to eseeed 25 per centum for opecific propei^
tiea where cost levels so require;
"(B) permit subordinated liens securing up to the full amount
of mortgaga financing provided by State or local BDvenunents or
agencies thereof ; and
"(C) pay cuch benefits in cash unless the mortgagee submits a
written requeat for debenture payment".
TTTLB IV— PROGRAM AMENDMENTS AND EXTENSIONS
Subpart 1 — General Authoritiea and Requirements
H or MORTGAOI INSUKANCX PROGRAMS
^ ^ ,— ..iten.745.
30, 1983" and inserting in lieu thereof "Septuuber 30, 1985". i^ "^ I7i5h.
(c) SactioB 221(0 of audi Act is amended by striking out "Novem- '*"'«& ''i^
bw 80, WSar in the fifth sentence and inaerting in lieu thereof '^ ^^ "1^'
"8M>t«mb«rS0,198S".
(Ml) Section 236(m) of such Act is amended by striking out Antt. a. 746.
'74ov«uber SO, 1983" and inaerting in lieu thereof ''September 30, 13 USC 171S>.
198S".
(2) SactioD 236((tXl) of such Act is amended by striking out "No-
VM^er 80, 19SS" in the lost sentence and inserting in lieu thereof
Ante. p. US.
in the first sentence 12 "* 1715.-9
), 1985":
(2) by striking out "December 1, 1983" in the second sentence
and inmting in lieu theivof "October 1, 1985"; and
<3Xby striUng out the last two sentanoea.
yGoot^le
Aalt. p 145
12 DSC lT4Bh-l.
AnU. p. 745
12 DSC lT4eh-2.
Aaie. p. 74S.
12 use n49bb.
Anit. p 745
12 use ]749aB«.
12 use l735f-9.
12 use 1709-1
12 use 1703
PUBUC LAW 98-181— NOV. 30, 1983
(f) Section 245(a) of such Act ii amended by Mriking out "Nowan-
ber 30, 1983" in the last sentence and inaertiiig in liau themf
"September 30, 1985".
(g) Section 809(f) of such Act i» amended by Krikin( out "Novtn-
ber 30, 1983" in the last sentence and inaerting in Iwu tfanaef
"September 30, 1985".
Oi) Section 810(k) of such Act is amended by atriking out "Novoa-
ber 30, 1983" in the laat sentence and inserting in lieu tbarssf
"September 30, 1985".
(i) Section 1002(a) of such Act is amended by strikins out "No*«»
ber 30, 1983" in the laat sentence and inserting in lieu thmnd
"September 30, 1985".
(j) Section 1101(a)of such Act is amended by striking out 'TlavMi-
ber 30, 1983" in the last sentence and insertii^ in. lieu tbssMf
"September 30, 19S5".
AMOUNT TO ■■ INBUKCD UNDBB T^E NATTONAL HOUSINO
Sic. 402. Section 531 of the National Housing Act is
read as follom:
"amount of INSuaiO MOtTGAOn
"Stc. 531. Notwithstanding any other provision of law and L ,__.
only to the absence of qualined requeeta for inauranca, to tlw
autnoritv provided in title II, and to any funding «— =--^—
approved in appropriation Acta, the Secretary shall enter inti
mitments during each of the fiscal years IvM and 1985 to i
lortgagea under title II with an aggregate principal
60,900,000
S60,9t
Sbc. 404. (a) The Act entitled "An Act to amend chapt«r ST of tiUs
38 erf the Unit«d States (^ode with respect to the veterans' hosM loM
program, to amend the National Houaing Act with napeet to inter-
1,000,000.".
ELIMINATION OF REQUntEMINT T1
May?. 1
and 4.
8 (Pub. L 90-30
(bXl) Section 2(bX5) of the National Housing Act ii i
r*ad as follows:
"(5) No insurance shall be granted under this sectioD to any waA
financial institution with respect U> any obligatio — "
such loan, advance of credit, or purchase by it unless i
has such maturity, bears such insurance premium
contains such other terms, conditions, and restrictions „
taiy shall prescribe, in order to make credit availabla for
purpose of this title. Any such obligation with nmpttt to wfaid
e is granted under this section shall bear intoraat at and
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PUBUC LAW 98-181— NOV. 30, 1983 97 STAT. 1209
IV be agned upMi by the borrower and the flnancial
mortgagor and the mortgagee.".
[3J Section 2030cX3XB) of iilch Ac
"(B) bear interest at inch ret« ai
roortgacorai
) The lirat I
nrat sentence of tl
I) 207(cX3) of Buch Act ii
mortgage ahall provide for complete amortization b
■nenta within nich term aa the Secretary ahall preat
bear interest at auch rate m may be agreed upon by the mortgagor
and the mortgagee.".
(5) The first sentence of aectiOQ 213(d) of such Act ia amended to IZ USC ni5e
read as foUowa: "Any mortgage insured under thia section shall
provide for complete amorUxation by periodic payments within such
term as the Secretary ma^ prescribe but not to exceed 40 years from
the beginning of amortization of the mortgage, and shall bear
interest at such rate as may be agreed upon by the mortgagor and
the mortgagee.".
<6) The second sentence of section 220(dX4) of such Act is amended IZ USC 171Gk.
to r«ad as followi: "The mortgage shall bear interest at such rate aa
may be agreed upon by the mortgagor and the mortgagee and
contain such terms and provisions with respect to the ap|»ication of
the mortgager's periodic payment to amortization of the principal of
the mortgage, insurance, repairs, alterations, payment of taxes,
default reserves, delinquency charges, forecloeure proceedings,
anticipation of maturity, additional and secondary liens, and other
■natters as the Secretary may in the Secretary's discretion
preecribe.".
(7) Section 220(hX2)(iii) of such Act is amended to read as follows:
"(iii) bear interest at such rate as may be agreed upon by the
mortgagor and the mortgagee;".
(8) Section 221<dX5) of such Act U amended by striking out "(exclu- 12 USC ITIU.
sjve" and all that fbllowa through "mortage market" and inserting
in lieu thereof the fbllowing: "at such ratios may be agreed upon by
the mortgager and the mortgagee".
(9) Section 231(cX6) of such Act is amended to read as follows: 12 usc ITiS*.
"(6) bear interest at such rate as may be agreed upon by the
mortgagor and the mortgagee; and".
(10) Section 232(dXSXB) of such Act is amended to read aa follows: 12 USC lT15w.
"(B) bear interest at such rate as may be agreed upon by the
mortgMor and the mortgagee.".
(11) The first sentence of section 234(f) of such Act is amended to 12 USC ITiSy
read aa follows: "Any blanket mortgage insured under subeectjon (d)
shall provide for complete amortization by periodic payments within
snch terms as the Sscretarr may preanibe but not to exceed 40
ITS from the beginning of amortization of the mortgage, and shall
\r interest at such rate as may be agreed upon by the mortgagor
(A) bj striiting out "and" a
"' g out the perioc
I lieu thereof "; 1 . _ ,
I the following new subparagraph i
12USCni5E.
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12 use m5i-5.
12 use ITlSi-e.
PUBLIC LAW 98-181-NOV. SO, 1983
any time u the Sacretary find* neccaw; to m«et Um iiiiiiUMi
market, taking into coiuideration tha jialdi on mortcagaa fa
the phmarv and aecondan mM-kets.".
(13) Section iWcM) at aucli Act ia amended to re*d am feUom
"(4) bear intetaat at mch rate aa mv he agned tipon by the
mortgagor and the mortgagee;".
(l«k Section 241(bX3) of aueh Act ia amended to ivmI aa fcllaaK
"(3) bear interact at auch rate aa may be agiaad upon by tka
mortgagor and the mortgagee;".
(15) Section 242(dX3XB> of auch Act ia amended to read aa fblkmc
"(B) bear intetaat at auch rat« a« may be agraed npoti by tbt
mortgagor and the mortgane.".
(16) Section lOOaidNZ) of tuch Act U emended to r«Ml as feDmn:
"(2) bear interest at auch rate as may be agreed upon hf tta
mortgagor and the mortgagee, except that the Seci«twr]r aaj
agree to ■ reaaonaUe extenaion of the term of a mortgage, tfaa
maturity of which ia limited by this paragraph to not mar* than
10 yeaiB, if the Secretary determines that unuaual o~ ~ *
aeen drcumatances make auch c '
undue hardship to the mortgager:".
nANtMBM
(1) in the (irat aentence. by i
tured homes," after "houaing";
(2) by adding the following new sentence at the end tbafaoC
"Following the effective date of thia aentence, the eaerp pw-
formance requirements developed and eatobliahed tj tha Saa»
tary under thia subaection for newly cooaUvtMi iiwiVaiHal
houaing, other than manufacttired homea, shall be at laaat m
effective in performance as the energy perCDrmanc* nqiiii»
ments incorporated in the minimum promrty atandrda Ibit
were in effect under this subaection on September 80; IMS.";
(3) by inserting "(a)" after the section deaignation and addiDg
at the end thereof the fallowing new subsection:
"(b) The Secretary may require that each property, othar than a
manufactured home, autgect to a mortgaga insured undsr thia Act
shall, with respect to health and safMv, comply with ooa of tlw
nationally recosniwd model building codes, or with a Stat* or loeid
building code baaed oa one of the nationally rscagniaed BOdil
building codes or their equivalent The Secretary ahall be ranoB»
ble for determining the comparability of the State and local coasi ta
such model codes and for selecting for compliance purpoasa as
appropriate nationally recogniied model building cods where ■>
such model code has been duly adopted or where the Hacrataiy
determines the adopted code is not comparable,",
(b) The section heading of section 526 of such Act is amaudad la
read as fbllowa: "MmiiiUM Piopihtt Standakos",
Sk. 406, Section 530 of the National Housing Act is •
yGoot^le
PUBUC LAW 98-181— NOV. 30, 1983 97 STAT. 121;
(1) bjr itriking out "promptly upon their receipt from the
borrower" and inaerting in lieu thereof the following: (I) in the
ease of loam or mortgages respecting one- to four-family re^
dencee, promptly upon tfieir receipt from the borrower, and (2)
in any other case, promptly when due to the Secretaty";
(2) by inserting "or due date, as appropriate." after "such
receipt '; and
(3) by inserting "or afl«r the due date, as appropriate," before
"and ending".
MOSTGAOB mSUKANCB FOK AMEBICAM SAMOA
Sbc. 407. (a) Section 9 of the National Housing Act is amended by 12USC1706d.
■naerting "American Samoa," after "the Trust Territory of the
Pacific Islands,".
(b) Section 201(d> of such Act is amended by inserting "American iz USC no7.
Samoa," after "the Trust Territory of the Pacific Islands,".
(c) Section 207(aX7) of such Act is amended by inserting "Ameri- 1^ USC 1713
can Samoa," after "the Trust Territory ot the Pacific Islands,".
ASnCNMKNT or BICTION IIl(gK41 HOBTOAOn TO OOVKRNHXNT
Sk. 40S. Section 221(gX4} of the National Housing Act U amended 13 USC 17151.
by Inserting "(A)" after the paragraph designation and by adding
the following new subparagraph at the end thereof:
"(B) In processing a claim for insurance benefits under this para-
graph, the Secretary may direct the mtwtgagee to assign, transfer,
and deliver the ori^nal credit instrument and the mortgage secur-
ing it directly to the Government National Mortgage Association in
lieu of assigning, transferring, and delivering the credit instrument
and the mortgage to the Senetary. Upon the assignment, transfer, Contnct
and delivery of the credit instrument and the mortgage to the lermiMii™.
Association, the mortgage insurance contract shall terminate and
the mortgagee shall receive insurance beneflts as provided in sub-
paragraph (A), "nie Association is authorised to accept such loan
documents in its own name and to hold, service, and sell such loans
as agent for the Secretary. The mortgagor's obligation to pay a
service charge in lieu of a mortgage insurance premium shall
cmtinue as long ss the mortgage is held by the Association or by the
Secretary. The Secretary shall have ths same authority with respect
ta mortgagee assigned to the Secretary or the Association under this
subparagraph as provided by section 223(c)". 12 USC 1715n
Sue. 409. The first sentence of section 221(gX4XA) of the National
Housing Act, as redesignated by section 408 of this Act, is amended
t^ inserting after "this section" the following: "pursuant to a
commitment to insure entered into before the elective date of this
37-922 O - 84 -
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97 STAT. 1212 PUBUC LAW 98-181— NOV. 80. 1983
Subpert 2— SinKte-Funily Mwtgafs IntunnM hogram
TiTU I tmuKANca torn ^uanNo MAKurACimsD Moma
IZUSCnoa. Sk. lis. Section 2(a) of the NationAl Houaing Act k uwd^^ tv
inserting tlw following before the l«st undeaigBatad p«ngnpa
thereof:
'"Hie insurance authority provided under thia sactioo amj ht
made available with raepect to an; existing i«»tinf»ff«ni'ii<l boms
that has not been injured under this sectioa if audi bd^M WM
constructed in accordance with the standards iMUsd andir lb*
National Manufactured Housing Construction and Sale^ Standtt4i
42 use 5401 Act of 1974 end it meet* standards aimilar to the min.M^iin pnj|MiU
121330 I7(n Standards applicable to existing homes insured under Mia IL .
DfCRKASKD TTTLB I LOAN LOCrn VOS HANUTACnnXD WWn AND LOB
1ZUSC1T03 Sac. 416. (a) Section 2(bKl) of the National Hoa«b« Act is
amended —
(1) in subparagranh (Q, by striking out "$22,600" aDd sB tiMt
follows through modules}" and inserting in lien tkasaef
"»40,500";
(2) in subparagraph (D), by striking out "S3G,000" and aU tiMt
fbllaws through modules)" and inserting in lien thstarf
"$54,000"; and
(3) in subparagraph (E), by striking out "such an ;
may be neceaaarr, but not eiceeding $12,500," and ii
lieu thereof "$13,500".
(b) Section 2(bX2) of such Act is amended by striking out tha lart
n dollar amounts specified ii
(bXlNE) mav be increased on an area^byntrea baaia to tha aslant dw
Secretary deenu neceasaiy, but not to eiceed the nerrantata bf
which the maxim nm mortgage amount of a one-fami^ raaidsnea ■
the area is increased by the Secretary under sectioo SOSCbXS-'-
■BINANCtNO MMtUTACtUXn HOIOS UNDn TRLK I
Sk. 417. Section 2aiX6) of the National Housing Act ia a:
bj adding at the end thereof the following n
"(C) The owner-occupant of a manufactured home or a booh ana
lot which was purchased without aasistance under this f^irm bst
which otiierwise meets the requirements of this seetiMi maj rrft
nance ludi home or home and lot under this section if tha home was
constructed in accordance with standards established under MCtka
604 of the National Manufacttired Housing Construction and SafMj
Standards Act of 1974.",
COOmATIVC HOUaiNO
Sk. 419. Section 203(n) of the National Housing Act is
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PUBUC LAW 98-181-NOV. 30. 1983
Ul in paragraph (1), by inserting the rollowing before the
period at Uie end of the second sentence: "or the construction of
which was completed more than a year prior to the application
for the mortgage insurance" i and
(2) by striking out "nonprofit" in paragraph (2XA).
Sbc. 420. (a) The first sentence of section 234(c) of the National
Housing Act is amended by striking out "(2)" and all that follows
through the period at the end thereof and inserting in lieu Uiereof
the following: "and (2) at least SO percent of the u' ''~
covered by mortgages insured under this title ar
mortgagors or comortgagora.".
(b) The third sentence of section 234(c) of such Act is amended by
striking out "(A)" and all that follows through "(25,000" the second
place it appears and inserting in lieu thereof the following: "(A)
in the proje<
supied by th
nofa
in the area pursuant U
(c) Section 234 of such Act is amended by adding at the end
thereof the following:
"(k) With respect to a unit in any project which was converted
from rental housing, no insurance mav be provided under this
section unless (1) the conversion occurred more than one year prior
to the application for insurance, (2) the mortgagor or comortgagor
was a tenant of that rental housing, or (3) Uie conversion of Uie
property is sponsored by a bona fide tenants oreanization represent-
ing a m^iohty of the households in the project.' .
BINCLS-PAMILV MOBTGAOt INSuaANCE ON HAWAIIAN HOMB LANDS
MORTDAOI INSUAANCE O.
"Sbc. 247. (a) The Secretary, subject to such conditions as the
Secretary may prescribe, may insure under any provision of this
title that authorizes such insurance, a mortgage covering a property
upon which there is located a one- to four-family residence, without
regard to any limitation in this Act relating to marketability of title
or any other limitation in this Act that the Secretary determines is
contrary to promoting the availability of such insurance on Hawai-
ian home lands, if—
"(1) the mortgage is executed by a native Hawaiian on prop-
erty located within Hawaiian home lands covered under a
homestead lease issued under section 207(a] of the Hawaiian
Homes Commission Act, ISM, or under the corresponding provi-
sion of the Constitution of the State of Hawaii adopted under
section 1 of the Act entitled "An Act to provide for the admis-
sion of the State of Hawaii into the Union ', approved March 18,
1959 (73 Stat. 5>.
"(2) the property will be used as the principal residence of the
Mortgagor; and
"(3) the Department of Hawaiian Home Lands of the Stete of
Hawaii (A) is a comortgagor; (B) guarantees to reimburse the
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PUBLIC LAW 98-181-NOV. 30. 1988
SMretar; for any mortgage in«urance claim paid in connectioa
with a property on Hawaiian home lands; or (C) oflua other
aecurjty acceptable to the Secretary.
"(b) Notwithstanding any other provision of thia Act, tbtt Saci*-
tary may, with respect to mortgages eligible for iasurance luidar
subsection (a), insure and make commitments to insuie advances
made during construction if the Secretary determiiw that the
proposed construction is otherwise acceptable and that do fnasibls
financing alternative is available.
"(c) For purposes of this section:
"(DThe term 'native Hawaiian' means any dsacemUnt of not
less than one-half part of the blood of the racaa inhabitinc th*
Hawaiian Islands before January 1, 1778.
"(2) The term 'Hawaiian home lands' means all laitda cmn
the status of Hawaiian home lands under aectioa 204 of tfae
Hawaiian Homes Commission Act, 1920, or under Iha cum-
sponding provision of the Constitution of the State of Hwaii
adopted under section 4 of the Act entitled "An Act to pravida
for the admission of the State of Hawaii into the Union",
approved March IS, 1959 (73 Stat. 5).".
SINCtJ tAUlLI tlOStCAGI INSUSANCt o:
"Sec. 248. (a) The Secretary, subject to such special conditioaa as
the Secretary may prescribe, may iruure under any provisiori at this
title that authorizes such insurance, a mortgage covering a ptofMr^
upon which there is located a one- to four-family residence, without
regard to any limitation in this Act relating to marketabilitjr of tiUa
or any other limitation in this Act that the Secretary detMnninaa ii
contrary to promoting the availability of such insurance on 1~Hian
reaervations if the mortgage (1) is executed by en Indian triba nd
the property is located on trust or otherwise restricted landa; or (S ii
eiecul«d by a member of an Indian tribe who will use the rmmttj
as a principal residence and the property is on trust (anoa w
otherwise roitricted land.
"(b) Notwithstanding any other provision of this Act, with rsapatt
to mortgages covering a property upon which there is locatad a ona-
to four-family residence —
"(1) uie Secretary may insure and make commitmonta In
insure under this title pursuant to this section advanoaa mad*
during construction where the Secretary determines that the
proposed construction is otherwise acceptable end meats aa
applicable tribal or national model building code, and that no
bauble financing alternative is available;
"(2) the applicable percentage limitation on the amount of tha
principal obligation of a mortgage based on the appraiaad valos
or replacement cost, as appropriate, of a one- to feur-fiunily
owner-occupied residence contained in this title shall apply ia
the case of all mortgages insured pursuant to this aaction
without regard to whether the residences are ownsriKcupiad
where the residences are owned by the tribe; and
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PUBUC LAW 98-181— NOV. 30. 1983
"(3XA) the Secretary may require an Indian tribe, only m a
condition of insurance made under this title pursuant to this
•ection, to pledge income from tribal resources or income from
tribal osseta not subject to a rettriction by the Secretary of the
Interior or pledge grants under title 1 of the Housing and
Community Development Act of 1974 or any other Federal
inis(«red bv the Secretary of Housing and
pant program administered bv the Secretary of Housing and
Urban Development to be used to reimburae the Secretary for
any mortgage insurance claims paid in connection with red-
dencee insured pursuant (o this section; or
"(Bl in the case of an individual Indian mortgagor, the Secre-
tary may require a pledge of his or her share of distribulieid
income from tribal resources or income from tribal assets,
excluding any Federal grants received by the tribe.
"(c) The Secretary may not refuse to insure a mortgage under this
section to an individual home purchaser because there is no distrib-
uted tribal or trust fund income attributable to that purchaser.
"(d) Before making any commitment to insure a mortgage under
this section with respect to property located on tribal or trust land,
the Secretary shall require a showing by the tribe that it has
adopted eviction procedures to be used in the event of a default
"(e) A mortgage insured under this section may be assumed,
subject to credit approval by the lender and the consent of the tribe
to an assumption o( the existing lease or the grant of a new lease,
without an adjustment of the interest rate. Any other sale of a
property subject to a mortgage insured under this section may be
made only if a new lease is granted, except that a sale following a
foreclosure may be accompanied by an assumption of the lease with
the consent of the tribe.
"(fXU The Secretary shall make information regarding the status
and payment history of loans insured under this section available to
local credit bureaus and proapective creditors. Prior to accepting
assignment of a mortgage, the Secretary shall require mortgagees to
submit documentation that mortgagors have been counseled in a
face-to-face interview, informed of die provisions of this subsection
or other available assistance, and provided with the names and
addresses of ofTicials of the Department of Housing and Urban
Development to whom further communications shall M addressed.
"(2) Notwithstanding the requirement for convevance of title
under section 204, a mortgagee under this section shall be entitled to
receive the benefit of insurance under this section in the case of a
mortgage which is more than 90 days in default upon conveyance of
the lease agreement and the mortgage documents.
"(3) In the event that any default is cured, the Secretary shall
seek to reinstate the loan with the mortgagee or another mortgagee.
For purposes of this paragraph, the Secretary may provide appropri-
ate financial incentives to reinstate the loan commensurate with
sound management of the insurance fund.
"(4) If the Secretary determines that a mortgagor is not making a
good-faith effort to cure a default, and that trust fund or tribal
income is available under subsection (bX3XB), the Secretary shall
commence proceedings for the garnishment of the mortgagor's dis-
tributed share of trituil or trust fund income in order to collect loan
Cyments that are past due. Proceedings under this paragraph ma}
instituted in a tribal court, court of competent jurisdiction desig-
nated by the tribe, or Federal district court.
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PUBUC LAW 98-181— NOV. 30. 1983
"(5j If the Secretary determines such action ia necaMary to ^mUct
the iniurance Tund from undue loe*. the Secretary may mitiata
forecloBure proceedings with reapcct to any mortcaga acquired
under this subaection. Such proceeding ma; taka place in • tiftal
court, a court of competent juriadiction, or Federal district coiiit.
Any Buch court shall mive junadiction to convey to the Secnten the
remaining life of a lease on the real property and to order evictioa <f
the delinquent mortgagor.
iniatratii
u charge for ii
cover the full costs of the mortgage ii
section, except that such charge may i
annum of the principal amount of the mortgage outstanding at
time. Not later than SeptembeT 30. 1984, the Secretaty shall dataf-
mineand report to the Congress on thefeaaibility of eliminating any
eitcesa amount of the premium under this section over the^cmium
under section 203. In the event such premiums are not sufnciwit to
cover the full costs of the mortgage insurance program under tluB
section, the Secretary shall make recommendations U '' "
that will be sulTicient to
program undar this
[ceed 3 percMit per
"(1) The term 'Indian tribe' means any Indian o
native tribe, band, nation, or other organized group oi
nity of Indians or Alaska natives recognized as eluible for the
services provided to Indians or Alaska natives by the Secretary
of the Interior because of ita status as such an entity, or that ■
an eligible recipient under chapter 67 of title 31. United StaAsa
Code.
"(2) The term 'trust or otherwise restricted land' maana (A)
that area of land, as defmed by the Secretary of the Interior,
over which an Indian tribe is recognized by the United State* as
having governmental jurisdiction; (B) land held in trust flM' the
benefit of any Indian tribe or individual or held by any Indian
tribe or individual subject to a restriction by the United States
against alienation; or (C) land acquired by Alaska natives under
the Alaska Native Claims Settlement Act or any other Iwid
acquired by Alaska natives pursuant to statute by virtue of
their unique status as Alaska natives.".
HOUBINC ADMIN IBniATION 8IKGU FAMILY
Sk. 423. (a) Section 203 of the National Housing Act is
by inserting the following new subsection after subsection (c);
"(d) Notwithstanding any provision of this title governing maii-
mum mortgage amounts for msuring a mortgage secured by a ooa-
to four-family dwelling, the maximum amount of the mortgua
determined under any such provision may be increased by the
amount of the mortgage insurance premium paid at the time the
by striking out the following: ": Prouidtd, That the foregoing n
mum mortgage amounts may be increased by the amount of tb*
mortgage insurance premium paid at the time the mortgag* ia
insured .
(2) Section 213(bX2) of such Act is amended by striking out the
following; "; Prooided furttur. That the foregoing n
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mortgage
PUBLIC LAW 98-181-NOV. !
gage amounts may be increased by the amount of the r
insurance premium paid at the time the mortgage ii i
(3) Section 221(dK2XA) oTsuch Act is amended by striking out the
following: ": Provided further. That the foregoing maximum mort-
gage amount! may be increased by the amount of the mortgage
insurance premium paid at the time the mortgage ia insured '.
(4 ) Qause <A) of the third sentence of section 234(c) of such Act is
amended by striking out the following: ": Provided. That the forgo-
ing maximum mortgage amounts may be increased by the amount
of the mortgage insurance premium paid at the time the mortgage is
(5) Section 235(i) of such Act is amended—
(A) by striking out in paragraph (3NB) the following: ": Pm-
vidtd. That the foregoing maximum mortgs^ amounta may be
increased by the amount of the mortgage insurance premium
paid at the time the mortgage is insured":
. (B) by striking out in paragraph (3KC) the following: "; Pro-
vided, That the foregoing maximum mortgage amounts may be
increased by the amount of the mortgage insurance premium
paid at the time the mortgage is insured"; and
(Q by striking out in paragraph (3XD) the fallowing: ": Pro-
vided, That the foregoing maximum mortgage amounts may be
increased by the amount of the mortgage insurance premium
paid at the time the mortgage is insured".
(c> The amendments made by this section shall take effect only if
the Secretary of Housing and Urhan Development determines that
the program of advance payment of insurance premiums, with
specific regard to the effect of the provisions authorized by the
amendments made by such sections, is actuarially sound.
N-TO-VALUI KATIO H
Sbc. 424. (aJ Section 203(bK2) of the National Housing Act is
amended—
(1) by striking out "(except as provided in the next to the last
aentence of this paragraph)" in the TirM sentence and inserting
in lieu thereof the following: "lexcept as otherwise provided in
thia paragraph)": and
(2) by inserting after the first sentence the following new
sentence: "If the mortgage to be insured under this section
covers property on which there is located a one- to four-family
residence to be occupied as the principal residence of the owner,
•nd the appraised value of the prc^mty, as of the date the
mortgage is accepted for insurance, does not exceed $50,000, the
principal obligation may be in an amount not to exceed 97
percent of such appraised value.",
(&) The amendment made by subsection la) shall take effect only if
the Secretary finds and reports to the Congress that such amend-
ment, taking into account the higher loan-to-value ratio resulting
from the advance payment of mortgage insurance premiums, will
not adversely affect the actuarial soundness of the Federal Housing
Administration mortgage insurance program.
CongreflO-
12 use 1J09
yGoot^le
66
97 STAT. 1218 PUBUC LAW 98-181— NOV. 30, 1983
Sac. 425. Section 203a>XS) of the National Housing Act ii amendad
by itrikinK out alt that follows "an amount «qual to" thitiu^
"Bubaection:" and inserting in lieu thereof the followinc: " '
of (A) the otherwise applicable n '
rATMENT or ctjLiua wmtour AcquwmoM or Tin.!
Sk. 426. (a) Section 204(a) of the NaUonal HouMm Act ii
•mended—
(1) by Btriking out "Upon such conveyance and aangnmmOC
in the second sentence and inserting in lieu thereof Um falkw-
ing: "The Secretary is also authoriied, in accordanM with audi
regulations as the Secretary may prt^cribe, to make th» beneflt
of the insurance u hereinafter provided available to ths mort-
gagee, notwithstanding any provision of this aectton iMpiiriaf
conveyance of title to the property to the Secretary, (1> upon
sale of the insured property at foreclosure, where such ••)• Ji
for at least the fair market value of the property (with appnipri-
ate attjustments). as determined by the Secretary, and W tt|Nn
the assignment to the Secretary of all claims lafenad to im
clause (2) of the preceding sentence. The paymant of b
under the preceding sentence may be made for any n
insured pursuant to a commitment to insure iwued on or anar
the effective date of this sentence and. with the approval afUw
mortgagee, for any mortgage insured pursuant to a CMnout-
ment issued before that date. Upon the conveyance and aMB|ti-
ment referred to in the first sentence of this section or th* aale
and Bissignment referred to in the second sentence of tfaii
Bubeection,"; and
(2) by atriking out "and any amount" and all that follow*
through the colon preceding the first proviso of the final aen-
tence and inserting in lieu thereof the following: "any amoiuit
received as rent or other income from the property, lea* re ■■on-
able expenses incurred in handling the property, after aithar of
such dates, and, in the case of insurance benefits paid in
accordance with the second sentence of this section, any aanouiit
received upon the forecloeure sale of the property:".
(b) Section 204(j} of such Act is amended by inserting after "under
section 203" the following: "lother than a mortgagee raceJTing
insurance beneflta under the second sentence of BubeectkM (ajr
rTRUCTUILAL DBPKC18 IM VETKHANS' ADMINlSTKATION-ArrKOVn,
miERAL HOUSING ADMINISTRATION -INSURED NEW HOME*
Sec. 427. Section S18(aJ of the National Housing Act it a:
by striking out "approved for mortgage insurance prior to tbt
beginning of construction which he finds" and inserting in Uau
thereof the following: "that, before the banning of conttruetion,
was approved for mortgage insurance under this Act or tot
guaranty, insurance, or a direct loan under chapter 37 of title M,
United States Code, end that the Secretary finds".
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PUBUC LAW 98-181— NOV. 30, 1983
KEINSURANCK DEMONfffRATION PBOGHAH
"SEINSUBANCE CONTHACTS
"Sec. 249. (a) The purpose of this KCtion is to authorize a demon-
■tnition mortgage reinsurance program designed to test the reaaibil-
ity of entering into reinsurance contracts with private mottgage
insurers in order to reduce Government risk and administrative
coots, and to speed mortgage processing. The Secretary shall limit
the demonstration under this section to not more than two adminis-
trative regions of the Department of Housing and Urban Develop-
ment, and shell assure that the program is in the financial interest
of the Government and will not result in loss of employment by any
employees of the Department of Housing and Urban Development
before September 30, 1985. The aggrt^ate number of mortgages
insured under this section in any administrative r^on erf the
Department of Housing and Urban Development in any fiscal year
mav not exceed 10 percent of the aggregate number ot mortgages
and loans insured by the Secretary under this title in such region
during the preceding fiscal year,
"(b) Notwithstanding any other provision of this Act incorwstent
with this section, the Secretary is authorised to provide mortgage
inaurance with respect to one- to four-family dwellings under sec-
tions 203(bl, 234, and 245 through reinsurance contracts with private
mortmge insurance companies Which have been detemtined to be
qualified insurers under section 30g(bX2XO. Such contracts shall
require private mortgage insurance companies to —
"lU assume a percentage of loss on any mortgage insured
pursuant to section 203(b), 234. or 245 covering a one- to four
family dwelling, which percentage of loss shall be set forth in
the reinsurance contract; and
"(2) carry out (under appropriate delegation) such credit ap-
proval, appraisal, inspection, commitment, claims processing,
property disposition, or other function as the Secretary puiau-
ant to regulations, shall approve as consistent with the purpoees
of this section.
"(c) Any contract of reinsurance under this section shall contain
such provisions relating to the sharing of premiums on a sound
actuarial basis, establishment of insurance reserves, manner of
calculating claims on such insurance, conditions with respect to
foreclosure, handling and disposition of property prior to claim or
settlement, right of assignees, and other similar matters as the
Secretary may prescribe pursuant to regulations. Pursuant to a
contract under this section, a private mortgage insurance company
shall endorse loans for insurance and take such other actions on
behalf of the Secretary and in the Secretary's name as the Secretary
may authorize.
'li) The Secretary shall require any private mortgage insurance
company participating in the program under this section to provide
reinsurance for those mortgages offered by the Secretary for inclu-
sion in the program.",
(bl The Secretary of Housing and Urban Development shall evalu-
ate the reinsurance program under section 249 of the National
Housing Act and, not later than March 1, 1985, submit to the
12 use no9,
ITISy, nibz-W.
ij use nn
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PUBLIC LAW 98-181-NOV. 30. 1988
Congress b report setting forth the results of such evBluation. !
report shall include an evaluation of the possible efTect of a
ance pTagram on the charscteristio of the pool of m
remaining wholly under the applicable insurance funds and the
actuarial soundness of such funds under such conditions.
Subpart 3— Multifamily and Other Mortgage
Sk. 431. (a) Section ZOTOtXZ) of the NatknuJ Hausing Act >•
amended—
(1) by strilting out "any other mortgagor approvad by tha
Secretary" and all that follows through "reasonable return on
the investment." and inserting in lieu thereof the folkniinf:
"any other mortgagor approved by the Secretary. The SecitttBir
may. in the Secretary's discretion, require any such mortca^BT
to be regulated or restricted as to rents or sales, iliargea, capital
structure, rate of return, and methods of opermtknt so ■■ to
provide reasonable rentals to tenants and a tcaaonaU* t«tani
on the investment. Any such regulations or restHctiotis dull
continue for such period or periods as the Secretary, in tfae
Secretary's discretion, may require, including until the termina-
tion of all obligations of the Secretary under the insuranc* and
during such further period of time as the Secretary shall b« the
owner, holder, or reinsurer of the mortgage";
(2) t^ striking out "render effective Uie rt^lationa or wtric
tions" and inserting in lieu thereof "render effective any aadt
regulations or restrictions"; and
(3) by striking out "and directed" in the second senteooe of
the first undesignated paragraph.
(b) Section 234(dK2) of such Act is amended—
(1) by striking out "shall be regulated or restricted by tha
Secretary" and inserting in lieu thereof "may, in the Sacra-
tary's discretion, be regulated or restricted"; and
(2) by striking out "the regulation and restriction" and inaart-
ing in lieu thereof "any such regulation or restriction".
(cl The amendments made in this section shall not apply with
respect to mortgages insured by the Secretary of Housing and
Urban Development before the date of the enactment of this AcL
N CDtTAIN MULTIPAIiaLT
12 use 1715k. Sec. 432. la) Section 220(dX3KBNii) of the National Housing Act a
amended by striking out "Provided further," the first time it m^
pears and all that follows through "property or project.".
IZ use 1715/, (b) SecUon 221(d)(3Kiii) of such Act is amended-
(II by striking out "Pmmded. That" and all that follow*
through "property or project:"; and
(2) hy striking out further" the first time it appear*.
Id Section 221ldX4Mivl of such Act U amended-
(1) by striking out "Prooided, That" and all thai tbllowa
through ''property or project:"; and
<2) by striking out "further" the Tint time it appear*.
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PUBUC LAW 98-181— NOV. 30, 1983 97 STAT. 1221
UMTTATION ON ntEPATMBNT OP kinSTOAOn OM llVLTirAMn.T ICNTAL
UUITATION ON PKXPAVIIINT Or UOKIOACB OM ltVLrttAUB.\
"Sbc. 250. (a) During any period in which an owner of ■ multi- 12 U8C
family rental housing project ia required to obtain the approval of I^i5i-I5.
the Secretary for prepayment of the mortgage, the Secretary shall
not accept an offer to prepay the mortgage on such project unless —
"(1) the Secretary has determined that such project is no
longer meeting a need for rental housing for lower income
families in the area or that the needs of lower income familiea
in such project can more efTiciently and effectively be met
through other Federal housing assistance taking into account
the remaining time the project could meet such needs;
"(2) the Secretary (A) haa determined that the tenants have
been notifled of the owner's request for approval of a prepay-
ment; (B) has provided the tenants with an opportunity to
comment on the owner's request; and <C) has taken such com-
ments into consideration ; and
"(3) the Secretary has ensured that there is a plan for provid-
ing relocation asaiatance for adequate, comparable housing for
any lower income tenant who will be displaced as a result of the
prepayment and withdrawal of the project from the program.
"(b) In the case of a project oBsisted under secUon 236 or the 12 USC lTI5z-l.
proviso to section 221(dX5) of this title, section 101 of the Housing IZ USC ITIS/.
and Urban Development Act of 1965. or section 202 of the Housing 12 USC ITOla. 42
Act of 1959 where the owner has the right to prepay the mortgage V^usc^itoiq.
covering the assisted project without the Secretary's approval, the ^
Secretary shall give a priority for additional assistance under sec-
tion 8 of the United States Housing Act of 1937 and section 201 of 42 USC i43Tr.
the Housing and Community Development Amendments of 1978 to 12 USC ITiSi-l
tenants and applicants to become tenants of the project, if — i? i 'k°l''
"(1) fun^ to provide such additional BSsistance are available; ' '
"(2) the Secretary determines that making such additional
assistance available to the project is necessary to prevent the
owner from prepaying the mortgage.
"(c) Any owner of a mullifaroily rental housing project referred to
in subsection (b) who receives additional assistance under section 8
of the United States Housing Act of 193T under the priority estab- 42 USC UVt.
lished in subsection (b) shall—
"(1) fully utilize the assistance which is available;
"(2) grant a priority to applicants to became tenants who have
the lowest incomes; and
"(3) maintain the low-income character of the project for a
period at least equal to the remaining term of the project
mortgage to the extent that assistance is provided.
"(d) For purposes of this section, the term 'lower income families'
has the meaning given such term in section 3(bX2) of the United
States Housing Act of 1937.". « use 143T»
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PUBUC LAW 98-181— NOV. 30, 198S
AmuumoH or torn undo iiuLnrAuav oMinuKAMcc
12 use niSi-9 S(C. 434. Section 244(g) of the NaUon»l Hoiuinc Act ia a:
(1) in paragraph (1), by •trikiiu out "th* inortgaya ia ■public
housing agency or an iniured depoutory inatitutioo and ; and
(2) by itriking out paragraph {SI and inserting in lieu thereof
the foJlowing new paragraph:
'\5) As used in this subeection, the term 'public boudnc ■■mcjr'
has the meaning given such term in section 3(bK€) of tlM United
42 VSC M8T.. SUtes HousinK Act <rf 1937.".
a MANUfACTUIKD HOKE r*axa n« TIB
Sk. 435. The Tirst sentence of the second undengnat
1^
wgnik
12 DSC ni5i-7.
12 use ITlSw.
Ai use l»B2a.
n 20T(b) of the National Housing Act H m
out "no mortsege shall be insured hereunder" and li
thereof the fMlowing: "the Secretary may not insura any n
under this section (eiuxpt a mortgage with reapact to a n
1 home park deaigned exclusively for occupancy hj ddarty
klORTQAOl INSUKANCa r
t PUBUC KOBPcrAU
BC. 436. Section 242 of the National Housing Act is »»Miwliri-
(11 by inserting "public facility," in subsection (bXlXO aftw
"which is a"; and
(2) by inserting the following before the period at tlM aid tf
" n (!> ", and. in the case of public hoapitala, to OMOur-
is that are undertaken to provide iiMenfial baaltti
I to all teeidents of a community regardlasa c(
ability to pay".
MORTGAOB INBUKANCI fOB BOABD AND CARB HOM^
Stc. 437. (a) Section 232(aX2) of the National Hoiuing Act il
amended by inserting "and board and care homea" after "intarmaiB-
ate care facilitiea".
(b) Section 232(b) of such Act ia amended—
<l) by atriking out the period at the end of paragraph (3) and
Inserting in lieu thereof ; and"; and
(2) by adding the following new paragraph at the and thancC
"(4) the term "board and care home^ means any reatdnitial
facility providing room, board, and continuous prtrtactiva awf
sight that is regulated by a State pursuant to the pronriatona «f
section lG16(e1 of the Social Security Act, ao long as the hotMll
located in a State that, at the time of an applicatiMi ia mada fir
insurance under this section, has demonstrated to the Sacrataiy
that it is in compliance with the provisions of aueh aaetlM
IGlfte).".
(cKl) Section 232(d) of such Act is amended by inaarting "er ■'
board and care home" after "intermediate care facility" th* aacood
place it appears.
(2) Section 232(dX4} of such Act is amended—
(A) by atriking out "The" in the first sentence and Inaailint
in lieu thereof tlie following^ "(A) With mpeet to But«fB(
homea and intermediate care facilitiea and combiiMd nut^Bf
home and intermediate care facilitiea. the":
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PUBUC LAW 98-181— NOV. 80, 1983
(B) by atnking out "(A)" and "(B)" in the flnt sentence and
inMiling in lieu thereof "(i)" and "(ii)", reapectivetv; and
(O by adding the following new subparagraph at the end
thereof:
"(B) With respect to board and care homes, the Secretary
■hall not insure any mortgage under this section unleai he has
received from the appropriate State licensing agency a state-
ment verifying that trie State in which the home ia or is to be
located is in compliance wiUi the provisions of section 1616(el of
the Social Security Act", 42 use I382e
Education, and Welfare" and ii
(e) Section Z32(h) of such Act is amended by striking out "Health,
Education, and Welfare" and inaerting in lieu there<rf "Health and
Human Services".
(f>l) Section 23aiXl) of such Act is amended—
(A) t^ inaertirig "or to board and care homes" after "i
(B) by inserting the following after "Association": "(or any
subsequent edition specified by the Secretary of Health and
Human Services)";
(Q by striking out "Health, Education, and Welfare" and
inserting in lieu thereof "Health and Human Services"; and
(D) by inserting the following before the period at the end
thereof: "or as mandated by a State under the provisions of
section 1616(e) of such Act".
(2) Section 232(i)(2) of such Act is amended—
(A) by striking out "and" at the end of subparagraph (DY,
(B) by striking out the period at the end of subparagraph (E)
and inserting in lieu thereof "; and"; and
(C) by adding the following new subparagraph at the end
thereof:
"(F) in the case of board and care homes, be made with
respect to such a home located in a State with respect to which
the Secretary has received from the appropriate State licensing
agency a statement veri^ring that the State in which the home
is or IS to be located is in compliance with the provisions of
section 1616(e) of the Social Security Act.".
(g) The section heading of section 232 of the National Housing Act
is amended to read as follows: "Mortgage Insurance tor Nursing
Homes, Intermediate Care Facilities, and Board and Care Homea' .
Subpart 4 — Insurance of Alternative Mortgage Instruments
. 441. (a) Section 245(a) of the National Housmg Act is
(1) in the first sentence, by insertins after "income" the
followitw: "or with monthly payments end outstanding balances
a4)usted by a percentage change in a selected price index": and
(2) in the second sentence, by striking out "subsection (b) and
inaerting in lieu thereof "subsections (b) and (c)".
(b) Section 245 of such Act is amended l^ redesignating subeection
(e) aa subsectum (d) and by inserting the following new subeection
• ■■111(b):
lauscnisw.
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PUBLIC LAW 98-181— NOV. 30. 198S
"(cl Notwithatanding the pnrtiaiatm of aufaMCtion W. tb* Ski*-
tary may insure under any prDviaion of thk till* a ntortof* or Ioh
that meeU the requirement* of the flrct ■entance at suMcti^ it)
and that ha* provuion* permitting adjuatment of moaOdj \
and outatanding principal according to changes or pen
changM in a wleetod price indei if the Secretary d*
"(1) the principal obligation of tbe i
Md the percentage at the initial appraind vate rf
the proper^ ■pecifwd in aection 203(b> aa oT tha 4a^ Om
mortgage or loan i* accepted for inaunmee; and
"(2) the moDthlv payment* and principal oHi^tii of tt*
mortgage or loan thereafter will not at any time be in *-*
a rate greater than the percentage change in the p
■tipulatad in the initial mortgage or loan cutttrart.
In carrying out this subaection, the Secretan riiall give a ,
mortgagee executed by mortgagors who, ea detennined h^ the
tory, have not owned dwelluig unit* within the pacediiig I jmn.
The SecreUiy shatl. not later than March 31. 1984. piMerUa ranln-
tion* establuhing guideline* governing mortgage* and mm
deacrihed in this ■uhsection and ehall, to the extent ptaOiaUa,
conduct a demonstration program to insure mortgagea Md Imbi ii
accordance with thi* Bubaection during fiacal yean 19U and UK.
The aggregate number of mort^igea and loan* ii
exceed 10 percent of the aggregate number
insured by the Secretary under this title during the
year.".
(c) "nie section headmg of section 245 of auch Act ia
read aa follow*; "
CXADUATED
Sic. 442. Section 245 of the National Housing Act, ai
section 441, i* amended 1^ —
(l)redesifpiating subaection (dlasaubaection(«)l I
(2) inserUng after subaection (c) the following nv .
"(dXl) The Secretary may insure, under any proviaiao of thia lM«
relating to multifamily housing projects, mortgage* and loaaa wilk
provisions of varying rate* of amortization eorreaponJing to t
1 the (
t the
determine* mich mortgage* or loans (A) have promiae for ■■nairflag
houaing on)ortunitie* or meet special needs; <B) can be devalupadii
include any caf^uarda for mortgagors, tenants, or puirhaaeia thai
may be naceaaary to offaet special riak* of auch mortgaga^ and (O
have a potential lor acceptance in the private market.
"(2) Notwithstanding any other provision of thi* title, the prind-
pal obligation of a mortgage or loan inaured pursuant to thil
aubaection—
"(A) may not exceed initially the percentage of the initial
appraiaed value or replacement coat (tf the pinpertji ~~
that is required by the provision of this title under w
property is insured; end
"(B) thereafter (including all intereat to be deforred am
to principal) may not at any time be acheduled to aaa
percent of the projected value of auch property.
"(Si Tot purpoae* of this subaection. the proiectad vali
propMty ahall be calculated by the Secretary by ino
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PUBUC LAW 98-181— NOV. 30, 1983
AMunABLX kxn uoKTOAOts roft aiNOLa rAutLV Housmo
"AtUUSTABU KATV BINOI^C rAMILV MOKTCAOia
"Sbc 251. <a) The Secretary may insure under any provision of
this title a mortgage involving property upon which there is tocat«d
a dwelling designed principally for occupancy by one to four fami-
lies, where the mortgage provides for periodic adjuBtments by the
mortgagee in the ef^ctive rate of interest charged. Such interest
rate attjuetmenti may be accomplished through adjustmenta in the
monthly payment amount, the outitanding principal balance, or Uie
mortgage term, or a combination of these factors, except that in no
case may any extension of a mortgage term result in a total term in
•xsess of 40 year*. Aitiuatmenta in the effective rate of interest shall
correspond to a specified nationa] intsrest rate index approved in
regulations by the Secretary, information on which is readily acces-
sible to mortgagor* from generally available published sources.
A4justmenta in the effective rate of interest shall (1) be made on an
annual basis; (2) be limited, with respect to any single interest rate
incraase, to no more than I percent on the outstanding loan balance;
and (3) be limited to a maximum increase of 5 percentage points
above the initial contract interest rate over the term of the
mortgan.
"(b) The Secretary shall issue r^ulations requiring that the
mOTtga^ make available to die mortgager, at the time of loan
application, a written eiplanation of the features of the ailiustabla
rat« mortgage, including a hn>othetical payment schedule that
displays the maximum potential increases m monthly payments to
the mortgagOTOver the first 5 years of the mortgage term.
"(c) The aggregate number of mortgages and loans insured under
this section, section 245(c), and section 252 in any fiscal year may
not exceed 10 percent of the aggregate number of mortgages and
loans insured Iqr the Secretary under this title during the preceding
fiscal year.",
SHAKED APPaaCtATION UOETOAon rOE SINQU fAMnv HOUSlNa
"Sic 2S2. (a) Notwithstanding any provision of this title that is
inconsistent with this section, the Secretary may insui«, under any
provision of this title providing for insurance of mortgages on
properties upon which there is located a dwelling designed prind-
pally (br occupancy by one to four families, a mortgage secured b^ a
first lien on such a property or on the stock allocatad to a dwelling
unit in a residential cooperative housing corporation, which —
"(1) provides for the mortgagee to share in a predetermined
percentage of the property's or stock's net appreciated value;
yGoot^le
PUBUC LAW 98-181— NOV. 30. 198S
"(2) bMis iiit«r«at at a rate which a
theSMmUiv;
"(3) providei for amortiiation over a period of not to BKcaad M
yeart. but th« actual t«nn of the mortg^a (axduditv WIT
rafmancin^) may be not lew than 10 nor more than 30 ytmn,
and contain* nich proviaiont relating to rafinanciiv « Iht
principal balance of the mortgage and an; coatiivant datend
le SecietaiT Bajrraqnin
by regulation.
■ ahara of a property'*
Secretary) of the property or stock or payment in full of the n .
"Net gi^e, wluchever occur* Hnt For purpoaea of thia Mciioo, tfaa t«B
appndatcd ^n^t appreciated value' mean* the amount bv which the aalaa prica
*■""■ of tha property or itock Oes* the mortmora ■)'" — "
the value of the property or atock at the time
insure ii iaaued (with at^uBtment* for capital ii. , . .
lated in the loan contract). If there has faeco no aale or b
the time the mortga^'i ahare of net appreciBt«d value bwoaan
payable, the aales price for purpoaea (tf tnt* ■action ahall b« Jatar
mmed by mean* of an appraual conducted in accordance with
procedurea approved by the Secretary and provided for in tbt
mortgage.
"(c) In the event of a default, the mortgagee ahall ba entttM ts
Ante. p. 1218. receive the beneTita of iniurance in accordance with aectioM HUttX
but *uch insurance benefit* shall not include the mortfame's mbtn
indpal oMigat'
appreciated value. The term 'original principal OMlga'
□rtgage' as used in tection 204 thall not include tha a
the mortgage'
gee'* share of net appreciated value.
"(d) Mortgages insured purauant to thi* section which c
pravi*ion* for iharing appreciation or which otherwisa r
permit increases in the outstanding loan balance whid> a
lied under this section or under applicable rcgulationa ihall not bt
subject to any State constitution, statute, court decree, '™"""" law,
rule, or public policy limiting or prohibiting incfaaaie in the «ut-
■tanding loan balance after execution of the mortgage.
"(e) In carrying out the provision* of this •ection, the Sacntan
ahall encourage U)e use of inaurance under this sectioD fay low ana
moderate income tenants who wonld otherwise be displaced faj the
conversion of their rental housing to condominiui
ownership.
"(0 The Secretary shall prescribe adequate consumer p
and disclosure miuirements with rcepect to mortgagee mauieo
under this section, and may pracribe such other tanna and eondi-
tions as may be appropriate to carry out the proviaiona of this
"(g) The
number of
lortgagea and loans insured wndar
not exceed 10 percent of the aggregate number of mortgagea
loan* iniurad i^ the Secretary under thi* title during tha
flsea] year.",
SHAKED APFUCIATION klOaTOACn FOR MULTirAMILV HOUaMO
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PUBUC LAW 98-181— NOV. 30, 1983
"BHABKO APPBICUTION MORTCAQtS FOR MULTirAMILIr HOUSING
"Sic. 253. (a) Notwithitanding any proviaion of thia title that ia
inconaiatent with thii aMtion, tbi Sacratary may inaure, under any
proviaioa of thia titia providing for insurance of mortgagee on
pTopertiei including 5 or more family units, a mortgage secured by a
tint lien on tha property that (1) pnmdes far the mortgagee to share
in a predetennuwd percentage of the property's net anireciated
value; and (2) meets such other conditions, including limitations on
the rate of interest which may be charged, as the Secretary may
require by reflation.
"(b) The mortgagee's share of a property's net appreciated value
shall be payable upon maturity or upon payment in full of Um loan
or sale or transfer (as defined by the Secretary) of the property,
whichever occurs Tiret Hie term of the mortgage shall not be leas
than 15 years, and shall be repayable in equal monthly installments
of principal and fixed interest during die mortgage term in an
amount which would be sufficient to retire a debt with the same
principal and fixed interest rate over a period not exceeding 30
years. In the case of a mortgage which will not be completely
amortized during the mortgage term, the principal obligation of tlu
mortgage may not exceed 85 percent of the estimated value of the
property or prctfect. For purposes of this section, the term 'net
appreciated value' meana the amount by which the sales price of the
pitnerty Oess the mortgagor's selling costs) exceeds the value (or
replacement cost, as appropriate) of the property at the time the
commitment to insure is issued (with adiustments for capital im-
provements stipulated in the loan contract). If there has been no
sale or transfer at the time the mortgagee's share of net appreciated
value becomes payable, the salea price for purposes of thu section
•hall be determined by means of an appraisal conducted in accord-
ance with procedures approved by the Secretary and provided for in
the mortgage,
"(c) In the event of a default, the mortgagee shall be entitled to
receive the beneflts of insurance in accordance with section 204, but
such insurance benefits shall not include the mortgagee's share of
not appreciated value. The term 'original principal obligation of the
mortgage* as used in section 204(a) shall not include the mortgagee's
shar« M net appreciated value.
"(d) 1^ Secretary ahall establiah by regulation the maximum
percentage of net appreciated value which may be payable to a
mortgagat as the mortgagee's share. The Secretary shall also estab-
lish Aselosure requirements applicable to mortgagees making mort-
gage loans pursuant to this section, to assure that mortgagors are
infbnnedof the characteristics of such mortgages.
"(e) Mortgages insured pursuant to this section which contain
proviaionB for sharing appreciation or which otherwise require or
permit increasea in the outstanding loan balance which are author-
tied under thia section or under applicable regulations shall not be
subject to any State constitution, statute, court decree, common law,
rule, or public policy limiting or prolubiting increases in the out-
standing loan balance after execution of the mortgage.
"(f) 'nie number of dwelling units included in properties covered
by mortgages insured pursuant to this section in any Tiscal year may
not exceed 5,0(K).".
97 STAT. 1227
SKT'"
37-922 O - 84 -
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PUBUC LAW 98-181— NOV. 30, 1983
IKSUKANd or HOmGACCS
Stc. 446. (a) Th« firat aentencs of the Tirst undwigiwtod pansrub
of Mction 20T(cK3) of the National Houeuig Act ie ammdad fay
inaerting immediately after "periodic paymenta" the foUowin^
"lunlen otherwiae approved by Uie Secretary)".
(c) SectioQ 22l)(dK4) of auch Act ia ammded by inaertinc after
"periodic payment*" the following; "(unleai otherwiaa Bppnmd by
the Secretatyr.
(d> Section 221(dX6> of auch Act ia amended by inaertinc aAar
"periodic payments" the fbllowjnr "(unleai otherwin approved by
tbeSecTVtaiy)".
(e) Section 231(cX5} of auch Act ia amended by inaertinc tlbtr
"periodic paymenta" the following: "(unleia otherwiaa approved fay
the Secretary/'.
(0 The aggregate number of dwelling unite included in propertiea
covered by mortgage* insured pursuant to the authority gnntad ki
the amendments made by this section in any fiscal year maj not
exceed lO.ODO.
pucutUH CHAKcn roa iNsuaANcs or AvroMA-rm moktoaob
12 use 1709. Stc 447. The first proviso in section 203(c) of the National Haw-
ing Act ia amended by inserting after "fixed for inauranoe" tbs
IZ use fUlowing: "(1) under section 245, 247, 251, 252, or 263. or any oUmt
'^'Izia^'im' financing mschanism providing alternative methoda for repay meat
VSvi of a mortgage that ia determined by the Secretary to invuva wA^
tiona]riak,or<2)".
HDOKT ON ROUS BQUmr CONVXXBION MORTOACn rOR THK ""imiT
Baport to Sac. 448. The Secretary of Housing and Urban Developmmt shall
Congma. evaluate the existing use of home equity conversioa martgagea liar
IZUSC 1709 (]^ elderly and, not later than the expiration of the 1-year period
'*°^' following the date of the enactment of this Act, submit to the
Congress a report setting forth the results of such evaluatioo. SuA
report shall include —
(1) an evaluation of whether the use of such mortcigca
improvea the financial situation, or otherwise meets the special
needs, of elderly homeownen;
(2) an evaluation of any risks incurred by mortgagor* sa a
result of the un of such mortgagee, and any reoommandatioas
of the Secretary for appn^Miate safeguards to be ■"^'■vitid ta
such mortgagee to minimise such risk*;
(3) an eviJuation of the potential for acceptanea of auA
mortgages in the private marketi and
(4) any rectanmendations of the Secretary for the «_
ment of a Federal program of insuring such mortg^ea.
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PUBLIC LAW 98-181— NOV. 30, 1983
Pact B— Fux» and Ptonotrv Inbueancb Pkoosams
97 STAT. 1229
Sic. 451. (a) Section 1319 of th* National Flood Iiuurance Act of
1968 it anwiuM by ftriking out "November 30, 1983" and iiuertinK
in lieu thereof "September 30, 1986".
(b) Section 1336(a) irfauch Act is amended by itrikingout "Novem-
ber 30, 1983" and inserting in lieu thereof "September 30, 1985".
(c) Section 13T6(c) of «uch Act is amended^
(1) by ftriking out "and" after "19S1,"; and
(2) by inserting the following before the period at the end
thereof ", not to exceed ^9,752,000 for the rucal year 1984, and
■ueh Buma aa may be necessary for fiacal year 1985".
(dXU The National Flood Iniurance Act of 1968 is amended by
striking out "Secretary" and "Secretary's" each place they appear
therein (other than aa a reference to a Secretary other than the
Secretary of Housing and Urban Development) and inserting in lieu
thereof Director" and "Director'a", reapecUvely.
(2) Section 1304(a) of such Act is amended by striking out "Secre-
tary of Housing and Urban Development" and inserting in lieu
thereof "Director of the Federal Emergency Management Agency".
(3) Section 1333 of such Act is amended by inserting "original
exclusive" before "jurisdiction",
(4) Section 1340(aX2> of such Act is amended b^ striking out
"oHicera and employees of the Department of Housmg and Urban
Development, and".
(5) Section 1341 of such Act is amended by inserting "original
exclusive" before "jurisdiction",
(6) Section 1360(aX2) of such Act is amended by striking out
"within Tifleen years following such date" and inserting in lieu
thereof "by September 30, 1985'^.
(7) Section 1360 of such Act is amended by adding at the end
thereof the following new subsection:
"(d) The Director shall, not later than September 30, 1984, submit
to the Congress a plan for bringing all communities containing
flood-risk sones into full program status by September 30, 1987..
(8) Section 1370(bX6) of such Act is amended to read as follows;
"(6) the term 'Director' means the Director of the Federal
Emergency Management Agency.".
(eXl) The Flood Disaster Protection Act of 1973 is amended by
striking out "Secretary" and "Secretary's" each place they appear
therein (other than aa a reference to a Secretary other than the
Secretary of Housing and Urban Development) and inserting in lieu
thereof ' Director" and "Director's", respectively.
(2) Section 3(aX6> of such Act is amended to read as follows:
"(6) 'Director' means the Director of the Federal Emergency
Management Agency.".
It) Section 15(e) of the Federal Flood Insurance Act of 1956 is
■mended by striking out "Secretary" the first and third places it
appears therein and inserting in lieu thereof "Director of the
Federal Emergency Management Agency".
(gXl) Thn premium rates charged for flood insurance under any
program eatablished pursuant to the National Flood Insurance Act
AhU. p. 746.
42 use 4D56.
42 use 4127,
date of the enactment of this Act and ending on Septomberlli
D the
42 use 40T2.
42 use 4101
12 use 4121,
42 use 4003.
4012a.
410.'i-4l07. 412S.
42 use 4015
42 use 4001
yGoot^le
97 STAT. 1230
PUBUC LAW 98-181— NOV. 80, 198S
(2) The Pederal Inaurancc Administrator Ami], aot latw than
June 30, 1984, aubmit to the CongreM a report with rennet to the
premium rate itmcture for flood insurance made available pmsoaBt
to the National Flood Insurance Act of 1968. Such report riiall
include an explanation of any increases in such pramiuias that tb*
Administrator anticipat«a will be made before October 1, 198Sl
CaiME AND MOT INSUaANCI
Sac. 452. (aXU Section 1201(b)(1) of the National Housii« Act is
amended Inr striking out "this title shall terminata on Novambar SO,
1983," and inserting in lieu thereof the followinc: "part B shall
t«rminala on November 30, 1983. and parts A, C, and D diall
terminate on September 30, 1984.".
(2) Section 1201(b) of such Act is amended by adding at tba and
thereof the following new paragraph:
"(3) Tht Administrator shall notify participating inauian ondsr
part B that the reinsurance authority of the Adminiatrator nndsr
such part shall terminate on November 30, 1983.".
(bNl) Title XII of such Act w amended by striking out "Secrataty
and "Secretary's" each place they appear therein (other than aa a
reference to a Secretar? other than Uie Secretary of Housin| and
Urban Development) and inserting in lieu thereof "Diractor^ and
"Director's", respectively.
<Z) Section 1203(a) of such Act ia amended—
(A) by striking out "and" at the end of paragraph (15);
(8} by striking out the period at the end of paragraph (16) and
inserting "; and ' in lieu thereof; and
(Q by adding at the end thereof the following new paragraph:
"(17) 'Director' means the Director of the Federal Emergancgr
Management Agency.".
(3) Section 1232(2) of such Act is amended by striking out "officers
and employees of the Department of Housing and Urban Pavalop-
ment, and' .
(4) Section 1247 of such Act is amended by inserting "of tfaa
Secretary of Housing and Urban Development" after "regulationa)".
Sac. 453. The Director of the Federal Emer^ncy I
Agency may make a grant to a nonprofit organization, educatkxtal
institution or affiliated agency or entity, or State or local agvnn to
finance a study of the feasibility of expanding the national fknd
insurance program to cover damage or loss arising trom rinkhoka.
There is authorized to be appropriated not to exceed 11,000,000 to
carry out the provisions of this section.
Pamt C— RsGin^TORT A
[> OiHiH PnocKAia
aXAL KfATt snTLBMBNT PBOODURn
(l)by striking out "and" at the end of paragraph (6);
(2) 1^ striking out the period at the end of paragraph (fi) and
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PUBUC LAW 98-181— NOV. 30, 1983
"(7) the term 'ctmtrolM buaiiMM airangnneat' i
anangeraent in which (A) * penon who is in • poaitio.. . _ _
buaincM inddMit to or a part of a raat catat* aettleiuMit aervtca
_r beneficial ownerehip interert of more than 1 percent in a
provider of aattlemant aervicea; and (B) either of luch peraona
directly or indirectljr refera auch buaineaa to that provider or
ftffinnatively influence* the aelection of that provider; and
"(8) the term 'aaaoeiate' meant one who haa one or more of
the following relationahipa with a person in a poeition to refer
aettlement buaineaa: (A) a Hpouae, parent, or child of auch
person; (B) a corporation or buaineaa entity that controla, ia
controlled by, or is under common control with auch peraon; (O
an employer, officer, director, partner, franchisor, or franchiaee
of auch person; or fD) anyone who ha« an asreement, arrange-
ment, or understanding, with auch peraon, Uie purpoae or aub-
•tantial effect of which la to enable the person in a position to
refer aettlement buainess to benefit financially from the refer-
rala of such buaineaa.".
(b) Section 8(c) of such Act is amended—
(1) by atriking out "or" before "(3)";
<2I by ledeaignating clauae (4) aa clauae (5>,
(3) l^ inaerting the following after "brokere," at the end of
clauae (3): "(4) controlled buaineaa airangementa ao long as (A)
at or prior to the time of the referral a dwcloeure ia made of the
existence of such an arrangement to the person being referred
Knd, in connection with the referral, such person is provided a
written estimate of the charge or range of charge* generally
mode by the provider to which the peraon ia referred, except
that where a lender makea the referral, tht* requirement may
be iatisTied aa part of and at the time that the eatimatea M
aettlement charge* required under section 5(c) are provided. (B)
auch peraon ia not required to use any particular provider of
aettlement service*, and (C) the only thing of value that is
ncaived from the arrangement, other than the payments per-
mitted under this subsaction, is a return on the ownership
int«r«at or franchiaa relationship,"; and
(4) by insertins the following new sententw at the end thereof:
"For purpoaaa a( the preceding sentence, the fallowing ahall not
be connitored a violation of clause 4(B): (U any arrangement that
require* a buyer, borrower, or aeller to pay for the services of an
attorney, credit reporting agency, or real eatate appraiser
chosen bj the lander to represent the lender's interest in a real
aetal* transaction, or (ii) any arrangement where an attorney or
law firm rspreaanta a client in a real estate trannution and
iaauea or arranges for the issuance of a policy of title insurance
in the tranaactioD directly aa agent or through a separate
corporate title insurance agency that may be •stablished by
that attorney or law firm and operated ai an adjunct to his or
its law practice.".
(c) Section 8(d) of such Act is amended by striking out paragrs^
(2) and inserting in lien thereof the following:
'fZ) Any person or persona who violate tns prohibitions or limita-
ticna of tnis aactioD ahall be jmntly and aererally liable to the person
or psnona diarged far the aettlement aervice involved in the viola-
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PUBUC LAW 98-181— NOV. 30, 1983
tion in an unouut equal to thna timM tb* unount «f »aj ebmigt
paid for audi Mttlement Nrricw.
"(3) No peram or peraona ihall be UabU for * vkUiai of dw
prvvivona of wcticoi fi(cX4XA) if nich person or pericoi pcofas by >
prapondennce of the evidence that nich vioUtkn ma ■«!
intentional and naulted from a bona fide error notwitlHtaiidiBK
maintenance of procedune that an raaaonably adapted to vrad
•uch error.
'\i) The Secretary, the Attonuj General ef any Stata, or tfaa
inaurance commiaeiODer of any State may bring an aetkn to aqjeta
violationa of thia aection.
"(6) In any private action brought purauant to thia aiihaection, the
court may award to the pr«vailing party the court casta of the aetiaB
together with reeaonable attomeya feea.
(6) No provision of State law or reffulatit
stringent limitationa on controlled busuess arrangemeula ahall be
consbved as beiiu inconsistent with thia section.**.
(d) Section 16 of auch Act is mmimAmA to read as foUowK
"juaiaiHcnoN op couan
"Sbc 16, Any action pursuant to the provisions of ssctiow 8 or 9
may be brought in the United States district court or in any othar
court of competent jurisdiction, for the district in whidi tbe
property involved is located, or where the violation is allaged to
nave occurred, within one year from the date of tbe
the violation, except that actions brought by the Secretary, the
Attorney General of any State, or the u '— ' — '■ — '
any State rosy be brought '" ' "
occurrence of uw violaticm.".
(e) Section 19 of such Act is amended by adding the fidlowing n
subsection at the end thereof:
"(cKD The Secretary may inveatigate any facta, cooditioaa, no-
„ — ■■--■ — ly be deemed neceaaary or prq>er to aid ia
iforcement of the D!
ticca, or mattera that may ee deemed neceaaary or pnmer to
the enforcement of the provisions of this Act, in pTeotaTUag of nilas
■ettlement practices. To aid in the inv««tigationB, the SacrataiT ii
authorized to hold such hearinga, admmiatar suefa oatha. and
recniire by subpena tbe attendance and testimony of such w
and production of such documents as the Secretary de«
"(2) Any district court of the United Sutes within U
of which an inquiry is carried on may, in the caas of
refusal to obey a subpena of the Secretary issued under this s<
issue an order requiring compliance therewith; and any fUtura lo
obey such order of tbe court may be punished by such court sa a
contempt thereof.".
(0 The ameadmenta made by this aection shall become efbrtiva oa
January 1, 1964.
KATtONAL INSI'irUIS OP BUILOIND saBNca
f adding a
following new sentences: "In addition to the amounts authoriaad to
be appropriated under the first sentence of thia section, there is
autbcmied to be ^tpropriated to the Institute to cany out the
yGoot^le
PUBUC LAW 98-181— NOV. 30, 1983 97 STAT. 1233
proviBiou of thi* wction not to exceed 1250,000 for fucal year 1984.
Any Bmount appropriated under the preceefling sentence shall be
made available for expenditure or obligation bv the Institute only to
the extent of an equal amount received by the Institute after the
effective date of Uua sentence from persona or entities other than
the Federal Government.".
Sbc. 463. (aXl) Section 504(6) of the Solar Energy and Energy
Conservation Bank Act is amended —
(A) by inserting after subparagraph (G) the following new
•ubparturaphs:
"(H) air<oaditioning systems having better than average
eneno' efficiency ratings;
"(Dany residnitial energy audit;";
(B) by redesignating subparagraphs (fi) and (I) as subpara-
gra^is tJ) and (K), reanectively; and
(CI in subparagraph (K), as so redesignated in this para-
graph—
(i) by striking out "any residential energy audit,"; and
(ii) by striking out "(H)" and inserting m lieu thereof
■vy:
(2) Section 5a4ai of the Solar Energy and Energy (Conservation
Bank Act is amended —
(A) by inserting after subparagraph (I) the following new
■ubparanrapha:
"(3) air-conditioning systems having better than average
(B) by redoignating subparagraplis
graphs (L) and AD, respectively; and
[Q in subparagraph (tit), as so re
nibparagraph (tit), as so redesignated in this para-
grapn—
(i) by striking out ", and any commercial energy audit,";
(ii) by striking out "(J)" and inserting in lieu thereof
"(L)".
(b) Section 50S(f) of such Act is amended by adding at the end
thereof the following new sentence: "Each such advisory committee
AaU roeetatthecaOof its chairperson or a majority of its members,
and shall meet not leM than twice during each year.".
(cXl) SecticM) SlKa) (rf' such Act is amended—
(A) by striking out "and" at the end of parupraph (3);
(B) fc^ striking out the period at the end afpaiagraph
inserting in lieu thereof "j and"; s
(O Iv T^'^'"g at the end thereof the following new paragraph:
"(6) m the case of a reeidential building witfi 2 to 4 dwelling
onita and an owner or tenant whose income exceeds 150 percent
of the median area income, or in the case of a residential
building that is available for rent and is owned by a person
whose income exceeds 150 percent of the median area income —
"(A) an amount equal to 20 percent of the coet of the
residential energy conservation improvements; o
yGoot^le
12 use 3612.
PUBUC LAW 98-181— NOV. 30. 1968
(2) Section 511 of auch Act is smended by midiag at tlw wd
thereof Ute following new mibeectiim:
"(d) The Board may not limit the
that majr b« provided under this ■ubtitle for the
Ution of rMidential or commcraal energy ctMuerrinf
on the basis of the projected amount of energy cr
of such improvements. '.
(cXl) Section 514(aX2) of such Act b amended
"(2XA) the contractor who installs reeidential or e . _
energy conserving improvement* in a building shall, in O
tion with such improvemcnta. warrant in writinf that tta
owner or tenant receiving the proceeds of such loan shall (fa
those improvements found within 1 ]rear of ■"^■"■*'*^ to to
defective due to materials manufacture, design, or inslallatiaal
at a minimum be entitled to obtain within a reasonabla pariad
of time and at no charge appropriate replacement partly
materials, or installation; and
"(B) in the case of ener^ conserving improvMMiita twatallsd
by an owner or tenant without the asMstanee ef a «oati«clar,
s^h owner or tenant shall certify to the financial iustiUiliua
that he or aha has obtained warranties as appropriato from the
supplier fcH- the energy conserving measures:' .
(2> Section 514(bX4) of such Act is amei
semicolon at the end thereof the following: "unles
energy conserving improvements are installed in a bnildinc wfaidi k
either located in an area which ia not served br a public otilitr
deacribed in section 211(a) of such Act or which isMcatadiB an area
served by such a public utility but in which no list boa baan laads
public by the pubtic utility under section 215(aX3) of such Act or br
the Secretary of Energy".
(3) Section 514(bX5) of such Act is amended ta'Mod aa IbllowK
"(5HA) the contractor who installs residential or commatcial
energy conserving improvements in a building diall, in taaam^
tion with such improvements, warrant in writing that ths
owner or tenant receiving the proceeds of such loan ahall (hr
thoae improvements found within 1 year of insUllatioa to fas
defective due to materials manufacture, design, or iastallatkn)
at a minimum be entitled to obtain wiUiin a reasonabla pariad
of time and at no charge appropriate replacement partly
materials, or installation; and
"(B) in the caae of enersy conserving impmemanta Jnatallad
by an owner or tenant without the assistance et a eoatocto,
such owner or t^iant shall certify to the finandal inaUlMUan
that he or aha ho* obtained warrantiee as appropriato f^wn lbs
supplier (br the energy conserving measures; .
(a) Section 620 of such Act is amencted—
(1) by inserting "(a)" after the section dealgnalion; and
(2) Inr adding at the end thereof the following new aiibaaellow
"(b) Not later than 90 d^ after the effective date of tUa aabaM-
tion, the Board shall issue regulations that—
"(1) permit the provision of financial sssistanra undar this
subtitle for the purchase and installation of solar enSTgr ^^
tems of the active type, and the purchase and Installatfan of
passive and active type solar apace heat
yGoot^le
PUBUC LAW 98-181— NOV. 30, 1983
"(2) do not prohibit Uu use of tax-exempt financing in connec-
tion with any purchase or inctallation of reeidential or commer-
cial enenO' conserving improvements or solar energy eyBtams
aasisted under this eubtitle;
"(3) provide that a re^dential energy audit ihall not be
required as a condition of the receipt of unandal aMiatamce by
an owner or tenant of ■ residential building under thia eubtitle,
accept that auch regulationa may require Mich audit with
reapect to any auch building located in an area in which an
audit is available under the pnrtiamia of title II or VII of the
National Ener0 Conservation Policy Act;
"(4KA) estaUuh ■ iw»imnm limitation on the percentage or
amount of any flnancial aaaistance provided under this subtitle
that may be used for administrative expenses, which limitation
shall be 12 percent (or such higher percentage as the Secretary
may determine to be appropriate), or |20,000, whichever
■iDount is greater; and
"(B) pnmda that not more than one-half of any such amount
may be used by any State for its administrative expensea, except
that if any State is the eole administrative entity in such State
with respect to financial asaistance under this subtitle such
State may use all of such amount for such expensea;
"iS) estaUish criteria for the allocation of financial assistance
under this subtitle among eligible financial institutions; and
"(6) provide that aia amount of unexpended financial assist-
ance under thia subtitle tltat is recaptured 1^ the Board shall be
reallocated by the Board to eligible financial institutions under
thia subtitle. .
(fXl) Section 1971 of the Omnibus Budget Reeondliation Act of
1981 is amended—
(A) by striking out "such fiscal year" and inserting in lieu
thereof "of fiscal yean 1982 and 1983"; and
(B) by inaerUng after "SSO.DOO.OOO" the following; ", and for
fiscal year 1984 not to exceed (35.000,000,".
<Z)Secti(m622of the Solar Ene^y and Energy Conservation Bonk
Act is amended —
(A) by striking out the hyphen before paragraph (1) in subsec-
tira (a) and all that follows throu^ the period at the end irf
aubaection (b) and inserting in lieu thereof the following; "and
of sotar energy systems such sums as may be necessary for fiscal
year 1985.": and
(B) by redesignating subsection (c) as subaection (b).
Energy C
Buildingi Act of 1976 is amended to read as follows:
"authouzation or AppKoraiATioNa
"Sec. 422. Of the fUnds authoriied by secUon 1005(1) of the
Omnibus Budget Reconciliation Act of 1981 for energy conservation 42 USC TZTD
for ftseal year 19S4, not less than 1190,000,000 is authorized to be "<»<
oppTMaiatad to carry out the weathenzation program under this
p*rt. lliere is authoriied to be appropriated such sums as may be
mil I asm J tor flscal year 1985 to carry out such weatherication
yGoot^le
PUBUC LAW 98-181— NOV. 30, 1983
Sue. 46S. SectkN) 106(aX3> of the Hmuing Mtd Urbu DnvlopOHnt
Act of 1968 it amended—
(Ubr Krlklng out "1962" and inantins in Ueu thMWif "IMI";
Sic. 466. <e) Section 601 of the Hotuins and Uifaan DairriofaMOt
Act of 1970 is amended by itriking out the lecand aentenea mad
uuertiiiK in lieu thareoT the following: "There an autboriaid to b*
appropriated for activities under this title not to exceed tl9,0OO4IW
for fiscal year 1984, and nich luma aa may be iMceaaaiy for fiacal
year 1985, Of the amount appropriated under the pnoadiac Mn>
teoee for fiscal year 1984, not Iom than S2.000,000 ihall be providad
for implementation 6f a research program to be developed in cntMul-
tatioD with public housing agendas, which program shall identic
current problems of public housing management, specific solutioos
to such problems, and incentivea to encourage implemetitatMMi of
such aolutions.".
BUKvn or KONOuic a
1 The Secretary shall, __
national, regional, and local economic and houaing markat e
tions in a manner tiiat provides data ccnnparaUe to tfa« data
collected in such survey conducted in 1981.".
NATIONAL HOUSINO PAKTNXaBHtPS
Sic. 467. Section 906(aXl) of the Housing and Urban Development
Act of 1968 is amended—
(1) hv striking out "or" after "building" and inserting in Uev
thereof a comma; and
(2) by inserting after "rehabilitation" the followixig ", acquit-
tion. and fmancing".
■CrORT BBOASniNO ntOCRAX ckancis
Sk. 468. The Secretary of Housing and Urban Development shall,
not later than March 1, 1984. transmit a report to botn Housaa «t
the Congreaa that describes—
(1) the standards utilized by the Department of Housing and
Urban Devel^Knent to make determinations concerning
whether program requirements and changes to those raquito-
ments are implemented through the use of regulations, hand-
books, memoranda, telegrams, or other forms of formal gr
infbrmal notioes; and
<2) the system currently utiliied by the Department to asaura
that changes in the operation of departmental programs that
yGoot^le
PUBUC LAW 9*-181— NOV. 30, 1983 97 STAT. 1237
■ufaatantiallj aCect the eligibility, rights, or benefita of penona
applying for or raceiving usistancc under any luch progranu
an aubject to requirementB at notice and publication, eapedally
thooe requirements fpedfied in mbaectiona (b) through (e) oT
•ection 653 of title 6, United Sutea Code.
Sac. 469. Aa aoon as practicable following the date of the enact-
Federal Dntont Insurance Corporation, the Board of Governors of
tlw Federal Raaenw Syatam, and the Comptroller of the Currency,
diaU dvrelo^ a method of accurately reporting to the Coitgrees on a
periodic bans with respect to residential mortgage delmquendee
and feredoaurea. Each such report shall include information with
respect to the number of residential mortgage foreclosurea, and the
number of ais^- and ninetv-da; residential mortgage delinquende*.
in the Nation and in each State.
iaduded in a notice of funding availabiUty; and (2) t£ere expiree a
Mriod of aizty calendar dan following the date of such publication,
OBring which period the Secretary Mall fully consider any public
comments submittad with raapect to such demonstration program.
(b> Nothing in this section may be considered to authorise the
conducting of any demcmatration program by the Secretary of Hous-
ing and Urban Development
Regiilcr.
42 use 3!
Sic. 471. Section 864 of the Multifamilv Mortgage Foreclosure Act
of 1981 U amended by adding at the end thereof the following new 12 USC 3703.
sentence: "If the Secretary forecloses on any such mortgage pursu-
ant to nich other foreclosure procedures available, the provisions of
section 3G7(b) may be applied at the discretion of the Secretary.". 12 USC 3T06.
ALnmKATIVl MOaTQAOt TKANSACTIONS
Sec 472. Section 805(a) of the Alternative Mortgage Transaction
Pari^ Act of I9S2 is amended by inserting after "transactions" the 12 USC 3801.
fbUowiaf "(or to any class or type of alternative mortgage
Sbc 47S. Section 34I(d} of the Thrift Institutions Restructuring
Act ia amended by striking out "A lender" and inserting in lieu
tbereof Iha following: "With reapect to a real propertv loan secured
\j a lien on residential real property contaimng leas than five
dweUinf units, including a lien on the stock allocated to a dwelling
yGoot^le
97 STAT. 1238 PUBUC LAW 98-181— NOV. 30. 1983
T OWED THi ntxAsmr AND u4uio*noM or
Sac 474. (a) In order to provide for the manaoBment
liquidation of the aneta, and diachar^ the Uabilitiea,
incurred in connection with the new communities praaram Mtthor-
i»d purauant to title IV of the Houaing and UiImb DwwInpmiBt
Act of 1968 and title VII of the Houaing end Urbaji Di»elog»«Bt
Act of 1970 (bM«an«r leferrad to in thia aection m "title IST «nd
"title VQ", reenecUvely), the liquidation of the new woimMiiiti—
proKram ahall be carried out punuant to the pcoviaicna cf law
applicable to the revolving fund (UqM^tu ' ^-"•-'--'
': upon the transfer by the Secretary of Housing and Uffaa*
DBvelojMnent QMreaflM- in this section referred to as the "8mi»
tary") of the a»ets and liabilities at the fiind aulhoriwd imdar
12 U9C tSiB. section 717 of title VH to such ravolving fund, m rw|u^«d in tiUa I
of the Department of Housing and Urban Development>IndspandsBt
Anir, p. 219. Agendes Appropriation Act, 1984. The Secretarr shall report ta Um
Report to Congress not Issi than sixty days prior to taking any Kiiaa with
"™«'*" respect to the diapoution irf real prop ^ ■-.'--- .■--- ■-- —
moner mortgage) which involves any n.
B from the Department M Houaing and Urban Devdop-
the diaposition M real property (other than a purchaas
rtgage) which involves Boy nirtner potential liabui^of or
■nent with respect to any proper^ so tran^rred.
(b) In carrying out thajturpoassofsubssctioM (a), all mootga in tha
ravcdring fuitd (Uquidatuig pregrama) shall be available for necea
•arv adminiatrative and other espenaee of servicing and tiquidatinc
obligations guaranteed pursuant to section 408 and ■ecUoo 713 at
42USC3902, tiUe IV and title VII, rsspMrtlvely, including oosts cf servicM (indnd-
^^'^ ing legal SNvioes) parformed on a contract or fee basis, and to
diachargeanyotharliability acquired or incurred in connectioa widi
'' IT cotnmnnitiea program. Notwithstanding any other provt-
the protection of the interaata of the revidTing fund Q
propvms), to pay out at anj • . • -
chai^ss in coimection with tl
pra^ams;^ to pay out of an* moneys in sudt ftmd idl swpiwses a
"htha a
Act aa a result of recoveries under security, subragatiMi, or other
rights in connection with the new communities program.
,_, .- ._.__..... , . -•^- "tie I cJtbe Department
tdent Agendea Appn-
priation Jut, 1984, the Sservtary of Housing and Urban Dsnlop-
(c) After making
of Housing and Uiban DBvelopment-Indapendent /
it may issue obligations to the Secretary cf the Treasory in an
amount sufficient to enable the Seeretan of Houaing and Urban
Development to tatisfr any guarantee made pursuant to sectioa 408
or 71S of title IV or UUe Vn. respectively, and othsrwiss carry oat
ths functions authoriMd by thia section. The obUgatioBS iMuad
under thia subssction shall have aucb maturitiee and bear sudi tito
yGoot^le
PUBUC LAW 98-181— NOV. 30, 1983 97 STAT. 1238
Sacreta^ of the Treaoury u authorizad to use u a public debt
trmnaaction tha proceada from the aale of any aecuritiea laaued under
chapter 31 of title 31, United Statea Code, and the purpoaea for % Stat aSJ.
whkli aecuritiea mw be laaued under aucb chapter are ectended to ^' ^^ ^"^^ ''
include purchaaea of obligationa iwued under this aubaection. *^'
(d) Upon the transfer required in title I of the Department of
HouainK and Urban Development-Independent Afenciea Appropri-
Btioa Act, 1984. each obligation iaeued by the Secratary of Hounng '*"'*■ P 219-
and Urban Development to the Secretary of the Treaauiy purauant
to aection 407(a) w TlTft) of tMe tV or title VII. reapecUvely. «ysC3906,
together with any promiae to repay the principal and unpaid inter- *"'
eat which hai accnied on each obligation, anid any other term or
condition apedfkd by each auch obligation, ia canceled.
(e) TiUe IV, except for aecti<ma 408, 411. 413. 414. and 416, and part i^ USC 3901 it
B of tiUe Vn. except for aectiona 724, 725, 726. and aufaaectiona (b) ^..e^.,.,
thrwigh (e) of aection 727, are hereby repealed. Section 717 of UtJe Z,^'^ *^" "
VH ahall remain in effect until completion of the tranafer required 42 uSC 4.SI8
in title 1 of the* Department of Housing and Urban Develofunent- note.
Independent Agenciea Appropriation Act, lEKt4. Tha Secretary may *2 use U36i>
not implement the amendment to aection 214 of the Housing and "^^
Community Development Act of 1980, made Inr aection 329(a) of the
Housing and Communitr Development Amendmenta of 1981, before 42 use 1136a.
tba expiration of the one-year period following the date of the
enactment of thla Act Any actiona taken, prior to repeal, under the *^ "^ 3^1
authority of any of the sectiona which are repealed oy this aection ""^
diall coDtlnue to he valid. Nothing in this aubaection shall impair
tlM validly oif anyguar«BteM which have been made purauant to
title IV or title VU and any auch guaranteea ahall continue to be 42 usc 390t,
fovemed hj the praviaiona of title IV or title VII, as api^icable. aa ^^>
thay existed immediately before the date of the enactment of this
Act
Part D — SscoNnAav Moktcagi Makkkt pRoosAMa
AMOUNT n BS OUAaANTKED UNDBK THB OOVXaNMENT NATIONAL
MOKTOAOX ASSOCIATION HOBTOAOI-BACUD SICUBrnXS FKKmjtU
Sac. 481. Section 306(gX2) (^ the Federal National Mortgage Asso-
ciation Charter Act is amended to read as toUowa: 1^ "SC mi.
"(2) Notwithstanding any other provision of law and lultject only
to ttia abaanca of qnaUiled requaata for guaranteea, to the authori^
pravidad in thia aubaection, and to any nmding limitation approved
in appropriatiim Acta, the Association ahall enter into commitments
Uir oadi of the tbcal yeara 1984 and 1985 to issue guarantees under
thia aubaection for each auch fiscal year in an aggregate amount of
168,260,000.000.".
tei 482. The commitment isaued under aection 306(b) of the
Federal National Mortgage Association Charter Act, known as
GNBIA commitment numbered 926-984, to purchase a mortgage
Inaured under auch Act ahall be granted for 43 months without the
hnporition of additional fisea beyond the initial commitment fee.
yGoot^le
97 STAT. 1240 PUBUC LAW 98-181— NOV. 80, 1988
■PKIAI. ASnRANCK AND DfKBGKNCT HOKTOAOB rVKMAMK AMVT
ANCI FUNCnONI or lia OOVKmNMKNT NAnONAL MOKRIAM
ASSOCIATION
Sk. 483. (a) SectiMu 305 and 813 of the FedenJ N«tioa»l Uort-
gage AMociation Charter Act and aection 3(b) of tba Ihiwigwuj
Hwne PurchoM AMiManee Act ^ 19T4 are hen^ rapealad.
usL iTzse (I,) ^j^ purchaM or comtniUDent to purchaae any iM(tgic» pan»
use 1720 ant to aection SOS or 313 of the FMleral NatioDal Hortfif* Aaaaci-
Charter Act made befoT* the di
' dng and diapoaition d
ovenied hy the provi
liat«ly briim the effoctiva data of thia MctioB.
TITLE V— RURAL HOUfflNG
12 use 1720.
lT23e.
la the "Rural HouaiDg Antand-
Sk. 602. (a) Section 50I(bX4) of the Houaing Act of 1M9 b
amended to read a* follows:
"(4) For the purpoee of thia title, the temu low incona ftuniliw ar
peraoni' and Sfen* low-incoi
familiee and persona whoee
levela eatablished for lower ini
familiee by the Secretary of Houaine and I
the United State* Houeing Act of 1937.".
(b) Section 501(bX5) of such Act is amended to read aa fidlowK
"(5) For the purpoee of thia title, the terms 'income' and 'adtuatid
income' have the meanings given by sections 3(bK4) and StbXSIl
leapectively, of the United State* Housing Act of 1937.".
BicnoN MI
Sk. 503. (a) Section 502 of the Housing Act of IE
adding at the end thereof the fbllowinr
"(d) On and after the effective date of the Rural Housing Amend-
roenta of 1983—
"(1) not leas than 40 per centum of the dwelling units financed
under this aection shall be available only for occupant 1^ vaty
low-income familiea or persons; and
"(2) not leea tlian 30 per centum of the dwelling unite in «adi
State financed under this aection ahall be availaUa only Ibr
occupancy by verv low-income familiea or persona.
"(eXl) A loan whidi may be made or insured under thia aectkn
with reapect to housing shall be made or insured with raqwct to ■
manufoctured home or with reepect to a manufactured mbm and
lot, whether such home or such home and lot ia real proi»«Hy.
peraonal property, or mixed real and peraonal property, if—
"(A) the manufactured home meets the standards pwaorfbad
puiauant to title VI of the Housing and Communis Dawdo^
mentActofl»T4:
"(B) the manuwcttired home, or the manufactured beoM and
lot, meets the installation, structural, and site r
yGoot^le
PUBUC LAW 98-181— NOV. 30, 1983 97 STAT. 1241
which would aplrijr under title n of the Natumal Hoiuing Act; li USC ITDT.
.„. -., h (2), the numufo^ured home meets the energy conaerving
requiremente eppliceble to boueiog other then manufactured
houtinc financed under thk title.
"(2) Energy eoneerving requiremente eetabliahed by the Secretary Energy
for the purpoee of paragraph <lKQ«hall— ?^'^"' u.
' (A) reduce the opeiating coeti for a borrower by maKJmizing requireroenu.
the energy aavings and be coet-effective over the life of the
manufactured htnne or the term of the loan, whichever is
ahorter, takiiu into account variations in climate, type* of
energy used, the coat to modify the home to meet such require-
menta, and the estiniatad value of the energy saved over the
tenn of the mortgage; and
"(B) be eetabliahed ao that the increase in the annual loan
payment resulting from the added energy conserving require-
menta in ezcees of thoae required by the atandards prescribed
under title VI of the Housing and Cconmunity Development Act
of 1974 shall not exceed the projected savings in annual energy *2 USC 5401.
A) Within 18 months from the issuance by the Secretary of Report bi
Afrieuiture of regulations under section 50e(eX2} of the Housing Act ^^^,-„^
of IMS. the Secretary of Energy, in consultation with the Secretary ^'*- '"'^
ct Housing and Urban Development and the Secretary of Agricul- Anir. p 1240.
ture, shall conduct a study and transmit to the Congress a report
that compares the incrMsed construction coetB. actual annual
energy use, and the pngected value of eneigy saved over the
expected life of the home or the mortgage term, whichever is
shortar. of manufactured homes which are financed under titlea 1
and H of the National Housing Act, or under title V of the Housing !?J/^ '''"^•
Act of 1949 and which are built according to national manufactured 42 use I47i
bousing safety standards with other homes insured under either
such Act.
te) Section S2T of such Act is repealed. Repeal.
(d) Section 60aa) of such Act is amended- « y^C H90g.
<1) Jv inserting "iiy after the subsection designation; " "^ '*^^
(2) t^ striking out all after "making of the loan with interest"
and inserting in lieu thereof a period and the following: "Hie
Secretary may accept the personal liability of any peiaon with
adequate repayment ability who will coeign the applicant's note
to compensate for any deficiency in the applicant ■ repayment
abilitv. At the borrower's option, the borrower may prepay to
the Secretary as escrow agent, on terms and conditions pre-
scribed by hira, such taxes, insurance, and other expenses as the
Secretary may require in accordance with section 501 <e),"; and 42 USC 1471.
(3) by adding at the end thereof the following new paragraph:
"(2) The Secretary may extend the period of any loan made under Loan «i«uicm
this section if the Secretary determines that such extension is penod.
naceaaaiy to permit the making of such loan to any person whose
income ooea not exceed 60 per centum of the median income for the
area and who would otherwise be denied such loan because the
payments required under a shorter period would exceed the finan-
cial capacity of such person. Ilw aggregate period for which any
yGoot^le
PUBUC LAW 98-181— NOV. 30. 1983
Stc. 504. The fliM and aaeood MntcncM of Mction SIHta) ot Oa
Houaing Act of 1949 are amended to read m MiowK "ttm aecretaw
may make a Umd, grant, or combined kMn and grant to an allgMi
very tow-income amlicant in order to impnrw la tnodemin ■ nnl
dwelling, to make Uie dwdling safer or mm* makttaj, «r to immm
hazarda. The Secretar; may make a loan or graat oadw tUa
aubaertion to the applicant to cover the coat tt any or all rapain
improvementa, or addiliona auch aa repairing rooh^ pwridif a^it
ta^ waste fiacilitiea, providing a convenient and aanitary wilw
supply, repairing or providing structural aupporta, o
lar repairs, additions, improvements, including all ~
inatallatjan eoeta in obtaining central water and a<
m»»inniim amount of a grant, a loan, or a kan
not exceed sucb limitatitma aa the Secretary iVitm iiiiiwa to be
appropriate.".
ncHNicAL aiavicn and »— "^"^
Sac. 505. SecUon 606(b) of the Housing Act of 1949 b "■f'M I9
adding at the end thereof the following: "In cafTjiiig oat Una
Bubaection, the Secretary may permit demonstntiaiia invoMBg
innovative housing units and systems which do nat maat *■*■"■§
published standards, rulea, regulationa, or policiaa if th* HirrstaiT
finds that in so dfung. the health and safMy of the popolatfaB of Oe
area in which the demonatratioa is carried out will not be advaiMtr
affected, except that the nagregata expenditurea for such deaMnatn-
tjons m^ not exceed JlOSOO.r"* ' " ' ~ - -
shall report to the Congress ai
results of such demoostrations.".
« nsgregata expenditurea for such deaMnatn-
(10^,000 in any flaeal year. Tba BacteUiy
ngreas at the cloae of ead flaeal y«ar en the
•TANDJUUM FOX ADC9UATX ROUaOKI
Sac. 606. (a) Section 509(a) of the Housing Act eri949 ia UMnded
t^ adding at the end thereof the following: "The Secretary ahaU
approve a rcaidentiel building as meeting audi atandaiA if tte
building is constructed in accordance with (1) the mlnliiniiB
standards prescribed by the Secretair, (Z) the minimum pnfm*J
standards [wescribed Inr the Secretary of Houting and Urfaan Dww
opment for mortgages msured under title II of the National Hownng
Act, (3) the standards contained in any of the vdtintaiT MJioBai
model building codes, or (4) in the case <rf manufactured lw»idng. the
standards referred to in section 502(e) of this Act To the maximuB
extent feasible, tlw Secretary shall promote tlw use of energy aaviag
newly const
standards s
_._ J practicable, be conslsteBt with the
standards established pumiant to section 626 of the Natlosial Hooa-
fiiuc, p. liiu. ing Act and shall incorporate the energy perfon ' *"
developed pursuant to auch section.",
RapMl. (b) Section 629 of such Act is repealed.
421^ 149D1.
yGoot^le
91
PUBLIC LAW 98-181— NOV. 30, 1983 97 STAT. 1243
Sk. 507. (al Section 510(e) of such Act is amended bv adding 42 USC 14B0.
before the semicolon at the end thereof the following: 'and the
authority of the Secretary under this paragraph includes the
authority to transfer section 502 inventory properties for use aa *2 USC 1472.
rental or cooperative units under section 515 with mortgages con- 42 USC 1486.
toining repayment terms with up to fifty years to private nonprofit
organizations or public bodies. Such a transfer may be made even
whiere rental assistance may be reauired so long as the authority to
provids such aaaistanca is available afler tailing into account the
requirements of section 521(dXl). Where the Secretary determines Poit. p. 1249.
the transfer will contribute to the provision of housing for very low-
income persons and families, the transfer may be maife at the lesser
of the appraised value or the Farmers Home Adminstration's
inveatment".
(b) Section 510 of such Act is amended by redesignating subsection 4Z USC 1480.
(j> as subsection (U and inserting alter subsection (i) the following
□aw subsection;
"()) utilize the services of fee inspectors and fee appraisers to
expedite the processing of applications for loans and grants
under this tit)e. which services shall be utilized in any case in
which a county or district ofTice is unable to expeditiously
procees such loon and grant applications, and to include the cost
of such services in the amount of such loans and grants; and".
n511 of the Housing Act of
Smc. 509. Section 512 of the Housing Act of 1949 ia repealed.
DBTKUHNATION OF NCZD FOK HOUSING UNDER BXTTIONS 514 AND SIB
Sbc 510. Section 514 of the Housing Act of 1949 ia emended by
adding the following new subsection at the end thereof:
"(h) In making available assistance in any area under this section
or section 516, the Secretary shall —
"(1) in determining the need for the assistance, take into
conaideratioii the housing needs only of domestic farm labor,
including migrant farmworkers, in the area; and
"(2) in detMmining whether to provide such assistance, make
such determination without regard to the extent or nature of
other housing needs in the area. .
"Sac I>13. (a). The Secretary may insure and guarantee loans
under this title during Tiscal years 1984 and 1985 in an aggregate
amount not to exceed such sums as may be approved in an appropri-
yGoot^le
97 STAT. 1244 PUBUC LAW 98-181— NOV. 30, 1983
"(b) There are BUthoriiad to be appn^riated for tbcal Toara 1W4
and 1985—
"(1) Buch aumt as may be neceMary for gnnts puiauant to
42 use 14T4. BOCtion 5M;
"(2) Huch sums aa may be nectwaiTi for the pnrpoaw of aartka
42 use 14T9. e09(c);
"(3) Huch aums aa may be neceaaaiy to meat paymauta m
notes or other obligationa issued by the Sten^MXj OBOar aiiftiwi
42 use 1481 511 aqua) to (A) the aggregate of the contributkiaa Bwda by tfa*
Secretat; in the form or credits on principal due oa loana Balk
12 use 14T3 punuant to oection 503. and (B) the intareat diM aa a aimilar
sum repreaented by note* or other obIisatia«ia twued b; the
Secretary:
"(4) Budi sums as may be neceaaaiy for Rnaitcial aaaiBtuca
\2 use H37f.
"(5) such-sums aa may be necewary for the porpoaaa of MCtka
23;
"(6) such luroa aa may be neo
12 use ITiSz. Housing Act and section S of the Unit«d SUtea Hooafnc Act of
JTl,^-^- 1937.
'""' "(c) The Secretary may enter into rantal aaaiatanca matrada
aggregating such auma aa may be approved in appropriatioB Ada
under section 521(aX2XA) during fiaca] yean 1984 and 1986.".
(b) Section 515(bK5) of such Act m amended Irr ^-^•- -
"November 30, 1983" and inserting in lieu tharaof H
1985".
(c) Section 517(aXl} of auch Act is amended br atriUiic out
"November 30, 1983" and inaerting in lieu thereof '"Septambtt- SO,
1985",
(d) Section 523(0 of auch Act is amended—
(1) by striking out the first sentence; and
(2) by atriking out "November 30, 1983" and iiissiUni fat Uan
thereof "September 30, 1985".
(e) Section 523(g) of auch Act ia amended—
(1) by striking out "fiacal ^eor 1982" in the '
SECTION SIS AHBNDIlCm
Sac. 512. (a) SecUon 515 of the Housing Act of 1949 la ai
adding at the end thereof the following:
"(g) The Secretary ahall limit increasea in renta on or aflar tfa*
date of enactment of this subaection for newly conatmctad <r ab^
stantially rehabilitated prcjecta aawif^iH undN thia tactton la the
leaser of the actual operating coat increaaaa incurred or tba amoBBl
of operating coat increase* incurred with reapact to raoqMraUa
rental dwelling unita of various aiaea and Qrpea la tba iaBM maitat
area which ara suitable for occupancy by families and pafMM
aasisted under this aectiim. Where no comparaUe dwdUng units
exist in the same market area, the Secretary shall have autheri^ to
yGoot^le
PUBUC LAW 98-181— NOV. 30, 1983
Bpprove such increaBCE in accordance with the best available data
regarding operating cost increases in rental dwelling units.
'(h) Alter approving a project involving newly constructed or
substantially rehabilitated units under this section, the Secretary
shall limit coat increases to thoee approved by the Secretary. The
Sec:retary may approve thoee increases only Tor unforeseen factors
beyond Uie owner s control, design changes required by the Secre-
tary or the local government, or changes in Tman^ng approved by
the Secretary.
"(i) For the purpose of achieving the lowest cost in providing units
in newly constructed projects assisted under this section, the Secre-
tary shall give a preference in entering into contracts under this
section for projects which are to be located on specific tracts of land
provided by States, units of local government, or others if the
Secretary determines that the tract of land is suitable for such
housing, and that alTording such preference will be cost elective.
"(j) The Secretary shall assure that management fees are not
excessive when a project developed under this section is managed by
the developer or an affiliate of the developer.
"(k) For purposes of determining the market feasibility of any
project to be assisted under this section—
"(1) in the case of any applicant whose project is expected to
utilise rental assistance payments imder section 521, the Secre-
tary shall only require such applicant to demonstrate that a
market exists for persons and famiiiee eligible for such rental
aasiatance payments; and
"(2) in tne case of any applicant whose project is expected
to utilize any assistance under a program of a State, or political
BubdiviMon thereof, that is similar to such assistance payments
under section 621, the Secretary shall only require such appli-
cant to demonstrate that—
"(A) a market exists for persons and families eligible for
such program of assistance;
"(Bl such program of assistance will provide rental assist-
ance for a period of not less than five years, and for the
term of the loan remaining afler the period of sucb assist-
ance, that an adequate rental market exists for the project
without such assistance; and
"(C) during the te'm of such rental assistance contracts,
such State or political subdivision shall make available the
amounts required for such rental assistance not less than
annually.
"(I) The Secretary shall establish standards for bousing and
related facilitiee rehabilitated or repaired with amounts received
under a loan made or insured under this section. Standards estab-
Ushed by the Secretary under this subeection shall provide that
except for substantial rehabilitation the particular items or systems
repaired or rehabilitated n
appropriate levels of quality or
^ camparaoie lo inose levels prescribed by the Secretary
of Housing and Urban Development for rehabilitation, but shall not
i«quire that such items or syetems or the remainder of the property
■nMt the standards which are applicable to new construction. The
Seovtai; shall ensure that standards prescribed under this subsec-
tiofi pnrnde decent, safe, and sanitary housing and related facilities.
"(m) lie Secretary mav not deny assistance under this section or
section ^I on the basis tliat the project involved is to be located on
yGoot^le
97 STAT. 1246
PUBUC LAW 98-181— NOV. 30, 1988
42 use 14900.
42 use U
42 use 1'
"(n) Tha Sacretary nuty not (1) deny bmuUiim imdn' thii wction
on Uw Imbu that rantal aaaiatanc* paymenta uodBr aectkn GZl loaj
be raquirad unleaa the authority to provide nich —rtttanca ■■ not
Bvoil^le; or (2) promulsate any rasulatiiHi that wtwld ha«» tha
affect of denjriiig occupancy to alujbla penona on tha haaia that auA
peraoDi require rental aBiataace pajrmanta uodar aacticm 621.
"(oXI) To the extent Baatstance ja available under wteUtm ttlOOODi
not mora than 25 per centum of the dwelling unita wUch ««•
available for occupancy under this section prior to tha date of
enactment of thia lubaection, and which will be laaaad oo or altar
auch effective date shall be available for leaains by knr '""™'^
Bona and (amiliaa other than very low-incmna pmona aad
"(Z) To the extent aaustance ia available under aactkn StlCaX&b
not more than 5 per centum of the dwelling unita which baoBna
available for occupancy under thia tection on or after tbe data <f
enactment of thia aubaection shall be available for Itwrlng taj low
income peraona and familiea other than very low^inooaia perMua
and families.
"(3) Unita in projects financed under this aaction wfaidi ♦'fiitt
available for occupancy after tlie date of enactment of thia anhaae
tion ahoU not be available for occupann by penons and fiiniiltai
other than very low-income penona and Nuuliea if the autlMri^ to
provide aaaiatance for auch peraona ia available.
"(p) In determining tbe income of a penon or fomily oocapjrfaig
houaing financed under thia section, the Secretary ah" •>---•-
value of that pereon'a or family's aosets in the a
Secretary of Houaing and Uiban Development o
for the purpoae of the United SUtee Houaing Act of ISSI.".
<b) Section SlG(b) of such Act is amended—
(1) by striking out "and"at theendofclauaa(5^
(2) by striking out the period at the end of dauae (6) aad
inserting in lieu thereof "; and"; and
(3) by adding at the end ti>ereof the following:
"(7) loana may be made to owners irtio are othervriaa ■HgiMt
under this section to purchase and convert Bingl»4amily rait
dencee to rental units of two or more dwellings. ".
(c) Section SIS of such Act is amended —
(1) by striking out aubaection <aK2^
(2) l^ redeaignating subaectiona (aX3) and <aX4) oa atibaactfcwa
(aX2) and (aXS). reapecUvely;
(3) by striking out aubaection (bMSY, and
(4) by redeaignating subaectiona (bXS), (bX4). (bXS), (bXti. and
a>X7) as subaectiona (bK2). (bXS), (bX4), (bX6). and (bXSK
reepectively.
(d) Section &16(c} of such Act is amended by adding at tfaa aal
thereof the following: "A loan may be made or insurad undv
aubaection (a) or (b) with respect to detached units, including ttwn
on scattered sitea, for cooperative housing.".
(e) Section SlKdXl) of such Act is amended by inaerting baAira tha
firat semicolon the following ", and such term also means tnawihc-
tured home rental parks where either the lota or both tha lota and
the homea are available for uae by occupants «ligU>le under tUa
yGoot^le
PUBUC LAW 9&-181— NOV. i
FARM LABOB HOOTINO
Skc. 513. SMtion 516 of th« Hotuing Act of 1949 is amendad by
■dduigat the end thereof the following subsection:
"(Ullie Secretary shall utilize not more than 10 per centum of the
•mouota available for any flacal year for ourpoees of this section for
financial aatietance to eligible private and public nonprofit agencies
to eim>urage the development of domestic and migrant farm labor
houaing prtijecta under this title.".
Sac 514. (a) Section 517 of the Mousing Act of 1949 is amended—
(1) bj striking out all after "insured" in subsection <s) and
inserting in lieu thereof a period and the following: "The
amount of such a loan to a low income person or family shall
not exceed the amount necessary to provide adequate housing
which is modest in size, design, and ccet (as dett.-rmined by the
Secretary)."; and
(2) by striJdng out "(bX4}" in subsection (h) and inserting in
lieu thereof "(bXS)".
(b) Section GlTti) of such Act is amended—
(1) by striking cut "; and" at the end of paragraph (5) and
inserting in lieu thereof a period; and
(2) by striking out paragraph (6).
(c) Section 5I7(o) of audi Act is repealed.
(d) Section 617 of such Act is amended by adding at the end
thereof the foUowiiig:
"(o) Hw Secretary shall promulgate rules which encourage the
rehabilitation or purchase of existing buildings for the purpoae of
jMwiding housing which ia economical in cost and operation.".
nsriNiTiON or kusal asea
Sk. 516. Section 620 of the Housing Act of 1949 is amended by
adding at the end thereof the following new sentence; "For purpoaea
of thia title, any area classified as 'rural' or a 'rural area' prior to
the receipt of data from or after the 1980 decennial census and
datonnined not to be 'rural' or a 'rural area' as a result of euch data
ahall continue to be so classified through the end of Tiscal year 1984,
if NCb area has a population in excess of 10,000 but not in excess of
20,000.".
»"*"" HousiNO roa nii minu.v amd HANDicAPFcn
&c 516. Section 621(aX2) of the Houring Act of 1949 U amended
bgr adding the following new subparagraph at the end thereof
'XBi In order to asaiat elderty or haiu&capped persons or families
iriko elect to live in a shared nousing arrangement in which they
benefit aa « result of iharing the facilitiee of a dwelling with others
in a manner that effectivev and efficiently meeta uieir housing
needs asd thereliT reduces their coat of housing, the Secretary shall
pannit rental assistance to be used by such pereons or families if the
ahared houain^ arrangement is in a aingle-family dwelling. For the
— — "* *»"- -..».—-—"». the Secretary shuill prescribe mini-
> assure decent, safe, and sanitary
yGoot^le
PUBUC LAW 98-181— NOV. 30, 1983
RENTAI, AMISTANCI TCNANT CONimiaVTlON
Sk. 517. (a) SecUon SZKaXZXA) of the Hoiuing Act ot 1»49 ii
amended by atriking out the last two Mntencc*.
(b) Section 521(a) of luch Act is amended by adding at tha end
thereof the followinr
"(SNA) In the case of loana under aectiona 514 and 615 ajlfwiwirf
prior to the effective date of thi* paragraph with raapAet to wliicfa
rental awistance ii provided, the rent for tenant* recaivinc Micfa
monthly adjusted income, (ii) 10 per centum of n;
(iii) if tne person or family is receiving pavmenta for weUan
once from a public agency, the portion of such payments whidi is
spedfieally designated by such agency to meet the penoa'a tm
family'! houaing casta.
"(B) In the caae of a section 515 loan approved inior to the
effective date of this paragraph with respect to i^idi i
credit! are provided, the tenant's rent shall not exceed the
of(i)30percentumof monthly adjusted income, (ii) 10 ^ oenram cc
monthly income, or (iii) if the person or family is receivuw pajawBta
for welfare assistance from a public agency, the portion of Midi
payments which is specirically designated by such agso^ to aioet
the person's or family's housing coats, or, where no rsntal ■ wist Mil a
authority is available, the rent level established on a tinaisftf ■ 1 par
centum interest rate on debt service.
"(C) No rent for a unit financed under lectioo 614 or 61S abatl bo
increased as a result of this subaection or other provisian at Pkdoral
law or Federal regulation by more than ID per centum in ai^
twelve-month period, unless the increase above 10 per contum m
attributable to increases in income which are tmrelatad to thte
subsection or other law, or regulation.
"(4) In the case of a loan with respect to the puicbaaa at m
manufactured home with respect to which rental r"""*r~^ it pro-
vided, the monthly pa3'ment lor principal and interest on the manu-
factured home and for lot rental and utilities ihall not in r will tho
highest of (A) 3D per centum of monthly adjusted income, <B) 10 par
centum of monthly income, or (Cl if the person or family is focoiviBS
payments for welfare assistance from a public agency, the portkn or
such payments which is specifically designated by such agency to
meet the person's or family B housing costs.".
(c) Section 521(aX2XA) of such Act is amended by striking out "25
per centum of income." and inserting in lieu thereof "the hi^ieat 0^
(i) 30 per centum of monthly adjusted income, (ii) ID par cantun 0^
monthly income; or (iii) if the person or family is receivit^ paymenta
for welfare assistance from a public agency, the portion of sucii
psjrments which ia specifically designated by such agency to meat
the person's or family'! housing costs. Any rent or contributiao of
any recipient shall not increase as a result of this nction or aaj
other provision of Federal law or regulation by more than 10 par
centum during any twelve-month period, unices the increaoe abovo
I€ per centum is attributable to increasea in income which are
unrelated to this subsection or other law or regulation.".
(d) Section 530 of such Act is amended by !triklng out "25" and
inserting in lieu thereof "30".
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PUBLIC LAW 98-181-NOV. 30, 1983 97 STAT. 1249
(e) Section 621 of auch Act is amended by adding at the end 42 USC 1490a.
thereof the following:
"(dNlXA) In entering into contracts for assistance under this Cmtracu.
section and utilizing rental assistance authority which becomes
available, the Secretary shall first assure that expiring contracts are
extended for thoae unita occupied by persons and families of low
income, and that additional asaistaiice is used where necessary to
provide the full amount authorized pursuant to existing contracts.
"CB) Remaining funds shall be used for contracts which assist very
low-income persons and families occupying projects receiving com-
mitments under aection 514, 515, or 516 after fiscal year 1983, except 42 USC
that up to 5 per centum of the units assisted may be occupied by 14S4-1486.
persons and families of low income,
"(O To the extent any funds are available after providing assist-
ance in accordance with subparagraphs (A) and (B), the Secretary
shall provide additional assistance to existing projects which would
become occupied and affordable by very low-income persons and
families, except that up to 5 per centum of the units assisted may be
oiimpied by persons and families of low income.
"(2) The Secretary shall transfer rental assistance contract Tranafer
authority under this section from projects where such authority is aulhonty.
unused after initial rentup and not needed because of a lack of
eligible tenants in the area to projects where such authority is
"(e) Any rent or contribution of any recipient shall not increase as
a result of this section, any amendment thereto, or any other
provision of Federal law or regulation by more than 10 per centum
during any twelve-month period, unless the increase above 10 per
centum is attributable to increases in income which are unrelated to
this subsection or other law or regulation.".
(0 The amendments made by this section shall take effect six Eflective dale.
months after the date of enactment of this Act, or upon the earlier *^^ iiiOa
promulgation of ttsulstionB implementing this section by the "
Sic. 518. (a) The last sentence of section 5Z5(b) of the Housing Act 42 USC H»Oe.
of 1949 is amended by striking out all after "sooner" and inserting
in lieu thereof a period,
Q>) Section E25(c) of such Act is repealed.
c SU, (a) Section 526 of the Housing Act of 1949 is amended— *i USC UMf.
<1) t^ striking out "in his discretion" in mfaoection (a); and
(2) 1^ striking out "in his discretion" in subsection (c).
PHA INSURANCS
"Sk. 631. The SecreUi
iry is
iUrb
Secretary vt Housing and Urban Development to recammend insur-
n agent of the 42 USC 1490k.
yGoot^le
PUBUC LAW 98-181— NOV. 30, 1983
P APPUCATIONS
"Sbc 532. (a) The Secretaiy shall, in making assistance available
under this title, give a priority to applications submittsd by —
"(I) persons and families that have the gna.U0t bouaug
~e needs because of their low income and tbeir resading
inadequate dwell inKs;
ippfying fi ...
ind families; and
"<2) appticanta applying for assistance for prcgecto that wiU
"(3) applicants residing in areas which ai« the moat rural io
character.
"fl>) In making available the assistance authorized I7 aectioa 513
and section S21(a) with respect to projects involving inaured and
guaranteed loons and interest credits and rental asrirtante pH-
ments, the Secretary shall process and approve requeata fi>r audi
In a manner that provides for a preliminary ia»si»iliiMi
s at the time of initial approval of the project.".
"Sac. 533. (a> The purpose of this section ia to authoriaa tb»
Secretary to make grants to eligible grantees includiDC privale
nonprofit orffanizations, Indian tribes, general units of local govtm-
ment, counties, States, and consortia of other eligible gnuteea, in
order to—
"(1) rehabilitale single family housing in rural areas which ii
owned by low- and very low-income persona and familisi^ and
"(2) rehabilitate rental properties or cot^erativa houring
which has a membership resale structure that enablea tbt
cooperative to maintain aiTordability for peiaons of low incooM
in rural areas serving low- and very low-income nccupantt.
The Secretary may also provide assistance payments as provided bf
section 8(0) of the United Stales Housing Act of 19S7 npMi the
request of grantees in order to minimize the displacemmt of vary
low-income tenants residing in units rehabilitated with awiatance
under this section.
"(b) Rehabilitation programs assisted under this sectioa ihall—
"(1) be used to provide loans or grants to owners of aiogle
family housing in order to cover the cost at repaira Uid
improvements;
(2) be used to provide interest reduction payment;
"(3) be used to provide loans or grants to owners at rental
housing, except that rental rehabilitation assistance provided
under this subsection for any structure shall not sacaad 7S par
yGoot^le
PUBLIC LAW 98-181— NOV. I
Gvntiun oT the tots] costs associated with the rehsbilitatioD of
that (tmctur^
"(4) be used to provide other comparable assistance that the
SecretaT7 deems appropriate to carry out the purpose of this
section, designed to reduce the costs of such repair and rehabih-
tation in order to moke such housing affordBOle by persons of
low income and, to the extent feasible, by persons and families
whose incomes do not esceed 50 per centum of the area median
income:
"(5) benefit liiw- and very low-income persona and families in
rural areas, without causing the displacement of current resi-
dents; and
"(6) raise health and safety conditions to meet those specified
in section 509(a).
"(cXl) The Secretan shall allocate rehabilitation grant fbnds for
use in each State on the basis of a formula contained in a regulation
preacribed by the Secretary using the average of the ratios
"(A) the population of the rural areas in that State and the
population of the rural areas of all States;
"(B) the extent of poverty in the rural areas in that State and
the extent of poverty in the rural areas of all States; and
"(C) the extent of substandard housing in the rural areas of
that State and th« extent of substandard housing in the rural
areas of all Sutes.
Any funds which are allocated to a State but uncommitted to
grantees will be transferred to the State ofTice of the Farmers Home
Administration in a timely manner and be used for authorised
rehabilitation activities under section 504.
"(2) Unless there is only ons eligible grantee in a State, a single
grantee may not receive more than GO per centum of a State's
allocation.
"(dXl) Eligible grantees may submit a statement of activity to the
Secretaiy at the time specified by the program administrator, con-
taining a description of its proposed rehabilitation program. The
Statement shall consiat of the activities each entity proposes to
undertake for the fiscal year, and the projected progress in carrying
out thoae activitiss. Ths statement of activities shall be made avail-
able to the public for comment.
"(2) In preparioft cuch statement, the grantee shall consult with
and consioer the views of appropriate local officials.
"<S) Tlie Secretary shall evaluate the merits of each statement on
the basis 4it such criteria as the Secretary shall prescribe, including
"(A) to which the repair and rehabilitation i
assist persons of low income who lack adequate shelter, with
priori^ given to applications assisting the maximum number of
persons and fkmiliss whcss incomss do not exceed 50 per
centum of the area median income;
"(B) to which ths repair and rehabilitation activities include
the participation of c^her public or private organizations in
providing assistance, in addition to the assistance provided
under this section, m order to lower the costs of such activities
or provide for ths leveraging of available funds to supplement
tfas rural bousing preservation grant program;
yGoot^le
PUBUC LAW 98-181— NOV. M, 1988
"(O to which such Bctivities wUl be u
having populations below 10,000 or in remote {Ntrto of other
rural ateaa;
"(D) to which the repair and rehabilitation MiWltiaa OtMj be
expected to result in achieving the greateat degree oT —
improvement for the least coat per unit or dwelung;
(E) to which the program would minimiw djq. ,
"(F) to which the program would alleviate overcrowding in
rural reeidencea inhabited by low- and very low-inoonM ponoo*
and families;
"(G) to wliich the program would minimise the nae of grant
funda for administrative purpoeee; and
"(H) to which the owner agrees to meet the requimnent of
■ubeection (eXIXBXiv) for a period longer than 6 yeum;
and ihall aBsess the demonstrated capacity of the grantae to carry
out theprogram as well aa the Tinancial feaaibility at the procrain.
"(4) The amount of assistance provided under this ■ectjun with
reapect to any housing shall be the least amount that the Secretary
determines is necessary to provide, through the repair and triiafaili-
tation of such housing, decent housing of modaat dwign that il
affordable for peraons of low income,
"(eXl) Assistance under this section may be provided with respect
to rental or cooperative housing only if—
"(A) the owner has entered into such agreeoMnta irith the
Secretary as may be necessary to assure compUancs with tbt
requirements of this section, to assure the flnancial tesibili^of
such housing, and to carry out the other proviaiena of this
"(B) the owner agrees—
"(i) to pass on to the tanants any reduction in the dabt
service payments resulting from the sssiitanw pravided
under this section;
"(ii) not to convert the units to condominium owuMsh^
(or in the case of a cooperative, to condMuiitiiim ownarahip
or any form of cooperative ownership not eligfUa Ear mmitb-
ance under this section);
"(iii) not refuse to rent a dwelling unit in tfaa structun lo
a family solely because the family is receiving or is «iija«l«
to receive assistance under any Federal, ^ta, or lottl
bouaing assistance program; and
"(iv) that the units repaired and rehabilitated with sudi
assistance will be occupied, or available for oecupsn^, bj
persons of low income;
during the 5-year period beginning on the date on which the
units in the housing ere avaiJahle for occupancy;
"(C) the unit of general local government or nonprofit oiiani-
ration that receives the assistance certifies to the ■atiatactiaa of
the Secretary that the assistance will be made avaUable in
conformity with Public Law 88-352 and Public Law 90-8U;
"(D) the owner agrees to enter into and allude by writtsn
leases with the tenants, which leases shall provide that tanaats
may be evicted only for good cause; and
' (E) the unit of general local government or nonpront oinuu-
sation will agree to supervise repair* and rehabUitatioa siia will
agree to have a disinterested party inspect such repain and
rehabilitation.
yGoot^le
PUBLIC LAW 98-181— NOV. 30, 1983 97 STAT. 1253
"(2) Assistance under this section provided with respect to any
housing other than rental or cooperative housing may be provided
only if the owner complies with the requirements set forth in
subparagraph <E) of paragraph (1| and any other requirements
established by the Secretary to carry out the purpose of this section.
"(3NAI The Secretary shall provide that if the owner or his or her
successors in interest fail U) carry out the agreements described in
subparagraphs (A) and (B) of paragraph (1) during the applicable
period, the owner or his or her successors in interest shall make a
payment to the Secretary of an amount that equals the total amount
of assistance provided under this section with respect to such hous-
ing, plus interest thereon (without compounding), for each year and
any fraction thereof that the assistance was outstanding, at a rate
determined by the Secretary taking into account the average yield
on outstanding marketable long-term obligations of the United
States during tne month preceding the date on which the assistance
was made available.
"IB) Notwithstanding any other provision of law, any assistance
provided under this section shall constitute a debt, which is payable
in the case of any failure to carry out the agreements described in
subparagraphs (A), (B), and (C) of paragraph ID, and shall be secured
by the security instruments provided by the owner to the Secretary.
"(fi The Secretary shall provide for such advance payments of Advance
assistance under this section as the Secretary determines is neces- S^Sraw
sai7 to effectively carry out the provisions of this section. paymen
'(g) The Secretary shall, at least on an annual basis, make such Review and
review and audits as may be necessary or appropriate to determine "'"^^
whether the grantee has carried out its activities in a timely
manner and in accordance with the requirements of this section, the
degree to which the activities assisted benefitted persons of low
income and very low-income who lacked adequate housing, and
whether the grantee has a continuing capacity to carry out the
activities in a timely manner. The Secretary may adjust, reduce, or
withdraw resources made available to grantees receiving assistance
under this section, or take other action as appropriate in accordance
with the findings of these reviews and audits. Any amounts which
became available as a result of actions under this subsection shall be
reallocated in the year in which they become available to such
grantee or grantees as the Secretary may determine.
"(h) The Secretary is authorized to prescribe such rules and
regulations and make such delegations of authority as he deems
necessary to carry out this section within 90 days after the date of
enactment of this section.
"li) The Secretary shall establish procedures which support Procedures
national historic preservation objectives and which assure that, if f.^EJJ'v'"^
any rehabilitation proposed to be assisted under this section would prHcrvBtion.
affect property that is included or is eligible for inclusion on the
National Register of Historic Places, such activity shall not be
undertaken unless (II it will reasonably meet the standards for
rehabilitation issued by the Secretary of the Interior and the appro-
priate State historic preservation officer is afforded the opportunity
to comment on the specific rehabilitation plan, or (2) the Advisory
Council on Historic Preservation is afforded an opportunity to com-
ment <m CBsea for which the recipient of assistance, in consultation
with the State historic preservation officer, determines that the
propooed rehabilitation activity cannot reasonably meet such stand-
■irds or would adversely afTect historic property as defined therein.
yGoot^le
I PUBLIC LAW 98-181-NOV. 30. 1988
"(j) Not later than 180 dayi after the cloee of aach fltcal Tear in
which asaurtonce under thia MCtion ia furnished, the Seerataiy abatl
■ubmtt to the Congreea a report which shall contain —
"(1) a deecription of the progreM made in aceomplMiing ttw
objectives of this aection; and
(2) a summary of the use of such funds duiinf the praeading
year.
Hie Secretary shall require granteee under this aectioD to aubmtt to
him such reports, and other information as may be iMC— aiy ia
order for the Secretary to make the report required by thk
maCKUANBOUB
PubLicstion in "Sic, 534. (a) Notwithstanding any other proviaion tt \tm, no luk
Federal ^^ regulation puieuant to this title may become eftacUve iinlMi it
mJSc'^Uson **** '^'^ ^^'^ published for public comment in the Fedanl SagiMar
for at least 60 days, and published in final form for at laaat 80 daya.
Traiumitul u "(b) The Secretary shall transmit to the chairman and rmnkinf
ixiBSrvmwiti Member of the Committee on Banking, Housing, and Urban Afhin
cDmimtiees ^ q^ Senate and the Committee on Banking, Finance and Uifean
AfEairt of the House, all fvles and regulationsat least 16 dayabeAiN
they are sent to the Federal Register for purpoaee of subascttoB UL
"(c) Tht proviaiona of this aection shall not apply to a nila or
regulation which the Secretary certifies is issued on an ai
42 use I490O.
taanoart m Appaovju. or housinc tavovnaotn amono
"Sac. SSS-TheSecretaryof Agriculture, the Secretanr of HouaiBC
and Urban Development, and the Administrator of Vatemis' A^
&ura diall each accept an administrative approval ef say booring
aubdiviaion made by any of the others so that ~~* *-*-- -*---
January 1, 19S4, there is total reciprocity for hou<
approvals among the agendea which they head.".
mOlTTtTLB
Fast A — GxrcaT-litPoaT Bank Act Ah DnunNTB
ITRNBION or Tin npOKT-iMroBT bank act
8k. 611. Section 8 of the Export-Import Bank Act of 1946 (U
U.S.C. 686f) is amended by striking out "November 18, 1983" »bA
inaerting in lieu therecJ "September 30, 1986".
yGoot^le
108
PUBLIC LAW 98-181— NOV. 30, 1983
Sk. 612. (e) The second sentence of section 2(bXlKA) of the
Export-Import Bank Act of 1945 (12 U.S.C. GSSOiXlHA)) is amended—
(1) by inserting "in all its programs" after "objective"; and
(2) by inserting "fully" after "which are".
(b) The (irst sentence of section 2(bXlXB) of such Act (12 U.S.C.
635(bXlKB)) U amended by striking out "It is" and all that follows
through "exporta of other countries;" and inserting in lieu thereof
the following: "It ia further the policy of the United States that
toans made by the Bank in all its programs shall bear interest at
rates determined by the Board of Directors, consistent with the
Bank's mandate to support United States exports at rates and on
terms and conditions which are fully competitive with exports of
other countries, and consistent with international agreements. For
the purpose of the preceding sentence, rates and terms and condi-
tions Deed not be equivalent to those offered by foreign countries.
but should be established so that the effect of such rates, terms, and
conditions for all the Bank's programs, including those for small
businesses and for medium-term fmancing, will be to neutralize the
efiect of such foreign credit on intern-itional sales competition. The
Bank shall consider its average cost of money as one factor in its
determination of interest rates, where such consideration does not
impair the Bank's primary function of expanding United States
exports through fully competitive financing. It is also the policy of
the United States".
(c) The fust sentence of section 2(bXlXB) of such Act (12 U.S.C.
635(bXlXB)), as in effect on the day before the date of the enactment
of this title, is amended by inserting "export trading companies,"
after "independent export firms,".
Sbc. 613. Section 3(d) of the Export-Import Bank Act of 194S (12
U.S.C. 635a(d)) ia amended to read as follows^
"(dXlKA) There is established an Advisory Committee to consist of
twelve members who shall be appointed by the Board of Directors on
the recommendation of the President of the Bank,
"(B) Such members shall be broadly representative of production,
commerce, finance, agriculture, labor, services, and State
government.
"12) Not lees than three members appointed to the AdviB0[7
Committee shall be representative of the small business community.
"(3) The Advisory Committee shall meet at least once each
"(4) The Advisory Committee shall advise the Bank on its pro-
erams, and shall submit, with the report specified in section
2(bKlXA) of this Act. its own comments to the Congress on the
extent to which the Bank is meeting its mandate to provide competi-
tive financing to expand United States exports, and any suggestions
for improvements in this regard.".
yGoot^le
56 PUBUC LAW 98-181— NOV. 80. 1988
(1) by redesignating the flnt sentence through the Mventh
■entence of such section as psragrairtis (1) through (T),
respectively:
(2) in the Tifth paragraph of such gection, m m indfitiiatiiil
by paragraph (1). by striking out 'Terms of the dinctocv shsU
be at the pleasure of the President of the Unitad SUtM, and
the" and inserting in heu thereof "The"; and
(3) by adding at the end thereof the following
"(SKA) the terms of the directors, including the PrcaidMit uid the
First Vice President of the Bank, appointed under this sactioD shall
be four years, except that —
"(i) during their terms of ofTice, the dinctois Bh«U aem at
the pleasure of the President of the United States;
"(li) the term of any director appointed after tha date of
enactment of this paragraph to serve before January 20, 198S,
shall expire on January 20, 1985;
"(iii) of the directors first appointed to serve beginnina on or
after January 21, 1965, two directors {other than the F
and First Vice President of the Bank) shall be mmmavaa lor
terms of two years, as designated by the President Mthe United
States at the time of their appointment; and
"(iv) any director first appointed to serve for a term begiaaiag
on any date after Januai^ 21, 1985, shall serve only nr the
remainder of the period for which such director would bmn
been appointed if such director's term had begun on January 21,
1985, If such term would have expired before the date on nidi
such director's term actually begins, the term of audi iHrwrfrir
shall be the four-year period, or remainder thereof, aa If audi
director had been preceded by a director whoee term had begnn
on January 21, 1985.
"(B) Of the five memben of the Board appointed 1» the Preeideat,
not less than one such member shall be selected m>m among the
small business community and shall represent the intereata of email
business.
"(C) Any person chosen to fill a vacancy shall be a^xunted only
for the unexpired term of the director whom such person sucoeedi,
"(D) Any director whose term has expired taay be reaiqMNnted.".
(b) In order to carry out the amendment maoe by subaection (a)
regarding section 3(cX8)(B) of the Export-Import Bank Act at IMS,
tM first member, other than a member who will serve as Chairman
or Vice Chairman of the Bank, appointed by the Praaidant of tbs
United States to the Board of Directors of the ExpoTt-Import Bank
of the United States after the date of the enactment of this wction
shall be selected from among the small businoas community and
shall represent the interests of small business.
MBPORT ON AUTHORm
Sec. 615. Section T(aK2) of the Export-Import Bank Act of 1»45 (12
U.S.C. G35e<aK2)) is amended to read as follows:
"(2MAKil Not later than March 31 of each fiscal year, the Presi-
dent of the United States shall determine whether the authority
available to the Bank for such Tiscal year will be sufficient to meet
the Bank's needs, particularly those needs arising from —
"(I) increase* in the level of exports unforeseen at the tioM of
the original budget request for such fiscal year;
"(II) any increased foreign export credit subsidies; or
yGoot^le
(1> in the second tentence of aubaection (aXl). by inserting
"and Mrvicea" after "exchange of commodities";
(2) in the ucond nntence of subsection (bXlXA), by inserting
"of gooda and aervicai" after "eiporta"; and
(3) by inaerting after subsection (bXlXC) the following:
'XDXi) It ii further the policy of the United States to foster the
delivery of United States services in international commerce. In
cx^^iaing its pcnvers and ftinctiooB, the Bank shall give full and
squal consideration to making loans and providing guarantees for
tba sjLpoit of servicM (independently, or in coiuunction with the
c&INu't of manufactured goods, equipment, hardware or other capital
moda) coDBiBlent with the Bank s policy to neutralize foreign subsi-
dised credit competition and to supplement the private capital
(1) fa^ striking out "or" after "export accounts receivable" and
'• -" — 8 in lisu thereof a comma; and
& tj iimsillim after "exportable goods," the following: "ac-
*■ raosivable firom leases, per^rmance contracts, grant
" 'i, participation fees, member dues, revenue from
ir such other collateral as the Board of Directors
Sac G17. Section 2 of the Export-Import Bank Act of 1945 (12
US.C. 635) is amended by adding at the end thereof the following:
"(dXl) In canying out its responsibilities under this Act, the Bank
diall work to Rwure that United States companies are afforded
an equal and lUMtdiscriminatoi; opportunity to Did for insurance in
connectko with transactions assisted by the Bank.
PUBLIC LAW 98-181— NOV. 30, 1983
"(OD the lack of progreas in n^otiations to reduce or elimi-
nate export credit subsidies,
"(ii) Not later than April 15 of each year, the President of the
United States shall transmit to ^e Congress a report on such Concrn*.
drtermination.
"(BXi) If the Preaident of the United States fmds that the amount PmidentiBl
rf direct loan authority or guarantee authority available to the renuwt for
Bank for the fiscal jrear involved exceeds the amount which will be uXinwraH
nece^ury to carry <nit the Bank's functions consistent with the ^^"'~'
■vailabiUty of qualified applications and limitations imposed by law
during such year, the President of the United States shall promptly
transmit to the Congress a request for legislation to elimmate the
■mount of such exceas direct loan, loan guarantee, or insurance
■ntboritv.
"(ii) Trie Bank shall continue to make remaining amounts of its
authority available for the fiscal year involved, in accordance with
the requirements of this Act, unless otherwise
toUw.''.
"GQ The Bank shall include in its annual report a summary of its
programs regarding the export of services.".
IH Section 206 oftbe Export Trading Company Act of 19S2 (Public 9E3tj». 1239.
I-wOT-2?0)U«nended- _ i^^^"*
96 Stat. 1233.
yGoot^le
58 PUBUC LAW 98-181— NOV. 30, 1988
"(2) In furtherance of such efTort. the ChBimian of the Bmak dwll
review Bank policies and programs in regard to this iMue, and in
coordination with the United States Trade Repraaentative and the
appropriate agencies of the Department of State, the Department of
the Treasury, and the Department of Commerce, undertaka action*
designed to proniol« equal and nondiscriminatorr mportui '*' ~ '~
bid for insurance in connection with all aapecta of inten
trade activities.
"(3) The Bank shall report to the Committee or Banking, Finance
and Urban Affairs of the House of Representative* and the Cotnmit-
t«e on Banking. Housing, and Urban Affairs of the Senate not later
than May 15, 1984, r^^arding—
"(A) the existing obstacles to equal and nondiacriminatOf
bidding for insurance related to transactions aa»i«teid bj the
Bank;
"(B) the efforts that the Bank has taken in addreMing such
problems; and
"(C) recommendations for such legislative or adminiatratin
actions as the Bank considers necessary.".
Sbc. 61S. <a) Section 2tbXl) of the Export-Import Bonk Act of IMS
(12 U.S.C. 635a>)(l)) is amended—
(II in subparagraph (Bl. by striking out "that the Bank shall
give due recognition to tiie policy stated in section 2(a} of the
Small Business Act" and all that follows through "the Small
Business Administration and other departments and a{
matters affecting small business concerns;"; and
12) by adding at the end thereof the following:
"(EMiXI) It is further the policy of the United State* to «
the participation of small business in international commarc*.
"(11) In exercising its authority, the Bank shall develop a proL
which gives fair consideration to making loans and providing guar-
antees for the export of goods and services by sroall huainsMW
"(ii) It is further the policy of the United SUtaa that tha Bank
shall give due recognition to the policy stated in section 2ta) of the
Small Business Act that 'the (jovemment should aid. counael, ■wi*t.
and protect, insofar as is possible, the interests of small bmin—
concerns in order to preserve free competitive enterprise'.
"(iii) In furtherance of this policy, the Board of Diracton shall
designate an ofHcer of tiie Bank who —
"(I) shall be responsible to the President of the Bank for all
matters concerning or alTecting small business concema; and
"(11) among other duties, shall be responsible for advisinc
small business concerns of the opportunities for small busine«
concerns in the functions of the Bank and for maintaining
haison with the Small Business Administration and other
departments and agencies in matters affecting small buaities*
"(iv) 'The Director appointed to represent the interests of atnall
business under section 3(c) of this Act shall ensure that tha Bank
carries out its responsibilities under clauses (ii) and (iii) of this
subparagraph and that the Bank's financial and other resources are,
to the maximum extent possible, appropriately used for small buu-
ness needs.
yGoot^le
PUBLIC LAW 98-181— NOV. 30, 1983
the
loan, guarantee, and
authority available to
lainess concenu (aa
Act) which ihall be
deHned u
not ICM than—
"(I) 6 per centum of such authoritv for fiscal year 1984;
"(II) 8 per centum of auch authority for fiscal year 1985; and
"(in) 10 per centum of such authority for fiscal year 1986 and
thereafter.
"(vi) The Bank ahall utilize the amount set eaide punuant to
clause (v) of this ■ubparagraph to offer financing for amall business
export* on term* which are fully competitive witn regard to intenet
rates and with regard to the portion of financing which may be
provided, guaranteed, or insured. Financing under this clause (vi)
' " ■ " " ard to whether financing for the
MppTOved by any other Federal
"(viiXD The Bank shall utUize a part of the amount set aside
pursuant to clause (v) to provide lines of credit or guarantees to
consortia erf small or medium size banks, export trading companies.
State espmrt Bnanca agencies, export financing cooperatives, imall
buainesi inveatiaent companies (as defined in section 103 of the
Small BusinM Investment Act of 1958), or other fmancing institu-
tioiis or entities in order to finance email business exports.
'YID Financing under this danse (vii) shall be made available only
where the oonacwtia or the partidpaUng institutions agree to under-
take iiiiiiessiii|[. servicing, and credit evaluation functions in con-
naetton with such fmancing.
"(HD To the i"B^ini'i") extent practicable, the Bank shall delegate
to tbe conamlla the authority to approve financing under this clause
(viix
"dV) In the sdministmtion of the program under this clause (vii).
the Bank shall provide appropriate technical asaiatance to partici-
pating consortia and may require such consortia periodically to
nimiui information to the Bank r^arding the number and amount
of loana made and the creditworthinees of the borrowers.
"(viii) In order to assure that the policv stated in clause (i) is
carried out, the Bank shall imimote email Dusinesa exporta and ita
small busineos export financing programs in cooperation with the
Secretary of Commerce, the Mnce of International Trade of the
m Adminiatralion, and the private sector, particularly
. > organintiona. State agenciea. chambers of commerce,
^^nifcjHj organia^iona, export management companies, export trad-
iag msnpniiins. and private industry. .
(b) Saction 9 afsneh Act (12 U.S.C. 635g) is amended—
(1) in the first sentence of subeectitm (b), ^ inserting before
tha period at the end thereof the following: and of the activi-
ties of the member of the Board appointed to represent the
interests of small business"; and
(2) bj adding at the end thereof the following:
"(cXl) The Bank shall include in its annual report to the Congress
a raport on the allocation of the sums set aside for small buainess
axporto pursuant to section 20)X1XE).
''(2) Such raport shaU epecify—
^U the total numher and dollar volume of loans made from
the •ons sot aside;
37-922 O - 84 -
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97 STAT. 1260 PUBLIC LAW 98-181— NOV. 80. 1988
"(B) the number •nd dollar vtriiune of Imuw mad* thi«a(h ti»
Anit. p. 1258. cMiaortia progmn under Mction ZCbXlKEXvlik
'\Q the kinount of guarantoea and inmraDoa piwidad far
Huall buaineai exporta;
"(D) tha number of recipienta of tmantiiiK frtan tba auma Ht
•aide who have not previoualy participated In tba Bank'i
profrnunfli
"(E) the number of commitmenta entered into in amoant* le*
than $600,000; end
"(P) any recommendationa for increaainc the paitic^Mtkn of
bai^ and other institutione in the proKrama auUHrtaad imder
aection 2(bKlXG).
TrBMmiual to "(3) For the purpose tf this lubeection, the Bank'i report ahall be
tranamitled to the Committee on Small Buaineaa tt tba ^"•^r*^ mat
'"(Fi CoDBistcut with international BKreementa, the Bank ■
urge the Forei^ Credit Insurance AMOciation to provide corw^e
a^inat 100 per centum of any loea with remiect to exporta hanr' ~
value of loH than 1100.000.".
spactAi. rAciuTtn in avreoxr or tTNrmi statss Kxromn
BPBcuL PAcnjTm IN BUPFOKT Or UMTRD BTATn Kxrana
"Sk^ 13. The Bank ie authorized to eatabliah genaral ftw^iiffw
oonaiatins of Buaranteea and insurance in aupport of enorttcwuee-
tiona to Brazil in the acKn«at« amount of 11.600.000.000 and la
Iteieo in the aggregate amount of 1500,000.000. No auch guaranlan
mar be made, or maurance itaued, after March 81. 1986.".
(b) The tint aenlcnce of section 2(bX3) of the ExportJnqMrt Bank
Act of 1945 (12 VS.C. 635ft>X3)) ia amendMl by inaartins "vr ganeid
guarantee or insurance faeiUty" after "no loan or **■?'—■■'
guarantee".
(c) Section 2(bX3XA) of the Export-Import Bank Act of IMS (U
U.S.C. 635(bX3XA)} is amended to read as followa:
"(A) in the case of a loan or financial guarantaa —
"(i) a brief description of the purpoaaa of the ta
"(ii) the identity of the party or p ''~ —
loan or financial guarantee;
"(iii) the nature of the good* or ae -, - -
and the uae for which uie gooda or sanicea are to be
exported; and
(iv) in the caae of a general guarantee or inaoranM
"(D a deacription of the nature and purpoaa of tbt
"(II) the total amount of guarantees or ii
"(in) the reasons for the facility and its B
operation; and",
(d) Section ZOt) of the Export-Import Bank Act of 1946 aZ VS.C
635(b)) is amended—
yGoot^le
PUBUC LAW 98-181— NOV. 30. 1983
(1) hj r»dwiipi»ting frngmpb (8) aa paragraph (9);
(2) Iqr ndaaviatiiiK wngniph (TK the wcDnd time it anwua
therein, a* paragraph (8h end
{8)bT ■■■
"(lOXA) T
law, piaraBt«e, innire, or mtand credit (or participate in
akm of credit) to—
~ t ipedfic oountries with balance of payment*
>t (aa the primary purpoae of any nich guarantee,
inmraiKe, or credit) any couotry in the management of it«
intamatiMtal iadebtedneal, other than its outstanding obli-
gationa to the Bank.
"(B) Nothing contained in oubparagraph (A) ahall preclude
Kuaranteea, insurance, or credit the primaiy purpoae of which i>
to support United States exports.".
nCHNICAL AMKNOHnrra
&C. 620. (a) SecUon 2(bXi) of the Export-Import Bank Act of 1945
(12 VS.C. 635(bX4)) is amended by striking out "he" wherever it
■raears and inserting in lieu thereof "the Secretary".
0>) Section 3(e) of the Ezport-Import Bank Act of 1945 (12 U.S.U.
6S6«(e))i*Biitaided—
(1) by striking out "his" and insaiting in lieu thereof "such
individual's"; and
(2) by striking out "he" and inserting in lieu thereof "nich
individual".
(c) Saction 4 trf the Biport-Iniport Bank Act of IMS (12 U.S.C.
636b) is amended by striking out "he" and inserting in lieu thereof
"the President".
(d) Section 7(b) of the Export-Import Bank Act of 1945 (12 U.S.C.
6S6e(b)) is amended by striking out "he" wherever it appear* and
inserting in lieu thereof "the President".
CAPTTAL LXVSL or THE BANK
CAPITAL LKVSL OP TUB BANK
"Sbc 14. After fiscal year 1983, if at the end of any Tiscal quarter Notification oS
the value cf the total capital stock and retained earnings of the Congrees.
Bank (alls bdowSOper centum of the value of the total capital stock izU8C635i-2.
and retained earnings of the Bank at the end of fiecal year 1983, the
Board «f IKractors diall notify the Congree* of the decreew in the
levd of the capital stock of the Bank not later than thirty days after
the and of the fiscal quarter involved and the Congress shall take
appropriate action.".
yGoot^le
97 STAT. 1262 PUBUC LAW 98-181— NOV. 80, 1988
"(2) In order for the Bank to be coniwtitive in all of It*
progruns with oountrie* whoae earporte ccoipeto with United Statet
exports, the Bank •hall establiah B imigrun that —
"(A) pTovidM ntedium-term financing where Decaaaaiy to be
fuUy cranpetitive —
"(i) at rates of intereat to the cuBbxner which am aqnal to
rataa eatabliabed in international agreementa; and
"(ii) in anwunta up to 85 percent at the tcrtal coat of A*
exporta involved; ana
"(B) enaUaa the Bank to cooperate MIt with the Secretai? «f
rnmiMWMtuI t.ha Ailmiiiiatratnrnf IJm HimII niimniii Ailiwjn.
Uration to develop a program for puipoaea of iliMHiiiliialliij
iiiftjrmBtian (uaing existing private institution*) to small bush
ness concerns regarding the medium-tern) Rnsadng pnrvided
under this paragraph.".
Sac. 623. SecUon 9 of the Export'Inipmt Bank Act ol 194S {\t
U.8.C. 635e) U amended by adding at the end tbereoT the foOowii^
"(dKl) The report shall include a detailed deacrMkxi of all aetwes
which have be^ taken by the Bank or whidi wul be taken hj Ih*
"(B) to support iodustriee which a:
hish value added products;
(Q to support industries which are eng^sd In the devricp-
ment of new capital goods technology;
"<D) to preserve and create hi^ skiUed Jobs in the United
States economy; and
"(E) to enhance the opportunity for growth and expanafaMi of
small busineasea and entrepreneturial enterpriaea.
"(2) Such report shall include the comments tt the AdriMrT
Committee regarding the otyectives specified in paragnph <U .
Past B— Matchino Cantns
UATCHWO cunnB
Sic. 631. Section 1912 of the Export-Import Bank Act Amaod-
menta of 1978 ii amended —
(1) by adding at the end orsubsectian (aXD tlM feOowing: "Tb*
inquiry, and where appropriate, the detenninatkn and authori-
sation to the Expor^Import Bank of the Unitad Stataa nfensd
to in this section shall be completed and made within 60 dqssf
the receipt of such information."; and
(2) in subsection (bXl). \fs str^ing out "i
and inserting in lieu thereof "significant hctor".
Sac 632. Section 1911 of the Export-Import Bank Act Amaod-
ments oft97S iB amended by adding at the end thereof the feUowioc
"After October 1, 1983, there are authorised to be apprnviatad sun
sums as may be neceesaiy to carry out the proYiaioBi of lliii
yGoot^le
PUBUC LAW 98-181— NOV. i
tXCHNICAL AHINDKBNT
97 STAT. 1263
Sac 633. (a) Section 19120)) of the Export-Import Bank Act
AnModmenta of 1978 ia amended by rtrklng out "he and inserting
in lieu thKtnS "the Secratary".
<b) SectioD 1912laX2) of the Eiport-Import Bank Act Amendmenta
of 1978 ii amended by atriking out "he" and inserting in lieu thereof
"thaSaeretwT".
Pait C— Tied Aid CMtDrr Exi>oin' SuanoiKS
Sac. 642. The purpose of this part is— a USC 63
<1) to expand employment and sconomic growth in the United
Statea by expanding Unitad States exports to the markets of the
developing world;
<2) to stimulate the sconomic development of countries in the
developing world by improving their access to credit for the
importatiim of United States products and services for develop-
mental pnrpoaea;
(3) to neutralixe the predatory financing engaged in by many
nations whose exports compete with United States exports, and
thereby reatore export competition to a market basis; and
44) to encourage (breign governments to enter into effective
and eomprehenaive agreements with the United Stales to end
the use of tied aid credits for exports, and to limit and goverr
the use of export credit subsidies generally.
Smc 643. The President shall vigorously pursv
limit and set rules for the use of tied aid for exporti
oltfsctiTce of the United States should include reaching
(1) to define the various forms of tied aid credit, particular^
mixad oredita under the Arrangement on Guidelines for ORi-
dallj Supported Export Credits established through the Organi-
xMion for Economic Coloration and Development (hereinafter
in this iNut referred to as the "Arrangement' y,
(2) to phase out the use of government-mixed credits by e date
(8)loi
(41 to
cndittc
(5) to
I govern]
forms M mixed financing, which may have the
govenunent-mixed credits of drawing
wnti
iistan<
o produce subaidized export financing;
raise the threshold for notification of the use of tied aid
taSO per centum level of concessionality;
Improve notification procedures so that advance notifi-
must be given on all uses of tied aid credit; and
o prtdiibtt the use of tied aid credit for production facili-
r iooda which Kre in structural oversupply in the world.
yGoot^le
PUBLIC LAW 98-181— NOV. 30, 1983
Sic 644. («X1) The OiHinnan of the Eiport-lmport Bank of the
United Statea ahall establiah, within the Expoit-Import Bank of the
United States, a program of tied aid credita for United State*
(2) TTie prcgram ehall be carried out in Eooperation with the
Agency for International Development and with private financial
inatitutiona or entitiea, as appropriate.
(3) lite program may include—
(A) the comhined lue of the credita, loana, or puranteei
oflerad by the Esport-Import Bank of the United States with
concessional financing or grants offerod by the Agency for
International Development, by methode including the blending
of the financing of. or parallel financing by, the Bank and the
Agency for International Development; and
(B) the combined uae of credita, loans, or guarantees offered
by the Bank, with financing ctffered by private financial institu-
tions or entitiee, by methods including the Uending of the
financing of, or parallel financing by, the Bank and private
institutions or entities.
(b) The purpose of the tied aid credit program under this section if
to offer or arrange for financing for the export of United States
goods and services which it subetaotially as owiceaaional as t<M«igD
financing for which there is reasonable proof that such foreign
financing is being offend to, or arranged for, a bcma fide foreign
competitor for a United States export ssle.
(c) The Chairman of the Bank ii authorized to eetahlish a fund, ss
' T CBTiTing out the tied aid credit program described in
(d) Concessional financing or grants offered by the Agency for
International Development for the purposes of the mixed financing
program established under this section shall be mads avBilable in
accordance with the provisions of subsections (c) and (d) of section
645rfthi8AcL
A TiKD Am cxBtrr pxoobam in tri aobnct fob
SH^ 64G. (a) The Administrator of the Agency for International
Developmsnt shall ttstaMlsh within the Agency ■ program et tied
aid credita for United States exports. The program dudl be canied
imt in coopeiation with the Export-ImiwTt Bank of Um United
Statss and with private financial institutions or sntltisa, as apim>-
priato. The program may include —
(1) the combined use of the credits, loans, or guarantees
offered by the Bank with conceeaional financing or grants
offered by the Agency for International Development, by meth-
ods including the blending of the financing of, or pandlsl
financing by, the Bank and the Agency for International Devel-
opmtat;aad
(2) the combination of conceeaional financing or grants ofleittd
hr the Agency for International Development with financing
yGoot^le
PUBLIC LAW 98-181— NOV. 30, 1988
iy, tha Afeoc^ for Intemmtional Development and private insti-
tutiona or entitie*.
(b) Tlieaa fund* mM be combined with Tmancing by the Ezport-
Import Bank of tbe United Statca or private* coramercial financing
in coder to offer, or arrange for, financing for the exportation of
Unitad Stataa BO(ida and aervicM which ia subatantially aa cooces-
Moal aa fixcign financing for which there ia reaaonable proof that
mdt foniga financing ii being tiered to, or arranged for, a bone
fide forrign emnpetitor for a United States export tale.
(cXl) nuuk ct the agenc; for Intamatiofial Development which
•I* uaed to cairr out a tied aid cndit program authorised by
wbaectiona (a) and A) ahall be offered only to finance United Stataa
norta which can reascoiBbly be expecUd to contribute to the
amnoaBMot of tlM development objecttvea of Uie importing country
or GonntnaL and ahall be conaiatent with the economic, aecurity,
md political criteria uaed to eetabliali country allocationa of Eco-
nmuc Support Puiuta.
(2) nm Xdminiatrator of the Agency for International Develop-
■ant ia autbrniMd to catablidi a fimd, aa neceaaary, for carrying out
a tiad aid credit Rnaneing program aa deecribed in this aection,
(d) Hm Adminiatrator of the Agency for International Develop-
■Mat may draw on Bri^m^ty Support Funda allocated for Commod-
ity Import Progiama to finance a tieJ aid credit activity.
Sk. 646. (aXl) Tbe National Adviaory Council on International
Htnetan and Rnandal Polieiea ahall coordinate Uie implementa-
tta of tne tied aid credit programa authoriaed by aectiona 644 and
CD No financing may be approved under the tied aid credit
— » uithoriied by aection 644 or aection 645 without the
ua consent irf' the memlien of the National Adviaory Coun-
o International Uonetaiy and Financial Polidea.
C 647. For piirpoaee irf thia part—
(1) tbe term ^'Ued aid crsfit" mi
country nanting the oedit;
(O iriuch ia *'"f"<'-<l either exclusivelr from public funda,
or, aa a mixed credit, partly from public and partly from
. -la defined by the Develop-
„_, Jommittee of the Organization for Eco-
ncinic Coopervtioa and Development, greater than aero
private fimd^ and
(D) which hna a grant el
ment Aariatance Commit
(Z) tbe term "Kuvei lunent-mixed credita" meana the combined
vaa of oedlta, inaiirance, and guarantaea offered by the Elxport-
Import Bank of tbe United Statea with conceaaional fmancing
cr franti offered by tbe Agent? for IntemationBl Development
neans the combined
Baa of altber oAdal development asaiatance or official export
credit with private commercial credit to fmance exporta;
yGoot^le
PUBLIC LAW 98-181-NOV. 30, 1988
12 use 636a-a.
19 use 1671*.
19 use 1611b
(4) the term "blendinff of^nancings" i
Combinationa of ofFiciaT development ai
credit, and private commerdal credit, inteKi^ted into a sin^
I, offitnal export
package witn a single set of financial terma, to finance ^port^
<6) the terra "parallel financinc" means the related lue d
varioua combinationa of separate linea of official development
aaristaiice, official ex|3ort cr«dita, and private commerdal
credit, not combined into a single package with a single set of
financial terma, to finance eiporta; and
(6) the term "Bank" means the Export-Import Bank of the
United States.
S(C. 650. (a) SecUon 702 of the Tariff Act of 1930 as amended, h
amended b* adding af^ subsection T02(bX2) a new suboectioii
T02(bX3) as followa:
"(3) PrrrnoN Baskd Upon a Dkrogation op an iNTKaNATiONAi.
Undkbtakino on OmciAi. Espobt Caxorrs. — If the sole basia of a
[letition filed under subsection 702(b)(l} is the derogntion of an
utemationol undertaking on official export credits, the Administer-
ing Authority shal] immediatelj notify the Secrvtat; of the Treas-
ury who shall, in consultation with the Administering Authority,
within twenty days determine the existence and estimated value of
the defection, if any, and shall publish such determination in the
Federal Register.".
(b) Section 703 of the Tariff Act of 1930, aa amended, is antended
by redesignating eubaection 703(b) as subaection 703(bXl} and adding
a new subsection 7030>X2) as follows:
"(2) NotwithatandinK subeecUon (bXl), when Um> peUtion is one
subject to subaection 702(bK3), the Administering Authority shall,
takmg into account the nature of the subsidy concerned, make the
determination required by subaection 703(bKl> on an expedited basis
and within 85 days after the date on whidi the petition is filed
under section 7020)) unleaa the provisions of section T03(c) apply.".
(c) TiUe VU of the Tariff Act of 1930 is amended by adding at the
end thereof the following new section —
"Sec. 708. Nothing in this title shall be interpreted as superseding
the provisions of section 1912 of the Export-Import Bank Act
Amendments of 1978, except ttiat in the event of an assessment of
duty based on a derogation under section 706 or action under section
703(dKZ>, the SecreUry of the Treasury shall not authMiie the Bank
to provide guarantees, insurance and credits to competing United
States sellers pursuant to section 1912 of such Act".
TTTLE Vn— MISCELLANEOUS PROVISIONS
Sk. 701. (a) Sections 304, 310, and 311 of the Home Mortgage
Disclosure Act of 1975 (12 U.S.C. 2803. 2809, and 2810) are amended
by striking out "standard metropolitan statistical area" wherever it
appears and inserting in lieu thereof "primary metropolitan statisti-
cal area, metropolitan statistical area, or conaolidated metropolitan
statistical area that is not comprised of designated primary metro-
piriitan statistical areas".
(b) SecUon 308 of the Home Mortgage Discloeure Act of 1975 (12
U.S.C. 2807) is amended by striking out "standard metropolitan
statistical areas" wherever it appears and inserting in lieu ther«of
"primary metropolitan statistical areas, metropolitan statistical
yGoot^le
PUBUC LAW 98-181— NOV. 30, 1983 97 STAT. 1267
nM, or CMMolidrtwL ,
wpi'i— d of dangnatad primary n
(c) Section 208(1) of the Depontory Institutiona Management In-
«rleda Act (12 VS.C. 3202(1)) ia amended bjr striking out "standard
urtnrirfmaii atatiatical area" and inaerUng in lieu thereof "primary
wtujwlilMj rtatiatical area, the aacne metropolitan statistical area,
w tka aama cooMdidated metiDpolitan statistical area that ia not
Wli|W laiMl ct designated primary metropolitan statistical areas".
Sac 702. (a) Section 2 of the Federal Deposit Insurance Act (12
J&C 1812) is amended by insertiiig after the third aentence the
* ** ' ig: "&k1i such appointive member may continue to serve
» azpiratian of his term until a succeosor haa been appointed
"September 30, 1983" and inserting in lieu thereof
0) Section 17(a) of the FedenU Home Loan Bank Act (12 U.S.C.
lIMa}) is amended by adding at the end thereof the followins-
"Uaon the expirationMthe term <rf office irf a member of the Board,
an member may continue to aerve until a successor has been
maintert and qualified.".
DKTDna noDucnoN act amNatON
te. 703. The first aentenoe of Section 7lT(a) of the Defense
FMduction Act of 1950 (50 US.C. App. 2166(a)) is amended by
ttiking out "SMttember 30, 1983" and in
-IbiSaD. 1984":
TITLE Vin— INTERNATIONAL MONET ABY FUND
a ooNDtnoNS roa kxchangs sati STAatuTV
40. (a) In order to help aaaure that the resources provided Iniiiaiives by
■■ " ■■ which will I™.'">'
ndar section 41 are uasd to support pn^growth policies
Up sstaMish the economic conditions necessary for more appropri-
A WwftwiMi and exchange rate alignment and stability, it is the
„. _ J Seci«tary of State and the
United States Trade Repreaentative, initiate discussions with
otho' countries regarding the economic dislocations which
rauH ftwn structural esdunge rate imbalances: and
"(2) instruct the United Statea Executive Director of the Fund
ta work fbr adoption of poUdee in the Fund, both within the
B IV (of the Articles of Agreement of the
» and with reepect to the conditions
1 with Fund.supported balance of payments adjust-
diaace ntea between major cur
liiea, the Secretary of the Treasury shall propose strengthening
the article IV conaultation procedures of the Fund to attempt to
yGoot^le
97 STAT. 1268 PUBLIC LAW 98-181— NOV. 30, 1988
enaure that coiintrica which are artificially ■""'"tfi'^'ng under
valued or overvalued rates of exchange agree to adopt market
determined exchanKe rates.
"(hi In determining his vote on eitennoua of aaaiBtance to aiqi
Fund borrower, the United Statea ELzecutive Director of the Fund
diall take into account whether auch borrower'a policiea are conaitt-
ent with the requirements of article IV of the Article* of Agreement
of the Fund".
Sbc 802. (a) The Bretton Wooda Agreements Act (22 U.S.C. 286 et
nq.) ia amended —
(l)io section 17<a>~
(A) by strilting out "dec!si<n) of January 5, 19G2," and
inserting in lieu thereof "decisions of Januai; 5, 1962, and
February 24, 1983, as amended in accordance with their
terms,"; and
(B) by striking out "not to excead $2,000,000,000 outstand-
ing at any one time," and inserting in lieu thereof "in an
amount not to exceed the equivalent of 4,2GO,000.000 Spe-
cial Drawing Rights, limited to such amounts as are prf^
vided in advance in appropriations Acts, except that piim
'a activation, the Secretary of the Treasury shall certi^
that supplementary resourcsa are needed to forestall e
cope with an impairment of the international mi
system and that the Fund has fully explored other ie
funding,";
<2) in section 170)), by striking out "$2,000,000,000," and
inserting In lieu thereof ''4,250,000,000 Special Drawing Rights,
except that prior to activation, thie Secretary of the Treasuiy
shall certify whether supplementaiy resources ai« needed to
forestall or cope with an impairment of the intematicKial mone-
tary system and that the Fund ha* fully explored other means
(3) by Mduig at the end of section 17 the folloiving:
"(d) Unless the Congress by law so authorizes, neither the Presi-
dent, the Secretary of the Treasury, nor anv other person acting on
behalf of the United States, may instruct the United States Execu-
tive Director to the Fund to consent to any amendment to the
Deciaion of February 24, 1983, of the Executive Directors of the
Fund, if the adoption of such amendment would aignificantly alter
the amount, terms, or conditions of p«rticipation by the United
States in the General Arrangements to Borrow."; and
(4) by adding at the end thereof the followiog:
"Sic. 41. (a) The United States Governor of the Fund is authorized
to consent to an increase in the quota of the United States in the
Fund equivalent to 5,310,800,000 Special Drawing Rights, limited to
such amounts as are provided in advance in apprapriations Acts.
"(bXl) 'nie Secretary of the Treasury shall consult with the chair-
man and the ranking minority member of—
"(A) the Committee on Banking, Finance and Urban Affairs
and the Committee on Appropriations of the Houae of R^>re-
•entativee, and any appropriate subcorrmiittee of each such
committee; and
yGoot^le
PUBUC LAW 98-181-NOV, 30, 1983
'XBi tha CMUaittas oa Foreign ReUtioiu, th« Committee on
^KirOfnriatioiis, and the Committee on Banking, Housing, and
Unan Albin of tbo Senate, and anr appropriate suboommittee
rf aacfa nich ecaniiiittee,
W purpOM* of ■*'—"—' "B the poeition of the executive branch and
ha vjfl«n of the Omgroi with respect to any international negotia-
■BBa beiiK hold to conaideT an^ future quota increase for the
J Mooetaij Fund which ma; involve an increased con-
"(B) during tha period in which tuch negotiationa are being
held, in a fr«quent and timely manner; and
"(C) before a aeaaiaai of eudi negotiations is held at which the
United States representatives may agree to such quota increase.
bDrmring, and to allow landers to make sound and prudent
dsdnona concaming thair international lending, threatens the
slalrili^ of the intamatioaal moaetary syBtam; and
"YS m racognition of tha Fund's dutjea, as provided particu-
larty by article Vm of the Articles of Agreement of the Fund, to
Kt M « canter fbr tha collectioo and exchange of information on
menetan and financial problems, the Fund should adopt necea-
mr and appropci»t« meawrw to ensure that more complete
■bJ timely fmandal inforawtion will be available.
HM T» this end, tha Saa«tai7 of the IVeaaurj; shall instruct the
tUad Stataa Bucutive Director of the Vuad to initiate discussions
•llhotherdirecloriof the nindaitd with Fund management, and to
fnpoM and vote fbr, the adoption of procedurae, within the Fund—
"(1) to collect and diMeminate information, on e quarterly
hi is. from and to Fund memben, and to such other persons as
tha Fnnd ili«ims appnpriala, concsming —
"CA) the extension oT credit by banks or nonbanks to
private and public enUtias, inflmliiig all government enti-
tiaa, instnimmtnlitins. and central banks of member coun-
tiiskand
"(B) the receipt of such credit bv those private and public
•ntitiea of member oountries, where such bonks or non-
banks are not principally established within the borden of
the I in II 111 Mil country to which the credits ore extended; and
"(Z) to diiniiiiiislii pablidy information which is developed in
it the Fluid's colIectioR, and to review and comment
t entitiM, instnmientalitiea. and central banks at
yGoot^le
7="?
PUBLIC LAW 98-181— NOV. 30, 1988
"(2) untued lines of credit which have been made avaiUtle to
thoee private and public entities of any member,
where such loans or lines of credit are repayable in freely concert'
"(d) The President is authorized to um the authority provided
under section S of this Act to require any perwm (as defined in Mch
section) subject lo the jurisdiction of the United States to proride
such information aa the Fund determinee to be necessary in order to
carry out the provisions of this section.".
SPECIAL DRAwwo uoms
Sbc. 803, Section 6 of the ^>ecial Drawing RighU Act (22 U.S.C
2S6q) is amended—
(1) by inserting "(a)" after "Skc. 6."; and
(2) by addine at the end thereof the fMlowinp
"(bKl) Neither uie President nor any peraon or sgency shall oa
behalf of the United States vote to allocate Special Drawing Righti
under article XVIII, sections 2 and 3. of the ArtKleaofAgreeiacmtaf
the Fund without consultations by Uie Secrvtarj of the Trcaiun at
least 90 days prior to any such vots, with the Chairman fnd rankiiic
minority membera of the (Committee on Foreign RalationB and tb*
Committee on Banking, Housing, and Urban AfEtii* of the Scoals
and the Committee on Banking, Finwoce and Urban AfTaira of ths
Ives, anduieai
House of Representatives, ai
le appropriate subcommittees tbers-
"(2) Such consultations riudi include an explanation of the consiit-
ency of such proposal to allocate with the raquiraments of tfaa
Articles of Agreement of the Fund, in particular the requirsnMDt
that in all itsdecisions with reapect to allocation of Special Dnnring
Rights, the Fund shall 'seek to meat the long-term global nasd, m
and when it arises, to supplement existing rseenrs asaeta in siidi
manner as will promote the attainment of its purposes and wiB
avoid economic stagnation and deflation ss well as excess 't*"'—'^
and inflation in the world'.".
'iNBTRUCnONS TO THE UNTTCD STATD KSKCUTIVI DtOaCTOa
other highly inefiicient labor and capital supiJy rigUities whiA
contribute to balance of pajmtents deficits in <uract contradiction of
the goals of the International Monetarr Fund, llwrelbn. the Seera-
tary of the Treasury shall instruct Uw Unilad States Executive
Director of the Fund to actively oppose any focilit; tnTOlving use <(
Fund credit by any Communist dictatoishipk onksa the Secratair ef
the Treasury certifies and documents in writing upon request and SO
notifies and appears, if requested, befora the Foreign Relations and
Banking, Housing, and Urban Affairs Committees of tbe Senate and
the Banking, Finance and Urban Affairs Committas of tbe House Vt
RepresentaUves. at least twenty-one days in advance of any vote en
such drawing that such drawing—
yGoot^le
PUBUC LAW 98-181— NOV. 30. 1983
n labor and capital
Qitr or other higfal; ineflicieiit labor and capital supply
SUm and advancea market-oriented forces io that country;
' ti in the beet ecmtomic intereet of the nuiiority of the
lain that covnti;.
.m._ a . — .... j^^^ ^ requeet to appear before the
e at least twenty-one days in advance of
t, the United SUtca Executive Direc-
tauchproKrani.
■ bercegr find* that the practice of apartheid
atrainte on labor and capital mobility and other
it labor and cai^tal supply rigidities which contrib-
e of paymcoti defidta m (Urect contradiction of the
HM intamatianal Uaoetary Fund. Therefore, the Preflident
tract the United SUtea Executire Director of the Fund to
Me any fadlity inv(dviiig uae of Fund credit by any
li prarticea aiiarthrid muMi the Secretary of the Treas-
UM documcnla in writinK. vpoa requeat, and lo notifiea
if leauealad, brfbre the FWeiiKn RelationB and Banking,
I Urban AOaira Conunitteoa of the Senate and the
ft and Urban Aflkiia Committee of the House of
. at Inaat twenlT«ne daya in advance of any vote on
L that aueb drawing: (1) wtnild reduce the severe con-
■ciallv-
UrictioiM on the Beogmihieal moUlibr of labor, (2) would
tar U0i]y ineffident bbor and capitu supply rigiditiea;
D^tt acmamicaUT the muority of the people of any ooi;
a the albtaiDwitioned mmmittiTni at least twenty-one
ifcanea «f any vote on mny Cscili^ involving use of Fund
' ai^ eounti7 practicing apaitbod and certify and docu-
wnting that thcae four conditioM have been met, the
lalai Baacotiw IMiactor shall vote against such program.".
:iru Bpartheid.
•tricted fuiHJ-
Mirictition of
"BJHDfAtiOM or AancuLTUBAi. axroar suaanMB
M. The SecretafT of the Treasury shaU instruct the United 22VSC2Mhb
lacutiva IXiactor of the F^ind to propoee and work for the
flf a policy encouraging Au^ inii !>!*■• to eliminate all
f agrictiltnral azport sobaidies which might result i:
■ urothn'ni
yGoot^le
PimLIC LAW 98-181— NOV. 30. 1983
auiTAiNiNO aconomc omowtb
"SUSTAININO aCONOMIC
"Sec. 4E. (aXl) The Prendent ahsU inatruct the SBCretar? ■
Treaaury. the Secretary of State, utd other apiwtmriate Ft
officiala. and shall request the Qiairman of the Bmm of Gov*
of the Federal Reeerve System, to uae all appraprial«
[xurage couDtriea to formulate economic a^iuatinent pncra
il with their balance of payment difBcultiea and ext^mal
owed to private banks.
"(2) Such ecoBomic adjustment programs abouM be iletigr
safeguard, to the maximum extent fauible, intcmatiooal •"
growth, world t^Mle, employment, and the loi ""'
Banks, and to minimi™ the likelihood of civil d
triea needing economic adjustment programs.
"(b) To ensure the effectiveneeB of economic a4juatment pro|
"(1) the United Sutee EiecuUve Directw of the Fund
recommend and shall work for changea in Fund guid<
policies, and decisions which would —
"(A) convert short-tern) bank debt which was BU
high intereet rates into long-term debt at lower n
interert;
"(B) assi
shaD include principal, intereet, points, fees, i
charges required of the country involved, is a manai
and prudent percentage of the projected annual 4
earnings of such count^, and
"(O provide that '
program the Fund
countries apolying to the Fund fbr . _,__
programs ana the aggi^ate effects that such progran
nave on international economic growth, worM
exports and employment of other member countriei
the long-term solvency of banks; and
"(2) except as provided in subaection (c) of this sectlo
United States Executive Director of the Fund ihaU oppot
vote against providing awietance from the Fund fbr an
nomic adjustment program for a country in which the ■
external debt eervkce exceeds B5 per centum of the a
export earnings of such country, \iTi\tm the Secretary '
Treasunr firat determinea and provides written documen
to the Committee on Banking, Housing, and Urban AfHai
the Committee on Foreign Relations of the Senate an
Committee on Banking, Finance and Urban Affair* i
House of Rcpreaentativea that —
"(A) the economic adjustment program convert!
interest rate, abort-term bank debt Into kmg-tenn d
significantly narrower interest rate spreads than tbi
age intereet rale spreads prevailing on bank debt r(~~
ings negotiated between A ■ '^" -* * '
countries receiving aasista
adjustment program* in order to minimise the burd
prevailing on bank lUtt reac
August U82 and Aupist IS
tance from the Fund for eco
yGoot^le
PUMJC LAW 98-181— NOV- 30, 1983
KJjii^tiieirt on the debtor nation, provided that such inter-
est rate apnada are consistent with that nation's need to
obtain adequate external private fmancing;
"(B) the annual external debt service required of the
counti; involved is a manageable and prudent percentage
of the fmgected annual export earnings of sucn countiy;
and
. _. economic growth, world
_, and employment of other member countries,
and the long-term solvency of banks.
lie) The praririona of nibMCtion (bX2) Bhatl not apply in any caae
■ whidi tM Sacretai; cf the Treasury first determines and provides
■iiU«m docmnentatMKi to the Committee on Banking. Housing, and
Ihtea Affoira and the Committee on Foreign [lelations of the
flwislt and the Cotnmittee aa Banking, Finance and Urban Affairs
rflhe Houae oTBqxvMntatives that-
'll) an cmeigency exiata in a nation that has applied to the
Fund for aviitance that reauirea an immediate short-term loan
to avoid dianiptuiK orduiy financial markets;
*X2) a ff"*iw' qecraaae in export earnings in the country
iqifilying to tita Fund for aaaintnnrr has increased the ratio at
■Dnnal tttemal debt service to annual export earnings, to
maisr than 8fi per ceitum for a period pK^ected to be no more
ninnixwyear or
"XSi other extraordinary circumstances exist which warrant
waiving the provinons of subsection (bX2).".
OFPOaiMO FUND BAlLOtna or BAMKS
oPFOONa ruNO bailoitis op banks
"Sac 46. nie Secretary of the Treasury shall instruct the United
SMm Eiwcutive Director of the Fund —
"il) to oppose and vote against any Fund drawing by a
nNalwr country where, in his judgment, the Fund resourcee
woold be drawn principnUy for the nuivne of repaying loans
<riliGll fame been imprudently msrde by banking institutions to
th* mandMr eount^ and
"00 to wmk to uaure that the Fund encourages borrowing
umiiliiaa and bankiiu inatituticau to negotiate, where a[vropn-
ate^ • I— IisiImIIiiu of debt which is consistent with safe and
■Mnd banfcing practices and the country's ability to pay.".
auHFUfS ooMMOomn
Sk-SOB-WSl
DAC 288b(b» is <
Mta Eitutiws Duector ol
. Act that devrioMMot aanatance loans have upon individual
I Uastn Melon and international commodity markeU —
"^A) to minimi— imgected advene impacts; and
yGoot^le
PUBUC LAW 98-181-NOV. 30, 1983
tho market* for nidi
"Sk. 47. The Secretary of the Treasury (hall iaatniet th« Unit«d
States E^zecutive Director of the Fund to propcae that tbe Fund
adopt the following polidea with reapect to tntamatiemal landiiif
"(1) In its eonaultationa with a member gnBmitient oa m
economic policies pursuant to article IV of the Articles nf
Agreement of the Fund^ the Fund should —
"(A) intMuiiy its esaminatiou of the trend and volmue of
external indefatadneM of private and public botroawis in
the member country and comment, as ^>propriate, in Hi
report to the Executive Board thMn Um Tiewpnnt of the
contribution of sudi bontwrings to ti>e aconomie staMUQf «l
the borrower; and
"(B) consider to what extent and in what IbnB thass
comments mitjht be made available to the intematioMsl
banking communitv and the public.
"(2) As part of any Fund^pproved «*»'*■'■*»*■"■ program, tbs
Fund shcHild fcive consideration to placing limits on pnbUe
sector external short- and long-term borrovring.
"(3) A* a iwrt of its annual report, and at soch Umas as it msy
"mr iNTCXxn' XATXi
S2USC286fT.
Fund drawing to bring those rates in line with market ralaa.".
Sic. 811. Section 5 of the Bretton Wooda AgrMmants Act (SI
U.S.C. 286c> la amended by adding at the end thereof the fonowing:
'Neither the President nor any person or agencT shall, on bdialf of
• . .1.. .. . . n. _ . . . . . jjy borrowing (ouier than btvrmrinc
other ofRcial public souroa) bj the
the United States, consent to any borrowing (ouier than har
from a foreign government or other ofRcial public souroa)
Fund of funds denominated in United States dollars, unh . . .
Secretary of the Treasury transmits a notice of such proposed
yGoot^le
PUBUC LAW 98-181— NOV. 30, 1983 97 STAT. 1275
[ to both Houw* of the Conrrcta at least 60 deya prior to
■I whidi such borrowing ui Bcheduled to occur.".
"tsadb PROvisicms
■ BzecutivB Director of the Fund
tfm with the Managing Director of the Fund and the other
> «f the Fund with regard to the development of Fund
I aMJatBitce polidea which, to the maximuni feasible
A) (edaeo ohrtaclee to and restrictions upon international
to and innMznent in goods and services;
n diminato nnfeir trade and investment practices; and
0 wmnate mutually advantageous economic relations.
ha Saattaiy of the Treasury sWi work closely in this effort
1 Aade PolKy Committee,
o Fund staff and the GATT Secretariat
The Secretary of the IVeasury shall instruct the United
kMUtive Director of the Fund, prior to the extension to any
of finsaicial assiatanoe by the Fund, to work to have the
itain the ^reement of such country to eliminate, in a
conaiatent with ita balance of paynients adjustinent pro-
odUr trade and inv««tment practicee with respect to goods
ricaa which the United States Trade Representative, after
ttai with the Trade Policy Committee, has determined to
"~~t deleterious effect on the international trading
aectioo with the ezp>rting of agricultural conuno<Utiee and
facta thereof to fi>reign countriea;
n the proviakm of other export subaidies, such as govern-
d ibeiniwid bdow-market interest rate financing for com-
Ktiea or manufactured goods;
O tUTHMonable import restrictions:
n> the impoeiUaa of trade-related performance require-
■toOB forei^ inveatment; and
K pcadicee which are inconsistent with international
In *«**■ iiiininj the United States position on reauests for
dnwing under Fund programs, the Secretary of tne Treas-
II tKk» nil] account of the piogiees countries have made ij
ig targets for eliminating or phasing out the practices
to in BObaection (b) of this section.
1 the event that the United States supports a request for
: ^ a country that has not achieved the Fund targets
to audi practicee apeciTied in its program, the Secretary of
aamy dwU report to the appropriate committees of the
■ the reasMis for the United States position. ".
yGoot^le
PUBLIC LAW 98-181— NOV. 30. 1983
XKFORn TO ooNOBm
"Sic. 50. (a) T^m National Advuory Council on Int«matioiMl
Monetary and Fbiancial Policies ihall include in tta annnal reporti
to the Congren—
"(1) a atatement listing all appraiaal report* whidi liK*e iMen
circulated during the prececung year within the Bank for
project aasiitance which would ect^liah or iKaiw the capac-
ity of any country to produce a commodity tor export, if—
"(AJ nieh commoittj is in nirplua <m world manata «r i*
likely to be in nirplua on world market! at the time the
reaulting productive capacity ia expected to bacome opera-
"(B) luch project aniBtance will cauaa matarial it^ury to
United States producers of the Hune, cimilar, or compMinf
commodity,
"(2) a review of succeM in reducing or elimlnatiBg impart
reatrictiona and unfair export subaidiea iriiich have been detei^
mined to be inconaistent with international agreementa, and
which have a aerioua adverae impact on the United Statea, or
any other raember'a, exporta or employment;
'^(3) a study for the fiacal year 1934 report of the impact on the
United Statce steel and copper induatriea ot atwl and copper
aubaidiea by nationa who are borrowets from the tvmii
"it) a review for the fiscal year 1984 report nsardinc prograai
achieved in reaching the goal of eliminating allprad^tMy agri-
cultural export Bubaidiee which might reeult in tlta reduclieB of
other member countriea' exports as set forth ir
"(5) copies of the analyses and any written i
prepared by the Secretary of the Treasury pursuant b
tiona (bX2) and (c) of iection 45 and a statement datK ..
IB and progress made in carrying out the raquirementa d
" iB<a)andai)ofBe "
"(b) Not later than one year after the date tt the enactment of this
section, the Secretary irf the Treasury shall transmit a report to tha
Congreaa on the operation of Uie international monetary and finan-
cial ayatem, including—
"(1) findines of the Secretary of the Treaaun, the Chairmas
of the Board of Governor* ot the Federal Reanva, and tha
Secretar; of State regarding consideration of United Stalaa
membership in the Bank for International Settlementa; and
"(2) proposals to improve the floating exchange i«ta systenL
"(c) Not Later than one year after the date of the enacbnent cf thia
section, the Secretary of the Treaaurjr shall transmit a report to the
Congnas with respect to etrengthenmg the role and improving the
operation of the International McmMiry Fund, in *
"(1) ways to maintain realistic, market-deteRniBad andbaaM
rates with other m^Jor currendea and lecommendatlaaa ngara-
ing what con be done t« avoid exchange rate manipulation, b
particular, auch report ahall axamine tha poUdsa at m^Jor
trading partnera which (A) maintain a aubatantial trade suiplns
I) encourage export of capital to
yGoot^le
PUBUC LAW 98-181— NOV. 30, 1983
nch an extent that czchanse rata do not appear to reflect
adhutmeDta faai«d on trade pattern* alone;
W a review and analyaia of—
"(A) the ability of the Fund to promote real economic
gni|wth and auBtained, Doninflationai? recovery, pursuant
to ita mandate in article 1 of the Articles of Affreemeiit of
the FubA, in couatriea which enter intii stabilization pro
grama with the Fund:
"(B) the feasibility of the Fund issuing securitiea in the
^ivate capital markets as a means of increasing its
reaouieea, either in lieu of, or in addition to, future quota
incraasM, together with an evaluation of how luch borrow-
ing would ainct the credit marketa of the United States;
^lO the feasibility of returning all or part of the Fund's
gold reecrrw to Fund members or of selling the Fund's gold
reeerviw in the inivate markets in an effort to raise capital;
"(D) the feasibili^ of aatabliahing temporary, supplemen-
tal fin«nfii<g facilitiea at the Fund;
"(E) the feasibility of eatablisbing a Gold Lending Facility
where^ the Fund would lend gold to Fund memoerB who
would in turn use such gold as collateral for commercial
"(F) recommendations for amendments to the Artielea of
Agreement of the Fund, if any, to improve the role of the
Fund in the international monetary system; and
"(G)tbeeffect on (i) the market price of gold, (ii) countries
whoae central banks maintain reservea in the form of gold
and (iii) credit markets of the United States as a result of
taking any of the actions described in subparagraphs (Q,
(D), or (E!) of this paragraph;
"XSi actions which have been taken to carry out the provision*
«f taction 33 of this Ac^
"^a progress made in implementing section 46 of this Act;
tS) a itiuijr on the past and uitential impact of Fund loan
> > — gm^ ^g^ world oil prices, such study to be done in
with the Secretary of State and the Secretary of
"(A) of whether under present circumstances a system-
atic restructuring and stretching out of developing country
debt should be ctmducted;
"(B) regarding the role global recovery will play in solv-
ing the debt crisis and wnat interim financing meeaures
RHV have to be taken for those countries which have no
poasttHlity of eontinning to service their debts even in the
•fentof a vigorous economic recovery;
"(Q of whether the Fund, which is increasingly being
taad as a source of credit to finance balance of payments
datlcita, haa adaqato resources te cover all conceivable
nqussta for credit extensions taking into account the quote
iacrsase ctmaantad to under section 41 of this Act;
•\D) regarding what role the United Sutes Government
■esa for the Fund in providiiu fmance and credit to the
least devvloped countries who have such a limited capacity
to borrow to finance paymente deficite; and
"(E) pursuant to the agreement at the Williamsburg
Summit outlining what progress has been made in the
yGoot^le
1983.
.2 use 3901
PUBUC LAW 98-181— NOV. 80, 1983
coiuultatioiu among finance ministen and the managing
director of the Fund on the conditiona for improring the
international monetary system; and
"CI) establishing collection, review, comment, and reporting
procedures within the Fund as provided in aecUon 42 of this
Act.".
TITLE Dt— INTERNATIONAL LENDING SUPERVISION
DBOAEATIDN or POUCV
Ssc. 902. (aKD It is the policy of the Congrees to assure that the
economic health and stability of the United States smd the other
nations of the world shall not be adversely affected or thr«atciied in
the future by imprudent lending practices or inadequat*
(2) This shall be achieved bv strengthening the bank regulatory
framework to encourage pruoent private decmoiunsiking and ^
enhancing international coordination among bank r^ulatory
authorities.
(b) The Federal banking ax^ciee shall conmilt with the bunking
supervisory authorities of other countries to reach understandina
aimed at achieving the adoption of effective and consisteat supervi-
sory policies and practices with respect to international lending.
nsFiNrnoNa
Sbc. 903. For purpoees of this title—
(1) the term "appropriate Federal bankiiw agenn" has the
same meaning given such term in section 3(i^ of uie Fedeml
Deposit Insurance Act, except that for purposes of this title neb
term means the Board of Governors of the Federal Susjn
System for —
(A) bank holding companies and any nonbank auhsidiBrT
(B) Edge Act corporatioi
nixed under section 2S(a)af
12 use 611-631. the Federal Reserve Act; and
(Q ^reement Corporations operating under section 26 of
12 use the Federal Reserve Act; and
601-6M* (2) the term "banking institution" means—
(AXi) an insured bank as defined in section 3Ch) of the
12 use 1813 Federal Deposit Insurance Act or any subsidiary of an
insured bank;
(ii) an Edge Act corporation organixed under section 25(a)
of the Federal Reserve Act; and
(iii) an Agreement Corporation operating under section
2& of the Federal Reserve Act; and
(B) to the extent determined Inr the appropriate Federal
banking agency, anv agency or branch of a fbieign bant
and any commercial lending company owned or cantrollaa
by one or more foreign banks or companies that control •
foreign bank as those terms are denned in the Interna-
yGoot^le
PUBUC LAW 98-181-NOV. 30, 1983 97 STAT. 1279
inking inatitution" 12 use aUH
nuNQTBKKBD lUpnvtnoN or inteiinational lending
Sk. 904. (a) Bad) Appropriate Federal banking agency shall evalu-
rit banking jnrtitution foreign country exposure and transfer risk
buae in barring inatitution examination and supervision.
(b) Each nich agency ahall establish examination and supervisory
{ncadurea to asnire that factors such as foreign country exposure
•nd transfer risk an taken into account in evaluating the adequacy
rfthe capital of banking institutions.
8k. 905. (aKl) Each appropriate Federal banking agency shalJ
rsfuii* A banking inatitution to establish and maintain a special
nssrra whenever, in the judgment of such appropriate Federal
tanking agency —
A) the quality of such banking institution's assets has been
impaired by a protracted inability of public or private borrowers
ia a forei^ country to make payments on their external indebt-
ednesB as indicatedhy luch factors, among others, as—
(i) a failure by such public or private borrowers to make
full interest payments on external indebtedness:
(ii) a failure to comply with the terms of any restructured
indebtedness; or
(iii) a failure by the foreign country to comply with any
IntematioDBl Monetary Fund or other suitable adjustment
program; or
(B) no definite prospects exist for the orderly restoration of
d^ service.
D Soch reaerv«a diall be charged againe
dhall&ot be considered ai part of capital and
m Hw api»vpriate Federal banking agencies shall analyze the
■■olta of foreign loan leacheduling negotiations, assesB the loan loos
JbA nflected in ivacheduliiu agreements, and, using Uie power* set
fcrth in aaction 908 (ragarding capital adequacy), ensure that the
rngtUl aad reaerva |MaiUons M United States banks are adequate to
mtmmnntitAmtm potrotial losses on their foreign loans.
(c) Th» •pfwopriata Fadaral banking agencies shall promulgate
~~ ~ * ' 'nm w orders necessary to implement this section within one
I and twenty days afur th* date of the enactment of this
BUa.
AOOOUNTINO FOB PUS ON INTERNATIONAL LOANS
Sk. 906. (aXl) In order to avoid escesaive debt service burdens on
Utor countries, no banking inatitution shall charge, in connection
■itb tba reatnicturing of an intomational loan, any fee exceeding
ft* ■dministrativa cost of th« restructuring unless it amortizes such
la orar the effective life of each such loan.
(ZXA) Each appropriato Federal banking agency shall promulgate
■d regulations aa ara necessary to further carry out the provisions
tfthksi'
yGoot^le
97 STAT. 1280
PUBLIC LAW 98-181— NOV. 80, 1983
(B) Hie requirement of para^aph (1) diall take efTact oa tha data
of the enactment of this aection,
(bXl) Subject to subsection (a), the appropriate Federal banking
agencies shall promulgate regulations for accounting for agtacj,
commitment, management and other fee* charied iy m y^rAinf
institution in connection with an international loan.
(2) Such regulations shall establish the accounting treatment of
such fees for regulatory, Bupervison, and diaelomire purpnaes to
assure that the appropriate portion of such fees is accrued in inoooM
over the effective life of each such loan.
(3) The appropriate Federal banking agencies shall promulgata
regulations or orders necessary to implement this subsection witUn
one hundred and twenty days after the date of the enactment of lUi
Utte.
CXlLLBCnON A
] DiacLoauBC op cutTAtN intsbmatiohal UNnNO
Sac. 907. (a) Each appropriate Federal banking asen^ riiall
require, by regulation, each banking institution wiui foreifn conn-
try expoaure to submit, no fewer than four times each calenaaryMT,
infonnation r^arding such exposure in a format preacribed by audi
r^Ulations.
(b) Each appropriate Federal banking agency ahall require, by
regulation, >*»"'fi"g institutions to ''■f'"ti' to the public infbrmtika
regarding material foreign country expoaure in relation to anrts
and to capital.
(c) The appropriate Federal banking agencies shall promulxats
regulations or ordera necessary to implement this McUon within ctw
hundred and twenty days after the date of the enactment of this
tiUe.
agency aball
t:^ establidung minimum levels ot capital for such b
tions and bf using such other methods as the aj^iropriate Fedtnl
banking agency deems appropriate.
(2) Each appropriate Federal banking agen^ ihaU hm tbt m-
thority to establish such minimum level of capital fbr a baiAiBt
institution as the appropriate Federal banking asancv, in Ha diKffr
tion. deems to be necessary or appropriate in lignt of the paitiwilw
circumstances of the banking institution.
(bHl) Failure of a banking institution to F»1'<''*»'" capital at or
above its minimum level as established pursuant to Wibaection W
may be deemed by the appropriate Federal hanfctng aianqr, in fta
discretion, to constitute an unsafe and unsound practioe within the
meaning ofsection 8 of the Federal Deposit Insuranca Act
(2KA) In addition to, or in lieu of, any otlwr action MiliwriMd bf
law, including peranai^ (1), the appropriate Pedeivl *"""■>
agency may issue a directive to a banking institntioB that bOi to
maintain captial at or above its required level aa eatahlisbed pona-
ant to subsection (a).
(BXi) Such directive may require the banking insUtutioo to aubmlt
and adhere to a plan acceptable to the appropriate Federal bawfclnt
yGoot^le
PUBUC LAW 98-181— NOV. 80, 1983 97 STAT. 1281
3 aired capiU level.
I punuuit to this paragraph, includ-
B( ^«ni mbmittod punuant thereto, shall be enforceable under
ka proriaiona of Mction 8(i) of tbe Federal Deposit Inauraiice Act to
ka aama aztant as an effective and outstanding order issued pursu-
nt to aectioo B(b) of the Federal Deposit Insurance Act which has
iMtDW final
QDUU Each apyropriala Federal banking agency may consider
■Alwnkiiv™t>tution'spR]Krassin adhering to any plan required
ndar tUi wibaectton whenever such banking institution, or an
^SEmtm theraof, or Ilia holding company which controls such bank-
H Inatitution, seeks the requisita approval of such appropriate
Maral banking agency for any proposal wliich would divert eam-
Bp. Jimiwlnh caiutcl, or otherwise impede such banking institu-
ioB a nrearess in nchi«viiiK its minimum capital level.
} Such appropriate Federal banking agency may deny such
oval wb^ it determines that such proposal would adversely
t tha abili^ of the tmnWing institution to comply with such
(O Hts Chairman of the Board of Governors of the Federal
" ■ ..." • ., -, ^^^ shall encourage
auUioritiea of other
SETS.'
., r *— "fc'-g countries to work toward maintaining and, where
fpiii|wialii. strengthening the coital bases of banking institutions
BMl««d In iatamational lending.
PO«DON LOAN bvaluahons
he. 909. (aXl) In any case in which one or more banking Inititu-
■■aaxtcnd credit, whether by loan, lease, guarantee, or otherwise,
■ktt individually or in the agKre|(Bte exceed* 120,000,000, to
*""> any project which has as a mmor objective tiie construction
~**~nafaByniiningoMration,any metal or mineral primary
operauon, any fabricating facility or operation, or any
■afliiiakhn operations (semi and finished) located outside the
Mlad States or its territtMiea and posswiions, a written economic
kHftSihr •valuatitm of such foreign jingect shall be prepared and
qpnina in writing by a senior official of the banking institution,
m, H BBOt* than one banking Institution is involved, the lead bank-
Mhislitiilinii prior to the extension of such credit.
CD Sudi avaluation diall—
(A) take into account the profit potential of the project, the
*-T'»^ of the prqject on world markets, tbe inherent competi-
Owm advMitaceB and disadvantages of the project over the entire
Uis of the prefect, and the likely efhet of the project upon the
0«iw»ll kmg-term economic development of the country in
iriiidi the prqiect is located; and
(B> eotiaiaer whether the extension of credit can reasonably be
«apactod to ba repaid from revenues generated by such foreign
pcqisrt without regard to any subsidy, as defined in inter-
Manonal a
tm liMtniinentality at my country.
^ftich acooomic nesibibtj' evaluations shall be reviewed by
*■— -mtativM of the appropriate Federal banking agencies when-
" n by such appropriate Federal banking agency is
yGoot^le
97 STAT. 1282 PUBUC LAW 98-181— NOV. 80, 1983
(cKl ) The authoritiM of the Federal banking BgeneiM conUioed k
12 use isis Mction 8 of the Federal Devout Inauranee Act and in section 910 of
thia Act, except thoM contained in aection 910(d), ihall be applicable
to thia aection.
(2) No privata right of action or claim for relief may be pradtcatii
upon thia section.
OKNBXAL AUTHOKtrm
RKulation* or Sk. 910. (aXl) The appropriate Federal banking agandea are
?^fJS;. »anq authoriied to intarpret and define the tanna naad in th& tttla, and
li v!^ dwi> ^^^ apprt^niate Federal bonking agency diall preacribe nilea or
re^lationa or iasue orden aa neceasarj to effectuate the puipcMea of
thia title and to prevent evasiona thereof.
|2) The appropriate Federal banking agency ia authoriaed to apply
the provisions of this title to any affiliate of an inaurad bank. Mt
only to affiliatee for which it ia the appropriate Federal banking
agency, in order to promote unifonn application of thia title or to
prevent evasions thereof.
(3) For purposes oT thia section, the term "afiiliata" ahall haw the
12 use 3Tic. aame meaning aa in section 23A of the Federal Reserve Act, except
that the term "member bank" in such section shall be deamad to
Tefertoan"inBuredbBnk", as such term is used in aection 3(h) of flis
12 use 1H13 Federal Deposit Insurance Act.
(b) "Hie approitriate Federal banking agencies shall establish on-
' — ~~'~~ka to implement the authoritiea provided under thia lir*~
(cXl) Hie Dowen and authorities granted in this title ahaU ba
■upplemental to and shall not be deemed in any manner to deroBjSta
from or restrict the authority of each appropriate Federal t»«lHng
agency under section 8 of the Federal Deposit Insurance Act or any
other law including the authority to require additional capital or
(2) Any such authority may be used by any appropriata Ftodersl
banking a^ncy to ensure compliance by a banldng insUtntioB with
the provisions of this title and all rules, regulations, or orders issusd
pursuant thereto.
(dKl) Any banking institution which violates, or any officer, dirsfr
tor, emi>loyee, aoent, or other person partici|»atiDg in the coadnct cf
the affairs of such banking institution, who violates any provison of
thia title, or any rule, regulation, or order, laaued under thia tiO»,
shall forfeit and pay a civil penalty of not more than $1,000 par in
Tot each day during which such violation continuea.
(2) Such violations shall be deemed to be a violation of a fhial
order under section 8<iX2l of the Federal Depoeit Insurance Act and
the penalty ahall be assessed and collected by the appropriate
Federal banking agency under the procedures establiahed by, and
subject to the rights afforded to parties in, such section.
oAo AUDIT AtnHORm
Stc 911. (aKD Under reffulationa of the Comptroller General, tha
Comptroller General shall audit the appropriate Federal tMwt-itig
agendea (aa defined in section 903 of thia title), but maj carry out an
onaita examination of an o^n inauiad bank or bank boldinf
company only if the appropriate Federal banking agency haa con-
sented in writing.
(2) An audit under this subsection may include a review or
evaluation of the international regulation, auperviaion, and CKami-
yGoot^le
PUBLIC LAW 98-181— NOV. 30. 1983
Mho activitiM of the appropriate Federal banking agency, jnclud-
V a* coontinatinn of such activities with similar activities of
HWlatiiij authoritiM of a foreign government or international
97 STAT. 1283
_} Audita of the Federal Reserve Board and Federal Reserve
laksmaj not include —
(A) trwunctknia for, or with, a foreign central bank, govem-
tnt of m foreign counti;, or nonprivate international financing
(K itHSamtioaa, decisions, or actions on monetary - policy
matten, iiwlinling diacount window operations, reserves of
wtaAer banks, Mcurities credit, interest on deposits, or open
nufcat opMatiMw;
(O tnmiactMiia made under the direction of the Federal Open
(I9apMtof a discussion or communication among or between
■'—■*'—■ of the Board of Governors of the Federal Reserve
ftnteoi and ofBcers and employees of the Federal Reserve
^■tem nlaled to subparagraphs (A) through (O of this
felOXA) &etpt as provided in this subsection, an officer or
■fktras of the General Accounting Office mav not disclose infor-
NHn identifying an open bank, an open bank holding company, or
icwtooMr of an open or closed bank or bank holding company.
M Hw Oomptroller General may discloee information related to
kiiAdnof a dosed bank or closed bank holding company identify-
SB OMtooier of the dosed bank or closed bank holding company
iWOtB Comptroller General believes the customer had a control-
taWlnance in the management of the closed bank or closed bank
Wfaf company or was related to or alTiliated with a person or
piMaarniig a controlling influence.
flfjla oSker or employee of the General Accounting Office may
Ihb ■ coatomer, baink, or bank holding company with an official
fas appropriate Federal banking agency and may report an appar-
■ItlMl'i'f' violation to an appropriate law enforcement authority
rftBtfadtod States Goremment or a SUte.
fl) Tbia lihaection does not authorize an officer or employee of an
|^apriat0 Federal '^'"'''"g agency to withhold information from a
■■itiaa air the Congress authorized to have the information.
(dOXA) To carry out this section, all records and property of or
■i fey an ^ipn^iriate Federal banking agency, including samples
rmpotti flf azaminalions of a bank or bank holding company the
Mptmller General considers statisticaUy meaningful and work-
ipan and corieapondenoe related to the reports shall be made
~ "a to the Ctnnptroller General, including such records and
' ' ' g to the coordination of international regulation,
' ui appropriate Federal
■Oi Bmper m
Hi^aad^riM]
ir copies necessary to carry out a
IQ Eadi appropriate Federal banking agency shall give t)ie Comp-
milsi GauOTal suitable and lockable tnlices and furniture, tele-
hsMS, and access to copying facilities.
yGoot^le
PUBUC LAW 98-181— NOV. 80, 1983
(2) Except for the temporary removal of workpapers of the Comp-
troller General that do not identify a cuatomer erf' an open or ctoMd
bank or bank holding company, an open bank, or an open bank
holding company, all workpapers of the Comptroller General and
records and property of or Uied by an appropriate Federal banking
agency that the Comptroller General pooocaoca during an audit,
shall remain in such agency. The Comptroller General ahall prevent
unauthorized access to records or property.
■4UAL REPUSENTATION r
Bory agencies, and as the insurer of the United States __. ._
involved in international lending, the Federal Deposit InsursDce
Corporation shall be given equal representation with the Bosid cf
Governors of the Federal Reserve System and the Offic* of Iks
Comptroller of the Currency on the Committee on Banking Regvl*-
tions and Supervisory Practices of the Group of Ten Countries ami
Switzerland.
Trunsmitul u> Sec, 913. Not later than six months after the date of ttie
^ijeij??' ment of this titie, the Secretary of the Treasury or the app
\i use i3[d. Federal banking agencies as specified below, shall transmit
to the Congr^ regarding chan^ to imorove the intemstMOsl '
lending operations ol banking institutions. Such report (hall —
(II review the laws, regulations, and eiamination and
supervisory procedures and practices, governing international
banking in each of the Group of Ten Nations and Switaerland
with particular attention to such matters bearing on ca^tal
requirements, lending limits, reserves, diaclosure, ezamnHr
access, and lender of last resort resources, such report to bs
prepared by the Chairman of the Board of Govenwrs of tl»
Federal Reserve System;
(2) outline proeresa made in reaching tiie goal spadftad la
Abu. p. 12X0 section 908(c), such report to be prepared bv the Secrrtarr of tbs
Treasury and the Chairman or the Board of GovemorB of tbs
Federal Reserve System; and
(3) indicate actions taken to implement this title br tbs
appropriate Federal banking agencies, including a JusLiIptioB
or the actions taken in carrying out Uie objectives of ths titk
and any actions taken by any appropriata Federal banUng
agency that are inconsistent with the uniform implsmsntatka
by the appropriate Federal banking agencies of their laspscti^
authorities under this title, and any recommendatioas §01
amendments to this or other legislation, such report to bs
prepared by the appropriate Federal hanking agenciee.
TITLE X-MULTILATERAL DEVELOPMENT BANKS
Sec. 1001. The Inter- American Development Bank Act (22 U,S.a
2S3 et seq.) ia amended by adding at the end thereof the followi^
"Sec. 31. (aKl) The United Stetcs Governor of the Bank is author-
ized to vote for resolutions—
yGoot^le
PUBLIC LAW 9»-181— NOV. 30. 1983 97 STAT. 1285
t propowd b]r the Goventon at a apedal
7 IMS;
8 before the Board of Govemora of the
I the authorized capitai stock of the
Bank and aufaacHptiona thereto; and
"(ii) an increaae in the reaources of the Fund for Special
Ooeratiooa and cxmtributions thereto.
Uuponwloniii
"Ml m^maOx to 4Z7,396 ahaiea of the increase in the author-
id ovital stod of the Bank; and
*VU ContriUilc $350,000,000 to the Fund for Special
it to make such auhecript
lod to make such contributions to the Fund
CCmI Operations shall be effectiTe Onl^ to such extent or in
mmnta aa are provided in advance in appropriation Acts.
bi4inler to pay for the increase in the United States aubecrip-
■d eontributkin provided for in this section, there are author-
I be ■ppropriateo. without (iscal jwar limitation, for payment
Sact^arv of the Treasury—
•tU $S,1&,86Z.744 for the United Statea sufaacriptiona to the
me. Tbe Asian Derclopinent Bank Act (22 U.S.C. 285 et *eq.)
pAid by adding at tbe end thereof the following:
i. tl. (aMIt Tbe United States Governor (rf tbe Bank is author- 22 USC zssi.
I a^Mcnbe on briialf of the United States to one hundred
pttne thousand three hundred and seventj-five additional
icfttte capital stock of the Bank.
Aqr anfaacription to the capital stock of the Bank shall be
WB only to such extent or in such amounts as are provided in
B* in apprcpriation Acta.
border to pay for the increase in the United States aubacrip- Apfinipriatiaa
»&■ Bimk pnnided for in suhaection (a), there are authorized ■uiborixatton
MPopriated, without Rscal year limiUUon, 11,322,999.476 for
■Iby tfae Secretary of the Treasury.
UThe Cougnas hm^finds that—
*U> tba RepuUic of China (Taiwan) is a charter member in
■d otanding <rfthe Asian Development Bonk;
*tn the Republic <rf' China baa grown from a borrower to a
■dar in the Aaian Development Bank; and
*^(C) the Repuhlic of Cnina prtnidea, throng its economic
neos, a model for other nations in Ana.
R ia the aense €f the Congress that—
*1UU1^rwBn, Republic of China, should remain a fiill member
the AMn Denclopment Bank, and that its status within that
rfjr afaouU mnain unaltered no matter how the iaaue of the
afla'a Republic of China's application for memberahip is
yGoot^le
97 STAT. 1286 PUBLIC LAW 98-181— NOV. SO, 1983
"(B) the Praaident and the Secretaf? of State should upn*
support of Taiwan. Repubhc of China, Dwku^ it elmar thftt the
United Stales will not ctnintenanca attempts to expel TaiwsB,
Republic of China, from the Asian Derelopment Bank; and
"(C) the Secretary of the Senate and Clerk of the House shall
transmit a copy of this resolution to the PrMiilent with ths
request that he transmit such copy to the Bosutl of Ooviums of
the Asian Development Bank.
Anwi Develop- "Ssc. 28 (aHI) The United States Governor of the Bank is autlM(>
!^f.'<^«'l "»«1 "> contribute on behalf of the United States 1520,000,000 to Urn
ri use «i.y. ^^^ Development Fund, a special fund of the Bank.
"(21 Any commitment to make the contribution authoriaed la
paragraph II) shall be made subject to obtaining the mil imssij
appropriations.
Apprapriation "(b) In order to pay for the United States contribution to ths
auuiDriiation. Asian Development Fund provided for in this section, there ars
authorized to be appropriated, without fiscal year '■"■"r'iwi.
1520.000,000 for payment by the SecreUry of the Treasuof ."■
AraiCAM DSVn^PMENT FUND
Sbc. 1003. The African Development Fund Act (22 U.S.a ZSMtg et
seq.) is amended by adding at the end thereof the following:
U.S "Sec. 213. (aXl) The United States Governor of ths F'und b
™'^".'S[^ 1* authorized to contribution behalf of the United States 1160,000,000
ii. uw. c*iK- vi. ^ ^^ p^^j ^ ^^ United States contribution to the third r«plnuifa-
ment of the resources of the Fund.
"(2) Any commitment to make the contribution authoriMd ia
paragraph (1) shall be made subject to obtaining the mil ii— ij
appropriations.
AppropriBiion "(b) In order to pay for the United States contribution providsd fer
auihoniation. ^^ ^^ section, Uiere are authorized to be appropriated, withont
fiscal year limitation, (150,000,000 for payment by the SecretaiT af
the Treasury.".
Sk;. 1004. Section 701 of the International Financial Institutioas
Act (22 U.S.C. 262g) U amended—
(1) in subsection (aXU. by striking out "consistent"; and
(21 in subsection (gXI). by striking out "The Secretary gf ths
Treasury, in consultation with the Secretary of State, shsll
report quarterly" and inserting in lieu thereof "Not latar than
thirty days after the end of each calendar quarter, the Seoetaiy
of the Treasury, in consultetion with the Secretary of State,
■hall report.".
Sbc. 1005. (a) It is the sense of Congress that—
(1) the multilateral development institutions serve an invaln-
able role in promoting development abroad;
(21 foreign direct investment, trade, and commercial lending
make a contribution at least equal to that of devrioptneBt
assistance in promoting development;
(3) United States economic interests are vitally affectad fay
conditions in developing countries; and
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PUBLIC LAW 98-181— NOV. 30, 1983 97 STAT. 1287
4} tlw multilateral development banka already play an im-
-tut, although indirect, role in encouraging private invest-
[A) Hie Secretary of the Treasury shall conduct a Btudy of
B multilateral development inatitutiona could more actively
■(« foreign direct investment and commercial capital nowe
aimel such investment and capital flows to developing coun-
•€ ■ound and productive development projects through the
f*V^f' Finance Corporation in cooperation with the multilat-
valopment institutions or throu^ a new investment banking
atone or more of these institutions.
I addition, such study shall evaluate whether the multilateral
■nent in^tutiona could help increase foreign direct invest-
ha Secretary of the Treasury shall solicit
from the multilateral development
vate such comments with the study m a
to both Houses of the Congress within
htjm <if the date of the enactment of this se
and shall
sport to be trana-
ne hundred and
1006. <a] It shall be the policy of the United States that no
itm, discusaions. or recommendations concerning the place-
r removal of any Inter-American Development Bank. Asian
MDent Bank, or African Development Bank personnel shall
d Ml the political philosophy or activity of the individual
•fciiig
»andl
Secretary of the Treasury shall consult with the Chairman
[ minority member of the Committee on Banking,
Urban Anairs of the House of Representatives and the
on Foreign Relations of the Senate and the relevant
■ prior to any discussions or recommendations by any
United States Government concerning the placement
' any principal oRicer of the Inter-American Develop-
Asian Development Bank, or African Development
TITLE XI— IMF APPROPRIATION
22 use 276c-a.
1101. (a) Notwithstanding any other provision of this Act.
I appropriated for an increase in the United Stetes quota in
teraational Monetary Fund, the dollar equivalent of
W.ODO Special Drawing Rights, to remain available until
■d.
lotwithstanding any other provision of this Act, there is
rialed for an increase in loans to the International Monetery
nder the General Arrangements to Borrow, the dollar equiv-
f 4,250,000.000 Special Drawing Rights less $2,000,000,000
irihr appropriated by the Act of October 23. 1962 (Public Law
76 Stat. 1163), pursuant to the authorization contained in
17 of the Bretton Woods Agreements Act and merged with
propriation, to remain available until expended.
22 UST 2><6e-2
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97 STAT. 1288
PUBLIC LAW 98-181-NOV. 30, 1983
CONDITION or
Sk. 1 102. (a) The Congress find* and declares that—
(1) the international banking lyateni is currently
t^ a series of national financiBl crises;
(2) the Congress is desirous of finding a solution to tha i
mooetary crisis which will result in a stable monetaiy
and preaervation of a liberal intemationnl economy;
(3) this solution must be found without r'*""g
pressures on United States credit markets;
<4) the breakdown in the Brettoo Woods monetaiy ^stera bM
contributed directly to these problems;
(5) the economic policies prescribed by tha '.
etary Fund can be harmful to economic growth; and
(6) the International Monetaty Fund currently ho
mstely ^0.000.000,000 of uncommitted assets in I
gold bullion and has rot utilized them MIy to data.
(b) It is the sense of the Senate that—
(1) restoration of a stable monetary syst<
e economic growth and to maintain a liberal intematiaMl
(2) as a first step toward this restoration the Seerrtaiy «f tht
Treasury should call for an intamational cMifneoca on flit
monetary system to investigate its sjrstemic proUema;
(3) in coping with the current financial crisis, the Intsrt»
tional Monetary Fund should make fuller uss of its eunWt.
assets, including its gold holdings;
(4) tin International Monetary Fund should revise ths eoaA
tions placed on its loons so as to encourage
OmtKAL OPBRATTNQ
for an evaluation of the emergency
CHAPTER n
LEGISLATIVE BRANCH
PAVMSNT TO WIDOWS AND HKIB8 OF DBCEAaKD UEUBXBS OF CC
For payment to Helen H, Jackson, widow of Heniy H. •
late a Senator from the SUte of Washington, $69,800.
Salabies, Officuis and Emplovkis
oftices op thl uajoiutv a
yGoot^le
PUBUC LAW 98-181— NOV. 30, 1983
OcmriHOtNT ExFBNSB or nn Senate
ncscTAK* or tub ssnati
1 additioiul amount for "Secretary of the Seiute", $60,000.
GENERAL PROVISIONS
201. The Saixeant at Arms and Doorkeeper of Uie Senate
fbn- in thn aection rftfemd to aa the "Sergeant at Anna")
Ignate one or mora emplojeea in th* OfRca of the Sergeant
•nd Doorkeeper of the Senate to approve, on hia behalf, all
% Ibr payment of moneys, which the Sergeant at Artna ia
«d to approve. Whenever the Sergeant at Arms makes a
tan nnder the authority of the preoedinK sentence, he shall
Mij notify the Committee on Rules and Administration in
of the designation, and thereafter any approval of anv
, far payment of moneys, by an employee so designated shall
di design at inn is revoked and the Sergeant at Arms notifies
inittee on Rules and Administration in writing of the
Ml) b* deemed end held to be approved by the Sergeant at
r^ intents and purposes.
■OS. Any prowisicm of law irtiich is enacted prior to October
HSd which directs the Serjeant at Arms and Doorkeeper of
As to dsposit any moneys in the United States Tnaauiy for
Aa account, within the contingent ftind of the Senate, for
aiwoua Itema", or for "Automobiles end Maintanance"
I and after October 1, 1983, be deemed to direct him to
ntsh moneys in the United States Treasury for credit to the
within the continfent fund of the Senate, for the "Serseont
■ImI Doorkeeper of the Senate".
nS. te) SecUon 106(aX2) of the Legislative Branch Appropri-
«, 1968 (2 U.S.C. ei-l<2)) is amended to read as follows:
iw or changed ratesofcwnpensation (other than changes in
■ST:.
appointment, transfer from one Senate appointing
f so another, or promotion by an appointing authority to a
the coropensntioii for which is fixed by law). In the case of
ntment or other new rate of compensation, the certification
racsiTed by such office on or before the day the rate of new
atioa is to become effective. In any other case, the changed
eotpsnsation shall take efRsct on tne first dajr of the month
t tucti certification is received (if such cerUfication is re-
tthin the first ten days of such month), on the first day of
Ot aftar the month in which such certiilcation is received (if
osi irtiich such certification is received ia after the twenty-
- of the month in which it is received), and on the sixteenUi
ba month in which such certification is received (if such
tion is received after the tenth day and before the twenty-
f of such month). Notwithstanding the preceding sentence,
«tifIcation for a changed rate of compensation for an em-
paciiSas an effective date of such change, such change shall
affisctive on the date so specified, but only if the date
is the first or sixteenth day of a month and is after the
yGoot^le
PUBUC LAW 98-181— NOV. 30, 1983
efTective date procrlbed in the prsCBdinK Mntence; and, notwitb-
itanding Buch sentence and the preceding provisioii* of this mi-
t«nce, any changed rat« of compenaation for a new employee or an
employee transferred from one appointing authority to anatber
shall take effect on the date of nieh employee'! appointment or
transfer (as the case may be) if such date ia later than the effective
date for such changed rate of compensation as preacribed by tuA
(til The amendment made by subaection (a) ihall be applicable In
the case of new or changed ratea of compenaatjoniriuch art certifiMl
to the Disbursing OfTice of the Senate on or after Jannanr 1, 1961
Sic 1204. (a) The fifth sentence of subeectioD (e) «f •ectiaa 606 of
the Supplemental AmmniriationB Act, 197S Q VS.C. S8M) li
aroendeid by atriking out or Hinoritv Whip" and hiiiliin ia lias
thereof "Minority Whip. Secretary or the QmferencaoT the Major
S use S8 nou. g^g^ of expenaea incurred or chaig** impoaed oa or after October 1,
1963.
2 use 58a. Sbc 1206. (a) The Sergeant at Arms and Doorkeeper of the Senate
shall hiralah each Senator local and loag-diatanca teiaoommunica-
tiona aervicea in Weahiogton, District of ColumUa. la aoeordanea
with regulationB prescribed by the Senate Committee oa Rtilaa and
Adminiatration; and the casta of such aerriee shall be paid out of tba
contingent ftmd of the Senate from moneya made available to hta
fbr that purpoae.
Repeal. (b) SubeecUon (g) of eection 112 of the LegislatiTC Brand) Apfn-
priaUon Act, 1978 (2 U.S.C 68a) ia repealed, eRectiTe on the firat d«r
of the first calendar month which begina more than thirty days after
thedateofenactmentof this Act
HOUSB OF BSPUSBNTATIVn
For payment to Kathryn Jackson McDonald, widow of HoDOcabla
Iattv McDonald, late a Repreeentative from the State of Georgia,
«9,gr-
Rauju
D AcoouNiTOO Fuotan^ Boaid
For aalarlei and expenses. Railroad Accounting Prindple* Boaid,
$50,000, to be expended in accordance with section SOZW at Publk
Law K-448 (49 U.S.C 11161-11168), subject to the e
authorizing legislation.
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PUBUC LAW 98-181— NOV. 30, 1988 97 STAT. 1291
CHAPTER m
KPASTBIENT OF THE INTERIOR
BuaxAu OP Rkxamation
ootnnucTioN PROCSAU
DMmo at the Ymw R
■adated wiUi the n
MtwHlj
NiTsable and constructed feature* will be
a Valley Water Uiera Association for oper-
department of energy
1 Supply, Rbiabcm and Dkvxlopuknt Acttvities
t for "Energy Supply, Research and
I renuun available until expended, of
le available to implement the four atoll
n aection 102 of Public Law 96-205 and
uction and operation of a second email
r tol*r mergy prc(ject on the island of Molokai, Hawaii.
Atomk Enbxot DcPENSt Acnvrms
il amoont for "Atomic Energy Defense Activities",
ftp Pnjact Tf-13-r, $G7,000,000, to i«main available until expended.
Of Um fnnds ■ppr^riated for "Atomic Energy Defense Activities"
in Pablic I'w 9»-«0, an amount shall be made available to purchase
4^1itwnBl helkaplera.
tnUnMATION OP TK> UBI OP CBTTAIN BESPAQI B
Sscntaryi
(ift
. . to tennioate, within 24 months after the date of enactment
of Ihii Act tbe use of seepage basins associated with the fuel
" ' " ■ at the Savannah River Plant, Aiken, South
(S to aubmit to the appropriate committees of Congress,
'thin G months after the date of enactment of this Act, a plan
* the protactkm of groundwater at the Savannah River nant
ud) dialt include —
(A) propoaed methods for discontinuing the use of seepage
baainB siw inlml with the materials processing areas;
(B) provisions for the implementAtion of other actions
sqipropriate to mitigate any significant adverse effects of
OD^aite or off-site groundwater and of chemical contami-
nants in seepage baniu and adjacent areas, including the
rcmov*] of such contaminants where necessary: and
37-922 0-84-10
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PUBUC LAW 98-181— NOV. 30, 1988
(C) provisions tor continuinK the expanded nHmitorinK
program of groundwater impacts involving the appropriate
South Carouna agencies in accordance with the rtatutixT
responsibilitiea of such agencies.
Of the funds appropriated for "Atomic Energr Defense Activitiss"
in Public Uw 98-50 for Project 82-D-109, 16S mm artUlary find
atomic projectile, SQO.OOO.OOO ai« leaciuded.
NucLKAB Wastb Disposal Fund
For an additional amount for "Nuclear Waste Disposal Fund",
$12,000,000, to remain available until expended, to be derived fron
the Nuclear Waste Fund. To the extent that balancea in the (Und
ate not sufficient to cover amounts available for obligatjon in this
account, the Secretary shall ezerciBe his authori^ pursuant to
section 302(eKS) of Public Law 97-425 to issue (d>ligations to the
Secretary of the Treasury.
INDEPENDENT AGENCIES
Appalachian RaotoNAL Cotof nsiON
Funds AppaopuATcn td thk PsasnnNT
APPALACHIAN BKllONAL DXVILOPtaNT PKOGKAMS
For an additional amount for "Appalachian Ra^onal Devdop-
ment Prozraras", $9,400,000, to lemoin available until expended, fct
the Appalachian Development Highway System.
GENERAL PROVISIONS
Sac. 1300. No part of the funds appropriated under this Act <»' any
other provisions of law may hereafter be need by the Depstftment of
Justice to represent the Tenneeeee Valley Authority in litigation in
which the Authority is a party unless the Department is i«questsd
to provide representation in such litigation by the Authori^.
Sec. 1301. Within funds available to the Corps of Englneara— CMl
for Operation and Maintenance, General, not te exceed $2,000,000
shall De used to rehabilitate, restore, and reftirbiah the Carpi of
Engineers dredge vessel Kennedy, te transport the vessel to New
Orleans, Louisiana, and there to operate, maintain, and disidar the
veaael for the duration of the 1984 Louisiana World Expcaitioa. Sudi
operation, maintenance, and display shall include the pr^Mration
and use of audio-visual and other exhibits to inform the public of
Corpe of Engineers water resources activitiee.
Sac 1302. The Secretary of the Army is authorind, tor a period of
two years beginning with enactment of this Act with the concur-
rence of the Director of the National Park Service and the South
Florida Water Management District, to modify the schedule for
delivery of water from the central and eouthem Florida prqject to
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PUBUC LAW 98-181— NOV. 30, 1983
. _ D for the delivery of water to the Everglsdei
NationAl P»ik frna auch project for the purpose of determining an
inproved KlMdule for *uch delivery.
nw Socretaij of the Army ia further authorized to acquire such
mteraat in land* cun«titly in agriculture production which are
>d»WBlyff«ctwHy any modification of schedule for water delivery
la &witfadw NatioDal Park under the preceding paragraph, "nw
Been^mrj AM acquire any interest in land at the fair market value
of auch intereat baaed oo conditions existing after the construction
of tbe prqinct lieaLiiLuJ in the preceding paragraph of this section
and farfsiV any loadification of auch delivery Mhedule. The Secre-
tai7 ia atao autboriBsd to conatruct necesBary flood protection meas-
nraafcr imtactioa of homea in the area affected by any modification
if auch delivuT schedule, at an estimated cost of {10,000,000.
Sac 1303. Tha Secretary of the Army, acting through the Chief of
bfuMOia, ia directed to utiliie available construction general
apfrapriatiana lo eoiopMt bank protection works at Wheeling
faland, Weat Virginia, m tin Hannibal Lock and Dam pool, at an
-^■— '"^ coat of 1136,000 and to complete the local Rood protection
prqiect at HiiweU, Kentucky, at an estimated cost of $600,000.
Sac 1304. The Secretary of the Army, acting through the Chief of
" ' 'B, is directed to utilise available general investigation funds
m a study nl altemativea to the Mentone Dam of the Santa
instem pnijact in California and the flood control study of
the niinMa River batweeu Henry and Naples, Illinois.
Sac 1305. Funds available or hereafter made available for the Red
Biwer Waterway Project shall be used to provide for construction of
a Ugh level replacement bridge for the Louisiana and Arkansas
Idway Company ttear Alexandria, Louisiana, pursuant to an
apatiiisirt between the Cbitt of Engineers and the Railway Com
HBj and upon tcnna and conditions acceptable to the Chief oi
BVDoen in tha interest of navigation and tiie expeditious proeecu
tion of the Prcgect. Federal costs of the bridge replacement, includ
■g deaign and constniction, shall be limited to (24,270,000 (July 1,
IttS prioa levda^ with an adjustment to this amount, if any. as may
bainalified by reason of a fluctuation in the cost of construction as
i«acatad by the Bnginesr News Record's applicable construction
tadieaaiplus the ooat of neceasary teal estate interests to be acquired
b* dta Omp* of Engineers, whidi interests may be conveyed to the
Rdaraj CHBpany.
Sac 130& Section lie(a) of the Rivers and Harbors Act of 1970
(PabUe I^w 91-611) is amended by adding at the end thereof the
*^Mae areas of the river between Howard Street and Cald-
well Avenue in Nilee, Illinois, that have aocumutated silt and
ing should be excavated to the normal align-
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97 STAT. 1294 PUBLIC LAW 98-181— NOV. 30, 1988
CHAPTER IV
DEPAKTMENT OF THE INTERIOR
FISH AND WILDLIFB AND PARKS
UNimt Statcs Fish and Wildutb S^nnci
tnouBCB UANAOKMam
For an additional amount for "R«aource n
National Park Srvio
Fund* appropriated to the National Park Service under thia head
in Public Law 97-394 shall be available to reimbune the Estate of
Besa W. Truman for operation expense*, including maintenance and
protection, of the Kan? S Truman National Historic Site incurrad
during the period October IS. 1962 through December 27, 1982.
coNsntxnioN
Notwithstanding any other proviiion of law, •action 4 of the Act <rf
October 26. 1972, as amended (86 Stat 1181; 16 U.ac 43ac note), ii
amended by striking the numeral "9,327,000" and inserting in IwB
thereof'10,500.000'T
LJUaO ACquiSmON AND STATC ASBISTANCI
For an additional amount for "L^nd acquisition and Stat* aarial-
ence", |25.500,000, to be derived from the Land and Water ConsM^
vation Fund and to remain available until expended.
OmCK OP SUKTACS MlNINO RSCUUIATION AND EnPCSCIKMNT
ABANDONED MNB aaCIAJUTION njND
For an additional amount for "Abandoned Mine RnrlamaHnn
Fund", (42,000,000. to remain available until expanded, to ba
derived from receipts of the Abandoned Mine Reclamatian Fund to
provide for the acquisition of private homes and bunnsasss and
nonprofit buildings occuoied or utilized eontinuouslj rinoa Saptam-
her 1, 1983. and the lands on which they are located, ""^I'l^'ny all
mineral interests, and the relocation of families and iudlviduala
residing in the Borough of Centralia and the Village c^ Byrneavills
and on outlying properties who are threatened by the [iimisssive
movement of the mme fire currently burning in and around the
Borough of Centralia: Provided, That all acquisitions made hy the
Commonwealth of Pennsylvania under the authority prwided
herein shall be at bir market value without regard to mine An
related damages as was properly done b^ OSM in its prior acquiai-
tiona of Centralia properties. These activities must comply with tbs
Uniform Relocation Assistance and Real Property Acquisition Poli-
cies Act of 1970 (42 U.S.C. 4601, et seq.). but shall not constitute a
iDRJor action within the meaning of section 102(2Nc) of the National
Environmental Policy Act of 1969 {42 U.S.C. 4332>r Atwittef furOter,
^Coo<}^z
PUraJC LAW 98-181— NOV. 30. 1983
niat no Ibiidi mmyte OMd to pay for the actual a
~ lidal further, Tliat the Federal discretion-
d 75 percent of the cost of such acquisition
id further. Hut any funds remaining available
, a «f Ifaese acquintian and relocation act' '""
■nf be made available to the Commonwealth of Pennaylva
■f further, lliat funds made available under this head to the
jdwealUi of Pcnn^lvania shall be accounted against the total
Ptakral aiul State ahare funding which is eventually allocated to the
BuBKAU or Indian ArrATU
_ . amount for pre-kindeigarten programs,
NotwitlMtanding the pnrrisions of Public Lsw 9T-25T, the funds M Stat $1«
mmpriatod therein under this head for transfer to the State of
Utt^M shall remain available until expended and may be used for
neooatruction of day schools formerly operated by the Bureau of
^^■w Affaira.
GnraKAL I'aoviBioNa
Funds available to the Department of the Interior and the Forest Pnvawi^ own
kvke in fiscal jear 1984 for the purpose of contracting for aervicss ^^^^'
ttMt ivquire the utilisation ol privately owned aircraft for the conincu
tMiia(e of caign or fm^t shall be used only to contract for aircraft
Itit aic certifiad as airworthy by the Administrator of the Federal
AvjstioD Adminiatntion as standard category aircraft under 14
(ra Zl-183 unless the Secratar; of the contracting department
islw III! lias that such aircraft are not reasonably available to con-
fact such services.
a (d) of seetian 109 of the Act entitled "An Act making
M for tlM Department of the Interior and related agen-
(M far tlM fiscal year anding September 30, 1984. and for other
■uipuaua" (Public Law 98-146), b amended by striking out "The Anit. p. 936.
*"'^r*''" with xfud to this subwction on the use of funds shall
BOt nply if any nal»«wned tide or submeixed lands within the
maaMcribad in this subsection are now or hereafter subject to sale
sr Isaaa for the extraction of oil or gas from such State lands; and"
■id inant in lieu thereof "The limitation with regard to this
■dasctiaa on the use of funds shall not apply to submerged lands
withia SlVoautical miles off any Florida land mass located south of
n JigrBSi north latitudr, and".
DEPARTSIENT OF ENERGY
foma. Enekct BnuKCH and Dxvelopment
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PUBUC LAW 98-181~NOV. 30, 198
SMrmsoNiAN Inritution
SAlAKltS AND tXnSKT NATIONAt. OALLKIT
CHAPTERV
UNITED STATES RAILWAY ASS0CUTI(»4
Adhinistrattvi ExpsNsn
The CongresE disapprovM the proposed deferral of budget author-
ity in the amount of $2,050,000 tor Um United States Railway
Association (deferral numbered Da4-20), a* set forth in tha Presi-
dent's special message which was transmitted to the Congress m
Otiober 3, 1983. This disapproval shall be efTective on the date <i
enactment of this Act and the amount of the proposed deferral
disapproved herein shall be made available for oblation.
CHAPTER VI
DEPARTMENT OF AGRICULTURE
FsDBRAL Grain iNSPscnoN Soviet
INBPBCnON AND WDCIHINQ BnVICKB
lished under section T(jXl) of the United States Grain Standards AO,
For expenses neceaaary to recapitalize the revolving fuitd si
lished under section 7ljXl) of the United S( ■ " ■ "- • •
M amended a U.S.C, 79ljXl», 16,000,000.
Food and Nutxition Scsvicb
Effective on October 16. 1983, and until April 16. 19g4, tha Sscrs-
tary of Agriculture shall not reduce or witAhold reimburacnnenllh
shall not collect or attempt to collect hinds from an institution, its
parenta. affiliates or Buccessors, and shall not otherwiss aflM an
Institution's participation in' the child care food program (42 U.8.C
1766), where the Secretary's claim relates to payments ouds In Ns«
York during the period January 1. 1975, through December SI, 19TB,
by the Secretary to the institution as a perUcipaQt in the child car*
food program.
AoRicuLTitaAi. Stabilization and CoNsnvAiioN S^mcs
cunomcv consuivation pkoobau
For an additional amount to carry out the emergra^ conser**-
tion program authorized by title IV of the Agricultural U«dit Act «f
1978 (16 U.S.C. 3201 et seq.). $7,000,000, to remain available until
expenided.
Donation or Ckstain pKOpnrr
tion, the land, buildings, fadlities and equipment at the Unites
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PUBLK; law 98-181— NOV. 30, 1983 97 STAT. 1297
A of Agncoltiire P1«iiit Introduction Station, eom-
Bonlj known ■■ Bamboo RcaMich Station* in Savannah, Georgia, to
^_ '■-■■ ' • — ■-■^-s, UnivoMJty of Geotjia.
CHAPTER Vn
DvAxiMKNT or Bducaiton
HKlHEa mUCATION
TITLE n
GENERAL PROVISIONS
Sk: 8001. No part of wiy appropriation ooBtainod in this Act shall
MBMin avaOabb for ^MigrUm bejond September 30, 1984, unlcaa
•nmirijao nnwided harain.
mc 8002, NotwitfaatandinK anj other provision of law, the terms
"■aat" and "meat find pnoneta" as naad in the Prompt PayineDt
Act (Public l«r 97-177; 96 Stat 85) in aection aaXZKBKi) thereof
iball indude also adibla frorii or froMn poultry meat, perishable
isnitnr mart Ibod pvodocta, fiiMb eggs and perishable egs products;
Md tbe SetTetai7 of Agnenltura, out of Rinds available to the
rMsanndilj Oradit Oirpondioa. npon proper proof of low, shall pay
lalilaiiiliin daima for loaaea nsulting tntn the 1980 embargo on
■ba at ^ncnltttral flommoditiw to tbe Soviet Union sustained by
taiBaaaea dealing in pork and fracan hog carcassea as well as edU)le
felA or froaen ponltij meat, pttiahahle poultry meat food products,
huh eg> and pwritftaMe egg products.
S^ 2003. (a) Section 4or tbe Act entitled "An Act to save
hjti^i and to provide standard time for the United Statee",
nd Hatch 10, 1918 (IS VAC 263). is amntded—
(1) by ^'^fc'''^ oat "Yukon" and inserting in lieu thereof
(D br striking out "Alaska-Hawaii and
ttarMS lEiawMlrAleutian"; and
QD br striking out "Bearing" and inserting
e to Yukon standard time in any law, regula-
L, record, or other paper of tbe United States
d considered to be a rderence to Alaska standard
09 Any nfeiBice to AIsAa-Hawaii standard time in anv law,
' " ' record, or other paper of tbe United
' to be a reference to Hawaii-
(8>Any . _
BdocuMnt, neord, or other paper of the United Statee shall be
and Goaadend bi be a tefnence to Samoa standaid time.
fe) The Rsciaaal RaU RMirganiiation Act of 1973 (46 U.S.C. 701 et
a) by striking from section 201<e) of such Act "1983" and
iiMartiiv in Um thereof "1985"; and
ood produci
II use 390;
yGoot^le
PUBLIC LAW 98-181— NOV. 30, 1988
(2) by Btriking from section 308(cXl) of Buch Act "1983" and
inaerting in lieu thereof "1985".
Sec. 2004. It is the sense of the Senate that the United States
Armed Forces engaged in military operations in Grenada are to be
commended for their rescue of United States citizens on that island,
and for their valor, success, and eiemplary conduct in battle, which
has been in the highest traditions of the military service.
Sbc. 2005. (a) Section IT of the Railroad Unemployment Insurance
Act is amended —
(1) in subsection (bX2), by inserting ", or the benefit year
beginning July 1, 19S3" after "July 1, 1982";
(2) in subsection (el, by striking out "June 30, 1983" and
inserting in lieu thereof "June 30, 1984"; and
(3) by amending subsection (f) to read as follows:
"(fXl) For purposes of this section the term 'period of eligibility'
means, with respect to any employee for the benefit year beginning
July 1, 1982, the period beginning with the later of—
"(A) the flrst day of unemployment following the day on
which he exhausted his rights to unemplojiment benefits (as
determined under subsection (bU in such twnefit year; or
"(B) March 10. 1983,
and consisting of five consecutive registration periods (without
regard to benefit year); except that for purposes of this paragraph,
any registration period begin nine after June 30, 1983, and before the
date 01 the enactment of the Supplemental Appropriations Act,
1984, shall not be taken into account for purpc«es of p«)Tnent «f
benefits, or in determining the consecutivenesa of registratun
"(2) For purposes of this section the term 'period of eligibility'
means, with respect to any employee for the benefit year beginning
July 1, 1983, the period beginning with the later of^
"(A) the first day of unemployment following the day on
which he exhausted his rights to unemploj'ment benefits (as
determined under subsection (b)l in such benefit year, or
"(B) the date of the enactment of the Supplemental Appropri-
ations Act, 1984,
and consisting of five consecutive registration periods; except that
no such period of eligibility shall include any registration period
beginning after June 30, 1984.".
(b) The amendments made b^ this section shall apply with reapect
to days of unemployment during any registration period beginning
on or after the date of the enactment of this Act.
(c) Amounts appropriated under section 1021)) of Public Law 98-8
shall remain available without regard to fiscal year limitation for
purposes of carrying out the amendments made by this section, and
amounts appropriated under such section into the railroad unem-
ployment insurance account in the Unemployment Trtist Fund may
be transferred into the railroad unem^oyment insurance adminis-
tration account in the Unemployment Trust Fund as may be nsCM-
sary to carry out the amendments made by this section (as
e Hist paragraph under the t: . _ . .
development grants" in the Department of Housing and Urban
Development-Kidependent Agencies Appropriation Act, 1981 (Public
I«w 98-45) is hereby amended l^ striking out the period at Uie end
thereof, and inserting the following ": Provided further. That any
unit of general local govenunent which was classlTied as an urban
yGoot^le
PUBUC LAW 9&-181— NOV. 30, 1983 97 STAT. 1299
mint; in fiMsal jtmz 19SS pumunt to iection 102(aX6) of the Hoiu-
Df and Community DBvelopment Act of 1974, as amended, ahall
Hotinue to be clasnfied aa an urban county for the purpoeea of the
iQocatioii of fundi provided therein for fiacal year 1984.".
Tlii« Act may be cit«d as the "Supplement Appropriations Act,
1W4".
Approved November 30, 1983.
UCaSLATIVE HISTORV— H.R 3959 (H.R lliH.R Z95T)(S. 695I(S. S69MS. 131DK
BOUSE REPOarS: No. 9B-m ud pi
(Comm.
SENATE REPORTS: No. 98-35 acnompenying S.
1310. No. 98-1B3 aa»nipanyin« S. S
Foreign R^tioiu). No. 9^111 accampi
accomunjiiig S. 695 both from (Corni
ami Urbui AITunl, and No. 9S-27& i
IComm, on Appropriationil.
00NORBS8IONAL RECORD. Vol. 129 (I983h
June T, 8, 8. 6!>fi conndarad and paned Senate.
Jub II- IS. H.R. 1 CMuidind and pa»«l Hoiue.
Jnh ES, as, a, Auc. 3, H.R. ^K^ considered and pssk.
~id S. 69S, ai "-J ' '- "—
Sept. 2a, S. 869 ccnuidered and paned Senate.
Oct e. H.R. S»S9 eoniidend uidf^Hl Hoiue
Oct- E&^ZI^ onuidcnd and pa WOO SenaU. amen
■nMndnwnU and in otiwn with amendmente.
No*. IT, Senate agreed to nmferena report^ concurred in Hoiue amendmenu
and in another with an amendment.
Not. 18, HouM coaoimd in Senate amendment.
WEEKLY CCMPILATIONOT PRESIDENTIAL DOCUMENTS. Vol 19. No. 4H(1983):
yGoot^le
yGoot^le
B. 1959 - Bajsiim and Utaa
sect ion- by- Sect lar
tkc «jpp(jrl of I
ceriiticati
q-4illf.c.tIor, fa:
cU»»ific«ti=- as a- ,r=a-
In liscal year 1933, fcr f:
ptriod covered By » cospeii
I«« 1914. A coji-.y s^.s::
yGoot^le
■ ipjljtion growth rate of not loss than 15 percent during
it recent 10-yeac period measured by applicable eensoBesj
a combined popjlatlon of not Ipss than 201. Oni.
as families whose incomes .ti> 'i.>i, i'«[r.;.>.1 30 p-^tcent of the area median
income. The term "persons of -'eiry low income" means lower Income
families whos.; incom-s do not PKcepd 50 pavcnt 'if th.f ^cea median
detei-rnined in the same manno: as fOL S.fCtlon 8 of the 1937 Housing
Gowernment Bai ldings--Sec . 102(cl detines "bjildiogs for the
buildings, Stato capitol or office buildings or other faciliti<?fl in
which government affairs are conducted .
Metropolitn statistical Areas (><Sft5> and other detetioinations for
sec. 102(e) st;iK';i Unjjd.j." L.>[«rriny to fiscal years !'»ai-1983.
Los-^s its classification as ajch to be inc!jd.?d in an urban county
In any year of thp 1-year cycle.
Authorization- -Sec. 101 authu;ii-i .Li ippropr la t ion of S3. 468
billion for each 'of the fiscal years 1984. 19HS, and 1986.
Statement of Activit !.■■? and Bsluew
Community Deuelqement Objyctlves--Sec. lOJ(a) states that all
CIWG grant recipients, beginning inFV 84. describ" the use of funds
received in Ft 82, and theteaf t-r, lor beginning in FV HS the use of
meot objecliwes.
.Pl5l'.c.Be'''.">'--S"C. 10i(b)(l) states that g^ant^.^a shall Furnish
yGoot^le
jn Picticipation-
tlwn^ nr ippcopr
records regarding
notice of and op
3L
mil
'■'J^lnll
araend or mntiiiy
with the above p
roced
j"f
rtlipi-"f«
!°^;
-Sec. 104
(cKl
) c
Comunity Develo[«ient
M the conmjoity dei/elopm.
iMjnity development objec
Uary objectiu« and ceqjl
"n t" 0
iTir
jroposed . sub-
• CDBG Program.
, J CertIfi_catt'>n~Sec. 104(0(41
11 not attempt to "charge or'assess fees and i
ipitsl costs of public improvements rjnde<'l in
th CDBG funds against properties owned by lov
rsons (including fees made as a condition of
;ch pjblic improvements) unless CDftr; fjnds art'
. except for vo.y low
vacant and Aba
ovi3es tfiat'va'car
,to consideration
tiling Assistance
U the graf
itee'i
pma^a-nmatic ace
tur» of Chi
ing<
.n proqi
iwe"-oaK
eMperieno
: a grai
hen-f ith.
thin thrt ji
.-an'
tee'
■s J urn
id let ion.
The Secret,
sry
shall encourage
3 of Statf
icr»tary wii
a unlfoL-n
ipoctina. a.
Id 1
!val
luatlnn
cepo.tin..
units of .jereral
1 and t-pcom.n.:nd tc
•ping, performancf
yGoot^le
L04(f) provides
fur
after t
income for eligible oommunitj' development a<
require as a condition, jndec the small citi
income to be used by tne State to fund addii
development activities, except that the Stal
dition to the extent such income is applied
Assistance- -Sec. I04lg) als(
grantee pioviae reason ' ' -
permanently
iced in a revolving
. recipients nay
zed after the initu
■ee to jse program
,o the State any such
inal eligiOle communi
I continue the activi
lity Eligibility — Sec, 105(a) makes cl
s, with the exception of buildings foi
of government, are eligible for COBG funding.
on on the use oE CDBG funds for publi
1 under Sec. 105(a)(8)i however, units
It which used mote than 15 percent at
s where general conduct of government
derly Shared Housing--sec. 105(d) permit;
tod of calcula-
1 for public fflcilil
,y when developed by neighbor hood- based nonprofit organiiati
■ lie nonprofit orgamzationa.
es are carried out by private for-profit entities, and the
y is identified by tne applicant as principally benefiting lo
lerate income individuals, the activity shall either (1) be
out in a noiynbornood consisting predoninately of low and
come persons and provide essential services tor such per-
nvolve facilities designed for use predcminately ty low
e income persons; or (3) involve employment of persons.
yGoot^le
153
AresHlde B«nefita to Low and Moderate Income PijcsoriB — Sec.
Oil «y also pcowldea that where "an el igible "actiwity isdesigned
) serve an aioa (jenetjlly and is eleaily designed to meet identi-
i(d needs of low and moderate Incoiiu? persons in such areas, the
IBG e-jnds allocated to that aciUity sh^tl ti.> considered to
Incipally benefit low and moderate income persons IF [1) not
tt than 51 percent ot the i-i^sidents of such area are persons
low and mniiiatu income, or 12} the area served has a laryir
cpoction of not lesa than 75 percent of low and pfLOderstP i ncom-i
r«ns of the other areas in the jurisdiction of tne recipient.
eonsld-^red to henefit low and moderate incofne pprsooq only to
location and Distcibutlon of Funds
Metropolitan City Consolidation — Sec. 106(a) states that the
ount det#»XTiiin«^ for a metropolitan city formed by the consolidation
one or more metropolitan cities with an jrban cojrity should equal
« SUB of the amounts that wojld have been determined for the metro-
litan city or cities and the urban county if th" consolidation had
t occurred. This shall apply to any consolidation that: (1) in-
jded all metropolitan cities receiving grants In the prior fiscal
ban county that received a grant in the fiscal year prior to
nsolidatinn; and (3) occurred on or after January 1, 1983.
Population Growth Rate--Sec. 106H) -tlsi piovid'-s that the
pjla'tion growth rate shall be based on the population of
) •etmpolitan cities other than ttiose tor which the grant is
ii^ determined, and (21 cities that were metropolitan citi.-;
forf incorporation into consolidated governments. in calculating
Funding Real location — Sec, in6(b} states that any city or
jnty which loses its'funding due to adjustments hy the Secretary
noncompliance in any fiscal year shall bf oxcla.l^id in the suc-
[ding year from the calculation of the share of the reallocation.
s Secretary iday, uiion" r-'quest, transfer the responsibility for the
linistL-ation of amounts received but not obligjiud by the urban
jnty to any metropolitan city located within It If (a) the city
« an included unit of government in the ,:,)unty prior to qualifying
a Betropolitan city; (b) the amount was designated and received
the county for use in that city prior to its classification as a
tropolitan city; and (c) the city and county agree to the transfer
responsibility.
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Nonentitlement Area Ailocacion-'Sec. lOtld) states that
aisttibjtion of fjnds "in nonerit iclement areas of a State be carried
trtbjte tantia after the end of fiscal year 1S8* is penoaneot. The
Secrecar/ shall distribjte the amojnts if a State Has elected not
-Sec. 106(e) provides
'ity chosen to meet It!
Certification by States— Sec. 106(f) directs the Governor
each state tn certify that each jnit of general local gouernmen
nent and housing needs, includxng the needs of low and moderate
income persons and the activities to be undertaken to meet thoa
State shall pay from i ts own resources all administrative exper
areas, it may deduct an amount not to exceed the sum of SlD2rOQ
Amounts deducted In excess of 5100,000 shall not exceed 2 percs
of the total amount received.
Reallocation of t
ived by a State becajse of failure
to meet tne requirements oi :>ection 104(a) or (b) or because at
areas of the State or as Che result of a closeout of a grant shall C
added to anounts allocated to the State in the fiscal year in which
they become available.
any State or the Secretary may not distribute funds to any unit of
general local government located in a nonent t tlement area unless it
certifies that: (a) it will minimize displacement as a result of
activities assisted with these funds; (b) the program is conducted
and administered in conformity with civil rights laws and the
(c) it will provide opportunities for citizen participation, hearing
and information on its community development program similar to tha<
required for entitlement communities! {dl it will not attempt to
recover any capital costs of public improvements funded in whole or
yGoot^le
.ip«!:t with COBG tjnda Ijy flsq.ia^inj t,;,.ri *jjinat (iropactiBS oanad
■■I occupied by low and nodecatB income psc*)iii, mcjtadin.j fees oi-
uessuBnCH aa.l'; is .) cundLhion of obtaining acceofl to poblic lupirr
»i Cut relates to capital coata financed from other cevenue 80iji-(
r liil in caaea oncept foi" very low income famlllea, Jhi:,-.- th.>
rinted n.^rt if t'l* t'> the State or the Seccetacy that it lacks sjf-
ident funda to cnniilutH iti Ci>nr. activities.
Sec. lOfi(i) statea that in the case whatfi fjo.ls ■.^- ■■<->.ilfici'
) provide the amounta to which ma tropo 1 i tan cities and urban
unties are entitled, the Secretary shall ue^t the deficiency
itOk>gh a pro r^tii reduction of all amounts. If the total amojnt
■tilable exceeds the lentltleinitnt anojnts fas: citits ami jrban
Secretar)^' s Discretionary Pjnd — Sec.
r (i»c«r"years 19^4 7 'Wa^ ," l^Si ' ^or grar
icretlonary Fund.
(4, 1985, and 1986, under the Secretary's DIsctetiondi y P.jn.1 . th.*
iretat-y nuy allocate amaunts to any State otr unit of ginn^Ml local
•ernnunt that is determined by the Secretary to have received
ijfCicient amounts und^r Sec. lOS as a result of a miscalcjlatiiin
its Bhar'i of fjn<H.
jrJintee of Lqajis
Uxn Guarantees aod_ Financing— Sec. 1081a> states that a
iranc'ee nay be used to assist a grantee to obtain financing only
th« gr-iiit<'<> h-41 made efforts to obtain financing without such
trantee and cannot complete flnancinj co'H i-il-ot with the program
Authorization — Sec. 108(b) provides that Mjhject to the absence
qualities "applicants and to limits appro^ied in appropriation Acts
B Secretary shall 'inter into ccmmitnenl
guarantee notes and (^ligations for th>i pu: ch.
real property with an aggregate |>rincLpal amoi.
seal y-.^i 19B4
or rehabilin-
of S225 mllli
3T-9JJ o - 84 - 11
yGoot^le
156
indinu_yct)an Renewal .Loans
ccvnnxanity developing
available. This shall apply to fonda available (oc FY B4 aid aft-if.
Pait H - Othe;- Programs
Ul5.*5._?^'^^l''_P'?^.'^t Action Grants
Authotizatlon--sec . 121{3) ajthocizes to be appropriated Cor
Urban'tiewelopiwnt "Action Grants (UDAGl , not to eKceed, S440 million
Col each of the fiscal yeais 1984, l^BS, and 1986.
Standards of Distress— See. IZUh) incljdes the extent ot
sec. 121(b) also states chat any city with a popalation o€
area and eligible Cor UOAG assistance in fiscal year 19m, shOijld
oC eligibility to include surplus labor as a standard of distcess.
UDAG assistance.
UDftG ftpplicant'a lapact Analj^sis — Sec. IZlld) provides th^t
the UOAG applicant's analysts of the impact of proposed activities
moderate income, of the neighborhood in which the activities at"^
eaiL-ied out, must be made available to any lnte;»5tcd person or
organization In the neighborhood where the oroposed activities are
to be carried out. .
Matlonal C<Miipetition — Sec. 121(e) states that the OOAG
yGoot^le
1S7
City and Urban County Consortia — Sec. 121(C) directs the
reratary to psrrilc a'consoftl'i'jif 'ii hi-?* Jith piipjlations of
'SS than SO, 000. which may ind.i.l-; uiuity governments that acH
It urban c<>jati>3s, C'> apply for granta on behalf of a city that
otherwise ali.jini«. Kny granta auardeil to a coniSOL't i-i -ihall
adttinifltered In compliance with eligibility requirements appli-
ble to individual cities.
ei ijtbility of Uninqorporated Areas for UD*G Pockets of
nerty — sac .""12 1 ("q) 'provides "that in "the case of 'an urban c'oonCy,
identifiable unincorporated cwimjoity nay qaslify 'o^ i IJMG
Technical Assiscanci to. Small Cit tes--Sec . 12l(g> r-friji c^
I Secratary toprowide technical assistance to Stats^ 'j.- t'l'M :■
tnci.!>;, iiniversity operated mjniclpdl techiical -idui^-jry seri/icea,
ties to develop, apply for assistance, and impt'^iTi.'ni: 'iriAO pL-D^ran:
ajtborizes 52,500,000 for fiscal years 1984, 19BS, and tsafi.
S«c. IJllgl also states that tht- s«cr<?ta;-y may not disCLMmlnati?
ing programs on th.? basia of the particular activity involved,
tther it is prinarily a neighborhood, industi' i'lt. . Oi •;O'0iieiclal
ressary for fiscal yeiir Itas.
Conveyance of HOD^Owned Single Family Prqgertx--Sec. 122(h)
.horizes the Se'ccetBty "to 'transfer7"HitKoJt 'payment, to any jnit
-•Eniaent any real property: that is improved by ^ I'l.?- t'l T'lui-
nipied by a person legally entitled to reside on such property;
I that i^ r-jqjested by the local government or agency for use In
Repairs, Imprqvementa, and Residency--Sec. 122(c) statics that
I Secretary shall approve th.? initial conveyance of vacant resi-
icial property by the local government oi- pjblii- ay^-rii;/ -without
ivtantial oinsideratioo to an individual or a fanily upon condt-
the date of such initial conveyance; an ayixsiM.'nr i.hat qjch fanil
person sh-ill 'iak« repairs and improvements to th^ p^ropwrty as maj
necessary to in«.3t applicable local standards fo ■ d-c'.ii., -iaf'S, jr
nitary hojaing within 3 years of the date of initial conveyancei
d occupy the property as a principal L-.!sMenee for a period of nol
: establiah*! by the Secretary.
yGoot^le
. 122(fll provi.lKt Cof *n uqjitable
;Li)iBOts ot SJCh propect(e« that
■> sppl icrtritii; whose cuEcont houatoy
ich and safety, including ovec-
excBSS of 30 [wccaric of Ch«ir
alnlivj
■e'cuccently
Unqccyfii'"! '^^s*:*'^'?'^.!^.! PlOE^t^ies Lislinq--Sec. 122(e) providH^
: in order to f^acilitate planning foi' th.! Homes teading Progran,
HilD Sectetary. the Adminlatcahoc of Veterans' Affaita. and the
retary of Agricjltuce shall, upon the request ot at'/ local gouecti
t oi- p.iblli; *j-jricy designated by the local ijoveLoment prowide a
:ing of all onoccopied residential prop^iit I'j-j to which the HUD
retary, the Administiatoi', or the secretary of Agricultors holds
il ijoh^ernment or public agency. Provides that such Hating shall
accessible to the public during ordinary business hours at the
ices of the local goyernment or public agency.
Conve
^ance of HUD-o.
Tied Multifamily Propectle
~<iec. 122{f)
may. on a
demonstration
aaia dur
ing FY 8
I local govern
ent or p
ublic
local gove
property
whl
ch the
secretary holds
title; th
t the secretary detet.s
pi ilea
in multlfamily
homestead i
ng requirements
and for
conslde
any, as may be
agreed upo
uni
t of general local gov
ernment or
public agency.
Mult
family Homestea
ding Progr
im Reguirements
-A mult
family
hom
BsteaTinij program car
fed out by
public
age
ncy de
ign.ite.1 by th*
tlfamily homesteadlng
program th
at complies wit
retary determir
- program conta
n. fldequ
uraocB
that (I) the f
of all homestead [icop^i
ties
follo-in.j
idential
; (2)
leas
ban 75 percent
of the rea
idential oocupa
ta of he
rnieatead
i-.-tie
following conv
lower
ncomo families"
od aH
yGoot^le
.,aaa,53d~in Yy S4 and 35 foe a program to denonstraE^ th.;
<<iibllity of providing aasiacancfi to State or local gouernoe'ita
thslr agsnoiHs for the pjtchasa of ti^al pcoperty that is
proved by a one- to tour-family ri>-jii1';iio«; i -; n.it occupied by a
rson legally entitled to r^^iii'i on 9jch property; is designated
the local govecnment or public agency for use in a ai^ijlii-f ani ly
MSteaflinj pt-i>jL'.4<i; and will be conveyed to Ion";.- iricome Camilies
M condition that the family agrees: (1) t) 'ii;cj[>y tht^ property
a principal reaid^no-- for a pKriod of not less than 5 years.
capt under such emergency circumstances as may ;>e established
the Secretary; (2) to repair all defects in the pcijppfty that
M a sabatantial danger ti> ii^Mlth ml saf-^ty ulthln one year of
a date of Initial conveyance; and {1} Co ^nalte repairs and improve
nts to the property as may be necessary to mtit local standards
public 11
::
ry shall
r?
ve pre
liens
fe
Evaluat
tdjct a CO
ti
ulng eva
"
. 122
t)
technica
utainlng a sun
ter than Decen
macy and
ber 31,
.'
turer
ec
iahborhopd
Development
Grants
Sec. 123 Cl-^;.t..s ..
IgiblB neighborhood de
rry out nei-jhborhood d
'•
opment
lopm.,.
'o
eitablish
-^
t.UUUs
enpand n
■w
ligib
buBlne
i:
ly Made vip of at least 51 pet
> neighborhood, has conducted
lor to the date of an appltca
itressed area as defined by (J
c or wire of the eligible act
Program Fundi no --The demonitracion |
Cching funds to eligible neighborhood c
« basis of monetary flupixj^'t v«*ceived fi
4 nonprofit or other organiiit ion-s.
yGoot^le
AEE.l-ic3ii-?.".l!-:'^Plication
s will be submlttad to the Secretary
ticipate in more than one year of th
program bjt must submit a new
application and compete for each
proyram year. Not more than 3
year award 9,
ABpl ication ReiJirements-
-Participating organizat ions will be
selected on a competitive basi
s. TO be selected, an applicant Bha
achievement in one or more of the
a), neighborhood development actiuic
■ proposed act
3 of the neigl
businesses and individuals participating in
are representative of all businesses and
individuals in the neighborhoodj and the extent of voluntary contri
the case of an application sjbmLttcd by a small, eligible neighbor-
hood organization; an organization targeting a very low-ircone
Grant ApiqLjnts--Part icipatinq organizations shall be assigned a
program year during which voluntary contt-ibocionB shall be eligible
for matching. On a quarterly basis, each eligible organization shal
be paid the product of the aggregate amount of contributions receive
neighborhood, but shall not exceed SSO.OOO in a program year. The
irded only if
the unit of governmenc in which
sted neighborhood is located
housing and community developmen
istancc
plans
' with%ivil'rights''8tatutes
Reflulations-ln order to ca
research conducted by federal ag
ry out
nds of
yGoot^le
iljde the pertorinai
ippnipr la t«il anount t
Haports to Conqt
IT fTT*
and"
:^.^i.S"T ere
ed
o be
apt
.oprt
i;.>d 3^.000.
'MipJiA
2 Re
hab
ti'^-tiq
Loans
sec. 124
;^'as°stngl
«*ipt oi js^
s f
an
flfl th^t
funds
oiily or
a prior
as CDBG
ty tor rece
or Section
prof' if
finds) 1
ng
log
t rfiq
type
Prog
oE housiny
Secretary
munlty
a priority
CorEO_ra_t.ion
sec.
125
y be
authorises
16.^12,000 for
isca
y.
.r n
4 .toil s,j.:ii
BMlers
ogra™,
■ever,
tmc the
]jeat<><l
ction a
GSA to
so reta
ny prop
s HUD an,1 P.»»-. to disp^
ransfer tho land prior
rty within 30 years, or
not used for housing of
20 y
a"
Sutpljs Land
plj<i property
tetary^had
inership to tl.i
nn.l^fite income
126 lb:
(11
I6(g:
A9, dealing with a tra
naj (2) S.JC. 703(d) of the Housing and
(S5, which prohibits the conversion of I
icllities during a 20-yecir period follov
14 and tho second sentence of Sec. 706 <
lich prohibits th; caovecBion of open spai
:iglnelly approved by HUD, and which give:
Jthorlty to deny approval of the conversli
^ of neighborhood
HojsingAct of 1961,
yGoot^le
TITLE II— HOUSING RSSlSTA-iCE PROOR^tS
Assisted Hojsing f
le a fo^jl* prescriti^J ti/
ttii relative needs of lifFe^
xlthin that fiscal yvi
•iic. 201(a)
approval of app.-.
of assistant- ji '
lonmetropolitan a
Lcaf? pr->jri.« f.
!0 nor Bore thai
;n ny fiscal j
may approwe' the
lority— Sec. 2111
ng developnent ajlhority
f property t-> 0-t js-?-3 fir pjblic hojsing if the
>xceed SI. 28*, 5^0, 000 for pablic hojsir
. fo.' lo.l.-i'i iijsna): Sl,926,*00.000 t
conjjnction with the Sec. 202 pr>jran,
• isiwe -Do.iirTiiiti .a, 32.217,150.000 fc
: 5540,000,000 for Sec. 8 vdtrate rehj
5115,000.000 for
yGoot^le
20UC)
tn
tea t
acqjl
n
Ion only If
sretary may
PH» deraans
'
, a PBA in conne
1 p»rcont of the
—See. 201(c) «
so .ir,t.lbli
eve fund in
St fOL- «io
*of*iio
po
.. appl
«
on or aftec October 1. 19H3, pi-iori
jBLng development shall lie gi^ren to pr
ising fo:: occjp4ncy by larye fanllies-
lv«r of Single Pecaon Occupancy Limita
■ ara a rHoiaining member ot a tenant family dje to the condition oc
cation of ajch dwelling jnlt. and that such dwelling unit may bs
cupled if made available to single persons In circumstancua
•eribed to cegolatlons of the Secretary.
iqrity for .Housing Assistance
Sec. 20J states that the priority in assisted housing programs
sec. 20A provides that the secretary shall legji
e public housing
•nciea"to establish and implement an administrative
Etcedure under which tenants will: 11 be advised of
yjnds of any proposed, adverse PHA action; 2> have
n opportunity
.- a hearing before an impartial party upon an appl i
■luesci 1) have an opportunity to eiamine any docume
ts. i-scor-is.
o be represented
a person of his/her choice: 51 be entitled to ask
uestions of
be entitled to receive a written decision by the P
1 agency may CKclude pcoceduren for evii
incy if the local jurisdiction requires
:retary detec^inea will provide the basi
yGoot^le
Sec. 204 also states that the PHA shall jtlllie lease* chati
{l> do not contain on tea so nab le c«i-mfl or conditions; (21 require
reqoice the PHA to give ad^qjate written notice oE trtmiodtion
of the lease which shall not by lass than: (a) a reasonable tiite,
not to exceed 30 days, when the health and safety of '*HA enployees
.)!- othi't twnants is threatened; (b) 14 days in the case ot nonpay-
ment of rent; and (c) 30 days in any other cai«; and (4) reqjlre
the PHA may not terminata th^r tenancy eKcept for serious or repeated
violation of the t«vm9 ot conditions ot the lease or tor other guod
Report I ncj Requirements
djplicative ot bjcdensome
Amendaents Affecting Tenan
/ipply foe fanilles receiving
ler denonstrat ion program.
PamilLea--Sec. 206(b) provides
ioV ceilings higher or lower
1^ -.L-..^ h.n.jd on the Secretary's
lessary becaja^ rjf jnjsually high
:>BCinition of Adjusted Income— See. 206(c) defines the terra
■adjusted fricdnie- "foe purposes of "th.^ 1137 Act as income less;
student la years or older; S400 per elderly family; medical
enpenses which enceed 1 percent of .innjal family income for any
elderly family; and chili) c.if i'xp..-nses needed for BTRployment or
to fjrther the education of the individual.
or before thi effective date of regulations i.ni)l.!.n^nt i nj this section:
(a) the Secretary 'nay provide for delayed applicability or staysd
implementation of procedures for determininij rents or contributions
if ir is determined that the procedures would violate the terms oF
yGoot^le
Tenant* not covered in the above paL'^gtr^ph will be sjbjecc
to payment of rant or conttibiutiopi jnder applicable law. but the
increase ot the cant or coocribocion shall be limited to 10 percent
t year i( the incraaaa is dje to a change oE law or regulation and
the tenant is in an assisted housing program on or before the
effective date of implenentat inn. Th-' ;ni:iiMS'^ nay be above 10
percent only iC it is based on an inccease of the Income oC the
Tenants receiving rental aiqiMh.im;'! jndec Sec. 521(a)(1) of
the Hou3in.j A.:t .->f 1*49 on th^ effective date of this section
of assistance fron Sec. 101 of the HUD Act of 196^. Sec. 23fi of
the Natiooal Housing Act oir Sec. 23 oC the U. S. Housing Act nf,
19J7 to Sec. 8 ot its a result of any amendments made by this Act
to not iiKice than 10 peceent annually in the ease of elderly tananta
occurring after October 1, 19B1, and befon; thi; 'inactment date of
this Bill, the rental payments due after such date by any elderly
shall tm OcTnliJJted as if the 10 percent limitation had been in effec
on the date of conversion. These limitations mAy bi i-^ruv^d only t
3 monthly adjusted income; 10 percent of the tenant
I or the designated cuiuunt ■if welfare assistance-.
1 25 to jn p;;-™nl
than b-=- fully implemented no later than 5 •,
■n^ictment of such amendments, except that tf
rental riliahLl itation and development program under Sec. 17 <
- '" -' -■-- sing Act ot 1949 or for other
Assistance Payments- -The monthly assistance payment for any
family shall~iJe "tfie amount by which the payment standard foe the
i exceeds JO poicent of the fa'Oily's monthly adjjsteed income,
encept the assistance shal! nfjt .jno-'ed the amount by which the
eluding utilities tf 4 unit h^s a s>!parate neterl exceeds
it of the family's nonthly income.
yGoot^le
es or £a»lllos previojsly asaisti-il jndar See. S. Preference
tiCarily dlaplicecl; who are paying more Chan ?0 percent of
ThB secretary shall use the aathotity to enter li
Ike aaslatance avallabble to familLea liiring in dwellings to
ihabilitated with sec. 17 f^inds; Cor fa>nilies displaced as a
It of Sec. 17 actWlty or sec. 5J3 activity.
If a family vacates a jitlt before the expiration of the lease.
Annual Contributions Contiflct--A contract with a PH* shall bo
initially for 60" months. The Secretary shall require chad (a) the
PHA inspect Che jnit before assistance is made available to determine
that It meets scandatd^ foe decent, safe, and sanitary hojsing;
(b) the PHA make annjal or more treqoenc inspections djcirig the
these qjality standards, unless it is corrected promptly by the owner
and verified by the PHA.
Payment Adj jstme_n^ts--At the discretion of the PHA, assistano<.
payments may be adjjsted as frequently as twice during any S-yea^~
exceed the anoant of the annual contributions over the amount of
assistance payments actually paid, including amounts which (ith,j.-wi'!<s
become available during the contract period. Each contract with a
PHA shall provide annual contributions equal to 115 percent oC th»
aggregate amount, of assistance required during the ClrsC year. Any
amounts not no>>ded for adjustnents may bu js-id for as'ii?it in':* to
affordability of this housi
Renewal of Seq^ 8 ContractJ
Sec. 208 provide that
yGoot^le
Bip»»l of tl»w Construction Author i tj;
pcogran. The re(Kial takes effect October 1, 19B3. except for fjnd<j
obliijBted for • viable Sec. 8 project before January 1, 1984, and
tor any Sec. 202 elderly project.
■ Occupancy Houi
Sec. 210 pro.
rfiich Kwe or all
or kitchen facilfi
Mr
: tl
tha
t as
-ell
i^^unltl
local .jotfet
pjblic houE
copHes ui
!ln.j ag.
.th loc,
)l
;y .
ich
ify
propi
saf.
sty 1
Shared Hou.
he
Ein,
.rly
Sec. 211 permitH Sec. S existing ho
lulJ-tlng for the elderly as such persons
of the U. S. Housing Act of 1937 and dir
develop ninlinum property standards for s
' Eligibility
See. 213 deletes the provision adopted in the Onnihus
Beconciliation Act of 1981 which cestricted in the Sec. ft a
public houqiri^ prograrns the percentage of familiee with inc
betiieen SO and 80 percent of area <nedian IncoiMi and provie
at l'-irtC 25 percent of the families a)i>ilst<>d under Sec. 8 n
vary low income (below SO percent of nnodian inconii^) .
yGoot^le
il d»!nolitlon, the denolll
.ii<j poition of the project
' ni- ttansEer, (i) the
th« project by t
effectively
€"
"lo«r"i'nconi9"hoos?ng'^Btr>ok? .'
nd will pcese
I- (iii) chs
ca oi- the PHA
pnity is ex
Llln
^n .ipplic^tion for dispositio
with the contln.i^.i operation o
n of property
incidental to
f a project.
U9e_q[ Dl
epos
ti£Q N£t .p^9q«sr:''*^p''""•'''
a of J dispoa
I tlie paymeiit'of development cost for the project
! retirement of ootstrtnrttn.j ■ibl igations Issjed to finance
il develop^B-i'ii; oi" noderniiatlon of the project; and 2) to the
acquisition, development, or rehabilitation of other properties
the local gove
■ unless
r disposition and con
iry may n
approve an
ly, affected
Lcatton by
1 result of tf
md affordable
Sec, Zl-i stflt.-s that c
^rest diftei-enttal payne
fi-rnpt public hoj.sing 1
yGoot^le
BMrgeney Slwlter ^ofltM
sec. 216 authorizes SSI) million for CLE
Hrvicis for Individ jala facing 1 ife-thceate
■ill ba awacded on the basis of the extent c
twjslny in the area, taking into accoont re^
tlw .-lost to urijtf Ide a shelter. Grants may t
ind/or natntain sxisting structures, to pay
f.iriiishi'vja, to provide for health ' ' '
»iiV CDBG actluity that is constste
Behabilitat.-.l st.-j.:t.i.-.;^ ahal
ttie special needs of families and
Eligibility— sec . Snta) clarifies thst as^i sl^.i^ii- ■ihall tit
tad4 aV^I table under the troubled projects program to eligible
sec.
2J6 Assi>
itance
Requirem.e
^nt to M;
Ike
AmendmeT
itB-
-Sec. 2H
;ai
am.
indi
JC.
236 of
the
Natiooal >-
«i"th"ri
!Bpe<
Lgible
,s and reee
living S.
2-iti ass:
ice prio!
) tl
^^ ddt.
; OF
«nac
:tm«nt of t
;his pro>
:equ
ire the !
:ed
into wit)
roj.
S^c.
2}6(f)(3)
pay.
) pi
lent
payi
and
li .ifC^
lard to -hetl
by su.
subject
moctgagi
nd tha
the
secretary
L payments,
shall t.
like
payment!
^'th!
3 as may
Ct^l
nee!
es^i
iry'
'ren
t'incr
ua'
1 the inccnea of tei
ily
lor
all units
covered
by
s.i.;'i ■;'}<
itrsi
cti.
Use of Becagtured Authority — Sec. 2lfl{b) amends Sec. 216 to
ividi' tlvtt d'Cter Septeiiber 10. 1981, any authority that is
;aptjred either as tho result of the conversion oC iMj^L'ig projm
listed under Sec. 236(f)(2) to contracts for assistance under Sec
ihall be utilized by th.> S.v;..-etary to the extent
yGoot^le
necessary tor t*ie pj-'ji-i- .1' ukin.j assistance payaents, includtno
as^?xi:«e nts , with r-^spect to tiojsmf p^'Oj-^cts t **i^t**r or i»ot subject
iimszaztce jnde: Sec. I]6<fM2l.
to Projects- -sec- Zl
"iti '-i~6a!i 'development iWt ol
ta eligible teiants 3ccjpyir»g
3 the date ot enactment o£ tdi'
ai a«?id<> S'C. lOl o( the
965 (Reic Sjpplesent), with
-.-*1 i
(ith
iiiJe sufficient payaenes to
lat «jch off*.- 5hal1 :»'•
covered hy sjch c-Mtracta
s ^;t, anJ that tie
le lecessary to ensure that
? 3f Recjptjred A
. Sf.-. i» ir 3
1 contracts tor as^is
i Hf 11* 'i-cretary to
nee pay:»ents jnder Sec. JJSIfKI'
sec. 2J0 r«;-!res -M.- S-ci--i-,
■ ;• enactve-.;. -. ■ :->-^':-~ t-- t'-.e
jrajraim estas 1 : s";.*! Sy the Seer*
;:x Sec. a assista-.ce ,
^■.^}ei tor pjMi; -.->?:
cip«-.i:t.,res cor-.tected
■.-.■-.i:.v r-iMrv-^J fcL-
r3»;lete^ a-sJ occ-p-.ei;
:;-s-.Jered la-fle-.^i.
laer t
Iter than 120 days after
prwiSe Sec. 8
■ the CDBu prograa. Ttie
E. Sid actjat and fjtjre
< the itatjs of anits
: fie nn^r of jnits
>j«3er of local proji-sas
yGoot^le
Sec. 221 provides that,
of law, for purposes ol detei
living in a dwelling jnlt in
.mder the 1437 Housing Act oi
■hall be consld<4E'ed tii bi> a i
Sec. 23« of t
author ity to .Carrj Out .Demonstration .Proarara — s«
provides that the' 'secretary 'stiair'carry 'out a deiibnst
to deteiTiiine the feasibility ot jslny pjhl Ic hoj^iivj
to provld.' child cat- spfvicea tor lower income famii
in pdblic housing. It provider that the Secretary sh
) chill
:hll(:
support child cari
jrvict
progra
prior to the denonal . ^
pojrv^ of the PHA will serve preschool children during
tlmenCary school children after school, or both, in ore
eligible persons who head the families of the children I
retain, or train for eaploynent; 4) the child care smvi
Of the Pa\ la designed, to the extent practicable
of I
jipVoy i
ime pos
ing frt
prograa for purposes of determining thi
program in providing child care servici
persons uho head lower income families
to obtain, retain, or train for employ
Sec. 222|d) provides that the deiM
0* construed as authorizin-j the Secreti
lafety, educational, or other standardi
ach child ca;
effect tvenea
37-922 0-84-12
yGoot^le
—Sec.
of ths !-ye»r period fo.
Secretary shsll prepare
nt carrying out this dewor
report ahal 1 Lncljde .
respect to the eatabl
provides that n
awing the bill'
,nd submit to tn
findings a
in the explEstic
1 detailed repor
Elderly and Handicapped Hojainq
Elderly .«nd_Hand lcageed_ .Hqusi
SeptemOar 3D, 1982, and prior to C
*ing author! ty for the ^
ajthoriies an increase in Treasjry
. 202 piogcam tor tiacal year 19B4
may be necessary for fiscal year 19(
ion for the Sec. 202 program for 1
iBd Hollaing Set -As idee- -See. 223(d;
I amends S>^c. 202(h;
least S50 million ol
nounts appropriated (or the ptogtam for 19H4 shall be made
ible Eo:: hariilic^pped housing, and to expand the definition of
iry may not a
. 221le1 limits
lercent unless
) SIO.OOO the a
i prepaymt
Fill e
i the
- of Sec. 20 2
linued operation
ita as provided for in the
Sec. 202 mortgages. In thi? process oE selecting process, the
Secretary shall assure the inclusion of special design features
and congregate space for elderly and handicapped residents and
encourage small and scatter site gro.jp homes and independent living
facilities for nonelderly handicapped persons and families.
yGoot^le
Th« b«*la (or aalecl
deteninml by the projoci
cost is l«aa than 92 iw'"
s a labor organ i
The Secratary nay not
ividlng funda fro* othei
appropriate design and
:. 202 projects IE he c-
Ion of a Sec. ZOZ
loni It project ri
02 fair naniet rei
t prohibit a prnjt
Con-jraqatc Housiiuj
include an evaluation bj
decentraliiJiti.jn oF t^^
Idijislative cecosnendati
y change since January
gate hojsinj s.'ixic'^s [
Ides that such report s
»ry ot thp reotgail J!atl
S-jci-.jtfl-y f'l:- th» PStat
ervlces program,
horizefl S4 million for
iblishex as t
and their designated auenci.>s in ');'lec to
■ill (II encourage ths upgrading of hausir
lower incone Csmillna, Including families
under the aid for Eaoilies with dependent
jnder Title IV of th.i Social Secjrlty Act:
coordination at the local level at the eCC
receiving public assistance from the Depar
ivelop a program th
occupied primarily
ictiving aasiatance
Authority to Carry Out Oemonstrat ton Ptoqraiii--S
ajthorizcs the "secretary of' HUD 'to carry "out tlir- den
t^b» extent approved in appropi-iation Acts.
yGoot^le
Authority to Mafce Grants — Sec. It^ld) provide* that in carrying
out the tieiiKinstratlnn prujuot. tttt Secretary shall nake grants to
jnlts oC general local gO''>«rTimiiit, or designated agencies thereof,
to carry out adminlstratiue plans flpprou-d h/ the Secretary, and
assi:
stance for the pj
cpose r,f asslstlig
SJCh
unltn of
g^n-r^l local
goue;
cnT,ini. to develop
and earn
' O'Jt 8"=*'
1 plan
.ay,
Eligibility for
■"Snd units
; of gene.-il lo
cl^ltZ
-nment and
ageni
spply Cor
dete,
rralned by the Sec
retary a-ic
i thit. in
, the
case ot I
inits ot genera
their ager
cted on t
:he basis of an
admii
ntstratlve plan d
.>-?ci-ih«d i
■ n sjch sif
.plica
tlon.
AdmlniatrativB P
Ian— Sec.
225(e)(2)
prov
ides thai
-. no such
ha'll be at
^orth^rplan'for
icttvi
ties that
: are designed
to (
ourage owr
housing '
Kcupie.! by
to bring
ling I
nto compl
local housing codes;
12) provic
le technic
:al as
sislance,
loans, or
gi-sn
of 3
jch housing; (3)
work with
the State
stablish
and Irapl-Bent
ciplents
undo
r Title IV of the
lourlty Ac
ed on bj
ding ojal ty
-111 be appllcab
le to bul!
dings ln«
in this
>imation^?oL
coordinate local
housing ir
ispection.
hous
Ing rehal
rental ass
..n.1 social set
-vice prog rails
,y and
hojs
ing for lower inc
ome faraili
.es.
Eliai.ble_U3e .of .
Funds— Set
:. 22S(e){
3) pr
ovide« tt
lat funds
ived from any gtra
■etacy
loca
I govern.nent shall he made
available
. for
■ding to the
adral
nistrative plans
! used (ot
■ (1)
or fln^nc^Ul .is^istan
upgrade
deac
ribed below: (2)
temporary
cental as
Iststa
,mUi«s who
live
.r their [
)rogra
a and who are eligible
fo:r.
iving, as!
S.iC, fl, '.
sxcept that
iving aS!
ilatance under
Titl.
e IV of the Socia
■ Act, and
1 the
■■ SJCh rHntal
stance may not ex
ceed 20 percent of
grant ret
:eived under
1 refe
other housing
related ser«tc«s: li)
expenses
Incurred
in ad
ing the proyran
aitpe
nsea may not exceed 10 pen
rent of tf
nt received" under this
sect
lont and (5) othe
t appri^ri
'ities
Kith
e approv.
td by th,,
Seer.
etary.
Conditions on As
slstance—
-Sec. 225(e) nc
ovidea tt
lat grant
pT^ITts— hirr-agreeto-riT [
li pe
Lohing
rried oul
with
the program; (2)
permit tt
le secrets
• try an
d the Gei
leral Account 1'
yGoot^le
■ rrying c
: thin
effect
and effi
: the funds re'^tiiaH
h! S'^iiCioni and (31
iry for the purpose
Selection Criteria — Sec. ZJSIg) provides that the Secretary
•11 select as r'icipients at least 20 jrtlts ni gnneral local
■rniaent (or their dosicjnated agijooiHsl and that ths selection of
Dpoaals for funding shall hv basftd on criteria that result in a
laction of projscti that will enable the Secretary to cacr/ out
■ purpose ot this s-^ctlon in an effective and efficient nanner
i provide a sufficient aiBojnt iif data necessary to maXe an
iljation ot the demonstration proj-ct i;->::i".i 'i.jt under this
Report- -S
•r tfian'jjr
Ions that
irrying o
ions that
.his
f.ion. It also requires
than October 1, 19B5,
iached by the Secretary
Sec. 22^(i) H
i of SIO mill!
ot SIS milli
Authqriiai
lilable until expei
:tton .?35_HQraoqwnBrshie ABsistafice
Li»itatlon on _Tei7i of ftssiscance P;
It assistance payments under Sec. 2l''i
:eced into after Septe^nher 30, 1983, t
appropriation Acta tor any fiscal yn
!'■• appropriated a
I y>ar 1984 and ar
1 year 1985, to re
I provides
:ity approvH
til^
for Prov
'.sion
,qt-M(lL
t'o
al_
553i.ltA
-s
exte
226(b)
t appro
lablishes In the
Tcea
ury a t
jnd
whi
ch, to
n^lpria
be used
by
the
ovid,. ^
po3 i t-i
;ljde a
recaptured a
jlt ot
h.>
■ill-
nded
ty
It is c
rCgas]-,
adva
nee ot c
red
nvolvod
is
i-efi
lanced c
:ausa s
payment
wna befo
. original
inatlon
e of
such cf
1 any i
ints
in the f
und i
of
unts de
tei-mined
by the
:ratary
to be cu
ly necesaar
the Un
ncy obliga
It pyr
It in t
e case of any
0-/^
d of
ilatancrt i^ det:
rmined by the
Se
ret
ary to
be
nabl
p to as
j.n«
yGoot^le
11 payments due under the noctgage. lOdn, ot' ^vance of cradit
amounts In the fund, conttact to nake, and nakii, contlrued
itinued assistance payments shall h-; madu in an amount determined
accii\lance with the method for detirmining such payinenta under
Author i latton — Sec. JZ6(c} provides that the agyreyflt« *'K)urit
outstanding contracta to make assistance payiaents under Sec. DS
)j'!<:t to appcoval in appropriation Acts shall be Increaaed by
j.66 million on October 1, 19B1, and that the aggre^jate awiunt
It may be obligated over the duration of ajch cnntriici'! 'O/iy oot
;eed $166.6 million.
Issuance of Commi tmenta and Bese_rvation3--Sec . 226ic) provic
t Che Sectretairy shall begin issuing n->M commitments and
per
lod (ollowing the approval in any appropriation Act of budget
hocity for Lh.- :^.;ti<>n after the date of enactment of this Act
Ekpansion of 2iS Program— sec. 226(d) provides that t-o Fa..i
dwe
11T?T5^ are elCgTbre for new construction an.1 ■JuBstantlal rehal
■■.- th-j 2J5 program and thre-4 f^rnily dwellings are eligible foi
stantial rehab. Mortgage limits for two and thr^ie f*nlly
llings av.; SSO.DOO and 566,250 In high cost areas. Rental jni
t be occupied by persons or families -hose incomes do not exc(
100
ppvc-^nt of the area median income.
P^A? i". Assisted Housing-S^c. 227 tenants in assisted housi
the elderly and" handicapped c _
although gjidelinei 'Shall bu established by both Management and t-^nar
as to 5ii.» and type of pets allowed, financial ■)blig^tions and
st.indrirds of pet care. Pets may bs removed for health and safety
yGoot^le
ion and DBvelopnent Grants
■ntr flr"h»"re°ta l''re ha b i 1 i tH "^ot ^ r
3p«rty to be used for prinariiy resident
1 Bake developDent grants tor new constt
tiabil itation of real property tot primar
rpo«e».
vately-owned
al rental pu
ly residenti
J to support the grantee's progcara.
placed by tbl
Uion for fiscal years 1984 and 1985, of
llion shall be available for technical a
■11 be available for development grants.
which. (1)
BiHtation, o
on for fiaca
Foraula Allocation— Funds available u
■llocated to cities with populations of
50,000 or mo
14, the Secretary
m
y art
iinl'
State
administer
low
wlr review and 1
cfileving
labili
imount esta
shed
tor
The secretary a
on is not feasible.
c shall be added to the state allocation
lish performance c
yGoot^le
1 Secretary may i
9al locate
by grant
r shall be added t
rehsbllita
end of t^
n program c
od of distr
tablishes
rules. The pcogr
ting of 1
s proposed actlvl
ren
s at
the proposed leue
s; a
< the
e
feet
of the pcogram on
nei
hbochood pres
ilabiliti
selected
(5) a
fina
c
al feasiOility analysis.
alld
evlde
nee that
proje
ctB%
1
be"
ocated in neighborhoods
Ighborhood indica
ext
nded
period,
and (6) s
ch in
forma
»
n as
the secretary prescribes.
pros
SiiSf"
irements-
ft ren
tal r
h
bili
Btlon progran shall:
only
to rehabi
P
arlly
residen
poses
2) be used in neighborhoods
e the
the gran
o SO
percent of the total
cept
in cases where the
sec
etar
ncing
sts
of
oject re
quires gr
he grant assistance is
o 50 per
opne
(4)
only
be that
rehat.il It
tion
correct substandard
itio
)coveme
ays
n dangec
of failu
re: (5
ide th
t assistnace for any .
shall n
per
cept in areas of high
c costs a
d whe
fort
by the grantee to keep
cos
s ul
hin ptas
s -ad
(6)
dis
ent of V
famil
by
amilies who are not very
low
incone; (7] r
equJre th
owne
)
iscrininate against
pect
of t
r receipt oc eligibility of
fed
ral,
State, o
r local housing
or, except for an elderly
pro
ect,
asis of t
«ith
hildcen, and ib) not
domin
oope
10 years
beg inn in
ich the project units
are
comp
eted : I S
) provide
that
the S
a
e or
local gowernment
yGoot^le
that asBistance ia aade availahle
ing lami and (9) use 100 percent o
ot(*r incope familiaB, except that i
70 percent if the grantee certifies
ary and cannot develop a program, a
t tihere the Secretary determines'th
n coBpliance with
shall be reduced
ter consultation
(b) not less than
•t«rv-8 Responsibility-- The Secreta
y shall assure tha
ble Bhare oF grants is used to assi
ilies "ith children, and priority s
containing units in substandard con
by vary low income families.
t farailies, includ
ition which are
r Ne« C
onst^uct
lo
and
subs
loans,
ruction
d prima
-Develop
provide
rily for
me
tial
t re
re ha
EUgib
ing a s
^^'ll
or
proj
age
f'de
account the extent of poverty, tti
incone fanilies of physically inad
; of i
ling,
ijpancy
:he level ;
housing vacancies, the extent of lag between the need
coduction of rental housing, and other objectively mea-
ditlons specified by the Secretary. The Secretary shall
egulations no later than 60 days after the date of
and shall promptly transmit to Congress the regulations
•d by a list at areas meeting the minlmjm standards,
aubmtt a grant application. The Secretary may consider
ation located in an area not eligible where the Secretary
B that a project involving assistance for other than
rahabllitation is necessary to meet special housing
to advance a particular neighborhood preservation purpose.
grantee shall submit an application which
description of the grantee's rental rehabili-
itlng of the proposed activities for the
■ schedule to carry them out; 12) a
was developed after consultation
procedures and standards
,ee's proposals, taking into
mits will be adequately main-
ied program on neighborhood
lion as the Secretary prescribes.
yGoot^le
PEoqrani I(equlreiiient8--Ttie program shall provido thati
(1) assTstance be used to develop real property for residential
rental purposes only; <2) grant aeslatance be United to 50 peccent
of total rehabilitation cost of tha structure, except in cases
where the Secretary determines that refinancing costs and the
special nature of the project requires greater assistance, the
grant Is li»lted to iO percent of the total development cost plus
acquisition; 11} the development will not cause the involuntary
displacement ai very low inccne families by fanilies who are not
very low incone; (4) the owner agrees; la) not to disctininate
against prospective tenants on the basis o£ their receipt or
except for an elderly project, on the basis that the tenants have
a minor child or children; and (b> not to convert the units to
condcniinium or cooperative ownership during the 20-year period
beginning on the date on which units in the project are available
for occupancy; (5) for 20 years, beginning on the date on which
50 percent of the units ace occupied ot completed, at least 20
percent of the units shall be occupied or available foe occupancy
by persons and families whose incomes do not exceed 80 percent of
the area median income; 16) the structure: (a) will have a value
after rehabilitation or construction that is not more than the
mortgage amount Insurable under Section 207 of the National Housing
Act! and (b) is secured bv a mortgage which bears a rate of interest
ditiona as determined by the
!rity of the shortage of decent
idividuals without other reasonable and
12) of non-federal public and
ibutionsi 11) to which projects
upment and mitigate displacement i
itablished a satisfactory record
;apocity to undertake the program
and
other reasons
le
ems
r than 24 mon
hs
fter
abl
in complianc
wi
th fa
Proiect seleotio
J— pr
s of the exte
(U c
loc
ted for famil
al
hbo
rhood
to which the
ppl
cant
5) to
are
xint recapture
a, financing
Ite
rnatt
nts being ser
(6)
for
ami
, including large fanilies
east federal c
differences among different
d the types of projects and
h rents will remain affordable
which the applicant has
yGoot^le
ith relatively long waiting lists ti
lere Eamiliea with Section S certif
tngth of tiae to find housing.
Entorceaant of Program Requlremi
take legal action to enforce coinp
ring the 2a-yea[ period beginning on the date when
the units ate occupied or ccinpleced. For violt,-5i
shall ma>ie a payment to the
ar and any frai
temined by tht
outstanding mt
nth preceding the dal
quired to be repaid ipius interesti snail oe cei
nt for each year in excess of 10 years between i
-year date and the violation. Any amounts reco'
ed for developBenc grants. Any assistance jndei
nstltutcs a debt payable fee failure to carcy out the agre>
d shall be secured by the security instruments provided by
iding. The rate will be
Lto account the average yield
shall be reduced by 10 per-
'ered shalll be
i occupied by
ared approved
Grant teounl
t the SI
anount established for eligible are
I or part of these resources to cart
ition program or to diatribiiEe theni
;lcy with a population over 50,000 n
Iminister its program.
yGoot^le
listec the resources in accordance
jcocedures, including grants to ci
10 electing not to tadminlster the
r own programs.
A State nay apply for and receive
a deveU
cehabillti
property included or eligible for inclusion in the National
Register of Historic Places, that: (1) it will reasonably me
BtandardB issued by the Secretary of the Interior and that til
appropriate state historic preservation officer is afforded t
; proposed activity c
luld adversely affect historic property, the Advisory
;ortc Preservation te afforded the opportunity to
Assistance is subject to Sec. I0*lt) oi
munlty Development Act of 197J concerning ei
and Sec. 220 of the National Housing Act.
t the Housing and Cf
ivitonmental policy
Financing— subject to terms and condit
secretary. State or local PHA obligations ii
development or rehabilitation projects are i
ions prescribed by t
BHued to finance
tax exempt.
Definitions— The ter™:
(11 -Hehabilitation granf means a grai
It to finance moder:
yGoot^le
Bousing and Co^unlty Davel
be used prlnarily lor ;
— ^araclva or Butual 1
bilitation or davelopmei
Secretary shall pern:
imate units of local
twhalC ot their ■embecrs.
nceed 5O,D00. ftny sbout
froa the state allocatior
Review aiw) Audit—The
view and audit proqran
it of local 90vernnenl
tivities in a tiiuly n
rry out those activiti
■e of a Stats adainist
) distributed the resc
«lth pEograa requlr^enl
of local goveriaentB to
■tcrstary aay adjust, re
» grantees or take othc
(Tlaw findings, except It
B eligible activities or <
■vallable to the grantee.
jlt of actions describef
t year they becone
aftotdability fot lo»
of geogtaphi
pply for assi
ally
e whose combi
consortia sha
ed populat
1 be dedoc
ither the grantee
require owners of properl
rifled IncoBe data and ot
prescribed by the se
basis. The infornati
:an be aggregated at a r
yGoot^le
1985 and each flacal year there
to Congress on the overall pro^
all pcogcaxi objectives, Incljdi
services dellveced, beneflclsri
Conforming flmcndmenta
under Sec
. 223(fl,
secut
Bd by property wh
ch
is to b
rehabilitate
ped under
tha
: (1
e ben
efits shall equal
th
sume o
: (a) 90 pe
cen
le moprCgage on
the d
ate of acquisition
the property
rwise
and (b) 90 peccan
he date beneti
tg
ge Bhal
the
tary, for
nd, 90 per-
of a
B Of
the property, incl
ud
ng sale
e luortgag
-tual and reasonable
lated to 'the
property
benefi
3 shall be
ash, unle
Mortgagee submits
request toe
payment!
and (
anca may
rei
He mortgage amount
ins
ranee
conpany or wit
li a State mortgage
agency. No
ins
ranee
t may
be issued on or a
ft
r October 1, 1985.
Sec.
303(b) states
that any purchase
or
refinancing under
Ion 2Z3(£) involving
property rehabil
und
. 17, the
tary may: (a) inc
U tat ion or
lopme
he limit by 25 per
(b)
petmi
t Bubordi
ated
iens securing up
■ortgage
financing
by St
nra
nts or
heir agencie
yGoot^le
TITLB IV—FROGBAH AHENDHEHTS I
t Nortgajje Inauranea Prog.?™!
Sjbsect ion
(a)
extends t
rough fi
ca
yeai
19S5 S
c
2(a)
operty inprov
e>en
and nanu
actui-ed
om
loan
insura
=
prog
Subsection
(b)
e« tends t
rough fi
ca
year
1985 a
1
FHA
rtgage inauta
der the
ority
eluding Sec.
201—
moi-tgag
07— r
jairtg insuran
ooperati
i insur
B-rehabiltiat
nd neighboiliood co
c. a2J— Boctg
ago
nsucance foe servi
nr Se
g urbi
■as and for e
Kiit
ng nultif
iHiilv hoj
i"
proj
Cts; S
j.ing £oi the
rly: sec.
s: sec.
p.ri«ental ha
using
7 Sec. 23
—condom
ms; S
c. 23T
pecia
Sec
fee 5
mple ti
c. 241— supp
al loans
ly ho
aslng p
c. 242— hosp
lilies.
tals
and sec.
243--h™n
ow
et-hip
"
e-lnc
Subsection
(cl
extends t
tough fi
ca
1985 S
^
221-
using Col: tnodecate
famil
subsection
(d)
extends t
rough fi
ca
year
1985 S
c
2 35-
■ownership [
ot Ic
wee incom
fa^ilie
Subsection
(e)
extends t
rough fi
ca
year
1985 S
c
244-
ijcance on a
co-ir
Burance b
sis.
Subsection
If)
extends C
rough Cl
ca
year
1985 S
c
245-
:endB through in
yGoot^le
186
rough fiBCOl year 1985 Sec. llOKa)--
T Hay Be
sec. 402 extends foi- fiscal yeat 19B4 and 1985 the suthocity
princ^ipal amount not to exceed S50.9 billion, and requires the
Secretary to enter xnto commitments up to that amount suOject to
the absence of qualified applicants.
FEDERAL HOUSING ADHTN ISTRATION
Secretary's authority to set the naxinun interest rate on Bost
FHA programs. Loans insured tftrough the FHA program may bear
interest at such rate as agreed upon by the mortgagoc and mortgagee.
Minimum Property Standards
Sec. 405 maintains the energy performance requireaiBnts
incorporated in the minimum property standards in effect prior to
safety, properties insured under the National Housing Act shall
CCinply with one of the nationally recognized model building codes
Che nationally recognized model building codes or their equivalent.
determining the comparability of the State and local codes to
ccmptlance purposes, an appropriate nationally recognized model
secretary determines the adopted code is not comparable.
Time Payment of Mortgage Insurance Premiums
premiums for single family programs be paid prcmptly upon receipt
frcm the borrower and in the case of multifaraily mortgages, that
they be paid promptly when due the Secretary.
yGoot^le
m In»uranc« In fTtcan Baaoa
Sec. 407 Mkas all PBA inBUrancs progr
taerican Sanaa.
AasiamenC of Sec. 221(a)(1) Hottoaoes to G
NMA
Sec. 408 ataCas that In proceaalng a e
lain for insorance
benefits under Sec. 2Zl(g){4) of the Nattan
al Housing Act, th
Secretary may direct the Bortgagea to asslg
n transfer, and de
the aortgage and credit inatruMnC to GNHA.
Upon the BBBignn
to GNHA, the BorCgsge insurance contract 8h
■ortgagee ahall receive insurance benefits.
GNHA ia authoirii
to accept these loan documents and to hold,
service, and aell
■uch loans aa agent for the Secretary. The
aortgagor'H oBlig
to pay a aervicea charge in lieu of a pren:
long as the Mortgage Is held by GBMA or the
Secretacy.
TecMinatlon of the Sec. 221 Buv-Baefc Ptovts
ion
Sec. 409 liBilB the See. 221 loans tha
t can be aaaigned
into before the
affective date of this proirision.
Subpart 2 - Slngle-Faatly Hortgage In
surance Programs
Title I inaurance for Exiattna Hanufactured
Hones
Sec. 415 provides FHA Title II insurance for existing
Binufactured hoaea that Here constructed in ccapliance with the
1$74 nanufactucad hi^e construction and safety standards, if the
■anufactursd hoae Beets atandards similar to the mlnimun property
standards for existing hones inaured under Title II.
Ittereased Title I Loan Limits for Manufactured Honies and Lots
Sec. 416(b) increases the loan anounta to $42,S00 for
■anufactured hoaasi $54,000 foe conbtnation hone and lot loansi
and *13,500 for lots.
sec. 416(b) allOHB the Secretary to increase the maKinum
loan anounts on an araa~by~araa basis as necessary for hone and
lot loans and lot loana, but not to exceed the percentage by
■hich the loan aaount for a single family home in the area is
Increased .
teflnancing Manufactured Henea
sac. 417 permlta owner-occupied manufactured hcflnes or hone
and lot coabtnationa purchased without Title I '
teflnanced under Title I if it meats standards
tlie National Manufactured Housing Construction
Act of 1974.
17-922 O - 84 -
yGoot^le
Tewporarv wortg»g» *»»t»tance p«yenf
sec. 419 provides that Individual cooperativ* units In
buildings whose construction hsb coaplatad ona yaar prior t
application for FHA Insurance ara eligible for aortgage ins
and the cooperative no longer has to be nonprofit to be eli
I mortgage lialts egual to
Sec. 420(c) •tatee that if • condoalniun unit Has converted
B rental housing, no Insurance may be provided unlessi (1> the
conferslon occurred one year prior to the application for insurance]
'") nortgagor was a tenant of that rental housing; or (31 the
•rslon Is sponsored by a tenants' organization representing a
rity of the households.
Fanlly Mortgage Inaurance on Hawaiian lalands
Sec. 422 provides for insuring one- to four-CaBlly homea on
Indian reservations.
FHfi single Family Premluns
Sec. 423 allows HUD to increne the applicable >axl>iui aortgage
amount by the anojnt of the up-front insurance pranlun charge If
the secretary detecalnes that it does not comprciiiiBa the actuarial
soundness of the FKA insurance fund.
Loan-To-Value Ratio for Kodeatly Priced Single Family Homes
Sec. 424 changes Che loan-to-value ratios for single family
hemes to 91 percent if the property la appraised at SSO.OOD or
less. This change takes place only if the Secretary detemines
it will not adversely affect the actuarial soundness of the FBA
yGoot^le
■onoeeupiit Slngl* F— llv Horto«oor«
sec. 425 Inccvssaa tha uxlauH Bortf
OWMt, aingl* f«Bily unlta Insurad by FBJ
or tS parcant of the appralsad valua of '
Tanwnt of Clalaa without Acqulaltlon o:
Sac. 43( glvaa tha Sacratary diacn
to aubait Clalaa on forecloaad Inaurad i
■ad bo paid without transfarrlng title '
property for at leaat
■Kiraiiclata adjust
B Of
la Ion
BBued prloi
In tha avant of foreclosure. BUD pa]
dilfecance betoaant (1) the outstanding
adjusted fair aarkat value) or (i) the oi
■n) tha Bala pcica at foreclosure.
Structural Defee
Title
Ion to pecvlt Kortgageea
ngle faaily pcopertlea
hUD upon sale of the
ue. Including any
applies to ccanitBants
and with the approval of
tha date
esser of the
tatandlng Indebtedness
1st reimburse lenders
[•faults exempted fron
ig assignment program
lents Program.
Hew Hoaes
lalnsuranca paaonstratti:
sac. 428 authorises a demonstration mortgage
jraa in order to determine whether the process
Lly Bortgages by private mortgage ii
processing. The demonstration
Imlnlstrative regions and not
ifore September 30, 19S5. Th
lana Insurad under tha demona
the total FRA-insured loans fo
<f FHA Bingls
ind the time required for
Mill be limited to two HUD
result in the loss of HUD enploynent
aggregate number of mortgages and
ration is limited to 10 percent of
the region in the preceeding year.
required to: ITT share any 1
parcentage of loss to be set
credit approval, claims proce
other functions as set by reg
[•gulre participating coopanl
mrtgagea offered by the Sect
Evaluation Report- — The 5
rtgages ins
red with the
The Secrets
y shall
Ihe program on the characteristics of
roialning wholly under the applicable insiirai
•ctuarlal soundness of such funds under such
pool of mortgages
yGoot^le
Subpart 3 - Hultll
Dtaeccttonacv Authority to Ryiulat* B»ntB or Charq««
Sac. 431 gives ths Secr«tary diacrationary authority to
regulate renta and rates of return dn jHSubsidized naured
projectB. Thia amendnent does not apply to Bortgagsa Inaurad
before the date of enactsant of thla Act.
Reaoval of Batinanetng Llwltattona on Cartaln Hultttawlly Projacta
Sec. 432 raw>ves current raflnanclng llBltatlona on sac. 330
and Sec. 331 projects to facilitate aubstantlal rahabilltatlon of
Limitation on Prepayent of Mortgagee on Hultlf^tly Rental Houalng
Sec. 433 anends Title It of thi
requests by project oxners on the pi
Conditions — The Secretary ahall not accept an offer to prepay
ttie mottgege on a rental housing project unless the Secretary has
( 1) determined that the project no longer meets the rental housing
needs of lover inccne families in the area Of that their needs
can be Bore effectively and efficiently met throjgh other federal
housing assistance programsj (2)(a) deterttlned that tenant a have
been notified of a prepayaient request, (b) provided tenanta the
opportunity to coaiaient on the request, (c) taken these ccauaants
nto considecatlon; and {31 ensured that there s a plan for
piovid ng relocation assistance for adequa
for tenants who w 11 be displaced as a rea
right to prepay the mortgage without
the Secretary shall give priority for aaaimonai bec> d asaiscance
to teTiants and applicants to becoae tenants of the project If:
(1) funds are available; and (2) the assistance is necessary to
prevent the owner from prepaying the mortgage.
Any project omer who receives additional Sec. B sasistancs
shalli (II fully utilize the available assistance, (2) grant
priority to low IncoBe applicants to becoara tenantsi and (3) aaln-
tain the low Income cliars^tLei of the project for the remaining ten
of the mortgage to the extent that assistance is provided.
Sec. 434 clarifies HUD's author
yGoot^le
IJOM Parta tor the Bldarly
s«c. 436 Bakaa public hospitals eligible tor mortgage
irancs undar Sec. 242 of the Hstlanal Housing Act, and e
public tkispltals to ptrovlde esaentlsl services to coamunlty
-Mldenta ■ithout regard tO their ability to pay for such i
InJexad HortO«ae«
SAC. 441 panilts a danonstratlon progra
wrtgages in irtilch aonthly payasnts and ogte
talancea are adjusted periodically according
. apaciflad price or iiaga Index. The Secrsnairy unaii give
rity to Bortgagea executed by nortgagors who have not owned
ling units within the preceedlng 3 years. Regulations to
conduct tha danonstration shall be laaued not later than Karch
Jl, 1984. The aggregate number of aortgages and loans Insured
' r this title is Halted to not nore than 10 percent of the
total Title II loans Insured In the preceedlng fiscal year.
Craduated Payment Mortgages for Hultitaifiily Housing
Authority to Insure— Sec. 442 amends the Sec, 245 Graduated
payBietit notLgsge Program to provide that the Secretary may insure,
iniec any provision relating to ■oltifanily housing projects,
nrtgagas and loans with provisions of varying rates oE anortiiatlon
corresponding to anticipated variations in project income, to the
extent the Secretary determines auch mortgages or loans; (11 have
pcsais* tor expanding housing opportunities or meet special needs;
'" can be developed to include any sateguards for mortgagors,
nta, or purchasers that may be necessary to offset special
lisks Of sjch mortgageai and (3) have a potential for acceptance
la the prlvat* nacltet.
Conditions on Principal Obligations Insured — Sec. 442 provides
notvithstanding any other provialon of this title authoriiing the
Secretary to insure OPHa, the principal obligation of a mortgage
or loan insured pursuant to this subaectloni (1) may not exceed
initially the percentage of the Initial appraised value or replace-
*nt cost of the property involved that is required by the provision
yGoot^le
oE this title und«r vhlch such property ia Insucad; and (3) tbara-
aCter (including all interest to be deferred and added to pclneipal]
may not at any time be scheduled to exceed 100 percent of the
projected value of such property.
Property Value — For purpoaea of thin siibBactlon, the projected
value of a property shall be ealejlated by the Secretary by
Increaaing the initial appraised value of such property at a rate
ftd]U5table Race Wottqaggs for Slrijle Family Houamg
Authority to InBai-e--Sec. 4*3 allovs the Secretary to Insure
single family adjustable race mortgages (ARMS). Intereat rate
adjuatments nay be accomplished through adjustments in the Monthly
payment amount the outstanding principal balance, or the mortgage
term or a combination of these, except that an extension of a
mortgage term may not result in a total tarn In excess of 40 years.
Interest Race AdiuEtnients--interest rate adjustaents shall
by the Secretary in regulations. Adjustne
on an annual basis; (2) be limited, for an
more char one percent on the outstanding 1
BequlrMsnts — The mortgagee oust provide the borrowar a
written explanation of the features of on ARH, including a hypo-
thetical payment schedule displaying msxlBum potential Incre
in monthly payaents over the first 5 years of the mortgage.
The aggregate number of mortgages insured under this se
sec. 245(c), and Sec. 252 may not exce "- "
gate number Insured under Title II dur
Shared Appreciation Hortqaqea for Single Family Housing
Authority to Insure— Sec, 444 allowa the Secretary to insure
shared appreciation mortgages (SAHs) for single fasily residences
which: (1) provides for a mortgagee to share In a predetenlned
percentage of the property's or stock's net appreciated value;
(2) bears an interest race prescribed by the Secretary; (3)
provides an amortization period not to exced 30 years, but the
actual term (excluding any refinancing) may not be less than 10
years; and (4) meets other conditions prescribed by the Secretary
Sale, Transfer, or Default — The mortgagee's share of the
property's or stock's net appreciated value shall be payable upon
sale or transfer or payment in full of the norCgage, whichever
comes first. In the event of a default, the mortgagee has a
yGoot^le
Low am) HodTate incoae" Tcnanta — The secretary ahall encourage
k* uaa of thTs insurance by low anJ noderate inco*e tenanta xho
Duld othecvlse be dlaplaced by the conversion of their rental
DdSing to condoainiua or cooperative ownership.
Sec. 444 alao requirea the Secretary to prescribe adequate
HuuBer protections and disclosure requlirenents for nortgages
nsured under thia section and other terms and conditions as nay
b* appropriate. The aggregate number of mortgages or loans
Insured under this section. Sec. 24^(c), and Sec. 251 may not
ncead 10 parcant of aggregate number insured under Title II In
tlw preceading fiscal year.
Shared Appreciation Hortgagea for Wultlfanlly Housing
Authority to Insure — The Secretary may insure multifamily
■ortgag es t ha t i <1) provides for the mortgagee to share in a
letetmlned percentage of the property's net appreciated value;
(2) meets Othar condleiona, including limitations on interest
B chargas. •■ required by the Secretary by regulation.
CorxlltionB — The mortgagee's share of a property's net appreciated
ja is payable upon maturity or payment in full of the loan, aale,
transfer, whichever occurs first. The mortgage term must not be
9 than 15 years eith payments at a fixed Interest rate sufficient
retire tha debt over a period not to exceed 30 years. In the
> of a mortgage not completely amortized during the mortgage
■, the principal obligation of the mortgage may not exceed 85
percent of the estimated value of the property or project.
pa fault— in the caae of a default, the mortgage shall be
itled to file an Insurance claim and receive benefits, excluding
mortgagee's share of net appreciated value.
Net Appreciated Value — The Secretary shall estoblish by
J la t Ion the maximum percentage of net appreciated value payable
> mortgagee's share. The Secretary will alao establish
;]oBure requirements to asEure that mortgagors are informed of
Sec. 446 amends Sec. 2a7(c)(l) of the National Mousing Act to
■llov the Secretary to insure balloon mortgages limited to 10,000
psr year.
yGoot^le
) Equity Cor
-BJon Report
Sec. 443 directs the Secretary to evaluate the exiatlng use
o£ home equity conversion mortgages for the elderly and report
to Congress not later than 1 year following the date of eract«»nt
of the Act, The report shall include: 1) an evaluation of whathec
the -JSI2 of this mortgage improves the financial sltjation or
otheiuiso meets the special needs, of elderly homeovners 2 an
evaluation of any risks incurred by mortyagors and recommeiidatlon>
Cor saCeguacda to minimize such risks; i) an evaluation of the
potential for acceptance of such mortgages In the private marketj
and 4) reccmmendatlons for establlshnent of a federal program to
— FLOOD AND PROPERTY
he progr,
xtends the August 19B3
n flo ■
Insurance program for two years
irough Septenber 30, L935: and requests a report by June 30, 1984,
on the Federal Insurance Administration on the preaiuD rata
3 an explanation of any anticipated
id to be made before October 1, 1985;
line for completion of risk studies
1 September 30, 19B1; confers original
Iving flood Insurance; changes the designation of adniniatratlve
cer from HUD Secretary to the Director of the Federal BKsrgency
gement Agency; and mandates that the premium rates charged for
lood insurance not be increased during the period beginning on
ind ending on Septenber 30, 1984.
Crime and Rtot Insurance
nkhole Inaura
- local agency t
yGoot^le
fcMlblllty of vxpandlns the national flood Int
ca*«r duuga or loss acislng Erom sinkholea. ]
tl aillion to carry out the study.
PART C~RBGULAT0R1 AND OTHER PBOGRAHS
»aal Estate Sattlewent Procedur
Definitions—Sac. 461 definea the term, '
controlled business
a position to refer business incident to or a
part of a real eatate
ed mortgage loan, or
■n associate of such person has either an aff;
Hate relationship
percent in a provider of Hottleaent services;
and (2) either oE such
iness to that provider
or affic-atlvely influences Che eolection of t
hat provider; and
, patent, or child
business! (2) a
is controlled by.
31 an BMployer,
officer, director, partner, franchisor, or fra
nchiaee at such
parsoni or (4) any person who tiaa an agEBenient
, BrrangeHsnt, or
undaratanding, with a person in a position to
the person in a posltlCHi to refer settlement b
usinesa to benefit
financially from the referrals of such busines
Disclosure of Controlled Business Relatio
nshlp— Provides that
nothing In Sec. 8 kickbacks and unearned fees
^THEibitions shall
bs construsd as prohibiting controlled busines
as (A) at or prior to the tine of the referral
a good faith effort
i« Bade to disclose the eiilstenco of such an a
rrangement to the
person being referred and. In connection with
provide such person a written estimate of the
range of charges
generally >ade by the provider to which the pe
aicepC that where a lender makes the referral.
be satisfied as part of and at the tine that t
he asCLinateB of
sattlenent charges and Che special Infocoation
booklet, are provided
u required under Sec. 5(c) of HESPAi (B) such
person is not required
to us* any particular provider of Bettlement B
ervices, and (C) the
only thing of value that is received frcn the
arrangement, other
than the payaents pemitted under this subsect
the ownership interest or franchise relatlonah
.p. Also provides
that it is not considered a violation of the k
fees provisions for a lender to require a buye
r. borrower or seller
to pay foe the service of an attorney, credit
reporting agency or
real estate appraiser chosen to represent the
for an attorney to issue a title insurance pol
.cy directly as an
igent or through an agency operated as an adju
net to his practice.
yGoot^le
! of BESPA provlsi
State Law Gov err
law or regulation tha
controlled
1 neons Istei
risdtct
1 Controlled Bualni
oe RESPA Sees.
) nay ba brought
: jui
:t in which the property involvei:
Lon is alleged to have occurred, within on
t the occurence of the violation, except t
t by the Secretary, the Attorney General c
}urance Ccounisa loner of any State nay be b
Authority of t
e
UD Secretary-- The S
cretary nay inve
tigaCe
ny facte, ooSditlo
practices
or matte
nay he de
ecessary or proper
f this Act, in pre
cr
binq of r
les and r
gulat
ons thereu
dor.
r in securing infotma
ing
urther legialation
cerning real estate
Bment pract
cea.
o aid in the Inves
ig
secretary is a
chs. and
a the
ttendance and test
y of such
ocuments as the 5e
advisable
th
"the*™r
sdiction
01 whi
-h an inqui
y i»
ntumacy o
c re£u
saJ to obey
ubpoena of the Sec
ry issued
under thi
on, issue
n orda
eqiiiring conpliance t
nd any fa
o obey such order
f the court may be
pu
ished by
uch court
as a
ontenpt thereof.
-T
eso RESPA
provision
» shal
becone effective
on January 1. 1984
yGoot^le
■■ttocial InatitutB of Building selcncea
sac. 4G2 ■uthorizea $250,000 for fis
■•tional InstltutB of Building Sciences.
■•d« availabl* for expenditure or obltgat
that an equal aaount la received after Ch
this sentence fro priv '
Solar Energy t Energy Conaervatton Etank
Sec. 4e3(a) aakea air c>
average energy efficiency am
audit eligible for bank auba
sec. 4e3<b
kdvisory Coadiit
their chalrpera
sec. 4S3(c)l
ivailable foi
Idlnga whose Incomes exceed
In the case of
ts of two- to four-unit
150 percent of the area
esldential building that
eceive bank subaidlea oE
energy conseirvation
sec. 463Ic)<ZI prohibits the Bank
.stance available for energy consei
projected energy aavlngs of auch aeaai.
Sec. 463(d) atataa that, I
tenant: 1} in the case of the
:caaDerclal energy conaervlni
-ant in writing that for defscta found
laitallatton the owner or tenant shall at
eceive replscenent parts, DUterials, i:
.1 and 2) in the case of energy inprovc
> year of
jn be entitle
nation at nc
natal led by i
the BUppllf
see. I
utility t
also allows fundi
ig for energy inprovenenta in
ty or In areas served by a public
een laade public under Sec. 215
clan Policy Act or by the Secretary
sec. 4e3Ce) directa the HUD
cagulatlona within 90 days of em
•olar systeBB eligible for asalsl
lutallatlon of pasalve and actlt
mter heating aystena in new and
and aultifaaily residential bulldlngi
type solar space
yGoot^le
eie>pt financing in connection »lth bank subs
dies; 3) prohibit
naking an energy audit a prerequisite for rec
iving bank aasiatance
4) limit adminlBtrative expenses to 10 percen
{or a higher
percentage determined by the secretaryl or S2
,000 whichever Is
be used by a State
for its adminlatrative expenaeo, except that
espect to financial
ue all of the
amount for ouch expenses; 5) establish criter
a foe allocating
funds to eligible financial institutions; and
6) provide that any
unexpended funds that are recaptured by the B
nk shall be reallocat
to eligible financial Institutions.
Sec. 463(f) provides 535 million for the
Solar Bank for fiscal
year 19B4, and auch Buna as neeeasary for (is
al year 19B5.
Weatherization Program
;c. 464 authorizes S190 million for fiscal year 1
jms as necessary for fiscal year 19B5 for the DOE
rizatlon Program with funds to renain available u
1 for fiscal year 19B4 for the
Sec. 466 authorizes $
/ear 1984. Of the amount
cor a research prooram tha
problems and provide solut
Incentives to Implement th
survey national, regiona
conditions to provide da
conducted In 1981.
9 ■llllon for HUD reaearch for fiscal
uthorized, 92 >illlon ia to be provided
would identify public housing nanageaent
ons Co chess problems, as well as develop
I the secretary to, not less than blanniatly,
, and local econcolc and housing aarket
I comparable to that collected in surveys
L Housing Partnt
sec. 467 amends the Chartet
CO authorize the HHP to plan, Ir
and financing of housing, and tl
acguiaition, and financing of cc
facilities that provide amployme
individuals of low and looderace
:arry out the acqulait
, rehabilitation,
industrial, and retail
Lees to famlllea and
yGoot^le
TITLE V~RURAL BOUSING
sac. 501 cites this title as the -Rural Housing ADendmants
!C. SOICa) states that the tenas -low-i
i" and ■very lo«-inco«« fanllLea or per
IS and peraons whose incone levels do n
^ive lave Is establlahed by HUD.
Sec. SOKbl gives the
terms 'Inc
one- and
adjusted
income*
the
aame Hanlngs as defin
sd by BUD.
Sec
Target inq Provislons-
sec. S03(a
) provide
that on
and aftac
the
effoctiva date of' on«ct»«nt of th
to
percent of tha dwelling
need unde
Sec. 502 of the
Bousina Act of 1949 shall be availabl
very
ons; and (
2) not lee
oe
the dwelling units in e
der Sec.
502 be
na
liable for occupancy by
very lo«-i
ncome fam
lies or
Hanufactured Houslnq-
Permits 5e
e. 502 loans to be
made or
ins
ured for a manufactured
hone or na
nufactured
home an<:
■heChec it la real, person
1, or mixed teal and
property
1) it neets federal manufactured
tandacds
2) it
■H
ts HUD title II Inauran
31 It ne ts Parmer
Ad»ini strati on (FmHA)
establlshe
d energy c
requlreme
aanufactured housing,
r until Fo
HA energy
standard
■It
sblished,. FmHA standard
for houBl
kaui
mg.
Bnerav Standards- -Ene
gy consorv
ing requlr
eoents a
all! 1)
inqa and
tffectivo over the lite of
-tured horn
loan term
types of energy used, the cost of home modification to meet these
itandarda, and tha esti>ated value of energy eaved over the mortgage
ten; and 2) be established so that any increase in loan payiaentB
u a result of energy i>provemente cannot exceed the projected
•nergy savings of the change.
yGoot^le
Altarnatlve Hortq«ge» Transactions
sec. 472 amends Sec. B05(a} ot the Gacn-SC Gemain Depository
Institutions Act of 1'I82, uMch pemits States to override the
federal pre-enption of alternative Mortgage Instrunent regulations,
by pecalttlng StBtsB to partially override the federal pro-a«ption.
Due-On-Sale Clause
sec. 473 clarities that due-on-sale enforcement Is prohibited
inly for single family loans secured by a lien on residential
real property with less than five dwelling units, including a lien
in stock allocoted to b dwelling unit in cooperative housing
Liquidation ot wew Communltlas Progran
PART D — SECONDARY MORTGAGE MARKET PROGRAMS
ige-Bscked Securities Program
Sec. 4B1 authorizes coamltwent levels for the Government
National Mortgage Association's mortgage- backed securities progri
at $6S.25 billion for fiscal years 1984 and U8_S_.
Sac. 482 the GNHA c
Special A»»i»tar
Gee. 483 repeals the CHMA Tandem Programs and sllOMS any
purchase or commitment to purchase before the date oC enactment
to continue to be governed under these sections.
yGoot^le
lea this title as the 'RuebI Housing Amendae
of 1983.'
sec. S02(B) BtatcB that the terns
peraonB* and 'very low-incoBte CaBilies
iBBllies and persons whose income lave
■respective levels established by HUD.
Sec. 50Z ftnendients
Targe
ting ProvlaionH — Sec.
f this Act
(1) not
on and after
the etlect
ive date o£ enactment
lass than
10 percent
of the dwelling units
der Sec.
502 of the
Housing Ac
t of 1949 shall be ava
labia for a
by very
low-incr»e
fanllleB or persons;
nd (21 not
less tha
n 30 percent
of the dwelling units in each St
under S
c. 502 be
■vail able
for occupancy by very
ow- income
amilies
Nanuf
actured Bousing— Pemi
s Sec. 502
loans to
be made or
iosuridTS
r a Manufactured home or nanuCactu
and lot
■hether it
Is real, personal, or
mixed teal
and personal property
IE: 11 It
meets federal manuFac
ured housin
Beets BUD
title II insurance reg
nd 3) it
ftse Adnin
istcatlon (FnUAl established energy conser
ing requlremen
ctured housing, or unt
1 FmHA ener
gy stand
•■tablishe
d. PmHA standards for
ousing othe
r than m
nufactured
bouBlng.
Energy Standards— Energy conserving req
ulrement
9 shall: 1)
effective
he loan term.
■hichevor
s shorter, taking int
riatlons
In climate.
types of e
standards.
and the estioated value of energy
saved o
er the mottgag
ten; and
2) be established so t
oan payments
a* a resul
. of energy Inprovemen
ceed the
projected
energy sav
ngs of the change.
yGoot^le
Energy Savings Report
sec 503(b) directs the Seoretarlea o£ Agvlculture Ensrgy
and HUD, within IS months of isBuance of energy conserving
requirenentB regulations by the Secretary of Agrlculturs. to
udy and trasmit to Congress a report analyzing the
lue of energy savings for FmHA manufactured hone
Housing Act of 1949.
Loan Tama — Sec. 503(d) pentlta the Secretary to accapt
'.lability of any person with adequate repaynent ability
roaign an applicant's note. Permits at the borrower's option.
;o prepay tanes. insurance, and other expenses as prescribed
■y of Agciciilture to
in order to permit an otherwiae
ncome does not exceed SO
Ian Incoae to afford to participate in
the Sec. 502 program.
. 502 loan not
to clarify that h
modernization, safety, sanltatl
other repairs Including was
atlon coats for central t
ist Units on the amoun
set by the Secretary.
lervices and Research
Standard* of Adequate Bousing
Sec SOe amends sec. 509 of the Housing Act of 194», to
permit FmHA to approve residential construction standards if
they meet I) minimum standards prescribed by the Secretary; 2)
HUD nlnlmuD property standards: standards contained in any
voluntary national Kdel building codes; or 41 In the case of
manufactured housing. FmHA manufactured housing atandardB: rsqulrei
that the Secretary ahall pronote energy saving techniques through
standards for newly constructed residential housing consistent
with standards established under Sec. 5ZS of the National Housing
yGoot^le
Gnwral Authority oC. tha Sacrecary
invantary Prppartles — Sac. 507(a) gives the SecreCarj
MtlMCity to transfar Sac. 502 inventory properties for ui
rantal or COoparatlve housing under Sec. 515 with mortgage
M-year terms ava labia to nonprofit organizations or pub]
bodtaa. A transfer may be Bade even where rental asaiatar
Hy b* required IE auch aaslstance Is available. For verj
IncoBS persons or Eauiliasr the transfer may be nade at tt
laaaar of tha apprataed value or the FaHA inveatnent.
Fee Inspectors ^nd topral ser s- -Sec .
■etacy to utilize fee Inapactoro and .
507(1
luthor
inapactoro and appraisers to procoas
loan ano grant applications where a county or district office Is
unable to expeditiously process applications and provides that
tha Secretary aay Include the cost of such services in the amount
of tha loan.
Sec. SOB rapaala proviaio
of 1949 dealing with the total
obligations purchased between
Sec. 509 repeal* Sec. 513 i
provided PbHA authority to aaka
Sec. 501 loans during 19S6 and
sec. 510 provldaa that foi
farmworker houalng asalatance.
consideration the bousing neadi
Including migrant fatHWorkera,
Other houalng naeda in the arei
Program Authortiatlon Leveli
Sec. 511(B) authorises such
PbBA*b overall loan acctivlty toi
also authoriiea auch lunii aa
lia« and 1985 for Sec. 504 h
509 t construction defect p.
aggregate contributions made
Sac. Sl6 fan labor liousing i
help housingi {ot Sec 525(a
grants) and for the adn n sti
■•c. 8 (low Income homeowner and
antborlses tlOO million tor each
frogram, of which 9 percent shal
The Secretary may enter Into rental
fee. 521(a)(2)(A] In the amour
Act* for fiscal 1984 and 1985.
of sec. 511
-Incipal amc
16 and 1969.
: the Housing Act
18 as may be appropriated fc
seal years 1984 and 19B5.
ipprOpriated f
■ los
for Sec. Sll equal t
or Sec. S23 mutual and self-
sory and technical assistance
sec. 235, Sec. 236. and
al assistance). It also
for the preservation grant
used for technical assistance,
aslstance contracts under
ay be approved in appropriation
37-922 O - 84 -
yGoot^le
Section S15 Anendnents
foe
newly canBtructed or
aubatanCially rehabilltatea elderly project!
jal operating cost IncreaBea Incurred or
amount of operating ■
:oat IncreaseB in ccmparablo rental dwelling
lie dwelling unite exist, the secretary
aha!
1 have authority to i
ipprove rent increaaeBr
LimitB eOBt incceaa.
IB in newly constructed or Bube tant ially
raeen'fa'' ''rE^be"nd'
) those approved by the Secretary for: 1)
unfo
the owner's ccontrol; 2) design changes
requ
ired by the secretac;
f or local government; or 3) changes In
tina
ncinfl approved By thi
) secretary;
Provi
des that in t
to demons t
applicant
■UBt demor
istrate that:
Directs the Secretary to give preference in entering into
sec. 515 contracts to those projects located on specific tracts of
land provided by States, units of local governnent, or others for
the purpose of achieving the lowest cost. The Secretary Buat
deteciDlne that the land is suitable for such housing and that it
is cost effective:
! case of any applicant using Sec. 521
:s, the Secretary shall require the applicant
Ligible market exists. In the case of an
local governinent assistance, the applicant
1) market exists for the proposed projectj
il rental assistance will be provided for a minimuB of 5 years and
that rental market exists for the term at the loan; and 3) the
State or local rental assistance will be available annually)
Directs the Secretary to establish standards for repair and
rehabilitation that meet levels of quality or performance be coaparable
to those established by UUDi
Provides that the Secretary may not deny Sec. 515 or SOC. 521
assistance because a project is located on more than one sltei
Provides that the Secretary Day not: 1) deny Sec. 515 assiatance
on the basis that rental assistance payments nay be required in
connection with such loans: or 3) prcoulgate any regulation that
will have the effect of denying occupancy to eligible persons on
the basis that they require rental assistance paymentai
yGoot^le
tor occupancy befc
low inccoe faMillss otner tnan very low incone tamiiisa; Z] not bo
ttwn 5 percent of the duelling units vhich become available for
occupancy on or after the date of enactuent shall be leased to
lov incoae faalliea o'ther than very low Income persons and that
units In Sac. SIS projects which become available for occupancy
after the date of enactaent shall not be available tor occupancy
by Individuals other than very low inccane Eanllles and persons
it Che rental assistance authority is available; and
Provides that in determining
conaider the value of that familj
■aae aannar as the BUD procedure.
Conversion Loans — Sec. S12(bl amends Sec. SlSfb) to
provide that loans aay be made to owners who are otherwise e
under this section to purchase and convert single family res
to two or Bore rental units.
) amends Sec. 515
losns to be Blade or ins
(including those on sea
mmershlp.
t-^-d^-s^te^T
'if a
nvolving
vailable
Zt
gh cooper a
sec.
512(e)
efines the
term
kouslng to
lot* and h(
Ived.
or
im.
Labor
Housino
sec. 513 provides that the Secretary shall, to the extc
approved in appropriation Acts, utilize not more than 10 pei
of the aaounts appropriated for Sec. 51fi grants Cor Cinancii
Ulistanca to eligible private and public nonprofit aganclet
ancoursQe the development of dcoestlc and migrant farm laboi
housing projects.
Insured Rural Housing Loans
Sac. 514(a) amends Sac. 517 of the HouBing Act of 1949
provide that the amount of loan made or Insured to low Incoo
tHllies under Sec. 502 shall not exceed the amount neceasai
provide adequate housing which la modest In siia. design, ar
Sec. 514(b) resuives the authority to utilize the Rural
lousing Insurance Fund for making construction defects conpc
psyissnts pursuant to Section 509(c).
yGoot^le
sec. S14(cl repeals the authority requiring that £0 percent
of Sec. S02 and Sec. 515 loans benefit low Inccone persons and
that 30 percent of assistance available in any State area In a
fiscal year benefit persons with incomes below 50 percent of the
nedian inecae.
Sec. 514(d) states that the Secretary prcnulgate rules Hhich
encourage the rehabilitation or purchase of existing buildings to
provide housing which is econcnical in cost and operation.
Definition of Rural Area
sec. SIS provides that a rural area with a population in exce
of 10,000 but below 20,000 is eligible to participate in PaHA
housing prograas through the end of fiscal year 19SS, as long as
it has a serious lack of mortgage credit for lOnBr and moderate
Shared Elderly Housing
Sec. 516 provides that rural rental assiatance payments
shall be permitted for elderly and handicapped persona who elect
to live in shared housing in a single family dwelling and provides
that the secretary shall issue BinlBun property standards or
nodlfy existing standards for such shared housing.
Rental Assistance
sec. S17(a) removes the TO percent unit limitation for
assistance payments in multlCanily projects and the requirement
that the Secretary give priority to projects in which assistancf
is providsd to 40 percent or less of the units under Sec. Sillal
Tenant Contribution-'Sec. Sn(b) states that In the case of
rental Bsslstai
ICO, the tenant r
ent
contrJ
.bution shall no
t exceed
the highest o£i
1 (il 30 percent
of
inthly adjusted
(ill 10 paroenl
t of the monthly
: (ill) the port
ion Of
the family's w<
>lfare payMnt de
Bigi
nated 1
:or housing cost
. In the
case in which Sec. SIS Interest
edits I
where nc
rental asslstai
liable,
is
established on
pe:
service. Rent
payment increase
re limi
ited to 10 perce
nt in ani
li-month period, unless the Inc
in inccM.
Sec. snd
CO
ntribul
tion reaulrenents to con-
form with those in sec. 517(a)
of
this Act for Sec. Sil(
a)(I)lA).
sec. S17<d) amends Sec. 530 to state that the Secretary may
C approve rental payment increases for units in which tenants
a paying In excess of 30 percent of their lnc<ne for rent.
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Rantal A>atatance Prlorlt}^ — Sec. 517(e) provl
Saeratary ahall: ' iT~ex teiHTexpielng rental aaslst
for unita occupied by lent incooe families and pere
aitant funda raaaln available, be used for contrac
nry low Incove faalllea or peraona. eicepC that l
at the units aay be for low ii
rcaainlno funda. provide aeai.
aould becoate occupied and
The Sacrs
to exiBting projects which
by very low income individual
nlta may be for low income
iny 12-month period.
Effective Date — Sec. 517(fl states that the amondmenta Bade
t>y this section ahall take effect 6 aonths after the date of enac
>ant of this Act or upon the earlier prcaulgation of regulations
by the secretary.
Technical and Supervisory Asststance
sec. 518 rsBoves the authority of
cancel repaymant* of Sec. 525 technics
I Secretary to waive
redundant terms i
■ 526 of the Housing
TEA Inaurance
sec. 520 adds a new section to Title V of the Housing Act
□f 1949 to authorite ths Secretary of Agriculture to act as an
agent for hud to ceccnBend insurance of any siortgage meeting
BDD/FHA sec. 203 loan regulrenents.
' *PPJi<
ittor
Sec. 911 adds a new section to the Act that provides that
In pcocesatng applications for PmHA assistance the Secretary
ahall give priority to applications Eron persons having the
lowest IncoMSS and the greatest housing needs, to applicants
■tioaa projects will serve such persons, and to applicants reaidlng
in areaa which are Boat rural in character, in nsking assistance
available, Che Secretary shall provide a preliminary reservation
of assistance at the tiae of the initial approval of the project.
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Rural Hou
Sec
bi2 p
of at
project"
for lov
] for rental and for
sffordabll ty foi
Jao_j9f_Fundi~The asiisi
intB to single family hi
npcovementa; 2) provide
: ie.
Lay be used to: 1) aak* loan*
i9t reduction payiaenta;
not to exceed 15 percent of t
designed to reduce repair and
• such houBing affordable by loa 1
by pert " -- ' ■■ ' "
jible,
i and faBllies
s and fa
icooe; 5
tth and safety condlt
allocation of Funds — l
: funds for use in each
I population of thi
State and the rural popi
ol poverty in that Stati
Itates; and 3) the e.
of that state and t:
9 FbBA
> grantee
1 than SO percent
and the projected progress in carrying out th
Btateiosnt shall be available for public ccniDen
38e activities.
in preparin
statement, the grantee shall consult with and
onsider the
B of appropriate local officials.
Proiect selection Criteria—The Secretary sha
1 evaluate the
the activities
ossist low ncoine persons in need of adequate
shelter (ulth
ec of pecEona and families whosp incomea do no
he DBxl»u>
exceed 50
r private organii
tions providing fir
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to lowsr th» cost of such projects; 3) the extent Co ohlch
ictlvltlaa will ba undertaken In rural areas having populationa
Mlcur 10,000 or In rewit* parte of other rural areaaj 4) the extent
te which th« repair and rehabilitation activities may be expected
te result in achieving the gceBtest degree of repair or iBproveaent
(or the l«aat cost per unit or dHelling; 5) minlnal displaceaent
bf the program} G) the alleviation of overcrowding In rural resl-
dtnces inhabited by low and very low income persons and fanlliesi
T) ainiBal uas of grant funds for adminiBtrative purposes; and
II agreeaiertts by the owner to rent to low income Csmllies and
ptrsons longer than the required 5 years. The Secretary ahall
uaaas the capacity of the grantee to carry out the program and
tba financial feasibility of the program. The Secretary shall
jroiide the least aaount naceesary to repair and rehabilitate
iMilng of Modest design that is affordable for low inccoe peraons.
Ter»« and Conditions of Assistance — Assistance will be made
to rental or cooperative housing only Ifi a) the project owner
agraea to aasure ccapllance with the program's requirements and
aaiures that the project is financially feasible; b) the project
(Mnar agrees during the S-year period beginning on the date on
lAich unifca are available for occupancy: 1] to pass on to tenants
uy reduction In debt service payments resulting from thin
cooperatives. 3) not to refuae to rent to tenants receiving other
tDUsing asBletance, and 4] that repaired and rehabilitated units
Hill be occupied or available for occupancy by low income pereons]
e) mite of local governnent and nonprofit organizations that
*pply ^o adBintster assistance will certify that they will confom
Nith the provialona of P. L. BB-352 and 90-284 (the Fair Bousing
Lavs); d) the owner agrees to enter into and abide by written
laaaes which provide that tenants may be evicted only for good
and rehabilitation and to have a diaintereBted party inspect
tbose repairs and rehabilitation. For homeowners projects
IBslstance aay be provided only IE there Is ccmipllance with: the
fair Housing Lawsi In addition any other requirements that the
Iscretary say establish to carry out the purposes of this section.
failure to Carry Put Agreeaents — Provides that if owners of
properties assisted under this section fail to carry out the
agrecaents, the project owner or succeeaor must repay the assistanct
•ith Interest and that any aseiatance provided shall constitute a
debt and ahall be secured by the security instruments provided by
the owner to the Secretary.
11 make advances of the
—The Secretary shall am
Ths Secretary Bay adjui
ide available to granteei
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procedures which auppoct national hiatocic preservation objectives.
It any rehabilitation would affect property that ia included or
eligible for Inclusion on the National Register of Historic Places,
it Hill not be undertalien unless: 1) it reasonably meets standards
issued by the secretary of interior and the appropriate State
historic preservation officer ccnnents on the plan, or 2) the
Advisory Council on Hiatoric Preservation ccoukentB, in consultation
storlc preservation officer, on cases In which it
t the rehabilitation cannot »eet such standards oc
tiould adversely affect hiatoric property.
Report — Not later than 180 days after t
year, the Secretary shall report to Congrosi
progress made in meeting the objecti\ ' '
summary of the use of funds '" """ ~"
required to submit reports i
the report required by this
wiacellaneouB
Sec. 523 adds a
rules and regulations
for at least 60 days
far* before they becc
all proposed rules and regulations to the Senate and House Banking
CoBBitteea at least 15 days before they are published in the
Federal Register, except those that the Secretary certifies as
being issued on an emergency baaia.
section
to the Act
that requires FmHA
be publi
Hhed in the
Federal Register
public c
30 days in final
etary shall transmi
Sec. 524 directs the Secretaries of HUD and Agri
VA Administrator to establiah no later than January 1
total reciprocity for housing subdivision approvals.
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as. HOUSE OF REPRESENTATIVES
AGREEHBNTS OH HOUSING BILL
Set forth below i
. period specified by t
t nors than 3 yeacs, the princ
lot lesH than 51 percent of CC
lent cities and urban counties that have fallen bel<:
lation thceahhold (50,000 and 200,000) due to the 1980
lauB would be grandfathered for the entitlement
Ilea between 50 and SO percent of median Income could be
feea for capital inprovements assisted in pact by CDBG
the coamunity certifies that additional CDBG funds ace
t to cover those activities.
1 for FY '85.
extended for
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:3ted H
ling
forth in
ppr
necesaary
for
program a
e
housing B
funds for
■iationa acts for FY '84 and such suns as iiay be
'es. Public housing, section 8 existing, and
'OUld be maintained and a new voucher denanstration
el of 15,000 units is established. Ho changes
ic housing performance funding system or the
public housing inoderniia t ion prograns. Public
permitted to use FY 'B4 and '85 development
bill will apply
that local evict
derly and handicapped person.
Ir Market Rents in Section 8 he
statute. Existing regulations
retained
but B
tatutory
lly reduca
ten*
a deduct
on of
$480
Iderly or
handl
capped
o£ 3 peree
nt of
I in the House
I judicial proceeding
ire established for
Is funded at the option of oomn
Existing Section 8 assistance i
single room ocoupancy type stri:
> facilities In publii
bidding will I
■ for Section 202 elderly housing la limited
lan 9 1/4 percent for fiscal year '04. Coopetitive
le reguired except where the Section 202 loan amount
!d S2 million, or the Fair Harhet Rent does not
sponsored by labor unions. The Revision and Consolidation ol
the Section 202 Program proposed for FY '84 Is not included.
The HUD/RHS Demonstration program to provide a workable connection
between HUD housing assistance and HHS welfare housing aasistance
is included St a level of SIO million for FY '64 and $15 million
for FY '85.
level for FY '84.
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Title III - R«ntAl BouBlTtg Rehabilitation
SC15 Billion will be available for PY 81 a
production prograB. In FY 84 S3S0 Billion uil]
Billion to be uaed for rehab and $200 Billion t
In py 85 $2fi5 Billion will be avallablet $150 n
(115 Billion for new construction.
to Bike available a portion of the voucher demonstration program
for peraona displaced, as well as to support tne grantees program.
Rehab grants will only be used in areas where the average Incoae
of the residents does not exceed BOt of the area median incoae.
IDOl of the fundi Bust be used for the benefit of low Incoae Camilic
except in soae circumstances, a portion of the grant funds may be
used to reduce the rents for units occupied by other Incone familieg
determined
L structure of the PnHA rural housing programs
ilons for rv 'B4 and 'B5 provide such subb a
iccordance with the levels set in Approprlat
juBlng preservation program targeted at the
this new prograB SlOO nllHon ie reapectf iilly authorized for eac
fiscal year. The Section 51S rural rental housing program will
priBsrily targeted to fanllles at or below 50 percent of area
aedlan InccBe. The definition of income and the amount of tenar
contribution to rent are Bade uniform with those established in
the RUD housing assisted programs.
Title V - niA Extension and Miscellaneous
All of the PEA insurance prograBs are extended for PY 'B4 a
'15. The Section 235 program is authorized for PY 'S4 and 'S5 a
•Itch new budget as Bay be appropriated. A demonstration of in:
for alternative Bortgage Instruments by pha, not to exceed 10
percent of the Insurance activities of the prior calendar year is
authorlied, except that Insurance for shell homes or reverse annuity
aortgages are not authorized. PRA-lnsured conventional homes
would be required to meet either one of the nationally recognized
building codas or a local code the Secretary determineB is coaparable.
The flood insurance program is extended for PY '84 and 'S5,
is teninated.
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The RESPA provision is retained. The Solar Bank provisi
? retained, except that the eligibility prowlsion for
itlement communities were dropped.
All o£ the secondary mortgage martet prowlsionB are
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SUIUJUIY Cff LEdSLATtVE ACTIONS ON EXPORT-IMPORT BANK,
NTCRNATIONAL MONETARY FUND, INTERNATIONAL lENDINC SUPERVISION,
AND MULTILATERAL DEVEL<»MENT BANK PORTIONS OP H.R. 39J9
Th* toUowIng P*BM cenUln a tumnury of ii£nUlcant lesiiUtlvc
action* In tte Hnw nd Scnata relating to the provUloiu contained In
THlM Vt, YUt, IX and X ol the Senate amendment to the Houie imendnMnt
to dw Senate aincndment number 11 to H.R. 1939, whidi became PiMc
Law n-111. The wmmaiy Indude* hearini*, mtiiaip*. Committee action
and Ploer action In both bodiet. Following the nimmary li a lectloi^^y-
Mctlon analyila of Tltla VI thrau^ XI of the Senate amendment.
(MB)
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AprU It, AprU IJ and AprU 20, l»>-^iearingi held on H.R. 2M1, to amend «ie
Export-Import Bu^ Act of 19tl to establUi dw Competitive Tied Aid Fun^
and for other purpoiei, before the Sii>coaimlttee on International Trade,
tnveltmenl and Monetary Policy.
May 10, lSt3— Provliloni of H.R. 2St2, w ordered reported by the Full Committee,
incorporated into Title 1 of H.II. 2997, and ttat bill ordered favorably
reported by the Full Committee by roll call vote ol 17 aye^ It nayi.
(For turttwr leglitatWe hbtory, lee K.R. 2997)
SENATE
MartA 22 and 24, DSS-Hearlngs held on S. t6», to anund the Eiport-Itr^ort Bank
Act of 19*J, before the Subcommittee on Intemailonal Finance and Monetary
Policy.
April 21, 1M3— Committee on Banking Homing, and Urban Allaire mar1c& i^ S.
■69, end ordered the bill, ai amended, faigralily reported by voice vote.
May 16, l9I3~Repart fUed by Mr. Heinz In Senate on S. S69 (S. Kept. 91-111}
n Porelsn Relatloni for 30
3(«tB 30, 19S3— Hearlnsi held before Committee on Foreign Relatloni.
July IS, 19t3-R«port fUed by Mr. Percy In Senate on S. tS9 CS. Rq>t. 9t-lt3}
Sept. 23, 1913— Senate paned S. S£9, as amended.
(For further legl*Utive history, m* H.IL 3939)
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Lqililuiw* Hitarr «f Interratkml Ucnetary Find ProvUoM
aid fateriktlanal Lcndbif Siqienridan Act
rntWs Vm and DC of Demectlc Hoi^iig and Intonatlaul Rccomy
and Finuicbl Stability Act) '
rabnnry 2, S and 9, 1H3— Hearingt held on International finandai marlteti and
niated problem* before the Committee on Banking, Finance and Urban
Affain.
2ff -21
.Aprll^ and 32^ 1913— Hearingi held on reguiatory atende^ international lending
reform propoaals and lupervlsory practices before the Siixuimmittee en
tlay 3, im-Hoarlngl held on H.R. 27K, to ametxl the Bretton Voods Agreement!
Act to autiiDrize an increaie in the United Statei quota In the International
Monetary Fund and for other purpotes, before the Siiicommlttee on .
international Trade, Inveitment and Monetary Policy.
Uay 9, mS— Committee on Banking, Finance and Urban Affairs, by nice vote,
ordered favoralily reported, as amended, H.R. 2930, to encourage the
coordination of national lUcal and monetary policy in order to achieve
■uatainable and non-inllationary economic growth on a world-wide baili, to
•mend the Bretton Voodi Agreement! Act to authorize an Increase in the
United States quota In the tntematlonal Monetary, Fmd, to reduce financial
presumes on developing nations, and to Improve- the siq>ervlsion ol
tntematlonal lending by United States banks.
Hay 10, i9S3— Provlsloni of tlR. 2930, as ordered reported by the FuU Committee,
incorporated into Titles II, lU and IV ol^^.R. 2937, and that bill ordered
favorably reported by the Full Committee by roll call vote of 27 ayet. It -
tiayi.
n aR. 2930 <K. Kept. »t-I77) and on tUU
(For tirther legliUtlve hlnory, tee HJL 2957.)
SENATE " .
Febriary 14, '13 and 17— Siiicommlttee on International Finance and Monetary
Policy of the Banking, Housing, and Urban Affairs Committee held hearings
on proposals to increase resource! of the International Monetary FinvL
Fdruary 19 and 23, 19t3-Committee on Foreign Relations held hearings on
propoaals to increase funding for tfie International Monetary Fund and the
General Arrangement to Borrow,
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March IS, IMS-Committee «n Foreign ReUtlont mxlced vp S. i>9, to aniand ih*
Brettot Woodi Agft/emtntt Act to withortee cantnt to >nd xnherlM
appropriation! lor in IncreaM in the U^ quota In the tntcmational Monetary
Fund and to authorize appropriation! for Inaeued U^ participation In the
IMPi General Arrangementi to Borrow.
n S. £93, ai amended
April II, 19S]~Camm[ttee on Banking, Homing, and Urban Atfaln marked up
S. 69S, and ordered the bill, ai amertded, favorably rqiorted by a vote of 15
ayei,Onay>.
May 16, I9S3-Report filed by Mr. Gam on S. C9), ai amended (5. Kept. 91-122).
]unc7, 1913— Senate considered S. 69S but came to no reioiutlan thereon.
(Per furthK legltlatlv« hUtory, *ee H.R. 3)}))
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OMaXo
HIttarr •< IMtUatml Dm^ipnient Oudn PravUoni
X of Doownlc HoiNlnK and biteniatkral Rosverr and
St^lUtyAct)
April IS Md aO, 19a>-H«arlr«( held on H.R. 2}g6, to provide for increuad
id Urban Aflalri ordered H.R. 2832
Uqr 10, lH3--Provl*io(U ol H.R. 2132, as ordered reported by the Full Cominlttee, .
Incorporated inta Title V ol H.R. 29f7, and that bill ordered lavn-ably
reponedby the Pull Committee by roll call vote of 27 ayes, 14 nays.
tPor lurther leglilatlve history, see H.It. 2937)
Pdiruary 23, 19B3— Hewlngi held on 5, 6tn, to provldelor U.S. participation In the
ttdrd replerdriHnent at the African Development Fund, and ai proposals for
replenlihmentt of the Inter-American Development Bank and the Asian
April (, l)t3— Conunlttee on Foreign Relation!' martced k^ S. 609, and S. 9tt,
provicdrv for US. partlclpatlixi In the sixth replenishment of the Inter- .
American Development Bank's capital itodc, the seventh replenishment of
the Fund for Special Operations, the 4drd r^lenlshment of the Asian
Developmetit &aiJf's o^tal itodc, and the tfiird replenishment of the Asian
Development Fund. The Committee ordered the two bills favorably reported
at • new bill by voice vote.
Uay 11, 19t3-Report tiled by Ur. Pticy on S. 1310 (S. Rept. 9S-127.)
(For f irther lifUUtive history, lee H.R. 3959)
3T-922 O - 84 -
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U^UttM Hbtorr ■< HJL 2»;
tntlM Vt, vi^X Md X cd Dm DeMMk HaurfM Mid
Inunatlanal RacomfT «d PlMiwUSt^lll'^ AcO
(For le|UUUv« hl*tory of the coinponents (d H.R. 2957, tee dlieuMlnn af
lesUlatlvB hlitory ol Expact-trnport Kwik Act AmenAncntl ol 1913, Intcnadonal
Monetary Fund protdiloni and Intcm>tlan«l' LendUif Sivcrvttton Act, ind
multllBtefal development bulla provliioni, whldi ve wt out ibvifii
May 16, 19S3-Report on H.lt. 2997 filed In Koine (H. Kept. 91-171)
(For lurther legislative hiitory, lee H.R. 39»)
H
It tofonats anNndRNOt number II)
November 17, 1913— Senate agreed by voice vote to oonleranoe report on
H.R. 39}9, making Kfplemental appropriation* lor the 11k«1 y«*r^jndlng
September 30, 191«, wt\ich contained provitlons related to Tltlei t, HI, IV
and V ol H.It. Z9;7, and related to S. 6^ S. U9 and S. 1310, interted br
means of the Senate amendment to the Houm amendment to the Senate
amendment number 11 to H.IL 39)9. The Senate amendment to the Hotne
amendment to ttie Senate amendment number 11 had prewUMily been afrecd
to, a* modUled, by roll call vote ol 67 eye*, 30 nayt.
November IS, 19t3— Houn agreed to K.Rei. 379, providing that «it Houae agree to
ttie Senate amendment to the Houk amendment to the Senate amendment
number 11 to H.R. 3939, i>y roll caU vote ol 22C yeai, ItCnays.
November 30,.19t3-SigMd by the Pretident, Public Law 91-111.
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NMwnlMr it, 19» '
Thta VI J Expert bi^ort Bm*
Sac (01. Smr thiM ■CxparMinport B«ik Act Amcndmcntt of m3.'
hrt A - ExUn BMk Act A
Sac £12. Umdatai Exim to bm fully competitive in »1I iti pregruTM]
Exlm'i prlmvy pwpote li to expand export* thnnjgh
csmpetltiva f inendng. The com of money ihill be ■ factor In
the Eidm'i operation.
Sec (13. Pravidet for ■ 12 memlier adviiory conunlttee to advise Exim on
pmpans. Urnnben are to be broadly repreicntattve of production,
cenunerce, finance, asrlculture, labor, lervlcei and State
Sec (It. Reatructwei the termi of ttie preiidentlally appointed Exim dlrecton
tiy praidding for ttancred termi conilitir<| of four yean except tor
nm Aracter* QrM appointed on or after laniary Jl, 1915, whoaa
term* ihaU be tor two year*. Not len thai one member shall be
m ll I mil from the anall builnen community. ^ .
Sac (13. Req<dre« the President of the United States to transnlt to the '
C«p«H a report no later than April IS of eadt year on the adequaqr
of £](&«■* resources. The President can requestConpen to eliminate^
exceaslve Exim loan authority for that flscid year.
Sec 61(. Speclflea that Exim thall provide flitanidni for the export of
III (1i 1 1. Independently, or In conjunction with the export of
manutactiaed, equipment, hardware or other cajdtal goods. Also addt
to Export Trading Company Act items qualifying as security for
Sac (17. Dlracts Exim to work to ensure that U.S. insurance companies are
afforded an equal and non-dlicrl minatory opportunity to bid for
Imurance in Exim tranuctioni. Directs Exim to report to the House
and Senate Bankir^ Committees not later than May 13, IM* on this
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Sec (11. rill liliiiiiilii iliiiilliiii III [l Ii iif llliiiih lij
reMnrtnc Mrtaln p«rcMta|n qt agpspta mall biMlnm leana,
guanntoct and tnturvKe authority lor vaall bialnoi pwpoaea In wa
amount not !«•* thm i parcent lor fbcal yaar 191*, ■ parccnt for
- flical yaar 1913 wid 10 percent for tbcal jraar in6 and ttwaaltafl
alto urjei the Fardpi Credt Imuranco Anadadan in prs*ida 100
percent coverage lor any Ioh at export* under $100,000.
Sec £19. Authorlzet ExLn general fadUtlei propamt lor Brazil and Uaxtce
throu^ March 31| 19U. Provldef that Exlm not extend cradh 1e
coontriei with balance of paymnt preblenwor anitt InnMnagemoit
of It* International ddit Without authorliatlan bf lahr.
Sec 630. Makei tadnlcal dianget.
Sec <Z3. Require* Exlm to report on Its actient taken io nvport U J.
Induftrie*, to create M^ ildlled Job* and to enhance KitaU budnen
Part B — Matchins Credln
Sec Ml Reqidrai that ttw Inquiry bt lectlon 1912 of the Exlm Act to ba
completed within CO dayt at receipt of Inlormatlan. Section 1912
allowi Cxim financing to mat<:}i fcreiB[^tinanclng by providing
flnBnc±ig TO competing U^ leilen.
Sec 6)3. Provide* appropriation authorizafion needed lor lection 19^ til ttie
Sec 633. Make* technical d
Part' C — Tied Aid Credit Export Subtldla*
Sac Ml. Short tttlet Trade and Development Enhancement Act of 19B3.'
.State* purpose To expand
Importing nation*, netitra
eicport (Tedlt nibildiei.
negotiate toward clarifying lae of tied aid
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Sac CM- EnablWwi tied aid credit progruni for U J. exporti. Progruni to ba
euricd «ut with Agenqr lor Int«rnatlon«l Development (AID).
Authorlxea Utndlng of Exim and private financial Initltutiont
- Ibwndng lor export of US. goods and services, if proof ol
conOBUlonal foreign financing being provided to foreign competitor.
SecMS.' EstabUthe«tled4ldprogram forU^.eirsrts within Agencylor
Intanatlonal Development (AID). Authorizes AID to establish a fund
to kn^Btnent program. Authorizes blending of Exlm AID pants and
privatB Imtitudon concessional financing lor export ot U,S. goods and
services if proof of foreign financing twing provided to a foreign
competitor. Stipulates that AID funds for program to be consbtent
with criteria of Economic Support Funds and kned for exports
contributing to development ^jectives of importing country.
Sec 6*7. Provides definitions of tied aid credit, govemment-mixed Credits,
public-private coftnancing, blending of financings, paraiiei financing.
Title VII - Miscellaneous Provision
Sec 703. Extend* the Defense Production Act until March 30, 19>«. '
Title VQI — International Irioneta^ Fund
Sec 101. Provides intTease in the U.S. IMF quota of m billion. Requires
Secretary ot Treasury to consult with Congress 30 days before and at
oti>er intervals in consideration of any future quota increase.
Provides Increase In General Arrangements to Borrow {CAB) ot $2-*
bll&on. Require! Secretary of Treasury to certify whether resources
'are needed to forestall or cope with impairment of International
monetary system and that IMF has luliy ej^iored other funding
before activating GAB. Also Instructs U J. Executive Director to
the IMF to werit for collection of information on the extension ol
credit by banks and dissemination of this information to the public.
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UDRi).
See. to* ' Requtrei the E>resldent to Instruct U J. Eitecutlve Director to
actively Oppose (ny IMF credit drawing by any country practicing
apartheid, or Secr«tvy ol Treasury to llkewije Instruct the Director
to actively oppose IMF drawings by any comimnist
dlctatoritUp, unless ttie Secretary at Treasury notifies Congress at
Jeast 21 days before vote on drawing, and certifies and document*
tollowlnp ^
[a) that «ith regard to any country practicing apartheid, such dnwingi
(I) reduces severe constraints on labor and capital mobility by
Increasing worker access to educstloni reduces artiliciai constralnn
on worker mobility, and substantially reduoa* racial restrictions on
geographical labor mobilltyi (2) reduces other labor and capital s^iply
rldigidties; (3) benefits economicaily tiia majority ol tint country^
people; (4} that Hie country suffers from balance ot payments
problems that can't be met In private capital markets.
(b) that regarding any caminunlst dlctstonhlps such drawing cofrects the
balance of payment^ problems, reduces Capital and labor rigidities,
and is in the best interests of the majority in that country.
In addition. If requested, the Secretary ot the Treasury shall appear
before Oie House and S^ute Elanking Committees and the Senate
Foreign Relations Committee at least 2i days before the vote to so
certify and document that the aforementioned condition* have been
met. Failure to meet the request would require the U.S. Executive
director to vote against sudi drawing.
le elimination of
Sec. sot. Requires the U.S. Executive [Mrector to work tor dianges in Fund,
policy which would convert shoA^erm bank debt made at high
Interest into long-term debt at lower interest rates. Except under "
certain circumstances, the Executive Director will oppose any
program for any country where Its annual debt service Is greater than
13%. of its export earnings.
Sec. S07. Instructs O
Sec. IDI. Directs 0)e U.S. Executive Director, as a general piriicy, to avoid
.government subsidization of the production and export ol
Citemational commodities without regard to Ae market tor such
commotfities.
Sec. K». Instructs U J. Executive Director to propose polides lor international
cooperation, within IMF consultations, on the trend and volume of
external indebtedness of borrowers in the member country.
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Sac 112. tnttrucn the U.S. Exaonlve Director to work lor IMP poUdei whldt
reduce raitrictiara on International tr&oe, promote Improved
•cenomlc reUtion* and eUmlnate tadair trade practices. US.
Executive Director to work for IMF agreementi with countrlei
aeetdm aniitance that would end predatory export ubiidiei,
unreiiMble Import reitrictlont, and other unfair practicei.
SK.IO.
review ol nccen In reducing or eliminating Import restrictions.
(e) documentation and progress made In carrying out Sec. t06.
U.S. membership In the Bank tor International Settlements,^
propoaalt to lmprev« the ttoatinjt^diange rate system,
recommendations on what the IMF can do to avdd the manipulation
M eadiange r«te«,
growth in countries
13) teaaibUity ol Fund Issuing lecvrttiei in private capital markets,
(fi> featlbUity ol selling Fund's gold reserves, " '
(7) tMsifalllty of establishing temporary iun>lement>l financing
fadlltiea,
tt) leasibillty of establishing ■ Cold lending Facility,
Fund In the
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(11) actloni taken to carry out the bwic human ne«d4 proWslons,
(t2) progr«M on equ&Uzing IMF Inlemt ratei with market ntet,
(13) impact of quoli extenilon on world tul prioei,
(It) assessment of a systematic restructuring or stretch-out of developlni
countries debt,
list the rale that global recovery will pUy in wiving the debt crisis,
(16) adeqiacy ol IMF resources,
(17) role of IMF in providing credit to least developed countriexi
Title IX — International I ending Siiperv!iion
Sec 901, Short title: Intematlanal Lending Supervision Act of I9I3.'
Sec. 901. Declares the policy of Congreu li to assure that the InlematiofWl
economic system should not be threatened by imprudent lending or
Inadequate supervision.
Sec 903. Defines the terms 'appropriate Federal'Wiking agency,' and
"banking Insiitinlon' tor purpose* ol this title.
Sec 9M. Provide* that the appropriate Federal banking agencies ihaOtake
foreign country exposure and trwofer risk into Account when
considering the adequacy ol the^pital of banlcing Institutions.
Sec 903. Provides that the sfipropriate Federal banldng agencies reqidre ■
banking initituticns to establish special reserves lor international
iMns whenever (I) there is a protracted f«Ui>e ol foreign borrowers
to meet lermi ol IMF lending agreements on restructuring of loans or
0) no definite prospects exist for the orderly restoration of debt
service. Requires reserves be charged against income and not part of
capital. Requires agencies to analyze rescheduling to enture
adequate capita] and reserves.
Sec 906. ProlUblts banking institutions from charging any fee lor loan
restructuring exceeding administrative costs, unless the fee Is
amortlxed over the life of the loan. Requires the banking agendea to
regulate lee accounting.
Sec 907, Directs the appropriate Federal banking agendo* to retpjlre banking
institutions to disclose thdr foreign country debt expo«re at least
four time* a year. Requires agende* to require Inlormation to be
publldy ^*dosed.
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• ■(nra9i1*te
EnadBqutaa
lo malnttln Maqtata npltal lev^. Fidlure to maintain ludi
Isreti lauf be deemed by the appropriate agency to coutitute an
until* aiM lamiund practice within the meaning of tectlon 1 of the
Sac 909. Requires banking Institutions to prepare an economic f eaalbiiity
and to evmiuate any lorelgn nibildiei and their Impact on world
Authorise* tha appropriate Federal agendes to Interpret and
define term* uud in thlt title and to prescribe rules and
reguIatianB as may be necenary. PnMdes dvll penalties up to
$1,000 per day Icr violation* of title.
Clarilia CAO authority to audit the International regulatory,
examination, and Hvervisory actions of the approfx-late Federal -
bonking agcndes. It also Incorporates the sateguardi widdi are
now provided for in existing CAO banldng agency audit authority.
Gives FDIC equal representatlcn with the Fed and OCC on the
Comndttee ol the Croup of Ten Countries on Banking Regulations
(Basia Conuntttqe).
Require* the Secretary of the Treasury or the appropriate Federal
banldng agency, to report to Congress, not later than six months
altar enactment, regarding diangci to ImprDve the
International lemfing supervision of banking insiltutiara,
■trenftheidng ca^t^ bases of banks In international lending and on
the unform Implementation ol this title.
Tide X — Multilateral Development Banks
Authorizes U.S. subscription to the Inter'Amerlcan Development
Bairic of $1.2 bllUon. Of this amount, *.5% Is paid In and the
remainder callable capital. Authorizes a S3J0 miUion U J.
contribution is the IDVt Fund tor Spedal Operations.
Authorize* U.S. subscription to the Asian Development Bank (ADB)
«( $13 bUlton. 3% to be paid in and the remainder cali^k c^iitai.
Authorliet a $320 mllUon U.S. contrlbutkm to the ADS'*
Development Fund. Expresses sense ol Congress that Taiwan shall
remain a lull member of the ADB.
o African
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Sec lOM. Clirlllei Intant at Section 701 «1 International Flnandal
Imtltutiani Act by deleting the word ■coniittent' from the phrua
"contbtent pattern ol grciis violation at huntan rlShti.* Abo
require* more timely transmltal of Tre«*uryi quvtcrly reporti an
human right*.
Sec. 100). Provldet lor a study on ttaw the MulUlaleral Development Banki
(MDB*) can help to more effectively diannel private direct
investment to developing countrlei.
Sec. lOW. ProWdei that personnel decisions at the MDBS be made In
coniultatlon with the House Banldng and the Senate Pordgn
Relations Committees.
Title XI - IMF AppropriaUon
Sec. 1101. Provides appropriation for U.S. IMP quota increase of the dollar
eiiuivaient of i.J billion SDKs. Provides appropriation for increase
In General Arrangements to Borrow of the dollar equivalent Of an
additional 2.23 billion SDRs.
Sec. 1102 Congressional findings that include that a Solution must be found to
current i.ionelary crisis and that IMF holds gold that is not fully
utilized. Expresses tense of ihe Senate thai Secretary of Treasury
should call for a conference on the monetary system and thai IMF
should malie fuller use of its assets, including gold.
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STATEMENT BY CHAIRMAN ST GERMAIN
[Congreseional Record— House— November 18, 1983]
Providing Procedures During Consideration of H.R. 3959,
Supplemental Appropriations, 19S4
Mr. Long of Louisiana. Mr. Speaker, by direction of the Commit-
tee on Rules, I call up House Resolution 379 and ask for its imme-
diate consideration.
The Clerk read the resolution, as follows:
H. Res. 379
Raoloed, That during the Kinsideration of remaining amendments in disagree-
ment to the bill (H.R. ^59) making supplemental appropriations for the fiscal year
Hiding September 30, 1984, and for other purposes, the Senate amendment to the
House amendment to Senate amendment number 11 shall be cmsidered to have
been read and considered to have been agreed to.
The Speaker pro tempore. The gentleman from Louisiana (Mr.
Long) is rect^nized for 1 hour.
Mr. Long of Louisiana. Mr. Speaker, I yield the customary 30
minutes, for purposes of debate only, to the gentleman from Ten-
nessee (Mr. Quillen). Pending that, I yield myself such time as I
may consume.
(Mr. Long of Louisiana asked and was given permission to revise
and extend his remarks.)
Mr. Long of Louisiana. Mr. Speaker, on Wednesday the House
adopted the conference report on H.R. 3959, the supplemental ap-
propriations bill for fiscal year 1984 by a vote of 372 to 51. There
were 34 amendments in technical disagreement which were all dis-
posed of as agreed upon by the House and Senate conferees. Fifteen
of those amendments were House amendments to Senate amend-
ments to House amendments and, therefore, required subsequent
action by the Senate.
Yesterday, the Senate further amended the amendment num-
bered 11, dealing with veterans job training programs and added to
it the so-called Garn amendment which contains the following six
items:
The housing authorization;
The IMF authorization;
The IMF appropriation;
The authorizations for the Export-Import Bank;
The authorization for the multilateral development banks; and
The extension of the Defense Production Act.
The rule provides that during the consideration of the remaining
amendments in disagreement, the Senate amendment to the House
amendment to Senate amendment number 11 shall be considered
to have been read and shall be considered to have been agreed to.
(229)
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230
Mr. Speaker, in plain English let me explain to my coUefigues
what this rule does. It is somewhat unusual, and a procedure which
the Rules Committee employs only sparingly. This procedure is not
unprecedented, however, and has been used to expedite the consid-
eration of very important legislative matters, such as the nuclear
waste legislation of the last Congress.
This rule is what we term a "self-executing" rule. Basically,
House Resolution 379 provides that, upon adoption of the rule, the
House will be deemed to have agreed to the Senate amendment.
All of the debate will occur, therefore, on the rule, and the vote on
the rule is, in essence, a vote on the substance of the legislation. .
As my colleagues know, a special order, or rule, is considered in
the House under the hour rule. The floor manager controls the full
hour and, by custom, yields 30 minutes of that time to the minority
floor manager. The rule is not amendable.
Let me also explain, Mr Speaker, that should the previous ques-
tion be defeated, then it would not be possible to amend the text of
the substantive legislation. I emphasize again, therefore, that the
vote on the rule is in effect the vote on the legislation.
Mr. Speaker, House Resolution 379 allows the House to complete
action, in an expedited manner, on several vitally important mat-
ters that have been unresolved for many months: extension of the
Federal housing program, and authorization of the IMF, the Exim
Bank, and the multilateral development banks. I am pleased that
the principal parties in dispute have reached agreement, and that
the matters have been resolved to their satisfaction. I urge my col-
leagues to approve the rule, thus approving the amendment in dis-
agreement.
D 1400
Mr. QuiLLEN. Mr. Speaker, I yield myself such time as I may con-
sume.
(Mr. Quillen asked and was given permission to revise and
extend his remarks.)
Mr. Quillen. Mr. Speaker, the gentlemem from Louisieuia is ab-
solutely correct. When this rule is adopted, the supplemental ap-
propriation amendment in diseigreement is adopted, embracing sev-
eral measures that have already been passed by the House, a very
important housing bill, the IMF authorization and other compo-
nents.
I say that it is mandatory that we get this measure behind us at
the 11th hour so that we can adjourn. However we might feel
about IMF, however we might feel about housing, however we
m^ht feel about the Export-Import Bank, the Inter-American De-
velopment Bank, the Asian Development Bank, and the African
Development Fund, lay those differences aside, if you have any,
and vote for the package because it is mandatory tluit this l^isla-
tion pass before adjournment.
I supported IMF when it was on the floor for consideration the
first time. I talked to the Secretary of the Treasury yesterday and
he assured me that the measure had been amended to prevent the
bailout of big banks. I am gratified at that because the criticism I
had on my vote was that we were bailing out the big banks.
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I think that for the economic progress of this Nation the interna-
tional loan situation is critical. We do not weuit to go back into fur-
ther recession when we are on the road now to a speedy and sure
recovery.
Mr. Speaker, I rise in support of the rule and I urge my col-
leagues to vote for it so that we can get on with the business of the
House, the debt ceiling which also must be passed before we ad-
journ, and other important matters.
Mr. Long of Louisiana. Mr. Speaker, I yield 2 minutes to the
gentleman from California (Mr. Patterson).
Mr. Patterson. I thank the chairman for yielding me this time.
Mr. Speaker, we have a very complex bill to vote on today. One
vote will adopt both the rule and the bill. However, we have had
time to study and vote on each of these matters, the Export-Import
Bank bill, the multilateral development banks, the International
Monetary Fund and the housing bill. We had these bills before this
body for a number of days in previous months.
We adopted the bills and they went to the Senate. The Senate
has taken our legislation, somewhat modified it and reduced spend-
ing amounts, and attached it to the supplemental appropriations
Irill before us today. Today is our opportunity to pass that legisla-
tion. It is a very important bill. The President indicated in his
Epeech at the Williamsbui^ summit that this is the linchpin of eco-
nomic recoveiy not only for the United States but for the rest of
the world.
I think it is very important that we cast "aye" votes for it and I
call upon my colleagues on the other side of the aisle, the side of
the aisle of the President's own party, to support your President,
because without your bipartisan support, without your votes, this
bill cannot be passed today, and we must pass it; if not today, we
must pass it prior to September 30 or you can rest assured the
President of the United States will call this House, the Congress,
back in special session.
Therefore, Mr. Speaker, I rise in strong support of the rule on
today's legislation covering housing, the Export-Import Bank, the
IMF and the multilateral development banks. As chairman of the
International FiuEUice Subcommittee, I want to stress the impor-
tance of this legislation to the economic health of the world at
large and, especially to the United States. Passage of this legisla-
tion is veiy much in our own self-interest.
I want to iiTst thank the chairman of the Appropriations Com-
mittee, Mr. Whitten, for the help he has provided in enabling this
legislation to be considered by the House today. I also want to
praise the chairman of the Banking Committee, Mr. St Germain,
for the outstanding job he has done during the many months he
has shepherd this bill though committee, through House passage,
and through intricate n^otiations with the Senate.
During this process, he encountered more legislative pitfalls than
anyone deserves and yet he came though it all with a bill that will
provide desperately needed resources enabling the IMF to continue
its indispensable role in the world economy and thereby, as the
President himself has repeatedly emphasized in correspondence
with me and with other Members, safeguard our own national se-
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curity. At the Williamsburg Economic Summit, the President
called the IMF "the linchpin of world economic recovery."
This measure also reallirmB the Federal Government's committ-
ment to safe and affordable housing for all Americans. A bill that
renews the charter of the Export-Import Bank, thus enabling a
continued competitive position for U.S. exports. A bill strongly sup-
ported by President Reagan, that will also authorize continued U.S.
participation in the Asian Development Bank, the Inter-American
Development Bank, and the African Development Fund. These in-
stitutions fulfill a critical role in the development of the economies
of our most important trading partners, the developing countries.
Finally, this legislation takes a realistic approach toward the
future lending practices of the commercial banks without being so
restrictive that overseas financing becomes inadequate to sustain
U.S. exports.
I believe President Reagan was absolutely accurate in stating
that the IMF is the key to avoiding worldwide economic chaos and
disruption of the flow of U.S. exports abroad. I am convinced, by
what I am told by our President, our Secretary of State, our Secre-
tary of Treasury, the lengthy and thorough-going hearings which
our Committee on Banking has held over the past two years on the
President's IMF request, and by what I know about the needs of
the employers and employees who live in my own district, that this
bill must pass. The President has stated that failure to approve
this legislation will substantially increase the chances for an eco-
nomic calamity that will affect this country for generations to
come. The costs of such a calamity would be mr more serious than
simply endemgerment of the U.S. economic recovery.
Passage of this legislation is crucial to the 5 million Americans
who are employed as a direct result of the exports we sell overseas.
It is not difficult to envision the harsh economic consequences for
the United States if there was a serious contraction in world trade.
I know for example, that in my home State of California, five of
the six largest importers of California products were developing
countries, some of whom are currently receiving IMF assistance
and policy advice. Those five countries, including Mexico, account-
ed for $8.4 billion in purchases from California— ^almost 30 percent
of the $28.6 billion in exports from California in 1982. It is estimat-
ed that 720,000 jobs resulted from these exports in California. So,
for me, the IMr issue is a jobs issue and an issue of jobs for the
people of my own home State and district.
Yesterday, the Senate passed its own language requiring the U.S.
Executive Director at the IMF to oppose loans to all countries
which are Communist dictatorships or which practice apartheid.
The Gramm amendment, which passed the House, required the
United States to oppose all loans to countries characterized as com-
munist dictatorships. As we all know, the President of the United
States himself opposed this language and it was eliminated from
the legislation by the Senate at the express request of President
Reeigan. The legislation before us, however, contains a newly draft-
ed provision which gives the President the flexibility he must have
if he is to conduct U.S. foreign policy. The Senate's language is
stronger than the House language and it is, by far, more worltable.
It requires opposition to all loans to Communist countries except
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where the administration certifies that numerous tough conditions
have been met, including the requirement that our national securi-
ty is best served.
The Secretary of the Treasury must personally testify to us on
these conditions and document that they have been fully met. I
wholeheartedly support the Senate's action in rejecting the Gramm
amendment, because it provides the President flexibility to work in
the best interests of our country without allowing U.S. taxpayers'
money to be sent to Communist debtors, without a strong showing
by the President as to why this is in the national interest.
The apartheid provision now contains similar stringent condi-
tions, generally requiring U.S. opposition to such loans, but allow-
ing the possibility that the administration may be able to make a
case that a long list of conditions have all been met. Thank you,
Mr. Speaker.
Mr. Mitchell. Mr. Speaker, will the gentleman yield?
Mr. Patterson. I would be delighted to yield to the gentleman
from Maryland.
Mr. Mitchell. I thank the gentleman for yielding.
Mr. Speaker, I asked the gentleman to yield for the purpose of
raising at least three questions, one of which might better be di-
rected to someone from the Committee on Rules.
I have only been here 14 years and this is the first time I have
ever been in a procedure where a vote for the rule is a vote for the
bia.
Mr. QuiLLEN. Mr. Speaker, I yield 5 minutes to the gentleman
from Ohio (Mr. Wylie).
(Mr. Wylie asked and was given permission to revise and extend
his remarks.)
Mr. Wyue. I thank the gentleman for yielding this time to me.
Mr. Speaker, I urge adoption of the rule and an affirmative vote
on this l^islation which, in addition to providing supplemental &p-
propriations, provides for the necessary funding for the domestic
bousing pn^ams, the Export-Import Bank, the multilateral devel-
opment banks, and the International Monetary Fund.
It has been a most difficult undertaking to bring this bill to a
vote on the housing and IMF authorizations, but I would submit
that there were 20 hours of floor debate on the IMF quota increase
alone, and the housing issues have been debated extensively.
Speaking to the increase in the funding for the IMF, in his
speech at last month's annual meeting of Finance Ministers, Presi-
dent Reagan reaffirmed his unbreakable commitment to increase
funding for the IMF. In his speech he noted:
The legislation is not only crucial to the recovery of America's trading partners
abroad and to the stability of the entire international financial system, it is also
III n wiiiij to a sustained recovery in the United States.
I join in that assessment, Mr. Speaker.
Let me quote from the President again about what might happen
if the Congress fails to enact this legislation:
ir the Congress does not approve uur participation, the incvitiible consequences
will be a withdrawal or other industrial i/«d countrit^s I'rum duint; their share. At the
end or this rood could be a major disruptiun or the world tradinf; and finuncial
lystem, nn economic niuhtmare that could plafjut- generations lo conic.
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D 1410
The President has been in discussions, may I submit, with other
world leaders on this subject, and I am sure he knows whereof he
speaks. He h£is just sent me another letter which says, in part:
Failure U> pass this legislation would undermine our efforts to ensure to a sound
world economy necesBary for the cNjntinued prosperity of all nations. It is essentia]
that our country now follow through to strengthen this vital institution.
The IMF has made a contribution to the United States by rein-
forcing the trend toward an open international system where free
markets and free enterprise can thrive.
Mr. Speaker, I have called it a jobs bill. I think it is very impor-
tant for our own economy and for jobs in our country, and I sub-
mitted some statistics during the debate as to how it impacts on
our own jobs market.
Adoption of the rule would also authorize the housing programs
administered by HUD and the Farmers Home Administration. This
is good housing authorizing legislation, and 1 am happy to say that
these authorizations are not budget busters. The total budget au-
thority falls within the budget resolution and is in line with previ-
ously appropriated amounts.
It is fair to say that with the help of Mr. Stockman, Secretary
Pierce, Chairman St Germain, and Senator Garn, this bill makes
many improvements in existing housing law.
In most instances this is the first time in 3 years there has been
comprehensive legislation on housing programs. That in and of
itself could justify consideration of this legislation, for as we all
know, Government programs work best when they are modified to
meet changing circumstances.
Mr. Mitchell. Mr. Speaker, will the gentleman yield briefly for
a question on housing?
Mr. Wylie. 1 will yield to the gentleman when 1 finish.
Mr. Speaker, in those situations where programs have outlived
their usefulness, the programs are terminated as we did in the case
of the riot reinsurance and the section 8 new construction.
In addition, this legislation includes several innovative changes
such £is the negotiated FHA rate provision, the so-called Bartlett
amendment, and the demonstration voucher program. Both of
these are administration initiatives, and, I believe, will be benefi-
cial to home buyers in the first instance and helpful to low-income
renters in the second. All in all, I feet the housing and community
development titles, standing on their own merit, justify speedy ap-
proval of the requested rule and enactment of this l^slation.
The administration supports the IMF and housing provisions.
Mr. Chairman, the Congress needs to act expeditiously to author-
ize the IMF quota increeise so the fund can continue to safeguard
our economic interests. We respectfully ask for £m affirmative vote
on the rule.
Mr. Speaker, I rise in strong support of the Senate amendment,
the Domestic Housing and International Recovery and Financial
Stability Act, to H.R. 3959, providing supplemental appropriations
for fiscal year 1984. As you know, the House approved the omnibus
IMF authorization last August and a housing authorization last
July. Together with the appropriations for the IMF, these are the
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m^ior component parts of the Senate amendment. I have been
working closely with the White House, the gentleman from Rhode
bland. Chairman St Germain, Senate Banking Committee chair-
man, Gam, and Senator Proxmire, and I am fully confident that
the legislation before the House today represents a carefully bal-
anced package which truly is in our Nation's best interests.
After many hours of hearings and debate, it is clear to me that
this l^islation is important for our international responsibilities as
the leading power in the free world, for our own economic recov-
ery, for private sector jobs, and for legitimate housing needs in this
country. Like it or not, we live in an interdependent world where
economic growth and recovery at home are dependent upon eco-
nomic growth and recovery throughout the world.
The recent full-page ad in the Washington Post sponsored by the
Ad Hoc Coalition of IMF supporters underscores my point. Groups
as diverse as the National Association of Wheat Growers, Levi
Strauss & Co., Johnson & Johnson, the Goodyear Tire & Rubber
Co., the Colgate-Palmolive Co., the American Association of Export-
ers and Importers, the American Retail Federation, and many,
many others support this legislation because it is in our own do-
mestic economic self-interest.
Quite frankly, Mr. Speaker, flnancial stability throughout the
world, aided by the valuable work of the IMF, means trade oppor-
tunities overseas and jobs here at home. In my home State of Ohio,
nearly 8 percent of all jobs have been identifled as being directly
related to exports.
Let me respectfully remind my collesigues that President Reeigan
has made the IMP legislation a key element in his legislation strat-
egy. At last month's einnual meeting of the IMF, President Ree^an
reaffirmed his "unbreakable commitment" to increase funding for
the IMF. He told us bluntly:
I urge the Cangreas to be mindrul ol its responsibility and to meet the pledge of
our govern ment.
He told US that the stakes are great. Quoting again from the
President's speech, he said:
This legialation is not only crucial to the recovery of America's trading partners
■broad and to the stability of the entire international financial system it is also nec-
avuy to a sustained recovery in the United States.
Let me quote the President one \ast time about what might
happen if Omgress fails to enact the IMF authorization and appro-
priation this session:
If the Congress does not approve our participation, the inevitable consequence
VDuld be a withdrawal by other industrialized countries Trom doing their share. At
the end of this road could be a meOor disruption of the entire world trading and
financial syatems — an economic nightmare that could plaKUL' generations to come.
No one can afford to make light ot the responsibility we all share.
I urge all of my colleagues to rise to our responsibilities, respon-
sibilities in my opinion which are clearly in our national interest,
and support the Senate amendment. In this way, we will fulfill the
President's unbreakable commitment to the IMF and to financial
stability around the world.
Turning now to other key component parts of this carefully bal-
'"te, let me point out the highlights of this l^islation.
37-922 O - 84 - 16
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This legislation extends the charter of the U.S. Export-Import
Bank for 3 years. Among other things, we improve Eximbank's ca-
pacity to support and finance U.S. exports, which as we all know
are a growing percentage of our GNP and thus, private sector jobs
in this country. Changes we make include:
We provide for greater attention to the needs of smatt business
as well as minimum financing levels for the aggregate of small
business loans, guarantee and insurance authority of 6 percent in
flscal year 1984, 8 percent in fiscal year 1985 and 10 percent in
fiscal year 1986.
We require that at least one member of the Board of Directors
represent the interests of small business.
Eximbank will now provide for medium-term financing up to 85
percent of the cost of the exports, and Eximbank also will set up a
program to help advise small business on this financing.
We specify that Eximbank can provide financing to all export
trading companies dealing in services.
We insure that U.S. insurance companies will have an equal op-
portunity to bid for insurance contracts on Eximbank's treinsfic-
tions.
We provide for a 12-member advisory committee with at least 3
members representing small business.
Many new watehdog restrictions will be added by title VIII of
this l^islation. For example these restrictions include:
For the first time, we provide for the Secretary of the Treasury
to certify that the general arrangements to borrow resources are
needed to forestall an impairment of the international monetory
system, before the funds can be used.
I support the inclusion of this provision in the bill in order to
insure that these resources are used primarily in those cases that
present serious difficulties for the international monetory system.
The Secretory of the Treasury is authorized to allow U.S. resources
to be activated for those cases where use of these resources is nec-
essary to forestell a serious threat to the international financial
system and where the Fund has fully explored alternative mesins
of financing. These stondards are, in their essence, similar to those
contoined in the eigreement on the general arrangements to
borrow. As a participant in the general arrangement to borrow, the
United Stotes is committed to this international obligation. We
want to note our desire to maintoin our prior international com-
mitments as well as our desire to allow the Secretory of the Treas-
ury to be able to respond quickly when such a need arises.
We instruct the U.S. Director to oppose the use of Fund re-
sources to repay loans imprudently made by private banks.
We instruct the U.S. Executive Director to work to bring the in-
terest rates on Fund drawings into line with market interest rates.
We direct the U.S. Executive Director to avoid the sul»idy of the
production of international commodities without toking into ac-
count the market for these commodities.
We instruct the U.S. Executive Director to work for Fund poli-
cies which reduce restrictions on international trade, promote im-
proved economic relations, and eliminate unfair trade practices.
We require prior consultation with Congress before the next cre-
ation of special drawing rights. I welcome this provision, since I be-
yGoot^le
237
lieve it is important that the executive branch consult with Con-
greBB on this important matter. The requirement for 90-day consul-
tation prior to any vote, however, could pose some dimculties.
Since international events can unfold rapidly, we must be sensitive
to the possible need to respond quickly and eiTectively to such
events and to accompanying international negotiations. The d(klay
consultation provision includes specific explanations and standards
the Secretary of the Treasury must meet. Since such an extended
period may, in certain cases, preclude the Secretair of the Treas-
ury from fully meeting these consultation standards, we note our
opectation that the 90-day consultation requirement be realistical-
ly applied and met. We will need to be flexible both with respect to
UK timing of such consultations and the substance on a case-by-
case basis.
We direct the Secretary of the Treasury to make all kinds of nec-
essary reports including:
Firat, proposals to improve the floating exchange rate system;
Second, the ability of Fund to promote real economic growth in
countries undergoing Fund stabilization programs;
Third, the feasibility of Fund issuing securities in private capital
markets;
Fourth, the feasibility of selling Fund's gold reserves; and
Fifth, the feasibility of establishing temporary supplemental fi-
oancine facilities.
Mr. Speaker, section 804 provides instructions to the U.S. Execu-
tive Director regarding IMF loans to Communist dictatorships and
countries pursuing a poller^ of apartheid. I know of no Member in
the House who favors either apartheid or communism. As Mem-
bers are aware, however, this is a highly controversial issue. The
proposed provision is the product of extended discussion. I believe
that it represents a balanced and constructive approach which re-
sponds to the concerns that have been raised while preserving the
apolitical character of the IMF. I want to themk all those involved
for tiieir cooperation in this effort.
Under the terms of this amendment, the United States would be
required to actively oppose IMF loans to Communist dictatorships
and countries practicing apartheid unless the Secretary of the
Treasury certifies and documents at least 21 days in advance of an
IMF vote that certain criteria had been met.
The 21-day requirement is based on current IMF procedures
which normally provide that the documentation relating to a re-
quest for use of IMF resources be presented to the Executive Board
at least 4 weeks prior to a decision. However, it is often not possi-
ble to meet this schedule and decisions on loans can be made
within a shorter period. Consequently, there may be situations in
which it would not be possible for a Secretary of the Treasury to
satisfy the 21-day requirement.
It is not the intention of the sponsors to have a provision which
cannot reasonably be expected to be met. Clearly, the 21-day re-
quimnent will have to be interpreted realistically to take account
of the IMF loan n^otiations; the other factors that may affect the
ability ol the Secretary of the Treasury to provide the necessary
certifustion and to testify before the appropriate committees. The
21-d^r requirement represents an expectation, but adherence to
yGoot^le
238
that goal would take into account reasonable variations due to the
circumstances at the time.
Under title IX private banks will behave in the future with
closer supervision and tighter regulation. For example,
We direct the appropriate Federsi] banking agency to evaluate a
foreign country's exposure in evaluating capital adequacy stand-
ards.
For the first time, we instruct each appropriate Federzil banking
agency to require banks to maintain adequate capital levels.
We direct the Federal banking agencies to require banks to es- ,
tablish reserves whenever the agency determines that the public or
private borrowers are unable to make their plan payments.
We require that no banking institution snail charge any fee for
loan restructuring exceeding its administrative cost, unless this fee
is amortized over the life of the loan.
We provide for evaluation of foreign loans in excess of $20 mil-
lion in mining or metal-msiking operations with regard to their
in^ct on world markets and the degree of subsidy involved.
We provide for audit authority of international bank supervision
by the GAO.
We direct the Secretary of the Treasury to report on changes
needed to improve the foreign lending operations of U.S. banks.
Mr. Speaker, we aiso include the authorization for the multilat-
eral development banks negotiated by this administration. Further-
more, we provide for a study on how the Multilateral Development
Bank can help to more efTectively channel private direct invest-
ment to developing countries.
Let me now turn to the housing component of this compromise
legislation.
There have been comments to the effect that the housing legisla-
tion is a hostage for the IMF bill and that housing would not have
been considered had it not been so linked. The implication is that
the housing portion is not worthy of being considered in its own
right.
I do not believe that is correct.
The housing and community development provisions are, on the
whole, good provisions. 1 am not saying 1 support everything that is
in the bill and there are program changes — notably secondary
market amendments — that I support which are not included. As I
said, however, on the whole the compromise is a good one. I can
assure my colleagues that, if we were considering only the housing
portion, and, if it were a question of an up or down vote, I would
urge a "yea" vote.
I would do so for these reasons.
It is a fiscally responsible piece of legislation. Much more so than
H.R. 1 was, which I opposed when it was reported from the ink-
ing Committee. This compromise is $8 bUlion less than H.R. 1, as
reported. The total new budget authority of $15,627 billion is well
within the limits of our congressionally adopted budget resolution.
It mirrors almost exactly the Ending contained in the appropria-
tion bills. It is definitely not a budget buster.
It contains many provisions that are necessair if the prt^ama
that are administered by HUD and the Farmer s Home Adminis-
tration are to function efficiently and equitably. As an example of
yGoot^le
that, let me cite the 3-year authorization for the community devel-
opment block grant program. This will give the mayors of our
dtiea an indication aa to how much Federal assistance they can
expect in the years ahead so they can plan their budgets according-
ly. Another example would be Uie statutorily established 9Vi per-
cent interest rate for our 202 elderly projects. Without this, it is
flttimated that 80 percent of the projects presently in the pipeline
would fall out.
It contains many innovative provisions. The negotiated FHA rate
is an example of tjiis. Originally added by our colleague from Texas
tMr. Bartlett) this should have a beneficial effect on overall mort^
gage coets. Other examples of innovative proposals include the
d^onstration voucher program and FHA msurance for alterna-
tive mortgage instruments.
It contains many cost cutting features for both the Grovemment
and private enterprise. Section 202 projects of over $2 million must
be subject to competitive bidding and all 202 projects are required
to be modestly designed. The contract term for the existing housing
program that will be part of the voucher demonstration has been
cut to 5 years, reducing the budget authority coat from an estimat-
ed $68,000 per unit to $16,000 per unit. Builders would only have to
meet one acceptable building code. Costly and outdated programs
are repealed.
Mr. Speaker, there are many, many more positive features to
this legislation, and I will cover some of them in more detail in my
prepared remarks, but I believe I have made my point. The housing
portion of this compromise is no drawback — it is a plus. It should
tw supported.
In cloeing, Mr. Speaker, this is a solid packa^ which fulfills our
Nation's domestic housing needs and our international financial re-
Bponsibilitiee. This legislation is strongly supported by the Reagan
administration. To my Republican colleagues, I encourage you to
join me and vote in favor of this package. As our former Republi-
can leader and former President, Jerry Ford, stated recently:
Mr. Speaker, I would like to discuss in some depth the provisions
in this compromise as they relate to programs administered by
HUD.
COMHUNITY DEVBIX)PMENT BLOCK GRANT PROGRAM
The community development block grant program is modified in
a number of ways through this bill. Section 101 clariHes the pri-
mary objective of this program to benefit persons of low and mod-
erate income. Each State and unit of general local government
must certify that, over a period of not more than 3 years, not less
than 51 percent of a grantee's CDBG funds are used for activities
that benefit low- and moderate-income persons. This is a compro-
mise from the language of H.R. 1 and is a fair and equitable
method of measuring tlus assistance.
Sectifm 102 contams various provisions relating to the designa-
tion of entiUement grantees. For exeunple, the bill permits all cities
yGoot^le
240
designated as metro cities in 1983 to retain such designatdon for
1984 and 1985. It allows cities in zin urban county that gain metro
city designation to forego such designation if they remain a part of
the urban county. The bill also provides a transition for counties
that lose urban county designation because of population decline.
The bill also authorizes $3,468,000,000 for the basic community
development block grant program for each of fiscal years 1984,
1985, and 1986.
Section 104 includes several s^ificant provisions relating to
HUD's CDBG programs. It requires grantees' statements to include
a description of how it has used CDBG funds in previous years, to
identify estimated amounts that will be used for activities benefit-
ing low- and moderate-income persons, to submit plans for mini-
mizing displacement of low- and moderate-income persons and pro-
vide assistance to persons displaced. This section also requires
grantees to provide citizens reasonable access to records showing
past use of grant funds and to provide citizens an opportunity to
comment on any substantial change in the use of their funds. It re-
quires grantees to further fair housing and requires grantees to
certify that they have developed a plan identifying community de-
velopment and housing needs and objectives.
Also in section 104, grantees will not assess low-income residents
to recover local funds used jointly with block grant funds on public
facilities projects unless they use block grant funds to pay the as-
sessment in behalf of the low income residents. Moderate-income
residents cannot be assessed to recover local and block grant funds
unless the grantees can certify they have insufficient CDBG funds.
The section also requires grantees to make performance reports
available to citizens. These reports must contain an evaluation of
the grantees' accomplishments against its objectives and identify
the amount of funds used to support activities that benefit low and
moderate income persons.
In addition, section 104 directs the Secretary to work with inter-
est groups in developing uniform, recordkeeping, evaluation report-
ing, performance reporting, and auditing requirements to be used
by States and requires that substantial disbursements from lump-
sum drawdowns for rehabilitation begin within 180 days of receipt.
The bill in section 105 authorizes each unit of government to use
up to 15 percent of its grant for public services, or if a higher
amount was used in fiscal year 1984, that amount may be spent on
public services. It authorizes grants to be made available to non-
profit organizations to assist in the development of shcired housing
opportunities for elderly persons.
It edeo prescribes that at least 51 percent of residents served by
an "area benefit" activity be low- and moderate-income persons
before that activity cem be counted as benefiting low- and moder-
ate-income persons but provides an exception when a community
has no areas occupied predominantly by low- and moderate-income
persons.
Section 106 makes several provisions relating to the administra-
tion of the CDBG pr^am. It allows, for esample, HUD to adminis-
ter the small cities CDBG prcKram in those States that elect not to
administer it, but States should determine by the b^inning of Oc-
yGoot^le
241
tober whether or not they wish to operate the prc^am for their
ownnnall cities.
Hie bill requires the Governor of each State to certify that for
the small cities program, its recipients have identified community
develcqmient and housing needs, including the needs of low- and
moderate-income persons and the activities to address those needs.
It also applies requirements for minimizing displacement further-
ing civil rights and fair housing objectives and providing opportuni-
ties for public participation to the small cities receiving CDBG
funds. For administrative costs. States may use $100,000 plus up to
2 percent of its CDBG zillocation, provided it matches each CDBG
dular with State resources.
Section 107 authorizes $68,200,000 for the Secretary's discretion-
aiy fund for 1984, 1985, and 1986.
The bill restricts the use of section 108 loan guarantees to those
grantees which Cfuinot complete the financing of an activity in a
timely manner without the guarantee. It requires the Secretary to
honor requests for such guarantees up to the limits contained in
Appropriations Acts.
Section 109 ia modified to insure that communities may use sur-
fdus funds generated by urban renewal projects for el^ble commu-
nity development activities in their jurisdiction.
UKBAN DEVELOPMENT ACTION GRANTS
Section 121 authorizes $440,000,000 per year for fiscal years 1984,
1985, and 1986 for urban development action grants. It expands the
number of cities that can participate by adding the extent of unem-
plmrment, job lag, or labor surplus as a criteria for eligibility.
Eligibility to compete for action grants is retained for any small
dty that had eligibility during fiscal year 1983 and subsequently
lost it, until the Secretary revises eligibility criteria to include un-
employment, job lag, or labor surplus eis a standard.
B^inning in fiscal year 1984 the bill requires a ne^borhood
impact analjrsis be made avEiilable to any interested person or orga-
nization residing or located in the neighborhood in which the pro-
posed activities are to be carried out.
Tbe Secretary is directed to establish selection criteria for a na-
tional competition for action grants and states that the Secretary
may not discriminate among UDAG applications on the basis of
the particular type of activity involved, whether such activity is
primarily a neighoorhood, industrial, or commercial activity.
This section also encourages cooperation by close small cities to
apply for action gremts and provides up to $2,500,000 annually for
t^hnit'J'l assistance grants to assist small cities develop, apply for
tmd implement UDAG programs.
URBAN HOMESTEADING
Section 122 authorizes $12 million for fiscal year 1984 and $8
million for fiscal year 1985 in urban homesteading funding. This
section extends the required occupancy of a homesteaded property
frimi 3 to 5 years prior to a homesteader's receipt of fee simple title
to the property and extends time limits for completion of required
yGoot^le
242
repair work. A number of changes in homesteader selection criteria
are made.
A multifamily demonstration is created for Secretary-held multi-
family properties, requiring that not less than 75 percent of resi-
dential occupants shall be lower income families after rehab or
conversion. This section authorizes a set-aside of $1 million in each
of fiscal year 1984 and fiscal year 1985 for a demonstration of the
use of locally owned properties for homesteading.
NEIGHBORHOOD DEVELOPMENT DEMONSTRATION
Section 123 authorizes HUD to carry out a neighborhood develop-
ment demonstration program. Eligible neighborhood activities in-
clude: Creating permanent jobs in the neighborhood, establishing
or expanding businesses within the neighborhood, developing, reha-
bilitating, or managing neighborhood housing stock, developing de-
livery mechanisms for essential services that have lasting benefit
to the neighborhood, or planning, promoting, or financing volun-
tary neighborhood improvement efforts. Eligible neighborhood or-
ganizations must be responsible to residents through a governing
board that consists of a m^ority of resident members. Primary
beneficiaries must be low- and moderate-income persons.
The Secretery is authorized to provide matching funds to eligible
groups for conducting this program and up to $50,000 may be pro-
vided to any neighborhood group in a program year. Neighborhood
groups must have demonstrated achievement in an eligible activi-
ty; $2,000,000 for each of the fiscal years 1984, and 1985 is author-
ized to be set-aside from the Secretary's discretionary fund.
SECTION 312 REHAB LOAN PROGRAM
Section 124 authorizes continuation of the section 312 rehabilita-
tion loan program for fiscal year 1984 and precludes the Secretary
of HUD from mandating the types of dwellings to be assisted with
rehabilitation loans.
The rental rehabilitation portion of the rental housing and pro-
duction grant program offers a new, cost-effective approach to
housing lower income households. The program supports a basic af-
fordability strategy for lower income persons by assuring that
decent unite are available for persons receiving housing assistance.
The rehabilitetion grants will make repairs to lower income hous-
ing both affordable and feasible. The availability of tenant housing
assistance means that lower income tenants in the buildings being
rehabiliteted are not displaced and that other lower income ten-
ants have the opportunity to move into vacant unite.
Because the program is designed for projecte needing modest
levels of repairs and because private funds are required in t^
projects, the program is capable of assisting many unite. In ffict,
the rehabilitation program will provide as many as 30,000 rehabili-
tated unite each year. Because the program will be operated by
Stete and local govemmente, it can be teilored to the specif needs,
housing markete, and problems of various parte of the country.
Local flexibility and control is maximized and Federal redtape and
intervention minimized.
yGoot^le
243
lUs is a program not just to rehabilitate housing but to provide
iflbrdable housing for lower income households. While the rental
rehabilitation portion of the pn^ram prohibits burdensome project
rent r^ulations, it includes very strong provisions targeting bene-
fits to lower income households. Projects must be in areas where
rents are generally affordable to lower income families and where
rents are expected to remain affordable. All programs must be de-
signed so that funds are used to benefit lower income families.
Section 301 of title III authorizes $150,000,000 in 1984 and
1150.000,000 in 1985 for rehabilitation grants. Development
grants — new construction and substantial rehabilitation — have au-
thorization levels of $200,000,000 in 1984 and $115,000,000 in 1985.
A rental rehab application is required to address targeting of
funds through neighborhood selection to low-income households.
One hundred percent of funds must be spent to beneflt lower
income; however, the grantee may reduce that to 70 percent per
HUD standards. With specific approval of the Secretary, low
income benefits may be reduced to 50 percent.
Other program rules provide limits on the amount of subsidy
that may be provided; permit rehabilitation only in neighborhoods
not excee<ling 80 percent of medifin income for area; limit rehabili-
tation to essential improvements; prohibit involuntary displace-
ment of very low-income families by higher income families; pro-
hibit rent restrictions except by laws predating this act; forbid con-
version to condominiums for 10 years; prevent discrimination
against subsidized tenants; insure an equitable share of funds for
large families and afford priority for substandard units occupied by
very low-income families.
For the subsidized housing program, this bill conforms in total to
the actions of the Congress in providing appropriation for this pro-
gram. The total budget authority provided amounts to
19,912,928,000.
Within that total, consistent with amounts already specified in
appropriations acts, this bill sets forth the following: $1,289,550,000
to provide for 7,500 public housing units including 2,500 units spe-
ciiically for Indian families; $1,926,400,000 for section 8 subsidies in
connection with 14,000 section 202 units; $1,550,000,000 for public
bousing modernization; $2,217,150,000 to provide for 32,500 section
8 existing certificates; and $540,000,000 to provide for 7,500 section
8 moderate rehabilitation units.
The total number of units thus far is 61,500 additional incremen-
tal units. The bill is otherwise in conformity with the use of assist-
ed housing budget authority described in the table accompanying
the recently enacted continuing resolution.
In addition to the above, the bill provides authorization for ap-
prapiiations for a number of additional purposes. This includes
$242,115,000 for an experimental voucher program. This amount
would provide for ftasistance to an additional 15,000 families.
The bill also provides authorization for $1,603,170,000 for 23,500
more section 8 existing certificates. In total, the bill would provide
yGoot^le
244
for 100,000 more familieB to be assisted as was stated in the confer-
ence report on HUD's 1984 appropriation.
The bill also provides for funding the new rental rehabilitation
and production programs out of the amount of budget authority
available in the subsidized housing account. There is sufficient
budget authority available in the account to finance all of the
above activities, although the Appropriations Committee may have
to determine a reallocation of carryover and recapture amounts
prior to their acting upon these authorizations.
ASSISTED HOUSING
Let me now describe the bill's provisions with regard to assisted
housing. The bill will maintain almost all basic assisted housing
authorities, and it will fund them consistent with appropriations
actions. However, two important changes should be empheisized.
First, the section 8 new construction program is repealed by sec-
tion 209 of the bill, except for funds appropriated prior to January
1, 1984, and except for funds used in connection with section 202
housing for elderly. Congress has recc^nized that this extremely
costly production program is simply not efficient, and this bill en-
sures that this intent is not violated.
Second, the bill authorizes a new demonstration prc^am for
housing vouchers. The program will incorporate a subsidy based
upon a payment stendard rather than a fair market rent, and thus
will contain a "shopping incentive," which is not present under
other comparable programs. In addition, the program will provide
for discretion on the part of local public housing agencies (PHA's)
to adjust assistance payments twice over the 5-year term of the as-
sistance contract. The authorization of this demonstration repre-
sents £in excellent stert in establishing more efficient assistance
programs for lower income households.
The bill before you also contains essential provisions regarding
the tenant rent contributions of assisted households. The bill re-
tains the basic contribution levels established by the Omnibus
Budget Reconciliation Act of 1981. Generally, tenants of assisted
housing will contribute 30 percent of adjusted income toward rent.
However, this bill defines adjusted income, and includes certain ex-
clusions from income. Under the deductions allowed in the bill
$480 is allowed for each family member under age 18 — other than
the head of the household or spouse — or who is handicapped, dis-
abled, or a full-time student; $400 for any elderly or nonelderly
handicapped family; medical expenses of an elderly family in
excess of 3 percent of income; and certain child care expenses. I
should note also that the bill reteins the current tenant protection
in the form of a 10-percent limitetion on rent increases from the
phasing in of the rent contribution level. These ac^ustments pro-
vide some relief to the most needy HUD subsidized tenants while,
at the same time, meeting congressional desires to preserve equity
among HUD tenants and reduce some of the disparity between
rents paid by subsidized and unsubsidized low income households.
As I have mentioned, the compromise legislation maintains basic
assisted housing authorities, including authority for the section 202
program for elderly and hfindicapped households. In addition, sec-
yGoot^le
245
tkn 223 at the bill makes a aumber of amendments to section 202.
Some are strictly programmatic, in that they define certain techni-
cal aspects of the pn^ram. These include: establishing the loan
rate at 9.25 percent; limiting sponsor contribution to $10,000; limit-
ing the number of efficiency units in a project to 25 percent, unless
a greater number is requested by the sponsor; and, establishing cer-
tain conditions under which the sponsor may exercise discretion to
curtail the development costs of the project or use the leeist costly
developer through a competitive bidding process.
Other amendments, also made under section 223 of this bill, pro-
vide special emphases within the section 202 program, such as:
taking into account special design features or congregate space nec-
esBary to meet elderly and handicapped needs; accommodating
handicapped persons who have been released from residential
health facilitieB; or encouraging group homes and independent
living facilities for nonelderly, handicapped households. Finally,
Bobsection 223(j) limits the Secretary of HUD in his ability to ap-
prove prepayments of section 202 loans and is prohibited from sell-
mgany section 202 mortgage.
The "bill contains two other noteworthy provisions with respect to
elderly housing. Under section 211, the Secretary of HUD is di-
rected to permit assistance under the section 8 existing housing
and moderate rehabilitation programs for elderly families who
elect to live in shared housing. Shared housing is a concept that
has broad support. Shared housing arrangements can contribute to
reduced housing costs, companionship, and security for elderly per-
sons. It is time we saw this concept realized under the assisted
bousing prognuna. Under the provision, HUD also is to issue mini-
mum habit^ility standards for shared housing.
Also, under section 224 of the bill, congregate housing services
are authorized for fiscal year 1984 at a level of $4 million.
This bill takes deliberate steps to protect the status of assisted
hou^ng is not Insured under the National Housing Act. For exam-
I^, section 217 of the bill extends troubled project operating subsi-
dy to projects which are not insured but are assisted by HUD and
sections 218 and 219 provide for amendments for these projects re-
ceiving rental assistance payments and rent supplement assistance.
I also want to mention that under the assisted housing provisions
of the bill, the special needs of certain lower income households are
First, the bill, under section 210, extends assistance under the
section 8 existing housing program to single room occupancy hous-
ing. This, of course, would be subject to local demeuid for such
housing.
Second, section 216 authorizes up to $60 million for fiscal year
1984 for grants to States, local governments, Indian tribes, and
nonprofit organizations to provide shelter for the homeless who
face life-threatening circumstances.
Third, a special demonstration project is authorized under sec-
tion 225 of the bill to provide assistance to local governments to en-
ooonige the upgrading of housing occupied by lower income fami-
lies, and to provide coordination at the local level so that families
' 1 under HHS pn^rams can find and occupy decent housing.
yGoot^le
246
Grant funds could be used for a variety of housing services, includ-
ing housing assistance.
Fourth, homeownership assistance under section 235 is author^
ized, subject to appropriation acts. New assistance contracts would
be for 10 years, although provision is made for extension of such
contracts, should the homeowner be unable to make full mortgage
payments at the end of the 10-year term.
Fifth, section 203 of the bill provides a priority in the section 8
and public housing prc^rams for families paying more than 50 per-
cent of income for rent. This priority recognizes the affordabUity
problem faced today by renters, and targets assistance at the most
needy — those with the highest rent burden.
And sixth, under this bill, the Secretary is authorized to carry
out a demonstration to determine the feasibility of using public
housing facilities for child care services for lower income families.
Funding for this demonstration will be provided through CDBG
funds.
I do have concerns with the spending implications of the propos-
als I have described; but, they do reflect a creditable job at identify-
ing those areeis where special efforts need to be taken on behalf of
lower income families.
In summary, the assisted housing provisions respond both to the
needs of lower income families and the reality of fiscal discipline.
In this regard, the bill is positive in providing the prt^ams needed
and positive in its reflection of a continuing bipartisan commit-
ment to lower income housing.
This legislation contains important changes in FHA pn^rams.
These changes are designed to better serve first-time home buyers,
to mfike FHA more effective as a provider of credit, and to improve
bzksic program operations. I would like to note first that basic in-
suring authorities, including those for nursing homes and hospitals,
are extended for 2 years, as opposed to the historical 1-year exten-
sion. Also, the credit ceiling for fiscal year 1984 is set at $50.9 bil-
lion.
An important provision applicable to most insuring authorities is
contained in section 404. This section eliminates the requirement
that FHA interest rates be set by law, and allows FHA to operate
under a negotiated interest rate structure. In this way, FHA will
operate under normal market practices, where rates are agreed to
by the lender and the borrower. As a result, points normally associ-
ated with FHA transactions can be minimized.
In the general area of single-family housing, some very creative
changes are being made.
First, a number of alternative mortgage instruments will be per-
mitted by the bill. These include: a principal indexed mortgage,
where monthly payments and the outstanding balance on the loan
can be adjusted for inflation according to an index; an Etdjuatable
rate mortgage for single-family housing, under which periodic ad-
justments to the interest rate can be made; and a shared apprecia-
tion mortgage, under which the lender can assume a share of pro-
spective property appreciation in return for a lower interest rate.
yGoot^le
247
TlwK mortf i instruments will have the potential of making
mortgage ci >t more available and more affordable to home
\nfexB, and cause FHA now will be able to offer them, will
extend these tinancing options to the first-time home buyers that
FHA serves. The bill adoressea consumer concerns raised by such
loans and limits activity under these mortgage instruments to 10
pmcmt of the aggregate number of mortgages insured under title
n of the National Housing Act during the previous fiscal year.
Second, in addition to providing new mortgage financing options,
the bill emphasizes homeownership opportunities of £ill varieties,
including cooperatives, condominiums, £md manufactured homes.
Sections 419 and 420 of the bill ease certain restrictions with
regard to insuring cooperative and condominium units, respective-
br. The latter provision also raises the maximum mortgage amount
nir condominiums. In addition, a series of amendments improves
manufactured home financing. Section 415 permits the insurance
of an existing manufactured home which previously did not have
insured financing, and section 417 authorizes the refinancing of a
manufactured home or a manufactured home and lot. In both cases
the home must have been constructed in accordance with the na-
tional manufactured housing construction and safety standards. Fi-
naUy, section 416 raises the loan limits for insurance of a manufac-
tured home and lot, combined — a long overdue adjustment.
liiird, this legislation contains provisions to make FHA insur-
ance more wi^Whr available to areas which may not have received
the benefit of FHA insuring activity in the past. The bill extends
FHA insurance to American Samoa, to Hawaiian homelands, and
to Indian reservations. In the last two cases, the bill's provisions
otend insurance authority without regard to marketability of title,
and this reflects a special effort on the part of the administration
and Congress to extend home financing opportunities fairly to
these unaerserved people.
Fourth, section 424 of the bill provides that for buyers of modest-
hr priced houses — those with a value of $50,000 or less — lower
iknnipaymenta than normal will be required. Loans of 97 percent
viU he available for these cases. This provision clearly will permit
more first-time home buyers with a modest income to participate
in FHA programs, and is an example of the targeting which FHA
is tiying to achieve throughout its activities.
I firmly believe that because of the provisions I have just de-
Kribed, FHA will be a better position to meet its market and to
o^r a wicte range of homeownership options to those who may be
andwweived in the conventional market. Let me emphasize, in ad-
dition, that the bill treats multifamily housing in the same positive
wajr that it addresses single-family housing.
u the first place, the extender provisions of the bill make an im-
portant change to the coinsurance program authorized under the
mtknal Housing Act. This change relaxes the limitation on the
volume of aetivi^ which can be insured under coinsurance provi-
MBs. The bill eliminates the individuctl 20-percent caps for single-
Hd mnlti^mily insurance, and raises the aggregate cap on coin-
■tfinoff activity to 40 percent of all insured loans. This is vitally
in^cstant be ^use HUD'S multifamily programs will soon begin to
tapkjy a ooii irance format to a much greater extent, and should
yGoot^le
248
not be restrained by the previous arbitrary limitation. The benefits
of coinsurance are compelling: It maximizes the role of the private
sector; it reduces processing time through lender processing; and, it
reduces HUD's exposure to losses through risk sharing, mcreased
cooperation and direct involvement of the private sector in multi-
family program will be facilitated through this change.
A second area of improvement involves rent deregulation. Sec-
tion 431 of the bill provides the Secretary of HUD discretion as to
rent regulation. This affects section 207 and 234 of the National
Housing Act, authorities which do not now provide for this discre-
tion. I believe it is important for unsubsidized FHA proertmis to
parallel conventional market practices, and the deregulation of
rents contributes to this objective. I am sorry, however, that this
provision will apply only to prospective insurance.
1 am concerned, also, with section 433 of the bill. This provision
limits the ability of the Secretary to approve prepayments of mort-
gages—for assisted housing — and to forestall requests for prepay- ;
ment of multifamily mortgages which receive assistance but which j
do not require Secretarial approval of prepayment requests. I be- j
lieve HUD now exercises adequate oversight of such situations, and -i
has adequate procedures to handle such cases, and that a legisla-
tive mandate in this regard probably is not needed.
A third area of innovation regarding multifamily insurance in-
volves the provision of new mortgage instruments and new insur-
ing authorities. Subpart 4 of title IV of the bill provides for: a grad- !
uated payment mortgage for multifamily housing, to reduce d^ i
service costs in the early years of a project's life; a shared apprecia- ^
tion mortgage for multifsunily housing — limited to 5,000 units in I
any fiscal year — and partially amortizing mortgages for multifam- il
ily housing — limited to 10,000 units in any fiscal year. These new
instruments will enhance FHA's ability to provide financing for
unsubsidized rental housing development. Income properties in
many cases require innovative financing techniques, and the bill
extends such techniques to FHA.
In addition, section 437 of the bill adds insuring authority for
board and care homes to section 232 of the National Housing Act
In addition to nursing homes and intermediate care feicilities, HUD
now will be able to insure a residential facility which provides
room, board, and continuous protective oversight. The Eiging of our
population, and the need for noninstitutional alternatives for elder-
ly living, make this provision particularly timely and wise.
Finally, I want to point out that the provLsions of the bill affect-
ing FHA have been concerned with the soundness of FHA pro-
grams. In light of the new thrusts in mortgage financing contained
in the bill, Euid the extension of mortgage insurance programs to
underserved areas, the bill allows mortgage insurance premiums
for the alternative mortgage instruments and for insurance on Ha-
wsiiian homelands to exceed the regulatory limits for other pro-
grams, subject to the statutory 1-percent limitation. In addition,
the provision for insureuice of single-family housing on Indian res-
ervations allows a premium of up to 3 percent. The bill also re-
quires the Secretary to assess the actuarial risk involved with the
low downpayment loan I described previously. These provisions are
designed to insure that the new programs operate with an ade-
yGoot^le
249
qnate premium and not endanger the current status of the insur-
I should add that the bill also addresses minimum property
standards for insured housing. Section 405 of the bill requires that,
for other than manufactured homes, energy performance standards
required by the Secretary be at least as eH'ective in performance as
those contained in the MPS on September 30, 1982, and that health
and safety requirements for insured properties comply with a na-
tkmally recognized model code or with a State or local code based
upon a national code or its equivalent.
In two are&s, the bill calls for further evaluation, or for a demon-
■tration prqject, before pure authorization is extended. These are:
m evaluation of the existing use of home equity conversion mort-
gage; and a demonstration in two regions of a reinsurance pri^am
with private mortgage insurers.
In summary, the FHA portion of this bill represents a giant step
fbrward. There is no question in my mind that FHA will become
more efiective in providing single-family and multifamily mortgage
credit more effective in serving modest income home buyers — in-
cluding first-time home buyers — and innovation in mortgage fi-
nance.
CONCLUSION
Mr. Speaker, in conclusion, this legislation deserves our support.
We need a bill such as this, not only because of the international
aspects, but also because we have not had a comprehensive housing
and community development packeige since the 1981 Omnibus
Budget Reconciliation Act.
The budget authority costs for the housing and community devel-
opment portions of the bill are essentially the same as the levels
appropriated for 1984 for HUD and FmHA programs. HUD's new
assisted housii^ prt^ams are funded within the $9.9 billion of
budget authority contained in the HUD-Independent Agencies Ap-
propriations Act (Public Law 98-45). Budget outlays in the bill for
nousing and community development programs are within 2 per-
cent of those estimated for HUD and the FmHA rural housing pro-
grams at their 1984 enacted levels. The bill authorizes HUD's
m^jor housing credit programs to operate in 1984 at the enacted
appropriation levels of $50.9 billion for FHA and $68.25 billion in
GNMA.
The bill allows the administration to continue eiforts to reduce
excessive costs of some housing subsidy programs while preserving
the benefits received by eligible low-income households. It also au-
thorizes mcnor structural reforms to make homeownership more
readily available, especially for first-time home buyers and those
who purchase lower priced homes through FHA.
&lr. Speaker, finally I wish to thank the Members and their re-
mective staff for the excellent cooperation displayed in developing
this moet complex legislative packfige.
The bill represents a bfilanced approach for providing housing
subsidies to low-income households, housing credit assistance to
American home buyers not served by the private market, and com-
munity and economic development support for local communities
yGoot^le
250
within the resources Congress has made available for those in 1984
appropriations actions for HUD and the FmHA rural housing pro-
grams.
Mr. Leach of Iowa. Mr. Speaker, will the gentleman yield?
Mr. Wyue. I yield to the gentlemein from Iowa.
(Mr. Leach of Iowa Eisked find weis given permission to revise and
extend his remarks.)
Mr. Leach of Iowa. I thank the gentleman for yielding and ui^
support for the IMF legislation. We simply cannot ztfford to play
Russian roulette with the international monetary system and domi-
noes with the American economy.
Mr. Speaker, the cloud over this vote on the IMF is the question
of whether it represents a banking bailout. This is a fair question.
But the fair answer is that the legislation represents a bailout of
the monetary system, not the banking system.
Prior Congresses have voted contingency l^islation that could
have the effect of bailing out the banks. That is what the FDIC and
Federeil Reserve Acts are all about.
Hopefully, no bailout of banks will be necessary. But if such dire
circumstances come to pass, it should be noted that 82 percent of
the funds to be obligated in this replenishment for the IMF come
from foreign countries, whereas 100 percent of any other approach
to aiding the banking system will come from the U.S. taxpayer, di-
rectly or indirectly.
In addition, it should be stressed that the countries in trouble
today are not only important U.S. trading partners but anchors of
the free world — countries like Mexico, Brazil, Argentina, Nigeria,
and Indonesia. Just as no American President will allow the bank-
ing system to collapse, no American President will allow these
countries to fall into economic anarchy. The alternative to modest
lending support to the IMF is massive direct foreign aid and an in-
determinate but certainly very large increase in military spending.
It is thus far more costly to vote against than for the IMP.
The issue is whether trade or edd has the best chance to pull us
out of the mess we are in.
To my Democratic colleagues, it should be noted that a vote to
turn our back on the international monetary problem increases the
likelihhood of conflict in the world: It is both cheaper and safer to
concern ourselves with building rather than destroying.
To my Republican colleagues, let me stress that the word of the
President of the United States is at stake. Our President has
worked for 2 years to defer and restrain the U.S. financial obliga-
tion to the IMF. He has struck a very prudent deal, involving Uie
lowest percentage contribution ever negotiated by an American
President to a similar international institution. Instead of being on
the line for 30 percent or more of total international funding,
which has been the postwar norm, President Reagan has commit-
ted our country to an 18-percent contribution, which is less than
our total percentage of the world's GNP.
This legislative package represents a conservative deal to con-
serve the world economy. It includes stricter controls on U.S. par-
ticipation in the IMF and tighter regulation and supervision of pri-
vate lending overseas.
yGoot^le
251
Last montii at the IMF's annual meeting. President Reagan de-
■ciibed the IMF as the "linchpin of the international financial
nstem," and he declared before the Eissembled finance ministers
uat this legislation haa his complete support.
I urge my colleagues, especially those on this side of the aisle, to
follow the lead of our President and pass this legislation which is
» essential to the continued economic recovery of this country.
This is not a bailout of the big banks or a foreign aid giveaway. It
is a carefully crafted piece of legislation which will place curls on
the lending excesses of the big banks.
Many critics of U.S. involvement in the Fund have the impres-
sion that the m^ority of IMF's resources go to overextended "Third
World countries. Quite the contrary, the vast majority of IMF re-
sources have been used to provide temporary balance-of-payments
support to Western European countries such as Great Britain,
France, and Italy as well eis the United States.
The United States has been the second lai^est borrower from the
Fund over its history. Only Great Britains' drawings have exceeded
ours. We have drawn from the Fund on 24 separate occasions for a
total exceeding $7.5 billion. In November, 1978 for example, we bor-
rowed $3 bilhon in German marks and Japanese yen to help slow
the rapid fall of the dollar.
Critics have also failed to appreciate the fact that payment of the
U.S. quota to the IMF has no direct impact on the Federal budget
because it entails no net outlay from the Treasury. When the IMF
draws on the U.S. quota we are credited with an increase in our
reserve position in the Fund. This reserve position is an interna-
tional monetary reserve asset. Contributing to the Fund is analo-
gouB to putting money in a bank account. The Fund pays interest,
so over the years we have made money as we loan it out and been
required to pay interest when we have ourselves been borrowers.
Some have charged that this legislation is nothing more than a
big give-away pn^am. I wholeheartedly concur: Any Member who
votes against this Dill will be giving away jobs and opportunities for
increased exports from his district and State.
Not even the strongest industrial power will be able to sustain
reasonable growth if the markets in the developing countries
remain depressed for lack of credit and financing. Iliird World
countries have been the fastest growing markets for U.S. exports.
These countries, which have tripled their output of goods from 1955
through 1980, now buy 40 percent of our exports — more than all of
Europe, the U.S.S.R., and China combined.
One fifth of all U.S. jobs depend on foreign trade and about one
third of corporate profits come from international operations. One
out of every three acres now in cultivation produces crops for
export. Two-fifths of our agricultural production is sold abroad. For
the United States as a whole, agricultural exports account for ap-
proxiniately $40 billion in income and some 4 million jobs. With
the IMF's role in supporting and encouraging the growth of inter-
national trade, it may well be that this quota increase is the most
important piece of farm legislation in the 98th Congress.
&mply put, failure to support the IMF implies the likelihood of
failure to nalt a collapse in the world's monetary system. Without
the ability to transfer credit and currency, international trade will
yGoot^le
252
Elummet. All of the peoples of the world, particularly thoee like
irniers who depend on foreign trade, will be the poorer.
The IMF is crucial to U.S. economic recovery. It safi^uards and
strengthens those parts of the internationsd economic system
where free markets and free enterprise thrive.
To underline our vulnerability to the taking of protectional steps
in international finance. Data Resource Inc. (DRI) has estimated
that if South American countries stopped payments in 1984 on
their debts to the United States, our GNP would fall by some $70
billion, unemployment would rise by 10 percent and interest rates
would climb by more than 2 percentage points.
But there is no need to refer to futuristic scenarios or hypotheses
in making the case for this quota increase. It is needed here and
now, and agriculture is a case in point. Directly and indirectly, the
IMF helps developing countries purchase American farm products.
The IMF's special cereal facility alone heis financed the sale of
more than $330 million in farm products, mostly from the United
States, to developing countries which have experienced severe bal-
ance-of-payments difficulties.
From 1981 to 1982, Argentina, Mexico, South Korea, and Brazil
cut back the purchases of our agricultural products from $6 to $3.2
billion. With IMF programs in place in several of these countries
their purchases from the United States are now climbing back to
pre-1981 levels.
Above anything else, at issue with the IMF is the problem of pri-
orities. It simply makes no sense whatsoever for this country on
the one hand to provide hundreds of millions of dollars in security
assistance to our allies while on the other hand we deny them any
resources from the one institution which c£ui best protect their
long-range economic security.
From Franklin Roosevelt through Ronald Reagan, the United
States has given strong bipartisan support to the IMF. This institu-
tion has been a remarkable success. It cannot solve all the world's
economic problems, but we can be sure that these problems would
be a lot worse without the IMF. It is simply too callous for our
friends abroad and too risky for our economy at home to turn our
backs on the IMF. It should be passed, forthwith.
Mr. Paul. Mr. Speaker, will the gentleman yield?
Mr. Wylie. I yield to the gentleman from Texas.
(Mr. Paul Eisked and was given permission to revise and extend
his remarks.)
Mr. Paul. Mr. Speaker, I thank the gentleman for yieldii^, and I
rise in strong opposition to the rule.
Mr. Speaker, the way this rule on the supplemental appropria-
tion has been written absolutely prevents any democratic or parlia-
mentary due process. None of the amendments that are supported
by a m^ority of the American people c£m be considered. The Mem-
bers of this House who oppose giving additional money to the Inter-
national Monetary Fund cannot even have a separate vote on that
question. This is a travesty. It is an example of the Big Fix, and the
losers are the American taxpayers.
The process we are being forced to follow here today is the
strongest proof that the Americein people do not support the bail-
out of the banks and their bad loans. Itiey do not support tiie IMF
yGoot^le
253
bureaucrata who have transformed that institution into a foreign-
aid agency and want to make Bure that it keeps expanding its
power amd influence. If the AmericEm people supported this dis-
credited policy of throwing bad money after good, this legislation
would have been passed early last summer. But because a majority
of the American people oppose this IFM bailout, we find the rules
of the game are rigged so that the vested interests can get their
money without an open vote.
Look how desperate these vested interests are to get this IMF
bailout through the Congress: Look at the housing bill that would
never have been considered by the Senate if they had not been
forced to swallow it in order to get this precious funding for the
IMF. The new spending authority for subsidies to housing amounts
to $15.6 billion — and when all of the loan guarantees are figured
in, it comes to more than $20 billion. All of this for a puny IMF
(niota increase of $5.6 billion and a couple of billion dollars for the
GAB. They do not care if the budget jumps $20 billion further out
of balance, just bo long as the IMF gets the money it wants to keep
itself in power and pay off its client States and their bankers.
Haybe the whole idea is to put the United States itself into such
Bad budgetary shape that we will have to apply to the IMF for our
own conditionality agreement to rescue our economy in a couple of
years.
I sincerely trust that the Members of this House who have de-
fended the American people against these powerful international
buieaucrats may have them on notice that this money will be the
last they dare ask for. There have been rumors, based on some in-
ternal staff memoranda from the IMF that they were planning to
come back next year for still more money. Let them pay attention
this time — if they think they have rolled over Congress and the
American people and taken their money in spite of our resist-
ance— do not come back next year, or the year after that. These
are enough respectable economists who have called for abolishing
the International Monetary Fund instead of increasing its size that
next time we will stop them before they can even get to the point
of bujring their subsidy with pork-barrel politics and more excessive
spending.
Mr. MrrCHELL. Mr. Speaker, will the gentleman yield?
Mr. Wyus. I Etm glad to yield to the gentleman from Maryland.
Mr. Mitchell. Mr. Speaker, I asked the gentleman to yield be-
cause I do want to compliment him and our chairman on feishion-
ing and getting accepted a very significant housing bill.
Mr. Wyus. Mr. Speaker, I thank the gentleman.
Mr. Mitchell. Many of us had almost given up in despair.
We now have a 2-year appropriation for housing, is that correct?
Mr. Wyue. It is a 2-year authorization.
Mr. Mitchell. A 2-year authorization.
Mr. Wyub. That is correct.
Mr. MrrcniELL. And there was an increase of $1.5 billion added on
in our housing bill, is that not right, moving it up to 16?
Mr, Wylie. There wm an increase over the House figure. It was
under the Senate figure, but it was within the figure in the appro-
priation bill.
yGoot^le
The Speaker pro tempore (Mr. Harrison). The time of the gentle
man irom Ohio (Mr. Wylie) has expired.
PARUAMENTARY INQUIRY
Mr. MrrcHELL. Mr. Speaker, I have a parliamentary inquiry.
The Speaker pro tempore. The gentleman will state it.
Mr. Mitchell. Mr. Speaker, I had sought earlier to find out
whether or not this was a usual procedure under which a vote for
the rule is a vote for the bill, and 1 would like to get some clarifica-
tion on that. It seems to me to be a very unusual circumstance, one
that I do not recEill having encountered during my period of serv-
ice.
Could we get some clarification on precedents for this?
The Speaker pro tempore. The Chair would request the gentle-
man to direct that question to the managers on behalf of the Rules
Committee.
Mr. Mitchell. Mr. Speaker, I would be delighted to direct the
question to the gentleman from Louisiana (Mr. Long).
Mr. Long of Louisiana. Mr. Speaker, as I said in the opening
statement, the Rules Committee well recognizes that it is an un-
usual procedure. It has been used before. It was used on the nucle-
ar waste bill.
In the memorandum that I gave to the gentleman from Mary-
land, under House Resolution 636 it provided that the Senate
amendments to H.R. 3809, which was the Nuclear Waste Policy Act
of 1981, be considered as adopted by the House, and the procedure
was the same. By the adoption of the rule itself. House Resolution
636, it constituted the approval of the program that was set forth
in the nuclear waste bill and that was the same procedure that is
followed here.
Mr. MrrcHELL. Mr. Speaker, I thank the gentleman.
I would like to ask one other question on precedents.
Where we are dealing with this supplemental appropriation,
with a number of bills included in it, some of which apparently
have little or no relationship one to the other, IMF and housing, I
was wondering whether that was taken into consideration when
the gentleman was guided by those precedents.
Mr. Long of Louisiana. Mr. Speaker, it was taken into consider-
ation, and, frankly, the Rules Committee was not very happy with
following this procedure.
Mr. Mitchell. May I add to the gentleman, nor am I.
Mr. Long of Louisiana. I am sorry, I did not understand the gen-
tleman.
Mr. Mitchell. I said, nor am I very happy with it.
Mr. Long of Louisiana. Certainly the Rules Committee was not
very happy with it.
The Speaker pro tempore. The Chair must observe that the gen-
tleman had been attempting to proceed under a parliamentary in-
quiry, and at this point it is no longer a valid parliamentary in-
quiry.
Mr. Mitchell. Mr. Speaker, the second part of the parliamenta-
ry inquiry was whether or not there was a precedent or whether
yGoot^le
255
the precedents cited were applicable of this kind of situation that
we confront.
The Speaker pro tempore. The point that the Chair wishes to
make is that all time is controlled, and unless the gentleman from
Louisiana (Mr. Long) is prepared to yield time, the gentleman from
Maryland cannot proceed further.
Mr. MrrcHELL. All right. I thank the Chair.
The Speaker pro tempore. The Chair recognizes the gentleman
from Tennessee (Mr. Quillen).
Mr. QuiuAN. Mr. Speaker, I yield 5 minutes to the gentleman
from A»ansa8 (Mr. Bethune).
(Mr. Bethune asked and was given permission to revise and
extend his remarks, and include extraneous matter.)
Mr. Bethune. Mr. Speaker, I thank the gentleman from Tennes-
see for yielding time to me.
Mr. Speaker, I would like to begin by inquiring of the distin-
guished gentleman from Louisiana (Mr. Long) on a matter concern-
ing the Defense Production Act.
Last evening I appeared before the Rules Committee. I was con-
cerned that we were including in this basket of measures a reen-
actment oif the old Defense Production Act when in fact this House
and the Senate have enacted bills that are much tighter and have
criteria for lending prc^ams. Accordingly, I was seeking permis-
sion to do somethinig about that.
In the course of the presentation before the Rules Oimmittee, we
discovered mutually that there is a letter from the Defense Depart-
ment saying they would not spend the $50 million that has been
appropriated between now and March 1, and I understand that in
this bill the old Defense Production Act would be renewed only
until March 1 next year. I want to get that in the Record.
Is that the gentleman's understanding?
Mr. Long of Louisiana. Mr. Speaker, if the gentleman will yield,
the gentleman is absolutely correct.
There was a letter delivered to the Rules Committee. It is ad-
dressed to the Honorable Fernand J. St Germain, that is signed on
the stationery of the Under Secretary of Defense for Research and
Engineering by R. D. DeLauer, who I assume is the Under Secre-
tary. And it does so state.
Mr. Bethune. Mr. Speaker, I thank the gentleman from Louisi-
ana (Mr. Long), and I include that letter in the Record at this
point, as f(dlows:
The Under Secretary Of DeFCNSB,
Washington, DC. November 17. 1983.
Hon. Pesnand J. St Germain,
Chairman, Committee on Banking, Finance and Urban Affairs. House of Representa-
tives, Wathington, D.C.
De&K BAb. CaAntMAN: t would like to confirm the Department of Defense position
OD the UM of the fiscal year 1983 appropriatione authorized under title III of the
DBtaue Production Act (DPAl. The title III projects are now sufTiciently defined nor
an the nquesta for proposals fmalized to allow for obligation of the fiscal year 1983
IHWOpi'lationa. Under these circumstances, the Department of Defense will not fi-
naJioe any contracts utilizing the appropriations authorized under section 799,
Public Law 87-377, DOD Appropriations Act. 1983, prior to April 1, 1984.
yGoot^le
I am sending a duplicate of this letter to Jake Gam, Chairman, Committee on
Banking, Housing, and Urban Affairs, U.S. Senate.
Sncerely,
R, D. DbLaukr.
Mr. Speaker, everyone has heard me speak, I presume, at some
length about the fact that lending pr(^ams are growing faster
than spending programs. At the present time credit assistance pro-
grsims are growing at an exponential rate. We have over $600 bil-
lion in credit assistance pn^iuns out there right now, and we have
got to do something about it because it crowds people out of the
marketplace and we substitute political decisions for the decisions
of the marketplace.
I raise that point because that is precisely what we do in a larger
context when the IMF makes loans throughout the world. We are
actually allocating credit now through a super mechanism known
as the IMF. That was not the original intention of IMF as Em insti-
tution. Everyone recognizes there are systemic problems with the
IMF, and they have been discussed at great length. What I want to
mention today is that it seems to me the heartburn on this particu-
lar issue insofar as the House is concerned is the bailout-cf-the-
banks allegation. This House passed an amendment when we con-
sidered the bill here. It was not debated much, but we passed an
amendment which would have done something about that.
I introduced the amendment and I labeled it: "They may have
ripped us off, but we get the money back." The resison I called it
that is that the banks did, in the course of making these improvi-
dent loans around the world, charge interest rates and fees that
were way in excess of what they should have chEtrged. They con-
tended that they were exposed to a great risk, and, therefore, it jus-
tified the interest charge that they made in the so^alled world
marketplace.
The fact of the matter is that if this bill goes through, they had
no risk because we are bailing them out. We are extinguishing
whatever risk they had. If we are going to extinguish whatever risk
they had, it seems to me that we ought to recover from them the
excess profit they made, because if we do not, thev have been un-
justifiably enriched. And that is all the amenoment that this
House put in the bill and that I offered would do.
My amendment was as follows:
RBIMBURSRMBNT PROM BBNBnCIARlES OP ^UOTA INCRBASBS
A BENEFiaARIBS OF <)UOTA INCREASES
"Sec. 5G. (a) The Congress hereby finds —
"(1) depositor)' institutions have charged excessive rates of interest on loans
made to foreign countries;
"(2) such excessive ratee of interest were often imposed in order to compen-
sate for the declared high-risk rate of lending to such countries;
"(3) the United States Government, bv increasing its quota contribution to
the International Monetary Fund, has substantially eliminated the risk of lend-
ing to those foreign countries which benefit from uie increased resources of the
International Monetary Fund;
"(4) such quota contribution by the United States Government will result In a
considerable financial burden to the American taxpayer^ and
yGoot^le
257
"(5) pennitting depodtory institutions to retain the profits earned from the
^tceanve interest rates charged to such foreign countries would result in uiijuBt
eaiichment to such depoeitory institutions in light of the increase in the United
States quota contribution.
"(b) Eadi dmodtoiy institution shall transmit a report to the Secretary of the
Traasury tpeciJying—
"(I) all loans made by such depository institution to any foreign country;
"(2) with respect to each such loan—
"(A) the rate of interest charged on such loan;
"(B) all service fees imposed on Buch loan;
"(C) the unpaid balance on such loan;
"(D) the total amount of interest collected on such loan; and
"(E) such other information as may be requested by the Secretary,
"(cKl) The Secretary may examine the books and records of any depository insti-
tution in order to insure compliance with the provisions of this section.
"{2) The Secretary shall consult with the Board of (kivemors of the Federal Re-
■STTe System, the Board of Directors of the Federal Deposit Insurance Corporation,
•nd other appropriate Federal and State regulatory agencies in order to obtain in-
formation on foreign loans by depository institutions which may have been reported
to such agencies.
"(dXl) The Secretary shall determine which loans made by depository institutions
or subsidiaries thereof have been extended, refmanced, or made more secure, or in
tny other manner affected by the increased United States quota contribution to the
latemational Monetary Fund made pursuant to section 40.
"(2) Ilie Secretary shall determine the interest rate charged, and the interest rate
earned, on such loans. All such interest rates shall be determined in accordance
with provisions of the Truth in Lending Act and the regulations issued pursuant to
such Act.
"(eXl) With respect to loans identified in subsection (dl, the Secretary shall deter-
mine whkh loans have earned for the depository institution involved a rate of
return which is greater than the rate of return which would have been earned by
auch depository institution if the principal amount involved had been lent in the
United States to a corporate borrower with a rating of AAA for a similar maturity.
"(2) The amount determined by the Secretary to have been earned in excess of the
amount which would have been earned from a domestic loan (as determined under
paragraph (1)) shall be paid to the Treasury as a reimbursement for the increased
quota contribution made pursuant to section 40 of this Act.
"(fl For purposes of this section—
"(1) the term 'depository institution' shall have the same meaning given such
term in section 19(bKlMA) of the Federal Reserve Act;
"(21 the term "loan" means any extension of credit to —
"(A) a foreign government or any agency or instrumentality thereof;
"(Bl any entity owned in whole or in part by a foreign government unless
United States persons own at least 1 0 percent of such entity;
"(O any entity which is not more than 10 percent owned by United
States persons.".
D 1420
Under my amendment we simply would calculate the amount of
interest and fees that the banks charged, then we would determine
what the triple A corporate loan rate for that same period of time
was and the Treasury Secretary would seek reimbursement of the
difference from the banks if they are now being benefited by this
bailout. A very simple proposition, restrospective in its operation,
to try to recover for the people the amount of money that the
banks gained as a result of this action of the Congress.
Now, because debate weis limited here in the House and because
of this convoluted process in which we now fmd ourselves, a hand-
ful of elitiats on the Banking Committee on the Senate side and on
the Banking Committee here and down at the Treasury Depart-
ment and from the IMF and from the bowels of other agencies scat-
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258
tered about this town have come in and written a bill for us, and
they have routinely knocked that provision out.
Well, I assure you that every time I talk about this, I see the
ears perk up on the lobbyists around who are from the big banks.
They do not want this amendment in the bill. If we defeat this rule
today and this bill goes down, I assure you the only way they will
ever be able to get it through this institution is to include some
provision such as mine to try to recover the unjust enrichment that
the banks made at the expense of the American taxpayer. That is
why I hope we will defeat the rule and get this amendment in the
bill.
Mr. Long of Louisiana. Mr. Speaker, I yield such time as he may
consume to the gentleman from Hawaii (Mr. Akaka).
(Mr. Akaka asked and was given permission to revise and extend
his remarks.)
Mr. Akaka. Mr. Speaiker, I rise in strong support of this rule and
the legislation that will be enacted upon its passage. I ask unani-
mous consent to revise and extend my remarks.
I want to pay tribute to the chairman of the House Committee
on Banking, Finance and Urban Affairs and the chairman of the
Housing Subcommittee, the gentleman from Texas, for Eill of their
diligent efforts that allow consideration of the housing bill on the
floor today. As you know, only a few weeks aigo it seemed that we
might never pass a housing bill this year. Today, however, we have
the opportunity to act on vitally important housing I^islation. It is
due to the many, many hours of negotiations between the House
and Senate committees that have produced this legislation. I com-
mend the committee and their staff for all their hard work.
In particular, I want to thank the committee for insisting that an
amendment I offered when the bill was considered on the House
floor be included in the compromise legislation. My Etmendment
would require the Federal Housing Administration to insure mort-
gages of Native Hawaiians who wish to obtain mortgages on prop-
erty located on Hawaiian homeland. Up to now, individuals living
on Hawaiian homelands have been unable to obtain FHA insured
mortgages.
Under this legislation, individuals owning homes located on the
approximately 200,000 acres of Hawaiian homelands may obtain in-
sured mortgages from FHA, My amendment will remove an exist-
ing impediment and open the door to insured mortgages for Hawai-
ian homestead leases.
Perhaps nowhere else do we find such a pressing call for access
to an established Federal program that has gone unanswered. The
cost and availability of housing for Native Hawaiians is especially
acute. In Hawaii, the cost of a home is 2W times greater than the
national average. By contrast, income levels of Native Hawaiians
are the lowest in the State.
Under my amendment, the restrictions against attachment, levy,
or sale that are contained in leases under the Hawaiian Homes
Commission Act will no longer prevent homeowners living on Ha-
waiiem homelands from receiving FHA insured mortgages. It will
mean greater access to much needed housing for Hawaiians.
Mr. Long of Louisiana. Mr. Speaker, I yield 2 minutes to the
gentleman from New York (Mr. Lundine).
yGoot^le
(Mr. Lundine asked and was given permission to revise and
extend his remarks.)
Mr. Lundine. Mr. Speaker, I wish to speak in support of House
action to amend H.R. 3959, the supplemental appropriation for
fiscal 1984, with the compromise provisions of both H.R. 2957, the
International Recovery and Financial Stability Act, and H.R. 1, the
Ifousiiig and Urban-Rural Recovery Act.
I recognize that some dissatisfaction exists with the necessity of
combining a m^or housing reauthorization bill with legislation to
increase Uie U.S. quota contribution to the International Monetary
Fimd, as well as with the need to bring both measures before the
House as amendments to the conference report on the supplemen-
tal appropriation. I think this is unfortunate, but strongly believe
that we have no other alternative to this procedure. Given the
narrow House vote in support of the international financial provi-
sions, and the administration's strong opposition to the needed
housing provisions in H.R. 1, this process has become absolutely
I wiah to commend the chairman of the Banking Committee (Mr.
St Germain) for his foresight in recognizing this necessity and for
his leadership and dogged determination to forge a compromise
package that is acceptable not only to this body, but to the Senate
and the administration.
Let me point out that while I support this broad package of hous-
ing and international financing provisions, I also supported each
Cof the package separately when they were considered by the
se. I continue to endorse each of the separate proposals.
The housing provisions in the legislation are absolutely essential.
Without their enactment, we will go 3 years without approving any
major housing legislation. This period coincides with the worst re-
cession in housing since the Great Depression and a period in
vrhich an increasing number of Americans were either forced into
poverty or forced to give up their dreams of home ownership.
While the compromise housing provisions incorporated in the
l^islation are not all I would like them to be, they do address
many of the critical housing policy questions the House sought to
address. They provide needed clarifying and technical changes to
improve the operation of our community development pr(^ams
and our public housing and elderly housing pri^rams, while offer-
ing important new assistance for rental housing construction and
housing rehabilitation.
In the area of rural housing, the legislation contains numerous
provisions to continue our current single-family and multi-family
housing prc^ams and make them work more effectively. While I
am disappointed with some of the Senate provisions incorporated
into tiie legislation, 1 must acknowledge the Senate's support and
increased funding for a new housing preservation program which I
nionBored that will greatly enhance the ability of local communi-
ties to improve their housing stock. I believe this legislation offers
the strongest rural housing bill we have seen in many years and
constitutes a mftjor victory over the administration's effort to elimi-
nate the Nation^ rural housing effort.
I also strongly support increasing our Nation's quota contribu-
tion to the International Monetary Fund by $8.4 billion. 1 cannot
yGoot^le
260
^^ee with those Members who term this measure a "bail out" for
the large international banks. On the contrary, the a4justment pro-
grams negotiated by the IMF with debtor nations require commer-
cial banks to make new loans and actually increase their involve-
ment and exposure in third-world lending. These prc^ams do not
seek to replace private debt with public money, but provide the
stimulus to keep commercial banks from merely writing off these
enormous debts at the taxpayers expense and at the risk of reusing
interest rates both here and abroad.
I would also emphasize that the legislation has served as a vehi-
cle to impose new reserve and operational requirements on the
commercial banks in order to restrict their questionable lending
practices and expose their operations to greater public scrutiny.
The cost of increasing the Nation's line of credit to the IMF is
certainly insignificant when you consider the possible alternative —
a collapse of international trade and finance. A default by one or
more of the major debtor countries would have disastrous conse-
quences for world trade, particularly for the United States. Since
the onset of the debt crisis, U.S. export sales to Latin America have
declined by 22 percent. A default by Mexico, Argentina, or another
major Latin American trading partner would further cut U.S. sales
abroad emd force thousands of Americans out of work.
This strong link between U.S. trade and domestic economic re-
covery also forms the basis for my continued support for the provi-
sions extending the charter for the Export-Import Bank. I believe a
strong and full^ competitive Export-Import Bank is essential if the
United States is to meet the challenge of foreign competition and
sustain our economic recovery.
There are a number of provisions in this portion of the legisla-
tion which I believe will contribute to improving the operation of
the Exim Bank. First, the mandate that the Bank be fully competi-
tive in eill its pr(^rams will insure that our firms remain on a level
playing field with their competitors. Second, the creation of an ad-
visory committee to the Board of the Bank will help foi^e a closer
working relationship between Government and private industry on
the question of international trade and competitiveness.
Also important are new provisions establishing a medium-term
credit Pribram and setting aside Exim assistance for small busi-
ness. These changes will insure that aggressive efforts are being
made to assist our small businesses that are the Nation's primary
job creators and innovators of new products to market abroad.
Finally, as the original House sponsor of the matching credit pro-
vision in the Exim Bank provisions, I am obviously pleased with its
inclusion in the compromise and am convinced that it is essential
for improving the position of U.S. firms in our own domestic
market. In recent years, jobs have been lost as vital contracts have
gone abroad due to foreign subsidies and other assistance provided
to foreign firms. The requirement that heretofore matching credit
will be made available to U.S. firms facing subsidized foreign com-
petition should put an end to the ability of foreign goverments and
firms to capture American contracts and jobs in this manner.
Mr. Speaker, I believe this legislation is vital not only for sus-
taining our own domestic recovery, but for preservirw the stability
of world trade and finance. Failure to adopt it would mean loss of
yGoot^le
261
jobs and further frustration of the hopes for decent hous-
ing and jobs of millions of our citizens.
I urge incorporation of this legislation in the Supplemental Ap-
pnniriation and support its adoption.
Mr. Long of Louisiana. Mr. Speaker, I yield 1 minute to the gen-
Usnan from Texas (Mr. Patman).
Mr. Pathan. Mr. Speaker, it is very difficult to describe an issue
or to discuss it in the short length of time that we have here today.
This rule should be defeated. It is ironic that housing would be
included with the IMF on this, because if anything will ruin hous-
ing it is high interest rates. By having this drain of $8.4 billion
from the U.S. Treasury, we will insure higher interest rates. Not
only will that $8.4 billion be devoted to world debt, but we will
have the banks bailed in, as my colleague, the gentleman from
New York, has said, by the requirement that certain banks loan an
additional $4 for every dollar in the IMF loans.
That is a new program that should be stopped. It is a new pro-
gram of the IMF that causes increased pressure on interest rates in
this Nation. Those pressures will result in higher and higher inter-
est rates that American borrowers will have to pay.
Our country is striving to pull out of a recession. Congress should
defeat this IMF proposal which could deal a very severe blow to
that recovery.
'Hie ones who stand to profit from the $8.4 billion commitment
are a few of our b^gest urban banks. For them, the IMF deal
ofTers a partial bailout if any of their high-interest, risky loans to
shaky foreign countries go sour. These big banks, like Chase Man-
hattan and Citicorp, have realized they may be in deep trouble if
debtor countries renege on repayment of their loans.
There is no question that b^ bemks are at heavy risk on many of
their foreign loans. The nine largest banks in Uie United States
have loaned 222 percent of their total capital to nonoil-producing
developing countries. These are countries with very weak, highly
inflationary economies.
A heavy concentration of capital exposure is potentially riskier,
even, than the actual amount of exposure on all loans. The same
nine banks that I mentioned have 112.5 percent of their capital ex-
posed in loans to just three countries — Argentina, Brazil, and
M^co.
"Hie importance of the $8.4 billion U.S. commitment to the big
American banks is that it bolsters the banks' willingness to contin-
ue lending and to ren^otiate old loans to foreign countries on
Btretched-out terms.
The purpose for which the IMF was established after World War
n is being subverted. Its primary purpose, originally, was to help
Gauntries with temporary cash flow problems, thereby contributing
to international stability by averting short-term crises. The thrust
rf the IMF now has been changed to turn it into what amounts to
a finvign aid office.
Host Americans are adversely aSfected by this $8.4 billion com-
nutment. When these weak, unstable foreign governments allocate
their IMF credit inefficiently — or even use the money to subsidize
their own exporters, who can compete in the international market
yGoot^le
262
with an unfair trade advantage over our exporters — it hurts the
U.S. domestic economy.
When $8.4 billion more is siphoned out of the U,S. Treasury the
American domestic money supply will grow tighter. That means
there will be less money available for domestic borrowing for cap-
ital equipment, for home building and home buyii^, for new cars
and for many other purposes.
There will be less money available for farm equipment, for small
businesses trying to grow — or trying simply to weather the rec^
sion.
When you t^hten the money supply — with the U.S. Government
the heaviest borrower of all — you tend to drive up interest rates
and tighten credit for private borrowers. The economic recovery
that we all want will be dampened, and we may be driven back
into a recession that still finds about 9 million people unemployed.
These are some of the reasons I have opposed this $8.4 billion
IMF bail out for the big banks. I wUl continue to oppose this dan-
gerous kind of threat to American taxpayers.
Mr. QuiLLEN. Mr. Speaker, I yield 3 minutes to the gentleman
from Connecticut (Mr. McKinney).
(Mr. McKinney asked and was given permission to revise and
extend his remarks.)
Mr. McKinney, Mr, Speaker, I have never in my 14 years in this
body voted for a closed rule, and yet I would say to you that I sup-
port this rule. House Resoultion 379, because in essence it is not a
closed rule. Every single issue that the House is going to package
together today has been debated in this House, h£is been debated,
and those Members who care have had their chance to add their
will to the legislation.
To my Republican colleagues I would like to point out that a
similar rule was proposed and adopted by the House last December
in the closing days of the 97th Congress. On that occasion 121 Re-
publicans voted for the rule and only 6 voted against it. If you are
opposed to the substance of the legislation, vote accordingly. But
don't try to hide behind the parliamentary argument. The record is
clear.
Since I raised the question of voting on the substance of this sup-
plemental appropriations bill, I would like to tell my colleagues
that the merits of the pack^e deserve our suppwrt. The Senate
amended in consultation with appropriate representatives of the
House, Treasury, HUD, and OMB, bills that had been passed by
the House. The version that we will vote on today is a better ver-
sion in almost every respect. Some concessions nave been made,
but on balance 1 think the administration is getting a good deai.
Believe me, David Stockman would not have agreed to these terms
if that were not the case.
The Housing authorization legislation contains a funding level
within the budget level adoptea by the House. Several prograioB
that had been included in H.R. 1 have been scaled back or deleted,
but still the bill addresses some of the major weaknesses in the
Federal housing programs.
The amended legislation also improves on the IMF bill that the
House passed. It continues to require more prudent lending prac-
tices by the banks as well as continued bank participation. It will
yGoot^le
How tbe United Stetes to continue to play a dominant role in
lapinc the economic and political policies of many developing na-
onB. The Secretaries of Treasury and State have given this legisla-
tion their approval.
In my opinion, H.R. 3959 contains legislation which is in the best
interest of the people of the United Stetes. I. too, have heard from
a number of constituents who oppose communism, unsound bank
practices and several other issues involved in this legislation. I
nave weighed those arguments against the points made by Presi-
dent Rea^in and his cabinet as well as numerous other supporters
of the IMF and housing bills. The answer is clear.
I do not believe that we can abdicate our responsibility either to
help provide a steble international financial system or to help pro-
vide better housing for Americans. This legislative package is nec-
essary to meet those responsibilities. I intend to support my Presi-
dent and the American people by voting for House Resolution 379.
We have a whole entire world economy standing on the brink of
watehine what this Nation does and how responsible it can be to
its world commitment.
I would love to walk through the city of Bridgeport where I have
lost Dictaphone and Bridgeport Brass and Singer Sewing Machine
and everything else and say, "Oh, boy, I voted against all that sort
of stuif,' but the fact of the matter is that Bridgeport would have
lost them sooner if it had not been for the International Monetary
Fund, which we started.
We have a reasonable housing bill. We have a reasonable supple-
mental appropriations bill. We have a reeisonable continuation of
the International Development Banks, which we voted for and
which we all need, it we in fact decide to remain a part of the
world community.
Most of us, and 1 look at my good friend from Baltimore sitting
there, know of my voting record.
I would just end by saying, Mr. Chairman, what I said with
regard to Grenada. We can either be a world leader or we can go
back to the make believe world of Peter Pan.
Mr. QuiLUEN. Mr. Speaker, I yield 5 minutes to the gentleman
from Massachusetts (Mr. Conte).
(Mr. Conte asked and was given permission to revise and extend
his remarks).
Mr. CONTB. Mr. Speaker, I rise in strong support for this rule
and for this Senate amendment authorizing and appropriating
funds for the International Monetary Fund, authorizing the export-
promotion activities of the Export-Import Bank, authorizing contin-
ued U.S. participation in the Inter-American Development Fund,
and authorizing previously appropriated funds for domestic hous-
mg
I also rise in support for the unusual procedure which brings this
diverse package to the floor on what we hope will be the flnal day
of this session. The timing is most critical in r^ard to the Interna-
txmal Monetary Fund.
IMF rules require that a country pay its increased quote sub-
scription befcn« the new quote can become effective. Most major in-
dusbial countries are waiting for the United Stetes to act before
approving the quote increase. There is nothing wrong with that; we
yGoot^le
264
started the IMF back with the Bretton-Woods Agreement, and we
are one of the major beneficiaries of its operations which stabilize
the international financial system.
A further delay in this authorization and appropriation for the
IMF will mean that the quota increase will not become effective,
and the IMF will not have the resources needed to deal with the
global debt problem. The Fund's loanable resources are virtually
exhausted, forcing the IMF to suspend completion of negotiations
on new lending commitments.
Delay in implementing the quota increase will mean that coun-
tries of vital interest to the United States will be unable to obtain
support necessary to correct their economic problems.
Mr, Speaker, these countries include Israel, Egypt, the Philip-
pines, Jamaica, Venezuela. El Salvador, Costa Rica, Honduras, Ni-
geria, Ivory CoEist, Sudan, Liberia, and Senegal, among others. Sev-
eral of the countries receive significant bilateral foreign assistance
from the United States, but we cannot provide all the resources
needed to bring about fliU economic recovery from the worldwide
recession. They must receive this assistance from the IMF. If they
do not, we may be forced to provide far more in the way of bilater-
al assistance to keep some of these friends afloat.
For my friends on the Republican side of the aisle, I want to
remind you of President Reeigan's strong and unwavering support
for this IMF quota increase.
That is President Ronald Reagan, our staunch conservative
leader. The President has stated his support in blunt terms, and I
quote:
No legislation now before the Congress is more important to a healthy world econ-
omy ana to a continuing economic recovery here in the United States.
Later in an address before the Board of Governors of the World
Bank and the IMF, President Reagan repeated his commitment.
Again, I quote:
My adminiBtration ie committed to do what ifi legitimately needed to help ensure
that the IMF continues as the cornerstone of the international financial system. Let
me make something very plain: I have an unbreakable commitment to increased
funding for the IMF * * *. 1 urge the Congress to be mindful of its reaponsibility
and to meet the pledge of our Government.
That is our leader, Republicans.
The President predicted dire consequences if the Congress does
not meet this responsibility, in stating:
At the end of this road could be a maior disruption of the entire world trading
and fmancial systems — an economic nigntmare that could plague generations to
come. No one can afford to make light of the responsiblity we all share.
That was our President, Jack Kemp. That was our President,
President Reagan, the arch conservative.
I can see that some on our side are still skeptical. Well, if Ronald
Reagan is not conservative enough for you on this issue, let us hear
what Gen. Alexander Haig s^s about this IMF increase. In an op-
ed article submitted to the WEishington Post this week. General
Haig wrote:
We have just devoted increased resources for our military defense. Now wa must
do the same for our international economic defenses.
General Hfiig continued:
yGoot^le
Hm IMF, armed with adequate reeourcee, is the linchpin in the strategy to avert
politically cataatrophic conaequences. Without it. the financial problems confronting
■ number of our key Latin American and other friends could also generate danger-
oui political and aoaai instability extremely detrimental to our interests.
There are mixed opinions in this body about Al Haig, but nobody
has ever questioned his devotion to the security interests of this
country. I would also mention that he argues strongly and persua-
sively against attaching political limitations on the IMF in this au-
tborizatioD. Specifically, he points out that countries such as Yugo-
slavia, Hungary, and Romania have been able to seek an alterna-
tive to total dependence on the Soviet Union through such mecha-
nisms as the IMF. He also states that the IMF is not the proper
forum for moderating South African racial policies, as disgusting as
those policies are, with the admonition:
If we politicize the IMF. what ailments will we have when others do the same?
Perhaps some others in this House are laboring under the as-
sumption that there is no constituency for the IMF, other than big
banks. That is clearly not the case. In case you missed it, a large ad
appeared recently with the headline: "Pass the IMF legislation."
That ad continued to state that the IMF protects existing jobs in
the United States and in the long run promotes new ones, and that
interest rates and our economic recovery are at stake. Who spon-
sored that ad? No, it was not the big banks. It was the big employ-
ers in your districts and in mine. Somewhat belatedly, these com-
panies which employ millions of Americans have recognized the
important stake l^y have in this legislation. I will read off just a
few of these IMF supporters:
American Association of Exporters and Imfwrters, Alli&-
Chalmers Corp., the Boeing Co., Cargill, Inc., Caterpillar Tractor
Co., the Chamber of Commerce of the United States, Chrysler
Corp., the Coalition for Employment Through Exports, Colgate-Pal-
molive Co., Continental Grain Corp., Corning Glass, Works, Dresser
Industries, Inc., Emergency Committee for American Trade, Ford
Motor Co., General Mills, Goodyear Tire & Rubber Co., Internation-
al Engineering & Construction Industries Council, Johnson & John-
son, Land O'Lakes, Inc., Levi Strauss & Co., Lockheed, Corp.,
McDonnell Douglas Corp., Monsanto Co., Motor Vehicle Manufac-
turers Association, National Association of Manufacturers, Nation-
al Association, of Wheat Growers, National Rural Electric Coopera-
tive Association, Owens-Illinois, Inc., Ralston Purina Co., Rockwell
International Corp., the Singer Co., United States Council for Inter-
national Business, Westinghouse Electric Corp., and the Weyer-
haeuser Co.
These companies and their associations, together with the thou-
sands of subcontractors and suppliers, represent significant employ-
ers in many of your districts, and they all support this increase in
the IMF. lliis is not a risky vote, this is a vote for jobs and for con-
tinued economic recovery in this country.
It is also a vote for the economic recovery of the agricultural
sector rf our economy. The Secretary of Agriculture, John Block,
recently wrote to me and to other Members expressing again his
strong support for the IMF. He pointed out that:
yGoot^le
The beat potential areas for expanding agricultural exports are the less develop-
ing countries. These are also the countries facing the most severe short-term liquitU-
ty problems and extraordinary debt burdens.
He continued:
The IMF provides the linchpin to manage this current difficult situation. Conse-
quently, if we are to realize the full potential for agricultural exports, we must pro-
vide this crucial short-term financing.
Our former colleague and now Senator from North Dakota, Mark
Andrews, who is a farmer himself, recently reversed his earlier op-
position to the IMF and stated simply in an op-ed article in the
New York Times that: "American agriculture need the IMF."
Mark notes that from 1981 to 1982, Argentina, Mexico, South
Korea and Brazil — the four largest debtors among the less-devel-
oped countries — cut back purchases of U.S. agricultural products
from $6 to $3.2 billion, a reduction of 47 percent. Agriculture ex-
ports to Mexico alone fell by $1.3 billion in 1982. This is estimated
to have cost 31,000 jobs in the United States.
Farmers know what exports mean to their income. This is a good
vote for those of you with large farmer constituencies.
Mr. Speaker, I have attempted to bring out some of the reasons
for supporting this Senate amendment. We should vote for the
amendment to support the President, to help our friends abroad,
and we should vote for it to help our own economy, companies and
workers, In fact, I cannot think of any reason not to vote for it.
But in the slight case that any of you are still not convinced that
this is a good vote, let me give you one more reason: vote yes for
me.
I hope this does not look like a conflict of interest, but as I re-
viewed the Secretary of Agriculture's reasons for a yes vote on this
amendment, I become even more convinced that agriculture ex-
ports are the most promising weapon we have in this tough eco-
nomic world.
My mind turned toward that little tomato pach in my backyard,
as it often does. I began to think about how I am going to support
my family after I leave this hall someday. There must be i>eople in
Brazil and Mexico and South Korea who have never tasted my to-
matoes, and who, if they had the foreign exchange, would love to
import some of my produce. I might even expand into a few pepper
plants.
So, if you are still looking for a reason to support this amend-
ment, think of a small enterpreneur of Italian-American parentage
who would like to get into the export market someday, maybe even
employ a few unemployed veterans if business picks up.
Let us pass this amendment by unanimous consent.
The housing authorization provisions of this amendment to the
conference report on the supplemental have appeared very sudden-
ly on this floor. But, as many of my colleagues are well aware,
these proposed authorizations for housing and community develop-
ment programs represent many months — in fact, many years — of
effort and negotiation.
It is a good compromise, one which has had the input of the:
House and Senate Banking, Housing and Urban Affairs commit-
tees, the House and Senate appropriations committees, the Depart-
yGoot^le
267
ment of Housmg and Urban Development, the Farmers Home Ad-
miniBtration, and the Office of Management and Budget.
Some Members may wonder why there is such an urgent need
for a housing authorization at this time. I would like to emphasize
to my colleagues the fact that there has been no housing authoriza-
tion enacted into law since 1980. No Member can persuasively
argue that our Nation's economy has remained stable over the
course of the past 3 years. Our changing economy has affected
renters, homeowners, prospective homeowners, builders, develop-
ers, realtors and every segment of the population.
But, particularly for those who come to the Federal Government
for housing £uid community development assistance, we need to
bring our authorizations up to date to reflect the economic and
social changes which have occurred in the past 3 years.
I do not often find myself in the position of supporting authoriz-
ing legislation on Ein appropriations bill. I have, however, found al-
together too many occasions whereon the authorizing committees
have failed to act in timely manners.
The fact that we have had no new housing authorization since
1980 has made the work of the appropriations committee most dif-
ficult. We have, however, managed to continue funding those pro-
gams which are authorized through regular, annual appropriations
bills.
The fiscal year 1984 appropriations bill for the Department of
Housing and Urban Development and Independent agencies was
enacted into law on July 12, 1983. I served as a manager on the
conference committee, smd recommended new budget authority for
fiscal year 1984 in the amount of $55.8 billion. Of this amount, $1.5
billion was placed in a reserve fund, and made unavilable to the
Department until January 1, 1984, pending enactment of a housing
authorization bill in this session of the 98th Congress.
Last week, in the act making further continuing appropriations
for fiscal year 1984, the so-cfdled second continuing resolution, the
Congress took further action on the disposition of this reserve. In
the event that this bousing authorization is enacted, $1.5 billion
will be made available to the Department of Housing and Urban
Development on March 31, 1984, in accordance with the provisions
of the second continuing resolution.
The enactment of this supplemental conference report, as further
amended by the Senate, will reauthorize many important housing
and community development programs for 2 years. Community de-
velopment block grant and urban development action grant pro-
grams would be authorized for 3 years.
Many authorizations for these programs were considered and ap-
proved by the House on July 13, 1983, when we passed H.R. 1, the
Housing and Urban Rural Recovery Act of 1983, Included among
these are:
Acljustments in the form of allowable deductions to the annual
grOBB income formula for tenant rent contributions.
A 3-year reauthorization for the CDBG and UDAG programs.
The new construction component of the rental rehab and devet-
(qimrat grants program.
yGoot^le
The elimination of the requirement that the HUD Secretary set
the FHA maximum mortgage rate, thereby allowing this rate to be
set more flexibly by the market.
And several important Farmers Home Administration programs.
The authorization for several other programs has been included
in an effort to effect a compromise with the Senate and the admin-
istration. These include:
A voucher demonstration program for em initial contract term of
5 years, establishing a limited 15,000-unit housing certiflcate pro-
gram.
Authorization for HUD to promulgate regulations establishing
lease and grievance procedures for public housing in those areas
where local eviction procedures do not require a judicial proceed-
ing.
FHA insurance to be provided for a number of new alternative
mortage intruments, permitting HUD to offer insurance which is
not presently available in the marketplace for the financing of
single and multifamily housing.
The level of budget authority contained within this amendment
is essentially the same as the levels appropriated for HUD and the
Farmers Home Administration in fiscal year 1984.
HUD assisted housing programs including public housing, section
8 existing and moderate rehab are funded within the $9.9 billion of
budget authority contained in the fiscal year 1984 appropriation.
Community development block grant and urban development
action grants are also maintained at their appropriated levels of
$3.5 billion and $440 million respectively.
Public housing modernization and operating subsidy programs
are not changed. These programs can be run in fiscal year 1984
with available funds. Rural housing programs as administered by
the Department of Agriculture would be authorized at levels appro-
priated in the continuing resolution with the exception of an addi-
tional authorization for rural housing grants in the amount of $100
million.
In this amendment, 1984 budget outlays would be authorized at a
level which would be 2 percent above the fiscal year 1984 enacted
appropriation levels for HUD and FmHA rural housing programs,
liie increase of $300 million in authorized outlays is due to an in-
crease in the number of allowable deductions to tenant income.
The deductions would include: $480 per minor and handicapped
person; $400 per elderly household; elderly household medical ex-
penses in excess of 3 percent of income; and child care expenses.
Such deductions would be used in the determination of tenant
rent payments in HUD-subsidized housing programs.
As is the case with any bill or amendment, there will always be
Members who oppose certain of its provisions or the process by
which it is considered.
In this case, I ask my colleagues to consider the efforts which
have been made on both sides of the aisle, and in both Chambers,
to have an authorization enacted before we adjourn. Unfortunately,
the only remaining vehicle for this legislation is the conference
report to the supplemental.
yGoot^le
I am not proud of this method of l^islatiog. I believe in keeping
onautborized projects and authorizing legislation off of appropria-
tiiHis bills.
But, in light of the agreements which have finally been reached
on these issues, and the time pressures that we are under, I will
npport this housing amendment, and the rule which provides for
its adoption, and I ask my colleagues to do the same.
D 1430
Mr. CoNABLE. Mr. Speaker, will the gentleman yield?
Mr. CoNTK. I yield to the gentleman from New York.
Mr. CoNABLE. I thank the gentleman for yielding.
Mr. Speaker, I support the rule, and I associate myself with the
remarks the gentlem£ui from Massachusetts is likely to Taake and
the fervor wiui which he is lik^y to make them.
The Speaker pro tempore. Tlie Chair would inform the House
that the gentleman from Louisiana (Mr. Long) has 21 minutes re-
maining and the gentleman from Tennessee (Mr. Quillen) has 10
minutes remaining.
Mr. Long of Louisiana. Mr. Spettker, I yield 1 minute to the gen-
tleman from Louisiana (Mr. Roemer).
(Mr. Roemer asked and was given permission to revise and
extend his remarks.)
Mr. RoEHES. I thank the gentleman for yielding me this time.
Mr. Speaker, what do Ralph Nader and Milton Friedman have in
common? Opposition to the IMF bill.
We should join in opposition to IMF because of what it does not
do. It does not call for a new Bretton Woods meeting on monetary
exchange rates; it does not regulate the big banks so eis to prevent
a reoccurrence of this financial fiasco; it does not require the IMF
to use its $44 billion in gold; and it does not force the IMF to em-
phasize growth rather than the limitation of the international eco-
nomic system.
We should join in opposition to IMF because this bill eliminates
a number of the reforms we placed in the original IMF bill that
bare^ passed the House.
lite following reforms have been eliminated:
A requirement for prior congressional approval before the U.S.
Executive Director commits the Congress to the next permanent in-
crease in quotas.
A provision preventing U.S. banks from collecting profits above
what they could earn on domestic loans on the very loans requiring
IMF assistance to pay back.
A requirement that IMF salaries not exceed our current Federal
aaployee executive IV level salaries of $67,200 a year and that
IMF employee home loans at less than half the interest payments
that average American taxpayers are currently paying be discon-
tinued.
A provision preventing U.S. banks from continuing to charge
feeB due immediately for loan rescheduling far in excess of admin-
istiBtive costs.
A requirement that future payments to the IMF be made with
greater portions of convertible currencies so that countries perpet-
yGoot^le
270
ually receiving IMF loans will start financing more of the real
costs.
Do not be fooleri. Passage of this bill will cost Americeui jobs, will
keep interest rates high, and will bail out the biggest, richest bank
on Earth.
Mr. Long of Louisiana. Mr. Speaker, I yield 1 minute to the gen-
tleman from Ohio (Mr. Eckart).
(Mr, Eckeirt asked and was given permission to revise and extend
his remarks.)
Mr. Eckart. I thank the gentleman for yielding me this time.
I am indeed chagrined that the snout and ears of my friend from
Massachusetts appear to have been replaced by turkey feathers.
We ought to reject this Thanksgiving turkey that comes to us
stuffed and gagged, filled with more giblet than goodies.
Under the most unusual type of rule that my friend usually re-
jects, because this turkey cannot stand the light of day, cannot
stand to be seen in public, cannot stand to have its contents exam-
ined because, like a good friend of mine once said, if you like sau-
sage and laws, do not watch either one being made.
Well, this is a lot of sausage and not very good law. It takes It^-
rolling and turkey stuffing to a new height.
This unusual rule defines gag rules in the newest way possible.
Reject the rule, restore some sanity to the process. If you are a
smEill businessman and your partner cannot get a loan, try to ex-
plain to them why we gave $8.5 billion of taxpayers' dollars away
to some of the richest banks in America. Reject the rule.
Mr. Long of Louisiana. Mr. Speaker, I yield 1 minute to the gen-
tleman from Michigan (Mr. Levin).
(Mr. Levin of Michigan asked and was given permission to revise
and extend his remarks.)
Mr. Levin of Michigan. I thank the gentleman for jaelding me
this time.
Mr. SpeEiker, 1 come from a very hard hit State, economically,
and that is why I favor this bill.
First, we need the housing in it. Second, we are struggling to get
back on our feet economically and so we have the greastest stake
in avoiding a collapse of international economic system and IMF is
a key in this. The proof is in the pudding. I suggest we look at re-
sults. Mexico is now moving back on its feet. A hard but necessfiry
bargain has been struck by the IMF with Brazil.
This allegation of elitism is poppycock. A hardnosed judgement, I
am sure, is that this bill is mainly necessa^ for the people of
Michigan, not for the banks of Michigan, eaid I urge its support by
everyone on this floor.
Thank you very much.
Mr. Long of Louisiana, Mr. Speaker, I yield 1 minute to the gen-
tleman from New York (Mr. Schumer).
(Mr. Schumer asked and was given permission to revise and
extend his remarks.)
Mr. Schumer. I thank the gentleman for yielding me this time.
Mr. Speaker, I too rise in support of this bill for two reasons:
First, it is a housing bill. It has in this bill for the first time a
rented production prc^am, the so-called Dodd-Schumer program,
part of the bill, which will flnedly build rental housing in our cities,
yGoot^le
271
aa luburbs, and our rural areas. There are homeless in America.
Ito are homeless because they do not have housing,
une turn our backs on them, we cannot say we are doing some-
thing for the liozneless. This is our last opportunity to do that, gen-
demen.
Many Members, when they think of federally subsidized housing,
think of past prc^^ame like section 8 new construction, and get a
lad taste in tfieir mouths. But the Dodd-Schumer program repre-
Rots a dramatic break from previous housing programs. This pro-
pam has received strict scrutiny in the 2V^ years since it was nrst
introduced by Senator Chris Dodd of Connecticut and I, and it has
emerged subetantially the same as we introduced it. The program
recognizes that while the section 8 program produced some ex-
btmely valuable housing units, it was also marred by fatal flaws,
and tries to correct many of those mistakes.
first, section 8 committed the Government to pay rental subsi-
dies far into the future. Assistance under the Dodcf-Schumer pro-
gram comes in the form of a one-shot, upfront subsidy to help
reduce the project's debt service costs.
Second, section 8 construction is extremely expensive, because it
prorided a deep subsidy over a long term. Dodd-Schumer, by utiliz-
ing a shallow subsidy up front, produces far more units for the
same amount of money. For example, in this bill, we authorize
(315 million over 2 yesirs, and expect that it will assist in the pro-
duction of over 20,000 units, at least 4,000 of which will be set aside
fci lower income families for 20 years. By contrast, if the same
amount was invested in section 8 new construction units, we could
produce, according to figures used by the Appropriations Commit-
to, only 2,300 units. Thus, under Dodd-Schumer we will produce
more lower income units. In addition, the nonlower income units
added to the housing stock will put some slack into tight urban
rental markets, which should alleviate some of the pressure driving
up all rents, ■which hits lower income families the hardest.
Third, under section 8, developers had every incentive to build
units up to the maximum allowable cost, because HUD guaranteed
their rental income. The Dodd-Schumer program contains incen-
tives to minimize development costs by selecting projects according
to competitive criteria, which heavily weight the degree to which
private contributions and local governmental contributions to the
prmect are maximized, and Federal contributions are minimized.
Fourth, section 8 was distributed to areas of the country by a for-
mula, which was designed to measure need, but which frequently
ended up providing funds where they were not necessarily needed.
Assistance under the Dodd-Schumer program is highly targeted.
Only communities suffering from a severe shortage of rental hous-
ing ¥rill be eligible for assistance, and those communities with the
Dxet severe shortages will be favored in the competitive selection
process.
Uf^ Members here sire well acquainted with the highly success-
fill UDAG profp'am, which is designed to develop public-private
partnerships in economic development projects, with local govern-
ments leamng the way and shaping their own strategy according to
their priorities. The Dodd-Schumer program is best viewed as a
UDAG for housing.
yGoot^le
272
The second reason I am for this bill ia, that in the IMF portion of
the bill safeguards have been added in the form of the amendment
that I had introduced when the bill was tlrst considered. That
amendment had lost on the floor, but had been restored to the bill.
It tells the banks that they can no longer make excessive profits on
their IMF loans profits that hurt both the economies of our country
and of the later American borrowers. The langu£^e of the amend-
ment limits the spreads that banks charge on their loans restores
some balance of funds between the creditors, debtors, and the
world economy.
D 1440
Mr. Long of Louisiana. Mr. Speaker, I yield 1 minute to the gen-
tleman from Massachusetts (Mr. Frank).
Mr. Frank. Mr. Speaker, I wish we had more time on this but
we are improving. We have 50 percent more time to debate this
today than we had for the Constitution on Tuesday, so we march
toward democracy.
This bill is not perfect in either regard— either for housing or the
IMF. And it would be better if they could come up separately. But
in these peculiar circumstances, this bill has to be t<^ther, al-
though I usually do not like that procedure, to make the housing
part veto proof It is the only way to help provide housing for the
elderly and other needy people without a veto. It is an imperfect
attempt to deal with IMF, but a satisfactory one. And it is an im-
perfect housing bill, but it is definitely an advance with regard to
housing.
The IMF part does restrict the ability of the bainks to make prof-
its off of their mistakes. The housing part does provide some relief
to the poorest people in this country, the residents of public hous-
ing who were unfairly, in my judgment, damaged some time ago.
We do not get perfection in this great, sprawling, multicham-
bered Government, but this bill does represent the best compro-
mise we are going to get. Vote this down today and you will not
have another IMF bill, and there will not be another housing bill.
This represents the most we can get, given the forces at work here
and at the White House.
All sides have gone as far as they can and this is the result.
Sometimes, compromise is essential if we are to govern fairly and
effectively.
On one specific point, Mr. Speaker, I would like to ask the distin-
guished chairman of the Banking Committee the following ques-
tions with respect to the Real Estate Settlement Procedure Act pro-
visions contained in the legislation. Am I correct that the legisla-
tion has been modified from the text of H.R. 1 with respect to dis-
closures made to consumers and that the new language is baaed
upon similar language found in the Tnith-in-Lending Act which
provides a defense to allied violations of the disclosure require-
ments?
Mr. St Germain. The gentlemem is correct.
Mr. Frank. Would the chairman agree that eilthough this lan-
guage is based upon the Truth-in-Lending Act, it is not intended
yGoot^le
273
thBt judiciRl or other interpretations of the defense contained in
that act would nec^Barily be applicable under this legislation?
Mr. 9r Gesmain. Yes, I would agree with that asseBsment.
Mr. FsANK. Furthermore, would the chairman agree that since
the discloBures which are to be made under this legislation are
likely to be much simpler than those required under Uie Tnith-in-
Leaddng Act, it is intended that the error avoidance procedures
necessary to establish a valid defense to an alleged controlled busi-
ness violation would also be simpler?
Mr. St Germain. Once again, I would agree with the gentleman.
Mr. Frank. Finally, would the chairman agree that it is intended
under this legislation that error avoidance procedures be adopted
which reflect the nature of customer dealings in the settlement
services industry in which the referring party is engaged?
Mr. St Gerbiain. That is correct.
Mr. Frank. I thank the chairman for his clarification of the leg-
islative intent of this provision.
Mr. Quiu-EM. Mr. Speaker, I yield 2 minutes to the gentleman
from South Carolina (Mr. Hartnett).
Mr. Hastnett. I thank my colleague for yielding.
Mr. Speaker, one of the most frustrating parts of being a
Member of this body, I think, is seeing things that are wrong and
being unable to correct those things.
I tiiink it is terribly poor that once again we are faced with what
is a gag rule. We are taking what is a necessary housing bill and
tying on to it something that I do not think is good for the Ameri-
can taxpayer.
We are attempting to bail out the IMF when we are $1.2 trillion
in debt and they are $20 billion in debt. How can this country and
my colleagues on the other side of the aisle say they want to
r^uce our deftcits when they brought a tax bill before us yester-
day which would have, in effect, done that, and here today we are
gomg to vote to give away $8 billion which the U.S. Treasury does
not have and which will only add another $8 billion to our deficit.
Mr. Speaker, this is improper. It is one of those things that is
wrong and people like myself are unable to correct. But I would
use my colleagues on both sides of the aisle not to vote for this
rule.
You have heard here this afternoon that this is the only housing
IhU we will ever get. I do not understand why the tremendous lead-
ership on the other side of the aisle could not bring before us what
I woi^d call a clean housing bill when we return in late January or
early February.
Th^ are uang it as a blackmail to get our votes for the IMF, to
get 8 Dillion dollars' worth of tax dollars that the Treasury does
not have and which will add $8 billion more to our deficit.
I urge my colleagues on both sides of the aisle to vote against
this rule and I yield back whatever time I have remaining.
Bfr. Long of Louisiana. I yield 2 minutes to the distinguished
gentleman from Maryland (Mr. Long).
(Mr. Long of Maryland asked and was given permission to revise
and eactend his remarks.)
Mr. Long of Maryland. Mr. Speaker, this is a gag rule of the
worst order, with hundreds of pages of amendments which have
yGoot^le
274
been almost impossible to get copies of and, an amendment which
includes $25 billion for IMF and housing.
Let me tell you, Mr, Speaker. As chairman of the subcommittee
that deals with the IMF issue, I have been given 2 minutes to
speak, and that is part of the gag rule.
Three or four years ago President Reagan promised if elected to
stop deficits by 1984, even by 1983. What has happened?
In 1983 alone there is a deficit of $195 billion, which equals the
deHcits of all 4 years of the Carter administration. This deficit will
grow to $208 billion in 1984 even without this amendment.
Nobody can deny that they are going to have to borrow $8.5 bil-
lion to give to the IMF if this amendment passes. Why should we
increase the deficit in this manner? The IMF has 20 times as much
gold, per billion dollars of debt as the United States. Yet the
United States is being asked to borrow or print money to bail out
the IMF.
Why? They have plenty of money to deal with their present prob-
lems. What they are planning to do is bail out the big banks that
loaned $350 billion to foreign countries. Many of these have na-
tions close to default and most have in one way or another indicat-
ed that they cannot possibly pay it back. And, we know from histo-
ry they will not pay it back.
I am not one to look under the bed for Communists. The adminis-
tration has stretched the Communist threat in many places where
that threat is only tenuous. But, if communism is a uireat, why are
we proposing to bail out Communist economies so that they can
concentrate on their military buildup?
Certainly we ought not to do it when we are asking American
boys to fight and die against communism.
Like it or not this will be an issue in the next election. Make no
mistake, IMF is an economic Lebanon or Vietnam. The deeper we
get, the further in we are going to have to get, and the more diffi-
cult it is going to be to withdraw.
Vote "no" on this bank bailout package. It is a vote you will
never have to explain.
Mr. Long of Louisiana. Mr. Speaker, I yield 1 minute to the gen-
tleman from North Dakota (Mr, Dot^an).
(Mr. Dorgan asked and was given permission to revise and
extend his remarks.)
Mr. Dorgan. Mr. Sj>eaker, the question is why this procedure?
Why the time limit?
I think the procedure and time limit are necessary because this
bill cannot be defended or explained in an afternoon. If we had
more time to talk about this we would talk about the things that
have been said by the gentlemen that preceded me.
They said there are safeguards in this bill. That is absolute non-
sense. They are toothless tigers. There are no safeguards in this
bill.
This bill has been stripped of the safeguards. The safeguards are
gone, and that is why we ought to vote against this rule.
The only way they could get this bill passed is to sweeten it with
housing, and that talks about the merits of the legislation.
People say this is not a bailout of the big banks. Of course it is a
bailout to the big banks. What do you think it is? If you do not
yGoot^le
275
want to call it a bailout, call it a cave-in, caving in to the big banks
fiH' S8.5 billion, a bill that is going to be footed by the taxpayers in
diis country, and on the final legislative day of the session when
we have a $197 billion Federal deficit.
Some say you need to see the higher truth. I see the higher
truth. The truth is we ought to do things the right way and this is
the wrong way, and I say you ought to vote against the rule.
Mr. Long of Liouisiana. I yield 2 minutes to the gentleman from
Wisconsin (Mr. Obey).
Hr. Obey. Mr. Speaker, I know that my chairman, Mr. Long,
does not like the fact that our subcommittee is bypassed on this
matter and I do not, either.
I joined him in opposing the President on Lebftnon and in oppos-
ing the President's policy in El Salvador. But on this one the Presi-
dent is right. I do not happen to agree with Ronald Reagan's eco-
nomic approach to life. I do not happen to agree with what I see as
his favoritism to big business or his favoritism to the wealthy.
I do not even like a lot of the parts of this bill.
But the fact is that in this instance the President is simply
trying to keep the economic system of the world afloat and we owe
hun our support.
The idea that some people seem to have, including the hard
rightwing, that somehow the President is going to lavish loans on
Communist countires is, frankly, so much baloney. If some groups
really feel that the President is not sufficiently anti-Communist to
be trusted with maximum authority to decide which loans are in
our national interest and which loans are not, then I would simply
niggest to you that is not the Ronald Reeigan I know.
You bet this bill is not perfect. There are part of this bill that I
would like to vote against, but the fact is that people ought to quit
blaming the President and quit blaming the Ckingress for the fact
that the world is complicated and sometimes you have to do some
things that are not perfect.
1 have opposed the President on many things. But I will support
him on this one because the stakes are simply too high if we do
not. The stability of the world's economic system is at stake, and
the security of our own economic recovery is at stake.
If we fail to support him on this issue today we risk both of those
things, and I do not think we can afford to do it.
I also ask you to remember we Americans started the IMF. It is
the United States and Great Britain who have drawn on it more
greatly than any other country. The Soviets do not even like the
IMF. They think it is too capitalistic for their own good.
I ask you to support the President on this today and I ask you to
¥ote yes today. A vote yes will help to stabilize the world economic
system, strengthen U.S. export opportunities and build some
hmiaes for Americans.
Mr. Long of Louisiana. Mr. Speaker, I yield 1 minute to the gen-
tlewoman from Ohio (Mr. Dakar).
(Ms. Dakar asked and v/as given permission to revise and extend
herremarbi.)
yGoot^le
D 1450
Ms. Oakar. I thank the chairman for yielding. I would like to
rise in support of the rule.
Mr. Speaker, I yield briefly to my friend (Mr. Marriott).
Mr. Marriott. I thank the gentlewoman for yielding.
Mr. Speaker, I will ask if the gentlewoman would clarify some
things on section 409.
Am I correct in that the terms "construction" and "operation" as
used there in section 409 include the word "expansion"?
Ms. Oakar. That is correct. As the original sponsor of the foreign
loan evaluation section which included the words "construction or ■
operation" it is the intent that loans in excess of $20 million at ex- '•
isting facilities be interpreted as loans for construction of opeiv '■
ation. '
Mr. Marriott. Also in terms of the word subsidy, I assume that |
the phrase is intended to cover all material or significant subsidies |
that may be provided by a foreign government even though it is j
not specifically mentioned. '■
Ms. Oakar. Yes. I thank the gentleman for his question. Let me |
reclaim my time and say that international agreements do include i
material subsidies. I appreciate the gentleman's concern for the :
economic distress our industries are facing and his support for this
measure. ■
I was very pleased with my chairmein for preserving that section. >
If we get another IMF bill, I guarantee it will not have this section <
in and our industries will not be protected.
So I hope you will support the bill.
The Speaker pro tempore. The Chair will observe that at this ■
point the gentleman from Louisiana (Mr. Long) has 10 minutes re- ■
meiining and the gentleman from Tennessee (Mr. Quillen) heis 8
minutes remaining.
Mr. Quillen. Mr. Speaker, I yield 2 minutes to the gentleman
from California (Mr. Dannemeyer).
(Mr. Dannemeyer asked and was given permission to revise and
extend his remarks.)
Mr. Dannemeyer. I thank the gentleman from Tennessee.
Mr. Speaker, I rise in opposition to this rule, most particularly to
the inclusion of the IMP funding or the bank bailout provision of
the bill.
For a person in my posture I think it is appropriate to ask: Well,
what if it goes down? What then? How will the IMF meet, truly,
the international crisis, the monetary crisis that is facing our
world? That is a fair question.
We should understand that the IMF today has $44 billion in gold,
current value, in its coffers.
At one of the hearings, the head of the IMF was asked by a
Member of Congress: "Mr, Chairman, under what circumstancea
would you use the gold to bail yourself out of this problem?" And
his response was, "Well, in case of an emergency we would use that
gold."
Well, now if this is not an emergency, I suggest that the IMF
people do not know how to define it because if they are truly in a
yGoot^le
277
mna th^y should use that resource rather than to come to ub to
bail them out.
Ihis problem with the IMF is not the cause, it is a symptom, the
lymptoin of an underlying fiscal and monetary discord that exists
in uie whole world. And when this IMF bill came up earlier I
■night to attach an amendment to the IMF bailout that would con-
dition the U.S. contribution on the United States declaring a fixed
relationship between the dollar and gold by January 1, 1985, be-
cause only by getting honest money in the United States, a doUar
backed by something solid such aa gold which h£is proved histori-
cally the way to rein in runaway politicians in our world, until we
get that honest money we are not going to solve the international
monetary crisis. I was denied that opportunity on a point of order.
We need a full debate in this House on the problem of paper
money, which is at the root of our problems.
Mr. Kemp. Mr. Speaker, will the gentleman yield?
Mr. Daknbmeyer. I yield to my colleague from New York.
(Mr. Kemp asked and w£is given permission to revise and extend
his reniarks.)
Mr. Kemp. I thank my friend for yielding.
Mr. Speaker, 1 rise to agree with the gentleman from California
and to speak against the rule and the bill.
A few moments ago, my friend the gentleman from Massachu-
setts, quoted President Reagan's statement that this International
Monetary Fund bill is the linchpin of the international monetary
Bystem. Regretfully, I must disagree, for as Aristotle put it so well,
"Plato is dear to me but the truth is dearer." The President is dear
to me but the truth is dearer, and the truth is that there is no
international monetary system and that is the problem with the
niF today.
There is no international monetary system for which the IMF or
any other body may act as linchpin. Since we abandoned the funda-
mentals on which the Bretton Woods agreement was based we
have destabilized all phases of international trade and finance and
the floating rate sjmtem is causing international economic contrac-
tion, austrity, and unemployment.
To understond the true situation, I ask my colleagues and our
President to remember the words of another great President, John
P. Kennedy, who said, "We shall continue jwlicies designed to stim-
ulate growth here at home — the well-being of all free peoples is in-
extricably entwined with the progress achieved by our own people.
I want to make it perfectly clear that this Nation will maintain the
dollar as good as gold * * * the foundation stone of the world's
trade and payment system."
Bfr. Speaker, this is the potential linchpin for a monetary system
i^Hiilt on the principles of stable exchange rates, free movement of
otpital, restoration of a liberal trading order and a new Bretton
Woods type system with an international unit of account "as good
Mgold.''
1 do not oppose this bill out of isolationism but out of my belief
that a systemic chan^ is cedled for in international and domestic
mmetary policy of this bill as I want te explain, will compound not
cure our difficulties.
yGoot^le
278
I want to briefly address the substance of the compromise which
has caused such division in this House and to point out a few of the
reasons why the authors of this compromise, a compromise com-
pleted far from public view and without consultation with the mi-
nority in this body, refuse to allow the close scrutiny which would
normally be applied.
When the IMF quota increase was first before us, I opposed it as
an inappropriate response to a serious International monetary
problem. Nothing has changed to alter that opposition.
The monetary problems we face are not limited to a handful o£
developing and Eastern bloc nations. They extend throughout the
monetary system and are endemic to it. Under the current regime,
money is a hodgepodge of paper currencies crawling, sinking or :
floating against other currencies, baskets of currencies or constant- ;
\y fluctuating, abstract, trade-weighted averages. Even nominally i
fixed currencies are pummeled by the actions of central bankers; '
they control the reserve currencies with no standard by which to
measure actions or anticipate them until the relationship of mone-
tary and real values forces a devaluation.
Without a monetary standard, credit markets become agents of
damage control rather than allocators of resources. Protectionist
pleas are in large part reactions to these constantly shifting cui^
rency values.
Therefore, Mr. Speaker, a precipitous move to expand the re-
sources of the IMF without addressing the system's underlying
weaknesses will simply worsen the hemorrhage as current borrow-
ing is diverted to interest payments on old debt. Potentially produc-
tive resources will be transferred by political fiat to those bank-
rupted by the lack of monetary standards. Rather than providing
assistance to developing nations we will just be postponing inevita-
ble policy adjustments.
Let us look for a minute at what would happen without IMF
quota increase.
First, as has been pointed out by Fred Smith of the Council for a
Competitive Economy, the IMF does not require funding to act as
financial arbitrator between the private banks and the debtor na-
tions. It can easily take the role of Moody's or Standfird & Poor,
providing guidance and evaluations.
Second, the banks continue to have the same incentives to re-
structure loans and avoid defaults whether the IMF has additional
lending authority or not. Working through the Bank for Interna-
tional Settlements, the Paris Club and through their own individ-
ued channels, the international banks will continue to seek solu-
tions to the problems they share with the debtors.
It should also be remembered that our Government is not impo-
tent to act if some of these efforts fall short. The Federal Reserve
System stands ready to assist as it did in Mexico by making addi-
tional exchange available in support of the banking system. The
Exchange Stabilization Fund at Treasury is similarly available to
help those who are in real danger.
I am sure that supiwrters of the legislation will respond that this
is too much for us to do alone, that we must leverage other nations
to support our efforts emd that we can only do that through the
IMF. To this I say, nonsense. Other nations do have the same in-
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279
we have to seek solutions. These are not dependent on the
DIF any more than the incentives of the banks are dependent on
ootaide forces. Moreover, we should keep in mind that the only
usable resources which flow into the IMF or any international in-
ititution are those of the industrialized nations, basically the G-10.
There is not a member of this group which would fail to support its
trading partners in an effort to maintain trade relationships and
aroid crisis.
I believe that these mechanisms wilt forestall any panics, failures
or crises. But, for the sake of debate, let us ask the question, "What
would happen in the event of a default by a major debtor?"
The dire warnings from Treasur>' indicate that U.S. banks would
bil, that a m^or deflation would occur and that interest rates
would skyrocket. Where is the truth?
To begin with, a major default, or even writing off the bad loans
being held by some banks, will indeed cause problems for those
banks. Their stockholders will probably lose money. But that is the
risk which they accepted in making capital available for adventur-
ous foreign lending. It is not the responsibility of the taxpayer.
We should keep in mind that it is the stockholders who are at
risk, not the depositors. The Federal Deposit Insurance Corporation
stands ready to protect depositors. Ever, if this requires additional
funding, it results in the economic damage being placed on the ap-
propriate risk takers.
Just as the FDIC protects depositors, the Federal Reser^-e S>'stem
has the authority to prevent any spread of defaults or a deflation.
If bank assets are wiped out by default to such a degree that the
banking system itself is endangered, the Fed can step in with addi-
tional reserves in an amount identical to the Ic^t assets. This injec-
tion of reser\'es would protect the systein without bailing out irre-
qxKisible bankers. Moreover, since the Fed can replace the exact
amount of assets lost, there is no domestic denationar>- or inflation-
air impact.
The notion that interest rates would rise is simply a ruse. The
Ominnan of the Federal Resen-e Board scored the Congress re-
omtly for high deficits, increased borrowing and the pressures
these bring on interest rates. He now Tells us '.ha: if we do not
borrow additional funds for the IMF rates wiH rise. I have been
b^d by some supporters of this :e^laT;or. tha: :-r.ding the IMF
will not cause rates to fall but r.ct fMr.iir.g :'. ■*':'.] ca'JS* the.T^ to
rise. What logic is this?
Interest rates in international lending are se*.. as those for do-
mestic lending, based on risk of ir.fiatior. ->r def.aTlon and the qual-
ity of the investments undertaker. The or.ly possib'.e incresise ir.
rates if we do not fund the IMF w-ill t* cue :'. "akir-e banks r^
qnnsible for their risks, that is. ;: the bh-.k^r: pe.-:*:;-.^ :ha: a Oov-
enunent guarantee of their losr-s has beer. ■*-.:'r.'ira-f.-r. \\ .-,&•_ effw.
would this have domestically? It is ver;.- siir.p.t: iXrr.trs-.ic !trr.c:.-.g
opportunities — ungtiaranteed loans for h-v.is«. =u:o.T.-jr.<:l«. ■:o.!e^e
cdiK^icHis and small busine^es — "kzI'. riove -p '.r.h ..='. ■/. dfrsi-'an!':
liAs as the Government rjbsidy to foreier. >.'.d:r.B .■■. r'z~j/-h^
As I have shown alxn-e. the F« :^r. :or«*.all hr.-> i.'.f.stior.ar;.- or
deflatiaDary effects of defaults, so ther^ is r.o ■yT'^.'-iiTh -...•■. ir.te.'ett
rates fnxn that sounx.
yGoot^le
280
The only pressure for increased interest rates comes from the de-
termined position of Federal Reserve Board Chairman Paul
Volcker to join with the IMF in a program of stifling austerity.
When we debated the IMF Quota increase in July, I made the fol-
lowing statement:
My question is that the Federal Reserve Board in the last three months has
raised the federal funds rate from S.2 to 9.4 percent. They are raising interest rates
right now. and the gentleman suggests that by spending more abroad we can lower
interest rates in the United States. The gentleman should be directing his att<?ntion
at Paul Volcker and the Federal Reserve Board to bring down those interest rates
because that would do more for Mexico and Brazil than the so-called quota increase
for the IMF.
Since I made that statement, the situation has only worsened.
The growth of the money supply as measured by the Fed's revered
Ml has slowed dramatically in the second half of the year. It has
risen at an economically crippling rate of 1.1 percent over the last
3 months, leaving growth for the Fed's main monetaiy target at or
below the bottom of its target range. The results are clear.
Interest rates continue to move upward. The dollar remains
strong with even the Soviet Union joining in the rush to the dollar
by selling major shares of its holdings of German marks and
buying dollars. Key commodity spot and futures prices remain at
or below the deflated values prevalent at the beginning of the year
while key measures of inflation show stable prices for both con-
sumer and producer goods despite the strong recovery.
The most telling result of all, Mr. Speaker, is that unemploy-
ment, while falling, remains far above normal and at levels far too
high.
Adding to the burden already being carried by American workers
by shifting resources from productive activities to support austerity
and incentive-destroying fiscal policy changes in developing nations
will not change this situation. Only the actions of the Federal Re-
serve Board in reversing its policies will provide the respite in do-
mestic and international financial markets required for movement
toward reestablishment of a monetary standard and the economic
growth and stability which would emerge.
But what do we see instead? The Fed, not content to support the
austerity preached by the IMF, has taken to the domestic pulpit.
While staunchly maintaining its all of independence of the Con-
gress and the President when it comes to monetary matters, the
Fed, through Chairman Volcker, is attempting to tfdce an increas-
ing role in the setting of fiscal policy. While obstinately continuing
the policy of unreasonably high interest rates, Mr. Volcker has un-
dertaken to try to influence fiscal policy in closed meetings with
Members of the Congress. According to reports in the press and
from the Senate, the offer before us is slight monetary ease and
slightly lower interest rates in return for a fiscal policy of higher
taxes which is to the liking of the Fed Chairman.
Mr. Speaker, I find this intervention in the duties of the Con-
gress by a body which considers itself beyond our control and
which has steadfastly refused to enter a dialt^ with us on mone-
tary policy to be intolerable.
This is the same tactic used by the IMF. The IMF does not
impose austerity in the strictest sense of the word. What happens
yGoot^le
281
is that thcgr go into a country with their team of economists and
work with the finance minister, or the chancellor of the exchequer,
and they end up saying, "In exchange for the help we are going to
pve you, you have got to impose budget austerity as the means of
correcting your current account imbalance."
As I have often stated before, the austerity being practiced in the
world today is to raise consumption taxes on the poor, to raise
taxes on savings and investment and channel these resources into
the central government. Credit is then allocated through the na-
tional policy board or the development bank or whatever govern-
ment agency has been established to make political decisions on
the allocations of credit.
The parallels of the actions of the international monetary body
and our own Fed are exact. Fortunately for American taxpayers
the Congress rejects this approach. Yesterday, by defeating the rule
on the Ways and Means Committee tax bill we killed the issue of
tax increases for this year.
Just as we have rejected the misguided policy of incentive-de-
stroying tax increases and austerity for our constituents, we should
reject the imposition of those policies on the poor of developing na-
tions by the IMF and its allies in the Fed.
I ur^e my colleagues to join me in voting no on this legislation
and send an unmistakable signal to those who would stymie the
pace of global economic growth which is just now b^inning and is
more threatened by the Federal Reserve Board and IMF econo-
mists than any other cause.
Mr. Long of Louisiana. Mr. Speaker, I yield 2 minutes to the
gentleman from North Carolina (Mr. Neal).
(Mr. Neal asked and was given permission to revise and extend
his remarks.)
Mr. Neal. Mr. Speaker, the world financial crisis is still with us,
and far from being resolved, even though it has been somewhat
contained through the cooperative efforts of the large industrial
countries and the debt-burdened developing countries.
Mr. Speaker, the IMF desperately needs additional funds to help
debtor countries weather the recession and get their finances in
order. At stake here is the survival of the world trading and finan-
cial systems, from which the United States benefits perhaps more
than any other country. This IMF bill is really about jobs and a
future for many of our people.
Mr. Speaker, despite months of delay, the IMF and most of the
bee world nations are counting on the United States to come
through with its share of the increase in IMF lendable funds.
When we do, the other 145 member nations will continue to follow
our lead.
It is fortunate that the IMF exists, because we have no other ve-
hide to provide the discipline and the coordination needed to re-
Jolve the drfrt problem. Every U.S. President from Franklin Roose-
Tclt through Ronald Reagan has recognized the importance of the
lUF and given it full support. In recent years, the IMF has rescued
(heat Britian, Turkey, Portugal, and other countries from econom-
ic calamity, and today dozens of developing countries are depend-
ing on it for temporary assistance and advice in the worst world-
wide recession since the Great Depression.
yGoot^le
Mr. Speaker, even though the IMF has a remarkable record of
success, its work and mission are poorly understood. Let us correct
some of the common misperceptions about the IMF:
The IMF does not bail out banks. IMF loans are a small percent-
age of a country's debt. For example, Mexico owes nearly $90 bil-
lion, but is borrowing from the IMF $3.5 billion spread over 3
years. Mexico could not even begin to pay the interest on its debt
with less than $1.2 billion a year from the IMF. Furthermore, the
IMF's total resources — even with the proposed increase — Jire but a
small fraction of the $700 billion of Third World debt. Banks and
everyone else benefit primarily from the IMF-approved economic
reform plans required of borrowing countries. IMF programs ioi-
prove debtor countries' financial stability and make them better
credit risks. This helps assure a more stable international trade en-
vironment from which we all benefit.
The IMF does not create austerity conditions in borrowing coun-
tries. Countries seeking IMF loans already are in such desperate
circumstances that austerity is inevitable. With the help of IMF
loans and advice, countries can institute belt-tightening measures
with as little pain and disruption as possible. Countries with IMP
programs usually attract private capital and keep their economies
working toward recovery. Without the IMF, some countries would
face bankruptcy and collapse; in that event, the austerity required
would be much worse.
Our IMF participation is not a contribution or a giveaway, nor is
it foreign aid. It constitutes a loan, on which we earn interest at
near-market rates. Our only cost is the difference between the in-
terest the IMF pays us and our Government's cost of borrowing the
funds we invest. Over the years, the cost has been nominal. In
some years, we have actually made money on our IMF investment.
The IMF is like a big credit union: Members deposit money emd
members — if qualified and in need — may borrow. Our deposits are
safe. No country has ever defaulted on an IMF loan.
Few Communist countries are IMF members. Of the Extern
bloc, only Hungary, Romania, and Yugoslavia have current IMF
programs, and their borrowings are a small percentage of total
IMF lending. These three countries, as you know, are more market-
oriented than other Communist nations, and we have always tried
to encourage their departures from the Soviet line. Most Commu-
nist nations shun the IMF because it requires free market solutions
to economic problems. Nothing would please the Soviet Union more
than to see the IMF run out of funds and become ineffective. From
the U.S. perspective, consider the [wUtical dangers of a Third
World bankrupt, in turmoil and ripe for takeovers,
Mr. Speaker, after months and months of hearings, debates,
amendments, and votes on the proposed increase in the U.S. quota
in the International Monetary Fund, it is time for us to approve it.
Mr. Speaker, while the IMF quota increase is at the heart of this
package, the package also contains quite a bit of additional legi^-
tion on important issues which have not commanded all the atten-
tion they deserve. Due to the extraordinary circumstances out of
which this bill has evolved, there has been little legislative history
clarifying some of these matters.
yGoot^le
In this package, we have essentially accepted the Senate's ver-
nm of tha Export-Import Bank's competitiveness mandate. This
language requires that Exim should be fully competitive in all its
nogiBins, but it should also ti^, to the extent possible, to honor its
longBtanding tradition as a self-sustaining financial institution. The
Sraiate language speaks of being "fully competitive," and not per-
mitting a concern with the Bank's own cost to impair this primary
function. But the language also makes clear that being fully com-
petitive does not require an exact matching of the rates and terms
(flered by foreign governments. Moreover, the Bank will hence-
forth be required, by this legislation, to report to the Congress any
cumulative losses which result in wiping out half its capital, at
which point the Congress would "take appropriate action." Obvi-
ously this language establishes a clear congressional concern that
E^Kim's losses not oe excessive. I could well imagine that the quick-
est way for Exim to impair its primary function would be to run up
loBses so heavy that Congress and the American people would no
loiter support what has historically been one of the most effective
and efficient and valuable of all Government programs.
Mr. Speaker, this legislation also mandates the establishment of
a medium-term financing program within the Export-Import Bank.
While the language in the bill concerning this may make it appear
to be an entitlement program, it is clear from a reading of the
entire section that medium term financing need be offered only on
whatever terms are necessary to be fully competitive. The language
does not automatically require such financing to be offered, even if
genuine foreign competition at the stipulated interest rates can be
documented. Exim still has to allocate its resources among all
claimants, and this language does not create any privileged posi-
tion for any class of claimants. In other words, it does not preclude
Exim's Board from exercising its independent judgment as to how
its budget resources can be most efficiently utilized to promote U.S.
exports as such.
Finally, Mr. Speaker, I would like to notice one of the striking
innovations contained in this l^islation: The establishment of tied
aid credit prt^ams in the Eximbank and in the Agency for Inter-
national Development. The National Advisory Council on Interna-
tional Monetary and Financial Policies is designated to coordinate
these programs, and will be able to effectively control their use. I
think this clearly indicates a congressional desire to rationalize the
granting of tied aid credits within a coherent government-wide pro-
gram, so that independent agencies can no longer operate on their
own in this highly sensitive and expensive form of quasi-aid, quasi-
export financing. Moreover, the purjwse of the whole scheme, as
d^rly spelled out in the legislation, is to support our negotiating
dforts to reduce and control the worldwide practice of granting
tied aid credits. The exact mechanics of the programs — what terms
to offer, what sales to target — should be determined in light of our
negotiatii]^ objectives. To offer credit substantially as competitive
as that ofierea by foreign governments, as required by this act, is
■imply a restatement of Exim's competitiveness mandate, this is, to
offer fully competitive fmancing. As 1 have already mentioned, that
mandate does not require an exact matching of rates and terms.
Hence, neither does the tied aid credit program.
37-922 0 - 84 -
yGoot^le
Mr. Speaker, with these clarifications, I think the entire Export-
Import Bank reauthorization package is a workable and worth-
while compromise. I must reemphasize however that it was a com-
promise hammered out in haste, and subordinated to the overrid-
ing neccessity of completing action on the IMF quota increase. The
result, though workable, is far from optimal. Vigilant oversight of
Exim programs and policies will be required over the next 3 years,
Mr. Speaker, approval of this rule will authorize our continued
support of the IMF and the Eximbank and I urge its adoption.
Mr. QuiLLEN. Mr. Speaker, I yield 3 minutes to the gentleman
from Minnesota (Mr. Frenzel).
(Mr. Frenzel asked and was given permission to revise and
extend his remarks.)
Mr. Frenzel. Mr. Speaker, I WEint to associate myself with what
I think are the very thoughtful and compelling remarks of the gen-
tleman from North Carolina.
Mr. Speaker, there is not much controversy over this bill with
the exception of the IMF portion, and unfortunately that appears
to be hip deep in controversy.
I would like to say to those in this body who are interested in
exports and the opportunity to advance American employment op-
portunities through exports, that there is no more im[>ortant
export hill that this House will vote on this year.
There is no other way to ensure the short-term growth of Ameri-
can markets abroad quite as effectively as through the passage of
this particular bill.
So for those who are interested in export jobs, I say that I hope
you will help pass this bill.
There has been a lot of talk about who this bill is going to help.
It is going to help everybody. It will help us and other countries
around the world whose continued financial health is enormously
important to us and to the jobholders of this country.
Yes, if it is successful, it is going to help some banks, too.
But if this bill does not work we will spend a good deal more,
propping up the banks of this country, than 58.5 billion.
Let us suppose that Mexico goes broke. That financial distress
will be accompanied by shrinking food supplies and higher prices
and soon our security interests will be involved.
I assure you that our ultimate cost would vastly exceed the $8.5
billion which is put in this bill.
The decision comes simply down to this: Either we can pay $8.5
billion today and hope to help world recovery, or we can deny this
bill and then later be forced to pay a good deal more for both secu-
rity and economic interests.
1 believe the first choice, passage of this IMF bill, is the right
one. I hope it will be swiftly passed.
Mr. Long of Louisiana. Mr. Speaker, I yield 1 minute to the gen-
tleman from Connecticut (Mr. Morrison).
(Mr. Morrison of Connecticut asked and was given permission to
revise and extend his remarks.)
yGoot^le
D 1500
Mr. MOBSISON of Connecticut. Mr. Speaker, I rise in support of
this rule. We need to pass it for two reasons.
F^rst, the United States has not had a housing authorization pro-
gram in force for the past 3 years. Enactment of this rule will in-
corporate into the supplemental appropriation bill comprehensive
housing legislation that will make a substantial contribution to the
production of new housing and to the renovation of existing houB-
insunits-
The bill improves the targeting of the community development
block grant program so that those funds will go to the benefit of
low- and moderate-income people. The bill also expands the section
235 home-ovmership pn^am from single-feunily to two- and three-
family homes based on an eunendment I offered when H.R. 1 was
considered in the House.
Finally, the housing provisions will significantly reduce the rents
paid by individuals living in publicly operated or subsidized hous-
ing units by allowing tenants deductions from income before apply-
ing the 30-percent rent-to-income formula. If this rule is adopted,
tenants will be entitled to deductions of $480 per child, $400 per
handicapped or elderly household, child care expenses and medical
I in excess of 3 percent of income for elderly and handi-
capped persons.
T^ese are substantial improvements for which we can be justly
proud.
Second, passage of the rule will result in a needed funding in-
crease for the ^temational Monetary Fund. In truth, the provi-
sions restricting the authority of the U.S. representative to the
IMF are not all that they should be.
But the message being sent by this bill is still clear. The IMF
must change its approach by moving to streteh out short-term
loans at lower rates of interest and by adopting a more growth-ori-
ented approach to the Third World countries.
I want to thank and to commend the chairman of the Committee
on Banking, Fintuice Euid Urban Affairs, Fernand J. St Germtun,
who conceived the strategy of linking the housing and IMF provi-
sions of this bill to insure their enactment.
It is no secret that the White House had no interest in the Demo-
crats' housing prt^am. Mr. St Germain found a way to spark their
interest and for that we are all in his debt.
I urge my coUeetgues to pass this important rule.
Mr. Long of Louisiana. Mr. Speaker, I yield 2 minutes to the
gentleman from Massachusetts (Mr. Boland).
(Mr. Boland etsked and was given permission to revise and extend
his remarks.)
Mr. Boland. Mr. Speaker, I support the rule and I support the
lemslative proposids embraced by the rule.
Mr. Speaker, I know that many of the Members here are con-
cerned with the procedure being used to pass these substantial
pieces of legislation. I share that concern — but I believe that if we
are going to be successful in getting a housing authorization bill
enacted — we need to support the elements of the Gfum amendment.
That amendment includes the housing authorization bill — the
yGoot^le
Internationa] Development Banks authorization — the IMF authori-
zation and appropriation — the Export-Import Bank authorization —
and the Defense Production Act extension.
Let me take just a moment to discuss one element of the pack-
age, the housing authorization bill. Fundamentally, it has author-
ized the amounts already appropriated for existing HUD programs.
These programs include such activities as urban development
action grants, community development block grants, public hous-
ing, section 8 existing and moderate rehabilitation, urban home-
steading, section 202 housing for the elderly or handicapped, and
operating subsidies. The housing bill simply reflects the amounts
already appropriated for these programs.
There are sdso a number of new prc^ams in this authorization
bill. These include the neighborhood development demonstration
program, a voucher demonstration program, a new emergency shel-
ter program, a public housing child care demonstration prc^ram,
additional authorization for section 235 homeownership assistance,
and a m^or new rental housing rehabilitation and production pro-
gram.
As has been stated here before, and I know the gentlemem from
Rhode Island is familiar with this fact, what the Appropriations
Committee did when the 1984 appropriation v/aa enacted v/as to set
aside $1.5 billion to fund parts or all of these new pri^rams. That
$1.5 billion is still in reserve and it will remain in reserve at least
until January 1, 1984.
However, in the second continuing resolution, language was in-
cluded which provides that if no authorization bill is enacted by
January 1, 1984, the $1.5 billion held in reserve is automatically
available for the section 8 existing housing program. On the other
hand, if an authorization bill is enacted as part of this package, the
$1.5 billion of funds in reserve continues in reserve until March 31,
1984.
That means that after we come back on January 23, the Appro-
priations Committee will report a vehicle that will allocate the $1.5
billion. Of course, we will be guided by the Authorization Act in
our efforts to edlocate that $1.5 billion.
But the important point to keep in mind is that unless this hous-
ing authorization is enacted before we go home, unless we do that
before January 1, 1984, the total $1.5 billion now in reserve will
automatically be used for the section 8 existing pn^am.
There is nothing wrong about that because additional section 8
units provide subsidized housing for more families. But the Appro-
priations Committee has made an effort to hold that $1.5 billion in
reserve as long as possible so that there would be new funds avail-
able for implementation of whatever new thrusts were adopted in a
housing authorization bill.
Therefore, I would urge that you support this rule and the hous-
ing authorization bill — even though the procedure is clearly «i-
traordinary. The point is that if we are going to have a housing au-
thorization bill for 1984 — this package must hang together.
Mr. Speaker, in summary, this is not the best way to l^islate.
We all know that. But what it represents is both a compromise and
a trade. Our history is replete with trades and compromises ihat
yGoo<^\q
287
have a<diiev«d major pieces of l^islation. That is what this is —
pure and simple — and I urge you to support it.
Mr. Long of Louisiana. Mr. Speaker, I yield 30 seconds to the
gentleman from New York (Mr. Garcia).
Mr. Garcia. Mr. Speaker, I rise in support of this rule. And I
also rise to commend the chairman of the full committee for work-
ing out with the chairman of the full committee in the Senate this
compromise. It is not perfect, but it is the best we can get.
And I would hope that everybody will support the rule today.
Ikfr. QuiLLBN. Mr. Speaker, to close debate, I yield the remainder
of my time to the distinguished gentleman from Illinois (Mr.
Michel), our minority leader.
(Mr. Michel asked and was given permission to revise and extend
his remarks.)
Mr. Michel. Mr. Speaker, I rise in support of the rule. I think
every one of us knows the arguments, pro and con, about IMF, Ex-
Erts on both sides have spoken at length. I want to speak particu-
■ly to Members on our side, who said we were shortchanging the
process here by bringing this up in this form under this procedure.
Aa I recall, there were 14 days of hearings on IMF in the commit-
tee, there were 20 hours of debate on the floor of this House, with
32 amendments being offered before it ever went over to the other
body.
It is my understanding also in the housing bill we had an exten-
ove debate here. You remember initially how we were opposed to
the magnitude of that bill, but it was pared down as it left the
House and improved even more in conference so that it is accepta-
ble to the administration on all counts.
We have as a matter of fact already provided for the funding in
the HUD appropriation bill.
This will oe the first authorization for housing in 3 years.
So, frankly, we have had a full airing and debate in both bodies
and this is the time now for completing eiction on both the housing
and IMF measures.
I have two overriding concerns that I have got to make mention
of here.
The President of the United States, our President, is on the line
here today. And I address my remarks primarily again over here
on my side. Our President has had the courage to set a course for
us and act upon it. At Williamsburg he told other industrial democ-
racies that the United States would remain a partner with them in
international development. He faced them eyeball to eyeball and
put his credibility and our credibility on the line. He did the same
m his efforts to reestablish our friendship and allegiance with our
Caribbean neighbors, who are struggling to preserve democracy
and freedom right at our doorstep.
The INIF is very much a part of that effort. It is critical to Ja-
maica, Costa Rica, Haiti, and others. What they now expect from
VB is the measure of what we can expect from them in the future.
This has not been an easy decision for me. We have folks on our
side who feel strongly on both sides of the IMF issue. We are split
ri^t down the midoJe. But somewhere along the line, the Presi-
dent has to make tough decisions that the same President could
have avoided as a candidate or simple observer of international oc-
yGoot^le
currences. When you are in the hot seat, realities of life hit home
and we have to appreciate that here today.
May I say further that my steadfastness on this thing ought not
to be mistaken for simple jwlitical loyalty to the President. My sup-
port for his efforts extends well beyond political boundaries. To me
it is a matter of national interest and not political interest.
And when I talk about national interests, I am not only talking
about credibility abroad, but concern for our people at home, aver-
age American families, all across this counti?. The Department of
ihe Treasury says that inadequate funding of the IMP could result
in export losses to the United States of $12 billion. And my col-
leagues know what that means, it means a loss of 300,000 Ameri-
can jobs. Let me repeat that number, 300,000 or more.
And so I look at this as very much of a jobs bill. The gentleman
from North Carolina made the point very well that we are loaning
the money — not giving it away. It does not really have any budget
impact. What we really are providing for in effect is a letter of
craiit.
As I recall, in the past we actually made money from our contri-
bution to IMF. And even though we have been in a worldwide re-
cession for the last several years, that net cost in interest to the
United States has only been $42 million a year, for each of the leist
5 years. That is a miniscule amount when you think in terms of
what it has done out there in the Third World to prop up those
governments, which in turn can purchase from ua.
I have a dominant industry in my district where 50 percent of
the people working for it depend upon an export market for their
products. And that ex[X)rt market will not be there unless we keep
those Third World countries alive. In my district, there are 7,000
families whose income depends upon the export market for Cater-
pillar products. I am talking about their jobs, their livelihood.
True, many countries in the Third World have had serious troubles
within these past several years, but in my judgment, the long-
range implications here are very profound. We ought to do the
right thing here today. Even though some may quarrel with the
parliamentary procedure as a means of tearing the compromise
agreement apart, we ought to do the right thing and support this
rule today.
Mr. Long of Louisiana. Mr. Speaker, I yield such time as he may
consume to the gentleman from California (Mr, Lehman).
(Mr. Lehman of California asked and was given permission to
revise and extend his remarks.)
Mr. Lehman of California. Mr. Speaker, I rise today to uree my
collee^ues to join me in supporting the passage of H.R. 3959. Em-
bodied in this bill is the housing authorization bill, H.R. 1, which
represents countless hours of work by the House Subcommittee on
Housing and Community Development and the House Banking
Committee. The bill comes before us for a vote todav due primarily
to the perseverance and negotiating skill of the chairman of the
Housing Subcommittee, Mr. Gonzalez, and the chairmfm of the fiill
Banking Committee, Mr. St Germain. I would like to offer my sin-
cere congratulations to both of these gentlemen and their stanTs for
shepherding this measure through both Houses of Congress with
obvious success.
yGoot^le
This past April I was fortunate enough to chair a hearing of the
Housing Subrommittee in my district in Stockton, Calif, where
witness after witness testiHed to the effectiveness of current hous-
ing programs, and provided evidence of the urgent need for the
continuation and expansion of these programs. After suffering sub-
stantial cutbacks on funding for housing programs during the last
session of Congress, this measure will be the first housing reauthor-
ization bill to pass the House in over 2 years.
The bill will reauthorize a long list of programs that provide
housing for many low-income Americans, assist first time home
buyers in purchfising their first homes, and give sorely needed as-
sistance to our cities through the use of community development
block grants, urban development action grants, and other programs
that I know are effective because I have seen firsthand the results
produced by these programs in my district, as well in communities
across the country.
The $15.6 billion in this bill will not only provide housing for
thousands of Americans, it will provide jobs for construction work-
ers, much needed business for homebuilders, and a restored sense
of civic pride for many of our communities. The bill has received
bipartisan support in both Houses of Congress, and 1 know that my
colleagues in the House will see fit to approve this measure today.
Mr, Speaker, if we are to keep our commitment to provide
decent, affordable housing for all of our citizens, we need to pass
this bill.
Mr. Long of Louisiana. Mr. Speaker, I yield 1 minute to the gen-
tleman from Maryland (Mr. Mitchell).
Mr. Mitchell. Mr. Speaker, I would like to raise some questions
to the apartheid language that is in the IMF bill.
From the way 1 read this language, it appears that it is not man-
datory that the Secretary of the Treasury certify in writing to the
conunittee.
Could the gentleman give me some clarification on that?
Mr. St Germain. Mr. Speaker, will the gentleman yield?
Mr. Long of Louisiana. I yield to the gentleman from Rhode
Island.
Mr. St Germain. I thank the gentleman.
I would like to state in our discussions and in my deliberations
with Treasury on this, I come away and my understanding of the
language is the Secretary has to, must certify and notify the com-
mittees of the House.
I sHeiII make sure he does in every instance. But in addition to
that, at the beginning of each year I will put in a blanket request
that the Secretary of Treasury to appear in each and every in-
stance on these.
Mr. Mitchell. I thank the gentleman. That clarifies it. It is an
awful price to pay for housing. But we desperately need housing.
We have got to pay a price for the IMF bill and language not as
strong on apartheid as I would want it to be, but I am going to sup-
port the rule, only because we desperately need housing.
Mr. Long of Louisiana. Mr. Speaker, I yield 3 minutes to the dis-
tinguished chairman of the committee, the gentleman from Rhode
Isleoid (Mr. St Germain).
yGoot^le
D 1510
Mr. Dicks. Mr. Speaker, will the gentleman yield?
Mr. St Germain. I yield to the gentleman from Washington.
(Mr. Dicks asked and was given permission to revise and extend
his remarks.)
Mr. Dicks. Mr. Speaker, I rise in strong support of the rule, par-
ticularly hecause of the outstanding work done on the Export-
Import Bank and on the housing bill.
Mr. St Germain. I thank the gentleman.
Mr. Wyue. Mr. Speaker, will the gentleman yield?
Mr. St Germain. I yield to the gentleman from Ohio (Mr. Wylie),
the distinguished ranking minority member.
(Mr. Wylie asked and was given permission to revise and extend
his remarks.)
Mr. Wylie. I thank the distinguished chairman for yielding.
Mr. Speaker, I have a point of clarification.
I would like to ask the chairman whether he agrees with my in-
terpretation relative to commitment as stated in the paper which I
handed him a little while ago.
Mr. St Germain. Mr. Speaker, I would say to the gentleman that
yes, indeed, I agree. The gentleman's understanding is correct. The
term "commitment" then should refer to and include conditional
commitments.
Mr. Wyue. I thank the gentleman.
Mr. St Germain. Mr. Speaker, the legislation before us repre-
sents the work product of so many Members that it would take too
much time to mention them all and thank them for their contribu-
tions. However, I would like to state for the record that the propos-
al before ua would not be here without the efforts of the House
leadership on both sides of the aisle; my good friend and associate,
Chalmers P. Wylie, ranking minority member of the committee;
Henry B. Gonzalez, chairman; and Stewart B. McKinney, ranking
minority member of our Housing and Community Development
Subcommittee; Jerry M. Patterson, chairman; and Doug Bereuter,
ranking minority member of our Subcommittee on International
Development Institutions; and Stephen L. Neal, chairman; and Jim
Leach, ranking minority member of our Subcommittee on Interna-
tional Trade. In addition, I want to commend the efforts of M of
my colleagues on the committee for their intense interest, valuable
contributions, and total support.
The process and procedure in which we are engaged in bringing
this legislation to the floor is somewhat unique. For those who feel
oppressed by this unique procedure, I apologize. I feel, however,
that the importance of the items contained in the legislation; such
as, new housing authorization programs for 2 years; new authoriza-
tion for U.S. participation in the International Monetary Fund;
new authorization for the Export-Import Bank; new authorization
for the Inter-American Development Bank, the Asian Development
Bank and Asian Development Fund, and the African Development
Fund; new bank regulatory provisions to be used by the regulatory
agencies concerning U.S. bank lending to lesser develop&i coun-
tries; and other important matters justify the process. As most, if
not all, of the Members know, the authorizing l^islation before us
yGoot^le
291
today has traveled a circuitous and tortuous route. This House ini-
tially passed a Housing and Community Development bill, H.R. 1,
as July 13, 1983, by a vote of 263 to 158. The Senate called up their
housing authorization legislation on June 21, 1983, and debated for
approximately 1 hour and then withdrew the legislation. It was un-
derstood the other body would subsequently return to consideration
of the housing and community development legislation. It never
happened.
On August 4, 1983, the House passed H.R. 2957 which provided
new authorizations for the IMF, Export-Import Bank, and the mul-
tilateral development banks. The Senate has passed authorizing
legislation for me IMF and Export-Import Bank but has not yet
considered authorizing legislation for the multilateral development
banks.
Mr. Speaker, I relate a little bit of the history concerning these
l^islative matters, in part, to justify the unique procedure in
which we are engaged today. Without the authorization and appro-
priation of funds for the IMF there would be no housing and urban
development bill. Also, I am convinced that the housing component
of this pacluige will help obtain the necessary votes. We are faced
with the necessity of both authorizing and appropriating funds for
the International Monetary Fund in a single piece of legislation. To
my coUeagues who may feel that their jurisdiction has been violat-
ea, I apologize. The lateness of the hour, the insistence of the ad-
ministration, left me no alternative. On balance, the substance of
the l^islation before us as regards its domestic importance and the
provisions for our necessary continued U.S. participation in the
mtemational arena overwhelmingly justify the procedure we have
before us.
Mr. Speaker, I would now like to describe some of the major pro-
visions contained in the various titles of this legislation.
The first five titles of this legislation are the housing and com-
munity development provisions that were resolved based on agree-
ments between both the House and Senate and the administration.
Title I contains the $3,4 billion reauthorization of the community
development block grant and $440 million for the urban develop-
ment action grant program. As part of the reauthorization of these
two important pn^rams, this l^slation makes a number of policy
changes with r^ard to both the CDBG and UDAG programs. The
mincipal policy change deals with the so-called "principally bene-
fit" issue. This legislation states that not less than 51 percent of
CDBG funds are to be used for activities to benefit low and moder-
ate income persons for a period of not more than 3 years. There
are a number of other changes in this title including grandfather-
ing provisions that would keep entitlement cities and urban coun-
ties that have fallen below the population threshold as entitlement
communities for an additional 2 fiscal years. The section 312 reha-
Ulitation loan program, of which I was one of the principal authors
back in 1964, was extended for 1 additional fiscal year.
Ld title n we have authorized $9.9 billion for the assisted housing
programs at levels set forth in appropriations acts for fiscal year
1^4, and have authorized such sums as may be necessary for fiscal
year 1985. We have retained the assisted housing delivery system
after a lengthy stn^gle with the administration who wanted to re-
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292
place such programs as section 8 and public housing with a housing
voucher program. The very difficult issue of Uie t^iant rental roll-
back is resolved not entirely satisfactorily to the House provision,
but provides for increased deductions of $480 per child, child-care
expenses, $400 for elderly or handicapped households, and medical
expenses in excess of 3 percent of income for elderly and handi-
capped persons. By providing for these additional deductions we
will sul^tantially reduce tenant rents for people living in assisted
housing. I regret that in our negotiations with the administration,
we were unable to maintain the changes made in the public hous-
ing comprehensive modernization program and the Performance
Funding System of the public housing operating subsidies program.
Simply put, the administration wanted no statutory changes in
these programs, but 0MB Director Stockman has sent me a letter
stating that the administration will make no fundamental changes
or structural program reforms absent seeking authorizing legisla-
tion.
Title III provides a $350 million program for rental housing reha-
bilitation and production. It is modeled along the lines developed
by our distinguished coUesigue from New York Chuck Schumer.
This program will provide $615 million to be made available over
the next 2 fiscal years. This new rental program provides for up-
front grants rather than long-term subsidies as our previous assist-
ed housing programs had been carried out.
Title IV extends all of the FHA insurance pri^rams through
fiscal year 1985, including the section 235 homeownership assist-
ance program. A demonstration of the FHA insurance for alterna-
tive mortgage instruments is provided for with various limits as to
the total amount of its activities. The flood insurance prt^am is
extended for the next 2 fiscal years. The crime insurance program
is extended for 1 additionsi] year and the riot reinsurance program
will be terminated.
The secondary mortgage market provisions were deleted from
this l^slative package, since the Senate insisted that without its
securities legislation they could not consider the other secondary
market provisions that were contained in H.R. 1; but the Housing
Banking Committee's Housing Subcommittee will be conducting
hearings on the secondary market issues early in the next session
and, hopefully, we can get this legislation moving early next year.
Title V retains the essential structure of the $3.2 billion Farmers
Home Administration's rural housing programs for both fiscal
years 1984 and 1985. A new rural housing preservation prc^ram
targeted at the low and very low income population is es^blished
in this title, and I would like to commend our distinguished col-
league from New York (Stan Lundine), who is the principetl propo-
nent of this program.
Mr. Speaker, I am plesised to report that the International Mone-
tary Fund provisions in title VIII and the International Lending
Supervision Act of 1983 in title IX, are virtualhr indentical to the
major provisions of H.R. 2957 which passed the House on August 8,
1983. While this final result, like the rest of this legislation, is a
compromise between House and Senate positions, it is a compro-
mise that retains essentially all the tough international finance re-
forms adopted by the House. It is a compromise that will insure
yGoot^le
293
that the foreini loan activities of our money center banks will be
monitored by CongrMS, thepublic, the Federeil bank r^ulators and
the General Accounting Office, more closely than ever before.
Thorough audit and accountability is provided for by specific
statutory inatructions to the Secretary of the Treasury, the U.S.
IMF r^nresentative. and to the Federal bfuiking agencies in fur*
therance of the Declaration of Policy contained in the Internation-
al Lending Supervision Act. That declaration states, and I quote,
"It is J>olic? of the Congress to assure that the economic health and
stability of the United States and the other nations of the world
shall not be adversely affected or threatened in the future by im-
prudent lending practices or inadequate supervision."
The proviaions of title VII will require the U.S. representative to
the IMF to vote against IMF loans which would bail out banks for
their imprudent loans. Congressional control over the IMF has
been increased by consultation requirements before they increase
SDR allocations and directives to work for greater monitoring and
diBcloeure Iqr the IMF of foreign loan trends and increases in the
maturity and lower interest rates on the debts owed by developing
nations. Specific instructionB to the U.S. representative to the IMF
will result in comprehensive reports that will enable the appropri-
ate committees of the Congress to discharge satisfactorily their
oversight responsibilities. In the future, the IMF will be a greater
participant in the effort of preventing financial crises.
Title IX mandates far more intensive supervision by the regula-
tory agencies than has been the case in the past. Several provi-
sions, each of which reflect the House position, should be empha-
sized.
The provision on capital adequacy — section 908 — is of utmost im-
portance. The Senate receded to the tough House language requir-
ing for the first time that regulators establish fixed standard^ of
adequate capital for "multinational" bernks. Ffiilure to maintain es-
tablished capital levels is explicitly made an "unsafe and unsound
piactice" within the meiming of Section 8 of the Federal Deposit
Insurance Act~ A penalty of $1,000 a day for violation of regula-
tions promulgated under this authority is provided.
In addition, the banking agencies are required to impose loan-
losB reserves on bank loans in which countries are facing protract-
ed repayment difUculties. This section — sec. 905 — a merger of
Senate and House provisions also requires the banking eigencies to
analyze each foreign loan rescheduling, assess the loan-loss risk re-
flected in rescheduling agreements, and insure that bank capital
and reserve positions are adequate to accommodate potential losses
of foreign loans.
To address the deeply troublesome problem of banks charging ex-
ce«ve fees for rescheduling imprudent and unjustifiably short-
term loans, the Senate has accepted the House provision which will
prevent excessive fees by requiring agency regulation of such fees
and prohibiting banks from charging any fees over the administra-
tive costs of the rescheduling unless they are paid by the borrowing
country in equal installments over the life of the loan, rather than
in one ourdensome, up front, lump sum payment.
The Senate and the House also agreed on the need for more bank
disckBure. The International Lending Supervision Act mandates
yGoot^le
294
an unprecedented mcrease in the distribution of international lend-
ing information, and will assure that we will never again be kept
in the dark by the international banks r^arding the true size and
growth of international lending.
In addition to disclosure, the House and Senate agreed that there
is a need for banks to analyze much more carefully the repayment
capacity of the recipients of foreign loans. To address this problem,
the Senate has accepted, with only slight modification, the tough
House requirement that commercial banks conduct a thorough re-
payment analysis of every foreign loan above $20 million in size.
To clearly demonstrate congressional intention to monitor closely
the international lending supervision activities of our banking
agencies, the Senate agreed to the House provision clarifying and
firoviding the authority the GAO needs to fully audit international
ending activities.
To assure that the agency with ultimate insurance responsibil-
ity— the FDIC — is a full participfmt in international supervision,
the Senate accepted the House provision directing that the Federal
Deposit Insurance Corporation will be given equal representation
on the International Committee on Banking Itegulations and Su-
pervisory Practices. Over time, the FDIC perspective will strength-
en international regulation and supervision.
Of great importance is the fact that both titles VTII and Dt re-
quire significant reporte which will assure public discloeure and
continued congressional participation. Both are essential if we Eire
to improve the existing system of IMF funding and regulatory su-
pervision. Both House and Senate versions contained reporting re-
quirements with appropriate public disclosure.
Mr. Speaker, this legislation would edso extend the Eximbank, so
vitel to U.S. exports, until September 30, 1986, improve Exim's sup-
port of small business exporte, expand Exim's programs to incluae
exports of services as well as go<>ds, and restructure the terms <rf
the Exim board members to make them more responsive to Con-
gress. To offset the effects of unfair foreign subsidies, it would au-
thorize Exim to grant lump sum eissistance to injured companies.
To increase U.S. exports, the Eximbank, and the Agency for Inter-
national Development would be required to establish tied aid credit
progTEims for U.S. exports.
Mr. Speaker, title X of this legislation would provide U.S. fund-
ing for the Inter-American Development Bank, the Asian Develop-
ment Bank and Development Fund, and Africtm Development
Fund.
Mr. Speaker, the "apartheid" and "Communist dictatorship"
amendment before us does contein an amendment to the House-
passed language on apartheid and Communist dictatorship lan-
guage.
While some of our Members might not approve of the Senate
amendment, I believe when the amendment is looked at as a
whole, the Senate amendment in this instance is acceptable. The
Senate amendment provides, in the instence of apartheid, that the
Secretary of the Treasury must appear before the committees of
Congress having made certain findings, before the Executive Direc-
tor to the IMF can vote for a resolution providing credits to a coun-
try which engages in apartheid. These frndlngs must state that the
yGoot^le
credits are made available only if the majority of the people in the
nation will be benefited. There are other criteria which must be
met before a positive vote can be made concerning the granting of
credits to a country which practices apartheid, all equally stringent
as the one just mentioned.
It is my intention at the beginning of every congressional session
to ask for a blanket request — the Secretary of the Treasury will
have to appear before our committee in each and every instance
where an IMF credit is being considered to a country which prac-
tices apartheid.
"Hie Secretary of the Treasury will have to notify us and certify
to the criteria in this amendment. I sheUl make sure he does it in
eath and every instance.
Mr. Speaker, this is a good amendment which will evidence to
the world our commitment to do whatever we can to stamp out this
repugnant form of economic, social and racial prejudice.
The Senate amendment concerning Communist dictatorships as
ing»"*"* on by the Senate would allow our Executive Director to the
IMF to vote in favor of the granting of a credit to such nations,
again after the Secretary of the Treasury appears before the com-
mittees of the Congress. In those cases where, among other things,
it can be shown the majority of the people in that country would
benefit from an IMF credit, we can vote in the affirmative.
For Hungary and Yugoslavia and other countries which we are
trying to assist in breaking away from their Communist leanings
this is, in my opinion, a good amendment. Therefore, Mr. Speaker,
I believe the "apartheid" and "Communist dictatorship" amend-
ment is a good amendment and should be supported by the Mem-
bers of the House.
Mr. Spefiker and Members of ths House, I repeat, in the spirit of
compromise and in order to get the best result possible, there are
amne items contained in this rather weighty package that may not
totally satisfy all Members. By the same token, it seems clear to
me for anyone interested in housing and community development
as well as the plight of our low-income people, for those who are
concerned about the present and future economic well-being of this
Nation; for those who are interested in a continued commitment to
our multilateral development banks; for those who subscribe to the
[diilosophy that the Ex-lm Bank is needed to create jobs; and that
the amendments contained herein will create even more jobs, par-
ticularly in the small business sector — 1 say that we have brought
a le^slative package that is worthy of your support.
Mr. Speaker, I include in the record at this point a letter from
the Director of the Office of Management and Budget, David Stock-
man, which states the administration will make no fundamental or
structural progriun changes to the public housing operating subsi-
^ and modernization programs in 1985 without iirst seeking au-
ttoriziiig I^islation:
yGoot^le
ExBCUTtvB OmcB or rm P
OrpicB or Manaoehknt and BuDGKr,
Waehington. D.C, November 6, 1983.
Hon. Fbrnand St Germain,
Chairman, Banking, Finance and Urban Affairs Committee, House of Representa-
tives. Washington, D.C.
Dear Mr, Chaibhan: This letter is intended to clarify the Administration's posi-
tion concerning fundamental structural program reforms for the Public Hoiunng
Operating Subsidy and Modernization Pri^raniB in 1984 and 1985.
Ab you know, the Department of Housine and Urban Development has developed,
through published r^ulations and other administrative procedures, a complex, tech-
nical system for allocating operating subsidies and modernization fuods among
more than 2,600 local puhnc housing authorities. The Department will administer
these programs in 1984 with the funding provided in the HUD-Independent Agen-
cies Appropriations Act of 1984 (P.L, 98-45) pursuant to regulations and pohcies in
effect as of November 15, 1983, except prescient to the pending authorization bilL
The Administration has agreed that it would seek authorizing legislation for any
fundamental changes or structural program reforms it might wish to make for these
programs in 1985.
1 hope these clarifications will remove any concerns Members of Congress may
have concerning the Administration's position on this matter.
Sincerely,
David A. Stockman,
Dtrtctor.
Mr. Vento. Mr. Speaker, will the gentleman yield?
Mr. St. Germain. I yield to the gentleman from Minnesota.
(Mr. VENTO asked and was given permission to revise and
extend his remarks.)
Mr. Vento. Mr. Speaker, I rise in support of this amendment to
H.R. 3959 and commend the chairman, Mr. St Germain, of the
Banking, Finance and Urban Affmrs Committee for the good work
that he has done to bring this matter before us today.
Indeed, this amendment includes the culmination of a great deal
of work in the Banking, Finance and Urban Affairs Committee and
subcommittees on which I serve.
These matters have been debated and discussed for many hours
in the full House as well as in our committee and have been re-
packaged in this manner to insure the Reagan administration's
support when this measure reaches the President's desk.
This administration has successfully undermined or resisted any
housing and community development legislation the past 2 years.
Hopefully, this will not be the case in the future.
"This measure continued the authorization of assisted and public
housing, both urban and rural, community development block
grants, FHA and GNMA programs, and urban development action
grants.
Some new programs including rental rehabilitation, rental con-
struction program and emergency shelter are also contained in this
package along with many substantive changes in the existing law.
This is a major victory for those of us who feel that the National
Government must play a key role in helping create the environ-
ment and housing that American families need.
The other titles of this amendment before us are equally impoi^
tant and some are controversial.
Mr. Speaker, members are right to be concerned about the IMF,
but should be aware that this measure for the quota increase for
the International Monetary Fund and general agreement to
borrow, special drawing rights amounts to the United States bor-
yGoot^le
297
rowing about $8.4 billion to fund these programs, which is only
about 20 percent of the total IMF new resources. The remainder
comes from other member nations.
The importance of this program to help achieve stability in the
international economy are extremely important. Even the United
States itself from time to time has utilized the IMF program to
deal with liquidity problems.
Nevertheless, m^or reforms are needed within the context of the
existing IMF/GAB program. This measure before us provides for
new regulation and reporting requirements for U.S. financial insti-
tutions, limitations on the ability of the IMF to borrow in U.S. dol-
lars and notification to the committees of Congress. It specifically
states c^jectives and concerns important to U.S. economic policy
and the interrelationship of the IMF activities to our economy. Fi-
nally, the eimendment contains the language which I and others
strongly supported to insure that the excessive bank and broker
charges will not be permitted and that the IMF will strive to par-
ticipate in loans to Third World nations at limited rates of interest
and stretch out the term so that reasonable time and cost would
prevail to permit a realistic prospect for these nations to successful-
ly manage these enormous debts.
The Export/Import Bank authorization is also included and is an
extremely important tool to assist our U.S. exports. The multilater-
al development banks are authorized to permit us to reach out in
coordinated manner with other nations and offer real assistance to
the underdeveloped Third World nations.
These measures all reflect the strong imprint of the legislative
process. Frankly I think we have made substantial progress under
difficult circumstances to meet our responsibilities and urge my
colleagues in the House to support this measure.
Mr. BoNKEH. Mr. Speaker, I rise in support of the rule (H. Res.
379) and the conference report on H.R. 3959 as amended by the
Senate, containing among other provisions replenishment of the
International Monetary Fund, extension of the Export-Import
Bank, and establishment of a program of mixed credit for U.S. ex-
ports to developing nations. I congratulate particularly the leaders
of the House and Senate Banking Committees, the Ways and
Means Committee, and the Finance Committee for developing the
compn)mise package which is now before the House. I believe it is
a package which will contribute greatly to international financial
stability and will improve the competitiveness of American firms
in foreign markets. Since four out of five new jobs in the United
States in recent years are attributable to export markets, it is es-
sential that the world trading system be maintained and improved,
liiis legislation makes a major contribution to international trade,
and therefore to employment in this country, and I strongly sup-
port it.
The pn^am authorizing the use of mixed credits to facilitate
and increase U.S. exports to developing countries is an especially
important and welcomed element of this legislation. Such a pro-
gram is long overdue. As my colleagues will recall, mixed credit
provisions were deleted from the House version of this legislation
when it was considered last August. The mixed credits proposal
now before us consists mostly of provisions adopted by the Senate.
yGoot^le
In my judgment. It is a far more constructive and workable propos-
al than the one previously considered and rejected by the House.
In the aggregate, Mr. Speaker, the developing world constitutes
both our largest and most rapidly expanding export market. One of
the major competitive obstacles U.S. exporters have encountered in
that market is the ability of other exporting nations to offer rela-
tively low-cost financing for projects and export goods by mixing in
various ways concessional government credits with market-rate
commercial credits while the United States has had no mechanism
for mixing of credits. As a result, many contracts have been lost to
our competitors even where the direct cost of our goods has been
highly competitive. By using mixed credits, our competitors have
been able to provide cheaper financing which has offset the higher
cost and sometimes lower quality of their goods and services.
The fact is that financing is a crucial element in the purchasing
decisions of developing countries. In order to continue to compete
in those markets, we simply must be able to meet the financing
terms offered by our competitors.
Progress has been made, Mr. Speaker, to reach eigreements with
our competitors to set common limits on export financing. In par-
ticular, an agreement, known as the Arrangement on Export Cred-
its has been reached and is in force among members of the Organi-
zation for Economic Cooperation and Development. That agree-
ment, however, does not fully cover the use of mixed credits. As a
result, the use of mixed credits by our export competitors continues
to pose a problem for U.S. industries seeking to maintain EUid
expand business in the developing nations.
Mr. SpeEiker, I favor continued efforts to expand the scope and
improve the procedures of the OECD agreement so as to neutralize
the effects of mixed credits upon export competition. In the mean-
time, however, we need the ability to mix credits ourselves where
necessary to meet foreign competition. The proposal now before the
House, which I urge my colleagues to join me in supporting, would
provide that ability. In general terms, it directs the Export-Import
Bank and the Agency for International Development to work to-
gether to combine concessional and commercial credits tied to the
purchase of U.S. goods and services. It authorizes mixing of govern-
mental credits and public-private cofinancing, as well as parallel fi-
nancing. Financing may be integrated into single packages subject
to a single set of financial terms, or may be a combination of sepa-
rate lines of credit.
To the extent that this program draws upon funds administered
by the Agency for International Development, authorized by the
Foreign Assistance Act, it falls within the jurisdiction of the Com-
mittee on Foreign Affairs. To the extent that it directly eiffects U.S.
exports and export competitiveness, it also comes within the juris-
diction of the Subcommittee on International Ekionomic Policy and
Trade, which I have the honor to chair. Because of the press of
other business, Mr. Speaker, and the defeat of the mixed credits
program originally recommended by the Committee on Banking,
the Committee on Foreign Affairs did not have an opportunity to
consider or act upon proposals pending before it to establish a
mixed credits program. The proposal now pending before the
House, however, is very similar to the proposals referred to the
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Fmeign Af&urs Committee on the basis of the role of the Agency
for Intemational Development and the use particularly of econom-
ic supporting assiatance funds authorized by the Foreign Assistance
Act.
Mr. Speaker, I am certain that the Committee on Foreign Af-
fairs, and the subcommittee which I chair, will take an active role
and will fully exercise its jurisdiction in providing for any neces-
sary refinement and for uie funding and implementation of the
mixed-credit pn^ram established by the bill oefore the House. I
was glad to work with the distinguished chairman of the Commit-
tee on Foreign Affairs, Mr. Zablocki, in assuring the Committee on
Bankine of our support for the establishment of a mixed-credit pro-
gram along the lines approved by the Senate despite its effect on
existing prcKrams within the jurisdiction of the Foreign Affairs
Committee. I want to thank and commend Chairman Zablocki for
rect^nizing the need to establish a mixed-credit program in the in-
terest of U.S, export competitiveness and foreign development, and
his readiness to exercise the jurisdiction of the Foreign Affairs
Committee over this prc^am through future authorization of for-
eign assistance funds and other measures rather than delay the es-
tablishment of a mixed credits program at this time. I think this is
a wise and most responsible approach in which I intend to take
part actively.
With respect to the $8.4 billion increase in U.S. participation in
the Intemational Monetary Fund provided by this bill, Mr. Speak-
er, I believe this further U.S. commitment, which will be matched
by the other developed nations of the world, is in the best interests
m the American people. As I have already noted, we benefit enor-
mously from trade with poorer nations who bear heavy debt bur-
dens in their continuing efforts to meet the needs of their own
people and to modernize. Many of those countries have been hard
nit by the energy crisis and the world economic recession of recent
years. A default by one or more major debtor nations could set off
a chain reaction that would drastically depress world trade and
prosperity. In short, we have much more to lose if these nations
are not helped cope with their debt problems than the cost of pro-
viding that help. Funds provided to the International Monetary
Fund are loans not grants. In reloaning those funds to countries
witii faltering economies, the IMF imposes strict conditions and
provides m^or incentives which, in the long run, help to avert
future economic problems.
I do not necessarily agree, Mr. Speaker, with all of the conditions
impoeed by this l^islation upon U.S. participation in the IMF. I
believe, however, that the provisions designed to impose greater
discipline upon lending to developing nations by large private
banks are useful and balanced. We must encourage and assure con-
tinued l^iding by such banks because the IMF alone cannot pro-
vide all of the financing needed to achieve growth and development
throughout the developing world. At the same time, however, we
must assure thatprivate banks do not engage in irresponsible lend-
ing or utilize IMF funds to recover from irresponsible lending prac-
tices. I believe the bill before us strikes the proper balance between
encouraging and better regulating private bank lending to the de-
veloping world.
37-922 O - 64 -
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300
Finally, Mr. Speaker, the Export-Import Bank since 1945 has
provided direct loans and loan guarantees to finance the export of
major capital equipment from the United States. It has contributed
substantially to our export competitiveness. When commercial in-
terest rates were relatively low, it was able to accomplish its legis-
lative mandate to facilitate exports while operating on a self-sus-
taining basis. As U.S. interest rates have risen, however, it has
become less and less able to meet foreign export financing competi-
tion. In order to continue to perform its principle function of facili-
tating exports, the Export-Import Bank's authorities must not only
be extended and its funds replenished, but it must be authorized to
five greater weight to matching the financing terms being offered
y our competitors, and somewhat less weight to making a profit
on its own operations. Again, I believe this bill provides these
needed changes in the Export-Import Bank charter.
The United States, Mr. Speaker, through the Export-Import
Bank helps to finance only about 13 percent of all of our manufac-
turered exports, while Government of France helps finance more
than 25 percent of its exports, Great Britain more than 50 percent
and Japan more than 40 percent. The Eximbank is an essential ele-
ment of our national export competitiveness effort whose continu-
ation under more liberal lending terms is needed to counter the
even more aggressive programs by our competitors.
Mr. Speaker, for all of these reasons I urge my colleagues to sup-
port House Resolution 379 and the amended conference on H.R.
3959.
• Mr. Porter. Mr. Speaker, today we are considering legislation to
increase the U.S. quota in the International Monetary Fund [IMF]
by $8.4 billion. The requested increase would provide $5,8 billion to
supplement the basic resources of the IMF and $2.6 billion to the
General Agreement To Borrow.
This legislation comes only after a compromise w£is struck to in-
clude the authorization for the Nation's housing programs with the
IMF's quota increase. It is important to point out that the $16 bil-
lion authorized for the housing programs in this bill is not new
spending authority. The bill simply determines how the money al-
ready appropriated by this House and signed into law by the I^esi-
dent will be spent for the Nation's housing program.
The issue then turns to the IMF portion of the bill. As I said in
my statement on August 3, the last time the House debated this
bill, my support for the requested quota increase hinges on provi-
sions of the legislation that will instill discipline in international
lending practices of U.S. banks. Today, I support this compromise
legislation because its provisions are very similar to the House's
original tough provisions to strengthen bank lending practices in
four important areas.
First, the bill explicitly instructs the U.S. Director at the IMF to
oppose and vote against requested fund drawings where, in the
opinion of the Director, the fund resources will be used to pay for
loans which have been imprudently made by banking institutions.
This language specifically precludes the possibility of using this
new quota increase to bail out U.S. banks which overextended
themselves and now experience great difficulty in collecting debts
owed to them.
yGoot^le
Second, the compromise includes two provisions to clamp down
on tbe banks' capital and reason requirements. The appropriate
Federal bonk superviBors will now establish a reserve level for fi-
nancial institutions whenever the agency determines that the
public or private borrowers are unable to meet their loan obliga-
tions, and will require banks to maintain adequate capital levels.
These provisions are fundamentally necessary to encourage banks
to return to prudent bank practices. The establishment of reserves
will provide coverage on a country-by-country basis when it ap-
s likely that an individual country will not be able to repay its
pears 1
loans.
Capital requirements will assure that financial institutions are
not making large lotms that will endanger their overall capital sit-
uation. Previously, large bemka were making loans that were of a
higher percentage of their capital than smaller banks could make.
The result was that laige banks were imprudently making huge
loans that, if defaulted, could have seriously jeapordize the banks'
oiverall capital strength. Smaller banks had been closely monitored
to assure that their loans could not endanger the institutions' over-
all health. The equalization of capital ratios mandated by this leg-
ialation would require all banks, regardless of size, not to m£ike
loans greater than a certain percentage of their capital.
Hie compromise also directs the appropriate Federal banking
agency to evaluate a foreign country's exposure when evaluating
capit^ adequacy standards. Again, this is basically the tougher
House language. The Senate's provisions simply established capital
adequacy requirements, but the House went futher to require
banks that now do not meet the standard, to establish a plan to
meet the capital requirements. If after establishing the plan, a
bank does not meet the plan's outline. Federal agencies will use
their full enforcement powers, including the levying of heavy fines,
to hring the offending institutions into compliance.
FiiuUly, this bill provides for the collection and disclosure of cer-
tain international lending information for dissemination to the
public. It is vitally important, in my judgment, to provide adequate
information to potential bank investors so that they understand
the institutions' commitment to international lending before
making an investment.
Mr. Speaker, the Congress must approve the requested increase
in the U.S. contribution to the IMF to assist the world economy as
weU as the U.S. economy. Without the IMF loans, lesser developed
countries (LDC's) would not have access to the capital necessary to
improve their economies. These LE)C's use a substantial percentage
(rf their IMF loans to purchase American goods. When we realize
that some 20 percent of all U.S. jobs can be directly attributed to
exorting, the importance of assuring export opportunities for LDC's
becomes apparent. Further, it is important to the world's economic
stability that the U.S. join the other 145 IMF member nations in
increasing its shares of IMF funding. If we do not provide these
funds, other member nations will withdraw support from the IMF
and further imbalance world economic growth and the possibility
of international monetary collapse could result. 1 urge my col-
leagues to support this legislation-^
yGoot^le
• Ms. Kaftur. Mr. Speaker, the reauthorization of the Export-
Import Bank includes a new provision which my colleague from
Louisiana, Mr. Roemer, and I offered in the Banking Committee to
aid small business. This provision will give small businesses im-
firoved access to the export financing programs of the Export-
mport Bank.
AH of us are aware of the important contributions small business
makes to our economy in terms of jobs and innovative technology.
Small business can also become a leading contributor in exporting
if competitive export financing is made available. Indeed, the Com-
merce Department estimates that at least 20,000 businesses in this
country would export, but currently do not. In fact, only 1 percent
of American manufacturers account for over 80 percent of our ex-
ports. As we face record trade deficits, it is imperative that small
businesses become more active in exporting. Without question, in-
creasing exports will improve both our balance of trade posture
and our employment situation. Small businesses, as the creators of
the largest number of jobs in this country, are in the best position
to achieve those goals.
The new Exim provisions call for the establishment of a smedl
business set-aside for iiscEil year 1984 equal to 6 percent of the total
direct loan, guaranteed loan and insurance levels provided in ap-
propriations acts. The percentage would increase to 7 percent m
hscal year 1985, 8 percent in fiscal year 1986 and 10 percent in
fiscal year 1987, the final year of the reauthorization. This set-aside
would increase small business export financing by over $2.3 billion
in the next 4 years without increasing Exim's budget. This provi-
sion will ensure that Exim's funds are utilized more produc^vely.
Second, the provisions also direct Exim to establish a program to
provide lines of credit or guarantees to consortia of local banks,
export trading companies, small business investment companies.
State financing companies, and export financing cooperatives.
These lines of credit or guarantees would be used by the consortia
to finance small business exports.
Third, Exim would be required to promote small business exports
and its export financing programs in cooperation with the Depart-
ment of Commerce, the Small Business Administration, and espe-
cially the private sector. This is critical to enable small business to
be aware of the financing to take advantage of it.
Fourth, at least three members of the Advisory Committee estab-
lished in the bill must be chosen from the small business communi-
ty. In addition, at least one of the five members of the board of di-
rectors must be appointed from the small business community to
represent small business.
Fifth, Exim is also directed to ui^e the Foreign Credit Insurance
Association (FCIA) to provide insurance against 100 percent of the
loss of export sales up to $100,000.
Lastly, Exim must report annually to Congress on the effective-
ness of the set-aside, the small business programs, and Elxim's ef-
forts in promoting small business exports. This is an important pro-
vision for it will enable Congress to monitor Exim's enorts in fiil-
filling the mandate of these new provisions.
These provisions will make more financing available to small
business exporters. The program will only be successful, however, if
yGoot^le
EaJm aggressively implements this legislation. It is incumbent
iqiofL Ezim to reach out into the small business community in a
poaitivewa^.
I would like to include in the Record an editorial which appeared
in the Toledo Blade on May 9, 19S3, after passage of the ESxim re-
authorization b^ the House Banking Committee. The amendment
was later modified. The editorial follows:
Practical Amendments
_« a •ubatantdal contribution that Congresswoman Mar^ Kaptur made to
latkin autluMriimg new Import-Export Bank loan programs for fiBcal 19S4 and
15. She achieved agreement in a House subcommittee on her amendments aimed
■t giving tmall bunneasefl — those with less than S35 million a year in annual
mIm— aluKBr dice of the ban pie.
Tiia would be a fi ' '— ' ■
li«ririnti(
IKSTsh
a fonrard-looking change, reflecting an awareness of the need tt
JSM
. t fr<Hn the current 3 percent to 9 percent in the first year
^ t in the secoDd. Inasmuch as nearly $14 billion a year is involv^ in
dinct louw 1^ tite bank and in loan guarantees for other financial institutions to
help American bonneeeee operate on the international scene, the amount diverted
to amall finna would be aubatantial.
Vmnf commuiiitiee benefit from the global business done by large firms, such as
UuM here in the Tbledo area. But figurea cited by Coi^reeswoman Kaptur indicate
that only a relatively few firms hanue 70 percent of the exports from this country,
■> there i> a need for financial help to the many smaller companies.
Tbe second amendment calls on President Reagan to fill the next vacancy on the
bank's five^nember board with a i>erson representing small business. The overall
■nthnization measure, of course, still has to clear the Banking Committee and win
the approval of the fiill House and Senate, not to mention receiving the President's
■gn^ure. But, given the logical and reasonable nature of the Kaptur amendments,
the legialation merits approval all down the line.#
• Blr. Dicks. Mr. Speaker, I commend my colleagues for adopting
the Senate amendment to this supplemental appropriations confer-
atoe report, and in particular, would like to emphasize the impor-
tance m the international Hnancing institutions to American em-
ployment
As my colleagues know, I have been a strong supporter of the
Export-unport Bank during my career in Congress. The legislation
we considered today provides a 3-year reauthorization for this insti-
tution, expands thie Bank's coverage to enhance access for small
bosinees, and will assist American industry in competing on equal
trams with our world trading partners. Eximbank's most recent
iiTiniiiil report shows that every dollar authorized for Eximbank
loans, guarantees, and insurance generates $1.45 in export sales.
That means that Exim's current authorization of $4.4 billion in
direct loans and $9 billion in guarantees generates $19 billion in
export sales. Using the Commerce Department's estimates, which
indicate that $1 biUion in export sales supports 25,000 mein-years of
employment, that $19 billion in sales backed by the Eximbank will
■nroort 475,000 man-years of employment.
I am pleased that the Congress has clarified the Bank's mandate,
aofdiasizing that the Bank is to provide competitive financing as
its primai7 goal. Recently, the Bank has been reluctant to match
competitive nnancing provided by other nations. This has effective-
ly disarmed the strongest weapon in our trade arsenal. The action
taken by the Congress today will m£ike that mandate clear to the
Director of the Bank.
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304
On the housing issues, I commend Chairman St Germain for his
perseverance in dealing with the administration and the Senate.
When the issue appeared deadlocked, the chedrman did not give up,
but continued to press for Senate action. We have not had a hous-
ing authorization bill for several years; enactment of this le^la-
tion is a real achievement for both the Congress and the adminis-
tration.
Finally, Mr. Speaker, I am pleased to see that this bill breaks the
impEisse that has occurred over the extension of the Defense Pro-
duction Act. Ab you may recall, the Committee on Appropriations
voted to approve a modest DPA program for fiscal year 1984. The
administration had requested $200 million in the 1984 budget for
procurement of domestically produced atrat^c metals and other
materials, and although we did not feel there was enough informa-
tion about the program to justify that amount, vre did feel it was
time to reopen this important authority and to finally do some-
thing about this country's dangerous reliance on foreign sources of
strat^c and critical minerals, metals, and other materials.
Unfortunately, the committee's proposal for $50 million in DPA
funding for 1984 came to the floor after the basic authorization htid
expired on September 30, and the proposal was deleted on a point
of order.
The parliamentary difficulty that occurred does not alter our
desire to see this program go forward. Certain preliminary assess-
ments are currently being made by the Department of Defense con-
cerning the potential for our country to produce some of the miner-
eils and metals we now buy almost exclusively in Central and
Southern Africa. Since we need to know this information in order
to assess the desirability of producing these materials in this coun-
try, we would hope that these assessments will continue and that
the Department will be ready early next year to provide us with
the information we will need to act on this matter.
Again, 1 commend my colleagues for adopting this amendment.
Thank you, Mr, Speaker.9
• Mr. BiAGGi. Mr. Speaker, I rise today with a mixed reaction to
the proposal before us this afternoon. As has been discussed, this
vote if approved will mean not only that the very fine housing bill
which was H.R. 1 will be passed — but also the hi^ly controversial
funding for the International Monetary Fund [IMF] will also be ap-
proved.
Simple fact of life is— I am a firm supporter of the housing por-
tion of this conference report largely because it does provide for
some increases In funds for public housing both in terms of housing
starts and assistance to those in need. Further the bill will provide
for increases in funds reserved for the section 202 pn^am for the
elderly and handicapped.
I am especially pleased that an amendment I authored to the
House passed bill has been retained in this final I^fislation. This
amendment would allow elderly and disabled residents of federally
funded and subsidized housing to own and keep pets.
I authored this legislation as the chairman of the Subcommittee
on Human Services of the House Select Committee on Aging when
it was brought to my attention that many elderly find disabled citi-
zens were being threatened with eviction simply because of pet
yGoot^le
305
ownenhip. Studies have shown, and statistics have proven, that pet
owneTship can be beneficial to the psycholc^cal, emotional, and
physical well-being of elderly and disabled people. For many, a pet
is the only companion they have, the only protection and the only
link to the outsule world.
My amendment is not one without responsibilities, however. Re-
alizing that landlords have a right to act in the case of destruction
of property or in the case of any disturbances to other tenants in
the building, my amendment provides a necessary balance of re-
sponsibility. The landlord has the right to remove the pet should it
become a threat to the health or safety of occupants in the build-
ing. The landlord also has the right to set up guidelines, upon con-
sultation with the tenants, that takes into consideration such fac-
tore as size of pet, financial obligations of the pet owners, density of
population of the building and the standards of pet care. My
amendment seeks to bring together the responsible pet owner and
the reasonable landlord.
Let me conclude with the observation that I remain opposed to
the inclusion of both the authorization and appropriations neces-
sary to increase the U.S. contribution to the International Mone-
tary Fund. I consider this to be an unwise and excessive invest-
ment of funds — an amount which could exceed $8.4 billion at a
time when we are struggling to correct problems at home caused
by massive cutbacks in spending — and while we tackle a Federal
deficit problem which has grown quite severe.
The simple fact is that in the eyes of our constituents, whether
they be from the Bronx or anywhere, I do not see the wisdom of us
spending this money at this time in this way. 1 am inclined to
agree at this time not only because of the amount we are spending,
Imt because of the occasiontil poor investment decisions made by
the IMF.
I will vote for this bill because I believe the good in it does out-
wei^ the bad. Housing is a desperate need in many aretis of our
Nation and after 2 years of abdicating our reponsibilities in the
field of housing we have a chance to reverse this trend. This bill
will do so. However let the record show that I opposed to the IMF
provisions in this bill and strongly so.s
• Mr. Whttten. Mr. Speaker, more than a year ago, our Commit-
tee on Appropriations was called upon to write the jobs bill. We did
that effectively, as a start toward trying to work out of our depres-
sion by increased production, substituting productive work with
Bomething to show for our efforts, instead of merely providing for
more vreeka of unemployment compensation, which had grown to
$32,000,000,000 a year, which however essential to the recipient
does not add wealth.
I supported the housing bill and other measures which passed
the House of Representatives to get us back to looking toward more
mn'k, enabling our people to provide for themselves what is
I have made a close study of the need to give some relief to the
insent international credit and threatened bankruptcy of many
eoDntries, where we are the principal creditor. I have studied histo-
ly. Such a situation existed as far back as World War I.
yGoot^le
I do believe that what we do here may be just postponing a show-
down and that it may be that we cannot avoid the situation getting
worse.
I do believe it well, however, to postpone — in the hope that we
can get world flnances straightened out — that it may help us to get
our finances in shape.
Foreclosing on what is owed us if possible and it is not apparent-
ly would bring in little but lead to default there than here. When
we do this, I truly believe we must pull our horns, slow down mili-
tary spending to real defense and get back in production, restore
and develop our Nation's resources — for that is our real wealth.
I truly hope I am right in voting for this amendment to the sup-
plemental appropriations bill from our committees
• Mr. Oberstar. Mr. Speaker, those of us who oppose the $8.4 bil-
lion increase in U.S. participation in the IMF are faced with a diffi-
cult decision today because the IMF quota increase has been at-
tached to important housing legislation.
I have not changed my opposition to the IMF quota increase. The
large multinational banks should bear the brunt of their own un-
sound banking policies. These banks have made risky short-t«rm,
high-interest loans to financially questionable nations in the hope
that the Americsm taxpayer will bail them out when these highly
profitable loans turn into liabilities. They ought to work out tneir
problems in the marketplace, under customary financial terms.
The administration is fisking the American people to bail out the
large multinationtil banks, while ignoring the plight of 9.9 million
unemployed Americans. It has failed to come to the rescue of
family farmers who lost their farms when they could not meet
mortgage payments.
The administration is now ready to come to the rescue of the big
banks, with the American people footing the bill. The IMF quota
increase will not solve the debt problems of debtor nations having
trouble meeting their loan payments. It will merely provide a quick
fix solution which will permit large multinational banks to contin-
ue earning exorbitant profits, and paying little In the way of taxes.
The interest rate charged to many Latin American countries by
the large multinational banks is approximately 2 percent higher
than the prevailing rate. These large banks also receive a 1.14-per-
cent avereige rate of return on their assets in Latin America com-
pared to 0.46 percent on assests in the United States.
The IMF quota increase should not have been attached to l^isla-
tion which provides funding for much needed housing aid emd com-
munity development grants. H.R. 3959 restores a substantial por-
tion of assistance cut by the Reagan administration. The cuts have
severely hampered the economic development efforts of our Na-
tion's cities and small towns. We must act today to reauthorize
community development block grants and urban development
action grants for nscal years 1984, 1985, and 1986. Earlier this
year, during House consideration of H.R. 1, I worked with my col-
league from Illinois (Mr. Durbin) to assure that small cities with
high unemployment would be eligible to compete for UDAG's. I am
pleased that this bill reflects our concern for those cities and towns
around the Nation which have been hardest hit by the Reagan re-
yGoot^le
307
Our Nation's public housing stock is rapidly deteriorating. The
Reagan administration recenUy announced a list of surplus hous-
ing for the poor; however, closer examination showed that, in reali-
ty, the administration could not find a single Federal housing pro-
gram with a surplus. This legislation would reverse the indi^'er-
ence of this administration to Federal housing prc^ams for the
poor and would bring the Federal Government back into the hous-
ing market to fulfill its obligation to our Nation's needy, to provide
housing for the elderly, handicapped, and low-income persons.
Because of my strong support for these housing and community
development programs, I must support H.R. 3959. I do so reluctant-
ly because of the IMF quota increase.9
• Mr. Fauntroy. Mr. Speaker, I rise in reluctant support of the
rule that has us voting on a supplemental appropriations bill
which combines appropriations for the International Monetary
Fund, the Export-Import Bank, the Inter-American Development
Bank, the Asian Development Bank and Fund, the African Devel-
opment Fund, and most importantly, a significant housing bill.
I wish to make it very clear that I am not completely satisfied
with the language in section 804 with regard to the IMF. The com-
promise language on South Africa, while not insignificant in posing
a requirement on the U.S. Executive Director with respect to any
Gountiy practicing apartheid in the world, is not language that I
would have preferred. That languE^e states:
Hie Congress hereby finds that the practice of apartheid results in severe con-
ttnintB on labor and capital mobility and other highly inefficient labor and capital
np^y rieidities which contribute to balance of payments deficits in direct contra-
*'^-— of the goals of the International Monetary Fund. Therefore, the President
(mat, an
Aall instruct uie United States Executive Director of the Fund to actively oppose
HIT facility invalving use of Fund credit by any country which practices apartheid
■nlMB the Secretary of the Treasury certifies and documents in writing, upon re-
and BO notifiCB and appears, if requested, before the Foreign Relations and
r(g, Housing and Urban AfTaira Committees of the Senate and the Banking,
nuance and Unmn AfTain Committee of the House of Representatives, at least
tmmty-aae days in advance of any vote on such drawing, that such drawing: (1)
VDUlil reduce the severe constraints on labor and capital mobility, through such
■rann as increasing access to education by workers and reducing artificial con-
■Itainta on worker mobility and substantial reduction of racially-based restrictions
geographical mobility of labor; (2) would reduce other highly inefficient labor
ipital supply rigidities; (3) would benefit economically the majority of the
Id the Secretary not meet a request to appear before the aforementioned
Oanunittoca at least twenty-one days in advance ol^ any vote on any facility involv-
ing uae of Fund credit by any country practicing apartheid and certify and docu-
nent in writing theee four conditions have been met, the United States Executive
Dinctor shall vote against such program.
I would have preferred the language that was in the House
passed bill on the IMF because that original language would not
permit an administration to come here and tell us without affirma-
tive action on the part of the Congress that loans to such countries
■hould be authorized. That language was ably crafted by our distin-
guished colleagues. Congressmen Jerry Patterson and Julian Dixon
and I commend them for their courage. I also want especially to
thank the chairman of my full committee, Mr. St Germain, for pro-
fiding tiie leadership that does give us an important precedent
that will restrict the ability of the administration to support IMF
yGoot^le
drawings for countries practicing apartheid. There has never previ-
ously been any \angaage at all attached to the IMF with regard to
apartheid sind 1 want to publicly thank Chairman St Germain for
holding fast on this issue of vital importance to our nationsil inter-
est. Unfortunately, the other body insisted on the language that we
have before us.
Mr. Speaker, the overriding importance of the housing authoriza-
tion bill contained in the supplemental appropriation compels me
to support the rule, the authorization, and the appropriation. We
will fight another day on the issue of our country's relations with
South Africa. Let us pass the rule, the authorization, and the ap-
propriation.•
• Mr. Corcoran. Mr. Speaker, I rise today in opposition to the
supplemental spending bill which has been returned to this body
from the Senate with the highly objectionable IMF-housing legisla-
tion attached. If proponents of the International Monetary Fund
believe that linking the U,S.-IMF contribution to such a very di-
verse issue such as housing somehow legitimizes or changes the
large IMF quota increase, they are mistaken.
I would like to point out to my colleagues that we are consider-
ing the same issues that we did with the IMF in August. The legis-
lation still contains a total $8.4 billion to "bail out" banks who
have made and will continue to make imprudent loans to countries
who are ill-equipped to even absorb interest payment on their
loans.
Third World countries continue to request additional funds,
while failing to fulfill obligations to alter the economic practices
which necessitated IMF assistance in the first place. The IMF is
doing a disservice to these countries and the other Fund members
by perpetuating the myth that financial assistance alone will solve
economic problems which have been festering for years.
In addition, Congress considered the initial IMF request believ-
ing that no additional funding requests would be made in the next
few year. A recent meeting of the International Monetary Fund in
Washington confirmed what many anticipated. The IMF will not
be back in 3 years, or even 2 years. The United States along with
other member countries will be considering this issue again next
year. I ask. my colleagues to consider the implications of a yearly
IMF increase which is by agreement to take place every 5 years.
The United States is not alone in believing that the problems
facing the IMF are far deeper than monetary levels.
While I vigorously oppose the IMF quota increase contained in
this bill, and encourage my colleagues to oppose the measure, I
would like to see our U.S. -IMF representatives push for a serious
reexamination of the goals of this organization. I would like to see
this organization become a valuable economic educator and fuiEm-
cial resource while losing its current identity as an "unconditional
world banker."*
• Mr. Bereuter. Mr. Speaker, this Member supports H.R. 3959
which includes the Domestic Housing and International Recovery
and Financial Stability Act authorizing domestic housing programs
and fulfilling U.S. pledges to the International Monetary Fund and
the multilateral development banks. This legislation has the full
yGoot^le
miyort of the administration and includes the strict regulation
ain oversi^t of private bank lending overseas.
^liB legislation is vitally important for the American farmer in
that the IMF plays a criti^ role in expanding trade, including the
e^ort of American farm products. Almost 1 out of every 3 acres of
American farmland produces food for export.
Exports of wheat and com, among other crops, have balanced to
a lax^ degree our vei? expensive oil import bill. According to the
latest information available, agricultural exports from my State of
Nebraska amount to more than $2.1 billion per year and account
far the approximate equivalent of 24,000 jobs.
Over the last several years, however, the international debt crisis
has adversely affected the American farm community because de-
letoping countries can no longer afford large-scale food imports.
From the period 1981 to 1982 U.S. exports of yellow com fell by
$2^ billion — a one-third drop. Grain sorghum and wheat exporte
also fell by one-third, costing our farmers about $1.5 billion in lost
nles. Without IMF financing for these countries, the drop would
have been even larger and their economic recovery is dependent
more than ever upon concessional lending and IMF assistance.
TTie measure before us also contains funding for severfil raultilat-
«al development banks including The Inter-Americem Develop-
ment Bank, The Asian Development Bank and The African Devel-
opment Fund.
It also contains as well, provisions requiring the Treasury De-
partment to report on how the Banks can play a more active role
m encouraging private companies and investors to support worth-
riiile development projects.
HUs report will be of great use to those of us on the Banking
CiRamittee who would like to see the Banks encourage private
bank loans and foreign investment flows in countries where the
multilateral assistance fedls short of meeting their capital function
requirements.
Continued funding of these Banks serve important U.S. foreign
poli^ interests. Most of the MBD loans are concentrated in coun-
tries or areas of special interest to the United States. In 1980, for
(sample, key U.S. allies including Brazil, Turkey, Korea, Egypt,
and Pakistan, received a large share of this multilateral aid.
In these and other countries, multilateral aid serves long term
U.S. economic and security interest at the same time that it pro-
motes market-oriented economic reforms. The MDB's also help to
ithmilate world trade and have been an important factor in ex-
panding U.S. exports to Third World countries.
Furthermore, U.S. contributions to the MDB's benefit the U.S.
economy. For every dollar in sales of U.S. goods and services to the
MDB's, there is a multiple effect of an extra $3 added to the U.S.
gnas national product. Over the past several years, for every dollar
actually paid in to the Banks, we have exported $1.50 worth of
goods eina services. Clearly, continued strong support of the mutila-
teial development banks is in the national interest of this country.
President Reagan calls the Fund the "linchpin" of the world fi-
nancial system. It is that, but it is also much more than that:
The Fimd is a key element in our foreign policy.
yGoot^le
310
The IMF is important to the economic well-being of Americans,
both those who work in our factories and on our farms.
On reflection, we find the objections to the Fund to have little
merit.
Foreign policy: In the past year Fund assistance has been crucial
for Mexico, Brazil, and Argentina. The economic pressures on these
countries have indeed been very heavy. Without the financial re-
sources mobilized by the IMF from U.S. and foreign sources, friend-
ly regimes might have been replaced and domestic stability woidd
certainly have been jeopardized. Surely, these large countries are
as important to the United States as the smaller ones of Central
America and the Caribbean where we have sent troops and U.S.
foreign aid.
As to those of my colleagues who are strong supporters of assist-
ance to Israel and Egypt, I would point out too that these two coun-
tries are undergoing serious economic difficulties at present and
are prime candidates for IMF concessionail financing. Yet the Fund
will have no further resources if we do not provide this quota in-
crease by the end of this month.
Numerous U.S. allies in Africa eind Latin America are also likely
to need balance-of-payments financing from the Fund in the near
future. Do we want to reject this quota increase today in the name
of fiscal austerity only to face much larger foreign aid expenditures
or loans to our financially depressed allies in the coming year?
U.S. economy: The Fund is playing a positive role in the U.S. eco-
nomic recovery. By lending its own funds and by inducing the com-
mercial banks to keep on lending, the IMF helps to finance U.S.
exports. The importance of this to the U.S. economy can by seen by
a few numbers. From 1981 to 1983, the U.S. trade balance (exporte
minus imports) fell by $21 billion. Almost all of this net loss ($19
billion) can be said to be due to trade difficulties caused by econom-
ic problems in Latin and other Caribbean Nations. The full reper-
cussions of such a drop in the trade balance result in a $30 billion
contraction in U.S. gross national product and caused the direct
loss of hundreds of thousands of jobs in the United States.
The IMF also plays a key role in avoiding defaults on the over-
seas debt owed to American banks. So long as the IMF and the
commercial banks are making new loans to foreign countries they
will have the incentive to avoid defaulting on their debts. If they
did default, or, more likely, declare a moratorium on payments on
their debts, the loss in income might cause some banks to fail and,
more certainly, would cause the banking system fis whole to cut
back sharply their lending to U.S. business. The Federal Reserve
could meet the problem by providing liquidity to the banks but this
would raise the specter of renewed infiation. Moreover, bfinks
would have to curtail lending even if the Federal Reserve Board
acted quickly, and interest rates would rise. The result would be a
financial panic with disastrous results for our citizens and Nation.
The objections: There are several major objections to IMF quota
increase. Let us briefly consider the most commonly cited.
It is asserted that the commerical banks made imprudent loans
and are now being bailed out by the Fund. It is easy in hindsight to
say that the loans were excessive. Perhaps the banks should have
foreseen that the deepest U.S. recession since the depression of the
yGoot^le
311
thirties would occur at a time of high oil prices and high interest
rates. They did not. The did make loans primarily to those develop-
ing countries with a history of sustained economic success.
Two-thirxls of all bank loans to developing countries went to Ar-
gentina, Brazil, Mexico, and South Korea. As the noted interna-
tional economist Rohert Solomon points out, Brazil's real gross na-
tional product grew by almost 9 percent per year over the 19T0's;
Mexico s grew by 6.4 percent and South Korea's by 10 percent. And
tbe rate of increase in their exports, a good measure of their ability
to service foreign debt, grew even faster. The figures in real terms
ibr the 1970'8 are impressive: Argentina, 10.7 percent per year;
Brazil 9.1 percent. Mexico 10.9 percent, and South Korea 25.3 per-
cent. In short, lending to these countries must have seemed like
good business in the 19T0'b.
Nor is the DVIF bailing the bfinks out. IMF loans to a country are
being made on condition that the private banks increase their
loEUis to that country. Moreover, the entire proposed increase in
the IMF resources could pay off only 10 percent of the $350 billion
owed by developing countries to private banks.
It is asserted that much of the $8.4 billion would go to Commu-
nist countries. Recent experience suggests otherwise. In the 12
months ending April 30, 1983, the IMF loaned $14.8 billion but
only $499 million (3 percent of the total) went to a Communist
country, Hungary. Latin America, on the other hand, got $11.8 bil-
Ikhi, or 80 percent of the total. Clearly, the IMF is supporting an
area of the world of strategic and economic importance to the
United States. It does so by using foreign as well as U.S. loan re-
■ources.
Mr. Speaker, I, therefore, urge the speedy adoption of this vitally
important piece of l^islation.9
GENERAL LEAVE
Blr. Long t^ Louisiana. Mr. Speaker, I ask unanimous consent
that aU Members may have permission to revise and extend their
ranarks on House Resolution 379 until the last edition of the Con-
gressional Record for this session of Congress is published.
The Spkaker pro tempore. Is there objection to the request of the
gentleman from Louisiana?
There was no olgection.
Ur. Long of Louisiana. Mr. Speaker, I move the previous ques-
tim on the resolution.
The previous question was ordered.
The Speaker pro tempore. The question is on the resolution.
The question was taken; and the Speaker pro tempore announced
that the ayes appeared to have it.
Mr. Dannbheyer. Mr. Speaker, on that I demand the yeas and
The yeas and nays were ordered,
^le vote was taken by electronic device, and there were — yeas
286, nasrs 186, not voting 22, as follows:
yGoot^le
312
[Roll No. 532]
YEAS-226
Ackennan
Pascell
Lowry(WA)
Addabbo
Fazio
Lman
Luken
Akaka
Fish
Alexander
Foi^(TN)
Lundine
Andrews (NO
MacKay
Andrews (TX)
Markey
Anthony
Marriott
Aspin
Forwthe
Fowler
Martin (NO
AuCoin
Martin (NY)
Bedham
Frank
Matoui
Barnard
Frenzel
Barnes
Froet
Mazzoli
Bartlett
Fuqua
McCandless
Bateman
Garcia
McDade
Bedell
Gaydoe
McEwen
Beilenson
a£""
McHugh
BereuUr
McKeman
Berman
Gephardt
McKinney
Sir.
Gibbons
McNulty
Gilman
Mica
Boega
Bolind
Glickman
Michel
Gore
MineU
Boner
Gradison
Mitchell
Bonior
Cray
MoakJey
Bonker
Gre^n
Moody
Borski
Guarini
Boucher
lallON)
Morrison (WA)
Boxer
lamilton
Murtha
Britt
Harkin
Natcher
Brown (CA)
Harrison
Ne^
Burton (CA)
latcher
Nowak
Campbell
iJ^
O'Brien
Carper
Dakar
Chandler
lar-
Oberatar
C3ieney
Obey
aarke
lorton
Ottinger
ainger
Coelho
CWemandX)
loward
Owens
KE^
Oxley
Patterson
Collins
Hyde
Pease
(Enable
reland
Pepper
Conte
Jefforda
Porter
Conyers
Johnson
Price
Coo^r
Jones (NO
Pritchard
Coughlin
Kaptur
Pursell
Cbyne
Kennelly
Oockett
Davis
Kogovaek
de la Garza
Kostmayer
Dellums
AFalce
Derrick
.agomarsino
DeWine
Lantoa
Roe
Dickinson
Latta
Rose
Dicks
Leach
Rostenkowski
Dingell
Lehman (CA)
Dixon
Lehman (FL)
&"
Downey
Leiand
Dwyer
«nt
Savage
Edgar
Sawyer
Edwards (AL)
Sch^er
Edwards (CA)
fl^^?
Schneider
Erienbora
Schumer
Evans (lA)
Lowery (CA)
yGoot^le
aikanki
%wke
Williams (OH)
Smitb(FL)
Wirth
aniUKIA}
Torrea
Wolpe
Smith (NJ)
TVirriceUi
Wortley
SDOwe
Towns
Wright
Wyden
&dlR
Udal)
Spmtt
Vander Jagt
Wyiie
9t Germain
Vento
Yates
Wajman
Young (MO)
Stokes
Weiss
Zablocki
Stntton
Wheat
Zechau
Studds
WhitehuTBt
9mft
Whitten
NAYS-186
Alborta
Plorio
Miller (CA)
Anderaon
FranUin
Molinari
Applegate
Gingnch
Mollohan
Areher
Goiualez
Montgomery
Bitea
Goodling
Moorl
Bennett
Granun
Moorhead
Bethune
Gunaeraon
Mrazek
Bilii«ki«
Murphy
BUky
Hall (OH)
Myere
BoKb
HaU, Ralph
Nelson
Bnaiu
Hall. Sam
Nielson
Brooks
Olin
Bnomfield
Hansen (ID)
Packard
Brown (CO)
Hartnett
Panetta
BnvhUl
Hefner
Parris
Bryint
Hertel
Pashayan
BnitanflN)
Hiler
Patman
Bnon
HopUns
Paul
Smey
Huckaby
Penny
CbiT
Hughes
Perkins
Ouppell
Hunter
Petri
Qui^e
Hutto
Pickle
CMta
JactriM
Rahall
Cdeman (MO)
Jenkins
gfd
Courter
Jones (OK)
Cnig
Jones (TN)
Richardson
Cnne, Daniel
Kasich
Hitter
Crane. Philip
Kastenmeier
Roberts
[TAaiouni
Kazen
Uiel
Kemp
Roemer
(umemeyer
Kildee
Rogers
Dwden
Kolter
Roth
IhKhto
Kramer
Rowland
luib
Leath
Russo
Dixmelly
Levitas
Schaefer
Dorpu)
Lewis (FL)
Schroeder
Dnfdy
Lipinski
Schuire
IW
Lloyd
Sensenbrenner
Dooeui
Loefller
Shannon
Durbin
Long (MD)
Sharp
Djwn
Lott
Shaw
i!^
Lungren
Shelby
Eck^
Madigan
Shumway
BihmrdatOK}
Marlenee
Shuster
Down
Martin (ID
SiUander
&^
McCain
McCloekey
Sisisky
Skeen
McCollum
Skelton
^'
McCurdy
McGrath
Slattery
Smith (NE)
fid&
Mikulski
Smith. Denny
yGoot^le
Smith, Robert
Taylor
Weaver
ffi™
Thomas (CA)
Weber
Thomas (GA)
Whitley
Whittaker
Sriiia
Trailer
»"
Valentine
Vandergriff
Wilson
Winn
Stenholm
Volkmer
Wise
Stump
Vucanovich
Wolf
Waigren
Walker
Yatron
Tailon
Young (AK)
Tauzin
Watkins
NOT VOTING-22
Young (FL)
Annunzio
Hansen <UT)
Nichols
Bevill
Hawkins
Ortiz
Clay
Holt
Binaldo
Corboran
Lewis (CA)
Rudd
DymaUy
Mack
Simon
Ferraro
Martinez
Williams (MT)
FmtKHD
Miller (OH)
Hance
Minish
D 1530
The Clerk announced the following pairs:
On this vote:
Mr. Hawkins for. with Mr. Bevill against.
Mr. Minish for, with Mr. Nichols against.
Mr. Dymally for, with Mr, Williams of Montana against.
Mr. Crockett chtuiged his vote from "nay" to "yea."
So the resolution was agreed.
The result of the vote was Einnounced as above recorded.
A motion to reconsider was laid on the table.
The Speaker pro tempore. Accordingly, the Senate amendment
to the House amendment to the Senate amendment numbered 11
to the bill, H.R. 3959, is agreed to.
yGoot^le
Titles I Through V of the Domestic Housing and
International Recovery and Financial Stability Act
I would like to explain several of the major provisions of the
Housing and Urban-Rural Recovery Act of 1983 as provided by this
amendment.
TITLE I — COMMUNITY DEVELOPMENT PROGRAMS
Community development block grants
The $3,468 billion is authorized for each of the fiscal years 1984,
1985 and 1986, It was almost exactly two years ago that the Admin-
istration first proposed regulatory changes to the Community De-
velopment Block Grant Program that threatened to weaken the
empnasis this pn^am has historically placed on community devel-
opment activities that principally benefit low and moderate income
families. Since HUD was unwilling to retain the existing regula-
tiona that assured the m^ority of the funds spent under the pro-
gram would be used to benefit the less economically fortunate
members of a community, Congress has been forced through this
l^islation to clarify the basic intent of the program. States and en-
titlement communities may propose one, two or three year commu-
nity development plcms; fifty-one percent of all funds spent in a
State or in an entitlement community over the period specified in
such plans must principally benefit low and moderate income fami-
lies. If CDBG funds are used to finance public improvements in
whole or in part, families of 50 percent of median or below may not
be assessed for ^eir share of the cost and families between 50 and
80 percent of median may be assessed for the non-CDBG share of
the cost only if the community's CDBG grant is insufficient to
cover the assessment. Low and moderate income families are de-
fined for both the States and the entitlement communities similar-
ly to the assisted housing definition as families of 80 percent of
area median income or below.
I^e statute defines eligible activities and how certain activities
are to be considered to principally benefit low and moderate
income families; these provisions apply both to entitlement commu-
nities and to small cities receiving funds from either HUD or the
State. Although States may establish criteria and priorities rele-
vant to selecting small city applications on a competitive basis,
they may not forbid the use of CDBG funds for any activities de-
fined as eligible under the statute.
The bill clarifies the responsibility of each small city receiving
funds to identify its housing and community development needs
(including the needs of low and moderate income residents) and the
activities designed to meet those needs. This provision should be
implemented in a simple and reasonable manner, taking into ac-
count tiae limited resources and personnel available to small cities.
(315)
37-922 O - 84 -
yGoot^le
316
Like entitlement grantees, small cities must also agree to minimize
displacement, affirmatively further fair housing and provide citi-
zens the opportunity to assist in the development of the grant pro-
posal. While each small city is not required to meet the 51 percent
low income benefit test, States should encourage or give priority to
applications that will meet or exceed that test in order to eissure
that the State as a whole will be able to comply with the principal
benefit requirement over the 1-, 2- or 3-year period of the State's
plan.
The bill contains various provisions designed to assure that enti-
tlement communities that have lost population according to the
1980 census or lost their classification as central cities continue to
be considered entitlement communities for an additional 2 years.
Any unit of general local government that becomes eligible to be
classified as a metropoHtian city for fiscal year 1984 or 1985 while
its population is included in an urban county may continue to be
considered part of the urban county for fiscal years 1984 and 1985
and if a new three-year cooperation agreement pursuant to Section
102(d) is entered into during those fiscEil years, it will continue to
be classified as an urban county for the period of such agreement.
Urban development action grant
The $440 million is authorized for each of the fiscal years 1984,
1985 and 1986 for the Urban Development Action Grant program
and the extent of unemployment, job lag or surplus labor will be
included in the UDAG eligibility criteria for small cities just as the
extent of unemployment has been considered for entitlement com-
munities. No small city that was eligible for a UDAG in fiscal year
1983 shall lose its eligibility until it is determined whether it will
qualify for assistance when the unemployment, job lf% or surplus
labor criteria are issued.
Urban Homesteading and 312 Rehabilitation Programs
The single family Urban Homesteading Program has been re-
vised to assure that the benefits to this program will accrue to low
and moderate income families whose primary opportunity for
homeownership lies in homesteading this program. By requirii^
the property to be transferred for free, by providing up to three
years for all repairs other than those posing a substantial danger
to be completed, and by giving priority to applicants whose current
housing is inadequate and who pay over 30 percent of their income
for shelter, low and moderate income families whose primary re-
source is their own and their friends' labor, will be offered the op-
portunity to become homeowners. The Multifamily Urban Home-
steading is also structured to assure that not less than 75 percent
of the occupants following rehabilitation or conversion will be
lower income families. While $12 million is authorized for this pro-
gram in fiscal year 1984, it is expected that funds for the rehabili-
tation of these buildings will he available from the Section 312,
CDBG, the new rental rehabilitation grants and private reso\irces.
By extending the Section 312 program for fiscal year 1984, Con-
gress explicitly permitted HUD to establish a priority only for Uie
use of these funds in conjunction with the Urban Homesteading
Program. HUD is not permitted to require the linkage of 312 loan
yGoot^le
funds with any other federal pn^am. Participating communities
may in their discretion use 312 loan program for single family or
miiitifiiTnily rehabilitation.
TITLE U — ASSISTED HOUSING PROGRAMS
Budget authority
The bill provides that the amount of budget authority which may
be obli^t^ for all the HUD assisted housing programs, including
the new rental rehabilitation and production program, is increased
by $9.9 billion on October 1, 1983, and by such sums £is may be ap-
proved in appropriation acts for fiscal year 1984.
Amiated housing tenant rents
One of the m^or items directly related to the issue of affordabil-
ity of assisted housing is the tenant rent contribution. In an effort
to reduce federeil spending in 1981, the Administration raised the
contribution requirement from 25 to 30 percent of adjusted income.
Regulations proposed in 1983 would have limited deductions from
income to $400 per child and $300 per elderly household. The con-
cern cf the House has been that these increases place an unwar-
ranted Rnancial burden on families and individuals who can least
afford it.
While the agreement retains the 30 percent rent to income ratio,
it establishes more equitable adjustments to income: $480 per
family member under 18 years of age or who is 18 years or older
and is either disabled or a full time student; $400 per elderly Euid
handicapped family; medical expenses in excess of 3 percent of
annual income for each elderly and handicapped family; and child
care expenses to the extent necessary to enable another family
member to be employed or pursue an education.
Operating subsidies
It is the intent of Congress that the Department of Housing and
Urban Development (HUD) shall continue to use a Performance
Funding System in establishing public housing operating subsidy
levels, and that the system shall be based upon current PFS. In ad-
^tion to taking into account the character of projects, local condi-
tions and the character of households served. Congress expects that
HUD will consider the impact of distressed local conditions on op-
erating costs and should adjust operating subsidies to account for
the impact of such distressed conditions. It is also intended that
HUD make such adjustments as are necessary to account for
under-and over-prediction of inflation in operating costs in making
annual adjustments to PFS, and that such adjustment shall be
made in such a way eis to minimize disruptions to the PHA budget
[dannin^ process. In addition, there is a need to provide incentives
to housing authorities to increase their 0[>erating income. HUD
[^Illations and policies reflect an intent to maintain or increase
incentives in this area. It is not the intent of the Committee that
HUD penalize efficient management recapturing income received
by PHAs in excess of the amounts contained in their approval
budgets, unless explicitly provided for in regulations that include
definitions of "excess" income, procedures for calculating such
yGoot^le
"excess," and methods and timetables for recapturing such
"excess." Several PHAs have been very aggressive in making
timely investments in pursuing utility rate aqjustments ^m their
States and succeeding in court suits that add to their income.
Given the precarious state of the operating budgets of many
PHA's, these aggressive management steps should be rewarded and
should not be penalized through the memipulation of the PFS
system, of regulations or of policy directives to the field.
Comprehensive modernization
The bill does not change existing stetutory provisions concerning
the Comprehensive Improvements Assistance Program (CIAP),
since Congress continues to support the provisions of the current
statute which emphasize the intent of the program to assist local
Public Housing Authorities (PHAs) in carrying out comprehensive
programs of modernizing their public housing developments, in
order to guarantee the long-term social and ^ysiceil viability of
public housing developments. To this end, we expect comprehensive
modernization to be given the highest consideration for funding by
HUD, eifter emergencies are funded, wherever this is the expr^sed
priority of the local PHA, In all cases, HUD should give clear rec-
ognition to the modernization needs identified by local PHAs when
making funding decisions under CIAP, whether the needs be emer-
gency, special purpose or comprehensive modernization. It was not
the intent of Congress at the time of enactment of the CIAP stat-
ute, nor is it now, to limit special purpose modernization funds
solely to energy conservation improvements, nor to give priority to
items which only produce reductions in PHA operating costs and
operating subsidies. Because of the usual nearly year-long delay in
funding emergency items, such items should be interpreted by
HUD to mean not only those produced by an immediate, already-
existing crisis, but also those work items which are considered nec-
essary by the PHA in order to prevent such a crisis from occurring
within the very near future. Any evaluation of the proposed bene-
fits of CIAP expenditures, for purposes of prioritizing HUD alloca-
tions, shedl be carried out in accord with the purpose of long-term
project viability, safety and habitability not solely in terms of
short-term cost-savings. Comprehensive applications should be
ranked against other comprehensive applications in making fund-
ing determinations, rather than against special-purpose applica-
tions.
In this bill, we are continuing the public housing development
program but, as an accommodation to Senate concerns, we have
provided that additional public housing units can be develoiied by
new construction only where such is ' less costly than acquisition
or acquisition and rehabilitotion would be." T^is assessment must
include the cost of the fund that will be established to finance
m^or repairs that may not be necessary when the building is ac-
quired, but will be necessary within five years of acquiBition in
order to assure the long-term viability and habitability of the
project. Plainly, the bill means that any existing structures, to
which the Secretary refers in determining whether or not proposed
new construction is less costly, must be in the same general neigh-
borhood Eis the proposed new construction, be avauable for pur^
yGoot^le
319
e and be capable of getting local approvEil. Moreover, these pro-
ns ahall not apply to any project for which a PHA has, prior to
January 1, 1984, in any way appued to HUD for funds or initiated
any local process leading to an application to HUD for funds.
Otiier provisions in tne bill allow the Secretary to increase the
amount of single person occupancy in any public housii^ authori-
ty's inventory of assisted housing to 30 percent of the units. Priori-
^ for housing assistance is given to families paying more than 50
percent of family income for rent.
Provisions in the House and Senate housing bills concerning pet
ownership in assisted rental housing are included in this ^"ee-
ment. An elderly or handicapped tenant may not be prohibited
from owning a pet or be denied occupancy because of pet owner-
ship in assisted nousing. Regulations will be issued outlining rules
fisr keeping pets emd the types of pets allowed.
Demolition and disposition of public housing
With r^ard to the demolition an disposition of public housing,
the Committee does not intend to encourage the sale of public
housing projects. The Committee intends for public housing to con-
tinue to serve those who are most in need — low income families
and elderly persons. The demolition or disposition of these extreme-
ly vital housing units should only be undertaken as a last resort
and only if each and every condition for such transactions have
been met.
The bill authorizes the Secretary of HUD to approve the sale of a
public housing project if the property's retention is not in the best
interest of the tenants or the public housing agency, or because the
disposition allows the acquisition, development or rehabilitation of
other properties for low income persons. It is expected that the sale
of a project not be approved unless there is an assurance that there
is a strong possibility replacement units will in fact be made avail-
able and plans for such replacement housing are established.
Funds must be available, commitments made and local government
approval obtfiined prior to the approval of a sale.
The bill provides that proceeds from the sale of a public housing
project be used to retire the debt incurred for the development or
modernization of the project. Any funds remaining from the sale
may be used for the acquisition, construction or modernization of
other public housing projects. The Committee does not intend for
the proceeds of a sale to be a substitute for ClAP modernization
fundfi. The Committee is also of the opinion that the modernization
of vacant public housing units does not satisfy the one-for-one re-
placement requirement in the current regulations or should the
modernization of public housing units be considered to meet the
housing authority s obligation in this new statute to maintain the
aame total amount of low income housing stock.
Again, it must be emphasized that the demolition or sale of any
pubfic housing project in this country should only be permitted as
a last resort. This bill is intended to set standards limiting the cir-
cumstances under which public housing can be demolished or oth-
erwise disposed. It is our intention that the standards in this bill be
folly enforceable by tenants, tenants councils and through certifica-
tion by local government officials.
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320
Recognizing the particular dilemma of many individuals who are
homeless and the demands placed upon local governments to meet
their needs, there is $60 million authorized for emergency shelter
grants. These grants will be used to provide shelter and essential
services for individuals facing life-threatening situations due to the
lack of housing. Awards will be made on the basis of the extent of
need, taking into consideration the special needs of families and
single women.
The HUD Secretary is authorized to carry out a child care dem-
onstration program in lower income housing projects. The prt^ram
will operate in areas where units of local government have provid-
ed Community Development Block Grant funds for the renovation
of public housing facilities and the operation of child care services.
The program shall be designed to determine the extent to which
these services facilitate the employability of public housing resi-
dents. The program will operate in public housing agencies where
child care services do not exist, should involve the parents of chil-
dren benefiting from the program, and should employ in part-time
positions elderly individuals living in the project. At the end of two
years, the Secretary shall report to the Congress on the demonstra-
tion program with recommendation for a permanent pn^ram.
Section 202 elderly or handicapped housing
The section 202 loan program is smiended to include a 9.25 per-
cent interest rate limitation for fiscal year 1984. A project financed
under this section may contain a maximum of 25 percent efficiency
units. Nonprofit sponsors of 202 housing projects for the elderly
and handicapped would be permitted to determine the bfisis of con-
tractor selection if the loan amount is less than $2 million, or the
project rentals will be less than 110 percent of the fair market
rentals applicable to projects for the elderly and hemdicapped, or
the sponsor is a labor organization. The fair market renttds for
projects for the elderly and handicapped assisted under section 202
are 105 percent of the fair meirket rentals applicable to other
projects. The terms of this provision in the bill are predicated on
the continuamce of a differential in fair market rentals between
elderly find non-elderly projects at least as great as the differential
that currently is in effect.
HUD/HHS housing quality demonstration
The Secretary of HUD is authorized to carry out a demonstration
progrsim to encourage the upgrading of housing occupied by lower
income families, especially those receiving public assistance, and to
provide better coordination between the Department of HHS and
HUD at the local levels to provide decent, affordable housing.
Grants will be made to states, local governments, and agencies.
Funds may be used to provide techniral or finacial eissisfaance to
property owners to upgrside housing projects, temporary housing
assistance to families currently not receiving it, housing counseling
and referral and other housing related services, and administative
expenses. The Secretary shall transmit an interim report on the
implementation of the demonstration program and a final evalua-
tion report to Congress.
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321
Public housing lease and grievance procedures
The bill establishes in statute the standards that must be imple-
mented in any public housing lease and grievance procedures. The
intent of these provisions is to require each public housing agency
to establish an administrative procedure under which tenants will
be advised of the specific grounds of any proposed adverse action;
have an opportunity for a hearing before an impartial party; have
an opportunity to examine documents related to the proposed
action, be entitled to representation of their choice; be entitled to
ask questions of witnesses and have others make statements on his
or her behalf; and be entitled te receive a written notice in a time
specified on the proposed action. These actions are aimed at provid-
ing individuals with basic due process protections. For more than a
decade, HUD has required that PHAs conduct fair administrative
hearings before goii^ to court to evict a tenant. This HUD require-
ment was based on Supreme Court and other federal appellate
court decisions interpreting the due process clause of the Constitu-
tion. HUD recently proposed regulations that would exempt the
PHAs from this obligation. The purpose of this section is to make
clear that a PHA may be exempted from that obligation only
where HUD has determined that the court hearing which the
tenant would be given would provide the basic elements of due
process. These basic elements have been identified by the courts
and by HUD regulations [Goldberg v. Kelly. 397 U.S. 254 (1970);
Kingv. Housing Authority, 670 F. 2nd 952 (11th Cir., 1982); 24
C.F.R. Section q66.53(c)] and have been included in the standards
specified in the statute for PHA administative hearings.
If a Housing Authority considers that it should be allowed this
exemption, the Authority must make a request of HUD giving
notice of the request to its tenants and other interested persons.
HUJD should provide tenants and others with an opportunity to be
beard with respect to the propriety of granting the request. HUD
must make these decisions with respect to each court system or
level in each state, scrupulously ascertaining whether the due proc-
ess elements are provided in each court. State-by-state determina-
tions will not suilice, because urban courts often provide protec-
tions that are not available in rural areas.
Section 235 homeownerskip
The Section 235 homeownership program is extended through
fiscal year 1985. Any new contracts entered into after September
30, 1983, under this section may not be made for more than a ten
year period. If a family continues to need assistance beyond the ten
year limitation, the Secretary may continue assistance payments
from a revolving fund established in this bill.
Section 236 and Rental Supplement Programs
Tlie bill contains provisions to assure continued adequate fund-
ing for State-financed, non-FHA insured projects assisted with Sec-
tion 236 rental assistance payments and Section 101 rent supple-
ment payments for the remainder of their assistance contract
tenns by mandating sufficient payments by HUD each year to
cover fiilly 90 percent of necessary rental increases and changes in
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322
tenant incomes for all units in each project covered by the assist-
ance contract. These actions, where applicable, should be made on
a timely basis for all units covered by contracts under these sec-
tions. The Secretary shall use any recaptured authority under
these sections due to conversion of contracts to section 8 assistance
for the purpose of providing assistance under existing section 236
and section 101 contracts. In the case of recaptured Section 101 au-
thority not being required to cover assistance under that section, it
should be used to cover assistance under the section 236 program.
Section 8 New Construction Program
As of January 1, 1984, the bill repeals the authority for Section 8
new construction and substantial rehabilitation assistance that is
not used in conjunction with the Section 202 program. Any funds
appropriated for the Section 8 new construction and substantial re-
habilitation program prior to that date are to be used pursuant to
those authorities and the requirements of those sections will, of
course, continue to apply to any units already constructed or reha-
bilitated pursuant to those authorities.
Section 8 fair market rents
The bill does not contain a statutory description of the rents that
must be taken into account in establishing the fair market rents
for the existing Section 8 program since regulations have recently
been issued which reflect a compromise between HUD's initial fair
market rent proposal and the language included in H.R. 1. The
present formula establishes fair market rents at the forty-fifth per-
centile of all rents for decent, safe and sanitary housing occupied
by recent movers, excluding public housing and units built within
the last two years. It is with the understanding that the Secretary
will not deviate from the present formula in a way that results in
lower fair market rents, the House agreed to eliminate statutory
language. However, it is expected that the Secretary will revise
these rentfi annually so that they reflect accurately current rental
market conditions.
Section 8 voucher demonstration
The $242 million is authorized for a demonstration of approxi-
mately 15,000 housing vouchers to be provided to families whose
income is 50 percent of median or below, or have previously lived
in federally assisted housing. The Secretary shall establish a pay-
ment standard based on the fair market rent established for the ex-
isting Section 8 program. The monthly assistance payment for any
family is the amount by which the payment standard for the area
exceeds thirty percent of the family s monthly adjusted income or
ten percent of the family's gross income.
Substantially all of the authority is to be used in conjunction
with the new rental rehabilitation program, for families displaced
by the new rental construction program or in conjunction with the
new FmHA rural housing preservation grant program.
The assistance payment may, at the discretion of the public hous-
ing authority, be adjusted twice in five years to assure that the low
income family participating in the program can continue to afford
the rental unit. To cover the cost of such adjustments, each Euuiual
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contributionB contract with the public housing authority will pro-
vide ntiTuml contributions equal to 115 percent of the estimated ag-
negate amount of assistance needed during the first year of the
five-year contract. The total amount of any adjustments that are
made within the five-year period plus the iissistance payments ac-
tually paid may not exceed the total annual contributions provided
in the contract for the five-year period. Any amounts not needed
for adjustments may be used by the public housing authority for
additional vouchers.
It is expected that HUD will closely monitor this program and
report r^ularly to Congress on its impact. Of particular concern is
whether low income families will have to pay more for decent shel-
ter and whether large ftimilies, in particular, will have greater dif-
ficulty in finding such shelter than under the existing Section 8
program. ChT importance also is the extent to which vouchers pro-
vide mobility to families to locate adequate shelter outside areas in
which they presently reside. Any reports should provide compari-
sions between the two pn^ams in communities that contain vary-
mg proportions of low income residents and difTering vacancy rates
for moderately priced rental housing.
TITLE ni — BENTAL REHABIUTATION AND DEVELOPMENT GRANTS
The Rental Housing Rehabilitation and Development Program
has 2 components. One component is designed to make rental reha-
bilitation grants to units of general local governments and states to
aid in rehabilitation privately owned rental housing stock. The
other component is to make available to certain areas of the coun-
tiy that have a severe shortage of affordable rental housing, devel-
opment grants to subsidize the cost of new construction and sub-
stantial rehabilitation.
A total of $615,000,000 is authorized for this new program in
1984 and 1985. Out of this total $150,000,000 will be spent on the
F^abilitation component of the program for both 1984 and 1985,
while $200,000,000 will be available for the development grant com-
pment in 1984 and $115,000,000 will be available in 1985. These
amounts are expected to assist approximately 60,000 units of rental
rehabilitation (30,000 in 1984 and 30,000 in 1985) and a total of
28,249 units with development grants, (16,666 units in 1984 and
9,583 units m 1985).
In order to assure very low income tenants the opportunity to be
housed under the rental rehab program, 15,000 housing certificates
are provided. It is expected that these certificates will be used pri-
marily to support the rehabilitation program developed by the
grantee by enabling many very low income tenants to remain in a
itructure that is improved, as well as to provide housing assistemce
to those who for any reason may be displaced by either the reha-
Ulitation or development program.
Rental Rehabilitation Program
The program structure for the rental rehabilitation component is
similar to a block grant. Allocations will be made by formula to
cities over 50,000, urban counties and states, all of which will ad-
minister the program and distribute the grants.
yGoot^le
324
A formula designed by the Secretary will take into consideration
such factors as low income renter population, overcrowding of
rental housing, the extent of physically inadequate housing stock
and other objectively measurable criteria that the Secretary deter-
mines may be useful in accurately determining the needs for reha-
bilitation funds around the country.
The rehabilitation program provides for establishing a minimum
allocation level below which the conduct of a local progrsun would
not be feasible. If a city or urban county is by formula allocated
less than a minimum amount, these amounts would be added to
the allocations for the States where the relevant cities and counties
are located.
After 1984 an annual performance adjustment will be made by
the Secretary up to 15 percent above or below the prior year's allo-
cation, depending on the grantee's progress in meeting program re-
quirements and in achieving the goal that at least 80 percent of the
units rehabilitated must have rents that would be affordable by
lower income families. Affordable rents are those which lower-
income families can pay with 30 percent of their adjusted incomes.
While the grantee will not be required to submit an application
for approval, the grantee will be required to provide a program de-
scription to the. Secretary that will contain a description of their
rental rehabilitation program, including a proposed schedule of
carrying out these activities, a certification that the public was in-
volved in developing the program, a statement of procedures and
standards that govern the selection of the projects and other infor-
mation necessary to assure that the rehabilitation program is
achieving its goal.
The rehabilitation program requires that a number of key re-
quirements be met. The grants can only be used in Eu%as where the
median income is 80 percent of the community's median income or
below. Rehabilitation is limited to correcting substandard condi-
tions, to make essential improvements, and to repair major systems
in danger of failure; 100 percent of the funds must be used for the
benefit of low income families, except in some cases this require-
ment could be reduced in order to enable the project to be feasible;
the maximum amount of Eissistance per unit is 15000 but may in-
cresise in high cost areas with the Secretary's approval; and the
grant assistance cannot exceed 50 percent of the total cost to reha-
bilitate a structure. In addition, the owner of each building receiv-
ing assistance must agree not to (1) discriminate against families
because they receive or are eligible for any housing assistance or
(2) convert the building to a condominium or a cooperative that is
not a limited dividend cooperative 10 years after the rehabilitation
is complete.
Because one of the greatest needs in many areas of the country
is the lack of decent and safe housing for families, and in particu-
lar large families, it is expected that the Secretary in distributing
funds in both the rehabilitation and the development program wiU
assure an equitable distribution to these families. Since many of
the substandard units in our nation are occupied by very low
income families, projects containing such units will be given a pri-
ority in the rehabilitation program.
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325
Deoeli^ment Grant Pix^ram
The need for new or substantially rehabilitated rental units in
many parts of the country is severe and the development grant
component is intended to aid these areas of the country experienc-
ing such a Mortage. The Secretary is required to set these stand-
ards for area eligibility based on such factors as the extent of pov-
erty, the extent of occupancy of physically inadequate or over-
crowded housing by lower income families and other housing dis-
tress factors. Since some areas may not be eligible for development
Emts because they don't meet the housing distress standards but
ve a particular project that cannot be carried out through mod-
erate rehabilitation, the Secretary may consider an application
from these areas in order to meet special housing needs or to sup-
port a special neighborhood preservation purpose.
A grant application must contain certain information, including
a description of the project and its production timetable, certifica-
tion Uiat the public was consulted about the project, a statement as
to how the grantee will select the project taking into account the
extent to which Federal funds will be efficiently used, how the
units will be maintained and the rents will be maintained at levels
that are affordable for the low income tenants and other criteria
the Secretary may prescribe.
In order to assure that low income families are assisted under
this program and to assure an adequate leveraging of private in-
vestment with federal funds, certain requirements must be met
under the rental development program. These include: requiring
Urat for at least 20 years, at least 20 percent of the units in a struc-
ture must be occupied or available for occupancy by families whose
incomes do not exceed 80 percent of the area medium; using grant
assistance only to develop real property for residential purposes;
Igniting grant assistance to 50 percent of the total costs of the de-
velopment, acquisition or rehabilitation; and prohibiting assistance
if it involves involuntary displacement of very low income families
1^ moderate income families. The landlord may not discriminate
against tenants who are eligible for or are receiving other housing
aasistance (such as existing section 8 or vouchers) or those with
dtildren and may not convert units to condominium or coop owner-
ihip during the 20-year period from time of initial occupancy.
Once eligible areas are designated and the grantee submits
looject applications to HUD, the Secretary then must select the
pra>)ectB to be funded. The selection criteria include: the extent of
the severity of the shortage of decent rental housing opportunities
in the project area; the extent to which nonfederal public and pri-
vate funds reduce the amount of development grant money needed;
how projects contribute to neighborhood development and mitigate
displacement; the past performance of the applicant community in
meeting assisted housing needs; the number of units developed for
the least cost to the Federal Government, taking into account a
number of factors, including cost difTerences among areas, among
financial alternatives and among types of projects and tenants
bang served.
A critical selection criteria is the extent to which a mechanism is
established to assure the maintenemce of affordable rents for lower
yGoot^le
326
income families for the required 20-year period. Possible mecha-
nisms include establishing a reserve account with part of the cap-
ital grant or with excess rents collected from unsubsidized tenants,
or any other means to accumulate sufficient funds to lower rents
for the subsidized tenants. An affordable rent is a rent that does
not exceed 30 percent of a family's adjusted income. This criterion
is intended to establish Congress preference for projects which pro-
vide that the lower income units are Eiffordable to a range of lower-
income families, including very low income families, ensuring that
no lower-income family pays more than 30 percent of its adjusted
gross income for rent. Although the amount of subsidy provided
should be enough to make the rents for the lower-income units af-
fordable by a family earning 50 percent of the median income, Con-
gress does not anticipate that the rents of all of the lower income
units will be at this level, regardless of whether the family's
income is 35 percent of median income or 75 percent of median
income. Rather, Congress believes that the 30 percent rent to
income ratio established for other lower-income housing programs
should apply to the lower-income units produced by this prt^ram
as well. The selection criteria are designed to reward prop(»als
which provide for such a rent structure, and which will set aside
more than 20 percent of the units in any project for low income
families. The financial feasibility of the project must be considered
in the selection process and the Secretary must also consider in se-
lecting projects the equitable distribution of the assistance to
assure that families including large families are housed under this
program. The ability of large families to find adequate shelter is a
serious national problem and the intent of this new program is di-
rected to this situation.
From among the projects selected by the Secretary based on
these criteria the Secretary shall give a priority to projects that
will provide more than 20 percent of the units for occupeincy by
low income families, as well as a priority for projects in areas with
lengthy waiting lists for those in need of housing assistance, and
for projects in areas where families may have Section 8 certificates
but must look for an excessive length of time to locate suitable
housing.
There is no fair market rent established for the units expected to
be occupied by families below 80 percent of the area mediitn
income but the rent provision requires that the grantee must ap-
prove the project rents for those families and these rents cannot be
more than 30 percent of the adjusted income of a family whose
income equals 50 percent of the median income for the area. It is
expected that a project will have a mechanism as described in the
selection criteria to help house those families whose income may be
below 50 percent of median as well as to assure that these lower
income families pay no more than 30 percent of their adjusted
gross income for rent.
If the program requirements are violated during the 20-year
period beginning on the date on which 50 percent of the unite are
occupied or completed either the owner or his or her succeeeor
must repay to the grantee the assistance provided plus the simple
interest thereon except that after the 10 years the amount to be
repaid shall be reduced 10 percent per year for each full year after
yGoot^le
327
year 10. The grantee iB expected to use any money recovered be-
cause of the Niforcement provision to provide additional assistance
for low income families.
The bUl provides that the assistance provided under the program
shall constitute a debt, payable if the owner fails to carry out the
agreements, and shall be secured by security instruments provided
t^ the owner to the grantee. It is not intended to imply that the
assistance provided for these projects shall be considered recourse
loans. A provision requiring that assistance for moderate rehabili-
tation be in the form of recourse loans weis contained in the origi-
nal Senate bill, but was dropped after extensive discussions on the
present bill. Having dropped if for moderate rehabilitation, it was
not intended to reconstitute that requirement in the development
program. Congress intends that the advance of the subsidy to the
owner can be secured by a security device such as a subordinate
lien on the project. It is not intended that this lien would have a
priority over the prim£iry security instruments for the financing of
the project.
The amount of assistance to be provided would be the leeist
amount needed to provide afTordable and modestly designed hous-
ing for families that are imable to find other reasonable and afford-
able housing in the private market.
The bill provides for a State rental rehabilitation program but
the States can only carry out the activities under this program in
cities with populations of less than 50,000 and in urban countries
and cities that receive less than the minimum allocation. The State
has the option to run its own rental rehabilitation program or may
distribute funds to units of general local government. If a State
opla not to run a rehabilitation program the Secretary has the au-
thority to do so.
When the State is administering such a program the State must
comply with the program requirements, as well as any other crite-
ria of the program, and units of general local government that run
a proeram must certify to the States that they are in compliance
with uie requirements.
A provision contained in the Rental Rehabilitation and Develop-
ment Program would prohibit the imposition of any rent require-
ments on structures assisted under these programs except where
Bu^ requirements or other agreements, were entered into pursu-
t to a State or local law enacted prior to the effective date of this
prosram.
The Coi
! Congress has debated rent control exclusively in the past
several years. The bill reported out of the Senate Banking Commit-
tee conteiDed a provision prohibiting the imposition of rent con-
trols on any unit assisted under the rental rehabilitation and devel-
opment pr<^am. An attempt to replace this provision with a
rldfather provision was narrowly defeated, on an 8-8 tie, and
provision was not debated on the Senate floor.
In the House, the Banking Committee has a long history of re-
jecting anti-rent control proposals, and this year an anti-rent con-
trol amendment was defeated twice on the House floor. The com-
pnnnise provision contained in the bill recognizes the autonomy of
Qiose junsdictions which have enacted rent regulations over their
local nousing markets. It adopts the langueige contained in the
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Senate program, but grandfathers jurisdictions with State or local
laws providing for the imposition of some form of rent regulations.
In adopting this provision, communities have been grandfathered
and not Just specific statutes. The grandfather provision is intended
to cover not simply existing statutes, but also extensions, re«nact-
ments, or amendments to these statutes which occur after the ef-
fective date of this program.
In order to assure the modest design of the project, the meuti-
mum mortgage amount for the project may not exceed the amount
insurable under Section 207 of the National Housing Act. State and
local bonds issued to finance eligible projects could qualify as Sec-
tion 11(b) tax-exempt bonds. Davis-Bacon wage standards will also
apply to projects developed with assistence from this program.
The Secretary is required to undertake a review and audit annu-
ally to determine that the grantee is carrying out its activities in a
timely manner and the grantee must provide a performance report
annually to the Secretary including information dealing with the
program's cost effectiveness, the type and income levels of tenants
who benefit from the program, any tenant displacement and any
other information the Secretary may require. While this provision
requires owners to supply verifiable data to the grantee with
regard to tenant income, household size, and other pertinent demo-
graphic information, the intent of the performance report is to fa-
cilitate Congressional oversight and we could not want these re-
quirements so stingent that they could in any way hamper the ef-
fective functioning of this program. If the owner shows the Secre-
tary that his ability to obtain the information is not practical, the
Secretary may consider other data useful in providing information
for effective Congressional oversight of this program. And third the
Secretary must provide a report to Congress as to the grantee's
progress under this program.
If a mortgage on a property which is rehabiliteted or developed
under this program is insured under 223(f) of the National Housing
Act, it may also be governed by the coinsurance requirements es-
tablished by Section 244 of the National Housing Act, which is
amended for this purpose to provide that: (1) insurance benefits
shall equal the sum of (A) 90 percentum of the mortgage on the
date of institution of foreclosure proceedings (or on the date of ac-
quisition of the property otherwise after default), and (B) 90 percen-
tum of interest appears on the date benefits are paid; (2) the mort-
gagee shall remit to the Secretory, for credit to the General Insur-
ance Fund, 90 percentum of any proceeds of the property, including
sale proceeds, net of the mortgagee's actual and reasonable costs
related to the property and the enforcement of security; (3) pay-
ment of such benefits shall be made in cash unless the mortgagee
submits a written request for debenture payment; and (4) the un-
derwriter of coinsurance may reinsure 1() percentum of the mort-
gage amount with a private mortgage insurance company or with a
stete mortgage insurance agency. In the case of any purchase or
refinancing of a property eligible for rental rehab grants under
Section 223(f) of the National Housing Act, the Secretary may in-
clude rehab or development costs up to $20,000 per unit, but this
may be increased by 25 percent by the Secretary and subordinated
liens securing up to the full amount of mortgage financing provid-
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ed by State or local governments or agencies thereof smd pay bene-
fits in cash unless the mortgage submits a written request for de-
benture payment.
TFFLE IV— PROGRAM AMENDMENTS AND EXTENSIONS
The authority for the Federal Housing Administration Mortgage
Insurance Programs is extended for two years. This is not in keep-
ing with the practice of prior years, but because of the complexities
involved in developing a multifaceted housing bill and in view of
the difRculties involved in peissing such a bill, to two-year exten-
sion as proposed in the Senate bill was adopted. The adoption of
this provision is not intended to signal either a lack of concern or a
retreat in the Congress' commitment to housing and community
development programs, but rather a recognition that consistency
and stability are needed and a two-year extension is the best policy
at this time.
The FHA insurance Hmit is set at $50,900,000 for both 1984 and
1985.
The provision to eliminate the requirements that FHA interest
rates be set by law is included in this title as identical provisions
<m this issue were in the Senate and House bills.
FHA minimum property standards
The bill provides the Secretary of HUD the discretion to insure
single and multifamily buildings if they meet standards established
in nationally recognized building codes or local codes that the Sec-
retary has determined are comparable to the nationally recognized
axles. It is essential that the Secretary carefully review local codes
to determine that standards affecting health and safety are as ef-
fiective as those assured through nationally recognized model codes.
Since the existing FHA minimum property standard is clearly
equivalent to a nationally recognized model building code, if build-
ers choose to build according to that standard, they may do so. In
any case, the Secretary retains the discretion to require that all
buildings insured by FHA meet minimum property standard estab-
lished by the Secretary.
Manufactured homes
The insuring authority for manufactured homes is expanded in
this bill and the Title I loan limits for manufactured homes are in-
creased.
Single-family mortgage insurance on Hawaiian homelands and
Indian reservations
The requirements for single-family mortgages under the Nation-
al Housing Act are modified to permit such mortgages on Hawai-
ian Homelands and Indian Reservations.
Digcretionary authority to regulate rents or charges
Secretarial authority to regulate rents under section 207 of the
National Housing Act is eliminated, but only for those mortgages
insured by the Secretary after the date of the enactment of this
Act The mandate of the Secretary to regulate rents will remain on
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those mortgages presently insured as landlords were aware of this
provision when entering the program and those tenants presently
residing in such housing entered into leases with the understand-
ing that rent levels would be reviewed by the Secretary.
Insurance of alternative mortgage instruments
A demonstration program for alternative mortgage instruments
is included in this bill. The alternative mortgage instruments in-
cluded in this program are indexed mortgages, adjustable rate
mortgages and shared appreciation mortgages. While the Secretary
will have the authority to insure such mortgages, the aggregate
amount of these instruments cannot exceed 10 percent of the ag-
gr^ate number of mortgages insured by the Secretary in the previ-
ous Hscal year. While the Committee still believes that it is impera-
tive that the FHA program retain the long-term fixed rate mort-
gage as an anchor of stability in the ever changing and complex
nnancial market for homebuyers there appears to be a need to
permit prospective homeowners to utilize, on a limited basis, some
of the new mortgage instruments being offered. The bill also cre-
ates a new insurance program for multifamily housing shared ap-
preciation mortgages, but sets a limit under this section to 5,000
units in each fiscal year.
The idea of including the home equity conversion mortgage for
the elderly under the FHA programs was rejected for a number of
reasons, but mmnly because there is no evidence to show that this
type of mortgage is in the best interest of the elderly homeowner
nor that the federal government should be in a position of encour-
aging or supporting such mortgages at this time. A number of dem-
onstration pro-ams are being conducted around the country and
the Secretary is directed to evaluate the use of this type of mort-
gage and to report back to Congress in one year.
Flood and Property Insurance Programs
The Flood Insurance Program has been continued for two years
until September 30, 1985, and there are to be no premium in-
creases on flood insurance from the date of enactment of this Act
until after September 30, 1984.
The Crime Insurance Program has been continued for one year
while the Riot Insurance Program will expire November 30, 1983.
Secondary mortgage market
The absence of the provisions approved by the House in H.R, 1
for FNMA and FHLCM in no way reflect a lessening of support for
these changes but rather a decision by the Senate not to accept any
secondary market provisions unless changes in the securities laws
for private mortgage backed securities were included. However, the
securities law changes are not within the jurisdiction of the House
Banking Committee and thus could not be included.
FNMA and FHLMC are vitally important to housing, especially
for low and moderate income families and it is intended that they
continue to play the critical role of providing credit for our nation s
homebuyers. Any attempt to curtail this role for either FNMA or
FHLMC will not be entertained and their role may well increase in
the coming years.
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TTTLK V— RURAL HOUSING
Tlie Rural Housing Amendments of 1983 extend the rural hous-
ing assistance programs for 2 years and provide for 2-year funding
authorizations in amounts necessary as approved in appropriations
Acts, except for the new rural housing preservation grant program
which contains a specific 2-year authorization for appropriation of
$100 million for each year. In providing for these authorizations
and extending the existing rural housing assistance programs in
this manner, the Congress has recognized that several of the alter-
natives for providing such Eissistance through the states at far
lower levels are not appropriate to meet the nature and extent of
the need in the rureil areas of the nation. This level of assistance is
critical to very low income rural families and in the areas of the
nation that are most rural in character. Thus, provisions are in-
cluded throughout these amendments to more effectively target
and give priority to very low income persons and families in
making the housing assistance available in rural aresis.
Other provisions included in these amendments make the Farm-
ers Home Administration rural low and very low income housing
assistance provisions more uniform with those operated by the De-
partment <^ Housii^ and Urban Development; streamline and ex-
pedite application processing and provide new authority to use
cost-effective approaches in meeting the rural housing needs, in-
cluding the use of energy efficient manufactured housing.
This amendment provides that the definition of rural low and
very low income families and persons is the same as that used for
the purposes of the United States Housing Act of 1937, which is re-
spectively SO percent or less and 50 percent or less of the area
median income. In addition, the terms income and adjusted income
as used in the rural housing programs are revised to mean the
same as those terms mean in that Act. In addition provisions are
included to conform to the Department of Housing and Urban De-
velopment requirements, the amounts required to be contributed
b; tenants for rent in housing assisted by PmHA with respect to
amount of income, deductions, and limitations on rental increases,
lliese provisions are designed to make uniform the low and very
low income and related criteria utilized for federal housing Eissist-
ance purposes in both rural and urban areas of the nation.
The Section 502 rural homeowner assistance program is amended
to provide that not less than 40 percent of the homes eissisted na-
tionally and 30 percent in each state shall be for persons and fami-
lies having incomes of 50 percent or less of the area median
income. The Congress expects that with such strict targeting re-
quirements the FMHA will utilize its subsidy authority to the full-
est extent to meet these targets but not ignore the serious housing
needs of persons and families above these income levels but below
80 percent of the area median income.
Given the concern of FmHA that homes financed for low income
families cost as little as possible to operate particularly with re-
spect to utility use, the bill permits manufactured homes to be fi-
nanced only if they meet energy conserving requirements estab-
lished by FmHA that take into account the geographical location of
the home and Eire cost-effective over the life of the building or the
37-922 O - B4 -
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loan, whichever is shorter. Until the FmHA issues regulations that
are specifically designed for manufactured homes, such homes may
be financed if they meet the ener^ conserving requiremente
FmHA hs silready established for site-built homes. More specifical-
ly. Section 502 and Section 515 loans or insurance are extended to
manufactured housing units including the lots on which they are
located which meet the basic Title VI Federal manufactured hous-
ing standards, the FHA insurance requirements of the Department
of Housing and Urban Development with respect to installation,
structural and site standards and which meet the Farmers Home
Administration enei^ conservation requirements for site-built
housing until such requirements are established by the FmHA for
manufactured housing. Also, this provision directs the Secretary of
Agriculture to establish energy conservation requirements that
minimize operating costs and which are cost-effective over the life
of the manufactured home or the term of the loan, whichever is
shorter. Increases in annual loan repayments resulting from added
energy conservation requirements shall not exceed the saving in
annual energy costs. The Secretary of Energy, in consultation with
the Secretaries of HUD and Agriculture, is directed to conduct a
study and reort to Congress within 18 months from the time the
Secretary of Agriculture issues regulations governing the energy
efficiency of manufactured homes. This study shall compare in-
creased construction costs, actual energy use, and projected energy
savings of manufactured housing financed by HUD or by FmHA
with other homes that are insured by both agencies.
In order to make assistance available under Section 502 to fam-
lies whose incomes are below that necessary to qualify for a Sec-
tion 502 loan with full interest credit subsidy but who otherwise
could meet the financial and related requirements, the Secretary of
Agriculture is authorized to extend the period of the loan up to 5
years and thereby reduce the monthly payment to within the
means of these low income borrowers. Only persons whose incomes
do not exceed 60 percent of the area median income are made eligi-
ble for such an extension. The Congress directs the Secretary to im-
plement this new authority with dispatch. It can benefit many
rural very low income families without adding to the cost of the
Federal Government for subsidies.
Provisions are included to amend the Section 504 home repair
loan and grant program targeting losais and grants to very low
income ffimilies and clarifying the repairs and improvements that
may be financed, including those necessary for sanitary water and
waste disposal facilities.
Technical Services and Research activities are strengthened by
permitting the Secretary to undertake innovative demonstrations
of housing and building systems under standards that may difler
from the FmHA minimum property standards. An annual amount
of not to exceed $10 million is authorized for such demonstrations
and a report to Congress is required annually on the results of the
demonstrations undertaken.
FmHA may provide loans for properties meeting FmHA mini-
mum property standards, HUD minimum property standards,
standards contained in any voluntary national code or, in the case
of manufactured housing that meets HUD's title VI standards, the
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properties also meet FmHA energy requirements as provided by
ttm title. For the purposes of approving applications for loans,
grants and rental assistance payments, the Secretary may only re-
quire that a market exists for the persons and families the projects
are intended to serve. These measures will clarify that Congress in-
tends applications for FmHA rental housing assistance must be ap-
proffld when they meet all other requirements if the need for the
ipediic housing project is demonstrated, without r^ard to other
hoQsine needs in an area.
In addition to the above-mentioned rental housing assistance pro-
gram amendments, the amendment limits rent increases to the
ieser of the Eunounts necessary for increases in actual operating
costs or comparable operating costs of other similar housing in the
am. Increases in approved construction costs are limited by the
Secretary to only thme resulting from factors beyond the owners'
control, design changes required bj[ the Secretary or approved
dtanges in tne financing of the project. For new construction, a
preference shall be given to projects located on donated land where
the Secretaiy finds the site suitable and where a project will be
nnre cost-efiective by locating it on the land donated. In giving
inference to donated lands, it is not the intention of the Congress
to ignore the relative housing needs of rural communities. Prefer-
eoce for donated lands should be provided after analyzing and
ranking the housing applications based on need. The Secretary is
required to assure that the management fees charged by a develop-
er or an affiliate of a developer are not excessive.
Moderate rehabilitation activities under Section 515 rental hous-
ing is permitted at a lesser standard than that applicable to new
nogtniction and substantial rehabilitation and items and systems
not included in the proposed rehabilitation need not be reouired to
meet F^nHA minimum property standards but are required only to
neet appropriate quality and performance standards. Congress ex-
pects that the Secrettuy will administer this provision so that mod-
oite rehabilitation includes all rehabilitation activities except
Suae which involve substantial alternatives of the structural com-
ponents of a unit. Moderate rehabilitation is expected to be permit-
ted to be carried out in units which substantially meet the struc-
ttral requirements of the FmHA minimum property standards.
The Congress has taken this action to assure that moderate reha-
lilitation activities will be undertaken in rural areas without re-
ipiiring ovmers to improve an entire existing building to new con-
struction standards when only parts of the building may be in need
of repair. In setting forth these amendments. Congress maintains
h intention to see that decent, safe and sanitary units are pro-
duced as a result of the rehabilitation activities without unneces-
sary added costs to the government or the owner. The amendments
iko permit FmHA to approve rental housing projects to be located
(D tcattered sites. The Secretary is prevented from denying direct-
Ij or through other regulations FmHA rental housing loans on the
ba^ that rental assistance payments may be required in a pro-
posed project.
In permitting the Secretary to make rental housing loans avail-
aUe in projects which will receive aissistemce from a State or local
(pvemment similar to FmHA rental assistance payments, the Con-
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gress intends to encourage the participation of the States and IoceJ
governments in meeting the needs of low and very low income
rural families. For this reason, it has provided that the assistance
need only be pledged for a 5-year term and appropriated by the
States or local governments annually. However, the ament^ent
also requires that these jointly assisted projects be determined by
the Secretary to be marketable without the rental subsidy after the
term of the initial subsidy and for the remainder of the term of the
loan. This is to eissure that a project will not become bfinknipt
without federal rental assistance subsidies if the State or locality
fails to provide the required subsidy after tlie initial period. In im-
plementing this requirement, the Secretary should assure that it
only be used in approving specific State or locally aided Section 515
loan applications and not extended to the determinations of regu-
lar Section 515 loan applications thus nullifying other provisions
included in these amendments with respect to Section 515 and Sec-
tion 521 application approval requirements.
In requiring that an applicant demonstrate that an adequate
rental housing market exists after the initial period of assistance,
the Congress directs the Secretary not to require a full market
survey but to accept other reasonable estimates of the future rental
housing market taking into account that the basic intent of the
Congress is to encoureige the joint participation of the States and
local governments with the federal government in providing rural
rental housing for low and very low income rural families.
A provision is included limiting to not more than 25 percent the
units in Section 515 rental projects that may be occupied by per*
sons and families requiring rental assistance payments other than
those whose incomes are at or below 50 percent of the area median
income. However, after the date of enactment of these amend-
ments, only 5 percent of the units that become available in new
projects in which rental assistance payments are provided may be
occupied by low income persons or families having incomes be-
tween 50 and 80 percent of the area median income. All of the re-
maining units that become available for occupancy after such date
must be available only for very low income persons and families
with incomes of 50 percent or below the area median income so
long as rental assistance payments funds are available.
Section 515 is amended to include projects involving scattered
site and detached units; single family residences that may be pur-
chased or converted for rental housing; and manufactured home
rental parks where either the lots or the lots and the homes are
available for low and very low income persons and ffunilies.
Not more than 10 percent of the funds available for Section 516
farm labor housing grants are made available to nonprofit organi-
zations and public Eigencies that will encourage the development of
farm labor housing, including housing for migrant farmworkers.
These farmworkers lack the capacity to package, develop and pro-
mote housing projects, and local governments in areas in which
decent farmworker housing is needed have limited resources with
which to cany out such activities as Congressional hearings and in-
quiries have shown. For this reason, the funds available from
FmHA for farmworker housing are often left unspent due to an in-
sufficient number of queility applications, despite the overwhelming
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335
need for such housing. Therefore, the Congress directs the Secre-
taiy to utilize this assistance fiilly and witiiout delay so that the
diagraceful and inhuman housing conditions of these persons and
Eamiliefl may be appreciably improved.
Other amendments are included to limit the amount of FmHA
hoomng loans to that necessary to provide housing of modest size,
design and cost without impairing the adequate livability of the
units financed; and to encourage through rehabilitation or pur-
diase the use ^ existing housing which is economical in acquisition
and rehabilitation cost, as well as the cost of operating such hous-
ingby promulgating rules for such purpose.
llie amendments include a provision that permits any area clas-
sfied as a rural area eligible for FmHA assistance to retain such
classification for fiscal year 1985.
Provisions are included that require the Secretary to prioritize
the interest credits and rental assistance payments made available
fiw contracts for assistance. First, the priority should be to renew
expiring contracts and to add the amounts necessary for contracts
that have run out of the amounts prior to the end of their terms;
secondly, to {issist very low income persons and families in projects
receiving commitments after FY 1983, except that in such projects
up to 5 percent of the units may be occupied by low income fami-
ly; and thirdly, for units which become available in existing
projects, except that 95 percent of such units must be for very low
income persons and families and 5 percent of low income persons
and families. Along with other related provisions these provisions
are designed to assure that the most needy persons and families in
the meet rural areas are first served with the limited federal finan-
cial resources available.
In addition, provisions are included to make more effective the
F^nHA application processing system, to permit the FmHA to proc-
ess applications for HUD single fcunily housing insurance, to pro-
ride that housing subdivision applications for Veterans Adminis-
tration, HUD or FmHA purposes shall be mutually acceptable so
that by Janueiry 1, 1984, there will be total reciprocity of subdivi-
non awlications among these agencies. It is the intent of the Con-
gress that the Secretary of Agriculture ensures that any subdivi-
sion approved under the reciprocity provisions have adequate facili-
ties for potable water and for waste disposal and will meet cost-ef-
fective energy conservation standards.
The amendments establish a new program of Housing Preserva-
tion Grants to private nonprofit organizations, Indian tribes, units
rf general local government, counties, States and consortia of other
^igible grantees to rehabilitate single and multifamily housing for
rural low and very low income persons and families. In addition, to
nich grants, housing certificates under the HUD Section 8 program
may beprovided to eligible tenants assisted as a result of this pro-
gram. The grants may be utilized by the grantees through a varie-
W of methods to reduce the cost of the repairs and rehabilitation so
tnat the units provided are affordable by low income families, and
to tiie extent feasible, very low income persons and families. Provi-
aums require that there be no displacement of the residents occupy-
ing the housing to be assisted and that the repairs and rehabilita-
tion result in FmHA health and safety requirements.
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336
Housing Preservation Grants must be allocated among the States
on the basis of a formula that takes into account the population,
the extent of a poverty, and the extent of substandard housing. Al-
located but uncommitted funds in a State must be transferred to
the FmHA State office and then may be used for Section 504 very
low income repair grants or loans. No single grantee in any State
may be allocated more than 50 percent of the funds allocated to
that State unless there is only one applicant.
In order to receive grsmis, otherwise eligible applicants must
submit a statement describing its proposed rehabilitation pri^ram
and the activities it proposes to undertake each year and shall
make the statement available for public comment. Such statements
must be prepared in consultation with and in consideration of the
views of appropriate local officials. The Secretary is required to
evaluate the statements submitted and approve applications on the
basis of criteria prescribed by the Secretary, including the extent to
which the activities will assist low income persons lacking ade-
quate shelter with a priority for very low income persons; the
extent to which other public and private contributions are involved
to lower the costs of the repairs or rehabilitation undertaken or
supplement the federal assistance involved in order to maximize
the averaging of these federal funds; the extent to which the pro-
posed activities wil be undertaken in small rural communities or in
remote parts fo rual areas; the extent to which the most repair or
rehabilitation may be expected for the least coat; the extent to
which displacement is minimized; the extent to which overrowding
is reduced, the extent to which the least amount of administrative
funds are required; the extent to which the owner agrees to mtike
the units in a building receiving this assistance for more than 5
years; and the capacity of the grantee to carry out the program
and the financial feasibility of the proposed program. Assistance
under the pn^am is limited to the leat amount necessary to carry
out the progTEim. Owners of rental or cooperative housing must
enter into agreements with the Secretary with respect to the Secre-
tary's requirements and the financial feasibility of the program
and must agree to pass to tenants any reductions in debt service
savings; not to convert the project to a condominium, not to refuse
to rent to persons or families because they require federal, State or
local housing assistance; and, that the units repaired or rehabilitat-
ed will be occupied or available to be occupied by low income per-
sons or families for a least 5 years. In addition, owners must Eigree
to provide wirtten annual leases that prohibit eviction of tenants
without good cause and local governments and nonprofit organiza-
tions must certify to meet fair housing laws, supervise repairs and
rehabilitation, and have an impartial party inspect the repairs and
rehabilitation. Other provisions regfirding annufil audits and re-
views, nonconformance and historic preservation elements are in-
cluded, as well as the requirement of a report to Congress 180 days
after the close of each fiscal year containing a description of the
progress made by the grantee in accomplishmg the program's ob-
jectives and a summary of the use of funds, m establishing this
program. Congress recc^nizes the limitations of the existing FmHA
repair and rehabihtation programs. They are not structured nor
funded Eidequately to meet me housing rehabilitation needs of
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337
nual areas so that the existing rural housing supply might better
be utilised for the vast, unmet housing needs of the rural poor and
with the participation of the States and local governments, as well
at capable nonproHt organizations dedicated to assisting these rual
fomilies. In this respect, it is the intention of the Congress that all
eligible applicants be given equal standing by the Secretary and
that only the specified criteria be used in selecting applications
from among the several grantees. While this new program encour-
ages tlie partidpetion of the States, the clear intent of the congress
m that the Secretary not delegate the authority provided under the
pTwram to a nonfederal entity.
The amendmetits established a Congressional review of FmHA
rules and regulations which provides that no rule or regulation
may become effective until it has been published in the Federal
Register and available for public comment at least 60 days prior to
its eflective date and shall not be published as final for at least 30
days thereafter. The Secretary is required to provide the appropri-
ate Committees of the Congress all rules and regulations at least 15
days before being submitted to the Federal Register for publication.
Rules or r^ulations the Secretary certifies to the Congress is nec-
enary for an emergency may be exempt from the requirements of
the applicable provisions of this amendment. In providing for this
exemption, the Congress is concerned that it not be used to circum-
vent the Administrative Procedures Act and expects that these pro-
visions will be implemented in full conformance with that Act.
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STATEMENT BY SENATOR GARN
[Congressional Record— Senate— November 17, 1983]
Mr. Hatfield. I yield to Senator Gam.
AMENDMENT NO. 2633
Mr. Gabn. Mr. President, I move that the Senate concur in the
House amendment to the amendment of the Senate numbered 11
with the following amendment which I send to the desk at this
time.
The Presiding Officer. The amendment will be stated.
The l^islative clerk read as follows:
The Senator from Utah (Mr. Gam) proposes an amendment numbered 2633.
Mr. Garn. Mr. President, I move that further reading of the
amendment be dispensed witii.
BJr, Byrd. Mr. President, reserving the right to object — and I
could object, which would require the reading of that entire amend-
ment— may I Eisk the distinguished Senator, still reserving my
right to object, is this the block of amendments that we have been
healing about and, if so, what is involved?
Mr. Garn. I would be happy to answer the distinguished minori-
ty leader's question. I was going to explain it, but it is appropriate
to do it at this point.
This is the amendment that everybody has been talking about,
and it is a situation where we passed the IMF bill in the Senate
early this summer and expected to go to conference with the House
of Representatives before the August recess. They were unwilling
to appoint conferees on that particular issue, although the Senate
was ready to proceed, and we were told that unless there was a
bousing authorization bill to go with the IMF bill, there would be
00 ^F conference. Therefore, there has been a series of n^otia-
Uons with the administration, with the distinguished chairman of
the House Banking Committee, myself, and many others to
produce a housing authorization bill.
So the Senate is correct, this is a large and rather unprecedented
amendment, a method of procedure that I do not like, I do not
think is appropriate and wished I had not been forced into proceed-
ing in thjs manner. But at this late date there are important
iasues. "Hie housing authorization bill is certainly one that is im-
portant to the country, so it is a large amendment including IMF
and housing and others that I will explain in more detail. I will not
take the time now, but to identify it for everyone this is that com-
bination package that has been talked about.
Mr. BvRD. Mr. President, I still reserve the right to object, and I
hope the distinguished Senator will indulge what I am about to
yGoot^le
340
Mr. Garn. I would be happy to.
Mr. Byrd. The distinguished Senator has indicated that the IMF
and the housing measures are included in this amendment, and he
has said "others that he will explain." I would like to know what
the "others" are.
Mr. Garn. Without explaining in detail, the Eximbank authori-
zation will also be in it, as well fis the authorization for the Inter-
national Development Banks.
Mr. Byrd. We have four authorizations?
Mr. Garn. There are three authorizations^for IMF, for Ex-Im,
for housing — and then we have the appropriation for IMF as well.
Mr. Byrd. Mr. President, still reserving the right to object, I
have to say — and this is without any denigration or aspersions with
respect to the Senator from Utah or any other Senator
Mr. Garn. May I interrupt the Senator?
Mr. Byrd. Yes.
Mr. Garn. There is one other element I neglected to announce.
We have not been able to come to an agreement with the House on
the Defense Production Act authorization. Therefore, an additional
element in this package is a simple extension of the Defense Pro-
duction Act authorization. I want the distinguished minority leader
to know eveiything.
Mr. Byrd. I thank the distinguished Senator.
My situation is this, Mr. President. I do not want to take long in
reserving my right to object, but if I do not reserve the right to
object, I might just have to go ahead and object, which would cause
the amendment to be read and that would take a good bit of time
of the Senate, because that is quite a lengthy amendment. I do not
intend to object.
I have the floor, do I not, Mr. President?
The Presiding Officer. The Senator from Utah lost the floor
when he sent the amendment to the desk. Until the amendment
has been read, or its reading called off, no Senator has the right to
the floor.
Mr. Byrd. Mr. President, I do not want to object. I want to save
the Senate's time, so I ask unanimous consent that I be permitted
to speak for a brief time.
The Presiding Officer. Is there objection to the request of the
minority leader? The Chair hears none, and it is so ordered.
The minority leader is recognized.
Mr. Byrd. Mr. President, this is a bad way to legislate. Again, I
am not complaining about the Senator. He too has said it is a bad
way, but he is a victim of circumstances.
There is one part of this package I strongly favor, and that is the
housing part. As to IMF and most other items he has mentioned, I
feel varying degrees of hostility or support, whichever word best
applies.
This is a reprehensible way to legislate. At leeist five mcgor bills
have been offered as an amendment en bloc to an amendment in
disagreement.
Is this a motion to strike and insert?
The Presiding Officer. It is a motion to strike and insert.
Mr. Byrd. So there could be no request for a division on the
amendment. Am I correct?
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S41
The PsBaniNG Officer. The Senator is correct.
Mr. Btrd. However, any Senator could move to strike any one or
more of these various items and thus get a separate vote in that
way. Am I correct?
The Presiding Officer. The Senator is correct.
Mr. Bybd. I thank the Chair.
The Senate has already passed several of these measures, I be-
lieve— IMF and what others?
Mr. Garn. It has passed them, except housing and defense pro-
duction. The others have been peissed by the Senate, including the
appropriation for IMF.
Mr. Byrd. I just want to say for the record that I hate to swallow
this kind of pill. I am going over in my mind as to whether I will
offer an amendment to strike one of these measures, such as the
IMF, for which I voted when it passed the Senate — but to strike it
out, in protest of this procedure.
For the moment, I suf^est the absence of a quorum.
Quorum Call
The Presiding Officer. The clerk will call the roll.
The l^islative clerk called the roll, and the following Senators
entered the Chamber and answered to their names:
Bjrrd
Hawkins
Levin
DcConcini
Heinz
Mathiaa
Denton
Inouye
Proxmire
Itodd
Riegle
Gua
Lautenberg
Stennis
Hatfield
Uahy
Wilaon
The Presiding Officer. A quorum is not present.
Mr. Baker. Mr. President, I move that the Sergeant at Arms be
instructed to require the attendance of absent Senators, and I ask
for the yeas and nays.
The Presiding Officsr. Is there a suf^cient second? There is a
sufficient second.
The yeas and nays were ordered.
The Presiding Officer. The question is on E^eeing to the
motion of the Senator from Tennessee to instruct the Sergeant at
Arms to require the attendance of absent Senators. On this ques-
tion the yeas and nays have been ordered, and the clerk will call
the roll.
The eissistant legislative clerk called the roll.
Mr. Stevens. I announce that the Senator from North Carolina
(Mr. Blast) is necessarily absent.
Mr. Byrd. I announce that the Senator from California (Mr.
Cranston), the Senator from Ohio (Mr. Glenn), and the Senator
from SouUi Carolina (Mr. Hollings) are necessarily absent.
The PtasiDiNG Officer. (Mr. Gorton). Are there any other Sena-
tors in the Chamber who desire to vote?
The result was announced— yeas 92, nays 4, aa follows:
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[Rollcall Vote No. 371 Leg.]
Mitchell
Moynihan
Murkowski
NicklcB
Packwood
Pell
Percy
Ruidolph
Riesle
Roth
Rudinan
Sarbanee
Sasser
Simpson
Specter
Stafford
Stennis
Stevens
gvmmB
lliumiand
Tower
Trible
Tsongas
WaUop
Wilson
Zorinsky
So the motion was eigreed to.
The Presiding Officer. With the addition of Senators voting
who did not answer the quorum call, a quorum is now present.
Supplemental Appropriations, 1984 — Conference Report
amendment no. 2633
Mr. Byrd addressed the Chair.
The Presiding Officer. Is there objection to the request of the
Senator from Utah?
Mr. Byrd. Reserving the right to object, Mr. President, I do not
intend to object to the request of the Senator from Utah to dis-
pense with the reading of the amendment. That funendment would
require 6 hours of reading. It was not my purpose in the b^inning
to object to the reading of the amendment. So I do not object to his
request.
Mr. Bakeb. Mr. President, is the request still pending?
Abdnor
Gam
Andrews
Gorton
Armstrong
Grassley
Baker
Hart
Baucus
Hatch
Bentsen
Hatfield
Biden
Hawkins
Bingnman
Hecht
Boren
leflin
BOBChwitz
leinz
Bradley
Helms
las-
luddlestan
lumphrey
a.
nouye
!ohwton
Kassebaum
Cohen
Kasten
D'Amato
Danforth
Lautenbfrg
DeConcini
Laxalt
Denlmi
*ahy
Dixon
*vin
Dodd
x)ng
Dole
Lugar
Demenid
Mathias
Durenberger
Matsunaga
Eagleton
Mattingly
Evans
McClure
Exon
Melcher
Ford
Metzenbaum
NAyS-4
W&
Pnnmira
NOT VOTING-
Cranston
Glenn
Bast
HollingB
yGoot^le
343
The Pbbsiihng Officer. The request is still pending.
Several Senators addressed the Chair.
Mr. Arbsttbong. Mr. President, reserving the right to object, it is
not my intention to object but I would like to say a word about the
parliainentary situation we find ourselves in.
Mr. Byrd. Will the Senator yield to me?
Mr. ASHSTRONG. Yes.
Mr. BvRn. Neither one of us has the right to debate this just
DOW. We either object or do not object. I hope the Senator will not
object. We will have an opportunity, once the request of the Sena-
tor from Utah is acceded to, to speak. Inasmuch as it was I who
called for the live quorum, I would like to say something about the
parliamentary situation.
Mr. AsMffTRONG. Since there are a number of Senators on the
floor, I wonder if the Senator from Utah can withhold his request
for a moment so that the minority leader might speak on the sub-
ject and I might speak on the subject.
Mr. Gabn. If the minority leader will yield, since I put in the re-
quest, certainly I would expect the minority leader to be recognized
first for his statement, and then I would hope I would be allowed,
as manager ot the bill, to make my opening statement. Then I
would be happy for anyone to seek the floor. I think the minority
leader deserves to be recognized first, however. I think we should
let the request go through and then the minority leader would
have the floor.
The Pbesiding Officer. Is there objection to the unanimous-con-
sent request of the Senator from Utah? Hearing none, it is so or-
dered.
(The text of amendment No. 2633 is printed later in today's
Record under Amendments Submitted in Routine Morning Busi-
ness.)
The Presiding Officer, The minority leader is recc^nized.
Mr. BvRO. Mr. President, I felt I would be neglectful in my duties
to my colleagues if I did not alert them to what we were doing
here. It is nothing new for the Senate to adopt an amendment to
an amendment in disagreement. That heis been done many times
here.
In this instance, however, the amendment contains, I believe,
five meyor bills. I suppose there are two saving graces here — at
least two saving graces. Those saving graces are: First, the housing
bill, which is in here, and which the administration has opposed —
BO Uiat is one thing.
Second, the Senate has already acted at one time or another, I
believe, the other four items. Am 1 correct — without losing my
right to the floor?
Mr, Gabn. Three out of the four have been passed by the Senate
previously.
Mr. Bybd. Which item has not previously been passed by the
Senate?
Mr. Gabn. The International Development Bank.
Mr. Byrd. I thank the Senator.
Here is where we are, Mr. President. Because there is a sweeten-
er in the package — namely, the housing bill — we are being asked,
at the last minute, figuratively speaking, to adopt a package of five
yGoot^le
344
bills, three of which the Senate has already acted on, euid two of
which the Senate has not acted upon.
Mr. Garn. That is correct.
Mr. Byrd. One of which two I am especially supportive of,
namely the housing bill.
Mr. President, 1 do not think this is a good way to I^islate. I say
again that it is perfectly proper to amend amendments in disagree-
ment. I urge my colleagues and I apologize to them for forcing a
live quorum here, but I thought I had the duty to do it so all Sena-
tors can see what we are doing.
I do not have any criticism of the Senator from Utah. I think he
is a victim of circumstances here. I have no criticism of the m^ori-
ty manager or the ranking manager, because 1 think they are
caught in the same situation. I doubt that they like this procedure
any better than I do.
I say for the third time, it is perfectly proper to do this. The
Senate from time to time will add an amendment to an amend-
ment in disfigreement. But I want my colleagues to know that we
are adding a package here en bloc — five bills. It is an amendment
to strike out and insert, so a Senator cannot ask for a division. A
division cannot be had. The only way to get a separate vote on any
one of these five bills would be to move to strike that particular
measure from the amendment and the Senate could then get a sep-
arate vote on that,
I shall not do that. I have not played the part of an obstruction-
ist in the Senate for the last 19 years out of my 26 years here. The
chairman of the committee and the ranking member have worked
hard and the Senator from Utah has worked hard on this.
Mr. President, I also call attention to the fact that any Senator
who wished to add an amendment to this package — if we are going
to go this way, I thought I should alert my colleagues to the fact
that they have a right fdso to ofTer to amend this package — any
Senator who wants to offer an amendment can of!er it. It is a per-
fectly legitimate way to get a vote on your amendment. I just hope
that we will not be forced on many future occasions to vote on a
package of five bills in order to be supportive of one we like.
I do not like the procedure of having to vote for four measures
that Senators might not like in order to get one they strongly sup-
port.
I say again to any Senator who wishes to participate in this kind
of approach that he has the right to do so.
Mr. Baker. Mr. President, will the Senator yield to me?
Mr. Byrd. Yes, Mr. President.
Mr. Baker. Mr. President, I cannot think of a single word ut-
tered by the minority leader that I disagree with. It is an awkward
and cumbersome way to legislate, but it is also right and proper. I
can assure the Senator for my part that it is not going to become a
practice as far as the leadership on this side is concerned. I ac-
knowledged to the distinguished chairman of the committee and
the distinguished Senator from Utah that I do not think there is
any other practical way. I feel the Senator from Utah was perhaps
reluctant to proceed this way but there is no other practical way. I
agree with the minority leader that it is not good, but perhaps best
yGoot^le
345
to go along with it. I assure my coUee^es on both sides of the aisle
that this ia not going to be habit forming.
Mr. Byrd. I tnank the majority leader. I am going to give up the
floor in a moment, but I want to extend my congratulations to the
diainnan of the committee, Mr. Hatfield, who is an outstfuiding
chairman, always fair and considerate, and all Members are grate-
ful to him. And kudos also to the ranking member and an apology
to the chairman of the subcommittee.
I have not yet given up the floor, but I do not intend to hold it
■"llr.
[r. Meizenbaum. Will my colleague yield for a question?
Mr. Btrd. I yield for a question, Mr. President.
Mr. Meizenbauh. Mr. President, nobody wants to keep matters
from moving forwfird, but it occurs to me that this package pro-
vides literally millions of dollars with respect to foreign expendi-
tures— International Monetary Fund, IDA, I forget the third one —
Eximbank, which really has to do with overseas matters. There is a
little bit in there as far as housing is concerned.
I know I have heard the Senator from Michigan address himself
on a number of occasions to the need to have an opportunity to in-
clude health insurance for the unemployed in some way — I think
the junior Senator was speaking of disability insurance and the
senior Senator was speaking of health insurance for the unem-
ployed. I wonder whether there would not be more equity if this
pacKage had a little greater concern for people living in this coun-
try, even though I am concerned for people living throughout the
world. I wonder if when the package is put together, it should not
indude either or both of the measures that the two Michigan Sena-
tors, with my support, have been advocating.
Mr. Byrd. Mr. President, I shall respond to the Senator, then I
shall sit down. Certainly, any Senator has the right, the Senator
&om Michigan or any other Senator, to call up an amendment to
the package and he can get a vote on it. That is my response.
Mr. Gasn. Mr. President, I would like to respond to the distin-
guished minority leader and say that I, too, agree with everything
he said about the procedures. As a matter of fact, during the
quorum call and vote, I told him there was nothing he could possi-
bly say negative or nasty about the procedure that I would not
agree with. It is a terrible way to legislate and I think the minority
leader knows that since I have been chairman of the Banking and
HUD independent agencies, my bills have been out first, 3 years in
a row. Dee Huddleston and I have worked together and we have
produced the first appropriations bill that has been signed. We
Kissed the housing authorization bill out of the Senate Banking
Committee a long time ago. We passed Eximbank authorization.
WeoaBsedlMF.
The major portions of this bill either came out of the Senate
Riinying Comniittee last June and July or passed the Senate emd
the House and went to the President for signature in some cases.
So this is not my idea of being the proper way to legislate. It is
wiODg and we should not be doing it. I point out to my colleagues
that it was not the choice of either Senator Proxmire and I from
the Bwpfci"g Committee or Senator Huddleston and 1 from the Ap-
propriations Subcommittee to do it this way. We were ready to go
yGoot^le
346
to conference on IMF in July. We were ready to go to conference
on a number of these issues and the House of Representatives
simply told us no, that they wanted a housing package attached to
this. We started negotiating more than 6 weeks ago, negotiations
that have been detailed and comprehensive and have been done at
the principal level between the distinguifihed chairman of the
House Banking Committee, Secretary Regan, myself, David Stock-
man, and others who were brought in on various parte of the nego-
tiations. At no time have I liked the procedure. I made the com-
ment it was like mating a turkey and a camel and hoping it would
lly. So I cannot tell my colleagues enough that this is Uie wrong
way to do it. But it was not the choice of this Senator or my Demo-
cratic colleagues on my committees to do it this way. It was forced
on us by the House of Representatives. That is the reality of the
situation. I wish it were otherwise. If I could possibly have avoided
this procedure, I would have done so.
But having said that, we do have what I think is a very good
package. Those negotiations resulted in some good, reasonable com-
promises between the House and Senate versions. I believe those
who have had the opportunity to study it will find that this is a
good housing package. It tracks very closely with the appropria-
tions bill that was passed, as I said, in June, the first »)propria-
tions bill to do so. I think the compromises between the House and
the Senate are reasonable. But it is important — the minority leader
is correct — anyone has a right to amend my amendment, and I do
expect several amendments to be offered. Some of them I may
agree with and some of them I may not. But having described tlm
tortuous 3-, 4-, 5-hour per day negotiations for weeks and now
having agreement that the House of Representatives will accept it,
that the President will sign the whole package because his people
have been involved in the negotiation, housing, the whole works,
without any thought of change or of veto, it is important for Sena-
tor Proxmire and I now to try to maintain this package intact.
Once eigain, do not misunderstand me. That is not locking out any-
body who wishes to offer an amendment but to say that we feel
constrained to try and defeat those amendments even if they are
good ones, because if we send this back to the House in disagree-
ment again and they modify it, it comes back to us, we could lose
everything. We could lose the housing package and, believe me, if
it is separated, the minority leader is also correct that someone can
make a motion to separate out one of these titles. But after 6
weeks of carefully constructing this mess we simply, if we separate
it, defeat all the parts.
I do not want that to happen. I want a housing bill, too. And this
is a good one. So I would hope my colleagues understand the proce-
dure and that there is no disagreement whatsoever with the distin-
guished minority leader, the fine parliamentarian that he is. This
is not the way to conduct the Senate's business. If I can avoid it in
the future, as long as I am here, it will never be initiated by me. I
will guarantee that. This procedure will never be initiated on the
Senate side.
Mr. Proxmire. Mr. President, will the Senator yield?
Mr. Garn. I would be happy to yield to the Senator from \
yGoot^le
347
BAr. Pkoxmikb. Mr. President, as ranking member of the Banking
Committee, I strong^ support my cheiirmeui. I think he is at^olute-
ly right about this. I rise in support of this amendment because it
is an amendment that certainly is unusual — not unprecedented, as
the minority leader has pointed out, but unusual. We do not like to
legislate this way. Normally it is not the way we do it. However,
this is legislation which simply takes three bills that have passed
the Senate emd two measures which have the support of the appro-
priate committee, the jurisdictional committee, and put them in a
package which is the only way we can get them through. The
House has been adamant on it. There is no way they will take and
implement this bill unless there is housing attached to it. lliat is a
iact of liJFe, I feel veiy strongly, as did the majority of the Senate
who voted for the IMF bill, that we ought to pass it. This is the
only way we could do it. So I hope that the Senate recc^nizes that
this is a combination of measures that has passed the Senate
before or has the approval of the authorizing committee and those
that have not passed the Senate, it seems to me are not really in
much dispute in this body.
So I again strongly support my chairman. I think he is right on
this. I think he has done a fine job of working out a compromise
with the House, and this is the only way we can get this l^slation
enacted. I think the minority leader was absolutely 100 percent
correct in calling our attention to this unusual kind of action, and I
hope we do not have to repeat it.
Mr. President, I urge my colleagues to support this amendment
which will, among other things:
First, authorize the United States to increase its quota to the
International Monetary Fund (IMF);
Second, renew and strengthen the mandate of the Export-Import
Bank; and
Third, extend and amend congressional authorization for housing
and community development programs.
Portions of the bill dealing with the IMF will authorize an in-
crease in the U.S. quota to the IMF of $5.8 billion, and also author-
ize appropriations of $2.7 billion in order to increase the amount of
fiinds which the United States may lend to the IMF under the gen-
eral agreement to borrow.
I support the IMF legislation because I am convinced it is vital to
insure America's continued prosperity and jobs for our workers. In
a recent speech. President Reagan warned that if Congress failed to
pass the IMF legislation we could face, in his words, "a major dis-
ruption of the entire world trading and financial system — an eco-
nomic nightmare that could plague generations to come." I agree
with the President — this legislation is needed now if we are to pull
the world's economy back from the abyss of fmancial collapse.
I also wish to emphasize that the United States is not acting
alone in this rescue effort. For every dollar we are making avail-
able to the IMF, other countries together are making available a
little more than $4. So we are getting lots of help from other coun-
tries in this truly cooperative enort to avert financial disaster.
There are some who will charge this bill is nothing more than a
bailout for the big banks who are in trouble because of their own
miqudgments and lack of prudence. 1 do not agree. There is a spe-
yGoot^le
348
ciflc provision in this bill that requires the United States to oppose
and vote against any funding by the IMF where the principal pur-
pose is to allow countries to pay back imprudent loans meide by the
banks. The fact of the matter is that we are bailing in the big
banks, not bailing them out. For every dollar the IMF lends to the
debtor nations to help them through this difficult period, the inter-
national bankers are going to lend $3 or $4. Combining this with
the money from other countries means the American taxpayer is
going to get about 10 times as much for his money as he does on
most foreign aid programs. To say then that the bfmkers are just
being repaid by IMF for their past imprudent loems to developing
countries is false.
Some argue that if these developing countries cannot repay their
debt, we should let them go bankrupt. Those who advocate such a
course fail to recognize that 45 percent of our exports of manufac-
tured goods and 39 percent of our total exports are to developing
countries. If they went bankrupt the effect on our country would
be devastating. Hundreds of thousands of Americans would lose
their jobs as our export sales dwindled. Perhaps even more impor-
tant, those bankrupt developing countries would become ripe for
social revolution and the influx of communism. Many of these
debtor countries, such as Mexico, Brsizil, and Argentina, are in
Latin America. Bankruptcy for them could mean economic and po-
litical chaos. We certainly do not need any more Castro-style re-
gimes in that part of the world.
The IMF, as you know, does not loan money to countries with
balance-of-payments problems without requiring them to take
measures to insure the loans can be repaid. These conditions are
designed to make sure that the borrowing nation puts its economic
house in order. To guarantee that the IMF does not fund practices
that contribute to the breakdown of our international financisU sind
trading system we have put provisions in this legislation that will
require our representative to the Fund, to seek to have practices
such as export subsidies discontinued by a country before it can
qualify for IMF funding.
The IMF bill eilso contains four provisions to reform the U.S.
bank regulatory system in order to prevent our banks from making
imprudent foreign loans.
In recent years many of our large banks had a capital ratio with
respect to their assets of less than 4 percent. This legislation re-
quires the bank regulating agencies to establish uniform systems
for requiring hanks to maintain adequate levels of capital. It does
not, itself, establish a uniform level of capital adequacy but leaves
that to the regulators. The Banking Committee will keep a close
watch on how the regulators carry out this requirement.
Second, the bill provides that each regulatory agency shall re-
quire its banks to establish and maintain a special reserve against
foreign loans that have not been repaid over a protracted period.
These reserves would be maintained off the books of the bank and
could not be counted as capital for supervisory, regulatory, or dis-
closure purposes at the bank r^ulatory agencies and at the Securi-
ties and Exchange Commission. Mfiintenance of such a special re-
serve by a bank would be tantamount to writing off such loans.
yGoot^le
349
lUid, the bill provides that each appropriate banking agency
Bhall establish rules for accounting fees charged by banks in con-
ntetioD with their international loans. Under such rules any por-
tioD [^ a lo£Ln fee that is deemed interest income would be amor-
tiKd over the effective life of the loan. Some banks have taken re-
scbedulit^ fees as earnings in the quarter they are received. Thus
these banks have actually shown an increase in their recorded
pn£ts after rescheduling their foreign debts, even though the qual-
ityoftheloan portfolio heis deteriorated.
Finally, the bill authorizes the regulatory agencies to require
more frequent and complete reports from banking institutions with
reaped to foreign country exposure. This legislation would require
Buch reports to be filed no fewer than four times a year, rather
than semiannually as now.
tliese refozins will go a long way toward correcting abuses that
have crept into our beuiking system over the last several years.
To Bum up 1 urge your support for the legislation to increase
our IMF con^tribution because it is a bargain basement means of
helping to safeguard U.S. economic and political interests while at
the 8ame tinne achieving reforms that will help prevent a reoccur-
rence of the zio^ threatening debt crisis. Our economy will benefit
1^ maintaining a viable International Monetery Fund.
Another section of this bill renews and amends the mandate of
the Eiport-Import Bank — Eximbank.
The private sector traditionally has provided most of the financ-
ing needed by our exporters. There are occasions, however, when
private sector credit is not available or is unsuitable because of
cratract terms, political risks, or interest rate constraints. In many
instances the Exim fills a void for our exporters. It can also play a
vital supplementary role by providing guarantees or insurance that
serve to stimulate private credit financing of our exports.
To make sure the Bank considers the needs of all of our export-
ers, this bill amends the Exim charter to make it clear that service
exports are to receive the same and equal treatment as the Bank
pves the export of goods. I think this particular amendment is
most welcome because services represent the fastest growing sector
of American exports and the Bank has been somewhat in doubt
siout its authority to provide support for service exports.
During the consideration of this bill, I heard complaints that the
Bank was not always responsive to the needs of small businesses.
Therefore, we have added a provision, which requires the Bank's
chairman to designate one member of the five-person board to
insure that the Bank's resources are appropriately used to the
maximum extent for small businesses. This provision states that it
is U.S. policy to encourage the participation of small business in
international commerce and directs the Bank to develop a program
to make loans and provide guarantees for the export of goods and
services by such businesses.
To assure that the Bank takes seriously our concerns about small
business, we are requiring it to set aside 6 percent of its 1984 ag-
gr^ate loan, guarantee and insuranc>. authority, to finance exports
^ small business concerns. The set-aside program will increase 1
percent a year until it reaches 10 percent in fiscal year 1988.
yGoot^le
350
This bill marks our resolve to stabilize the free trading system to
which the members of the GATT and OECD have committed them-
selves. The bill will allow parties, that may be iryured by foreign
government subsidized imports to our country, to have access to a
streamlined process under which duties can be impeded on the
import that will eliminate the effect of the foreign subsidy.
It is our intention that if the Secretary of the Treasury deter-
mines that there has been a derogation of an international under-
taking on official export credits, pursuant to section 650 of this bill,
the liquidation process on the entry of any such goods shall not be
finalized pending a final determination on the matter by the ad-
ministering authority.
We intend that the Secretary exercise his discretion and impose
a cash deposit on the offending merchandise because this is the
most effective method to deter use of these illegal export subsidies.
Petitions filed under this provision constitute a special class of
petitions filed with the Commerce Department. Congress intends to
single these petitions out for special consideration because of their
public importance. They are to be considered and investigated im-
mediately and their handling should be expedited in every way so
they can be brought to an accelerated conclusion.
1 believe the Export-Import Bank provisions will benefit our
economy and enable all segments of our export community to com-
pete internationally, particularly small business. The export sector
of our economy is vitel to our prosperity in terms of jobs it provides
our workers and the profit it provides our companies. This Ex-Im
legislation supports our efforts to maintain a strong export sector
to our economy. The provision to deter use of illegal subsidies by
other countries will also help protect our domestic industry from
predatory practices by other nations.
Several Senators addressed the Chair.
The Presiding Officer. The Senator from UUih has the floor.
OVERVIEW OF HOUSING AND COMMUNITY DEVELOPMENT PROVISIONS
Mr. Garn. I thank the distinguished Senator from Wisconsin.
Mr. President, the housing authorization langu^e contained in
the IMF-Housing amendment is a hybrid product of extensive nego-
tiations between the Senate and House Banking Committees and
the administration. This product provides a 2-year authorization
for most housing programs including housing assistance and the
PHA insurance programs. Exceptions to this rule include a tradi-
tional 3-year authorization for the community development block
grant and urban development action grant programs, and a 1-year
authorization for the section 312 rehabilitation loan program and
the Federal crime insurance program operated by Federal Emer-
gency Management Agency.
Funding authorization for fiscal year 1984 in this housing pack-
age adhere to the same levels set in the fiscal 1984 HUD appropria-
tions law enacted Ifist June. Senators will recall that the appropria-
tions bill set aside $1.5 billion of appropriations for new programs
if such programs were authorized. The housing authorization lan-
guage creates two new programs: a rental rehabilitation and devel-
opment grant program funded at $615 million f^r 2 years and a
yGoot^le
housing voucher demonstration program funded at approximately
$242 miUioD. The balance of the $1.5 billion would be used to fund
the current program of section 8 for existing housing certificates.
COlfMUNiry AND NEIGHBORHOOD DEVELOPMENT AND CONSERVATION
Community development block grants will be reauthorized for 3
years at $3,468 billion per year. Of this total, $68.2 million will be
used for the Secretary's discretionary fund for each of the 3 years.
TTie objective of the CDBG program, to principeilly benefit low-
and moderate-income feimilies, is strengthened by requiring that
during a period of up to 3 years, not less than 51 percent of the
funds expended must be used by a grantee to benefit low- and mod-
erate-income persons.
Cities or urban counties losing their entitlement status because
of updated census information are grandfathered for 2 fiscal years.
In the instance that a newly designated entitlement city wishes to
retain its status as part of an urban county program, it may do so
for a period of up to 3 fiscal years. A county may qualify as an
urban county between decennial census if it meets the criteria
roecified by the act and has verified that it has a combined popula-
tion of not less than 200.000.
Urban development action grants are reauthorized for 3 fiscal
years at a level of $440 million each year.
HUD is required to use unemployment data in determining
UDAG eligibility for small cities. Currently eligible small cities will
retain their eligibility until the criteria are revised to include un-
emplojonent statistics.
The section 312 rehabilitation loan program is extended for 1
year. New loans are permitted from repayments to the revolving
fund.
Urban homest«ading is reauthorized at $12 million for fiscal year
1984, and at such amounts as are appropriated for 1985.
An equitable procedure for selecting the recipients of the proper-
ties is established.
Several demonstration programs, including one using multifam-
ily rental properties, are adopted.
HOUSING ASSISTANCE PROGRAMS
Budget authority is provided for housing assistance programs to-
taling $9.9 billion for fiscal year 1984, and such sums as may be
apm^priated for flsceil year 1985.
The section 8 new construction and substantial rehabilitation
programs have been repealed, except in conjunction with the sec-
tion 202 elderly housing program.
Tenants of public housing and housing assisted under section 8
would continue to pay 30 percent of their adjusted income for rent
iy 1986. Deductions from family income will be; $480 for each
child, $400 for any elderly family, the amount of medical expenses
in excess of 3 percent of annual income of an elderly family, and a
deduction for child care.
A voucher demonstration program is authorized in connection
with the rental rehabilitation and development program to assist
families below 50 percent of median income. Public housing au-
yGoot^le
352
thorities wil] receive 5-year contracts from HUD to make assist-
ance payments primarily for families residing in units fissisted
under the rental rehabilitation and development pri^ram. The
monthly assistance payment for any family represents the amount
that the payment standard for the area exceeds 30 percent of the
family's monthly income. The monthly payment cannot exceed the
amount that the rent exceeds 10 percent of the family's income.
The section 202 elderly housing program is authorized at a level
of $666 million for fiscal year 1984. An annual interest rate of 9.25
percent on 202 loans has been statutorily set for 1 year. Prepay-
ment or transfer of a 202 mortgage will only be allowed if the
project is operated under the original contract until the maturity
date.
Competitive bidding would be allowed on 202 project construction
only if the rents required to operate the unit exceed 110 percent of
the fair market rent applicable to such projects, if the project ex-
ceeds $2 million or if the project is not sponsored by a labor organi-
zation.
Lease and grievance procedures are established to implement an
administrative procedure to advise tenants of the specific grounds
of any action taken against them by a public housing agency, pro-
vide an opportunity for a hearing, emd require a written decision
on the proposed action.
An emergency shelter prc^am is authorized at $60 million for
fiscal year 1984 to provide shelter and essential services for individ-
uals who are subject to life threatening situations because of their
lack of housing. Grants may be used to rehabilitate existing struc-
tures, maintain existing structures, pay utilities and furnish the
shelters and provide health and safety measures.
A public housing child care demonstration program is estab-
lished to utilize public housing facilities for the provision of day
care for lower-income residents.
RENTAL HOUSING REHABIUTATION AND DEVELOPMENT PROGRAM
This new prt^am is established as a lower-cost alternative to
the section 8 programs for rehabilitation and construction of rental
housing. Total funding for this program may not exceed $615 mil-
lion for fiscal years 1984 and 1985. Of this amount, $150 million
will be available for rental rehabilitation in each fiscal year.
During fiscal year 1984 up to $200 million will be available for de-
velopment grants. In 1985, $115 million will be provided for devel-
opment.
This program provides grants to States and localities to support
the rehabilitation of privately owned rental properties for lower
income families, or for new construction or substantial rehabilita-
tion under very restricted circumstances.
Assistance for rehabilitation grants can be used only for residen-
tial rental properties located in moderate income neighborhoods
where the area income is less than 80 percent of median. Grant as-
sistance cannot exceed 50 percent of the total cost of rehabilitation,
except under limited circumstances, and must be used only to
make essentifU improvements. A maximum of $5,000 grant funds
may be provided for each unit.
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353
Development ^ants can only be made in areas experiencing a
severe shortage of decent rental housing, as determined by the Sec-
retary of HUD. Grant funds can only be used to develop rental
properties, and assistance can not exceed 50 percent of the develop-
ment cost, including acquisition. For 20 years following construc-
tion, 20 percent of t^e units must be available for persons of fami-
lies with incomes below 80 percent of the median.
PROGRAM AMENDMENTS AND EXTENSIONS
FHA insurance programs are reauthorized for iiscal years 1984
and 1985 at an aggregate commitment level of $50.9 billion per
year. Losses to the fund are covered by such sums as may be neces-
sary.
■Hie requirement that the FHA interest rate be set by the Secre-
tary of HUD has been eliminated. Interest rate on FHA insured
loans will be agreed upon by the borrower and the financial insti-
tution.
Properties insured under FHA may comply with one of the na-
tionally recc^nized model building codes or a State or local build-
ing code based on one of the nationally recognized model building
codes or their equivalent. Energy performance requirements for
new construction must be at least as effective as the requirements
which were in effect on September 30, 1982.
Loan limits for manufactured homes and lots insured under title
I have been increased. Manufactured homes which are not insured
by FHA may be refinanced through FHA if they meet the stand-
ards established in the National Manufactured Housing Construc-
tion and Safety Standards Act of 1974.
Lending for condominium and cooperative housing is facilitated
by allowing insurtince on cooperative shares where the basic loan
was not FHA insured. Loan limits for condominium units will be
consistent with those provided in section 203(bX2).
Single family mortgage insurance is facilitated on Indian trust
land, Hawaiian homelands and Pacific Trust Territories where title
cannot be conveyed.
The maximum amount a mortgage secured by a one- to four-
family dwelling can be increased by the amount of the mortgage
insurance premium paid at the time the mortgage is insured.
The mfiximum loem to value ratio for homes up to $50,000 has
been charged to 97 percent of the appraised value.
A demonstration mortgage reinsurance program has been au-
thorized to test the feasibility of entering into reinsurance con-
tracts with private mortgage insurers in order to reduce Govern-
ment risk and administrative costs and to speed mortgage process-
ing.
Demonstration programs for alternative mortgages including
ARM'S, SAM's, PLAAfs, are authorized.
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PART B — FLOOD AND PROPERTY INSURANCE PROGRAMS
The flood insurance program has been extended for 2 fiscal years
and mapping studies have been authorized at a level of $49,752,000
for fiscal year 1984 and such sums as may be necessary for the fol-
lowing year.
The Director of FEMA must submit a plan to Congress for bring-
ing all the communities with flood risk zones in the emergency
phase of the program into full program status by September 30,
1987. The study must be prepared by September 30, 1984.
The premium rates charged for flood insurance cannot be in-
creased during fiscal year 1984. By June 30, 1984, the Federal In-
surance Adminstrator must submit a report to Congress on the pre-
mium rate structure for the program and an explanation of any
premium increases anticipated before October 1, 1985.
The riot reinsurance program is repealed.
The crime insurance program is extended until the close of fiscal
year 1984.
PART C — REGULATORY AND OTHER PROGRAMS
The Real Elstate Settlement Procedures Act has been clarified by
permitting controlled business arrangements if disclosure is made.
A strong antitying provision prohibits any requirement that a
client use a particular settlement service provider.
The National Institute of Building Sciences is authorized to re-
ceive no more than $250,000 for flscal year 1984, in addition to the
amounts already authorized to be appropriated. The amount appro-
priated must be matched by donations from nongovernmental con-
tributors to the Institute.
The solar energy and energy conservation bfUik has been reau-
thorized at $35 million for flscal year 1984.
The weatJierization program has been authorized for not less
than $190 million for flscal year 1984.
The housing counseling program has been authorized at $3.5 mil-
lion for fiscal year 1984.
The research authorization for the Department of HUD is $19
million for fiscal year 1984; $2 million of this totfU will be used to
identify current problems of public housing management EUid po-
tential solutions to the problems.
Studies emd reports will also be conducted on the following
topics:
PROGRAMS
PART D — SECONDARY MORTGAGE MARKET PROGRAMS
The Government National Mortgage Association is authorized to
enter into commitments to issue guarantees under the mortoa^
backed securities prc^am for an aggr^ate amount of $68.25 bil-
lion for flscal years 1984 and 1985,
RENTAL requirements/agreements STATEMENT
Mr. President, the title of this legislation which establishes a
rental rehabilitation and development program provides that
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355
rental requirements or agreements shall not apply to units assisted
under that title unless such requirements or agreements are en-
tered into pursuant to a State law or local ordinance of general ap-
plicability which was enacted and in effect in that jurisdiction
prior to the enactment of this section and such requirements and
agreements would apply generally to structures not assisted under
tUs section.
For the sake of those cities which are covered by this grandfa-
ther provision, it is not our intention that the grandfather protec-
tion lapses if a Stat« or local ordinance temporarily' lapses while
awaiting reenactment by a legislative body. Not even Congress
always extends programs before deadlines have temporarily passed.
This provision also prevents States or cities from applying rent con-
trols or agreements specifically created just for projects assisted
under the rental rehabilitation or development program.
We also want to make clear that the provision exempting
projects in those certain jurisdictions from the rent control preemp-
tion under this progrzun does not affect the power of HUD to pre-
empt rent controls on projects benefiting from FHA mortg^e in-
surance. HUD's power to preempt rent controls on FHA-insured
projects, whether or not subsidized under this program, in order to
protect the fiscal interest of the Federal Government would apply
to projects in grandfathered jurisdictions in the same manner as to
those elsewhere.
With respect to title 6 which deals with the Export-Import Bank,
Mr. President, what we have worked out closely approximates the
Senate version of the bill. Senate language w£is agreed to with only
minor changes in the provisions clarifying the Bank's mandate to
provide competitive financing and specifying a level of assistance
for small business — the Boschwitz Eimendment.
The practice of mixing foreign sad moneys with officially support-
ed exjKjrt credits is a particularly unfair and pernicious practice.
Yet, in recent years, our industrialized trading partners have re-
peatedly engaged in this practice in order to garner export con-
tracts in less developed country markets. The compromise struck
with the House creates a new mixed credit, or tied aid, program at
the Ebcport-Import Bank. This program should act as a deterrent
against this unfair practice and help our trade negotiators reach
agreement with our allies to end it. But it would also act, in select-
ed cases, as a defense for U.S. exporters who are the potential
losers when this practice is used. The program would be adminis-
tered by the Eximbank and coordinated by NAC, the National Ad-
visory Council, an interdepartmental group established to coordi-
nate international economic policy. Unanimous approval of the
NAC would be necessary before any mixed credit under this pro-
gram could be implemented.
The legislative language makes it clear that the unanimous ap-
proval of the NAC is only necessary for mixed credit programs car-
ried out under this particular program. Nothing in this legislation
precludes the Eximbank from continuing to carry out its own
mixed credit programs as it has in the past, or from derrogating
from the arrangement on officially-supported export credits of the
organization for economic cooperation and development under its
yGoot^le
own charter and under the implementation procedures it has used
heretofore.
The midyear report requirement in the Senate hill as well as the
provision effectively making the Bank subject to the rescission
mechanism are also included in this compromise with a number of
wording changes that clarify that such reports or requests are to be
submitted by the Office of Management and Budget on behalf of
the administration and not by the Bank directly. Further, the new
language clarifies that even if a proposed rescission were disap-
proved, the Bank would not be obligated to make available all of
its funds regardless of the qualifications of the applicants for them.
One area where the compromise differs from the Senate bill is
with respect to the question of the independence of the Bank's
Board of Directors. Although the compromise includes the Senate
language providing fixed, staggered terms for the Board members,
it also includes language providing that the Board members will
continue to serve at the pleasure of the President. This is a weak-
ening of the Board independence the Senate wanted to create, but
the fixed staggered terms will nonetheless provide for greater con-
tinuity of Board policy and closer, more regular oversight of Board
activities by the Congress.
Another area where the compromise difiers from the Senate bill
is its treatment of subsidized export financing offers in the United
States. Section 1912 of current law creates a mechanism whereby a
U.S. company competing in the United States against a foreign
subsidized financing offer can obtain a matehing offer from the Ex-
imbank. The compromise strengthens that language by requiring
that the subsidized financing be a significant factor in the sale
rather than a determining factor, as in present law, and by putting
a 60-day time limit on the Treasury Department for making that
judgment.
In addition to this provision, the compromise also contains a re-
vised version of the Proxmire amendment, which provides an addi-
tional recourse for aggrieved American companies. The original
language would have created a mechanism permitting the Govern-
ment to exclude goods or services benefiting from subsidized export
financing from our shores. The revised version amends the counter-
vailing duty law to provide for an accelerated determination by the
15th day of whether or not the proposed export financing derogates
from the international arrangement on export credit financii^ smd
an evaluation of the amount of that subsidy.
Subsequent to such a finding, the normal countervailing duty
firocedures would operate, except that in the event of suspension of
iquidation, a cash deposit would be required rather than a bond.
The current law's injury requirement would remain intact, al-
though we would expect that the International Trade Commission
would lend special weight to the fact that in these cases the harm
done is usually irreparable, the sale having been eigreed to, and to
the fact that sales in the large capitol goods sector are often infre-
quent. In my judgment, this earlier determination of whether the
financing has derogated from the arrangement will be a significant
deterrent to the offering of subsidized export financing by our for-
eign competitors.
yGoot^le
357
The compromise also expresses congressional authorization for
the Mexican and Brazilian facilities eBtabliehed by the Bank on
September 30, with a proviso that such facilities are to be used for
export purposes and not for balance of payments purposes. Fur-
ther, the compromise reauthorizes the Bank for 3 years, instead of
2 years as proposed by the House and 6 years as proposed by the
Senate.
A number of other minor provisions from both the House and
Senate bill are also included in the compromise: The House provi-
sion on medium term credits, with a minor change in language, the
House provision on the export of services, the Senate provisions on
export trading companies, the House provision providing notifica-
tion to Congress if the Bank's capital falls below 50 percent of the
value of its capital at the end of fiscal 1983, the Senate provision
on FCIA insurance for small exporters, the House provision recon-
stituting the Bank's advisory committee, without the Senate re-
quirement that advisory committee members be permitted to
attend Bank Board meetings, the House provision on nondiscrim-
inatory insurance opportunities, the House provision authorizing
appropriations for an International Trade Commission report on
the impact of the Bank's activities on industries and employment
in the United States — this report had been previously authorized
without funding being provided for it, and a group of technical
amendments pr^K)sed by the Bank to make references in the act
gender-neutral. Finally, the Senate's provision raising the report-
ing threshold for large transactions to $250 million has been
dropped.
Mr. President, this is a good compromise between version of the
legislation that were not that far apart to being with. The Senate's
determination that the Bank become more competitive, more e^-
gressive, and more independent is fully reflected in this final prod-
uct. In view of the fact that the Bank apparently utilized less them
one-fourth of the direct credit funds available to it in the last fiscal
year, it is clefu- that the Bank has not yet received the message the
Congress expects a more aggressive performance. This bill sends
that message loud and clear.
Title 8 of the legislation provides authorization for the U.S. share
of increases in two International Monetary Fund lending facilities.
One is a 47-percent increase in IMF quotas, of which the U.S. share
is $5.8 billion. The second is a $19 billion increfise in the "General
Agreement to Borrow" (GAB), of which the U.S. share is $2.6 bil-
lion.
Opponents of the increase in the IMF's resources have charged
that the new funding will be used to bail out international banks
that have made imprudent foreign loans. But such criticism is
based on a misunderstanding of how the IMF operates. Before the
IMF will loan to a country, the IMF requries the commercial banks
with outstanding loans to that country to commit to continue their
lending as well. Far from being a bail out for the banks, the IMF
prwrams should be viewed as bailing in the banks.
"Hie big advantage of including the IMF in these lending pro-
grams is that the IMF can require the borrowing countries to un-
dertake the fundamental economic policy changes that are re-
quired to solve their balance-of-payments difficulties.
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Title 8 also contains a number of significant amendments to the
Bretton Woods Agreement Act. The Secretary of the Treasury is di-
rected to work toward the adoption of policies which promote
proper exchange rate alignment and stability and preclude the ma-
nipulation of exchange rates between currencies. He is also direct-
ed to work for procedures which collect and disseminate timely in-
formation on extensions of credit to public and private entities
throughout the world. In addition, the Secretary would be required
to give Congress 60 days notice before any IMF borrowing takes
place in the U.S. credit markets. Nor, would any approval to in-
crease allocations of special drawing rights be authorized unless
the Congress is consulted 90 days prior to such action.
Title 8, further, provides a number of instructions to the U.S. Ex-
ecutive Director to the Fund. Among other things, the USED is in-
structed to work for the elimination of predatory export subsidies,
for the reduction of obstacles to world trade, for market rates on
IMF loans, for greater IMF review and disclosure of international
lending information, and against any loans which could be consid-
ered bank bailouts.
Finally, title 8 contains an omnibus reporting requirement which
requires the National Advisory Council on international monetary
Emd financial policies to include in its annual reports to the Con-
gress a very substantial list of analyses and information based on
every amendment requiring such analyses offered in the Senate —
as well as an almost equally comprehensive list from the House.
For example, analyses will be prepared on questions such as wheth-
er project assistance from the Bank will establish or enhance the
capacity of any country to produce a commodity in surplus on the
world markets; what is the impact on the U.S. steel and copper in-
dustries of steel and copper subsidies by nations who are borrowers
from the Fund; and what progress has been made in eliminating
agricultural subsidies by Fund members. A number of other impor-
tant studies will be produced by the Secretaries of State, Energy,
and the Treasury pursuant to the reporting requirements of this
provision. I think my colleagues will agree that the hill will provide
a mandate for information which will be of benefit to us ana to our
constituents for years to come.
Title 9 of this legislation provides: First, for strengthened super-
vision and r^ulation of international lending by the Federal bank
regulatory agencies; second, for more timely and comprehensive
public information on individual banks' foreign borrowing and
lending; and third, for accounting procedures that will more accu-
rately refwrt the true results of international lending.
As the title 9 provisions are very similar in most respects to the
provisions in S. 695 as reported by the Bfmking Committee and
passed by the Senate, the report accompanying that legislation —
Senate Report No. 98-122 — should be reference for a detailed ex-
planation of the intent of the provisions in title 9.
Some proposed measures beyond those in S. 695 relating to reeu-
lation of international lending — such as requiring a rebate to uie
Treasury of all interest earned above a certain level — proved to be
unworkable and/or counterproductive upon closer examination.
The l^islative proposals which are included in title 9 meet the
test of being workable. They also meet the test of having a positive
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impect on the overall strength of the interaational financial
Oyvtem and the test of meeting the legitimate needs of the Federal
bank r^ulatory agencies.
In light of the transfer risk associated with foreign lending, the
legislation specifically directs each of the Federal banking agencies
to incorporate country exposure and transfer risk in its examina-
tion and supervision procedures as well as in its evaluations of cap-
ital adequacy, while recognizing that such factors as diversification
of foreign credits clearly are important in assessing capital adequa-
cy.
As recommended by the Federal bank regulatory agencies, title 9
creates a new category of special reserves which commerciid banks
would be required to set aside against foreign loans when borrow-
ers experience a protracted inability to make debt service pay-
mentB.
Protracted inability to make payments would be indicated by
such factors as first, a failure of borrowers to make full interest
payments on indebtedness for a substantial time period such as 6
months or more second, the terms of restructured indebtedness
have not been met for over 1 year third, an IMF or other suitable
adjustment program has not been complied with and there is no
immediate prospect for such compliance, or fourth, no definite
prospects exist for the orderly restoration of debt service in the
near future.
These special reserves would not apply, for example, to lending
to a country where the terms of any restructuring of debt are being
met, where interest payments are being made regularly, and where
the borrowing country is complying with the terms of an IMF-ap-
proved stabilization program.
As an alternative to establishing special reserves, a bank would
have the option to write off all or part of the loans that would be
subject to special reserves and, thereby, reduce the smiount of spe-
cial provisions tmd reserve balances that otherwise would be re-
quired.
Consideration was given to requiring that these special reserves
be applied to any foreign loan that was renegotiate. After much
discussion, the decision was made that this would be unwise.
Domestic loans as well as foreign loans often must be renegotiat-
ed and, in both cases, the renegotiation frequently improves the
quality of the loans. To impose special reserves on a loan just be-
cause it was ren^otiated, thus, would not make sense.
Moreover, a prime objective of this legislation is to strengthen
the international financial system, not to weaken it. Special re-
serves are not included in capital, as are regular loan loss reserves.
As a result, whenever a bank is required to make an allocation to
these special reserves, the capital position of that bank is weak-
ened. This consideration underscores the need to limit application
of special reserves to only those loans where there is a clear pro-
tracted inability to make debt service payments.
Title 9 further recognizes the importance of bank capital by
granting explicit authority to the Federal banking e^encies to re-
quire banks to maintain adequate levels of capital. The language in
title 9 on capital adequacy is more specific than in S. 695 regeu'ding
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the enforcement of capital requirements, but the intent of both ver-
sions of the capital-adequacy language is the same.
In carrying out these capital adequacy provisions, the banking
agencies are expected to give banks reasonable time periods to
meet any requirements for higher capital rations.
Title 9 provides specific guidelines for banks in their accounting
treatment of "front-end" fees charged in connection with the re-
structuring of international loans. If such a fee exceeds the admin-
istrative cost of the restructuring, the excess must be amortized
over the effective life of the loan. Of course, the effective life may
differ from the loan's stated term.
In order to enhance the bank supervisory agencies' capacity to
analyze and assess developing trends in international lending and
to supervise better the banking institutions involved, the bill au-
thorizes the agencies to require more frequent reports from bank-
ing institutions with respect to foreign country exposure. Current-
ly, counti? lending reports are required on a semiannual beisis,
whereas this legislation would require such reports to be filed no
fewer than four times a year.
The bill also directs the bank supervisory agencies to require
public disclosure of information regarding material country risk ex-
posure in relation to the assets and capital of the banking institu-
tion. Such disclosure requirements are separate from those re-
quired under SEC authority but, of course, similar information
may be required by the SEX^. Public disclosure will enhance mar-
ketplace discipline by providing depositors and investors with infor-
mation upon which to assess the banking institutions' foreign lend-
ing. Banks will need to be prepared to defend policies leading to
lat^e and concentrated country exposure. Recognizing the relation-
ship of disclosure to the financial and competitive condition of the
bank, however, the bill grants to the three banking agencies the
authority to determine the form and type of information which
must be disclosed.
Section 911 clarifies the current audit authority of the General
Accounting Office with respect to the activities of the Federal
banking agencies. Reports prepared by the Comptroller General
under this section will not disclose to the public policy proposals or
nonpublic supervisory actions of foreign central banl^ or regulato-
ry authorities or international organizations provided to Federal
banking agencies in confidence. It is expected that the GAO's
access to agency records pursuant to an authorized audit will be in
such framework as will not impede or jeopardize productive discus-
sions, negotiations and sound working relations among U.S. bank-
ing agencies and foreign agencies and institutions. This provision is
not intended to modify in any way exemptions from audit as con-
tained in the Federal Banking Agency Audit Act and all the provi-
sions of title 31, sections 701-779 that apply to GAO audita of these
agencies will continue to apply.
Finally, in light of the transfer risk associated with foreign lend-
ing which has been highlighted by the recent liquidity problems of
some countries, the legislation specifically directs each of the Fed-
eral banking agencies to incorporate country exposure and Ixansfer
risk in its examination of supervision procedures. It is expected
that an effective system of country exposure warnings will be
yGoot^le
adopted as part of the examination process that assures these
warnings are considered at the pohcymakii^ level. This system of
country exposure warning should recognize that certain country
exposure may be subject to greater levels of transfer risk than
others, depending on domestic economic policies and conditions, as
well as other factors, in a particular country. The legislation also
directs the hanking agencies to include considerations of country
exposure and transfer risk in evaluations of capital adequacy,
while recognizing that such factors as diversification of foreign
credits clearly are important in assessing the amount of capital
needed by an individual bank.
Mr. Hatfield. Mr. President, this is an unusual procedure. In
fact, I never would have agreed to it if it had not been for the ur-
gency of the matter, and I would confirm the thesis as given to us
today by the minority leader of the Senate. We have several hun-
dred pages of legislation in the form of an amendment to an
amendment in disagreement on a minor supplemental appropria-
tions bill. I remind the Senate that we have had a very extraordi-
nary record of the appropriations process functioning will for the
first time in my memory. We have reported all 13 bills to the
Senate. We have passed 11 of the 13 in the Senate. We have eight
of them signed into law and two more on the way down to the
White House to be signed into law. We have passed two continuing
resolutions. We have had two previous supplementals and now this
supplemental.
In this context, it is particularly disconcerting to see another ap-
propriation bill held up for the consideration of extraneous l^sla-
tion. Time and time again Senators have complained from the au-
thorizing committees about legislative provisions in appropriation
bills, and the intrusion into their jurisdiction. These complaints are
often well taken. Senator Stennis and I have worked hard together
to fend off legislative provisions, but we have just as often found as
we find here that we are asked to carry provisions of legislation on
appropriations. We are asked, not that we have initiated. I do not
believe we can have it both ways. The chairmen and the members
of the authorizing committees do not want legislative provisions in
appropriation bills, and I hope they will refrain from asking us on
the Appropriations Committee to carry them and vote with us
when we attempt to keep them out. But as I say, with the extraor-
dinary circumstances which we face today, 1 want to commend the
efforts of Senator Gam and Senator Proxmire and their counter-
parts on the House side for their diligence in putting this package
together. I am also happy to support the administration and the
IMF appropriation, and I am pleased to support the housing provi-
sion. But I am disheartened to see the appropriations process used
again as a vehicle for all and sundry legislation, no matter how
vital it is. But I shall support it in this particular CEise because of
the exigencies of the time.
Several Senators addressed the Chetir.
The Presiding Officer. The Senator from Nebraska.
Mr. ExoN. Mr. President, what I am about to say is in no way
critical of the distinguished members of the Banking Committee or
the Appropriations Committee, but it seems to me that there is an
overriding issue here, despite the fact that there has been a great
yGoot^le
362
amount of effort, supposedly, and I believe it has been put forth in
an effort to come up with a compromise.
Unfortunately, "compromise" is beginning to be the key word in
passing legislation, both by the House of Representatives and the
U.S. Senate. Indeed, ™aybe it would be well if every law we passed
started out by saying, "This was not what we wanted to do, collec-
tively or individually, but this is a compromise."
I have listened with amazement to the remarks that have just
been made in this regard on the Senate floor. I have heard s^te-
ments such as these: "This is a carefully constructed mess." "We
don't like to legislate in this way, but we have to." "This is a terri-
ble way to legislate, which we should not do now, and we should
never do it in the future."
However, it seems that the recommendations are that we go
Eihead and do it.
Mr. President, I call to the attention of this great body that, sup-
posedly, we are the most deliberative body in the world. If we study
the intentions of the Founding Fathers, the U.S. Senate, by its very
nature and by its procedures and by its staggered terms and by its
6-year tenure, is supposed to say, "Halt! Halt!" when the U,S.
House of Representatives goes off on a tangent to which this more
deliberative body is supposed to say, "No."
I suspect that many Members of this body sire similarly situated
to the Senator from Nebraska, and that is that there are some
parts of this horrendous and horrible compromise that I might be
able to support, but I am not willing to go ahefid under any circum-
stances, nor can I vote for this proposal and will continue to oppose
it if the full funding as recommended by the President, and which
he is now pushing for, is part of the package. They have evidently
put in some sweeteners from one place or einother, put together a
mess, as it has been described by one of the leading Senators in-
volved in this compromise.
Mr. Garn. Mr. President, will the Senator yield for a correction?
I said it is a procedural mess, hut substantively it is a good hous-
ing bill. I wfmt to be quoted correctly. It is a procedural mess,
turkey, anything you want to apply to it.
Mr. ExON. I thank my friend for that clarification. I think it is
not only everything he says from a procedural standpoint, but also,
it goes much farther than that, and we might differ.
I suppose some of the justification advanced for this is that we
have to get out of here. There is no Member of this body who
would rather see us adjourn, because I think it would be in the best
interests of the Senate and the American public. But in our rush to
get out of here for Thanksgiving and a long recess, I think we are
doing a disservice to the responsibilities we have as U.S. Senators if
we vote for this piece of legislation, whatever it is called; if, individ-
ually and collectively, as a majority, we cannot agree that it is good
legislation.
So I simply call upon the Senate, once ^ain, to recognize that,
as badly as we would like to leave, and as much as I think we
should, pushing through something that is put tcwether in this
fashion, whether it is a procedural mess or a legislative mesa, is
not legislation that should be passed by the U.S. Senate, either in
its form, in its substance, or in the way it was handled.
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Several Senators ad<lre8sed the Chetir.
The Presiding Opficke. The Senator from Colorado.
Mr. AauSTRONG. Mr. President, I think the Senator from Nebras-
ka is absolutely right about the procedure we are following. The
minority leader is right in criticizing the procedure we are follow-
ing. The Senator from Utah, the manager of this bill, is completely
correct in describing this, imd I noted precisely his words, because I
found them to be profoundly descriptive of our circumstance.
He said: "A terrible way to legislate." He is right about that. It
is a horrible way to legislate. It is a travesty on the legislative proc-
ess. Why are we doing it, then?
The Senator from Wisconsin (Mr. Proxmire) explained it very
well. He said it is the only way we could get these bills enacted —
and I think that is right — which gives us an additional resison, in
my opinion, to turn down the proposed amendment.
This legislation is bad in its substance, in my opinion, and I
expect to point out some shortcomings in this legislation, and I
expect to propose some amendments which, if adopted, would
greatly improve it.
More than that, and as a place to start, we should think serious-
ly about the consequences of giving into our brothers in the other
body on a matter such as this.
This is exactly what happened: The Senate passed an IMF bill. I
did not vote for that. It was a controversial piece of legislation. But
the Senate worked its will, expressed its intention to pass an in-
crease in the IMF authorization. We sent that to the House months
ago.
The House would not take it up, would not consider it, would not
confer with us; just would not perform their part of the legislative
Instead, in a very public way, in a blatant way, in a flagrant
way, they said, "Look, we're going to hold this IMF matter hoste^e
until you get a housing bill out."
Mr. President, if we start that game on a grand scale — obviously,
there has been some of that kind of practical procedure common to
the l^islative process, I guess, forever — but when you start rolling
together issues of this consequence and then bringing them back as
an amendment in disagreement, we are going a long way in the di-
rection the Senator from Nebrfiska suggested, saying we did not
want to do this, but everything got rolled together.
We should separate this into its component parts and consider
each component part on its merits. If we fail to do so, if we just
give in and vote on this package, whether it is voted up or down, it
seems to me that we greatly encourage the other body to proceed
in this way in the future.
So, Mr. President, I want to talk about the substance of the IMF
Inll first, and then it is my intention to offer an amendment.
I win also aak that the matter be divided, so that IMF will be
considered separately on its merits; and then, having disposed of
that, I will hope to turn to a detailed consideration of the housing
bQl, and I have some Eimendments there to offer.
Before I do so and before I yield to the Senator from Pennsylva-
nia, who I gather would like to make a statement at this time, let
me say that while I am extremely critical of the process and while
37-922 O - 84 - 24
yGoot^le
I am really dismayed at the fix we find ourselves in, I nonetheless
have the greatest sympathy and admiration for the role played by
the Senator from Utah in all this.
He and I have been conferring about this on a daily basis for
weeks, and weeks, and weeks. In fact, he prefaced a conversation a
day or two ago by saying: "I am not calling you about the housing
bill or IMF." He has gone the extra mile not only in dealing with
me but, more important, in dealing with the other body.
This is not the procedure of his choosing. While he arrived at a
different conclusion about the propriety of this project and about
the substance of the legislation, I compliment him for handling this
with the courtesy, with the steadiness, with the scholarship, and
with the infinite patience that is in the highest tradition of the
Senate and of the legislative process, and I publicly express my ap-
preciation.
My strong appreciation is more than just a thank you. In consid-
eration of his patience and courteous efforts, I have forgone the op-
portunity I would have otherwise exercised to object to the consid-
eration of this matter, to speak against the motion to proceed on
the housing bill if it had been brought up as a separate bill, to
object to the waiving of the reading of this amendment when it was
presented at the desk, or in some other way to use procedural tac-
tics to delay the process.
I have done so for no other reason than his extraordinary pa-
tience and courtesy and his helpfulness to me on a lot of matters
we dise^ee about. I am not going to try to delay this bill. I am not
going to fihbuster it. I believe there is a reasonable chance that on
its merits it m^ be defeated. I expect to raise those issues as force-
fully as I can. But after all he has gone through, I do not have the
heart to engage in some kind of parliamentary high-jinks, delaying
tactics, or filibustering, to try to avoid voting on the issue. I am
ready to vote on it after everyone has taken up their amendments.
I want to acknowledge publicly the role he has played.
Mr. Garn. I want to thank the Senator for stating his position as
clearly as he has and to thank him for his generous comments.
Mr. Armstrong. I am ready to proceed, but I see the Senator
from Pennsylvania is on the floor and wishes to make an opening
statement. I will yield the floor so that he can proceed, and then
pick up with my amendments and my observations about this bill.
Mr. Heinz. Mr. President, I thank the Senator from Colorado for
yielding the floor.
Mr. President, what I want to say about this procedure and
about the substance involved here are two very different things. I,
too, have reservations about the procedure, legislatively, emd I
would be hard put to disagree with most of the statements which
have been made about it insofar as it poses a precedent. But one
point I would make to all my colleagues on the procedure is that,
for all intents and purposes, it does not sacrifice the right of emy
Senator to modify the legislation. I would remind our coUeagues
that most of the elements of this amendment have been on the
floor of the Senate. As the manager of two elements, the Ebcimbank
authorization and the International Monetary Fund authorization,
and as a very interested party in the housing authorization, I can
testify to the fact that each of them has been on this floor not just
yGoot^le
for hours but in scnne cases for days. In the case of the Eximbank
and the IMF, the Senate worked its entire will on both of those.
We considered many amendments, including those of my friend
from Colorado, and the Senate had the total opportunity to work
its will.
Indeed, it seems to me that anybody who has any reservations
about the IMF, or the Eximbank or the housing authorization is
now getting a second bite at the apple. Substantively and procedur-
ally, therefore, everybody's rights, so far as this Senator can deter-
mine, are being fully protected. So I would hope that no one having
heard all the protestations, which I think are well taken, about the
procedure believes that the procedure is either illegal or sacrifices
the rights of Senators to deal with these matters.
(Mr. Boschwitz assumed the chair.)
Mr. Heinz. I do not like it that the House has put us in this pro-
cedural bind, and I intend to join Senator Garn, the minority
leader, the majority leader, Senator Armstrong, and all others in
resisting tiny further use of this procedure. But I must tell my col-
leagues that this is not the first time that the House has taken hos-
tages, nor is the Senate free from having taken hostages or prison-
ers on other occasions. There were some people who might have
said that the debt ceiling was a prisoner in this past couple of
weeks in an effort to get the House to move forward on reconcilia-
tion or some deficit-reduction measure. In every legislative process,
Strisoners are Uiken at every opportunity unless they are fleet of
OOt. There is an army after them at each and every moment.
So I do not know that I would characterize the political proce-
dure here as anything out of the ordinary. I think any of us who
have ever been privileged to chair a committee or a subcommittee
knows that l^islation ultimately emerges only when you have
enough votes to get it to the full committee and report it from the
full committee to the floor. I do not expect, therefore, that this will
be the last attempt to take prisoners, but it does suggest to me that
it is certainly well to be on our guard.
Mr. President, having spoken at length during the consideration
of the Eximbank bill and the IMF bill when they were on the floor,
I shall say nothing of them except that I support them again. I
hope we enact them in this procedure, notwithstanding all our res-
ervations about it.
I would only say that the housing authorization that Senator
Gam h£is worked at so diligently is an excellent compromise. It is
literally true — I know, because I have tried to contact him on other
matters on which he has also spent a good deal of time — he has
spent 3, 4, and 5 hours a day on this compromise, and it has been
going on for weeks. I do not know of any other Member of this
body who has such patience and perseverance. I would be remiss if
I did not compliment him and the ranking minority member. Sena-
tor Proxmire, as well as Senator Riegle and others who have
fjayed an indispensable role in getting an agreement on a housing
authorization that, assuming we pass it and I hope we do, will be
the first time we have enacted a housing authorization in some 3
years.
Mr. President, I want to commend the Banking Committee lead-
erdiip in both Houses of Congress as well as the administration for
yGoot^le
coming to an a^eement on a housing authorization bil} for 1983.
Those of us who care about the Federal responsibility for insuring
that all Americans have decent and affordable shelter should be
pleased that we are on the verge of passing the first housing au-
thorization bill under the current administration. Those of us who
serve on the respective housing subcommittees of the House and
Senate Banking Committees as I do, should feel some measure of
satisfaction for the contributions made toward the achievement of
a consensus document.
S. 1338, the ori^neil Housing and Community Development Act
of 1983, reported m May by the Senate Banking Committee, was a
sound and fisc£illy responsible piece of legislation. It contained the
seeds of the compromises reached between Congress and the ad-
ministration on many of the major points of disagreement, includ-
ing the level of rent contributions to be made by tenants in subsi-
dized housing; a reasonable legislative response to HUD's adminis-
trative efforts to change the methods of calculating fair market
rents for section 8 existing housing units; and protection of the ex-
isting method of allocating operating subsidies and modernization
funding to public housing authorities across the country. While I
have some questions about the exact nature of that protection,
which I shall direct to Chairman Gam at the appropriate time,
public housing management should feel reassured that Congress
will be vigilant in its oversight of HUD. I fully support these and
other congressional efforts to inject a measure of stability into Fed-
erfil housing assistance programs for the poorest families in Amer-
ica.
The legislation before us today draws from S. 1338 and H.R. 1 to
enact a vital new rental production pri^ram, a signiiicant portion
of which will be devoted to new construction of rental units. Since
the elimination of the section 8 construction and rehabilitation pro-
grams, many of us in Congress have been struggling to devise a re-
sponsible way to help local communities meet the rising demand
for affordable low- and moderate-income rental housing, an eH'ort
of special importance to States with older housing stock such as my
own State of Pennsylvania.
I am also pleased that we have extended the successful Federal
community development programs, I supported efforts to clarify
congressional intent requiring that low-income Americans be the
principal beneficiaries of the community development block grant
program. The prospective improvements in the small cities portion
of urban development action grant program are especially wel-
come. It is about time that we made the small cities UDAG pro-
gram more workable, particularly for those jurisdictions suffering
the severest long-term economic hardship. By adding the best avail-
able measure of unemployment in small communities, the labor
surplus area designation, to the eligibility criteria for the small
cities UDAG prt^am, Congress will give nearly 2,000 of the most
distressed small jurisdictions, including 200 in Pennsylvemia, the
opportunity to use this vital economic development tool. This is a
change I sought legislatively ob well ob administratively in a letter
to 0MB Director, David Stockman, in September.
Mr. President, I am pleased to see that many provisions benefi-
cial to elderly housing are part of the compronuse bill. As chair-
yGoot^le
man of the Special Committee on Aging, I have monitored closely
the provisions in S. 1338 and H.R. 1 which affect the housing needs
of older Americans. This bill wilt cap the interest rate for section
202 loans at 9.25 percent; preserve the ability of aged households to
deduct excessive medical expenses from their income prior to calcu-
lating their rent share; and retain the nonprofit sponsors' option of
negotiating contracts or getting competitive bids in most cases.
Ihave strongly supported these provisions as they provide impor-
tant protections for elderly residents. I am gratified to see that $6.8
million is provided for 14,000 units of section 202 housing for the
elderly and handicapped. I understand that a provision in H.R. 1 to
expand the 202 program to 36,000 units beginning in 1985, offered
by Representative Lundine, was dropped during conference. It was
felt by the conferees that the proposal required further study.
Last July, I introduced similar legislation, S. 1648, to modify and
consolidate current Federal programs providing housing assistance
for elderly and handicapped households. At that time, I emphasized
the fact that this l^islation did not represent the one and only so-
lution to. the housing needs of the elderly and handicapped of this
country. Also, because of the revised financing and subsidy mecha-
nism and the inclusion of for-profit sponsors in the proposal, I
stressed the need for further budgetary analysis and a public
forum on the bill. Accordingly, as chairman of the Aging Commit-
tee and as a senior member of the Housing Subcommittee of the
Senate Banking Committee, I plan to push for a series of hearings,
b^inning in February, on housing for older Americans, with the
first on S. 1648 and the section 202 program.
In order to prepare for this hearing and to assure that we have
the most current data on the present section 202 prc^am, the
Senate Aging Committee is now conducting the first comprehensive
survey of all section 202 projects across the country. The results
will give Congress £md elderly housing advocates a detailed picture
of the current 202 population and those waiting for 202 units.
Mr. President, Federal housing programs are currently providing
assistance to more than 3 million older Americans. The section 202
pnwram is the most well known of the Federal housing programs,
and preliminary results from the Aging Committee survey under-
score the immense demand for this specially designed housing. Yet,
less than 6 percent of all federally assisted unite occupied by the
elderly have been constructed under this pn^am. The primary
sources of assistance are the section 8 and public housing pro-
grams. We must examine these Federal programs and other pri-
vate sector options for housing elderly families in light of the dra-
matic growth of America's older population. I plan to develop com-
prehensive elderly housing legislation in 1984.
In the community development title of this bill. Congress has
also enacted the Neighborhood Development Demonstration Act, a
bill I first introduced a year ago with Senator Hatfield. Reintro-
duced in Feburary, 1983 with bipartisan support as S. 586, the leg-
islation was accepted in both S. 1338 and H.R. 1. It establishes a 3-
year pn^am to demonstrate public/private partnerships for job
development, small enterprise development, and community revi-
talization by neighborhood groups. This legislation complements
recent efforts by the Ford Foundation and the Local Initiative Sup-
yGoot^le
port Corporation (LISC) in Pittsbui^h, Philadelphia, and elsewhere
across the country.
Unfortunately, his package does not include another bill, S. 846,
I introduced to assist unemployed homeowners avoid the tragedy of
foreclosure on their homes. This legislation, I might add, was
agreed to by the Senate Banking Committee when it reported S.
1338 in May 1983. Due to objections persistently raised by the ad-
ministration, the leadership in both houses of Congress was com-
pelled to drop any language on mortgage foreclosure assistance
from the compromise packe^e before us today.
Mr. President, I have repeatedly stated my intention to offer an
amendment on mortgage foreclosure assistance to the housing bill
when it reached the Senate floor. I and Senator Riegle, my cospon-
sor, have felt that we owe it to our constituencies — the unemployed
factory workers in our States whose unemployment compensation
is running out and whose home mortgage payments are already de-
linquent— to make every effort to pass foreclosure assistance legis-
lation. Our colleagues may recall that we offered a much reduced
Eimendment to the fiscal year 1984 HUD appropriations bill in July
1983 which was not accepted by the Senate.
Members of Congress who have followed the negotiations on this
housing package know that we attempted to have included modest
language allowing mortgage foreclosure assistance to be an eligible
activity under the CDBG program and authorizing the Secretary of
HUD to use discretionary funds to provide such assistance in areas
of the country hardest hit by unemployment and high mortgage de-
fault rates — areas like the Monongahela Valley in western Penn-
sylvania. We were rebuffed again by colleagues, both Democratic
and Republican, who did not want to jeopardize the progress of the
negotiations.
Mr. President, this has been a difficult situation for me to accept.
I am deeply disappointed by the fact that this legislation was never
given fair consideration by the administration. And while I am, of
course, extremely pleased that this Nation appears to be enjoying a
steady economic recovery, I urge my colleagues to remember that
there are regions of this country where hardship is ob severe as
ever. Unemployment and mortgage delinquency rates are not de-
clining in areas where smokestack industries remain depressed —
places like Gary, Ind., where 20 homes a week go into foreclosure
and in Allegheny County where nonprofit E^encies like Action
Housing are running out of the means to help the steadily increas-
ingstream of pleas for assistance.
There were nearly 500,000 home loans past due at the end of the
first quarter of 1983. There were 60,000 homes edready in foreclo-
sure. That is 60,000 families — fathers, mothers, sons, and dai^h-
ters — who were forced to give up their stake in the American
dream,
Mr. President, I have reluctantly agreed not to offer an amend-
ment to this housing bill. The country can no longer look to the
Federal Government for quick action on this matter. I will look to
the wise and responsive leadership of nonprofit organizations, of
sympathetic lending institutions, of local city and county executive
and judicial officials, and of legislatures in my home State of Penn-
sylvania and ot^er States where mortgage foreclosure assistance
yGoot^le
Icfiislatum is pending. I will continue to urge all those in govern-
ment and in the private sector to forebear on mortgfige delinquen-
cies wherever possible.
The Federal Government must continue to do what it can to help
low-income Americans find decent housing; it must address the
question of how this Nation intends to house its growing elderly
population; it must continue to make it [>ossible for young Ameri-
cans to buy their first homes; and I would hope, Mr. President, that
it will in the future fulfill a responsibility to help those hard-work-
ing Americans who through no fault of their own are temporarily
out of work and who have invested their life's savings in a home.
In sum, Mr. President, as one who has been pressing since May
for passage of a housing authorization bill, I am encouraged by the
progress we have made in this legislation. Probably no one who has
worked on the bill is completely satisfied with the results — that is
the nature of compromise. Congress and the administration have
more work to do on national housing policy and in my capacity as
a senior member of the Senate Banking Committee I will continue
to push for responsible Federal responses to the overriding housing
needB of poor, elderly, and unemployed Americans.
Mr. Gabn. Mr. President, I would compliment the distinguished
Senator from Pennsylvania because he has spent a total of weeks
and months in the IMF section of this bill and has a great interest
in that portion of it. He is chairman of the International Finance
Subcommittee of the Banking Committee. I wish to thank him for
all his work in that area, without which we would not have passed
the IMF bill in the first place earlier in the summer.
I see Senator Dodd is about to seek recognition. Rather than in-
terrupt again, I would like to thank him and Ed Silverman of his
staff for the very important role they played and their help on the
housing section of this bill. We appreciate that very much.
Mr. Dodd addressed the Chair.
The Presiding Officer. The Senator from Connecticut.
Mr. Dodd. Mr. President, I join with my other colleagues on this
side of the aisle. This is not a memorial service for Jake Garn, but
a lot of us feel that without his perseverance, we would not be at
this particular juncture. He has done a remarkable job in holding a
negotiating process together, which is a very difficult thing to do.
This process has been maligned significantly here this afternoon. I
would just like to make a couple of points on the procedure.
We do not operate like the textbooks told us we were going to
operate. This is not the first time and it will not be the last time. It
is not a particuleu'ly attractive sight, the tools that have been used
over and over, and the two things people should not witness in pro-
duction, the production of sausage and laws, which certainly ap-
plies to this particular effort from a procedural standpoint. I want
to emphasize this does occur and it has over our long history. I pre-
sume it will again. Enough said on that.
With regard to the issue of compromise, I have heard a number
<rf' people rise emd say compromise is somehow an ugly word in all
rf this. How else do we Etccomplish anything short of compromise?
You take strong people with strong views who work hard on issues,
and if you have any hope at all of moving forward in vital areas,
whether it be international monetary policy or export policy or cer-
yGoot^le
370
tainly something as important to all of us as housing, it takes com-
promise. That is, in fact, the deflnition of politics, in effect, the art
of compromise. For those who have suggested that this is not a
worthwhile way to proceed, I would again strongly commend the
efforts of the Senator from Utah, the Senator from Wisconsin, Sen-
ator Proxmire, and Senator Riegle, who I think have worked tre-
mendously hard and long to see that we arrive at the point we are.
As the Senator from Utah, Jake Garn, has pointed out, the chair-
man of our committee, the housing section of this is something I
have a particularly strong interest in. I think we have done a good
job. It is not eve^hing I wanted. He knows that. I would have
wanted more, frankly, in this area, but I think it is an excellent,
excellent beginning.
Overall, I would consider it, frankly, as part of this whole pack-
age, the most important aspect of the legislation we have moved
forward on. It is a modest new initiative contained in title III to
establish a program of rental housing, rehabilitation, and develop-
ment grants.
On the bill itself, I can only say that the proposal before us rep-
resents a compromise of some very divergent views in this counti^.
Everyone was forced to make some concessions. I am sure that we
will all feel there are some positive and negative aspects to the
package as it is before us.
But the bottom line, as viewed by this Senator, is a positive one.
We have reauthorized and improved targeting of community devel-
opment progams, which is essential for our cities. Important
changes have been accomplished in our assisted and insured hous-
ing programs, an extremely important effort. Most significantly, we
are addressing the major void in rental housing policies by reestab-
lishing and properly defining the Federal role with respect to reha-
bilitation and development of rental housing for low- and moder-
ate-income people in this country. This is the first time in 2%
years we have been able to do something in this area. While it is
not everything I wanted, I think it is a very important feature of
this legislation.
On this latter issue, Mr. President, I want to signal my endorse-
ment of the proposed rehab and development grant program. This
program responds to the general need and incorporates m^or por-
tions of legislation I introduced over 2 years ago with Representa-
tive Charles Schumer of New York. Over the next 18 months, $600
million will be available to States and localities for block grants for
moderate rehab or targeted discretionary grants for the develop-
ment of modest affordable rental housing. Like prior programs in
this r^ard, the Federal program is not committmg resources over
an extended time. It is not assuming the total risk. These are
highly leverfiged initiatives and in mtuiy aspects are structured in
a similar manner to the very successful community development
block grant and urban development action grants program of years
past.
Assistance under either allocation mechanism is highly targeted
to both individuals and areas with objectively measured needs.
Finally, the practice not only emphasizes leveraging of Federal
funds but in addition requires the most prudent use of these limit-
ed resources.
yGoot^le
THE miLTILATERAL DEVBLOPMENT BANK REPLENISHMENTS
Mr. President, I riBe today to aupport provisions of this amend-
ment which authorize U.S. participation in the pro[>osed replenish-
ments of three key multilateral development institutions — the
Inter-American Development Bank, the Asian Development Bank,
and the African Development Fund. The Committee on Foreign Re-
lations held hearings on these requests and, after careful review,
recommended that the Senate give it favorable consideration. The
House has already acted favorably on similar legislation.
Little needs to be said with respect to the African Development
Fund replenishment request, as the Senate considered an identical
request during the last Congress and passed legislation without ob-
jection. It is only because the House failed to act on the bill before
the Congress adjourned that we have once ageiin been asked to con-
sider it. In fact, subject to favorable action on the authorization
bill. Congress has already approved appropriations of $50 million in
fiscal year 1983 as the first installment, in the $150 million 3-year
replenishment.
The replenishments of the Inter-American Development Bank's
(IDB) ordinary capital account and its concessional loan window —
the Fund for Special Operations (FSO), together with the replenish-
ments of the ordinary capital of the Asian Development Bank
(ADD) and its concessional afHliate, the Asian Development Fund
(ADF), are the first multilateral development bank (MDB) replen-
ishments negotiated by the Reagan administration and submitted
to the Congress for its approval. As I am sure all of my colleagues
know, the Reagan administration came into office highly skeptical
of the utility of continued U.S. participation in these institutions.
However, after an exhaustive review by the Department of the
Treasury, the administration was forced to conclude in the compre-
hensive report of its findings, "U.S. Participation in the Multilater-
al Development Banks in the 1980's," that "the MDB's • • • have
been most effective in contributing to the achievement of our
global economic and financial objectives."
It m^ht be useful to take a look at some of the factors which I
am sure helped to convince the Reagan administration that contin-
ued support of the MDB's would be in the economic and foreign
policy interest of the United States, First, the MDB's activities
have proved to be significant in stimulating overall investment and
fostering economic growth in the developing world. In the case of
the IDB for example, the $22 billion of loans made in the course of
its 23 years of operation have served as the catalyst for invest-
ments totfiling $85 billion in Latin America.
The MDB's have been able to provide significant amounts of fi-
nancial Eissistonce to developing countries in a cost-effective
manner. The proposed replenishments continue that practice. In
the case of the ADB, for example, as little as $13 million in U.S.
appropriations annually would enable the ADB to make loans to-
taling $12 billion over the next 5 years. Similarly in the case of the
IDE, annual U.S. appropriations of only $145 million will contrib-
ute to a $14 billion loan program during 1983-86. Given the tight
budgets which most countries face today, these institutions enable
us to maximize U.S. assistance to developing countries, friendly to
yGoot^le
372
us and our allies, at the least possible cost to the Treasury and the
U.S. taxpayer. In fact, if one analyzes the annual cost of U.S. par-
ticipation in these proposed replenishmentfi, one discovers that it is
only slightly more than $338 million, and represents a 15-percent
reduction from current U.S. commitments to the MDB's.
Continued U.S. participation in the MDB's, the primary develop-
ment institutions serving their respective regions, helps to meet
important U.S. foreign policy goals. The IDE, for example, is the
primary source of official assistance for the nations of the Caribbe-
an region — a region which the President felt was bo important to
our national security and foreign policy interests that it warranted
extraordinary assistance from the United States in the form of the
Caribbean Basin Initiative. Similarly, the President's recent trip to
the Asian and Pacific region emphasizes the importance the U.S.
accords in foreign policy terms to the region which depends on the
ADB for funds and technical assistance to meet its economic devel-
opment objectives.
In countries where poverty is at the root of revolutionary fervor;
eliminating hunger, eradicating disease, and providing jobs for
people are the soundest methods of fostering political stability. In
this regard, the MDB's have a proven track record of successfully
reaching out to the poorest peoples of these countries, making day-
to-day existence more tolerable and fostering a spark of optimism
about tomorrow. Not only do our contributions improve the materi-
al conditions of people in these regions, and foster good will region-
ally and internationally, but it also serves to thwart propaganda ef-
forts by those who would seek to portray us as concerned only with
winning the political victories of propping up right-wing dictators,
and not with improving the lives of the vast majority of people who
live there. For these reasons I believe that our firm support for the
MDB's is necessary and wise.
In conclusion Mr. President, I believe that continued support for
the multilateral development banks makes sound economic and for-
eign policy sense, as these institutions complement our bilateral ef-
forts as well as the efforts of the IMF in fostering a stable and
growing international economy. U.S. national security interests
continue to benefit from our participation. Therefore, I urge my
colleagues to give their endorsement to these replenishment re-
quests.
In conclusion, Mr. President, I want to also acknowledge the con-
tributions, as I have, of Senator Tower of Texas, of Senator Prox-
mire, the ranking minority member of our Banking Committee,
and Senator Riegle, of Michigan, for their work in getting this leg-
islation to this point, and for their accommodations to this particu-
lar Senator for several provisions in addition to those I have just
highlighted in these remarks.
Again, Mr. President, let me associate myself, if I may, with the
remarks of my minority leader, the Senator from West Virginia, at
the outset of this discussion. He appropriately points out that this
is not the best way to run a railroad. But we are in that awkward
position, as we have been in the past and I presume before I leave
this body we will be in again. It is advisable for us to avoid it but
when we cannot, when we have important measures before us, we
yGoot^le
373
have to m forward this way if we are goin^ to get things done. So I
commena again the chairman of the committee for his work.
Mr. Presioent, I yield the floor.
Several Senators addressed the Chair.
The Presiding Officer. The Senator from Colorado.
Mr. Arbibtrong. Mr, President, if the Senator from New Jersey
wishes me to withhold for a couple of minutes, I will do so.
Mr. Lautenberg. I appreciate my colleague's yielding.
Mr. President, I will not take much of the Senate's time now, but
1 want to briefly express my thanks to those with whom I have
worked on this legislation regarding housing. I commend the chair-
man of the Banking Committee, without whose cooperation we
would not be approving this housing bill today. I also thank the
ranking minority member. Senator Proxmire, and the ranking mi-
nority member of the Housing Subcommittee, Senator Riegle, for
their work in accomplishing what was a difficult compromise.
In my work on this bill as a member of the Housing Subcommit-
tee, I found the leadership of the committee and their staff to be
cooperative and sensitive to the needs of my State. While there are
elements of the bill I supported in the committee which are not in-
cluded in this bill, many of the issues of importance to New Jersey
have been addressed. I am pleased to have been able to play a part
in their resolution.
There is a crying need for new construction and rehabilitation of
rental housing in New Jersey. I want to commend the Senator
from Connecticut Senator Dodd, for his authorship and his partici-
pation in the development of this legislation.
Community development block grants and urban development
action grants extended under this title for 3 years are of vitol im-
portance to communities in my State. Low- and moderate-income
citizens will be served well by this bill and local housing conditions
and circumstances will be addressed, as well as housing for the eld-
erly and support for public housing operations.
While the procedure is one that I continue to learn about here,
and it may be faulty, 1 do strongly support this housing bill.
Mr, President, I rise in support of this amendment to provide au-
thorizations for the Nation's housing and community development
programs. With the possible exception of general revenue sharing,
no l^islation has been of more interest to local governments in
New Jersey. Nor is any legislation more important for local eco-
nomic development than the passage of this housing and communi-
ty development bill.
Communities throughout New Jersey rely heavily on community
development block grants and urban development action grants to
provide jobs and a healthy living environment. The need for addi-
tional housing in New Jersey is critical, particularly for those of
low and moderate income. With vacancy rates well below the na-
tional average in many of our cities, there is a crying need for new
rental construction in New Jersey.
Mr, President, several provisions of this bill are especially impor-
tant to me. They are:
A 3-year authorization for community development block grants
which means in excess of $100 million in funds to New Jersey com-
munities.
yGoot^le
374
Reauthorization of the UDAG program which brought $80 mO-
lion to New Jersey last year.
Protection of those communities who due to population loss or
other changes in formula allocation were in danger of losing their
CDBG entitlement status. In New Jersey the affected communities
include Hoboken and Hudson County, Asbury Park, Sajrrevilie,
Long Branch, Parsippany-Troy Hills, and Bloomfield.
Creation of a new rental rehabilitation and construction pn^ram
at $615 million over 2 years to produce and repair rental housing.
Increases the allowable percentage of community development
block grant funds which can be used for social services from the
present 10 percent to 15 percent and also allows those communities
which utilized a higher than a 15 percent level in fiscal year 1983
(excluding funds under the jobs bill passed earlier this year) to
maintain a higher than 15 percent level of social service funding.
Continuation of the urban crime insurance program which has
been used to insure against residential and commercial loss due to
urban crime in New Jersey and throughout the Nation.
Provision of 14,000 units of section 202 housing for the elderly
and handicapped, which brought over $20 million to New Jersey in
fiscal year 1983 and produced 406 much-needed units.
Coverage of necessary rent increases in State-insured section 236
and 235 housing under the rental assistance and rent supplement
programs. Ninety percent of these rent increases will be covered
under this bill to preserve this housing for existing tenants.
Mr. President, one of the principal controversies in the Banking
Committee during consideration of housing legislation this year
was whether the Federal Government should preempt local rent
control laws as a precondition to receiving Federal assistance to re-
habilitate or construct rental housing. I firmly resisted this on the
basis of the strong tradition of home rule in New Jersey. I was also
very concerned that denying local jurisdictions the flexibility to
maintain their current practices might well lead to the trfigic dis-
placement of low- and moderate-income people. This bill will not
adversely affect current practices in New Jersey. The bill includes
a grandfather provision sought by me in committee to insure that
existing local ordinances would not be overridden.
This legislation is the product of difficult negotiations. It repre-
sents a rather painful compromise. This is not the bill I would have
written if it was left to me to write it. Nevertheless, the bill is the
first housing authorization bill approved by the Congress in several
years. It gives much needed direction and assistance to our Na-
tion's housing [>olicy. I urge its adoption.
Mr. Armstrong. Mr. President, depending on who you listen to,
this IMF provision is the cornerstone of a sound economic policy
which will set the stage not only for international monetary stabili-
ty but for the restoration of the kind of growth and prosperity in
this country and abroad that we all long for. It will lead to a reduc-
tion of unemployment, better relations between countries, an up-
surge of trade. Or, if you listen to other sources, it is nothing lees
than a bailout of the big banks, an egregious affront not only to tiie
financial well-being of our country but in fact it is a ripoff.
I suppose the truth is somewhere in between. My own feelii^ is
that this is not so much as a bank bailout but it is a bank bail-in. If
yGoot^le
we pass this IMF section, we are not bailing the banks out of these
bad loans; we are encouraging them to take themselves even
deeper into the hole that they are in.
I am not going to talk about the jobs argument or the financial
stability argument. Frankly, I just do not think the case has been
made. If we could buy economic prosperity for $8 billion, I would
say let us buy a double load emd authorize $16 billion. I just do not
believe it. I do not think that case has been persuasively made, so I
am not disposed to deal with it at any length at this point. I do
want to look at some of the banking issues involved, because I am
honestly convinced, as are many of the most thoughtful observers,
including many bankers, including leading economists and others,
that by passing this IMF legislation in its present form, we are
likely to make the situation worse rather than better. Far from fos-
tering reform, we are likely to retard reform.
The problem for the United States is that many of our major
banks are already vulnerable because they now hold a large
amount of questionable loans to Brazil, Mexico, and other Third
World countries. Normally, these loans would be rated nonperform-
ing and the banks would have to write them down.
This process would be painful to some of the financial institu-
tions involved. It would mean that the banks would bear some
costs, the same kinds of costs that banks ordinarily bear when they
make nonperforming losms. If you or I fall behind on a loan to our
neighborhood banker, it is rated as nonperforming and at a very
early time, it is written down on the bool^ of the bank.
I do not see that, from a banking standpoint, from the standpoint
of sound financial practice, it is wise to permit these extraordinari-
ly lEirge, infinitely larger loans to be treated in a different way.
It would be costly for the banks to follow that normal business
practice. It would not be, in my opinion, nor the opinion of many
others — officials who have served in the highest positions of our
Government, like former Treasury Secretaries, people who have
headed large banks like the former chairman of the Chase Manhat-
tan Bank, economists like Paul Craig Roberts, Milton Friedman,
and others — it would not be catastrophic.
It would be painful, but it would be the best medicine. But there
would be a cost.
Borrowers would £dso have to bear a portion of the cost. They
would have to b^n to perform on these loans if they are going to
ccmtinue to enjoy access to capital markets, thus would have every
incentive to take the steps necessary to improve security positions
of their banks. For example, they might be called u[x>n to put up
some collateral or to expand the equity position of their creditors
in tjhe enterprises or to agree that subsequent debt disputes might
be arbitrated in U.S. courts. Neither the banks nor the creditor na-
tions nor creditor entities would be happy with this kind of devel-
opment, but I say to my colleagues in the Senate, these are not
^od loans and it does not matter — that is to say, some of them are
not. Ot course, some are. But the loems that have gotten us into a
jam are not performing loans and whether we call them something
else, liie notion of increasing the IMF authority so we can extend
more money to countries who are not performing on their loans so
yGoot^le
376
they can perform in part, is really, when you boil it down to its
simplest essence, a very flawed idea.
In fact, I guess I would have to report to you that out our way, it
seems like kind of a foolish idea. Why would we want to pump out
more money in order to get just a part of it back? That is what this
whole rescheduling idea is all about.
The notion behind this IMF increase is that, somehow, we can
avoid the hard choices. The IMF arranges for new funding that
permits debtor nations to continue servicing existing loans and we
play a game of "let's pretend there is no crisis" when we all know
there is a crisis. I do not think that is to the benefit of the banks,
nor to the benefit of debtor nations, either.
The debtor nations do not benefit, either. Political leaders and
the various creditors are encouraged to defer any hard adjustment
decisions. Instead, they negotiate with the IMF to determine what
minimum conditions must be met. Since these burdens will be allo-
cated politically, we can be sure that they will fall on the less po-
litically powerful groups.
So, Mr. President, we have a "bail-in" provision, instead of bail-
ing anybody out. We are not bailing out the debtors, not bailing out
the banks, we are instead postponing the day of reckoning and
hinting or implying there will not have to be a day of reckoning;
maybe we can just postpone the whole problem.
How did the IMF get into such a delicate situation? Originally,
the IMF was intended to handle short-term currency fluctuations
associated with fixed exchange rates. External events could create
currency shortages which would require formal Government action
to alleviate and that might take time: Thus the IMF was created to
provide short-term bridging liquidity. When floating exchange
rates were introduced in 1973, this rationale for the IMF vanished.
IMF lending in such circumstances would only impede the normal
a<^ustment6 of exchange rates and encourage nations to interfere —
to "dirty" the float.
However, another rationale for the IMF operation was found.
The IMF would play the expert credit assessor-credit advisor role.
When nations got into trouble the IMF would intervene, determine
a plan to restore its economic health and then monitor the nation's
adherence to the plan. To make acceptance of these, at times,
rather harsh plans more palatable, the IMF would itself lend
funds. This lending role was thought to be the "spoonful of sugar"
to help the medicine go down.
In some cases, Mr. President, I think it has worked out in that
Thei
here are also problems with this approach, the most serious of
which is that the IMF's lending authority would be in conflict with
its credit assessment role. In this role, the IMF is to determine
whether the prospects for loan repayment justify banks to lend
more. As a lender, however, IMF wants to keep the loan cycle
churning. Banks may then decide to lend to the debtor nation not
because they believe IMF's credit assessment, but because they be-
lieve the IMF has gotten itself into the same boat and therefore
would not let the boat sink.
That is the argument we have heard over and over in private,
that we are so deep in this thing that we cannot pull the plug. Mr.
yGoot^le
377
President, I do not believe we are in that kind of crisis, but I think
we could be going in that direction. There £ire some places where
the loans could b«»me so large that there will not be any solution,
there will not be any way out through normal banking practices.
We are not in that situation at this point.
Mr. President, 1 think it is a mistake for us to enact this legisla-
tion. However, I must say that I am impressed by the prestige and
sincerity of those who are advocationg its passage. I am not so sure
that I would be willing on my own recc^nizance to urge the Senate
to turn down this legislation, just to say that because the idea does
not seem sound to me, I would want to buck the influential and the
thoughtful persons who are backing this legislation. It so happens
that there fire as many and [>erhaps more of the most thoughtful
and the best informed experte on this subject who eigree with the
position I have just outlined than there are who say we ought to go
ahead and pass this. I wish to quote briefly from a letter from Dr.
Bililton Freedman, the Nobel Prize-winning economist, who, on Sep-
tember 23, wrote to our colleague, Representative Clarence Long,
who is the chairman of the Subcommittee on Foreign Operations of
the Committee on Appropriations which has jurisdiction over this
matter.
By the way, Mr. Long told me yesterday that he is very much
opposed to t^e passage of this proposal. Here is what Dr. Friedman
wrote:
I write to expreM my opposition to the proposed increase in the IMF quota on
whkh your subcommittee is holding hearings,
"Hie IMP was founded to preside over the system of fixed exchange rates estab-
liihed by Bretton Woods. Its power to make loans was created to facilitate that func-
ticm, not to enable it to become a central bank, or a lender of last resort, or a savior
W banks that have made bad loans.
Dr. Friedman goes on at some length. 1 do not intend to quote
the letter in its entirety. I shall, in a minute, send it to the desk
and ask that it be printed in full. Let me read the conclusion Dr.
Friedman reeiches.
In consequence, I strongly oppose any increase in the IMF quota.
I send this letter to the desk and ask unanimous consent that it
be printed in the Record at this point.
Mr. Pbrcy. Mr. President, we have before us today a vitally im-
Grtant l^islative package. This package includes housing, Export-
iport Bank, International Monetary Fund, and multilateral de-
velopment bank legislation.
There is a common thread which holds the contents of this pack-
age together, American workers will be helped by each of the four
pieces of l^islation contained here. Our unemployment will be re-
duced. Our economic recoveiy will be furthered. In the judgment of
the President of the United States, particularly with respect to the
International Monetary Fund, by our taking positive action as he
has strongly recommended, we could help ward off what might
become a worldwide depression if we have a catastrophic ffiilure or
bankrupty by country after country if they cannot be at this time
of world recession eissisted and helped.
Hie chairman of the Betnking Committee has addressed in detail
the housii^ and Export-Import Bank portions of this legislation. I
yGoot^le
378
want to confine my remarks to the Internationa] Monetary Fund
and Multilateral Development Banks.
The Senate has already acted on the IMF authorization legisla-
tion. What Members have before them today represents the care-
fully worked out compromise between the House and Senate au-
thorization bills. I need not rehearse in detail for my colleagues the
reasons why action by Congress on this legislation is absolutely
necessary. Though we will provide only about 20 percent of the ad-
ditional resources for the IMF, other countries are awaiting our
lead before fulfilling their pledges.
At a time of continuing global recession we must not abstain
from fulfilling our role as the leader of the free world. Only the
Soviet Union gains from economic disruption in the Third World.
The IMF plays an important role in avoiding such disruption.
But we must be candid. Not just our leadership is at stake here;
our self interest is caught up as well in the fate of the IMF legisla-
tion. As I said, President Reagan has made this clear. Restoring
the health of the U.S. economy depends heavily on reviving U.S.
exports. But our exports require foreign markets and those mar-
kets are being adversely affected by the global recession.
To cite only one example, according to the U.S. Department of
Treasury.
U.S. exports to Brazil fell steeply in the first half of 1983 following moderate de-
clinea in 1981 and 1982. The U.S. exported only $1.22 billion January-June, 1983, 30
percent lower than the level of $1.76 billion for the first half of 1982.
The IMF is absolutely critical to the economic recovery of Brazil
and other major markets for U.S. exports.
This is not an abstract issue for this Senator. Last year Illinois
companies exported over $360 million in goods and services, repre-
senting over 10,000 agricultural and manufacturing jobs in our
State, to 9 countries on the IMF troubled country list.
Illinois needs the IMF and the IMF in turn needs access to in-
creased resources.
That could be said by many, many Senators. Every Senator that
is from a State that depends upon export for jobs would be adverse-
ly affected if we do not act wisely and properly in accordance with
the request of the President in this regard.
Let me now turn to the multilateral development bank legisla-
tion.
The legislation before us provides for replenishments for the Af-
rican Development Fund, the Inter-American Development Bank,
and the Asian Development Bank.
The Senate Foreign Relations Committee received testimony Ifist
winter from Secretary of the Treasury Donald Regan that —
„ „ . . irtlcipatK
represents a significant part of both present and projected U.S, foi
The multilateral banks are the largest official source of external
capital for the lesser developed countries (LDC's). Furthermore,
multilateral development bank lending is an important catalyst in
generating other resources. The U.S. tax dollar, in short, goes far.
The statistics speak for themselves. For every one dollar the U.S.
contributes to the Multilateral Development Banks other members
yGoot^le
379
contribute $3. These banks in turn borrow on the capital markets
generating additional lendable resources. For example, for every
dollar the United States contributes to the World Bank, the Bank
lends over $60.
Let me conclude by saying I am sure that some of my colleagues
may have problems with certain elements of this package. I do not
approve of every single feature of what is, after all, a substantial
document. I do believe on balance that the package serves our na-
tional interests. I urge its passage.
I wish to thank my distinguished colleague very much, indeed,
for his thoughtfulness in yielding at this time, and to express my
tremendous respect for his tenacity, his determination, and the
perspective from which he causes the Senate to look at a great
many of these issues. So many times in the past we sort of passed
over lightly and let them go without very, very close examination.
He is forcing the Senate to take a good hard look at these matters,
in addition to the growing concern I have along with my distin-
guished colleague about the national debt and what we are going to
do about it. It has given us all cause for thoughtful concern — how
we face up to this issue. The question, "What are we going to do
about it?" that he puts to us I feel very deeply is put to me as a
Senator from the State of Illinois, and I intend to do something
about it. I will try in every way I possibly can to further the objec-
tive of our distinguished and respected colleague.
Mr, Armstrong. Mr. President, I want to acknowledge my tre-
mendous appreciation to my friend from Illinois for his generous,
indeed, his flattering comments about my participation, which are
far more generous than I deserve.
I am especially conscious of the task I am undertaking here
today because we are on opposite sides, and his statement and his
interest in passing this IMF bill give me pause because I know he
is an authority on this matter and has provided admirable leader-
ship. It pains me to be at cross purposes with him in this matter. I
am sorry that fate has cast us in this role and I truly hope it will
not often be so.
Mr. Percy. If we differ on some issues, let me just give a report
at this time on one issue where we stood side by side, the fact that
we have $147 billion in debts owed the U.S. Government, $43 bil-
lion in deficits in default and we ought to do something about it.
We worked together on legislation that gave the power to the Fed-
eral Government and this administration, when it was refused by
the last administration and the last Congress, Senate and House, to
even consider it. We grasped onto it. It is now law. And without
raising taxes, $4 billion of new money will come to the Federal
Treasury reducing our deflcit by that amount simply by giving five
additional powers to the Federal Government to go out and collect
our debts.
I thank my distinguished colleague for the support he gave to me
in the l^pslation I offered in that regard.
Mr. Armstrong. Mr. President, on the contrary. We are all in-
debted to the Senator from Illinois for his leadership on that, and I
just hope he has some more ideas like that because we sure need to
save some money.
yGoot^le
Mr. RiEGLE. Will the Senator yield so that I might address some-
thing to the Senator from Illinois before he leaves the floor, related
to what he just said?
Mr. Armstong. Of course, I will be happy to yield.
Mr. RiEGLE. I want to address one question to the Senator from
Illinois. We are proposing here to spend billions of dollars overseas
through a variety of devices. Like the Senator, I think it may be
necessary that we do it, although I do not like it, and I am troubled
about it. But by the same token, we are doing very little for people
in this country. I may be offering later an amendment to provide
health insurance for unemployed workers in the Senator's State, in
mine, and in the rest of the 50 States. I am wondering, in light of
the fact that I listened to his appeal on the need to spend literally
tens of billions of dollars abroad, if we are going to be able to use
the same logic to defend spending a tiny fraction of that for health
insurance for unemployed workers in Illinois and in Michigan and
other States, and if the Senator will be prepared to support such an
amendment as part of the package of responses to crises at home
as well Eis Eibroad.
Mr. Percy. I am conversant with this legislation and sympathetic
with his compassion for the unemployed. Illinois is only exceeded
by a few States — West Virginia, Michigan — in unemployment level.
We have a very high unemployment level. But what would be the
cost of this new entitlement program in the first year, the second
year, the third year, and the fourth year?
Mr. RiEGLE. Yes. 1 can tell the Senator that I can lay that out in
detail. But first the Senator should know that we have worked out
on a bipartisan basis an agreed-upon packeige where there will be
adjustments in the tax laws to provide the funding, the full cost of
this program, so that this program will not have an effect upon the
deficit.
That has been worked out with Senator Dole in the Finance
Committee and other Members on the Senator's side of the aisle.
Senator Quayle, Senator Heinz and others, so that we have an au-
thentic bipartisan packf^e which is self-financing from a budget
point of view.
So I would hope this would be something that the Senator could
support.
I wish to say, frankly, we are at a point here where I do not
think we can have appeals from the Foreign Relations Committee
to be sending tens of billions of dollars out of this country and at
the same time an unwillingness to respond to urgent human prob-
lems at home. I think it is hypocrisy of the worst form, and I would
hope that the Senator would feel that he could suppjort an initia-
tive like that as long as we are responding here to emergency prob-
lems. I might further say that my amendment could not create an
entitlement.
Mr. Percy. Mr. President, I shall briefly res[>ond. First, the Sena-
tor could not possibly vote for a bill that I do not know the cost of,
and I am glad to hear we will get the details later. I could not find
out what the costs of this new entitlement program was the last
time we were called upon to vote.
There is the practiced problem we face, and I turn to the distin-
guished manager of the bill and chairman of the Banking Commit-
yGoot^le
381
tee for a reply on this: What we are faced with is the package here.
The package has been agreed to by the House of Representatives.
We either buy this package now and take it and do it, or we begin
throwing people out of work in Illinois, Michigan, and all over Uie
country if we fail to come through with this package.
From a practical standpoint, I have all kinds of amendments 1
would wish to add on to this bill and get through before we ad-
journ. But I know if I add them on there, 1 am going to sink the
lull, the package goes down, and we are going to end up, as the
saying goes so frequently, shooting ourselves in the foot, or doing
something like that, because we have not adopted the practical ap-
proach, which is about the only appro2ich left to us.
Mr. Armstrong. Mr. President, will the Senator yield?
Mr. RiECLE. Mr. President, let me say, if 1 may
Mr. Garn. Could I respond?
Mr. RiEGLE. I wish to answer the speciflc questions the Senator
raised.
The Dole figure is $900 million for the first year and $900 million
for the second year, and it is only a 2-year program. It ends at that
point. It is not eui entitlement, and the funding is provided for and
it is done on a bipartisan basis.
Let me go further to say this: Yes, it is a package but that does
not prevent me or anyone else from asking for individual votes on
items of this package. I think if we are not going to get a response
on other issues, we may just find ourselves voting on pieces of this
package and one piece perhaps we should vote on is the IMF and
let us find out how much support we have.
This, the health insurance for the unemployed bill, has passed
the House of Representatives. I have heard people in this Chamber
on both sides of the aisle from the industrial States come in here
and cry crocodile tears about the unemployment problem and yet
do nothing to respond to it.
So I would just say to the Senator I would urge him and others
similarly situated to think about it because if we are not going to
be able to respond to urgent needs here at home, we just may And
ourselves having to vote on this issue not as a package but on its
separate parts. We could then find out how much support there is
for IMP, if all we are going to do is respond to foreign problems
and not respond to problems right in our own back yard.
Mr. Armstrong. Mr. President, will the Senator yield?
Mr. Gam addressed the Chair.
The Presiding Officer. The Senator from Utah is rect^nized.
Mr, RiEGLE. I thank the Senator for yielding.
Mr, Garn. Mr. President, I respond to the Senator from Illinois,
and I will not repeat the great length of talk at the beginning of
this bill about how the package was arrived at.
But the Senator from Illinois is correct. I am sorry I do not like
closed things of this type, as I said earlier, but I will say to my dis-
tinguished coUeeigue from Michigan that there are three parties to
this agreement. I will be very blunt about it. There is no doubt that
U^you were successful in passing thit. I would expect the House of
Representatives would probably accept it. It would not be a killer
as far as they are concerned. It would be with the administration.
yGoot^le
So any time we look at any of the parts of this, there is the
Senate, the House of Representatives, and the administration.
Particularly dangerous is if we split this, if we separate it, any of
the major parts are taken out and IMF is the most vulnerable, I
am very well aware of that. If IMF is on a separate vote and de-
feated, there is no packeige. Housing fails, Eximbank fails, the
whole package fails. If housing comes out separately, you lose IMF.
They are all interrelated.
So, I am just trying to explain that there are three parties that
agreed to this process. You irritate any one of them and it pulls a
piece of it out.
I do not like to be in the role. I will just repeat so everyone un-
derstands. There will be some amendments that will be ofTered
today that I will personally agree with and some I will disagree
with.
I wish to reiterate f^ain that Senator Proxmire and I determined
so we are not picking and choosing and entering our own substan-
tive opinions on these, that whatever the amendments are without
prejudice to the substance we will move to table those amendments
in attempting to keep this whole package. I want a housing bill.
When we talk about we should recognize that in this package, al-
though there is money for IMF, there is more than double the
amount of money in this package for domestic programs. There is
the housing and the other programs compared. It is about $16 bil-
lion to about $8.6 billion. It is in the domestic area.
But I again am speaking procedurally. I am certainly not going
to debate the Senator from Michigan on the merits or demerits.
There is a very serious problem in his State particularly. I am
well aware of that. And I just want him to know that I am speak-
ing procedurally in my attempt to keep this together and not talk-
ing for or against individual amendments on their merits.
Mr. RiEGLE. Mr. President, if the Senator will yield just briefly
for one additional comment, and I appreciate him doing so, as a
matter of record in the negotiations we have had on the health in-
surance for the unemployed with the administration, we have been
given assurance by Stockman that if the funding is provided for in
this, if the funding source is provided to pay for the health insur-
ance for the unemployed, and it is within the scaled-down scope
that we have agreed to on a bipartisan basis, that is acceptable to
the administration. I want that known because I do not want the
Senator from Utah or anyone else to be under a misapprehension
about that. We do not have a veto threat hanging over this matter
because we are way past that point on this issue.
So there may be other reasons to oppose it, but that is not one of
them.
Mr. Garn. Mr. President, let me say with all of my n^otiations I
have gone through with we did not negotiate health insurance for
the unemployed. So I cannot speak about those negotiations. I am
attempting procedurally to keep a package together.
I apolc^ze to the Senator from Colorado. He continues to get in-
terrupted, but with his usual kindness and courtesy he lets all of
us speak. I yield the Hoor.
Mr. RiEGLE. He has been very gracious, and I thank the Senator.
yGoot^le
Mr. Abustrong. Mr. President, there is a general consensus in
the diamber that interruptions have been the better part of my
speech thus far. So I am glad to yield.
The Presiding Officer. The Senator from Colorado is recog-
nized.
Mr. Armstrong. I appreciate that, Mr. President.
I have been fisked to yield to the Senator from Iowa and I will do
that, and then I think rather than yielding further if it would be
agreeable I would like to complete my statement and offer my
amendment. I will not be veiy long, but in order to accommodate
the schedule of the Senator from Iowa, I am pleased to yield to
him.
Mr. Grassley. I thank the Senator from Colorado for yielding.
The Presiding Officer. The Senator from Iowa is recognized^
Mr. Grassley. Mr. President, I wish to say to my good friend, the
Senator from Michigan, that as I heard him speak for the last 10
minutes in various exchanges, it seems as though he is voicing
those concerns of my constituents. I am not sure Qiat my constitu-
ents would agree that health insurance for the unemployed is as
important a new program to establish as he feels it is. But every-
where I go in my State, every letter I read, there is no constituency
for giving away $8.4 billion to the IMF. In every instance where
someone is moaning about not having enough money for this or
that domestic program, there is generally the proposition brought
up: "How can you Senators or you people in Washington be appro-
priating money for overseas ventures, and to foreign lands without
taking care of our needs at home?" In this case, we are asked to
increase funds for the IMF, which my constituents probably consid-
er even a more irresponsible donation of funds tha^ foreign aid in
general.
So I hope that all of my colleagues who heard what Senator
Ri^le had to say understand that he reflects views expressed to
me at the grassroots of every constituency in this country.
I rise once ^ain in strong opposition to the passage of this IMF
quota increase. As I have spoken at great length during previous
debates on this subject, I am not going to belabor the debate at this
point.
l^e quota increase, as the Senator just indicated, has picked up
some additional baggage of late, and that is the housing authoriza-
tion bill. I And the procedure by which we are going forth here as
troublesome as the substance of the legislation we are considering.
If Congress does not feel the IMF quota increase can pass on its
own merits, which the proponents of the other bo<h' must believe,
surely that speaks for the desirability of the bill. While I, too, am
troubled by the Congress inability to adopt the housing authoriza-
tion, it is most inappropriate to consider these measures as a pack-
age deal. I suggest to my colleagues that each bill should be consid-
ered on its merits and not as a result of some political threat.
It is my understanding progress has been made in improving the
provisions of the housing authorization bill. And I want to applaud
those efforts. However, I am greatly disturbed by the lack of debate
on the housing measure. Instead, it is being used as the vehicle to
provide a fast track for passage of the IMF quota increase. I cannot
vote for this ill<conceiv^ package tied up with a ribbon of red ink.
yGoot^le
It is paradoxical to be considering a quota increase for the Inter-
national Monetary Fund at the same time we are considering ef-
forts to reduce the deficit by increased taxes and by spending re-
straints. We would be authorizing additional spending to aid banks
and foreign nations, and asking the American taxpayers to make
greater sacrifices to do so.
The American public is not fooled by claims that the quota in-
crease wilt cost nothing. The Federal Government has no money in
its coffers, we all know. And that should be self-evident by the fact
the Senate just increased the debt ceiling, and will likely adopt the
conference report shortly.
What a record we will be taking back to the American people. In
less than 24 hours we will have increased both the debt ceiling and
the U.S. contributions to the International Monetary Fund. That is
not a messf^ that I will carry back to lowans with pride. I would
only hope more of my colleagues would reflect the views of their
constituents and join me in opposing this quota increase.
I yield back now to the Senator from Colorado and thank him
venf much for his help.
Tiie Presiding OpncER. The Senator from Colorado is recog-
nized.
Mr. Armstrong. Mr. President, I wish that every Senator could
hear the statement just made by the Senator from Iowa.
Last night, in this Chamber, we had extensive debate and a fair
amount of hand wringing over the enormous deficits which are
facing this country. Speaker after speaker talked, and properly so,
about their concern for the awesome size of the deficits projected
for this country, about what it portends in terms of rising inflation
if we let such deficits occur, rising interest rates, rising unemploy-
ment, economic stagnation, snuffing out of the recovery, how we
are holding the economic future hostage to these deficits and how
intolerable this is. And today we are right back considering not one
but two enormous spending measures wrapped together as an
amendment to an amendment in disagreement to a supplemental
appropriation bill.
Mr. President, I would like to pick up where I left off a few min-
utes ago and complete my statement and then offer am amendment
rather than yield further, because I have really held the floor
longer than I intended and longer than I really wished to.
Senators may recall that a few moments ago I was pointing out
that, while I nave certain concerns about this IMF legislation, I
would be reluctant to oppose at length the adoption of this bill if it
were only my own opinion. I have already put in the Record the
observation of Dr. Milton Friedman, who is opposed to this bill, and
an article from Forbes magazine which quotes, among others, Paul
Craig Roberts and George Champion, the former chairman of the
Chase Manhattan Bank.
Mr. Armstrong. Mr. President, these concerns about whether or
not additional funding for IMF is the correct answer, about wheth-
er or not we are imposing the wrong kind of conditions on borrow-
ing countries, of whether or not banks in fact ought to follow the
standard banking practice of writing down these loans before it is
too late, before we dig them in deeper, cause me to have the grav-
est concern about this IMF legislation. They cause me to think it is
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a bad deal. Somebody described it as a turkey that would not fly. I
think that is pretty close to the mark. This is a packeige that has
been brought together by expenditious circumstances and it is
really a package that none of us have much taste for.
Even so, Mr. President, I recognize that there is an argument
and a plausible, although not to my mind wholly convincing, argu-
ment that at least as a stopgap measure we ought to support an
increase in the quota for IMF. So despite everything I have said,
despite all the reservations I have, there are some circumstfuices
under which I would personally support such a quota increase.
AMENDMENT NO. 2634
Mr. Armstrong. My support for it could be conditioned on the
adoption of two amendments, the first of which I send to the desk
and ask for its immediate consideration.
The Presiding Officer. The clerk will report.
The bill clerk read as follows:
n amendment numbered
Mr. ARMErniONG. Mr. President, I ask unanimous consent that
reading of the amendment be dispensed with.
The Presiding Officer (Mr. Cochran). Without objection, it is so
ordered.
The amendment is as follows:
Insert at an appropriate place the following:
(a) The Congress finds and declares that—
(1) the international banking system is currently threatened by a series of nation-
al financial crises;
(2) the Congress is desirous of finding a solution to the current monetary crisis
which will result in a stable monetary system and preservation of a liberal interna-
ls) this siriution must be found without placing inordinate pressures on United
StatM credit markets;
(4) the breakdown in the Bretton Woods monetary system has contributed directly
to these problems;
(5) the economic policies prescribed by the International Monetary Fund can be
harmful to economic growth; and
(6) the Intemation^ Monetary Fund currently holds approximately $40 billion of
uncommitted assets in the form of gold bullion and has not utilized them fully to
date.
(b) It is the sense of the Senate that—
(1) restoration of a stable monetary system is necessary to assure economic growth
■od to maintain a liberal international economic system;
(2) as a first step toward this restoration the Secretary of the Treasury should call
fin' an international conference on the monetary system to investigate its systemic
problems;
(3) in coping with the current financial crisis the International Monetary Fund
ahould make &ller use of its current assets, including its gold holdings;
(4) the International Monetary Fund should revise the conditions placed on its
loans 90 as to encourage economic growth;
(5) any additional financial resources made available during the current crisis
dwuld be made available on a temporary basis, preferably through bilateral ar-
rangements.
Mr. Armstrong. Mr. President, I will attempt to explain the
amendment.
yGoot^le
This amendment is sense^f-the-Senate language that expresses a
proposed solution to some of the concerns which have been raised
by the experts I have quoted.
Mr. President, I am not sure how to explain what has transpired,
other than to explain what has transpired.
The manner of the bill has suggested a very cedent reason why
this wonderful amendment, which I will take a moment to explain,
could be more aptly, more fittingly, and perhaps more successfully
considered at a more convenient time. So, to avoid confusion, I will
explain it and then ask that it be set aside so that other Senators
may offer amendments or proceed as they wish.
The concerns which economists like Dr. Friedman, Mr. Roberts,
and the National Taxpayers Union have expressed are addressed in
this resolution. It sets forth sense-of-the-Senate language which at-
tempts to cope with some of these concerns. It makes the following
findings:
First, it is the sense of the Senate that restoration of a stable
monetary system is necessary to assure economic growth and to
maintain a liberal international economic system.
This does not call for fixed exchange rates, although there are
many who think that would be a good idea, but it does say that the
system of wildly oscillating exchange rates, where currencies can
change value enormously overnight — such as in Mexico recently —
creates international chaos. It is impossible to do business from one
day to the next if you close down on Friday when you do not know
what the money will be worth on Monday.
This says we should look for a way to stabilize those relation-
ships.
Second, as a first step toward this restoration the Secretary of
the Treasury should ceiII for an international conference on the
monetary system to investigate its systemic problems
In fact, a latter-day Bretton Woods conference.
The format of that, it seems to me, is a detail we need not con-
cern ourselves with. But the idea of getting the nations of the
world together to look at this problem and to consider the systemic
problems seems to me to be a very timely one.
Third, in coping with the current Hnancial crisis the Internation-
al Monetary Fund should make fuller use of its current assets, in-
cluding its gold holdings.
IMF has a substantial amount of gold on hand which is carried
on its books at $4 billion, but that $4 billion figure, or whatever it
is — that is an approximation, but it is close enough — is based upon
gold at $35 an ounce. So if we took the present market value of the
gold, it would be worth about 10 times that amount and could be
used to collateralize loans.
I stress that I do not favor the sale of the gold. It is an option
suggested by Mr. Davidson, of the National Taxpayers Union. I do
think it makes sense to collaterfilize loana to reduce or eliminate
the need for increases in the IMF quota.
Instead, the IMF should revise conditions placed upon its loans
in order to stimulate economic growth. One of the great theories of
IMF— and I imi not unsympathetic to it, although I am skeptical
about it — is that as a sort of international agency, IMF can impose
upon a borrower country the kind of economic conditions that
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387
would be impossible for any political agency within a country to
impoee upon its own people.
bi other words, when things get bad enough, a country goes to
the IMF and gets the money, but with the money comes conditions.
Sometimes I think the United States should apply for an IMF
loan BO that IMF would say, "All right, you have to balance your
budget in 3 years."
In too many cases, the kinds of conditions imposed by IMF have
been antigrowth conditions, the kind of things that resulted in in-
creases in taxes on dividends, levies on capital, instead of focusing
on pro-growth, pro-capital formation, the kinds of economic condi-
tions tl^t would emphasize methods of restraint on consumption,
in a number of cases — not in every case — IMF has apparently used
its leverage in an exactly backward fashion.
So the fourth item in the language I propose simply says that the
Intemationed Monetary Fund should revise the conditions placed
OD its loans so as to encourage economic growth.
Mr. President, that is the proposition. For the reason I have
stated previously, I ask unanimous consent that this amendment
be laid aside so that others may propose their amendments, and I
will be glad to come back to it at a time convenient to the mann-
ers.
I also will be glad to proceed to other amendments of mine on
the housii^ portion, but I think it would be more orderly to go for-
ward with other amendments by Senators in connection with the
IMF portion.
Mr. Garn. Mr. President, I see no one ready to ofTer an amend-
ment at this time. We have no sequence for amendments. Inas-
much as the Senator has the floor, I think he should proceed.
Mr. Proxmire. Mr. President, I think Senator Riegle has an
amendment with respect to the IMF.
I should like to ask the Senator from Colorado a couple of ques-
tions.
First, I congratulate the Senator from Colorado. He is always one
of the most lucid and intelligent Members of this body, one of the
most persuasive. I am delighted that he. recognizes that the IMF is
not a bailout of the banks. He said it is not a bailout; it is a bail-in.
He is right. Few people realize that.
As the Senator may have pointed out — I did not hear all his re-
marks— what the IMF does is to require that if the IMF provides
fimds, the banks provide funds probably in a 2 or 3-to-l ratio; so
that instead of just getting leverage where we put in $8.5 billion
and other countries put in $30 billion or $32 billion, a 4-to-l ratio,
we get a much bigger ratio, because the banks will match it, so we
get a IO-to-1 ratio, which ia an argument for helping countries
nUch are our trading partners.
The argument that the Senator from Colorado pursued is that
this would make matters worse, because it would endanger our
banks as well as banks in the United Kingdom and Italy and
Japan which are all part of the international lending community.
I should like to respond to the argument that the Senator from
Colorado makes this might be catastrophic because making more
loans will only aggravate the situation but that we should require
writing down loans, that is what I understand the Senator from
yGoot^le
Colorado proposes. In saying that we simply provide more funds
you are overlooking the record of the IMF.
The IMF is insistent, when it makes these loans, oa austerity, on
domestic policies of fiscal responsibility by the borrowing opti<Mi
and it has worked.
If this country provides a loan to Mexico or to Brazil and we try
to tell them, as the United States, how they should conduct their
fiscal policy, it is resented. Politically, it is impossible in their
country to go along. But if an international organization, the IMF,
does this, they can persuade the other country to go along. It is not
being imposed by a superpower or any other sovereign country.
The important element here is that the IMF will require a
change in the operations of the countries to which they lend the
money, and that change means that the loans will become sounder.
I do not say that on the basis of theory. I say it on the basis of
experience, a fact. I challenge the distinguished Senator from Colo-
rado or any other Senator to point to a case in which the IMF has
been improvident and has loaned money and as a result has not
been able to get repayment.
It is astounding that they have made these loans over a period of
years and they have been successful. They have been repaid; th^
have not lost.
That is to our benefit, particularly since the prime beneficiaries
of IMF lending over the next several years will be our trading part-
ners. Our jobs are at stake. They are lending money to Brazil and
other countries, bo that in North Dakota, Wisconsin, Utah, and
other States, the jobs that are dependent on exports will benefit
from the IMF activity, and it is the most efficient way we can do
the job.
What is the Senator's answer to that?
Mr. Armstrong. Mr. President, I would respond in severfd ways.
First of all, I would respond any time I find myself on the opposite
side of issues like this with the Senator from Wisconsin. I figure
there is a 60 to 40 chance that I am dead wrong, because he knows
a lot more about these issues than I do. My knowledge about this is
acquired recently, and I base most of my opinions and conclusions
on those who are far more expert than I, Dr. Friedman, Alan
Meltzer, Bill Simon, and so on and so on. My opimons, however,
about the matter he raises are as follows:
First, whether the loans are improvident I think is not yet
known. My judgment, as a former director of a couple of banks, is
that no bank that I was a director of would ever have made loans
to any private borrower on such terms and conditions and with
such credit.
What I think is the implicit understanding is that the U.S. Gov-
ernment just is not going to let these loans go bad, that they are so
big and the banks involved are so important that we are going to
sustain them at any cost.
I do not think we are bo deep in that if some of these loans, in
fact, are written off, that is not what I suggest but I suggest that
they be handled in the normal course, that they be written down,
those performing. I do not suggest that they be written off. I do not
think they will all go bad. In fact, I do not think the situation is so
yGoot^le
desperate that the nonnat market forces ceinnot tfike care of the
sitiution. I think Champion is right about that.
In recent years, we have branched out into a form of lending
which was simply not contemplated as recently as 10 years ago. We
are in just a lot different situation. So as we have extended more
credit, they have used a part of the newly extended credit to meet
the debt service on the old loan. In that sense, it is sort of a All the
leaking bucket kind of operation, and I do not know whether they
will turn out to be good.
Mr. Proxmire. Would the Senator from Colorado differ with the
conclusions? After all, the International Monetary Fund has a long
record of being verv careful, a long record, as I say, of success, a
long record in which they have been paid back. If the Senator can
recite examples of how they have departed in the past, I would like
to hear about them. The IMF insisted on policies on the part of
BrazU that were hard to take, but that kind of policy is working.
Mr. Armstrong. The Senator is correct that in many cases, pos-
sibly in every cetse, if that is what he is saying, the IMF has been
tough. In a number of cases, and I will cite Mexico and India as
two speciflc cases, the specific conditions that resulted from IMF
loans were unwise, in my opinion, in that they contained provisions
which levied on capital or which discouraged investment or which
taxed dividends unduly and the kind of economic activity which is
very necessary in countries like India and Mexico to promote
growth, which is the ultimate hope of these countries.
I do not dispute his notion that IMF officials have stepped up to
the plate and shown courage, and so on. It is a question of whether
they have acted wisely in every case. It is my conclusion that they
have not. But I cannot dispute his vouchering.
Mr. Proxmire. It just seems to me that it is hard to argue in a
vacuum, to argue theoretically. What you have to do is to make
your judgment baaed on results. If the Senator is arguing about
whether or not they should have been tougher or less tough with
respect to India, Brazil, or Mexico, it seems to me you have to look
at the results they achieved, and the results they achieved in every
case, so far as we know, have been successful. As I say, the big per-
suasion, as far as I am concerned, is that it is so much better than
having this country, with all of our resources, provide these funds
iiistee^ of having other countries provide 80 percent, 75 or 80 per-
cent, of the money, and then having banks throughout the world
match that and exceed that by a 2-, 3-, or a 4-to-l ratio.
This, it seems to me, is the most sensible kind of assistance.
I remember Senator Fulbright when he was in this body used to
argue that multilateral loans and activities of this kind are by far
the most economical, the best for our tax;>ayers, and the best also
because the relations between the lender and the borrower are so
much easier to maintain, so much easier to pick on the part of the
borrower. He does not feel he is knuckling under to another sover-
eign country.
1 thank the Senator.
Mr. Armstrong. Mr. President, that just goes to show there are
two sides to every issue. The points made by the Senator from Wis-
consin are plausible. My purpose is really not to criticize anybody.
I happen to think that if I were a director of some of the bfinks
yGoot^le
390
involved, I would raise Cain. I am not and I do not think the
Senate is functioning as some kind of a super board of directors for
a bunch of banks. I am not here to criticize anybody. I am here to
say I think it is a mistake to go ahead and increase the IMF quota
by $7 billion or $8 billion, unless we adopt a couple of amendments,
one of which is already on the table, another of which will be of-
fered by the Senator from New Hampshire (Mr. Humphrey), of
which I will be a cosponsor.
It is a matter about which reasonable men may disagree. The
evidence to me is pretty persuasive, the expert testimony is pretty
persuasive, that we are making a mistake.
At the suggestion of the manager, I am going to shift gears and
talk about the housing portion of this.
The Presiding Officer. There is pending a unanimous consent
request that this amendment be set aside. Is there objection to the
request?
Mr. Armstrong. It is the intention to set it aside temporarily,
rather than prejudice it, so that it will recur as the pending busi-
ness.
The Presiding Officer. Without objection, it is so ordered.
Mr. Armstrong. Mr. President, let us shift gears and think
about housing. Earlier this year, I opposed the Senate action on the
Senate housing authorization bill reported by the Banking Commitr
tee. I did so because I believed it was flawed legislation. In fact, I
probably said something to the effect that I thought it was about
the worst piece of legislation I had ever seen. It is not the biggest
spending, biggest budget-busting bill I have ever seen, fdthough it
is certainly one of the biggest spending, biggest budget-busting
items that ever came down the pike.
It was not the dollar amount I objected to so much. What I ob-
jected to was that it was an absolutely wrongheaded piece of l^is-
lation, in my opinion, for the times we live in. It was clear, even
several months ago, that this country was right on the edge of the
cliff on deficits. Senator after Senator was combing through the
budget to find places to save $100 million here, $100 milHon there,
to find places where worthwhile, existing programs could be con-
strained in their growth, could be curtailed, possibly in some cases
suspended, and in a few instances abolished, in a desire to wring a
few billion out of the budget and lower the projected deficits.
For the Senate Banking Committee to send to the floor and for
the Senate to consider and pass an authorization bill which author-
ized the spending of billions of dollars and create a number of
brand new housing subsidy programs just seemed to me to be a
masterpiece of bad timing as well as bad policy because the actual
programs for the most part that were recommended I did not think
were well suited for their intended purpose, even if we could have
afforded them, which we could not.
Well, I objected to the bill, and partly in consideration of the ob-
jections which I raised the Senate did not proceed to the consider-
ation of this legislation. We talked about it for a couple of hours,
and then by prearrangement with the managers of the bill the 1^-
islation weis taken off the floor and it was permitted to simmer for
a while.
yGoot^le
Well, it has been simmering for a few months. During that
period, managers of this legislation have consulted with their coun-
terparts in the House and with 0MB, and I am pleased to report
that the package which comes before us is substantially — let me
say enormously — improved over the bill that was on the floor a few
months ago.
Since I took quite a while, I took a good deal of the Senate's time
a few months £^0 to explain my objections, I want to acknowledge
the improvements.
Both the House and Senate bills, that is the bill we almost con-
sidered here and the bill taken up in the House, proposed costly
revisions to current programs. Among those provisions which have
been deleted or modified in the amendment now pending are the
following:
Targeting assistance to the needy. The pending bill continues,
with one exception, the 1981 reforms as directed on the housing as-
sistance on a priority basis to very low-income families, rather
than to more affluent families. The pending bill also expfuids the
1981 targeting provisions to rural housing programs for which as-
sistance Weis not previously targeted.
This is very significant and I acknowledged the work done by
0MB and the managers of the bill in this respect. At a time when
we have limited resources, clearly we ought to direct limited re-
sources to those most in need, rather than just splashing the
money around across all income brackets.
Tenant contributions to rent. Although providing income exclu-
sions somewhat higher than now provided in current regulations,
the pending bill retains the 1981 reform that increased the tenant
contribution for rent from 25 to 30 percent of income. This in-
creased contribution is fair, particularly since those not receiving
the benefit of subsidized housing often pay as much as 40 percent
(rf* their income for housing expenses.
Next, I am very pleased to note that the pending bill deletes two
provisions contained in the earlier Senate draft of the bill which
would have extended the time which illegal aliens could reside in
federally subsidized housing.
I do not know how many Senators remember this, but some of us
were a little upset when we discovered that Federal subsidy was
being extended to house people whose very presence in this country
constituted a violation of the law. This came to my attention as a
result of a newspaper headline. So we called up HUD and said,
"What in the world are you guys thinking about, subsidizing illegal
aliens?"
They said, "We don't have the legal authority to do anything
else."
Well, we passed an amendment giving them that legal authority.
You can imagine how astounded I was when I found out that one
of the drafts of legislation on housing was going to in some way
alleviate, moderate, or attenuate the decision we made earlier to
stop subsidies for housing. I am glad that has been taken out of the
stop s
[ note some improvement in the Davis-Bacon provisions in this
bilL I think that is significant, although the change is not large.
Senators know I personally believe we ought to repeal the Davis-
yGoot^le
Bacon law as it relates to federally subsidized housing. It is costing
us billions and billions of dollars over time to continue this unnec-
essary provision of Federal law, which results in higher construc-
tion costs. You can look at it one of two ways: You can either say
as a result of Davis-Bacon labor provisions, taxpayers have to pay
more for what they get; or, viewed in another perspective, low-
income persons get less housing from the available money. In
either case, it is a genuine ripoff. It has been found to be so by, I
think, just about everybody who has looked at it, including the
General Accounting OfBce, which has reams of cost data about just
how bad the situation is. So I think we ought to repeal the Davis-
Bacon provisions.
This Dill does not do it, Mr. President, though I notice with great
pleasure and satisfaction that, although full repeal is warranted,
we are making a modest reform in that we exempt from the provi-
sons of Davis-Bacon projects of less than 12 units, from having to
be constructed by firms adhering to the Davis-Bacon wage scale. In
former years, the cutoff was eight units. That is a small, maybe a
miniscule movement but, to my knowledge, it is the first movement
on Davis-Bacon in this direction. I tip my hat to the managers of
the bill for getting that problem solved.
Mr, President, the pending bill deletes three provisions which
would have expanded, even mandated, the use of tax-exempt fi-
nancing for HUD contracted projects. Both 0MB and GAO have
concluded that tax-exempt fmancing is among the most costly sub-
sidies now provided. That is good to have out of there.
Provision for the setting of fair market value was previously con-
tained in earlier House and Senate legislation. Hereafter, fair
market values will be set by regulation, not by law. Both the House
and Senate legislation contained a number of new programs which,
in my view, were not well advised.
All of these programs have been, in the measure that comes
before us, either reduced in scope or significantly improved. Just to
tick them off: The pending bill does not contain the so-called mort-
gage foreclose relief assistance. That is an idea which I thought
was flawed in concept, certainly not timely. I am glad it is not in
here.
Public Housing Accreditation Commission. Earlier drafts of this
legislation contained a proposal to set up a new Federal commis-
sion on which Federal officials would be given sweeping authority
to regulate, inspect, subpena, and accredit public housing authori-
ties, which are subdivisions of State and local governments. Not a
good idea, very much opposed by the officials who are affected by
it.
I am glad to note the pending bill deletes an earlier Senate pro-
posal to establish a new fund not requested by the administration
to finance equipment and property replacement within public hous-
ing authorities.
Mr. President, I am glad to note also a number of other changes.
I think I have made the jmint I wanted to make, which is that this
is a greatly improved piece of legislation over what we had earlier
considered. So I think that whatever happens, whether this legisla-
tion passes today — as I hope it will not — but if it does pass, we owe
a debt of gratitude to the distinguished Senator from Utah, the
yGoot^le
Soiator from Wiaconsin, and the staff of the Bank Committee, who
have literally worked nights and days over a period of many, many
weeks to hammer out something which makes a lot more sense
than what we had before us a few months ago. I salute them for it.
Mr. President, if there are some improvements, then why is it
that I am calling for the defeat of this bill? Because there are still
a lot of provisions in here which, to my way of thinking, are com-
pletely haywire; things that only in the context of a gigantic end-
of-the-session package would not stand careful examination.
AMENDMENT NO. 2635
n the rental
Mr. Armstrong. Mr. President, I should like now to simply send
to the desk an amendment, the first in a series of three or four
than I shall offer, which, if adopted, would greatly improve this al-
ready improved legislation.
The Pmsiding Officer. The clerk will state the amendment.
The assistant legislative clerk read as follows:
The Senator from Colorado (Mr. Armstrong) proposes an amendment numbered
2635.
Tide m. On page 6, line 24 after "familiea" strike through line 34.
Mr. Armstrong. Mr. President, the pending legislation permits
up to 50 percent, at the discretion of the Secretary of HUD, of the
assistance provided under the rental rehabilitation grant program
to be given to persons without consideration of their income. My
proposed amendment requires that all assistance from the rental
rehabilitation program should go to very low-income families. This
is not a very drastic idea, not even a very creative idea. It just says
if you are short of money, whatever amount of money you are
going to spend ought to go to the lowest income ;>eople. That is con-
sistent with policy previously adopted by the Senate. Let me sug-
gest four reasons why this amendment ought to be adopted.
First. Federal assistance programs are generally not targeted to
help the truly needy. Less than 9 percent of all Federal assistance
ia means tested. At a time of budget stringency, it does not make
sense to do it that way.
Second. The proposed rental rehabilitation program is no excep-
tion. No income limit is imposed on those who receive the grants to
rehabilitate housing. And the bill permits, at the HUD Secretary's
discretion, that up to 50 percent of the assistance provided under
this rental rehabilitation grant program to be given to anyone re-
gardless of income.
Third. This provision is contrary to the successful efforts of the
past 2 years to get housing assistance targeted to those in need. In
fact, the eligibility for assistance under the grant section of the bill
are more generous than most HUD programs currently offered.
Fourth. The first of several targeting amendments directs that
all assistance must be directed to those earning less than 50 per-
cent of area median income, HUD's definition of "very low
income." According to the Senate Appropriations Committee, at
least 800,000 famuies earning less than 50 percent of median
yGoot^le
income live in units needing repair. Assistance provided by Con-
fess should help these families first.
It seems to me we ought to take care of them first before we go
on to provide rental rehabilitation assistance to somebody else.
Mr. President, I urge the adoption of the amendment.
The Presiding Officer. Is there further debate?
Mr. Proxmire. Mr. President, I suggest the absence of a quorum.
The Presiding Officer. The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. Garn. Mr. President, I ask unanimous consent that the
order for the quorum call be rescinded.
The Presiding Officer. Without objection, it is so ordered,
Mr. Garn. Mr. President, I object to the adoption of this amend-
ment but not the substance of it. The Senator from Colorado knows
I supported his efforts in the committee on this particular amend-
ment. I agree with what he is trying to accomplish. Therefore, I
shall take no more time to debate it, because I agree with him but
I still must table the amendment.
I said earlier on two different occasions that in order to keep this
pack^e together, I would move to table amendments wheUier I
agreed with them or not. The first one out of the box happens to be
one that, under normal circumstances, I would be voting for.
But if the Senator has no more comments — I do not want to cut
him off— I move to table and ask for the yeas and nays.
The Presiding Officer. Is there a sufficient second? There is a
sufficient second.
The yeas and nays were ordered.
The Presiding Officer. The clerk will call the roll.
The assistant legislative clerk called the roll.
Mr. Byrd. I announce that the Senator from California (Mr.
Cranston), the Senator from Ohio (Mr. Glenn), the Senator from
South Carolina (Mr. Hollings), are necessarily absent.
The Presiding Officer. Are there any other Senators in the
Chamber who wish to vote?
The result was announced — yeas 74, nays 23, as follows:
[Rollcall Vote No. 372 U«.]
Andrews
Dole
Kennedy
Baker
Eagleton
Laxalt
Benteen
Evans
Leahy
Biden
Ford
Levin
Binganwi)
Gam
Long
forin
Gorton
LugSr
Bradley
Hart
bUE*
Hatch
Hatfield
Mattingly
^tet
lawkins
McQure
Hecht
Melcher
Chiles
Heflin
Cochran
Heinz
Mitchell
Cohen
Moynihan
lyAmato
Inouye
Murkowski
Danforth
Johnston
Nunn
Dixon
Dodd
Hasten
PeU
yGoot^le
Pen?
Stevens
Ptownire
Sarbaoes
Tower
Sasser
Tsongae
&ph
Specter
StafTord
Wallop
Weicker
Rkgle
Stennis
NAYS-23
Abdnor
GoldwBter
Simpson
Annstrong
Grassley
Symms
Thurmond
Boochwitz
Helms
DeConcini
Humphrey
Trible
Denton
Jepeen
Warner
Domenid
NicUes
Wilson
Eeat
PrtHsler
Zorinsky
Eion
Roth
NOT VOTING— 3
Cranston Glenn Boilings
So the motion to lay on the table Mr. Armstrong's Emiendment
(No. 2635) was agreed to.
Mr. Garn. Mr. President, I move to reconsider the vote by which
the motion was agreed to.
Mr. Proxmire. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
AMENDMENT NO. 2636
IPurpoee: Amendment to the Gam amendment — to reduce the IMF quota increase
by 10 percent thereby saving approximately $5&4 million)
Mr. Humphrey. Mr. President, I send an amendment to the desk
and ask for its immediate consideration.
Mr. Garn. Mr. President, may we have order so the Senator
from New Heunpshire can be heard?
The Presiding Officer. The Senate will please be in order.
The Chair advises the Senator that there is an amendment by
the Senator from Colorado which will have to be set aside by unan-
imous consent once again to consider the amendment of the Sena-
tor from New Hfimpshire.
Is there a request to do so?
Mr. Humphrey. Mr. President, I wonder if the floor manager, the
chairman of the Banking Committee, is aware of the intentions of
the Senator from Colorado. Is it the impression of the Senator from
Utah that the Senator from Colorado is planning to proceed now
with his amendment which was set aside?
Mr. Garn. Mr. President, it was set aside temporarily. I ask
unanimous consent that the amendment of the Senator from Colo-
rado be temporarily set aside so that the Senator from New Hamp-
shire may offer his amendment.
The Presiding Officer. Is there objection? Without objection, it
is so ordered.
The clerk will report.
The legislative clerk read as follows:
The Senator from New Hampshire (Mr. Humphrey), (for himself and Mr. Arm-
strong), pr^oees an amendment numbered 2636 to amendment numbered 2633.
In title Vm, section 802, on page 33. line 2, strike "5,310,800,0{W" and insert
'•4.T79.720.000".
yGoot^le
396
Mr. Humphrey. Mr. President, may we have order?
The Presiding Officer. The Senator is entitled to be hesird in
support of his amendment. The Senate will please be in order.
Those Senators who desire to converse will please retire to the
cloakroom. The Senate will please be in order.
The Senator from New Hampshire.
Mr. Humphrey. I thank the Chair.
Mr. President, this amendment represents a 10-percent reduction
in the $5.8 billion increase in the U.S. quota to the IMF. This does
not touch in any way the change in the authorization for the gen-
eral agreements to borrow. It is focused on the SDR portion of this
Eroposal. It represents a 10-percent decrease from the proposed $5.8
illion increase in the U.S. quota.
Mr. President, I intend to vote against this bill in any case, irre-
spective of the fortune that my amendment might meet. But, inas-
much as there is so much genuine concern about the deficit, inas-
much as we have seen so much concern expressed within the last
few days about the size of the deficit and the inability of the Con-
gress to deal meaningfully with the spending side of the ledger, it
seems to me an amendment of this nature is very much in order.
Relative to the bill itself, that is the total IMF part, I think it is
objectionable on many grounds. Generally, it is objectionable to
this Senator because what it involves at the bottom line is the bu-
reaucratic allocation of resources. Another definition of that is so-
cialism, the allocation of resources by government fiat.
If we make available to the IMF this line of credit that has been
proposed, and which will be drawn down over a period of perhaps 2
or 3 years, we are going to drain the private sector of our country
of some $8 billion. That money will go to the IMF, which will then
Earcel it out to a number of nations, most of which are in trouble
ecause they have state-managed economies, they have state-owned
industries, they subsidize their industries and engage in all kinds
of inefficient practices. So we are draining a capitalist economy,
that of the United States, of a significant amount of money — we
will be, if this bill passes — and transferring that capital and those
eissets to nations that are in trouble largely because they deserve to
be in trouble because they mismanaged their economies through
socialistic and, in some cases, outright Communistic economic prac-
tices.
Some of the nations which are members of the IMF, and which
stand to benefit by our largess if we approve this bill as it is, are,
in fact. Communist nations. Now that does not make an awful lot
of sense to the man on the street in the United States of America;
the man on the street who is having to pay mortgage rates and
faced with mortgage rates such that he cannot even afford a home.
Yet we propose to drain our economy of more than $8 billion so
that we can help the economies of other nations who deliberately
mismanage their economies and never seem to learn from their les-
sons. So on that general ground, it is objectionable enough.
Let me also point out, as v/as pointed out I believe by the Sena-
tor from Michigan, that many of these nations whom we will be
helping through this intermediary called the IMF, this bureaucracy
called the IMF, engage in unfair trade practices eigainst our coun-
try, against our industries, and against our workers.
yGoot^le
We are going to enhance this process if we pass this bill. We are
going to enable them to compete unfairly by helping them to subsi-
dize their industries and their ineHiciency by draining capital from
our private sector.
Mr. DeConcini. Will the Senator from New Hampshire yield?
Mr. Humphrey. I am delighted to yield to the Senator from Ari-
zona.
Mr. DeConcini. I want to thank the Senator from New Hamp-
shire for offering what I think is as symbolic an amendment as we
may see here today. We are really faced with an interesting propo-
sition of the administration and the distinguished chairman of the
committee trying to tell us in this body and across the land that we
have to do something about deficits.
Now the Senator from New Hampshire has come up with a very
modest decrease in this replenishment.
I think it is very worthwhile that we do this, at least to demon-
strate that times are tough in this country, for all the reeisons that
the Senator from New Hampshire has indicated, but also for the
fact that if we cannot take at least a 10-percent cut in foreign aid —
and that is what we are talking about here, in this area — we
cannot go out of here with our heads very high, that we are inter-
ested in reducing deficits.
Mr. President, I ask unanimous consent that my name be added
as a cosponsor of the amendment, and I thank the Senator for of-
fering the amendment.
The Presiding Officer (Mr. Mattingly). Without objection, it is
80 ordered.
Mr. Andrews. Mr. President, will the Senator yield?
Mr. Humphrey. I yield.
Mr. Andrews. Mr. President, I have been listening with a good
deal of attention to the remarks of the Senator from New Hamp-
shire.
I used to feel that way. In the 20 years I have been in Congress, I
have probably voted against the IMF as much as any other
Member. But as a member of the Budget Committee, I have been
doing a good deal of study about where these deficits come from.
It is important to point out that while there would be an $8 bil-
lion transfer, not out of the taxpayers' funds but a transfer from
our capital, because we would have to provide the backup to this
increased capital funding for IMF — that because of the unique
problem of exports, particularly agricultural exports in this coun-
try, we would have a $7.5 billion decrease in the deficit of this
country just by this credit line transfer. That is what this adminis-
tration can score right away. There are a number of other side ben-
efits.
It is my feeling that had we done more in feeding, health care,
and education in the Latin American hemisphere, we would not
have to be riding down there with munitions today.
This IMF funding gives us the opportunity to help the infrastruc-
ture of these underdeveloped countries.
I say to my colleague from New Hampshire that when this ad-
ministration, this Republican administration, comes up with fig-
ures such as those which indicate a net decrease in our deficit.
yGoot^le
almost paralleling dollars for dollar the capital we put up in the
IMF, that is a whale of a good bargain.
Those of us who have grown up on the farm have learned that
you watch those dollars pretty carefully.
So I hope that some of my colleagues who, like myself, have been
less than enthusiastic in the past about IMF will take another look
at it based on the problems as they exist in the troubled world
today, reconsider it, and recognize that there is a good deal of bene-
fit that flows back to this country.
I appreciate my colleague from New Hampshire yielding, and I
hope he will take another look at the policy line of this IMF consid-
eration.
Mr. Humphrey. Mr. President, I am always glad to have the
thoughts of my friend from North Dakota. He is suggesting that
this process of transferring money to other nations through this
multinational intermediary known as the IMF is good for our ex-
ports. If that is the case, why quibble about $8.4 billion? If transfer-
ring our wealth to other nations through the IMF is beneficial to
this Nation, why not double it? Why not increase it by 100 percent?
Why not increase it by a factor of 10? If this is good, why settle for
a mere $8.4 billion? If this is a good process, let us go whole hog.
We can get rid of all agricultural commodities in the United States.
That does not seem like a logical argument for this Senator, al-
though I understand full well the importance to the State of North
Dakota and other States of agricultural and industrial exports. I
think the argument is suspicious on its face. I do not buy it.
Mr. Andrews. To get away from being parochial, I point out to
my friend, the Senator from New Hampshire, that I was addressing
the issue of deficits.
As I said in the Budget Committee, it seems to me that deficits
affect the people of all 50 States, not just the agricultural States.
For far too long, this Nation has overlooked the unique contribu-
tion agricultural exports make to our overall economy. The figures
we obtained from the administration attest to the fact that there
will be a net reduction deficit almost dollar for doIlEU* for this
transfer of funds to the IMF. This is something I think my col-
leagues have not looked at.
Let us argue this on the basis of deficits that are killing our
economy ana the fact that some of these exports are extremely im-
portant to the overall economy, to the people in New Hampshire,
to the people in New York, who would not know a blade of wheat
from a loaf of bread. Nonetheless, it is important.
Mr. Humphrey. Mr. President, I will yield to the Senator from
Pennsylvania in a moment.
It seems that I missed an important point. Not only does it boost
our exports to turn over our capital to the IMF, to be turned over
to Socialists, and Communists, and mismanaged nations; not only
does it boost our exports, but also, it reduces our deficits. So why
stop it at a mere $8.4 billion? If it is so good in reducing the deficit,
$8.4 billion is not enough. Let us make it $84 billion.
Mr. Andrews. Let me caution my colleague that moderation in
the pursuit of virtue is always a good thing to think about [Laugh-
ter.]
yGoot^le
Mr. HuBfPHREY. Mr. President, I^un left S[>eechle88, so I yield for
the moment to the Senator from PennsylvEinia.
Mr. Heinz. I thank the Senator. He will not be surprised to hear
me say that I do not support his amendment.
In addition to the reasons so well stated by the Senator from
North Dfikota (Mr. Andrews), I only add that there is, as I suspect
the Senator knows, a reason for this amount. This is an amount
negotiated over nearly a year by the administration. We can all
argue about whether it is too high or too low. I suspect that the
Senator would argue that it is too h^h. I certainly would not ai^e
that it is too low. In tiny event, this is the product of a negotiation;
and whether we agree with it or not, we have to make a fundamen--
tal decision aa to whether or not we want to take the responsibility
of sending everybody back to the bargaining table in a rather pre-
carious situation.
There is also another reason to oppose this amendment. I know
that the Senator from New Hampshire is second to none in his op-
position to Communist regimes and as well as Government mis-
management and that he is for a very strong national defense. I
know that he stands for all those thin^.
However, one problem I find with the Senator's amendment — al-
though this is not the intended consequence of it, I realize — is that
if we abn^ate the agreement that was reached between the devel-
oped countries and the members of the IMF on this quota in-
crease— we are a small part of it, about 18 percent — we run the
risk of the IMF not being able to do what it is supposed to do. We
do not know what that uncertainty will bring.
If the uncertainty should result in the IMF being unable to help
countries like Mexico readjust its economy, we have a very criticed
problem on our hands; because if the Mexican economy continues
to fall out of bed and if, as a result of that catastrophic economic
decline, there is a political change in Mexico and Mr. Castro £ind
his supporters are able to take over, we will have to think seriously
about redeploying a lot of our national defense assets in the South-
western United States. The people down there would demand it.
So, to my mind this is a good balance which we ought not to try
to tilt in one direction or the other. I hope the Senator — I under-
stand his rationale — would not insist on his amendment.
I thank him for yielding.
Mr. Humphrey. The Senator from Pennsylvania is more than
welcome.
Mr. President, I shall not consume much more time, unless
others will rise to engage further in debate.
I do not agree with the Senator from Pennsylvania or the mem-
bers of the Banking Committee in general. This is not a wise policy
for the United States to be following. We should let the market-
place work. We profess to believe in free enterprise. We should let
that occur in our country. We should let that occur among the na-
tions of the world.
To engage in international socialism, and that is what this is —
transferring wealth from our economy to other economies at the
diilraretion of bureaucrats over whom we have virtually no control,
and who have a very poor track record — is plainly unwise.
yGoot^le
400
Let us let the marketplace work. If we do not appropriate money
for IMF, what will happen? The banks will be Beared of losing their
money. They will renegotiate the payment terms. They will write
down some of the loans. They will make it easier for some of the
countries to repay. We know what they will do to protect their in-
terests. It is not necessary for us to bail them out.
Banks want this because it will make life a heck of a lot easier
for them. Bank presidents will not have to answer to boards of di-
rectors and explain why things are in such bad shape if we lend
this money through the IMF to help repay the outstanding loans.
That is one aspect of it, though not the only one.
Mr. President, this issue has been discussed in great detail.
There is really nothing more that 1 can add. I will yield to the Sen-
ator from Colorado. He is always able to add something.
Mr. Armstrong. I compliment the Senator from New Hamp-
shire. I think this is a worthy amendment for two reasons. First, it
will save us money. If we have to pass this package, at least we
might as well make some saving, particularly in view of the sense
of urgency that we all have in mind about the deficits.
Second, the passage of this eimendment would transmit to all
who care about it the signal that whatever is negotiated in these
great international negotiations is not considered to be binding on
the U.S. Senate. We reserve our judgment to make up our own
mind of what is a proper level.
I think the proper level is substantially less than what is in this
amendment, but at least it is a saving of several hundred millions
of dollars and it does assert our independence. I think it is a very
good amendment. I expect to vote for it.
Mr. President, I ask unanimous consent that there be printed in
the Record at this point an editorial from the Washington Times of
November 14, 1983, headlined "Let's Not Make This Deal," in
which that newspaper comments in a very perceptive and hard-hit-
tiM way why this is a bad package.
There being no objection, the editorial was ordered to be printed
in the Record, as follows:
Let's Not Make This Deal
Looks like the administration has cut a deal on public housing with Hotise Bank-
ing Committee Democrats, It's the Democrats' price for reecuing an $8.4 billion in-
crease in Washington's contribution to the International Monetary Fund. President
Reagan backed the proposed IMF increase, you'll recall, because someone misled
him into believing it was the only way to solve the so-called international debt
crisis. It ain't. The IMF bill remains the oailout of private banks it always was.
The debt crisis— to the eittent it exists at all^arose because our big banks made
some bad loans to faraway places and now want the government to cover for them.
But doing so, as we've oflen noted, would not be without cost to the economy. In
spite of 'Treasury Secretary Regan's claims to the contrary, the increase in our IMF
Krticipation would have the same effect as widening the U.S. budget deficit. To
rrow the money, Treasury will have to dip into the same markets it relies on to
finance the deficit.
A much better and fairer solution, from the very bE^nniag, was fbr the lenders to
renegotiate the loans, giving up some interest and profits, so the debtor nations can
get back on their own feet ana repay the banks with their monev, not oun. And to
do this without the IMF standing in the wings, checkbook in hand.
Because of their hard-sell marketing efforts with developing nations when cash
was burning a hole in their vaults a few years ago, the banks clearly share the re-
sponsibility for the present mess. And there is room for samflce. The latest quarter-
ly reports show that in most cases they're well in the black.
yGoot^le
401
Tbe bankera end developing country borrowers can sort it out by themselves —
without what amounts to a Bubeidy. Like a slap in the face, there's nothing like the
diBCi|dine of the market to get their attention, forcing each to make sacrifices and
DOts^gentlv signaling them that next time around they'd better be prudent, be-
cause there 11 be no massive transfer of wealth from our taxpayers to bail them out.
What about all that band-wringing— that reduced profite on outstanding loans
make the banks shrink from lending to these countries ever again? Pure hype. It's
in the banks' self-interest to continue the flow of dollars to help them etay afloat
and avoid defaults.
Only the Senate now stands between the taxpayer and the IMF quota expansion.
It has to act on the expansion of housing programs demanded by House Banking
Committee Chairman Femand St Germain, D-R.l., before the deal can be clinched.
This is its chance to reject both measures and save nearly $25 billion. The public
housing bill, to which EJemocrats went to add monies for new construction and gar-
nish with larger rent subsidies, is just another rat-hole down which they propose to
pour over $15 billion. It's outrageous for the administration to have agreed to
ranaom a bad proposal, the quota expansion, with an even more wasteful and expen-
Mr. Humphrey. I thank the Senator from Colorado for his co-
gfmnsorship and adding further ammunition to this effort on fund-
ing.
To come back to the amendment before us, Mr. President, it is
an effort to reduce by 10 percent the $5.8 billion increase in the
U.S. contribution to the IMF. That is a savings to taxpayers of
some $580 million. That is not a lot compared to the amount we
would make available to the IMF under this amendment. It is only
a 10-percent reduction. But given all of the handwritii^ and ex-
pressions of concern about spending, about deficits, about national
debt, about interest on the national debt, and about the effect of all
of those things on the economy a year or two down the road, here
is an opportunity to put our votes where our mouths are, so to
speak.
I yield to the Senator from North Carolina.
Mr. East. Mr. President, I would like to make a few comments in
defense of the amendment being offered by the Senator from New
Hampshire.
I agree with his sentiments that we ought to cut it. Second, I
would be candid and forthright, as he has been, and say that I
intend to vote against this measure on tinal passage. Senator Hum-
phrey is suggesting in this time of budgetary restraint we ought to
at least cut down the amount we are going to contribute even if we
do not eliminate it in toto.
I agree with him that not only should we do that as a modest
step, but I also agree with him that this ought to be voted down in
finEil passage. This bill ought to be killed.
I think basicEilly what you are up against when you strip it down
to bare essentials is that imprudent loans were made by major
banking institutions in the United States. What they need to do, as
any other bank does that makes an imprudent loan, is to renegoti-
ate. They should ren^otiate them in terms of perhaps interest
rates, string out the period of time over which repayments are
made, et cetera.
We are given the impression here by some, for whom I have
great admiration defendii^ this measure, that some way or an-
other we are going to reach a great economic international Arma-
geddon if this does not go through. Not so. Not so.
yGoot^le
402
These loans can be renegotiated and it will be a good experience,
a chastising experience, for the banks as well as the borrowers.
For example, if the average American goes down and borrows
from his bank and his bank imprudently loans him more than it
should have, and then they would ask for assistance, let us say,
from the State legislature to get them out of that economic hole, it
would not be done.
I think if the American people genuinely understood what we
were doing here they would vote unanimously against it. There is
no economic Armageddon at hand here at all. All of this talk about
our export markets will fail, these international economies will
fail, it will have an adverse impact upon the American economy, I
think is to conjure up a chamber of horrors that simply will not
stand up under careful scrutiny.
All you are really saying is imprudent loans were made, they
ought to be renegotiated, and in this time of budgetary restraint
the U.S. Senate — and we are now the last place where this battle
will be fought — ought to say no to another $8.4 billion to help ball
out those — and I hate to use the words bail out — to assist, reim-
burse, backup. It is a bad precedent. People who make bad loans of
this kind ought to be required themselves to make the accommoda-
tion. They will, and I think the economic economies of the world as
well as the country will be stronger for having done that.
So I think the Senator from New Hampshire is right on track
when he said, one, based, on sheer budgetary considerations it
oi^ht to be cut down to begin with, but even beyond that I agree
with him completely it ought to be eliminated.
So I would hope that the U.S. Senate across the aisles, party
lines and philosophical lines, liberal and conservative, would vote
this down. I will say one thing, I would find it very, very difficult
to go back to my State of North Carolina and explain to the aver-
age citizen in the street why in the world we voted another $8.4
billion to help large, major banks get out of an economic jam that
they got themselves into.
You will not be doing that for my local bank in Greensboro, N.C.,
nor will the State l^islature. These banks will have to do the same
thing they would have to do — renegotiate it, try to bring the inter-
est rate down, stretch it out over a period of time. Economic life
will go on in the State, in the country, and in the international
community in economic trade. It will be a healthy experience. It
will dictate, next time, prudence, economic prudence, in planning
being in order.
So the Senator is correct. 1 am going to vote for his amendment.
I wish him well with it. Even if it pass^, which I hope it does, I am
going to join him in final passage in voting against the bill. It is a
bad bill, with all due respect to the fine Senators and the adminis-
tration supporting this measure. On this one, I firmly and vigorous-
ly dissent. Thank you, Mr. President.
Mr. Humphrey. Mr. President, I thank the Senator from North
Carolina for his assistance.
Mr. Levin. Mr. President, I will vote in support of the Humphrey
amendment which would cut the contribution to the IntemationEd
Monetary Fund by 10 percent.
yGoot^le
403
At a time when we are attempting to reduce the deficit here at
home BO that economic recovery can continue, we have to carefully
scrutinize all spending programs to assure that they are fully justi-
fied. At a time when people on food stamps have been £isked to do
with less, we cannot avoid asking the biggest banks in this country
to accept some of the responsibility and consequences of ill-advised
loans which they may have made to foreign nations over the past
decade. The Humphrey amendment would ask the banks to share
the burden.
What, then, we have before us is a balancing act. If our economic
recovery continues, then the chances for world economic recovery
will improve £ind economic conditions in many of the countries
which are recipients of IMF loans stand to benefit. For this set of
events to occur, it is essential for us to reduce the Federal deficit.
However, if we cut the IMF contribution too much in an effort to
reduce the deficit, then we risk throwing a fifteen foot rope to for-
eign nations on the vei^e of drowning 30 feet off shore with all the
negative effects on our economy which will result, I believe that
ihe Humphrey amendment struck an appropriate balance in meet-
ing these needs and avoiding these dangers. It is for this reason
that I give it my support.
The pREsroiNG Officer. Who yields time?
Mr. Humphrey. I ask for the yeas and nays on the amendment.
lie Presiding Officer. Is there a sufficient second? There is a
sufficient second.
The yeas and nays were ordered.
The Presiding Officer. The Senator from Utah.
Mr. Humphrey. Mr. President, a parliamentary inquiry. Do I
lose the floor by asking for the yeas and nays?
Mr. Garn. Mr. President, I was not trying to take the floor from
the Senator. I thought he had completed his remarks.
Mr. Humphrey. The Senator was recognized, but I had a ques-
tion about the parliamentary situation.
The Presiding Officer. The Senator from New Hampshire now
has the floor.
Mr. Humphrey. I thank the Chair.
Mr. President, to reiterate with the utmost gravity, this is an
amendment to reduce by 10 percent of |5.8 billion increase in the
U.S. SDR quota for the IMF. It does not affect the GAB portion of
this propocral, only the $5.8 billion \ficrease. That of course calcu-
lates out to $580 million.
I yield the floor, Mr. President.
Mr. Garn. Mr. President, I shall be very brief before I move to
lay this amendment on the table. Once figain, I repeat, I shall move
to table all amendments, whether I happen to personally ^ree
with them or not, for the purpose of attempting to keep this bill in
the package that was n^otiated with the administration and the
House of Representatives.
The only comments I make are general. The major opposition to
this is common, believe me. I have had a great deal of opposition
from my own State. Mr. Howard Ruff and Free the Eagle are based
in Utah. I have received a lot of mail and 99 percent of it is against
what I have been attempting to do. I do not make those decisions
lightly. I never have since I have been in the Senate.
yGoot^le
404
Certainly, 1 do not think I could be accused by any of the rating
groups of being a liberal or sympathetic to socifdism. I think after
9 years in the Senate, I am a card-carrying conservative and I do
not think anybody can dispute that.
Then the question comes up: Why am I supporting this? If this
were an issue of just bailing out the big banks, I would not be for
it. I did not vote for the Chrysler loan guarantee. I am glad it
worked, but I did not work for it. I have not voted for any sort of
bailouts since I have been in the Senate; neither has Senator Prox-
mire. He also opposed the Chrysler loan guarantee when he was
chairman of the Banking Committee.
It is not just the big New York banks. There are some 1,500
banks all over the country involved in international lending. Many
of them got involved at the encouragement of politicians from thjs
body, after the energy embargo by the oil-producing nations in 1973
and 1974, demanding "Let us be independent, go out and make
those loans, develop that oil in Mexico or wherever you can that is
not a part of OPEC."
I do not see any of those people now claiming that they had any
part in the problem. It is just those dumb big banks. I could say, as
the Senator from North Carolina did, "they made some bad loans,
let them suffer the consequences; they are big boys. Let them
handle this themselves."
After many years of testimony and meetings on this, I £un con-
vinced that serious consequences would result. When we talk about
$8.4 billion, first of all, the United States has the first drawing
rights. Any country that puts up the money — it is not automatical-
ly spent, it is not automatically loaned. The country that put up
that quota has the first drawing rights on their quota, not just the
$8.4 billion new, but past quota. We have first drawing rights on it.
Mr. PsoxMiRE. Will the Senator yield on that point?
Mr. Garn. Yes, I yield.
Mr. Proxmire. Is it not also true that we have used the IMF as
borrowers, consistently, and more than any other country?
Mr. Garn. That is correct, we have used parts of our own quota
over the years.
It is also not mentioned by the opponents that we have put in
requirements to try to prevent this from happenii^ in the future.
There are additional capital requirements which the Senator from
Wisconsin insisted upon. There are additional reserve requirements
and additional disclosure requirements.
There is also conditionality. Brazil right now is having a big
stomach ache over whether they want to accept the conditions im-
posed by IMF in order to get a loan.
Somebody previously on the floor talked about our fiscal respon-
sibility in this country with a $200 billion deficit. Some of the con-
ditions IMF has imposed upon these countries for help would be
very useful in the problems we refuse to deal with now in solving
our deficit problems. The^ say you simply are not going to get any
help at fill unless you follow some of these conditions. Some of
them are incredibly stringent. Mexico is going throi^h that process
right now.
None of them is the reason for my support. If you default these
loans, the banlu, most of them, would survive, in my opinion. They
yGoot^le
405
would weather the storm. It ie just like a country bank in North
Carolina, Utah, or Alabama. They got out on the hmb on mortgage
loans on a development project and had a big loss. Their loss ratios
are reflected in the price of money. There are independent studies
that did not come from banks or did not come from the House or
Senate or anyplace else, that indicate that if you had failures in
BrEizil or Mexico on a loan, you could have an increase in the
prime rate of IVi percent in this country, that you lose jobs. That is
what I am looking at, not adding to the burden.
It is not a good choice. My normal preference would not be to be
appropriating any additional money for IMF. It is like having a
good friend that falls in a bed of quicksand. You can point out the
things he did wrong and how stupid he was to fall in and say,
"Sorry, we are not going to help you because you were dumb."
We are sayii^ in the American economy there were some mis-
takes made, and there were. I cannot dispute what the Senator
from New Hampshire says and a lot of the things he said I agree
with. A lot of the banks made bad loans. We could wash our hands
of them and say, "Tough, live with your bad loans." But it has a
dramatic effect, when you are dealing with this loan problem, on
our international trade, our deficits, our employment in this coun-
tiy.
Again, totally apart from the issue of the banks that are in-
volved, we did not do this in order that we would pay a far, far
bi^er price than $8.4 billion, which may or may not be paid. That
is not an automatic, that is going to be used.
So, Mr. President, the last argument I shall make on it — I do not
want to take any more of the time of the Senate. I think it is im-
portant for those reasons and we ought to separate the two issues:
that of whether we are bailing out banks, which 1 am not in favor
of and do not think we are in any sense doing — they are big boys,
as I said; they can live with themselves — and trying to analyze the
impacts on the economy.
There are various versions from some who think it would have
minor impact, others major. You split the difference. 1 believe it
would be incredibly costly to the economy of this country. I think it
is something that is necessary that we do, just as, 2 or 3 years ago,
when we increased the FDIC and FSLIC insurance to $100,000 from
^0,000. That was to instill some confidence in the domestic mar-
ketplace when we had the proposed failure of hundreds of banks
and savings and loans in this country; to send a signal that you are
not going to lose your money up to $100,000, to prevent a run on
the bank.
In essence, this $8.4 billion is a similar thing, to prevent a panic
in the international markets, to see if we can instill some little
amount of confidence while the countries of this world, including
our own, rebuild our economies from a very serious, worldwide re-
Mr. President, I do not see anyone else seeking recognition. I
move to table the amendment of the distinguished Senator from
New Hampshire and ask for the yeas and nays.
The Presiding Officbr. Is there a sufHcient second? There is a
sufficient second.
Tlie yeas and nays were ordered.
yGoot^le
The Presiding Officer. The question is on agreeing to the
motion to table the amendment. "Hie yeas and nays have been or-
dered. The clerk will call the roll.
The legislative clerk called the roll.
Mr. Byrd. I announce that the Senator from California (Mr.
Cranston), the Senator from Ohio (Mr. Glenn), and the Senator
from South Carolina (Mr. Hollings) sire necessarily absent.
The Presiding Officer (Mr. Mattingly). Are there any other Sen-
ators in the Chamber who wish to vote?
The result was announced — ^yeas 52, nays 45, as follows:
{Rollcall Vote No. 373 Leg.]
YEAS-52
Andrews
Gorton
Packwood
Baker
Hart
Pell
BenUen
Hatfield
Percy
Hecht
Bradley
leini
Quayle
Chafee
luddlestgn
giegle
Sarbanes
Chiles
nouye
Cochran
Sasser
D'Amato
Kast«n
Stafford
Danforth
Kennedy
Stennis
Dixon
Stevens
Dodd
Long
Tower
Dole
Liigar
Tsongas
Domenici
Mathias
Wallop
Durenbei^er
Weicker
Eagleton
Mitchell
Wilson
Evans
Moynihan
Gam
NAYS-45
Abdnor
Goldwater
Metzenbaum
Armstrong
Grassley
Nickles
Baucus
Hatch
Nunn
Biden
Hawkins
Pressler
Boren
Heflin
Pryor
Boflchwitz
Helms
Randolph
Bumpers
Burdick
Humphrey
Roth
•!=„„
Rudman
Byrd
SimpeoR
Cohen
Laxalt
Specter
DeConcini
Leahy
SymmB
Thurmond
Dentcn
Levin
East
Mattingly
Trible
Exon
McClure
Warner
Ford
Melcher
NOT VOTING-S
Zorinsky
Cranston
Glenn
Hollinge
So the motion to
lay on the table Mr.
Humphrey's amendment
(No. 2636) w£is agreed to.
Mr. Gasn. Mr. President, I move to reconsider the vote by which
the motion was agreed to.
Mr. Proxmire. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
The Presiding Officer. The Senator from Utah.
yGoot^le
407
Mr. Gabn. Mr. President, the Senator from Utah is not seeking
recognition at this time.
Mr. Armstrong addressed the Chair.
The Presiding Officer. The Senator from Colorado.
AMENDMENT NO. 2637
(Purpoee: Voucher Demonstration)
Mr. Aahstrong. Mr. President, I send em amendment to the
desk and ask for its immediate consideration.
The Presiding Officer. Is there objection to setting aside the
previous amendment?
Mr. Garn. Mr. President, I ask unanimous consent that the
amendment of the Senator from Colorado be temporarily set aside
so we can consider another amendment of the Senator from Colora-
do.
The Presiding Officer. Is there objection? Without objection, it
is so ordered.
The clerk will report the amendment.
The legislative clerk read as follows:
The Senator from Colorado (Mr, Armstrong) proposes an amendment numbered
Mr. Armstrong. Mr. President, this amendment deletes from the
proposal a new prc^ram of housing vouchers. These are what
might be described in simplest terms as rent stamps. They are
analogous to food stamps. The idea of the housing voucher program
is we are going to give people who are eligible for this a piece of
paper that they take out and spend like money. It is a very attrac-
tive idea if you are a recipient.
But, from where we are sitting, with the potentially explosive
growth of a program like this, I believe that we ought to look very
carefully before we leap.
The Presiding Officer. Will the Senator refrain for just one
moment while we try to create some order in the Senate? Those
desiring to talk, it would be much appreciated if they would go to
the cloakroom. If not, we will gavel everybody down. Please go to
the cloakroom and talk and let the Senator from Colorado proceed.
The Senator from Colorado.
Mr. Armstrong. Mr. President, I do not wish to overdraw the
parallel between this new housing voucher system and the experi-
ence we have had with food stamps, but I think the comparison is a
very apt one. The food stomp idea started out with the notion that
it would cost maybe $100 million, a little less than $100 million,
and within a very few years, it became a $13 billion program. Be-
lieve me, my friends, housing vouchers have an even more explo-
sive potential. Let me explain why.
Under the eligibility criteria contained in this legislation, some
12 million people are estimated to be eligible for housing vouchers.
This bill funds 15,000 vouchers. Now 15,000 is not very many. It is
not going to make us or break us although, in my judgment, it is
not a very well warranted expenditure.
But once we set the precedent, once we decide we are getting in
the business of housing vouchers, how can you equitably, let alone
yGoot^le
408
politically, draw a line? Where is the justice of a prt^ram that says
to two people who are equally situated, who may live side by side,
who may have the same kind of employment, who have the same
size family and number of children and says to one of these two
families, ' You get a subsidy" — and a large one, by the way — and to
the other, says 'You get nothing"?
Mr. President, I suggest that that is extraordinarily unjust. It is
the kind of injustice that will utimately, probably sooner rather
than later, be reconciled by a vast expansion of the program to all
or most of the 12 million people who are potentially eligible under
the eligibility criteria in the bill.
This thing is a time bomb. This provision, if we enact it, sets the
stage for an astronomical cost over time. A few years ago, when I
was in the other body, I engaged the floor manager of a housing
subsidy bill, the distinguished Representative from Massachusetts
(Mr. Boland) in a discussion about the future potential of section 8
housing.
I talked at great length about what seemed to me to be the fx>-
tential for that program. I asked him, "Is is not true that we have
already committed' — this is now about 8 or 9 years eigo — "over $30
billion to section 8 housing?" He said, "Yes, the gentleman is cor-
rect." I said, "Well, isn't it true if we keep going that it could go to
$100 billion or even more?" And he said, 'Yes, that is correct."
Well, that was about, I think, 8 years ago. Thus far, we have
committed over a quarter of a trillion dollars to the section 8 hous-
ing program. I am convinced that this housii^ voucher program
has the same kind of explosive potential.
Somebody will say that it is only a demonstration program.
Somebody will say that we are not going to let it get out of control.
But my conscience would not be clear if I let this bill go by without
drawing attention to this kind of explosive growth.
This is a bad idea. At least, it is, in my estimation. It is unjust.
We cannot stand the potential cost.
In an April 1983 report to Congress, the General Accounting
Office expressed serious reservations regardii^ how effectively cer-
tificates served those most in need.
The GAO made these points:
First, the certificates may not reach those families in greatest
need. Because the per unit subsidy is substantially less than under
section 8, the poorest of poor are less likely to be served. Such fam-
ilies are more likely to be living in substandard housing and thus
will have to relocate, which is costly and not always possible, espe-
cially for large families.
Second, the existing housing stock may not be adequate to fully
support a housing certificate program.
Third, progrjun administration could be a burden, Eind the GAO
report discusses this concern at some length.
Fourth, it is difficult to prove certificates will be a less expensive
subsidy strategy in the long run.
That is the heart of the argument. The people whopropose this
say that it will be a better desil than what we have. Tliis program
comes right out of the administration.
I have just reminded my friends downtown how we got in the
section 8 mess in the first place.
yGoot^le
409
Secticm 8 housing, it is generally conceded, has proved to be scan-
dalously corrupt, and I base that on GAO reports and reports of
law-enforcement agencies around the country who have turned up
scandalous corruption and abuse.
I try to remind some of the people fostering this program down-
town how we got into section 8. It was because at the time they
said the 235 and 236 housing program was impossible, that we
could not stand it, that it was awful, and they said section 8 is
going to be better and we will replace 285 and 236 with section 8. It
has proved to be a disaster.
We are still saddled with 235 and 236; and if we adopt the hous-
ing voucher, we will still have 235 and 236 and section 8.
The amount in this meeisure is small, but the principle is very
lai^e, and therefore 1 urge adoption of the amendment.
Mr, Garn Mr. President, 1 rise in opposition to the amendment.
No one on the Senate Banking Committee has been more dili-
gent in attempting to reduce excessive housing programs in this
country. 1 share many criticisms of section 8. It has become a very
expensive prc^am.
I Bay to the Senator from Colorado that this was an administra-
tion attempt at reform, to try to produce housing units for the
poorer families in this country at a much lower cost than section 8.
It is not a new concept. It is a variation of the existing section 8
certificate prt^ram.
It is important to note that it is a 1-year authorization for only
15,000 units. It provides eligible recipients the ability to find hous-
ing of their choice, rather than to be forced into public housing.
Because of the chcmge in the amount of time for when we
budget, it reduces the cost from a 15-year $68,000 certificate to a
116,000 5-year voucher.
Most of the vouchers in the demonstration prc^am are used in
connection with the rental rehab program, where they may be nec-
essary to help families displaced in the rehab process or to help
cities meet targeting objectives of the bill. Other uses would be in
connection with new rural rehab programs and to help make hous-
ing affordable to very poor people.
It is not an entitlement. The bill strictly limits expenditures to
{242 million for approximately 15,000 vouchers.
I stress that it is a 1-year demonstration program. Obviously, the
administration, I would expect, will try to expand it. I grant that to
the Senator from Colorado. But what we are talking about is a very
limited demonstration program.
Mr. DoDD. Mr. President, will the Senator yield?
Mr.GARN. I yield.
Mr. DoDD. Mr. President, I second what the distinguished Sena-
tor from Utah has said.
I point out to the Senator from Colorado that there were those of
ua on the committee who objected to this demonstration program. I
will be candid with the Senator from Colorado and say that it is
not as generous a program as the existing section 8 program. The
depth of subsidy in this demonstration is less than section 8, and
th^ is designed to replace the existing section 8 program.
yGoot^le
410
I understand that we need this to try it, but I am uneasy about
it, because I do not think it will be as much as the existing section
8 program.
Under normal circumstances, I would find myself alined with the
Senator from Colorado, for different reasons from those he has ar-
ticulated this afternoon.
So I emphasize that what the chairman has just said is correct.
This was an administration proposal. It is to replace existing sec-
tion 8. It is a 1-year authorization, only 15,000 units, and only for
two programs — rental rehab and rural bousing. Those are the only
two programs in which this demonstration can be used. I urge my
colleagues to accept it.
I assume that a motion to table will be offered. This is a program
the administration wants. I think in this case we should vote for
the tabling motion or defeat the amendment.
Mr. Armstrong. Mr. President, I think we have had a useful al-
though not extensive discussion of this matter.
I just want to sum up by saying that we already have in exist-
ence, or in the pipeline, 5 million units of subsidized housing in
this country. Under the circumstances, I do not think there is any
prospect that we are going to continue the section 8 housing pro-
gram, and we should not. It has been extravagant. It has t»en
abused. It has not been well targeted. It has not served the needy,
for the most part; but, on the contrary, it has served the less needy.
We should target it to those most in need, and we are at long last
in the process of doing that.
As to whether a voucher program makes sense, I do not think it
does, for the reasons we have discussed.
I understand that it is the intention of the Senator from Utah to
move to table, and I understand his reasons for doing so. I hope he
understands why I could not permit this to be enacted into law
without sounding the alarm.
I hope that 5 or 10 years from now — if it lasts that long — when
we see what this is all about. Senators will have a second thought.
Mr. Garn. Mr. President, before I move to table, I state that al-
thoi^h the housing prt^ams in this country are very expensive,
considerable prioress has been made in making them more effi-
cient in the last 3 years. There are no new construction starts in
sewtion 8.
I only make the comment that I guess I get caught in the middle.
On the one hsmd, I have been criticized by many in this countiy for
dramatically cutting the housing programs; and on the other side, I
am getting criticized because I have not cut them enough. I guess
that is something you expect in politics, getting it from both sides
on some issues.
I appreciate the courtesy of the Senator from Colorado and his
viewpoints, as well as his willingness not to take a great deal of
time, in view of all the other amendments we have.
I move that the amendment be tabled.
Mr. Armstrong. Mr. President, I ask for a division vote on the
tabling motion. We have not had a division vote in the Senate re-
cently, but it is the right of the Senator to ask for it, and in my
view, it is the most expeditious way for the Senate to work its will
in this matter.
yGoot^le
411
llie Presidino Officer (Mr. Specter). A division heis been called
for.
Senators in favor will rise and stand until counted.
[After a pause.]
Senators opposed will stand until counted.
On a division, the motion to toble Mr. Armstrong's amendment
(No. 2637) was agreed to.
Mr. Gabn. Mr. President, I move to reconsider the vote by which
the motion to table was agreed to.
Mr. Proxmire. I move to lay that motion on the table.
The motion to lay on the table was aigreed to.
AMENDMENT NO. 2634
Mr. Levin. Mr. President, I ask unanimous consent to temporari-
ly lay aside the amendment in disaigreement and move to amend-
ment No. 11, so that it might be in order for me to offer an amend-
ment.
Mr. Garn. Mr. President, reserving the right to object— and I do
not intend to object— I jxist want to make certain from the Parlia-
mentarian and uie Chair that in setting this matter aside, we will
return to exactly the position we are in, that my amendment be
the amendment to the amendment in disagreement. No. 11, and
that an Armstrong amendment is pending to the Garn amendment.
Mr. Long. Mr. President, I object.
The Presiding Officer. Objection is heard.
Mr. Garn. Mr. President, I see no one seeking recc^nition at this
time. I would hope tiiat those listening realize Uiat we have a good
deal to do remaining on this bill, and I would hope those who have
amendmente can come to the Chamber and o^er their zunend-
ments.
Mr. President, I suggest the absence of a quorum.
The Presiding Officer. The clerk will call the roll.
The bill clerk proceeded to call the roll.
Mr. ARMffiRONG. Mr. President, I ask unanimous consent that
the order for the quorum call be rescinded.
The Presiding Officer. Without objection, it is so ordered.
Mr. Armstrong. Mr. President, is the pending business the Arm-
strong amendment on the IMF?
The Presiding Officer. The Senator is correct.
Mr. Armstrong. Mr. President, I believe this matter has been
adequately discussed and that we are ready for the question.
Mr. Garn. Mr. President, this is a sense of the Senate resolution,
not an amendment, which has been worked on by Senator Prox-
mire and me. We have modified the sense of the Senate resolution
and are willing to accept it, I believe. Senator Dodd will speak for
Senator Proxmire.
Mr. Dodd. If the Senator will yield, I understend there is no ob-
jection to this resolution and we are prepared to accept it.
The Presiding Officer. Is there further debate? If not, the ques-
tion is on agreeing to the amendment.
The amendment (No. 2634) was agreed to.
Mr. Garn. Mr. President, I move to reconsider the vote by which
the amendment was agreed to.
37-922 O - 84 -
yGoot^le
412
Mr. Armstrong. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
Mr. Armstrong. Mr. President, aim I correct that the Senator
from Nebraska (Mr. Exon) was added as a cosponsor to the amend-
ment just agreed to on IMF? If not, may I ask unanimous consent
that he be added as a cosponsor.
The Presiding Officer. Without objection, it is so ordered.
AMENDMENT NO. 2638
(Purpose; Amend reinsurance demonstration program under title IV)
Mr. Armstrong. Mr. President, I send an amendment to the
desk and ask for its immediate consideration.
The Presiding Officer. The clerk will report.
The bill clerk read as follows:
The Senator from Colorado (Mr. Armstrong) proposes an amendment numbered
2638.
Mr. Armstrong. Mr. President, I ask unanimous consent that
further reading of the amendment be dispensed with.
The Presiding Officer. Without objection, it is so ordered.
The amendment is as follows:
Page 21, linea 13 through 15 delete "and will not result in loes of employment by
any employees of the Department of Housing and Urban Development.". This
amendment will take affect on September 30. 1985.
Mr. Armstrong. Mr. President, this amendment is a very simple
one. The pending legislation requires that the demonstration pro-
gram will not result in loss of employment by any HUD employee
involved in the program.
In my opinion, this is not a wise provision. The purpose of the
demonstration is to test the feasibility of entering into reinsurftnce
contracts with private mortgage insurers in order to reduce Gov-
ernment risk and administrative costs. By guaranteeing the preser-
vation of the HUD job the purpose of the program is effectively de-
feated. Administrative and monitoring costs will not be reduced for
HUD jobs which are retained.
It is not good policy to legislatively protect the jobs of some HUD
employees and not of others, and Federal workers as well.
In its original form, my amendment struck the grandfathering in
of these employees. In the revised form, which I have sent to the
desk, my amendment does not become effective until September 30,
1985, a date which I am told is agreeable to managers of the bill.
Mr. Garn. Mr. President, we have reviewed this on both the ma-
jority and minority sides. It is merely a date change, which no one
objects to.
Mr. DoDD. Mr. President, there is no objection on this side.
The Presiding Officer. Is there further debate? If not, the ques-
tion is on agreeing to the amendment.
The amendment (No. 2638) was agreed to.
Mr. Garn. Mr. President, I move to reconsider the vote by which
the amendment was agreed to.
Mr. Armstrong. Mr. President, I move to lay that motion on the
table.
The motion to lay on the table was agreed to.
yGoot^le
HOUStNG/lMF AMENDMENT
Mr. RiEOLE. Mr. President, it now appears that the Senate will at
long last have an opportunity to vote on housing and community
development policy.
The amendment now before the Senate gives the Congress an op-
portunity to take important action not only on housing and com-
lAunity development, but also on the International Monetary Fund,
ihe Export-Import Bank, and the Multilateral Development Banks.
I commend Senator Gam and Congressman St Germain for
having steered this legislation through a very difficult obstacle
course. These matters are now before the Senate only because of
intense negotiations that the Banking Committee chairmen led
over the last several weeks.
This is extremely important legislation. I urge my colleagues to
pass it promptly.
I wish to comment briefly on the major elements of this package.
HOUSING AND COMMUNrrV DEVELOPMENT
Mr. President, Congress traditionally has reviewed and revised
housing and community development policy every year. However,
it has now been over 2 years since Congress last enacted a housing
bill. Last year, an omnibus housing bill was carefully constructed
in committee but did not even get to the Senate floor. This year's
housing bill was allowed less than 2 hours of debate on June 21
before it was pulled off the floor and returned to the calendar.
Only a few weeks ago it appeared that housing legislation was dead
not only for this year but for next year as well.
The cause of that inaction has been very clear: The administra-
tion simply did not want a housing bill last year and did not want
one this year. The White House has worked effectively behind the
scenes to keep housing legislation off the Senate floor.
Of course, 0MB was claiming in public that the housing bill was
a budget buster. Those who were familiar with the facts knew that
chai^ was untrue. Both bills were within the amounts anticipated
in the congressional budget resolution. The Senate Banking Com-
mittee— on a bipartisan basis — produced a very responsible housing
bill. It would actually have authorized less than was provided in
appropriations signed willingly by the President.
More accurately, the administration simply has wanted to decide
national housing policy through administrative fiat and with little
congressional involvement. Under any circumstances, that would
be a bad way to govern — all the regions and groups who are affect-
ed by housing policy should be given a chance to be heard. Howev-
er, given the biases of this administi ation, that approach could be
disastrous for thousands of families and ultimately very costly to
the country.
Mr. President, this administration has been far less supportive of
housing than any in living memory. In most respects, administra-
tion policy has clearly been antihousing.
OvBF the last 3 years, the President's policy of continuing high
interest rates drove the homebuildii,g and building supply indus-
tries into their worst crisis ever. Although starts have begun to re-
bound, the iiyury remains. Just three States — California, Texas,
yGoot^le
414
and Florida — will account for 40 percent of the housing starts in
1983. Homehuilding in most States is still suffering. An unusually
large share of the building is being done by a few large builders.
The small and medium-sized builders, who are the backbone of the
U.S. housing industry, typically are in very fragile financial condi-
tion.
This administration has adamantly opposed measures to provide
relief to homebuilders or homeowners or homebuyers who have
been hurt hy the administration's economic policies. Administra-
tion ofllcials have worked in the open and behind the scenes to
hamper the ability of Ginnie Mae, Fannie Mae, and Freddie Mac to
support U.S. housing finance.
Housing and community development prograims have BufTered
disproportionately in the administration's budgets of the last 3
years. The administration proposed cuts in real terms for assisted
housing of 45 percent between fiscal 1980 and 1984 and cuts of an-
other 80 percent between fiscal 1984 and 1988. Real reductions over
the same period would be 32 percent for rural housing.
The administration proposed sharp reductions in the incomes of
low-income families by changing fair market rent standards, count-
ing foodstamp subsidies as income and capping medical deductions
at $300. Those proposals would have forced families receiving hous-
ing assistance into decaying neighborhoods and would effectively
have killed the section 8 existing housing certificate program in
many communities.
The administration would even cut assistance to elderly families
by 42 percent in real terms. The Urban Institute has estimated
that the impact of just three administration housing proposals
would reduce the income of a low-income elderly couple by $1,000
to $2,000 per year.
Measures such as these are what have made the administration's
budget program so unfair.
The administration's legislative proposals of last January
aroused a fire storm of opposition from across the country. Those
who understood housing problems at the local level knew that the
proposals would make housing assistance unworkable, would
weaken neighborhoods and would ultimately impose heavy costs on
American society. The Senate and House Banking Committees
evaluated each of those proposals carefully and rejected most of
them soundly.
Despite talk of New Federalism, the administration's budgets
would deprive States and communities of tolls they need to relieve
the worst problems of ill housing, neighborhood blight, and eco-
nomic distress. Community development block grants would be cut
by 28 percent and UDAG by 40 j»ercent in real terms between
fiscal 1984 and 1988.
Mr. President, in such an environment, this housing l^islation
takes on added importance. The Congress must no longer avoid its
responsibility for setting public policy. This bill will, of course, not
bring a marked improvement in housing for all Americans. But it
would take some significant new steps to improve housing for
many, and it would reject some of the Administration's more ill-
considered policies.
yGoot^le
415
First, the amendment continues a strong Federftl commitment to
community development, specifyii^ that the community develop-
ment block gremt progrfim has a clear national purpose to benefit
primarily low- and moderate-income people. Local communities
could continue to use the section 108 loan guarantee program
where it is needed to obtain financing in a timely manner. Local-
ities in a number of States would be protected from adverse
changes in their funding.
Seamd, the amendment strongly reaffirms congressional support
of the UDAG program and of the system of national competition
that has enabled UDAG to provide the greatest public benefit at
the lowest cost. This amendment includes a provision in both the
Senate-reported and House-passed bill that unequivocally rejects
an administration proposal to weaken UDAG by decentralizing the
competition. The amendment makes it clear that HUD area and re-
gional offices are not authorized to interfere with a local communi-
ty's right to have its UDAG proposals fairly considered in the na-
tional competition.
Third, the amendment includes a new program to assist in the
rehabilitotion and production of rental housing. Enactment would
recognize that Federal housing policy, if it is to be balanced, must
help produce new housing in those local markets that have a short-
age of decent rental housing, particularly for elderly persons and
large families. Localities would be able to tailor assistance efUcient-
ly to the requirements of particular projects.
Fourth, the amendment provides a more realistic level of housing
assistance for participating families by increasing income deduc-
tions for children and elderly householils.
Fifth, the amendment reaffirms congressional support for the
provision of decent housing in rural areas. Nonprofit organizations.
States, and local governments would he helped to rehabilitate
homes owned by tower-income families and multifamily housing
that serves lower-income people. Farmers Home would be able to
finance manufactured housing that meets energy standards de-
sired to reduce a homeowners long-term operating costs.
Mr. President, I believe that enactment of this amendment
would improve our ability to meet the Nation's urgent housing
needs.
I r^ret that three important items have not been included in
this amendment.
First, the amendment does not include any of the provisions of S.
2040, the Secondary Mortgage Market Enhancement Act. Title 1 of
that bill would make it easier for private firms to enter the second-
£iry mortgage market as issuers of mortgage-backed securities. Title
n would help Fannie Mae and Freddie Mac support homeowner-
ship and respond to changes in the mortgage market. I understand
that title I of the bill cannot be enacted this session because of con-
siderations of committee jurisdiction in the House. However, 1 be-
lieve that provisions of title II, which have already been passed by
the full House and were just passed by the Senate, should have
been included as part of this hill.
Mr. President, a majority of my colleagues on the Banking Com-
mittee agree. I ask unanimous consent that the text of our letter be
printed at this point in the Record.
yGoot^le
There being no objection, the letter was ordered to be printed in
the Record, as follows:
COUMRTEE ON BaNKINO,
HouBtNC. AND Ukban Affaiks,
Washington, RC, May i. ISSS.
Hon. Jakb Gasn,
Chairman, U.S. Senate Banking Committee, WaahingtoTi, D.C.
Dear Mr. Chairman: We congratulate you on the Committee's succem in mark-
ing up the Housing and Community Development Amendments of 1983. We think it
is important that the CongreBa pass a housing bill this year, and we intend to woik
with you toward that end in the spirit of bipartisan cooperation that has maiked
the Committee's work on the bill thus far.
We believe that the reported bill, as a whole, demonstrates the Committee's deter-
mination to strengthen Federal housing and community development programs.
It is our view, however, that two important parts of the reported biU were ap-
proved as l^islative proposals subject to Airther consideration by the Committee
prior to Senate floor action.
"With r^ard to public housing, the Committee has agreed that first priority
should be given to bringing the existing stock of public housing up to standartl rap-
idly and then maintaining and managing it well for years to come. However, Title
m of the bill contains in addition a new and rather detailed proposal for establish-
ing a Public Housing Accreditation Commission. Serious questions have been raised
concerning this proposal— including its constitutionality — and it has engendered
considerable controversy since the markup.
"The rural housing provisions of the reported bill are a m^jor improvement over
the legislation advocated by the Administration. However, a number of the proposed
changes included in Title V have also given rise to controversy."
We understand that Senator Tower is asking for a full Committee meeting to con-
sider a motion to change the provision concerning rent control that was contained
in Title I of the April 12 Committee Print, For procedural reasons, we support his
We therefore suggest that you schedule a Committee meeting to take up these
outstanding it^ms along with proposals on the secondary mortgage market, Indium
housing, and mortgage default assistance. We also request tbat any Committee
amendments tt^ether with a written report on their implications be made available
to ail Senators in a timely manner prior to floor debate on the bill.
In conclusion, we want to thank you for the accommodation you and your staff
have shown members and staff of the minority. We will support your efforts fa) have
a responsive and responsible housing bill enacted early in this session of Congress.
Sincerely,
AiAN Cranston,
CKRIffTOPHER J. DODD,
JtM SaS88B,
William Proxmire,
Donald W. Ribgle, Jr.,
Paul S. Sarbanbs,
Frank B. Lautenberg,
Alan J. Dixon,
U.S. Senators.
Mr. RiEGLE. Second, the compromise dropped a number of provi-
sions in the House and Senate bills that would have helped insure
that public housing will be better managed and maintained for
years to come. The administration asked that these provisions be
dropped in exchange for a commitment that the administration
would make no change in regulation or administration of these
Erograms unless the changes are enacted in l^islation. Since
iUD's recent administration of these programs has been very con-
troversial, I believe that this is a serious loss to the program.
Finally, I regret that the amendment fails to include any relief
for those unemployed homeowners who are threatened with the
loss of their homes as a result erf' economic adversity beyond their
control.
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Despite these omisBions, I urge my colleagues to adopt the
amendment.
EXPORT IMPORT BANK
I would now like to make a few brief comments in support for
the Export-Import Bank Amendments of 1983 and about the pro-
posed quota increases for the International Monetary Fund which
we are also considering today.
I am a long-standing supporter of the Export-Import Bsink and
remain strongly committed to this agency, which helps American
exporters by insuring their loans and by providing credits to their
customers abroad.
At a time when the U.S. deficit in foreign trade is increasing dra-
matically, I think that it is imperative that we do everything in
our power to facilitate and accelerate American exports.
In 1982 the U.S. foreign trade deficit was $43 billion and for
1984, Martin Feldstein, Chairman of the President's Council of Eco-
nomic Advisers, predicts that this deficit could reach $100 billion.
Since approximately one out of every six American jobs is de-
pendent on foreign exports, the more we export, the more Ameri-
cans we will be putting back to work; and the less we export, the
more we allow the other nations to capture our domestic markets
and the weaker we will become as a nation.
I believe that our current trade imbalance is an extremely seri-
ous problem which threatens the economic welfare of our country
and which cannot be underestimated. Serious ongoing efforts must
be made to address this problem.
Passage of the Export-Import Bank Amendments of 1983 is a
vital step in this direction. The purpose of today's Export-Import
I^islation is, among other things:
To expand U.S. employment and economic growth by increasing
U.S. exports to markets in the developing world;
To stimulate the economic development of countries in the devel-
oping world by improving their access to credit for imports from
the United States; and
To neutralize foreign predatory financing of exports in competi-
tion with U.S. exports.
In considering and peissing this legislation in the Senate Bemk-
ing. Housing and Urban Affairs Committee we recognized the vital
need for a strong and aggressive Export-Import Bank and the im-
portance of neutralizing subsidized foreign export financing.
Vtu^ous sections of the Export-Import Bank Act amendments re-
flect our following intentions:
To make it absolutely clear that a primary function of the
Export-Import Bank is to be competitive with foreign officially sub-
sidized export credits;
To reestablish the Eximbank Advisory Panel to make the bank
more fully responsive to the needs of American exporters;
To reduce the opportunity for politicizing the Eximbank by
givii^ members of the Board of Directors fixed 4-year terms; and
To discourage the use of subsidized financing by foreign govern-
ments to support sales in the U.S. market.
yGoot^le
418
Other major provisions of the Export-Import Bank Act Amend-
ments of 1983 are designed specificadfy to assist the export of aerv-
ices, to assist small business, and to insure that U.S. companies are
afforded an equal and nondiscriminatory opportunity to bid for in-
surance in connection with transactions assisted by the Bank.
Services represent the fastest growing sector of American ex-
ports. This testation amends the Eximbank Charter to make it
clear that service exports are to receive the same and equal treat-
ment as the Bank gives to other export sectors.
The bill seeks to insure that the Bank will be responsive to the
needs of small business exporters. The Chairman of the Eximbeink
Board is to designate one Director of the Bank to coordinate the
Bank's support for small business.
Mr. President, in hearings last year, the Banking Committee
teamed that well over $1 billion of U.S. export sales were lost in
fiscal year 1982 due to inadequate Eximbank support. During the
same period, the Bank failed to use approximately $1 billion of its
direct loan authority.
This underutilization of funds to stimulate U.S. exports is totally
unacceptable and in our Senate committee report we recc^ized
the need for greater adherence on the part of the fietnk to meet its
responsibilities to provide American exporters with competitive fi-
nancing in the face of foreign government subsidized export credit
competition.
As one Senator representing a major exporting State, with an in-
tolerably high unemployment rate, I view the improvement of our
trade imbalance and export situation as a major imperative of the
Congress and I support passage of this Export-Import legislation as
a much needed measure in the right direction.
INTERNATIONAL MONETARY FUND
Mr. President, during the past year the Senate fiemking Commit-
tee has held numerous hearings on the international financial situ-
ation and the participation of the United States in the Internation-
al Monetary Fund.
It is no secret that "our monetary system is in a rather frighten-
ing state" as H. Johsmnes Witteveen, the former managing director
of the International Monetary Fund put it at the start of the
annual meetings of the IMF and the World Bank here in Septem-
ber.
President Reagan's speech to the SEune conference acknowledged
the possibility of "an economic n^htmare that could plague gen-
erations to come" if steps were not taken to buttress our interna-
tional monetary system.
Recently, no single issue has dominated the financial community
more than the outstanding loans of our banks to lesser developed
countries and debtor nations as and the implicatioiu on the world's
monetary system of a default on the part of any of a number of
different countries.
The International Lending Supervision Act of 1983 is the result
of hundreds of hours of hearings, thousands of pages of testimony,
and the best eiTorts of Members in both the Senate and in the
yGoot^le
Ifouse to reach an acceptable compromise on an extremely difficult
piece of legislation.
In addition to increasing the U.S. quota in the IMF by $5.8 bil-
lion and contribution to the general agreement to borrow by $2.6
billion, the International Lending Supervision Act:
Requires bank r^ulators to insure that banks heavily involved
in overseas lending maintain adequate capital to protect them-
selves irom possible defaults;
Requires banks to spread the earnings from service fees over the
effective life of the loan;
Requires more frequent reporting by banks of their foreign lend-
ing;
Encourages the IMF to examine more closely and report on the
external indebtedness of borrowing nations;
Urges consideration of U.S. membership in the Swiss-based Bank
for International Settlements;
Disallows U.S. banks to extend credit to finance foreign mineral
and mining operations without conducting a thorough feasibility
study; and
Reiquires special reserves for beuiks with loams Ukely to default.
This l^islation also directs the U.S. representative to the IMF
to:
Propose policies to improve collection and public dissemination of
information;
Propose policies to the Fund to insure that countries using Fund
resources take steps to eliminate import restrictions and export
subsidies;
Work for policies to eUminate agricultural export subsidies;
Oppose the use of GAB funds for loans to noncontributing coun-
tries; and
Propose policies to eliminate IMF assistance which would en-
hance a country's production of world surplus commodities.
Mr. President, the Domestic Housing and International Recovery
and Financial Stability Act, taken as a package, represents meuiy
compromises arrived at through the give-and-take inherent in the
legislative process.
On bzilance I support this omnibus legislation with enthusiasm
and urge my colleagues to pass it without further delay.
Mr. DeConcini. Mr. President, I rise in opposition to the amend-
ment to the supplemental appropriations bill to fund the Interna-
tional Monetary Fund.
I do not believe that our Nation can afford the full increase con-
tained in this given our own economic problems. As a matter of
fact, I would prefer that no quota increase were granted. I do not
believe that this increase will help to remedy the international
debt problem, and I do not believe that the American people want
our Nation to allocate this additional sum to the IMF.
Perhaps David Stockman best summarized the arguments
against additional funding of the IMP when he stated on July 21,
1980:
yGoot^le
420
. . . Proponents argue that the IMF needs this increase to help prevent 0
in the Third World from collapsing under the burden of excessive external ddit and
thereby becoming vulnerable to Communist takeover or Bubvenion. But the IMF
does not have a record of success in strengthening unstable economies in the Third
World. Indeed, it has been counterproductive.
Some argue that the quota increase is needed to protect the international banks
from the possible default of Third World loans. Except for an imprudent few, howev-
er, it is unlikely that banks will have difficulty weathering any such defaults.
In this time of economic stringency, when Federal deficits are placing heavy bor-
rowing requirements on the capital markets of this country, the American public
should not be called upon to fork over $5,5 billion to the IMF . . ,
Thus, spoke Mr. Stockman in 1980, and what was true then is
true today.
The increase in the IMF will add to the Federsil deficit. It will
also significantly impact on our credit markets because the IMF
bailout packages require additional foreign lending by U.S. banks,
thus reducing their ability to purchase U.S. Government and corpo-
rate bonds at home. According to one estimate, our private banks
lend $4.30 abroad for every dollar in IMF loans. Paul Volcker has
warned us that there is not enough credit to go around. Thus, it
seems that a larger IMF quota will cost the United States either
higher interest rates and a weaker recovery or higher taxes or re-
duced defense and social spending.
In addition to contributing to our own economic difficulties, the
IMF quota increase will serve to prop up old debts with new debts.
The ultimate risk of default is increased, and the banks and our
Government become more and more entangled in the economies of
the debtor nations. Such an approach solves no problem — it en-
hances them.
The President has always been a strong critic of foreign aid — at
least he was before he came into office. The IMF is another multi-
lateral aid agency to the Third World. Based on our own contribu-
tion to the IMF, we should have 40 percent of the vote in the IMF.
But we do not — we have just under 20 percent. So the IMF is an-
other multilateral aid agency over which we have little control. We
receive plenty of international pressure to contribute to the IMF,
but receive no apparent credit from those to whom our assistance
goes. The loss of control not only may harm our foreign policy in-
terests— it also may result in aid which will be directed in ways
that will harm particular sectors of our own economy.
In sum, I believe that the threat of a banking crisis has led us to
jump at the IMF quota increase without adequately exploring the
alternatives. Perhaps a temporary revolving fund would be suffi-
cient to get us through the current situation. At least then, we
would not have to permanently commit our funds.
Another possibility would be to concentrate on bilateral arrange-
ments. We would at least have control over these arrangements
and ensure that our money was going to nations that we want to
help in ways that will help.
A third option is for the President to determine just what per-
centage of the bank loans would have to be written down in order
to make the others manageable. This knowledge would create a
basis for some sort of assistance plan that would make more sense
than just throwing additional money into the IMF.
yGoot^le
421
A fourth alternative, if the decision is made that the IMF must
be used, is for the IMF to sell some of its assets rather than ask
contributing nations to up their quotas. The International Mone-
tary Fund holds the world's second largest gold reserve — 103 mil-
lion ounces of gold, currently worth between |40 to $50 billion. The
sale of gold by the IMF would not be unprecedented — the IMF sold
25 milhon ounces at public auction over a 4-year period and earned
$4.6 billion.
I urge my colleagues to encourage the administration to explore
these options. Fully — for the.good of our Nation as well as for the
long run benefit of the world economy — by opposing this amend-
ment.
Mr. Bradley. Mr. President, I rise today to support the first
housing authorization bill the Senate heis considered in almost 4
years. Although the authorization does not provide enough housing
assistance for low-income tenants, the bill does authorize enough
moneys to build or renovate 30,000 to 40,000 units and it does reau-
thorize community development block grants and urban develop-
ment action grants for 3 years.
This is a long way from the 300,000 units which were financed in
the 1970's. But the housing units the bill will provide will help at a
time when the poverty rate has risen to 15 percent nationally, the
highest rate since 1966. This legislation is far better than nothing,
which for a while appeared to be the only alternative.
A very important provision for me is the protection this legisla-
tion will provide several New Jersey communities. Many cities and
counties that would have been adversely affected by CDBG reclassi-
fications including Asbury Park, Long Branch, Sayreville, Hobo-
ken, and Hudson County in New Jersey, will have a 2-year reprieve
under the reauthorization community development block program.
Because of administrative changes and redefinitions, relating to
the CDBG program, these cities and Hudson County stood to lose
vitally needed funds.
For example, the city of Hoboken now receives its CDBG funds
from Hudson County which in turn receives its moneys from HUD
under the urban county entitlement designation. After a redefini-
tion of the standard metropolitan statistical area, Hoboken was
classified as a "central city' because it has a population in excess
of 50,000. This designation would require Hoboken to be classified
as a "metropolitan entitlement city" for CDBG purposes and to re-
ceive its funds directly from HUD. The problem with this is that
Hoboken would have to compete with very large cities and that
would mean a probable loss of $700,000 annually in CDBG funds.
With a per capita income of $5,421, unemployment at 15 percent,
and the poverty rate at 23.5 percent of its population, Hoboken
cannot afford the loss of a single dollar.
Worse, if Hoboken's population were removed from Hudson
County for CDBG eligibility, the county would slip under the
CDBG urban county population minimum. That means Hudson
County would no longer be eligible for the $5.2 million it now re-
ceives. With unemployment at 13 percent, a poverty rate of 17 per-
yGoot^le
422
cent, and a per capita income of $6,476, Hudson County could not
tolerate the losa of CX)BG funds. As anyone in New Jersey knows,
there is no more of an urban county than Hudson. It is perhaps the
most densely populated county in the country.
As these per capita income figures and unemployment and pov-
erty rates indicate, Hoboken and Hudson County rely heavily on
CDBG funds to supplement their services available to low- and
mode rate- in come individuals.
Similarly Asbury Park, Long Branch, and Sayreville rely heavily
on CDBG funds to supplement their services for low- and moderate-
income individuals. Because of the redefinition of a standard met-
ropolitan statistical area these cities would have lost their status as
central cities under CDBG. Without this legislation these three
cities would have lost a total of $1.7 million annually.
1 commend the Banking Committee, and in particular, its coun-
terpart in the House for working long hours to develop this com-
promise which could be brought to the floor.
I support this compromise housing authorization bill and urge
my colleagues to support it as well.
HOUSING
Mr. TsoNGAS. Mr. President, I wish to comment on the housii^
authorization bill contained in the supplemental appropriations
legislation. After 3 years without housing authorization legislation,
I am pleased that we finally have legislation for passage tonight. I
understand that the bill is a delicately crafted compromise ardu-
ously constructed in the past week. Because I believe such I^isla-
tion is so essential to our Nation's desperate housing needs, I will
not endanger the passage of this compromise by pro[>08ing £uiy
amendments to improve the bill.
However, I am compelled to express my concern over the provi-
sions pertaining to public housing authorities in this legislation.
Local public housing authorities have been responsible for the most
difficult task of administering housing for the country's low
income, elderly, and handicapped. It is unfortunate that we are
unable to address any of the issues that would improve the often
deplorable conditions under which the tenants must live.
Provisions to confirm a cost-based system for operating subsidies;
establish incentives for better management, reduction of vacancies,
and improved energy conservation; reduce inequitable rents; and
make production of units possible through realistic and achievable
total development cost controls are all eliminated in this l^isla-
tion. Yet such provisions are necessary for an effective public hous-
ing system. Their removal raises serious concerns.
In the next session of Congress I intend to introduce legislation
that would address these important issues so crucial to providing
decent housing. However, I reiterate my support for enacting hous-
ing authorization legislation tonight and will respect the compro-
mise.
HOUSING AUTHORIZATION
Mr. Tower. Mr. President, I am pleased to stand today and
speak in support of the loi^-awaited comprehensive housing au-
yGoot^le
tborization le^Iation that is now before us. I must commend the
distiiigaished chairmen of the Senate and House Banking Commit-
tees, Senator Gam and the gentleman from Rhode Island, Mr. St
Germain. Their leadership and willingness to grapple with this
critically important legislation has been diligent and untiring. I
know that I express gratitude ftvm the Nation's housing communi-
ty when I thank these colleagues for their efforts.
This is the first piece of comprehensive housing authorization
legislation since the 1981 reconciliation package. It responsibly ad-
dresses the needs of low- and moderate-income Americans and it is
my understanding that this measure is within the parameters of
the already enacted HUD appropriations bill. Mr. Preisdent, I urge
my colleagues to consider this package carefully and to act favor-
^1y on it. This measure reflecte the hours of hard work smd com-
promise by Members of the Senate, the House, and the administra-
tion.
Mr. President, I have been dismayed over the last few months by
the delay in approving the U.S. share of the needed increase in
fUnds for the International Monetary Fund. Traditionally, we have
attempted not politicize major foreign policy decisions. The U.S.
share of the proposed increase must be placed in its proper econom-
ic perspective.
We cannot return to the days of a United States that is self-suffi-
cient in every way and able to set policies that serve only our own
rarochial interests. On a global basis, our world is interdependent.
We link arm in arm with our allies and together oppose the spread
of communism and terrorism, poverty and starvation, and encour-
age enlightenment from new scientific and technological discover-
ies. Since Bretton Woods, the United States and the major finan-
cial countries have helped develop the rapidly growing Third
World. Such development has created jobs and homes for an ex-
ploding population and has created new markets for the exporting
of American consumer goods, research, and technology. We as pol-
icymakers cannot act so narrowly in our short-term interests that
we ignore the fragile interdependence of our financial world. We
must protect stability and the knowledge of confidence while the
IMF, t*^ether with the debt-ridden countries, restructure their
weakened balance sheets.
Were there bad loans made? Yes. Was there far too much con-
centration and risk by a few banks in a few countries? Yes. I b^ to
differ with those, however, who argue that this increase is purely a
"bail-out" of the large money center banks. In looking at the
period from 1977 to mid-1982. Treasury Department analysts found
that in the 20 countries that have received the largest IMF dis-
bursements, all relied most heavily on private bank financing. IMF
programs have been followed up by new bank tending much great-
er than the amount dispersed by the IMF itself During this period,
net IMF disbursements totaled $11.5 billion to these 20 countries,
while net commercial bank lending totaled $49.7 billion, resulting
in a ratio of 4.3 to 1. It is to be hoped these increeises will prevent
huge loem losses and perhaps further bank failures, but this is
being done in the ultimate interest of the American worker,
termer, and taxpayer. President Reagan and Secretary Regan were
firmly opposed to any increase in the IMF quota less than a year
yGoot^le
424
ago, but Eifter a great deal of painful analysis and study of Brazil
and Mexico's problems alone, they have reluctantly recommended
this 18-percent quota increase of £8.4 billion as the most cost effec-
tive solution.
I was shocked when I studied the reports on this international
debt situation. I shared the concerns of many regarding this quota
increase. But, in my view, one must study the hard data of the po-
tential impact of a country default. During the 1970's, U.S. exports
grew twice as fast eis total world exports. In 1970, exports repre-
sented 9 percent of our total production. In 1980, that number was
19 percent, and U.S. export-related jobs totaled 5.1 million, or 5.1
percent of the total civilian employment. Every $1 billion in ex-
ports resulted in 24,000 jobs. As I mentioned earlier in relation to
our participation in the development of the Third World, one now
finds that some 30 percent of U.S. exports are sold to non-OPEC-
member Third World countries. Jobs are at stake here. We on the
Senate Banking Committee went a step further prior to approving
passage of the increase by imposing more strict lending, account-
ing, and capital adequacy measures for our banks involved in inter-
national lending, Additionally, Senator Mattingly, Ri^le, and I
amended the measure to impose restrictions on IMF dispersals to
any country that has restrictive trade barriers to U.S. products. I
believe that this amendment strengthens the IMF's ability to insist
on conditionality prior to any commitment. Jobs and exports
should continue to be our chief concern in this process.
Many of my colleagues have offered possible alternatives to in-
creasing the IMF quota, the most popular of which would be to sell
IMF gold inventories or to pledge that gold as collateral for fund-
ing loans to the IMF. First, selling the IMF's gold buUion would
result in a lowering of the price of gold which would have a dra-
matic negative impact on the solvency of the very countries Emd
the very banks that we are discussing. Countries and world central
banks keep a large portion of their capital in gold reserves. Lower-
ing the value of those reserves would dsimage the liquidity of the
banks and the customers they serve and, therefore, this solution is
not a practical one. The concept of using the gold as collateral is
often discussed. In fact, this is already being done by the IMF for
certain short-term borrowing needs and thus this proposal is cur>
rently being used.
The President and the Congress have often been forced by public
views, as well as by grave concern for the stability of our Nation, to
do things that are unpleasant. One would be hard pressed to tell
me that passage of the Garn-St Giermain bill was not a "bail-out"
of the savings and loan industry through the capital certificates
program. Yet, millions of American savers, borrowers, £ind deposi-
tors and their homes are affected by this decision. Chrysler is an-
other example of the same principle. Let us hope our friends in the
international community tidte Lee lacocca's advice about borrow-
ing— "We borrow money the old fashioned way; we pay it back."
Mr. DoMENici. Mr. President, I stand up today to oppose any
quota increfise for the International Monetary Fund. I think it is
about time to stop our suicidal practice of using U.S. tax dollars to
export American jobs to foreign countries. In addition to the IMF
authorization, this package dso reauthorizes the Eximbank and
yGoot^le
425
several interdevelopment banks. Each of these institutions have
been a menace in the past. Their loan activities have hurt our
copper, steel, potash, and cement industries. They make loans
which build plants to increase world capacity for commodities that
are already in surplus. They make loans that put Americans out of
work.
I am very concerned that this bill does nothing significant to ad-
dress this problem of surplus commodities. In addition, I think that
this ie an inexcusable authorization when this country is facing
gat^antuan deficits. But I am not going to expound upon the deficit
problem in this speech. There is an equally important reason why
this legislation should be defeated.
The United States is suffering from the unscrupulous trade prac-
tices of other countries. These are the same governments that are
the beneficiaries of the IMF, and the same beneficiaries of the
United States' essential and generous participation in that institu-
tion.
Let me focus for a moment on what we have received in return.
When I meet with constituents I hear about how our markets are
being lured away because of subsidized competition by the same
countries who we help down at the IMF. We help them through
the IMF so that they can continue to borrow money to continue to
uneconomically subsidize their industries, take over our markets
BOid put Americans out of work.
One problem is that some of these countries are not supply and
demand economies. They set production levels and sell at whatever
price necessary to meet that goal. They disregard market condi-
tions and increase capacity, building new plants — even when a
product may be in surplus. They subsidize production to the point
that even with the most modem technology our domestic producers
have no hope of competing in their own markets.
The problem is spreading, hast year the World Bank approved a
$450 loan package to the Cananea project in Mexico. Eximbank
also financed $75 million for the project. After considerable effort I
was able to persuade the World Bank not to make the loem. I was
assured that this sort of thing would not happen again. But amaz-
ingly, 2 weeks ago I learned about another proposed $268 million
loan for the Codelco copper plant's expansion. This is the national-
ized copper company in Chile. This comes at a time when copper is
in surplus and our own plants are operating at depression levels.
Copper is not the only target. Mexico has built or remodeled
seven cement plants and has increased its U.S. market share 669
percent in the first 9 months of this year. Mexican cement is so
marketable because half the cost of producing cement is energy
and the Mexican Government, through PEMEX, its government
owned and controlled monopoly sells heavy oil to its cement indus-
try at $1.23 per barrel.
During this same period of time when Mexico has made major
inroads into our copper and cement markets, Mexico has also been
a r^ular customer at the IMF.
Another commodity that is being subsidized at the expense of
U.S. producers is potash. Israel, East Germany, the Soviet Union,
and Spain subsidize the potash and sell it at below market prices
here Euid in the international market.
yGoot^le
426
These countries are making the United States look stupid. They
subsidize their industries, steal our markets, and then they expect
us to bail them out through institutions like the IMF.
It is bad enough that our trade laws do not address the unfair
practices of energy subsidies and has no effective way of dealing
with government subsidies in nonmarket economies.
It is hard for me to tell my unemployed constituents that our
trade laws will not protect their jobs. I have introduced measures
that I believe would address the commodities in surplus problem.
In fact, the amendment was passed in both the House and the
Senate. However, in this conference that we are voting on today,
numerous changes have substantieilly curtailed the provisions' ef-
fectiveness. I have also introduced a bill to deal with the energy
subsidies undermining our cement industry, but it Is going to be
next year before any legislative trade relief is enacted.
Today we have an opportunity to at least send a message to
these countries that the United States is not that stupid, and that
we are no longer goin^ to pay for the reckless subsidization of for-
eign countries industries at the expense of our own.
Mr. President, for the past 18 months we have watched with
alarm the development of a crisis in world trade and finance. As
our own recovery gathered steam, American farmers and business-
men watched their foreign markets contract as their foreign cus-
tomers ran out of dollars. The crisis has had a particularly striking
impact on our neighbors in Mexico and Central America.
I agree with the proponents of this amendment that there is a
serious problem. Where I part company is with the stop-gap solu-
tion that is offered by this legislation.
Just yesterday, the Washington Post editorial writers called on
each Senator to make tough decisions to prevent the nightmare of
collapsing world trade and finance. This Senator knows what tough
decisions are. We saw last night how difficult it is for the Senate to
make the tough decisions that would bring Federal spending under
tighter control.
The problem with immediate consideration of the $8.5 billion
package for the International Monetary Fund luid the general
agreement to borrow is that it does not do the job at hand. This
measure would not protect our financial system. It would not
revive world trade, and it would not sustain our domestic recovery.
In the view of the Senator from New Mexico, this amendment
does not have a significant impact on the fintuicing problems that
overhang our domestic economy and leave the world economy in
the doldrums. If this amendment made a real difference, I could
vote for it, but $8.5 billion is a lot of money to spend in order to
make us feel better.
All of the news is not dismal. There are some favorable develop-
ments and I will review some of these in a few minutes. The IMP
package, however, helps to camouflage the fact that severed coun-
tries have contracted large international debts and they can not
meet interest payments on that debt. I would consider supporting a
measure which would clearly promote a heeilthy world economy,
but I am not prepared to support U.S. financing of other nations'
debt service. For that reason, I will oppose this amendment. Let me
explain how I have come to this conclusion.
yGoot^le
427
Mr. President, I believe that we need a constructive approach to
international finance — one which promises growth and opportunity
not only for our developing neighbors, but for our own country and
our industrialized trading partners.
Earlier in the year, the proponents of this amendment suggested
that our own economy could not recover unless the world recovered
and particularly the developing world which is so important to our
ezpOTt growth. At the time, I was impressed by these arguments.
Today, however, I am more impressed by the fact that the U.S.
economy has recovered beyond our expectations. The economy will
likely grow in excess of 6.5 percent this year compared to the
fourUi quarter of 1982. This is certainly a respectable growth rate
for a recovery that just some months ago we thought would be
anemic.
If we ignore our first quarter experience which was very weak,
the economy is likely to grow at better than an 8 percent annual
rate for the 9 months ending in December. This compares favor-
ably with past recoveries. In fact, only twice in the last 35 years
has the economy grown more than 8 percent during the first year
of an economic recovery. If the net export sector had been flat, in-
stead of very weeik, the growth rate in our economy would have
been 1 to 1.5 percent higher. With additioneil exports, this recovery
could have been one of the strongest of the post war period, and
our growth rate in recent months would have been near 10 percent
at an annual rate.
I do not believe that such high growth rates are sustainable or
are consistent with the kind of price and interest rate stability we
are trying to achieve. In short, I believe that even if the foreign
trade sector had been stronger during the past year, we would have
not realized any more rapid a growth rate than we already have.
It is for this reason that I find the recent study by the Federal
Reserve Bank of New York, which finds that we have lost 250,000
jobs as a result of the sharp decline in U.S. exports to financially
troubled nations of Latin America, to be misleading. Of course if
you look at any one sector of the economy you can identify job
losses that would not have occurred had the demand grown more
rapidly.
But the plftin fact is, Mr. President, that we have added 3.0 mil-
hon jobs to this economy during the past year. This is as many jobs
as we have added to this economy in any single year in our post-
war history. Indeed, I would point out to my colleagues that the
mix of the job growth is just as distorted by the growth in imports
from many developing countries as it is by any loss in jobs due to
lower exports.
During this recession, Mr. President, we lost 3 million jobs. All of
these jobs were in the manufacturing sector. However, only 35 per-
cent rf the recent job growth — or about 850,000 jobs — are manufac-
turing jobs. Part of the reason may be weakness in the export
sector. Equally important, however, is the alarming weakness of
many other sectors, particulary mining and basic materials, that
are crippled by imports. Some foreign competitors export minerals
at less than the cost of production with the financial support of the
Tt/^. The practice devastates our American copper industry.
yGoot^le
428
While the rest of the economy is operating at about a 78-percent
capacity, which is up almost 10 points from the 1983 low, the
mining industries of this country are operating at only about 70
percent or about the same as the low point for 1982. And many in-
dustrial material prices are now going down, not up, which is not a
very encouraging sign for the future prospenzts in these industries.
Moreover, Mr. President, if we look at the trade sector, now, we
see that it is improving — without any action on the IMF legisla-
tion. Import growth is stabilizing after a large run up in the early
stages of the recovery. More important, exports are stabilizing and
actually improved dramatically in the third quarter. Of course, the
world must continue to recover. But, I happen to believe that the
world recovery is more dependent on what we do in this country
and in this Congress with our national economic policy than on
this proposed contribution to the IMF.
Finally, Mr. President, there are many in this body who would
characterize this vote as a vote of confidence for the banking
system in this country. I want to tell my colleagues that it is possi-
ble to vote against this amendment and not be antibanks. I support
the commercial banks in this country and in my own State of New
Mexico. But I believe that there are good banking practices and
poor banking practices. The banks in my own State have oflien sac-
rificed tremendous growth opportunities by what, at the time, may
be referred to as conservative banking practices that in the long
run are clearly prudent.
I, for one, Mr. President, see no undue stress in the banking
sector. The banks of this country are enjoying substantial profits.
Let us run down the list. Citicorp; profits will be up almost 19 per-
cent this year. Chase; profits will be up 45 percent this year; J. P.
Moi^an, and Chemical Bank; profits up 10 to 15 percent. This is
not stress. By many industries standards, this is prosperity. To me
this means that banks are able to take account of the losses in in-
terest and the existing restructuring of debt, are able to raise loan
loss reserves and still show substantial profitability.
In addition, Mr. President, I have heard many times during this
long debate that banks will have to raise capital under conditions
of serious duress if the IMF funding is not passed. But, I note in
Tuesday's Wall Street Journal that banks are already raising cap-
ital at record rates. Commercial banks in this country have raised
$7.6 billion in debt and equity capital during the first 9 months of
the year. Is this flurry of bank financings to compensate for the
drain in capital due to our troublesome international financial situ-
ation? Yes, some, but a large share of these financings is to take
advantage of new growth and investment opportunities now avail-
able under financial market deregulation. I would like to enter this
Wall Street Journal article into the Record at this point.
yGoot^le
[From the Wall Street Journal, Nov. 17, 1983]
T Record Pace: $7.6 Billion in 9
(By Daniel Hertzberg)
Nkw Yosk. — A growii^ economy, new expansion opportunities created by deregu-
latioD and an underlying fear of high loan-losees are prompting the nation's com-
mercial banks to raise new capital at an unprecedented rate.
Led by giant money-center institutions, banks have issued {T.6 billion in stock
and long-term debt through the first nine months of this year and the total prob-
aUy will exceed (9 billion by year-end. That's more tban what they raised in the
previoua 3M yean and far above the record $5,5 billion that banks raised in 1982.
The growing economy is behind some of the money-raising efforts. Under bank
rules, the greater a bank's capital, the more quickly it can expand such assets as
loans. But the prospect of der^ulation allowing banks t« expand quickly is also pro-
viding an incentive to raise money. For example. Key Banks Inc., Albany. N.Y., in
July sold MO million of adjustable rate perpetual preferred to help fund several ac-
quisitions, including the pending purchase of Depositors Corp., Augusta, Maine, for
about $75 million.
But another reason for the funding flurry is the widespread concern over loan
loooec, particularly the threat of a major loan default by a foreign country. Banks
vant to increase their capital in anticipation of possible write-offs on the troubled
loans associated with Third World borrowers.
So far, the nation's biggest banks have dominated the rush to the public markets.
Banks with assets greater than $5 billion accounted for 84% of the bank financing
in the first nine months of 1983, according to a report issued last week by Irving
Trust Co.
The list was led by Citicorp, which raised $2,3 billion in the nine months, accord-
ing to Irving Trust. Manufacturers Hanover Corp, raised $650 million; J,P. Morgan
i Co., $400 million; and BankAmerica Corp., $400 million.
To raise capital, banks are selling either long-term debt or equity, which includes
common stock end adjustable rate preferred stock. The adjustable rate issues recent-
ly have made a comeback.
One effect of all the money-raising has been to boost substantially some banks'
ratio of capital to assets. For some time, federal regulators have been pressing big
banks to strengthen their capital levels and earlier this summer imposed rules re-
quiring the nation's 17 largest multinational banking organizations to maintain cap-
ital equal to 5% of their assets, which principally consist of loans.
According to preliminary figures from the Federal Reserve Board, all but two of
the big banks matched or exceeded the 5% limit on Sept. 30, BankAmerica moved
to 5.03% from 4.79%; Bankers Trust New York Corp. to 5,68% from 4.79%; J.P.
Uorgan to 6.84% from 6.2% and Irving Bank Corp. to 5.03% from 4.83%. Citicorp
moved to 4.8% from 4.67%, still below the 5% level, while Manufacturers Hanover
drojpped to 4-92% from 5.04%.
Tlie ratio measures primary capital, which includes common stock, perpetual pre-
ferred stock, loan loss reserves and certain other factors. It doesn't include most
long-term debt, although long-term debt is regarded as part of a bank's capital by
most financial analysts.
Mr. DoMENici. Mr. President, the conference agreement provides
$0.3 billion in budget authority and $0.2 billion in outlays for flscal
year 1984 for activities of the Veterans' Administration, the De-
partments of Agriculture, Energy, Housing and Urban Develop-
ment, and Interior, and miscellaneous Federal pr(^ams.
Enactment of this conference report would put the Appropria-
tions Committee $8.2 billion in budget authority and $0.2 billion in
outlays below its overall allocation under the Budget Resolution
when outlays from prior-year budget authority, actions to date, and
possible later requirements are taken into account.
Mr. President, I commend Chairman Hatfield and the members
of the Appropriations Committee for fashioning a reasonable com-
yGoot^le
430
promise and expediting completion of this bill prior to adjourn-
ment.
I ask unanimous consent that a table showing the relationship of
the conference report, together with other actions completed and
possible later requirements, to the Budget Resolution, the Senat«-
euid House-passed levels, and the President's budget request be
printed in the Record at the conclusion of my remarks.
There being no objection, the table was ordered to be printed in
the Record, as follows:
FISCAL YEAR 1984 SUPPLEMENTAL APPROPRIATIONS BILL CONFERENCE AGREEMENT— SENATE
APPROPRIATIONS COMMITTEE STATUS
{In biiors a Mlnj
Id date by AppnfiriallMS Cmih
Mjustment to confonn nomtanry programs to Biiisfi Rmlulim asswiplwu
AppnpriatiDfls ConHnittee total
Commitlee total unpand to:
CommcttM 30;(a) alia
SenatHiassal level
a, ml Mhtf pnor aOtie.
Mr. Garn. Mr. President, regarding the provision in my amend-
ment which would prohibit the Secretary of HUD from prescribing
a fixed interest rate for FHA mortgages, I want to clarify a matter
that has been raised with me by the distinguished Senator from
California (Mr. Cranston) who serves as the ranking minority
member on the Senate Veterans' Affairs Committee, as well as on
the Banking Committee with me. We have discussed the concerns
of many veterans about the effect of the provisions of the pending
amendment on the authority of the Administrator of Veterans' Af
fairs under section 1803(c) of title 38, United States Code, to deter-
mine the maximum rates of interest applicable to VA guaranteed
home loans.
We are in agreement that the pending FHA proposal, if enacted,
would not affect the VA's current authority to establish maximum
interest rates. The title 38 authority in section 1803(c) does require
that the Administrator consult with the HUD Secretary in estab-
lishing the interest rates applicable to VA guaranteed loans. How-
ever, the Administrator is in no way bound by the HUD Secre-
tary's view. Whatever authority the VA Administrator presently
yGoot^le
431
has with respect to setting the interest rates for VA guaranteed
loans, he would contioue to have if this FHA provision were en-
acted.
Certainly, Mr. President, the Senator from California (Mr. Cran-
ston) and I would both expect that the Administrator would contin-
ue to exercise his authority in the best interest of our Nation and
our Nation's veterains.
Mr. D'Amato. Mr. Chairman, I would like to state for the record
that I appreciate the efforts that you personally have made to
enable the 1983 housing bill to become a reality in the last few
days before Congress recesses. In the hurried atmosphere in which
the House and the Senate has been able to achieve a compromiBe, I
want to be sure that I understand correctly the intent of the com-
mittee with regard to certain legislative language in Public Law
98-63. Sections 218 and 219 of the bill address the funding of rent
supplement and rental assistance payments which run to State as-
sisted, non-FHA insured projects. I want to be sure that the intent
oP these provisions is to assure that all units contracted for such
assistance will receive at least 90 percent of the amount necessary
to cover rent increases and changes in the incomes of eligible ten-
ants required under amendments to the subsidy contracts. As you
know, we have labored over the amount of funding for these units
over the last 2 years. An acceptable compromise was reached this
year when the 1983 supplemental appropriations bill provided that
banning with fiscal year 1984, the RAP and rent supplement
units will receive, in addition to the 1983 base amount, funds to
cover 90 percent of the necessary increases due to increased rent
changes and changes of tenant incomes. I want to be sure that the
committee intends that the full 90-percent funding is required
under the statute.
Mr. Garn. I thank the Senator for his expression of appreciation
for my effort in producing this compromise. It is the intention of
the committee that amendments to a project for the number of
units occupied by eligible tenants on the date of enactment assisted
under the RAP and rent supplement programs on uninsured State
projects be funded to a full 90 percent of the amount necessary to
cover changes in rents or tenant incomes. This authorization stat-
ute reflects the agreement reached in the 1983 supplemental appro-
priations bill, whereby Congress provided that the full 90-percent
nmding of such amendments are required.
Mr. Lautenberg. Will the Chairman yield?
Mr. Garn. Yes, I will yield to the Senator.
Mr. Lautenberg. I would like to thank the distinguished Senator
from New York for raising this important point. I agree with the
chairman that these provisions regarding RAP and rent supple-
ment are drafted to assure that a full 90-percent funding of amend-
ments Eire required.
Mr. Garn. I appreciate the Senator's comments. For the record, I
believe that Secretary Pierce has already expressed his intent to
Aind the full 90 percent of the amendments to these units which
yGoot^le
432
we require under this iegislation. I would like to read a letter
which I have recently received from Secretary Pierce, the last
paragraph of which addresses the issue we now discuss.
Thb Sbcrbtakv,
Dd'artment of Housing
AND Urban Dbvblophbnt,
Washington, D.C., Novembers, 1983.
Hon. Jake Garn,
Chairman, Subcommittee on HUD-Independent Ageneiet, Committee on Appropria-
tions. U.S. Senate, Washington. D.C.
Dear Senator Garn: The Senate Report on P.L. 97 -377 directed the Department
to develop a comprehensive funding plan to meet the long-term needs of projects
being assisted under the Rent Supplement and Rental Asustance Payments (RAP)
programs. Our original Bui^et proposals included both short-term and long-term
measures designed to meet fully the anticipated needs of insured Rent Suppkmen-
tal and RAP projects. However, the Department did not request any fiinaing for
projects that had been financed by State Housing Agencies, and the Report directed
us to deal with the needs of both insured and non-insured projects.
In large part, this issue was resolved by the subsequent enactment of the FY 1983
Supplemental Appropriations Act (P.L. 98-63) which set-aside up to $114 million to
be used for non-insured Rent Supplement and RAP projects. In compliance with the
Committees direction, I am writing to summarize the steps we are taking to assure
adequate funding for both insured and non-insured projecta under the two subsidy
programs.
INSURED AND SECBETARy-HBLD PROJBCTO
During FY 1984, the Department intends to continue converting insured and Sec-
retary-held Rent Supplement and RAP unita to funding under Section 8 Loan Man-
agement Set-Aside, llie FY 1984 Appropriations Act includee 40,000 units of Section
8 specifically targeted for this purpose, (That Act also includes another $1.3 billion
for subsidized housing, the allocation of which has not yet been determined.) The
FY 1984 Budget also assumes the use of $23,209,000 in short-term Rent Supplement
and RAP amendments for projects which have not yet converted to SKtion 8.
Amounts not required for amendments under these two proerams will be rescinded.
The FY 1984 Appropriations Act authorizes the rescission of up to $106.6 million of
contract authority and an estimated $2.9 billion of budget authority under the two
We estimate that by the end of FY 1983, as many as 64,101 eligible Rent Supple-
ment and RAP units will still lack a Section 8 reservation. Therefore, while we
expect that an allocation of at least 40,000 units in FY 1984 will meet the bulk of
conversion demand in that year, additional Section 8 funding will ultimately be
needed. The Department is committed to providing sufficient authority to convert
all remaining Insured and Secretary-held Rent Supplement and RAP units to Sec-
tion 8 as quickly as possible. Depending on the response of owners, the process
should be completed in FY 1985.
STATE-AIDED, NONINSURED PIIOJECIS
The FY 1983 Supplemental Appropriations Act (P.L. 98-63) signed by the Presi-
dent on July 30, 1983, contains the Congressional ly-mandated plan for funding Rent
Supplement and Rental Assistance Payments (RAF) amendments for Statt^ded,
non-insured projects. Specifically, the Act sets aside up to $50,828,000 in Rent Sup-
plement contract authority and $63,365,000 in RAP contract authoritv to cover
amendments for the remaining term of outstanding Rent Supplement and RAP con-
tracts for non-insured projects, HUD is to fund fully required amendment in FY
1983. Beginning in FY 1984, HUD funding will be limitMl to 90 percent of required
amendments.
I am sending similar letters to Senators Hatfleld and Huddleston and Congress-
men Boland and Green.
Very sincerely yours,
Sahukl R. PmRCB, Jr.
Mr. Percy. Mr. President, before the Senate completes consider-
ation of S. 1338, the housing authorization bill, I would like to clar-
ify the intent of the title I, dealing with the grandfathering of sev-
yGoot^le
4S3
eral urban counties in the community development block grant
IKOgrain (CDBG).
In July of this year. Senator Dixon and I were alerted by Madi-
son and St. Clair Counties in Illinois that these counties faced loss
of their eligibility as urban counties under the CDBG program in
fiscal year 1985. This situation is the unanticipated result of OMB's
designating in the counties three cities — Granite City, Alton, and
Belleville — as central cities. Under HUD's rules, the counties can
no longer count the population of these cities. Therefore, without
these cities, they do not have enough people to remain eligible for
CDBG's.
Mr. President, this change would have resulted in the loss of
over $1 million for each of these counties. The CDBG program is
one of the most successful Federal assistance efforts in Madison
and St. Clair Counties — the funds appropriated for it have gone di-
rectly to work for low-interest loans for low- and middle-income
persons, for senior citizen centers, for water and sewer improve-
ments, and economic development.
Moreover, Belleville, Alton, and Granite City want the counties
to continue being eligible for the program. This arrai^ement has
worked well, and there is no reason for the Federal Government to
disrupt this relationship now.
There are two other counties in the United States that fsiced an
identical situation: Hudson County in New Jersey, and Sonoma
County in Csdifornia. The central cities there, and these two coun-
ties, also want the counties to remain the entitlement entity. Sena-
tor Lautenberg, Senator Bradley, Senator Wilson, and Senator
Cranston have joined Senator Dixon and me in seeking a statutory
change insuring continued eligibility for these four counties.
Senator Garn and Senator Tower, and their staff, have been ex-
tremely helpful in rectifying this problem. The housing bill now in-
cludes language grandfathering the entitlement status of these
four counties. Because of the complexity of the issue, I would like
to make it crystal clear for the record precisely what our intent is
in part A of title I of the bill.
Madison and St, Clair Counties have a 3-year cooperative agree-
ment for the CDBG program through fiscal year 1984, and will be
entering into a new 3-year agreement for fiscal years 1985, 1986,
and 1987. It is important that there be no misunderstanding re-
garding the housing bill and its impact on these counties and their
agreements.
I would like to ask Senator Garn to clarify the langueige of sec-
tion 102 which amends section 102(aX4) of the Housing and Com-
munity Development Act of 1984:
Is it the intent of the Senator to allow continuation of the cur-
rent 3-year cooperative agreements between the city and county
under section 102, subsection (d) of the act, allowing the city to
remain part of the urban county through fiscal year 1984?
b it the intent of the Senator to allow the city to continue to
defer its entitlement status in fiscal year 1985, and permit the city
to enter into a new 3-year cooperative agreement with the county,
allowing the city to remain part of the urban county in fiscal years
1985 and 1986?
yGoot^le
434
Mr. President, I would like to turn to my distinguished colleague
from Illinois, Senator Dixon.
Mr. Dixon. Mr. Preeident, the compromise languEtge embodied in
the Housing and Community Development Act of 1984 I believe is
acceptable. However, I join with the senior Senator from Illinois in
seeking clarification regarding section 102 which amends section
102(aX4). Is it the intent of the Senator from Utah to permit the
newly designated central cities in St. Clair and Madison Counties
in Illinois and two cities in two other States to remain part of the
urban county through fiscal year 1984? In addition, is it the intent
of the Senator to permit these newly designated central cities to
defer ODBC entitlement status in fiscal years 1985 and 1986?
Mr. Garn. Mr. President, I assure Senator Percy emd Senator
Dixon that my intent is to allow Madison and St. Clair Counties in
Illinois, Sonoma County in California, and Hudson County in New
Jersey, to continue to be urban counties, for entitlement purposes,
by permitting their newly designated central cities to remain part
of the urban county, if they so desire, in fiscal years 1984, 1985,
and 1986.
Mr. Lautenberg. Mr. President, I want to express my apprecia-
tion to Senators Garn and Tower for their cooperation on this
matter. The entire New Jersey congressional del^ation hfis ex-
pressed their support for maintaining the current status of Hudson
County and the city of Hoboken under the CDBG program. This
provision which carries them through 1986 is vital to the city and
county. As a cosponsor of S. 1802, I commend Senators Percy and
Dixon for their leadership on this issue.
Mr. Heinz. I have commended leadership in an eeirlier statement
for bringing this housing compromise to the Senate floor. Knowing
of the differences between Congress and the administration, X am
well aware of the hard bargains that had to be accepted on both
sides.
Mr. President, I am particularly dismayed, however, to find that
in an 11th hour bargaining session on S. 1338 and H.R. 1, all of the
meuiagement-oriented improvements in the public housing operat-
ing subsidy formula and modernization progriun were dropped
from the package. The distinguished Chairman of the Senate Bank-
ing Committee knows better than anyone of the time and energy
devoted to developing these improvements by members of the
Senate and House Committees and their staffs, as well as the good
faith efforts made by outside representatives of the Nation's public
housing authorities.
It is my understanding, Mr. Chmrmem, that as part of the com-
promise you and the House leadership have received a commitment
from the administration not to make any changes in fiacal year
1984 in the way operating subsidies are funded or in the CIAP pro-
gram. Furthermore, if l^e administration wishes to pursue any
such changes in fiscal year 1985, it will do so only by presenting a
legislative proposal to the Congress.
yGoot^le
435
It is my belief that we must insure some measure of stability in
these programs so that ihe public housing authorities can effective-
ly manage a system which provides housing for more than 3.5 mil-
lion Americans. I know from my constituents who are tr>-ing to do
a good job running their authorities in York, in Harrisburg. in
Pittsburgh, in Westmoreland County and in other Pennsylvania
communities that we must protect them from uncertainties created
by unpredictable administrative changes. My question. Mr. Chair-
man, is what is the nature of the commitment given to Congress by
the administration?
Mr. Garn. I thank the distinguished Senator from Pennsj'lvania
for his remarks. I share his concerns.
Mr. President, we have the flrmest assurances from 0MB Direc-
tor, David Stockman, and Secretary of HUD, Samuel Pierce, that
the administration will not make any changes in the operating sub-
sidy or modernization program in fiscal year 19S4 and that in fiscal
year 1985, the administration will only make fundamental changes
or structural program reforms by seeking authorizing legislation.
These assurances Eire embodied in a letter which I have received
from Mr. Stockman. I ask unanimous consent that the full text of
this memorandum be made part of the Record.
There being no (Ejection, the letter was ordered to be printed in
the Record, as follows:
ExBCvnvE Omcx of the Presidest.
Omce OF Management and Budget.
Washington. DC. .\oi-ember }€. ISiJ.
Hon. Jake Gakn,
Chairman. Batikiiy^
U.S. Stnale. Washington. L
Deak Mb. Chaikman: This letter is intended to clariij' the .^dministratioD's posi-
tion concerning fuDdamental stnictura] program reforms for the Public Housing
Operating Subsidy and Modernization Programs in 19!-1 and i99o.
As you know. Uie Department of Housing and Urban Development has dev'eloped.
through published regulations and other administrative prot?edures. a complex, tech-
nical system for allocating operating Eubfidies and modernization funds among
more than 2.600 local public housing authorities. The Department «-ill administer
thtse prafTTsms in 19^ with the funding provided in the HUD-Inde pendent .Agen-
cies Appropriations Act of HSi 'P.L. 9»--1.5i pursuant to regulations and policies in
effect as of November 15. 19"^. except prescient to the pending authorization bill.
Hie Admiuisirauon has agreed that it would seek authorizing le^Iation for any
fiindamenta] changes or structural program reforms it might wish to make for these
pngranta in 1985.
I hope these clarifications will remove any concerns Members of Congress may
have coDceming the Administration's position on this matter.
Sincerely.
David .A. Stockman.
(Identical letter sent to the Honorable Femand 5i Germain, chairman, htuif -^
Finance and Urban Affaire Committee.'
Mr. Gabk. I understand that the Senator has a technical u^-^- ■:
ment to section 437 of the Housing and Urban-Rural Recuvi-_i .' • ■
r^ar^. ,_ :■: :;,;..„:. u.i n uirements under section 'i'^y ••' ■•,t
National tiw^m^j^^— ^ U glad to include thr '
r"^
I bill that will
for includiii
^ifllatiuti
yGoot^le
436
The text of the proposed ameodinent foltows:
At the appropriate place, ineert the following:
Sec. . Section 232(dX4) of the National Housing Act is amended by inserting
before the last sentence thereof the following: "The certification referred to in
clause (A) of the preceding sentence shall not be required until January 1. 1986, for
facilities located in any State where the designated agency is not, as of January 1,
1983, authorized by State law, to issue such certifications.".
Mr. RiEGLE. Mr. President, I also share the concerns of the Sena-
tor from Pennsylvania.
I believe that several important reforms related to public hous-
ing were contained in both the Senate and House housing bills.
The provisions regarding the public housing performance funding
system and the comprehensive improvement assistance program
would have helped preserve a valuable national asset that makes it
possible for many of the country's neediest fsunilies to have decent
housing. Virtually all of those provisions were removed from this
compromise in the late stages of the negotiations.
I know that the chairman of the Banking Committee authored
some of the more helpful provisions and that he supported the
thrust of the Senate bill, as I do.
I understand that the administration pressed to have these provi-
sions dropped from the bill in exchange for the administration's
commitment that they will make no changes in regulation and no
substantive changes in administrative policy without prior approv-
al by Congress in legislation. It is helpful to have that letter on the
record.
However, I want to make it clear that I am still concerned by the
questions that have been raised about the recent administration of
these programs. I believe that the intent of Congress has been very
clear that the performance funding system should be administered
in a way that permits local housing authorities to have adequate
resources and that the CIAP program should contribute primarily
to the long-term habitability of the public housing stock. The pur-
poses of these programs are not changed by adoption of this
amendment. My vote for this amendment is not an endorsement of
the administration's policies that are inconsistent with those con-
gressional objectives.
Mr. Heinz. I want to congratulate the managers for bringing up
a bill which responds in a balanced way to the concerns that have
been raised during congressional consideration of this complex and
controversial issue.
However, I do want to raise a concern about one aspect of the
provision dealing with the U.S. vote on IMF loans to countries
practicing apartheid or Communist dictatorship. It is my under-
standing that the United States would be required to vote against
IMF loans to such countries unless the Secretary of the Treasury
certifies in writing and testifies before Congress at least 21 days in
advance of an IMF vote that certain conditions had been met. I do
not believe that such a 21-day rule is practical or realistic.
The IMF procedures normally provide that the results of loan ne-
gotiations are to be presented to the Executive Board at least 4
weeks prior to a decision. However, it is often not possible to meet
this schedule and decisions on loans can be made within a shorter
period. For example, the negotiations on the IMF loan to Brazil
yGoot^le
437
have just been completed and the Executive Board will be meeting
on the request next Tuesday. In such circumstances, it would be
impossible for a Secretary of the Treasury to satisfy the 21-day re-
quirement provided in the bill.
I would appreciate knowing how the managers intend for this
provision to be applied in such circumstances.
Mr. Garn. I want to thank the Senator for raising a very impor-
tant point.
It is not the intention of the sponsors to have a provision which
cannot reasonably be expected to be met. Clt^arly, the 21-day re-
quirement will have to be interpreted realistically in order to take
account of the IMF loan negotiations; the legislative calendar, in-
cluding congressional recesses; and other factors that might affect
the ability of the Secretary of the Treasury to provide the neces-
sary certification and to testify before the appropriate committees.
I want to assure the Senate that the 21-day requirement would be
our expectation, but the adherence to that goal would take into ac-
count reasonable variations due to the circumstances at the time.
EXPORT-IMPORT BANK REAUTHORIZATION
Mr. Mattingly. Mr, President, I would first like to commend my
colleagues here in the Senate and also my counterparts in the
House for their efforts in developing legislation which forces the
U.S. Export-Import Bank — Eximbank^to be responsive to the
needs of American exporters, no matter how large or small. While
extending the Bank's charter, this legislation makes a significamt
contribution to U.S. exporters by making the terms and conditions
of Eximbank's financing competitive with government-supported,
financing offered to exporters from other countries.
The Eximbank is too frequently viewed as a bank and not as an
instrument of U.S. trade policy or job creation. It has been estimat-
ed that Eximbank supports over $18 billion in U.S. exports annual-
ly, with each billion dollars providing 24,000 to 30,000 jobs. If U.S.
exporters are unable to obtain competitive financing, they fre-
quently face the loss of sale and perhaps a permanent loss of
market.
The challenge to develop international and domestic solutions to
global economic problems and trends will face not only this admin-
istration but many to come. To make the Bank's programs fully
competitive, as this bill provides, will assist in its use of resources
in ways to help meet that broader objective.
Mr. President, in the Senate-passed version of this bill, we were
successful in having approved an amendment which will permit
small business exporters to benefit more from Eximbank resources.
1 would like to commend again the efforts of the other Senators
who joined Senator Boschwitz and myself in formulating this
amendment. Since the House passed a similar amendment provid-
ing for a small business set-aside within the Bank, I am pleased
that the conference bill retained language pertaining to an Exim-
bank small business set-aside.
I believe our efforts will result in the growth of the export base
of our country through the increased participation of small busi-
ness exporters. The additional employment impact resulting from
yGoot^le
an increeise in smeill business exports will be substantial. Small
businesses have the potential to create more jobs than the tradi-
tional large manufacturing concerns. You have already heard the
figures: Tlie Commerce Department estimates that at least 20,000
businesses in the United States could export but do not. The fact is
clear: The rewards of increasing the participation of small business
exporters are great.
Eximbank ofHcials have conceded that there is a need to make
the Bank work for small business. Although the Bank has devel-
oped a few ad hoc progrfims directed at smaller exports over the
past 2 years, Bank oflicials admit that, and I quote: Their use has
not been as great as we had hoped."
Therefore, I am pleased to have this opportunity to comment on
this legislation which will require Eximbank to be more attentive
and responsible to the needs of small business. This provision will
require the Bank to consistently focus on the needs of small busi-
ness. Previous efforts in this regard have been implemented by the
Bank on a come-and-go basis.
American small business exporters want to export, they want to
compete, and are able to compete on the basis of those things at
which they excel — quality, service, and price. However, they cannot
compete against the officially subsidized export financing offered to
their foreign competitors. The set-aside insures small business
better access to Eximbank's resources at competitive terms by:
First, establishing a small business set-aside in an amount of 6 per-
cent for fiscal year 1984 and increasing to 10 percent by fiscal year
1987; second, requiring Eximbank to provide lines of credit or guar-
antees to consortia of local banks, export trading companies, State
export finance agencies, export financing cooperative and small
business investment companies: Third, requiring Eximbank to pro-
mote this small business program in cooperation with the Com-
merce Department, the Small Business Administration, and the
private sector: Fourth, designating leaders from the Small Business
Community to the advisory committee at the Eximbank and to its
Board of Directors: Fifth, directing Eximbank to urge the Foreign
Credit Insurance Association (FCIA) to provide insurance against
100 percent of the loss of export sales up to $100,000; and finally,
sixth, requiring Eximbank to report to Congress annually on the
status and effectiveness of the small business set-aside.
Mr. President, I would like to raise one other point. I understand
that this bill includes an Eximbank loan guarantee package in an
amount equal to $500 million to be extended to Mexico. This pack-
age is tied to the Mexican purchase of U.S. exports. What many
people do not know is that in September 1983, Mexico extended
low-interest loans to Cuba in an amount of approximately $55 mil-
lion. While we do not have jurisdiction over the lending practices
of Mexican banks, we do have more influence over U.S. bank prac-
tices.
I opposed the Banking Committee's motion to approve the $500
million Exim loan guarantee package to Mexico because of Mexi-
co's loans to Cuba. I want to be 100 percent certain that by lending
money to Mexico, we are in no way facilitating Mexico's ability to
lend to Cuba, thereby, aiding and abetting communism. Making it
easier for Mexico to nnfuice its imports permits it to use the capital
yGoot^le
439
otberwiae needed for that purpose for other purposes — like aiding
Cuba's ability to import. I continue to find this activity intolerable
and one we should not support
While the provision was passed by the Senate Banking Commit-
tee and is included in this conference bill, I have received assur-
ances from the Chairman of the Eximbank, Mr. William Draper,
that the assistance extended to Mexico will in no way, not even in-
directly, facilitate our ojectives to foil the growth of the Communist
threat.
With my opposition to this provision of the bill clearly stated, I
reiterate my support of this Eximbank bill and e^ain commend by
colleagues R>r their fine work. Thank you, Mr. President.
ON ASIAN DEVELOPMENT BANK AUTHORIZATION
Mr. Kasten. Mr. President, I wish to express my strong support
for a particular provision of the bill before us, and to commend the
conferees for including it. I refer to the sense of the Congress provi-
sion that the Republic of China should remain a full member of the
Asian Development Bank and that its status within that body
should remain unaltered, no matter how the issue of the People s
Republic of China's (PRC) application for membership is disposed
of-
This provision is an important one and it is essentially the same
as Senate Resolution 137 which I introduced in May. lliat resolu-
tion now has 55 cosponsors, and for good reason. My resolution
strongly reaffirms U.S. support for Taiwan, and makes it clear that
any attempt to abandon our oldest Asian ally in order to improve
relations with the People's Republic of China would be unaccept-
able to Congress. I am happy that the conferees decided on lan-
guage just as uncompromising.
lliis language should also make it clear that any attempt by the
People's Republic of China to msmipulate multinational agencies
such as the Asian Development Bank will be counterproductive.
China will gain much more from the United States if it refrains
from such actions as trying to have Taiwan expelled.
The Asian Development Bank is a nonpolitical regional financial
organization. Its sole purpose is to provide the developing member
countries with financial and technical assistance for their economic
development. Article 36 of the Asian Development Bank agreement
specincally prohibits the influence of political considerations on the
deciaions of the bank:
1 order to
Political influences, of the sort being brought to bear by the Peo-
ple's Republic of China, undermine the ability of the Asian Devel-
opment Bank to carry out its mission, namely to foster economic
growth and cooperation in the region.
CongresB will continue to be vigilant concerning the well-being of
Taiwan. It is now up to the administration to recognize the
strength of this congressional commitment to Taiwan, and to do its
part to insure the security of our ally.
Mr. MoYNiHAN. Mr. President, I rise today in support of the
housing authorization amendment to the conference report on the
yGoot^le
440
supplemental appropriationa bill (H.R. 3959). This is a compromise
proposal and, under the circumstances, a necessary one. For 3
years, we have passed no housing authorization legislation. This
cannot go on.
This amendment provides us with an opportunity to renew the
Federal goal of providing decent, safe, and aifordable housing for
all Americans. It does so by authorizing new Federal assistance for
100,000 housing units for the elderly and low- and moderate-income
families.
The amendment also reauthorizes the urban development action
grant and community development block grant programs for 3
years. These pr(^ams have been most important, and most effec-
tive, in supporting community r e vital ization efforts in New York
and throughout the Nation. Many innovative and successful renew-
al and redevelopment efforts have been grown out of the UDAG
eind CDBG programs.
I should also say that this compromise proposal accommodates
several issues of particular concern to me. First, the compromise
includes provisions to mitigate the impact of a 1982 change in
tenant rent contribution policy. That change increfised the rental
contribution in federally assisted housing from 25 percent to 30
percent of income for new tenants and from 25 percent to 27 per-
cent for current tenants.
I opposed this change when it occurred. It was and is a inequita-
ble way to increase rents — the equivalent of Government-sponsored
inflation for those who can least afford it. I tried to delay the effec-
tive date of the HUD regulation implementing the new policy. I
was concerned about the effect of such an immediate rent increase
on 700,000 New Yorkers in federally assisted housing. I remain
concerned, and therefore I am pleased that this compromise hous-
ing legislation allows for new adjustments in determining a ten-
ant's income for the purpose of setting his rent. It is my hope that
the new deductions available for the elderly, the handicapped, find
for each child in a family, will offset the impact of the rental con-
tribution percentage change.
Second, I applaud the compromise on rent control. On June 3,
1981, I spoke on the Senate floor opposing provisions in housing
legislation then under consideration, to deny housing assistance to
communities with rent control ordinances. This provision, which
had been added by amendment in the Banking Committee, was
wholly improper, unacceptable Federal interference with local stat-
utes. This issue of rent control should not be federalized. Cities
with rent control and rent stabilization policies should not be
forced to choose between Federal housing eissistance and local pro-
grams to maintain affordable private housing for all their citizens.
The housing amendment before us today reaffirms the right of
local communities to maintain rent control and stabilization pro-
grams as their communities see fit, without a Federal dictate. This
is a wise and proper decision, and one that will be welcomed in
communities like New York City with longstanding commitments
to rent control and rent stabilization.
I commend my colleagues involved in fashioning this housing
and community development amendment. We have gone far too
long without authorization l^slation in this area. I ui
yGoot^le
441
at this amendment, so we can renew our Federal commitment to
housingand community development programs.
Mr. D'Amato. Mr. President, I wish to take a minute of this dis-
tinguished body's time to lend my highest commendation to my col-
leagues who have labored so long and so hard to make this legisla-
tive package a reality. Much has been said about the terrible prece-
dent this body has set proceeding as it has during consideration of
this package. I could not agree more with those assessments. It is
my hope, however, that the Senate does not lose sight of the criti-
ctu needs this legislation will address in fulfilling both our domes-
tic and international policy-making responsibilities.
There are many provisions of this legislation that are of grave
importance to my State of New York. I would like to especially ex-
press my deep appreciation to Chairmem Garn for being responsive
to the needs of New York in the formulation of this legislation. Al-
though we often differed sharply on many policy questions, the
Chairman was exceptionally cooperative in exploring mutually ac-
ceptable solutions to what sometimes seemed irresolvable dead-
locks.
Of special importance to me is the authorization of a rental reha-
bilitation propMal Senator Dodd and I had introduced in the 97th
Congress. Rehabilitation is a cost-effective method of adding sorely
needed units to our housing stock.
In addition, Mr. President, I would like to commend Senator
Tower, the Chfiirman of the Senate Housing Subcommittee, the dis-
tinguished ranking minority member. Senator Ri^le, and the
ranking minority member of the full Banking Committee, Senator
Proxmire, for their persistence in seeing the housing bill to final
In closing, Mr. President, I believe passage of this housing bill
reasserts the federal presence in the area of housing and communi-
ty development which would have been threatened should a third
year have passed without a housing authorization bill. I urge the
House of Representatives to act quickly and favorably on this pro-
posal imd I look forward to working with Secretary Pierce and the
Department of Housing and Urban Development in the construc-
tive implementation of this legislation.
MODIFICATION TO AMENDMENT NO. 2633
Mr. Garn. Mr. President, I would modify the pending Gam
amendment. This was an amendment of Senator Proxmire. It de-
letes subsection (c), which has been agreed to by all parties in Sen-
ator Proxmire's behalf. It is not an amendment, but I sent to the
desk a modification to the pending Gam amendment.
The Presiding Officer. It would take unanimous consent to
modify the amendment.
Mr. Garn. Mr. President, I Eisk unanimous consent that the
Gam amendment be so modified.
The Presiding Officer. Without objection, it is so ordered.
The modification is as follows:
Strike section 650(c).
Mr. Gakn. Mr. President, I am not aware of any additional
debate. To protect any Senators who may wish to offer amend-
yGoot^le
442
ments, there are many more amendments in disagreement where
they would be protected on offering additionfil amendments. There-
fore, I move immediate consideration of the Gfim amendment to
amendment No. 1 1 in disagreement.
The Presiding Officer. Is there further debate?
Mr. Garn. Mr. President, I ask for the yeas and nays.
The Presiding Officer. The motion is to concur in the House
amendment to the Senate amendment No. 11, with the Gam
amendment, as amended and modified.
Is there a sufficient second? There is a sufficient second.
The yeas and nays were ordered.
The Presiding Officer. The question is on agreeing to the
motion of the Senator from Utah. The yeas and nays have been or-
dered and the clerk will call the roll.
The bill clerk called the roll.
Mr. Byrd. I announce that the Senator from California (Mr.
Cranston), the Senator from Ohio (Mr. Glenn) and the Senator
from South Carolina (Mr. Hollings) are necessarily absent.
The Presiding Officer. Are there any other Senators in the
Chamber who desire to vote?
The result w£is announced — yeas 67, nays 30, as follows:
[Rollcall Vote No. 374 Leg.]
Hart
MurkowBki
Baker
Hatch
Nunn
Bentsen
Hatfield
Packwood
Biden
Hawkins
Pell
Bingaman
lecht
Percy
BoKhwiti
leinz
Proxmire
Bradley
Burdick
luddleaton
Quayle
nouye
cLfee
Johnston
Rudman
Kassebaum
Chiles
Kafltcn
Sarbanes
Cochran
Kennedy
Sasser
D'Amato
Specter
Danforth
^alt
Stafibrd
Dixon
jeahy
Stennis
Dodd
«vin
Stevens
Dole
Mag
Tower
Durenberger
Lugar
Tsongas
Eagleton
Mflthias
Wallop
Evans
Matsunaga
Weicker
Ford
E3'
Wilson
Gam
Gorton
Moynihan
NAYS-30
Abdnor
Exon
NicklM
Armstrong
Goldwater
Preasler
Baucus
Grawley
Pryor
Boren
Heflin
Berth
Bumpers
Helms
Simpson
Cohen
DeConcini
Humphrey
JepBCn
Synuns
Thurmond
Denton
McClure
Trible
Doraenici
Melcher
Warner
East
Zorinaky
yGoot^le
443
NOT VOTING— 3
Cranshn Glenn HoUingB
So the motion to concur in the House amendment to the Senate
amendment No. 11, with the Gam amendment (No. 2633), as
amended and modified, was agreed to.
Mr. Garn. Mr. President, I move to reconsider the vote by which
the motion to concur was agreed to.
Mr. Hatfield. Mr. President, I move to lay that motion on the
table.
The motion to lay on the table was agreed to.
Supplemental Approphiations, 1984— Conference Report
The Senate continued with the consideration of the amendments
in disagreement to the conference report.
ADJUSTMENT TO AMENDMENT NO. 2638
Mr. Garn. Mr. President, earlier, during the consideration of my
amendment, we had modified a Proxmire amendment from back in
the Banking Committee when it w£is marked up and changed the
date. The words that were inserted were "before September 30,
1985."
We find that my staff erred in the drafting of this, and I have to
ask unanimous consent, so there is no misunderstanding, that in
title rV, page 21, line 15, after the word "development" add "before
September 30, 1985." There is no change in what we put in, but we
put it in the wrong place. We are correcting the drafting of the
amendment. It has been cleared on both sides of the aisle. I ask
unanimous consent that Eimendment No. 2638 agreed to earlier be
corrected to read as shown in the amendment which I send to the
desk.
The Presiding Officer. Is there objection?
Mr. Johnston. This is a technical correction?
Mr. Garn. That is correct. It is a technical drafting error correc-
tion to an amendment in my part of the bill.
The Presiding Officer. Is there objection? The Chair hears
none. Without objection, it is so ordered.
SENATE amendment NO. 45
Mr. Johnston. Mr. President, this committee amendment creates
a zone around the State of Florida in which no drilling or leasing
can take place for the duration of this supplemental appropriation
bill. It also creates another cordon some 20 miles wide extending
all the way from Aptilachicola to PemEmia City in which no drilling
can take place.
Mr. President, the action of the joint conference committee on
this bill was most unusual because it added on language which was
not in the Senate bill, was not in the House bill, and went far
beyond the language of the House bill that dealt with leasing pro-
hibitions in the area off the gulf coast of Florida.
ThJa constituted, Mr. President, the third time that this Senate
had dealt with the issue of drilling off the coast of Florida. The
37-922 0-84-29
yGoot^le
444
first time we dealt with the question was in the interior appropria-
tions conference committee. At that time, Mr. President, a compro-
mise was struck by all parties in which fill sensitive areas off the
coast of Florida were banned from drilling. In the so-called sea
grass area, 177 tracts were taken off limits for drilling or leasing
by the interior appropriations conference committee. In the Florida
middle grounds, 23 tracts were banned from drilling or leasing. In
the so-called 20 mile isobath area, 99 tracts were taken off limits.
These three areas combine for a total of 2,700 square miles in the
Outer Continental Shelf off the gulf coast of Florida, which are off
limits to leasing for oil and gas production.
Mr. President, as a member of that conference committee, I can
tell you that every area that had Intimate environmental com-
plaint— any legitimate environmental complaint at all — was placed
off hmits to Federal leasing.
After adopting these environmental protections we came back to
the floor of the Senate. An amendment was then offered and
^reed to which created a protected area of the same length, width,
and dimensions as the pending amendment but with one important
proviso. That is, if the State of Florida has in existence now, or
issues in the future any oil and gas lease in its territorial waters,
the restriction in Federal waters is vitiated.
The idea behind that amendment, Mr. President, was that if the
State of Florida, in the 10.4-mile area which it owns, sees fit to
allow drilling or leasing, then the Federal Government should not
be prohibited from leasing in its territorial waters which lie even
farther out to sea.
What happened? It was discovered by the Senator from Florida
that the State does, in fact, have a lease. The facta are that the
State of Florida has a lease that extends all the wa^ from Naples
to Apalachicola, a distance of some 450 miles, which is 3 miles wide
and comprises some 880,000 acres. The lease was updated, rede-
fined, and renegotiated in 1976. Not only did the Governor of Flori-
da sign that lease, but all the members of his Cabinet signed that
lease. That lefise not only permits drilling, it requires drilling not
less than every 5 years. Not only does it permit and require drill-
ing, but drilling has, in fact, taken place in Florida's waters.
Some 15 wells have already been drilled, some to depths of as
much as 20,000 feet, with the last having been drilled this very
year, 1983. Another 10 wells have been slant-drilled from Florida
waters into the Outer Continental Shelf, for a total of 25 wells.
In spite of that, Mr. President, we are now asked by amendment
No. 45 to let Florida go ahead and drill and lease to any extent
they want in their 10-mile area, yet not permit the Federal Govern-
ment to lease at all in its territorial waters. This is fine when it is
somebody else's money, but when it is your own, you want to lease
and you want to develop that oil and gas.
Mr. President, to say that this is unfetir, to say that this is
unwise, is much too mitd. The proper word is to sa;^ that it is an
outrage to the people of the United States to prohibit this drilling
in this manner,
Mr. President, lest my colleagues think that the Outer Continen-
tal Shelf in the zu'ea off Florida is cm inconsequential, insignificant,
and unimportant source of oil and gas, let me tell you that the
yGoot^le
445
area off Florida is an area of vital interest to the oil companies. I
talked to the head of exploration for Shell Oil Company just 2
weeks ^o. He brought out the maps and showed me the hot areas
off Florida, which are of great interest to a number of oil compa-
nies.
There are now some 26,000 wells in the Gulf of Mexico— 26,000.
Since the first well was drilled out there in the Inland Sea in 1927
there is no evidence of any oil spill ever reaching shore. So, for all
those years, over 50 years, we have been drilling out in the Outer
Continental Shelf of the gulf. It is probably the most stable geologic
environment for drilling of any offshore area in the world. How
can you have a safer record than to say you have been drilling for
50 years with no oil spills ever reaching shore. And this, drilling is
taking place in the greatest estuary of the world — this is, off the
coast of Louisiana. There is more seafood production off the coast
of Louisiana than anywhere in the world, with the possible excep-
tion of the coast of Chile. We produce over a billion pounds of com-
mercial seafood, and right within the producing grounds of this bil-
lion pounds of commercial seafood, we have 26,000 wells.
Mr. President, we have produced out there some 5.7 billion bar-
rels of oil — 5.7 billion barrels of oil. That is more than this country
uses in many years. The Gulf of Mexico is the most important re-
source this country has. We have produced 54 trillion cubic feet of
naturfil gas from the gulf That is enough natural gas to keep this
country running for more than 3 years.
How much else is there out there? Hundreds of millions of bar-
rels of oil — hundreds of millions. And Florida is one of the richest
areas that there is.
Mr. President, if there were any justification for this 30-mile
cordon around Florida then I would like to know what it is, be-
cause in the weeks this amendment has been pending, we have
given no — zero — justification. There is no environmental study that
says this is a sensitive area. To the contrary, we know it is not sen-
sitive.
Of course there are fish out there. TTiere are fish all around
those 26,000 wells off the coast of Louisiana. One thing we have
proved — not with one test well, not with one year's study, but with
over 50 years of study and over 26,000 wells, and over 5.7 billion
barrels of oil and 54 trillion cubic feet of gas — we have proved that
drilling in the gulf is safe, is benign, and is probably the stablest
form of energy that we have.
You say, you do not want to drill out there in the Gulf of
Mexico? What would you rather do? Use more coal with acid rain?
We are going to address that issue here next year and in years
after. I hope we will do it wisely, but 1 can tell you that there is
much more resistance to acid rain and the burning of coal and
much more expense than there is to drilling in the Gulf of Mexico.
How about nuclear? "Oh, we cannot have nuclear," so many of
our colleagues say. They say that has been proven to be, if not too
dangerous after 'fnree Mile Island, then too expensive.
But there is one source of energy that is vast, that is available,
that is benign, and that is stable, lliat source is the Gulf of Mexico
including this area off the Florida ccast — a vast area, Mr. Presi-
dent. We do not know how much oil and gas is there, but the area
yGoot^le
446
covered by the amendment is almost 500 miles. It is 450 miles long
and 30 miles wide just from Naples to Apsilachicola. And that
would be off limits to leasing by the Federal Government, Then
again, from Apalachicola to Panama City, another 20 miles is off
limits to leasing by the Federal Government. All the while the
State of Florida has an existing lease and existing exploration. Not
only does the holder of this lease have the right to go out and drill
for oil, they have the duty to drill at least once even" 5 years, and
they have been doing it much more frequently than that.
Not only, Mr. President, is the State of Florida leasing and drill-
ing in its own waters, the State of Florida is also importing oil in
wholesale quantities, and that is much more likely to cause pollu-
tion than is OCS production. According to the National Academy of
Sciences, shipping oil by tankers causes 400 times as much oil dis-
charge as does drilling. It is 400 times £is dangerous to import oil as
it is to drill in the OCS, according to the National Academy of Sci-
ences.
But what does Florida do? In the Port of Pensacola every year
they import 790,000 tons of oil. In the Port of Tampa, they import
10.5 million tons of oil every year. In the Port of Jacksonville, they
import 6 million tons of oil every year. In the Port of Fort Lauder-
dale, they import 71 million barrels of oil every year. Although it is
400 times more dangerous than offshore drilling, there has been no
effort to curb that importation.
If Florida were really sensitive to the dangers of oil spills, the
first thing they would do would be to stop the importation of oil.
The way to stop that importation, Mr. President, is to develop our
own resources and to drill in our own areas. This is the big frontier
in the Gulf of Mexico right now.
Mr. President, there are also jobs involved. You use steel out
there. Only 55 percent of our present steel capacity is being used. I
could go down the list of jobs. But that is not the primary issue.
T^e primary issue is that the taxpayers of this country, whose re-
source this is, the energy users of this country, whose resource this
is, all of us — it belongs to all of us — are being asked to let the State
of Florida proceed to drill in their land closer to shore and say no
to us.
Mr. President, that is nothing less than an outrage. As a matter
of fact, Mr. President, the State of Florida has 10.4 miles that has,
in effect, been reserved to them according to the Supreme Court
while other States, such as the State of Louisiana have only 3
miles. The State of California owns only 3 miles. Florida has 10.4.
We have 3. Why? Because the Supreme Court said that when Flori-
da came into the Union, there was some provision in the instru-
ment by which they were admitted that gave them 10.4 miles,
while California was not so farsighted and Louisiana was not so
farsighted so we got only 3. So they can do what they wish in their
10.4 miles, and they have three times more protection than any-
body else.
Mr. President, it is not good policy. However, as I mentioned, the
conference committee put this amendment on as a compromise. I
am going to offer an amendment which returns to the House lan-
guage. I think we should have no language at all and no prohibi-
tion at all, but the amendment I am going to offer goes back to the
yGoot^le
447
House language and provides a 40-mile area not to drill in between
the 26th and the 28th parallels.
Mr. President, the amendment is something that I would not or-
dinarily support but in the spirit of compromise, as a middle
ground, I ofTer this amendment. I send it to the desk and ask for its
immediate consideration.
AMENDMENT NO. 2644
The Presiding Officer. The amendment will be stated.
The l^isiative clerk read as follows:
The Senator from Louisiana (Mr. Johnston) proposes an amendment numbered
2644.
Mr. Johnston. Mr. President, I ask unanimous consent that fur-
ther readily of the amendment be dispensed with.
The Presiding Officer. Without objection, it is so ordered.
The amendment is as follows:
In lieu of the language proposed to be added by the amendment numbered 45,
insert the following:
"No funds may be expended by the Department of Interior for the lease-sale of
tracts in Lease-Sale numbered 79 within the Eastern Gulf of Mexico planning area
listed below:
All tracts in the Federal Outer Continental Shelf area between 28 degrees north
latitude and 26 degrees north latitude extending from the 10 mile Federal-State
boundary seaward 40 miles.
This section shall not affect the authority of the Secretary of the Interior to ap-
IHwe any plan, or to grant any Ucense or permit, which is restricted to scientific
exploration or other scientific activities, or other preleasing activities necessary up
to the point of sale.
Mr. Johnston. Mr. President, just to repeat, this is the House
langueige. I offer it as a compromise. I yield the floor.
Mrs. Hawkins addressed the Chair.
The Presiding Officer. The Senator from Florida is recognized.
Mrs. Hawkins. Mr. President, I rise in opposition to the amend-
ment presented by the Senator from Louisiana that weakens the
buffer zone along the west coast of Florida from offshoring drilling
included in this conference report.
I must say I am astounded that the same Senator who just 15
minutes ago was dictating to the new Secretary of the Interior how
he must change the Interior Department's ways, has already had a
change of heart. The Senator from Louisiana's resolution spoke
about the failure of the Interior Department to carefully weigh the
balance between environmental and mineral interests, that the en-
vironment has been shortchanged by the prior Secretary. Indeed it
was a masterful memo to Secretary-designate Clark.
I applauded him for his language. I thought it meant that the
Senator had changed his attitude on how he felt about correcting
the imbalance between preserving Florida's unique way of life and
developing hydrocarbon deposits.
t have spoken a number of times on this particular issue on the
Senate floor and I will continue to demand that the environmental
and economic concerns of Florida be protected from the risks out-
siders W£mt to force on us through greatly expanding offshore oil
and gas exploration program off our west coast. My colleagues
should make no mistake about it. The program has been expemded
yGoot^le
448
at an astronomical rate under Secretary Watt. In the yearB be-
tween 1970 and 1981, the U.S. Government offered only 36.9 mil-
lion acres for oil and gas leasing. That is 11 years. And yet if I had
not objected some weeks ago, the Department under the previous
Secretary would have leased 58 million acres off the weet coast of
Florida in one fell swoop alone.
Furthermore, I say to the Senator from Louisiana that everyone
knows his State relies heavily on oil and gas development to
employ its people. No one in this body b^rudges the people of Lou-
isiana for making their living in the oil and gas industry. They £ire
very good at it and they have benefited this country by their ef-
forts. But at the same time the people of Louisiana, other oil
States, and the Interior Department cannot rightfully deny the
people of Florida their livelihood.
Floridians have a right to expect that our unique natural re-
sources, magnificent beaches, crystal clear water, exotic wildwife,
and supreme sporting environment, all unmatched anywhere else
in the United States, will be defended seriously by the Department
of the Interior.
To the Senators from oil States, I say I know the Nation's major
oil and gas companies do not share my view. They are constantly
waiting at the door. Every Senator that leaves the chamber after
this vote will meet an oitmEin. I meet them, too. But you have to
tell them no sometimes. For me this is partly an industry versus
industry fight; 20 or 30 big oil companies on one side and thou-
sands of individuals in mid- and small-sized companies involved in
tourism imd fishing on the other side. Both groups have an equal
right to do business and prosper in this country, and both groups
are equally entitled to representation in the Senate. I believe that
the compromise I authoi«d that was incorporated in the supple-
mental appropriation conference report feiirly bedances the inter-
ests of both groups. Frankly, the way to increeise energy independ-
ence is to develop our abundant coal resources.
The United States of America is the Saudi Arabia of coal. At
today's usage rate, we have over a 1,000-year supply. We should be
spending our time scientifically designing ways to safely use coal in
this country in new ways, not threatening Horida's way of life by
adopting reckless oil development policies.
I ask that my colleagues to support the Florida position and not
adopt the amendment of the Senator from Louisiana.
The Presiding Officer. The Senator from Florida is recognized.
Mr. Chiles. Mr. President, the hour is late. We have spent a lot
of time. Actually, it is not the time to rewrite a conference on the
floor at this hour.
The conferees did have time to go into this. They did. They lis-
tened to all the arguments, and on the basis of their ailments
that is the report that we have before us.
Let me say that Florida is not averse to having some oil drilling
off their shore. We have had that before. We have filready entered
into leases in the Atlantic and entered into leases in the gulf. We
have done that under Federal leases.
Florida is concerned that the environmental problems and con-
siderations be taken into consideration.
yGoot^le
449
Why IB this problem before us tonight? Let me juBt tell you why
it is before us.
It is before us because the Department of the Interior in effect
said, "We are going to issue these leases," and the State of Florida
said, "Now wait a minute. Before you issue them, sit down with us
and let us share our concerns with you. Let us tell you what we
think some of the problem areas are.'
And the Department of the Interior was high-handed, was arro-
gant, and said, "We do not have to listen to you. We are going to
lease wherever we want to lease."
The Governor said: "Wait a minute. You know that is not right."
And the Governor then contacted the del^ation and said, "For
goodness sakes, see if you can give me some help. I cannot get
through the Department of the Interior. They have broken off the
negotiations with us. They will not negotiate."
So the Florida Congressional Delegation started to go to work. In
the House of Representatives, they put in provisions trying to set
up a bufTer zone. We did it in the Senate.
I^e distinguished junior Senator from Florida started moving a
provision for a bufTer zone, and we were saying: "Look, sit down
with the State of Florida. Listen to what their concerns are. Let us
work out these matters. We already have leases there "
And the Senator from Louisiana said that there are some State
leases. Yes, they are. They go back to a lease in 1942, back in a
time where, you know. States just did not have sense enough to
worry about oil spills and what the problems would be and what
the concerns would be, and someone took a lesise and took all of
the 10 miles of the State of Florida.
Since that time, the State of Florida has been trying to break
that lease. They have been in court time after time. In 1976 it was
finally a settlement, a negotiated settlement.
Mr. Johnston, Mr. President, will the Senator yield?
Mr. Chiles. I will yield when I get through.
A negotiated settlement. In that settlement, they were able to
n^ate those leases up to a portion of Florida's 10-mile zone, except
3 miles. Another thing they put in that settlement, agetin trying to
see that those leases would be terminated, and they got a 40-year
termination where before they had a lifetime lease. "Hiey also pro-
vided that you just cannot have those leases and sit on them, liiey
made the companies make an exploration well every so often.
Hopefully, the companies will not do it. If they do not do it, they
break the lease and we get out of it.
But so far, they managed to drill that well to mfike sure that
they put it down. They keep finding dry holes. They are not finding
anything in that area. So they have had some leases there, but, as I
say, we have had Federal leases. We have agreed to Federal leases
before, but we want to do it in safe areas.
What is the State of Florida asking for? The Stote of Florida is
trying to put together an oil spill model, a part of our studies that
we are paying our dollars for, to find out what the dangers will be,
and it is going to toke us about 2 years to get the data. So we are
BEiying do not go out there and drill all our land. Do not go out
there and sell all these leases until we get a chance in the Stote of
yGoot^le
460
Florida to determine what are the other major sensitive areas that
there may be so we can exclude those areas.
Let me ask the Senator from Louisieuia one thing. Heis he ever
been to a beach in Louisiana?
Mr, Johnston. Yes.
Mr, Chiles. By golly, I have not, and maybe I am backwards
about that. But most of the people in Louisiana come to the Florida
beaches because they enjoy the kind of sand we have, the white
sand we have, Mr. President, and they enjoy the fact that they do
not have to clean the oil off their feet when they come out of that
beach. They enjoy the fact that we have birds there that can fly
because they do not sink with the oil that they have on them.
So we want them to be able to keep comir^ there. We want them
to make all the money they can in Louisiana, drill all the holes
they want to drill there, eat all those fish out of that estuary there
they want to, and then come and spend their dollars in beautiful
Florida because that is what we have going. So we are just saying
to Senators tonight, do not let these oil compemies come in there
before we have the data, and drill all these dadgum holes in our
beaches. That is all we are asking.
We will do our share. We have teases off the Atlantic. We have
leases off the gulf We will take a lot more, but we just want to
watch some of the careful areas that we do not have it.
Mr. Johnston. Mr. President, will the Senator yield,
Mr. Chiles. I will certainly yield.
Mr. Johnston. Mr. President, first of all, I wish to say that
people from Louisiana do indeed come to Florida. We have a beach
on Grand Isle, but it is not as big and not as white as it is on Santa
Rosa Island, and we love it there. We want to be able to get there,
though. If we do not have the gasoline, we cannot get to Florida.
That is what we are interested in here.
My question to the Senator is this: Is he telling me that the State
of Florida in 1976 wanted to break this tease because they did not
want any drilling out there, and so, therefore, they entered into a
new lease that required them to drill every 5 years? Is that r^ht?
Mr. Chiles. Absolutely.
Mr. Johnston. And that is just indicative of the fact that they
wanted to break the lease.
Mr. Chiles. Absolutely.
Mr. Johnston. That required them to drill?
Mr. Chiles. That is right. They said, "If you do not drill, we are
not going to let you have this thing forever, as they had it to st^
with."
Mr. Johnston. Only to 2016.
Mr. Chiles. That is right. But before it was forever. So that is
something, if you get it cut to 40 years from forever. That is a
pretty good chunk.
But the other thing they said is that you just cannot sit back and
wait until you ever want to do it.
Mr. Johnston. You cannot sit back and not drill. You have to
drill.
Mr. Chiles. Hopefully, those companies are going to get tired
and they are getting tired of drilling that dry hole and havmg to do
one every 5 years, at least one every 5 years. The Senator already
yGoot^le
451
told me what the risks are for them to do that. They are going to
get dadgum tired of it and goii% to say, "We better go someplace
else."
The Senator from Florida convinced me. When he had the other
resolution I voted with him. He convinced me that thia Department
of Interior had run roughshod over the States. He put particular
language in there that we had to change the establishment of poli-
cies of leasing public mineral resources under conditions of careful
environmental protection.
The "Good Book" says a fountain should not spew forth sweet
and sour water.
I do not want the Senator from Florida to be spewing forth any
sour water. I hope that someone will table this amendment and we
can have sweet water, sweet beaches, white sands, and welcome all
those people from Louisiana to come to the State of Florida.
Mr. Levin. Mr. President, I would like to take a few minutes to
discuss with my colleagues the amendment of the Senator from
Louisiana.
When I first learned of the resolution of the Senator from Louisi-
ana, I was struck by the el^imce of such a proposal. The resolu-
tion would give the Senate an opportunity to not only consent — or
not consent — to Mr. Clark's nomination, but to advise as well.
Reading through the resolution, section 1 makes certain findings
and declarations, while section 2 resolves that it is the sense of the
Senate and the advice of the Senate that certain actions be taken.
Nothing in this resolution mandates that the new Secretary take
any specific action. No rider was attached to the continuing resolu-
tion prohibiting the Interior Department from operating unless the
advice of the the Senate is followed by a certain date. The resolu-
tion simply provides advice, outlining policy eu-eas where the reso-
lution's sponsors believe improvements can be made in the man-
agement of the Department of the Interior.
Section IT of article II of the Constitution states that—
llie President shall Dominate, and by and with the advice and consent of the
Senate, shall appoint ambaaaadors, other public ministers and consuls, judges of the
Supreme Court, and all other officers of the United States.
While it is true that usually the Senate only exercises its right to
consent, we certainly retain the power to advise as well as to con-
sent, and given the amount of controversy that surrounded the pre-
vious Secretary of the Interior and his policies, a little advice
seems to be in order. I do not know why amyone would want to
bottle up this nonbinding resolution and prevent the Senate from
providing some advice.
The amendment offered by the Senator from Louisiana, of which
I am proud to be a cosponsor, states that it is the advice of the
Senate that the new Secretary of the Interior should undertake im-
mediate actions to insure that the policies and programs of the De-
partment of the Interior first, conform with the express will of Con-
gress and second, regain general public support and confidence.
One would hope emd expect that the new Secretary would not have
any trouble tfUdng this advice.
I would like to focus attention on item (4) of the resolution:
yGoot^le
452
Resumption of urgently needed purchases of lands within authorized unita of the
National Park S>-8tem, the National Wildlife Refuge System, the National Forest
Syatem, and the National Wildlife Refuge System, the National Forest Sy«tem, and
the National Wild and Scenic Rivers System, and of funding for state and local ac-
quistion of park and recreational land.
The establishment of parks and the preservation of undeveloped
lands and habitat for wildife have a long history of support
throughout the United States. In the State of Michigan, for exam-
ple, such support comes from local government, individual hunters
and fishermen who presently have access to Federal lands, environ-
mental groups, and many others. Secretary Watt broke that tradi-
tion. \\'hen he took office, Secretar>- Watt requested only 10 per-
cent of the amount previously requested for the land and water
conser\-ation fund iL&WCFl, which is used for Federal land acquisi-
tion as well as for matching funds for State park and recreation
firojects. In 19S1. Secretary- Watt requested a rescission of $250 mil-
ion from proposed spending for the land and water conservation
fund: the Congress rescinded only S90 million. The next year, fiscal
year 19S2. Secretarj" Watt asked for a total appropriation for tiie
}'und of onlv $39 million: the Congress insisted on funding at £151
million. In fiscal year 1983. Secretary- Watt asked for S69_ million,
but the Congress insisted upon S22T million — including i7a million
for State matching funds, a prt^am that Secretar>- Watt contin-
ually tried to abolish. In addition, $68 million was added in a fiscal
year 19S3 supplemental appropriations bill. For the current year,
fiscal year 19S4, Secreiar\- Watt requested 565 million for the land
and water conservation fund and the Congress appropriated S225
million, including $7.5 million for the States matching program.
His obstinate opposition to requesting adequate funding for the
land and water conservation fund raises several questions. This
fund is financed through royalties paid for leases issued for explor-
ing Federal offshore oil and gas tracts. Secretarj- Watt was trying
to decimate the fund at the same time that he proposed to lease
offshore areas at a faster rate than any other Secretar\' of the Inte-
rior. Under his proposed Outer Continental Shelf 'OCS' program,
because of increased leasing, more and more money would be avail-
able to the fund, but he would be spending less and less. It should
be remembered that the establishment of the land and water con-
servation fund was part of a compromise reached in exchange for
expanded Outer Continental Shelf leasing. Those who feared envi-
ronmental damage caused by increasing offshore drilling were as-
sured that the expanded fund would protect enough areas to insure
adequate wilderness and recreation areas. Inadequate spending of
the fund, therefore, is inconsistent with the compromise.
The fact that the Secretary nev-er accepted the judgment of the
Ccmgresa— dopite our constant overruling of his budget requests—
shows a laA or rapect for the Ctngress.
And to tlMiB irin aric wfay tiwee past battles are being discussed
ncHr. * -< ^"V ^w llpHt wa do not know if these battles are yet
^•^^ - '^CBBHrtmt leoord of congressional disapprov-
""" II ha\'e only dis-
■tiHnwing coal leasing, leas-
r areas where the Congress
: nominee for Sec-
yGoot^le
453
retary of the Interior, William Clark, has not committed himself to
chax^e any policies of the past Secretary. I find that disturbing
and hope if Mr. Clark does not change the policies of the past Sec-
retary, that he too wiU be checked by Congress.
Mr. Johnston. Is the Senator saying that oil wells drilled in
Florida's gulf are sweet and oil wells drilled out a little farther are
sour?
Mr. Chiles. The Senator from Florida is saying that we want to
keep our white beaches. If the Senator from LouisiEma likes his
darker beaches, that is all right.
The Presiding Officer. TTie Senator from New York is recog-
nized.
Mr. D'Amato. Mr. President, I say that the conferees knew what
they were doing and did the right thing and afforded the State of
Florida and its people along the west coast and beautiful gulf co£ist
the protection to which they are entitled; 18 of the 19 Floridian
Congressmen were in favor of this. The two Senators were in favor
of this, and the Governor is in favor of this.
As to the amendment by my distinguished colleague today, the
Senator from Louisiana knows what it does. It creates a 50-mile
buffer. It adds 40 miles additionally between the 26th and 28th par-
allel fmd strips down the rest of the coast, strips it down to 10
miles. We are talking about a 1-percent differential in the total
area between Senator Johnston's amendment and that agreed upon
by the conference. That is what we are talking about.
I think the people of Florida have a right to say where they wish
to have the buffer, and that the place they desire to have it is down
along the coast, starting from the Apalachicola down to Naples.
Additionally, t^e 10.3 miles was not given to Florida. No one gave
that to the people of the State of Florida. That came from the
Spanish deeds. The same thing happens in Texas. It is the product
of a Supreme Court decision. So we did not give them 10.3 miles.
The fact of the matter is the original agreement on this floor en-
visioned that 30-mile buffer strip, 20 mues added to the basic 10
miles down along that coast.
I think we knew exactly what we are doing. I think it was envi-
ronmentally the sound thing to do.
The senior Senator from Florida touched on it. Let us do the en-
vironmental studies and ascertair. whatever they can tell us.
We should not say what a wonderful thing we did when certeun
lands were exempted from drilling. To get the Interior Department
these days to admit these were environmentally sound Ian(k, they
must have been ecologically important, so did not do anything meig-
nificent bv doing that.
I would hope that we would continue to honor the conference
report because it really makes the most sense.
Mr. Hatfield. Mr. President, I move to table the Johnston
amendment.
Mr. Johnston. I ask for the yeas and nays.
The Presiding Officer. Is there a sufficient second? There is a
sufficient second.
The yeas and nays were ordered.
The Presiding Officer. The question is on agreeing to the
motion of the Senator from Or^on (Mr. Hatfield) to table the
yGoot^le
454
amendment of the Senator from Louisiana (Mr. Johnston). The
yeas and nays have been ordered and the clerk vrill call the roU.
The bill clerk called the roll.
Mr. Stevens. I announce that the Senator from Maine (Mr.
Cohen), the Senator from Arizona (Mr. Goldwater), and the Senator
from Virginia (Mr. Warner) are necessarily absent.
Mr. Byrd. I announce that the Senator from Texas (Mr. Bent-
sen), the Senator from California (Mr. Cranston), the Senator from
Ohio (Mr. Glenn), the Senator from South Carolina (Mr. Hollings),
the Senator from Massachusetts (Mr. Kennedy), and the Senator
from Missouri (Mr. E^leton), are necessarily absent.
The Presiding Officer. Are there any other Senators in the
Chamber wishing to vote?
The result vfas announced — yeas 71, nays 20, as follows:
IRoUcall Vote No. 378 Leg.]
YEAS-Tl
Abdnor
Grassley
Nunn
Andrews
Hart
Packwood
Armstrong
Hatoh
PeU
Baker
Hatfield
Percy
Baucus
Hawkins
Preaaler
Biden
Hecht
Proxmire
BoBchwitz
Heinz
Pryor
Bradley
Bumpers
Chafee
Helms
Humphrey
Jepeen
Ro%
Chiles
Kassebaum
Rudmsn
Cochran
Hasten
Sarbanes
D'Amato
Lautenberg
Simpson
Danforth
Laxalt
Specter
DeConcini
Leahy
Stafford
Denton
Levin
Stevens
Dodd
Lugar
Dole
Mathias
Tower
Domeaici
Matsunaga
Trible
Durenberger
East
Mattingly
Melcher
Tsongas
Weicker
Evans
Metzenbaum
Wilson
Gam
Mitchell
Zorinsky
Gorton
NAYS-20
Bingaman
Heflin
Nickles
Boren
Huddleston
Randolph
Burdick
Inouye
Saseer
Byrd
Johnston
Stennis
Diion
Exon
Sfflu„
\^C
Ford
MurkOwHki
NOT VOTING-9
fientsen
Eagleton
Hollings
Kenn^y
Cohen
Glenn
Cranston
Goldwater
Warner
So the motion to lay on the table amendment No. 2644 was
agreed to.
Mr. Hatfield. Mr. President, 1 move to reconsider the vote by
which the motion to lay on the table was agreed to.
yGoot^le
455
Mr. QuAYLE. Mr. President, I move to lay that motion on the
table.
The motion to lay on the table was agreed to.
The PEEsroiNG Officer. The Senator from Oregon.
Mr. Hatfield. Mr. President, I know of no other amendments.
Therefore, I move that the Senate concur in the amendment of the
House to the amendment of the Senate.
The Presiding Officer. The question is on agreeing to the
motion.
Without objection, the motion is agreed to.
Mr. Hatfield. Mr. President, I move to reconsider the vote by
which the motion was agreed to.
Mr. Baker. Mr. President, I move to lay that motion on the
table.
The motion to lay on the table was agreed to.
Mr. D'Amato. Mr. President, I am pleased that the conferees on
H.R. 3959, the Supplemental Appropriations bill, have resolved
their differences on the disposition of redeemable preference
shares. That resolution provides that the applications of two rail-
roads, the Erie Lackawanna and the New York, Susquehanna &
Western, be given equivalent priority consideration to the extent
that their projects can be funded from surpluses derived from exist-
ing projects.
It is my understanding that surplus funds from the redeemable
preference share program are expected by the Federal Railroad Ad-
ministration. I urge the FRA to determine the amount of that sur-
plus as expeditiously as possible so the two applicants can proceed
with their plans.
The Erie Lackawanna group has invested a great deal of time
and effort, as well eis local resources, in their effort to reopen the
line from Dover to Scranton. The New York, Susquehanna & West-
em has already played a critical role in preserving local service by
buying and operating lines that were scheduled for abandonment.
Both these lines are expected to submit their applications to the
FRA in the near future. It is the intent of the conferees that these
applications be given equal consideration. Equality is particularly
important in this instance because the proposed Dover to Scranton
line would be in direct competition with the New York, Susquehan-
na & Western, which is already operating in the same region and
which serves the same New York metropolitan area that the new
line hopes to serve.
I want to stress my colleagues the admirable job the New York,
Susquehanna & Western has done in preserving service along lines
that were to be abandoned by Conrail and other bankrupt carriers.
Moreover, they have accomplished this with private investment
and must now use a significant portion of operating revenue to pay
the debt on its market rate loans.
Any decision on low-interest loans for a direct competitor to the
New York, Susquehimna & Western must take into account the
competition among rail carriers serving this region. I am pleased
the conferees have insisted that the FRA make equity a prime con-
sideration as they deal with these applications.
yGoot^le
yGoot^le
House Floor Debate on H.R. 1
[Congresaiona] Record— House-^uly 11, 1983]
Housing and Urban-Rural Recovery Act of 1983
The Speaker pro tempore. Pursuant to House Resolution 248 and
rule XXni, the Chair declares the House in the Committee of the
Whole House on the State of the Union for the consideration of the
bm, H.R. 1.
IN THE COMMITTEE OF THE WHOLE
Accordingly the House resolved itself into the Committee of the
Whole House on the State of the Union for the consideration of the
bill (H.R. 1) to amend and extend certain Federal laws that estab^
lish housing and community and neighborhood development and
preservation programs, and for other purposes, with Mr. Mineta in
the chair.
The Clerk read the title of the bill.
The Chairman. Pursuant to the rule, the first reading of the bill
is dispensed with.
Under the rule, the gentleman from Texas (Mr. Gonzalez) will be
recognized for 1 hour, and the gentleman from Connecticut (Mr.
McKinney) will be recognized for 1 hour.
The Chair recognizes the gentleman from Texas (Mr. Gonzalez).
Mr. Gonzalez. Mr. Chairman, I yield myself such time as I may
require and reserve the balance of the time.
Mr. Chairman, I take considerable and great pride in bringing
before the House the pending bill, H.R. 1, which is the Housing and
Urban-Rural Recovery Act of 1983.
The designation of this bill as H.R. 1 should be a very clear indi-
cation of the urgent importance of this Nation's housing policy, not
only as a question of economic policy, but as an absolute human
imperative.
I must say that even though I am very proud of the fact that we
are being offered this opportunity to present H.R. 1, that this bill
was a result of a crying need that has emanated from our Ameri-
can citizens throughout the country.
The Subcommitt«e on Housing and Urban Development for the
past 2 years conducted the most extensive and comprehensive set
of hearings in the history of that or any other committee. Despite
the tremendous opposition, not on the merits of the policies and
the progrfims, but because of budgetary imperatives emd constric-
tions, we had to confront a very headstrong opposition to even a
minimal consideration of the sustenance of these programs for the
past 2V5i years; so that at the beginning of this Congress, or not
later than 2 weeks after the formation of the committees, the sub-
committee got to work and immediately subtracted from the origi-
(457)
yGoot^le
458
nal H.R. 1 two emei^ency sections; first, to help these American
families who are about to lose the great American dream, a home,
due to unemployment, and the other to help those poor, destitute
persons who have no home and are forced to live in the street.
Again, this was the result of a burgeoning critical need that we
saw and heard as late as last December in the lameduck session in
which we had emergency hearings for such a problem as the home
mortgage assistance program.
Finally, even though the committee acted expeditiously and did
act in line with the designation of that bill as a housing emergency
bill for the homeless, as well as assistance for the homeowner, and
actually this assistance was not an entitlement program, it was a
loan program. Even that is today languishing in the Senate, op-
posed bitterly as a basic principle of program and policy.
There is no denial of the need, as ^ere is no rebuttal of the need
and the burgeoning cries of the need emanating from the Ameri-
can people and the reason and the basis for the structure of H.R. 1,
whicn we are presenting here today.
Every living creature has certain absolute needs: Adequate food,
adequate health, and adequate shelter. It does not matter what
order of life we are talking about, for not even the simplest one-cell
microbes can survive without those essentied minimum conditions.
Prom the bottom of the ladder of biolc^cal things up to ourselves
and our fellow human beings, survival is not possible without ade-
quate shelter. That is what this bill is all about, shelter, and that is
tne one single issue before us here today.
The position of the present administration is that Government
has no need to be involved in the business of providing shelter. It
claims that there is plenty of adequate housing already in exist-
ence, although there is no rebuttal of the factual testimony and the
facts to buttress that testimony and even despite the flimflam and
the attempted brainwashing of our people in the so-called recovery,
is this need denied.
The claim that there is plenty of adequate housing already in ex-
istence is not borne out by the facts of the testimony presented by
witnesses, Americans from every single geographical center or
region of this country in both urban as well as rural. The adminis-
tration is not troubled at all that for millions of Americans it is not
possible to pay the rents or the mortgages for that housing. As I
am speaking to you, I am receiving these cries, pitiful cries for help
and assistance, not even a bailout, but just the ability to have
credit allocated, where for once it would be for Americans of the
most stable kind, the people who have been paying on a home for
as long as 15 years and want to hold on to the only connection they
have with the soil of this great country.
The administration is not concerned that because millions cannot
afford a decent life, that those millions are forced to live in condi-
tions that are at best intolerable and at worst impossible, not be-
cause these people are any less human, not because they have tried
their best not to help Uiemselves, because they have given up
trying is it that they live in d^adation or cold, as this last winter,
and dying on our streets. As I nave said repeatedly, we do not have
to go to Calcutta, India, any more to see people dropping dead on
the streets from exposure.
yGoot^le
n 1340
We had them right here in this country, in this Capital this last
winter, and still we have an impervious, hard-shelled resistance,
obstruction to even a minimal lifeline of help to these great Ameri-
can families.
They live in such conditions because they have no choice.
Franklin Roosevelt said early in his Presidency that the picture
of America was £ui America where one-third was ill housed, ill
clothed and ill fed. Thi^ is the economic recovery that our Presi-
dent is talking about? This is where we are fast approaching.
In the interim period these housing programs that we are fight-
ing desperately now to save have housed AJmerica.
The miracle of the world was performed because of housing pro-
grams, because of Government intervention under FHA which this
administration was considering abolishing early in the inception of
this administration. Had it not been for this subcommittee they
would have succeeded. Let us face it. This is the fight that is con-
fronting us today.
I say what a horrible tragedy it would be to turn mischievously
the hands of the clock backward this way where we can say now
that just in the last 2Vz years the number of substandard, unac-
ceptsdile dwellings has increased by more than 10 percent. This is
adequate housing when the programs of a President and an admin-
istration call for the elimination of the only programs euid policies
that have housed Americans and performed, 1 repeat, the miracle
of the world?
In 1940 over 60 percent of America's housing was substandard.
When the President was talking about one-third ill sheltered, he
was talking about really being ill sheltered, shelterless. But the
standard of quality of the housing was so deteriorated in 1940 that
over 60 percent was imdesirable.
In 40 years' time, by 1980, that figure was less than 7 percent.
But in 2^ years' time it has gone to over 10 percent.
Why? Because this is a burgeoning country. This is made up of
living human beings that do not stand still, and the needs of the
country grow with its growth. I do not care what is said today or
what has been said here about economic recovery plans that are so
nebulous. We do not know what recovery they are talking about.
"Diey are talking about an economic recovery to what? To halfway
full employment? We do not have it.
Or are we talking about the dream of home ownership? Even the
most staunch supporters of this will admit that that is a dream
gone lost. It is not entertained any longer now by the average
American family.
This is our fight. This is what we are talking about. This is the
issue.
I say that we must be responsive to those needs and that no
matter the claims, no one will ever, will ever hogtie this country.
N<^ody will ever put this country in binders. So we are going to
have, despite all of this opposition, a need to house Americans.
. We may lose a battle, but eventually we are going to be respon-
sive to the American people. I mean the American people, not just
37-922 0-94-30
yGoot^le
one segment, not just one area of our population, but to the crying
national needs.
Every one of us knows the truth of the matter and the truth is
this: there is no way we can insure that our fellow human beings,
our fellow citizens, can live in decent homes unless those less fortu-
nate among us get some kind of help through the Federal Govern-
ment. There is not a country in the world that has created a hous-
ing program for its people without a national commitment.
The issue is a President who says that you cannot trust the
American family to pay back the loan at 10 percent, which is a
meager thing that we came out at as a lifeline in our so-called
emergency mortgage assistance program, but even that would have
saved, it would have saved in the intervening months since March,
it would have saved more than 25,000 families, their shelter, and
their attachment to the land.
They are gone now. The hammer has come down on those homes,
and all they were asking was for an allocation of credit, of re-
sources, so that they could continue to hold on to that home.
The record of the Depression showed the American families kept
their pledges and paid in such quantities their debts back that the
Government made money, over $350 million, by the time they
closed the books on the old Home Owners Loan Corporation.
Ours was just a sort of half baked, weak imitation of the Home
Owners Loan Corporation. Why? Because of this distorted and per-
verted priority reflected by a President who says you cannot trust
these people; this is a squandering of our resources. But he says I
have got to have $10 billion to bail out the biggest banks in this
country because they trust some foreigners to pay their debts and
pay their loans.
What kind of perversion of priorities is this? Has the Congress
reached the point where it will accept this perversion continuous-
ly? I do not think so.
I think this is an issue in which the line is drawn, just as clear
as if I were to erect a 10-foot wall here in front of me. That is the
line. I ask my fellow Congressmen to vouch for the fact that the
need, reflected in this bill s attempt to answer and fulfill, is mini-
mal. Even at that, we are trying to compromise.
I do not know how much more we could go in seeking a compro-
mise on our side without capitulating on principle, which I will
never do, or on basic policy and program, which, again, I do not
think I was elected to do.
This has always been an issue with me from the beginning. But
we know the truth of the matter and the truth is that there is no
way we can have a national commitment for housing unless we
make a national commitment.
Every one of us also knows that the type of help and the extent
of it must vary with the conditions. Some families need more room
than others. Some need less financial help than others. Some can
get along with a little boost toward making over and rehabilitating
with their own sweat and muscle as we have seen in one State
after the other.
This is what this bill does. It provides the type of help necessary
to meet the wide range of needs that our fellow citizens have if
yGoot^le
461
they are to obtain decent housing within their financietl and physi-
cal means. That is the way this bill will provide help.
This is not a generous bill. Let me say that personally it is one
that I have compromised beyond my own personal wishes. But, as I
said, and I repeat, it is an attempt to compromise.
Up to now the biggest argument has been either, that it would be
a bucket breaker or that it was administratively unfesisible.
D 1350
Today I have introduced a substitute, an amendment by way of a
substitute, in an attempt to meet 100 percent of those criticisms. In
this substitute we provide the exact figure with one exception, and
that is TUral housing, where this administration is against it,
period. They do not want any type of rural housing.
Now, the rural needs are great or maybe even greater than some
of the cases of urban needs.
Let me assure you of that. I have been to the rural sections.
As a matter of fact, as long as our country allows what continues
to happen even today, 2 years later; just take a drive, less than an
hour and a half away from this Capitol and you will see unbeliev-
able housing conditions for our farmworkers.
Oh, sure, compared to the total vast labor force we have in this
country, they are a drop in the bucket, but since when is human
life degraded and cheapened, even if it involves one life, in our
American way of doing things?
I invite my colleagues and my fellow Americans, if they have
any doubts about the need, to come and take a trip. They do not
have to go far, just to the Eastern Shore here. They will see some-
thing that I think even they would agree needs to be improved.
I take great pride in bringing before the House the pending bill,
H.R. 1. the Housing and Urban-Rural Recovery Act of 1983. The
designation of this bill, H.R. 1, is a clear indication of the urgent
importance of this Nation's housing policy — not only as a question
of economic policy, but as an absolute human imperative.
Every living creature has certain absolute needs — adequate food,
adequate health, and adequate shelter. It does not matter what
order of life we are talking about — for not even the simplest of one-
celled microbes can survive without those essential, minimeil condi-
tions. From the bottom of the ladder of biological beings, up to our-
selves and our fellow human beings, survival is not possible with-
out adequate shelter. That is what this bill is about— shelter — emd
that is the issue before us today.
The position of the administration is that Government has no
need to be involved in the business of providing shelter. They claim
that there is plenty of adequate housing already in existence. It
do^ not trouble them at all that for millions of Americans, it is
not posBible to pay the rents or mortgages for that housing. It does
not concern them at all that because millions cannot afford the
good life, those millions are forced to live in conditions that are at
best intolerable and at worst impossible. Not because these people
are any less human; not because they have not tried their best; not
because they have given up trying, do they live in degradation or
cold or in run-down and overcrowded places. They live in such con-
yGoot^le
462
ditions because they have no choice: they are the poor or the near-
poor. And they are also the reasonably skilled, what we mi^t rail
the working poor, who cannot afford to buy a home at todies
mortgage interest rate of nearly 13 percent, or who cannot afFwd
to pay immense rents on decent apartments. The administration
does not make the connection between lack of personal means, lack
of wealth, and a life lived out in unsanitary, indecent, or inad-
equate housing. They deny that it exists at all. But it does, and
that is the issue.
Every one of us knows the truth of the matter, and the truth is
this: there is no way that we can insure that our fellow human
beings, our fellow citizens, can live in decent homes, unless those
less fortunate among us get some kind of help through the Federal
Government. Every one of us also knows that the type of help and
the extent of it must vary with conditions: some families need more
room than others; some need less financial help thfui others; and
some can ^et along with as little as a boost toward taking over and
rehabilitating, with their own sweat and muscle, an empty but re-
deemable house. And that is what this bill does: it provides tjie
^pes of help necessary to meet the wide range of needs that our
fellow citizens have, if they are to obtain decent housing within
their financial and physical means.
This is not a generous bill; it in fact provides only a survival pro-
gram for housing. It provides for vastly less housing assistance
than the Nation needs, but the administration is opposed even to a
token effort. They want no effective housing pn^am at fdl. The
bill is not generous because it conforms with the very limited
budget authority that was provided for in the House budget resolu-
tion. Yet, it does not abandon the principle that this Congress must
keep faith with its 35-year-old commitment to a safe, decent, afford-
able home for every American. That is the question we face with
this bill: since we know there is a need, and since we know the
need can only be met through a positive, comprehensive Federal
housing program, are we going to keep our commitment; are we
going to work toward meeting that need? The issue is that simple.
The provisions of this bill are many, and they are as complex aB
they are numerous, but every vote on this bill comes down to that
simple issue: are we going to provide a reasonable effort toward
providing absolutely essential help to people who are unable to
afford one of life's absolute essentials, which is decent shelter? It
does not matter how high flown the debate may be, nor how com-
plex the particular amendment, I want to assure my colleagues
that every item in this bill, and every stand that I will take, rests
on the simple test of whether or not the proposition actually would
help people achieve their goal of decent housing at a price they can
afford to pay. If there is a great disparity between what the oppo-
nents of this bill want, and what the administration wants, and
what the Housing Subcommittee and the Banking Committee call
for in this bill, it is because the administration wants no housing
policy, and no meaningful housing program of any kind, while we
do.
Let me cite an example. The administration advances the view
that there ought to be a housing voucher program, and that all ex-
isting housing production programs ought to be scrapped. As an
yGoot^le
463
economic theory, this housing voucher program could work only if
it provided adequate subsidies, and then only if it were an entitle-
ment. Without those conditions, it could never replace the existing
housing assistance programs. But what has the administration
brought forweird? A proposition that would provide housing vouch-
ers for maybe 80,000 families that are not already being helped.
Even then, these vouchers would be set at such a low level they
would not pay rent on any decent place, in any kind of market
where there is any strong demand — which is the case in almost all
markete. The administration's voucher program would provide
rental assistance for less than 80 people in each one of America's
946 towns of 25,000 or greater population. Suppose you were to
hand out a dozen housing vouchers even in a town of 2,000 — who
among us would say that the result would be to create a vast new
supply of privately constructed rental housing? And so, when you
examine the administration's voucher program, when you measure
it against the real world, it is seen for what it is — a sham, a TroJ£in
horse that would allow them to procleum that they have brought
America the great gift of a new housing program, when, in fact,
they would destroy what little of a housing program we now have
left, save only a token 10,000 units for the elderly and hsmdi-
capped.
I remind my colleagues that even if H.R. 1, were to be enacted as
reported from the committee, the funding level for housing would
atul be 60 percent below what existed in 1981, At the proper time, I
will offer an amendment that approximately conforms the funding
levels to the budget conference and to closely track the funding
levels agreed to in HUD appropriations conference, which will rep-
resent a still greater cut. But no matter how great the reduction
from the 1981 level is, the fundamentel question is still whether we
have a housing program at all. After all, what the administration
wants is a production program that would, in all likelihood, not
even be adequate to finish existing commitments. What they rec-
ommend is a closeout, a shutdown of any Federal assistance for
new housing construction — this in the face of their own admission
tfiat there are at least 1.1 million families who today live in sub-
standard units and pay better than a third of their incomes for
housing. What is needed, what we recommend, and what this bill
provides, is continuation — continuation of programs that are clear-
ly need«l, programs that have met the test of time, and programs
that work.
Let me turn to a few of the issues that will come up during the
course of action on this bill.
First, community development block grants. Congress has, from
the beginning, insisted that community development block grants
be something more than general revenue sharing. We know that
communities themselves are best equipped to set out a community
renewal Eind redevelopment strategy, and that is why this block
grant was developed. But we also know that unless the funds are
targeted in a way that benefits the truly needy, and unless there is
some means by which to insure good planning and careful adminis-
tration, the whole concept of community development block grants
will be destroyed. Unless we have tergeting and planning and some
kind of ability to measure results, CDBG would not only fail to ben-
yGoot^le
464
eflt the truly needy, but would in all likelihood fail to accomplish
anything that we intend or envision. Therefore, this bill requires
that 51 percent of CDBG funds be expended on activities that bene-
fit persons of low and moderate income. It will require that com-
munities maintain their existing planning methods, and it will es-
tablish a uniform reporting system, so that Congress can gau^
how well the program is actually operating. These are common-
sense provisions that insure the CDBG program operates effective*
ly and prudently, and that it benefits areas and people with the
greatest needs.
The administration, which does not blink at imposing huge pa-
perwork burdens on the hapless, poor welfare recipients, or the
powerless and impoverished applicants for food stamps, all in the
name of prudence and efficiency, says that any efibrt to tai^t or
plan or evaluate CDBG programs is unreasonable. But, in fact,
their aim is to reduce CDBG into a general revenue sharing pro-
gram, and then later claim that it ought to be killed altc^ether be-
cause there is no way to determine what efiect the money has had.
Up until this time, there has been bipartisan agreement that the
CDBG program should be targeted, and that cities receiving these
funds should undertake reasonable planning efforts, provide rea-
sonable reports, and be reasonably accountable. Yet, the adminis-
tration persists in adamantly opposing these commonsense ap-
proaches. Since they will not accept any kind of reasonable guid-
tmce on what the intent of Congress is and has always been with
regard to the CDBG program, we have no recourse other than to
write into explicit law how this program is to operate.
Let me turn to an assisted housing issue. I^e pending bill pro-
vides for a maximum rent of 25 percent of a family's adjusted gross
income, for those residing in assisted housing. In addition, the bill
sets out how adjusted income is to be arrived at. For example, food
stamps would not be counted as income, which the administration
wemts to do, despite the warning from its own Assistant Secretary
for Research ana Development that this idea most severely affects
the lowest income — and that it could have disastrous consequences
for the poorest of the poor.
In this case, we can expect to hear all manner of demagoguery,
but the issue once again comes down to the question of a fair and
effective housing policy. You will hear it said that since a vast
number of poor Americans who cannot live in public housing are
paying more than 25 percent of their income for rent, it is not un-
reasonable to expect people who live in assisted housing to pay 30
percent or more. But it is senseless and cruel to say that aa a
matter of policy all the poor should be equally impoverished. It is
like arguing that because God did not provide an ark for everyone,
He should not have caused Noah to build one. The fact that we
have people in need of housing does not support the argument that
those who live in public housing ought to be paying more; it, in
fact, supports our argument for more housing production. But not-
withstanding logic or need, the administration wants to drive the
working poor out of public housing altogether, and it wants to
impose a huge new burden on those who remain. They want to do
this in the name of reducing the deficit — but the whole operating
subsidy for the entire public housing stock of this country, for a
yGoot^le
466
whole year, would not operate the Penta^n for even one full 8-
hour shift. Let me tell you how the administration's rent increase
program actually works — and this is an actual letter from a man
who lives in public housing in Erie, Pa.
My rent has increased from $65 a month tc $89 e month . . . We only receive
$169 twice a month cash aasiHtance and out of that I've got to pay $89 for rent, $124
fbr food, clothing, medical expenses and bus fare. There are no jobs anywhere.
We've got an unemployment rate in Erie in excess of 30 per cent . . , Reaganomics
is fcilling me and my family.
The fact of the matter is that the poor, who have already had to
endure vast reductions in food stamps, and for whom there has
been no way at all to increase their cash income in the face of in-
flation, simply cannot pay stiff increase in rents for assisted hous-
ing and expect to survive. Unless the rent provisions of H.R. 1, are
adopted, tens of thousfmds of poor people will have no choice but to
leave public housing, £ind go back to unsafe, inadequate, wholly in-
decent housing. Why? Because the Reagan rent increases will force
Uiem to choose between living in bad housing, or the impossibility
of economic survival. Many will leave public housing to take their
chances back in the slums £ind tenements, because there will be no
other way that the^ can hope to meet their irreducible need for
clothing, for food, for transportation, for those absolute essentials
of existence.
Finally, let me point out that this bill includes with it new ap-
proaches for the production of assisted housing, through a flexible
subsidy for multifamily units. This flexible subsidy, developed
largely by my friend and able colleague from New York (Mr. Schu-
mer) is a less expensive, more expeditious way to obtain new or re-
habilitated multi family units than the section 8 new construction
program. And there is a great need for affordable units. How
great? Not long ago, 216 new units became available in the South
Bronx of New York. There were 6,000 applicants for those units.
That is how great the need is. And the fact of the matter is that we
ought to produce aa many as a half million low-cost homes each
year, if we aregoing to meet all the need for good quality, afford-
able housing, llie administration, itself, through its own Housing
Commission, admits to the absolute need for anordable housing by
better than 1.1 million families that now pay exorbitant amounte
of ttieir income for substandard housing. What would they provide
for that million families? Inadequate housing vouchers for 80,000.
A token 10,000 units for the elderly and handicapped. Nothing —
nothing at all — for those who are poor that they have no real
(Jioice other than public housing. In the face of needs that every-
one knows, we cannot abandon our housing production programs m
favor of a handf\il of housing vouchers that would not be adequate
to pay the rent in a decent place in any active market.
And that summarizes the issue. For the ill-housed, this bill pro-
vides the continuation of programs that work. The administration
proposes abandonment of those programs. They simply want to
deny the fact that there is need for decent new housing, and they
aim to consign the poor and the near-poor to hopeless despair. But
we have a responsibility to continue our commitment to decent and
affordable housing — for, as I said at the outset, every living crea-
ture has certain beisic, irreducible needs, Emd among those is ade-
yGoot^le
466
quale sheher. Tim bfll annc to pnwide Adm ed
help, no more aod no iem. And ths cwuuii caaa
science, abandon its oomnntment to the Amerion
to keep &itfa with the oxnuntznent of a b
home for enryooe. the poor as well as the famame. the
well as the bi&
asjoUH ua
iiJB nuKJH lUii mjmum
. i2ijn s^tszuoa aui; >miuiojii
COMPAfttSOII OF H.R. 1 AMENDMENT AND BUDGET RESOLUTION
tiOk Inninj dqctn |nnli
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7,991.000000
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1,450,000,000
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25,000,000
yGoot^le
467
CMPAnSW OF KR. 1 AMENDMENT AND BUDGET RESOLUTION-Cantlliuid
HUlnnlral
BuWrntjta
59,000,000
18.000,000
Mr. Chairman, I yield such time as he may consume to the gen-
tleman from lUiode Island (Mr. St Germain), the distinguished
chairman of the Committee on Banking, Finance and Urban Af-
fairs.
(Mr. St Germain asked and was given permission to revise and
extend his remarks.)
Mr. St Germain. Mr. Chairman, I too rise in support of H.R. 1,
the Housing and Urban-Rural Recovery Act of 1983, and 1 have to
|jve eveiy plaudit and commendation to our colleagues on the
Committee on Banking, Finance £ind Urban Affairs, but in particu-
lar the chairman of the Subcommittee on Housing and Community
Development, my beloved colleague from Texas (Mr. Gonzalez), for
his untiring eH'orts in bringing forth the first m^'or housing au-
thorization bill since 1980 for consideration by this House.
Our committee bill is the result of a 2-year effort on the part of
the House subcommittee and represents our committee's enort to
address the housing and community development needs of this
Nation as we in the House perceive them.
I elIso want to pay special tribute to the staff of the Subcommit>
tee on Housing and Community Development, under their able
staff director, for the herculean efforts they have put into this leg-
islation. In this instance staff certainly has been of invftluable as-
sistance.
H.R. 1 was reported out of the Committee on Banking, Finance
and Urban Affairs in early May, well before the budget issues in
the first budget resolution were resolved and prior to the Commit-
tee on Appropriations had completed its action on H.R. 3133, the
HUD-independent agency appropriation bill.
The committee-reported bill therefore provides for higher author-
ization levels than were subsequently agreed to by the House
Budget Committee and the conference on the budget resolution. An
amendment will be offered by the gentleman from Texas (Mr. Gon-
zalez) and myself that will bring the authorization levels contained
in the committee-reported version of H.R. 1 down to the levels set
forth in the budget resolution and as are contained in the confer-
ence report on the HUD-independent agency appropriation bill.
Mr. Chairman, I regret that we had to further reduce the author-
ization levels in H.R. 1 because the levels set forth in H.R. 1 were,
in the committee's view, minimal levels necessary to meet the low-
and moderate-income housing needs and the community develop-
ment needs that we believe our Nation requires.
Be we believe that this House and the other body would be in no
mood to consider these higher authorization levels for assisted
housing and community development. The members of the Com-
yGoot^le
mittee on Banking, Finfince Euid Urban Affairs, and I believe I
speak for both sides of the eiisle, feel that it is absolutely necessary
for Congress to approve this year's housing authorization bill.
Our responsibilities revolve not only around setting the authori-
zation levels for our HUD programs but in providing the policy di-
rection that we expect the administration to follow and the neces-
sary program changes that we believe must be made to make our
programs responsive to the housing and community development
needs of our Nation.
Perhaps in a better climate this Congress can consider in a more
rational manner our eissisted housing and community development
needs.
Mr. Chairman, I commend my senior Republican colleagues on
the Committee on Banking, Finance and Urban Affairs, the gentle-
man from Ohio (Mr. Wylie), and, yes, we do have a gentleman from
Connecticut (Mr. McKinney), for the cooperation that they bring to
our consideration of H.R. 1 and the responsible attitudes of this
House. I also wEuit to commend their stan for their cooperation as
well on this matter.
I believe that we will be able to go to conference with the Senate
and present the President with a housing bill that meets our re-
sponsiblities as elected representatives of our constituents and our
responeiblities as members of the Committee on Banking in ad-
dressing the housing and community development needs of our
Nation.
Mr. Chairman, I look forward to a very productive debate when
we get into the amendatory process, which I hope will be early on
this week, and for a successful conclusion to this very lei^thy
effort, wherein a great many parties have expended a great deal of
time, so that we can go forth and meet with the honorable Senate
and discuss the needs of this Nation.
Mrs. BoGos. Mr. Chairman, will the gentleman yield?
Mr. St Germain. I am happy to yield to the gentlewoman from
Louisiana, a very distinguished former member, a graduate, an
alumna of the Committee on Banking, Finance and Urban Affairs.
Mrs. BoGGS. I thank the gentleman for yielding and for his kind
remarks.
Mr. Chairman, I would like to join my remarks with those of the
gentleman from Rhode Island (Mr. St Germain) in commending the
subcommittee and the full committee and of course the chfiirmem
and ranking members of the full committee and the subcommittee
for their diligent work, and the staffs for their very comprehensive
attitude toward the multiple housing and urban development and
rural development problems and challenges throughout this coun-
try.
I should also like to particularly mention that with the floodmg
that has been so rampamt over the entire United States, there is
new interest among all Members from every part of our country in
the flood control programs and the flood insurance prc^ram. I
would like to especially thank the committee for including within
this bill the authorization for the continuance of the flood mapping
program and the flood insurance pn^am. I thank the gentleman
for yielding.
yGoot^le
Mr. St Gkbuain. I thank the gentlewoman for her very, very
kind, meaningful remarks.
Mr. Chairman, I yield back the balance of my time.
Mr. McKiNNEY. Mr. ChairmEin, I yield myself such time as I may
consume.
(Mr. McKinney asked and weis given permission to revise and
extend his remarks.)
Mr. McKiNNEY. Mr. Chairman, this country has not had a hous-
ing authori2atioD bill since 1980.
I consider that to be a tremendous tragedy. I do not think that in
these times when things move along so quickly that we can stand
not to review and not to make some changes in the basic housing
law of the United States.
n 1400
Tliere is a great deal that is wrong with H.R. 1, not the least of
which is as it is presently printed it is a gigantic budget blockbust-
er. I found myself, as ranlung member of the Housing Subcommit-
tee, confronted on the one side by an administration that was total-
ly unrealistic at |8 billion and by a committee bill that was totally
unrealistic at |24 billion. In fact last year we appropriated some-
where in the neighborhood of $17.8 billion.
Reality should have suggested to the White House, and should
definitively have suggested to the committee, that both of those fig-
ures were out of balance.
I am delighted to hear that today there will be an amendment to
the committee's bill put in by my friend, the chairman, the gentle-
man from Texas, wluch will bring this authorization bill into line
with the appropriation amounts, though it remains not program-
matically correct as we would like to see it.
I think the chairman of the full committee and the chedrman of
the subcommittee are well aware that the minority at no time has
tried to be dilatory in the consideration of this bill. It has been this
Member's feeling that a bill was needed so desperately that I was
willing to get it to the full House floor as quickly as possible so
ttiat the elected Members of this body could work their will and we
could go to conference.
I find it a tragedy that once more we are confronted with an au-
thorization, following an appropriation. If this continues I begin to
question the necessity, in fact, even the advisability of having an
authorizing committee, because our work is being done for us by
people who do not spend all of their time concerned with the intri-
cacies of housing.
I mentioned the financial problem which I think has been solved.
The programmatical problems are so severe that I question wheth-
er they can be solved. I would be confused as to how my vote would
be cast if this bill were proper in the appropriations phase, but if it
were simply as unacceptable in the appropriations phase as it is in
the programmatical phase, I would not have any problem voting
against it.
Some of the things that really bother me about this bill are that
very great improvements that we made to try to make things work
better seem to have been put backward. Community development
yGoot^le
470
block grant programs got tied up in so much redtape, so much bu-
reaucracy, that in fact many of our communities found themselves
buried in paperwork. We did a great deal to cut back on that pa-
perwork. We had made the whole process much simpler. We bad
followed along with the same intent that Secretary Harris had
when she started the urban development action grant prt^ram and
that I had when I separated the Neighborhood Reinvestment Cor*
poration from HUD. We had made community development blot^
grant process a simpler process, a speedier process, but I am afraid
this bill programmatically takes us right back to ground zero. In
fact, it makes it a complicated, difficult, and very (involuted proc-
ess for the communities and cities of this country.
I want to thank my friend, the gentleman from Texas (Mr. Bart-
lett) for at least getting an amendment put into this bill which
would allow cities to say that they had complied.
A qualification was put on the community development block
grant program which states that 51 percent or more must go to
low- and moderate-income families. I feel the 51 percent is an arbi-
trary number. I feel it is an unnecessary number. The average
community is now dedicating about 60 percent of their money to
that category. But 1 feel that 51 percent done on a yearly basis is
an absolute disgrace because it is going to totally tie down the
hands of our communities.
I offered an amendment within the committee which would have
had the 51-percent test based on an average of 3 years. This would
have given a community, for instance, with the first year, the right
to buy property, to move on and do the other qualifications wiuiin
the next 2 years of the 3-year cycle, proving that they had lived up
to the means emd the desires of the committee zuid the House of
Representatives at the end.
Fifty-one percent will not work, cannot work, and is terribly
cumbersome on a yearly basis.
I am very disappointed that the committee did not see fit after
weeks and weeks of negotiations and many meetings between staff
on both sides to allow communities as a matter of last resort to
build new low- and moderate-income housing as part of a neighbor-
hood strategies area. How many of us have had cities and towns
where we have almost finished with a neighborhood strategy area,
everything is almost done, and there are one or two or three impos-
sible lots that tear down the whole progress we have made by be-
coming resting places for junk cars, garbage, dope addicts and all
of those other things that seem to grow in urban neigborhoods. I
felt to give the mayors of this country who are responsible for their
communities this one little bit of help to finish off would have been
helpful. However, everybody dashed forth and said that I was
trying to change the program.
I would suggest to my colleagues that the langUEige was so severe
it would have taken the utmost qualification and accounting to
prove that you were eligible for the nousing.
This bill rolls back the maximum rent that anyone can pay from
30 to 25 percent of income. 1 do not want to raise anybo^'s rent,
but I find it hiu-d put to go back to Bridgeport, Conn., or Stamford
or Norwalk and turn around to the averiige factory worker, janitor,
the working men and women of my district to say that those who
yGoot^le
471
are on public welfare are only goii^ to have to pay 25 percent of
their income, while metny of my constituents, particularly in Fair-
field Counfy are paying 35, 40 and sometimes as high as 45 percent
<rf their income for basic dwelling. And I think that 30 percent is
painful, but taken up at a slow basis, it certainly is fair across the
whole row.
I think that the expansion of deductions to registered gross ad-
justed income makes this even more of a travesty. In fact we are
giving more help to those at the lower end than those who are
struggling, double working families and trying to maintain them-
selves. It is something that we certainly should have looked at.
I feel very sorry that we did not have an opportunity within this
bill to test the voucher system. And as the chairman of the sub-
committee knows, this ranking member does not like the voucher
^ystem much either, but there is a saying in this town, "If you
^n't prove something and finally put it to bed, it is going to be
around bothering you forever." And it seemed to me that this was
the bill to try in a demonstration program in various different
areas a voucher program in a rural area and in a big city and in a
medium size city and in a small town to see if in fact rental vouch-
ers, free market movement, might not be a simpler way to house
Americans who need help being housed.
There is in this bill a monstrously large raultifamily housing in-
centive for new construction. This is, once more, here we go. If this
program in fact comes into effect we are building a project pro-
gram, we are building a builders program. Only 20 percent of the
tenants in these new buildings would be required to be in low- and
moderate-income circumstances. What we are doing is developing a
program which will be used to build a project, to get a builder
started, we are not developing a program that is going to help low-
and moderate-income people. How can we justify the Federal sup-
port of 80 percent of the construction of $900 million, when we are
only going to affect out of that $900 million 20 percent of those who
are low income? Plus the fact that one of the qualifications for this
is a severe rental shortage. Where is a severe rental shortage? A
severe rental shortage is in the cities that force through rent con-
trol and in fact included on new buildings that are just being con-
structed.
I have been rankii^ member of the District of Columbia Commit-
tee for 6 years. I have served on it for 13. I invite my colleagues if
they wish to see new apartment construction that is not luxury
apcu-tment construction, drive down Route 95, drive down Route 1
in Virginia. Do not come to Washington. Because you are nei'er
going to find it, because the minute we put rent control in on this
city and included new construction, there was no new construction
done.
The Wylie amendment which has been offered on previous hous-
ii^ bills would have allowed communities to keep rent control but
not on new construction.
n 1410
What we are doing with this multifamily housing program is, to
turn around and reward the cities that have rent control by saying.
yGoot^le
!J,
472
"Here, we are going to give you the money to build some apart-
ments, and we are only going to require that in fact 20 percent <^
that help go to low income."
My friends in the House, we need a housing bill. I hope that
during the consideration of this bill an accommodation can be
reached that will take this bill to conference. There are things that
desperately need to be done at the Department of Housing and
Urban Development. They cannot be done and we cannot effective-
know where we are going without a new housing authorization.
e are presently today, I would suggest, stuck in the largest
morass of interpreting regulations, deregulations, overrreulation
criteria, that all of us, whether we come from Louisiana, like the
gracious gentlewoman who complimented us, or Fairfield County,
And it almost impossible to get fuiything meaningful done for our
cities and towns.
And we need to get this behind us because there are so many
other things that need to be defined and determined, such as the
status of public housing authorities, right on across the entire list
of the involvement of the Department of Housing and Urban De-
velopment.
I have appreciated working with my chairman. We have, though,
a different opinion. We have enjoyed working together, I want a
housing bill as well as he does. We have our programmatical difTer-
ences, but they certainly have not been personfd. I have appreciat-
ed the effort.
Mr. Chairman, I yield 7 minutes to the gentleman from Ohio
(Mr. Wylie).
(Mr. Wylie asked and was given permission to revise and extend
his remarks.)
Mr. Wylie. Mr. Chairman, I rise in opposition to H.R. 1, which is
the bill before us. I rise in opposition to H.R. 1 in its present form.
I understand that there will be amendments offered or have been
offered which will substantially change the thrust of H.R. 1, and I
am pleased about that, certainly. I do want to compliment the
chairman of the Housing Subcommittee, the gentleman from Texeis
(Mr. Gonzalez), for his tireless efforts in holding those many, many
hours of hearings on this very, very important subject that is now
before us. I also want to compliment the ranking minority
Member, the gentleman from Connecticut (Mr. McKinney), for his
attention to duty, and Chairman St Germain for his expert leader-
ship in bringing the housing bill to the House floor.
We are all for a housing bill. We need a housing program. We
have not had one, as has been suggested, for about 3 years. I think
it is very important that this body express its will on a housing
program and on a housing bill and establish the parameters that
we think ought to be placed into law as far as a housing program is
concerned.
There has been, I think it is feiir to say, little willingness on the
Eart of the Members of the other side to come up with a consensus
ousing bill. I think it is unfair to say today that the administra-
tion is against a housing bill.
H.R. 1 is so excessive that it is ludicrous, in my thinking; $25.6
billion in new budget authority cannot be sustained in our present
economy. Even in the area of housing, we need to ask whether we
yGoot^le
473
can atTord $25.6 billion in new budget authority. The prospect of a
Federal budget deficit of $200 billion constitutes our greatest threat
to affordable housing, in my judgment. At a time when the Federal
Government consumes over one-half of the total credit available in
the marketplace, eidding that much money to that deficit would
surely kill off a housing program that is now really coming to life
again.
I think it is not fair to say that the administration is against a
rural housing pr(^am. We think that the section 502 rural hous-
ing progr£un is excessive in amount. 1 have found that there is
more abuse in this section 502 program than probably any housing
program in history. This is what is known as a deep subsidy pro-
gram. It pays interest down to 1 percent on loans. There is almost
a 20-percent foreclosure rate in this program. There are a lot of
houses in the inventory right now. As a matter of fact, on Friday,
the Farmers Home Administration announced that, rather than
direct the moneys to individual counties in Ohio, it would pool all
of the moneys on a statewide basis. This means that something like
$73 million would be available in a pool for the section 502 pro-
gram in the State of Ohio.
Now, that seems to be like a very adequate amount for the rural
housing prt^ram. But when compared to the administration's
budget recommendations, H.R. 1 is almost $16 billion higher. As a
result, I looked upon a freeze at the fiscal year 1983 levels as a
^lit-fee-di£ference compromise with the administration and a ra-
tional effort to come up with a housing bill that could be signed
into law.
We do not want to do a vain thing here and just debate the hous-
ing issue. We want to try to come up with a bill that can be signed
into law. Even when compared to the higher than warranted fund-
ing found in the completed action of the HUD appropriations bill,
Hlk. 1 iB out of line. H.R. 1 is $5.5 billion higher on the HUD pro-
grams alone.
Now, we understand that Chairman Gonzalez, along with Chair-
man St Germain, will offer an amendment or a series of amend-
ments which will bring H.R. 1 down to about $17 billion or $16 bil-
lion. I have not been able to examine that amendment in detail,
but I applaud their efforts in this regard. But even a comparison of
budget authority figures leaves some major spending issues unad-
dressed.
For instance, H.R. 1 repeals the tenant rent increases enacted as
a part of the Omnibus Budget Reconciliation Act of 1981. On its
face, that does not mean much in terms of Federal spending. How-
ever, if you look at the Congressional Budget Office cost estimates
for this one provision, you will be astounded by the figures you see
there. According to CBO, this change in tenant rent would increase
outlays by $174 million in fiscal year 1984, an increase to over $1
billion by fiscal year 1988. That would total approximately $4 bil-
lion in increased outlays for the next 5 years.
Now, these figures would even be higher, except that CBO esti-
mates there will be a l-year lag between the rents as they are de-
creased and the additional operating subsidies.
The program which has to do with the community development
block grants, this would be burdened by a statutory requirement
yGoot^le
474
that 51 percent of the community development block grant funds
must be used to benefit persons of low income and moderate
income. This change naturally leads to a series of other provisions
dealing with how you measure benefits to low- and moderate-
income persons for various community development projects. This
causes a lot of decisionmaking at the HUD level, which I think en-
cumbers the community development block grant program.
In addition to that, there are other progreims which are em-
bodied in this bill which I think add to it unnecessarily. A new $1.3
billion multifamily housing production prc^ram, I think the timing
on this is very bad.
A resurrected neighborhood development grants pn^am authoi^
ized at $15 million.
A new program of non-interest-bearing advances for 202 elderly
housing.
A $100 million farm home program of housing preservation
grants, which has never been subject to any hearings.
With the budget problems that we have, I do not believe that we
can afford H.R. 1 in its present form and, as I say, I am glad to
hear and I am encouraged by the words of the chairman of the
Housing Subcommittee and the chairman of the full committee
that a more reasonable bill will be forthcoming through amend-
ments that will be offered on the House floor tomorrow.
D 1420
Mr. Gonzalez. Mr. Chairman, I yield 3 minutes to the distin-
guished gentleman from CEilifomia (Mr. Brown) for purposes of a
colloquy.
(Mr. Brown of California asked and was given permission to
revise and extend his remarks.)
Mr. Brown of California. I thank the gentleman for yielding this
time to me.
Mr. Chairman, before I pose a very simple question to the distin-
guished chairman, I would like to compliment him on the l^isla-
tion which he has brought to the floor. Looking at the committee
report, I agree wholeheartedly with the statement on page 2 that
the committee's recommendations contained in this bill are modest
in comparison with the housing need, and it is an effort to main-
tain our commitment to the housing needs of the poor and the eld-
erly in our district. I want to assure the gentlemftn of my whole-
hearted support for the legislation.
In my district, we have made particular use of the provisions
with regard to housing for the elderly and for rural housing, pro-
grams which are sometimes under attack. I would like to assure
the chairman that these pri^ram have accomplished more good for
the people in my part of California. I might mention that our dis-
tinguished colleague, the gentlemzin from Florida (Mr. Pepper) was
in my district last week dedicating a pn^iun of 36 units of senior
housing which has been undertaken several years ago. There are
no funds available for such programs today, and this could be the
last of a very important progr£im if it were not for the support
given by l^islation such as has been brought to the floor today.
yGoot^le
475
Mr. Chairmfui, if I could, I would like to propound a question to
the distinguished chairman, and this has to do with a clarification
of a provision, section 119, of the act, which has been amended to
allow distressed areas within identifiable but unincorporated com-
munities in urban counti^ to qualify for UDAG pockets-of-poverty
assistance.
As we understand it, Mr. Chairman, urban counties will be able
to qualify, distressed pockets in small communities that are similar
to small cities except for incorporation in the same manner that
small cities now qualify as pockets.
Am I correct in this assumption?
Mr, Gonzalez. If the gentleman will yield, yes, the gentleman is
quite correct. That is the precise intention of the subcommittee.
Permit me to clarify that the gentleman refers to section 119 of the
1974 act.
The Chairman. The time of the gentleman from California (Mr.
Brown) has expired.
Mr. Gonzalez. I yield 5 additional minutes to the gentleman
from California (Mr. Brown).
Mr. Chairman, will the gentleman yield?
Mr. Brown of California. I gladly yield to the chairman, the gen-
tleman from Texas.
Mr. Gonzalez. The need for this was very dramatically illustrat-
ed when we made a trip. The subcommittee went to California, and
a gentleman there came up to the hearing and brought out the
plight of such unincorporated communities. So the intention is very
clearly that it would allow distressed pockets within unincorporat
ed communities in urban counties, which have many of the chareic-
teristics of municipalities that are incorporated, to qualify for
UDAG pockets-of-poverty assistance. It was to fill in that gap that
this language is included in this version of the bill.
The qualification of pockets in small, unincorporated communi-
ties, would be handled in the same way as it is now for small incor-
porated communities. We would expect that the counties would
identify the pockets of unincorporated areas that are historically
and ge<^aphically recognized as a community. A pocket in such a
community, of course, meets all of the requirements of a pocket of
poverty that apply to similar small cities.
As I said, and repeat, we would expect the county to initiate the
process by identifying the unincorporated community based on a
variety of census-defined areeis, such as census tracts, block groups,
enumeration districts, or other such areas that are defined by the
U.S. Census Bureau. In the same way that it is currently handled
for small cities, the county in this case would submit the informa-
tion to HUD as part of the application process.
Mr. Brown of California. I thank the chairman very much for
these assurances, etnd I would just like to point out to the gentle-
man what he perhaps already knows: That I represent portions of
two very large urban counties adjoining Los Angeles. They are in
the process of rapid growth. Many of these areas that we are talk-
ing about perhaps will be cities within 5 years or 10 years, but cur-
rently, because they are not incorporated, they have difficulty in
qualifying, and it is in recognition of this problem that I sought
37-922 O - 84 - 31
yGoot^le
476
clarification from the chairman. I am very pleased at the response
that he has given me.
Mr. Gonzalez. Let me, in turn, on behalf of the subconunittee,
thank the gentleman for his interest and his concern and his dili-
gence in being responsive to the needs of his area. This is a real
need and it will fulfill what I consider to be an obligation on our
part to try to answer that need in this progrsim. What it does is to
make available to these areas that ought to be, and I think the
Congress never intended to exclude them, from the UDAG pro-
gram.
Mr. Brown of California. I thank the chairman again, and I
yield back the balance of my time.
Mr. Gonzalez. Mr. Chairman, I yield 5 minutes to the distin-
guished gentleman from Massachusetts (Mr. Frank).
Mr. Frank. I thank the gentleman for yielding this time to me.
Mr. Chairman, I want to thank the chairman of the subcommit-
tee and the chairman of the full committee for their persistence in
pushing ahead with this legislation against a variety of obstacles.
The House will be making a very momentous decision this week
when we take up the housing bill. What we have on the part of the
Re£igan administration is an effort to implement an ideology that
says that helping housing get built is simply none of the Federal
Government's business. We have been in a severe and profound
housing depression for many years. We began to see some increase
in housing earlier this year, but it is threatened. Interest rates
have already gone up. The most recent action of HUD was, giving
in to market pressures, to increase the mortgage rates for federally
assisted programs.
The central part of the Reagan housing program is to end virtu-
ally all programs by which the Federal Government helps housing
be constructed, not because of a decision that we no longer need
Federal assistance, not because of a view that the meirket is going
to take care of it, but because of the ideology of this administration
which says as it reads the Constitution of the United States, it does
not see anything in there about housing.
So its decision, which will be faithfully implemented in the Re-
publican substitute, will be to say that there will be no more Feder-
al housing construction programs with the exception of, I think,
about 10,000 units of housing for the elderly and the handicapped,
to be built only by nonprofit institutions.
Mr. Chairman, my experience, and I think that of many other
Members, is that when I go to my district, when I meet with
people, a demand, a request, a plea for affordable housing by the
poor, by the elderly, by moderate-income people with lai^e families
is one of the most difficult requests we get, because the housing in
many parts of the country simply is not there.
I will be putting into the Record later today material from the
Attleboro area of my district, not the most crowded of the urban
areas that I represent, but an area in which there is a desperate
need for housing in which people who are engaged in work with
the elderly and work with children and work wiUi distressed fami-
lies over and over have this need for housing and simply cannot
find it.
yGoot^le
477
What the bill that came out of the subcommittee and the full
committee will do is to establish a new housing production pro-
gram. We have had, since the Gerald Ford administration, a Re-
publican program known as section 8 housing. People have felt
that section 8 new construction costs more than we could afford.
Whatever the merits of that debate, it has been decided that there
will be no more section 8 new housing or substantial rehabilitation.
D 1430
The question is whether we will do euiything in its place. What
this administration has done in housing is similar to what it has
done elsewhere, although it has been more extreme here than in
any other policy area. They begin by analyzing the existing pro-
gram and making the not surprising finding that they are false,
they have problems. Government gets into things and does not do
them perfectly; sometimes it does them badly.
The problem is not their analysis of past programs but their pre-
scription, because this administration is not proposing that we im-
prove, renovate, or make more cost-efficient housing production
programs. Their prescription is that the Federal Government
should do nothing to build housing except very limited units for
Uie handicapped and elderly and only by nonprofit institutions.
What the committee has come up with is a bill which would pro-
vide some new housing construction.
Now, in a ploy which my friends on the other side have become
very good at, they first deny the need for anything at all, and then
they scoff because what we come up with is not quite big enough. I
agree that it is not big enough. I agree that with the emphasis on
budgetary constraints, we have come forward with a program
which does not have enough in community development block
grants, which does not build enough housing for the elderly, and
which does not do enough to preserve the existing housing stocks
in public housing and elsewhere which we have.
But it does make an effort to do something, and the choice is be-
tween that and a program from the other side which carries forth
the David Stockman nobody-is-entitled-to-anything philosophy or
the Samuel Pierce "HUD-shouldn't-be-invoIved-in-housing philoso-
phy," which says that we should not have a new unit of construc-
tion.
We do have, I guess, a variant of the food stamp program for
housing, which is the new Republican approach to dealing with
housii^, and it will provide, if that is all we have got, some addi-
tional money to some people, but it will not directly help housing
to be built. It is far too marginal a program to lead to the construc-
tion of new housing, and the result will be, come October 1, that
there will be no new housing.
And we are already there, by the way. People know that who
have had an opportunity to discuss with the Housing and Urban
Development Department proposals for new housing construction,
other than that very limited program whereby nonprofit programs
are provided for the elderly — a good program but hardly an ade-
quate one for the whole country, Thay are just hearing today, if
they call HUD, that we have no new programs, either for construc-
yGoot^le
478
tioD o( new housiiig or for subBtantial rritatHlhatkn. nwae pro-
grams have been stopped and if this administratHHi has its way,
they will not be allowed to continue after October 1.
llie Chairman. The time of the gentleman from Maasadiusetts
fMr Frank> has expired.
Mr. Gonzalez. Mr. Chairman, I yield 6 additional minutes to the
distinguished gentleman from Massachusetts (Mr. Frank).
Mr. Frank. Mr. Chairman, I thank the gentleman for jrielding
me this additional time.
Mr. Chairman, the new production program requires that 20 per-
cent of the units be set aside for low- and moderate-income people.
We hope it will provide even more. The gentlemen from the other
side say it is not enough. I agree that it is not enough. If they
would support us in allocating more money, we could get more low-
income and moderate-income units.
The reason this program does not call for more low- and moder-
ate-income units is that we are under these budgetary constraints,
and it requires some subsidy. But it is not only those at the low-
and moderate-income level, 80 percent of the median and below,
who need housing. The real estate section of Saturday's Washing-
ton Poet is full of articles on the subject. The U.S. Savings & Loan
League is telling us that the dream of housing for all Americans is
going out, that people, if they are young, can no longer expect to
own houses unless they are wealthy.
We are trying to address that, but with r^sird to the budgetary
constraints, yes, with less than ought to be done. But we are told
that we cannot afford it. We are told we cannot afford it by an ad-
ministration which can build an MX missile at $20 billion plus. We
are told that we cannot aff'ord it by people who tell us we can
afford $8.5 for the IMF.
Now, that is off budget, Mr. Chairman. When we call something
"off budget," it is not real dollars. It is not supposed to bother us,
but it has a budgetary impact, and it seems to me inappropriate for
the Federal Government to be allocating $8.5 billion additionally
for the IMF and then to tell Americans who are literally homeless,
who are living in excessively crowded conditions, with far too much
of their income spent on housing, that we cannot afford any money
to build them a new production program at all.
If Members on the other side or Members anywhere or people in
the administration think our particular new production program is
not a good one, let us talk about it. But we will not hear that from
them; we will hear that we cannot afford to do anything at all. We
can afford $3 billion for agricultural subsidies, we can afford the
MX missile, we can afford $8.5 billion for the IMF, but we cannot
afford a penny for a new production program in which the Federal
Government helps housing to get built £tnd adds to the housing
stocks in a country where we badly need additional housing.
We have the view from this administration that we have over-
housed and that resources should be shifted out of housing. They
submitted a budget by which the Federal Government would have
made money off the housing pn^ams because of their desperate
desire to fund it elsewhere.
We have one chance now this week in the House and later on, on
the other side, to keep the Federal Government in the business of
yGoot^le
479
helping people build housing. If we do not, if we fsiil with this bill,
if it fails on the other side, or if it is vetoed, people will wake up
next year to a situation in which there are no programs whatso-
ever to help people get desperately needed housing built, and it
would be too late then to undo the great damage.
There are other provisions in this bill that are important. There
is an amendment in there which I sponsored that would prevent
HUD ^m allowing buildings that were built as subsidized units
from being sold off for upper class condominiums. There are two
projects right now, one in the city of Boston and one in the city of
PhUadelptua, built with Federal subsidies by developers for low-
income people, and the developers have walked away. I do not
know why, but they have walked away. HUD is now going to be in
possession of the buildings, and in those cases, HUD plans sales,
the result of which will be that the poor people who in good faith
relied on the Government's word and moved into that housing
would be thrown out because they are in an area that is gentrify-
ing. The housing would be bought by people who would throw out
the poor and put in new levels of income or perhaps condominiu-
mize them. They would profit substantially by this Federal subsi-
dized housing, and the people for whom it was built will be thrown
out in the streets.
HUD refuses to do anything about it. This bill includes a provi-
sion which would prevent HUD from consumating those sales. It
would say, yes, sell the property, but if poor and moderate income,
people with families, people struggling to make it, single parents
worried about their children and trying to provide them a decent
place to live, had moved in there in good faith on that assumption,
then we will not allow them to be thrown out because somebody
decided to take his or her tax advantage and sell the units for con-
dominiums. That is in our bill.
We have in our bill provisions to restore the rental level from 25
to 30 percent. The poorest older people in this country, elderly
people living on SSI, on minimum amounts of income, people who
live in public housing, have been told by this Congress and this
President in 1981, "You are not paying enough rent." It used to be
that when your social security check went up, your rent went up.
This eidministration had taken care of that. That is no longer the
case. Today your rent goes up even when your social security check
does not go up. We have broken the linkage. People who got no
social security increase on July 1 still get a rent increase, and they
are the poorest people in America and live in public housing.
This bill says to the elderly:
No, we will go back to the 25 percent. We don't think you should get a 20 percent
increase in your rent when you got no increase in your income if you are living at a
desperate poverty level.
The bill does other things as well. Does it do all that ought to be
done? Obviously not. It does not do half of those things. But if is an
effort, with the constraints that the budget imposes on it, to meet
some of the most desperate needs of this country, and the adminis-
tration's Emswer is an ideologically based, rigid negativism that will
leave us badly off.
yGoot^le
Mr. Chairman, I include at the conclusion of my remarks the fol-
lowing material:
1 was invited to a meeting at the Welfare Office last week by Mr. Silva regarding
the plight of the homeless person and family in the Attleboro area. In attnidance
were representatives of numerous local agencies who are being asked to deal with
the problem. As you know, we get numerous calls asking us to find bousing tar
people , . . from what I heard at the meeting, our calls are only a fraction of what
some of the other agencies are experiencing.
Welfare pointed out what they can and can't do — the difficulties that they are ex-
periencing when they try to find apartments etc. They are interested in working
with the whole community in trying to set up a place where a temporary idielter
might be established. Mr. Silva mentioned the feasibility of using a building fttmt
the Foxboro State Hospital as a site ... or unused building at Taunton State.
New Hope cited the difficulties they are experiencing in getting people to leave
the shelter since there are no apartments to rent — particularly for AFDC mothers.
Mansfield Housing Authority Director said that they were building 9 units for
low-income families and had 217 applications. N, Attleboro the same. F^iblic Health
nurse in N. Attleboro made a special plea for a United effort.
The meeting soon evolved into a discussion on the very real unavailability of
housing even for the intact low or middle income family who want to rent. It was
decided to form an ongoing committee to come up with some recommendations. I
offered to serve on the committee, since Mr. Silva had specifically asked if tjiere was
any plan in Congress to address the housing problem ... he hadn't realized that
Sec. 8 was dead.
HoMBLBssNBsa IN THE GREATER Attleboro Area
(By Janet Sylvia, Child Advocate Coordinator)
Long held dreams of the American citizen of owning a white house with a white
picket fence may not come to fruition in our society today because of unemploy-
ment, high interest rates and the economy in general.
Homelesaneas in the greater Attleboro area is not unique to the state of Massa-
chusettB. This is a problem 1 have observed in the past eight and one half years as a
Child Advocate Coordinator for the Office for Childron. Through the Help for Chil-
dren caseload, I have been able to document the needs, ga^in services and barriers
relating to this issue. Oftentimes, parents will call the HFC program seeking hous-
ing resources of which there are few. They have been referred to local housing au-
thorities and South Shore Housing which services this area for subsidized housing.
Waiting lists at the local housing authorities are a mile long or a two-year wait
Sometimes a family's name will be moved up on a list because of political pressure.
The South Shore Housing uses a lottery system to place names on a list.
Families with more than two children experience great difficulty obtaining ade-
quate housing due to the fact that landlords who own tenement houses have divided
the tenements in half eo they rent out three room apartments, thus, resulting in
double the rental income to the landlord. Three bedroom apartments in the Attle-
boro aroa aro scarce! There has never been enough low to moderate income housing
in Attleboro,
Many homes have been condemned in North Attleboro, thus, leaving the tenants
displaced. Tlie town of North Attleboro is addressing this matter now. Most of theee
families end up in motels if they cannot move in with relatives. Those families that
do go to motels have little resources available to them. Usually they are funded by
the local Salvation Army, a church or the Help for Children Prt^ram. These finan-
cial resources are only temporary. Those who are on AFDC could not apply for
emergency assistance because it did not come under the emergency assistance regu-
lations until quite recently. There are two such families residing with their children
in a North Attleboro motel now.
Because of Attleboro being a jewelry industrial area, families have moved up here
from the southern stales with the hope of obtaining employment. These families
have been known to the Help for Children Program since they have been referred
by other agencies which could not service them financially or with housing re-
yGoot^le
481
L For Axomple, in the recent past, DPW has referred a family, new in the
area and vntiiout resources, because first they must have a residence in order to
receive an AFDC grant.
Many of the HFC information calls are related to a lack of housing, housing re-
sources or inadequate housing. Many of these have been a result of evictions for
non-payment of rent. If these recipients have already used their emergency assist-
ance during the year they are not entitled to use it again until that year is up.
TliuB, leaving them homeless. Moet families have to rely on clasaified ads, many of
which are diacriminat«ry, i.e., one child accepted, rent is an exorbitant amount.
landlords will tell potential tenants they do not want divorcees, welfare recipients.
Hiapanics and Puerto Ricans,
Our minority populations such as Puerto Ricans, Hispanics. Cambodians. Laotians
and Guatemalans end up renting in out pocket areas of Attleboro, thus paying
higher rente for substandard housing. The Health Agent and the Building Inspector
can not keep up with the requests. However, I must state they do their job and well!
We have a number of adolescents who are out on the street because their families
have disown^] them, they left foster care because of some problem and they are
runaways. We have no drop-in center, soup kitchen, visible Salvation Army Unit or
Because of revitalization of downtown Attleboro and North Attleboro many fami-
lies have been displaced. Due to having to relocate, these families have had to face
great hardships such as having to leave the area, due to lack of available housing,
ineligibility of emergency assistance and discrimination.
Women who are staying at our Battered Women's Shelter, New Hope, experience
the same difficulties when they become displaced. A great many of these women
from other areas decide to relocate in the Attleboro area because the support sys-
tems for the battered women and their children are here.
Mr. McKiNNEY. Mr. Chairman, I yield 5 minutes to the gentle-
man from TexaB (Mr. Bartlett).
Mr. Bastlett. Mr. Chairman, I rise in strong opposition to H.R.
1 in its present form.
Throughout this session during this spring, I have been active, as
have the gentleman who have spoken earlier, in the hearings and
in the debate, and I would take a moment to commend my col-
league, the gentleman from Texas (Mr. Gonzalez), chairman of the
subcommittee, for his diligence and openness. I commend also the
chairman of the full committee, the gentleman from Rhode Island
(Mr. St Germain), and likewise commend the ranking members on
the Republican side of the Committee on Banking, Housing, and
Urban Affairs.
What is wrong with H.R. 1 is not the intent of the sponsors but
the result of what this housing bill, H.R. 1, does in its present
form, because the emphasis in housing should, in fact, be on hous-
ing and should be on the opportunities for decent, safe, and sani-
tary housing for all Americans and on increasing those opportuni-
ties. The emphasis should not be on Federal programs, on Govern-
ment agencies, on politics, or on promises that cannot be kept or on
how m£tny Federal housing units one can put in this bill.
The emphasis ought to be on providing opportunities for decent,
safe, and sanitary housing for Americans at all economic levels,
and particularly for increasing the opportunities for homeowner-
ship for low- and moderate-income Americans.
Mr. Chairman, I would commend the chairman for his announce-
ment that we will not have a debate purely over funding. I would
commend the chairman of the subcommittee for his statement that
he would reduce the funding in H.R. 1 from $22.2 billion to $15.8
billion. That increase, if it were allowed to stay in H.R. 1, would in
fact have decreased the opportunities for housing, would have in-
yGoot^le
creased Interest rates across the board, and ultimately would have
denied Americans new housing opportunities.
n 1440
So that the debate will not be on funding alone, but will be on
those significant program changes from existing program levels
and existing management and existing housing progreims that are
beginning to work, those signiflcant changes in the progranmiatic
changes in H.R. 1.
Now the debate will be on the merits or the demerits of this bill,
those changes in prc^ams, those changes that could in fact hurt
the cause of good housing. Those changes that, in fact, make hous-
ing and the ability of our cities and our housing authorities more
complicated to deal with housing and would in my judgment help
fewer people.
I would cite this afternoon several of the demerits of those pro-
gram changes and the severe disadvantages of this bill. First, as
has been mentioned several times, this bill would roll back from a
decision that was made 2 years ago, from 30 percent of tenant
income for housing to 25 percent of income. That is an unfair and
an ill-timed rollback and I will have more to say on that later, as
will I think a number of Members from both sides of the aisle.
In addition, this bill would add, new construction. It would add,
so near as this Member can tell, approximately 15,000 new units of
subsidized housing that would be newly constructed and the con-
struction subsidy would come from this bill at a cost of $900 mil-
lion.
I would point out to the Members that that $900 million is not
an add-on. In fact, it would be the same amoimt as is included in
the appropritions bill, but that $900 million to assist middle-income
Americans and that $900 million to assist apartment builders
would, in ffict, come from what would otherwise be assisted housing
in section S for low- and moderate-income Americans; so it is charg-
ing those low- and moderate-income Americans to increase new
construction for middle income, and I do not think that is fedr.
This bill would add to the cost and the burdens of administering
the community development block grants with some changes. Now,
the committee did make some changes to make that less onerous,
but in fact this bill would return in part to the bad old days when
community development block grants did not resemble a block
grant at all, but resembled a series of categorical grants.
This bill has significant omissions that I think will be addressed
by eunendments from this side of the aisle. This bill does not pro-
hibit rent controls in cities which receive Federal funds for housing
and, in fact, in that sense the Federal Government would work
against itself.
This bill would continue prevailing wage rates on rehabilitation
of public housing, in fact, when the prevEuling wage is almost im-
possible to obtain and we could renovate and rehabilitate 20 to 40
percent more units using the same amount of money.
This bill does not, and it should, increase FNMA loan limits in
high-cost areas to allow FNMA to serve the needs of housing.
yGoot^le
483
I said a minute ago that this bill, we are not going to deal direct-
W with the funding, but with those program changes because the
nmding is about the same on the surface; but, Mr. Chairman, I
would at this time detail some of those other costs of funding, those
costs that will never show up in the budget calculations, but they
are just as important to the taxpayer and they are just as much
fimmng increases, would add to interest rates paid in this country,
if you begin to recognize the taxpayer as a taxpayer and forget
about layers of government.
Now, the costs that are added into this bill that I am talking
about are costs that are attributable to structural changes in exist-
ingprcKrams that would occur if H.R. 1 were adopted.
The Chairman. The time of the gentleman from Texas has ex-
pired.
Mr. McKiNNEY. Mr. Chairman, I yield 3 additional minutes to
the gentleman from Texas.
Mr. Bartlett. Mr. Chairman, these are hidden costs, costs that
cannot be shown in a bookkeeping document, such as a budget, but
costs that are, nevertheless, re^ and must be paid by someone
sometime.
The most obvious example is the rollback in tenant rent contri-
butions from 30 to 25 percent. I would support such a rollback if, in
fact, that lower figure were in line with what other taxpayers are
pajrlng for their shelter costs; but on the average, the American
people pay 33 percent of their income for shelter and on the aver-
age, low-income Americans who are not subsidized, pay 50 percent
(tt their income for housing costs. This one rollback along, while it
looks like small funounts of money individually, and it is, in flsceil
year 1984 would mean $174 million in additional Federal costs. By
nscal year 1986, adoption of this 25-percent rule, the difference
would be $1 billion in outlays, which translates into either cost
overruns addii^ to the deficit and adding to the interest rate for
all Americans, or would translate into less funds available for
those same Americans.
There are other changes in the tenant rent determination that
will cost the Federal Government more, but will never show up in
this bill as a budget authority or funding figure. By excluding an
fidditional $100 for each elderly person from each tenant's adjusted
income, you add $62 million in Federal costs. By excluding extraor-
dinary medical expenses in excess of 3 percent of income, you add
$198 million. By excluding child and dependent care expenses, you
add another $30 million.
There are other structural changes in the assisted housing sec-
tion which will have an impact on our budget. The 50th percentile
of recent mover rents, as opposed to the 40th percentle, which was
previously discussed, would add approximately $97 million in fiscal
year 1984 and $485 million over me period of the fiscal years 1984
to 1988.
Mr. Chairman, what I am trying to say is that these are real dol-
lars that will add to the funding costs of this bill, even though we
do not see them reflected in the budget authority figures that we
are used to dealing with.
Who pays for these figures? It is clear the taxpayer does. What
difference does it make u he pays additional Federal taxes or addi-
yGoot^le
484
tional taxes at the State and local level so that they can comply
with the Federal requirements? The net result is the same.
Mr. Chairman, the point I have attempted to make is that we
cannot look to the budget authority figures alone in determining
the costs of these programs. Someone either now or later must pay
the piper. With many of these structural changes, it is now. H.R. 1
forces upon us immediate Federal outlay expenditures that this
country can ill afford, expenditures that are not listed on the
budget authority figure, but are real. Other provisions of the bill
simply shift the increased costs to the State and local governments.
The taxpayer is going to suffer in the end because he pays taxes at
all levels.
Therefore, I caution my colleagues to beware of the siren song of
reduced authorization. It is not only how much we spend, but how
we spend and when we ^>end that is important. Without major
changes in the structure of^the programs in H.R. 1, reduced author-
ization levels will not be the answer. Spending less money on bad
programs is not good government. Spending the same amount for
good programs is.
I thank the chairman and I thank my colleagues.
Mr. Gonzalez. Mr. Chairman, I vield 5 minutes to the distin-
guished gentleman and a very valued member of the subcommittee,
the gentleman from New York (Mr. Lundine).
(Mr. Lundine asked and was given permission to revise and
extend his remarks.)
Mr. Lundine. Mr. Chairman, I rise in support of H.R. 1, the
Housing and Urban-Rural Recovery Act of 1983. I wish to com-
mend the chairman of the Housing Subcommittee (Mr. Gonzalez)
for his effort and leadership in developing this comprehensive
housing legislation and also for offering amendments to bring the
authorization levels in the legislation into accord with those recent-
ly approved by Congress in the first concurrent budget resolution
for fiscal year 1984. I also compliment the full committee chair-
man, the gentleman from Rhode Island (Mr. St Germain) and the
remking subcommittee member (Mr. McKinney) for their contribu-
tions to this legislation.
There remmns much uncertainty in the Nation's housing mar-
kets. While it appears the most severe housing recession since the
Great Depression has ended, the prospect for recovery in housing
continues to change with each month's economic reports. New pre-
dictions of rising interest rates have again dampened earlier hopes
for a vigorous upturn in housing construction and sftles during the
second half of the year.
This continues to pose very serious problems for Federal housing
policy. Two years of stagnant housing eictivity have seriously a^ra-
vated an existing shortage of decent and affordable housing for the
great mEyority of American households. Persistently high mortage
interest rates have forced all but a small percentage of homebuyers
out of the market for new homes and rising demand for existing
housing has made it increasingly difficult for lower-income house-
holds to obtain housing that is either adequate or affordable.
The Reagan administration continues to ignore these serious
housing pr^lems. It lacks any comprehensive housing policy and
remsiins unwilling to even consider such a policy. From the outset,
yGoot^le
485
this administration has dedicated itself to destroying all existing
Federal housing efforts. It has successfully halted all but a token
level of federally assisted new housing construction and has severe-
ly restricted housing-related services to the poor. Now, after 2 of
the worst years on record for housing, the administration persists
in seeking to restrict all remaining housing assistance, including
vital aid to homebuyers provided with FHA mortgage insurance
and Federal secondary mortgage market activities.
In place of our current housing programs, the administration has
offered only inadequate housing vouchers, limited block grants, and
a vague promise that tax benefits and reduced relation will
induce the private market to do what it has been unwilling to do —
provide housing to meet the needs and budgets of the m^ority of
American households. This approach has not worked in the past
and is clearly inadequate to meet current housing shortages.
In a series of speeches earlier this year, 1 attempted to outline an
alternative policy to guide Federal housing efforts during the next
few years. Given the administration's hardened views on housing
assistance and the lack of consensus in Congress on the future di-
rection of Government housing programs, it appeared that only an
interim housing policy would be possible for the foreseeable
future — a policy designed specifically to address our most pressing
housing needs while beginning to lay the groundwork for new, less
costly approaches to meeting low-income housing needs.
Essential to such an interim policy is an effort to shift more of
our limited housing resources to less costly housing rehabilitation
programs find to programs, like the elderly housing program, that
meet pressing housing needs while also freeing existing housing for
repair and occupemcy by young families. An interim policy must
also seek to strengthen existing programs to assist moderate-
income homebuyers both directly with mortgage insurance and
loan guaremtees and by expanding our secondary mortgage financ-
ing system.
As part of this policy, Congress must begin to build a new con-
sensus regarding long-term housing goals and priorities, as well as
develop new housing programs that permit an expansion of hous-
ing assistance within the tighter budget limits of the next decade.
I support the housing authorization legislation currently before
the House and believe it will dc much to implement the kind of
interim housing policy 1 have advocated. H.R. 1 continues existing
prwrams that meet the most pressing housing needs of the poor,
while offering new proposals that could serve as models for less
costly housing eissistance programs in the future. It shifts increased
priority to housing rehabilitation and neighborhood preservation
efforts, and strengthens current programs to facilitate private
home construction and finance.
In short, H.R. 1 offers what the Nation has lacked for the past 2*
years — a comprehensive approach to our current housing problems
and an indication that new, more efficient approaches are being de-
vised to preserve the Government's traditional commitment to
decent housing for all Americans.
Mr. Chmrman, I wish to highlight a number of the provisions in
H.R. 1 that I think are particularly noteworthy and deserving of
support. The legislation, as amended by the Gonzalez amendment.
yGoot^le
486
would provide $9.9 billion in new budget authority for low-income
housing assistance. This is a significant reduction from prior au-
thorizations and a level of spending consistent with the fiBcal year
1984 budget resolution.
In an effort to continue to serve as many of the Nation's poor as
possible, the bill shifts funding priorities for assisted housing by in-
creasing the proportion of funds allocated to the section 8 existing
housing prc^am and the section 8 housing rehabilitation pro-
grams. Rather than providing new public housing construction,
H.R. 1 seeks to preserve the public's existing investment in public
housing by increasing funds for project operation and moderniza-
tion, and by making additional funding available to meet problems
in troubled housing projects.
Housing rehabilitation is given much greater emphasis in this
legislation than in any prior housing authorization. In addition to
providing a larger proportion of funding for public housing repair
and the section 8 rehabilitation program, H.R. 1 seeks to contmue
funding for rehabilitation grants under the section 312 prt^am,
institutes a new program of assistance to neighborhood organiza-
tions to finemce neighborhood preservation activities, and includes
housing rehabilitation as an eligible activity under a new multi-
family housing production program.
In rural housing, H.R. 1 also makes needed changes to encourage
housing rehabilitation under the current section 515 rental housing
program and authorizes a new rehabilitation block grant program
to assist small communities in converting existing structures into
needed low-income rental housing. This constitutes a mtyor change
in rural housing policy, one that could significantly increase hous-
ing opportunities in many rural areas for a fraction of the cost of
current new housing construction.
Other provisions in H.R. 1 offer creative examples of how uigent
housing needs can continue to be met through more efficient use of
scarce Federal resources. The multifamily housing production pro-
gram in title III of the bill offers minimal "up front" financial as-
sistance to developers to promote construction of up to 100,000
units of multifamily rental housing. Unlike current rental con-
struction programs, assistance would be offered through local
public agencies and designed to meet the specific housing needs of
a community and would not necessitate expensive long-term Feder-
al subsidy payments.
Of equal importance is the proposed changes in the section 202
elderly and handicapped housing program contained in title II. By
revising the financing and subsidy mechanisms for the section 202
program to eliminate costly section 8 payments, the proposal sig-
nificantly reduces the cost of providing new housing for the elderly.
Through the improved use of program funds, it would be possible
to assist some 36,000 units of section 202 housing during fiscal year
1985, with the same amount of budget authority currently provided
for only 14,000 units.
I have only addressed a few of the important program and policy
changes contained in H.R. 1. The l^slation incorporates many ad-
ditional provisions that are unlikely to demand headlines, but
make important and much needed improvements in our basic hous-
ing laws.
yGoot^le
487
I call upon my colleagues to consider the needed changes that
are incorporated in H.R. 1 and to recognize the effort that has been
made to reduce housing costs and devise creative approaches to
meeting pressing housing needs. I support the Housing and Urban-
Rural R«:overy Act of 1983 and urge its adoption.
D 1450
Mr. McKiNNEY. Mr. Chairman, I yield 5 minutes to the gentle-
woman from New Jersey (Mrs. Roukema).
(Mrs. Roukema asked and was given permission to revise and
extend her remarks.)
Mrs. Roukema. Mr. Chairman, it seems to me that the problems
with H.R. 1 go beyond the spending limits and the program
changes that are included in the bill. Some of my colleagues, nota-
bly the gentleman from (!k)nnecticut (Mr. McKinney), have already
highlighted a number of the problems in the bill, such as the limi-
tations in the CDBG program and the multifamily housing pro-
graxa.
I would like to focus, however, on one particular failure that I
see in the bill, and I take here the opposite position of the previous
speaker, my colleague from New York (Mr. Lundine). 1 am refer-
ring to the program of housing payment certificates or vouchers.
Unfortunately, there was no effective effort made in committee
to work with the administration on this initiative. This was true
even with respect to a demonstration voucher program for some-
thing like 25,000 units, a proposal which was made in committee
and one would assume that there would have been room within the
increases in funding for assisted housing that have been appropri-
ated in this bill for such a modest demonstration program.
However, efforts to provide such a demonstration were inexplica-
bly opposed on party lines.
This stands in stark contrast with the more bipartisan approach
taken by the Appropriations dkimmittee. Despite the lack of au-
thorization, the Appropriations Act for 1984 provides deferred
budget authority sufficient to permit a 25,000-unit demonstration
contingent upon eui authorization bill being eneicted.
At least the Appropriations Ck)mmittee has made an effort to
come up with a compromise that could be enacted, rather than
being strictly confrontational on the subject of vouchers.
I believe all members of the O^mmittee on Banking, Housing,
and Urban Affairs want a housing bill this year. It will be the first
in 3 years. However, the rigid approach taken hy the m^'ority
when they excluded the minority from any aspect of^ developing the
l^islation is not conducive to compromise.
In my opinion, much of this bill perpetuates the inefficiencies of
the bureaucracy and in some cases compounds our problems. I
think the case could be made, as the gentleman from Connecticut
(Mr. McKinney) has previously stated on the multifamily housing
program, that we are now initiating a yet more costly program
with a shallow subsidy. However, only 20 percent of this costly pro-
gram will be set aside for low-income housing.
"niat, to me, is not the purpose of a new housii^ bill. It seems to
me that we should be looking for innovative, cost-efficient ways of
yGoot^le
providing housing. Ageiin, I would like to point out, the voucher
system is not a cure-^. It is not a panacea. But it certainly seems
to provide a method of looking at a problem in a new way, and it is
worthy of the modest pilot project that has been prop<»ed by the
Appropriations Committee.
I regret that the Banking Committee has refused to go zdong
with this approach.
Mr. McKiNNEY. Mr. Chairm£m, will the gentlewoman yield?
Mrs. RouKEMA. 1 am happy to yield to the gentleman.
Mr. McKiNNEY. I just would like to join with the gentlewoman in
her remarks. I find it very difficult, as someone who quite frankly
really was not too enthralled with the voucher idea or housing pay-
ment certificates — they will not work where I represent, I am con-
vinced, because of our low vacancy rate — but I do feel, as I said in
my statement earlier, that they needed to be examined and investi-
gated under a demonstration setup.
I think the Appropriations Committee was very wise in putting
aside 25,000 units to demonstrate. 1 think we made a great mistake
and I tried to amend it within the committee.
But it would seem to me everybody on the committee would
really want to put this issue to rest one way or the other since it
has been sort of moving around for about 10 years. No one seems to
really know and appreciate what the gentlewoman has said.
I am at least glad we have in the bill a stipulation that would
bring HHS and HUD together because that, of course, is now
where we have the rental income supplemental payments and it is
the most gigantic voucher progrtun in the world already going on
with no coordination and direction.
Mrs. RouKEMA. I thank the gentleman and I yield back the bal-
ance of my time.
Mr. Gonzalez. Mr. Chairman, 1 yield 3 minutes to the distin-
guished Commissioner from the great Commonwealth of Puerto
Rico (Mr. Corrada).
Mr. Corrada. Mr. Chairman, I rise in support of H.R. 1, and
would like to commend the House Banking, Finance and Urbtm Af-
fairs Committee and its Subcommittee on Housing for bringing this
vital legislation to the House floor.
This legislation bears, once again, the talents and leadership of
the Housing Subcommittee Chairman Henry Gonzalez and other
committee members who have, with considerable patience and dili-
gence, acted responsibly in paving the way for what will hopefully
resolve a problem of considerable proportions, that of the necessity
to reauthorize our country's housing and community development
program.
Mr. Cheiirman, one of the highest priorities in the midst of our
current economic situation should be to preserve and protect those
time-honored and vital housing programs at the Federal level. For
years, these programs have adequately provided a decent shelter
for the citizens of the Nation and Puerto Rico.
This bill reauthorizes the most important housing and communi-
ty development programs administered by the Department of
Housing and Urban Development.
yGoot^le
It will also continue the rural housing programs administered by
the Farmers Home Administration. It will start up a new rental
housing program.
But, perhaps most important of all, this bill modiiies in a posi-
tive and constructive manner, the existing housing programs
which — in Puerto Rico over the years — have helped U.S. citizens
attain the right to a decent living environment.
I believe it fair to say, Mr. Chairman, that the report on this leg-
islation is both a concise and vivid document that will help us un-
derstand the present housing problems and how best to continue
the Federal role in this fundamental area.
The report notes that there is a national and historic commit-
ment to a housing policy that must be continued, and that H.R. 1 is
definitely a survival program in the current recession to continue a
fair emd decent national housing policy.
The community development block grant (CDBG) program is pro-
posed to be reauthorized, at a level of $4.5 billion for ^ach of the
next 3 fiscfd years.
This total is approximately $1 billion more than the current level
of the CDBG prc^am which, in the current fiscal year, is provid-
ing a t^tal of $115,516,000 to help every municipality in Puerto
Rico with projects to carry out a wide range of activities geared
toward neighborhood economic revitalization, economic and urban
development and the provision of improved community facilities
and services.
The higher total will allow our island's mayors an annual reas-
surance that — if the funds are appropriated to the level of the new
authorization — the problems caused by inflation and high construc-
tion costs will be adequately met.
A total of 10 of our our island's 78 municipalities receive guaran-
teed funds on an entitlement basis under the CDBG program.
In June, the CDBG State block grant prc^am for the current
year was approved, which will allow the 68 smaller municipalities
on the island heh) meet the needs of low-income families, at a level
of $54,796,000. The approval of our nonentitlement, or small cities
pn^ram, which is operated by the Municipal Services Administra-
tion of Puerto Rico, constitutes a new approach in Puerto Rico.
Under H.R, 1, we would be reauthorizing this program for fiscal
years 1984, 1985. and 1986.
The State block grant program will meet three objectives.
First, it will focus benefits on low- and moderate-income persons,
the most needy in our society. Second, it will help eliminate slums
and blight in various neighborhoods through the Island and, third,
meet economic development needs so pressing in Puerto Rico,
The tightenii^ of various rules and regulations of the CDBG pro-
gram on the national level provided in H.R. 1, are met with ap-
proval in Puerto Rico, for it helps us continue to focus on the areas
of need in various municipalities throughout the island.
In the case of a companion urban program, the urban develop-
ment action grant program is reauthorized at a level of the current
national total of $440 million. This program has my strong support.
In recent years, the UDAG program has provided an invaluable
tool to both large and small cities in increasing private sector in-
vestment in helping solve urban problems.
yGoot^le
490
Since the UDAG program began in 1978, Puerto Rico's participa-
tion in this program has consistently increfised. UDAG gretnts focus
aid to cities and counties experiencing economic distress. UDAG
grants have brought into play considerable private investment in
Puerto Rico to help construct, throughout the island, shopping cen-
ters and hospitals, merchant emd retail centers, housing units for
low- and middle-income families at lower interest rates and other
construction projects which serve the dual purpose of creating con-
struction as well as permsment jobs.
The most recent estimates for this program, which I consider es-
sential, is that Puerto Rico has utilized a total level of Federal
funding of more than $71 million since the progreun b^an.
This has funded 69 projects throughout Puerto Rico but, most im-
portant of all, has generated an eidditionsil investment of
$259,972,552 from the private sector.
The provisions in H.R. 1 which would allow substantizd technical
assistance to smaller communities are, in my opinion, necessary in
helping many small towns throughout the Nation which lack the
expertise to develop sound, imaginative and practical proposals,
and the committee properly notes that simple dissemination of in-
formation on the UDAG program is not enough to help those com-
munities lacking the full time staff to develop good proposals.
Title II of this legislation authorizes the various low income as-
sisted housing programs and other programs such as public hous-
ing operating subsidies, public housing modernization, section 8 re-
habilitation and conversion program and others.
In rejecting the proposal for a housing voucher program to sub-
stitute many of these programs, the committee has opted to contin-
ue the traditional and effective role of the Federal Government in
helping low-income families. These programs have been and contin-
ue to be important to us in Puerto Rico to house and shelter many
of our low-income families. Continuation of the traditional HUD
role is welcome news in Puerto Rico. The bill breaks new ground in
the case of title III.
Title III provides $1.3 billion for fiscal year 1984 for a new pro-
gram, to help State and local governments build or rehabilitate
multifamily rental and cooperative housing. This housing is needed
in areas with a severe shortage of affordable alternatives.
Finally, Mr. Chairman, title IV reauthorizes the various rural
housing programs of the Farmers Home Administration.
In Puerto Rico, for the most recent fiscal years for which data is
available, the island received a grand total of $76,836,000 for hous-
ing programs of the Farmers Home Administration.
The reauthorization of rural housing programs, as well as the
other reauthorizations contained in H.R. 1, will oH'er reassurance
that the national role in housing will be continued. It is a sound,
solid piece of legislation and it has my support. It comes at a time
when the need for decent and affordable housing has been height-
ened by high interest rates and the severe recession from which we
appear to be finally emerging.
I commend the committee and the House leadership for bringing
this bill, shaped eis it is, to the House floor and urge my colleagues
to support it.
yGoot^le
n 1500
Mr. GoszMXZ. Mr. Chairman, I thank the distinguished Commis-
aioner Representative from Puerto Rico find also for his assistance
with respect to some of the programs that we have incorporated in
H.R. 1, because he and some of the constituents he represents were
very instrumental in some of these sections.
Mr. Chairman, I yield 5 minutes to the distinguished gentleman
^m Minnesota (Mr. Oberstar).
Mr. Oberstar. I thank the chairman.
I want to compliment the chairman on the splendid work that he
has done, and the committee and the ranking member, Mr. McKin-
ney, also for bringing forth H.R. 1, the Housing and Urban-Rural
Recovery Act of 1983.
The legislation will reaffirm and strongly reinforce the lone-
standing national commitment to the well-being of our Nation s
cities. The legislation will also strengthen and restate the essential
elements of our nationtil housing program. And I know the commit-
tee has labored long and with great detail over this legislation, to
examine these pTograros, in their every facet, and has brought
forth a piece of l^islation that our Nation's cities both large tmd
small desperately need. I do rise to express a matter of concern
about the urban development action grant program for small cities.
This year, some 2,000 cities across the country will lose eligibility
for what has come to be recognized as a very important develop-
ment tool to r^enerate, strengthen local economies, even at a time
when many of those cities are experiencing severe economic reces-
sion and dutress.
The 1980 census will not gage the extent or the impact of the
deep recession that many small communities have experienced par-
ticixlarly in the last 2^ years.
My own hometown of Chisholm, Minn., is located in a county
whi<^ has 26.9-percent unemployment. That is 1 out of every 3
workers out of a job. Yet, the city has been notified that it will not
be eligible to compete for UDAG's in fiscal year 1984.
Another example in another county, Taconite, Minn., in Itasca
County, Taconite has been notified that it will not be eligible for
the UDAG program for small cities; yet the county in which it is
located has 22.4-percent unemployment.
Other small cities throughout Minnesota, throughout the Great
Lakes States, the New England, Middle Atlantic States, the great
industrial heartland of the United States, are in the same problem,
principally because the census data collected for the 1980 census
will not reflect the distress of the current recession.
Now, as I examined the program for large cities and for urban
counties, I find that they are allowed to include unemployment as
a factor in their qualification formula as well as the employment
lag. Two additional factors along with the four basic factors for
small cities.
Now, while unemployment data and I recognize there is a prob-
lem here, unemployment data is not collected for small cities per
ae. Chisholm does not show up in the U.S. Department of Labor
statistics. But tiie Labor Department does collect data for the bal-
37-922 o - a* -
yGoot^le
492
ance of the county. We use that information for the Economic De-
velopment Administration programs.
We have provided in the bill that was debated just prior to this
one, H.R. 10, the National Development Investment Act, an alter-
native; that a city, to qualify for the program, could use either un-
employment at 1 percent above national average unemployment
for the past 24 months or it could use the per capita income, 80
percent of the per capita income, similar to the UDAG formula.
Now, it would seem to me that it would be a measure of fairness
to small cities to allow them to use the unemployment data as a
measure of distress. The Labor Department does make those certifi-
cations, does declare certain areas to be labor-surplus r^ons. And
there is a specific formula written in the law; standards already
exist; you would not be creating anything new.
So, I really am considering offering an amendment, and I would
like to have the chairman's reaction to this, to inclusion of unem-
ployment as a measure of the distress, one of the feictors for consid-
eration.
Mr. Gonzalez. If the gentleman will yield, let me answer briefly
that in section I02A of our bill, we are taking cc^nizance of that
and we provide for these pockets of depressed areas for UDAG pur-
poses within communities that are not even incorporated where, of
course, distress or unemployment is a factor.
On top of that, counsel for the committee has notified us that
HUD has notified ub that they are proposing issuing regulations
that will provide these standards of consideration of unemployment
rates and the like for UDAG purposes.
We are monitoring this very much to see that they implement
them as quickly as possible.
But there is a cognizance of this need. Both in our bill as well as
in the administration's proposed regulations it is being taken cogni-
zance of.
So, it may not be necessary to have an amendment. But let me
not preclude the gentleman from considering something that might
perfect the bill.
Mr. Oberstar. I thank the chairman for that comment. I did
want to discuss the matter of the proposed r^ulations that HUD is
considering issuing. They have been in the works for many months,
but the gestation period seems to be endless.
Mr. Gonzalez. That is true, but we were just informed that they
are apparently putting some heat under the vessel that is cooking
the r^ulations.
Mr. Oberstar. Perhaps the discussion with the chairman could
put additional heat and shed some light on the matter as well; if
the chairman takes an interest in the matter that could expedite
the action by the agency.
Mr. Gonzalez. I do not want to disappoint my distinguished col-
league. I do not know how much influence I would be able to
muster.
The fact we have incorporated language in the bill itself and
taken cc^nlzance of this great need should be a clear n
the congressional intent.
Mr. Oberstar. 1 thank the chairman.
yGoot^le
Mr. McKiNNKY. Mr. Chairman, in a spirit of bipartisan generosi-
§f, I yield t>ack all except 5 minutes, which I will yield to the gen-
eman from New York (Mr. Schumer).
D 1510
Mr. Gonzalez. Mr. Chairman, let me acknowledge the generosity
o£ our distinguished colleague, for whom I have nothing but the
highest honor and praise, lor offering this time in order that the
distinguished and young and dynamic Congressman from New
York will be able to sum up and close out the debate.
I yield whatever time is available to this side to the gentleman
from New York (Mr. Schumer).
(Mr. Schumer asked and was given permission to revise and
extend his remarks.)
The Chairman. The gentleman from New York (Mr. Schumer) is
recognized for 7 minutes.
Mr. Schumer. Mr. Chairman, before I begin my remarks, I would
like to praise the chfiirman of our subcommittee, the gentleman
from Texas (Mr. (jonzalez) and the chairman of our full committee,
our staff, and the members of our committee on both sides of the
aisle, for the hard work that they have done, and the cooperative
spirit that has prevEiiled.
Mr. McKiNNEY. If the gentleman would yield for just one second,
please do not preiise me anymore. It got the gentleman into a great
deal of trouble the last time he did it.
Mr. Schumer. Mr. Chairman, this bill has had almost 3 years in
percolation. It is the first housing bill to reach the floor of this
House since I emd the gentlewoman from New Jersey and the
others in my class on the Banking 0)mmittee and the Housing
Subcommittee have been Members of Congress.
And to me, Mr. Chairman, it represents a watershed. I think
that this bill really reflects the direction that our country will take
£Uid our party in particular, the Democratic Party, will take in the
years to come. I think that the bill shows that we have learned
from some of our past mistakes. It is no secret that many of the
housing pn^[rams that existed prior to 1981, csune into disrepute,
in Congress and throughout the country, for one reason or another.
I am referring particularly to the section 8 new construction pro-
gram.
Now, in my opinion, section 8 did what it was intended to do,
house very poor people for a long period of time, but there is no
doubt that it was expensive, extremely expensive. That it did not
encourage cost effectiveness, and that there were a variety of other
Intimate criticisms of the program.
The Reagan administration's response to the excesses, shall we
call them, was simply to slash and cut. In the last 3 years, this ad-
ministration has done just that. The Reagan administration record
is one of devastation, of lower income housing programs. The ad-
ministration terminated low income housing construction programs
funded at $28 billion in the last year of the Carter administration,
and proposed instead a $150 million program that would be aimed
mostly at cosmetic improvements. The administration raised the
rent for assisted housing tenants from 25 to 30 percent of their
yGoot^le
494
income. The administration twice proposed including food stamps
in the Cfilculation of tenant income. The administration studied the
feasibility of demolishing large portions of public housing stopped.
And this administration has opposed every neighborhood base pro-
gram that has been proposed. It has proposed eliminating crime
and riot reinsurance, which would leave thousands of small busi-
nessmen without euiy insurance in some of our Nation's most trou-
bled neighborhoods. It proposed the elimination of solar enet^ and
energy conservation bank, which everyone eidmits we will need in
the future. Beyond these measures, the administration has used
the regulatory process as a weapon in its war on housing programs.
This new housing bill does not make advocates of lower income
housing very happy. It does not do everything we want it to do. But
it is a modest attempt to say to the American people, to our col-
leagues in Congress, and to our party that we will not abandon
social programs as the administration has done, that we will not
throw out the baby with the bath water, that because one person
on food stamps, for instance, is found to be cheating we will not cut
off assistance to the many who honestly use those food stamps.
What we have tried to do is learn from our past mistakes and yet
create a comprehensive housing bill.
This bill does that. It is a modest attempt to deal with the hous-
ing problems in our Nation. And I would remind all of my col-
lefigues that we talk about the homeless and there is a great deal
of sympathy emd justified sympathy from all corners of this Nation
about the homeless. The homeless are homeless because they do
not have housing. And nothing we can do will make them non-
homeless again except produce housing. You cannot have it both
ways. You cannot be reMly sympathic to the homeless and then not
provide any funding for the production of housing.
Mr. ChairmEm, I know many of my colleagues have outlined dif-
ferent provisions of the bill, but the provision that I am most famil-
iar widi is the new rental assistance production part of the bill
called the Dodd-Schumer program. It is this part of the bill that I
have worked the hardest on and I think it shows the future for
those of us Democrats who believe that we must do something to
aid those who need help, that we must have some sympathy for the
underdog, but we must be aware of the burgeoning costs and re-
lentless bureaucracy.
The Dodd-Schumer program — and my colleague in the Senate,
Christopher Dodd of Connecticut, has been an ardent spokesman
for rental housing in the Senate and was instrumental in crafting
this bill — is a program that has stimulated support from all parts
of the spectrum in the housing world, from the National Associa-
tion of Realtors and the National Association of Home Builders, to
the National Low-Income Housing Coalition support this program.
Why? Because it is a program that will work, will work in as cost-
efficient a way as possible.
The pri^ram is called — and I think justifiably — a UDAG for
housing. It is based on the same principles of leveraging private in-
vestment with public contributions that has made UDAG one of
the most popular and successful programs, not only in the House,
but in the country.
yGoot^le
495
I might just outline the principles that underline, I think, this
Dodd-Schumer prt^am find the housing bill in general.
First, in Dodd-Schumer, assistance is designed not to supply the
entire cost of production or rehabilitation, but to simply fill the gap
between a project's actual cost and the cost that is necessary to
make the project feasible in the private market.
Second, the assistance is flexible. In other words, too often local-
ities, developers, and recipients of assistance, complain that rigid
rules from Washington do not allow them to fulfill local needs.
This bill bends over backward to take into account local needs.
Third, projects represent a local-Federal-private partnership,
with the center of responsibility shifted to the local level.
Fourth, Federal assistance will leverage local assistance, in a
competitive atmosphere which should maximize the local contribu-
tion.
Fifth, assistance is targeted to areas of the most need, as ranked
according to objective measures of need, such as overcrowding, va-
cancy rates, and the amount of substandard housing.
The substitute to be offered by Chairmen St Germain and Gonza-
lez would provide $900 million for this program, which should be
enough to produce or rehabilitate 70,000 units.
The CHAmMAN. The time of the gentleman from New York (Mr.
Schumer) has expired.
Mr. McKiNNEY. Mr. Chairm£ui, I yield 1 additional minute to the
gentleman from New York.
Mr. Chairman, in conclusion, I would simply like to urge the
Members of this body to look at this bill carefully, to examine its
provisions, and to see that it does do what 1 think this nation has
mandated it to do, provide some housing. We do not have much
rental housing being built in this country. If your income is below
a certain level, you are out cold and that level is higher and
higher. I am sure there are people in the Capitol right now who
cannot afford a home, even though their income is substantial. But
it also, Mr. Chairman, is mindful of cost. It does not go back to the
old ways of spend, spend, spend. It is pared down. It is moderate.
And it does the job as cost efficiently as possible.
I think the entire House and certainly our Banking Committee
can be proud of the bill we are placing on the floor.
I urge its passage by all Members of this body.
Mr. Chairman, I yield back the balance of my time.
Mr. Gonzales. Mr. Chairman, I move that the Committee do
now rise.
The motion was agreed to.
n 1520
Accordif^ly the Committee rose; and the Speaker pro tempore
(Mr. Murtha) having assumed the chair, Mr. Mineta, Chairman of
the Committee of the Whole House on the Stete of the Union, re-
ported that that Committee, having had under consideration the
bill (H.R. 1) to amend and extend certain Federal laws that estab-
lish housii^ and community and neighborhood development and
yGoot^le
preservation programs, and for other purposes, had come to no res-
olution thereon.
KEY SECTIONS OF HOUSING BILL
The Speaker pro tempore. Under a previous order of the House,
the gentleman from Texas (Mr. Gonzalez) is recognized for 30 min-
utes.
(Mr. Gonzalez asked and was given permission to revise and
extend his remarks and include extraneous materied.)
Mr. Gonzalez. Mr. Speaker, I rise because the present current
Elans now are to attempt to bring up the housing authorization
ill, or the recovery bill as we call it, tomorrow and go into at least
the amendatory process. During the general debate this afternoon,
most of the discussion overlooked the key features of H.R. 1. I feel
t^at our colleeigues who are not members of the committee or sub-
committee should have an opportunity and should benefit from
having a discussion of the key sections of this legislation in the
record of today's proceedings which they will be able to scrutinize
tomorrow and study in anticipation of the debate and the amenda-
tory process.
The administration has been of the mind that there is no longer
any need or justification for housing production subsidies, but
there is an emerging bipartisan consensus in the Congress that
there is a need. At least this consensus has develo[>ed this year,
unlike last year and the year before last. Both Democrats as well
as Republicans recognize that housing programs have been cut too
far and too much, and that wholesale abandonment of our proven
housing programs is not warranted.
When the House acts on H.R. 1, we will have an opportunity to
keep in place a survival program for housing, just a mere survival.
We will have the opportunity to begin the process of rebuilding the
historic, the national consensus on housing policy. That consensus
rejects the notion that there is no longer any need for Federal help
to produce housing for low- and moderate-income citizens.
The administration itself, while proclaiming that there is ample
housing stock, dots support the continuation of the section 202
housing program for the elderly and the handicapped, a clear ad-
mission that suitable housing at affordable prices in not always
available. But it is not only the elderly and the handicapped who
have problems finding suitable housing at a price they can afford.
Among Americans who rent their homes, the median income is
somewhat less than $11,000 a year. This is for all rental families in
the country. The median income is less than $11,000 a year.
About 600,000 rental units a year are needed to meet basic, mini-
mal demands, but only 100,000 unsubsidized rental units are being
built each year. In fact, total rental housing production in the past
2 years has been at less than half the amount needed to meet the
demand for rental units. This year the outlook is that only about
two-thirds of the number of rental units needed will actually be
built.
yGoot^le
497
This shortfall, and it is a persistent one, is because the vast
number of people simply cannot afford the princely sums that
decent rental housing costs today. It is a fact of life. We can pride
ourselves in the statistical decrease in the so-called inflationary
rate, but everybody who has any touch with real life knows that
rents have not gone down; rents are still going up. Where is infla-
tion deflating there? It just simply is a fact of life that this ques-
tion of shelter and rental housing particularly is still very much
inflated and very much out of the reach of the average or especial-
ly the low- or moderate-income family.
The demsmd is there, but not the buying power that would cause
the supply to rise enough to meet that demand. That is why we
have to have a continued and a sustained effort to assist in the pro-
duction of rental housing.
H.R. 1 offers a new and an innovative and an efficient way to
encourage retal housing construction. Let me explain to my col-
leagues that this has been a real challenge because while even
before this administration we were facing the critical need to
review and have oversight of these programs. Some of these pro-
grams, for instance, those that this administration and one prior
administration which was in power at the time of the programs' in-
ceptions, did not have the benefit of my support. They have now
turned out to be those programs that are highly expensive, cost
prohibitive, and have given the ammunition to the David Stock-
mans and the others who point with horror to the high cost of pro-
duction or construction of this type of housing. Those of us who
saw this £md visualized it in 1968, in 1974 particularly, with the
advent of the so-called block grant program in housing, now are
challenged with not only trying to defend a basic production policy
just to keep a bare minimal amount, 10,000 units, fis Mr. Frank
brought out earlier in the debate, from not getting axed and actual-
ly being constructed. It is just not even a lifeline, it is a bare mini-
mum, and at the same time devising language that would improve
the administration of the programs all the way back to the proce-
dures that are followed in the construction of these programs.
What everybody forgets is that when we talk about tax-supported
subsidization of housing, the construction of that housing is not
made by the Government; the construction is all private enterprise.
So that within the limits of our free system, the Congress can only
go as ffU" as it Cfm in providing the guidelines that would prevent
abuse, which has been, incidentally, the greatest reason for the ex-
cessive, high cost of this kind of subsidized housing construction. So
that we now have perfected language, and this has been difficult
while we were warding off the assaults to kill every program, to
also polish the program, to try to perfect the language, to try to do
everything possible from the legislative level that could be done to
enable an honest, efficent administration and construction pro-
gram.
So that this is a flexible subsidy offered mostly because it was
the handiwork of our distinguished, very young, but very dynamic
and very skilled Member from New York, Mr. Schumer. With his
cooperation and with his vEiluable help, we have perfected the lan-
guage and have what we think is a very flexible and I think sub-
yGoot^le
stantially improved program. It provides funds to local housing
agencies to encourage multifamily rental construction.
One thing that has been my dream, and that was since I first
came on this committee and subcommittee 22 years ago, my arrival
here in the Congress, since I had had the great privilege of working
in housing, and in public housing, in my own home, I felt I was
charged with knowledge and I felt that the great challenge in
America was to have the type of housing that would give the digni-
ty and still the self-esteem and the feeling of attachment or posses-
sion to a little plot and that it could be done; that America not
only has the know-how, it has the means, it has the genius, it has
the wit and it has the will, but it has to have the leadership to go
with it.
It is my dream that in this multifamily construction program
that we will be able to provide for the first time, and I hope in the
very near future, the type of construction that will msike it look
like an American construction. When I visit the teeming behives of
our densely concentrated urban areas, I feel great apprehension
about the future of our country because what we are doing is sub-
mitting Americans to living in conditions that are d^rading. Even
when they are considered to be relatively new and standard con-
struction, they look like habitations for beehives or anthills, rather
than human beings.
a 1540
At this point I want to take cognizEtnce of a recent conference
that was held in New York under the sponsorship of the AIA, the
American Institute of Architects. They had a forum, eind lo and
behold, one of their seminars had to do with this very stated prob-
lem. I want my colleagues to know that some very valuable contri-
butions were made by some of the most ingenious and creative
minded architects present. I have read deeply into their proposals,
and I see no reason why the Congress cannot sooner or later incor-
porate into subsidized housing the needed architectural designs
that will maximize the quality of living for Americans.
This new multifamily program will allow local housing agencies
to act as financial catalysts. Funds available to the local agencies
could be used to buy land, or the funds could be applied as an up-
front capital contribution in the nature of an interest buy-down, as
a rental assistance fund, or in any other manner that would make
a multifamily rental project financially feasible at low- and moder-
ate-interest rates.
This is new, this is innovative, and I am sure that if the Congress
approves it and the President sees fit to sign it into law, it will
reveal itself to be a creative, constructive, and fruitful program.
The whole object of this approach is to do what is necessary, no
more and no less, to increase the supply of rental housing. Because
it is a flexible approach, it is well suited to the infinite variety of
local conditions and needs. It works in the same way as a UDAG
approach does, to encourage private developers and local housing
agencies to devise the best possible way to deliver low and moder-
ate cost rental housing. It rewards those who come up with the
most effective and the most cost-effective and efTicient proposals. It
yGoot^le
499
encourages innovation, and it creates the kind of competitive forces
that have worked 8o well in the UDAG program.
We do expect that the new multifamily housing assistance pro-
gram will be the most effective way possible to help meet the per-
sistent shortfall in rental housing production in America whose
needs are not now being met through the private construction
sector alone.
H.R 1 also rect^nizes the fact that the very low-income families
of this country are not likely to be helped by anything other than
the public housing program. This, I thought, was a well settled
principle. I thought that the original opposition by the private
sector had been long overcome, to the point where the private
sector had no opposition, because today the private sector readily
admits that it cannot construct housing for the poor or the moder-
ate income people on its own. It just simply is not within the re-
sources, and this is true in every other industrialized nation of the
world.
As a matter of fact, real housing subsidies, what they call subsi-
dy programs here, the kind that at this time have been under such
heavy attack as being unnecessary Government intervention or un-
needed, are now being stimulated in every one of the European in-
dustrialized nations, from Germany to France. As a matter of fact,
it is a sorry repetition of the history following World War I. We are
now going through the same thing. It is so hauntingly reminiscent
that it is personally vei? troubling to me.
We have over half of our defense budget — and that means over
$115 billion — that we are asking our taxpayers to come up with for
the defense of Europe. That is over $115 billion just for the defense
of Europe — a Europe that at this time is a lot more scared of us
than it is of the Russians and that is telling us that they do not
know about our defense plans that are predicated on this expendi-
ture of $115 billion plus. At the same time, they have resist^ this
President's and the prior President's recommendations that they
put in a little bit more for their own defense.
But where are they putting their priorities? In housing and some
of the so-called social programs that our President says must be
curtailed to the point of elimination, or, at least up to now, with
some modification as a result of some resistance on the congres-
sional level.
To me, this is such a needless and a sorry repetition of what hap-
pened after World War I. We had the same thing then. We had the
same speculation by the bankers on the bonds and debts of the
countries that we had defeated and that were supposed to be
paying reparations. And then in the guise of breaking up and with
our fillies unable to pay their wartime debt to us as a result, they
came in and we had the Dawes plan, the Young plan, and the mor-
atorium of 1930 or 1931, or somewhere around there, and Uncle
Sam ended up paying the whole kit and caboodle.
Meanwhile, the same countries were defaulting as they are
today, except that we had a difTerent scenario in different coun-
tries, different sections, and different economies, but we have the
same basic operating procedures today as following World War I.
If we would look at the record and read what was being printed
then, as I have, we would see that while these bankers were greed-
yGoot^le
500
ily investing American depositors' money because they were get-
ting these big interest payments, so they thought, until they de>
faulted, we had the same thing happen as today, the same thing.
What were they doing? Germtmy initiated one of the bluest
housing programs right then and there in the 1920*8 and lode's.
"They showed where their priorities were. They were thinking of
their people. They always assumed that this is what we ought to be
doing, but it lool^ to me as if, for whatever reason, it has been the
other way around.
What I am saying is that we reached the point in our destiny
where our own demands and needs, the needs of a vital dynamic
country, were not met, and as I say and repeat, America is not
going to be strmtjacketed by anybody, including the Congress or
the President, because sooner or later it is just going to bust forth.
Iliis is still a growing, dynamic country, and this attempt of the
last 2 years to try to straitjacket it and even try to reduce it in size
to 30 or 40 years ago, is absolutely self-defeating and unbelievable
to me. Yet this is what is transpiring. While we are talking about
aborting or refusing to consider the basic needs of a shelter and of
employment, we have the highest rate of unemployment still per-
sistent, still lingering, and we are condemning able-bodied, willing
Americans who want to work and will do any^ing to work but are
unable to find anything, even dish washing.
D 1550
Is this something that we have come to accept? I do not think so.
I have been critical, not only of this President, I have been criti-
cal of past Presidents since 1973.
The doctrine of blight and no growth, I think, is perverse. I think
it is a disservice to this country and it is not really representing
the people of this great country.
This is reflected in H.R. 1 in the sense that we are just tiyii^ to
keep the flame alive, a little flame alive in these basic housing pro-
grams.
Public housing is a need. There is no other source of housing,
other than publicly subsidized housing for the poor and to those of
moderate income.
There are 1.2 million people, Americans, who live in public hous-
ing. On the whole, they have incomes that are about one-third of
the median income for their areas. The typical public housing
family exists on a cash income less than $5,000 a year. It is a
feimily that is larger than the typical American renter family, two
children fis opposed to one, and it is a family that is larger than
the families of section 8 rental housing, another subsidized rental
housing program; but not only poor families are helped by public
housing. There are a vast number of elderly people who live in
public housing units today. Most of these are women living alone,
believe it or not, and typically having a cash income of less than
$3,900 a year.
"The rental subsidy we provide in public housing runs at about
$95 per unit a month. 'This is a national medifui. That is the
median subsidy figure per unit in public housing. Public housing is
essential if we are to meet the needs of the poorest people in this
yGoot^le
501
country. People, aa I have said and repeat, are not only poor, but
face circumstances that give them almost no choice at ml. Realisti-
cally, there is no way to meet their needs except through a con-
tinuation of the time-tested public housing program euid this we
provide in H.R. 1 is a minimum.
At present rates, mortgage interest is slightly higher than 13
percent. In fact, this week, at least in my area, it jumped to about
three-fourths of 1 percent more than that.
The outlook, unfortunately, is that interest rates especially for
long-term commitments like mortgages, will rise. In fact, we are al-
ready beginning to see the falling stock marKet and other indica-
tors that suggest higher interest rates are in the making; but not
only is the interest rate high, it is at an historic high in terms of
inflation. Such so-called real interest historically has run at 3 per-
cent; but current mortgage rates are at least 10 percent above in-
flation and going up. Less than 15 percent of the people looking to
buy a home today ceui qualify for a loan at these catastrophic rates.
As I have said for years, and especially the last 2 years, extortion-
ate rates; but not only is interest high, the price of homes has in-
creased much faster than family incomes.
We have a twin squeeze, a persistent shortfall in housing produc-
tion that runs up prices. As a matter of fact, better than 20 percent
of the labor force in housing construction is still unemployed and
the credit squeeze places the housing still further out of reach,
thereby causing low rates of construction and sending prices still
higher.
This year the housing industry will produce perhaps a million
units fewer than are actually needed to meet the demand, even
though the outlook is for construction of perhaps 1.4 million units.
Unless we can make housing more affordable, we will see a bur-
geoning crisis, a crisis that as I have tried to tell my colleagues is
already upon us.
I must point out, because 1 think the impression is out, that I am
hypercritical of this administration and that my criticism is new
and novel to it. I was fighting this fight with two or three prior
administrations, because we have never met the minimal, even in
the heyday of so-called prosperity, we did not meet the minimal
needs of housing construction for the country and the avere^e
family.
I was critical then as I am now, especially because now the fight
goes to the philosophy of housing, something I thought had been
settled years ago. That is the only thing that has complicated the
fight. We have been inveighing against what we knew would be ex-
tortionate thievery, I call it, in these interest rates.
I have taken this floor ad nauseum, gone into the history of in-
terest rates, back to 7,000 years before Christ, and have shown that
there is no country that has existed in the recorded annals of man-
kind that has had a viable kind of society with minimal economic
needs satisfied with high interest rates or extortionate or usurious
interest rates; but I never thought in my wildest fears, 15, 13, 12,
10, even 6 years ago, I would never have thought it possible that in
our country we would have reached 21 percent interest. If that is
not usurious and extortionate, I do not know what is.
yGoot^le
502
Amendments
Under clause 6 of rule XXIII, proposed amendments were sub-
mitted as follows:
By Mr, GONZALEZ:
— Page 7, strike out line 10 and insert in lieu thereof the following: "(A) the metro-
politan area within which the metropolitan city or urban county involved is located,
— Page 8. strike out lines 3 through 5 and insert in lieu thereof the following:
(dl Section 103 of such Act is amended by striking out the second sentence and
inserting in lieu thereof the following: "There are authorized to be appropriated for
such purposes not to exceed $3,500,000,000 for fiscal year 19&4 and not to exceed
J3,450,0OO,0OO for each of the fiscal years 1985 and 1986.".
—Page 22, after line 19, insert the following new Bubeection:
(k) Section 106(c) of such Act is amended by adding at the end thereof the follow-
ing new paragraph:
"(3) Notwithstanding paragraph (11, the Secretary may reallocate to any metropol-
itan city any amounts allocated to, but not received by. the urban county in which
such city is located if (A) such city was an included unit of general local government
in such county prior to the qualification of such city as a metropolitan city; (B) such
amounts were designated by such county for use in such city prior to the qualifica-
tion of such city as a metropolitan city; and (C) such city and county agree to such
reallocation and the resulting transfer of responsibility for the BdministratiOQ of
—Page 22, strike out line 20 and all that follows through page 23, line 25.
— Page 24, line 1, strike out "The" and all that follows through the colon on tine 2
and insert in lieu thereof the following: "Section 107(a) of such Act is amended by
striking out the first sentence and inserting in lieu thereof the following:".
— Page 24, line 6, insert after the first period the following new sentence: "In addi-
tion to such amounts authorized to be set aside for grants under subsection (b).
there is authorized to be appropriated J100,000,000 for fiscal year 1984 to carry out
the provisions of subsection (d). .
— Page 24, line 24, strike out "(d) and (e)" and insert in lieu thereof "(e) and (0"-
— Page 25, line 2, strike out "subsection" and insert in lieu thereof "subaections".
— Page 25, line 19, strike out the quotation marks and final period.
—Page 25, after line 19, insert the following:
"(d) The Secretao' shall, to the extent approved in appropriation Acts, make
grants to States, units of general local government, and Indian tribes for the provi-
sion of shelter and essential services for individuals and families who are subject to
life-threatening situations because of their lack of housing, except that in the case
of a grant to a State the Secretary shall first certify that the purposes of this sub-
section will be more effectively carried out by making a grant to such State that has
an existing program that serves such individuals and families. Such grants shall be
awarded on the basis of the need for emergency housing in the area where the
project is or will be located, shall take into account regional variations in the cost of
providing shelter, and shall consider the extent to which units of general local gov-
ernment and nonprofit organizations are currently providing shelter and assistance.
Such grants may be used by such units of general local government or by local non-
profit organizations to rehabilitate existing structures in order to provide basic shel-
ter, to maintain structures providing such shelter, to pay for utilities and the fur-
nishing of such shelters, to provide for any necessary health and safety measures
that are required to protect the individuals using such shelter, and for other pur-
poses described in section I05(al that are consistent with the purpose of this pro-
gram. In the case of a structure that is rehabilitated with assistance under this sub-
section, such structure shall be used for emergency housing, after such rehabilita-
tion, for a period of not less than 3 vears. In providing grants under this subsection,
the Secretary shall take into consideration the special needs of families and single
women. The Secretary shall ensure that grants provided under this subsection are
used solely to provide additional shelter capacity and essential services and are not
used to r^lace amounts currently expended in the provision of such shelter and
>. The restriction contained in the preceding sentence shall not apply t . ,
plicants under this subsection that, pursuant to a State constitutional mandate.
have provided shelter to any person who presents himself or herself for shelter.".
yGoot^le
(4) Section 107(e) of such Act, aa ao redesignated in thiiB iiection. is amended by
inaertinf ", or appropriated for use under subeection (d)," after "aubaection Ob)".
—Page Z7, strike out lines 7 through 13 and insert in lieu thereof the following:
Sbc. 102. (a) Section 119(a) of the Housing and Osmmunity Development Act of
1974 is amended by adding at the end thereof the following new sentence: "There
are authorized to be appropriated to carry out the provisionB of this section not te
eiceed $440,000,000 for each of the fiscal years 19S4, 1985, and 1986, and any
amount appropriated under this sentence shall remain available until expended. .
—Page 3T, line 17, strike out "$15,000,000" and insert in lieu thereof "J5,000,000".
— F^ge 47, strike out line 19 and all that follows through page 48, line 3, and insert
in lieu thereof the following:
"(nXl) There are authorizied to be appropriated —
"(A) $12,000,000 for fiscal year 1984 to carry out subsections (a), (b), (c). and (i);
"(B) $12,000,000 for fiscal year 1984 to carry out subeections (0 and (g).
"(2) Any amount appropriated under this subsection shall remain available until
eipended.".
—Page 48, line 5, insert "(a)" after the section designation.
— Page 48, strike out lines 7 through 10 (and redesignate the subsequent paragraphs
accortUngly).
—Page 48. line 13, strike out "$69,000,000" and insert in lieu thereof "$72,000,000".
—Page 48. after line 24, insert the following new subeection:
(b) Section 312(h) of such Act is amended by striking out "1983" each place it ap-
pears and insert in lieu thereof "1984".
—Page 49, line 6, strike out "(18.512,000" and insert in lieu therwof "$16,000,000".
—Page 50, line 3, strike out "$729,033,000 on (Jctober 1. 1983" and insert in lieu
thereof the following: "$549,949,000 on October 1. 1983 (of which amount $16,660,000
shall be available for contracts to make assistance payments under section 235 of
the National Housing Act)".
—Page 50, line 8, strike out "$12,927,147,000" and insert in lieu thereof
"$9,912,928,000".
—Page SO, line 9. insert after "1983" the following: "(of which amount $166,600,000
shall be available for assistance payments unders section 235 of the National Hous-
ing Act and $900,000,000 shall be available for assistance under the Rental Housing
Production and Rehabilitation Act of 1983)".
—Page 50, line 19, strike out "$105,000,000" and insert in lieu thereof "$81,022,000".
— Page 51, strike out lines 1 through 16 and insert in lieu thereof the following:
"(i) at least $395,023,000 shall be made available for assistance under section
8—
"0) not less than $125,883,000 of which shall be made available for assist-
ance under section 8<bMl);
"(SI) not less than $21,905,000 of which shall be made available for assist-
ance under section 8(eX5), other than for use in connection with the sale of
projects owned by the Department of Housing and Urban Development;
"mlt r.r.1 loon than iA9 CUVUVin nf luhlfh ahull he rrtaiia nviiIlaKlis I
rscaptui
l^clby
. e entered into under section 8 in any fiscal year ending before Oc-
tober 1, 1983; and
"(TV) not more than $143,260,000 of which may be utilized to convert as-
sistance under any other provision of law te assistance under section 8; and
"(ii) at least $57,244,000 shall be made available for lower income housing
projects under this Act (other than under section 8). of which amount not less
than $13,912,000 shall be made available te Indian public housing agencies.
"(O Any authority approved in appropriation Acts under this subsection th.'.t is
— itured and maae available for obligation during fiscal year 1984 shall be uti-
by the Secretary for the following purposes:
(i) for assistence under section ^X2), with respect to projects assisted under
section 202 of the Housing Act of 1959. not less than $1,926,400,000; and
"(ii) for assistance under section 8(bXl). not less than $573,600,000 of the bal-
ance of such authority that remains after deducting the amount to be utiked
under clause (i).".
—Page 61, line 20, strike out "$1,550,000,000" and insert in lieu thereof
"$1,^.000,000".
— Page 83, strike out line 25 and all that follows through page 84, line 6 (and redes-
ignate the subsequent subsection accordingly).
— Page 84, strike out line 10 and all that toflows through page 85, line 18, and insert
in lieu thereof the follovring:
yGoot^le
SECTION £36 AS8IOTANCB
Sec. 222. (a) Section 236(h) of the National Housing Act is amended by adding at
the end thereof the following new sentences: "To ensure that qualified tenanta in
units in projects assisted, but not subject to mortgages insured, under this section
receive the benefit of assistance contracted for under subsection (fX2), the Secretaiy
shall offer annually U> amend contracts entered into with project owners under such
subsection to provide sufTicient payments to cover necessary rent increasea and
changes in the incomes of tenants in such units if, after September 30, 1984, such
payments are not already provided for under such contracts. The Secretary shall
take such actions as may be necessary to ensure that payments, including payments
that reflect necessary rent increases and changes in the incomes of tenants, are
made on a timely basis for all units covered by contracts entered into under st^Mec-
tion (f)(2).".
(b) Section 236(iKl) of such Act is amended by adding at the end thereof the fol-
lowing new sentence: "The Secretary shall utilize, to the ext«nt necessary after Sep-
tember 30, 1984, any authority under this section that is recaptured either as the
result of U)e conversion of housing projects covered by assistance under subeection
(fX2) to contracts for assistance under section 8 of the United States Housing Act of
1937 or otherwise for the purpose of making assistance payments, including amend-
ments as provided in subsection (h), with respect to housing projects assisted, but
not subject to mortgages insured, under this section that remain covered by assist-
ance under subsection 10(2).".
—Page 86, line 7, strike out ■'J6,507 ,660,000" and insert in lieu thereof
"$6,944,858,000".
— Page 88, line 6, insert "or" after the semicolon.
— Page 88, line 10. strike out "; or" and insert in lieu thereof a period.
—Page 88, strike out lines U through 15.
—Page 92, line 13, insert after "shall" the following: ", to the extent approved in
appropriation Acts.".
—Page 95, line 2, strike o
—Page 95. strike out line t
in lieu thereof the following:
RENT SUPPLEMENT PROGRAM
Sec. 227. (a) Section 101(g) of the Housing and Urban Development Act of 1965 is
amended by adding at the end thereof the following new sentences: "To ensure that
qualified tenants in units in housing assisted under this section, but not subject lo
mortgages insured under the National Housing Act, receive the benefit of assistance
contracted for under this section, the Secretary shall offer annually to amend con-
tracts entered into with housing owners under this section to provide sufTicient pay-
ments to cover necessary rent increases and changes in the incomes of tenants m
such units if, after September 30, 1984. such payments are not already provided for
under such contracts. The Secretary shall take such actions as may be necessary to
ensure that payments, including payments that reflect necessary rent increases and
changes in the incomes of tenants, are made on a timely basis for all units covered
by contracts entered into under this section,",
(b) Section 101(1) of such Act is amended by adding at the end thereof the follow-
ing new sentence: "The Secretary shall utilize, to the extent necessary after Septem-
ber 30. 1984, any authority under this section that is recaptured either as the result
of the conversion of housing projects covered by assistance under this section to con-
tracts for assistance under section 8 of the United States Housing Act of 1937 or
otherwise (1) for the purpose of making assistance payments, including amendments
as provided in subsection (g), with respect to housing projects assisted under this
section, but not subject to mortgages insured under the National Housing Act, that
remain covered by assistance under this section; and (2) if not required to provide
assistance under this section, and notwithstanding any other provision of law. for
the purpose of contracting for assistance payments under section 236(f>2) of the Na-
tional Housing Act,",
—Page 106, line 3, insert after "1983" the following: "(from the additional authority
to enter into contracts made available on such date under the first sentence of sec-
tion 5(cXl) of the United States Housing Act of 1937)".
—Page 106. line 8, insert before the period the following: "of the amount of budget
authority made available for fiscal year 1984 under the third sentence of section
5(cXl) of'^the United States Housing Act of 1937".
—Page 117, strike out lines 19 through 22 and insert in lieu thereof the following:
yGoot^le
UMITATION ON BUDGBT AUTHOBTTY
311. Of the budi
thud*
than $900,000,000 shall be available for purposes of assistance under this title.
—Page 118, line 8, strike out "$3,955,600,000" and insert in lieu thereof
"$3,291,000,000".
—Page lis, line 12, strike out "$3,705,600,000" and insert in lieu thereof
"$8;a2,000.000".
—Page 1 18, after line 16, insert the following new paragraph:
(4) in subsection (aK2), by striking out "$25,600,000" and inserting in lieu
thereof "$20,000,000.".
—Page 118, strike out lines 17 through 22,
—Page 119. line 3. strike out ^'$1,000,000,00
_ _„_ .. .. _ .... and insert in lieu thereof
■$940,000,000".
-Page 119, line 7, strike out "$50,000,000" and insert in lieu thereof "$29,000,000".
—Page 119, after line IT, insert the following new paragraphs (and redesignate the
lubsequent paragraph accordingly):
(7) in subsecUon (bX2), by striking out "$50,000,000" and "$25,000,000" and in-
serting in lieu thereof "$36,500,000" and "$12,500,000", respectively;
(8) in subsection (bX3). by striking out "$25,000,000" and inserting in lieu
thereof "$4,400,000"; and
—Page 119, line 25, strike out "; and" and insert in lieu thereof a period,
—Page 120, strike out lines 1 through 8.
" B 120. line 10, strike out "May 20, 1983" and insert in lieu thereof "September
—Page 120
30, 1983".
e 120, line 13, strike out "May 20, 1983" and inseri^ in lieu thereof "September
30 1983"
—Page 120, line 17, strike out "$400,000,000" and insert in lieu thereof
"S135 000 000"
— Pa^e 120, line 23, strike out "$200,000,000" and insert in Ueu thereof
"$72,000,000".
—Page 121, beginning on line 4, strike out "May 20. 1983" and Insert in lieu thereof
"September 30, 19SS'\
-Page 121, line 6, strike out "312,000,000" and insert In lieu thereof "$12,600,000".
—Page 137, line 19, strike out "$100,000,000" and insert in lieu thereof
"$10,000,000".
— Page 138, strike out tine 1 and all that follows through page 139. line 14 (and re-
designate liie subsequent section, and conform the table of contents, accordii^ly).
—Page 139, line 19. strike out the comma and all that follows through the comma
on line 20.
— Page 139, line 21, strike out "appropriated" and insert in lieu thereof "available
for any fiscal year".
—Page 140, line 7, strike out "May 21, 1983" and insert in lieu thereof "October 1,
198r.
—Page 140, line 10, strike out "May 20, 1983" and insert in lieu thereof "September
30, 1983".
—Page 140, line 13. strike out "May 20. 1983" and insert in lieu thereof "September
30, 1983".
—Page 140, line 16. strike out "May 20. 1983" and insert in lieu thereof "September
30, 1983".
—Page 140, line 19, strike out "May 20, 1983" and insert in lieu thereof "September
30, 1983".
—Page 140, line 22. strike out "May 20, 1983" and insert in lieu thereof "September
30, 1983".
—Page 141 line 1, strike out "May 20, 1983" and insert in lieu thereof "September
30, 1983".
—Page 141, line 4, strike out "May 21, 1983" and insert in lieu thereof "October 1,
198r.
— Page 141. line 8. strike out "May 20 and insert in lieu thereof "September 30,
198ir.
— Page 141, line 11, strike out "May 20, 1983" and inseri in lieu thereof "September
30, 1983".
—Page 141, line 14, strike out "May 20, 1983" and insert in lieu thereof "September
30, 1983".
—Page 141, line 17, strike out "May 20, 1983" and insert in lieu thereof "September
30, 1983".
yGoot^le
506
—Page 141. line 20, strike out "May 20. 19S3" and insert in lieu thereof "S
30, 1983".
—Page 141, line 24 strike out "May 21, 19g3" and insert in lieu thereof "October 1,
198r.
-Page 142, line
■■$50300,000.000".
—Page 142, line 18 strike out "1!
—page 169. line 10 strike
—Page 170, beginning on line 7, strike out "May 20. 1983" and insert in li«u thereof
"September 30, 1983'°
—Page 170, line 10. strike out "May 20, 1983" and insert in lieu thereof "September
30, 1983".
—Page 173, line 1. strike out "May 20. 1983" and insert in lieu thereof "September
—Page 174. line 10, dtrike out "$8,000,000" and insert ii
—Page 174. line 18, strike out "$24,000,000" and insert in
By Mr. OBERSTAR
— Page 27. after line 13, insert the following new Bubsection (and redesignate the
subsequent subsections accordingly):
(b) Section 119(bXl) of such Act is amended by adding at the end thereof the fal-
lowing new sentence: "Standards established by the Secretary under this paragra]^
to determine the eligibility of any city that has a population of less than 50,000 per-
sona and is not a central city of a metropolitan area shall include the extent of un-
employment in such city or, if such datii is not available, the extent of unemploy-
ment m the county or in the county, excluding cities that have populations of more
than 50,000 persons, within which such city is located,".
By Mr. WYLIE:
(Amendment in the nature of a substitute to the committee amendment in the
nature of a substitute.)
— Strike all after the enacting clause and insert in lieu thereof the following:
TABLE or CONTENTS
TITLE l-^^MMUNITV A
^utharidUona— Title 1 of the HouBiog ■
tfomotHdiiu.
104. Objective « prosruu ind uee of fundi-
105. NHghborhDOd IuinvBetm«rit CorpoAtioEl.
TITLE D— AS31OTED H'
Authorualion Tor uiiited houEinE.
Section B Hoiuibg Payment Certificate Program
^aerating aiaiatanoe for tnubled inultifuDjIy pr
Houeiiia lor the eMerlj and hand' ''
"haredhoiuing for the elderly.
r appropratjoni to cover ioeaee to the General In
>r the ekieriy and handicapped.
uiins for the el'-'-
iB. DemooMiation pniiect.
TITLE Ul— PROGRAM AMENDMENIS AND EXTENSIONS
PAcr A — Pedikal Houswo AuiiiHEffnuTroK Moitkjaoe Imvuiuhci Phooiahb
Sec. 301. Exteneian of Federal Houeins Admini
Sac. 302. Flexible IntareM rata authority.
" " alMorHageAi
3m! SK! it««vdrautbmiiat£^
" c 30e. Counaalinf.
c. 307. IncreMEiTlQaii ji
le parka for the elderly.
Sac. SIZ. &iidiiatad pajFment nwr^nge for multifamlLy and lingle fajnity hou
Sac. SIS. AlliattMt lala moitgasea lor nngle familj h«uln(.
B._ •■< fli___j '-"■JO mortgagee for iiDgle family houBng.
n mortgaan for Dniltiiamily houaing.
Bt that FHA intereat rale be eel by law.
n-B— OIMBI PtODlAlO
yGoot^le
507
TITLE IV— RURAL H0U8IN0
X, V-GENERAL PROVISIONS
Sk. SOI. Apfdiabilitr.
TITLE I— COMMUNITY AND NEIGHBORHOOD DEVELOPMENT
AUTHOKIZATIONS — TTTLB I OF THB HOUSING AND COMUUNITy DBVBLOPHKNT ACT OF 1674
Sbc. 101. (a) The Hecond eentence of section 103 of the Housing and Community
Development Act of 1974 is amended to read as follows: "There are authorized to be
appropriated for these purposes not to exceed $3,908,000,000 for each of the fiscal
years 19S4, 1986 and 1986.".
(b) The first sentence of section 107(a) of such Act is amended to read as follows:
"Of the total amount approved in appropriation Acts under section 103 for each of
the fiscal yearv 1984, 1985 and 1986, not more than $56,500,000 for each such year
may be set aside in a special discretionary fund for grants under subsection (b).".
<c)The second sentence of section 119(a) of such Act is amended to read as follows:
"Of the total amount approved in appropriation Acts under section 103 for each of
the flscal yearv 1984, 1986 and 1986, not more than $440,000,000 shall be available
for each sudi year for grants under this section.".
HOUBSTKADINC
g and Community Development Act of 1974 is
"Skc. 810. (a) Notwithstanding any other provision of law, the Secretary of Hous-
ing and Urban Development may transfer, without payment, to any unit of general
local government or public agency designated by such unit of general local govern-
ment any real property —
"(1) that is improved by a one- to four-family residence;
"(2) to which the Secretary holds title:
"(3) that is not occupied by a person legally entitled to reside on such proper-
"(4) that is recguested by such unit of general local government or agency for
use eicluBtvely in a single-family homesteading prc^am that complies with the
requirements of subsection (d).
"(b) The Secretary may convey to any unit of general local government or public
agency designated by such unit of general local government any real property —
"(1) to which the Secretary holds title; ana
"(2) that the Secretary determines to be suitable for a multifamily homestead-
ing program that complies with the requirements of subsection (e);
for such consideration, if any, as may be agreed upon between the Secretary and
such unit of general local government or public agency.
"(cXD The Secretary may provide funds to any unit of general local government
or public agency designated by such unit of general local government for the acqui-
sition of unencumbered title to any real pro^rty that—
"(A) is improved by a one- to four-familv residence;
"(B) is not occupied by a person legally entitled to reside on such property;
of properties that may be acquired under this subsection.
(d) Any single-family homeeteading program carried out by any unit of general
local government or public agency designated by such unit of general local govern-
ment shall be considered a single-family homesteading program that complies with
37-9ZJ 0-84-33
yGoot^le
508
the requirements of this subsection if the Secictaij' determines that euch {Htigram
provides for —
"(1) the initial conveyance of vacant residential property by such unit of gen-
eral local government or public agency without substantial consideratiOB to a
family of low or moderate income, upon condition that such family otfiuju to
repair all defects in the property that poae a subetantial danger to health and
safety within 1 year of the date of such initial conveyance;
"(2) a procedure by which title to such property shall be conveyed to any such
family without Bubstantial consideration upon the repair of sJl such defects,
under the condition that such family agrees to—
"(A) make such repairs and improvements to the property as may be nec-
essary to meet applicable local standards for decent, safe, and sanitary
housing within 3 years of the date of initial conveyance; and
"(B) occupy such property as a principal residence for a period of not lees
than 5 years, except under such emei^ency circumstances as may be eMab-
lished by the Secretary;
"(3) an equitable procedure for selecting the recipients of such properties
that—
"(A) gives a special priority to applicants —
(i) whose current housing fails to meet standards of health and
safety, including overcrowding;
"(ii) who currently pay in excess of SO percent of their income for
shelter; and
"(iii) who have little prospect of obtaining improved housing within
the foreseeable future through means other than homesteading;
"(B) excludes applicants who are currently homeowners; and
"(C) takes into account the capacity of the applicant to contribute a sub-
stantive amount of labor to the rehabilitation process, or to obtain assist-
ance from private sources, community organizations, or other sources; and
"(4) a plan for the provision of rehabilitation assistance and technical assist-
ance to recipients of homestead properties who are in need of such assistance.
"(e) Any multifamily homesteading program carried out by any unit of general
local government or public agency designated by any such unit of general local gov-
ernment shall be considered a multifamily homesteading program that complies
with the requirements of this subsection if the Secretary determines that such pro-
gram contains adequate assurances that —
"(1) the primary use of all homestead properties following conversion or reha-
bilitation shall be residential;
"(2) not less than 75 percent of the residential occupants of homestead proper-
ties following conversion or rehabilitation shall be families of low or moderate
"(3) all dwelling units in homestead properties shall be owned 1^ occupants
under a limited-equity cooperative form of ownership;
"(4) such cooperative may not be dissolved without permission of the unit of
Seneral local government or public agency responsible for administering such
omesteading program;
"(5) entities that are operated for profit shall be excluded from ownership of
homestead properties at all times between the transfer of properties by the Sec-
retary to such unit of general local government or public agency and the acqui-
siton of such properties by their occupants subsequent to conversion or rehabili-
"(6) a substantive amount of the labor required to rehabilitate homestead
properties shall be provided by the occupants of such properties;
"(7) rehabilitation assistance and technical assistance shall be available to oc-
cupants of homestead properties who are in need of such assistance; and
(8) the displacement of any individuals who reside in homestead properties
-ior to rehabilitation or conversion shall be minimized,
... LI The Secretary may to enter into agreements with any unit of general local
government or public agency designated by such unit of general local government to
provide technical assisbuice —
"(A) to such unit of general local government or public agency for the admin-
istration of a homesteading program that complies with the requirements of
subsection (d) or (e); and
"(B) to any recipient of property under any such homesteading procram.
"(2) Not more than 5 percent of any amount made available under suBsection In)
may be used to carry out this subsection.
"(Wl T
yGoot^le
"(kKD The SecretaiT majr asnot families of lov or moderate income receiving
prupvft^ under a homenteading program that compliee with the requirements of
eubsectKHi (d) or (e) in the rehabihtation of such ppoperty by providing grants to any
unit of genera] local government or public agent^ designated by such unit of gener-
al local government for the aole purpose of asBisting any such recipient within the
jurisdiction of each unit of general local government or public agency. Such grants
shall Rtimulata the rshabilibation of homestead properties by providing—
"(A) capital grants;
"(B) loan^
"(C) interest reduction payments;
"(D) technical assistance; and
"(E) other comparable assistance that the Secretary deems appropriate to
reduce the coats of homesteading for families of low or moderate income.
"(2) Not less than T5 percent of any funds received by anv unit of general local
government or public agency for any purpose described in tnis subsection shall be
allocated to aid families of very low income participating in approved homesteading.
All money repaid to units of general local government or public agencies designated
ty a unit of general local government shall be used only for aid'
"(h) In selecting projects for assistance under this section from among eligible
projects, the Secretary shall make such selection on the basis of the extent —
"(1) of the severity of rMidential property abandonment in the area in which
the project is to be located;
"(2) to which the assistance requested from the Secretary under this section
will provide the maximum number of units for the least cost, taking into ac-
count the cost differences among different areas, among financing alternatives,
and among the types of projects and homesteaders being served;
"(3) of non-Federal public and private financial or other contributions that
reduce the amount of assistance necessary under this section;
"(4) to which the applicant has established a satisfactory performance in ad-
ministration of homesteading. where applicable; and
"(5) of coordination of the homesteading prc^am with other efforts to up-
grade community services and facilities.
"(iKl) The Secretary may reimburse the Administrator of Veterans' Affairs, in an
amount to be agreed upon by the Secretary and the Administrator, for property
tiiat the Administrator conveys, for use in connection with a homesteading program
that compliee with the requirements of subsection (d) or (e), to any unit of general
local government or public agency designated by such unit of general local govern-
ment.
"(2) The Secretary may reimburse the Secretary of Agriculture, in an amount to
be agreed upon by the Secretary and the Se<rretary of Agriculture, for property that
the Secretary of Agriculture conveys, for use in connection with a homesteading
program that complies with the requirements of subsection (d) or (e), to any unit w
general local government or public agency designated by such unit of genera! local
government.
"(j) In order to facilitate planning for purposes of this section, the Secretary, the
Administrator of Veterans' AfTairs, and tne Secretary of Agriculture shall, upon the
ret^uest of any unit of general local government or public agency designated bv such
unit of general local government provide a listing of all unoccupied residential prop-
erties to which the Secretary, the Administrator, or the Secretary of Agriculture
holds title and that are located within the gec^aphic jurisdiction of such unit of
general local government or public agency. Such listing shall be accessible to the
public during ordinary business hours at the offices of such unit of general local
government or public agency.
"(k) The Secretary shall conduct a continuing evaluation of any program carried
out pursuant to this section and shall transmit to the Congress an annual report
containing a summary of his evaluation of all such programs and his recommenda-
tions for the future conduct of such programs. Eacn such report shall include an
assessment of the extent to which homesteading prt^rams consider the require-
ments described in subsections (dX2) and (eX2) relating to housing need and income
in selecting homestead recipients, and an estimate of the median income of such re-
cipients during the year covered by such report,
"fl) For purposes of this section:
"(1) The term 'families of low or moderate income' means families whose in-
comes do not exceed 80 percent of the meJian income of the area involved, as
determined by the Secretary with acijustments for smaller and larger families.
Such term includes families consisting of one individual.
yGoot^le
510
"(2) The term 'Camiliee of very low income' roeans famitiM whoae incmiMB do
not exceed 50 percent of the median income of the area involved, as deteimiiwd
by the Secretary with ai^ustnients for Hmall«r and laiger fiunilies. Sudi term
includes families consisting of one individual.
"(3) The term 'Secretary' means the Secretary of Housing and UrhaD Devel-
opment
"(41 The term 'unit of general local government' has the meaning given auch
t«rm in section 102(aXII.
"(m) The Secretary may prescribe such rules as may be necessary to carry out his
functions under this section,
"(n) Of the total amount approved in appropriation Acts under sectioa 103 for
fiscal year 1984—
"(1) not more than 16,000,000 shall be available for fiscal year 1984 to cany
out Bubeections (a), (b), <c), and (i^ and
■'(2) not more than (6.000,000 shall be available for fiscal year 1984 to carry
out subsections (0 and (g).".
COMMUNiry DEVELOPMENT DKnNmONB
Sec. 103. (aXl) Section 102(aM4) of the Housing and Community Development Act
of 1974 is amended by etriking out "fifty thousand or until September 30, 1983,
whichever ia later" and inserting in lieu thereof "45,000".
(2) Section 102(aX61 of such Act is amended—
(A) by striking out "through September 30, 1983, and shall not be subject to
the provisions d' section 102(d) in through such date" and inBerting in lieu
thereof "until the decennial census indicates that the populatiixi of such county
is less than 180,000"; and
(B) by adding at the end thereof the following new sentence: "Notwithstand-
ing the combined population amount set forth in clause (B) of the first sentence,
a county shall also qualiiy as an urban county for purposes of aoaistance under
section 106 if such county (A) complies with all other requirements set forth in
the first sentence; <B) has a combined population between 190,000 and 199,999,
inclusive; (C) had a population growth rate of not less than 25 percent during
the most recent lO-vear period measured by applicable censuses; and (D) has not
previously qualified as an urban countv under the first sent«tce.".
(b) Section 102(b) of such Act is amended by adding at the end thereof the follow-
ing new sentence: "Notwithstanding any other provision of this title, any unit ol
general local government qualifying as a metropolitan city described in subsection
(aX4XA1 for purposes of assistance under section 106 for fiscal year 1983 shall contin-
ue to qualify as auch a city for purposes of assistance under such section for fiscal
year 1984 and each succeeding fiscal year, if such city utilizes not leas than 75 per-
cent of the assistance received under such section for fiscal year 1982 and each suc-
ceeding fiscal year, respectively, in areas or on projects directly benefiting persons
of low and moderate income,".
OBJECTnVE OF PROGRAM AND USB OF FUNDS
Sec. 104. (a) Section lOKc) of the Housing and Community Development Act of
1974 is amended by inserting "and of each grantee's program" after The primary
objective of this title".
(b) Section 104(bX3) is amended by inserting before the semicolon at the end there-
of the following: "so long as the use of funds taken as a whole, over a period speci-
fied by the grantee of not more than three years, will principally benefit peraons of
low and moderate income".
neigh BORHOOD REINVESniBNT CORPORATION
Sec. 106. Section BOfta) of the Neighborhood Reinvestment Corporation Act is
amended —
(1) by striking out "and" after "1981,"; and
(2) by insertiitt the following before the period at the end thereof: ", and not
to exceed $15,51^000 for fiscal year 1984."
TITLE n— ASSISTED HOUSING
Sbc. 102. (a) Section 5(c) of the United States Housing Act of 1937 is amended by—
(1) striking out "and" in the first sentence of paragraph 11} and i
after "1981" the follovring: ", and by $636,336,000 on October 1, 1983" ;
yGoot^le
511
(2) striking ont "and" in the third sentence of paragraph (]) and inserting
after "1981" the following: ", and by $9,912,928,000 on October 1, 1983" ;
<3) redesignating paragraphs (4), (5), and (6) as paragraphs (6), (6), and (7). re-
spectively, and
(4) adding the fbllowing new paragraph after paragraph (3):
"(4XA) Of the additioi^ authority approved in appropriation Acta and made
available on October 1, 1983, the Secretary shall enter into contracts aggregat-
ine at least $77,500,000 for assistance to projects under section 14.
IB) Of the balance of the additional authority referred to in subparagraph
(A) that remains after deducting the amount to be provided for assistance to
projects under section 14, no more than $62,500,000 shall be made available for
assistance under section 8(bXl) pursuant to section 8(d).".
(b) Section 9(c) of such Act is amended by striking out "and" and by inserting
after "1981" the following: ", not to exceed $1,350,000,000 on or after October 1,
1982. and not to exceed $1,362,200,000 on or after October 1, 1983".
SICnON B HOUSINO FAVHENT CBRTItlCATE PROGRAM
Sec. 202. (a) Section 8(b) of the United States Housing Act of 1937 is amended by
adding the following new paragraph at the end thereof:
"(3) Assistance contracts entered into under this section shall provide for
either (A) assistance payments under subsection (c) of this section based upon
the maximum monthly rent which the owner is entitled to receive for each
dwelling unit with respect to which the payments are to be made, or <B) assist-
ance payments under subsection (d) of this section iiaaed upon a payment stand-
ard much is used to determine the maximum monthly assistance which may be
paid for any family.".
(b) Section 8(c) of such Act is amended by —
(1) striking out the designation "(cXl)" and the first sentence of paragraph (1)
inserting in lieu thereof the following:
"(c) In the case of assistance contracts using a maximum monthly rent:
"(1) The contract shall establish the maximum montUy rent (including utili-
ties and all maintenance and management charges) which the owner is entitled
to receive for each dwelling unit with respect to which such assistance pay-
ments are to be made.";
(2) striking out the penultimate sentence in paragraph (1) and inserting in
lieu thereof the following: "Fair market rentals for an area shall be published
in the Federal Register.";
(3) striking out the second sentence in paragraph (3); and
(4) striking out "under this section" in paragraph (8) and inserting in lieu
thereof "for newly constructed or substantially rehabilitated units"; and
(5) adding the following new paragraphs at the end thereof:
"(9) E^ch contract for an existing structure entered into under this subsection
shall be for a term of not less than one month nor more than one hundred and
eighty months.
(10) Each such contract entered into by a public housing agency with an
owner of existing housing units shall provide (with respect to any unit) that —
"(A) the selection of tenants for such units shall be the function of the
owner, subject to the provisions of tiie annual contributions contract be-
tween the Secretary and the agency, except that the tenant selection crite-
ria shall give preference to families which, at the time they are seeking as-
sistance, occupy substandard housing, are involuntarily aisptaced, or are
paying more Uian 50 per centum of income for rent;
(B) the lease between the tenant and the owner shall be for at least one
year or the term of such contract, whichever is shorter, and shall contain
other terms and conditions specified by the Secretary;
"(C) the owner shall not terminate the tenancy except for serious or re-
peated violation of the terms and conditions of the lease, for violation of
applicable Federal, State, or local law, or for other good cause;
(D) maintenance and replacement (including redecoration) shall be in ac-
cordance with the standard practice for the Duilding concerned as estab-
li^ed by the owner and agreed to by the agency; and
"(E) the agency and the owner shall carry out such other appropriate
terms and conditions as may be mutually agreed to by them,
"(11) Notwithstanding any oUier provision of law. with the approval of the
Secretary the public housing agency administering an assistance rontract with
respect to existiiig housing unite may exercise all management and mainte-
yGoot^le
512
nance responsibilities with respect to those units punuast to a contract be-
tween Buch agency and the owner of euch units.",
(c) Section 8(d) of such Act is amended to read as follows:
"(d) In the case of asHistance contracts using a payment standard:
"(1) The Secretary shall establish payment standards periodically but not less
than annually for dwelling units of various sizes and types in the mai^et area.
The pavrnent standard shall be used to determine the maximum monthly assist-
ance which may be paid for any family, as provided in paragraph (2) of this sut>-
section. Payment standards shall be established at levels designed to assist fam-
ilies in securing decent, safe and sanitary housing while pnmding assistance to
the greatest possible number of families. Payment standards for an area shall
be published in the Federal Roister.
"(2) The monthly assistance payment for any family shall be the amount tn
which the payment standard for the area exceeds 30 per centum of the family^
monthly adjusted income, except that such monthly assistance payment stull
not exceed the amount by which the rent for the dwelling unit (including the
amount allowed for utilities in the case of a unit with separate utility metering)
exceeds 10 per centum of the family's monthly income. In addition, if the family
is receiving payments for welfare assistance from a public agency and a part of
such payments, adjusted in accordance with the family's actual housing costs, is
specifically designated by such agency to meet the family's housing coots, the
monthly assistance payment shall not exceed the amount by which the lower of
such rent or the payment standard exceeds the portion of such payment which
"(3) Assistance payments may be made only for (A) a family determined to be
a very low-income family at the time it initially receives assistance under this
subsection, or (B) a family previously receiving assistance under this Act or (O
a lower income family previously participating in programs under section 101 of
the Housing and Urban Development Act of 1965. tne National Housing Act,
section 202 of the Housing Act of 1959, section 312 of the Housing Act of 1964.
or any other provision of law, where appropriate, as determined by the Secre-
tary. In selecting families to be assist^, preference shall be given to those
which, at the time thev are seeking asaistance, occupy substandaro housing, are
involuntarily displaced, or are paying more than 50 per centum of income for
"(4) The Secretary is authorized, without r^ard to the preferences contained
in the preceding paragraph, to use all or any of the authority to enter into con-
tracts provided under section 5(c) to make assistance payments under this sub-
section for (A) families previously assisted under this Act,. or (B) families eligible
for assistance under paragraph <3)(C) of this subsection.
"(5) If a family vacates a dwelling unit before the expiration of a lease term,
no assistance payment may be made with respect to tne unit after the month
during which the unit was vacated.
"(6) Contracts to make assistance payments for a dwelling unit shall be for a
term of not less than one month nor more than sixty months.
"(7) The Secretary shall require with respect to any unit that (A) the public
housing agency inspect the unit before any assistance payment may be made to
determine that it meets housing quality standards established by the Secretary,
and (B) the public housing agency make annual or more freouent inspections
during the contract term. No assistance payment may be made for a dwelling
unit which fails to meet such quality standards, unless any such failure is
promptly corrected and the correction verified by the public housing agency.
"(8) Where the amount of the maximum annual commitment pursuant to an
annual contributions contract exceeds the annual amount required for assist-
ance payments pursuant to such (»ntract, the Secretary mav reserve the
amount of such excess for assistance payments in following years, .
(d) Section 8ij) of such Act is amended by—
(1) inserting "or subsection (d)" after "under this subsection" in the first sen-
tence of paragraph (1); and
(2) redesignating paragraph (S) as paragraph (9) and inserting a new para-
graph (8), to read as follows:
"(8) With respect to assistance contracts under subsection (d) on behalf of a
family which utilizes a manufactured home as its principal place of residence,
paragraphs (2) through IT) of this subsection shall not be applicable, and the
Secretary shall have the discretion to modify the amount of the payment stand-
ard as appropriate for assistance under this subsection. With respect to a family
renting real property on which is located a manufactured home which is owned
yGoot^le
property which is rented by such family for the purpoee of locating its manu&c-
tured home.".
(eXl) Sertion 6(cX4XA) of the United States Housing Act of 1937 is amended by—
(A) striking out "or" after "substandard housing" and inserting a comma in
lieu thereof; and
(B) inserting ", or are paying more than 50 per centum of income for rent,"
after "displaced".
(2) Section 8(eX2) of such Act is amended by—
(At striking out "or" after "substandard bousing" and inserting a comma in
lieu thereof; and
(B) inserting ", or are paying more than 50 per centum of income for rent,"
after "displaced".
(3) Section lOKeXlXB) of the Housing and Urban Development Act of 1965 is
amended by —
(A) striking out "or" after "substandard housing" and inserting a comma in
lieu thereof; and
(B) inserting ", or was paying more than 50 per centum of income for rent,"
after "displaced".
AHKNnHINTS AFraCTlNd TKNANT RENTI
Sec. 203. (a) Section 3(a) of the United States Housing Act of 193T is amended
by-
(1) adding the following immediately after the first sentence: "Reviews of
family income shall be made at least annually."; and
(2) inserting after "A family" in the final sentence the following: "(other than
a family assisted under section 8(d))".
(b) Section 3(b) of the United States Housing Act of 1937 is amended bv striking
out the period at the end of paragraph (2} and inserting in lieu thereof tlie follow-
(c) Section 322(iXl> of the Omnibus Budget Reconciliation Act of 1981 is amended
to read as follows:
"(iXlXA) The provisions of this subparagraph (A) apply to determinations of the
rent to be paid by a tenant whose occupancy in housing assisted under the United
States Housing Act of 1937, section 236 of the National Housing Act or section 101
of the Housing and Urban Development Act of 1965 b^ns on or before the effective
date of regulations implementing Hubsections (a) through (h) of this section. The Sec-
retary shall provide that the rent required to be paid by a tenant shall not increase,
as a result d any one or a combination of the provisions of subsections (a) through
(h) of this section and any other provision of Federal law redefining which govern-
mental benefits are required to or may be considered as income, by more than 10
per centum during any 12 month period, unless the increase above 10 per centum is
attributed solely to increases in income which are not caused by such proviHions.
"(B) the 10 per centum limitation in subparagraph (A) shall also cover increases
in rent or contribution, as defined by the ^retary, of a tenant assisted under sec-
tion 8(d) of the United States Housing Act of 1937, as amended by the Housing and
Community Development Act of 1983 (i) where such tenant previously received sec-
tion 8 existing assistance with respect to occupancy of a unit selected by the family.
and where the anistance under section 8(d) is for occupancy of the same unit; and
(ii) with respect only to increases as a result of the provisions of subsections (a)
through (h) of this section, where such tenant occupied housing assisted under the
United States Housing Act of 1937, section 236 of the National Housing Act or sec-
tion 101 of the Housing and Urban Development Act of 1965, beginning on or before
the effective date of regulations implementing subsections (a) through (M of this sec-
IC) Tenants of assisted housing not meeting the occupancy requirements of sub-
paragraphs (A) or (B) shall be subject to immediate rent payment or contribution
determinations, as defined by the Secretary, in accordance ivith applicable law.
However, the Secretary shall provide that the rent or contribution payable by any
SIKh traant who is occupying assisted housing on the effective date of any provision
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514
of Federal law redenning which governmental benefits are required to or mu be
considered as income shall not increase, as a result of auy such provision of Feoera]
law, by more than 10 per centum during any 12 month period, unless the increase
above 10 per centum ia attributable to causes unrelated to such redefinitions.
"(D) Notwithstanding the provisions of subsections (a) through (h) of this section
or section 81dl of the United States Housing Act of 1937, as amended by the Housing
and Community Development Act of 1983, the Secretary may provide for delayed
applicability, or for staged implementation, of the pnx^uree for determining rents
T contributions, as defined by the Secretary, required by such provisions if Uie Sec-
_etary determines that immediate application "" ' ' . ■ . . ■
cable, would violate the terms of existing lea
hardship for any class of tenants.
"(E) The limitations on increases in rent or contribution contained in subpara-
graphs (A). (B) and (C) shall remain in effect and may not be changed or supereeded
except by another provision of law which amends this subsection,
"(F) If the tenant is receiving payments for welfare assistance from a public
agency and a part of such payments, actuated in accordance with the tenant's actual
housing costs, is specifically designated by such agency to meet the tenant's housing
costs and if the tenant's rent or contribution, as defined by the Secretary, is based
on the part of such payments which is so designated, the 10 per centum limitation
on increases in the rent or contribution in subparagraphs (A) and (B) shall not apply
with respect to the portion of such payments which is so designated to the extent
the Secretary determines the tenant will not bear the burden of the increases.
"(G) Notwithstanding any other provision of this section application of the proce-
dures for determining rent or contribution, as deHned by the Secretary, contained in
the aforementioned provisions shall not result in a reduction in the amount of such
rent or contribution below the amount paid by any tenant occupying housing assist-
ed under the United States Housing Act of 1937, section 236 of the National Hous-
ing Act or section 101 of the Housing and Development Act of 1965 immediately
preceding the effective date of r^ulations implementing this section,".
(d) Section 322(1) of the Omnibus Budget Reconciliation Act of 1981 is further
amended by striking out paragraph (2) and by redesignating paragraph {3> as para-
graph 12).
CONG RKG ATS SERVICBS
Sec, 204. Section 411(a) of the Congregate Housing Services Act of 1978 is amend-
ed by-
(1) striking out "and" at the end of paragraph (3);
(2) striking out the period at the end of paragraph (4) and inserting in lieu
thereof "; and"; and
OPBRATING AflSlffTANCB TOR TEOUBLKD MULTJPAMILY fBOnCK
Sec. 205. Section 236(fX3) of the National Housing Act is amended by striking oat
"September 30, 1982" in the third sentence and inserting in lieu thereof "September
30, 1984".
HOUStNC FOR THE ELDERLV AND HANDICAPPED
Sec. 20G. (a) Section 202(aX4KBKi) of the Housing Act of 1959 is amended—
(1) by striking out "and" after "1980," in the first sentence; and
(2) by inserting ", and to 86,507,660,000 on October 1. 1983," after "1981" in
such sentence,
(b) Section 202<aX4KC) of such Act is amended by striking out "$850348,000" and
"1982" in the second sentence and inserting in lieu thereof "$666,400,000" and
"1984", respectively.
<c) Section 202 of such Act is amended by adding at the end thereof the fol-
lowing new subsections:
"(i) Unless otherwise requested by the sponsor, a maximum of 25 perc«it of
the units in a project financed under this section may be efficiency units, sub-
ject to a determination by the Secretary that such unite are appropriate for the
elderly or handicapped population residing in the vicinity of such project or to
be served by such project.
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515
transfer ia made as part of a transaction that trill ensure that the prtqect in-
volved will continue to operate until the original maturity date of such loan in
■ manner that will provide rental housing for the elderly and handicapped on
terms at least as advantageous to existing and future tenants as the terms re-
quired by the original loan agreement entered into under this section and any
other loan agreements entered into under other provisions of law.".
BKARBD HOUSING VOR THR RLDBRLV
Sk. 207. Section 8 of the United States Housing Act of 1937 is amended by adding
the following new subsection at the end thereof:
"lo) In order to assist elderly families (as defined in section 3(bX3)) who elect
to live in a shared housing arrangement in which they benefit as a result of
sharing the facilities of a dwelling with others in a manner that effectively and
elTiciently meets their housing needs and thereby reduces their coat of housing,
the Secretary shall permit assistance provided under the existing housing and
moderate rehabilitation programs to be used by such families in such arrange-
ments. In carrying out this subsection, the Secretary shall issue minimum prop-
arty standards (or modify existing standards) for the purpose of assuring decent,
safe, and sanitfiry housing for such families while taking into account the spe-
cial circumstances of shared housing.".
DEMONSTRATION PROJBCT
Sic. 208. (a) The Congress finds that—
(1) the Department of Health and Human Services spends in excess of
$6,000,000,000 annually for housing in the form of allowances for belter for
public asBistance recipients;
(2) States administering the Department of Health and Human Services
public assistance program often specify shelter allowances that have little rela-
tionship to the cost or the quality of the housing in which public assistance re-
cipients live;
(3) at least 30 percent of public assistance recipients live in substandard hous-
ing;
(4) the older rental buildings in which many public assistance recipients live
are in those neighborhoods that need the assistance of the programs of the De-
partment of Housing and Urban Development for preservation and rehabilita-
tion; and
(5) there is the potential for improving housing for many lower income fami-
lies by coordinating State and local government efforts in order to assure that
families receiving public assistance payments from the Department of Health
and Human Services are able to live in decent, safe, and sanitary housing.
(b) The purpose of this section, therefore, is to provide assistance to units of gener-
al local government and their designated agencies in order to develop a program
that will—
(1) encourage the upgrading of housing occupied primarily by lower income
families, including famtlies receiving assistance under the aid for families with
dependent children program established under title IV of the Social Securi^
Ac^ and
(2) provide for better coordination at the local level of the efforts to assist
families receiving public assistance ^m the Department of Health and Human
Services so that these families will be able to occupy affordable housing that is
decent, safe, and sanitary and that, if necessary, ia rehabilitated with funds pro-
vided by the Department of Housing and Urban Development.
(c) The Secretary of Housing and Urban Development (hereafter referred to in
this section as the "Secretary") shall, to the extent approved in appropriation Acts,
establish and maintain a demonstration project to carry out the purpose described
in subnection (b>.
(d) In carrying out such project, the Secretary shall make grants to units of gener-
al local government, or designated agencies thereof, to carry out administrative
plans approved Iqr the Secretary in accordance with subsection (e), and the Secre-
tary may make grants to States to provide technical assistance for the purposes of
g»<>uiting such units of general local government to develop and carry out such
(eXl) Grants may be made to States and units of general local government
ami agencies thereof that apply for them in a manner and at a time determined
by the Secretary and that, in the case of unita of general local government and
Digitised by VjOOQ IC
their agencies, are selected on the basis of an adminiotiative plan diaciibad ii
such aiqilication.
12) No such administrative plan shall be selected by the Secrataij Mile- i
sets forth a plan for local government acUvitiea that aj ' ' ' '
(A) require or encourage owners trf' rental IvHwns i
families to bring such hmising into compliance with loi
(B) provide technical assistance, loans, or grants to assist owners described ii
subparagraph (A) to undertake cost^ffective improvements erf' such bousing;
(C) work with the State to establish and implement a schedule of local ^tslter
allowances for recipients of assistance under title IV of the Social Sscuri^ Act
on building quality that will be applicable to buildings invtdved in this ptogram;
(D) coordinate local housing inspection, housing rehabiUtation loan or grant
aaeistance. rental assistance, and social services programs for the purpose M im-
proving thj quality and affordability of housing for lower income families.
{31 Funds received from any grant made by the Secretary to a unit of general
local government shall be made available for use according to the administrative
plana and may be used for —
(A) technical assistance or financial assistance to property owners to upgrade
housing projects described in paragraph <2KA) of this subsection;
(Bl temporary rental assistance to families who live in buildings assisted
under this program and who are eligible for, but are not receiving, assistance
under section 8 of the United States Housing Act of 1937, except that such fami-
lies shall not include families receiving assistance under title IV of the Social
Security Act, and the amount of such rental assistance may not exceed 20 per-
cent of each grant received under this section;
(C) housing counseling and referral and other housing related services;
(DJ expenses incurred in administering the program carried out witii funds
received under this section, except that such expenses may not exceed 10 per-
cent of the grant received under this section; and
(E) other appropriate activities that are consistent with the purposes of this
section and that are approved by the Secretary.
(f) Any recipient of a grant from the Secretary under this section shall agree to —
(1) contribute to the program an amount equal to 15 percent of the funds re-
ceived from the Secretary under this section, and the Secretary shall permit the
recipient to meet this requirement by the contribution of the value <tf services
carried out specifically in connection with the program assisted under this sec-
(2) permit the Secretary and the General Accounting OfFlce to audit its books
in oraer to assure that the funds received under this section are used in accord-
ance with the section; and
(3) other terms and conditions prracribed by the Secretary for the purpose of
carrying out this section in an effective and emcient manner.
(g) In making grants available under this section, the Secretary shall select as re-
cipients at least 20 units of general local government (or their designated agencies).
The selection of proposals for funding shall be based on criteria that result in a se-
lection of prt^jects Uiat will enable the Secretary to carry out the purpose of this
section in an effective and efficient manner and provide a aufFlcient amount of data
necessary to make an evaluation of the demonstration project carried out under this
section.
(h) The Secretary shall transmit, not later than March 1, 1984, to both Houses of
the Congress a detailed report concerning the findings and conclusions that have
been reached by the Secretary as a result of carrying out this section, along with
any legislative recommendations that the Secretary determines are necessary.
(i) Tnere is authorized to be appropriated for the purpose of carrying out this sec-
tion an amount not in excess of |25,0O0,0O0 for fiscal year 1984.
TITLE m— PROGRAM AMENDMENTS AND EXTENSIONS
Part A— Fribral Housing AoMiNtsTKATioN Mortoaob Insurance Proorams
Sec. 301. (a) Section 2(a) of the National Housing Act is amended by striking out
"October 1, 1983" in the first sentence and inserting in lieu thereof "October 1,
1984".
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517
(b) Sectioa 217 of such Act is amended by striking out "September 30, 1983" and
inanting in lieu thereof "September 30, 1984".
(c) Section 221(f) of such Act is amended by striking out "September 30, 1983" in
the fifth sentence and inseding in lieu thereof "September 30, 1984".
(dXD Section 235(m) of such Act is amended by striking out "September 30, 1983"
and inserijng in Ueu thereof "September 30, 1984".
(Z) Section 235(qXl) of such Act is amended by striking out "September 30, 1983"
and inserting in lieu thereof "September 30, 1984".
(e) Section 236(n) of such Act is amended by striking out "September 30, 1983"
and insert:ing in heu thereof "September 30, 1984",
(0 Section 244(d) of Buch Act is amended by striking out "Septemtter 30, 1983" in
the firet sentence and inserting in lieu thereof "September 30, 1984".
(g) Section 809(fl of such Act is amended by striking out "September 30, 1983" in
the second sentence and inserting in lieu thereof "September 30, 1984".
(h) Section 810(k) of such Act is amended by striking out "September 30, 1983" in
the second sentence and inserting in lieu thereof "September 30, 1984".
(i) Section 1002(a) of such Act is amended by striking out "Septemt>er 30, 1983" in
the second sentence and inserting in lieu thereof "September 30, 1984".
(j) Section 1101(a) of such Act is amended by striking out "September 30, 1983" in
the second sentence and inserting in lieu thereof "September 30, 1984".
GOVIRNMBNT NATtONAL UORTGACB ASSOCIATION AND rSDERAL HOUSING
Sec. 303. (a) Section 306(g) of the National Housing Act is amended by adding at
the end thereof the following:
"(3) During fiscal year 1984, the Association may not enter into commitments to
issue guarantees under this subsection in an aggruate amount in excess of
$68,250,000,000.".
(b) Section 531 of the National Housing Act is amended—
(1) by inserting "(a)" after "Skc. 531."; and
(2) by adding at the end thereof the following:
"(b) During fiscal year 1984, the Secretary may not enter into commitments to
insure martgaeea under title II of this Act in an aggregat« principal amount in
excess of $SO,900,0(XI,000.".
FEDERAL HOUSING ADMINISTRATION GBNBRAL INSURANCE FUND
Sec. 304. Section 519(f) of the National Housing Act is amended by inserting the
following before the period at the end thereof: ", and further increased by
$252,974,000 on October 1. 1982".
RESEARCH AUTHORIZATIONS
Sec. 305. The second sentence of section 501 of the Housing and Urban Develop-
ment Act of 1970 is amended by striking out "and" each time it appears, and insert-
ing immediately after "1982" the following: ", not to exceed $19,000,000 for the
fiscal year 1983, not to exceed $18,000,000 for the fiscal year 1984".
COUNSELING
Sec. 306. Section 106(aK3) of the Housing and Urban Development Act of 1968 is
amended by striking out "1982" and '$4,000,000" and inserting in lieu thereof
"1984" and "$3,500,000". respectively.
INCREASED LOAN UMITS FOR MANUFACTURED HOMES AND LOTS UNDER TTTLE I OF THE
Src. 307. (a) Section 2(bXl) of the National Housing Act is amended by—
(1) striking out "$22,500" and all that fallows through "modules)" in subpara-
graph (O and inserting in lieu thereof "40,500";
(2) striking out "$35,000" and all that follows through "modules)" in subpara-
graph (Dl and inserting in lieu thereof "$54,000"; and
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518
(3) striking out "such an amount as may be neceSBary, but not •
S12,500," in subparagra[^ (£) and inserting in lieu thereof "113,600".
<b) Section 2(bX2) of such Act is amended by striking out the second sentence and
ins^ing in lieu thereof the following: "In other areas, the ma»in>uwi dollar
amounts specified in subsections (bXlXD) and (bXlXE) may be increaaed on an area-
by-area basis to the extent the Secretary deemB necessary, but not to exceed the per-
centage by which the maximum mortgage amount for a one-family resid^m in the
area is increased by the Secretary under section 203(bX2) of ttiis Act".
Sbc. 308. Section 2(bK6) of the National Housing Act is amended by adding at the
end thereof the following new subparagraph:
"(C) The owner-occupant of a manufactured home or a home and lot which
was purchased without assistance under this section but otherwise meeting the
requirements of this section may refinance such home or home and lot under
this section provided that the home was constructed in accordance with stand-
ards established under section 604 of the National Manufactured Housing Con-
struction and Safety Standards Act of 19T4.".
SHELL HOME CONSTRUCnON
Sec. 309. (a) Section 203|kXl) of the National Housing Act is amended by—
(1) striking out "The Secretary may. in order to aseist in" in the (iret sentence
and inserting in lieu thereof the following: "In order to assist in (A)";
(2) striking out all that follows "purposes." in the first sentence and inserting
in lieu thereof the following: "or (Bl the purchase, construction and completion
of one-family shell homes, the Secretary is authorized to insure and make com-
mitments to insure rehabilitation loans and shell home mortgage loans made by
financial institutions, including advances made during rehabilitation or sheU
home purchase, construction and completion."; and
(3) ^ding at the end thereof the following: "Shell home mortgage loans may
be insured under this subsection only on a coinsurance basis purauant to section
244 of this Act, and the number of such loans which may be so insured may not
exceed 30,000.".
(b» Section 203(kX2) of such Act is amended by-
CD striking out "and" at the end of subparagraph (aXiii);
(2) striking out the period at the end of subparagraph (B) and inserting in lieu
thereof "; and"; and
(3) adding the following new subparagraph at the end thereof:
"(C) the term 'shell home mortgage' means a mortgage loan made for the pur-
pose of financing the costs (including the provision of any necessary materials,
appliances and specialized labor) of the purchase and development of a site; the
purchase and construction on the site of a one-family shell home, as defined by
the Secretary; and the completion of the shell home, which shall be owner-occu-
(c) Section 203(kK3) of such Act is amended by—
(1) striking out "a rehabilitation loan Hhall" and inserting in lieu thereof "a
loan shall";
(2) inserting after "(A)" the following: "(i) in the case of a rehabilitation
loan,"; and
(3) inserting the following immediately after subparagraph (A):
"(ii) in the case of a shell home mortgage loan, involve a principal obliga-
tion {including such initial service charges, appraisal, inspection, and other
fees as the S«:retary shall approve) not eiceadiog the amount specified in
subsection (bX2), except that the Secretary shall establish as the appraised
value of the property an amount not to exceed the sum of the appraised
value of the site, the estimated costs of site development, and the estimated
costs of purchase, construction and completion of the one-family shell
home;".
(dl Section 203(kX4> of such Act is amended by striking out "rehabilitation loan"
and inserting in lieu thereof "loan or mortgage".
(e) Section 203(k) of such Act is amended by adding at the end thereof the follow-
ing:
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MORTGACB IH8UKANCE FOR HANUFACTUKED HOME PARKS FOR THB BLDERLY
Sec. 310. The first sentence of the second undesignated paragraph of section 207(b)
of the National Housing Act is amended by striking out "no mortg^e shall be in-
sured hereunder" and inserting in lieu thereof the following: "the Secretary shall
not insure any mortgage under this section (except a mortgage with respect to a
manufactured home park designed exclusively for occupancy by elderly persons)".
CONDOMINIUM INSURANCE LIMITS
Sec. 311. The third sentence of section 234(c) of the National Housing Act is
amended by inserting "(118 percent in the case on newly constructed units)" after
"111 per centum".
GRADUATED PAVMBNT MORTGAGES FOR MULTIFAMILV AND SINGLE FAMILY HOUSING
Sec. 312. Section 245 of the National Housing Act is amended by —
(1) striking out nibaections (a) and (b) and inserting in lieu thereof the follow-
"(a)The £
s Secretary may insure under any provision of this title mortga^ and
loans with provisions of varying rates of amortization corresponding to anticipated
variations in family or, as appropriate, project income, to the extent the Secretary
determines such mortgages or loans (1) have promise for expanding housing oppor-
tunities or meet special needs, (2) can be developed to include any safeguards for
mortgagors, tenants or purchasers that may be necessary to offset special risks of
such mortgages, and (3) have a potential for acceptance in the private market. A
mortgage or loan may not be insured pursuant to this section ahet September 30.
1985, except pursuant to a commitment entered into on or before that date.
"(b) Notwithstanding any other provision of this title, the principal obligation of a
mortgage or loan insured pursuant to this section involving property upon which
there is located a dwelling designed principally for occupancy by one to four fami-
"<!} shall not initially exceed the percentage of the initial appraised value of
the property specified in section 203(b) of this title as of the date the mortgage
or loan is accepted for insurance; and
"(2) thereafter (including all interest to be deferred and added to principal)
(A) shall not at any time be scheduled to exceed 97 per centum, or, if the mort-
gagor is a veteran, such higher percentage as is provided under section 203(bX2)
for veterans, of the projected value of the property, and (B) shall not exceed 113
per centum of the initial appraised value of the property.
"(c) Notwithstanding any other provision of this title, the principal obligation of a
mortgage or loan insured pursuant to this section involving property upon which
there are located Rve or more dwelling units —
"(1) shall not initially exceed the percentage of value or replacement cost re-
quired by the provision under which the property is insured; and
"(2) thereafter (including all interest to be deferred and added to principal)
shall not at any time be scheduled to exceed 100 per centum of the projected
value of the property.
"(d) For purposes of this section, the Secretary shall calculate the projected value
of the property by increasing the initial value of the property, as determined by the
Secretary, at a rate not in excess of 2V^ per centum per annum,"; and
(2) redesignating aubaection (c) as subsection (e).
ADJUffTABLa RATE HORTOAGBS FOR SINGLE FAMILY HOUSING
"adjustarle rate single family mortgages
"Sec. 347. (a) The Secretary may insure under any provision of this title a mort-
Ka^ involving property upon which there is located a dwelling designed principally
for occupancy by one to four families, where the mortgage provides for periodic ad-
justments by the mortgagee in the effective rate of interest charged. These interest
rate adjustmenta may be accomplished through adjustments in the monthly pay-
ment amount, the outstanding principal balance, or the mortgage term, or a com-
yGoot^le
bination of these factors, except that in no case may any eztanaion of a
term result in a total term in excess of 40 years. Adjustments in the effective rate of
interest shall correspond to a specified national inlsreet rats index approved in reg-
ulations by the Secretary, information on which is readily accessible from published
sources, Ad)ustments in the effective rate of interest shall (1) be made on an annual
basis; (2) be limited, with respect to any single interest rate increase, to no more
than 1 per centum on the outstanding loan balance; and (3) be limited to a maxi-
mum increase of 5 percentage points above the initial contract interest rate over Uw
term of the mortgage. A mortgage many not be insured pursuant to this section
after September 30, 1985, except pursuant to a commitment entered into on or
before that date.
"(b) The Secretary shall issue regulations requiring that the mortgagee make
available to the mortgagor, at the time of loan application, a written explanation 6!
the features of the adjustable rate mortgage, including but not limited to, a hypo-
thetical pa3'ment schedule which displays the maximum potential increases in
monthly payments to the mortgagor over the first five years of the mortgage term.
"(c) The number of mortgages and loans insured pursuant to this section in any
fiscal year may not exceed 125,000 mortgages.".
SHARBD APPREaATION M0R1GACBS FOR SINGL8 FAHILV KOt^INO
"SHARED APPRECIATION MORTGAGBS FOR SINGLE FAMtLV HOUStNC
"Sec. 248. (a) Notwithstanding any provision of this title which is inconsistent
with this section, the Secretary may msure. under any provision of this title provid-
ing for insurance of mortgages on properties upon which there is located a dwelling
designed principally for occupancy by one- to four-families or providing for insur-
ance of mortgages on the stock allocated to dwelling units in residential cooperetivie
housing corporations, a mortgage secured by a first lien on such property or such
stock, which (1) provides for the mortgagee to share in a predetermined percentage
of the net appreciated value of the property or stock; (2) provides for amortization
over a period of not to exceed thirty years, but the actual term of the mortgage (ex-
cluding any refinancing) may be not less than ten nor more than thirty years, and
other conditions, including limitations on the rate of interest which may be charged,
as the Secretary may require by regulation. A mortgage may not be insured puraii-
ant to this section after September 30, 1985, except pursuant to a commitment en-
tered into on or before that date.
"(b) The mortgagee's share of a property's or stock's net appreciated value shall
be payable upon sale or transfer (as defined by the Secretary) of the property or
stock or pa3'ment in full of the mortgages, whichever occurs fir^. For purposes of
this section, the term 'net appreciated value' means the amount by which tne sales
price of the property or stock (less the mortgagor's selling costs) exceeds the value of
the property or stock at the time the commitment to insure is issued (with adjust-
ments for capital improvements stipulated in the loan contract). If there has been
no sale or transfer at the time the mortgagee's share of net appreciated value be-
comes payable, the sales price for purposes of this section shall be determined l^
means of an appraisal conducted in accordance with procedures approved by the
Secretary and provided for in the mortgage,
"(cl In the event of a default, the mortgagee shall be entitled to receive the bene-
fits of insurance in accordance with section 204(a) of this title, but such insurance
benefits shall not include the mortgagee's share of net appreciated value. The term
'original principal obligation of the mortgage' as used in section 204 shall not in-
clude the mortgagee's snare of net appreciated value.
"(d) The Secretary shall prescribe adequate consumer protections and disclosure
requirements with respect to mortgages insured under this section, and may pre-
scribe such other terms and conditions as may be appropriate to carry out the provi-
sions of this section.
"(e) Mortgages insured pursuant to this section which contain provisions for shar-
ing appreciation or which otherwise reauire or permit increases in the outstanding
loan balance which are authorized under this section or under applicable regula-
tions shall not be subject to any State constitution, statute, court aecree, common
law, rule or public policy limiting or prohibiting increases in the outstanding loan
balance after execution of the mortgage.
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8MABKD APPRECIATION MORTGAGH POR HULTTPAMILV HOUSING
"shared appreciation uortgages por multipamilv housing
"Sec. 249. (a) Notwithstanding any proviaion of this title which is inconsistent
with this section, the Secretary may insure, under any provision of this title provid-
ing for iziBurance of mortgases on properties including five or more family units, a
mortgage secured by a first lien on the property which (1) provides for the mortga-
gee to share in a predetermined percentage of the property s net appreciated value
and {2> meets sucn other conditions, including limitations on the rate of interest
which may be charged, as the Secretary may require by regulation. A mortgage may
not be insured pursuant to this section alter September 30, 1985, except pursuant to
a commitment entered into on or before that date.
"(b) The mortgagee's share of a property's net appreciated value shall be payable
upon maturity or upon payment in full of the loan or sale or transfer (as defined by
the Secretary) of the property, whichever occurs first. The term, irf the mortgage
shall not be less than 15 years, and shell be repayable in equal monthly install-
ments of principal and fixed interest during the mortgage term in an amount which
would be sufficient to retire a debt with the same principal and fixed interest rate
over a period not exceeding thirty years. In the case of a mortgage which will not be
completely amortized dunw the mortgage term, the principal obligation of the
mortgage may not exceed 85 per centum of the estimated value of the property or
project. Por puipoees of this section, the term 'net appreciated value' means the
amount by which the sales price of the property (leas the mortgagor's selling costs)
exceeds the value (or replacement cost, as appropriate) of the property at the time
the commitment to insure is issued (with adjustments for capital improvements stip-
ulated in the loan contract). If there has been no sale or transfer at the time the
mortgagee's share of net appreciated value becomes payable, the sales price for pur-
poses of this section shall be determined by means of an appraisal conducted in ac-
cordance with procedures approved by the Secretary and provided for in the mort-
gage.
(c) In the event of a default, the mortgagee shall be entitled to receive the bene-
fits of insurance in accordance with section 207(g) of this title, but such insurance
benefits shall not include the mortgagee's share of net appreciated value. The term
'original principal face amount of the mortage' as used in section 20T(g) shall not
include the mortgagee's share of net appreciated value.
"<d} The Secretary shall establish by regulation the maximum percentage of net
amreciated value which may be payable to a mortgagee as the mortgagee s share.
Tlie Secretary shall also establish disclosure requirements applicable to mortgagees
making mortgage loans pursuant to this section, to assure that mortgagors are in-
formed of the characteristics of such mortgages.
"(e) Mortgl^SS insured pursuant to this section which contain provisions for shar-
ing appreciation or which otherwise reauire or permit increases in the outstanding
loan balance which are authorized under this section or under applicable regula-
tions shall not be subject to any State constitution, statute, court decree, common
law, rule or public policy limiting or prohibiting increases in the outstanding loan
balance after executjou of the mortgage.".
(b) lite first sentence of the first undesignated paragraph of section 207(cX3) of
such Act is amended by inserting immediately after "periodic payments" the follow-
;) Section 220(dX4) of such Act is amended by inserting after "periodic payments"
ing: "(unless otherwise approved by the Secretary)".
(c) Section 220(dX4) of such Act is amended by insei _...„
the following: "(unless otherwise approved by the Secretary)".
(d) Section 221<dX6) of such Act is amended by inserting after "periodic payments"
the following: "(unless otherwise approved by the Secretary)".
(e) Section 231(cX5) of such Act is amended bv inserting after "periodic payments"
the following: "(unless otherwise approved by the Secretary)".
N authoritv to insure home squrrv convbrbion mortgages pob
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DKUONSTBATION AUTHOKnT TO INBl/KX HOHK EQUTTT O
"Sec. 250. (a) The purpose of this section ia to authorize a demonstiratioD mortgage
inaurance program designed to —
"(1) meet the special needs of elderly homeowners by reducing the eflect of
economic hardship caused by the rising coets of meeting health, housing and
subsistence needs at a time of reduced income, through the insurance of home
equity conversion mortgages, to permit the conversion of a porticHi of accumu-
lated home equity Into hquid assets;
"(2) encourage and increase the involvement of mortgagees and secondary
market participants (lendere and inveators) in the making and servicing of
home equity conversion mortgages for elderly homeowners; and
"(3) permit the evaluation of data to determine-
(A) the extent of the need and demand among elderly b
insured and uninsured home equity conversion mortgages;
"<B) the types of home equity conversion mortgages which best serve the
needs and interests of elderly homeowners, the Federal gorerniDent and
lenders; and
"(C) the appropriate scope and nature of participation by the Seci«taiT in
connection with home equity ccmveraion mortgages for elderly homeowners.
"(b) For purposes of this section—
"(1) The terms 'elderly homeovmer' and 'homeowner' mean any homeowner
(or homeowners) at least 66 years old or such higher ege as the ^cietary may
prescribe.
"(2) The term home equity conversion mortgage' means a loan, secured by a
first lien on the property, which provides for periodic and/or luinn Hum pay-
ments to the homeowner based upon accumulated equity and whim may pro-
vide for a fixed or variable term or for future sharing, between the lender and
the homeowner, of the equity or appreciation in the value of the property. Such
mortgages shall provide that—
'^A) the loan becomes due on the earlier of a specified date after dts-
bursement of the full principal amount or when a specified event occurs,
such as sale of the property or death of the homeowner;
"(B) periodic paymenta, if provided for in the mortgage inatrument. are
made directly by the lender or are made through purmaee of an annuity
from an insurance company authorized to engage in such business and su-
pervised by the State in which it is incorporated; and are made monUi); or
upon such terms as agreed to by the parties;
"(C) lump sum payments, if provided for in the mortgage instrument, are
used by the homeowner to purchase a deferred annuity or to pay for mtgor
housing or other needs as determined by the homeowner;
"(D) prepayment in whole or in part may be made without penalty at any
time duriiig the term of the loan; and
"(E) the intereat rate may be fixed or adjusted periodically as may be
agreed upon by the mortgagor and the mortgagee.
"(c) The Secretary is authorized, upon application by the mortgagee, to insure as
hereinafter provided any home equity conversion mortgage which is eligible for in-
surance as hereinafter provided, and, upon such terms and conditions as the Secre-
tary may prescribe, to make commitments for the insurance of such mortgages prior
to the date of their execution or di^ursement thereon to the extent that the Secre-
tary determines such mortgages —
(II have promise for improving the financial situation or otherwise meeting the
special needs of elderly homeowners;
"(2) can he developed to include any saft^ards for mortgagors that may be neces-
sary to offset the special ristu of such mortgages; and
' (3) have a potential for acceptance in the private market,
"(d) To be eligible for insurance under this section, a mortgage shall —
"(1) have been made to, and be held by, a mortgagee approved by the Secretary as
responsible and able to service the mortgage properly;
' (2) have been executed by a mortgagor who qualifies as an elderly homeowner
and meets requirements prescribed by the Secretary;
"(3) be secured by a property which is designed principally as a one-family resi-
dence and which is occupied by the mortgagor;
"(4) involve a principal obligation (incluaing such initial service charges, apprais-
al, inspections, and other fees as the Secretary shall approve, and all interest to be
deferred and added to the principal) which does not exceed the lesser of the maxi-
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mum area dollar limitation for a one-family reaideDce set forth in section 203(bK2) of
this Act and 90 per centum of the appraised value of the property as of the date the
mortgage is accepted for insurance;
"(51 permit an interest rate t« be fixed or adjusted periodically as may be agreed
upon by the mortgagor and the mortgagee;
"(6) contain provisions for full satisfaction of the obligation satisfactory to the Sec-
retary; and
"(7) contain such terms and proviaions with respect to insurance, repairs, alter-
ations, payment of taxes, default reserve, delinquency charges, foreclosure proceed-
ings, anticipation of maturity, additional and secondary liens, and Other matters as
the Secretary may prescribe.
"(e) The mortgagee shall be eligible to receive the beneiits of insurance as provid-
ed in section 204(h) of this Act with respect to mortgages insured under this section
(except that in the case of a mortgage providing for shared appreciation, the insur-
ance benefits shell not include the mortgagee's share of net appreciated value and
the term 'original principal obligation of the mortgage' as used in section 204 ahall
not include the mortgagee's share of net appreciated value), and the provisions of
subsections (b), (c), (d), (e), (f), (g), (h), (j), and (k) of section 204 of this Act shall be
applicable lo such mortgages insured under this section, except that all references
therein to the Mutual Mortgage Insurance Fund or the Fund shall be construed to
refer to the General Insurance Fund and all references therein to section 203 shall
be construed to refer to this section.
"(f) The Secretary shall require that the mortgagee make available to the home-
owners, at the time of loan application, a written explanation of the features of the
home equity conversion mortage. The explanation may include, but is not limited
to, its etlect on tax and estate planning and homeowner eligibility for governmental
benefits and other assistance.
"(g) No mortgage may be insured under this section after September 30, 1986
except pursuant to a commitment to insure issued on or before that date. The total
numoer of mortgagee insured under this section may not exceed 5,000.
"(h) The Secretary is authoriTed to (1) enter into such contracts and agreements
with Federal, State and local units of government, public and private entities and
others as the Secretary determines to be necessary or desirable to carry out Uie pur-
poses of this section, and (2) make such investigations and studies of data and pub-
lish and distribute such reports, as the Secretary determines to be appropriate.
"(i) Mortgages insured and authoriTed under this section and applicable r^ula-
tions which contain or set forth provisions pertaining to (1) sharing appreciation, {2)
increases in the outstanding balance after execution of the mortgage (including but
not limited to adding deferred interest to principal), (3) disbursement of mortgage
proceeds over an extended term, or (41 setting of a due date in relation to the earli-
est of a specified event shall not be subject to any State constitution, statute, court
decree, common law, rule or public policy (1) limiting or prohibiting (A) sharing ap-
preciation, (B) increases in the outstanding balance after execution of the mortgage,
or (C) disbursement of mortgage proceeds over an extended time, or (2) requiring
that the term of the mortgage be fixed.
"(j) Notwithstanding any other provisions of law, and in order to further the pur-
poses of the demonstration program authorized by this section, the Secretary is au-
thorized to take any action necessary to provide the mortgagor with funds to which
he or she is entitled under the insured mortgage or ancillary contracts but has not
received because of the default of the party responsible for payment, and to obtain
repayment of such disbursements so provided from any source. Such actions may
include, but are not limited to: (1) disbursing such funds to the mortgagor from the
General Insurance Fund; (2) accepting an assignment of the insured mortgage not-
withstanding that the mortgagor is not in default under its terms, and calculating
the amount and making the payment of the insurance claim on such assigned mort-
gage; (3) raquiring a junior mortgage from the mortgagor at any time in order to
secure repayments of any funds advanced or to be advanced to the mortgagor; (4)
requiring a subrogation to the Secretary of the rights of any parties to the transac-
tion agamst any defaulting parties; (5) imposing premium charges; and (6) preempt-
ing any State or local law which may prohibit or limit any of the actions enumer-
ated in items (1) through (5) of this suDsection,".
Smc 317. (flj Sections 3 and 4 of Public Law 90-301 are hereby repealed,
(b) The National Housing Act is amended in the following respect
(1) Sectimi 2(bX5) is amended to read as follows:
37-922 O - 84 -
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524
'(5) No insurance shall be granted under this Becti<»i to anj such Bnandaj institu-
tion with respect to any obligation representing any such loan, advance of credit, or
■ ■ ■ atheobEi ■ '
purchase by it unless the obUgation has such maturity, bears such ine ^
um charges, and contains sucn other terms, conditions, and restrictions H the Sec-
retary shall prescribe, in order to make credit available for the purpcee of Ibis title.
Any such obligation with respect to which insurance is granted under this section
shall bear interest at such rate as may be agreed upon by the borrower and the
financial institution.".
(2) Section 203(bX5) is amended to read as follows:
"(5) Bear interest at such rate as may be agreed upon by the mortgagor and the
mortgagee,".
(3)S
(4) The Tirst sentence of the first undesignated paragraph of section 207(cX3) is
amended to read as follows: "The mortgage shall provide for complete amortizatlMi
by periodic payments within such term as the S«:retary shall prescribe, and shall
bear interest at such rate as may be agreed upon by the mortgagor and the mortga-
gee,",
15) The first sentence of section 213(d) is amended to read as follows: "Any mort-
gage insured under this section shall provide for complete amortization by periodic
payments within such term as the Secretary may prescribe but not to exceed forty
years from the beginning of amortization of the mortgage, and shall bear interest at
such rate as may be agr«ed upon by the mortgagor and the mortgagee.".
(6) The second sentence of section 220(dK4) is amended to read as follows: "TTie
mortgage shall bear interest at such rate as may be agreed upon by the mortgagor
and the mortgagee and contain such terms and provisions with respect to the appli-
cation of the mortgagor's periodic payment to amortization of the principal of the
mortgage, insurance, repairs, alterations, payment of taxes, default reserves, delin-
quency charges, foreclosure proceedings, anticipation of maturity, additional and
secondary liens, and other matteis as the Secretary may in the Secretary's discre-
tion prescribe,",
(T) Section 220(hX2Kiii) U amended to read as follows:
"(iiil bear inter^: at such rate as may be agreed upon by the mortgagor and the
mortgagee;".
(81 Section 221(dX5) is amended by striking out "(exclusive" and all that follows
through "mortgage market" and inserting in lieu thereof the following: "at such
rate as may be agreed upon by the mortgagor and the mortgagee".
(91 Section 231(cXG) is amended to read as follows:
"(6) bear interest at such rate as may be agreed upon by the mortgagor and the
mortgagee: and",
(10) The ftrst sentence of section 234(0 is amended to reed as follows: "An^ blan-
ket mortgage insured under subsection (d) shall provide for complete amortization
by periodic payments within such terms as the Secretary may prescribe but not to
exceed forty years froi
bear interest at such ri
gee",
(ID Section 235(iX3) is amended by—
(A) striking out "and" at the end of subparagraph (D);
(B) striking out the period at the end of subparagraph (E) and inserting ii
lieu thereof ; and"; and
(C) adding tiie following n
"(F) bear interest a'
le amount of the pr
_jtary finds necessary ^ „ „
ation the yields on mortgages in the primary and secondary markets.".
(12) Section 240(cX4) is amended to read as follows:
"(4) bear interest at such rate as may be agreed upon by the mortgagor and
the mortgagee;".
(13) Section 241(bX3) is amended to read as follows:
"(31 bear interest at such rale as may be agreed upon by the mortgagor and
the mortgagee;",
(14) Section 1002(dX2) is amended to read as follows:
"(2) bear interest at such rate as may be agreed upon by the mortgagor and
the mortgagee: Provided, That the Secretary may s^ree to a reasonable exten-
sion of the term of a mortgage, the maturity of which is limited by this para-
graph to not more than ten years, if the Secretary determines that unusual or
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Pakt B— Otheb Proorams
WBATHERIZATION PROOKAM
Sbc. 321 Section 422 of the Energy Conservation in Existing Buildinss Act of 1976
is amended by adding the following new sentence at the end thereof: Of the funds
authoriied by section 1005(1) of the Onmibus Budget Reconciliation Act of 1981 for
eoer^ conservation for the Tiscal year ending September 30, 1984, not less than
(300)000,000 is authorized to be appropriated to cany out the weatherization pro-
gram under this part.".
FLOOD INSURANCS
(b) Section 1336(8) of such Art is amended by strilung out "September 30, 1983"
and inserting in lieu thereof "September 30, 1985".
(c) Section 1376(c) of such Act is amended—
(1) by striking out "and" after '
(2- ■ ■■'
(dXD The National Flood Insurance Act of 1968 is amended by striking o
retary" and "Secretary's" each place they appear therein (other than as a reference
ta a Secretary other than the Secretary of Housing and Urban Development) and
inserting in lieu thereof "Director" and "Director's", respectively.
(2) Section 1304(a) of such Act is amended by striking out "Secretary of Housing
and Urban Development" and inserting in lieu thereof "Director of the Feder^
Emergen(^ Management Agency".
(3) Section 1333 of such Act is amended by inserting "original exclusive" before
"jurifldirtion".
(4) Section 1340(aK2) of the National Flood Insurance Act of 1968 is amended by
striking out "officers and employees of the Department of Housing and Urban De-
velopment, and".
(5) Section 1341 of such Act is amended by inserting "original exclusive" before
"jurisdiction".
(6) Section 1360(aX2) of such Art is amended by striking out "within fifteen years
following such date" and inserting in lieu thereof "by September 30. 1987".
(7) Section 1370<bX6) of such Art is amended to read as follows;
"(6) the term 'Director' means the Director of the Federal Emergency Man-
agement Agency,",
(eXl) The Flood Disaster Protertion Act of 1973 is amended by striking out "Secre-
tary" and "Secretary's" each place they appear therein (other than as a reference to
a SBCretary other than the Secretary of Housine and Urban Development) and in-
serting in lieu thereof "Director" and "Director's , respectively.
(2) Section 3(aK6) of such Act is amended to read as follows:
"(6) 'Director' means the Director of the Federal Emergency Management
Agency.",
(f) Section 15(e) of the Federal Flood Insurance Art of 1956 is amended by striking
out "Secretary" the first and third places it appears therein and inserting in lieu
thereof "Director of the Federal Emergency Management Agency".
CRIHB AND RIOT INSURANCE
Sec. 323. (a) Section 1201(b) of the National Housing Act is amended—
(1) by striking out "September 30, 1983" in paragraph (1) and inserting in lieu
therettf "September 30, 1985"; and
(2) by striking out "September 30, 1985" in paragraph (IXA) and inserting in
lieu tberaof "September 30, 1988".
(bXD Title XII of the National Housing Art is amended by striking out "Secre-
'""t" and "Secretaiy's" each place they appear therein (other than as a reference U
other than the Secretary of Housing and Urban Development) and i
»u thereof "Director" ana "Director's , respertively.
1203(a) of such Act is amended—
(A) by striking oat "and" at the end of paragraph (15);
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tB) by striking out the period at the end of paragraph (16) and ii
and" in lieu thereof; and
(C) by adding at the end thereof the following new paragraph;
"(171 'Director' means the Director of the Federal Emergency Management
Agency,".
(3) Section 1232(2) of such Act Is amended by striking out "ofFlcers and employees
of the Department of Housing and Urban Development, and".
(4) Section 1247 of such Act is amended by inserting "of the Secretary of Housing
and Urban Development" afler "regulations)".
TITLE IV— RURAL HOUSING
AUTHORIZATIONS
Sic. 401. Section 513 of the Housing Act of 1949 ia amended to read as follows:
"authorizations
"Sec. 513. (a) For iiscal year 1984, the Secretary may, as approved in appropria-
tions Acta, insure loans under the authorities provided in this title in an aggregate
principal amount not to exceed {1,840,(X)0.000 except that—
"(1) not more than S1,128.000,(}(K) shall be made available for loons insured
under section 502 on behalf of borrowers receiving assistance pursuant to sec-
tion 521(aKlXB).
"(2) not more than $12,000,000 may be made available for loans insured under
section 514; and
"(3) not more than $700,000,000 may be made available for loans insured
under section 515 on behalf of borrowers receiving assistance pursuant to sec-
tion 521(aXlKB).
"(b) For fiscal year 1984, there are authorized to be appropriated —
"(1) not to exceed $10,000,000 for direct loans pursuant to section 504;
"(2) not to exceed $13,500,000 for fmanciai assistance pursuant to aection 516;
"(3) not to exceed $25,000,000 for financial assistance pursuant to section 504;
"(4) not to exceed $12,500,000 for financial assistance pursuant to section 523;
"(5) such sums as may be necessary to meet interest payments on notes or
other obligations issued by the Secretary under section 511; and
"(6) such sums as may be required by the Secretary to administer the provi-
sions of sections 203(b), 235, and 236 of the National Housing Act and Section 8
of the United States Housing Act of 1937.".
Sec. 402. Section 517(j) of the Housing Act of 1949 is amended—
(1) by striking out paragraph (4) and inserting in lieu thereof the following:
"(4) to provide assistance authorized by section 521(aXI);";
(2) by striking out "; and " at the end of paragraph (5) and inserting in lieu
thereof a period; and
(31 by striking out paragraph (6).
insurance authority
EXTENSION OF RURAL HOUSING INSURANCE AUTHORm
TENANT CONTRIBUTION
Sec. 405. (a) Section 521(aX2XA) of the Housing Act of 1949 is amended by striking
out "not exceeding 25 per centum of income" in the first sentence and inserting in
lieu thereof "not exceeding the highest of the following amounts, rounded to the
nearest dollar: (I) 30 percent of the family's monthly adjusted income; (11) 10 percent
of the family's monthly income; or (III) if the family is receiving payments tor wel-
fare assistance from a public agency and a part of such payments, adjusted in ac-
cordance with the family's actual housing costs, is specifically designated by such
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ageiic]' to meet the ftunil/a housing costs, the portion of such payments that is bo
(b) Section 501(bX5) of auch Act is amended to read as followe:
"(5) For purpoaee of this title, the terms 'income' and 'adjusted income' shall have
the same meaning given such terms in section 3(b) of the United States Housing Act
of 1937.",
(c) The Secretary of Agriculture shall provide that the amount of rental pa3'menta
to be made by any family shall not increase, as a result of the amendments made bw
this section and as a result of any other provision of Federal law redefining which
governmental tienefits are required to or may be considered as income, by more
than 10 percent during any 12-month period unless the increase above such 10 per-
cent is attributed solely to increases in income which are not caused by such amend-
ments or by such redefinitions. The limitation contained in the preceding sentence
shall remain in effect and may not l>e changed or superseded except by another pro-
vision of law that amends this subsection.
(d) The amendments made by this section shall be effective with respect to tenant
rental payments due on or after the date of the enactment of this Act.
CaRnnCATBS OV BBNBnClAL OWNBRSHIP
Sec. 406. Section 517(k) of the Housing Act of 1949 is amended or read as follows:
"(k) Any transactions pertaining to certificates of beneficial ownership issued
under this title shall be treated in accordance with generally accepted budget
and accounting practices for participation certificates for purposes of chapter 11
of title 31, United Stetes Code.".
RENTAL A8S1OTANCI AUTHORIZATION
Sbc. 407. Section 521(bX2XD) of the Housing Act of 1949 is amended to read as
follows:
"(D) For fiscal year 1984, the Secretory, to the extent approved in appro-
priation Acts, may enter into rental assistance contracts aggregating not
more than $100,000,000 in carrying out subparagraph (A).".
BXU^HELP TRCHNICAL AND SUPERVtaORV ASSiaTANCB
Sbc. 408. (a) Section 523(bXl) of the Housing Act of 1949 is amended to read as
follows:
"(1) to make grante to, or contract with, public or private nonprofit (»rpora-
tions, agencies, institutions, Indian tribes, and other associations approved by
him, for developing, conducting, administering, or coordinating enective and
comprehensive progrsma of technical and supervisory assistonce which will aid
needy tow-income individuals and their families in carrying out mutual or self-
help housmg effort^ and".
(b) Section 523(b) of such Act is amended —
(1) in paragraph (2), by striking out "; and" and inserting in lieu thereof a
period; and
(2) by striking out paragraph (3).
(c) Section 623(f) of auch act is amended by striking out "1983" each place it ap-
pears and inserting in lieu thereof "1984".
Skc. 409. (a) The assets and liabilities of the Self-Help Housing Land Development
Fund establidied in section 523 of the Housing Act of 1949 hereby are transferred to
the Rural Housing Insurance Fund established in section 517 of such Act, and the
Self-Help Housing Land Development Fund hereby is abolished.
(b) Section 623 of the Housing Act of 1949 is amended—
(1) b? striking out subsection ig); and
(2) by redesignating subaection (h) as subsection (g).
DBFlNmON OP RURAL AREA
Sbc. 410. Section 520 of the Housing Act of 1949 is amended by adding at the end
thereof the following new sentence: "For purposes of this title, any area classified as
'rural' or a 'rural area' under paragraph (2) prior to the receipt of^data from or after
Uie 1980 decennial census and determined not to be 'rural' or a 'rural area' as a
result of such data shall continue to be so classified through the end of fiscal year
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TITLE V-GENERAL PROVISIONS
Sec. 501. No provision of this Act, or any amendment made by this Act, ma;
become effective prior to October 1, 1983 or be construed as pronding for the ex-
penditure of any amount, except to the extent approved in appropriation Act-
[Congressional Record—House— July 12, 1983]
Housing and Urban-Rusal Recovery Act or 1983
The Speaker pro tempore. Pursuant to House Resolution 248 and
rule XXIII, the Chair declares the House in the Committee of the
Whole House on the State of the Union for the further consider-
ation of the bill, H.R. 1.
IN THE COMMnTEE OF THE WHOLE
Accordingly the House resolved itself into the Committee of the
Whole House on the State of the Union for the further consider-
ation of the bill {H,R. 1) to amend and extend certain Federed laws
that establish housing and community and neighborhood develop-
ment and preservation programs, and for other purposes, with Mb*.
Mineta in the chair.
The Clerk read the title of the bill.
The Chairman. When the Committee of the Whole House on the
State of the Union rose on Monday, July 11, all time for general
debate had expired. Pursuant to the rule, the substitute committee
amendment recommended by the Committee on Banking, Finance
and Urban Affairs, now printed in the reported bill, shall be con-
sidered by titles as an originail bill for the purpose of Etmendment
and each title shall be considered as having been read. Immediate-
ly after the short title has been designated by the Clerk, it shall be
in order to consider amendments printed in the Congressional
Record of July 11, 1983, by Representative Gonzalez and if offered
by himself or his designee, said amendments shall be considered en
bloc and shall be debatable for not to exceed 1 hour, equally divid-
ed and controlled by Representative Gonzalez and a Member op-
posed thereto before they are considered for amendment under the
5-minute rule.
After the disposition of these amendments, the substitute com-
mittee amendment shall be considered for amendment. After said
substitute has been read for amendment in its entirety, it shall be
in order to consider an amendment in the nature of a substitute
printed in the Congressional Record of July 11, 1983, by Represent-
ative Wylie 2md if offered by himself or his designee and said
amendment shall be debatable for not to exceed 2 hours, equally
divided and controlled b^ Representetive Wylie and a Member op-
posed thereto before it is considered for amendment under the 5-
minute rule.
Amendments to the table of contents of the substitute committee
amendment shall be in order at any time during the consideration
of said substitute.
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The Clerk will designate section 1.
Section 1 reads as follows:
s of the United States of
SHORT TITLE AND TABLE OF CONTEN1S
AMENDMENTS OFFERED BY MR. GONZALEZ
Mr. Gonzalez. Mr. Chairman, I offer amendments.
The Clerk read as follows:
Amendments offered by Mr. Gonzalez: Page 7, strike out line 10 and insert in
lieu thereof the following:
(A) the metropolitan Euea within which the metropolitan city or urban county
involved is located, in
Page 8, strike out lines 3 through 5 and insert in lieu thereof the following:
<d) Section 103 of such Act is amended by striking out the second sentence and
inserting in lieu thereof the following: "There are authorized to be appropriated for
such punKMM not to exceed $3,500,000,000 for fiscal year 1984 and not to exceed
$3,450,000,000 for each of the fiscal years 1985 and 1986.
Page 22, after line 19, insert the following new subsection:
(k) Section 106(c) of such Act is amended by adding at the end thereof the follow-
"(3) Notwithstanding paragraph (I), the Secretary may reallocate to any met-
ropolitan city any amounts allocated to, but not received by, the urban county
in which auch city is located if (A) such city was an included unit of general
local government in such county prior to the qualification of such city as a met-
ropolitan city; (B) such amounts were designated by such county for use in such
city prior to the qualificatiou of such city as a metropolitan city; and (C) sudi
city and county agree to such reallocation and the resulting transfer of respon-
sibility for the administration of such amounts.".
Page 22. strike out line 20 and all that follows through page 23, line 25.
Page 24, line 1, strike out "The" and all that follows through the colon on line 2
and insert in lieu thereof the fallowing: "Section lOT(a) of such Act is amended by
striking out the first sentence and inserting in lieu thereof the following:".
Page 24. line 6, insert aft«r the fu^t period the following new sentence: "In addi-
tion to such amounts authorized to t>e set aside for grants under subsection (b),
there is authorized to be approoriated $100,000,000 for fiscal year 1984 to carry out
the provisions of subsection (d). .
Page 24. line 24, strike out "(d) and (e)" and insert in lieu thereof "(e) and (0".
Page 25, line 2, strike out "subsection" and insert in lieu thereof "subsections".
Page 25. line 19. strike out the quotation marks and final period.
Page 25. after line 19, insert the following:
"(d) The Secretary shall, to the extent approved in appropriation Acts, make
grants to States, units of general local government, and Indian tribes for the provi-
sion of shelter and essential services for individuals and families who are subject to
life-threatening situations because of their lack of housing, except that in the case
of a grant to a State the Secretary shall first certify that the purposes of this sub-
BCctioD will be more effectively carried out bv making a grant to such State that has
an existing program that serves such Individuals and families. Such grants shall be
awarded on the basis of the need for emergency housing in the area where the
project is or will be located, shall take into account regional variations in the cost of
providing shelter, and shall consider the extent to which units of general local
enunent and nonprofit organizations are currently providing shelter and assists
Such grants atny be used by such units of general local government or by local non-
pn^t mrgaimations to rehabilitate existing structures in order to provide basic shel-
ter, to maintain structures providing such shelter, to pay for utilities and the fur-
nifliii^ of Buch shelters, to provide for any necessary health and safety measures
that an required to protect the individuals using such shelter, and for other pur-
pons deacriDed in section 105(a) that are consistent with the purpose of this pro-
gram. In the case of a structure that is rehabilitated with assistance under this sub-
— '--- —-'n structure shall be used for emergency housing, after such rehabilita-
yGoot^le
I. The Secretary shall ensure that grants provided under this suianliuM aie
used solely to provide additicmal riwHer capacity and pwwitinl aenicea and an oat
used to replace amounts currently expended in the provisiiin oT such Adter and
services. The reatriction containecf in the preceding sentence shall not appij to ap-
Elicants under this subsection that, pursuant to a State coostitutioDa! numJat*
Bve provided shelter to any person who presents himself or herself for abdter.".
(4) Section 10T(el of such Act, as so redesignated in this sectioo, is ■imtufaJ faj
inserting ", or appropriated for use under subsection (d)," after "subsectioti Qtf.
Page 27, strike out lines 7 through 13 and insert in lieu tberetrf the following:
Sec. 102. (aJ Section 119(aJ of the Housing and Conununity Developmoit Act of
1974 is amended by adding at the end thereof the follcnving new wnteDCe: "There
are authorized to be appropriated to carry out the proviaiims t( this section not to
exceed $440,000,000 for each of the fiscal years 1984, 1985, and 1986, and 9m
amount appropriated under this sentence shall remain available until enwoded. .
Page 37, line 17, strike out "$15,000,000" and insert in lieu therecrf "$5,000,000".
Page 47, strike out line 19 and all that foUows through page 48, line 3, md insert
in lieu thereof the following:
"(nXl) ThMe are authorized to be appropriated —
"(A) (12,000,000 for fiscal year 1984 to carry out subsections (a), (b). teX and (i);
"(B) (12,000,000 for fiscal year 1984 to carry out subaeetions (f). (g).
"(2) Any amount appropriated under this subsection shall remain available until
expended.".
Page 48, line 5, insert "(a)" after the section designation.
Page 48, strike out lines 7 through 10 (and redesignate the sufaeequent paragrai^
accordingly).
Page 48, line 13, strike out "$69,000,000" and insert in lieu thereof "$72,000,000".
Page 48. after line 24, insert the following new subsection:
(b) Section 312(hJ of such Act is amended by striking out "19SS" each place it ap-
pears and inserting in lieu thereof "1984".
Page 49, line 6, strike out "(18,512,000" and insert in lieu thereof "$16,000,000".
Page 50, line S, strike out "$729,033,000 on October 1. 1983" and insert in lieu
thereof the following; "$549,949,000 on October 1, 1983 (of which amount $16,660,000
shall be available for contracts to make assistance payments under section 235 of
the National Housing Act)".
Page 50, line 8, strike out "(12,927.147,000" and insert in lieu thereof
"$9,912,928,000".
Page 60, line 9, insert after "1983" the following; "(of which amount $166,600,000
shall be available for assistance payments under section 235 of the National Hous-
ing Act and $900,000,000 shall be available for assistance under the Rental Housing
Production and Rehabilitation Act of 1983)".
Page 50, line 19, strike out "(105,000,000" and insert in lieu thereof "$81,022,000".
Page 51, strike out lines 1 through 16 and insert in lieu thereof the follovring:
"(i) at least $395,023,000 shall be made available for assistance under section
8-
"(1) not leas than $125,883,000 of which shall be made available for assist-
ance under section 8(bKl];
"ai) not less than (21.905.000 of which shall be made available for assists
ance under section 8<eX5), other than for use in connection with the sale of
projects owned by the Department of Housing and Urban Development;
''(tU) not less than $42,000,000 of which shall be made available fbr
amendments to reservations of assistance under section 8 or to contracts for
assistance entered into under section 8 in any fiscal year ending befbre Oc-
tober 1, 1983; and
"(IV) not more than $143,260,000 of which may be utilized to convert as-
sistance under any other provision of law to assistance Under section 8; and
"(ii) at least (57.244.000 shall be made available for lower income bousing
projects under this Act (other than under section S), of which amouDt not leas
than $13,912,000 shall be made available to Indian public housing aaeacies.
"(C) Any authority approved in appropriation Acts under tliie suMectiOTi that
is recaptured and made available for obligation during fiscal year 1984 shall be
utilized by the Secretatr for the following purposes:
"(i) for assistance under section 8(bX2) with respect to projects aadated under
section 202 of the Housing Act of 1959, not less than (1,926,400,00(H and
yGoot^le
581
._. e under aection 8(bXl), not lees than $573,600,000 of the bal-
e of such authority that remainB after deducting the amount to be utilized
under clause (U.".
Page 51, line 20, strike out "$1,550,000,000" and insert in lieu thereof
"$1,460,000,000".
Pa^ 83, strike out line 25 and all that follows through page 84, line 6 (and redes-
ignate the aubaequent aubeection accordingly).
Page 84, strike out line 10 and all that follows through page 85, line 18, and insert
in lieu thereof the following:
SBCnON 236 AaaiSTANCB
Sbc. 222. (a) Section 236(hl of the National Housing Act is emended by adding at
the end thereof the following new aentences: "To ensure that qualified tenants in
units in projects assisted, but not subject to mortgages insured, under this section
receive the benefit of assistance contracted for under subsection (fX2), the Secretaiy
shall offer annually to amend contracts entered into with project owners under such
subsection to provide sufficient payments to cover necessary rent increases and
changes in the incomes of tenants in such units if. after September 30, 1984, such
payments are not already provided for under audi contracts. The Secretary shall
take such actions as may be necessary to ensure that payments, including that re-
flect necessary rent increases and changes in the incomes of tenants, are made on a
timely basis for all units covered by contracts entered into under subsection (fH2).".
<b) Section 236(iXl) of such Act is amended by adding at the end thereof the fol-
lowing new sentence: "The Secretai? shall utilize, to the extent necesaary after Sep-
tember 30. 1984, any authority under this section that is recaptured either as the
result of the conversion of bousing projects covered by assistance under subsection
(fX2) to contracts for assistance under section 8 of the United States Housing Act of
1937 or otherwise for the purpoee of making assistance payments, including amend-
ments as provided in aubeection (h), with respect to housing projects assisted, but
not subject to mortgages insured, under this section that remain covered by assist-
ance under subsection (fX2).".
Page 86, line 7, strike out "$6,507,660,000" and insert in lieu thereof
"$6,944,868,000".
Page 68. line 6, insert "or" after the semicolon.
Page 88, line 10, strike out "; or" and insert in lieu thereof a period.
Page 88, strike out lines 11 through 15.
Page 92, line 13, insert after "shall" the following: ", to the extent approved in
appropriatiiui Acta,".
Page 96. line 2, strike out "$10,000,000" and insert in lieu thereof "$4,000,000".
Page 95, strike out line 20 and all that follows through page 97, line 7. and insert
in lieu thereof the foUowing:
Sbc. 227. (a) Section 101(g) of the Housing and Urban Development Act of 1965 is
amended by adding at the end thereof the following new sentences: 'To ensure that
qualified tenants in units in housing assisted under this section, but not subject to
mori^ages insured under the National Housing Act, receive the benefit of assistance
contracted for under this section, the Secretary shall offer annually to amend con-
tracts entered into with housing owners under this section to provide sufficient pay-
ments to cover necessary rent increases and changes in the incomes of tenants in
such units if, after September 30, 1984, such payments are not already provided for
uncler sucdi contracts. The Secretary shall take such actions as may be necessary to
ensure that payrnents, including payments that reflect necesaary rent increases and
changes in Uie incomes of tenants, are made on a timely basis for all units covered
by contracts entered into under this section.".
(b) Section 101(1) of such Act is amended by adding at the end thereof the follow-
ing new sentence: "The Secretary shall utilize, to the extent necessary after Septem-
ber 80, 1984, any authority under this section that is recaptured either as the result
of the conversion of housing projects covered by assistance under this section to con-
tracts for asaistance under section 8 of the United States Housir^ Act of 1937 or
otherwise (1) for the purpose of making assistance payments, including amendments
■s provided in subsection (g), with reepect to housing projects assisted under this
sscnon, but not subject to mortgagee insured under the National Housing Act. that
remain covered by assistance under this section; and (2) if not required to provide
assistance under this section, and notwithstanding any other provision of law, for
yGoot^le
the purpoee of contracting for assietance payments under section 236(fX2> of the Na-
tional Housing Act.".
Page 106. Une 3, insert after "1983" the following: "(from the additional autfaori^
t4] enter into contracts made available on such date under the finrt sectMioe cS sec-
tion 5(cKl) of the United States Housing Act of 1937)".
Page 106, line 8, insert before the period the following: "of the amount of budget
authority made available for fiscal year 1984 under the third sentence of section
5(cXl) of the United States Housing Act of 1937".
E^ 117, strike out lines 19 through 22 and insert in lieu thereof the following:
Sec. 311. Of the budget authority made available for fiscal year 1984 under the
thinl sentence of section 5(cMl) of the United States Housing Act of 1937, not more
than $900,000,000 shell be available for purposes of assistance under this tiUe.
Page 118, line 8, strike out "$3,955,600,000" and insert in lieu thereof
■'$3.ai.000,000".
E%e 118, line 12, strike out "$3,705,600,000" and insert in lieu thereof
"$3,262,000,000".
Page 118. after Une 16, insert the following new paragraph:
(4) in subsection (aX2), by striking out "$25,600,000" and inserting in lieu
thereof "$20,000,000;
Page 118. strike out lines 17 throuch 22.
Page 119. line 3, strike out ^'$1,000,000,000" and insert in lieu thereof
"$940,000,000",
Page 119. line 7. strike out "$50,000,000" and insert in lieu thereof "$29,000,000".
Page 19. after line 17. insert the following new paragraphs (and redesignate the
subsequent paragraph accordingly):
(7) in subsection (bX2). by striking out "$50,000,000" and "$25,000,000" end in-
serting in lieu thereof "$36,500,000'* and "$12,500,000". respectively;
(8) in subsection (bX3), by striking out "$25,000,000" and inserting in lieu
thereof "J4.4O0,OO0"; and
Page 119. line 25. strike out "; and" and insert in lieu thereof a period.
Page 120. strike out lines 1 through 8.
Page 120. line 10. strike out "May 20, 1983" and insert in lieu thereof "September
30 1983"
Page 120, line 13, strike out "May 20, 1983" and insert in lieu thereof "September
30. 1983",
Page 120. line 17, strike out "$400,000,000" and insert in lieu thereof
"$135,000,000".
Page 120. line 23, strike out "$200,000,000" and insert in lieu thereof
"$72,000,000"-
Page 121, bwinnins on line 4, strike out "May 20, 1983" and insert in lieu thereof
"September 30. 1983'
Page 121. line 6 strike out "$12,000,000" and insert in lieu thereof "$12,500,000".
Page 137, line 19, strike out "$100,000,000" and insert in lieu thereof
"$10,000,000".
Page 138, strike out line 1 and all that foUows through page 139, line 14 (and re-
designate the subsequent section and conform the table of contents, accordingly).
Page 139, line 19, strike out the comma and all that follows through the comma
on line 20.
Page 139. line 21. strike out "appropriated" and insert in lieu thereof "available
for any fiscal year".
Page 140. line 7, strike out "May 21, 1983" and insert in lieu thereof "October 1,
I98r.
Page 140, line 10, strike out "May 20, 1983" and insert in lieu thereof "September
30 1983"
iw 140, line 13, strike out "May 20. 1983" and insert in lieu thereof "September
30. 1983".
Page 140, line 16, strike out "May 20, 1983" and insert in lieu thereof "September
30, 1983".
Page 140. line 19, strike out "May 20, 1988" and insert in lieu thereof "September
30, 1983".
Page 140, line 22, strike out "May 20. 1983" and insert in lieu thereof "September
30, 1983".
Page 141, line I, strike out "May 20, 1983" and insert in lieu thereof "September
Page
30, 1983
yGoot^le
Page 141, line 4, strike out "Bilay 21, 1983" and insert in lieu thereof "October 1,
1988".
Page 141, line 8, strike out "Bilay 20, 1983" and insert in lieu theraof "September
30, 1983".
Page 141, line 11, strike out "May 20, 1983" and insert in lieu tliereof "September
30, 1583".
Page 141, line 12, strike out "May 20, 1983" and insert in lieu thereof "September
30, 19^'.
Page 141, line IT, strike out "May 20, 1983" and insert in lieu thereof "September
30, ISSS".
Page 141, line 20, strike out "May 20, 1983" and insert in lieu thereof "September
30, 1983".
Pase 141, line 24, strike out "May 21, 1983" and insert in lieu thereof "October I,
1983^.
Past
"Km
Page 142, line 18, strike out "1982" and insert in lieu thereof "1983".
Page 169, line 10, strike out "$100,000,000" and insert in lieu thereof
"$35,000,000''.
Page 170, beginning on line 7, strike out "May 20. 1983" and insert in lieu thereof
"September 30, 1983^
Page 170, line 10, strike out "May 20, 1983" and insert in lieu thereof "September
30 1983"
Page 173. line 1, strike out "May 20, 1983" and insert in lieu thereof "September
Mr. Gonzalez (during the reading). Mr. Chairman, I ask imani-
moaa consent that the amendments be considered as read and
printed in the Record.
The Chairman. Is there objection to the request of the gentle-
man from Texas?
There was no obi^tion.
The Chairman. The gentleman from Texas (Mr. Gonzalez) is rec-
ognized for 30 minutes.
Mr. Gonzalez. Mr. Chairman, I am offering this amendment, to
be perfectly freink, quite reluctantly, not because I believe it pro-
vides an adequate housing program, because at this point it is the
only and best alternative that we have. It sets the authorization
level somewhat below the budget resolution and the assisted hous-
ing levels match exactly the amount provided in the conference
agreement on the HUD appropriations bill which the Oingress has
approved and sent to the President. It was overwhelmingly adopted
by the House and the administration, I understand, has accepted
that conference.
I want to be perfectly clear, the Gonzalez amendment deals with
funding levels. It does not propose any s^ificant changes in the
questions of policy or principle.
The purpose of this amendment is to resolve funding issues, since
these have by and large already been determined by actions of the
Congress.
Additionally, I hope that this amendment clearly demonstrates
good faith.
I am willing to take this step because it is critically important
that we do enact housing authorization legislation this year, and
because it is imperative that we establish ground on which to re-
build the historic bipartisfin commitment to an effective national
housing policy. Two and a half years of r^d Stockman ideology
have frustrated every effort to enact practiosd housing legislation.
yGoot^le
534
My amendment offers practical and reasonable grounds for practi-
cal and reasonable compliance.
I recognize that there are some who would not support any rea-
sonable approach, solely on their own ideological or partisan feel-
ings; but for those who favor practical approaches, approaches that
work, that are responsible and prudent, this amendment is the best
course open.
The amendment reduces assisted housing authorization and the
other elements of H.R. 1 to a point of $660 million below the
budget authority levels provided in the budget resolution.
In terms of assisted housing, it provides budget authority of $9.9
billion.
We estimate this would assist 209,000 families, including 149,000
who are not now receiving any form of housing assistance.
Mr. Vento. Mr. Chairman, will the gentleman yield?
Mr. Gonzalez. I am delighted to yield to the gentleman.
Mr. Vento. Mr. Chairman, let me say, I realize that the gentle-
man has done yeoman service here with the committee in terms of
providing an opportunity to move forward, with his proposed
amendment, because while the authorizing levels provided in Uiis
amendment will not attain the goals that the gentleman and I and
other members of the committee have, certainly from a results ori-
ented tjrpe of solution, there are many other policy areas in hous-
ing in this measure that need to be addressed, other than just a
unanimous consent reauthorization of the housing prc^ams that
has occurred the past few years. In our committee, both the minori-
ty and majority side has done a great deal of work in terms of
trying to rewrite some of the housing laws so that they work
better.
I think we all r^ret that in 1981 and in 1982 reconciliation
really represented the only authorizing work that was permitted or
poBsible at the time; but here I think in this instance we have a
chance to move forward with a true housing authorization measure
for 1984.
I think we should commend the Appropriations Committee for
providing us some latitude, some hard fought latitude, I might say,
to accomplish the goals in terms of providing dollars down the road
for our new programs. We will and we can move forward.
I think it is a good, positive move that we can accomplish. I
think this measure is results oriented. It is not what the gentleman
and I want, Mr. Cheiirman, but I think we can accept it.
I want to commend the gentleman from Texas for his work in
terms of bringing this to us today.
I rise in support of this amendment, reluctantly, for many of the
same reasons outlined by the chairman of the subconnnittee.
Mr. Gonzalez. Mr. Chairman, I thank the distinguished gentle-
man from that great State of Minnesota and to say for the Rbcord
that the gentleman is one of the leading contributors to the forging
of housing policy and has been since he has come to the Congress. I
am deeply grateful for the contributions the gentleman has made,
not only to this bill, but other housing legislation, and for his kind
words.
Let me just sum up by saying that this amendment brings into
total reconciliation with the appropriation bill on housing and
yGoot^le
below the budget allocatione, the budget obligations and authority
Eind, therefore, removes any possibility of the big, big accusation
that was raised about this being a budget-busting attempt.
On top of that, it brii^s about a reconciliation in language on
some of our baaic programs, section 8 programs, that have long
been overdue.
Mr. Garcia. Mr. Chairman, will the gentleman yield?
Mr. Gonzalez. I yield to the gentleman from New York.
(Mr. Garcia asked end was given permission to revise and extend
his remarks.)
Mr. Garcia. Mr. Chairman, I thank the gentleman for yielding.
Just let me say to the gentleman, as a representative of a city
with an 8-year waiting list for housing assistance, I rise in strong
support, obviously, of H.R. 1, the Housing and Urban-Rural Recov-
ery Act, and also for the responsible substitute amendment offered
by the gentlenuin.
D 1600
So I will be supporting that today and helping in whatever way I
can on the floor to see we can get this housing legislation through.
Over the last few years, we hiave made some significant progress
in rebuilding areas like the Bronx. The efforts of community people
such as those in my district have been possible with the help of
such urban programs eis neighborhood development grants, the
community development block grant, and the action grant pro-
However, our efforts have been slowed by the total lack of any
commitment to housing programs as espoused by this administra-
tion. Indeed, we are now in a period — the first in over 40 years —
where there is no active production program. This is why title III
of this bill is so important, it offers an opportunity to once again
produce new rental housing units.
H.R. 1, supported by anyone with a commitment to the restora-
tion of a Federal housing policy, recognizes the overwhelming need
of our Nation's citizens. Though the summer months are hiding the
tragedy of America's homeless, H.R. 1 begins to address the prob-
lem with a homeless assistance program. The act also recognizes,
thanks to the intensive series of hearings held on housing by the
Banking Committee, that something needs to be done — and soon.
A 1981 GAO study indicated that over 18 million families in the
United States need some form of housing assistance, 6 million live
in substandard housing, 10 million spend in excess of 25 percent of
their income for housing and that over 2 million are living in over-
crowded housing.
This bill also seeks to preserve our commitment to the Nation's
public housing stock by offering modernization moneys that not
only will seek to preserve our investment and improve the living
conditions of the poor, it will also offer a significant boost to local
job opportunities.
Community development funds are still too low in this l^isla-
tion. Over the last few years, inflation and the reduction of other
like prcKrams have placed some serious limitations on the pro-
gram, yfiih the increased needs of our Nation's cities and with the
yGoot^le
536
increased amount of entitlement communities, the CDBG program
should be expanded. However, the budget reeolution has limited
our flexibility in this regard.
The bill also goes a long way in reversing some of the uncon-
scionable policy changes of the 1981 Reagan budget. In particular,
it rolls back the percentage a low income tenant must pay for rent
to 25 percent from the 30 percent level mandated by the 1981 act.
According to the just released 1981 Annual Housing Survey, the
average homeowner with a mortgage, spent 19 percent of house-
hold income for shelter, including utilities and maintenance. How
much more should low income tenants pay? Anyone who has spent
some time with elderly or low-income families living on fixed in-
comes is certainly aware of the burden placed on them by ever in-
creasing rents.
Other policy changes require that a majority of the CDBG funds
be spent in assistance of low- and moderate-income families. Why
this is opposed by the same administration which advocates that
the housing assistance funds only go to those below 50 percent of
the median income, baffles me. It seems durii^ such a time of lim-
ited resources, we need to target these funds as well.
H.R. 1, with the Gonzalez amendment, is truly a modest bill. I
wish we could offer as much in housing assistance to the poor as
we do to America's middle class through such tax deductions as
those allowed for mortgage interest costs. I urge my colleagues to
support the Gonzalez amendment and H.R. 1.
Mr. Gonzalez. I thank my esteemed colleague from New York. I
also wish to compliment him for his tremendous aid and help on
this legislation.
I would say further I do not want to hold out any fzdse promises.
This bill is a survival bill but at least it is a realistic attempt to
answer responsibly the present situation as we confront it.
Mr. Chairman, I yield back the balance of my time.
Mr, Wyue, Mr. Chairman, I rise in opposition to the amendment.
The Chairman. The gentleman from Ohio (Mr. Wylie) is recog-
nized for 30 minutes.
Mr. Wyue. Mr. Chairmem, I yield myself such time as I may con-
sume.
(Mr. Wylie asked and was given permiasion to revise and extend
his remarks.)
Mr. Wylie. Mr. Chairman, I am constrained to oppose the Gonza-
lez amendment. I do not believe it addresses all the mtoor problems
with H.R. 1, but it does represent a big step in the right direction.
It reduces budget authority in H.R. 1 from $25.8 billion to $19.4 bil-
lion.
If this amendment had been proffered during committee delib-
erations on this bill, it is quite possible that a bipartisan working
relationship could have been developed and H.R. 1 might have ac-
tuEilly passed the House prior to the consideration of the appropria-
tions bill.
Certainly, we all — Republicans and Democrats — have a stake in
seeing to it that the orderly processes of the House are maintained
and it should have been realized by now that that means develop-
ment of bipartisan housing hills.
yGoot^le
637
As I stated earlier, I complement this for this amendment. The
bud^t authority it represents is consistent with the total for all
HUD programs that weis included in the substitute I filed in the
Record yesterday. It is still $1.5 billion over in rural housing.
However, I must take issue with how the HUD funds are to be
allocated. Of particular concern is the frittering away of over $1
billion in valuable resources on two housing programs which are
not targeted on the neediest families in our country. It does the
poor a great disservice to set aside more than $1 out of every $10 in
assisted housing funds to help families other than the truly low
income.
Specifically, I am objecting to the diversion of $900 million to a
multifamily production program designed more to benefit develop-
ers and syndicators than the families in need of decent s^e and
sanitary housing. Who is pushing for this program? It certainly is
not the poor. Iney are only assured of getting 20 percent of the
total units assisted and even that will require additional subsidies
from section 8. Oddly enough, an effort to require a higher percent-
age of assistance to go for lower income families was drastically
watered down in committee — in stark contrast to the 51-percent
test imposed in this bill in the CDBG program.
I fdso object to the diversion of $167 million to the 235 homeown-
ership program. When we have such limited resources, we should
not be channeling even minor amounts into a program designed to
subsidize the purchase of a home for some precious few moderate
income and above families. This allocation resembles a private bill
which will primarily benefit limited areas of the country which
have made extensive use of the 235 program in the past, virtually
all funds would go to Alabama.
Those are my major objections to the Gonzalez amendment.
There are, of course, numerous objections to H.R. 1 which the
amendment does not address, however, and I will not go into detail
on those items.
The Gonzalez amendment may make it possible to go to a confer-
ence with the other body, something that could possibly bear fruit.
Without these changes, even a conference was out of the question.
Mr. Chairman, I yield back the balance of my time.
The Chairman. Are there any amendments to the pending
amendments?
PARUAMENTARY INQUIRY
Mr. Wylie. Mr. Chairman, I have a parliamentary inquiry.
The CHAiRtfAN. The gentleman will state his parliamentary in-
quiry.
Mr. Wyub. Mr. Chairmem, are we going through this title by
title now?
The Chairman. First pursuant to the rule, will be the vote on
the Gonzalez amendments en bloc.
Are there any amendments to the amendments?
If not, the question is on the amendments offered by the gentle-
man from Texas (Mr. Gonzalez).
The amendments were agreed to.
The Chairman. The Clerk will designate the table of contents.
yGoot^le
The table of contents reads as follows:
TABLE OP COmSNIfi
Sec. I. Short tiU* mj ubli attonMalM.
Sac. 2- Finding tod purpoH-
TTTLE I-COMMUMTY AND NEIGHBORHOOD DEVELOPMENT AND CONSEBVAIVHI
Sac. tot. Conun unity development
Sec. 102- Urten drW '— -
Sh;. 103. Neichborl*
. 106. Neighborhood R«mneti»D
TITLE n— ASSISTED HOUSING
pulST
9k. iOT.LiraltMkn on duplicMiw public hou
Set 210. LimiHtliiii oo Unuit renul intiiMEi multuu (tou
Sac. 211. raHilatimi of puWic bouiiiic epaixtina wbaidiea.
Sac. 212. iBcooiaaliclUlity.
Sec 218, ConditionaafdaBioliatilDa, lalling. or otherwiae diipi
Sac 214. AsHHiiita ncownd br public houciiuf ihw-im.
Sac. MB. Co* lit
c. 21T. Contfdantion c4 utilily paymenl* :
oeiflbborhood it
.. KMwirti uuniv DA ■ j-»-.
i. niKiclK
Put B— Onm Amano Housho Picxiu
Sec. ai. npiiiaMiiflaaalatinrn for troubled multifamily houaiBg pR^ecta.
Sec. 22S. HouaiBa Ha the elderly and haodicappad
Sec. 224. Conaolidatioci of houaing —latanea Rir elderly and handicapped b
Sec 221. Coa(iaate aervicee.
Sec. 226. Oiand boualDi for tht aldarly.
"— "^ Rent lumleaient propram.
TITLE m-HULTIFAMILY HOUSING PRODUCTION FttOORAH
Sac. 807. Terna and conditioDa of
Sec. 311. Authorimtion of approprutiont.
TITLE IV— RURAL HOUSING
Sec. 402. Rural Hoifeaill| Iriauranee Pund aiDaDdnienta.
■1 Houaini li
anlGODtfJhit
MC 4V4. Term of aection buz Joana.
Set 406. Section SOS intanet crediu.
Sac 406. Uae of fee inapectora and appraiaen.
Sec 407. DtMmbiatlon ef need fur im^ng und
8ac40s!DaflnlUaDefi ~ "*"*
Sec 410, Shuwl hoDBi
Sec 411
Sac. 412. ,,— .
Sec 413, Ouarantead Hu deiznnatration
TITLE V-PROORAM AHBNDHBNTS AND RXTENnONS
Paki a— Fbuu. KovBiHa AmnHiaisAixw Moncuai iHnnAMa PaooiAMi
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Sac. sot. Mortnca in
Sk. GIO. Indud BUI
. ^ ^™ bf FNMA mi PHLMC
Purchui odBODd iiwrtBi«»V FNHA wid FHLMC
FHUK ■uthori^ to parduK State igencr innmd mortgage loan
S26. FadHal NaUonal lloRgage AwiciatioD.
Wl. AiMtaritJ <lf 7HLUC te piuchaH loua on DUDuhdiimd humeB.
t FNHA and FHLMC.
The Chairman. Are there any amendments to the table of con-
tents?
If not, the Clerk will designate section 2.
Section 2 reads as follows:
Sec. 2. (a) The Congress finds and declares that—
(1) severe economic conditions have adversely afTected the cities, towns, and
smaller communities of the Nation, and the primary objective of the community
development block grant program is to principally benefit persons of low and
moderate income;
(2) for nearly half a century the Federal Government has played a meaning-
fill role in providing shelter for families of low and moderate incomes and in
aawsting the housing industry to make its essential contribution to the general
welfare of this Nation and its people; and
(3) a reaffirmation of this Federal role is necessary in order to continue assist-
ing the housing and related industries, assisting families by providing opportu-
nities for the purchase of homes, and providing decent and affordable rental
housing opportunities.
(b) The purpoee of this Act, therefore, is to reaffirm the role carried out by the
Federal Government toward achieving the national goal of decent, affordable hous-
ing and a suitable living environment for every American family by establishing
and carrying out housing, community development, and related programs for the
past 60 yaara, and to theretw assist the housing industry and urban and rural com-
miinJHwi in n^'lting their full contribution to the development of the economic well-
bong of conunimitiea and a national economy with maximum employment and pro-
The Chairican. Are there any amendments to section 2?
If not, the Clerk will designate title I.
Title I reads as follows:
37-922 O - 84 -
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COMMUNITY DEVELOPMBNT
Sec. 101. (a) The second sentence of section 101(c) of the Housing and Community
Development Act of 1974 is amended by iiwerting after the first comma the follow-
ing: "not less than 51 percent of the Federal financial assistance provided in this
title, other than under or for section 119, ahall be used for the support of activities
that benefit persons of low and moderate income, and".
(bXl) Section 102(aK4) of such Act is amended by striking out "fifty thousand or
until September 30, 1983, whichever is later" and inserting in lieu thereof "45,000".
(2) Section lD2(aX6) of such Act is amended—
(A] by striking out "through September 30, 1983, and shall not be subject to
the provisions of section 102(d) in through such date" and inserting in lieu
thereof "until the decennial census indicates that the population of such county
is less than 180,000": and
(B) by adding at the end thereof the following new sentence: "Notwithstand-
ing the combined population amount set forth in clause (B) of the first sentence,
a county shall also qualify as an urban county for purposes of assistance under
section 106 if such county (A) complies with ^1 other requirements set forth in
the first sentence; (B) has a combined population between 190,000 and 199,999,
inclusive; (C) had a population growth rate of not less than 25 percent during
the most recent 10-vear period measured by applicable censuses; and (D) has nt^
previously qualified as an urban county under the first sentence.",
(3) Section 102(b) of such Act is amended by adding at the end thereof the follow-
ing new paragraph:
"(20) I^e terms 'persons of low and moderate income' and 'low- and moder-
ate-income persons' mean families whose incomes do not exceed 80 percent of
the median income of the area involved, as determined by the Secretary with
adjustments for smaller and larger families. Such terms include families con-
sisting of one individual. The area Involved shall be considered to be (A) the
metropolitan city or urban county involved, in the case of a grant to any such
city or county under section 1060>); and (B) the portions of the State involved
that are nonentitlement areas, in the case of a grant to any State or any unit of
general local government in a nonentitlement area under section 106(d).".
(c) Section 102(b) of such Act is amended by adding at the end thereof the foUow-
ing new sentence: "Notwithstanding any other provision of this title, any unit of
general local government qualifying as a metropolitan city described in lubMCticm
(aX4XA) for purposes of assistance under section 106 for fiscal year 1983 shall contin-
ue to qualify as such a city for purposes of assistance under such section for fiscal
year 1984 and each succeeding fiscal year, if such city utilizes not less than 75 per-
cent of the assistance received under such section for fiscal year 1982 and each suc-
ceeding fiscal year, respectively, in areas or on projects directly benefiting persona
of low and moderate income,".
(d) Section 103 of such Act ie amended by inserting the following after "1983": ",
and not to exceed $4,500,000,000 for each of the fiscal years 1984, 1986, and 1986".
(e) Subsections (a) and (b) of section 104 of such Act are amended to read as fol-
"(aXD No grant may be made by the Secretary to any metropolitan city or uriian
county under section 106(b) unless the applicant involved—
"(A) certifies that it has developed a 3-year community development plan that
identifies community development and housing needs, includes 8 comprehensive
strategy for meeting such needs, and specifies both short- and long-term com-
munity development objectives that have been developed in accordance with the
primary objective and requirements of this title;
"(B) certifies that it has formulated a program that (i) include* the activities
to be undertaken, using funds available under section 106, to meet its communi-
ty development needs and objectives, together with the estimated coats and gat-
eral location of such activities end the estimated extent to which sudi activities
will benefit persons of low and moderate income; (ii) indicatss nuownxm other
than those provided under this title that are expected to be made avallabla
toward meeting its identified needs, activities, and objectives, including s«iivi-
ties designed to revitalize neighborhoods for the benefit of persons of Tow and
moderate income; and (iii) specifte* a plan to minimize direct and indirect dis-
placement of persons as a result of activities assisted under this title and to
assist persons actually displaced as a result of such activities, whicb plan shall
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541
take into account particularly the eflect of such activities on the involuntary
din>Iacemeat of petsone of low and moderate income;
''(O except ae provided in section 107(dK2), certifies that the proKram wilt be
conducted and administered in conformity with Public Law 88-3^ and Public
Law 90-284, and that the appUcant will affirmatively further fair housing op-
portunities;
"(D) certifies that (i) prior to submission of its application, it has prepared and
followed a written citizen participation plan that provides citizens an opportuni-
ty to participate in the development of the application, encouraxea the submis-
sion of views and proposals, particularly by residents of blighted neighborhoods
and persons of low and moderate income, provides for timely responses to the
proposals submitted, and schedules hearings at times and locations that permit
broad participation; <ii) prior to submiaaion of its application, it has provided
citizens with adequate information concerning the amount of funds available
for proposed community development activities and housing activities, the
range of activities that may be undertaken, and other important requirements;
(iiil prior to submission of its application, it has held public hearings to obtain
the views of citizens on community development and housing needs; (iv) it will
provide citizens with reasonable access to records regarding the use of funds in
suflident time for citizens to submit comments concerning the community de-
velopment performance of the applicant; and (v) it will provide citizens with
reasonable notice of, and opportunity to comment on, any substantial change
proposed to bo made in the use of funds received under section 106 from one
eligible activity to another; except that nothing in this paragraph may be con-
strued to restrict the responsibility and authority of the applicant for the devel-
opment of the application and the execution of its community development pro-
gram;
"(E) certifies that it will not attempt to recover any capital costs of public im-
provements assisted in whole or part under section 106 by charging any fee or
Bseessing any amount against properties owned by persons of low and moderate
income, including any fee charged or assessment made as a condition of obtain-
ing access to such public improvements, unless funds received under section 106
are used to pay the proportion of such fee or assessment that relates to the cap-
ital costs of such piAilic improvements that are fmanced from revenue sources
other than under this title; and
"(F) certifies that it will comply with the other provisions of this title and
other applicable laws.
"(2) No grant may be made by the Secretary to any State under section 106(d)
unless the applicant involved —
"(A) compUee with the provisions of paragraph (1), except subparagraph (B) of
such paragraph;
"(B) certifies that it has consulted with the units of general local government
in nonentitlement areas located in such State in developing its community de-
velopment plan and its procedure for the allocation of funds received under sec-
tion 106; and
"(O certifies that It has developed a method by which applications for assist-
ance from units of general local government in nonentitlement areas will be se-
lected, which shall (i) include a competitive selection process; and (ii) provide
that an application for assistance from a unit of generfd local government may
not be denied on the basis of the particular eligible activity selected by such
unit of general local government to meet its community development needs.
"(3) No amount may be distributed by any State under section lD6{d), or 1^ the
Secretary under section 106(dX2XB), to any unit of general local government located
in a nonentitlement area unless the applicant involved—
"(A) coniplies with the provisions of paragraph (1), except subparagraphs (A),
(BXi). and Kii) of such paragraph; and
"(B) certifies that it has developed a statement that (i) identifies its communi-
ty development and housing needs; (ii) includes a strategy for meeting such
needs in accordance with the primary objective and requirements of this title;
and (iii) includes the activities to be undertaken, using funds available under
section 106, to meet its community development needs and objectives, together
with the estimated costs and general location of such activities and the estimat-
ed extent to which such activities will benefit persons of low and moderate
yGoot^le
542
period may be designated for uiupeciiied local ofAion acttritm tbtf aie atigiUe for
aseistance under section 105(a|.
"(2) Any grant ot distributimi under aection 106 shall be made only on conditiDii
that the a^^lkant involved certify to the satiafBCtion at the Secrctair or tbe Slate,
as the case may be, that its community development prngram has beoi deraloiMd so
as to give maximum teasible priority to activities that will benefit persona of km
and moderate income or aid in the prevention or elimination of alums or Ui^t, and
that not leas than 51 percent of the assistance received under such sectioD shall be
used for the support of activities that benefit persons trf low and moderate incofne.
An application may also describe activities that the applicant certifka are ^rtagnr^
to meet other community development needs that have arisen during the preceding
IS-month p(.riod and have a particular urgency because existing ccwditiaas poae a
serious and immediate threat to the health or welfare of the communis, and other
financial resources are not available.".
(f) Section 104(cNlXBMi) of such Act is amended by insertiDg "vacant and aban-
doned dwelling units and" after "including".
(g) Section 104(d) of such Act is amended to read as follows;
'^dXlNAl Bach grantee under subsection <b). Idl. or ldM2N6) of sectiim 106 shall
submit to the Secretary, and each unit of general local government that is located
in a nonentitleraent area and is distributed amounts by a State under section
I0G(dX2) shall submit to such State, a performance report concerning the activities
carried out pursuant to this title. Such performance report shall include an aaseas-
ment by such grantee or unit of general local government of—
"(i) the relationship of such activities to the primary objective and specific ob-
jectives of this title;
"<ii) the relationship of such activities to the certifications required in subsec-
tions (a) and (b);
"(iii) the relationship of such activities to the needs and objectives identified
in the statement developed by it under subsection (a>;
"(iv) in the case of any unit of general local government required to submit a
housing assistance plan under subsection (cXll, the actions taken by it toward
achievement of the goals established in such plan; and
"(v) in the case of any unit of general local government receiving amounts
under any subsection of section 106, the projected and actual benefits to persons
of low and moderate income as a result of such activities, described on a project-
by-project basis.
"(B) Such performance report shall include any citizen comments sulnnitted pur-
suant to subsection (aXlXD), and the Secretary shall consider such comments, to-
gether with the views of other citizens and such other information as may be avail-
able, in carrying out the provisions of this subsection.
"(Cl Such performance report shall be submitted annually, on a date determined
by the Secretary to be appropriate.
"(D) In order to ensure a uniform review of the various programs conducted by
different recipients of assistance in accordance with this title, the Secretary shall
provide that such performance reports shall be made on a standard form that is pre-
scribed by the Secretary and that requires information sufTicient to enable the Sec-
retary and the States to conduct adequate reviews and audits under this subsection.
"(2) The Secretary shall, not lees than annually, make such reviews and audits as
may be necessary or appropriate to determine—
"(A) in the case of any grant under section 106(b) or section 106(dX2XB),
whether the grantee involved has —
"(i) carried out its activities and, where applicable, its housing assistance
plan in a timely manner;
"(ii) carried out such activities and its certifications made under this sec-
tion in accordance with the priman' objective and requirements of this title
and with other applicable laws; and
"(iii) a continuing capacity to carry out such activities in a timely
"(B) in the case of any grant to a Stat« under section 106(d), whether such
Stat* has—
"<!) distributed funds to units of general local government in a timely
manner and in conformance with the method of distribution described in its
statement under subsection (a);
"(ill carried out its certifications made under subsections (a) and (b) in
compliance with the primary objective and requirements erf' this title and
with other applicable laws;
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"(iii) required each unit of general local government in a nonentitlement
area receiving amounts from it under section 106(dX2) to comply with the
certifications made by such unit of general local government under this sec-
"(iv) made such reviews and audits of each such unit of general local gov-
ernment as may be necessary or appropriate to determine whether it has
satisfied the applicable performance criteria described in subparagraph (A).
"(3) The Secretary ^iall make such reviews and audits as may be necesBSJ? Or
appropriate to determine if units of general local government in nonentitlement
areas receiving amounts from States under section 106(dX2) have satisfied the appli-
cable performance criteria described in paragraph (2)(A).
"(4) The Secretary shall require each State and unit of general local government
receiving assistance under section 106 to maintain euch records and other informa-
tion as may be necessary to enable the Secretory and the Stotes to conduct adequate
reviews and audits under this subsection, particularly with respect to the extent to
which the activities carried out with such assistance benefit persons of low and mod-
"(5) The Secretary may make appropriate adjustments in the amount of the
annual grants made under section 106, in accordance with the findings made by the
Secretary under this subsection. With respect to asaiatance made available to units
of general local government under section 106(d), the Secretory may adjust, reduce,
or withdraw such assistance, or toke other action as may be appropriate in accord-
ance with the reviews and audits of the Secretary under this subsection, except that
funds already expended on eligible activities under this title shall not be recaptured
or deducted from future assistance to auch units of general local government. .
(h) Section 104 of such Act is amended by adding the following new subsections at
the end thereof:
"(iXl) Any unit of general local government receiving assistance under section 106
may, at its request, receive funds in one payment, in an amount that does not
exceed the amount such unit of general local government determines is net^ssary to
help finance, make feasible, or accelerate implementetion of a specific project that —
"(A) is included in its moet recent statement of activities submitted under
subsection (a);
"(B) is eligible under section 105(aX14); and
"(C) will require actual expenditures for an eligible activity within 2 years.
"(2) The Secretary shall promptly make any payment requested in accordance
with paragraph {!) following receipt of such request. Such request shall be accompa-
nied by a statement by such unit of general local government that describes the rea-
sons why such payment is necessary,
"(3) Any interest accrued on a payment received by a unit of general local govern-
ment under this subeection shall be expended on the project Tor which such pay-
ment is requested.
"(j) Notwithstanding any other provision of law, any unit of general local govern-
ment may retain any prt^am income that is realized from any community develop-
ment grant made by the Secretary or by a State under section 106 if such income
was raized after the initial disbursement of the grant funds by such unit of gener-
al local government and such unit has agreed to utilize the program income for eli-
gible community development activities. A State may require as a condition of a
grant made by such State under section 106 that a unit of general local government
shall pay to such Stote any such income to be used by such Stote to fund additional
eligible community development activities, except that such Stote shall waive such
condition to the extent such income is applied to continue the activity from which
such income was derived,
"(k) Notwithstanding any other provision of law, any amount made available to
any unit of general local government under this title by the Secretary or by a State
shall be considered, for the purposes of the Uniform Relocation Assistance and Real
Property Acquisition Policies Act of 1970, to be Federal fmancial assistance and to
be a grant that requires the approval of the head of a Federal agency. Any person
diaplaced as a result of an activity that is carried out with assistance provided
under this title shall be entitled to receive assistance from such unit of general local
government to the same extent as the assistance provided under the Uniform Relo-
cation Assistance and Real Property Acquisition Policies Act of 1970, and such as-
sistance shall be provided by such unit of general local government from amounte
received under this title. Persons receiving such assistance shall submit a statement
detailing actual expenses incurred as a result of such displacement, which informa-
tion together with a summary of the actual assistance provided such person pursu-
ant to this section shall be kept in a form specified by the Secretary in order that
yGoot^le
544
the Secretory may conduct a review to determine the reasonablenese and appropri-
ateness of such assistance.".
UXIXA) Section 105(aK8) of such Act is amended—
<i) by striking out "10" and inserting in lieu thereof "20"; and
(lit by inserting before the semicolon at the end thereof the following: "unless
such unit of general local government used more then 20 percent of the assist-
ance received under this title in any of the fiscal years 1981, 1982, or 1983 for
such activities, in which case such unit of general local government may use
not more than the highest percentage or highest amount of such assistance used
for such activities in any of such ftscal years, whichever method of calculation
yields the higher amount".
(B) Section 303(bl of the Housing and Community Development Amendments of
1981 is amended by striking out ", 1983, and 1984" and inserting in lieu thereof
"and 1983".
(2) Section 105<aX15) of the Housing and Community Development Act of 1974 is
amended by inserting the following before the semicolon at the end thereof: ", in-
cluding grants to neighborhood-based nonprofit organizations, or other private or
public nonprofit organizations, for the purpose of assisting, as part of neighborhood
revitalization or other community development, the development of shared housing
opportunities in which elderly families (as defmed in section 3(bK3} of the United
States Housing Act of 1937) benefit as a result of living in a dwelling in which the
facilities are shared with others in a manner that effectively and efncientlv meets
the housing needs of the residents and thereby reduces their cost of liousing' .
(j) Section 105 of such Act is amended by adding at the end thereof the following
new subsections:
"(cKl) In any case in which an assisted activity described in paragraph (14) or (IT)
of subsection (a) is identiHed as principally benefiting persons of low and moderate
income, such activity shall —
"(A) be carried out in a neighborhood consisting predominately of persons of
low and moderate income and provide essential services for such persons; or
"(B) involve facilities designed for use predominately by persons of low and
moderate income; or
"(C) involve employment of persons, a majority of whom are persons of low
and moderate income.
"(2) In any case in which an assisted activity described in subsection (a) is de-
signed to serve an area generally and is clearly designed to meet identifled needs of
persons of low and moderate income in such area, such activity shall be considered
to benefit persons of low and moderate income in proportion to their share of the
population of such area.
(3) Any assisted activity under this title that involves the acquisition or rehabili-
tation of property to provide housing shall be considered to benefit persons of low
and moderate income only to the extent such housing will, upon completion, tie oc-
cupied by such persons.
"(d) No assistance may be provided under this title for any project intended to
relocate any industrial or commercial plant or facility from one area to another,
unless the Secretary finds that such relocation does not aignificantty and adveraely
affect the unemployment or economic base of the area from which such plant or
facility is to be relocated.",
(k) Section 106 of such Act is amended—
(II by redesignating subsections (e) and (0 as subsections If) and (g), respective-
ly; and
12! by inserting after subsection (d) the following new subsection:
"(eXl) The Secretary is authorized to make grants for any fiscal year to any State
or unit of general local government under this subsection if the annual rate of un-
employment in the Nation during the second and third quarters of the preceding
fisud year is more than 7 percent.
"(21 Grants under this sulteection siiali be allocated and distributed in accordance
with the provisions of this section, except that a unit of general local government
shall be eligible to receive amounts under this subsection only if the annual rate of
unemployment in such unit of general local government during the second and
third quarters of the preceding Fiscal year is more than 9 percent.
"(31 For purposes of carrying out the provisions of this subsection, the Secretary
shall utilize information made available by the Secretary of Labor with reelect to
rates of unemplo3mient. If such information is unavailable for any recipient, the
Secretary shall utilize the best available information with respect to rates of unem-
ployment, as determined by the Secretary.
yGoot^le
M6
"<4) Of the total amount approved in appropriation Acts under section 103 for
each of the fiscal yean I9M, 1985. and 1986 that exceeds $3,500,000,000 for grants
under this section, not more than $260,000,000 shall be available for each such fiscal
year to carry out the provisions of this subsection.".
(IXUThe iirBt sentence of section 107(a) of such Act is amended to read as follows:
"Of the total amount approved in appropriation Acts under section 103 for each of
the fiscal years 1984, 1985. and 1986, not more than $65,000,000 for each such fiscal
year may be set aside in a special discretionary fund for grants under subsection
(b).".
(2) Section 10T(b) of such Act is amended—
(A) by strildng out "and" at the end of paragraph (3);
(B) by striking out ". The" in paragraph (4) and inserting in lieu thereof ";
and the";
(O bv striking out the period at the end of paragraph (4) and inserting in lieu
thereof"; and"; and
(D) by adding at the end thereof the following new paragraph:
"(5) to States and units of general local government for the purpose of allocat-
ing amounts to any such State or unit of general local government that is deter-
mined by the Secretary to have received insutTicient amounts under section 106
as a result of a miscalculation of its share of funds under such section.".
(3) Section 107 of such Act is amended —
(A) by redesignating subsections (c) and (d) as subsections (d) and (e), respec-
tively; and
(B) by inserting after subsection (b) the following new subsection:
"(c) Of the amount set aside for use under subsection (b) in any fiscal year, the
Secretary shall make available, (1) not less than $2,000,000 in the form of grants to
institutions of higher education, either directly or through areawide planning orga-
nizations or States, for the purpose of continuing programs in effect during fiscal
year 1983 for providing assistance to economically disadvantaged and minority stu-
dents who participate in community development work study pri^ams and are en-
rolled in full-time graduate or undergraduate prt^ama in community and economic
development, community planning, or community management. Such grants may be
made only to institutions of higher education receiving grants for such purpose
under section (b) for fiscal year 1983, and may only be provided to such institutions
in the same manner as such grants are provided during such fiscal year; and (2) not
to exceed $2,600,000 for purposes of grants made under subsection CbXll-".
(mXl) Section 108(a) of such Act is amended by striking out the last sentence and
inserting in lieu thereof the following: "Notwithstanding any other provision of law
and subject only to the absence of qualified applicants, to the authority provided in
this section, and to any funding limitation approved in appropriation Ads, the Sec-
retary shall enter into commitments during fiscal year 1984 to guarantee notes and
obligations under this section with an aggregate principal amount of $225,000,000.".
(2) Section 108 of such Act is araendedby adding at the end thereof the following
new subeection:
"0) No note or other obligation may be guaranteed under this section unless the
issuer certifies to the Secretary that—
"(1) not less than 51 percent of the amounts received through the issuance of
such note or other obligation will be used for the support of activities that bene-
fit persons of low and moderate income; and
(2) it will not attempt to recover any capital costs of public improvements
assisted in whole or part with amounts received through the issuance of such
note or other obligation by charging any fee or assessing any amount against
properties owned by persons of low and moderate income, including any fee
chaj'ged or assessment made as a condition of obtaining access to such public
improvements, unless funds received under section 106 or amounts received
through the issuance of notes or other obligations under this section are used to
pay the proportion of such fee or assessment that relates to the capital costs of
such public improvements that are financed from revenue sources other than
under this title.",
(n) The amendments made by this section shall apply only with respect to funds
appropriated for fiscal year 1984 and thereafter.
URBAN DEVELOPMENT ACTION GRANTS
Sk. 102. (a) Section 119(a) of the Housing and Community Development Act of
1974 is amended by adding the following new sentence at the end thereof: "Of the
total amount approved in appropriation Acts under section 103 for each of the fiscal
yGoot^le
546
years 1984. 1986, and 1986, not more than $440,000,000 shall be made available for
each of the fiscal years 1984, 1985. and 1986 for grants under this section.".
(bXl) Section 119(bX2XAXi) of such Act is amended by inserting ", whichever is
less" before the semicolon at the end thereof.
(2) Section 119(bX2XB} of sucb Act is amended—
(A) by inserting after "area" the following: ", or, in the case of an urban
county, contains an identiriable unincorporated community that contains an
(B) in clause <i). by inserting "or identifiable unincorporated community"
after "city"; and
(C) in clause <ii). by inserting "or urban county" after "city".
(c) Section 119(cX3] of such Act is amended—
(1) by striking out ", and (B)" and inserting in lieu thereof "; (B)"; and
(2) by inserting the following after "carried out" in clause (B): "; and (O has
made available the analysis described in clause (B) to any neighborhDod-baaed
nonprofit organization in the neighborhood in which the proposed activitieB are
to be carried out".
(d) Section 119(d) of such Act is amended by adding at the end therectf the follow-
ing new paragraph:
(3) In establishing selection criteria under paragraphs (1) and (2), the Secretary
shall provide that, in considering the extent to which a great will stimulate econom-
ic recovery by leveraging private investment, the leveraging ratio may be as low as
2 dollars of private investment for each dollar of grants provided under this section
to any city that has a population of less than 50.000 peisons and is not a central ci^
of a metropolitan statistical area, if such amounts are to be used for prcgects involv-
ing industrial plants or facilities or providing housing for persons of low and moder-
ate income. Such reduced leveraging ratio shall apply only with respect to funds ap-
propriated for fiscal year 1984.".
(e) Section 119(i) of such Act is amended by adding at the end thereof the foUow-
ing new sentences: "The Secretary shall provide the following technical a ' '
to any such city that the Secretary determines will benefit from such Basis
provision of information with respect to the availability of funds under this eection;
(2) evaluation of the needs of sudi city; and 13) development of a program to assist
such city in meeting such needs with funds under this section. The Secretary shall
make available for such assistance not less than $3,000,000 in each of tfae fiscal
years 1984, 1985, and 1986 from the fiinde set aside under this suheection.".
(F) Section 119 of such Act is amended by adding the following new eubeections at
the end thereof:
"(p) The Secretary shall allocate the amounts available for grants under this sec-
tion in a manner that achieves a reasonable balance amons programs that are de-
signed primarily (1) to restore seriously deteriorated neighborhoods; (2) to reclaim
for industrial purposes underutUized real property; and (3) to renew commercial em-
ployment centers.
"(q) The Secretary may not deny assistance under this section on the basis that
such assistance is to be used solely for the provision of housing.
"(rXl) The Secretary shall, to Uie estent provided in appropriation Acta, guaran-
tee (in accordance with the provisions of this subsection) the repayment of loans
made to neighborhood-based nonprofit organizations.
"(2) Such guarantees may be made only if—
"(A) the organization is based in a neighborhood in which activities financed
with funds from a grant under this section are being or will be carried out;
"(B) the funds from the loan are to be used to finance neighborhood revital-
ization activities that are designed to meet housing and other related needs of
persons of low and moderate income in the neighborhood and that have been
developed vrith the approval of the city or uri>an county receiving the grant de-
scribed in subparagraph (A);
"(O the amount guaranteed at any time does not exceed 90 percent of the
outstanding unpaid principal balance of the loan;
"(D) the amount of the loan does not exceed 95 percent of the coet of the
neighborhood revital ization activities financed by the loan;
"(E) the organization meets requirements est^lished by the SecretarT;
"(F) there is reasonable assurance of repayment of the loan;
"(G) the guarantee is requested by a financial institution in the manner and
form required by the Secretary;
"(H) we loan is not available fioia financial institutaons without the guaran-
yGoot^le
547
"(I) tbe guaranUe meets terms and conditions prescribed by the Secretary
with reapect to tbe interest rate and amartizatian of the loan, security required
for the loan, proceedings in the event of default, and other matters defined by
the Secretary.
"(3) In making available guaranteee under this Bubeection, the Secretsi^ Bhsll
give a priority to assisting neighborhood revitalization activities designed pnmarily
to mitigate the displacement M persona of low and moderate income that is likely to
occur aa a result of commercial or other activities in the neighborhood.
"(4) The aggregate amount of loans that may be guaranteed under this subsection
durii\g fiscal year 1984 ma^ not exceed an amount equal to 10 percent of the
amount approved in appropriation Acta for urban development action grants during
such fiscal year.
"(5) The full faith and credit of the United States is pledged to the payment of all
guarantees made under this subsection. Any such guarantee made by the Secretary
shall be conclusive evidence of the eligibility of the loan for such guarantee, and the
validity of any such guarantee so niade shall be incontestable in the hands of a
holder of the guaranteed loan.
"(6) With respect to any proceedings conducted in connection with the default of
any loan guaranteed under this subsection, the Secretary shall have the authority
described m paragraphs <3) through (8) of section 402(c) of the Housing Act of 1950..
NDGHBORHOOD DRVBLOFUENT GRANTS
"Sec. 122. (a) The Secretai^ of Housing and Urban Development shall, to the
extent approved in appropriation Acts, make and contract to make grants to eligible
neighborhood development organizations for purposes of assisting such organiza-
tions in carrying out eligible neighborhood development activities.
"(bXl) The grants to be made to any eligible neighborhood development organiza-
tion shall be determined on the basis of amounts received by such organization from
individuals, businesses, and other organizations, and shall not be lees than than 3
Federal dollaim for every dollar so received or more than 10 Federal dollars for
every dollar so received.
"(2) In establishing the ratio of assistance for any eligible neighborhood develop-
ment or^aniiation under paragraph (1), the Secretary shall establish the highest
such ratios for neighborhoods having the the greatest degree of economic distress in
relation to the number of households in such neighborhoods.
"(31 The Secretary may not provide more tlian $50,000 under this section to any
eligible neighborhood development organization durli^ any year,
(c) 'Hie Secretary shall make a grant to any eligible neighborhood development
organization under this section only if such organization certifies to the satislaction
of the Secretary that—
"(1) the unit of general local government within which the neighborhood in-
volved is located has been notified of the application of such organization for
such grant, and has been provided a reasonable period of time to comment on
auch s^iplication prior to its submission, except that the Secretanr may disap-
prove such application on the basis of such comments only if the Secretary de-
termines that such comments clearly establish that the proposed eligible neigh-
borhood development activities of such organization will be plainly inconsistent
with the housing and community development plans of such unit of general
local government; and
"(2) the individuals, businesses, and other organizations providing the
amounts to such organization that are to be matched under this section have
made (»mmitments to provide such amounts within the period during which
the eligible neighborhood development activities for which such grant is to be
made are to be undertaken by such organization.
"(dXl) Tbe Secretary shall award grants under this section among the eligible
iieigUMM'hood dsTOlopment organizations submitting applications for such grants on
tbe bciBts of—
"(A) the degree of economic distress of the neighborhood involved;
"(B) the extent to which the proposed activities will benefit persons of low
and moderate income; and
"(O tbe extent of neigborhood participation in the proposed activities, as indi-
cated by the proportion of the households and buBinesses in the neighborhood
yGoot^le
548
involved that are members of the eligible neighborhiMd develoiNDeiit oigBnua-
tion involved.
"(2) The Secretary may not award grante under this section on the basis of the
particular eligible neighlxirhood development activity proposed to be carried out
"(eXD The Secretary ehall establish a neighborhood development advisory com-
mittee, which Bhall consist of not less then 5 members appointed by the Secretai?
who are representative of eligible neighborhood development organizatjons. Each
such member shall serve for a term of not less than 1 year, as established by the
Secretary. Such advisory committee shall meet not leee than 3 times during eadi
fiscal year, at the call of the Secretary or a majority of its members.
"{2) It shall be the function of such advisory committee to advise the Secretary
with respect to the operation of the program established in this section, including
the effectiveness of the selection process, and to assist the Secretary in evaluating
the effectivenesB of such program.
"(3) Each member of such advisoi^ committee shall serve without pay, allowances,
or benefits by reason of such service. E^ch such member shall be reimbursed for
actual expenses, including travel expenses, incurred in the course of performing the
duties vested in such advisory committee,
"(4) The Secretary shall provide such advisory committee with such staff and
office facilities as the Secretary, following consultation with such advisory commit-
tee, considers necessary to permit such advisory committee to carry out its fimctions
under this subsection.
"(5) No eligible neighborhood development organization shall be disqualified from
the receipt of grants under this section by reason of the membership of a represent-
ative of such organization on such advisory committee.
"(61 The provisions of section 14 of the Federal Advisory Committee Act shall not
apply to the advisory committee established in this subsection.
It) The program established in this section shall not be subject to the provisions
of section 105.
"(g) For purposes of this section:
"(1) The term 'eligible neighborhood development activity' means any activity
designed —
"(A) to create permanent jobs in a neighborhood;
"(B) to establish or expand new businesses within a neighborhood;
"(C) to develop or rehabilitate neighborhood housing stock;
"(D) to deliver essential services to a neighborhood; or
"(E) to plan, promote, or finance voluntary neighborhood improvement ef-
forts.
"(2) The term 'eligible neighborhood development organization' means an or-
ganization that—
"(A) is organized as a private, voiuntaty, nonprofit corporation under tht
laws of the State in which such oi^anization operates;
"(B) ia responsible to the residents of the neighborhood in which such or-
ganization operates through a governing body, not less than 61 percent of
the members of which are residents of such neighborhood;
"(C) has conducted business for not leas than 3 years prior to the date of
the application of such organization for a grant under this sectirai;
"(D) operates within an area that complies with the requirements for
Federal assistance under section 119; and
"(E) conducts one or more eligible neighborhood development activities
that have as their primary beneficiaries individuals of low or moderate
income.
"(h) Not later than the expiration of the 9(kiay period followi^the date of the
enactment of the Housing and Urban-Rural Recovery Act of 19tsl, the Secretai?
shall issue such regulations as may be necessary to carry out the provisions of this
section.
t the provisions of this sec-
yGoot^le
549
local government <a public agency deeignated by auch unit of general local govern-
ment any real property —
"(1) that is improved by a one- to four-family residence;
"(2) to which Uie Secretary holds title;
"(3) that ia not occupied by a person legally entitled to reside on such proper-
"(4) that is requested by such unit of general local government or agency for
use e:icluBively in a single-family homesteading program that comptieB with the
requirementa of Bubeection (d).
"(b) The Secretary may convey to any unit of general local government or pubUc
agency designated by such unit of general local government any real property —
"(1) to which the Secretary holds title; and
"(2) that the Secretary determines to be suitable for a multifamily homestead-
ing program that complies with the requirements of subsection (e);
for such consideration, if any, as may be agreed upon between the Secretary and
such unit of general local government or public agency.
"(cXl) The Secretary may provide funds to any unit
or public agency designated by such unit of general loc
Bition of unencumbered title to any real property that—
"(A) is improved by a one- to four-family residence;
"(B) is not occupied by a person l^ally entitled to reside on such property;
"(O is designated by such unit of general local government or public agency
for use exclusively in a single-family or multifamily homesteading program that
ccHnplies with the requirements of subsection (d) or (e).
"(2) The Secretary may establish reasonable restrictions on the value and number
of properties that may be acquired under this subsection.
"(d) Any sin^e-family homesteading program carried out by any unit of general
local government or ptuilic agency designated by such unit of general local govern-
ment shall be considered a single-family homesteading program that complies with
the requirements of this subsection if the Secretary determines that such program
provides for —
"(1) the initial conveyance of vacant residential property by such unit of gen-
eral local government or public agency without substantial consideration to a
family of low or moderate income, upon condition that such family agrees to
repair all defects in the property that pose a substantial danger to health and
safety within I year of the date of such initial conveyance;
"(2) a procedure by which title to such property shall be conveyed to any such
family without substantial consideration upon the repair of all such defects,
under the condition that such family agrees to —
"(A) make such repairs and improvements to the property as may be nec-
essary to meet applicable local standards for decent, safe, and sanitary
■tleea
than 6 years, except under such emergency circumstances as may be estab-
lished by the Secretary;
"(3) an equitable procedure for selecting the recipients of such properties
that—
"(A) gives a special priority to applicants —
(i) whose current housing fails to meet standards of health and
safety, including overcrowding;
"(ii) who currently pay in excess of 30 percent of their income for
shelter; and
"(iii) who have little prospect of obtaining improved housing within
the foreseeable future through means other than homesteading;
"(B) excludes applicants who are currently homeowners; and
"(C) takes into account the capacity of the applicant to contribute a sub-
stantive amount of labor to the rehabilitation process, or to obtain Bssiat-
ance from private sources, community organizations, or other sources; and
"(4) a plan for the provision of rehabilitation assistance and technical assist-
eroment shall be considered a multifamily homesteading program that commies
with the requirements of this subsection if the Secretary determines that such pro-
gram contains adequate assurances that —
yGoot^le
"(1) the primary use of all homestead properties fallowing coovenion or reha-
bilitation snail be residential;
"(2) not lesa than 76 percent of the residential occupantA of homestead proper-
ties following conversion or rehabilitation shall be families of low or moderate
income;
"(3) all dwelling units in homestead properties shall be owned by occupants
under a limited-equity cooperative form of ownership;
"(4) such cooperative may not be dissolved without permission of the unit of
general local government or public agency responsible for administering such
bomesteading program;
"(5) entities that are operated for profit shall be excluded from ownership of
homestead properties at all times between the transfer of properties by the Sec-
retary to such unit of general local government or public agency and the acqui-
sition of such properties by their occupants subsequent to conversion or reha-
bilitation;
"(6) a substantive amount of the labor required to rehabilitate homestead
properties shall be provided by the occupants of such properties;
"(T) rehabilitation assistance and technical assistance shall be available to oc-
cupants of homestead properties who are in need of such assistance; and
(8) the displacement of any individuals who reside in homestead properties
S-ior to rehabilitation or conversion shall be minimized.
1) The Secretary may to enter into agreements with any unit of general local
government or public agency designated by such unit of general local government to
provide technical assistance —
"(A) to such unit of general local government or public agency for the admin-
istration of a homesteading program that complies with the requirements of
subsection (d) or (e); and
"(B) to any recipient of property under any such homesteading proeram.
"(2) Not more than 5 percent of any amount made available under subsection (n)
may be used to carry out this subsection.
(gXD The Secretary may assist families of low or moderate income receiving
property under a homesteading program that complies with the requirements (rf'
subsection (d) or (e) in the rehabilitation of such property by providing grants to any
unit of general local government or public agency designated by such unit of gener-
al local government for the sole purpose of assisting any such recipient within the
jurisdiction of such unit of genera! local government or public a^ncy. Such grants
shall stimulate the rehabilitation of homestead properties by providing —
"(A) capital grants;
"<B| loans;
"lO interest reduction payments;
"(D) technical assistance; end
"(E) other comparable assistance that the Secretary deems appropriate to
reduce the costs of homesteading for families of low or moderate income.
"(2) Not less than 75 percent of any funds received by anv unit of general local
government or public agency for any purpose described in tnis subsection shall be
allocated lo aid families of very low income participating in approved homesteading.
Alt money repaid to units of general local government or public agencies designated
by a unit of general local government shall be used only for aiding homesteading
activities.
"(h) In selecting projects for assistance under this section from among eligible
projects, the Secretary shall make such selection on the basis of the extent —
"(1) of the severity of residential property abandonment in the area in which
the project is to be located:
"(2) to which the assistance requested from the Secretary under this section
will provide the maximum number of units for the least cost, taking into ac-
count the cost differences among diFTerent areas, among financing alternatives,
and among the types of projects and homesteaders being served;
"(31 of non-Federal public and private financial or other contributions that
reduce the amount of assistance necessary under this section;
"{i) to which the applicant has esteblished a satisfactory performance in ad-
ministration of homesteading, where applicable; and
"<5) of coordination of the homesteading program with other eflbrts to up-
grade community services and facilities.
"(iXI) The Secretary may reimburse the Administrator of Veterans' Afiairv. in an
amount to be agreed upon by the Secretary and the Administrator, for property
that the Administrator conveys, for use in connection with a homesteading program
that complies with the requirements of subsection (d) or (e). to any unit of general
yGoot^le
551
local government or public agency duignated by such unit gf general local govem-
"(2) The Secretary may reimburse the Secretary of Agriculture, in an amount to
be agned upon by Uie Secretary and the Secretary of A^culture, for property that
the Secretary of Agriculture conveys, for use in connection with a homesteading
prograin that compiles with the requirementa of subsection (d) or (e), to any unit m
general local government or public agency designated by such unit of general local
government.
"(j) In order to facilitate planning for purposes of this section, the Secretary, the
Administrator of Veterans' Affairs, and the Secretary of Agriculture shall, upon the
request of any unit of general local government or public agency designated by such
unit of general local government provide a listing of all unoccupied residential prop-
erties to which the Secretary, the Administrator, or the Secretary of Agriculture
holds title and that are located within the geographic Jurisdiction of such unit of
general local government or public agency. Such listing shall be accessible to the
public during ordinary business hours at the offices of such unit of general local
government or public agency.
"(k) The SecretaJ7 shall conduct a continuing evaluation of any program carried
out pursuant to this section and shall transmit to the Congress an annual report
containing a summary of his evaluation of all such prc^rams and his recommenda-
tions for the future conduct of such programs. Each such report shall include an
aseeesment of the extent to which homesteading programs consider the require-
ments described in subsections (dX2) and (eX2) relating to housing need and income
in selecting homestead recipients, and an estimate of the median income of sudi re-
cipients during the year covered by such report.
"(1) For purposes of this section:
"(1) The term 'families of tow or moderate income' means families whose in-
comes do n<k exceed 80 percent of the median income of the area involved, as
determined by the Secretary with B4justments for smaller and larger families.
Such term includes families consisting of one individual.
"(2) The term 'families of very tow income' means families whose incomes do
not exceed 50 percent of tlie median income of the area involved, as determined
by the Secretary with adjustments for smaller and larger families. Such term
includes families consisting of one individual,
"(3) The term 'Secretary' means ttie Secretary of Housing and Urban Devel-
opment,
"(4) The term 'unit of general local government' has the meaning given such
term in section 102(aXl).
"(m) The Secretary ma^ prescribe such rules as may be necessary to carry out his
functions under this section.
"(n) Of the total amount approved in appropriation Acts under section 103 for
fiscal year 1984—
"(1) not more than $25,000,000 shall be available for fiscal year 1984 to carry
out Bubsectiona (a), (b), (cj, and (i); and
"(2) not more than $25,000,000 shall be available for fiscal year 1984 to carry
out sutwections (f) and (g).".
(2) t^ inserting "and not to exceed $9,000,000 for the fiscal year twginning on
October 1, 1983,'^^ after "1980," in the first sentence;
(3) by striking out "$210,000,000" and "1980" in the third sentence and inser^
ing in lieu thereof "$69,000,000" and "1983", respectively; and
(4) l>y adding the following new sentence at the end thereof: "The Secretary
may not establish (1) any requirement that a certain proportion of assistance
received under this section l>e utilized for any particular type of dwelling unit;
or (2) any priority for the receipt of such assistance that is based on the receipt
or use of funds by an applicant or area under any other program of Federal
assistance for housing or community development, other than the urban home-
■teading program established in section 310 of the Housing and Community De-
velopment Act of 1974,".
NBIGHBORHOOD R8INVESTMENT CORPORATION
. 106. Section 608(al of the Neighborhood Reinvestment Corporation Act is
yGoot^le
552
(1) by Btriidiig out "and" after "1981,"; and
(2) Iqf inserting the following before the period at the end thereof: ", and not
to exceed $18,512,000 for fiscal year 1984"; and
(3| by adding the following new sentence at the end thereof: "Of the ammint
appropriated for fiscal year 1984, at least $3,000,000 shall be utilized by the Cor-
poration for the purpose of carrying out a demonstration prograni with leepect
to mutual housing associatiotiB that is similar to the program deacribad in sec-
tion 316 of the Housing and Community Development Act of 1980, except that
such demonstration program shall emphasize the rehabilitation of t^tiHn^
housing.",
AMENDMENT OFFERED BY MR. WILUAMS OF MONTANA
Mr. WiLUAMS of Montana. Mr. Chairman, I offer an amendment.
The Clerk read as follows:
Amendment offered by Mr. Williams of Montana: Page 12, after line 9, insert the
following new subparagraph (and redesignate the subsequent subparagraph accord-
ingly):
"(B) in the case of any public improvements that are assisted in whole or part
under section 106(d) and are required to be made to comply with any Federal or
State standard regarding public water supply, sewage or solid waste treatment,
air quality, or storm drainage, certifies that, if any capital costs of such public
improvements are to be charged against properties owned by persons of low and
moderate income whoee incomes exceed 50 percent of the median income of the
area involved (including any fee charged or assessment made as a condition of
obtaining access to such public improvements), it will^
"(i) to the greatest extent practicable, utilize funds received under section
106(d) to offset such charges; and
"(ii) in determining the appropriate amount of such ofbet in any case,
utilize a method of calculation that ensures that such amount is related U
the ability of the person involved to pay the charge involved; and
Page 27, after line 2, insert the following new paragraph:
"(3) in the case of any public improvements by a unit of general local govern-
ment located in a non entitlement area that are assisted in whole or part with
amounts received through the issuance of such note or other obligation and are
required to be made to comply with any Federal or State standard regarding
public water supply, sewage or solid waste treatment, air quality, or storm
drainage, if any capital costs of such public improvements are to be charged
against properties owned by persons of low and moderate income whose in.
comes exceed 50 percent of the median income of the area involved (including
V fee chaiged or assessment made as a condition of obtaining access to such
'ic improvements), it will —
"(A) to the greatest extent practicable, utilize funds received under sec-
tion 106(d) or amounts received through the issuance of notes or other obli-
gations under this section to ofTset such charges; and
"(B) in determining the appropriate amount of such oflset in any case,
utilize a method of calculation that ensures that such amount is related to
the ability of the person involved to pay the charge involved.".
Page 11, line 13, insert or as provided in paragraph (3XB)" before the semicolon.
Page 12, line 9, strike out "; and" and insert in lieu thereof "or as provided in
subparagraph (B);".
Page 26, line 12. strike out "and".
Page 26, line 13. insert "except as provided in paragraph (3)," after "(2)".
Page 27, line 2, strike out the period, quotation marks, and final period, and
insert in lieu thereof "; and".
Mr. St Germain (during the reading). Mr. Chairman, I ask uneui-
imous consent that the amendment be considered as read and
printed In the Record.
The Chairman. Is there objection to the request of the gentle-
man from Rhode Island?
There was no objection.
Mr. WiLUAMS of Montana. Mr. Chairman, community develop-
ment block grants are intended by the Congress to assist communi-
any fee
yGoot^le
553
ties in the development of decent housing, healthful and safe living
environments, and economic opportunities, principally for persons
of low and moderate income. H.R. 1 includes language designed to
insure that CDBG funds are not used in a w^ that would be inju-
rious to low- and moderate-income families. The bill presently re-
quires that capital costs of public improvements, assisted by CDBG
moneys, will not be recovered by charging any fees or assessments
against persons of low or moderate income.
Unfortunately, the legislation works against itself by preventing
CDBG funds from being used to offset fees which will be charged to
low- and moderate-income households as a result of necessary
public work projects being financed by other means, unless those
CDBG moneys can cover the entire fee increases to low- and moder-
ate-income persons. This would result in the elimination of the use
of CDBG funds in many useful and necessary circumstances. For
example, the CDBG program presently makes grants to communi-
ties facing sanctions for not meeting Federal standards for vital fa-
cilities such as water, sewage, and solid waste. In many of these
cities and counties, the limited CDBG funds are used to reduce
overall project costs, rather than finance entire projects; thereby
reducing or eliminating fees that would otherwise have been
charged to low- smd moderate-income families.
Current language in H.R. 1 would prevent CDBG progrjims from
participating in a project whenever fee assessments must be used
to complete the project costs. The affected communities face legal
sanctions that will force them to finance projects such as water
treatment plants, regardless of whether CDBG assistance is avail-
able. It is far better to have the flexibility to be able to provide sub-
stantial assistance to communities of low- and moderate-income
families theui to provide no zissistance at all.
My amendment allows CDBG funds to continue to be used to
offset fees to low- and moderate-income families. In those cases
where the CDBG funds are insufficient to cover all such costs, the
amendment requires that 100 percent of any fees to be chained will
be offset for families with incomes at 50 percent of the median
income or below. It further requires that for families with incomes
between 50-80 percent of the median income, fees will be based on
the ability of the family to pay. My amendment will affect only
non-entitlement entities — cities with populations of 50,000 or less,
or counties with populations of 200,000 or less— as the problem ad-
dressed by my aimendment is most severe in these more rural
areas.
My amendment allows CDBG funds to continue to assist in fi-
nancing community projects mandated by Federal law, while con-
tinuing to stress Congress intent that CDBG funds be used to assist
low and moderate income persons. It does not change the intent of
Congress that CDBG funds may not be used simply to finance
projects the capital costs of which would then be recovered by
charging fees to low- smd moderate-income persons. The amend-
ment provides flexibility without diluting the intent of the pro-
gram.
I understand that my amendment is supported by both the ma-
jority and the minority. It is also suijported by the National League
of Cities (NLC), the National Association of Counties (NACo), the
yGoot^le
534
National Governors' AasociatuHi fNGA), and the CouncQ of State
Communi^ Aflain Agencies.
Mr. St Gebmain. Mr. Chairman, will the gentleman yieU?
Mr. Williams of Montana. I yield to my chairman.
Mr. St Germain. The committee has reviewed the gentleman's
amendment. We think it is an improvement, and <h) this side of the
aisle we are prepared to accept the gentleman's amendnienL
Mr. Williams of Montana. 1 appreciate that. I undeistand both
the majority and minority have seen the amendment.
Mr. Wyue. Mr. Chairman, will the gentleman yield?
Mr. Williams of Montana. I jrield to the gentleman frcHn Ohia
Mr. WvuE. Mr. Chairman, we have a copy of the amoidment
and had a chance to look at it. We have no oiijection to the amend-
ment, either, and we urge its adoption.
Mr. Williams of Montana. I appreciate both the majorily and
the minority accepting this amendment, and 1 yield ba(» the bal-
ance of my time.
The Chairman. The question is on the amendment ofEned by the
gentleman from Montana (Mr. Williams).
Tlie amendment was agreed to.
AMENDMENT OPFESED BY MS. DUSBIN
Mr. Dubbin. Mr. Chairman, I offer an amendment.
The Clerk read as follows:
URBAN DEVELOFlIDrT ACTION GRANT EUGIBILITT
Sic. 107. Any city that has a population of lem than 50,000 persons and is not the
central city of a metropolitan area, and that was eli^ble unoer sectacm ]190>K1) of
the Hoiuing and Community Development Act of 1974 for assistaace under such
section, shali continue to be elii^le for such assistance until the Secretary of Hous-
ing and Urban Development revises the standards for eli^ility for such cities
under such section and includes the extent of unemployment as a standard of dis-
treM for such cities.
Mr. St Germain (during the reading). Mr. Chairman, I ask unan-
imous consent that the amendment be considered as read and
printed in the Record.
The Chairman. Is there objection to the request of the gentle-
man from Rhode Island?
Mr. Wyije. Mr. Chairman, reserving the ri^ht to object, we do
not have a copy of the amendment on this side. Would someone
provide us with a copy?
Mr. Chairman, I withdraw my reservation of objection.
The Chairman. Is there objection to the request of the gentle-
man from Rhode Islsrnd?
There was no objection.
(Mr. Durbin asked and was given permission to revise and extend
his remarks.)
Mr. Durbin. Mr. Chairman, the amendment which I have pro-
posed today to the Housing and Community Development Act of
1983 woulci hold harmless small cities and towns which would oth-
erwise be declared ineligible for small cities and towns urban devel-
opment action grants as of August 31, 1983.
yGoot^le
655
The purpose of this amendment is to hold these cities and towns
harmless until the Secretetry of the Department of Housing and
Urban Development has an opportunity to develop regulations
which will include as one of the criteria for eligibility the question
of unemployment in the area of distress.
There are approximately 2,000 communities in the United States
which would otherwise become eligible as of August 31 of this year.
The purpose of our funendment is to give to the Secretary an op-
portunity to develop these reguIationB.
Mr. St Gebmain. Mr. Chairman, will the gentleman yield?
Mr. DuRBiN. I jrield to the gentleman from Rhode Island.
D 1610
Mr. St Germain. The committee and Mr. Gonzalez and I and
other members of the committee have had an opportunity to
review this and discuss it with the gentleman and we are prepared
to accept the amendment.
Mr. DURBiN. I thank the gentlemem.
Mr. Wyue. Mr. Chairman, will the gentleman yield?
Mr. DuRBiN. I yield to the gentleman.
Mr. Wylie. As I understand the Eunendment, this does provide
some cities will be eligible to the extent of unemployment under
the UDAG pn^ram pending the promulgation of r^ulations on
the subject.
Mr. DuRBiN. Yes, that is correct. There are presently several cri-
teria under the law and we are giving the Secretary an opportunity
to promulgate a criterion relating to unemployment in the commu-
nity under which he could also consider some communities for eli-
gibility.
Mr. Wylie. We have no objection to the gentlemtm's amendment.
Mr. Dubbin. Mr. Chairman, I yield back the balance of my time.
The Chairman. The question is on the amendment offered by the
gentleman from Illinois (Mr. Durbin).
The amendment was agreed to.
The Chairman. Are there further amendments to title I?
If not, the Clerk will designate title 11.
Title II reads as follows:
TITLE II— ASSISTED HOUSING
pAKT A — LowRR Incximb Houbino Programs
J) by inaerting the following before the period at the end of the first sentence
of nragraph (1): ", and bv $729.033,(H)0 on October 1, 1983";
(3) by striking out "ana" after "1980," in the third sentence of paragraph (1);
(4) by inserting the following before the period at the end of the thira sen-
tence of paragraph (1): ", and 112,927,147,000 with respect to the additional au-
thority provi^ on October 1, 1983";
(5) b^ redesignating paragraphs (4), (5), and (6) as paragraphs (5), (6), and (7),
remectivelY;
(d) by striking out subparagraph (C) of paragraph (3); and
(?) m adding the following new paragraph after paragraph (3):
"(4XA1 Of the additional authority approved in appropriation Acts and made
available on Octt^r 1, 1983, the Secretary shall enter into contracts aggi^ating at
37-922 0-84-36
yGoot^le
556
leaat $105,000,000 for asButance to projects under MCtion 14. Such amount riudl not
include authority utilized under section 14 as a result of paragisph (S).
"(B) Of the balance of the additional authority referred U> in gubpengrsiph (A)
that remaina after deducting the amount to be provided for a ' ' ~ ' ' '
under section 14 —
"(i) at least $95,229,000 shall be made available for a
8(bK2) with respect to projects assisted under section 202 of the Housing Act of
195^,
"(ii) at least $172,557,000 shall be made available for aamatance under section
SfcKlk
"(iii) at least $99,494,000 shall be made available for assistance under section
8(6X5);
"(iv) at least $84,034,000 shall be made available for lower income houaiiig
Srojects under this Act (other than under section 8), of which amount at least
26,749,000 shall be made Bvailable to Indian public housing agencies; and
"(v) not more than $129,218,000 may be utilized to convert assistance under
any other provision of law t« assistance under section 8 of this Act.",
(b) Section 9(c) of such Act is amended^
(1) by Htriking out "and" after "1980,"; and
(2) t^ inserting before the period at the end thereof the following: ", and not
to exceed $1,550,000,000 on or after October 1, 1983".
TSNANT CONTBIBUnON
Sec. 202. (aXl) Section 3(a) of the United States Housing Act of 1937 is amended—
(A) by inserting the following new sentence after the ftrst sentence thereof:
"Except as otherwise provided in this Act, income limits for occupancy and
rents in public housing shall be flxed by the public housing agency and ap-
proved by the Secretary.";
(B) by inserting "not more than" before "the highest"; and
(C) by striking out "30" in paragraph (1) and insertiitg in lieu thereof "25".
(2) Section 3(bX4) of such Act is amended to read as follows:
"(4) The term 'income' means income from all sources of each member (rf the
household, except the following:
"(A) any temporary, nonrecurring, or sporadic income, including —
"(i) any casual, sporadic, or irregular gift;
"(ii) any amount that is specifically for, or in reimbursement of, the
cost of medical expenses;
"(iii) any lump-sum addition te family as
ance, health insurance payment, accident ii
compensation payment, other insurance payment, capital gain, and set-
tlement for any personal or property loss; and
"(iv) any amount ofeducational scholarship paid directly to a student
or to an educational institution, and any amount paid m the Federal
Government te a veteran, for use in meeting the costs of tuition, fees,
books, and equipment, except that any such amounts that are not used
for such purposes and are available for subsistence shall be included in
"(B) any earned income of any member of the family residing in the
household (other than the head of the household or his or her spouse) who
is under 18 years of age, including any individual described in subpara-
graph (C);
"(C) any amount received by the head of the household or his or her
spouse from, or under the direction of, any public or private nonprofit child
placing agency for the care and maintenance of anv individual who is
under 18 years of age and was placed in the household Dy such agency;
"(D) any relocation payment received under title II of the Uniform Relo-
cation Assistance and Real Property Acquisition Policies Act of 1970;
"(E) the value of any coupon, stunp, or type of certificate received under
the Food Stamp Act of 1977;
"(F) any payment to a volunteer received under the DomMtlc Volunteer
Service Act of 1973;
"(G) any payment received under the Alaska Native Claims Settlement
Act;
yGoot^le
557
"(I) any peyment or allowance received under any Federal pn^am of
energy aanstance, if the law authorizing such program providee for exclu-
sion of such BHeiatance from income for purpoees of other Federal programs;
"(J) any income derived from any youth program carried out under sec-
tion 181(a) or title II of the Job Training Partnership Act;
"(K) any income derived from the disposition of funds to the Grand River
Band of Ottawa Indians under the Act of October 18, I9T6 (90 Stat. 2503);
"(L) any amount excluded by any Federal law from consideration as
income for purposes of determining the amount of. or eligibility for, assist-
ance under the United States Housing Act of 1937;
"(M) in the case of any public assistance payments that include an
amount specifically designated for shelter and utilities, which amount is
subject to adjustment by a public assistance agency in accordance with the
actual cost of shelter and utilities, any amount exceeding the amount of
such payments actually received by or on behalf of the family; and
"(N) any payment received under title XVI of the Social Security Act by
any elderly family las defined in paragraph (31) living in a shared housing
arrangement In which such family benefits as a result of sharing the facili-
ties of a dwelling with others in a manner that effectively and efficiently
meets their housing needs and thereby reduces their cost of housing,".
(3) Section 3(bX5) of such Act is amended to read as follows:
"(5) The term 'adjusted income' means the income that remains after deducting
the following:
"(A) an amount equal to $400 for each member of the family residing in
the household (other than the head of the household or his or her spouse)
who is under 18 years of age, or who is 18 years of age or older and is dis-
abled or handicapped or a full-time student;
"(B) an amount equal to $400 for each member of the household who is
"<0 any unreimbursed medical expenses of the family, to the extent such
expenses exceed 3 percent of the income of the family;
(D) any amount paid by the family for the care of any member of the
family residing in the household who is under 18 years of age or disabled or
handicapped, if such care is necessary to enable any other member of the
family to be gainfully employed, except that such amount may not exceed
the amount of income derived from such employment; and
"(E) any unusual unreimbursed occupational expenses of any member of
the family residing In the household, such as expenses for special tools and
equipment, to the extent such expenses exceed normal and usual expenses
incidental to the type of employment engaged in by such member of the
<bXl) Section 236(f) of the National Housing Act Is amended—
(A) by striking out "30" each place it appears therein and inserting in lieu
thereof "25"; and
(B) by striking out "25" in paragraph (IXii) and inserting in lieu thereof "20".
(2) Section 236(m) of such Act is amended to read as follows:
"(m) For purposes of this section, the terms 'income' and 'adjusted income' shall
have the meanings given such terms in section 3(b) of the United States Housing
Act of 1937.".
(cKl) Section 101(cK2) of the Housing and Urban Development Act of 1965 is
amended to read as follows;
"(2) 'income' and 'at^usted income' shall have the meanings given such terms
in section 3(b) of the United States Housing Act of 1937.".
(2) Section 101(d) of such Act is amended by striking out "30" and inserting in lieu
thereof "25",
(dXl) The Secretary of Housing and Urban Development shall provide that the
amount of rental payments to be made by any family shall not increase, as a result
of the amendments made by this section and as a result of any other provision of
Federal law redefining which governmental benefits are required to or may be con-
sidered as income, by more than 10 percent during any 12-month period unless the
increase above such 10 percent is attributed solely to increases in income which are
not caused ^ such amendments or by such redefmitions. The limitation contained
in the preceung sentence shall remain in effect and may not be changed or super-
ceded except by another provision of law that amends this subsection.
(2) Section 322 of the Housing and Ck>mmunity Development Amendments of 1981
is amended by striking out sulMection (i).
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WAtVBR OF StNCUt PBR80N OCCUPANCY UMITATION
Sec. 203. Section 3(bX3) of the United States Housing Act of 1937 is amended by
adding at the end thereof the following new sentence: "The Secretary may waive
the limitation described in the second sentence of this paragraph with respect to
any dwelling unit if, following consultation with the public housing agency involved.
the Secretary determines that such dwelling unit is neither being occupied, nor is
likely to be occupied within the next 12 months, by families, or persons ueacribed in
clauses (A), (B), and (C), due to the condition or location of such dwelling unit, and
that such dwelling unit may be occupied if made available to single persons de-
scribed in clause (D).".
Sec. 204. (a) Section 5(c) of the United States Housing Act of 1937 is amended by
adding the following new paragraph at the end thereof:
"(8) In the case of any authority that is authorized by this section end has been
allocated with respect to any fiscal year prior to fiscal year 1984 under section
213(d) of the Housing and Community Development Act of 1974 to a public housing
agency for use with respect to units to be assisted other than UQd» sectian 8 or
section 14, the Secretary may not recapture any part of such authority during the
24-month period following the date of the enactment of the Housing and Urban-
Rural Recovery Act of 1983. The public housing agency may use part or all of such
authority for comprehensive improvement assistance according to the requirements
of section 14 if the agency, after consultation with the unit of general local govern-
ment, determines that such authority or portion thereof will be used more effective-
Iv under section 14. For the purpose of making this euthorit>[ available according to
the requirements of section 14, this authority shall be considered to be assistance
made available under subsection (b) of such section.".
(b) Section 14(h) of such Act is amended by inserting after the fiiVt conmia the
following: "the Secretary may not establish any preference based on the types of
activities for which such assistance is requested, except that".
UHITATIONS ON PUBUC HOUSING nEVELOPUENT COBIB
Sec. 205. Section 6(b) of the United States Housing Act of 1937 is amended—
(1) by insertinK "(1)" after the subsection designation;
(2) in the third sentence —
(A) by redesignating clauses (1} through (8) as clauses (A) through (H), re-
spectively; and
(B) by striking out "(1) through (7)" and inserting in lieu lliereof "(A)
through (G)"; and
(3) by adding at the end thereof the following new pars^raiih;
"(2) The Secretary shall establish reasonable maximum limitations on total devel-
opment costs under this Act that take into account local prototype costs and local
variations in land, site improvement, and construction cosla. Ine Secretary shall
public such limitations in the Federal Roister, and shall revise such limitations
not less than once annually. Any project for which a development cost budget has
been approved by the Secretary prior to December 6, 1982, shall be subject to the
limitations on total development costs established pursuant to regulations in effect
on September 7, 1982.".
Sec. 206. Section 6 of the United States Housing Act of 1937 is amended by adding
at the end thereof the following new subsection:
"(h) The Secretary shall by regulation require each pubUc housing agency receiv-
ing assistance under this Act to —
"(1) establish and implement an administrative grievance procedure that will
provide tenants' and applicants an opportunity to be heard, in accordance with
the basic safeguards itf due process but not less than as set forth in sections
866.56 through 866.59 of title 24 of the Code of Federal Regulations as in effect
on March 1, 1983. regarding public housing agency actions or failures to act
that adversely affect their rights, duties, welfare or status; and
yGoot^le
"&> utUize leaaea that—
"(A) do not contain unreasonable terms and conditions;
"(B) obligate the public housing agency to maintain the projects in a
decent, safe and sanita]^ condition;
"(O require the public housing agency to give adequate written notice of
termination of the lease, which shajl not be leaa than (i) 14 days for nonpay-
ment of rent^ (ii) a reasonable time when the health or safety of other ten-
ants or public housing agency employees is threatened; and (iii) 30 days in
all other cases; and
"(B) require that the public housing agency shall not terminate the ten-
ancy except for serious or repeated violation of the terms or conditions of
the lease or for other good cause.".
UMITATION ON DUPUCATtVE PUBUC HOUSING TENANT RBPORTtNG RI4UtREMKN18
Sbc. 207. Section 6 of the United States Housing Act of 1937 is amended by adding
at the end thereof the following new subsection:
"(iHl) It shall be the responsibility of each public housing agency operating a
lower income housing project to establish an adequate procedure for determining
the eligibility of and rent to be paid by families applying for occupancy in, or occu-
pying, dweUiiag units in such project. In carrying out such responsibility, such
public housing agency may only require such families to provide information that is
directly related to accomplishing fair housing objectives or determining eligibility,
rental payments, or appropriate dwelling unit size,
"(2) The Secretary may not require any such family to provide any information to
the Secretary that duplicates information provided by such family to such public
housing agency, unless such information is requested pursuant to (A) a survey of a
sample ponulatitm of such families; or (B> an audit of such public housing agency to
evaluate tne adequacy of its procedures for determining eligibility and rent.
"(3) The Secretaiy may not maintain any record with respect to a family applying
for occupancy in, or occupying, any dwelling unit in a lower income housing project,
unless such record is necessary to the investigation by the Secretary of a specific
alWation of iraud by such family in its application for occupancy or reporting of
Sbc. 208. (aXl) Section 8(cKl) of the United States Housing Act of 1937 U amend-
ed—
(A) by inserting "(A)" after "(cHD"; and
(B) by adding tne following new subparagraph at the end thereof:
"(B) In the case of existing units—
"(i) the fair market rental for an area shall, taking into consideration the
various sizes and types of dwelling units described in the second sentence of
subparagraph (A), be the median rent paid by tenants who moved into or
witriin the area during the most recently completed period of not to exceed
24 months for which date is available at the time such fair market rental is
determined; and
"(ii) the maximum monthly rent shall be reasonable in relation to rents
currently being charged for comparable units in the private unassisted
market (taking into account the location, size, type, quality, amenities, fa-
cilities, and management and maintenance service of such unit) and shall
not be in excess of rents currently being charged by the owner for compara-
ble unassisted units.".
(2) The amendment made by paragraph (1) shall apply with respect to fair market
rentals applicable on or after March 1, 1983.
(b) Section (SKcXlMA) of such Act, as bo redesignated by this section, is amended
by inserting after the third sentence the following new sentence; "The Secretary
shall revise the fair market rentals established for each area under this section not
leoB than once annually, taking into consideration any changes in the monthly rents
chargad for rental dwelling units in such area.".
ANNUAL CONTsraunONa CONTRACTS
Sic 209. {aXU Section 8(bXl) of the United Stales Housing Act of 1937 is amended
t^ inserting the following new sentences at the end thereof: "In the case of any
annual contribution contract entered Into by the Secretary with a public housing
authority under this subsection for fewer than 15 years, the Secretary shall offer to
yGoot^le
560
renew such contract for a period of 5 yetm each time it expires if the autbtnitr has
carried out the terms of the contract prior to the renewal offer and if the luewal
does not extend the period of assistance under the original contract and its rotewals
beyond 15 years. In anv case in which the total period of assistance that has been
made available under the contract and its renewals is more than 10 but less than 15
(2) The amendment made by paragraph (1) shall apply to contracts in effect on or
after the date of the enactment of this Act,
(b) Section 8(dX2) of such Act is amended by adding at the end thereof the foUow-
ing new sentences: "At the discretion of the public housing agency involved, the
contract to make assistance payments to the owner of an ejtisting structure shall
either be attached to the tenant or to the structure. If attached to tne structure, the
owner may renew the contract, if the owner otherwise complies with the require-
ments of this section, except that the aggr^ale period of such contract and contract
extension may not be more than 180 months,".
Sbc. 210. Section 8 of the United States Housing Act of 1937 is amended by adding
et the end thereof the following new subsection:
"(oXl) Notwithstanding any other provision of law, in the case of the conversion of
any assistance under section 101 of the Housing and Urban Development Act of
1965, section 236(fK2) of the National Housing Act, or section 23 of the United States
Housing Act of 1937 (as in effect before the date of the enactment of the Housing
and Community Development Act of 1974) to assistance under this section, any in-
crease in rental payments resulting from such conversion, and from the amend-
ments made by section 202 of the Housing and Urban-Rural Recovery Act of 19S3, of
any tenant benefiting from such assistance who is 62 years of age or older may not
exceed 10 percent per annum.
"(2) In the case of any such conversion of assistance occurring after October 1,
1961, and before the date of the enactment of the Housing and Urban-Rural Recov-
ery Act of 1983. the rental payments due after such date by any tenant benefiting
from such assistance who was 62 years of age or older on the date of such conver-
sion shall be computed as if the limitation established in paragraph (1) had been in
effect on such date of " " "
Sec. 211. (a) Section 9(aXl) of the United States Housing Act of 1937 is amended
by striking out the fourth sentence and inserting in lieu thereof the following; "For
pu)-pases of making payments under this section, the Secretary shall utilize stand-
ards for costs of operations and reasonable projections of income in accordance with
the provisions of part 890 of title 24 of the Code of Federal Regulations, as in effect
on March 1, 1983, except that such provisions shall be revised as follows:
"(A) To include a formal review process for the purpose of providing such in-
creases to the allowable expense level of a public housing agency as necessary
to correct inequities and abnormalities that exist in the base year expense level
of such public housing agency and to reflect changes in operating circumstances
since the initial determination of such base year expense level.
"(B) To include amounts determined by the Secretary to be necessary to reim-
burse public housing agencies experiencing excessive costs that are beyond their
control and the full extent of which were not taken into account in the original
distribution of funds for the fiscal year involved,
"(C) To modify the method for adjusting the allowable expense level of a
public housing agency under section 890.105(dX3) of title 24 of the Code of Fed-
eral Regulations to provide for an annual one-half of I percent increase to such
level to take into account aging of the public housing stock, and to provide for
such adjustments as may be necessary to take into account significant changes
in the number or type of housins unite operated by such public housing agency.
"(D) To include as an allowable expense the unreimbursed cost of any litiga-
tion or administrative proceeding in which a public housing agency is a party
for the purpose of obtaining a more favorable utility rate, except that (i) any
amount recovered as a result of such litigation or proceeding shall be deducted
from the allowable expenses of such public housing agency, as such amounts
are recovered, up to the total cost of such litigation or proceeding to such public
housing agency; and (iO 75 percent of any amount recovered in excess of the
yGoot^le
561
cost of the litigation or proceeding shall be retained by such public housing
agen^.
"(E) To provide for an acjjustment to the allowable expense level of a public
housiiig agency to reflect the higher cost of operating a lower income housing
project in an economically distressed unit of general local government, which
adjustment shall be based on the extent of growth lag, the extent of poverty,
and the age of housing in the unit of general local government involved, and
such other criteria as the Secretary determines will ensure that the allowable
expense level accurately reflects the higher cost of operating a lower income
housing project in an economically distressed unit of general local government,
"(F) To provide for a year-end ^^ustment to the allowable expense level of a
public housing agency in any case in which the actual inflation rate is more
than or teas than the estimated inflation rate and in any case in which actual
utility rates and utility consumption are more than or leas than estimated utili-
ty rates and utility consumption, except that the Secretary shall only provide 50
percent of any increased expenses due to increased utility consumption,
"(GJ To modify the method of computing the utilities expense level of a public
housing agency by utilizing a fixed base period of 4 years for the first public
housing agency fiscal year following the effective date of this subparagraph, and
a fixed base period of 5 years thereafter.
"(H) To provide that 75 percent of any decrease in the utilities expense level
of a public housing agency due to decreased consumption shall be retained by
such public housing agency, to be used according to the requirements of section
14.
"(1) To provide that any additional funds procured by a public housing agency
for operation from other Federal, State or local programs or from private
sources shall not be deducted from assistance provided under this section,
"(J) To provide that not more than 50 percent of any increased revenues re-
sulting from increased occupancy rates may be computed in determining the
amount of assistance available to a public housing agency under this section.
"(K) To provide that if, in any fiscal year the funds that have been appropri-
ated for such fiscal year for use under this section are less than the total
amount that the Secretary has determined is necessai? to make payments pur-
suant to the formula established under this section for such fiscal year, pay-
ments shall be reduced on a pro rata basis and distributed promptly. The Secre-
tary may develop an alternative distribution method, except that the develop-
ment of such alternative shall be considered a rulemaking activity of the Secre-
tary subject to sulisections (b) through (el of section 553 of title 5, United States
Code, and section 7(a) of the Department of Housing and Urban Development
Act. Such pro rata payments shsJl not be delated by the development or imple-
mentation of any alternative approach to distribution.
Not later than January 1 of each year, the Secretary shall transmit to the Congress
a report setting forth detailed estimates of the amount of assistance reauired under
the formula established in this section, and any recommendations for proposed
modifications of such formula. Not later than March 1, 1984, the Secretary shall
transmit to the Congrcos a report setting forth recommendations for modifications
to the formula established under this section and other legislative and regulatory
changes for the purpose of providing incentives to public housing agencies to implC'
ment management improvements designed to reduce long-term costs and provide for
more efficient operation of projects and delivery of services to tenants, which recom-
mendations shall be developed in consultation with public housing agencies,".
(b) Section 9 of the United States Housing Act of 1937 is amended by striking out
eubiection (d),
(c) For purposes of determining the amount of payments to be made during fiscal
year 1983 under section 9 of the United States Housing Act of 1937, the rule of the
Department of Housing and Urban Development entitled "Gross Rent— Public
Housing Program", published on May 4. 1982 (4? Federal Register 19120). may not
be considered to have been effective before February 15, 1983, with respect to any
public housing agency that was, before the beginning of such fiscal year, a party to
a civil action to ei^oin implementation of such rule.
INCOME KUGIBIUTY
Smc. 212. (a) The United States Housing Act of 1937 is amended by striking out
section 16.
V paragraph at
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"(9) At least 30 percent of the families assisted under this section with annual
allocations of contract authority shall be very low-income families at the time of
the initial renting of dwelling units.".
A PUBUC HOUaMG
"Sbc. 16. (b) Except as provided in Bubsection (c), no public housing project may be
demolished, sold, or otherwise disposed of (including any demolition or diapoeal con-
ducted pursuant to section 6(f) or otherwise), in whole or in part, unless—
"(1) the public housing agency and the unit of general local government con-
cerned have certified their approval;
"(2) such project is substantially unoccupied;
"(3) the cost of rehabilitating such project would be greater than replacing it;
"(4) the Secretary and the public housing agency have developed the plan for
demolition, disposition, and replacement after notification to, and consultation
with, the affected tenants and tenant councils;
"<5I the Secretary and such agency have entered into agreements assuring re-
location assistance (comparable to the assistance provided under the Uniform
Relocation Assistance and Real Property Acquisition Policies Act of 1970] to any
tenant who is displaced as a result of the demolition or disposition; and
"(6) the public housing agency has secured funding commitments from the
Secretary or other sources and such funding has been committed to replacing
the sold, demolished, or otherwise disposed of units with an equal number of
newly constructed or substantially or moderately rehabilitated units in the
same neighborhood; except that the Secretary may approve, after consultation
with the tenants and tenant groups alTected. replacement by fewer units in the
same ne^hborhood or in one or more different neighborhoods if the Secretary
determines that this action will result in a better living environment for lower
income families and that replacement by an equal number of units is not neces-
sary to meet lower income housing needs.
"(b) The requirements stated in paragraphs (2) and (3) of subsection (a) may be
waived if —
"(1) there are sound social and economic reasons for the demolition, sale, or
other disposition; and
"(2) a m^ority of the tenants affected consent to such action.
"(cXD The provisions of this section shall not apply to the sale of a public housing
project to its tenants.
(2) The provisions of this section shall not apply to demolitions to which section
i/n onnlif "
14(0 apply.**.
AMOUNTS RECOVERED BY PUBUC HOUSING AGENCIES
Sec. 214. Section 326(dXl) of the Housing and Community Development Amend-
ments of 1981 is amended —
(1) by striking out "the housing assistance program under section 8 oT' and
inserting in lieu thereof "any program established under"; and
(2) by inserting the following new sentence at the end thereof: "In any case in
which the public housing agency recovers such wrongfully paid amounts
through actions other than those described in the preceding sentence, the Secre-
tary shall permit such agency to retain an amount equal to 50 percent of the
amount actually collected,".
Sec. 215. (a) Section 80) of the United SUtee Housing Act of 1937 is amended—
(1) by inserting in the first sentence after "shall limit" the following: "con-
tract authority reservation,"; and
(2) by inserting the following before the period at the end of the second sen-
tence: ', and the Secretary shall not impose a percentage or other arbitrary lim-
itation on such i"--™""—"
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(b) The amendment made by this section shall apply to proposals receiving a pre-
liminaiv reservation of contract authority in any tiH^ ; — ■-'-'! - n-.-i
ending oefore the date ol
HKPOKT REGABDINC HOUSING NEIGHBORHOOD STRATEGV AEBA PROCBAM
Sec. 216. Not later than the expiration of the 12(klay period following the date of
the enactment of this Act, the Secretary shall transmit to the Congress a report
with respect to the program established by the Secretary to provide assistance
under section 8 of the United States Housing Act of 1937 to units of general local
Eovemment in areas where concentrated housing and community development
block-grant assisted physical development and public service activities are conduct-
ed under title I of the Housing and Community Development Act of 19T4. Such
report shall include the following information for each unit of general local govern-
ment selected to participate in such pri^am:
(1) the total number of dwelling units located in such unit of general local
government that have been initially reserved by the Secretary for assistance
under such program, and any subsequent revision of such number;
(2) the total amount of funds pledged by such unit of general local govern-
ment for all public improvements and services, and actual and future expendi-
tures, in connection with such program;
(3) the status of the dwelling units located in such unit of general local gov-
ernment that have been initially reserved by the Secretary for assistance under
such program, including the number of units completed and occupied;
(4) the total' number of dwelling units required to complete each local pro-
gram, as estimated by such unit of general local government; and
(5) the total number trf' local programs considered completed by such unit of
general local govenunent
OONSIDEHATION Or UTIUTY PAVHENTS MADE BY TENANTS IN ASSISTED HOUSINfi
Sec. 217. Notwithstanding any other provision of law, for purposes of determining
eligibility, or the amount of benefits payable, under chapter A of title IV of the
S<mal Security Act, anj[ utility payment made by a person living in a dwelling ui '
SINGLE ROOM OCCUPANCY HOUSING
Sec. 218. Section 8(n) of the United States Housing Act of 1937 is amended—
(1) by inserting "subsection (bXl)," before "subsection (eXS)":
(2) by inserting a comma after "(eX5)";
(3) by striking out "and" at the end of paragraph (1);
(4) by striking out the period at the end of paragraph (2) and inserting in lieu
thereof "; and"; and
(6) by inserting after paragraph (2) the following new paragraph:
"(3] in the case of assistance under subsection (bXl), the unit of general local
government in which the property is located and the local public housing
agency certify to the Secretary that the property complies with local health and
safety standards.".
PUBLIC HOUSING CHILD CARE DEMONSTRATION PROGRAM
Sec. 219. (a) The Secretary of Housing and Urban Development shall, to the
extent approved in appropriation Acts, carry out a demonstration program of
lUies who reside in public housing and are headed
by eligible persons. The Secretary shall design such prc^am to determine the
extent to wttich the availability of child care services in lower income housing
projects facilitates the employability of eligible persons who head such families.
(b) "nie Secretary may make a grant to any public housing agency under this sec-
tion only if—
(1) such public housing agency does not have a child care services program in
<^ration prior to receipt tn assistance under this section;
(2) such public housing agency agrees to provide suitable facilities for the pro-
vision <^ child care services;
(3) the child care services program of such public housing agency will serve
procbool children during the day, elementary school children alter school, or
yGoot^le
564
both, in order to permit eligible pereonB who head the families rf sudi diildnn
to obtain, retain, or train for employment;
(4) the child care services program of such public housing agency is designed,
to the extent practicable, to involve the participation of the parenta of chUdren
benefiting from such program;
(5) the child care services program of such public housing agency is designed,
to the extent practicable, to employ in part-time positions elderly iodividuala
who reside in the lower income housing project involved; and
(6) the child care services program of such public housing agency oompUea
with all applicable State and local laws, reflations, and ordinances.
<c) In providing grants under this section, the Secretary shall —
(1) give priority to lower income housing projects in which reside the largeet
number of preschool and elementary school children of lower income faroiliw
headed by eligible peraons;
(2) seek to ensure a reasonable distribution of such grants between urban and
rural areas and among lower income housing projects of varying sizes; and
(3) seek to provide such grants to the largest number of lower income housing
projects practicable, considering the amount of funds available under this sec-
tion and the Tmancial requirements of the particular child care services pro-
grams to be developed by the applicant public housing agencies.
(dXl) Applications for grants under this section shall be made by public housing
agencies in such form, and according to such procedures as the Secretary may pre-
scribe,
(2) Any public housing agency receiving a grant under this section may use such
grant only for operating expenses and minor renovations of facilities necessary to
the provision of child care services under this section.
(eHD The Secretary shall conduct periodic evaluations of each child care services
program assisted under this section for purposes of —
(A) determining the efTectiveness of such program in providing child care
services and permitting eligible peraons who head lower income families resid-
ing in public housing to obtain, retain, or train for employment; and
(B) ensuring compliance with the provisions of this section.
(2) Nothing in this section may be construed as authoriring the Secretary to estab-
lish any health, safety, educational, or other standards with respect to child care
services or facilities assisted with grants received under this section.
(0 For purposes of this section;
(1) The term "eligible person" means an individual who is the head of a
household and (A) is unmarried; (B) is l^ally separated from his or her spouse
under a decree of divorce or separate maintenance; (C) maintains a separate
place of residence from his or her spouse and such spouse is not a member of
such household; or (D) whose spouse is a person described in section 3(bX3XA) of
the United States Housing Act of 1937.
(2) The term "lower income families" has the meaning given such term in sec-
Uon 3(bK2) of the United States Housing Act of 1937.
(3) The terms "lower income housing project" and "public housing" have the
meanings given such terms in section 3(bXl) of the United States Housing Act
of 1937.
(4) The term "public housing agency" has the meaning given such terra in
section 3(bK6) of the United States Housing Act of 1937.
(5) The term "Secretary" means the Secretary of Housing and Urban Devel-
opment.
(g) Not later than the expiration of the 2-yeer period following the date of the
enactment of this Act, the Secretary shall prepare and submit to the Congress a
detailed report setting forth the findings and conclusions of the Secretary as a
result of carrying out the demonstration program established in this section. Such
report shall include any recommendations of the Secretary with respect to the es-
tablishment of a permanent program of assisting child care services in lower income
housing projects.
(h) There is authorized to be appropriated to carry out the provisions of this sec-
tion not to exceed S3,000,000 for fiscal year 1984. Aay amount appropriated under
this subsection shall remain available until expended.
yGoot^le
Fait B— Othek Assistid Housing Peoorams
orekating aseivtanci for troubled hultifamilv housing projects
Sbc 221. (aXl) Section 201(a) of the Housing and Community Develoiiment
Aiuendments of 1978 ia amended by inserting before the period at the end tnereof
the following: ", without regard to whether such projects are insured under the Na-
tional Housing Act".
(2) Section 201(b) of such Act is amended by inserting before the period at the end
thereof the following; ", without r^ard to whether such projects are insured under
the National Housing Act".
(3) Section 201(cXlxA) of such Act is amended by striking out the finrt semicolon
and all that follows through 1979.
(bXH Section 201(a) of such Act is amended by striking out "or under" and insert
ing in lieu thereof ", the United States Housing Act of 1937, or".
(2) Section 201(cXl) of such Act is amended—
(A) by striking out "or" at the end of aubparagraph [A);
(B) by redmignating subparagraph (B) as subparagraph [O: and
(C) by inserting after subparagraph (A) the following new subparagraph:
"(B) IS assisted under section 3 of the United States Housing Act of 1937 fol-
lowing conveniion to such aasistance from assistance under section 236 of the
National Housing Act or section 101 of the Housing and Urban Development
Act of 1965; or".
(c) Section 201(i_) of such Act is amended —
(1) by striking out "(B)" in the first sentence;
(2) by striking out "and" in such sentence after "1981,"; and
(3) t^ inserting the following before the period at the end of such sentence: ",
and not to exceed $32,000,000 for the fiscal year 1984".
Id) Section 236(f)(3) of the National Housing Act is amended by striking out "Sep-
t«mber 30, 1982" in the third sentence and inserting in lieu thereof "September 30,
1984".
SECnON 33G ASSISTANCE
Sbc. 222. (a) Section 236(h) of the National Housing Act is amended by adding at
the end thereof the following new sentences: "To ensure that qualified tenants re-
ceive the benefit of assistance contracted for under subeection <fX2), the Secretary
shall offer annually to Eunend contracts entered into with project owners under such
subsection to provide sufficient payments to cover necessary rent increases and
changes in the incomes of tenants. Such offer shall be made without r^ard to
whether the projects covered by such contracts are subject to mortgages insured
under this Act. llie Secretary shall take such actions as may be necessary to ensure
that payments, including payments that reflect necessary rent increases and
chongeo in the incomes of tenants, are made on a timely basis for all units covered
by contracts entered into under subsection (fX2).",
(b) Section 236(iKl) of such Act is amended by adding at the end thereof the fol-
lowing new sentence: "The Secretary shall utilize, to the extent necessary, any au-
thority under this section that is recaptured either as the result of the conversion of
housing projects covered by assistance under subsection (fK2) to contracts for assist-
ance unoer section 8 of the United States Housing Act of 1937 or otherwise (A) for
the purpcee o( making assistance payments, including amendments as provided in
subsection (fX2), with respect to housing projects (whether or not subject to a mort-
gaee insured under this Act) that remain covered by assistance under subsection
(fX2); and (B) to the extent approved in appropriation Acts, pursuant to section Sc)
of the United Statee Housing Act of 1937, and if not required to provide assistance
under this section, for the purpose of providing assistance payments with respect to
exttti"B dwelling units under section 8 of such Act, which authority shall be in addi-
tion to any other funds authorized and approved for use under such section.".
HOUSING FOR THR EUIRRLV AND HANDICAPPED
Sec. 223. (aXl) Section 202(bX3) of the Housing Act of 1959 is amended by insert-
ing the following before the period at the end tnereof: ", except that such interest
rate plus such allowance shall not exceed 9.25 percent per annum".
(2) The amendment made by paragraph (1) shall apply only with respect to loan
'B entered into after September 30, 1982.
n 202(aX4XBXi) of such Act is amended—
yGoot^le
566
(1) by striking out "and" after "1980," in the fint aeatenee; and
(2) by inserting ", and to $6,507,660,000 on October 1, 1983," after "1981" in
such aent«nce.
(cl Section 2t>2(aX4XC) of such Act is amended by striking out "$850,848,000" and
"1982" in the second sentence and inserting in lieu thereof "$667,808,000" and
"1984", respectively.
(d) Section 202(h) of such Act is amended—
{It by striking out '■1978" and inserting in lieu thereof "1983";
(2) by inserting before the period at tTie end of the fufit sentence the foUow-
ing: ", and persons described in subparagraphs (B) and (Q of subsection (dX4)
who have been released from residential health treatment facilities";
(3) in paragraph (1), by striking out "handicapped persons" and u. . .
lieu thereof persons described in the first sentence of this subsection";
(4) in paragraph (2), by striking out "handicapped persons" and inaei
lieu thereof persons described in the fiiHt sentence of this subsection who are";
(5) in paragraph (1), by striking out "and" at the end thereof;
(6) in paragraph (2), by striking out the period at the end thereof and insert-
ing in lieu thereof "; and"; and
(7) by adding at the end thereof the following new paragraph —
"(3) not more than 20 percent of the amount made available pursuant to this
subsection shall be utilized for the development of rental housing and related
facilities for persons described in subparagraphs (B) and (O of subsection (dX4)
who have been released from residential health treatment facilitieH.".
(e) Section 202 of such Act is amended by adding at the end thereof the following
new subsections:
"(iMl) Unless otherwise requested by the sponsor, a TnniiTnnTn o( 25 percent of the
units in a project financed under this section may be efficiency units, subject to a
determination by the Secretary that such units are appropriate for Uie elderly t«
handicapped population residing in the vicinity of sucn project or to be served by
such prmect.
"(2) The Secretary may require a sponsor of a housing project financed with a
loan under this section to deposit an amount not to exceed $10,000 in a special
escrow account to assure the commitment and long-term management capabilities
of such sponsor. Nothing in this section authorizes the Secretary—
"(A) to require an equity particuiation by a sponsor in any euch project;
"(B) to prohibit any sponsor froia voluntarily providing funds from other
sources for amenities and other features of appropriate design and constructiDn
suitable for inclusion in such projects; or
"(O to prohibit a required meals pn^ram, nor shall any provision of the
United States Housing Act of 1937 be deemed to prohibit such a program or to
require that payments under such a program be considered a part of the rental
chai^ for a unit.
establishing per unit cost limitations for purposes of this section, the Secre-
tary shall take into account design features necessary to meet the needs of elderly
and handicapped residents, and such limitations shall reflect the cost of providing
such features. The Secretary shall a4just the per unit cost limitations in effect cm
January 1, 1983, not leas than once annually to reflect changes in the general level
of construction costs.
"(4) The basis on which a contractor to be employed in the development or con-
struction of a project assisted under this section is selected shall be determined by
the prmect sponsor or borrower.
"(j) The Secretary may not approve the prepayment of any loan made under this
section, or sell or transfer such loan, unless such prepayment, sale, or transfer is
made as part of a transaction that will ensure that the project involved will contin-
ue to operate until the original maturity date of such loan in a manner that will
provide rental housing for the elderly and handicapped on terms at least as advan-
tageous to existing and future tenants as the terms required by the original loan
agreement entered into under this section and any other loan agreements entered
into under other provisions of law.".
CONSOUnATlON OF HOUSINO ABSIOTANCE for EUtBRLV and MANniCAPPID FAUIUCS
Sec. 224. (a) Section 202(aX2) of the Housing Act of 1969 is amended to read as
follows:
"(2HA) In order to carry out the purpose of this section, the Secretary may make
assistance available to any corporation (as defined in subsection (dX2)), to any con-
sumer cooperative, or to any public body or agency for the provision of rental or
yGoot^le
567
cooperetivB tuiiuiiig and related fecitities for elderly or handicapped familiee, except
that no such BMiBtance shall be made unless the Secretary finds that the construc-
tion will be undertaken in an economical manner and that it will not be of elabo-
rate or eztravBgant' design or materials. The assistance may be in an amount not
exceeding the total development cost (as defined in subsection (dX^M, as determined
by the Secretary.
"(B) In addition to the assistance provided pursuant to subparagraph (A) and sub-
ject to the conditions in subparagraph (A), the Secretary may make assistance avail-
able to any entity described in paragraph (1) of this section if part of the fmancing
is to be provided by a public housing agency (as defmed in section 3(bX6) of the
United States Housing Act of 1937). The asBistance may be in an amount not ex-
ceeding 75 percent of the total development cost, as determined by the Secretary. To
the maximum extent practicable, public housing agencies shall administer the pro-
visions of this subparagraph.
"(C) Assistance provided under this section shall be in the form of a deferred pay-
ment, nonint«rest bearing advance that is repayable to the Secretary after 20 years.
If the project continues to serve elderly and handicapped families with substantially
similar incomes after the termination of the 20-year period, the Secretary may for-
give a portion of the advance for each year of continued service and may forgive the
entire advance at the end of 40 years of such continued service. The Secretary shall
require that during this initial 20-year period not less than 75 percent of the units
in a project assisted under this section shall be made available for occupancy by
lower income families, as such term is defined in section 3(b) of the United States
Housing Art of 1937.",
(b) Section 20aaX4) of such Act is amended—
(1) by inserting the following new sentence at the end of subparagraph (C);
"Repayments and income to the fund shall be available, sul^ect to approval in
appropriations Acts, to cover increases in loan amounts approved by the Secre-
taiT."; and
(2) by adding the following new subparagraph at the end thereof:
"(D) There is authorized to be appropriated for fiscal year 1985 not to exceed
9880,000.000 for assistance pursuant to paragraph <2KA). and not to exceed
$660,000,000 for assistance pursuant to paragraph (2XB) for fiscal year 1985. Sums
appropriated pursuant to tbis subparagraph shall remain available until expend-
ed.".
(c) Section 202(aK6) of such Act is amended by striking out "loans" each place it
appears and inserUng in lieu thereof "assistance made available".
(d) Section 202(cXl) of such Act is amended by striking out "a loan made" and
inserting in lieu thereof "assistance made available".
(e) Section 202(g) of such Act is amended—
(1) by inserting "(1)" after "(g)"; and
(2) 1^ adding the following new paragraphs at the end thereof:
"(2) During the initial 20-year period, rents paid by lower income families occult-
ing projects assisted under this section shall be determined in accordance with the
provisions of section 3(a) of the United States Housing Act of 1937, except that the
Secretary may reduce the percentages specified in such section 3<a) for any project
with development costs or operating costs below levels that are established by the
Secretary. Rents for units occupied by elderly or handicapped families who are not
lower income femUies shall be approved by the Secretary.
"(3XA) The Secretary shall enter into contracts with owners of projects assisted
under this section to make payments to cover any part of the costs attributed to
units occupied (or as approved by the Secretary held for occupancy) by lower income
familiea that are not met from project income. In the case of a project assisted pur-
suant to Bubeection (aX2XAI, the annual contract amount shall not exceed 80 percent
of the initial project operating costs, and in the case of a project assisted pursuant
to subsection (aX2XB|, the annual contract amount shall not exceed 50 percent of
the initial project operating coats. Any contrart amounts not used by a project in
any year shall remain available to that project until the expiration of the contract.
The term of the contract shall be 240 months.
"(B) In the case of a project that has qualified for lower tenant rent contributions
purauant to paragraph (2), the Secretary may enter into contracts in amounts in
exoeM of those authorized by subparagraph (A).
"(O Hie Secretary is authorized to enter into contracts for payments pursuant to
this paragraph aggregating not more than $41,500,000 per annum, and the aggre-
g^ amount that may be obligated over the duration of the contracts may not
exceed $830,000,000.".
yGoot^le
<r> The pronaioiis of Mction llfbl of the United State* Haamag Act of 1937 d
be applicable to oUigatioDS iwuwl ^ J "' ' '
prqjtcf H— irtwl iinJcr MCtifln 2D2 of the H
(gl llie pTorinoaa of. and a
tiw on October 1, 1984. e«n ..__
the Bmendnent made by nilnection (bXl» shall not be apfrfkaMe with rtaptet to
pTDjeetB with loana or loan reaervatioBS under aectioa WZ of the Hooataig Act <f
iSfO iiaing anthoritv approved in appropriations Acts for fiacal yesrs beginning
prior to October 1, 1984.
ooNcaacATB stavicn
the Congregate H<
ed by adding at the end thereof the rotl<Twing m
"rcl Not later than March 15, 19S5, the Secietar; shall prepare and suhmit to the
Congren a report evaluating the effects of any change in the administratioa of the
congregate housing services program established in this title. Such report shall in-
clude an assMsment by the Secretary of any plan for the reorganizatiwi or deoes-
tralization o( the admiDistratioo of such program, and any legislative Tecotnmenda-
tions of the Secretary for the establishment of a permanent congregate housing
services program. Until such report is submitted to the Congress, the Secretaiy may
not implement any plan for the decentralization of the administraliofl of suoi pro-
Ihl Section 411(a) of the Congregate Housing Services Act of 1978 is amended—
ID by atriking out "and" at the end of paragraph (3>.
(2) 1^ striking out the period at the end of paragraph (4) and inserting in Ueu
thereof "; and"; and
(3) by adding the following new paragraph at the end thereof:
"(5) ioT fiac^ year 1984, not to exceed SiOfiOO.OOO." .
SHARED HOUSING FOH THE ELOSBLV
Sbc. 226. Section 8 of the United States Housing Act of 1937, as amended in sec-
tion 210, is amended by adding the following new subsection at the end thereof:
"(p) In order to assist elderly famUies (as defined in section 3(bX3)) who elect to
live in a shared housing arrangement in which they benefit as a result of sharing
the facilitiee of a dwelling with others in a manner that effectively and efficiently
meets their housing needs and thereby reduces their cost of housing, the Secretary
shall permit assistance provided under the existing housing and moderate rehabili-
tation programs to be used by such families in ouch arrangements. In carrying out
this BUDsection, the Secretary shall issue minimum property standards (or modify
existing standards) for the purpose of assuring decent, safe, and sanitary housing for
such families while taking into account the special circumstances of shared hous-
ing.".
RENT SUPFLBMENT PROORAM
Sec. 227. (a) Section 101(g) of the Housing and Urban Development Act of 1965 is
amended by adding at the end thereof the following new sentences: "To ensure that
Sualified tenants receive the benefit of assistance contracted for under this section,
ie Secretary shall offer annually to amend contracts entered into with bousing
owners under this section to provide sufficient payments to cover necessary rent in-
creases and changes in the mcomes of tenants. Such offer shall be made without
regard to whether the housing covered by such contracts are subject to mortgages
insured under the National Housing Act. The Secretary shall take such actions as
may be necessary to ensure that payments, including payments tiiat reflect neces-
sary rent increases and changes in the incomes of tenants, are made on a timely
basis for all units covered by controcts entered into under this section.".
(b) Section 101(1) of such Act is amended by adding at the end thereof the follow-
ing new sentence: "The Secretary shall utiliie. to the extent necessary, any author-
ity under this section that is recaptured either as the result of the conversion of
housing projects covered by assistance under this section to contracts for assistance
under section 8 of the United States Housing Act of 1937 or otherwise (I) for the
purpose of contracting for assistance payments, including amendments as provided
in subsection (g), with respect to housing prtnects (whether or not subject to a mort-
gage insured under the National Housing Act) that remain covered by assistance
under this section; (2) if not required to provide assistance under this section, and
notwithstanding any other provision of law, for the purpose of contracting for assist-
yGoot^le
anoe payments under eection 236(fX2] of the National Housing Act; and (3) to the
extent approved in appropriation Acta, pursuant to section 5(c} of the United State*
Housing Act of 1937, and if not required to provide assistance pursuant to para-
tion to any other funds autboriied and approved for use under si
APPIiCABIUTY OF RBSTRICTION ON USE OF ASSISTED
Sbc. 228. Section 214 of the Housing and Community Development Act of 1980 is
amended by adding at the end thereof the following new subsections:
"(c> The restriction established in subsection (a) shall apply only with respect to
any alien, other than an alien student described in subftKtion (aHl) or the aUen
spouse or minor children trf' such alien student, applying for fmancial assistance
Bilfir the date of the enactment of the Housing and Urban-Rural Recovery Act of
1983.
"(d) "nie Secretary of Housing and Urban Development shall require each individ-
ual applying for financial assistance after the date of the enactment of the Housing
and Urban-Rural Recovery Act of 1983 to include in such application a certification
as to whether such individual is a citizen of the United States, an alien allowed fi-
nancial assistance under subsection (a), or an alien prohibited financial assistance
under subeection (a).".
DEMONCTRATION PROJECT
Sec. 229. (a) The Congress fmds that—
(1) the Department of Health and Human Services spends in excess of
{5,000,000,000 annually for housing in the form of allowances for shelter for
public aBsistance recipients;
(2) States administering the Defurtment of Health and Human Services
public assistance program often specify shelter allowances that have little rela-
tionship to the cost or the quality of the housing in which public assistance re-
cipients live;
(3) at least 30 percent of public assistance recipients live in substandard hous-
ing;
(4) the older rental buildings in which many public assistance recipients live
are in those neighborhoods that need the assistance of the prc^ams of the De-
fkartment of Housing and Urban Development for preservation and rehabilita-
tion; and
(5) there is the potential for improving housing for many lower income fami-
lies l^ coordinating State and local government efforts in order to assure that
families receiving public assistance payments from the Department of Health
and Human Services are able to live in decent, safe, and sanitary housing.
(b) The purpose of this section, therefore, is to provide assistance to units of gener-
al local government and their designated agencies in order to develop a program
that will—
(1) encourage the upgrading of housing occupied primarily by lower income
families, including families receiving assistance under the aid for families with
dependent children program established under title IV of the Social Security
Act; and
(2) provide for better coordination at the local level of the efforts to assist
famihes receiving public assistance from the Department of Health and Human
Services so that these families will be able to occupy affordable housing that is
decent, safe, and sanitary and that, if necessary, is rehabilitated with funds pro-
vided ^ the Department of Housing and Urban Development.
(c) The Secretary of Housing and Urban Development (hereafter referred to in
this section as the "Secretary") shall, to the extent approved in appropriation Acts,
establish and maintain a demonstration project to carry out the purpose descrit>ed
in subeection (b).
(d> In carrying out such project, the Secretary shall make grants to units of gener-
al local government, or designated agencies thereof, to carry out administrative
plans approved by the Secretaiy in accordance with subsection <e), and the Secre-
tary may make grants to States to provide technical assistance for the purpose of
assisting such units of general local government to develop and carry out such
plans.
Secretary and that, in the case of units of general local government and their egen-
yGoot^le
e plan deaeribcd ii
tion.
(2) No Nch admin JatratiTe plan iball be selected by the Secretary onleH it wt»
forth a plan for local government activitiee that are doaigned to —
(A) require or encourage owners of rental houmng occupied by loiwer incane
familiee to bring such IxMising into compliance with local bousing codes;
(B) provide technical assistance, loans, or grants to assist owners described in
subparagraph (A) to undertalie cost-effective improvements of such housing;
IC) work with the State to establish and implement a schedule of local abetter
allowances for recipients of aasistance under title IV of the Social Security Act
tiaaed on building quahty that will be applicable to buildingi invdvol in thit
program; and
(D) coordinate local housing inspection, housing rehabilitation loon or grant
assistance, rental assistance, and social service programs for the purpoae ot im-
proving the quality and afTordability of housing for lower income families
(3| Funds received from any grant made by the Secretary to a unit of geneni
local government shall be made available for use according to the adniiniiArBin*
plans and may be used for —
(A) technical assistance or financial a . . ,
housing projects described in paragraph (2MA} of this subsection;
(B) temporary rental assistance to familiee who live in building nariitcd
under this prc^ram and who are eligible for, but are not receiving, assistance
under section 8 of the United States Housing Act (^ 1937, except that such fami-
lies shall not include families receiving assistance under title IV of the Social
Security Act, and the amount of such rental assistance may not exceed 20 per-
cent of each grant received under this section;
(O housing counseling and referral and other housing related services;
(D) expenses incurred in administering the program carried out wiUi funds
received under this section, except that such expenses may not exceed 10 per-
cent of the grant received under this section; and
(E) other appropriate activities that are consistent with the purpoeee of thi>
section and that are approved by the Secretary.
(t) Any recipient of a grant Irom the Secretary under this section shall agree to—
(1} contribute to the program an amount equal to 15 percent of the ninds re-
ceived from the Secretary under this section, and the Secretary shall permit the
recipient to meet this requirement by the contribution of the value of services
carried out specifically in connection with the program assisted under this sec-
(2) permit the Secretary and the General Accounting Office to audit its books
in order to assure that the funds received under this section are used in accord-
ance with the section; and
(3) other terms and conditions prescribed l^the Secretary for the purpose of
carrying out this section in an etTective and enicient manner.
(g) In making grants available under this section, the Secretary shall select as re-
cipients at least 20 units of general local government (or their designated agencies).
The selection of proposals for funding shall be based on criteria that result in a se-
lection of projects that will enable the Secretary to cany out the purpose of this
section in an effective and eflicient manner and provide a sufficient amount of data
necessary to make an evaluation of the demonstration project carried out under this
<h) The Secretary shall transmit, not later than March I, 1984. to both Houses of
the Congress a detailed report concerning the fmdings and conclusions that have
been reached by the Secretary as a result of carrying out this section, along with
any l^islative recommendations that the Secretary determines are necessary.
(ij Iriere is authorized to be appropriated for the purpose of carrying out this sec-
tion an amount not in excess of 125,000,000 for fiscal year 1984.
KXCLUSION Of HOUSING ASSISTANCE AS INCOHI
Sec. 230. Notwithstandine any other provision of law, the value of any assistance
paid with respect to a dwelling unit under the United States Housing Act of tSTT,
the National Housing Act, section 101 of the Housing and Urban IDevelopment Act
of 1965, or title V of the Housing Act of 1949 mav Dot be considered as income or a
resource for the purpose of determining the eligibility of, or the amount of benefits
payable to. any person living in such unit under any other Federal program of as-
sistance.
yGoot^le
BBCnON 23S K0HBOWNBK8HIP A6SIOTANCK
Sec 231. (a) Section 235(cXl) of the National Housing Act is amended—
(1) by striking out "The" in the firat sentence and inserting in lieu thereof
"Subject to the second sentence of this paragraph, the"; and
(2) by inserting after the first sentence the following new sentence: "Assist-
ance payments pursuant to any new contract entered into after September 30,
1983, that utilizes authority approved in appropriation Acts for any fiscal year
beginning afler such date may not be made for more than a 10-year period.".
(b) Section 2354c) of such Act is amended by adding at the end thereof the follow-
ing new paragraph:
(3XA) There hereby is established in the Treasury of the United States a fund,
which, to the extent approved in appropriation Acts, may be used by the Secretan
for purposes of carrying out subparagraph (B). There shall be deposited into such
fund (i) any amount recaptured under paragraph (2); (ii) any authority to make as-
sistance payments under subeection (a) that is committed for use in a contract but is
unused be^uae the mortgage, loan, or advance of credit involved is refinanced or
because such assistance payments are terminated or suspended for other reasons
before the original termination date of such contract; and (iii) any amount received
under subparagraph (O-
"(B) In the case of any homeowner whose assistance payments are terminated by
reason of tjie 10-year limitation referred to in paragraph (1), and who is determined
by the Secretary to be unable to assume the full payments due under the mortgage,
loaji, or advance of credit involved, the Secretary shall, to the extent of the avail-
^ility of amounts in the fund established in subparagraph (A), contract to make,
and make, continued assistance payments on behalf of such homeowner. Such con-
tinued assistance payments shall be made in an amount determined in accordance
with the applicable provisionH of paragraph (1) or subsection <aX2)(B) and for such
period as the Secretary determines to be appropriate.
"(C) Any amounts in such fund determined by the Secretary to be in excess of the
amounts currently required to carry out the provisions of subparagraph (B) shall be
invested by the Secretary in obligations of, or obligations guaranteed as to both
prindpal and interest by, the United States or any agency of the United States.".
(c) Section 235(hXl) of such Act is amended—
(1) by striking out "and" after "1971," in the second sentence;
<2) by inserting the following before the period at the end of such sentence: ",
and fav $16,660,000 on October 1, 1983";
(3) Dy iiuertuig the following new sentences after the second sentence: "The
aggr^ate amount that may be obligated over the duration of the contracts en-
tered into with the authority provided on October 1, 19S3, may not exceed
$166,600,000. The Secretary shall b^n issuing new commitments and reserva-
tions to provide mortgage insurance and assistance payments under this section
before the expiration of the SO-day period following tlie approval in any appro-
priation Act of budget authority for this section after the date of the enactment
of the Housing and Urban-Rural Recovery Act of 1983."; and
(4) by striking out the last two sentences.
The Ckaiuian. Are there any amendments to title EI?
AMBNDUENT OFFERBD Bv MR. BIAGGI
PKT 0WNKB8HIP IN ASSISTEO RENTAL HOUSING POH THE ELDERLY O
Sbc. 232. (a) No owner or manager of any federally assisted rental housing for the
elderly or handicapped m^ —
(1) as a condition of^ tenancy or otherwise, prohibit or nrevent any tenant in
such housing from owning pets or having pets living in the dwelling accommo-
datiom of such tenant in such housing; or
&) resMct of discriminate against any person in connection with admission
to, or continued occmtany of, such housing by reason of the ownership of pets
by, or the preeence of pets in the dwelling accommodations of, such person.
(b)(1) Not later than the expiration of the 12-moDth period following the date of
' t of this Act, the Secretary of Housing and Urban Development and
yGoot^le
572
the Secretary of Agriculture riiall each nnie nich reguIatioiM 3& may be iidcawiy
e <Al compliance with the provisions of suhaection (a) with r
program of aesisUnce referred to in subsection (d) that is administerad bf audi Sn
retary; and (B) attaining the goal of providing decent, safe, and sanitary houeiag h
the elderly or handicapped.
(2j Such r^uIatJonB shall eetabliah guidelines under which the owner or iiiiiiim[ii
of any federally aseiBted rental housing for the elderly or handicapped (A) may pfV-
scribe reasonable rules for the keeping of pets by tenants in such houainf; and IB)
shall consult with the tenants of such housing in prescribing such rules, ^idi rulea
may consider factors such as density of tenants, pet size, potential futancial obliga-
tions of tenants, and standards of pet care.
(C) Nothing in this section may be construed to prohibit any o
federally assisted rental housing fm" the elderly or handicapped, or any local faouB-
ing authority or other appropriate authority of the community where such hcMising
is located, from requiring the removal from any such housing of any pet wboae cco-
duct or condition is duly determined tci constitute a threat to the health or safety at
the other occupants of such housing or of other persona in the community where
such housing is located.
id) For purposes of this section, the term "federally assisted rental hou^ng for the
elderly or handicapped" means any rental housing project that-
Ill is assisted under section 202 of the Housing Act of 1959; or
12) is assisted under the United States Housing Act of 1937, the National Houang
Act, or title V of the Housing Act of 1949, and has as a m^fonty of its tenants elder-
ly or handicapped families, as such terra is defmed in section 202(dX4) of the Haw-
ing Act of 19^.
Mr. BiAGGi (during the reading). Mr. Chairman, I ask unanimous
consent that the amendment be considered as read and printed in
the Record.
The Chairman. Is there objection to the request of the gentle-
man from New York?
There was no objection.
Mr. BiAGGi. Mr. Chairman, I rise to offer an amendment to H.R.
1, the Housing and Community Development Act Amendments of
1983. I have consulted with the chairman, Mr. Gonzalez, and I ap-
preciate his indication of support. I commend him for his overedl
leadership on this one of the most important bills before the 98th
Congress.
My amendment seeks to prohibit by statute discrimination
against millions of elderly and disabled persons living in federally
funded housing who own pets. Put tmother way, my amendment
seeks to establish by statute that basic human right of pet owner-
ship for elderly and disabled persons living in federally funded
housing.
My amendment ia consistent with efforts of this Congress as well
as previous ones to outlaw all forms of discrimination in housing. I
would not be here today if there were not documented proof of eld-
erly and disabled persons being discriminated against simply be-
cause of ownership of a pet.
This form of discrimination is especially objectionable because it
attacks an ofttimes vulnerable group in our society. This discrimi-
nation can take one of two ugly forms. It can serve to deny em eld-
erly or disabled person admission into Federal housing — or worse,
it can serve as the basis for eviction of these tenants.
1 assure my colleagues that this is a serious problem. Every day
my offlce receives calls and letters from anguished senior citizens
who are forced daily to endure suffering from either forced separa-
tion from their pet or eviction caused by their pet. It is wrong and
it is that wrong we seek to right with this amendment.
yGoot^le
673
The situation is even more appzilling when one considers the es-
sential relationship which exists between an elderly or disabled
person and their respective pet. The old saying is that a dog is
man's best friend. For many elderly and disabled people in this
Nation, a dog or whatever pet cem be their only friend, their only
source of companionship — their only protection against criminals —
their only link to the outside world. Do we want Federal dollars
being used to throw these people into the street?
The reason we need this amendment is to clear up amb^ities
which exist in present HUD rules and regulations. For all practical
purposes, HUD r^ulations are silent on the issue of pet ownership.
This has led to a wide degree of local discretion on the part of oper-
ators of Federal housing. It is this local discretion which has
caused some of the abuses which have come to my attention.
Let me review some graphic examples of the problem — I received
a call last week from a disabled mother of two in Delta, Colo., who
was served a 30-day eviction notice because she kept a small rat
terrier in her apartment — the only link she has to her recently de-
ceased mother.
I receive many other letters illustrating how elderly and disabled
people depend on their pets for comfort, companionship, and pro-
tection. To be denied this right is a cruelty beyond bearing and
indeed unnecessary. As one elderly writer put it:
My wife and I are both elderly and I am also handicapped. We are fortunate in
havine our own home at present but if we had to leave it without our cat who gives
us so much love and companionship we would feel the loss deeply.
Mr. Cheiirman, a fundamental premise behind my amendment is
that pet ownership does have responsibility. It is spelled out specifi-
cally in the amendment with the following lemguage:
(c) Nothing in this section may be construed to prohibit any owner or manager of
federally assisted rental housing for the elderly or handicapped, or any local hous-
ing authority or other appropriate authority of the cximmunity where such housing
is located, from requiring the removal from any such housing of any pet whose con-
duct or condition is duly determined to constitute a threat to the health or safety of
the other occupants of such housing or of other persons in the community where
such housing is located.
Further, the legislation specifically spelts out that within 1 year
of passage, HUD shall develop regulations which will "establish
guidelines under which the owner or manager of emy federally as-
sisted rental housing for the elderly or handicapped first, may pre-
scribe reasonable rules for the keeping of pets by tenants in such
housing; and second, consult with the tenants of such housing in
prescribing such rules. Such rules may consider factors such as
density of tenitnts, pet size, potential ftnancial obligations of ten-
ants and standards of pet care."
This amendment is a modification of H.R. 1378, a bill I have in-
troduced in this Congress and in several previous Congresses. The
bill has a bipartisan list of 30 cosponsors.
The need for this legislation has been evident for a long time,
and I believe that the best time is now. Several State laws have
either passed or are pending and I think the time is right for Fed-
eral legislation.
An elderly gentleman from Indiana recently wrote:
yGoot^le
Mr St Ockmaix. Mr. Oiaifia:;. will zbt gvasiemati vidd?
Mr hmryn. I >ielid k» tnt gentl^maji.
Mr. St Gexmain. I thack ihe gentlfeiaais-
Mr. Chairman, the c»iBaiiru« has had an opportcnixy to it <if
th« nirifiniimer.t. The commhue ksow^ htnr hard the gentlanan
has worked ^m the aroendinent and his derodon lo Teufinaiy pa-
tienU aiid we are therefore prepared u> acceix the ameodnienL
This will help us expedite oon^deratton of the kgislaiicn.
Mr. WruE. Will the gentleman >ield?
Mr. BiAGCi. I yield to the gentleman.
Mr. WruE. I (xnnplimcnit the gentleman for the tune that he
spent on this amendment and for the consideratiaa and concern
that he showa here for persons who are renting housiiig. dderly
and handicapped.
As I understand it, the reason for this is to at least reqoiie anoe
consideration as to whether a person, elderly or handicspped,
comes into a rental unit and has a pet, whether that pet would be
allowed to continue with that person on the basis that it mi^t be
Home threat to their health or well-being; is that correct?
Mr. BiA'Xii. That is correct. Studies have pnn-en that.
Mr. Wylie. Now, it only applies to the elderly or handicapped as
I understand it. What about other persons?
Mr. BiA^xii. Clearly there may be others who might be interested
but the incidents that have developed over my time in the Cchi-
gress have been most heart rending with relation to the elderly
and handicapped. These pets mean more to those people in many
caseH than the rest of the community.
Mr. Wyuk. On page 3 of your amendment it says is assisted
under the U.S. Housing Act. If a m^rity of its tenants are elderly
or handicapped, What about the other teoimts in the unit?
Mr. BiAfXJi. No, it does not apply to them. We are talking strictly
about the elderly and the handicapped.
Mr. Wyije. So, an elderly or handicapped in a development could
have pets under the provision of this, but if they are not elderly or
handicapped and live in the same housing development they might
be precluded from having a pet?
Mr. BiAfirji. If there is an objection on the part of the landlord or
owner of the property, yes, this legislation does not cover them.
Now, this legislation flnds for its motivation a number of factors.
One of them would be protection for the elderly and the handi-
capped and they have a greater need, that is a proven fact. In ziddi-
tion to that, you have the compassionate perspective.
Wo have letters, I have included in my testimony letters from in-
dividuals whose only connection to people of their family who have
Ijredoceased them has been a common interest in a pet.
There are many emotional and traumatic experiences that relate
to the separation of a pet from an elderly or handicapped person.
You could make the argument that all people should have a pet
I understand what the gentleman's interest is. I Eigree. Except that
is the larger picture. We have difficulty with a specific area, that
yGoot^le
575
was the elderly find disabled and we are addressing that specific
area.
Perhaps we can in the future.
Mr. Wyue. I like the overall thrust of the gentleman's amend-
ment. I like the compassion it exemplifies.
Therefore, I have no objection to the amendment.
Mr. Vento. Will the gentleman yield?
Mr. BiAGGi. I ^eld to the gentleman.
Mr. Vento. What provision is provided for individuals that
might have an allergy or reaction to a dog, or cat, or other type of
pet? Is there any provision here? In a multiple-housing situation
obviously some people experience great discomfort on that basis.
Mr. BiAGGi. I am glad the gentleman asked that question. Clear-
ly tjiere is a provision in this legislation under paragraph C which
states, and I will quote it exactly the languEige for the Record and
for the gentleman's concern:
Nothing in this section ma^ be construed to prohibit any owner or manager of
federally assisted rental housing for the elderly or handicapped, or any local hous-
ing authority or other appropriate authority of the community where such housing
ia located, from requiring the removal from any such housing of any pet whose con-
duct or condition is duly determined to constitute a threat to the health or safety of
the other occupants of such housing or of other peraons in the community where
such housing is located.
Mr. Vento. I appreciate the gentleman's effort to respond to my
question but I do maintain concern about this. I must say with all
respect to the gentleman, 1 understand his motivation, but I re-
spectfully oppose and ask for opposition to this particular amend-
ment.
Mrs. Johnson. Will the gentleman yield?
Mr. BiAGGi. I yield to the gentleman.
Mrs. Johnson. It is my understanding that at this time policy
with r^ard to pets in Federal housing for the elderly is deter-
mined by local housing authorities and the public boards that
govern those authorities. Is that not the case?
Mr. BiAGGi. That is true.
Mrs. Johnson. In that case, I would just like to relate our experi-
ence in the State of Connecticut.
"The Chairman. The time of the gentleman from New York (Mr.
Biaggi) has expired.
(By unanimous consent, Mr. Biaggi was allowed to proceed for 2
additional minutes.)
Mrs. Johnson. Will the gentleman yield?
Mr. Biaggi. I yield to the gentlewoman.
Mrs. Johnson. We have had prolonged debates on precisely this
issue. As a representative at the State level last year I had peti-
tions from the elderly in my town in opposition to this kind of a
mandate. We also had lots of petitions in support of that kind of a
mandate.
It very clearljy impressed me that we ought to retain local regula-
tory auUiority in this sensitive area so that elderly from each town
can govern their unita in the way that is appropriate.
In some of my towns the units are one-story houses. Then it is a
very different matter from those towns that I represent where the
units are basically hi^rise.
yGoot^le
576
We are at this time in Connecticut invdved now in a idbt
project that will test out this policy in a number of different aet^
tings throughout the State in federally subsidized elderiy hoosing.
So, I see a lot of difficulty with a Federal mandate in this area at
that time, in the district that I represent. And I think from tbe
grassroots we have made a great deal of progress in discuamng thiii
issue and are now piloting the efTect of it.
I would dissent from the gentleman's amendment.
Mr. BiAGGi. If I may respond to the gentlewoman's concern.
Mr. Chairman, clearly I undenitand the controversy" it is not
without some duration. But this language is very balanced, it is
very balanced. We are talking about two perspectives; one, discrim-
ination. And this Congress can hold its head up with pride in its
fight against all types of discrimination.
Here we have in federally assisted housing a prohibition placed
not by the Federal Government but by local authorities. From a
Federal perspective I think we should be consistent to resist any
form of discrimination.
Now we £ilso understand a potential difficulty that arises. And I
have expressed the language in response to the gentleman ^m
Minnesota's query. The landlord or manager would have, in this in-
stance, under this language, the right to ask the tenant to remove
the pet.
The Chairman. The time of the gentleman from New York has
expired.
(By unanimous consent, Mr. Biaggi was allowed to proceed for 1
additional minute.)
Mr. Biaggi. Just to respond to the lady, it would give the manag-
er or owner the right to ask the tenant to remove the pet or run
the risk of eviction.
D 1620
In addition, we are asking HUD to establish guidelines which
would prescribe many reasonable rules to consider the density of
housing, the size of the pet, the standards of pet care, and the po-
tential fmancial obligations of tenants.
It is a balanced approach. It is not the usual approach of black or
white. We have kind of compromised. We are dealing with human
feelings of the disabled and the elderly, as well as those in the en-
vironment who might be adversely affected.
1 think this is a balanced approach and I am hoping that the
Members will pass it. I appeciate the support of the chairman and
the ranking minority member, the gentleman from Ohio (Mr.
Wylie).
The Chairman. The question is on the amendment offered by the
gentleman from New York (Mr. Biaggi).
The amendment was agreed to.
Mr. St Germain. Mr. Chairman, I move to strike the last word.
Mr. Chairman, I yield to the gentleman from Maryland (Mr.
Mitchell).
(Mr. Mitchell asked and was given permission to revise and
extend his remarks.)
yGoot^le
577
Mr. Mitchell. Mr. Chairman, I rise in support of this l^islation
with only one caveat and I would hope that in the future we would
not pass an appropriations bill prior to an authorization bill. It
does strai^acket us to some extent, but the legislation is good. The
chairman of the Housing Subcommittee and the chairman of the
full committee members have worked assiduously on this bill and 1
would hope that it would pass overwhelmingly.
Mr. St Germain. Mr. Chairman, I yield to the gentleman from
Illinois (Mr. Evans).
(Mr. Evans of Illinois asked and was given permission to revise
and extend his remarks.)
Mr. Evans of Illinois. Mr. Chairman, I rise in support of the
amendment by my colleague and friend from Illinois. This amend-
ment insures that small cities get a fair shake and their fair share.
In May, I wrote to the distinguished chairman of the House
Banking, Finance and Urban Affairs Committee as well as the
chairman of the Subcommittee on Housing and Community Devel-
opment to bring their attention to the matter concerning urban de-
velopment action grants and smaller cities.
In that letter, I pointed out that the law does not state at any
point that the extent of unemployment shall not be used for deter-
mining the eligibility of small cities for UDAG, Indeed, this was
not the intent of the Congress during consideration of the enabling
legislation.
Since that time, the Department of Housing and Urban Develop-
ment has indicated its intention to clarify in its regulations that
unemployment information may be used by smaller cities where
available to qualify for these grants. I certainly look forward to
such regulations.
In the meantime, however, I believe that this amendment is nec-
essary to insure that smaller cities are held harmless and are able
to retain their eligibility for these grants. Since 1978, UDAG has
brought almost $1 billion in new private investment and 22,000
jobs into Illinois.
Mr. Chairman, for purposes of clarification I would like to ask
my colleague from Illinois a few questions.
I ui^e our colleagues to give smaller cities a fair shake and to
support this constructive amendment.
The following are excerpts from my letter to the committee
chEiirman:
Congress of the UNrrsD States,
House of REFRraENTATivBS,
Washington. D.C., May SO. 1983.
Hon. Fernamd St Gbrmain,
Chairman, House Committee on Banking. Finance and Urban Affairs, Washington,
D.C
DxAR Mr. Chairman: I would like to bring to your attention a matter concerning
the Urban Development Action Grant program and smaller cities. Oflicials in small-
er cities are being informed by the Department of Housing and Urban Development
that Congress has statutorily stated that the extent of unemployment cannot be
used M a criterion for determining the eligibility of small cities for the UDAG pro-
gram. The Department has stated "that the exclusion of the employment factor for
small cities is statutory and can only be altered by Congress."
However, a close examination of the law by this office as well as by stalT of your
Committee has raised serious doubts as to the accuracy of that statement. As we
yGoot^le
578
begin to consider H.R 1, the Housing Urban-Rural ReCdvery Act of 1988, I bdi«ve
that legislative action must be talien to ensure that small cities receive a fair ihake.
It is staled in Section 119(bXl) of Title ! of the Housing and Community Develop-
ment Act that when the Secretary is iaeuing regulations for this program the atano-
ards which he is to use * ' * shall take into account factors such as the afge of bon>-
ing; the extent of poverty, the extent of population lag; growth of per capita income
and, where data are available, the extent of unemployment ami job lag. " (ilaUe
added).
The law does not state at anv point that the extent of unemployment shall not be
used for determining the eligiSility of small cities. Committee staff has noted that
this was also not the intent of the Congress during consideration of this enabling
legislation.
It appears that the Department has interpreted the language above to exclude the
extent of unemployment from its criteria for small cities' eligibility. It has stated
that since there is no uniform information available by whicn small citiee can be
compared with each other nationwide, unemployment cannot be counted as a factor.
ThiB interpretation has resulted in a situation that is essentially contrai? to Ute
intent of the UDAG program. When small cities that are experiencing high unem-
ployment levels cannot have this factor taken into account, they are unable to fairly
compete for these needed funds.
. . . My proposal is to state that it is not the intent of Congress to statutorily ex-
clude the employment factor for small cities and that the extent of unemployment
may be used to determine the eligibility of a small city if that information is avail-
able from Bureau of Labor Statistics' figures or can be demonstrated by that city on
the basis of other verifiable employment information.
Such a change would not require this standard to be used, but would allow small
communities that are experienc'
uiUble access to UDAG funds .
periencing a high level of unemployment to have n
Best regards.
Sincerely,
Lanr Evans,
Member of Congre$a.
The Chairman. Are thei% further amendments to title U?
Mr. Oberstar. Mr. Chairman, I move to strike the last word.
(Mr. Oberstar asked and was given permission to revise and
extend his remarks.)
Mr. Oberstar. Mr. Chairman, yesterday I discussed an amend-
ment that I proposed to offer. Previously the gentleman from Illi-
nois (Mr. Durbin) offered a similar amendment to the one that I
planned to offer, providing that unemployment statistics may be
used as one of the criteria for cities of under 50,000 population.
As I understand the Durbin amendment, it would grandfather in
those cities that have high unemployment rates and that are under
the 50,000 population level. It would accomplish, in a different way,
the same purpose of my amendment.
I would simply like to £isk the chairman of the subcommittee
whether that is his understanding that the two amendments do ac-
complish the same objective?
Mr. CjONZALEZ. Mr. Chairman, will the gentleman yield?
Mr. Oberstar. I yield to the gentleman from Texas.
Mr. (jONZALEZ. I thank the gentleman for yielding.
Precisely. As a matter of fact, when the gentleman from Illinois
(Mr. Durbin) consulted with us, we told him to make sure he
cleared with the gentleman from Minnesota (Mr. Oberstar) and to
correlate it. And in answer to the gentleman's question, yes; the
gentleman's understanding is correct.
And it does, with a little different language, what the gentlemcm
wanted to do and intended to do yesterday.
Mr. Oberstar. We both have consulted. The language does ac-
complish the purpose that I had intended.
yGoot^le
579
I thank the chairman for his cooperation on this very importfuit
matter.
Mr. ChairmEin, I commend the committee for its fine work on
this needed l^Blation and am pleased to support this recommit-
ment of the Congress to a strong Federal role in housing and com-
munity development. The amendment which Mr. Durbin and I
have proposed represents a fine tuning of this legislation, l^e
amendment is made necessary due to the unacceptably high unem-
ployment this Nation has undergone in the worst recession since
the 1930's.
Urbsm development action grants are an important development
tool for America's cities, large and small. But, this year, some 2,000
cities will lose eligibility for this important development tool while
many of them continue to face economic recession.
The 1980 census cannot reflect the impact of the deep recession
of the past 3 years. In northeastern Minnesota, the economic slide
began in 1981, with massive layoffs in the mining and steelmaking
industries. Today, that h^h unemployment continues. My home-
town of Chisholm is located in a county experiencing 26.9 percent
unemployment, yet the city will be inel^ble to compete for
UDAGs in fiscal year 1984. Other small cities in Minnesota and
throughout the Nation may lose their eligibility because census
data collected in 1979-80 cannot adequately reflect the high rates
of loi^-term unemployment.
The Department of Housing and Urban Development considers
four factors when establishing el^bility for UDAG's for small
cities with populations under 25,000 people. It looks at the popula-
tion growth from 1970 to 1980, and the percentage of housing built
before 1940. It calculates the change in per capita income from
1969 to 1979 and the percentage of poverty using the 1980 level of
poverty and the 1980 population data. For small cities with popula-
tions between 25,000 and 50,000 persons, it also calculates the rate
of growth in retail and manufacturing employment for the period
from 1972 to 1977. None of these factors adequately assesses the
impact of long-term high unemployment on these small cities be-
tween 1980 and 1983. For example, Biwabik, Minn., located in a
county with unemployment over 22 percent, had poverty of 10.5
percent of its population, under the 11.9 percent mandated by
HUD. If poverty were estimated today in Biwabik, this figure
would top the qualification standard due to the deep recession it
has undergone since 1980.
HUD rec(^nizes the important impact of unemployment on a de-
clining economic base and includes unemployment in the formula
for the lai^e cities and urban counties program. While unemploy-
ment data is not collected for small towns with populations under
25,000, the Department of Labor does collect unemployment statis-
tics for counties and so-called balance of counties which exclude
any city that has a population of 50,000 or more. Those areas
which have an unemployment rate of 120 percent the national av-
erage over a 2-year period are designated ' labor surplus areas" by
the Department of Labor. The designation "labor surplus area" is a
clear measure of prolonged and deep economic distress and offers a
more current indication of hardship than census data for our Na-
tion's small cities. These county-based statistics accurately reflect
yGoot^le
580
the unemployment problems small towns face and the flux of un-
employed persons within one county. This readily available nation-
al measure of unemployment for small cities clearly should be uti-
lized by the Department of Housing and Urban Development in its
UDAG qualification formula.
The Etepjirtment of Housing and Urban Development is currently
considering issuing new regulations which would incorporate a
measure of unemployment into the UDAG formula. My concern is
that the revision process at HUD may be time consuming, regula-
tions may not be issued in time for many deserving small cities,
and some cities may be dropped altogether. Grandfathering in such
cities will assure that they are protected while the rulemaking
process runs its full course. Under this amendment, HUD can con-
tinue to draft regulations which effectively incorporate national
unemployment data in the eligibility criteria, but they will be
under pressure to move quickly, and small cities will not have to
fear loss of eligibility for needed community development funds.
With this amendment there will be no difference in the criteria
£md large cities and urban counties; HUD will have a better tool
with which to measure economic distress in our Nation's smeill
cities.
The committee recognizes that the small cities UDAG program
would be greatly improved by incorporating such a meiisure of un-
employment in the qualification formula. In adopting this amend-
ment. Congress will be recc^nizing the harsh impact of unemploy-
ment on a declining economic base and we will signal the Depart-
ment of Housing and Urban Development that Congress is commit-
ted to maintaining a UDAG program that will meet the real and
urgent development needs of small cities in Minnesota and else-
where across the country.
AMENDMENT OFFERED BY MR. MORRISON OF CONNECTICUT
Mr. Morrison of Connecticut. Mr. Chairman, I offer an amend-
ment.
The Clerk read as follows:
Amendment offered by Mr. Morrison of Connecticut On page 106, afler line 16,
insert the following new subsections:
"(dXU Section 235(i) of such Act is amended—
(A) in paragraph (3XA)-
<i) by striking the word "two-family" and inserting "three-family" in lieu
thereof; and
(ii) by inserting the words "or a two-family" before the word "dwelling"
the first time it appears.
(B) in paragraph OKDl—
(i) bv inserting the words "or three-family" before the word "dwelling";
(ii) by striking the figure "$55,000" and inserting "$60,000" in lieu there-
(iii) by atriiiing the figure "$G1,250" and inserting "566,250" in lieu there-
(C) bv adding at the end thereof the fallowing new paragraphs:
(4) In mauring eligible mortgages under this subsection, the Secretary
may not deny insurance on the basis that a mortgage involves a two- to
three-family dwelling or is to be used to finance substantial rehabilitation
rather than new construction.
"(5) As a condition of insuring a mortgage on a two- to three-family dwell-
ing, the Secretary shall require the mortgagor (A) not to discnminale
against prospective tenants on the basis of their receipt of or eligibility for
yGoot^le
houoiiig asnatence under any Federal, State or local housing aaaistance pro-
gram and (B) to affree that during the term of the mortgage each of the
rental unite shall be occupied by, or available for occupancy ^, persons and
families whose incomes do not exceed 100 percent of the area median
"(e) Section 236(j) of such Act is amended —
(A) in paragraph (6) by striking out "two-family" and inserting "two- to three-
family" in lieu thereof; and
<B) by adding at the end thereof the following new paragraph:
W In insuring eligible mortgages under this subsection, the Secretary
may not deny insurance on the basis that a mortgage involves a two- to
three-family dwelling or is to be used to tinance substantial rehabilitation
rather than new construction,"
Mr. MoRHisoN of Connecticut (during the reading). Mr. Chair-
man, I ask unanimous consent that the amendment be considered
Eis read and printed in the Record.
The Chairman. Is there objection to the request of the gentle-
man from Connecticut?
There v/aa no objection.
(Mr. Morrison of Connecticut asked and was given permission to
revise and extend his remarks.)
Mr. Morrison of Connecticut. Mr. Chairman, this amendment
modifles the section 235 prc^am which is included and reauthor-
ized in H.R. 1. The section 235 program has varied application in
different areas of the country and is a very valuable provision of
our housing law. It is a homeownership provision. It helps low- and
moderate-income people acquire a home.
My amendment is directed to making this provision of the law
effective in older urban communities where existing structures
made up of two- and three-family units can for very limited
amounts of money be rehabilitated and used effectively for home-
ownership in the community — homeownership by low- and moder-
ate-income people. The amendment also authorizes assistance for
low- and moderate-income purchasers of new two-family structures.
This amendment will result in the production of standard units
at low cost to the Federal Government. It contributes to the stabili-
ty of communities by promoting not absentee landlords, but home-
owners who can do what we need most in deteriorated uH^an areas,
that is, provide the stability that these neighborhoods need.
Mr. St Germain. Mr. Chairman, will the gentleman yield?
Mr. Morrison of Connecticut. I yield to the gentleman from
Rhode Island.
Mr. St Germain. I thank the gentleman for yielding.
Mr. Chairman, I have consulted with the minority and I have
consulted with the chairman of the subcommittee, and we are pre-
pared to accept the amendment.
Mr. Morrison of Connecticut. I thank the chairman.
Mr. Wyue. Mr. Chaiirman, will the gentleman yield?
Mr. Morrison of Connecticut. I yield to the gentleman from
Ohio.
Bdr. Wyub. I thank the gentleman for yielding.
Ohio is a high unemployment State, as the gentleman from (!>3n-
necticut knows. My visceral reaction is to be for the amendment. I
would want to reserve the right to consult with HUD ofHcials
b^ore we got to conference and before it is adopted.
Mr. Morrison of Connecticut. I certoinly understand that.
yGoot^le
I thank the gentleman.
The CHAntHAN. The question is on the amendment offered by the
gentleman from Connecticut (Mr. Morrison).
The amendment was screed to.
The Chairman. Are there further amendments to title II?
AMENDMENT OFFERED BY MR. WORTLEY
Mr. WoRTLEY. Mr. Chairman, I offer an amendment.
The Clerk read as follows:
Amendment ofFered by Mr. Wortley: Page 89, after line 13, insert the following:
"(2) The Secretary may not sell any mortgage held by the Secretary as security
for a loan made under this section.".
Page 89, line 3. insert "(If after -<j)".
Page 89, line 4, strike out "or sell".
Page 89, line 5, strike out ", sale,".
Page 89, line 13, strike out the quotation marka and the final period.
Mr. Wortley (during the reading). Mr. Chairman, I eisk unani-
mous consent that the eimendment be considered as read and print-
ed in the Record.
The Chairman. Is there objection to the request of the gentle-
man from New York?
There was no objection.
(Mr. Wortley asked and was given permission to revise and
extend his remarks.)
Mr. Wortley. Mr. Chairman, my amendment does just what it
says. It is de''£ned to prohibit the secretary of Housing and Urban
Development from selling section 202 mortgeiges.
For almost 25 years, the section 202 program has provided low-
income elderly and handicapped people with safe, decent, and af-
fordable housing. The program has enjoyed widespread support
both within and outside of Congress. Of all the prc^rams in HUD's
repertoire, the section 202 program immediately comes to mind as
a conspiciouB success. More than 113,000 elderly and handicapped
individuals live in section 202 apartments.
When the 202 program was created by the 1959 Housing Act,
Congress intended HUD to hold the mortgages on these projects for
their duration. That intent was reinforced with the provision of
section 8 housing assistance contracts for section 202 projects. It is
an arrangement that has worked well. It is good public policy.
When HUD announced that it intended to sell 109 section 202
mortgages this spring, it surprised and upset a great deal of people.
From all accounts, ^e proposed sale was just the beginning of a
series of sales of section 202 mortgages until HUD haa divested its
portfolio of all 202'a.
It seems that HUD was equally surprised by the reaction to its
proposal. Prudently, HUD decided to "indefinitely postpone" the
May 25 sale. However, "indefinitely postpone" leaves a lot of
leeway for future attempts to sell these morteages.
Residents of 202 housing are not wealthy. They have no trade as-
sociation, they have no high powered lobbying organization geared
up to look after their interests. As Members of Congress, we must
be their advocates. It is up to us to protect their rights to live in
decent and eiffordable housing. Selling mortgages at deep discounts
to private investors for a short term infusion of capital is troubling
yGoot^le
583
and shortaighted. That is why direct and clear language is needed
to insure that section 202 mortgages remain in HUD's hands. To do
otherwise would be a serious mistake.
Mr. St Gbrmain. Mr. Chairman, will the gentleman yield?
Mr. WoRTLEY. I yield to the gentleman from Rhode Island.
Mr. St Germain. I thank the gentleman for yielding.
If the gentleman would understand that the chairman has re-
viewed his amendment, along with the chairman of the subcommit-
tee and the staff, under condition the gentleman would revise and
extend his remarks, we would be prepared, on this side, to accept
the gentleman's amendment.
Mr. WoRTLEY. I th2mk the chaiirman.
Mr. St Germain. The gentleman gave a very eloquent disserta-
tion.
Mr. Wyue. Mr. Chairman, will the gentleman yield?
Mr. WoRTLEY. I yield to the gentleman from Ohio.
Mr. Wylie. I thank the gentleman for yielding.
May I compliment the gentleman from New York (Mr. Wortley)
for his persistence and the hard work he has done on this amend-
ment.
I congratulate him for it, and we accept it on this side.
Mr. Wortley. I thank the gentleman.
• Mr. Hammerschmidt. Mr. Chairman, while I felt that H.R. 1,
with its origin{il authorization level of $23.1 billion, $15.7 billion
over the administration's recommendation and $8 billion more
than was appropriated last year, was an excessive budgetary ex-
penditure, I do support H.R. 1, as it has just been amend^.
As the ranking minority member of the Housing and Consumer
Interests Subcommittee of the Select Committee on Aging, I wish
to compliment the chairman and the ranking minority member of
the Banking Committee, Mr. St Germain and Mr. Wylie, and the
chairmeui and ranking minority member of the Subcommittee on
Housing and Community Development, Mr. Gonzalez and Mr.
McKinney, for their work on this bill and for including some im-
portant provisions for the elderly.
H.R. 1 provides $667.8 million which will support approximately
14,000 units of section 202 housing for the elderly and handicapped.
With the high cost of new construction and the interest rates at
about 13 percent, it is very difficult for the private sector to build
bousing for low- and moderate-income older persons. This commit-
ment by the committee and the administration to continue to
produce specialized and affordable housing for the elderly and
handicapped is to be commended.
As an original sponsor of the congregate services bill, I am
pleased that the committee has also authorized $4 million for the
congregate housing services prc^am. I believe that when the flnal
report on the congr^ate housing services program is completed
next year, we will documentation that this program saves enor-
mous amounts of medicare and medicaid funds by providing the
services which allow frail elderly persons to remain in the commu-
nity for extended periods of time.
'The section of the bill which allows section 8 existing housing
and moderate rehabilitation programs to be used by the elderly for
shared housii^ is an important change. This legislation does not
yGoot^le
584
expand the eligibility pool for the section 8 certificates but merely
allows those persons who are already eligible for rental assistance
to use the certificate in a shared housing arrangement "Hie section
adds no additional cost to the Government and in most cases will
result in a savings in Federal rental assistance subsidies due to the
lower cost of a shared unit. Furthermore, as mentioned Iw Mr. Phil
Abrams, then General Deputy Assistant Secretary for Housing, at
one of our subcommittee hearings, shared housing is also a cost-ef-
fective use of the existii^ housing stock. Many older people who
live in their own homes cannot afford to maintain them. Instead of
a house becoming dilapidated, the added income to the homeowner
from the rent would allow the home to be adequately maintfiined.
In closing, I would like to compliment Mr. Wortley for his
amendment which will prevent HUD from selling any mortgages
held as security for a loan under the section 202 program. My sub-
committee worked closely with members of the Banking Committee
to delay the stile HUD had scheduled for May of this year until the
authorizing committee had an opportunity to review HUD's propos-
al. It was my view at the time that the sale of these mortgages was
not consistent with congressional intent of the 202 pn^am and did
not provide the safeguards necessary to protect the residents of the
projects. I know that Mr. Wortley has given this issue a great d(Hil
of consideration, smd I feel this amendment is in the best interest
of the 202 pre^am,
I appreciate the opportunity to discuss the bill from the perspec-
tive of the Aging Committee. Three years is too long to go without
a housing authorization bill and I urge my colleagues' support of
H.B, 1.
The Chairman. The question is on the amendment offered by the
gentleman from New York (Mr. Wortley).
The amendment was agreed to.
The Chairman. Are there further amendments to title II? If not,
the Clerk will designate title III.
Title III reads as follows:
TITLE lU-MULTlFAMILY HOUSING PBODUCmON PROGRAM
8HOBT TTTLB
STATEMENT OF PURFOes AND AUTHOSTTY
Sec. 302, (al The purpose of this title is to increase the stock of rental and cooper-
ative housing in the Nation and to reduce the housing costs of the reeidents of such
housing by encouraging the construction and rehabilitation of multifomily rental
housing projects and cooperative housing projects for famUies and individuals with-
out other reasonable and affordabie housing alternatives in the private market.
(b) The Secretary of Housing and Urban Development (hereafter referred to in
this title as the "Secretary") shall, to the extent approved in appropriation Acts,
provide financial assistance to carry out the purpose of this title with respect to
that enables the cooperative to maintain affbrdability for lower income families as
required under section 30T(aX2).
(c) Such assistance shall be made available by the Secretary to States, units of
general local government (including Indian tribrat, or designated agencies of States
or units of general local government (including an areawide plannii^ organiiation
yGoot^le
demgnAted Iqr two or more unite of general local government to apply for asBistance
under this title and established under State law, interstate compacts, or interlocal
agteement for the purpose of formulating policies and plans for the orderly develop-
ment of a Bubstate or interstate region) Uiat apply for such assistance in a form and
manner preacribed by the Secretary and that are selected for such assistance on the
basis of the eligibility and selection criteria and other conditions set forth in this
title.
(d) States, units of general local government, or agencies thereof that receive such
assistance shall utilize it to stimulate the construction or rehabilitation of rental or
cooperative housing projects described in subsection (b) by providing —
(1) capital grants;
(2) loans;
(3) interest reduction payments;
(4) grants to finance the purchase of land; or
(5) other comparable assistance that the Secretary deems appropriate to carry
out the purpose of this title, designed to reduce project development and operat-
ing costs.
(e> The Secretary is authorized to enter into contracts with any State or agency
thereof in which contract such State or agency agrees to administer assbtance
available under this section, subject to all the terms and conditions specified in this
title and in rules, regulations, and procedures adopted by the Secretary under this
title. In administering assistance under this section, such State or agency thereof
will not provide assistance unless the unit of general local government in the area
where tbe project is to be located approves the application for assistance that is sub-
mitted for such project. In any case where the State is administering assistance
under this subsection, units of general local government or their designated agen-
cies shall not be precluded from applying directly to the Secretary for assistance
under subsection (c) with respect to a project where the State or the designated
Bgmcy of a State is participating by providing assistance for such project other than
tbe assistance specified in this subsection, except that units of general local govern-
ment (and their designated agencies) may not receive assistance with respect to any
project under this title both from the Secretary and from the State housing agency
if the assistance from such agency is made available from the a ' ' ' '' >
in the first sentence of this subsection.
Sic. 303. To be eligible for assistance under this title, a project must be located in
an area that is experiencing a severe shortage of decent rental housing opportuni-
ties for families and individuals without other reasonable and affordable housing al-
ternatives in the private market. The Secretary shall issue regulations, consistent
with the preceding sentence, that set forth minimum standards for determining
areas eligible for assistance. Such standards shall take into account the extent and
change in the level of poverty, housing overcrowding, the amount and duration of
rental housing vacancies, the amount of substandard rental housing, the extent of
rental housing production lag, and such other objectively measurable conditions
specified by the Secretary that are consistent with the first sentence of this section.
PROJBCT SBLBCnON CSrraHIA
Sbc 304. (a) In selecting projects for assistance under this title from among the
eligible projects, the Secretary shall make such selection on the basis of the
(1) of the severity of the shortage of decent rental housing opportunities in
the area, in which the project or projects are to be located, for families and indi-
viduals without other reasonable and affordable housing alternatives in the pri-
vate market;
(2) of non-Federal public and private financial or other contributions that
reduce the amount of assistance necessary under this title;
(5) to which the project or projects contribute to neighborhood development
■nid mitigate displacement;
(4) to which the applicant has established a satisfactory performance in meet-
ing aasistad housing needs; and
(6) to which the assistance requested from the Secretary under this title will
provide the maximum number of units for the least cost, taking into consider-
ation cost differences among different areas, among financing alternatives, and
among the types of projects and tenants being served.
yGoot^le
<bl From among the projects selected by the Secretaiy under subaection (aX the
Secretary shall give priority for Bwistance under this title to projects that e»ceed
the requirements of section 30T(aK2) with leopect to occupancy or availabili^ for
occupancy by persons and families whose inoomes do not ^ueed 80 perorat at the
area median income.
ALLOCATION OP ASSISTANCE
Sic. 305, In providing assistance under this title, the Secretary shall ae^ to
assure a reasonable distribution among eligible areas in different geographic n-
gjons. between metropolitan and nonmetropolitan areas, and among States and
units of general local government or their designated agencies. In addition, the Sec-
retary shall make a reasonable distribution of assistance among newly constructed,
substantially rehabilitated, and moderately rehabilitated projects on the basis of
local housing needs and prevailing local housing market conditions identified in the
application for assistance.
AMOUNT OF ASSISTANCE
Sec. 306. The amount of assistance provided under this title with respect to a
project shall be the least amount that the Secretary determines is necessarr to pro-
vide, through the construction or rehabilitation of such project, decant rental or co-
operative housing of modest design that is affordable for famiUea and individuals
without other reasonable and aHbrdabte housing alternatives in the private market,
including an amount necessary to make rents for at least 20 percent of the unita, as
described in section 307la)(2), affordable for persons and fasulies whose incomes do
not exceed 80 percent of the area median income. In determining the least amount
of assistance necessary to provide rental or cooperative housing, the Secretary shall
determine, at the time of approval of the project, that no assistance under this title
will be provided to persons or families who can afford units in the project without
such assistance.
TERMS AND CONDITIONS OF ASSIffrANCB
Sec. 307, (a) Assistance under this title may be provided with respect to a project
(1) the owner has entered into such agreements with the Secretary as may be
necessary to assure compliance with the requirements of this section, to assure
financial feasibility of the project, and to carry out the other provisions of this
title;
(2) the owner agrees that, during the 20-yaar period beginning on the date on
which 50 percent of the units in the project are occupied (or in the case of a
moderately rehabilitated project, are completed), at least 20 percent of the unite
the construction or rehabilitation of which is provided for under the application
"'""" be occupied, or available for occupancy by, per ..-■.■
s do not exceed 80 percent of the area median ii
shall be occupied, or available for occupancy by, persons and families whose in-
comes do r ■ ' "" - "-' *■ ■
(3) the o'
o pass on to the tenants any reduction in the debt service payments
reeulting from the assistance provided under this title;
(B) not to discriminate against prospective tenants on the basis that the
tenants have a minor child or children who will be residing with them or
on the basis of their receipt of or eligibility for housing assistance under
any Federal, State, or local housing assistance program; and
(CI not to convert the units to condominium ownership (or in the case of a
cooperative, to condominium ownership or any form of cooperative owner-
ship not eligible for assistance under this title);
during the 20-year period beginning on the date on which the units in the
project are available for occupancy lor in the case of a moderately rehabilitated
project, are completed 1;
(4) the mortgage secured by the project —
(A1 has a principal amount that is not more than the amount that could
be insured for the project under section 207 of the National Housing Act;
yGoot^le
587
(6) the State or unit of general local government that receives the a
certifieB to the satisfaction of the Secretary that the assistance will be made
available in conformity with Public Law 88-352 and Public Law 90-284.
(bXD The SecrMai? shall provide that if the owner or his or her Bucceasors in in-
terest fail to carry out the agreementa described in paragraphs (1), (2), and (3) of
subsection (a) during the applicable period, the owner or his or her auccesaors In
interest shall make a payment to the Secretary of an amount that equals the total
amount of assistance provided under this title with respect to such project, plus in-
terest thereon (without compounding), for each year and any fraction thereof that
the asslHtance was outstanding, at a rate determined by the Secretary taking into
account the average yield on outstanding marketable long-term obligations of the
United States during the month preceding the date on which the assistance was
made available.
(21 Notwithstanding any other provision of law, any assistance provided under
this title shall constitute a debt, which is payable in the case of any failure to carry
out the agreements described in paragraphs (1), {2), and (3) of subsection (a), and
shall be secured by the aecurity instruments provided by the owner to the Secretary.
(cXl) Rents charged for units occupied or available for occupancy by persons and
families whose incomes do not exceed SO percent of the area median income, as re-
quired by subsection (aX2), in any such project shall be approved by the Secretary.
bi approving such rents, the Secretary shall provide that tenants of such units are
charged not more than 25 percent of their adjusted income for rent, including utili-
ties, and shall require that not less than 30 days prior written notice of any increase
in rents be provided to such tenants.
(2) Any schedule of rents submitted by an owner to the Secretary for approval
shall be deemed to be approved unless the Secretary informs the owner, within 60
days after receiving such schedule, that such schedule is disapproved.
Sbc. 308. (a) Subject to terms and conditions that are prescribed by the Secretary
and are consistent with the purpose and other provisiona of this title, any obligation
issued by a State or local housing agency for the purpose of financing the develop-
ment of a project or projects assisted under this title is hereby deemed an obligation
that meets the requirements of, and has the benefits (including the benefit of inter-
est earned with respect to the obligation being exempt from Federal taxation) asso-
ciated with, an obligation described in section 11(b) of the United States Housing
Act of 1937.
(b) A mortgage on a project assisted under this title may he insured under title 11
of ^e National Housing Act if it meets the standards required for insurance under
such title.
(c) Section 817 of the Housing and Community Development Act of 1974 is
amended—
(1) by striking out "and" after "1966,"; and
(21 1^ inserting after "and 1970" the following: ", and the Rental Houaing
Production and Rehabilitation Act of 1983".
Sxc. 309. Any contract for assistance pursuant to this title shall contain (1) in the
case of a housing project developed and operated by a State, unit of general local
government, or an agency of a State or unit of general local government, a provision
requiring that not lees than the the wages prevailing in the locality, as determined
or adopted (subsequent to a determination under applicable State or local law) by
the Secretary, shall be paid to all architects, technical engineers, drafUmen, and
tedmicians employed in the development, and all maintenance laborers and me-
chanics employed in the operation, of the such project; and (2) in the case of any
housing project, a provision that not less than the wages prevailing in the locality,
as predetermined by the Secretary of Labor pursuant to the Davis-Bacon Act 140
U.S.C. 276a et seq.), shall be paid to all laborers and mechanics employed in the
development of such project. The Secretary ahall require certification as to compli-
ance with the provisions of this section prior to making any payment under such
contract.
37-922 O - 84 -
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MECuutnons
Sk, 310. Not later than tbe «i|nratioii of the Smonth period faOaniog the date of
tbe enactnient of this Act, tbe Secretary shall ueue such regulatiatB •■ may be nee-
eaaary to carry out the proviBions of this title.
under this title not
AMENDMENT OFFERED BY MR. WYUE
Mr. Wyue. Mr. Chairman, I offer an amendment.
The Clerk read £is follows;
Amendment ofTered by Mr. WYUE: Pag« 117, line 23. title m is amended by
adding the following new section:
Sec. 312. Notwithstanding any other provision of law, assistance under this title
shall not be made available if the unit of general local government, with juriadictjon
over the area In which the project is to be located, has any law, ordinance or odier
measure which could control rents on projects built after the date of enactment of
this section.
Mr. Wylie (during the reading). Mr. Chairman, I ask unanimous
consent that the amendment be considered as read and printed in
the Record.
The Chairman. Is there objection to the request of the gentle-
man from Ohio?
There was no objection.
(Mr. Wylie £i8ked and was given permission to revise and extend
his remarks.)
□ 1630
Mr. Wyue. Mr. Chairman, my amendment really needs very
little explanation, I think, at this point. Simply stated, it would say
rent control laws passed by local subdivisions cannot be awlied to
new rental housing constructed with Federal funds from this new
multifamily housing pri^ram.
This amendment is identical to an amendment which was passed
by this House on August 21, 1980, by a vote of 239 to 162. My
amendment would not apply — I repeat — would not apply to any ex-
isting housing or any existing rent control arrangement; it would
only apply to new construction under this new multifamily housing
program.
According to the purpose clause, this new multifamily housing
production pr(^am, and I read from page 106, line 23, is to "in-
crease the stock of rental housing and to reduce housing costs." It
is a fact, which can be statistically supported, that rental housing
heis declined more in cities with rental control than in those cities
without rent control. I do not ask my colleagues to take my word
alone for this statement, but I quote the former Secretary of HUD,
Mrs. Patricia Harris, who commissioned a task force to study the
problem of the lack of rental housing in the city of New York. The
task force reported the problem is rent controls, and in her words,
"Rent controls makes it difficult to persuade anyone to build new
apartments."
HUD Secretary Moon Landrieu said, "Rent control will only
make housing scarcer and drive the prices up further."
yGoot^le
The moBt recent HUD^ponsored task force, in its report, "Devel-
opment Choices for the 1980's," published in December 1980, stated
as one of its recommendations: "Remove rent controls and condo-
minium conversion bans if you want additional rental housing."
Last year the President's Commission on Housing reached a simi-
lar conclusion. It found, "that rent control causes a reduction in
the quality of existing rental housing stock and discourages invest-
ment in new rental property. Therefore, the Commission opposes,
in principle, rent control at Federal, State, and local levels."
Gunnar Myrdai, the 1974 Nobel Prize winner in economics from
Sweden, who says he is a liberal, said:
His cowinner of the Nobel Prize that year, a conservative,
Frederich Hayek, expressed a similar view.
The Washington Post, on the lacking-courage at^ment, said in
an editorial on June 11, 1980:
The main reason to keep rent control appears to be political. Many people regard
politicians who ommse it as enemies of the poor. What is needed now is for strong
politicians to stand up to the myths surrounding rent control in the District and say
no to eztonding this bad law.
The Washington Post followed that up with another editorial on
August 5, 1980, where it said:
The basic fact about rent control in Washington today is that it is encouraging
neglect of apartment buildings and discouraging construction of new, low-priced
apartments. In other words, rent control is not benefiting the poor.
To quote newspapers from New York City where we have prob-
ably the worst rental housing problem in the country, the Wall
Street Journal in an editorial on March 1, 19S0, said:
Rent control, as with all price controls, are counter-productive. They discourage
adjustments of supply to demand and accelerate deterioration of housing stock.
The New York Daily News, in an editorial on June 13 of this
year, said:
New York's housing regulations are the very reason there is a severe shortage of
rental apartments. The controls means that a landlord's income does not rise as his
costs, 90 thousands have either abandoned their buildings or turned them into co-
ops or condominiums.
And rent control is grossly unfair; there are wealthy folks ensconced in spacious
apartments on Park Avenue for $500 a month while working people are desperate
to find shoeboses for twice that figure. Crazy Ekldie could not design a more insane
poUcy.
Mr. Chairman, without my amendment, we would be saying the
more a city does to discourage private production, the more Feder-
al funds Uiey can receive. I believe that is wrong and I see no
reason why the taxpayers in Columbia, Ohio, who have resisted the
siren call of rent controls and have adequate, relatively low cost
rental housing, should subsidize, with taxpayers' dollars, the con-
struction of rental units in other areas.
Without my eimendment we have a contradiction in goals. On the
one hand, we are seeking to encourage increased construction of
rental housing, and on the other hand, we say do it only in commu-
nities that discourage it.
Mr. Chairman, I urge adoption of my amendment.
yGoot^le
Mr. Bartlett. Mr. Chairman, I rise in support of the a
of the gentleman from Ohio. Representative Wylie's a
would limit the new multifamily production program funds to com-
munities which do not impose rent controls on newly constructed
units.
For the past few years, the Congress has wrestled with the issue
of rent control. Both in 1980 and 1981 conferees adopted report lan-
guage that spoke to the detrimental effects of rent control. Lsst
year's Senate bill, S. 2607, prohibited the imposition of rent con-
trols on units to be assisted under the proposed rental rehabilita-
tion program. And, Mr. Speaker, this body has already gone on
record in support of the Wylie rent control amendment. In 1980 the
House of Representatives overwhelmingly adopted this amend-
ment. This body's landmark vote represented clear recognition of
the negative impact of rent controls.
I know that you share my concern about the decline in produc-
tion in rental housing across this country. Every effort must be
made to encourage investment in multifamily housing. However,
experience has proven over and over agetin, that rent control dis-
courages private investment in new unsubsidized rental housing.
Not only does rent control lock out private investment in rental
housing, but it also encourages the conversion of multifamily hous-
ing to condominiums and cooperatives. In addition, rent control has
been shown to result in the deterioration of existing rental hous-
ing. The cumulative effects of rent control, then, diminish housing
opportunities for low- and moderate-income persons, the very
people rent control is aimed to protect. 1 do not believe that any
one of us in Chamber intends for this result to occur.
Many would argue that the Wylie amendment denies many local
communities their decisionmaking authority. On the contriu^, how^
ever, this amendment does not tell local governments that they
Cfuinot enact rent control ordinances. Instead, the Wylie amend-
ment properly frames the choices for localities as they contemplate
the use of Federal funds and eliminates the ambiguities which
arise when communities pursue contradictory policies. And, given
the ecomonic distress that nearly every community in this country
is experiencing, I think we could all agree that the need for clear-
headed local policy decisions is even more acute.
Scarce Federal funds should not be made available to communi-
ties which have compounded their housing shorUige problems by
the adoption of rent control. This is not a reasonable approach to
the use of Federal moneys and this body and this Government
should not condone such practices.
I do not believe that rent control is or should be a partisan issue.
Rather, I think if each one of us was to examine the record, we
would find that opponents to rent control come from all across the
philosophical/political spectrum.
This amendment would increase the opportunities of housing for
Americans at all income levels, and the Wylie amendment does not
preempt local decisionmaking. The question is whether it is appro-
priate to throw good Federal subsidy money after a bad local deci-
sion, This is not a Federal preemption — it is a Federal decision. I
urge my coUezigues to vote for the Wylie amendment.
yGoot^le
591
Mr. Mitchell Mr. Chairman, I move to strike the requisite
number of words.
Mr. Chairman, I rise in opposition to the amendment. I just
heard my distinguished colleague say that this is not a preemption
on the part of the Federal Government with regard to jurisdiction
and decisions made by local governments. It is precisely that. Call
it by whatever name you want to call it, it is straitjacketit^ local
governments into doing something that maybe they do not want to
do, into disobeying the will of the people who might have passed a
rent control by a mandate, really.
It is always amazing to me that when we see Members of the
other body that have urged greater Stete control, greater local con-
trot, "get the Federal Government off the backs of local people and
State people," to see this sudden switoheroo.
D 1640
And then suddenly they say, "We are not preempting you; all we
are doing is putting you under the blackjack."
Mr. Green. Mr. Chairman, will the gentleman yield?
Mr. MrrcHEU- I yield to my distinguished friend, the gentleman
from New York.
Mr. Green. Mr. Chairman, I thank my colleague for yielding,
and I want to say to him that I think this is perhaps a much more
significant amendment than many Members would understand, be-
cause we have something of a tradition in the Congress of not in-
volving ourselves in local landlord and tenant law except where
federally financed projects are involved, and obviously this will be
a major step to intrude the Federal Government into still another
area of jurisdiction if we were to move forward with it.
But it seems to me, going beyond that, this amendment does
some other unintended things which I hope the Members would
take a look at. The amendment specifically bars aid to any jurisdic-
tion in which the projects would be located "as any law, ordinance
or other measure which would control rents on projects built after
the date of enactment of this section."
Now, many areas of this country have programs where they pro-
vide assistance to developers in the form of tax abatement or use of
condemnation powers to acquire land, and the quid pro quo they
get from the developer under local law is em eigreement to hold
down rente so that low and moderate income households can afford
them. All those kinds of local self-help efforts would be wiped out
by this amendment.
But let us go further. The Federal Government has provided in
the Internal Revenue Code, in section 103(b)(4), that for teix exempt
bonds, so-called industrial development bonds or revenue bonds, to
be used to finance rental housing a project has to be either 15 per-
cent low income in the case of targeted area projects or 20 percent
in the case of projecte in other areas, and bond counsels insist on
some local regime which insures that over the life of the project
those rente are going to be held down in order to qualify communi-
ties for this tax exempt provision that is provided in the Internal
Revenue Code.
yGoot^le
Mr. Mitchell. Mr. Chairmeui, I thank the gentleman &om New
York (Mr. Green) for his very c(^ent remarks.
It just seems to me that those who support this amaidment
ought to realize the danger they are placing themselves and local
governments in. If they do it on rent control, what is to pre^^nt
them from doing it on building codes? And that is a local decision.
If they do it on rent controls, what is to prevent them from intrud-
ing this massive Federal presence in the area of zoning?
Mr. Chairman, this is absolutely contrary to everything certain
Members stand for philosophically.
Mr. Vento. Mr. Chairman, will the gentleman yield?
Mr. Mitchell. I yield to the gentleman from Minnesota.
Mr. Vento. Mr. Chftirman, I thank the gentleman for yielding.
The irony of this is that the National Government, in our assist-
ed housing program, would be exempt under this particular cmiend-
ment. We are only reaching beyond the programs, and someone
might interpret the type of programs we have at the national level
in terms of assisted housing programs and other types of prc^rams
as constituting a form of control. So we initiate that for the local
and State governments' responsibilities but stubbornly, and I think
rightly, persist in terms of having some types of controls. We ought
not to be telling them that, I think, but we are telling them two
things, our colleague, the gentleman from New York (Mr. Green),
tells us. Under one regime, we are telling them that if they wfmt to
qualify for tax exempt housing bonds, ^ey have to do certain ac-
tivities, and, on the other hand, we are saying that if they do those
things, they cannot have other programs.
So, Mr. Chairman, I think at the very least there is a (»ntradic-
tion in this amendment notwithstanding probably the good inten-
tions of the author of it.
Mr. Wylie. Mr. Chairman, will the gentlemem yield?
Mr. Mitchell. I yield to the gentleman from Ohio.
Mr. Wyue. Mr. Chairman, the contradiction in the amendment
comes from the gentleman from New York (Mr. Green). It has not
been my intention to include anything except a rent control oidi-
nance which imposes rent control provisions.
The Chairman. The time of the gentleman from Maryland (Mr.
Mitchell) has expired.
(By unanimous consent, Mr. Mitchell was cdlowed to proceed for
2 additional minutes.)
Mr. Wylie. Mr. Chairman, will the gentleman yield further?
Mr. Mitchell. I yield to the gentleman from Ohio very briefly,
because I know he can get his own time later.
Mr. Wyue. Mr. Chairman, this has nothing to do with nonsubsi-
dized units. All it would have to do with this is with reference to
imposing rents on these new multifamily units, and that is what it
specifically says.
As long as they have a freedom of choice, which they do in this
case, as to whether they want to utilize this new program, then
they can say that the rent controls will not apply to this new pro-
gram. Now, the Federal Government has said that rent controls
will not be applied to the program.
Mr. Mitchell. Mr. Chairman, let me reclaim my time because I
only have about a minute and a heilf left.
yGoot^le
I think the ^ntleman is pointing up the flaw in this amend-
ment. No one, m my opinion, has thought through all the implica-
tions of this amendment to their ultimate conclusion. I just think,
based on one thing, that the Federal intervention and intrudii^ at
the local level is wroi^.
Our Maryland song says, "The despot's heel is on thy shore.
Maryland, my Maryland.' This amendment becomes the ' despot's
heel ' on local governments' right to pass ordinances as they so
desire.
Mr. Chairman, I yield back the balance of my time.
Mr. McKiNNEY. Mr. Chziirman, 1 move to strike the requisite
number of words, and I rise in support of the amendment.
Mr. Chairman, I would like to engage in a colloquy with my
ranking minority member of the full committee. I think there is a
great deal of confusion here as to what this amendment says. Let
me see if we can establish a legislative record. This amendment
allows the imposition of, say, a city council or government ordi-
nance on rent control on buildings that take advantage of this pro-
gram; is that not correct?
Mr. WyuE. Mr. Chairman, if the gentleman will yield, let me say
that that is correct.
Mr. McKiNNEY. Mr. Chetirman, there have been some interpreta-
tions in the past by builders that say condominium conversion
laws, which I support and which we have here in the District of
Columbia, are in fact rent control imposition because they require
X number of tenants to sign off for it to become a condo. Since they
can refuse to sign off, they therefore keep the rent there. There are
all kinds of other areas and instances that come into this.
The author of this amendment does not mean to include any of
these extraneous legislative affairs, does he?
Mr. Wyue. I do not mean to include any of these extraneous leg-
islative affairs. It would not apply, as I suggested when I was offer-
ing my amendment, to any existing rent control arremgement. It
would onl^ apply in this one case to this new proposed multifamily
rent housmg program.
I am merely saying that as a condition precedent, if a community
wants to take advantage of it, then they should not stifle the con-
struction under this progr£un with rent controls. What it amounts
to is a subsidization of a new multifamily housing program in those
cities which have rent controls.
In my own city of Columbus, Ohio, there is adequate rental hous-
ing, so we probably would not be taking advantage of it.
Mr. McKiNNEY. Mr. Chairman, one of the reasons I support the
gentleman's imiendment is that I know as a member of the Com-
mittee on the District of Columbia and as ranking minority
member for the last 6 years, that in 1975, when the District of Co-
lumbia put in pure across-the-board rent control, everything
stopped dead except for the building of luxury apartments. They
have since changed the law so that new construction is exempt.
Past construction is grandfathered in as rent control, so, therefore,
there is new construction going on Eigain.
I think all the gentleman is saying is that in new construction
whi<^ takes advantage of the formula that takes into consideration
the rental vacancy market, we are giving an unfair advantage in
yGoot^le
this particular amendment, the original amendment, to those ocnn-
munities that have a rental shortage because in fact they do have
rent control.
Mr. Green. Mr. Chairman, will the gentleman yield?
Mr. McKiNNEY. I will yield in just a second.
I think all any of us have to do is to get into our cars and drive
down Route 1 or Route 95 in Virginia, and we will see that those
buildings, before they became "condo canyon," were in fact the
rental apartments that were built before the District of Columbia
imposed rent control and stopped the construction of all multifam-
ily housing within the District itself.
Mr. Green. Mr. Chairman, will the gentleman yield?
Mr. Frank. Mr. Chairman, will the gentleman yield?
Mr. McKiNNEY. I am delighted to yield to the gentleman from
Massachusetts briefly, £md then I will yield to the gentleman from
New York.
Mr. Frank. Mr. Chairman, I thank the gentleman for yielding.
I think there is some confusion in the lemgueige. I will ask for my
own time to debate the merits later.
I want to say, with regard to the subject of Washington, D.C.,
that former Secretary Harris was quoted, and I think, for one who
has strong feelings on rent control, she did the appropriate thing.
She ran for Mayor of Washington, and I think that is ttie appropri-
ate forum for debating the merits of rent control.
But my question is that I think there was some uncertainty in
the colloquy between the gentleman from Connecticut (Mr. McKin-
ney) and the gentleman from Ohio, (Mr, Wylie). As I understand
the amendment, it does not simply say that we cannot put the new
buildings to be constructed with Federal funds under rent control. I
think we all agree that the new buildings that are themselves to be
constructed with Federal funds would be exempt. But as I under-
stand it, if rent control applied to any other new construction, they
would not be eligible for this program. In other words, if I am in a
city and I say that purely private, nonfederally subsidized new con-
struction is to be covered by rent control, I cannot then get this
Federal program, because I think we eigree the pr(^am itself
should be exempt from rent control.
D 1650
I think we agree that the prc^am itself should be exempt from
rent control, llie question is whether purely privately constructed
buildings, not themselves taking advantage of any Federal pro-
gram, if they are under rent control in the new construction phase,
should that mean that they do not benefit from this program? My
understanding is that that is what the amendment says. I would
think it is a little different them what came out in that colloquy.
Mr. McKiNNEY. Mr. Chairman, I yield to the author of the
amendment to answer that question.
Mr. Wylie. Mr. Chairman, let us do a little discussion of congres-
sional intent here.
What I suggested was that it would only apply to this program,
this new multifamily housing program, which we are providing
yGoot^le
595
under tiiis law to any new construction under this new housii^
program.
Mr. Fbank. Mr. Chairman, if the gentleman will yield further, I
am about to agree. We may be able to get home earlier and I think
others will.
I think we may have to look at the \ang\iage, but if the intent of
the amendment is as the gentleman from Ohio just said, that only
the buildings themselves constructed with Federal funds advanced
are to be exempt from rent control, I do not think there is much
objection to it on this side. I had understood the gentleman to
mean any new construction.
The Chairman. The time of the gentleman from Connecticut has
expired.
(At the request of Mr. Frank, and by unanimous consent, Mr.
McKinney was allowed to proceed for 2 additional minutes.)
Mr. Wyue. Mr. Chairman, that is the way I intended it to work,
if the gentleman from Massachusetts will yield.
Mr. Frank. Well, it is the time of the gentleman from Connecti-
cut. I just got it for the gentleman.
Mr. McKinney. Have we settled this colloquy, that that is exact-
ly what the author of the amendment intended?
Mr. Wyue. I said, that is exactly how I intend the amendment to
work, that it would apply to new construction under this new mul-
tifamily housing program.
Mr. Frank. And not to other buildings constructed privately; in
other words, if I am a city and I have new construction going on
that is purely private and that is covered by rent control, I would
not be affected by the gentleman's amendment, as long as the
building itself that was to be built under this program was exempt
from rent control.
Mr. Wylie. It would apply in that case, yes. I misunderstood the
gentleman.
Mr. Frank. Well, I think it should be clear.
Mr. Wyue. It would not apply.
Mr. Frank. So that this amendment does apply to far more than
simply the Federal buildings built themselves, because none of us
are talking about rent control on federally subsidized buildings. We
are talking about if a city makes a decision to control other build-
ings, they would then lose their right to get money under this pro-
gram.
Mr. Wylie, They would have to qualify under this program first
as a condition precedent; then it would come into play.
Mr. Frank. First you would qualify and then you would not get
inything.
Mr.WYL
iVYUE. Exactly right.
Mr. Frank. I appreciate that distinction. I am sure the cities
will, too.
Mr. Green. Mr. Chairman, will the gentleman from Connecticut
yield?
Mr. McKinney. What remaining time I have, yes,
Mr. Green. I would agree with the gentleman from Connecticut
that this language does not purport to rule a community out of a
program because it has restrictions on condo or co-op conversion;
but the language is very clear that it does rule out a community
yGoot^le
which has any law, ordinance, or other metisure, which could con-
trol rents on projects built after the date of enactment of this sec-
tion and could deny those communities the benefits of this section.
My problem is that a community which does not have general
rent control on new projects, and my home community of New
York City does not, may nonetheless have a number of laws which
impose limitations on the rents of some projects where a municipal
benefit is conferred.
The Chairman. The time of the gentleman from Connecticut has
again expired.
(At the request of Mr. Green, and by unanimous consent, Mr.
McKinney was allowed to proceed for 3 additional minutes.)
Mr. Green. Mr. Chairman, will the gentleman yield further?
Mr, McKiNNEY, I am delighted to yield.
Mr. Green. For example, Mr. Chairman, a municipality may
give a tax abatement in order to spur the development of housing.
In return for that tax abatement, it may ask under its law that the
developer commit — and this may be a legal requirement to get that
benefit — to hold down rents.
The more common program is that which many places have en-
acted, because we enacted it in the Internal Revenue Code. We
have said that 15 percent in the case of tai^et areas, or 20 percent
in the case of other areas of rental housing developed with tax-
exempt revenue bonds has to be for low-income households. The
way that is assured, so that the bond house, bond council can give
an opinion that the bonds in fact are federally tax exempt, is by
legislation which provides for this limitation on rents and the
agreement, of course, of the person who is developing the property
to comply with that legislation.
It seems to me what the Internal Revenue Code gives, what this
House has given in the Internal Revenue Code, we would now take
away with the Wylie amendment, because I think it simply has not
understood all the ramifications of rent legislation in the many dif-
ferent municipalities around this country and that is why the Fed-
eral Government should not be intruding into this area.
Mr. ScHUM£R. Mr. Chairman, I move to strike the requisite
number of words.
(Mr. Schumer asked and was given permission to revise and
extend his remarks.)
Mr. Schumer. Mr. Chairman, I rise in opposition to the amend*
ment.
I think this amendment can be discussed in a variety of ways.
For one, there are many fallacious arguments that have been made
about rent control itself For example, "Rent control is the leading
cause of housing abandonment; rent control prevents new construc-
tion." All these arguments are gainsayed by the statistics. I will
just give a few.
On abandonment of housing, of the nine leading cities in this
country, only one has rent control and New York, which is always
regarded as the classic example of a city with rent control, has less
per capita housing abandonment than Philadelphia, St. Louis,
Cleveland, Louisville, Baltimore, or Newark, cities without rent
control.
yGoot^le
597
Siinilarly, they say that rent control cuts down on cash flow, yet
in New York, with rent control, rente have increased by 12.4 per-
cent on the average in the last several years.
In Atlanta, they have only increased 6.5 percent, in Baltimore,
7.8 percent and in Chicago, 6.4 percent, cities without rent control.
As for new construction, just the same. There is no correlation
between new construction and rent control. In fact, if you look at
the reeisons why no rental housing has been built in this country in
recent years, there is no difference between areas with rent control
and areas without rent control. The most important factor is high
interest rates, and high construction costs, not because of rent con-
trol. But today we are not here to debate the merits of rent control.
Many of us are for it, many of us are against it.
We are here really to talk about local control. We are here today
to ask, is it appropriate for the Federal Government to tell local-
ities what kinds of land use regulations they may adopt, depending
upon our view of whether or not these regulations impede the de-
velopment of rental housing. That is the issue. It is not an issue of
whether we like or do not like rent control, but whether or not a
Federal intrusion is the appropriate mechanism on the threat of
cutting off money to aU localities that have rent control?
Well, what about other local land use regulations, such as 2-acre
zoning? There is no doubt that these regulations impede the build-
ing of rental housing.
Should we cut off all money for this progreim or other Federal
programs because a community has 2-acre zoning?
What about building codes? Should we cut off all housing money
for this new program or any new program because of their particu-
lar building codes? These questions are rhetorical, perhaps, but I
would think that if the gentleman from Ohio was consistent, he
would accept amendments like that as well, because it is clear that
2-acre zoning impedes housing development, and it is clear that
building codes impede the development of rental housing, and yet
you might say those decisions have always been left up to the local
constituency.
In keeping with that, Mr. Chairman, I am ottering em amend-
ment to the Wylie amendment. My amendment is at the desk.
PARUAMENTARY INQUIRY
Mr. Wyue. Mr. Chiurmem, may I propound a parliamentary in-
quiry?
The Chairman. The gentleman will state it.
Mr. Wylie. Mr. Chairman, the gentleman was recognized for 5
minutes in opposition to my amendment.
The Chairman. The gentleman concluded and is now seeking
separate recognition.
Mr. Wyue. For purposes of offering an amendment?
The Chairman. For purposes of offering an amendment to the
amendment.
Mr. Wylie. Do I have a copy of the amendment?
Mr. ScHUMER. It was brought to the minority about an hour ago.
I will bring another one to the desk as well.
yGoot^le
Mr. ScHUMXR. Mr. Chairman, I ask unanimous oonaeiit t
exj^in the amendment before it is iHougfat over to the <f
The Chairman. The Qerk must first report the a
Mr. ScHUMER. Mr. Chairman, I offer an amendment to the
amendment.
The Clerk read as follows:
Amendment ofTered by Mr. Schumer b> the amendment uQeivd bf Hr. W^ie At
the end of the new aectkm proposed to be inserted by the amendment, insert the
following new subaection:
n» A project ihali not be eligible for aHBistance under this title unteiB tfae Seem-
tar^ determines that the area in which such project is located:
111 does not have land use regulations or policies that preclude or tuucMoaaUr
restrain the development of rentel housing.
Iii> does not have building regulations or policies that jweelude or iiiimMWislilj
restrain the use of the least costly safe construx:tion materials.
(iii) does not have regulations or policies that restrict the number (rf dweUing
units that may be included in any residential structure in a manner that incdadv
or unreasonably restrains the development of rental housing.
In the new section prc^Msed to be inserted by the amendmmt, insert "(a)" after
the section designation.
Mr. Schumer (during the reading). Mr. Quiirman, I ask unani-
mous consent that the amendment be considered as read and print-
ed in the Record.
The Chairman, b there objection to the request of the gentle-
man from New York?
Mr. Wyuk. Reserving the right to object, Mr. Chairman, we just
f;ot a copy of the amendment. I think we might want to take a
ittle time here and at least look through the amendment, if the
gentleman does not mind.
Mr. Chairman, withdrawing my reservation of objection, would
the Clerk please continue to read?
The Chairman. The Clerk will continue reading the amendment
The Clerk concluded the reading of the funendment.
D 1700
Mr. Schumer. Mr. Chairman, what this amendment does is add
these other issues to the rent control issue because they, too,
impede local rental housing, at least in the eyes of many people,
including the President's Commission on Housing.
The first part of the etmendment says that if a locality has zoning
provisions that are unreasonably restraining the buildmg of rental
housing, then they should not get money for this new Dodd-Schu-
mer program.
A second part of the amendment says that any locality that has
building codes which impede construction, that it should not get
money for the new Dodd-Schumer program.
The third part of the amendment says that any locality which
haB density controls, should not receive money for the new pro-
gram because these, too, impede the building of rental housing.
You might say, and I am sure the gentleman from Ohio will say,
"but we have always left these issues up to the localities." Indeed
we have. So have we also left rent control up to the localities.
yGoot^le
599
You might also say that it could hardly be proven that any of
these three things, zoning, building codes, or density controls are
the sole real reason we do not have rental housing produced in this
country.
I would agree that that is correct, but nor has it been proven
that rent control is the reason we do not have new rental housing
being produced in this country.
This amendment aims at consistency. If we are going to pick out
certain localities, mine zunong them, because it has local laws we
do not like, then maybe we ought to pick out at other localities
that have other methods of impeding rental housing because they,
too, have things that perhaps a m^ority of Members in this body
do not like.
Mr. Wyue. Mr. Chairman, will the gentleman yield?
Mr. ScHUMER. I yield to the gentleman from Ohio.
Mr. Wyue. If we accept this amendment to the amendment, will
the gentleman support the amendment as amended?
Mr. SCHUMEB. No, I probably would not.
Mr. Wylie. Then why are you offering it?
Mr. SCHUMER. Because I want to extend your amendment which
I consider to be illogical, to an illogical extreme.
Mr. Wyue. This is completely extraneous to anything that I have
offered and to suggest that a project should not be eligible because
it does not have land use regulations or policies that preclude or
unreasonably restrain the development of rental housing, or does
not have buUding regulations or policies that preclude or unreason-
ably restrain the use of the least costly safe construction materials,
or does not have r^ulations or policies that restrict the number of
dwelling units that may be included, you have to make all of these
findings before you can qualify under the gentleman's amendment.
My amendment simply goes to one issue, which I suggested has
been counterproductive of rental housing. If the gentleman wanta
rental housing constructed in the city of New York he ought to be
encouraging people to invest their money in rental housing and not
suggesting they invest their money in rental housing that we are
going to impose a rent so low that they cannot get their money
back.
I just wanted to point out that this is a facetious amendment, I
know, on the part of the gentleman and it is not intended to be
adopted and he hopes it is not adopted, and if it is then he would
be opposed to the amendment, of course.
Mr. ScHUMER. In answer to the gentleman, I certainly think if
the eunendment he has introduced is going to pass it will be im-
proved by the addition of my amendment. I think the best solution
is to have neither amendment passed. But the gentleman from
Ohio, my good friend, offered his amendment and I am trying to
perfect that amendment, so to speak.
My basic point is that what is good for New York is not necessar-
ily good for Columbus, Ohio, and what is good for Columbus, Ohio,
is not necessfuily good for San Frsmcisco or Abilene or Tulsa.
I would say to the gentleman that we ought to once and for all
let each locality make its own decision as to what is good for it and
what is not.
yGoot^le
600
We have different rates of abandonment, we have different ratee
of vacancy. We have different rateB of many different things in our
areas and we ought to let the localities decide.
Just as the gentleman from Ohio thinks that this amendment IB
sort of absurd and is imposing the Federal Government's or my
whim on hia locality, the same is true of what I think his amenok
ment does to my locality.
Mr. Gonzalez. Mr. Chairman, I move to strike the requisite
number of words.
Mr. Chairman, the only reason I am compelled to rise is that I
see here that with the best of intentions those of us that are mn-
cerely trying to be responsive to the housing needs, the prograniB
and policies that have been in place over the course of the years,
and fully understanding and sympathizing with the gentleman
from New York, and knowing the situation of many, many of our
citizens, particularly those in New York who really have nothing to
look for protection in this matter of affordable rents than whatever
meager amount of State and city authority is there to defend that
interest. I know that this question of rent control or any control of
that kind is sort of repugnant to us by tradition. But I know from
personal experience, living here in the District, how much the citi-
zen needs some kind of protection in the kind of market for rental
housii^ that one must seek rental housing in these areas up here
in the East.
I have watched with great interest over the course of the years I
have resided here because all during the time, the 22 years I have
served here, I have lived on the Hill in a little, old ef^ciency apart-
ment. I have seen the rent in that apartment go from $110 to $430
in less than 10 years. A comparable, measly little apartment in my
area, why, there would be an uproar if that kind of exactment were
even suggested.
But yet, on the other hand, the contents of the amendment to
the amendment do not help any, either, because, as understandfible
as the reason and motivation for the amendment to the amend-
ment is, I must say that it puts us in a very, very difficult position
to support it because it is the old principle of two wrongs do not
make a right.
I am afraid that the Schumer amendment would put us on
record as being for those things that we do not really desire. And
as equivocal and as contradictory as the Wylie amendment is wi^
those who always have pledged their support to States rights and
local self-determination, I do not think this helps matters any.
Therefore, reluctantly, I must say I oppose the amendment.
Mr. Schumer. Would my distinguished chairman from Texas
yield to me?
Mr. Gonzalez. I am happy to yield.
Mr. Schumer. I understand the gentleman's arguments and I
will withdraw the amendment. But I wanted to use it as a means
of showing the absurdity of this amendment.
Mr. Chairman, I ask unanimous consent to withdraw the amend-
ment to the eunendment.
The Chairman. Is there objection to the request of the gentle-
man from New York?
Mr. Wyue. Mr. Chairman, I object.
yGoot^le
PAKUAHENTARY INQUIRY
Mr. Gonzalez. Mr. Chairman, the gentleman's request to with-
draw was objected to?
The Chairman. That is correct, objection is heard.
The gentleman from Texas still has the time.
Mr. Annunzio. Mr. Chairman, will the gentleman yield?
Mr. Gonzalez. I yield to the gentleman from Illinois.
(Mr. Annunzio asked and was given permission to revise and
extend his remarks.)
Mr. Annunzio. Mr. Chairmem, I rise in support of H.R. 1 and the
amendment offered by the distinguished chairman of the Housing
and Community Development Subcommittee, my colleague from
Texas, Henry Gonzalez.
As a longtime member of the Committee on Banking, Finance
and Urban Affairs and as a member who has represented one of
the largest urban communities of our Nation, I strongly endorse
the provisions contained in the committee-reported version of H.R.
1. I regret the necessity of having to reduce across the board the
authorizations in H.R. 1, but understand the necessity of doing so if
we are to have a housing authorization bill. It is regrettoble that
we have been unable to have a major housing bill since 1980. While
there were provisions on housing and community development au-
thorizations in the 1981 Gramm-Latta Budget Act, these provisions
were not carefully considered by the Committee on Banking, Fi-
nance and Urban AfTairs.
I commend my colleagues on the Housing and Community Devel-
opment Subcommittee for their work in the past 2 years in putting
this bill together. I was particuliu'ly pleased with an additional au-
thorization of a billion dollars for the community development
block grant program, including the programmatic changes in the
community development block grant and the urban development
action grant progreuns. Regretfully these additional authorizations
had to be dropped in order to comply with the budget resolution
and the action of the Appropriations Committee in passing H.R.
3133, the HUD-Independent Agencies appropriation bill.
Nevertheless, the 3-year authorization for CDBG and UDAG will
provide the necessary long-term authorization that cities, such as
Chicago, need in order to plan adequately their community devel-
opment progrEuns. The community development block grant pro-
gram is a particularly important one for my city, since it has made
extensive use of community development funds for rehabilitation of
residential housing throughout the city and has also made exten-
sive use of funds to develop community centers and senior citizen
centers.
H.R. 1 and the Gonzalez amendment retains our assisted housing
programs without which thousands of low-income people will be
un£3)le to be housed in a decent, safe, and suitoble housing unit. I
commend the committee for the initiative it has taken in producing
a new rental housing construction program. Perhaps there is no
other major urban community in this country today that has a
greater need for new rental housing units than the Chicago metro-
politan area.
yGoot^le
602
The program coatained in title III of H-R 1 is an in
carefully crafted productitm program that builds npon
€9 and the faUures of our past housing prodoction efibrtB. Ik wiD
not involve huge budgetary commitmrats that ive had to bear
under the section % new construction program. TIk imtal pmdae-
tion program will build much-needed rmtal houang tor both
middle-income people and lower-income people without desgning
projects which are totally low income or totally middle income. Up
to 20 percent of the units in each individual project will be tor knr-
and moderate-income people — the rest will be available for middle-
income people.
This rental production program is sponsored by our c»lleague
from New York, Mr. Schumer, and the distinguished BSember tt
the other body, Senator Christopher Dodd of Connecticut. It will
provide my city with the toots to provide rental housing that is juat
unavailable.
Mr. Chairman, I would urge my colleagues to expedite consider-
ation of this bill that the Banking Committee has worked diligently
in putting together and reporting out. It is an important piece m
domestic legislation and 1 urge its prompt approval by the House.
Mr. Ga&cia. Mr. Chairman, 1 move to strike the requsite number
of words and I rise in opposition to the amendment.
Mr. Chairman, I am taking the well because I think there are
many Members in their respective offices right now who are listen-
ing to this debate on rent control in the city of New York and vari-
ous other cities throughout the country.
Just let me say to my colleague from Ohio who has introduced
this amendment, now as long as I have been a Member of this body
there is no question in my mind that rent control is an issue that is
a local issue.
In the city of New York today we have an 8-year waiting list of
people trying to find apartments. I am sure if we go to the other
large metropolitan areas of this country, whether it be Los Aneelee
or ChiCEigo or Miami, we will find the same type of waiting lists.
□ 1710
It seems to me that while his intent and while the realtors in the
18 years that I have been in political office, whether at the State
level in Albany or here in Washington, have always pushed is that
rent control caused the demise of the city of New York. Well, that
is the furthest from the truth. I think the statistics were spelled
out quite clearly for seven or eight other cities throughout the
countn' which have a worse problem than we have in the city of
New York.
The key here is that there are many people living in New York
City today who are elderly and who are poor and let us forget
about the poor, let us just talk about our senior citizens. I am cer^
tain that my colleague from Ohio does not, under any set of cir-
cumstances, want to create chaos amongst the poor and the elderly,
especially the elderly.
Many of the people who are presently living in these apartments
today are people who are on fixed incomes, who have been living in
these apartments for many years. What you would be doing by lift-
yGoot^le
603
ing rent control would be placing these people under an unfair
hardship.
It seems to me that is not what we want to do. I would go a step
beyond that. Rent control right now in my city, the city of New
York, is voluntary; that is up to the developer if he decides on
using the tax benefits. Rent control in the city of New York today
is being phased out in favor of rent stabilization.
Let us face it, this is truly a local issue. I would suggest to my
colleague from Ohio who has had this amendment in for years and
years and years that he withdraw his amendment.
Rent control is something that the locality should have control
over and not the Federal legislature, because what is good for New
York, may not be good for other cities and what is good for other
cities may not be good for New York. Let the local governments
decide what it is they want and need for themselves.
Mr. Frank. Mr. Chairman, I move to strike the last word. I
thank the chairman.
Mr. Chairman, my first impulse when my friend from Ohio of-
fered this amendment was to raise a point of personal privilege.
Like many Members here I spent significant amounts of time
working in the local government and I spent some time it the State
l^islature. One of the minor reasons I was happy to get elected to
Congress was I looked forward to never Eigain discussing rent con-
trol.
For the gentleman from Ohio to inject that very local issue into
this body causes me personal distress. I know that was not his
motive but it is the effect.
Reference was made before to Pat Harris, who, caring strongly
about rent control, did what was appropriate, she ran for mayor.
Rent control is a State or local issue. I am not going to debate
the merits. I do not want to, I do not have to do that any more.
What we want to talk about is does it make sense for us to
punish communities that have rent control by denying them this
new Federal housing? There are several reasons already advemced
against that. One of course is a minimum regard for consistency.
For this Federal Government, for people on the other side who
have been in the process of giving more power to the States, more
authority to the local government, cutting back on the Federal
Government, for the first time in our history to make the Federal
Government the "super rent control administrator" of America is a
great mistake.
If the gentleman from Ohio has a long-suppressed desire to run a
city, I am sure we could all find him one to run. I wish he would
not further complicate our agenda.
There is another flaw in the gentleman's reasoning. He says, "If
you have rent control in a city, we will not allow you, if it covers
new construction, to build new housing."
You are punishing the wrong people. If the purpose is to get rid
of rent control it will not work because the beneficiaries of rent
control are already living in housing.
If you go to the people in a city and say, "As long as your city
kecnw i«nt control we are not going to allow any new housing to be
buiU," do you think the people now living in rent control units are
yGoot^le
going to say, "Oh, my, let us give up our protection because m
want to build new housing."
You are going to punisJi the city by aas^ng, "We will not build
new housing."
I am willing to bet the gentleman from Ohio who thought that
the city councils invoking (or rent control do not plan to move into
new houBing. The mayors do not live in new housing.
You are punishing the wrong people. You are saying the follow-
ing, "From the standpoint of the Federtd Government we believe if
you have rent control that means you do not have enough housing.
Therefore, in those communities where there are people who are
deprived of housing because they have rent control we are going to
compound that by not letting any new federally supported housing
be built."
You are punishing the wrong people, you are punishing the un-
housed because the housed have rent control. That is one of the
problems with trying to do this.
This is a Congress and a President which have been concerned
about proper authority for the local governments.
I wemt to refrain from, I should have not mentioned the Presi-
dent because as I said as I remember in 1981 David Stockman, tes-
tifying before the Banking Committee, said on his behalf emd that
of the President that he was opposed to this amendment. Ronald
Reagan out of a sense of consistency, according to David Stockman,
does not agree with the gentleman from Ohio, that we should start
picking and choosing as to what local policies make sense.
So, I would implore my colleague to show a sense of fairness and
consistency. We are not in opposing the Wylie amendment asking
anyone to be for rent control or against it. We are asking them to
act like Members of a national legislative body properly concerned
with national legislative policy.
We are asking them not to say to a few communities that be-
cause a particular majority of the national Congress at a particular
time does not like a policy that that community has always had
the right to accept we are going to punish them by sajring they
cannot get any new Federal housing.
The new Federal housing built under this pn^ram will not be
covered by rent control.
The question is should Congress say, "If you dare disagree with
us on whether or not rent control is a good thing you will get no
housing. We will send your city to bed without those apartment
houses. '
It is an inappropriate response for the Federal Government. It is
not a sensible way to make housing policy. If the gentleman from
Ohio has this craving to deal with all of the local housing policies
then I suggest to him there are more appropriate ways to do it
than involving the Congress in a subject matter that is not proper-
ly, constitutionally ours.
Mr. Wylie. Mr. Chairman, I rise in oppoeition to the amendment
The offering of my amendment was a sincere effort on my part,
let me say, to try to take care of what I regard as very serious
problems and that is the lack of rental housing units in those cities
which have rent controls. Now, this is not just my idea. I cited
many authorities which suggested that rent control is counterpro-
yGoot^le
605
ductive of producing rental housing. The latest editorial comments
from the new York Times, the city of the gentleman from New
York, who is opposing my amendment and offered an amendment
here which -was not an attempt to try to satisfy the problem or a
sincere effort, as I regard it, to help the situation, but rather was
an attempt to ridicule my amendment and for what reason I do not
know, because I staked out this position for a long time.
But there is an editorial in the New York Times from July 9
which says that:
Even if on owner pravea hardship, the law limits relief to a 6 percent rent adjust-
ment per year, which permits little progress over costs once inflation is deducted.
The hardship provision will do little to encourage new or rehabilitated rental hous-
ing.
New Yorkers who cannot afford the rents necessary to maintain housing in
decent, lawful condition need financial help, not laws that erode housing invest-
ment. The legislative psycholon that sees permanent rent regulation as a solution
to the housing prd)lem resemblea public policies that have neglected highway and
subway maintenance until these vital public investments crumble.
Easing the continuing apartment shortage in New York requires new investment,
not tightened rent regulation. The new rent bill suggests that Albany talces the
housing problem less seriously than the lobbying of tenant groups.
That is where I am coming from. I am sincere in my effort to try
to provide rental housing units for New York City and for the
Washington, D.C., area.
As I said, we do not have the problem in Columbus, Ohio, be-
cause we do not have rent controls in Columbus. How can we per-
suade somebody to invest in new rental housing units, if you sug-
gest to them that, "We are going to control the amount which you
receive on that investment?" , No way, not in our free enterprise
system will something like that work.
Mr. St Germain. Mr. Chairman, will the gentleman yield to me?
Mr. Wylie. I would be glad to yield to the gentleman.
Mr. St Germain. Mr. Chairmem, I, too, rise in opposition to the
Schumer amendment.
I wonder if at this time the gentleman from Ohio (Mr. Wylie)
having heard the debate on the Schumer amendment would con-
sent to a unanimous consent request by the gentleman from New
York to withdraw the amendment.
Mr. Wylie. Yes. It is not my intent to become personal over this
amendment. I do suggest that the effort was not — the amendment
was not offered in good faith, but if the gentleman wants to ofl'er a
unanimous-consent request again, I will not object.
Mr. Schumer. Mr. Chairmem, will the gentlemem yield?
Mr. St Germain. I yield to the gentleman.
Mr. Schumer. I thank the gentleman from Rhode Island and the
gentleman from Ohio.
I assure the gentleman from Ohio of my respect for him is the
highest. We have worked closely together for 3 years. My only
point in introducing this amendment was to show why I thought
the gentleman's amendment would need some modification. But I
appreciate the gentleman's consenting to my request.
Mr. Chairman, I renew my unanimous-consent request. I ask
unanimous consent to withdraw my amendment to the Wylie
amendment.
yGoot^le
Tht Chaumax. Is then objectioD to the i
man irrjm New York?
Tlxfre was DO oiqectiozL
Mr. Geeen. Mr. Chairman. I offer an amendment to the unoid-
ment.
The Clerk read ae follows:
Aa^m/iTntrm '/ff^rmi by Mr Grt«3 Vt Um amnximmt o0R«<i b« Mr. WjliK At tke
end of Umt Wylife UDendment. coAiige iht pcnod U> a "-""" and add 'otfacr dwi
(^nyscta 4«vet«p«d with Sum '.« kcaj grn-emnmt asnance.'.
Mr. Gbeen. Mr. Chairman, this amendment would meet tiie
problem that I discueeed earlier that a number of States and local
govemmentfl have laws which prmide for governmental aasistaiiee
in the form of tax abatement or in the form of tax exempt bonds
which require a restriction on the rents as a quid pro quo for the
State or local assistance.
It is my understanding from discussions with the l
from Ohio that it has never been his intent to preclude those li
of programs. I think this amendment would solve Uie problem from
the point of view of my own city, New York Ci^, which has no
general rent control law applicable to new construction, but does
benefit from those kinds of programs.
In that spirit, 1 offer the amendment.
Mr. Wyue. Mr. Chairman, will the gentleman yield?
Mr, Green. 1 yield to the gentleman from Ohio.
Mr. Wyue. I thank the gentleman for yielding.
Mr. Chairman. 1 am happy to accept the gentleman's amend-
ment.
It was never my intention to have this amendment apply in the
case of a tax abatement situation which the gentleman earlier de-
scribed or local situations where for some reason or other there an
investment opportunities made available to local tax laws.
I am happy to accept the gentleman's amendment. I meant for it
only to apply to specific rent control ordinances.
Mr. Green. I thank the gentleman.
The Chairman. The question is on the amendment offered by the
gentleman from New York (Mr. Green) to the amendment offered
by the gentleman from Ohio (Mr. Wylie).
The amendment to the amendment was agreed to.
Mr. St Germain. Mr. Chairman, I ask unanimous consent that
all debate on the Wylie amendment and all amendments thereto
end at 5:30 p.m.
The Chairman. Is there objection to the request of the gentle-
man from Rhode Island?
There was no objection.
The Chairman. Members standing at the time the unanimous-
consent request was made will each be recognized for I minute.
yGoot^le
PASLIAMBNTARY INQUIRY
Mr. Gonzalez. Mr. Chairman, I have a parliamentary inquiry.
The Chairman. The gentleman will state his parliamentary in-
quiry.
Mr. Gonzalez. Mr. Chairman, the Chair propounded the last
question as a vote on the amendment of the gentleman from New
York.
The Chairman. The amendment of the gentleman from New
York (Mr. Green).
Mr. Gonzalez. The amendment of the gentleman from New
York (Mr. Green) to?
The Chairman. To the amendment offered by the gentleman
from Ohio (Mr. Wylie).
Mr. Gonzalez. I thank the Chair.
The Chairman. The Chair recognizes the gentleman from Cali-
fornia (Mr. Levine).
(Mr. Levine of California asked and was given permission to
revise and extend his remarks.)
Mr. Levine of California. Mr. Chairman, I rise in strong opposi-
tion to the Wylie amendment which threatens to undermine com-
munity control over loctd housing policy. This is not an issue of ap-
K roving or disapproving rent control. If Congress succeeds in pro-
ibiting multifamiJy rental housing assistance to cities with rent
control on newly constructed units, it will set a dtmgerous prece-
dent by permitting the Federal Government to intrude into local
housing policies.
Mr. Chairman, I represent eight jurisdictions in my district.
Three of them have decided in favor of rent control. Five have de-
cided against it. This is an issue of local control.
Even in those cities which have elected to impose rent control,
this amendment would punish those persons within the city who
support rent control and those who oppose it.
Mr. Chairman, H.R. 1 contains a new, and necessary rental hous-
ing production and rehabilitation program which is expected to add
between 50,000 and 70,000 units of rental housing in areas of the
country that have a severe short^e of affordable rental housing.
Recognizing the urgent need to address the fact that vacancy rates
have reached an unprecedented low level, this program has re-
ceived the bipartisan support of the National Association of Home
Builders, the U.S. Conference of Mayors, and the National League
of Cities.
Representative Wylie 's amendment would not only have the
effect of withholding funds from communities which suffer from
the most severe housing shortages, but would threaten a city's
right to determine housing policy according to its own require-
ments.
Whether implementing zoning regulations, height and density
limitations, and building code regulations, local city government^
have traditionally determined and enforced local housing policy.
Similarly, the decision to regulate local rents should be left to local
authorities, who are most familiar with local housing conditions.
In light of the fact that over 5 million lower income families
throughout the Nation still live in inadequate housing, I believe
yGoot^le
that all cities should qualify for support nnder the rental 1
production and rehabilitation pragram. Rather than punisfa all c
zens of any city which adopts certain hoiising policies, the Federal
Government should protect their right to govern themselves.
Whether you support or oppose rent control is not the point. I uifie
you to oppose this unwarranted and unnecessary intrusion by the
Federal Government into local control of housing policy.
Therefore, 1 strongly oppose this amendment.
(By unanimous consent, Messrs. Gonzalez, Weiss, Schumer, and
Levine of California, yielded their time to Mr. Wright).
The Chairman, llie Chair recognizes the gentleman frtMU Texas
(Mr, Wright).
Mr. Wright. Mr. (^airman, I thank my colleagues for jrielding.
Mr. Chairman, I rise in opposition to this amendment because I
think it would be a dramatic break from tradition. It would be an
overturning of all of the precedents that we have sought so as^du-
ously to ol»erve in this Congress.
Never before have we undertaken to dictate to localities what
kinds of ordinances or what kinds of rules and r^ulations tbi^
might apply locally to land use or rent controls. There have been
times, of course, when the Federal Government has applied rent
controls. As a matter of fact, in our low-cost, low-rent housing pro-
grams, we exact a form of rent control today from the standpoint
of the Federal Government. We think in the public interest if we
are to make Federal credits and Federal dollars available to con-
struct low-cost, low-rent housing units available to people of low in-
comes, that we have the responsibility to see to it that certain con-
trols are exerted over the amounts that might be charged by the
landlords, liiose landlords are the beneficiaries of largesse from
the Federal Government, whether it be by dollars or by credits.
Therefore, if we assume the responsibility eis the Federal Govern-
ment to exert certain controls over the amounts of money that may
be charged, how do we presume that we have the authority to deny
to communities in some four of our States the right on their own,
in their own volition, in the exercise of their own local governing
powers, to assert rent controls within their own jurisdictions?
It seems to me it would be an outrageous intrusion on the part of
our Federal Government into the rights that have always inhered
in State and local governments.
For that reason alone this amendment ought to be voted down as
an intrusion into State and local rights.
Beyond that fact, I think we need to recognize that there is a
need for us to be concerned about the quality of housing and tiie
cost of housing, whether it be purchased housing or rented housing.
If we say that we are going to be dead set against any attempt on
the part of any unit of Government to keep rents low, then we en-
coureige rents being high. I do not think that is what we want to
encourage in this Congress. I do not think we are in the business
now of trying to approve that which the administration is attempt-
ing to do in turning low-rent projects, once they are paid out, into
condominums so that they can be sold at higher and higher prices.
And those people who have been the beneficiaries of the reasonable
rents are thrown out to fend for themselves. That it seems to me is
an outrageously unresponsible position for us to take.
yGoot^le
Mr. MiNiSH. Mr. Chairman, will the gentlemein yield?
Mr. Wriqht. I yield to the gentleman from New Jersey.
(Mr. Minigh asked and was given permission to revise auid extend
his remarks.)
Mr. MiNiSH. Mr. Chairman, I rise in opposition to the Wylie
amendment.
Mr. Chairman, I rise to voice my very strong opposition to this
amendment.
We are currently debating one of the most important pieces of
I^islation the Congress may consider this session. This legislation
is a reaffirmation of our national commitment to provide a decent
home and suitable living environment for every American family.
It reauthorizes all of the major federally s[>onsored housing and
community development programs and includes a very signiHcant
provision which is designed to stimulate the production of rental
housing.
It is the implementation of the rental housing component of this
bill which the proposed amendment would impinge upon. Some
Members of this body are attempting to use this important legisla-
tion as a means of overriding a local government's ability to re-
spond to the housing needs within its jurisdiction. By offering this
amendment the sponsors are attempting to ransom much needed
moneys for low and moderate rental housing production in return
for a local government's freedom to respond to the rental housing
market conditions in their area.
I do not intend to belabor my colleeigues with a full discussion of
the relative merits of rent control. Quite frankly, that is a matter
which could keep us occupied for quite some time. Suffice it to say
that the correlation between rent controls and the decline of rental
housing is not proven. Most likely, abandonment and the decline of
rental housing have been the result of a compilation of factors in-
cluding high interest rates, restrictive zoning, and local building
codes. Unless each of these causes were addressed individually, sin-
gling out rent regulation alone would be shortsighted indeed.
Today I am simply calling upon the Members of this body to rec-
ognize the authority to stabilize rents as an inherently local pre-
rogative, which should not be infringed upon through such heavy-
handed techniques as the denial of much needed Federal housing
moneys.
This country's rental housing market is actually comprised of nu-
merous regionally oriented markets which differ from area to area.
In my district of New Jersey, for example, the vacancy rate is ex-
tremely low compared to many other areas of the country. If at the
FederEil level, we were to impose a uniform, rigid policy which
would have the effect of limiting the authority of local officials, we
would be failing to recognize that housing markets differ between
areas, and that the problems require remedies which are designed
for each set of particular circumstances. By ignoring the different
rental housing conditions which exist throughout this country, we
could be doing a very grave disservice to those with limited in-
comes who are forced to compete for rental housing in tight mar-
kets. Local governing bodies must be free to respond to their indi-
vidual market conditions. A Federal policy restricting State and
yGoot^le
610
local implementation of rent control could severely impinge upon
this freedom.
I think it is ironic that those who are calling for the Federal
Government to override State and local rent control laws bekmg to
the same party which espouses the so-called New Federalism, a
new direction of turning back authority and responsibility to State
and local governments.
To insure that housing opportunities can be kept available to
members of all income groups, I urge that this amendment be de-
feated, and local governments be left to respond to their market
conditions as they see fit.
Mr. Wright. For each and all of those reasons, Mr. Chairman, I
implore ray colleagues to vote "no" on the Wylie amendment.
D 1730
The Chairman. The Chair recc^nizes the gentleman from Ohio
(Mr. Wylie).
Mr. WVUE. Mr. Chairman, I am surprised that the mi^jorit;
leader is opposed to my amendment and suggests that if it is adopt-
ed that rents will somehow go up.
If we produce a lot of apples, the price of a single apple will come
down; if we produce few apples, the price of a single apple will go
up. It is that simple. This is the issue. It is not a new issue.
Two years our committee, in commenting on the lack of rental
housing, said:
Rent control
velopment of n<
Again, in the budget reconciliation bill, we said:
Two cities which do not have rent control ordinances have huge
vacancy rates. Dallas-Fort Worth has a vacancy rate of 9 percent
Houston h£is a vacancy rate of 19 percent. There are no vacancy
rates in those cities which have rent control ordinances.
The Chairman. All time has expired.
The question is on the amendment offered by the gentleman
from Ohio (Mr. Wylie), as amended.
The question was taken; and the Chairman announced that the
noes appeared to have it.
RECORDED VOTE
Mr. Wyue. Mr. Chairman, I demand a recorded vote.
A recorded vote was ordered.
The vote was taken by electronic device, and there were — ayes
206, noes 208, not voting 19, as follows:
[Roll No. 241]
Anthony Badham
Archer Bamard
AuCoin Bartlett
yGoot^le
nan
Hartnett
Pashayan
U
Hg^bwer
Patman
ett
Paul
iter
illis
Petri
u^^
Porter
ikif
Pritchard
uckaby
Pursell
nfield
Hunter
gjm.„
n(CO)
Hutto
in (IN)
Hyde
Ireland
ffi-
Jeffords
Ritter
ibell
Jenkins
Roberts
sy
Johnson
Robinson
Kaaich
Roemer
pie
Kemp
Rogers
ey
Kindneea
Roth
Kolter
Rudd
Kramer
Sawyer
Schaefer
oanCMO)
Utta
Schneider
ble
Leach
Schuize
■ran
Leath
blin
Lent
Shaw
Levitas
Shelby
Lewis (CA)
:, Daniel
Lewis (FL)
Shuster
9, Philip
Livingston
Siljander
9l
Uoyd
Skeen
ito
Loeffler
Skelton
Long(MD)
Smith (U)
Lott
Smith (NE)
ck
Lujan
Smith, Denny
^T"
Smith, Robert
Snowe
MacKay
a™
an
Madigan
rd8(AL)
Marlenee
Spence
Kl8(0K)
Marriott
isxr
Martin dh)
tich
Martin (NO
stump
bom
Martin (NY)
Sundquist
9(IA)
McCain
Tallon
er
McCandless
Tauke
McCoUum
Taunn
the
McDonald
Taylor
din
McEwen
Thomas (CA)
Ml
McGrath
Thomas (GA)
McKeman
Vander Jagt
Vandergriir
>
McKinney
Mica
Volkmer
■kh
Michel
Vucanovich
Miller (OH)
Walker
ling
Mollohan
Weber
Montgomery
Whitehurst
Moore
Whittaker
im
Moorhead
Wilson
t
Morrison (WA)
Winn
ereon
Myers
Wolf
:OH)
Nelson
Wortley
Ralph
Nichols
Wylie
Saif
Nielson
Young (AK)
nenchmidt
O'Brien
Young (FL)
•
Oxley
Young (MO)
Bn(UD
Packard
Zschau
in
Parris
yGoot^le
Ackerman
Ford(TN)
Murtha
Addabbo
Fowler
Natcher
Akaka
Frank
Neal
Alexander
Frost
Nowak
Fuqua
Dakar
Annunzio
Garcia
Oberstar
Applegate
Gejdenson
Obey
ABpin
Gephardt
Gilman
Olin
Bat«a
Ortiz
Beilenson
Gonzalez
Ottinger
Berman
Gray
Owens
Bevill
Green
Panetu
a.„
Guarini
Patterson
Hall (IN)
Peaae
la
Hamilton
Hatcher
Penny
Bonior
H«fner
Bonker
Hertel
Pickle
Borski
lorton
Price
BOBCO
Boucher
lowaH
Hoyer
Rangel
Ratchford
Boxer
Hughes
Reid
Britt
Ja^bs
Richardson
Brooks
Jones (NO
Rinaldo
Brown (CA)
Jones lOK)
Roe
Burton (CA)
Jones (TN)
Rose
Carr
Kaptur
Chappell
Kaatenmeier
Roukema
Ca^ho
Kazen
Rowland
Ken nelly
Roybal
Coleman (TX)
Kildee
Russo
Collins
Kogovsek
Sabo
Conte
Kostmayer
Savage
Conyere
LaFalce
Scheuer
Cooper
Lantos
Schroeder
Coyne
D' Amours
Lehman (CA)
Schumer
Lehman (PL)
Seiberling
de la Garza
Leland
Shannon
Dellums
Levin
Sharp
Dickfl
Levine
Sikor^ki
Dingell
Lipinski
Simon
Dixon
Long (LA)
Sisiaky
Donnelly
xjwry (WA)
Slattery
Smith (FL)
Dorgan
,uken
Dowdy
Lundine
Smith (NJ)
Downey
Markey
Solarz
Durbin
Martinez
Spratt
Dwyer
Matsui
St Germain
Dymally
Mavroulea
la-
E^n
Mazzoli
Early
McCloskey
Stokes
Eckart
McCurdy
Stratton
Edgar
McHugh
McNulty
Studds
Edwards (CA)
Swift
English
Mikulski
fc
Evans (ID
Miller (CA)
Fascell
Mineta
Towns
Fazio
Minish
Traxler
Feighan
Mitchell
Udall
Ferraro
Moakley
Valentine
Fiah
Molinari
Vento
Florio
Moody
Walgren
Watkins
Foglietta
Foley
Foi^(MI)
Morrison {CD
Mrazek
Waxman
Murphy
Weaver
yGoot^le
WeiBB
Wirth
Yates
Wheat
Wise
Yatron
Whitley
Wolpe
Zablocki
Whitten
Wright
V/ySen
Williams (MT)
NOT VOTING-19
Bamee
Flippo
McDade
Boner
Hansen (ID)
Rahall
Breaux
Rodino
Broyhill
Hawkins
Torricelli
Chandler
Heftel
Williams (OH)
CrockeU
Holt
Dannemeyer
Lowery ICA)
The Clerk announced the following pairs:
On this vote:
Messrs. Coyne, Richardson, Aspin, Panetta, and Lantos changed
their votes from "aye" to "no."
Messrs. Ray, Gaydos, Gunderson, and Ralph M. Hall changed their
votes from "no" to "aye."
Mr. Skelton changed hia vote from "present" to "aye."
So the amendment, as amended, was rejected.
The result of the vote was announced bb above recorded.
D 1750
The Chairman. Are there any further amendments to title III?
AMENDMENT OFFERED BY MR. MORRISON OF CONNECTICUT
Mr. MoRBisoN of Connecticut. Mr. Chairman, I offer an amend-
ment.
The Clerk read as follows:
Amendment otTered by Mr. Morrison of Connecticut: Page 111, afier line 19,
insert the following new subsection:
"(b) In providing assistance under this title, the Secretary shall make a reasona-
ble distribution of such assistance provided in each State between unite to be occu-
pied by (1) elderly or handicapped families (as defined in section 202(d)(4) of the
Housing Act of 1959); and (2) other families or individuals. The amounts allocated in
each State for elderly and handicapped units shall not exceed an amount that bears
the same relationshio to the amount allocated for other families and individuals as
the number of elderly and handicapped families living in substandard unite in the
State bears to the number of other families and individuals living in substandard
housing in the State."
Page 111, line 10, insert "(a)" after the section designation.
Mr. St Germain (during the reading). Mr. Chairman, I ask unan-
imous consent that the amendment be considered as read and
printed in the Record.
The Chairman. Is there objection to the request of the gentle-
man from Rhode Island?
There was no objection.
Mr. Morrison of Connecticut. Mr. Chairman, this is a targeting
amendment. This amendment makes clear that the funds to be
made available and the assistance to be made available under the
yGoot^le
614
new rental production pn^am will be made available for both eld-
erly and family housing in a reasonable mix.
Mr. St Germain. Mr. Chairman, will the gentleman jdeld to me?
Mr. Morrison of Connecticut. I yield to the chairman of the ftill
committee.
Mr. St Germain. Mr. Chairman, I would like to inform the mem-
bers of the committee what the plans are and if we receive their
cooperation, they will all be very happy. I am sure my colleagues
are interested in what the plans of the committee are. I would like
to state them.
As of now, up until this point we have had tremendous coopera-
tion from the minority and the cooperation will continue, as will
ours. We can finish this bill within 40 minutes. I anticipate per-
haps one vote on an amendment and then a vote on final passage.
This means, if you look at your schedule, that the bill that was
scheduled for Thursday, the housing bill, will have been taken care
of this evening and I leave you to reach your own conclusions.
Therefore, please cooperate, so that we can hear these amend-
ments expeditiously and dispose of them.
At this point I would like to say that the majority has looked at
the gentleman's amendment and is prepared to accept his amend-
ment.
I think if the gentleman yields to the gentleman from Connecti-
cut, he will be happy to hear what he has to say.
Mr. Morrison of Connecticut. Mr. Chairman, 1 am happy to
yield to my friend and colleague, the gentleman from Connecticut
(Mr. McKinney).
Mr. McKinney. Mr. Chairman, the minority has reviewed the
amendment and we consider it a good addition to the bill and
accept it.
The Chairman. The question is on the amendment offered by the
gentleman from Connecticut (Mr. Morrison).
The amendment was agreed to.
The Chairman. Are there further amendments to title III?
amendment offered by MR. BARTIftT
Mr. Bartlett. Mr. Chairman, 1 offer an amendment.
The Chairman. The Chair wishes to inquire of the gentleman
from Texas, is the gentleman from Texas offering these amend-
ments en bloc?
Mr. Bartleit. These amendments are not offered en bloc, Mr.
Chairman.
The Chairman. They are not offered en bloc?
Mr. Bartlett. No.
The Chairman. Could the gentleman from Texas identify which
amendment it is?
Mr. Bartlett. The amendment begins, "Strike out the item
agreed to in the amendment relating to page 50, line 3, of the bill."
The Chairman. The Clerk will report the amendment.
The Clerk read as follows:
Amendment ofTered by Mr. Bartlett: Strike out the item agreed ta in the amend-
ment ofTered by Mr. Gonzalez relating to page 50, line 3, of the bill and insert in
lieu thereof the following item:
Page 60, line 3, strike out '•$729,033,000" and insert in lieu thereof "$649.949.000".
yGoot^le
615
Strike out the item agreed to in the amendment offered by Mr. Gonzalez relating
to page 50, line 9, of the bill.
In clause (iXI) of the provisions proposed to be inserted by the item in the amend-
ment relating to page 51, lines 1 through 16, of the bill, strike out "$126,883,000"
and insert in lieu thereof "£196,989,000.
Page 104. strike out line 1 and all that follows through page 106, line 16 (and con-
form the table of contents accordingly).
Page 106, strike out line IT and all that follows through page IIT, line 22 (and
redesignate the subsequent titles and sections and any references to such titles and
sections, and conform the table of contents, accordingUr).
Strike out the item agreed to in the amendment offered by Mr. (Gonzalez relating
to pa^e 106, line 3, of the bill.
Strike out the item agreed to in the amendment offered by Mr. Clonzalez relating
to pa^e 106, line 8, of the bill.
Strike out the item agreed to in the amendment offered by Mr. Gonzalez relating
to page 117, lines 19 through 22, of the bill.
Mr. Bartlett (durit^ the reading). Mr. Chairman, I ask unani-
mous consent that the amendment be considered as read and print-
ed in the Record.
The Chairman. Is there objection to the request of the gentle-
man from Texas?
There was no objection.
Mr. Gonzalez. Mr. Chairman, I reserve a point of order on this
amendment.
The Chairman. The gentleman from Texas reserves a point of
order. Does the gentleman wish to state the point of order at this
time?
POINT OF ORDER
Mr. Gonzalez. Mr. Chairman, I make a point of order against
the amendment.
Tlie Chairman. The gentleman will state it.
Mr. Gonzalez. Mr. Chairman, if the chair wishes, and it is in
order, I will be delighted to state the reasons for the point of order.
D 1800
In the first place, this amendment attempts to perfect and
change the provisions of the bill that have already been perfected
under my amendment by nature of a substitute, the amendment
previously approved by the committee. As such I believe the
amendment is not in order and I raise a point of order against it.
In addition, the amendment attempts to amend title II which has
already been passed in the reading and, therefore, for those two
bzisic reasons I wish to interject this point of order against the
pending amendment.
The Chairman. Does the gentlemam from Texas (Mr. Bartlett)
desire to be heard on the point of order?
Mr, Bartlett. Mr. Chairman, I would comment that my amend-
ment is broader in scope than the Gonzalez amendment as it would
strike all of title III and strike section 231 of the bill which relates
to the 235 assistance, and my amendment is broader in scope than
merely the previously adopted Gonzalez amendment.
The Chairman. With one exception, and that is the portion of
the amendment that b^ns on page 106 striking title III, these
amendments en bloc seek either to amend portions of the Gonzalez
amendment already agreed to en bloc or to amend unamended por-
yGoot^le
616
tions of the bill contained in title I and title n which have been
passed in the reading.
Thus since the bill is not open at any point, the amendments en
bloc are not in order and the Chair sustains the point of order.
Are there further amendments to title III?
If not, the Clerk will designate title IV.
Title IV reads as follows:
TITLE IV— BUBAL HOUSING
Sec. 401. (a) Section 513 of the Housing Act of 1949 is amended—
(1) by striking out "$3,700,600,000 with respect to the fisca! y«ar endi
tember 30, 1982;" in subsection (al and inserting in lieu thereof "$3,955,Gi
with respect to the fiscal year ending September 30, 19&4,";
(2| by striking out "$3,170,000,000" in subsection <aXl) and inserting in lieu
thereof "53,705.600.000";
(3) by inserting before the semicolon at the end of subsection <aXl) the foUow-
ing: "or pursuant to subparagraph {A) of such section in the case erf borronort
who are persons of low income";
(4) in subsection laX4)—
(At by striking out "none" and inserting in lieu thereof $200,000,000";
(B) by inserting before the period at the end thereof the following: "and
who are not persons of low income":
(5) by striking out "and" at the end of subsection (bK3), by striking out the
period at the end of subsection laK4} and inserting in lieu thereof a semicoloB.
and by adding at the end of subsection la) the following new paragraphB:
"(61 not less than {1.000.000.000 of any amount so approved in an appropria-
tion Act for such year shall be made available for loans under section 515; and
"(7) not more than JaO.OOO.OOO of any amount so approved in an apgx)priati(»
Act for such year may be made available for loans under section 502 that are
made without interest rate credite under section 521|aXl)(B). which loans ma;
be made only in connection with the transfer of a loan under section 502 to an-
other eligible borrower or the sale by the Secretary of a dwelling unit ai^Bted
under such section.";
(6) by striking out "September 30. 1983" each place it appears in subeectioD
(b) and inserting in lieu thereof "September 30, 1984";
(7) by striking out subsection (bK4) and inserting in lieu thereof the following:
"(4) not to exceed $2,000,000 for the fiscal year ending September 30. 1984, for
the purposes of section 525(a), and of the amount Bppro[niated for such pui^
poses the Secretary shall make available not less than 50 pereent for counseling
purchasers and delinquent borrowers;"; and
(8) by adding the following new subsection at the end thereof:
"(c) Notwithstanding any other provision of law and subject only to the absence of
qualified applicants, to the authority provided in this title, and to any funding limi-
tation approved in appropriation Acts, the Secretary shall, during fiscal year 1984,
guarantee loans under this title with an aggregate principal amount of
$200,000,000.".
(b) Section 515(bX5) of such Act is amended by striking out "May 20, 1983" and
inserting in lieu thereof "September 30. 1984",
{c> Section 517(aXl) of such Act is amended by striking out "May 20, 1983" and
inserting in lieu thereof "September 30. 1984".
(d) Section 521(aX2XDI of such Act is amended—
(1) by striking out "$398,000,000" and inserting in lieu thereof "$400,000,000".
(2) by striking out "September 30, 1982" and inserting in lieu thereof "Sep-
tember 30. 198r; and
(3) by adding the following new sentence at the end thereof: "Of such rental
assistance authority that is approved in appropriation Acts, the Secretat? shall
utilize at least $200,000,000 to provide assistance on behalf of tenants of^ newly
constructed and substantially rehabilitated housing and related facilities for
which assistance is provided with respect to such fiscal year under si "
(e) Section 623 of such Act is a
yGoot^le
617
(1) by striking out "$5,000,000" and "May 20, 1983" each place such terms
appear in subsection <f) and inserting in lieu thereof "$12,000,000" and "Sep-
tember 30, 1984", respectively; and
(2) by striking out "fiscal vear 1982" each place it appears In subsection (g)
and inserting in lieu thereof fiscal year 1984".
Sec. 402. Section 517(]) of the Housing Act of 1949 is amended—
{1) by Htriiting out paragraph (4) and inserting in lieu thereof the following:
"(4) to provide assistance authorized by section 521<aMl);";
<2) by striking out "; and" at the end of paragraph (5) and inserting in lieu
thereof a period; and
<3) by striking out paragraph (6).
Sec. 403. (a) Section 62I(8X2KA) of the Housing Act of 1949 ia amended by striking
out "not exceeding 25 per centum of income" in the first sentence and inserting in
lieu thereof "not exceeding the highest of the following amounts, rounded to the
nearest dollar: (I) 25 percent of the family's monthly adjusted income; (II) 10 percent
of the family's monthly income; or (III) if the family is receiving payments for wel-
fare assistance from a public agency and a part of such pa3rmentB, adjusted in ac-
cordance with the family's actual housing costs, is specifically designated by such
aigency to meet the family's housing costs, the portion of such payments that is so
(b) Section 501(bX5) of such Act is amended to read as follows;
"(5) For purposes of this title, the terms 'income' and 'acljusted income' shall have
the same meanings given such terms in section 3(b) of the United States Housing
Act of 1937.".
(c) The Secretary of Agriculture shall provide that the amount of rental payments
to be made by any family shall not increase, as a result of the amendments made bv
this section and as a result of any other provision of Federal law redefming which
governmental beneHts are required to or may be considered as income, by more
than 10 percent during any 12-month period unless the increase above such 10 per-
cent is attributed solel^ to increases in income which are not caused by such amend-
ments or by such redefinitions. The limitation contained in the preceding sentence
shall remain in effect and may not be changed or superseded except by another pro-
vision of law that amends this subsection.
(d) The amendments made by this section shall be effective with respect to tenant
rental payments due on or after the date of the enactment of this Act.
TBRM OF SECTION SOZ LOANS
Sbc. 404. Section 502(a) of such Act is amended—
(1) by inserting "(1)" after the subsection designation: and
{2> ^ adding at the end thereof the following new paragraph:
"(2) The Secretary may extend the period of any loan made under this section if
the Secretary determines that such extension is necessary to permit the making of
such loan to any person of low income who would otherwise be denied such loan
because the payments required under a lesser period would exceed the financial ca-
pacity of such person. The aggregate period for which any loan may be extended
under this paragraph may not exceed 5 years.",
SECmON 502 INTEREST CREDrTS
Sec. 405. Section 521(aXlXB) of the Housing Act of 1949 is amended by inserting
the following before the period at Che end thereof: ", except that for persons of low
W moderate income who receive assistance under section 502 or 517(a), the amount
of aasiatance in the form of credits may not exceed the lesser of—
"(i) the balance of the monthly payment for principal, interest, taxes, and in-
surance due under the mortgage remaining unpaid after applying 20 percent of
the adjusted income of the mortgagor; or
"(ii) the difference betvreen the amount of the monthly payment for principal
and interest that the mortgagor is obligated to pay under the mortgage and the
monthly payment for principal and interest that the mortgagor would be obli-
gated to pay if the mortgage were to bear interest at a rate of 1 percent per
yGoot^le
USB OF FEB INSPECTORS AND APPRAISBRB
Sec. 406. Section 510 of the Housing Act of 1949 a amended by redesigiiBtiiig sub-
section (j) as subsection (k) and inserting after subsection (il the following new sub-
"(j) utilize the services of fee inspectors and fee appraisers to expedite the process-
ing of applications for loans and grants under this title, which services shall be uti-
lized in any case in which a county or district office is unable to expeditiously proc-
ess such loans and grants, and to include the cost of such services in the amount of
such loans and grants; and".
DBTRRUINATION OF NBED FOR HOUSING UNDER SECTIONS 514 AND 516
Sec. 407. Section 514 of the Housing Act of 1949 is amended by adding the follow-
ing new subsection at the end thereof:
(h) In making available assistance in any area under this section or section 516,
the Secretary shall^
"ID in determining the need for the assistance, take into consideration the
housing needs only of domestic farm labor, including migrant farmworkers, id
the area; and
Sec. 408. (al Section 515(a) of the Housing Act of 1949 is amended—
II) by striking out "and" at the end of paragraph (3);
(21 by striking out the period at the end of paragraph (4) and inserting in lieu
thereof "; and"; and
13) by adding at the end thereof the following new paragraph:
"(5) loans may be made under this subsection for the purpose of utilizing a*
rental or cooperative housing for persons of low income, without regard to
whether or not assistance under section 521 will also be utilized to assist sudi
persons, existing dwellings (A) that the Secretary holds or is likely to hold
under section 502 as a result of the transfer or foreclosure of such dwelling
and (B) with respect to which eligible applicants for purchase under section 502
have not been identified after a reasonable period.".
<b) Section 515 of such Act is amended by adoing at the end thereof the following
new subsections:
"(g) For purposes of determining the market feasibility of any project to be assist-
ed under this section —
"(I) in the case of any applicant whose project is expected to utilize rental
assistance payments under section 521, the Secretory shall only require such
applicant to demonstrate that a market exists for persons and families eligible
for such rental assistance payments; and
"(2) in the case of any applicant whose project is expected to utilize any as-
sistance under a [irogram of a State, or political subdivision thereof, that ii
similar to such assistance payments under section 521, the Secretary shall only
require such applicant to demonstrate that—
"(A) a market exists for persons and families eligible for such program of
assistance;
"(B) such program of assistance permits rental assistance contracts to be
made for a period of not lees than 5 years; and
"(C) during the term of such rental assistance contracts, such State or po-
litical subdivision shall make available the amounts required for such
rental assistance not less than annually.
"(h) The Secretary shall establish standards for bousing and related facilities re-
habilitated or repaired with amounts received under a loan made or insured under
this section that are less stringent than standards established by the Secr«ts^ for
housing and related facilities constructed with such amounts, except that the Secre-
tary shall ensure that such standards provide decent, safe, and sanitary housing and
related facilities.
"(i) The Secretary may not deny assistance under this section or section 521 on
the basis that the project involved is to be located on more than one site,
"(j) The Secretary may not (1) deny assistance under this section on the basis that
rental assistance payments under section 521 ma^ be required; or (2) promulgate
any regulation that would have the effect of denying occupancy to eligible persons
yGoot^le
on the basis that such persons require rental aasistance payments undi
521".
(c) Section 521(aX2XA) of such Act is amended by striking out the last
DEFINlTtON Qy RURAL AKEA
Sic. 409. Section 520 of the Housing Act of 1919 is amended by adding at the end
thereof the following new sentence: "For purpoees of this title, any area clasBified as
"rural" or a "rural area" under paragraph (2) prior to the receipt of data from or
after the 1980 decennial census and determined not to be "rural or a "rural area"
as a result of such data shall continue to be so classified through the end of fiscal
year 1984, if such area has a population in excess of 10,000 but not in excess of
20,000 and complies with the requirements of paragraph (3XB).".
BHARBD HOUSING FOR THE BLDEBLV
Sec. 410. Section 521(aK2) of the Housing Act of 1949 is amended by adding the
following new subparagraph at the end thereof:
"(E) In order to assist elderly or handicapped persons or families who elect to
live in a shared housing arrangement in which they benefit as a result of shar-
ing the facilities of a dwelling with others in a manner that effectively and effi-
ciently meete their housing needs and thereby reduces their cost of housing, the
Secretary shall permit rental assistance to be used by such persons or families
if the shared housing arrangement is in a single-family dwelling. In carrying
out this subparagraph, the Secretary shall issue minimum property standards
(or modify existing standards) for the puniase of assuring decent, safe, and sani-
tary housing for such families while taking into account the special circum-
stances of shared housing.".
FROCESSINO OF APPUCATIONS
"Sec. 531. (a) The Secretary shall, in making assistance available under this title,
give a priority to applications submitted by —
'(1) penons and families that have the greatest housing assistance needs be-
cause of their low income and their residing in inadequate dwelling; and
"(2) applicants applying for assistance for projects that will serve such per-
sons and families.
"(b) In making available the assistance authorized by section 513 and section
521(a) with respect to insured and guaranteed loans and interest credits and rental
assistance payments, the Secretary shall process and approve requests for such as-
sistance in a manner that provides for a preliminary reservation of assistance at the
time of initial approval of the project".
amended in section 411, is amend-
"kural housing
"Sbc. 532. (a) The Secretan may provide financial assistance to units of general
local government (including Indian tribes) and public and private nonprofit organi-
tationa to enable the recipients of such assistance to carry out programs of repair
and rehabilitation of housing occupied, or to be occupied, by persons of low income
"(bXD Assistance received under this section may be used with respect to (A) any
building that is to be made available for rental housing or cooperative housing if
EUCh cooperative housing has a membership resale structure that enables the coop-
erative to maintain afTordability for persons of low income; and (B) single-family
dwelling occupied bv or to be occupied by persons of low income, if the Secretary
detennines that sucn rental or cooperative housing is inappropriate to meet the
Deeds of such persons in any area.
"(Si Units of general local government and nonprofit organizations that receive
such assistance shall utilize it to stimulate the repair and rehabilitation of build-
37-922 O - 84 -
yGoot^le
620
ings, including single-fainily dwellings, that will be made available for the purpoaee
described in paragraph (1) by providing —
"(A) capital grants;
"(B) loans;
"(C) interest reduction payments; or
"(D) other comparable assistance that the Secretary deems appropriate to
carry out the purpose of this eection, designed to reduce the costs of such repair
and rehabilitation in order to make such housing afTordable by persons of low
income and, to the extent feasible, by persons and families whose inctHoes do
not exceed 50 percent of the area median income.
"(3) The Secretary is authorized to ent«r into contracts with an^ unit of ^neral
local government or nonprofit organization that agrees to administer assistance
available under this section, subject to all the terms and conditions specified in this
section and in rules, r^ulations. and procedures adopted by the Secretary under
"(cXl) In allocating assistance under this section, the Secretary shall seek to
ensure that there is a reasonable distribution of such assistance among eligible
rural areas throughout the Nation.
"(2) In selecting applications for assistance under this section from among the eli-
gible applicants, the Secretary shall make such selection on the basis of the
"(A) to which the repair and rehabilitation activities will assist persons of tow
income who lack adequate shelter, with priority given to applicatims asusting
the maximum number of persons and families whose incomes do not exceed 50
percent of the area median income;
"(BXi) to which the repair and rehabilitation activities include the participa-
tion of other public or private organizations in providing assistance, in addition
to the assistance provided under this section, in order to lower the casts of such
activities; or
"(ii) to which such activities wUl be undertaken in rural areas having popula-
tions below 10,000 or in remote parts of other rural areas; and
"(C) to which the repair and rehabilitation activities may be expected to
result in achieving the greatest degree of repair or improvement for the least
cost per unit or dwelling.
"(d) The amount of assistance provided under this section with respect to any
housing shall be the least amount that the Secretai^ determines is necessary to pro-
vide, throiigh the repair and rehabilitation of such housing, decent rental or cooper-
ative housing of modest design that is afTordable for persons of low income.
"(eXl) Assistance under this section may be provided with respect to rental or co-
operative housing only if^
"(A) the owner has entered into such agreements with the Secretary as may
be necessai^ to assure compliance with the requirements of this section, to
assure the financial feasibility of such housing, and to carry out the other provi-
sions of this section;
"(B) the owner agrees that the units repaired and rehabilitated with such as-
sistance will be occupied, or available for occupancy, by peraona of low income
for not less than the 15-year period beginning on the date on which such units
are available for occupancy;
"(C) the owner agrees —
"(1) to pass on to the tenants any reduction in the debt service payments
resulting from the assistance provided under this section;
"(ii) not to discriminate against prospective tenants on the basis of their
receipt of or eligibility for housing assistance under any Federal, State, or
local housing assistance pro-am; and
"(iii) not to convert the units to condominium ownership (or in the case of
a cooperative, to condominium ownership or any form of cooperative owner-
ship not eligible for assistance under this section);
during the l&-year period banning on the date on which the units in the hous-
ing are available for occupancy;
(D) the unit of general local government or nonprofit organization that re-
ceives the assistance certifies to tne satisfaction of the Secretarv that the assist-
ance will be made available in conformity with Public Law 88-352 and Public
Uw 90-284;
"(E) the owner agrees to enter into and abide by written leases with the ten-
ants, which leases shall jirovide that (i) the unit of general local government o:
nonprofit organization will review any propo^ increase in rent and that any
such increase shall be approved only if it is justified and reasonable as deter-
yGoot^le
621
mined by the unit of general local government or nonprofit organization; (ii)
tenanta may be evicted only for good cause; and <iii) that a tenant may appeal
to an impartial hearing officer any decision detrimental to his or her tenure
and well being;
"(F) the unit of general local government or nonprofit organization wilt agree
to supervise and inspect repairs and rehabilitation undertaken by someone
other than an employee of such unit of general local government or nonprofit
organization; and
"(G) the unit of general local government or nonprofit organization will agree
to provide periodic reports to the Secretary with such frequency as the Secre-
tary shall deem necessary.
"(2) Assistance under this section may be provided with respect to any housing
Other than rental or cooperative housing only if there is compliance with the re-
quirements set forth in subparagraphs (D), (F), and (G) of paragraph <1), in addition
to any other requirements Uiat may be established by the Secretary to carry out the
purposes of this section.
"(3XAJ The Secretary shall provide that if the owner or his or her successors in
interest fail to carry out the agreements described in subparagraphs (A). (B), and (C)
of paragraph (1) during the applicable period, the owner or his or her successors in
interest shall make a payment to the Secretary of an amount that equals the total
amount of assistance provided under this section with respect to such housing, plus
interest thereon (without compounding), for each year and any fraction thereof that
the assistance was outstanding, at a rate determined by the Secretary taking into
account the average yield on outstanding marketable long-term obligations of the
Unil«d States during the month preceding the date on which the assistance was
made available.
"(B) Notwithstanding any other provision of law, any assistance provided under
this section shall constitute a debt, which is payable in the case of any failure to
carry out the agreements described in subparagraphs (A), (B). and (C) of paragraph
(1), and shall be secured by the security instruments provided by the owner to the
Secretary.
"(4XA) Rents charged for units occupied or available for occupancy by persons of
low income, as required by paragraph (IXB), in any such housing shall be approved
by the Secretary. In approving such rents, the Secretary shall provide that tenants
ol such units are charged not more than 25 percent of their adjusted income for
rent, including utilities, and shall require that not leas than 30 days prior written
notice of any increase in rents be provided to such tenants.
"(B) Any schedule of rents submitted by an owner to the Secretary for approval
shall be deemed to be approved unless the Secretary informs the owner, within 60
days after receiving such schedule, that such schedule is disapproved.
"(f) The Secretary shall provide for the recapture of all or a portion of the assist-
ance provided with respect to any housing under this section upon any disposition of
such housing that involves a discontinuation of the use of such housing in compli-
ance with the provisions of this section. Notwithstanding any other provision of law,
any assistance provided with respect to any housing under this section shall consti-
tute a d«bt secured by the security instruments provided by the owner of such hous-
ing to the Secretary to the extent that the Secretary may provide for the recapture
of such assistance.
"(g) The Secretary shall provide for such advance payments of assistance under
this section as the Secretary determines is necessary to elTectively carry out the pro-
"(h) For purposes of this section, the term 'unit of general local government'
means any borough, city, county, parish, town, township, village, or other general
purpose political subdivision of a State.
"(i) Not later than the expiration of the 6-month period following the date of the
enactment of the Housing and Urban-Rural Recovery Act of 1983, the Secretaiy
shall issue such regulations as may be necessary to carry out the provisions of this
section.
"(jXl) There is authorized to be appropriated for assistance under this section not
to exceed the sum of $100,000,000 for fiscal year 1^84.
"(2) Not more than 10 percent of any amount appropriated under paragraph (1)
mw be used for administrative expenses by the units of general local government
and nonprofit organizations receiving assistance under this section.".
yGoot^le
"guaranteed loan demonstration proorah
"Sec. 533. (a) The Secretary shall, to the extent approved in appropriation Acts,
carry out the program established in this section to demonstrate the effectivenesB of
utilizing the loan guarantee authority provided in this title in connection with State
or private mortgage credit.
"(h) The Secretary may insure, and malce commitments to insure, loans made by
any State housing finance agency or private lender in accordance with terms and
conditions that are, except as otherwise provided in this section, substantially iden-
tical to the terms and conditions established with respect to loan guarantees author-
ized in section 517(a).
"(cXl) The Secretary may provide interest subsidies with respect to loans guaran-
teed by the Secretary under this section on behalf of borrowers whose incomes do
not exceed 130 percent of the median income of the area involved. The Secretary
shall prescribe r^ulations establishing the amount of interest subsidy to be made
with respect to any such loan and the period for which such interest subsidy sh^
be made, except that in no case may such interest subsidy result in the reduction rf
the interest rate of a loan to below 9,5 percent per annum.
"(2) The Secretary shall provide for the recapture of all or a portion of the asmst-
ance provided to any borrower under this subsection upon the disposition or nonoc-
cupancy of the property involved by such borrower. Notwithstanding any other pro-
vision of law, such assistance shall constitute a debt secured by the security instru-
ments provided by such borrower to the Secretary to the extent that the Secretaij
may provide for the recapture of such assistance.
"<d) Of any amounts appropriated under section 513(aX4) for fiscal year 1984, the
Secretary may use such sums as may be necessary to carry out the demonstration
program established in this section.".
FARM LABOR HOUSING
Sec. 414. Section 516 of the Housing Act of 1949 is amended by adding at the end
thereof the following subsection;
"(i) The Secretary shall, to the extent approved in appropriation Acts, utilize not
more than 10 percent of the amounts appropriated for purposes of this section for
flnancial assistance to eligible private and public nonprofit agencies to encourage
the development of domestic and migrant farm labor housing projects under tUl
title.".
Mr. McCoLLUH. Mr. Chairman, I move to strike the last word.
Mr. Chairman, housing is one of the most important consider-
ations of any family or any legislator in America. We can be proud
of the enormous amount of housing that our country has and that
we provided over the last few decades for American citizens.
Furthermore, I doubt there is anyone in this body who is not sup-
portive of the goal of providing decent, safe, sanitary housing for
every American who does not now have it.
What is at issue with this bill that we have been debating most
of this afternoon and are about to vote on is how best to achieve
the goals and whether the direction of the Federal Government in
the housing arena should be generally continued as is done in this
legislation.
Since the Federal Government entered the public housing Held
in 1937, about $363 billion has been committed to Federal subsi-
dized housing and almost all of it since 1970. Less than $90 billion
has actually been spent to meet these obligations, leaving future
generations at least $263 billion to pay, assuming no additional
commitments and assuming that projected deficits do not material-
yGoot^le
623
ize. Over 5.5 million subsidized housing units are already occupied,
housii^ about 13 million Americans.
The Congress has previously obligated the Government to build
another 364,805 units which are not yet occupied. So if the Govern-
ment merely fulfills its present obligations, there will be more than
360,000 units of housing provided in this decade, bringing the total
number of units to about 6 million.
It is incredible that the spending cuts in the Federal housing pro-
grams Eilone in the first year of the Reagan administration consti-
tuted 52 percent of all of the spending cuts of that year and at the
same time the reality of this situation is that Federal outlays for
housing will rise in each year for the rest of this decade.
This is a prime example of how the efforts of 1981 and 1982 to
slow the growth in Government spending did nothing more than
that. It did not actually reduce spending.
While we are nowhere near achieving a bfilanced budget, It is in-
teresting to look back on how we got here.
We got into an incredible mess because from 1937 to 1969 things
were goi^ fine, but about that time we started to really move.
From 1937 to 1939 Federal public housing programs consisted
largely of construction of units which were federally financed euid
operated by local public housing authorities. The low-cost finance
allowed rents to be reduced and made available to the poor out of
Federal operating subsidies.
Virtually all public housing authorities met their costs and even
established reserves.
Concerns were then raised that tenants paid too much of their
income for rent and Congress enacted requirements that tenants
were to pay no more than 25 percent of their income toward rent,
which is now 30 percent but under this bill would return to 25 per-
cent.
This created a giant increase in Federal revenues diverted to
public housing as ^e Federal Government acted to pick up the dif-
ference in the amount of these rents.
This was not all. With tenants not having to pay more than 25
percent of their incomes toward rent, the reserves of the public
nousing authorities were shortly exhausted and could no longer
meet operating expenses, so that by last year there were 383,000
units located in public housing authorities that were financially
distressed to the point of bankruptcy.
We have not rented units that have become vacant and are actu-
ally thinking of boarding up additional units that are currently oc-
cupied.
Naturally this caused Congress to jump in with even more
money to subsidize the operating costs, and on top of that came a
great public ripoff of the section 8 housing which Congress commit-
ted in 8 short years — more than $145 billion and about which the
Congressional Budget Office at one point estimated that a newly
omstructed section 8 unit could have a lifetime cost of more than
$500,000 ainece.
GAO estimated that more than 40 million Americans at one
point were eligible for subsidies under section 8, and finally in
1982, Confess slashed funds for section 8. But the Congressional
Budget Cmtce estimates that the unfunded liability for section 8
yGoot^le
624
housing is aa lai^ as $50 billion, which Congress will have to
spend in the future to bail out the remainder of the program.
With at least $263 billion already obligated to be spent by Con-
gress over the next 40 years on public housing, we have dug a deep
&-ench by obviously biting off more than we could chew.
There are still millions of low-income American families who do
not have the kind of housing most of us would like them to have.
Even with all of the spending, it is estimated that only 25 or 26
percent of the very-low-income families of this country are living in
federally subsidized housing that is of the quality and the standard
that we want. This percentage may go up a fraction, but not much
more than that.
However, we can only imagine the many billions of dollars more
that would have to be spent to really bring all of the poor out of
the housing ghettos any time in the near future.
The solutions to the problems of low-income Americans in hous-
ing simply does not lie in the continued gigantic Federal Govern-
ment subsidies and spending on progrtims that reach only a small
fraction of those in need. We need to reorder our priorities in
spending in Congress so that we do not have a $100-bUlion-pIu8
budget deficit. In so doing, Mr. Chairman, in the future we can
completely reexamine the housing programs of this country, over-
haul those prt^ams, instead of just adjusting them like we have
been doing, because those adjustments have only cost the taxpayers
more dollars and never achieved the intended goals.
This is a bad bill, very simply put. There are no m£uor changes of
Federal housing progrfims in this bill.
The amended bill adds over the next 5 years $14 billion in out-
lays over the 1984 budget resolution, and the bill adds almost $54
billion in budget authority over the President's request.
It reverses several key 1981 Reconciliation Act reforms — reduc-
ing, for example, rent payments of tenants to 25 percent of income,
as 1 mentioned earlier, from the 30-percent level, and it raiaea
income eligibility standards from 50 percent of median income to
80 percent of median income, diluting benefits to the most needy
and increasing the eligible population by over 50 percent, the in-
crease being primarily for higher income families.
In short, this is an exceedingly bad bill.
The Chairman. The time of the gentleman from Florida (Mr.
McCollum) has expired.
(On request of Mr. Grtmim and by untuumous consent, Mr.
McCollum was allowed to proceed for 3 additional minutes.)
Mr. Gramm. Mr. Chairman, will the gentleman yield?
Mr. McCollum. I yield to the gentleman from Texas.
O 1810
Mr. Gramm. I thank the gentlemaui for yielding.
Mr. Chairman, I would like to point out we have had a very im-
portant statement here. This bill is a budget-buster. Before the
amendment adopted here, over the next 5 years it would spend $25
billion more than the President recommended. Even with the adop-
tion of the amendment it spends more than $17 billion more ttuiD
the President recommended.
yGoot^le
It is important, further, Mr. Chaiinnan, to note that the cuts are
in slow Bpendout pn^ams such £is section 8. The real dollars here
have to do with tenant payments under subsidized housing.
I want to remind my colleagues that in the 1981 reconciliation
bill we changed the tenant payments from 25 to 30 percent of ad-
justed income. And that was based on a radical idea. And that idea
was that since the working poor were paying 30 percent of their
income in rente that the nonworking poor ought to be treated the
same.
In other words, those that were riding in the wagon ought not to
be treated any better than those that were pulling the wagon.
I urge my colleagues to listen to the advice of my colleague from
Florida: Vote "no" on this bill.
We certainly intend to encourage the President to veto this bill if
the other body should be so foolish as to adopt it in this form.
Mr. McCoLLUM. I urge my colleagues to vote "no" on this bill. As
the gentleman from Texas said, this is one of the biggest budget-
busters we have. Even though it is given to us in the appearance of
being sane, it is not.
I yield back the balance of my time.
The Chairman. The time of the gentleman has expired.
Are there any other amendmente to title IV? If not, the Clerk
will designate title V.
Title V reads as follows:
TITLE V-PROGRAM AMENDMENTS AND EXTENSIONS
Part A — Fedkral Housing Adhiniotration Mortgage Insurance Programs
Skc. 501. (a) Section 2(a) of the National Haiuing Act is amended by Btriking out
"May 21, 1983" in the firat sentence and inserting in lieu thereof "October 1, 1984".
Q>) Section 21V of such Act is amended by striking out "May 20, 1983" and insert-
ing in lieu thereof "September 30, 1984".
(c) Section 221(f) of such Act is amended by Btriking out "May 20. 1983" in the
fifth sentence and inserting in lieu thereof "September 30, 1984",
(dXD Section 235(m) of such Act is amended by striking out "May 20, 1983" and
inserting in lieu thereof "September 30, 1984".
(2) Section 235(qXl| of such Act is amended by striking out "May 20, 1983" and
inserting in lieu thereof "September 30, 1984".
(e) Section 236(n) of such Act is amended by striking out "May 20. 1983" and in-
aerting in lieu thereof "September 30, 1984".
(f) Section 244(d) of such Act is amended —
(1) by striking out "May 20, 1983" in the (irat sentence and inserting in lieu
thereof "September 30, 1984"; and
(2) by striking out "May 21, 1983" in the second sentence and inserting in lieu
thereof "October 1, 1984".
(g) Section 245(a) of such Act is amended by striking out "May 20, 1983" and in-
serting in lieu thereof "September 30, 1984".
(h) Section 809(f) of such Art is amended by striking out "May 20, 1983" in the
•ecMtd sentence and inserting in lieu thereof "September 30, 1984",
(i) Section 810(k} of such Act is amended by striking out "May 20, 1983" in the
•soond sentence and inserting in lieu thereof "September 30, 1984 '.
(J) Section 1002(b) of such Act is amended by striking out "May 20, 1983" in the
ncond amtsnce and inserting in lieu thereof "September 30, 1984".
(k) Sectkm UOKa) of such Act is amended by striking out "May 20, 1983" in the
e and inserting in lieu thereof "September 30, 1984",
yGoot^le
E INSURED UNDER THE NATIONAL HOUStMG ACT
Sec. 503, Section 531 of the National Houaing Act ie amended to read as follonc
"Sec. 531. Notwithstanding any other provision of law and subject only to the ab-
sence of (qualified requests for insurance, to the authority provided in title II, and to
any funding limitation approved in appropriation Acts, the Secretary shall txtUx
into commitments during fiscal year 1984 to insure mortgagee under title n with on
aggregate principal amount of $45,900,000,000.".
HOUSING AnMlNlSTRATION GENERAL INSURANCE FUND
Sec. 504. Section 519(0 of the National Housing Act is
following before the period at the end thereof: ", .
1252,974,000 on October 1, 1982".
Sec. 505. Section 203(n) of the National Housing Act is amended—
(1) in paragraph (1), by inserting the following before the period at the end irf
the second sentence: "or the construction of which was completed more than a
year prior to the application for the mortgage insurance"; and
(2)hyBt ■' ■ - " - -"" ■ -
y striking out "nonproUt" in paragraph (2XA).
MANUFACrrUBBO
Sec. 506. Section 2(al of the National Housing Act is amended by insertitig the
following before the last undesignated paragraph thereof:
"The msurance authority provided under this section may be made available with
respect to any existing manufactured home that has not been insured under this
section if such home was constructed in accordance with the standards issued under
the National Manufactured Housing Construction and Safely Standards Act of 1974
and it meets standards similar to the minimum property standards applic^le to ex-
isting homes insured under title II.",
B amended by striking out ",
MORTGAGE INSURANCE FOR PUBUC HOSPITALS
Sec, 508. Section 242 of the National Housing Act is amended—
(1) by inserting "public facility," in subsection (bXlXQ after "which is a"; and
(2) by inserting tne following before the period at the end of subsection (0: ",
and, in the case of public hospitals, to encourage programs that are undertakm
to provide essential health care services to all residents of a community re^rd-
less of ability to pay".
Sec, 509, (a) Section 9 of the National Housing Act is amended by inaertiiig
"American Samoa," after "the Trust Territory of the Pacific Islands,".
(b) Section 201(d) of such Act is amended oy inserting "American Samoa," after
"the Trust Territory of the Pacific Islands,",
(c) Section 207(aMT) of such Act is amended by inserting "American Saiaos," after
"the Trust Territory of the Pacific Islands,".
mOBXED MORTGAGES
Sec. 510, (a) Section 245 of the National Housing Act is amended by striking out
the section headir^ and inserting in lieu thereof "Qhaduatkd Pavmbnt and In-
yGoot^le
627
(1) by striking out "of varying rates of amortization corresponding to antici-
pated Tariations in family income" in the first sentence and insertmg in lieu
thereof "of vaiTing rates of amortization corresponding to anticipated vari-
ations in family income or with monthly payments and outstanding balances
adjusted by a percentage change in a selected price index"; and
(2) by atrikuw out subeectian (b)" in the second sentence and inserting in
lieu thereof "subsections (b) and (c)",
(c) Section 245 of such Act is amended by redesignating subsection (c) as subsec-
tion Id) and by inserting the following new subsection after subsection (fa):
"(c) NotwitWanding the provisions of subsection (a), the Secretary may insure
under any provision of this title a mortgage or loan that meets the requirements of
the first sentence of subsection (a) and that has provisions permitting adjustment of
monthly payments and outstanding principal according to changes or percentages of
changes in a selected price index if the Secretary determines —
"(1) the principal obligation of the mortgage or loan initially does not exceed
the percentage of the initial appraised value of the property specified in section
203(b) of this title as of the date the mortgage or loan is accepted for insurance;
and
"(2) the monthly payments and principal obligation of the mortgage or loan
thereafter will not at any time be increased at a rate greater than the percent-
age change in the price index stipulated in the initial mortgage or loan con-
tract.
In carrying out this subsection, the Secretary shall give a priority to mortgages exe-
cuted by mortgagors who, as determined by the Secretary, have not owned dwelling
units within tiie preceding three years. The Secretary shall, not later than January
1, 1984, prescribe regulations establishing guidelines governing mortgages and loans
described in this subsection and shall, to the extent practicable, conduct a demon-
stration pnwram to insure mortgages and loans in accordance with this subsection
during the fiscal year ending September 30, 1984.".
Sac. 511. (a) Section 526 of the National Housing Act is amended —
(1) by adding the following new sentence at the end thereof: "Fallowing the
dat« of the enactment of the Housing and Urban-Rural Recovery Act of 1983,
the energy performance requirements developed and established by the Secre-
tary under this subsection shall be at least as effective in achieving increases in
energy efTiciency as the energy performance requirements incorporated in the
minimum property standards that were in effect under this subsection on Sep-
tember 30, 1982."; and
(2) bv inserting "(a)" after the section designation and adding at the end
thereof the following new subsection:
"(b) Each oropertv subject to a mortgage insured under this Act shall, with re-
spect to health and safety, comply with one of the nationally recognized model
building codes, or with a State or local building code based on one of the nationally
recognized model building codes or their equivalent. The Secretary shall be responsi-
ble for determining the comparability of the State and local codes to such model
codes and for selecting for compliance purposes an appropriate nationally recog-
nised model building code where no such model code has been duly adopted or
where the Secretary determines the adopted code is not comparable.".
(b) The section heading of section 526 of such Act is amended to read as follows:
CONDOMINIUM INSURANCE UMITS
Sec. 512. The third sentence of section 234lcl of the National Housing Act is
amended by inserting "(118 percent in the case of newly constructed unitsl" afler
"111 per centum".
OXADUATBD PAVMBNT MORTGAGES FOR MULnFAMILY HOUStNC
^ S13. Section 245 of the National Housing Act. as amended in section 510, is
Jedby-
(1) redesignating subsection <d) as subsection <e); end
(2) inserting after subsection (c) the following new subsection:
"(dKl) The Secretary may insure, under any provision of this title relating to mul-
tifamily houaing prpiecta, mortgages and loans with provisions of varying rates of
yGoot^le
the Secretary determin . . . _
housing opportunities or meet special needs; (B) can be developed to iochMe taj
safeguards for mortgagorH, tenants, or purchasers that may be neceasaiy to ofbet
special risks of such mortgages; and (C) have a potential for acceptance in the pri-
vate market.
"(2) Notwithstanding any other provision of this title, the principal obligation of a
mortgage or loan insured pursuant to this subsection —
'\A] may not exceed initially the percentage of the initial appraised value or
replacement coat of the property involved that is required by the provislm of
this title under which such property is insured; and
"(B) thereafter {includine all interest to be deferred and added to principal)
may not at any time be scneduled to exceed 100 percent of the prcgected Talne
of such property.
"(3) for purposes of this subsection, the projected value of a property shall be cal-
culated by the Secretary by increasing the initial appraised value of such property
at a rate not in excess of 2.5 percent per annum,
"(4) A mortgage or loan may not be insured pursuant to this subsection after Sep-
tember 30, 1984, except pursuant to a commitment entered into prior to such dat«. .
Part B — Secondabv Mortgage Market Programs
BXTENStON OF
Sec. 521. Section 3(b) of the Emergency Home Purchase Assistance Act of 1974 is
amended by striking out "October 1, 1981" and inserting in lieu thereof "October 1,
1984".
Sec. 522. Section 306<gX2l of the Federal National Mortgage Association Charter
Act is amended to read as follows:
"(2) Notwithstanding any other provision of law and subject only to the absence of
qualified requests for guarantees, to the authority provided in this subsection, and
to any funding limitation approved in appropriation Acts, the Association shall
enter into commitments during fiscal year 1984 to issue guarantees under this sub-
section in an aggregate amount of $68^50,000,000.",
Sec, 533. (a) The sixth sentence of section 302(bX2) of the Federal National Mort-
gage Association Charter Act is amended to read as follows: "The corporation shall
establish limitations governing the maximum principal obligation of conventional
mortgages that are purchased oy it; in any case in which the corporation purchases
a participation interest in such a mortgage, the limitation shall be calculated with
respect to the total principal obligation of the mortgage and not merely with respect
to tne interest purchased by the corporation.".
(b) The fifth sentence of section 305(aX2) of the Federal Home Loan Mortrau« Cor-
poration Act is amended to read as follows: "The Corporation shall establish limita-
tions governing the maximum principal obligation of conventional mortgages that
are purchased oy it; in any case in which the Corporation purchases a participatkui
interest in such a mortgage, the limitation shall be calculated with respect to the
total principal obligation of the mortgage and not merely with respect to the inter-
est purchased by the Corporation.".
purchase of second mortgages bv fnma and fhlmc
Sec. 524. (a) Section 302(h) of the Federal National Mortgage Association Charter
Act is amended by adding the following new paragraph at tne end thereof:
"(5XA) The corporation is authorized, until October I, 1985, with the approval of
the Secretary of Housing and Urban Development, to purchase, service, sell, lend on
the security of and otherwise deal in conventional mortgages that are secured by s
subordinate lien against a one- to four<family residence.
"IB) The corporation shall establish limitations governing the maximum principal
obligation of conventional mortgages described in subparagraph (A^ in any case in
which the corporation purchases a participation interest in such a mortgage, the
limitation shall be calculated with respect to the total principal obligation of the
mortgage and not merely with respect to the interest purchased by the corporation.
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Such timitationa shall not exceed $50,000 in the case of a one-family residence and
S60,000 in the caae of a two- to four-family residence. No subordinate mortgage shall
be purchased by the corporation if the total outstanding indebtedness secured by the
property as a reault of such mortgage exceeds SO percent of the value of such prop-
erty unleaa (i) that portion of such total outstanding indebtedness that exceeds such
80 percent is guaranteed or insured by a qualified insurer as determined by the cor-
poration; (ii) the seller retains a participation of not less than 10 percent in the
mortgage; or (iii) for such period and under such circumstances as the corporation
may require, the seller agrees to repurchase or replace the mortgage upon demand
of the corporation in the event that the mortgage is in default. The corporation
shall not issue a commitment to purchase a subordinate mortgage prior to the date
the mortgage ia originated, if such mortgage is eligible for purchase under the pre-
ceding sentence only by reason of compliance with the requirements of clause (ii) of
such sentence.".
(bNl) Section 302(hl of the Federal Home Loan Mortgage Corporation Act is
amended by striking out "The maximum principal obligation" and all that follows
tJhrough "associations." and inserting in lieu thereof the following: "Such term shall
also include, until October 1, 1985, other secured loans or advances of credit that are
secured by a subordinate lien against a one- to four-family residence.".
(2) Section 305(a) of such Act is amended by adding the following new paragraph
at the end thereof:
"(4) With respect to the purchase by the Corporation of any residential mortgage
secured by a subordinate hen against a one- to four-family residence, the Corpora-
tion shall establish limitations governing the maximum principal obligation of such
mortgages; in any case in which the Corporation purchases a participation interest
in such a mortgage, the limitation shall be calculated with respect to the total prin-
cipal obligation of the mortgage and not merely with respect to the interest pur-
chased by the Corporation. Until October 1, 1985, such limitation shall not exceed
$50,000 in the case of a one-family residence and SS0,0D0 in the case of a two- to
four-family residence. No subordinate mortgage shall be purchased by the Corpora-
tion if the total outstanding indebtedness secured by the property as a result of such
mortgage exceeds 80 percent of the value of such property unless (il that portion of
such total outstanding indebtedness that exceeds such 80 percent is guaranteed or
insured by a qualified insurer as determined by the Corporation; (Ii) the seller re-
tains a participation of not less than 10 percent in the mortgage; or (iii) for such
period and under such circumstances as the Corporation may require, the seller
ries to repurchase or replace the mortgage upon demand of the Corporation in
event that the mortgage is in default. The Corporation shall not issue a commit-
ment to purchase a subordinate mortgage prior to the date the mortgage is originat-
ed, if such mortgage is eligible for purchase under the preceding sentence only by
reason of compliance with the requirements of clause (ii) of such sentence.".
FHLMC AUTKORmr TO PURCHASE STATE AGENCY INSURED MORTGACE LOANS
Sic. 525. Section 302(i) of the Federal Home Loan Mortgage Corporation Act is
amended by striking out "a State or anj; agency or instrumentality of either" and
inserting in lieu thereof "any of its agencies or instrumentalities".
Sbc. 326. (a) The Tirst sentence of section 303(a) of the Federal National Mortgage
Association Charter Act is amended by striking out "all" the first place it appears.
lb) Section 304(aX2l of such Act is amended by striking out the first two sentences.
(c) The first sentence of section 308(b) of such Act is amended to read as follows:
"The Federal National Mortgage Association shall have a board of directors, which
shall consist of 18 persons, 5 of whom shall be appointed annually by the President
of the United States, and the remainder of whom shall be elected annually by the
stockholders.".
(dKl) Section 309(h) of such Act is amended by striking out the second sentence.
(2) Section 311 of such Act is amended by inserting after "issuances" the follow-
ing: "by the Association and all issuances of stock, and debt obligations convertible
into stock, by the corporation".
(e) Section 309(h) of such Act is emended by striking out the fifth and last sen-
tences and inserting in lieu thereof the following: "Pursuant to the authority pro-
vided in this subsection, the Secretary shall, not later than June 30 of each year,
report to the COngresa on the activities of the corporation under this title.".
(f) Section 809 of such Act is amended by adding at the end thereof the following
■WW subsection:
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"til If the Federal National Morteage Association Bubmita to tbe Secratair of
Houeing and Urban Development, after the date of the enactment of the Hoiwiag
and Ui6an-Rural Recovery Act of 1983, a request for approval or other actioa under
this title, the Secretary shall, not later than the expiration of the 45Kiay period M-
lowing the submission of such request, approve such request or transmit to Ote Con-
sresB a report explaining why such request has not been approved. Such period nu^
be extended for an additionfd 15-dav period if the Secretary requests additional in-
formation from the corporation. If the Secretary fails to transmit such report to the
Congress within such 45-day period or 60-day period, as the case may be, tbe corpo-
ration may proceed as if such request had been approved,".
AUTHOEUTV OF FHLMC TO PURCHASE LOANS ON UANUFACTURKD HOHIS
Sec. 527. Section 302(h) of the Federal Home Loan Mortgage Corporation Act is
amended by adding the following new sentence at the end Uiereof: 'The term 'i«a-
dentia] mortgage' is also deemed to include loans or advances of credit secured by
mortgages or other liens against manufactured homes, whether secured by property
that is real, personal, or mixed.".
Sec. 528. (a) The penultimate sentence of section 3'
Mortgage Association Charter Act is amended by striking out "125" and inserting in
lieu thereof "240".
(b) The penultimate sentence of section 305<aX2) of the Federal Home Loan Hoit-
gage Corporation Act is amended by striking out "125" and inserting in lieu thereof
"240".
FNMA COMMITMKNT EXTENSIONS
Sec. 529, Section 305(b) of the Federal National Mortgage Assodation Charter Act
is amended by adding at the end thereof the following new sentence; "If any com-
mitment issued under this section to purchase a mortgage insured under this Act is
for a number of months less than the number of months of the construction period
of the project involved a& estimated by the Secretary in a commitment for mortgage
insurance, extensions of the commitment issued under this section shall be grsnted
without tbe imposition of additional fees beyond the initial commitment fee, except
that customary fees for the extension of such commitments may be charged for peri-
ods in excess of the number of months of such approved construction period.".
STUDY OF PRBPAYHENT PENALTIES AND THE SBCX>NDARy M081GAGB UARKKT
Sbc. 530. Not later than 180 days after the date of the enactmrat of this Act, the
Secretary of Housing and Urban Development, following consultation with the
board of directors of the Federal National Mortgage Association, the Board of Direc-
tors of the Federal Home Loan Mortgage Corporation, the President of the Govern-
ment National Mortgage Association, the Board of Governors of the Federal Reserve
System, the Federal Home Loan Bank Board, the Comptroller of the Currency, and
the National Credit Union Administration Board, shall submit to the Con^ves a
report regarding mortgage prepayment penalties and their impact on secondary
mortgage market activities. Such report shall include —
(i) a review of State laws and regulations r^arding prepayment penalties;
(2) an evaluation of the impact of prepayment penalties on the ability to at.
tract investors to the secondary mortgage market;
(3) an analysis of existing authority for lenders to offer mortgage instrumenli
containing prepayment penalties; and
(4) a proposal for feaerally standardized mortgage instruments that would
contain prepayment penalties in combination with features that would be at-
tractive to prospective purchasers of homes, including below-merket interest
rates and prohibitions on non-risk related settlement charges normally incurred
by homeowners upon refinancing.
Pabt C— Other PaooiiAMa
REPORT REGARDING PROGRAM CHANCES
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(2) the syetem currently utilized by the Department to assure that chances in
the operation of departmental pragramB that substantially alTect the eligibility,
rights, or benefits of persons applying for or receiving assistance under any
such programs are subject to requirements of notice and publication, especially
thoee requirementa specified in subsections (b) through (e) of section 553 of title
6, United States Code,
Skc. 542. <a) Section 3 of the Real Estate Settlement Procedures Act of 1988 is
mended —
(!) by striking out "and" at the end of paragraph (5);
(2) 1^ Striking out the period at the end of paragraph (6) and inserting in lieu
therem a semicolon; and
(3) by adding the following new paragraphs at the end thereof:
"(T) the term 'controlled businesa arrangement' means an arrangement in
which (A) a person who is in a position to refer business incident to or a part of
a real estate settlement service involving a federally related mortgage loan, or
an associate of euch person, has either an affiliate relationship with or a direct
or beneficial ownership interest of more than 1 percent in a provider of settle-
ment services; and (B) either of such persons directly or indirectly refers such
business to that provider or affirmatively influences the selection of that provid-
"(8) the term 'associate' means (A) a spouse, parent, or child of a person in a
position to refer settlement business; (B) a corporation or business entity that
controls, is controlled by, or is under common control with such person; (Q an
employer, officer, director, partner, franchisor, or franchisee of such person; or
(D) any person who has an agreement, arrangement, or understanding, with a
person in a poeition to refer settlement business, the purpose or substantial
effect of whidi is to enable the person in a poeition to refer settlement business
to benefit financially from the referrals of such business.".
(b) Section 8(c) of such Act is amended —
(1) by striking out "or" before "(3)";
(2) t^ redeei^ating clause (4) as clause (5);
(3) by inserting the following after "brokers," at the end of clause (3): "(4) con-
trolled business arrangements so long as (A) at or prior to the time of the refer-
ral a good faith effort is made to disclose the existence of such an arrangement
to the person being referred and, in connection with the referral, to provide
such person a written estimate of t^e range of charges generally made by the
proviaer to which the person is referred, except that where a lender makes the
referral, this requirement may be satisfied as part of and at the time that the
aatimatee of settlement chaiges required under section 5(c) are provided, (B)
■uch person is not required to use any particular provider of settlement serv-
ices, and (C) the only thing of value that is received from the arrangement,
other than the payments permitted under this subsection, is a return on the
ownership interest or franchise relationship,"; and
(4) by inserting the following new sentence at the end thereof: "For purposes
of the preceding sentence, (i) any arrangement that requires a buyer, borrower.
or seller to pay for the services of an attorney, credit reporting agency, or real
estate appraiser chosen by the lender to represent the lender's interest in a real
estate transaction, or (ii) any arrangement where an attorney or law Orm repre-
sents a client in a real estate transaction and issues or arranges for the issu-
ance of a policy of title insurance in the transaction directly as agent or
through a separate corporate title insurance agency that may be established by
that attorney or law firm and operated as an adjunct to his or its law practice,
shall not be considered a violation of clause 4(B). .
(c) Section 8(d) of such Act is amended by striking out paragraph (2) and inserting
n lieu th^neof the following:
"(Z) AKf person or persons who violate the prohibitions or limitations of this sec-
ion shall be jointly and severally liable te the person or persons charged for the
Kttlement service mvolved in the violation in an amount equal to three times the
UDOunt c^ any charge paid for such settlement service.
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632
"(3) The Secretary, the Attamey General of any State, or the iiwunuioe oommii-
aioner of any State may bring an action to et^in violationa of this aectioa.
"(4) In any private action brought pursuant to this subsection, the oamt may
award to the prevailing party the court costs of the action together with raaacnddc
attorneys fees.
"(5) No provision of State law or regulation that imposes more Btrin^ent limita-
tions on controlled business arrangements shall be construed as being inoonsisteiit
with this section.".
(d) Section 16 of such Act is amended to read as follows;
"jurisdiction of coukts
"Sec, 16, Any action pursuant to the provisions of section 8 or 9 may be bron^
in the United States district court or in any other court of competent jimadictiao,
for the district in which the property involved is located, or where the violatian ii
Sieged to have occurred, within one year from the date of the occurrencs of the
violation, except that actions brought by the Secretary, the Attorney Geneml of anjr
State, or the Insurance commissioner of an^ State may be brought within 3 yean
from the date of the occurrence of the violation.".
(e) Section 19 of such Act is amended by adding the following new subeectitHi at
the end thereof:
"(cKD The Secretary may investigate any facts, conditions, practices, or matten
that may be deemed necessary or proper to aid in the enforcement of die ^vriiiona
of this Act, in prescribing of rules and reflations thereunder, or in aacuring ioAr-
mation to serve as a basis for recommending further legislation concerning real
estate settlement practices. To aid in the investigations, tiv Secretary ia authoriaed
to hold such hearings, administer such oaths, and require by aubpema the attend-
ance and testimony of such witnesses and production of such documents as the Sec-
retary deems advisable.
"(2) Any district couri of the United States within the jurisdiction of which aa
inquiry is carried on mav, in the case of contumacy or refusal to obey a subpena el
the Secretary issued under this section, issue an order requiring comnliance there-
with; and any failure to obey such order of the court may be punished ny such court
as a contempt thereof".
(0 The amendmenta made by this section shall become effective on January t,
1984.
NATIONAL INSnrUTK OF BUILDING SCIENCES
Sbc. 543. Section 809(h) of the Housing and Community Development Act of 1974
is amended by adding at the end thereof the following new sentence: "In addition to
the amounts authorized to be appropriated under the first sentence of this section,
there is authorized to be appropriated to the Institute to carry out the provisiont of
this section not to exceed $500,000 for fiscal year 1984.".
SOLAR ENERGV AND ENERGY CONSERVATION BANK
Sec. 544. (aXl) Section 504<6) of the Solar Energy and Energy Conservation Bank
Act is amended—
(A) by inserting after subparagraph (G) the following new subparagraphs:
"(H) air-conditioning systems having bett«r than average energy eflicienc]i
ratings;
"(I) any residential energy audit;";
(B) by redesignating subparagraphs (H) and (1) as subparagraphs (J) and (K),
respectively; and
(C) in subpa
. . ibparagraph (K), as so redesignated in this paragraph —
(i) by striking out "any residential energy audit,"; and
(ii) by striking out "(tf)" and inserting in lieu thereof "(J)".
(2) Section 504(7) of the Solar Energy and Energy Oinservatian Bank Act ia
amended—
(A) bj^ inserting after subparagraph (I) the following new subparagniphs:
"(J) air-conditioning systems having better than average energy efficiency rat-
ings;
(K) any commercial energy audit;";
(B) by redesignating subparagraphs (J) and (K) as subparagraphs (L) and (Ml,
respectively; and
(C) in subparagraph (M). as so redesignated in this paragraph—
(i) by striking out "any commercial energy audit,"; and
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<ti) by rtrikiiig out "(J)" and inserting in lieu thereof "(L)".
(b) Section SOBif) of such Act is amended by adding at the end thereof the foUow-
ig new aentenoe: "Each such advisory committee shall meet at the call of its chair-
eiBon or a nuuority of its members, and shall meet not less than twice during each
(cXD Section 611(a) of such Act is amended—
(A) by striking out "and" at the end of paragraph (3);
IB) by strildng out the period at the end of paragraph (4) and inserting in lieu
thereof "; and"; and
<0 by adding at the end thereof the following new paragraph:
"(5) in the case of a residential building with 2 to 4 dwelling units and an
owner or tenant whose income exceeds 150 percent of the median area income,
or in the case erf a residential building that is available for rent and is owned by
a person whose income exceeds 150 percent of the median area income —
(A) an amount equal to 20 percent of the cost of the residential energy con-
servation improvements; or
"(B) the sum of $400 times the number of dwelling units in such building in
the case of an owner, or $4(H) in the case of a tenant,
hichever is less.".
<2) Section 511 of such Act is amended by adding at the end thereof the following
ew subsection;
"(d) The Board may not limit the amount of fmanciat assistance that may be pro-
ided tinder this subtitle for the purchase or installation of residential or commer-
■1 energy conserving improvements on the basis of the projected amount of energy
maerved as a result of such improvements.".
(d) Section 520 of such Act is amended—
(1) by inserting "(a)" afler the section designation; and
(2) tq' adding at the end thereof the following new subsection:
"(b) Not later than 90 days after the date of the enactment of the Housing and
iban-Rura] Becovery Act of 1983, the Board shall issue regulations that —
"(1) permit the provision of financial assistance under this subtitle for the
purchase and installation of solar energy systems of the active type, and the
purchase and installation of passive and active type solar space heating and
water heating in new and existing residential buildings and multifamily resi-
dential buildings;
"(2) permit metropolitan cities and urban counties (as defmed in section 102
of the Housing and Community Development Act of 1974) to receive fmancial
assistance under this subtitle directly from the Bank;
"(3) permit the use of tax-exempt fmancing in connection with any purchase
or installation of residential or commercial energy conserving improvements or
solar energy systems assisted under this subtitle;
"(4) provide that a residential energy audit shall not be required as a condi-
tion of the receipt of Twancial assistance by an owner or tenant of a residential
building under this subtitle;
"(5KA) establish a maximum limitation on the percentage or amount of any
financial assistance provided under this subtitle that may t>e used for adminis-
trative expenses, which limitation shell be 10 percent <or such higher percent-
^e as the Secretary may determine to he appropriate), or $20,000, whichever
amount is greater; and
"(B) provide that not more than one-half of any such amount may be used by
any State for its administrative expenses, except that if any State is the sole
administrative entity in such State with respect to fmancial assistance under
this subtitle such State may use all of such amount for such expenses;
"(6) establish criteria for the allocation of fmancial assistance under this sub-
title among eligible financial institutions; and
"(7) provide that any amount of unexpended fmancial assistance under this
subtitle that is recaptured by the Board shall be reallocated by the Board to
eligible financial institutions under this subtitle.".
(e) Section 1071 of the Omnibus Budget Reconciliation Act of 1981 is amended —
(1) by striking out "such fiscal year" and inserting in lieu thereof "of fiscal
jeers 1982 and 1983"; and
(2) by inserting alter "$50,000,000" the following; ", and for fiscal year 1984
not to exceed $100,000,000,".
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634
DEPARTMSNT Or HOUSING AND URBAN DEVBLOPIIKNT BBOBQANIZATION nOCtOVMMB
Sbc. 545. Section T(p) of the Department of Housing and Urban Devekipment Act
is amended —
(1) in the fiTBt sentence, by inserting "the central ofFlce or" after "reorgania-
(2) in paragraph (31, by inserting the following before the semicolon at the end
thereof: ", including the direct and indirect impart on unemployntent in both
the public and private sectore".
WBATHBRIZATION PROORAU
Sic. 546. Sertion 422 of the Energy Conservation in Existing Buildings Act of 1976
is amended by adding the following new sentence at the end thereof: "Of the fiinds
authorized by sertion 1005(1) of the Omnibus Budget Reconciliation Act of 1981 for
ener^ conservation for the liscal year ending September 30, 19S4, not len tfaan
(300^000,000 is authorized to be appropriated to carry out the weatberixaticm pro-
gram under this part.".
FLOOD INSURANCB
Sec. 547. (a) Sertion 1319 of the National Flood Insurance Act of 1968 is amended
by atnking out "May 20, 1983" and inserting in lieu thereof "September 30, 198S".
(b) Sertion 1336(a) of such Art is amended by striking out "Hay 20, 19S3" and in-
serting in lieu thereof "September 30, 1985".
(c) Sertion 1376(0 of such Art is amended—
(11 by striking out "and" after "1981,"; and
(2) by inserting the following before the period at the end thereof ", and not
to exceed $58,600,000 for the fiscal year 1984".
(dXD The National Flood Insurance Art of 1968 is amended by striking out "Sec-
retaiV' and "Secretary's" each place they appear therein (oUier than as a rrference
to a Secretaiy other than the Secretary of Housing and Urtwn Development) and
inserting in lieu thereof "Director" and "Director's", respertivelv.
(2) Section 1304(a) of such Art is amended by striking out "Secretary of Housing
and Urban Development" and inserting in lieu thereof "Director of the Federal
Emergency Management Agency",
(3) Sertion 1333 of such Act is emended by inserting "original exclusive" beCne
"jurisdirtion".
(4) Section 1340(aX2) of the National Flood Insurance Art of 1968 is amended by
striking out "officers and employees of the Department of Housing and Urban De-
velopment, and".
(5) Sertion 1341 of such Art is amended by inserting "original exclurave" befoie
"jurisdiction".
(6) Section 1360(aK2) of such Art is amended by striking out "within fifteen yean
following such date" and inserting in lieu thereof "by September 30, 1987".
(7) Sertion 137(XaX6) of such Art is amended to read as follows:
"(6) the term 'Director' means the Director of the Federal Emergency Man-
agement Agency.".
(eXD The Flood Disaster Protertion Art of 1973 is amended by striking out "Socre-
taiy" and "Secretai^'s" each place they appear therein (other than as a reference to
a ^ecretat? other than the Secretaiy of Housing and Urban Development) and in-
serting in lieu thereof "Director" ana "Director's ', respertively.
(2) Section 3(aX6) of such Art is amended to read as follows:
"(6) 'Director' means the Director of the Federal Emergency Management
Agency.",
(f) Sertion 16(e) of the Federal Flood Insurance Art of 1956 is amended by striking
out "Secretary" the first and third places it appears therein and inserting in lieu
thereof "Director of the Federal Emergency Management Agency".
(gXD Notwithstanding any other provision of law, until October 1, 1984, the FMt
era! Insurance Administrator shall provide that premium rates which ara charged
for flood insurance under any prc^iam established pursuant to the National Flood
Insurance Art of 1968 shall not exceed the rates that are in eflert for such insiir
ance on September 15, 1982.
(2) The Federal Insurance Administrator shall report to the Congress not later
than December 1, 1963, with reapert to the premium rate structure for flood insur-
ance made available pursuant to the National Flood Insurance Art of 1968. Sudi
report shall contain a detailed explanation of all increaaes in rates charged for such
e during the S-year period ending on September 15, 1982, along with an ex-
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■lanatkMi of any increasee in such premiums which the Adminiatralor anticipates
nU be made b^M« October 1, 19S5.
CRIMB AND BIOT INSUKANCS
Sk:. 548. (a) Section 1201(b) of the NaUonal Housing Act is amended—
(!) by striking out "May 20, 1983" in paragraph (1) and inserting in lieu
thereof "September 30, 1985"; and
(2) by striking out "September 30, 1985" in paragraph (IKA) and inserting in
lieu thereof "September 30. 1988".
(bXl) Title XII of the National Housing Act is amended by striking out "Secre-
ary" and "Secretaiy's" each place they appear therein {other than as a reference to
Secretai^ other than the Secretary of Housing and Urban Development) and in-
ertins in Ueu thereof "Director" and "Director's ', respectively.
(2) Section 1203(a) of such Act is amended—
(A) by striking out "and" at the end of paragraph (15);
(B) by striking out the period at the end of paragraph (16) and ii
and" in lieu thereof; and
(C) by adding at the end thereof the following new paragraph:
"(17) 'Director' means the Director of the Federal Emergency Management
Agency.".
(3) Section 1232(2) of such Act is amended by striking out "officers and employees
f the Department of Housing and Urban Development, and".
(4) Section 1247 of such Act is amended by inserting "of the Secretary of Housing
nd Urban Development" after "regulations)".
COUNBEUNC
Sbc. 549. Section 106(aM3) of the Housing and Urban Development Act of 1968 is
(1) by striking out "1982" and inserting in lieu thereof "1984"; and
(2) 1^ striking out "M.OOO.OOO" and inserting in lieu thereof "$8,000,000".
RB8BARCH AUTHORIZATION
&C. 550. (a) Section 501 of the Housing and Urban Development Act of 1970 is
mended —
(1) by striking out "and" after "1981," in the second sentence; and
(2) 1:^ inserting the following before the period at the end of such sentence: ",
and not to exceed $24,000,000 for the fiscal year 1984, of which amount (1) not
lew than $2,000,000 shall be provided for (A) implementation of a research pro-
gram to be developed in consultation with public housing agencies, which pro-
gram shall identify current problems of public housing management, specific so-
lutions to such problems, and incentives to encourage implementation of such
aolutions; and (B) carrying out the provisions of section 512; <2) not less than
data aeries on national, regional, and local economic and housing market condi-
tions, for which the Secretary shall utilize the method of collecting such data
aeries utilized by the Secretary for fiscal year 1983, except that the Secretary
may revise such method following consultation regarding such proposed revi-
Bions with 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.",
(b) Title V of the Housing and Urban Development Act of 1970 is amended by
dding at the end thereof the following new sections:
"study of comprehensive improvement assistance program
"Sic. 512. (a) The Secretary shall enter into a contract with an independent firm,
LDder which such firm shall conduct a study and prepare a report with respect to —
"(1) the costs, estimated on a national, regional, and State basis, of bringing
the existing public housing stock into conformance with (A) the property and
tMBTB/ conservation standards established by the Secretary under section
14(jX2) of the United States Housing Act of 1937. as such standards were in
eflfoct on Mareh 1. 1983; and (B) all applicable Federal requirements relating to
the accessibility of such housing to handicapped persons;
"(2) the extent of the improvements relating to property, energy conservation,
and accessibility to handicapped persons that have been made or are to be made
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by public houaing agendce with aaeiBtance provided under Mction 14 of the
United States Houaing Act of 1937 through September 30, 1983; and
"(3) the amount of additional aeslBtance required under section 14 of the
United States Housing Act of 1937 after September 30, 1983, to finance the casta
estimated under paraeraph (1).
"(b) The Secretary shall ensure that the report required in aufasection (a) is sub-
mitted to the Secretary and the Congress on the same date, not later than March 1,
19&4.
"STUDV OP MUTUAJ. MOUSING ASSOCIATIONS
"Sec. 513, (a) In tarrying out activities under section 501, the Secretary may
study, and conduct demonstrations of, the capacity of mutual housing associations to
provide housing to families in a coat-efTicient manner. For purposes of such d
strations. the Secretary may make grants to nonprofit mutual housing aasoci
for projects to provide housing to families of low and moderate income, which
projects shall empahsize the rehabilitation of existing housing.
"(b) Not later than the expiration of the 12-month period following the date of the
enactment of the Housing and Urban-Rural Recovery Act of 1983, the Secretary
shall submit to the Congress a report setting forth the results of the studies and
demonstrations conducted under subsection (a). Such report shall include any l^is-
lative recommendations determined by the Secretery to be necessary or appropriate
as a result of such studies and demonstrations.".
NATIONAL HOUSING PARTNERSHIPS
Sec. 551. (a) Section 906(aXl) of the Housing and Urban Development Act of 1968
(1) by strilcing out "or" after "building" and inserting in lieu thereof a
(2) by inserting after "rehabilitation" the following: ", acquisition, and financ-
ing".
(b) Section 906 of such Act is amended —
(I) by redesignating subsections (c) and (d) as subsections <d) and (e), respec-
tively; and
(2| by inserting after subsection (bl the following new subsection:
"(c) For purposes of this title, the term 'housing and related facilities' includct
commercial, industrial, and retail facilities that provide employment or services to
families and individuals of low or moderate income, except that the production and
preservation of housing primarily for the benefit of families and individuals of low
or moderate income shall remain the primary purpose of the corporation and the
income generated by such facilities shall he used for such purpose. The total equi^
commitment of the corporation to commercial, industrial, and retail facilities that
are not directly related to a housing project shall not exceed 25 percent of its equity
commitment to housing activities.".
(c) Section 907(c) of such Act is amended—
(1) by inserting before the period at the end thereof the following: ", including
the acquisition of such developments, projects, and undertakings^ and
(2) by adding at the end thereof the following new sentence: "The partnership
is also authorized to enter into partnerships, limited partnerships, or joint ven-
tures organized under applicable State or local law for the purpose of engaging
in the acquisition, development, financing, construction, rehabilitatimi, ana
management of housing and related facilities, except that the production and
E reservation of housing primarily for the tMnefit of families and individuals of
iw and moderate income shall remain the primary purpose of the partner
qUARTERLY REPORT BY BBCRETARY OP HOUSING AND URBAN DEVKLOPUKNT
Sbc. 552. (a) The Secretary of Housing and Urban Development, with the coopera-
tion of the Pfderal Home Loan Bank Board, the Federal Deposit Insurance Corpora-
tion, the Board of Governors of the Federal Reserve System, and the Comptroller <rf
the Currency, shall conduct a survey during each 3-month period following the date
of the enactment of this Act of residential mortgage delinquencies and foreclosures,
and transmit te the Congress during each such period a report setting forth the re-
sults of the study conducted during the previous such period.
(b) Bach report required under this section shall inciude information —
yGoot^le
(1) with reqwct to the number of residential mortgage forecloeuree, and the
number of 60- and 9(May residential mortgage delinquencies, in the Nation and
in eodi State; and
(2) identify separately conventional mortgages and mortgages insured or guar-
anteed under the National Housing Act, title V of the Housing Act of 1949, or
title 38. United States Code.
UULTIPAUILV UQRTGACE PORBCLOSURB
Sec. 553. Section 364 of the Multifamily Mortgage Foreclosure Act of 1981 is
amended by adding at the end thereof the following new sentence: "If the Secretary
forecloeea on any such mortgage pursuant to such other foreclosure procedures
available, the provisions of section 36T(b) shall apply.".
SEa 554. Section 805(a) of the Alternative Mortgage Transaction Parity Act of
1982 is amended by inserting after "transactions" the following: "(or to any class or
tjrpe of alternative mortgage transaction)".
The Chairman. Are there any amendments to title V?
AMENDMENT OFFERED BY MR. LEVIN OF MICHIGAN
Mr. Levin of Mich^an. Mr. Chairman, I ofTer an amendment.
The Clerk read as follows:
Amendment offered by Mr. Levin of Michigan: Page 180, after line 9, add the fol-
lowing new section (and conform the table of contents accordingly):
cONSmSRATioN or unemployment in allocating certain abbwtance
;. 555. In allocating fini
lament under any den . „
Housing and Urban Development involving employment training, the Secretary
•hall give principal consideration to the relative extent of unemployment in such
States and units of general local government, as indicated by (1) the rate of unem-
ployinent; (2) the number of unemployed persons; and (3) the rate of unemployment
for the intended beneficiaries of such demonstration program.
Mr. Levin of Michigftn (during the reading). Mr. Chairman, I ask
unanimous consent that the amendment be considered as read and
printed in the Record.
The Chairman. Is there objection to the request of the gentle-
man from Michigem?
There was no objection.
Mr. Levin of Michigan. Mr. Chairman, this amendment relates
to demonstration programs of the eigency relating directly to em-
ployment for training. It would require the Department to take
into filll account as a major factor in determining sites for such
demonstration programs three factors.
Mr. St Germain. Mr. Chairman, would the gentleman yield?
Mr. Levin of Mich^an. I yield to the gentleman.
Mr. St Germain. Mr. Chairman, the subcommittee chairman and
myself have had occasion to work with the gentleman on this
amendment. We have examined it thoroughly and we are prepared
to accept the amendment.
Mr. McKjnnky. Mr. Chairman, will the gentleman yield?
Mr. Levin of Michigan. I yield to the gentlemem.
Mr. McKiNNEY. I understand Mr. Sawyer of Michigan has
worked with the gentleman in developing this amendment. He
spoke to me about it. The minority would accept this amendment.
yGoot^le
I just want to make clear for l^islative history though that thk
is not a target by amount of percentage; it is a fact that HUD
should consider.
Mr. Levin of Michigan. That is correct. This does not target in
terms of 75 percent of the funds for areas with so much unemploy-
ment.
Mr. McKiNNEY. It simply adds the general fact that unemploy-
ment should be considered as part of the criteria.
Mr. Levin of Michigan. It should be a major consideration. This
is after all unemployment-employment training program. Your un-
derstanding is correct.
Mr. McKiNNEY. The minority accepts the amendment.
Mr. Levin of Michigan. I yield back the balance of my time.
The Chairman. The question is on the amendment offered by the
gentleman from Michigan (Mr. Levin).
The amendment was agreed to.
AMENDMENT OFFERED BY MR. AKAKA
Mr. Akaka. Mr. Chairman, I offer an amendment.
The Clerk read as follows:
SINOLB-FAMILV UOSTGAGE INSURANCE ON HAWAIIAN HOHK LANDS
MORTGAGE
"Sec. 247. (a) The Secretary, subject to such conditions as the Secretary may pre-
scribe, may insure under any provision of this title that authorizes such insurance,
a mortgage covering a property upon which there is located a one- to four-famil]'
residence, without r^ard to any limitation in this Act relating to nuirketabilj^ a
title or any other limitation in any other law that the Secreta^ determines is om-
trary to promoting the availability of such insurance on Hawaiian home lands, if—
"(1) the mortgage is executed by a native Hawaiian on property located
within Hawaiian home lands covered under a homestead lease issued under sec-
tion 2(}7[a) of the Hawaiian Homes Commission Act, 1920, or under the corre-
sponding provision of the Constitution of the State of Hawaii adopted under sec-
tion 4 of the Act entitled "An Act to provide for the admission of the State of
Hawaii into the Union", approved March 18, 1959 (73 Stat. 5);
"(2) the property will be used as the principal residence of the mortgagor, and
"(3) the Department of Hawaiian Home Lands of the State of Hawaii (A) is a
comortgagor; (B) guarantees to reimburse the Secretary for any mortgage insur-
ance claim paid in connection with a property on Hawaiian home lands; or (Q
offera other security acceptable to the Secretary.
"(b) Notwithstanding any other provision of this Act, the Secretary may, with re-
spect to mortgages eligible for insurance under subsection (a), insure and make com-
mitments to insure advances made during construction if the Secretary determinss
that the proposed construction is otherwise acceptable and that no feasible financ-
ing alternative is available,
(c) For purposes of this section:
"(II The term 'native Hawaiian' means any descendant of not leas than one-half
part of the blood of the races inhabiting the Hawaiian Islands before januaiy I,
1778,
"(21 The term 'Hawaiian home lands' means all lands given the status of Hawai-
ian home lands under section 204 of the Hawaiian Homes Commission Act, 1920, or
under the corresponding provision of the Constitution of the State of Hawaii adont-
ed under section 4 of the Act entitled "An Act to provide tor the admission of Uie
State of Hawaii into the Union", approved March 18, 1959 (73 Stat. 6).".
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Mr. Akaka (during the reading). Mr. Chairman, I ask unanimous
consent that the amendment be considered as read and printed in
the Record.
The Chairman. Is there objection to the request of the gentle-
man from Hawaii?
There was no objection.
(Mr. Akaka asked and was given permission to revise and extend
his remarks.)
Mr. Akaka. Mr. Chairman, my Eimendment would extend the
FHA insured mortgage provisions of H.R. 1 to native Hawaiians
who wish to obtain mortgages on property located on Hawaiian
Home Lands. Up to now, individuals living on Hawaiian Home
Lands have been unable to secure FHA insured mortgages.
On July 9, 1921, Congress passed the Hawaiian Homes Commis-
sion Act. Under this legislation, approximately 200,000 acres of
land were set aside to be used by native Hawaiians for homestead
purposes. One of the provisions of this act makes it impossible to
alienate such land, now or in the future. It affords immunity from
attachment, levy or sale upon court process for lemd settled under
die Hawaiian Homes Commission Act. It is this provision that pre-
vents these homeowners from acquiring FHA-insured mortgages.
These restrictions against attachment, levy or sale, are in con-
flict with r^ulations established by FHA for their insured mort-
gage pn^am. Up to the present time, native Hawaiians have not
been able to qualify for FHA insured loans if their home was to be
located on Hawaiian Home Land. My amendment would remove
this impediment and thereby give these individuals access to the
same FHA insured mortgage program that is available to other
homeowners.
Perhaps nowhere else do we find such a pressing call for access
to an established Federal program that is not being euiswered. The
cost and availability of housing in Hawaii is particularly acute, emd
this is especially so of housing for native Hawaiians, The ccet of
bousing is extremely high in Hawaii. The median value of a house
in Hawaii is 2V^ times greater than the national average. By con-
trast, income levels for native Hawaiians is the lowest in the State.
The extremely high cost of homes in Hawaii places homeowner-
ship far beyond the reach of native Hawaiians. The restriction
agunst attachment, levy or sale that is contained in the Hawaiian
Homes Commission Act prevents much-needed access to the FHA
insured mortgage program. Furthermore, these same restrictions
prevent homesteaders from securing mortgages from traditional
lending institutions for the same reasons that FHA insured mort-
Ts are not available,
want to inform my colleagues that a provision to extend the
FHA insured mortgage program to Hawaiian Home Lands was
part of the original housing legislation submitted to Congress by
the administration. The administration's bill is H.R, 1901. A corre-
apaa^ing provision is contained in the housing bill being considered
Iqr the otber body.
Mr. Chairman, I know of no opposition to the amendment I have
offiered. It creates no new program, and only includes insured mort-
gages on Hawaiian Home Lands within the FHA program.
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640
I have discussed my amendment with the chairman erf* the Hous-
ing Subcommittee, and I am offering it with his support, I am also
advised that the minority has been consulted and are in agree*
ment. At this point, I would like to yield to the gentleman from
Texas (Mr. Gonzalez).
Mr. Gonzalez. Mr. Chairman, will the gentleman yield?
Mr. Akaka. 1 yield to the gentleman from Texas.
Mr. Gonzalez. I thank the gentleman.
He has had a chance to look this amendment over. As a matter
of fact, as 1 explained to the gentleman from Hawaii, I had been
under the impression that we had incorporated the thrust of his
amendment in the version we passed out of committee, but actually
it was in last year's authorization bill.
We had hearings on this. The gentleman contacted us. What it
does is correct what we consider to be an injustice in denying the
extension of FHA insurance to the Hawaiian natives under certain
circumstances involving State-owned lands and the like. This cor-
rects that injustice.
We certainly accept this amendment as an improvement in the
bill.
Mr. McKiNNEY. Mr. Chairman, will the gentleman yield?
Mr. Akaka. I yield to the gentlemsm.
Mr. McKiNNEY. Mr. Chairman, the minority has had a chance to
examine the amendment and we agree with it.
Mr. Akaka. Mr. Chairman, I yield back the bfilance of my time.
The Chairman. The question is on the amendment offered by ihs
gentleman from Hawaii (Mr. Akaka).
The amendment was agreed to.
AMENDMENT OPPBRED BY MR. PA1TEICSON
Mr. Patterson. Mr. Chairman, I offer an amendment.
The Clerk read as follows:
BECONDARV MORTGAGE MARKET EqUITY
Sec. 531. (a) Section 305(aH2) of the Federal Home Loan Mortgage Corporation Act
is amended by adding at the end thereof the following new sentence: "Each maxi-
mum limitation set forth in this paragraph with respect to a one- to four-family res-
idence (as adjusted in accordance with the annual adjustment required in this para-
graph) shall be increased for any area, other than an area located in a jurisdiction
referred to in the preceding sentence, by a percentage equal to the percentage 1^
which the Secretary of Housing and Urban Development has increased the corre-
sponding maximum limitation set forth in section 203(b)(2) of the National Houaiiig
Act for such area on account of limited housing opportunities due to hi^ prevailing
housing sales prices,".
(b) Section 302(bX2) of the Federal National Mortgage Association Charter Act is
amended by adding at the end thereof the following new sentence; "E^ach maximum
limitation set forth in this paragraph with respect to a one- to four-family reaidence
(as a4juat«d in accordance with the annual adjustment required in this paragraph)
shall be increased for any area, other than an area located in a jurisdiction r^eired
to in the preceding sentence, by a percentage equal to the percentage by which the
Secretary of Housing and Urban Development has increased the corresponding max-
imum limitation set forth in section 203lbX2) of the National Housing Act for such
area on account of limited housing opportunities due to high prevailing housiiig
sales prices.".
yGoot^le
641
Mr. PATTBitBON (during the reading). Mr. Chairman, I ask unani-
mous consent that the amendment be considered as read and print-
ed in the Record.
The Chairbian. Is there objection to the request of the gentle-
man from California?
There was no objection.
Mr. Patterson. Mr. Chairman, my amendment would provide a
high cost area adjustment for the mortgage ceilings of Fannie Mae
and Freddie Mac.
The problem is that under current law, Fannie Mae eind Freddie
Mac may only purchase mortgages that fall within the statutory
mortgage ceiling of $108,300. At present, there is no adjustment of
this ceiling to accommodate regional price variations of moderate-
priced homes. Because of this singular nationwide ceiling, buyers of
modest homes in over 200 market areas within 37 States are denied
access to the beneficial programs of Fannie Mae and Freddie Mac.
The solution proposed by my amendment is to correct this in-
eqiiity by providing a modest high-cost area adjustment in the
mortgage ceilings governing Fannie Mae and Freddie Mac pro-
grams. This adjustment would be identical to the high cost area ad-
justment provided under current law for the Federal Housing Ad-
ministration (FHA) mortg£ige insurance programs.
As provided under my amendment, the secondary mortgage
market ceiling would be increased by up to 33y3 percent in those
market areas designated as high cost by the Secretary of HUD.
This modest adjustment would assure that all home buyers, includ-
ing those families living in high-cost areas, have equitable access to
the national secondary mortgage market.
Background: I have been pursuing this change in the Fannie
Mae and Freddie Mac charter acts since the beginning of the year.
First, during Housing Subcommittee markup of H.R. 1, I offered
a similar eunendment, but withdrew it pending hearing on the
issue.
Second, the hearings were held in May. A number of members —
Democrats and Republicans alike — expressed support for a propos-
al put forward by the industry representatives.
Third, jiist before the July 4 recess, I introduced the consensus
proposal with 14 original cosponsors, 13 of whom are members of
the Banking Committee. Since then, a number of other Representa-
tives have joined on as cosponsors.
Fourth, now I offer the proposal as an amendment to H.R. 1.
In conclusion, Mr. Chairman, the FHA high-cost accommodation
system — after which my amendment is patterned — was approved
by Congress in 1980 in recognition of the need for Government-in-
sured housing programs to be made available for low- and moder-
ate-income home buyers in high-cost areas. For the same reasons
that this public policy decision was made for primary market lend-
ers to serve home buyers using FHA programs in high-cost areas,
the federally chartered secondary mortgage market institutions
also should be allowed to provide their needed support to these
hif^-cost markets.
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Fact: The vast majority of the mortgages bought by Fannie Mae and Freddie Ibc
are well below the limits. In 1982. for example, the average mortgage of Fannie Blae
and Freddie Mac was £47,500 and $56,000, respectively— nowhere near the then-ceil-
ing of $107,000.
It should be added that the Charter Acts of Fannie Mae and Freddie lilac ctwunit
them t« serve the entire market up to their legal limits, and they have shown everj
willingnees to do so. There is no reason to believe that this commitment to tfae
entire range of mortgage sizes will change when the mortgage limit is a^juBted aa
called for in my legislation.
Myth 2: An increase in the Fannie Mae and Freddie Mac loan limits will impede
the entry and growth of private firms within the secondary mortgage market
Fact: The size of the mortgage market above the current ceiling of $108,300 is esti-
mated to be about 20 percent to 25 percent of all mortgage loans made. TluB
amounts to $35 billion in 1983 and is projected to increase to more than $58.2 billim
in 1985. It is estimated that even with my legislation, 17 percent of the mortg^e
market would continue Ui be out of the reach of Fannie Mae and Freddie Mac and
available exclusively to the private secondary market corporations.
It is not my intention to limit the growth of private sector secondary market cor-
porations. In fact, I would like to encourage their entTy. At the same time, however,
I would like to assure that moderate income homebuyers in all areas of the countiy
are given equitable access to the national secondary market institutions.
This bill, nevertheless, is narrowly drawn so as to leave more than adequate room
for growth and participation by both private sector firms as well as the federally
chartered Fannie Mae and Freddie Mac.
Myth 3: If Fannie Mae and Freddie Mac are given authority to expand their ac-
tivities into mortgages larger than $108,300, they will have to increase their borrow-
ing on the capital markets. This will result in crowding out of other worthy borrow-
Fact: Fannie Mae's and Freddie Mac's share of borrowing on the capital market!
is relatively small. Although Fannie Mae, alone, is the second largest borrower in
the U.S. economy^second only to the U.S. Treasury — Fannie Mae's share of boi^
rowing only comprises 1,3 percent of total borrowing on the U.S. capital markets.
It is true that Fannie Mae and Freddie Mac will have to borrow more funds «i
the capital markets to serve both these newly eligible mortgages and to continue to
serve the lower priced mortgages. However, I expect that both Fannie Mae and
Freddie Mac would continue their current practice of concentrating their activitiea
on the lower priced mortgages and thus I do not expect that the additional borrow-
ing would be significant enough to have a crowding out effect.
Myth 4: The current ceilings are high enough to adequately serve the needs of
most American home buyers.
Fact: The current policy of a singular nationwide mortgage ceiling does not equi-
tability serve all markets. According to OMB's own testimony, the current ceiling
could serve 80 percent of the market nationwide. However, in a high coat area sudi
as San Francisco, only 58 percent of the market could be served.
Myth 5: The new ceiling created by the Patterson Amendment would only benefit
high income people buying luxury housing.
Fact: The Patterson Amendment would only provide a high cost adjustment in
those areas where the price of a modest home is high.
In high cost areas such as those in my home state of California, the typical middle
income family of 4 cannot fmd a home for $108,300. That middle income family may
want at least a 1,500 square foot home and that's going to cost well above $108,300.
Yes, to afford that high<ost home will require two incomes. At today's interest rates
a $108,300 mortgage will require a family income of $55,000, In the highest cost
areas, the $144,400 mortgage will require a family income of $75,000,
However, it should be kept in mind that these high-priced homes are not extrava-
gant homes. Rather, the same modest home merely costs more in high coat areas.
According to the Nationwide Relocation Service— an independent company that pro-
vides home price comparisons for people contemplating moves to new areaB — the
same type home located in different cities carries very different price tags:
yGoot^le
AlbMij,N.Y J66.000
Sp<Aane,WMh „ 78.500
NarfivUle, Tetin ^ ^ - 89,000
Atlanta, Ga „ — 93.500
Wichita, Kana. - - ~ 102,600
SeatUe.Warfi - - 110.000
Billings, Mont _ _ _ 115,000
Miami Fla - - - - 126,000
New York, nibuiban — - — - ~... 134.000
Dallaa,TM _ _ _ „ „ „... 140,000
Anchorase. Alaska » 156,000
Orange County. Calif - 160,000
Fairfield. Conn „ „ 190,000
Honolulu, Hawaii 199,000
Oakland, Calif 210.000
Mr. Baktlett. Mr. Chairman, will the gentleman yield?
Mr. Patterson. I yield to the gentleman from Texas.
Mr. Bartlett. Would the gentleman agree then that all this
amendment does is establish fairness and equity across the country
80 in one city to zmother, one State to another, across the country,
in fact, irom each congressional district to another, you would be
having the mortgage rates adjusted for housing costs to be at the
same rates in the mortgage amount, is that the gentleman's pur-
pose?
Mr. Patterson. The gentleman is correct, it would do exactly
that.
Mr. Bartlett. I commend the gentleman for his amendment and
I wtnild hope we are able either now or at some point in this ses-
sion we are able to adopt this feiimess and equitable amendment to
the Fannie Mae loan limits. I commend the gentlemEin.
Mr. Patterson. I thank the gentleman.
Mr. St Germain. Mr. Chairman, will the gentleman yield?
Mr. Patterson. I yield to the gentleman.
Mr. St Germain. As the gentleman knows, we have discussed
this amendment. At this point in time there are those of us who
still have a problem with it.
However, we feel that certainly the gentlemzin from Ctilifomia
has an amendment that is deserving of serious consideration.
Under the circumstances and in keeping with our conversation and
our agreement, I have spoken with the chairman of the subcommit-
tee and it has been s^eed that we would indeed have hearings on
the gentleman's amendment and go to a markup. We will follow
the committee process.
Mr. Patterson. The chairman is saying that he would allow the
bill that I have introduced to proceed to markup in committee?
Mr. St Germain. That is correct.
Idr. Patterson. That would be this year, following the August
recess?
Mr. St Germain. Absolutely.
Mr. Patterson. I thank the chairman.
□ 1820
Mr. McKiNNEY. Mr. Chairratm. will the gentleman yield?
Mr. Patterson. I yield to the gentleman from Connecticut.
Mr. McKiNNEY. I thank the gentleman for yielding.
yGoot^le
644
The chairman of the full committee and the chairman of the sub-
committee have discussed this with me cuid I have agreed that Uw
Housing Subcommittee should have hearings on the gentleman's
concept and should, in fact, go to markup and express the wishes d*
the membership of the committee whether to bring it to the floor
or not.
Mr. Patterson. I thank the gentleman.
Mr. Vento. Mr. Chairman, will the gentleman yield?
Mr. Patterson. I yield to the gentleman from Minnesota.
Mr. Vento. 1 thank the gentleman for yielding.
Mr. Chairman, 1 think the gentleman points up an important
problem in terms of meeting housing in his community and in
some high-cost areas, but we nave every expectation that there is a
private sector that has begun to serve in these areas. I sincerely
hope that that will meet the concerns that have very rightly been
stated in terms of the secondary market and providing liquidity to
the financial institutions in his community.
While 1 understand the problem, 1 do not agree with the solution
of extending the Freddie Mac and Fannie R^e mantle of jurisdic-
tion and operation in those areas and think that the private sector
market ought to have the opportunity, but I hope that Uie solution
in terms of the private sector will solve these particular problems.
Mr, Patterson. 1 thank the gentleman for his contribution.
As we have discussed many times, the private sector may not be
able to pick it all up, but I think with the agreement from the
chairman of the full committee, the chairman of the subcommittee,
and ranking members of the full committee and subcommittee, I
would ask that there be a hearing on the bill and that it proceed to
markup following the August recess.
Mr. Chairman, I ask unanimous consent to withdraw my amend-
ment.
The Chairman. Is there objection to the request of the gentle-
man from California?
There was no objection.
• Mr. Kostmayer. Mr. Chairman, I rise in support of H.R. 1, the
Housing and Urban-Rural Recovery Act of 1983.
I wish, Mr. Chairman, to direct my remarks to those sections of
the bill dealing with section 8 elderly housing. The l^islation we
have before us today will rectify a terrible injustice which was in-
flicted upon all those residing in senior citizen housing communi-
ties by the Gramm-Latta budget bill approved by the Congress in
1981.
In the Eighth Congressional District in Pennsylvania, this legis-
lation will apply to the following senior communities under the
Bucks County Housing Authority:
Grundy Towers in Bristol Borough;
Grundy Manor in Telford;
Grundy Home in Quakertown;
Grundy Hall Doylestown;
Miriam Wood Brown in Perkasie;
Galilee Village in Levittown; and
The new Grundy Gardens in Fairless Hills.
In 1981 Congress slashed the authorized funding for senior hous-
ing programs, and increased the tenant contribution toward rent
yGoot^le
645
from 25 to 30 percent of tenant income, and required the Depart-
ment of Housing and Urban Development to severely limit income
deductions for extraordinziry medical expenses. These changes were
all too typical of the callous approach of the Reagtm administration
in cutting pn^ams to aid the truly needy. These cuts hit seniors —
those generally on a fixed income who have a limited ability to
absorb hefty increases in their housing costs, and the cuts bear no
relation to the situation facing senior citizens regarding their medi-
cal costs.
HUD has now proposed a regulation which would eliminate all
itemized medical expenses and substitute a standard medical de-
duction of $300 in order to carry out the Gramm-Latta bill. This is
truly outrageous.
I would hke, Mr. Chairman, to share some statistics with my col-
leagues to prove my point.
Mr. Andrew Flager, the management agent at Galilee Village in
Levittown, Pa., has provided me, on an anonymous basis, the
annual medical deductions for 12 of his tenants, taken at random.
Six tenants surveyed, all individuals, had the following medical
costs: $1,081, $841, $1,146, $719, and $1,348, for an average of
$963.67. Six couples had the following costs: $1,656, $1,424, $2,681,
$2,293, $1,445. and $1,295, for an average of $1,865.67 per couple.
It 18 obvious that a $300 flat deduction is totally inadequate in
computing realistic rents for our senior citizen tenants.
The bill before us, H.R. 1, does two things of beneflt to these ten-
ants in fissisted housing: First, it restores the amount of income
that tenants are required to contribute toward rent from the cur-
rent level of 30 to 25 percent of income as it was prior to 1981.
Second, the bill establishes legislatively the exclusions to income
that would be determined before applying the 25 percent contribu-
tion level. The exclusions especially applicable to seniors would be:
First, $400 personal exclusion ($800 for a couple); Second, $400 for
each disabled handicapped person; and, addressing the need evi-
denced above; and third, extraordinary medical expenses exceeding
3 percent of income.
Mr. Chairman, I am pleased the House is coming to terms with
the special housing needs of our elderly. This would be a top priori-
ty for the Congress, and I hope the Senate moves expeditiously in
passing this bill and sending it to the President, so that the obvious
uiequitiee in his earlier budget proposal can be rectified.
Ma. Kaftur. Mr. Chairman, 1 rise in support of the Gonzalez
amendment to bring H.R. 1 in conformity with the first budget res-
olution and the HUD-independent agencies appropriation bill. This
substitute is an important expression of our determination to oper-
ate within the guidelines estehlished by the budget resolution
while at the same time meeting our Nation's housing needs. H.R. 1
extends the major HUD and Farmers Home Administration hous-
ing pn^emis for another year and reauthorizes the community de-
vdopment block greint and urban development action grant pro-
grams for 3 more years. It also provides for necessary increases in
public housing, section 8 existing and section 8 moderate rehabili-
tation units; an urban homesteading initiative; a neighborhood de-
velopment grant prc^am; and authorizes a new rental housing
production and retiabilitation program. Furthermore, H.R. 1 rolls
yGoot^le
back the 1981 rent increfise for the poor and elderly subsidized
housing tenants.
H.R. 1 also contains an important new initiative, the public hous-
ing child care demonstration program, which would establish and
fund a few pilot child care programs in public housing for the pur^
pose of determining extent to which child care facilitates the em-
ployability of low income single heads of households residing in
public housing.
Adequate child care has a profound impact upon the economic
well-being of women, children, and families. Increasingly, we are
witnessing what has graphically been described as the ' feminiza-
tion of poverty." Today, families with female heads have a poverty
rate six times that of male headed families, and almost one-third m
all female headed families live below the poverty level. The lack of
affordable child care is a major factor keeping these women and
their children in poverty. The U.S. Commission on Civil Rights
identified the lack of adequate child care as one of the key obsta-
cles to women in poverty:
In the absence of safe and affordable child care, women who would raise thrir
families out of poverty must remain outside the labor force or when compelled U>
work, place their children in circumstances detrimental to their wholesome growtli.
This unfortunate situation is magnified for those living in public
housing.
The public housing child care demonstration program included
in H.R. 1 seeks to det«rmine to what extent child care facilitates
the employability of low income single heads of households residing
in public housing. The $3 million fiscal year 1984 authorization is a
mtxlest, well-thought-out attempt to deal with an enormous pnA-
lem.
The demonstration program provides for a limited number of
child care projects in a cross section of settings— urbtm and rural,
high rise and smaller projects. Awards would be based on a nation-
al competition, and housing authorities would be required to pro-
vide usable space for the child care facility. To the extent possible,
the individud projects would have to include a support role for the
parents and part-time aide positions for the elderly living in the
projects.
Tlie program received strong bipartisan support during consider-
ation of H.R. 1 in the House Banking Committee. It has been en-
dorsed by both child advocacy and low income housing advocacy oi^
ganizations. A letter from the Children Defense Fund follows:
Children's Defense Fund,
Washington, D.C., July 7. 1983.
Dear Representatives Kaptur ANn Oaear: The Children's Defense Fund was
very pleased when an amendment to H.R. 1 waa approved with strong bipartisan
support in the Banking Committee to create a pilot project establishing and funding
child care programs in public housing projecta. We welcomed such a creative effort
to ei))and the supply of child care for low-income families. Adequat« child care is a
pressmg need for many American families especially those with limited incomes.
We hope that when H.R. 1, The Housing and Urban Rural Recovery Art of 1988
comes to the floor that it will receive the support of members of the House.
Our patchwork child care system which comes nowhere near meeting the needs at
the 14 million children ages 13 and under whose mothers work full-time has been
rapidly unraveling as a result of severe cuts made in 19B1. Many states, have now
severely diminished child care support for mothers enrolled in training programs or
stiffened eligibility criteria so that subsidised child care is no longer available or too
yGoot^le
647
ccatly for tower-iooome working familiee. The results are extremely painful. Chil-
dren as young as two or three years old are being left alone or have been moved to
leas familiar, and often less aupportive child care arrangements.
Mothers witJi young children living in public housing projects have definitely suf-
fM«d fNHn these reductions. Improved access to child care could help many of them
take advantage of employment or training opportunities. Although the child care
amendment repreeents a limited solution given the enormity of the problem, it
marks an important first step in meeting the child care needs of families, in public
housing and sets an important precedent.
Sincerely,
Helen Blank,
Child Cart and Family Support Servites.^
• Mr. Patterson. Mr. Chairman, I rise in support of the bill, H.R.
1, the Housing and Urban-Rural Recovery Act of 1983. It is essen-
tial that the Congress enact this legislation if the Federal Govern-
ment is to continue its effort toward the goal of a decent, safe, and
sanitary home for every American.
In the spirit of this historic Federal commitment, H.R. 1 reau-
thorizes a ntmiber of housing and community development pro-
grams administered by the Department of Housing and Urban De-
velopment [HUD]. It also reauthorizes the rural housing programs
adnunistered by the Farmers Home Administration. Furthermore,
the bill corrects a number of problems in current law as well as
creates new cost-efficient programs to meet the housing needs of
families, the elderly, and hiindicapped citizens.
The authorizations contained in this bill are not extravagant. In
fact, they are quite modest in comparison to our Nation's housing
needs. Nevertheless, a modest program is essential — one which
fcjls within today's budget constraints but preserves the essentied
elements of a nationsil housing policy. And that is exactly what
this bill does; it continues our Fededal Government's commitment
to housing but it does so within the parameters of the fiscal year
1984 budget resolution.
THE PROBLEM IN MULTIFAMILY AND ELDERLY RENTAL HOUSING
Today we find ourselves in the midst of a crisis in rental housing.
Demt^aphic projections indicate that demand for rental housing
will range from 290,000 to 400,000 units per year throughout the
decade. However, the market for unsubsidized multifamily rental
construction has been depressed to about 100,000 units annually
nationwide. One reason is high development costs due to persistent-
ly high interest rates. Another is declining real family income and
thus the inability of families to afford market rents. If nothing is
done to stimulate the construction of additional affordable rental
housing, the shortages which are already acute will become more
severe and result in rising rents or families doubling up.
For the past 50 years, the Federal Government has played a
mfuor role in meeting the housing needs of low-income families.
ITie National Housing Act of 1934 assured that affordable housing
credit would be available. Then, with the Housing Act of 1937, the
Federal Government for the first time provided direct construction
and operating support to meet the particular needs of low-income
families. Althougn each of these approaches had its failures, they
laid the groundwork of a positive Federal policy that created the
conditions under which the private sector responded to the housing
yGoot^le
648
needs of our Nation's citizens. And together these policies have
made America the best housed nation in the world.
The Federal Government has also played a m^jor role in meeting
the special housing needs of the elderly through a variety of hous-
ing programs and financing mechanisms. For example, in the last 3
years, approximately 250,000 units of housing for the elderly and
handicapped were completed under three HUD programs — public
housing, section 8 eind section 202 — for an average of about 84,000
units a year. In fiscal year 1983, however, no funds were meide
available under the public housing progreim or the section 8 pro-
gram. Under the section 202 program only enough funds were re-
leased to support fewer than 11,000 units for the elderly and handi-
capped.
Nonetheless, the needs of the elderly persist. Currently, more
than one in every five American households is elderly or headed by
an elderly adult. Estimates are that nearly 16 percent of elderly
people live on incomes below the Nation's poverty level, and up to
20 percent occupy substandard or inadequate housing. Elderly
. households gener^Iy require housing units that are smaller and
more easy to maintain than those generally available in the pri-
vate market. They also require special design features — such as
Eiccess ramps, handrails, brighter lighting, wider doors, and congre-
gate facilities. It is unfortunate, however, that without Government
incentives the private sector does not produce adequate affordable
housing for low-income elderly.
The Federal Government's role in meeting the needs of low-
income families, the elderly, and the hemdicapped must be reassert-
ed. However, a less costly alternative to the section 8 program
must be found.
NEW SOLUTIONS
Several new approaches at providing assistance in a cost-con-
scious manner have been developed in this bill. First, we have pro-
[>osed a new rental housing production and rehabilitation pn^ram
for families, a program which attempts to stimulate much-needed
new construction at reduced budget authority levels.
Under this new program, $900 million is provided in fiscal year
1984 to subsidize the cost of new construction or rehabilitation of
multifamily housing in areas of the country that have a severe
shortage of affordable rental housing. This amount will assist ap-
proximately 55,000 to 75,000 units, of which at least 20 percent
would be affordable by low-income families.
The key to this new program is flexibility. As proposed. States
and loceilities would apply for assistance. They, in turn, would work
with the private sector — for-profit and nonprofit developers — in de-
termining the type of financial assistance that would be the most
cost-effective and useful to respond to prevEiiling local housing, fi-
nancial, and economic conditions. For exEimple, the State or locali-
ty could use the assistance in the form of a capital greint, a loan, as
interest reduction payments, as land purchase grants, or in any
comparable form which is designed to reduce project development
and operating costs.
yGoot^le
649
Second, we have proposed a revised and expanded section 202
pn^rzim. Like the multifamily proposal, this new program at-
tempts to produce more new housing at reduced budget authority
levels. However, the changes in the 202 prc^am are of such signifi-
cfince that we have specified that they will not take effect until
fiscal year 1985. This will eillow the committee to further examine
the prc^am and to correct any potential problems before they
occur. Furthermore, this will provide adequate time for regulations
to be developed, for potential participants to understand the
changes, and for the revised program to be recognized in the con-
gressional budget and appropriations process.
Simply put, the new progreim eliminates the duplication that
exists in our current section 202 program. That is, it eliminates the
circumstance in which the Federal Government both makes the
loan for the development of a 202 project and then pays off the
loan through section 8 subsidies to the tenants — subsidies which
allow rents to be high enough that the developer can pay off the
loan.
The new program eliminates this duplication by providing loans
to developers of 202 housing projects, as is done in the current pro-
gram, but the loEui bears no interest nor is the principfil fimortized.
Because no debt service is required, no tenant subsidies are re-
quired. In this way, the total costs to the Federal Government for
providing more homes for the elderly and handicapped are signifi-
cantly lower than under current law. In effect, more units can be
constructed for the same amount of precious Federal budget dol-
lars. In fact, under the new program, approximately 36,000 units of
housing for the elderly and handicapped can be constructed for the
same budget authority used to assist 14,000 units under the current
program — as is provided for fiscal year 1984 in this bill.
Although I would have preferred higher budget authority levels
for both these new programs, I understand the reality of such fund-
ing levels in light of today's budget constraints. Accordingly, I be-
lieve that housing programs must be designed to assist as many
families as possible in the most cost-effective manner. The revised
pn^rams contained in H.R. 1 accomplish this objective by changing
the finfincing and subsidy mechanisms of our Government's new
construction programs and by various other reforms to achieve
greater cost emciency.
While 14,000 units of 202 in 1984, 36,000 units of 202 in 1985, and
55.000 of multifamily rental housing in 1984 falls far short of need,
the funding levels within H.R. 1 are a reasonable effort in light of
present budget constraints. This Federal effort must be made, for
the Federal Government has always recognized its responsibility to
provide the fineincial incentives and regulatory framework that
makes it possible for the private sector to provide housing for the
elderly, handicapped, and poor families. Furthermore, without such
inducements, the housing needs of such groups would not be met.
Federal housing fkssistance for the low-income and elderly has al-
ready borne more than its share of domestic budget reductions. The
administration's request for no new budget authority in 1984, as
well as the President's budget proposal of robbing prior year assist-
ed housing budget authority to fund a minimum level of assisted
yGoot^le
housing is unconscionable. Thus, it is essential that H.R. 1 be ap-
proved.
OTHER HOUSING PROGRAMS
Id keeping with our effort to provide the clinaate under which
the private sector can respond to our Nation's housing needs, we
have included a number of other significant policies in H.R. 1.
MINIMUM PROPERTY STANDARDS
For example, we have included language which allows HUD to
replace the current FHA minimum property standards with local
codes 80 long as the local codes meet one of the nationally recog-
nized model building codes. This will eliminate the duplicative re-
quirement that a builder must comply with both local and Federal
codes — thereby reducing costs to home buyers. At the same time,
heeilth and safety standards will be assured.
FHA CONDOMINIUM INSURANCE
Furthermore, we have provided a modest increase in the FHA
mortgage ceiling for condominiums. H.R. 1 increases the maximum
insurable mortgage limit under section 234(c) from 111 percent to
118 percent of the FHA 203(b) limit. This is of particular impor-
tance to me because in high cost areas, such as my district in
Orange County, Calif., the condominium limit would be increased
to $79,650.
GRADUATED PAYMENT MORTGAGES
To provide another avenue for the construction of multifamily
housing, we have authorized FHA to insure graduated payment
mortgages on multifamily projects. Such authority may allow mul-
tifamily projects to be developed that would not be feasible with a
fixed rate mortoage. The authority is only provided for 1 year to
give the HUD Secretary time to assess whether this type of loan
would expand multifamily housing while safeguarding the moTigBe-
gors, tenfuits or purchasers.
CHILD CARE DEMONSTRATION
In light of the fact that many families in assisted housing
projects are headed by a single parent, child care is essential. Ac-
cordingly, H.R. 1 includes funds for a child care demonstration pro-
gram— a pn^am which will ediow HUD to eveduate the extent to
which diild care services are needed.
CALCULATION OF FAIR MARKET RENTS
In order to ensure that an adequate level of subsidy is made
available to provide reasonable housing opportunities for families
participating in the section 8 program, fair market rents must be
set at an appropriate level. Thus, our bill provides that fair market
rents for an area must be established at the median rent paid by
recent movers into the area— not the 40th percentile as proposed
by the administration.
yGoot^le
EUHINATION OP THE 5 AND 10 RULE
Another provision in the bill essential to the stability of multi-
family projects removes the so-called 5 and 10 rule. Adopted as a
part of the Omnibus Reconciliation Act of 1981 this rule limits the
percentfige of families with incomes between 50 and 80 percent of
area median income that can occupy assisted housing. Instead,
H.R. 1 restores to law the provision that had been deleted by the
Reconciliation Act which provides that at least 30 percent of the
families in assisted housing shall be very low income (below 50 per-
cent of area median income). The families who would be displaced
as a result of the reduced income eligibility criteria — principally
the working poor — provide the backbone of neighborhood stabiliza-
tion efforts. These families do not earn enough income to afford
decent housing without some form of subsidy, especially during pe-
riods of high mortgage interest rates. These families would be
denied the oppwrtunity for decent housing precisely because of
their efforts to improve their living conditions.
SECnON 202 PROGRAM REVISIONS
In addition to the fundamental program revisions proposed for
the 1985 section 202 program, H.R. 1 includes a number of changes
intended to effect the 1984 program. First, the bill codifies the cur-
rent practice which requires a minimum capital investment on the
part of the sponsor, but such investment can be no more than
110,000. Second, the bill prohibits the HUD Secretai? from requir-
ing an equity participation by a sponsor although it does permit
sponsors to include suitable amenities and design features which
enhance the living environment for residents if the funds for such
amenities are provided voluntarily by the sponsor. Third, the bill
requires that cost limitations for 202 projects adequately reflect the
actual cost of constructing or rehabilitation housing which incorpo-
rates congregate space and the special design features required by
elderly and handicapped residents.
COMMUNITY DEVELOPMENT
Our bill includes language designed to assure that the majority
of CDBG funds are expended for activities that actually benefit
low- and moderate-income people. The maintenance of this basis
principle is essential today since communities have been hard hit
by the recession and their budgets are shrinking or stagnating.
When less money is available to meet the needs of our citizens,
each precious Peered dollar should be targeted to those low- and
moderate-income families most in need.
CONCLUSION
Again, Mr. Chairman, I would like to restate my support for H.R.
1. 1^ bill strikes an appropriate balance between our need to con-
tinue the Federal Government's commitment to housing our Na-
tion's citizens and our need to accomplish this within today's
budget constraints.^
• Mr. Sawyer. Mr. Chairman, while 1 may not support all of the
ccmcepts of the housing l^islation, H.R. 1, 1 do support a mandate
37-922 O - 84 -
yGoot^le
652
that would require HUD to take into primary consideration the
critical factor of unemployment in demonstration pn^nmis involv-
ing employment training.
Training programs are an important lifeline for our unempltnred
Jobs in areas such as housing rehabilitation will exist for a long
time to come, and such training programs offer the opportunity to
learn skills that will serve a lifetime and provide a decent standard
of living.
Since my own State of Mich^an suffers from a high unemploy-
ment rate, I am distressed to find that demonstration programs
that would provide employment for our people are bestowed upon
States whose actual unemployment rate is not nearly as high.
For this reason, 1 feel that this amendment, which by the wi^
does not seek to add any new program or ask for any more money
for any program, is necessary. This amendment simply requires
that when allocating assistance under any demonstration grant to
any of the States and local governments that principal consideT^-
ation be given to the rate of unemployment, the total number of
unemployed persons and the rate of unemployment for the intend-
ed beneficiaries.
With this action, those States who have similar problems as
Michigan would be assured that any demonstration pn^am in-
volving training would address their most critical problem, higli
unemployment, in a positive manner. •
• Mr. AcKERMAN. Mr. Chairman, this afternoon. Members of this
House attempted to subvert the sovereignty of our local communi-
ties. They attempted to dictate to the communities how to best deal
with their housing situation. Never before has the Federal Govern-
ment tried to subvert local control as insidiously as the Wylie
amendment. It would have been a disastrous statement of this body
if the House passed the amendment.
It is not a secret that the cost of housing has increased astro-
nomically. It is not a secret that housing is scarce. It is not a secret
that a significant amount of the housing is deteriorating. And it is
not a secret that curtailing Federal support for new rent-controlled
housing units will not solve the aforementioned maladies.
The argument that rent control leads to deterioration and hous-
ing scarcity suffers from a serious fallacy. It is the choice of the
developer whether or not to cover the units with rent control. It is
voluntary, not mandatory. Why should tenants be forced to pay ex-
orbitant rent increeises because we mandate that the developer
cannot choose rent control? Why should cities be forced to accept
Federal dictation of a local ordinance?
I represent a district in New York City that is characterized by a
large number of multiple dwelling rental apartments. It would be
unconscionable to tell individuals who are seeking residences in
Forest Hills, Elmhurst, Rego Park, or Flushing that they should
camp out in Flushing Meadow Park, under the Unisphere, because
affordable housing is not available.
The 10th amendment to the Constitution reserves certain righte
to the States. It is my strong belief that one of these rights is the
determination of how to best house its citizens. We should never
infringe on this right.
Mr. St Germain. Mr. Chairman, I move to strike the last word.
yGoot^le
Mr. Chairman, I shall not utilize the 5 minutes. I would merely
like to inform the membership of the fact that my information ear-
lier was that we would probably have one to two or poBsibly three
votes. My information now is that we would be having a minimum
of four record votes with debate on two amendments that would be
time consuming.
That being me case, it would be impi^sible to keep my word to
the leadership and to the Speaker to be out of here by 7 o'clock
this evening.
However, I have discussed the situation with the Speaker and he
has assured me of the fact that we would return to the housing bill
tomorrow when the House convenes.
Under those circumstances, Mr. Chairman, I move that the Com-
mittee do now rise.
The motion was agreed to.
Accordingly, the Committee rose; and the Speaker having re-
sumed the chair, Mr. Mineta, Chairman of the Committee of the
Whole House on the State of the Union, reported that that Com-
mittee, having had under consideration the bill (H.R. 1), to amend
and extend certain Federal laws that establish housing and com-
munity and neighborhood development and preservation programs,
and for other purposes, had come to no resolution thereon.
Economic Costs op Tax Cut
(Mr. Alexander asked and was given permission to eiddress the
House for 1 minute and to revise and extend his remarks and in-
clude extraneous matter.)
Mr. Alexander. Mr. Speaker, I have just come from an export
workshop during which some vital information was revealed. The
Reagan economic policy — which features a tax cut, resulting deA-
cita exceeding $200 billion, prohibitive interest rates and an over-
ralued American dollar abroad — has cost the American people $100
billion in reduced gross national product edong with a subsequent
loss of 1.6 million jobs.
Mr. Speaker, at this point I would include in the Record the
report to which I have just referred.
[Fron BuurwH Wwk. Juim ZT. 1983]
A Devastating Impact on U.S. Industry
Like a prolonsed high fever, the overvalued dollar is sapping U.S. industrial
■Ireagth. Even if the dollar should decline substantially— a big if~it will leave im-
portant BC^ments of U.S. industry permanently weakened in the llerce struggle for
nirvival in international markets. By pushing up the price of U.S. goods in foreign
markets and sucking cheep imports into the U.S., the strong dollar has put U.S. pro-
dueera at a severe competitive disadvantage, with ominous long-range consequences,
European and Japanese rivals have seized the opportunity to grab market shares,
both overseas and in the U.S., that will be difTicult or impossible for U.S. companies
la racc^iture. By sacrilicing U.S. competitivenesa, the high-int«reat-rate policy that
hm tent the dollar soaring is forcing U.S. companies, in effect, to export productive
capacity and jobs instead of products to lower^:ost foreign markets.
We nave only begun to see the adverse effects on the economy of the dollar over-
valuation," C. Fred Bergsten, director of the Institute for International Eiconomlcs,
lold the Senate Foreign Relations Committee recently. Adds John E. Barnes Jr.,
Fmd Motor Co.'s executive director for external business environment analysis:
"Ilie longer these imbalances go on. the more U.S. export business we're destroy-
yGoot^le
ing." Given the time tag between a change i:
trade, Barnes sa)ia. "you're buying another o;
have a solution today."
Because of the dollar's persistent strength, foreign competitors of VS. coinpanin
"are now dug in, some in capital-goods industries where long-term relatiooahipa an
important," warns Arnold Simkin, senior economist for Merrill Lynch Ecmomies in
London, "It is dangerous and naive to believe they are simply going to give up ttiig
grip." If the dollar goes down, Simkin says, foreign companies will use trie eamiii0
they are piling up now to shave their mai^ins on future sales. As a result, ht
argues, "a share of the U.S. industrial base will be wiped out forever when this ex-
change-rate cycle is over."
Such long-range erosion of the U.S. industrial structure, largely ignored by poliiT-
makers in Washington, is alarmingly apparent to U.S. businessmen who have to
cope with the strong dollar's adverse consequences. "We don't think the Administra-
tion understands the magnitude of the problem," says George Liney, director of
int«mational subsidiaries at Ingersoll-Rand Co., a New Jersey industrial equipment
maker, "Other countries worry about exports," he adds. "We in the U.S. worry
about the money supply,"
Robert O, Anderson, chairman of Atlantic Richfield Co., complains that in the
U.S., "in effect, we have created an export barrier for our own produce." And tlie
dramatic shift in local production costs for Chilean copper producers, measured in
dollars, has put them in a profitable position, Anderson noted, "at the very moment
that every m^or copper deposit in the U.S. is seriously under study for complete
shutdowns."
More alarming for the future of U.S. industry is the toss of market share to fi>r-
eign competitors in manufacturing. This loss spans almost the full range of U.&
manufactured goods, except for a few high-technolc^ sectors. Even in capital goode,
where U.S. producers have traditionally had the strongest competitive edge, tte sur-
plus of exports over imports in key products is shrinking or existing deficits are wid-
ening. To hold costs down, U.S. manufacturers are being forced to buy more compo-
nents from foreign suppliers and shift production from U.S. plants to oveneas sub-
sidiaries and licensees.
"There is a tremendous scramble now to source abroad," says Liney of Ingeraoll*
Rand, one company that has been forced to take that route, '^f Ineersoll-Rand hM
to do it, it is obvious that other U.S. manufacturers of all kinds irf equipment will
have to do the same thing." Such moves to foreign manufacturing and procuranent
are hastening the "deindustrialization" of vital parts of the U.S. economy. B<ith pn»-
duction and jobs are being transferred overseas — in many cases irrevocably.
Ingersoll-Rand Executive Vice-President James E. Perrella estimates that the
impact of currency changes has put the company at a price disadvantage of 20* to
40% on standard products. This is particularly distressing because its chief wwld-
wide rival, Sweden's Atlas-Copco. is enjoying the added advantage of two devalu-
ations of the Swedish krona last year. "Our responsibility in running Ingeraoll-Rand
is to keep ourselves competitive in world markets," Perrella says. As a result, "we
are shifting our manufacturing and sourcing to countries with weaker currencies"—
primarily Britain, Italy, and India, where Ingersoll-Rand already has plants. An Im-
portant group of products, such as air compressors, is especially vulnerable to com-
petition from suppliers in weak-currency countries. "By the end of 1984, probabl;
60% of that group will be manufactured internationally." Perrella says. "We haw
not started brii^ng products into the U.S. yet. but we will probably do that, too."
Such transfers of manufacturing and sourcing overseas will be hard to reverse.
"Once you make commitments for inventory, hire and train people, and make com-
mitments to vendors." Perrella says, "you can't easily shift back. '
The most serious misalignment among major currencies, most experts agree, is be-
tween the strong dollar and the weak yen. That currency gap is devastating for (Mr
erplllar Tractor Co., of Peoria, III,, which competes glotelly against Japan's Ko-
matsu Ltd. "We are losing sales to Komatsu in virtually every market we compete
in around the world because of a 20% to 25% disadvantage caused by the weaknev
of the yen," says H. Richard Kahler, manager of governmental affairs. "That differ
ential is on top of the built-in cost disadvantage we have due to labor and materiak
yGoot^le
655
In a recent eciuipment sale in the Mideiwt, for example, Caterpillar bid $14 mil-
lion asaiut Komateu'i winning SH-S miliion. The Japanese company will convert
that omotiDt to ytm, which Caterpillar argues should be worth around 180 to the
dollar VB. the currant undmvalued rate of around 342. At 180, Kahler says, Komatsu
would have had to bid $16 million to obtain the same number of yen.
Tlw InsgMt casualty tf Japanese competition is the U.S. auto industry. Genera)
Motors Cmp'a. executive vice-president for finance, F, Alan Smith, says sourcing of
Japanese auto parts — which are made cheaiier by the dollar's strength— was "a
factor" in GM's pending deal with Tovota Motor Co. to build cars in California,
partly from Japeneae components. Ana if the dollar's misalignment persists, Ford
Motor Co. may shift to Europe more sourcing of parts for Latin American subsidiar-
ies that it now supplies from the U.S.
In high-tech, the edge some U.S. companies still have over foreign competitors
provides a cu^ion against the disadvantage of the strong dollar. Even so, a British
company ordered $1 million worth of computers about a year ago and canceled the
purchase when the pound fell against the dollar, says James L. Kelly, vice-president
and general manager of TRW Datacom International Inc., a Los Angeles subsidiary
of TRW Inc. that markets the products of U.S. computer companies abroad. "The
Eund was worth $1.90 when thev placed the order," he recalls. "When it dropped to
.60, the cost justification for the program no longer applied, and they dropped it
to stay with their old computers." Such examples convince Kelly that the computer
business could grow faster for U.S. companies selling abroad if the dollar were
weaker. But he concedes, "We're primarily selling against U.S. competitors, so we're
all in the same boat."
Technology and the long lead ti
lar's impact on Weetinghouse Electric Corp.'s overseas si ._„
as nuclear power plants and giant turbines. "We know the strong dollar hurts uh,
■ays Robert T. Winston, director of international trade policy. "But it has been ex-
tremely hard to (quantify the impact." For projects such as nuclear reactors. West-
inghouae's expertise is likely to weigh heavily with customers against price difTeren-
lialB, and delivery time of up to five years lessens the impact of currency fluctua-
tioaa.
But in machine tools, the strong dollar has wiped out Cincinnati Milacron Inc.'s
ability to export most products from the U.S. to markets such as West Germany,
•eeording to Donald G. Shivety, London-based director of European machine tool op-
erations. Instead, for some products, the company is now supplying foreign custom-
en almost entirely from plants in Britain, the Netherlands, and Austria. Milacron
is still able to export sophisticated robots from the U.S., but, partly because of the
Itrong dollar, it is looking at the possibility of making robots in Europe as well.
In Tow- and medium-technology manufactured products, Goodyear Tire & Rubber
Co. Chairman Robert E. Mercer blames a surge of tire imports into the U.S. this
Mr on the strong dollar. To compete in the U.S. market against foreign-made tires.
Goodyear announced this month that its Lee Tire subsidiary has begun importing
tires from Goodyear's big Brazilian subsidiary. At chemical maker Du Pont Co., ex-
— "■» dropped to $500 million in the first quarter, down 10% from the same period
■nai- 'T»b wniiM iiiyliiB l-hat half that Hwlina is litil} to the Strong dollar. SayS
ports d
faatyei
U.S. steelmakers have benefited from restrictions on European and Japanese steel
that lowered imported steel's share of the U.S. market to IB. 3% in the firet quarter,
dmn from 22.8% in the first quarter last year. But the "brutal impact" of the
ttrong dollar has made the U.S. industry even more vulnerable to import competi-
tkn, says W. L. Hoppe, manager of economic studies of foreign producers to offer
lower prices has exacerbated price discounting in the U.S., to an average 1U% off
!i^ according bo Peter F. Marcus, a steel industry analyst at Paine Webber Mitchell
Hatchins Inc. "The strong dollar has reduced steel prices by at least S25 a ton,"
Marcus says.
nie effect of the overvalued dollar is not confined to manufacturing. American
producers of price-sensitive farm commodities are taking a severe beating. In Sacra-
nento, the California Almond Growers Exchange reports that exports dropped in
the paat 10 months, hurt by competition from a bumper Spanish crop and low prices
oStored by Spain, aided by the weak peseta. Because of the dollar's rise since early
19B1, "pncee that are constant in the U.S. are being reflected as a '2a% to 2»% in-
yGoot^le
656
crease [outBide the U.S.]," adda G. Edward Schuh, head of the Universi^ of Huuw-
Bota's department of agncultural and applied economics. The result, he bhs, ii that
"we're providing strong incentives for producers in other countries to prooiioe man,
and at the same time we're pricing ourselves out of the mai^et."
For many U.S. companies, the biggest problem with the strong dollar has bean
the impact of currency conversions on Uieir balance sheets, not lose of mufcet
share. Unit sales of Gillette Co., for example, are not directly aflected by the •trong
dollar because moet of the products tKe company sells abroad are manu&etured n
foreign plants. But the translation of foreign operating results into dollars caused a
6% drop in the company's eamingH in the first quarter, compered with the 1982
level, and a 7% decline in sales revenue, even though sales of many of Qillette'i
European subsidiaries have increased. Rorer Group Inc., a Fort Washington (Fa.)
maJier of pharmaceuticals and surgical equipment, also had a "paper shrmkage" of
sales and income of its 23 foreign subsidiaries last year when tranidated into dtdlan,
says Treasurer Robert I. Kriebel. If average exchange rates had been the KUDe in
1982 as in 1981, Rorer's sales and net income would have been 16 peRent and 9
percent higher, respectively. "It is not a new problem, but over a number of yean tt
has had an impact on overseas growth," Kriebel says. "I'm sure that this qrcle [of a
strong dollar] will have its run.'
Such low-key responses by U.S. industry to the ravages of the strong dollar puale
businessmen in Europe and Japan. Overseas, competitiveness in trade is a Urn policy
priority, not a sacrifice to other economic and monetary goals, as it seems to be in
the U.S. "Why does U.S. industry stay quiet? We can't understand it," says Masa^
Kojima, senior managing director of Marubeni Corp., a major Japanese trading com-
pany. His question is echoed by a senior British monetary ofTicial: "I ask rayeul," he
says, "where is the U.S. industrial lobby? Has it given up?"
Ihe reaction to the overpriced dollar slowly building in U.S. industry, many ob-
servers fear, may result in a virulent outburst of protectionism. "Throughout tiw
postwar period," says Bergsten of the Institute for International Economics, "dollar
overvaluation has been a key 'leading Indicator' of an outbreak of protectkniit
trade pressures." Gillette Treasurer Milton L. Glass cautions: "We have only tUi
calendar year to deal with the [dollar] problem. There is a powerful constituent
building up for protectionism." And Jacob J, Kaplan, of the Atlantic Council's inter-
national monetai? working group, draws a parallel with 1930, when the Smoot-
Hawley high-tenfT bill helped trigger a worldwide Depression. "If the dollar r»
mains this strong for another two years," he warns, "what happens will make
Smoot-Hawley seem like a happy memory."
{Congressional Record— House— July 13, 1983]
D 1315
Housing and Urban-Rural Recovery Act op 1988
The Speaker pro tempore. Pursuant to House Resolution 248 and
rule XXIII, the Chair cleclares the House in the Committee of the
Whole House on the State of the Union for the further consid^
ationofthebill, H.R. 1.
IN THE COMMHTEE OF THE WHOLE
Accordingly the House resolved itself into the Committee of the
Whole House on the State of the Union for the further conBide^
ation of the bill (H.R. 1), to amend and extend certain Federal laws
that establish housing and community and neighborhood develw-
ment and preservation prc^ams, and for other purpoeee, with Mt.
Mineta in the chair.
The Clerk read the title of the bill.
The Chairman. When the Committee of the Whole rose on Tues-
day, July 12, 1983, title V was opened to amendment at any point
yGoot^le
657
Are there any further amendments to title V?
Mr. Gonzalez. Mr. Chairmein, I move to strike the last word.
Mr. Chairman, H.R. 1 originally included language reaffirming
the Secretary of HUD's obligation to assure timely funding on an
annual basis of increases in rent supplement and section 236 rental
assistance payments necessitated because of rent increases or de-
creases in tenant incomes. The bill also provided for the use of
funds recaptured from the conversion of units to assistance under
the section 8 program or otherwise for such amendments. The com-
mittee amendment modifies these provisions as follows.
As with the original language, the committee amendment is de-
signed to assure timely annual funding of amendments but is limit-
ed to non-FHA insured projects which are State financed. ITie
amendment drops coverage of insured projects because of the assur-
ance by HUD that their needs will be met primarily through con-
version to section 8. If this later should prove not to have occurred,
the committee will consider extending to insured projects this reaf-
firmation of HUD's obligation to fund amendments under these
pn^rams. Thus, the provisions remain designed to assure that the
Secretaiy will meet the existing obligation to fund amendments for
State-financed projects.
Further, the provisions have been designed to complement the
language of the supplemental appropriations bill for 1983, current-
ly awaiting conference, which will set aside permanently an
amount of funds designed to assure that these amendment obliga-
tions can be met for all such contracts for the remainder of their
terms. Thus, to the extent funds made available by appropriations
actions from recaptures or otherwise in fiscal year 1983 or fiscal
year 1984 or prior years prove not fully adequate for these projects
for their remaining subsidy contract terms, the committee amend-
ments sets forth an independent, complementary requirement for
funding these amendments from recaptures achieved in either
fiscal year 1985 or later years, or in prior years, or from other re-
sources.
The Banking and Appropriations Committees of both Houses
have already made clear their belief and intentions that timely
fimding for these amendmente is both necessary and imperative to
assure the continued viability of these existing low-income housing
units.
In sum, these provisions of the committee amendment are de-
ngned te reafHrm the Congress clear intention that HUD not delay
or otherwise implede the funding of amendments for those projects,
and to assure a permanent resolution of the issue that assures the
timely availability of these amendment funds. Accordingly, the De-
partment is ui^ed to b^n immediately to process currently pend-
X amendments to avoid hardship to tenants, and the n^ative
t on project viability, which further delay will cause.
AMENDMENT OFFERED BY MR. ST GERMAIN
Mr. St Gbrhain. Mr. Chairman, I offer an amendment.
The Clerk read as follows:
Amendineiit offered t^ Mr. St Germain: Page 158, after line 17, insert the (ollxtwiag
new nctlDii (and oonform the table of contente accMdingly):
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MULTtPAMtLY MORTOAGB LOAN-TO-VALUK RATIO
Sbc. 531. (a) The second Kntence of section 302(bK2) of the Federal Natknal Mort-
gage Association Charter Act ie amended by inaerting after "mcMlgage" tho tint
place it appears the following: "secured by a property comprising one to four family
dwelling units".
(b) The first sentence of section 305(aX2) of the Federal Home Loan Mortgage Cor-
poration Act is amended by inserting after "mortgages" the first place it appean
the following: "secured by a property comprising one to four family dwelling unita".
Mr. St Germain (during the reatding). Mr. Chairman, I ask unan-
imous consent that the amendment be considered as read and
printed in the Record.
The Chairman. Is there objection to the request of the gentle-
man from Rhode Island?
There v/as no objection.
(Mr. St Germain asked and was given permission to revise and
extend his remarks.)
Mr. St Germain. Mr. Chairman, I shall be very brief.
The FNMA charter act and the Federal Home Loan Mortgage
Corporation Act contain provisions prohibiting the purchase erf'
multifamily mortgages with loan-to-value ratios greater than 80
percent unless the seller has mortgage insurance, retains a 10-pei^
cent participation interest, or commits to repurchase or replace the
mortgage in case of default. The restriction makes it difficult, if not
impossible, for FNMA and FHLMC to issue commitments to pui^
chase any new FHA-insured mortgages, because, unlike single
family mortgages, multifamily mortgages do not have access to pri-
vate mortgage insurance.
Mr. McKiNNEY. Mr. Chairman, will the gentleman yield?
Mr. St Germain. I yield to the gentleman from Connecticut.
Mr. McKiNNEY. Mr. Chairman, the minority has looked at the
gentleman's amendment, and it is to be applauded. There is no
doubt about the fact that this has been a tremendous hindrance
and obstruction to the purchase of these mortgages. We totally
agree with the amendment.
Mr. St Germain. Mr. Chairman, I thank the gentleman.
The Chairman. The question is on the amendment o^ered by the
gentleman from Rhode Island (Mr. St Germain).
The amendment was agreed to.
amendment offered by MR. BARTLBTT
Mr. Bartlett. Mr. Chairmfin, I offer an amendment.
The Chairman. The Clerk will report the amendment.
Mr. Bartlett. Mr. Chairman, I ask unanimous consent that the
amendment be considered as read and printed in the Record.
The Chairman. The Chair would like to inquire of the gentleman
from Texas, is this the amendment to title V?
Mr. Bartlett. It is the aunendment to title V, Mr. Chairman. It
begins on page 149.
The Chairman. Is there objection to the request of the gentle-
mem from Texas?
Mr. St Germain. Mr. Chairman, reserving the right to object,
once the Clerk has started to report the amendment, we will have
no objection.
The Chairman. The Clerk will report the amendment.
yGoot^le
The Clerk read as follows:
F BKIUIKUIKNT THAT FEDERAL HOUSING ADMINISTHATION tNTSRSST
RATES BE SET BY LAW
Sec. 514. (a) Sections 3 and 4 of Public Law 90-301 are hereby repealed.
(bXl) Section 2(bK5) of the National Housing Act is amended to read as follows:
"(5) No insurance shall be granted under this section to any such financial institu-
tion with respect to any obligation representing any such loan, advance of credit, or
purchase by it unleas tJie obligation has such maturity, bears such insurance premi-
Q charges, aad contains such other terms, conditions, and restrictions as the Sec-
dwfn
__._ _ t at such rate as may be agreed upon by the borrower and the
financial institution.".
"(2) Section 203(bKS) of such Act is amended to read as follows:
"(5) Bear interort at such rate as may be agreed upon by the mortgagor and the
moTlfMgee.".
<3) Section 203(kK3XB) of such Act is amended to read as follows:
"(B) beer interest at such rate as may be agreed upon by the mortgagor and
the Btortgagee;".
(4) The first sentence of the first unde
Mich Act is amended to road as follows: ' _..
amortizBticKi by periodic payments within such t_
Kribe, and ihaU bear interest at such rate as may b>
(9 nw first sentence of sectioo 213(d) of such Act is amended to read as follows:
"Aay morisage insured under this section shall provide for complete amortization
by periodic payments within such term as the Secretary may prescribe but not to
nirncNl forty years from the beginning of amortization of the mortgage, and shall
I — !_. . _. — 1 . i_ J !._. ., '-Igor and the '""
at such rate as may be agreed upon by the mortgagor and the mortga-
(6) "Die second sentence of section 220(dX4) of such Act is amended to read as fol-
je shall bear interest at such rate as may be agreed upon by the
mortgagee and contain such terms and provisions with respect to
: "The mortgage ^lall bear interest at such rate as may be agreed upon by the
moctgaKor and we mortgagee and contain such terms and provisions with respect to
tta qiplicatioa of the mortgagor's periodic payment to amortization of the principal
of the mortgage, insurance, repairs, alterations, payment of taxes, default reserves,
delinquanf^ cnarges, foreclosure proceedings, anticipation of maturity, additional
i ■econdary liens, and other matters as the Secretary may in the Secretary's dis-
CFBtion prescribe. .
(T> Section 220(hX2Xiii) of such Aa is amended to read as follows:
"(iii) bear interest at such rate as may be agreed upon by the mortgagor and
the mort^neee;".
(8) Secticm 221(dN5) of such Act is amended by striking out "(exclusive" and all
that folloin through "mortgnge market" and inserting in lieu thereof the following:
"at tudi rate as m^ be agreed upon by the mortgagor and the mortgagee".
(9) Section 231(cK6) of such Act is amended to read as follows:
"(6) Bear interest at such rate as may be agreed upon by the mortgagor and the
mortBuee; and".
(10) Section 232(d)(3)(B) of such Act is amended to read as follows:
"(B) beer interest at such rate as may be agreed upon by the mortgagor and
the mortgagee.".
(11) The fiiBt sentence of section 234(0 of such Act is amended to read as follows:
"Any Uanket mortmige insured under subsection (d) shall provide for complete am-
ortinition by periooic payments within such terms as the Secretary may prescribe
but not to exceed forty years from the beginning of amortization of the mortgage,
and iball bear interest at such rate as may be agreed upon by the mortgagor and
the mntgagee.".
(12) Section 235(iK3) of such Act is amended—
(A) by striking out "end" ' "
(B) l^ striking out the p
lieu thereof "; and"; and
(C) bv adding the following ___ ^ ^^^ _.__
"(F) bear interest at a rate not to exceed such per o .
* of the principal obligation outstanding at any time as the Secretary
yGoot^le
finds necessary to meet the mortgage market, takii^ into oonsiderBtaon the
yields on mortgasee in the primary and secondaiy marKets.".
(13) Section 240(cX4) of such Act is amended to read as follows:
"(4) bear interest at such rate as may be agreed upon t^ the mortgagm' and
the mortgagee;".
(U) Section 24I(bK3) of such Act is amended to read as follows:
"(3) bear interest at such rate as may be agreed upon by the mortgagor and
the mortgagee;".
(15) Section 242(dX3XB) of such Act is amended to read aa follows:
"(B) bear interest at such rate as may be agreed upon by the n
the mortgagee.",
(16) Section 100adX2) of such Act is amended to read as foUows:
"(2) bear interest at such rate as may be agreed upon by the n
the mortgagee: Provided. That the Secretary may agree to a reas _.. ._
sion of the t«nn of a mortgage, the maturity of which is limited by this peia-
graph to not more than ten years, if the Secretary determines that unusual oc
unforeseen circumstances make such extension necessary to avoid undue hard'
ship to the mortgagor;".
Mr. Bartlett (during the reading). Mr. Chairman, I ask unani-
mous consent that the amendment be considered as read and print-
ed in the Record.
The Chairman. Is there objection to the request of the gentle-
man from Texas?
There was no objection.
Mr. Bartlett. Mr. Chairman, I am offering an amendment todw
to H.R. 1, the Housing and Urban-Rural Recovery Act of 1988,
which would allow the interest rates on Federal Housing Adminis-
tration mortgage loans or FHA loeuis to be negotiated between the
lender and ttie buyer, thus lessening the need for those excessive
points which are too often charged at the closing, t^ose points
which dampen the housing market and in fact act to restrain boUi
the buyers and the sellers who are ready to close.
Congress first recognized the need for the negotiated interest
rate program in the 97th Congress in the Housing and Communis
Development Act of 1980. A trial program, a demonstration pro-
gram allowing 50,000 loan approvals or 10 percent of the FHA-in-
sured mortgage volume to be negotiated by the borrower £ind tbe
lender went into effect in December of 1982, just last year. That
demonstration program passed on this House floor by a vote of 290
to 68.
The demonstration has been very well received by the home-
buying market, and my amendment would now put that demon-
stration project into effect across the board.
Between December 1982 and June 30, 1983, the Department of
Housing and Urban Development reports that 22,898 outstanding
commitments have been issued under this demonstration of n^oti- [
ated rates. What is significant about these figures is that activity j
was slow in the first months that the program was fully imple-
mented— there were only 3,216 outstanding commitments — but by
March 15 that total had nearly tripled to 10,273.
Mr. Chairman, I am saying that the initial public acceptance of
the negotiated rate was slow as the public began to understand it,
but within 2 months consumers became familiar with the concept
and the concept rapdily gained support.
A negotiated FHA rate benefits both the buyer and seller by
minimizing points charged to bring the effective rate of the loan up
to the market rate. One more inflationary pressure is extracted
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the mortgage Bcenaiio to the advantage of all concerned.
no mistake, the market aeta the rate anyway. The only quae-
3 whether that market rate will finally be set by surprise
charged at closing, either adding to the price of the home or
ng the sale by an otherwiae willing seller to a willing buyer.
setting of a maximum interest rate for mortgages insured by
tiarkens back to on earUer era in America's financial history
residential mortgage markets were highly localized and
imes dominated by a few suppliers of credit. At that time the
ility for abuse existed, and the Federal Government acted in
ion similar to State governments and set a maximum inter-
te ceiling. That ceiling is no longer necessary. The time has
d for Congress to complete the task of reforming the law by
ing all artificial restrictions on interest rates for FHA mort-
ge this committee to support this amendment which would
%A rates from any maximum limitation and to allow all
nsured mortgages to bear eai interest rate in points as eigreed
DVthe borrower and the lender without any maximum set by
UD secretary. Adoption of a freely negotiated FHA interest
vould effectively substitute the market force of supply and
id for the current artificial restriction on interest rates for
nsured loans and would obviate the need for those burden-
points which are often charged at closing,
tuld refer the Members to the Washington Post article of just
day in which it was stated that thousands of would-be buyers
ill shut out of the housing market by the high cost of dis-
points charged with FHA- and VA-insured loans.
head of the Mortgage Bankers Association, Mr. James
^n, of Dallas, says that the high level of points now being
id is aggravating a seasonal slowdown in the housing indus-
>uld emphasize in the final analysis that the market will set
,tes whether the present system of ever-changing ceiling rates
- administrative fiat is continued or not, because the differ-
letween the market rates £md the ceiling rates will be made
' points unless this market is adopted, and in a volatile
;t, those points, sometimes toteling 5, 7, 8, or 10 points at a
become very cumbersome and very inflationary.
Chairman, they are unfair to buyers, they are unfair to sell-
1^ are not productive to anyone, and I urge the adoption of
DOendment to lessen the need for those burdensome points.
Leath of Texas. Mr. Chairman, will the gentleman yield?
Bartlett. I am happy to yield to the distinguished gentle-
rom Texas.
Leath of Texas. Mr. Chairman, I want to commend the gen-
ii from Texas for offering this amendment, because I think,
jiough it possibly comforts all of us when we can say we have
mA and VA rates to a certain level, the gentleman is abso-
correct. It has been proven that we do have the market set-
Btee currently. I think it is terribly impwrtent that we not
a buyer who is faced with a $10,000 to $11,000 or $12,000 up
that could be amortized over the period of that mortgage if
d not had the rates negotiable.
yGoot^le
662
Mr. Chetirman, 1 want to commend the gentleman from Texas
(Mr. Bartlett) for offering the amendment. I support Hie amend-
ment, and I hope my colleagues will vote for it.
Mr. St Germain. Mr. Chairman, I move to strike the last word,
and I rise in opposition to the amendment.
Mr. Chairman, the amendment before the House at this point
might sound attractive, and, of course, if the packaging and the no-
menclature used to describe it were to be accepted at face value, it
might well be acceptable. However, we have to look behind the
packaging and the nomenclature at the actual facts and at what
the results will be rather than at what we might hope the results
might be.
We must not be fooled by the term, "negotiated rate," and the
connotation it carries, because that suggests equity is better served
this way than by permitting a borrower and lender to negotiate ^
terms of the loan.
The fact is that the parties are not on an equal footing. The hat-
rower is at a distinct disadvantage, and the negotiations are going
to conclude at one point and the rate is going to be set b^ the
lender. Amen. Case closed. That is the only result of a negotiation
between a lender and a borrower.
The borrower comes in and looks for a mortgage, but the buyer
comes in once or twice in a lifetime. The lender is lending mooqr
on a daily basis — who knows how memy times per day. The borrow-
er very badly and sadly needs that home for his family, and if he
or she is told that he or she is going to have to pay a high rate,
indeed that is what will happen.
As to the argument that the points would be lessened or dmie
away with, witn all due deference, bankers, S&L people, lenden,
and mortgage bankers, are in business to make a proHt. Points
have become a way of life with them, and there is no way that we
are going to eliminate or in any way reduce the number of points
with an amendment such as this.
The gentleman is well intentioned. I have very high r^ard f(ff
him, but, very frankly, I am afraid that his amendment will not
accomplish that which he would like to accomplish.
Of equal significance is the fact that the FHA rate has served sB
an incentive in the industry to keep mortgage interest rates lower
than otherwise— at least for the lower portion of the market. And,
to the extent that points have been either formally or informally
limited, the result has been lower borrowing ccsts for the lower
end of the market, which is precisely the sector that we traditional-
ly have targeted FHA to serve. So even with points, the FHA rate
serves to maintain relatively reasonable mortgage interest rates fi>r
moderate income home buyers. That is what FHA was all about
when it was conceived almost 50 years ago and that is what it is
about today. Perhaps it is even more appropriate today, when we
all know how interest rates are fluctuating at unprecedented high
levels.
I urge my colleagues in the House to vote in favor of the mode^
ate income home buyers to assure that they have at least some
chance to realize the American dream. Many of these families will
more than likely be cut out of the market if the FHA rate is al-
lowed to float as the gentleman's amendment would permit.
yGoot^le
Mr. Chairman, for those reasons, I must oppose this amendment.
Mr. Vbnto. Mr. Chairman, will the gentleman yield?
Mr. St Germain. I yield to the gentleman from Minnesota.
Mr. Vknto. Mr. Chairman, I think the chairman of the commit-
tee has spoken very eloquently with r^ard to the problems of the
inherent disparity between the buyer, the person who needs the
home and is purchasing the home, and the bank. But, more impor-
tantly, the interest rates on this loftn, of course, as we all under-
stand, are paid by the buyer, wheresis the points, with the excep-
tion of 1 point, 1 percentage point, is paid by the seller.
"Hie fact of the matter is that the gentleman's amendment, as
ireil intentioned as it may be, does not really address or in any way
limit the nimiber of points that might still be assessed against that
seller and be reflected in the price and indirectly, of course, petid by
the seller. In other words, that is the freight, the price that the
market will bear with regard to it.
Second, what is the interest here? Why does the National Gov-
ernment have an interest in terms of what the FHA loan rate is?
Well, it is a matter of the extension of the insurance we provide
with regard to the FHA. Are we to let the extension of the value of
that insurance to be determined by the private bankers.
In other words, are we not going to have anything to say over
the type of loan guarantee or insurance program we are extending
in this particular interest? Because indirectly we maintain, of
course, a «)nsiderable liability and concern, in other words, with
«ard to the basic objectives of the FHA prt^am.
For those reasons, Mr. Chairman, and those articulated by the
committee chairman, this amendment is simply not workable, and
is indeed not equitable and I ask the House to defeat it.
ib. McKiNNEY. Mr. Chairman, I move to strike the requisite
number of words, and I rise in support of the amendment.
(Mr. McKinney asked and was given permission to revise and
extend his remarks.)
Mr. McKiNNEY. Mr. Chairman, I think that the gentleman from
Texas (Mr. Bartlett) has come forth with one of the most important
imendments that could face this House when we are discussing
housiiig in this country.
The point system that presently takes care of the differential be-
tween the FHA emd the VA mortgage and the real estate market is
probably in fact one of the most destructive instruments to the real
state business this country has seen in many years. This point
Rstem has been known to fluctuate as much as six or seven points
mm 1 week to the next. This has made many builders and home-
Owners who have their property for sale write in contingency
clauses in their contracts which say the sale will not take place if
points go further than such and such a level.
n 1330
"niis means that from 1 week to the next, the person buying the
home and the person selling the home do not, in fact, even know
wbe^ier they can do it. We are doing this to one of the most de-
prrased industries within the United States of America that is
trying to make a comeback.
yGoot^le
We do far more destruction with the point system than juflt
simply putting in doubt on the pairt of the sale and doubt on the
part of the owner or buyer. Look what we in fact do to the whole
price index structure in the United States. We have turned anmnd
and improved the Consumer Price Index by putting it on a rraital
basis, but at the same time points are built into the price of ttie
house, not the price of the money. This is an aberration of ttie
entire system. What you are saying is that you are inflating the
price of housing to in fact cover the price of money which is buying
that house proportionately.
This was an enormous distortion when points were as high as 12,
14, and 16, when this country was suffering through our interest
rate climb and our sales recession; but on top of that. Mr. Chair
man, 80 to 85 percent of the houses in the United States of Amer-
ica are sold outside of the FHA, outside of the VA structure. Tbej
are sold through the conventional mortgage system, and yet since
parity in real estate prices is a well-known fact, you nnd that
owners and real estate brokers are building points into those
houses that are not even going to have a VA or an FHA mortgage.
Last, but not least, and think about this, and I speak as a man
who has just had two of his daughters get married and tiy to find I
place to live in Fairfield County. The point rate at one settlement
was 9 and 5 for the other.
This is up-front cash that the seller must get when the seller is,
in fact, going to be going forward and trying to replace that dwdt
ing with something else. It is up-front cash that the buyer must
get. It artificially inflates the value of the house and it is a moB.
If, in fact, SO-odd percent of the mortgages in this country can be
done by negotiating with a bank, albeit the buyer may do it twio^
and the bank may do it 200 times a day, the fact of the matter ii
that there are a lot of banks out there. There are a lot of banks in
competition with each other. Anyone that just goes shopping in one
place for a mortgage is pretty darned stupid. You can get the beet
negotiated rate, and this could also be done with the FHA.
I think the gentleman has proposed an amazingly correct and
proper amendment.
Mr. Bartlett. Mr. Chairman, will the gentleman yield?
Mr. McKiNNEY. I yield to the gentleman.
Mr. Bartlett. So the gentleman is saying, Mr. Chairman, that
even though these points would technically be charged on the se-
er's closing statement, the gentleman would say that in fact if
those points are excessive, due to the volatility of the market,
either the sale will not occur, which slows down the entire housiiig
recovery, or the seller raises his price on the negotiated rate ana
the buyer ends up paying anyway; but it is a cumbersome process.
Mr. McKiNNEY. Absolutely no question that in that type of
neighborhood, particularly in my district, I can prove it, wh«e
FHA sales and VA sales are the norm, that prices are adjusted to
reflect the points that people know, the seller knows he is going to
have to pay, and when those points can go from 5 to 10 points dif*
ference, in 1 single week, this is a tremendous inflationary factor
to the housing market which is trying to struggle up m>m the
bottom.
Mr. Vento. Mr. Chairman, will the gentleman yield?
yGoot^le
665
Mr. McKiNNEV. What little time I have, yes.
Mr. Vknto. Well, Mr. Chairman, I think the concern here, of
nurse, is one with the high FHA point problem; but the gentle-
nan's amendment really does not eissure us, there are no assur-
tnces whatsoever that it will do anything for the cost of housing.
The Chairman. The time of the gentleman from Connecticut has
ixpired.
(At the request of Mr. Vento, and by unanimous consent, Mr.
tlcKlnney was allowed to proceed for 2 additional minutes.)
Mr. Vento. Mr. Chairman, will the gentleman yield further?
Mr. McKiNNEY. I am delighted to yield.
Mr. Vknto. There is no assurance in this amendment, there is a
tope that it would, but there is no assurance that it will really
lave any effect. In fact, the gentleman from Connecticut himself, I
hink, in a way reflected this tangentially, although I do under-
tand the gentleman's point with regard to market value and agree
hat that is not a positive factor; but nevertheless, I indicated that
hey have built into the cost of that housing points already. So
rhat assurance do we have?
Does the gentlemsm not concede that the National Government
hies have a fundamental interest in terms of the extension of the
IIA guarantee and the extension of the FHA insurance, which, of
ourse, they are paying for, in terms of maintaining some control
iver what the rates would be and what the conditions of sale might
le?
I mean, that is why, for instance, we limit the buyer to paying
mly one point, as an example.
I would appreciate it if the gentleman could respond. I frankly do
M)t understand the gentleman's logic.
Mr. McKiNNEY, Mr. Chairman, if I may regain my time, I am a
linn believer that the negotiated system will work just as well as it
irorkB in 80 percent of the other sales, I believe in the national in-
terest; but if this amendment does nothing else, it would at least
put the load of financing on financing, instead of the system we
nave now, which puts the load of financing on the cost of a build-
ing and that is intrinsically wrong and intrinsically disjoints the
entire system and the structure of pricing of housing throughout
the United Stetes.
If, in fact, the cost of the house is one thing, it should be the cost
and the honest cost. If, in fact, the cost of financing is one thing, it
ihould be clearly rect^nized.
Mr. Gonzalez. Mr. Chairman, I move to strike the requisite
number of words. I rise in opposition to the pending amendment.
I just CEinnot seem to believe my ears to hear the proponent and
the supporters of this amendment advancing arguments on the
basis that they are. This is simply an amendment that, if mistaken-
]y accepted by the Congress and adopted as law, would just legalize
eibnti(mate rates of interest.
Points or no points, interest is interest by any name, whether it
is called points or interest rates.
The fact is that this amendment has absolutely no purpose in
mind other than to remove the only existing legal restreiints on
nmaway rartortionate interest rates. That is all it does. That is all
it is infolded to do. All this folderol about reversing the awkward
yGoot^le
financial mechanisms where interest is on buildings and not on tbe
financial process is exactly that, folderol.
In the first place, the predicate on which the main thruBt of this
argument is made is absolutely fallacious — that this is going to be
a negotiable situation where the lender and the borrower are going
to be on an equal plane negotiating interest rat^s.
I think any adult knows by now that in that kind of situatiOB,
the lender has absolute control of the bargaining process. He is tiw
one that is going to determine what the terms of n^otiating are
going to be, not the borrower, not the seeker of credit.
Now, I do not know the statistics in most of the districts of the
country, but I do know that, in the areas represented by the gentle-
men who have spoken thus far in its behalf, there the statistics
show that homeownership, and I am not talking about FHA mort-
gages now, I am talking about conventional mortgages, which the
gentleman from Connecticut quite correctly says is the m^ority of
the mortgage activity in this country, there the average price of a
home today exceeds $90,000 in actual value. I am talk^ig about
single family, new by constructed homes. This is what we are talk-
ii^ about. We are talking about homeownership.
Now let us talk about the existing housing stock and the terms
and conditions under which interest is negotiated today.
As a matter of fact, the average long-term mortgage rate as of
last week went up over ISVi percent, not counting points.
Now, points are just interest charges disguised as service charges
and nothing else. The gentleman's amendment, by his own adima-
sion and wording, says that the purpose and intent of this is exclu-
sively to remove that power of the Secretary to set the mzudmum
limite of interest, period, on FHA insured mortgages.
D 1340
So I agree to this extent. I cannot think of a more important,
though I think quite undesirable amendment, than this one pend-
ing before the House. I cannot believe that the m^ority of the
Members of this House are going to accept the legalization of extor-
tionate rates of interest from here on out, and particularly in an
FHA insured mortgage which the Congress originally intended
should be controlled this way. I ui^e my colleagues to vote against
this amendment.
Mr. Leath of Texeis. Mr. Chairman will the gentleman yield?
Mr. Gonzalez. I yield to the gentleman from Texas.
Mr. Leath of Texas. I wish my colleague would explain to me the
difference between n^otiating for points, which we currently do,
and the difference between n^otiating interest rates.
It would be great if we sat here today and said that the FHA
lending rate is going to be 8 percent.
The Chairman. The time of the gentleman from Texas (Mr. Goc-
zal^) has expired.
(On request of Mr. Leath of Texas Eind by unanimous consent Mr.
Gonzeilez was allowed to proceed for 2 additional minutes.)
Mr. Leath of Texas. If the gentleman will yield further, the
problem with that would be there would not be {inybody to buy
those mortgages at 8 percent. So someone could come in and say
yGoot^le
>K, now, in order for us to take that 8-percent mortgage we are
oing to have to get some money up front. The same thing is true if
he current goit^; rate is 14 percent and we have a lid of 12 percent
n FHA guaranteed mortgages. They are going to pay that money
.p front as opposed to amortizing that money over a period of 20 or
5 years, and there is absolutely no difference. We are negotiating
!iterest rates.
All we are doing is saying we are not negotiatii^ interest rates.
Mr. Gonzalez. I think the gentleman reveals a tKisic flaw of his
Jiderstanding of the thrust of this amendment. There is one thing
he gentleman must recognize and that is that FHA, with its limi-
ittions, sets the pace in that market. It sets the pace.
If you remove FHA's authority to set the interest rate you are
oing to open up the flood gates for legalization of extortionate in-
sreBt rates. I do not think the gentleman would deny that when
ou get into a situation of this kind you are not talking about an
qua! basis negotiating situation. The lender has all of the chips.
'ou are not going to negotiate on an equal basis if you are borrow-
le with the bank lending or the mortgagor lending. You are going
) be at the lender's mercy.
What I am saying is that this removes the only protection that a
orrower has when purchasing a home, that the Congress has pro-
ided from the inception of the program.
Mr. Lbath of Texas. If the gentleman will yield further, I would
ist say I do not disagree with that. But this Congress made the
ecition when it chose to deregulate all of the financial markets to
J* everything float and let everything be deregulated. Now for us
a come back and say we are going to regulate simply does not
rork.
Mr. St Germain. Mr. Chairman, I offer an amendment to the
jnendment.
liie Clerk read eis follows:
.t offered by Mr. St Germain to the amendment offered by Mr. Bart-
■t: At the end of the amendment, insert the following additional subsection:
64 In the case of any mortgage insured under titles I or II of the National Hou»-
ag Act, DO mortgagor may charge a fee of more than 1 percent of the principal
mount of such mortgage, nhich fee may be charged only against the purchaser of
be property covered by the mortgage.
Mr. McKiNNEY. Mr. Chairman, will the gentleman yield?
Mr. St Germain. I yield to the gentleman from Connecticut.
Mr. McKiNNEY. On the third line of the amendment as proposed,
loes not the gentleman mean "mortgagee"?
Mr. St Germain. That is a typographical error. Mr. Chairman, 1
sk unanimous consent to have the word "mortgagor" in the third
ine of the amendment itself changed to the word ' mortgagee."
Mr. Chairman. Is there objection to the request of the gentlemcm
mm Rhode Isltmd?
There was no objection.
Mr. St Germain. Mr. Chairman, I will not take the 5 minutes. If
rhat we are talking about is doing away with those extra points
37-922 O - 84 -
yGoot^le
that are being charged at the present time, I have wanted to do
that for the last 18 years in this Congress but I have alwa^ been
told that you could not do away with it. But when listening to the
arguments by the proponents of the pending amendment, they
seem to think indeed we can.
Well, if that is the case, why just pretend to do it? Let us indeed
do it and do it with statutory language.
That is the thrust of the amendment. It would limit the points to
one point to be psdd by the purchaser, and none by Uie seller, so
that the seller need not increase the price of the home that he is
selling in order to compensate for those points he would have to
give to the lender.
I am sure the lenders will all be happy about this because in this
way they will not be getting all of that money up front that they
have been getting up front for that long period of time.
Mr. McKiNNEY. Mr. Chairman, will the gentleman yield?
Mr. St Germain. Certainly.
Mr. McKiNNEY. I think the gentleman would have to admit as
perfecting as this amendment appears to be and the joy it would
spread throughout the communities of the country, that it would in
fact totally stop the secondary market and therefore the FHA
market as well.
The point is
Mr. St Germain. Excuse me. The gentleman is on my time.
The point is that I listened to your argument and the arguments
of the proponents of the legislation. You are giving the American
people the feeling and conveying to them the thought the Bartlett
amendment would indeed do away with points and reduce points to
where they would no longer exist.
If that is the case, as the fellow says, let us put our money when
our month is and let us just prohibit any points beyond the one
point permissible to be paid by the purchaser.
Mr. McKiNNEY. If the chairman would yield further on his time,
I would suggest that then we would not have the ability to have
the secondary market take over because there has to be ability to
move. That is exactly what a negotiated mortgage could do for 80
percent of the sales throughout the United States of America.
Mr. St Germain. Did not the gentleman in his dissertation in
support of the amendment extol the merits of the amendment be-
cause of what it would do to eliminate these ugly points?
Mr. McKiNNEY. Yes.
Mr. St Germain. And those points increased the price of the
home?
Mr. McKiNNEY. And would replace them with a real mortgage
base which would be the flnance charge and not be put on me
charge to the cost of the house.
Mr. St Germain. That is r^ht and you could still do that with
this amendment, absolutely.
Mr. McKiNNEY. I would simply suggest that with this amend-
ment there is going to be no way still to n^otiate the mortgage
costs so there will be no FHA market.
Mr. St Germain. I think everybody would love to pet rid of ex-
horbitant, extortionate points being diai^ed at this tune, and this
is one way to do it.
yGoot^le
I yield back the btilance of my time.
Mr. Wylie. Mr. Chairman, I move to strike the requisite number
of words and I rise in support of the Bartlett amendment.
The amendment which has been offered, may I say, by the chair-
man of the full committee, the gentleman from Rhode Island (Mr.
St Germain), does have some visceral appeal in that it would limit
the amount of points which can be charged to 1 percent.
One of the reasons that I am supporting the Bartlett amendment
at this time is because what I regard as excessive charging of
points, or may I say the surprising charge of points at the time of
closing.
I did some real estate l^al work on my own when I was in the
private practice of law, and there is nothing more disconcerting
than to go to a closing where everybody is agreed on how much
will be passed by the purchaser to the seller and then a bank offi-
cer comes in with a little adding machine tape and he has five, six,
or seven points written on it, and says, "I am sorry, 1 must charge
the seller five points," and therefore deduct from his amount which
be receives at the closing.
As a matter of fact, that sort of thii^ became so disconcerting to
me that I decided I did not want to represent anybody in FHA clos-
iius.
So I support the Bartlett amendment and as the author of the
1980 provision now in the law which provided for a demonstration
program of negotiated FHA interest rates I strongly think that the
program has worked fairly well.
As a matter of fact, HUD has suggested that they would like to
have this authority and in a report entitled "The Future of FHA"
dated January 18, 1977, and in the final report of the Task Force
oi Housing Costs dated May 27, 1978, which was established by the
then Secretary of HUD, the HUD task force suggested that the De-
partment deregulate the FHA interest rate on all insured mort-
gages and other loans for any housing related purposes.
D 1350
The "Future Role of FHA" report included another statement:
Through this system of charging an up-front discount the lender
compensates for the fact that the interest rate ceiling may be
below the prevailing rate required by the market.
Now, discounts can become excessive. And as was pointed out by
Mr. McKinney a little eeu-lier, this is exactly what they do in the
conventional market; negotiate the rate and if it is good for the
conventional miu'ket, I do not understand why it would not be good
for the Government
As sellers are required to pay points, the price of, of course, of
tboee housing units is increased, as has been pointed out. And even
when interest rates fall, these inflati-d prices built in by the dis-
count are used as comparable and there is a wholesale upward
gpind of housing costs.
yGoot^le
670
So, I think Secretary Pierce has made a fine effort to keep the
FHA rate in line with the market but there is no substitute to my
way of thinking to a free floating interest rate and I therefore ui|e
adoption of the Bartlett amendment without the St Germain
amendment.
Mr. Green. Mr. Chairman, will the gentlemjin yield?
Mr. Wyue. I yield to the gentleman.
Mr. Green. I thank the gentleman from Ohio for yielding.
I want to commend him for the initiative he showed back in 1980
in getting an amendment passed which made possible the demon-
stration of the market rate FHA insured mortgage.
I think the evidence is quite clear that that demonstration has
been highly successful. I have not heard one person opposing the
Bartlett amendment today point to anything that h£is occurred
under that demonstration that is in any way untoward. I think
both sides have acknowledged that market interest rates have to be
paid and that people are not going to lend money on mortgages
below the market. They either get paid through interest rates or
they get paid through points. The problem with pa3^g them
through points, aside from the disruption of the closing to whidi
the gentleman from Ohio referred, is, of course, that the higher in-
terest gets paid in a single up-front lump sum; but typically the
home buyer does not then occupy his home for the full term of tJie
mortgage. And some years later, an average of 12 years or so, be
comes to sell his house. If he has had to [>ay that extra interest
charge up front, he has paid that interest for 30 years, even though
he is getting only 12 years benefit, whereas if he pays that interest
month by month then he pays only for the time he actually occu-
pies the house.
So, plainly the home buyer is much better off to have a situaticHi
where he pays the true interest rate rather than having to pay up
front in points.
(On request of Mr. Green and by unanimous consent, Mr, W^e
was allowed to proceed for 3 additional minutes.)
Mr. Green. Will the gentleman yield?
Mr. Wylie. I yield to the gentleman.
Mr. Green. I thank the gentleman for yielding further.
So, I think the effort which the gentleman from Ohio began with
his amendment to esteblish the demonstration pn^am has proved
that this approach will work.
I again commend him for that initiative that he showed and I
commend the gentleman from TexEis (Mr. Bartlett) for pursuing the
issue here today.
Mr. Wylie. Mr. Chairman, I thank the gentlemfin from New
York (Mr. Green) for his excellent stetement. I appreciate it very
much because this comes from a gentleman who has the expertise
of a former HUD area officer in his home town of New York. So, I
appreciate the contribution.
Mr. St Germain. Mr. Chairman, will the gentleman yield?
Mr. WyuE. I am glad to yield to the gentleman.
Mr. St Germain. I thank the gentleman.
The gentleman from New York just made a wonderful argument
for my amendment to the amendment, when he referred to the up-
front payment which meant that the purchaser was paying interert
yGoot^le
671
30 years, even though he might own the house for only 12
ITS.
'. further note that the gentleman from Ohio is impressed with
! expertise of the gentleman from New York. I wish he would be
impressed with that expertise of the gentleman from New York
ii respect to the Wylie amendment that I understand we will re-
it on the motion to recommit, to wit: The rent control emiend-
nt.
iTou talk to Mr. Green; his expertise is there from his service
A HUD in New York. I thank the gentleman.
kfr. Wylie. The gentleman from New York has a little more pro-
tcial interest on the rent control issue. But I did accept his
lendment on it yesterday if you recall.
yield back the balance of my time.
Mr. Gonzalez. Mr. Chftirman, I move to strike the requisite
mber of words.
tfr. Chairman and fellow Members, I think that we are getting
o the mesquite brush of error; with this amendment.
do not know of any way I could honestly offer my colleagues,
istituents, or fellow Americans a perfecting amendment to this
nlutely noxious, insidious, vicious attempt to legalize an extor-
nate rate of interest, no matter what you call them, and this is
at this amounts to, simply put.
honor the distinguished chairman of the full committee's effort
bring about the purposed intent of the sponsors of this amend-
nt by attempting to control such things as points and point
uges, either by one or the other party.
Jut, it is very simple for the people in the kind of business that
xunes predatory — and this is the reason why we have this pro-
tion in the law, to protect the averi^e American home buyer
i mortgage seeker from the predator. We are not trying to do
fthing otiier than maintain the initial protection that the Con-
sses through the years have seen necessary in order to maintain
t minimal sfifeguards for the American who is in the mortgage
dit market and needs that protection from the predator and ex-
tionate rates of interest.
Hie basic argument we must answer and the basic duty we have
ifronting us is to stoutly resist the continued attempt to legalize
at all through the years has been considered extortionate and
irioufi rates of interest.
ffe have alwavs complained about the Congress not having that
lity to control interest rates and that Chairman Volcker is the
i that imposes these high rates of interest because of tight
•ney policies. Well, here is where the Congress has a chance to
>re8B itself against extortionate and prohibitive rates of interest.
is amendment will do nothing else but legalize extortionate
es of interest at a time when this market is practically nonexist-
; for the avenge American family.
\b of this year, as of the moment I am speaking, the ability of
) American family to purchase a home has been reduced to only
«rceat of our population.
Ninety-four percent of the American fstmilies are simply out.
ly? because of interest rates; no other reason. Interest rates have
through the history of mankind, have been antipublic interest.
yGoot^le
672
They have never been anything but outlawed since before Christ
And this minimal protection that the Coi^reae wisely, gave to the
Secretary to set the maximum limits of interest chained on FHA-
financed insured mortgages should be retained. I just do not see
ourselves reneging on that fixed rate and turning our backs on
that duty of protecting the interests of our American citizens who
are still hoping to reach the point that a few years ago they had,
and that is to have affordable housing within their reach.
This amendment will further anchor down the inability of the
average American to purchase a home.
It will further restrict it only to those favored, who themselves
are powerful enough to enter into a negotiable position with the
lender.
n 1400
Mr. HiLER. Mr. Chairman, I move to strike the requisite number
of words and I rise in support of the amendment of the gentleman
from Texas (Mr. Bartlett).
Mr. Chfurman, I rise in support of the amendment of the gentle-
man from Texas because I think it is exactly the right thing to be
doing at this time of high volatility in interest rates, the kind (k
volatility we have seen for the last 3 to 4 years.
The fact of the matter is the market rate of interest is beir^ paid
already. The FHA through trying to at times artificially lower in-
terest rates, we just end up having higher points chafes, whidi
ends up in having higher home prices and at times restricts the
ability of many buyers to buy a house, restricts the ability of many
sellers to sell the home; and as a result, we have a market that ii
not clear. We have buyers wanting to buy, sellers wanting to sell,
but because of high numbers of points and artificieUIy low set inte^
est rates, that market clearing does not take place.
We have been in the process of deregulating the interest rate
structure in this country now for the last 3 years or so. And I think
it is only proper that we continue this process by doing away the
artificially set rate by the FHA and by the Secretary of HUD. We
have determined that the market can best set interest rates. I
think it is proper that we do that by passing the Bartlett Eimend-
ment. I think that the only thing that would result from the gen-
tleman's amendment being passed is the fact that we will have a
better functioning market which insures that buyers and sellers
are able to buy homes and sell homes at rates that are affordable
in our marketplace.
I applaud the gentleman for offering his amendment.
Mr. St Germain. Mr. Chairman, will the gentleman yield?
Mr. HiLER. I yield to the gentleman from Rhode Island.
Mr. St Germain. I thank the gentleman for yielding.
I would like to propound a few questions to the sponsor of the
amendment.
The gentleman from New York (Mr. Green) referred to the fact
that this side had not discussed the demonstration progreun or ad-
dressed it during the debate.
I would like to ask a few questions on that very point .
yGoot^le
No. 1, how did the D^otiated interest rate under the demonatra-
ion pnwram compare to the FHA rate set during the same time
eriod? Do we have statistics on that?
Mr. Baktleit. Mr. Chairman, will the gentleman yield?
Mr. HiLER. I yield to the gentleman from Texas.
Mr. Bartlktt. I thank the gentleman for yielding.
We do not have the statistics back yet. It was well received in
he marketplace, hut as Far as a specific study as to what happened
0 the rates, we have not been able — it just took effect.
Mr. 5r Gesmain. By the way, and incidentally, where is this
eport that we are talking about on the FHA negotiated rate dem-
nstration program? We do not have the benefit of that report.
Mr. Baktlbtt. That is correct. The project did not begin until De-
ember. We have the total numbers — through June 30.
Mr. St Germain. If the gentleman will yield further, we do not
sve a report.
The second question: What weis the difference between the dis-
ount points charged under the demonstration program and those
barged under the r^ular FHA prt^am during the same time
»riod?
Mr. Babtlett. Would the gentleman clarify his question or
epeat his question.
Mr. St Germain. The gentleman in his arguments on behalf of
08 amendment stated that his amendment would reduce the
lumber of points that are charged. Now I am asking the gentle-
nan to tell us what the differences were between the discount
mntB charged under the demonstration program and those under
he r^ular FHA program.
Mr. Babtleit. I will get that information to the gentleman a
itUe later on in the debate. I have it here.
Mr. St Germain. Well, we are about to vote. The gentleman's ar-
imnents were to the effect that the number of points charged were
educed under the demonstration program, so lie should have this
nfbnnation with him in hand
Mr. Bartlxtt. If the gentleman from Indiana will continue to
ield, the point is 85 percent of the market is done by the conven-
iooal market in which both points and the rates are negotiated
ind the fact is that the con\-entional market then does not have
fail higfa volatili^ of surprise points as has been well reported in
he public press, if nowhere else, of 5 points, 7 points, 10 points at a
Mr. Sr Germain. Well, if the gentleman will yield further, I am
iiBt afflting for this report. The gentleman's amendment i.>i biMed on
lie demonstration program and the results of that program
I have another question on that program. The demon.<itration
iroeram differs from the proposed amendment, in any cas^, sinr*
taSer the demonstration program the intere?ft rat« and duyyiunt
md the points charged were binding for at least a ^/''^^ay period.
Hierefore, the purchaser could go out and shop arounii u* d»;Urr-
nioe if he (n* toe oould get a better deal When^a.^- thi.t: amendment
Iocs not even include those limited cor^^umer prfA*^.lirjri>: Wh^t
ms the impac* of the 30-day commitment f*n'jd: d'XA tn* rfrp'^rt
tdil us that? O nously not. sine* the rep'.^rt <l'jvi n'A yet HxiMt, d'**
yGoot^le
674
Mr. Bartlett. The buyers and lenders and the seUets do have
the opportunity to shop around as they do in the conventioiial
market. There is a very efficient marketplace which lends moiK|y
in this country. A lender does not set the rates, but it is set by teoa
of thousands of lenders who are competing with each other, so
there is a great deal of shopping around, and there could be under
the FHA market, in fact, if this amendment is passed.
Mr. St Germain. If the gentleman will yield further, the point is
that the 30-day commitment period that was included in the dem-
onstration program is not included in the gentleman's amendment
Mr. Vento. Mr. Chairman, I move to strike the requisite numbo*
of words and I rise in opposition to the Bartlett amendment.
Mr. Chairman, I think it is very clear from the last colloquy that
we are really in an area where we do not really understand what
the effect is of the so-called experiment or pilot program wUh
regard to the FHA.
The fact that it has only been in existence for 6 months ought to
give a signal to many of us because when we start talking about
the actuarial soundness of the FHA program which extend mort-
gages for almost 30 years, the straight-line, fixed mortgage, wfaidi
has been the bulwark of the mortgage market, it has been a couit
tercyclical force and here we are on the floor today with the Bart-
lett amendment attempting to pull the rug out, as it were, fitnil
under that FHA program and mandate a complete n^otiation of
that rate of interest.
What is the real reason that underlies what the point prcMem
with regard to FHA? I think it is very clear to all of us, although it
has not been stated on this floor today. And that is that we an
concerned about the rate at which, and the means by which, HUD
has actually increased or decreased the FHA rate that has been an
imperfect mechanism.
Now if I wanted to be unkind and uncharitable, I could BUggeBt
that if the Reagan administration wants to deal with monetaiy
policy, it might address itself to the conduct of the people it ap-
points to the Federal Reserve Board and what is going on therc^
rather than attempting to do it through the FHA mortgage ratea,
which has caused these tremendous distortions in terms of the
number of points that are being paid, one way or another.
But all of us recognize that ^e FHA rate setting is an imperfect
mechanism and that as a consequence results in the point diAeren-
tial being able to make up for the inconsistency or lack of inter&ic-
ing, as it were, with the marketplace with regards to FHA mort-
gage rate. And over the last few months it has been volatile, it hat
been a problem, it is not an easy thing to set the FHA rate. Al- i
though I think the lag has been obvious, it may even have political
overtures as to why FHA has been out of sync.
What this amendment really does in essence, however, is to I
shift — and especially now with the amendment proposed by the '
chairman of the committee — the burden of this financial tatd fi-
nancing from the seller to the buyer. A vote for the Bartlett
amendment, in conjunction. With a vote for the St Germain
amendment will really accomplish that, it will foreclose any option
for the seller to absorb some of the costs.
yGoot^le
675
1 the reason that the seller has been permitted to absorb
of those costs, either rightly or wrongly, is because from a
' standpoint they are in a better position to do so. They are
e; a home, they are selling a piece of re£d estate, they are ac-
; a cash value, and the payment of points by the seller facili-
in fact, the sale of the home.
D 1410
ay times I think these buyers or sellers are willing to pay
points, they are actually willing to do that if that facilitates a
lownpayment, fixed-rate, 30-year type of mortgage arrange-
and that is indeed what FHA has offered.
! fact of the matter is, now, with the type of amendment being
d by the chairman, with all good intentions clearly to accom-
te what in fact has been the expressed policy objective of our
gue from Texas, it really does shift once and for all the cost
■ buyer,
link we oij^ht to look at what we are doing to the buyer in
of the FHA insurance and the other programs and with
i to the up-front payment of insurance, of course, which I ob-
to on this floor last year. But what this amendment does is,
invitation to extend the Federsil loan guarantee, the FHA
im, to a whole series of noncontrolled types of interest-rate
gements. In fact, it may well be the demise of the 30-year,
rate mortgeige. And I think we ought to really have some-
before us, the oFFlcial transmission, at least, of what has hap-
in the last 6 months, before we embark on this particular
venture.
St Germain. Mr. Chairman, will the gentleman yield?
Vento. I yield to the gentleman from Rhode Island.
9r Germain. I thank the gentleman for yielding.
Chairman, I think the purpose of my perfecting amendment,
sen accomplished and that is to point out that, in reality, the
nents really do not mean to do away with the point system
86 they know, as the chfurman of the subcommittee pointed
nd as we all know, one way or another those points are going
chamed.
ler the circumstances, Mr. Chairman, I ask unanimous con-
o withdraw my perfecting amendment to the amendment.
Chairman. Is there objection to the request of the gentle-
rom Rhode Island?
re was no objection.
Vknto. Mr. Chairman, I think a vote now for the Bartlett
Iment is a vote basically for one thing, and that is for higher
Bt rates on the part of buyers. I confess to the problem that
leen alluded with regard to points. I think the solution,
h, is inequitable and would cause great harm to the FHA pro-
We would lose a basic tool by which we hold accountable the
program. I do not think I am prepared to do that, and I would
■he other Members of this body to reject the Bartlett amend-
HARNffiT. Mr. Chairman, I move to strike the requisite
er (^ words, and I rise in reluctant opposition to the amend-
yGoot^le
676
ment ofTered by the gentleman from Texas, but I strongly dimgree
with my colleagues on the other side of the aisle as to the inten-
tions of the gentleman from Texas. I commend him from the
bottom of my heart for his sincere efforts to do what he can
through his amendment and his opinion to improve the housing in-
dustry in this country and make more moneys available at reascm-
able rates of interest for buyers.
I want to say at the outset, Mr. Chairman, that I am a realtor. I
consider myself a citizen Congressman, one who is a realtor, who is
serving in the Congress and who one day looks forward to going
bfLCk to being a realtor. I want to say, also, that the FHA has
meant a lot to generally first-time home buyers in this country.
I would like to get it clear, from the outset — I am sure everyone
understands this — the FHA, the Federal Housing Administration,
is not a lending agency. It is, for all intents and purposes, the Fed-
eral Government insuring the loans of purchasers.
When the Federal Housing Administration looks at a potential
purchaser and at a piece of property, they want to know two
things: First, that the property is worth the amount of money that
the purchaser is going to pay for it; and second, the purchaser a
financially able to fulfill his obligation, thereby hopefully not
maiking it necessary for the Federeil Government to have to pick up
his loan later on should he default in his payment.
We have had throughout the years a good number of first-home
buyers participating in the FHA program. The Federsd Govern-
ment, in its wisdom, has always regulated the rate of loans insured
by the Federal Housing Administration, as they do with loam
made through the Veterans' Administration.
If we were in fact by this amendment, Mr. Chairmfui, going to
eliminate those incidious points, as was wanted to be done by tiie
distinguished chairman over there, or to at least kept the points, at
one point, then in fact perhaps the amendment of the gentleman
from Texas would have some substance. But let me say that since
the Federal Housing Administration is only an insuring agenc?
and not a lending agency, I want to assure the chairman and my
colleagues here in this House that those lending institutions are in
business for one purpose and one purpose alone; that is, to make
money.
They are either going to continue to charge points, as is not pro-
hibited by the amendment of the gentleman from Texas, or wej
are not going to lend money through the Federed Housing Adminis-
tration's insurance program at all.
It is my understanding that only 15 percent of the buyers ti
houses buy through the FHA insured program, and that is limited
to 15 percent of the 6 percent to which the gentleman from Texas
referred.
What we would be doing, in effect, and what we are doing now,
Mr. Chairman — let me use a hypothetical situation for my col-
league from Texas and for anyone who may care to listen. If I as a
seller of a home — an existing home, not a new home — had my
house appraised through the Federal Housing Administration's in-
surance program, they would send one of their desi^ated apprais-
ers out to establish the market value of my home. Let us hypoth-
esize that that market value were set at $100,000. If a potential
yGoot^le
677
urchaser came along and wished to buy my home for that
mount, several thingB have to be done: One, he has to be shown
lie FHA appraisal certificate indicating that indeed the value of
sat home, as certified by the Federal Housing Administration, is
100,000, so that he would know he was not paying 1 penny more
lan what the Federal Government was willing to insure that loan
u*. His downpayment is set by law and by the Secretary as to
'hat percentage of that $100,000 he would pay as downpayment. If
e ana I, as the seller, were to enter into a negotiated contract for
ie purchase of my house, and we established the market value of
100,000, I as a seller would have to agree to pay the FHA dis-
nint, or the points, as we refer to them today. That is set, Mr.
hairman, by what the market rate is now.
ir the chairmfin over here were the third party in our n^otia-
on, me the seller, the gentleman from Texas the purchaser and
le chairman the lender, he would say to the FHA — you being the
HA, Mr. Chairman — "If I am limited to 12 percent or IIV^ per-
snt lending money through your program, and I can lend money
J AT&T for 16 percent, I am either not going to lend money
tKTOUgh your insurance program, or if I am — you being in business
D make money — I am going to charge the seller a discount to
lake up for the difference in the money I could charge by lending
ly money to AT&T or lending it to the purchaser, the gentleman
rom Texas."
Do you follow me, Mr. Chftirman?
The Chairman. The time of the gentleman from South Carolina
tfr. Hartnett) has expired.
(By unanimous consent, Mr. Hartnett was allowed to proceed for
■ ■dditional minutes.)
Mr. St Gebmain. I just wanted to know, Mr. Chairman, why the
Kntleman makes me the lender.
Mr. Harnbtt. The lender is always the bad guy, Mr. Chairman,
md I Just tend to look to that side of the aisle as all being bad
HVB. so I apolc^ize to the gentleman for that.
Mr. St Germain. I am really chagrined to hear the gentleman
ay that.
Mr. Hartnett. That was all in jest, Mr. Chairman.
Hr. St Germain. I would hope so.
Mr. Hartnttt. I withdraw those remarks. I ask that those re-
narks be stricken from the Record.
If I might go on
Mr. St Germain. If the gentleman will yield to me, I want to say
umetbing nice about the gentleman.
Mr. Hartnett. That ha^ never been done here. I would like to
•ethat done, and I nill be happy to yield to the gentleman.
Mr. St Germain. Seriously, as one who has worked with the pro-
tram, the gentleman has given the Members of thi.'- Hou.se a ver>'
dear understanding, for those who mieht have been a little con-
ioed by the debate, of what FHA is alf about and of what we can
k> and what we cannot do with FHA and what the importance of
?HA ia to that first home purchaser That is very important. And I
iust want to commend the gentleman for his very wonderful sUiXH-
nent because I think it i£ ver>' helj^ul trj all the Members of the
Houae.
yGoot^le
678
Mr. Hartnktt. I thank the chairman.
If I might summarize, Mr. Chairman, to the lender or to the in-
surance agency, also what we are doing is, these mortgages, theae
points, they enable the lender to get a mortgage for $100,000 and
only put out $96,000, thereby actually giving him more mon^ to
lend to other purchasers who may be coming down the road. So, in
effect, if we pass, as well intentioned as it is, the amendment of the
gentleman from Texas, I am afraid we would be doing one of sever-
al things. And do not forget that we have also inflate that fellow's
home, the Federal Government through its spending polidee of
past decades has already inflated that seller's home far beyond
what its actual value would be. What we will be doing if we paa
this amendment is, we will either be drying up all FHA funds com-
pletely or we will be placing an interest rate on FHA insured loans
which is going to dry up the recovery of the housing industry.
D 1420
We will psychologically be saying to first-time home purchasers^
"Your rate is now 17 or 16 or 15 percent," when we have just given
them a small flicker of encouragement to go out and buy that
home. So, in effect, what we will be doing is scaring away first-time
home purchasers or drying up FHA-insured funds altc^ether.
So I commend the gentleman from Texas and the chairman for
the debate which has taken place here today, and for his efforts to
strengthen and to make available more money for housing throu^
the Federal Housing Administration, but I urge my colleagues to
defeat the Bartlett amendment.
The Chairman. The Chair wishes to announce that the time on
the mortgage has run.
Mr. Ridge. Mr. Chairman, I move to strike the requisite number
of words.
(Mr. Ridge asked and was given permission to revise and ext^
his remarks.)
Mr. Ridge. Mr. Chairman, I rise today in support of my oot
leEigue's amendment on FHA mortgages. It is time that we give
consideration to ways to make a good program, FHA mortgages, as
even better program. All of us know that the FHA has done a
great deal to assist homeownership. But when the interest rate
changes, there are high costs added to getting an FHA mortgage.
This added cost takes the form of increased points that have to K
paid by the home buyer and the home seller in order to get an i
FHA mortgage. ]
Currently, the points added to an FHA mortgage range between
5 and S'/a, while the normal range is about 3 to 3V4- This is a sub-
stantial fee that must be paid by the seller of the house. The seller
has to pay this cost because present law sets a 1-point limit Uiat
can be chained to the home buyer.
At a time when the dream of homeownership is already suffer^
ing, and just beginning to pick up, it makes no sense to impair the
recovery. This is even more important as the problems facingthe
real estate market is the high cost of financing; the present FHA
program is exacerbating this problem when it is intended to assist
the sale of houses. The amendment offered by the gentleman from
yGoot^le
679
corrects this problem. By Edlowing the interest rate on FHA
ages to reflect the market rate of interest, we will facilitate
J getting FHA mortgages to finance the purchase of a home.
ihort, this amendment makes it easier for the American home
to get FHA finfincing. The negotiated interest rate program
eliminate the need for a lender to charge a seller points, a
ce that ends up hurting the very people that the FHA ceiling
posed to protect — the home huyer and the home seller. Points
la^ed the seller by the lender to bring the effective rate of
on up to the market rate. This c£tn mean as many as 7 or 8
I, or 7 or 8 percent of the loan amount. Although the home
is prohibited by law from paying more than 1 point, he
1 ends up paying more for a property than it is worth, a
i home sellers use to offset the cost of points.
^ prospective home buyer will be free to arrange the best fl-
og plfui possible. There will be no extra points assessed on the
H" increase to the worth of the house. Rather, the cost of fi-
og will be a negotiated interest rate, ^reed to by the lender
he home buyer and set in advance. This is a dramatic im-
ment from the existing system where the buyer can Eigree to
tnent expecting to pay one rate of interest and number of
I and then find the situation has changed before the purchase
ict can be signed.
•ge all of my colleagues to support this amendment which in-
!B the opportunity of the home buyer to find financing. This is
lendment that will improve the housing market and help re-
vitality to a major sector of our economy.
Green. Mr. Chairmem, I move to strike the requisite number
rds.
Chairman, I think the basic point we have to face as we
up this debate is that we do not set interest rates by pEissing a
md the Secretary of HUD does not set interest rates by an-
nng an FHA interest rate. Interest rates are set by market
en an FHA mortgage comes to close, those market forces
into play regardless of what rate the Secretary has set, and
market forces can be dealt with either by allowing a market
0t rate or by points. I submit that the sole question we have
dde is whether it is better to use the market interest rate by
ing the interest rate to fluctuate or to have those enormous
burdens which have come up during a period of rapid fluctua-
f interest rates.
I problem with doing it by points has been made very clear.
jne has to eat those points. When the buyer or the seller
it eat those points in some form or other, the transaction does
ike place, the seller does not get to sell his home, the buyer
not get to buy the home he wants, and they are both discom-
ematively, if the transaction is accommodated by a price
1 reflects the fact that points are going to be included in the
action, then the price of the home is increased and, therefore,
aterest that otherwise would have to be paid over the life of
dortgage is reflected in those points. That means that a 'AO-
higher interest gets reflected in a price that the buyer pays,
yGoot^le
but, since the typical buyer does not live in the home for 30 yean,
when he goes to sell etft«r an avereige of 12 years he has lost tiiat
full 30 years of interest payments because he paid it up front in
[>oints.
So we are doing the buyer no favor by artificially holding down
the interest rate and having him pay it in the form of the hi^wr
price for the home instead. That is really what this amendment w
about.
If you think that we can pass a law and the Secretary of HUD
can determine what the interest rate is going to be on mortgages
by arbitrarily setting an interest rate, then vote against tfiis
amendment.
But if you understand that market forces are going to work and
that we do the buyer no favor by making him pay that higher in-
terest rate up front in the form of points, then you will understand
that this is a sound amendment and one which should be support-
ed.
The Chairman. The question is on the amendment offered by tlie
gentleman from Texas (Mr. Bartlett).
The question was taken; and on a division (demanded by Mr.
Bartlett) there were — ayes 15, noes 14.
Mr. St Germain. Mr. Chairman, I demand tellers.
Tellers were refused.
Mr. St Germain. Mr. Chairman, I make a point of order that a
quorum is not present and object to the vote on the ground that a
quorum is not present.
The Chairman. The gentleman from Rhode Islsmd may demand
a recorded vote.
Mr. St Germain. I demand a recorded vote.
The Chairman. On this, of course, the Members are aware that
25 are required. The gentleman first made a point of order.
Mr. St Germain. I make a point of order that a quorum is not
present and object to the vote on the ground that a quorum is not
present.
The Chairman. Obviously a quorum is not present.
The Chair announces that pursuant to clause 2, rule XXIU, he
will vacate proceedings under the call when a quorum of the Com-
mittee appears. Pursuant to the provisions of clause 2(a), rule
XXIII and clause 2(b), rule XV, Clerks will take their places and
Members will submit their cards in the well to indicate their pres-
ence.
D 1440
QUORUM CALL VACATED
The Chairman. One hundred Members have responded. A
quorum of the Committee of the Whole is present. Pursuant to rule
XXin, clause 2, further proceedings under the CEtll shall be consid-
ered as vacated.
The Committee will resume its business.
yGoot^le
RECORDED VOTE
Chairman. The pending business is the demand of the gen-
n from Rhode Island (Mr. St Germain) for a recorded vote,
scorded vote was ordered.
Chairman. In view of the fact that the electronic device is
irking, the Clerk will call the roll.
question was taken; and there were— ayes 223, noes 201, not
; 9. as follows:
[Roll No. 243]
AYES-223
on
Emerson
Lewis (CA)
ncrxi
Endiah
ErJreich
Lewis (FL)
y
Livingston
Erlenborn
Lloyd
Evans (IA)
Loefder
d
Faaio
Lott
Fiedler
Lowery (CA)
t
Fields
Lujan
in
Fiflh
Lungren
Mack
ir
Flippo
e
Foreythe
MacKay
ia
Franklin
Madigan
Frenzel
Marriott
■t
Gekas
Martin (ID
ield
Oilman
Martin (NO
(CO)
Gingrich
Martin (NY)
Goodling
McCain
(IN)
Gradison
McCandless
Gramm
McCoUum
sU
Green
McCurdy
McDonaSd
&™n„
McEwen
a
Hall, Ralph
McGrath
Hall, Sam
McKernan
Hance
Mc Kinney
Hansen (ID)
Michel
Hansen (UT)
Miller (CA)
Hightower
Hiler
Miller (OH)
-n(MO)
Molinari
jitTX)
Hillis
Mollohan
Holt
Montgomery
Hopkins
Moody
Morton
Moore
in
Huckaby
Moorhead
Hunter
Morrison (WA)
Hutto
Mrazek
Dsniel
Hyde
Murphy
Philip
Ireland
Myers
Jeffords
Neal
neyer
Jenkins
Nelson
Jones (OK)
Nielson
Jones (TN)
O'Brien
B
Kasich
Olin
Kazen
Ortiz
Kemp
Oxley
Kindness
Packard
Kramer
Parris
Lagomarsino
Pashayan
Latta
Paul
Leach
Penny
Is(AL)
Leath
Petri
b(OK)
Lent
Pickle
yGoot^le
Porter
Sikorski
Tbomaa<CA)
Punell
Siljander
ThomMiGA)
QniUen
Sisisky
Valentine
S™
Slattery
Vandei-Jsft
Vaniuffm
Ridge
Smith (PL)
Vucanovich
Rinaldo
Smith <NE)
Walker
Hitter
Smith (NJ>
Watkina
Roberts
Smith, Denny
Weber
Robinson
Smith. Robert
Whitehunt
Roemer
Rogers
Snyder
Solomon
Whitley
WhittaW
Rofli
Spence
Williams (OH)
Rowland
S^tt
Winn
Rudd
Wirth
Sawyer
Wolf
Schaefer
Stump
Wortl^
Schneider
Sundquist
Wylie
Schulze
'fShn
Young (AK)
YZi(FU
Shaw
Tauke
Zachau
Shelby
Taittin
ShuBter
Taylor
NOES-201
Ackennan
Derrick
Hatcher
Dicks
Hefner
Akaka
Dingell
Hertel
Alboeta
Diion
Howard
Alexander
DonneUy
Dorgan
Hoyer
Annundo
Downey
Hughes
Applegate
Dwyer
Jacobs
Aspin
Dymally
AuCoin
Ekrly
Jones (NO
BaUe
Edgar
Kaptur
Bedell
Edwaitls (CA)
Beilenwn
Evans (IL)
KenneUy
Bennett
Fascell
Kildee
Bevill
Feighan
Ferraro
Kogovsek
KoTter
Biaggi
Florio
B^d
Foslietta
Foi7(MI)
LaFalce
Lantos
Bonier
Lehman (CA)
Bonker
FortlCTN)
Lehman (FD
Borski
Fowler
Leland
Boucher
Frank
Levin
Boxer
Frost
Levine
Britt
Fuqua
Levitas
Brooks
Garcia
Lipinski
GaydoB
Long (LA)
Burton (CA)
Gejdenson
Long (MD)
Carper
Gephardt
Lowry{WA)
Carr
Gibbons
Luken
Coeiho
Glickman
Gonzalez
Markey
Collins
Gor«
Marlenee
Conyers
Gray
Martinez
Cooper
Guarini
Mataui
CoySe
HalinN)
Havroulee
CrockeU
Halt (OH)
Mazioli
D' Amours
McCloskey
Davis
Harkin
McDade
de la Garza
McHugh
McNuIty
Dellums
Hartnett
yGoot^le
Mica
Ratchford
Stokes
Mikulski
a
Stratton
MineU
Studds
MiQiBh
Rodino
Swift
MitcheU
Roe
Torres
Moakley
Rose
Towns
Morrison (CD
RoetenkowBki
Traxler
Murtha
Udall
Natcher
Rc^rbal
Vento
Nichols
Ru^
Volkmer
Nowak
Sabo
Walgren
Oalcar
Savage
Waxman
Oberetar
Scheuer
Weaver
Obey
Schroeder
Weiss
Ottinger
Schuiner
Wheat
Owens
Seiberling
Whitten
Panetta
Shannon
WilliamB (MT)
Patman
Sharp
Wilson
Patterson
Simon
Wise
Peaae
Skelton
Wolpe
?:?£Ss
Smith (lA)
Snowe
Wright
Wyden
Price
Solan
Yates
Pritchard
St Germain
Yatron
RahaU
i»"
Young (MO)
Rangel
Zablocki
NOT VOTING— 9
Boner.
Broyhill
Heftel
Bosco
Shumway
Breaux
Hawkins
Torricelli
□ 1520
Mr. BOLAND changed his vote from "aye" to "no."
Messrs. Miller of California, Richardson, Nelson of Florida,
Kazen, and Wirth changed their votes from "no" to "aye."
So the amendment was agreed to.
The result of the vote was announced as above recorded.
The Chairman. Are there further amendments to title V?
AMENDMENT OFFERED BY MR. RINALDO
Mr. RiNALDO. Mr. Chairman, I offer an amendment.
The Clerk read as follows:
MoarOAOE
Sbc. 514. (a) Section 232(bK2} of the National Housing Act is amended by inserting
"and board and care homes" after "intermediate care facilities",
(b) Section 232(b) of such Act is amended—
(1) by striking out the period at the end of paragraph (3) and inserting in lieu
thereof "; and "; and
(2) by adding the following new paragraph at the end thereof:
"(4) the term 'board and care home' means any residential facility providing
room, board, and continuous protective oversight that is regulated by a State
pursuant to the provisions of section 1616(e) of the Social Security Act, bo long
as the home is located in a State that, at the time of an application is made for
insurance under thia section, has demonstrated to the Secretary that it is in
oomplianM with the provisions of such section I616(e>.".
37-922 O - 84 - -
yGoot^le
684
(cXl) Section 232tdi of such Act is amended by uuerting "or a board and caie
hone" after "intermediate care facility" the second jAaoe it appean.
(2) Section 232(dN4) of such Act is amended—
(A) by striking out "The" in the Tirst sentence and inaertiiig in liea tbenat
the following: "lA) With respect to nursing homes and intermediate care facilt-
ties and combined nureing home and intermediate care facilities, the";
(B) by striking out "(Aj" and "(B)" in the first sentence and insertiiig in lien
thereof "(iV and "(ii)". respectively; and
(C) by adding the following new subparagraph at the end tfaereof:
"(B) With respect to board and care homes, the Secretary shall not insure an^
mortgage under this section unless he has received from the appropriate State li-
censing agency a statement verifying that the State in which the home is or is to be
located is in compliance with the provisions of section 1616(eJ of the Social Security
Act".
(dl Section 232lg) of such Act is amended bv striking out "Health. Education, and
Welfare" and inserting in lieu thereof "Health and Human Services";
(e) Section 232(hJ of such Act is amended by striking out "Health, Education, and
Welfare" and inserting in lieu thereof "Health and Human Services".
(fKU Section 23aiKll of such Act is amended—
(A) by inserting "or to board and care homes" after "intermediate caie tacSi-
(B) by inserting the following after "Association": "(or any subsequent edition
specified by the Secretary of Health and Human Services)";
iC] by striking out "Health, Education, and Welfare" and inserting in lieu
thereof "Health and Human Services"; and
(D) by inserting the following before the period at tbe end thereof: "or as
mandated by a State under the provisions of section 1616(el of such Act".
(2) Section 23aiX2) of such Act is amended—
(A) by striking out "and" at the end of subparagraph (Dy,
(B) by striking out the period at the end of subparagraph (E) and inserting in
lieu thereof "; and "; and
(O b^ adding the following new subparagraph at the end thereof:
"(F) in the case of board and care homes, be made with respect to such a
home located in a State with respect to which the Secretary has received from
the appropriate State licensing agency a statement verifying that tbe State in
which the home is or is to be located is in compliance with the provisions of
section 1616(e) of the Social Security Act.".
(g) The section heading of section 232 of the National Housing Act is ameiided to
read as follows: "hobtgage insurance fob nursing homes. iNTKRitmiATB cars fa-
aUTIBS, AND BOARD AND CARE H0MB8".
Mr. RiNALDO (during the reading). Mr. Chairman, I ask unani*
mous consent that the amendment be considered as read and print-
ed in the Record.
The Chairman. Is there objection to the request of the gentle-
man from New Jersey?
There was no objection.
Mr. RiNALDO. Mr. Chairman, I am offering an amendment to this
l^islation concering section 232 of the National Housing Act. Sec-
tion 232 insures loans for the construction and rehabilitation of
skilled nursing facilities emd intermediate care facilities, as well as
for the installation of fire safety equipment. My amendment would
add board and care homes regulated by a State under section
1616(e) of the Social Secuiity Act to the list of eligible facilities.
For the most part, board and care homes house indigent euid eld-
erly persons, msuiy of whom are former patients of State mental
hospitals. While in theory board and care homes provide a viable
alternative to institutionalization, the greatest number of these
buildings were not designed to house the frail or infirm, nor do
they met State fire and safety requirements.
As ranking minority member of the House Select Committee on
Aging, I have closely monitored the problems of board and care
yGoot^le
686
homes brought on by inattention to fire and safety standeirds and
negligence in the proper care and supervision of residents.
In my own State of New Jersey, many old, wooden frame resort
hotels have been converted into board and care homes. A series of
deadly fires in these homes and other around the country during
the piist few years claimed well over 100 lives and focused the at-
tention of concerned individuals and agencies on promoting fire
safety measures for these facilities.
I am concerned about board and care homes because they are
vulnerable structures housing equally vulnerable individuals, and
because Congress has little leverage over their operation. The Fed-
eral Government has no effective means of requiring board and
care proprietors to make the structural modifications necessary to
minimize these treigedies. Unlike nursing homes, which must meet
certification standards for participation in the medicare and medic-
aid programs, there are no Federal payments which go directly to
board and care facilities.
At my request, former Secretary Schweiker of the Department of
Hefdth and Humem Services ordered the Inspector General to
study this problem. Subsequently, Secretory Schweiker issued the
Inspector General's report and expressed his Hrm commitment to
strengthening Federal protections for board and care residents
through an eight-point program undertaken by the Department.
My amendment is consonant with the Department's concern for
ui^ading the conditions of board and care homes.
This amendment would provide a means of encouraging board
and care home operators to comply with State fire and safety
standards. The extension of mortgage insurance to board and care
homes would facilitate rehabilitotion of these fficilities, thereby ex-
panding the universe of quality board and care homes, providing
greater options for housing persons not requiring daily medical at-
tention in less costly and less institutional settings. There is no cost
to the Government in the section 232 program unless there is a de-
fault, since it only insures the improvements through conventional
private sector loans.
The rising costs of nursing home care eind the decreasing avail-
ability of medicaid funds will certainly increase the need to place
tihe long-term care population into the most appropriate institu-
tional setting, and it is the responsibility of the Federal Govern-
ment to encourage a greater standard of fire safety and healthy
conditions than exists today. This amendment represents a signifi-
cant step in that direction.
Mr. McKiNNEY. Mr. Chairman, will the gentleman yield?
Mr. RiNALDO. I yield to the gentleman from Connecticut.
Mr. McKiNNEY. Mr. Chairman, the minority side has reviewed
the gentleman's amendment, finds it totelly acceptable, and con-
gratulates the gentleman on the Eimendment.
Mr. RiNALDO. I thank the ranking minority member.
Mr. St GEfiMAiN. Mr. Chairman, will the gentleman yield?
Mr. RiNALDO. I yield to the gentleman from Rhode Island.
Mr. St Germain. Mr. Chairman, the majority has looked at the
amendment, finds it acceptoble, and we have no objection to the
amendment.
Mr. RiNALDO. I thank the gentleman.
yGoot^le
The Chaibhan. The question is on the amendment oflered by the
gentleman from New Jersey (Mr. Rinaldo).
The amendment was agreed to.
The Chairman. Are there further amendments to title V?
AMENDMENT OFFERED BY MR. CHAPPELL
Mr. Chappbll. Mr. Chairman, I offer em imiendment.
The Clerk read eis follows:
Sbc. 555. <a) Section 6(cN2l of the United States Housing Act of 1937 is ai
read as follows:
"(2XA) the public housing agency shall determine, and so certify to the Secre-
tary, that each family in the project was admitted in accordance with dn^
adopted regulations and that the eligibility of each such family was verified in
accordance with the requirements described in section 8(k);
"(B) the public housing agency shall review, on an annual basis and in accord-
ance with the requirements described in section 8(k), the eligibility of faniiliee
living in the project; and
"(O the Secretary may conduct verifications using the data obtained under
section 8(k);".
(b) Section 8(k) of such Act is amended to read as follows:
"(kXl)The Secretary shall verify the eligibility of families in accordance with this
subsection.
"(2) The Secretary shall require that eligibility data be provided to a public bous-
ing agency or owner by each family applying for or receiving assistance under this
Act. Such data shall be verified in accordance with this subsection. In order to carry
out such verification, the Secretary shall require that each such family authoriK
the Secretary to obtain information on the family for the purpose of eligibility veri-
fication and authorize any Federal, State, or local agency to release information re-
lated to the initial determination of eligibility or benefit level or poatverificatimi
thereof. Such information may include, but is not limited to, data concerning wages
(not including return information as defined in section 6103(bK2) of the Int«roal
Revenue Code of 1954}, unemployment compensation, and benefits made available
under the Social Security Act, the Food Stamp Act of 1977, or tiUe 38, United SUIee
Code. The Secretary may require, as a condition of initial or continuing eligibUi^
for participation that an applicant, including members of an applicant's househald
if the Secretary so requires, include his or her social security account number on
forma prescribed by the Secretary. Any such information received pursuant to this
subsection shall be subject to the requirements of section 552a of title 6, United
SUteeCode,
"(3) In addition to any other sanction or remedy that may be available, upon a
finding by the Secretary or a public housing agency responsible for determining di-
gibility or level of benefits under this Act that an applicant for assistance or currmt
participant has made or submitted inaccurate or misleading statements, concealed
or withheld material facta, or violated provisions of law or related Federal regula-
tions with respect to such applications or participation—
"(A) the Secretary of such agency shall, with respect to any such applicant or
participant who is ineligible for benefits under such program, deny or terminate
such eligibility; or
"(B) the Secretary or such agency shall, with respect to any euch applicant or
participant who received assistance paymenia in amounts exceeding those to
which such applicant or participant was properly entitled, require reimburse-
ment to the Secretary or such agency of such amounts in accordance with a
schedule, notwithstanding the family rental payment limits set forth at sectioii
3(a) of this Act.".
(C) The last sentence of section 8(cK3) of such Act is amended to read as follows:
"Reviews of family eligibility shall be made, for each family receiving assistance
under this section, on an annual basis in accordance with the verification require-
ments described in Hubeection (k).".
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Mr. Chappell (during the reading). Mr. Chairman, I ask unani-
mous consent that the amendment be considered as read and print-
ed in the Record.
The Chairman. Is there objection to the request of the gentle-
man from Florida?
There was no objection.
(Mr. Chappell asked and was given permission to revise and
extend his remarks.)
Mr. Chappell. Mr. Chairman, the amendment which I ofier has
to do with a procedure by which we may further reduce wEiste,
fraud, and abuse in the programs covered by this bill.
The Department of Housing and Urban Development subsidizes
over 2 million families under the U.S. Housing Act. The estimates
are that at least 15 percent of these families are either totally in-
eligible or are receivii^ more assistance than is allowable because
they simply do not disclose all their income.
This costs the taxpayers about $200 million annually, according
to studies done by Uie HUD Inspector General of the low-income
and section 8 programs.
n 1530
It is obvious to me, then, that we need a better approach on the
part of HUD to detect these individuals, such as the computer
match progriims used by the States to identify food stamp fraud.
The provisions of this proposed will help public housing agencies
tmd HUD to better use housing resources for truly needy families.
This amendment, Mr. Chfiirman, simply has the following effect:
It would require the social security numbers and other el^ble data
to be provided and authorization for current eligibility factors to be
verified annually.
Unlike the food stamp program, social security numbers cannot
be required by HUD to check those who participate in housing pro-
grams. These are essential for public housing authorities to obtain
information from State unemployment agencies on unreported
income. Authorizations are needed to allow for the verifications
and auditing of the information they supply about their eligibility.
Data on wages would not include any Fecleral income tax return
information.
Second, this amendment would require the PHA's or HUD to ter-
minate assistance to inel^ble tenants or require repayment by
those who have received unauthorized benefits. This provision per-
mits enforcement by PHA's and HUD. Many individuals have used
l^al or administrative loopholes to avoid losing their benefits. En-
abling administration to stop these practices is a must in maintain-
ing program integrity.
Third, this amendment would require State unemployment agen-
cies to cooperate with the PHA's and HUD in computer matching,
which would be extremely important and very helpful. This provi-
sion, which is identical with the authority provided in the food
stamp program, would provide the m^or information source for
identi^ng unreported income.
In essence, Mr. Chairman, the purpose of this amendment is
simply to provide HUD and the PHAs an opportunity to better
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identify fraud, waste, and abuse in eligibility, and in the reportins
of income. This should save us about tWO million a year, and 1
would UT^e the adoption of the amendment.
Mr. McKiNNEY. Mr. Chairman, will the gentleman yield?
Mr. Chappell. I yield to the gentleman from Conn«licut.
Mr. McKiNNEY. I thank the gentleman for yielding.
Mr. Chairman, I would like to commend the gentleman from
Florida on his amendment. I think that we have a tremendous
problem that this Committee must examine in full, and that is the
relationship between Housing and Urban Development and the
public housing authorities, which for the nuun part are misman-
aged and ill-used.
In my own city of Bridgeport, I managed to get a $9V& million
grant to redo one of the Northeast's worst public housing projects.
We found out the money had been misappropriated, misused, and
that some of the people who were taking advantage of what it was
doing were not eligible. Yet HUD was powerless to come in except
under public health and safety and violation of contract.
I think what the gentleman is proposing is a good amendment
Mr. Chappell. I thank the gentleman.
Mr. St Germain. Mr. Chairman, will the gentleman yield?
Mr. Chappell. I yield to the gentleman from Rhode Mand.
Mr. St Germain. I thank the gentleman for yielding.
Mr. Chairman, the gentleman will recall that we had a conversa-
tion with the chairman of the subcommittee, and I, myself, have
queried people from HUD over the years on this very point.
By the same token, in looking at the gentleman's amendment, al-
though we agree with its purport and its purpose, we do have a
problem with the working of the amendment. We would like to
work with the gentleman, have a hearing, and do something in the
near future when we are prepared to commit ourselves to that, if
the gentleman would be gracious enough to withdraw his amend-
ment.
Mr. Chappell. 1 respect the gentleman very highly, as he knows,
and I would like to work with him to make certain that we do per-
fect it. If the gentleman would assure us that he would have hear-
ings in this session of Congress and giving back to the House l^is-
lation to rectify this problem, I will be delighted to withdraw the
amendment.
Mr. St Germain. Very early hearings this year in the subcom-
mittee. As I say, I share the gentleman's concerns, and I want to
work with him to cure this defect.
The Chairman. The time of the gentleman from Florida (Mr.
Chappell) has expired.
(On request of Mr. McKinney and by unanimous consent, Mr.
Chappell was allowed to proceed for 1 additional minute.)
Mr. McKiNNEY. Mr. Chairman, will the gentleman yield further
to me?
Mr. Chappell. I yield to the gentleman from Connecticut.
Mr. McKiNNEY. I thank the gentleman for yielding.
Mr. Chairman, I am delighted to hear the chairman's au^estion
and your response because this type of hearing would give us, in
fact, the ability to look a little further. I have already been speak-
ing to the chairman on other occasions about the entire business of
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why HUD should supply all the money and not have any control
over public housing authorities and how they react.
Mr. Chappell. I thank the gentleman.
Mr. Chairman, with that assurance, I ask unanimous consent to
withdraw my amendment.
The Chairman. Is there objection to the request of the gentle-
man from Florida?
There was no objection.
AMENDMENT OFFERED BY MR. AU COIN
Mr. AuCoiN. Mr. Chairman, I offer an amendment.
The Clerk read as follows:
Amendment oflered by Mr. AuCoin: Page 169, after line 10, insert the following
new subeection:
(f) Section 514(bX4) is ameoded by inserting before the semicolon at the end there-
of the following: "unless such residential energy conserving improvements are in-
stalled in a building which is either located in an area which is not served by a
public utility described in section 211(a) of such Act or which is located in an area
served by auch a public utility but in which no list has been made public by the
public utility under section 215(faK3) of such Act by the Secretary of Energy".
Mr. AuCoiN (during the reading). Mr. Chairman, I ask unani-
mous consent that the amendment be considered as read and print-
ed in the Record.
The Chairman. 1b there objection to the request of the gentle-
man from Or^on?
There was no objection.
(Mr. AuCoin asked and was given permission to revise and
extend his remarks.)
Mr. AuCoiN. Mr. Chairman, this amendment corrects an over-
sight in the Energy Security Act of 1980 by allowing for solar
energy grants to go to buyers of energy weatherization equipment
in service areas outside of those served by utilities that utilize the
residential conservation list.
The Energy Security Act of 1980 established the Solar Energy
and Energy Conservation Bank to encourage energy conservation
and the use of solar energy, and thereby reduce the Nation's de-
pendence on foreign sources of energy supplies.
The act set forth certain conditions on financial assistance pro-
vided by the bank for residential and commercial energy conserva-
tion improvements. One condition requires that in order for the
bank to provide a grant, the supplier or contractor installing or
selling the residential energy conservation improvements must be
on a fist of contractors provided under the Residential Energy Con-
servation Service in section 231(a) of the National Energy Conser-
vation Policy Act.
This contractor listing requirement creates a problem for States
in their efforts to assist individuals through the bank in aresis not
covered by the Residential Energy Conservation Service. This is be-
cause the RCS is required only of larger utilities, leaving those
areas not required to participate in RCS without any RCS contrac-
tor lists under auiy circumstances.
The logical conclusion, if the listing requirement continues, is
that many States could not offer solar bank grants in areas not
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served by a utility under the RCS or in States without a 8
RCS contractor list.
To resolve this problem, I am offering an amendment to HJt. 1,
the Urban-Rural Housing Recovery Act of 1983. The amendmait
would specifically amend section 514(bX4> of Public Law 96-^4,
Enet^ Security Act, to allow individuals to be eligible for asnst-
ance under the solar bank in areas not covered by RCS or where a
State has not gone forward with RCS plans.
The amendment in no way relinquishes States from the RCS te-
3uirement and does not eliminate uie RCS contractor-listing proce-
ure in areas served by RCS utilities.
It simply supports States in their efforts to provide energy ocw-
servation assistance to segments of the population not served by
areas participating in the RCS program.
llie House Banking Committee and Congress have taken steps to
assure the creation of an effective pn^ram that fiilly complies with
the intent of the original legislation to lessen our national depend-
ence on foreign oil sources. Although the so-called oil ^ut has
turned our attention from energy conservation, the case for conser-
vation, as a recent Post editorial notes, remains as compelling as
ever.
I urge the Members to support this eunendment.
Mr. St Germain. Mr. Chairman, will the gentleman yield?
Mr. AuCoiN. I yield to the chairman c^ the full committee, the
gentleman from Rhode Island.
Mr. St Germain. I thank the gentleman for yielding.
Mr. Chairman, with the cooperation of the genial gentleman, an
alumnus of our committee, we would like to see if we cannot get
this thing rolling fdong. We have looked at the amendment. He has
made a very strong case for the amendment. We would be veiy
happy to support his amendment.
Mr. McKiNNEY, Mr. Chairman, will the gentleman yield?
Mr. AuCoiN. I yield to the gentleman from Connecticut.
Mr. McKiNNEY. I thfmk the gentleman for yielding.
Mr. Chairmsm, as the gentleman knows, I have been very inter-
ested in the solar bank for a very long time, in fact, so interested
that I became a correspondent in a lawsuit against my own Presi-
dent in the Southern District Court of New York which, by the
way, we won.
I approve of the gentleman's amendment. I do want to have a
further discussion within the committee on how we qualify contrac-
tors, because I think there is a foggy area there.
We, in the minority, are delighted to accept the amendment.
The Chairman. The question is on the amendment offered by the
gentleman from Oregon (Mr. AuCoin).
The amendment was agreed to.
Mr. LowHY of Washington. Mr. Chairman, I move to strike the
requisite number of words.
(Mr. Lowry of Wfishington asked and was given permission to
revise and extend his remarks.)
Mr. LowRY of Washington. Mr. Chairman, I rise in support of
this legislation and congratulate the chairman of the full commit-
tee, the chairman of the subcommittee, and our outstanding rank-
ing minority member on the subcommittee, the gentleman from
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Connecticut, and the ranking minority member on the full commit-
tee.
Mr. Chairman, I speciHcally would ask the distinguished chair-
man to enter into a colloquy on an important question of clarity
within the bill.
Mr. St Germain. I appreciate the opportunity to have a colloquy
with the gentleman.
Mr. LowRY of Weishington. We will try to make it eis short as
possible, and I thank the chairman.
Mr. Chairman, as is well known, this bill provides explicit statu-
tory authority for FNMA and FHLMC to purchase second mort-
gages until October 1, 1985. The maximum principal obligation of
such mortgages may not exceed $50,000 for a single family home or
$60,000 for a two- to four-family home.
Mr. Chairman, it is my understanding that the purpose of this
provision is to clarify the authority for FNMA and FHLMC to pur-
chase second mortgeiges of up to $50,000 and $60,000 regardless of
the purposes for which the loans are made.
The reason that I believe clarification is needed, Mr. Chairman,
is to clarify that this provision is not intended to permit FNMA or
FHLMC to exceed their maximum statutory loan limits above the
$108,300 that is now within the existing law. Is that the purpose of
this?
Mr. St Germain. If the gentleman will yield, I would like to
again thank the gentleman for this colloquy and commend him for
bringing this to the attention of the House because it was certfunly
not our intent to allow this limitation or this $50,000 second mort-
gage to be utilized to circumvent the existing absolute ceiling of
$108,300 for single-family residences or the higher multifamily
limits now in effect for the first mortgage or a combination of a
first and second mortgage, to wit: If an additional second mortgage
is granted it cannot and should not and it is not the intention of
the legislation that that mortgage does indeed increase the limits
now in effect.
n 1540
Mr. LowRY of Washington. Mr. Chairmem, I thank the cheiirman
of the committee for that clarification.
Mr. McKiNNEY. Mr. Chairman, will the gentleman yield?
Mr. LowsY of Washington. I yield to the gentleman from
Connecticut.
Mr. McKiNNEY. Mr. Chairman, I would just like to add the voice
of the minority to that subject. I think the chairman of the com-
mittee and I made it clear in our conversation with the gentleman
from California (Mr. Patterson) yesterday, and we further made it
clear today that in no way should the combination of these two
powers be put together for a first mortgage on the purchase of a
new house or to circumvent the distinct subject that the committee
chairman and I and everyone else have committed ourselves to. We
have committed ourselves to hold hearings on it and in fact to
bring it to a vote of the full committee at a later date this year.
yGoot^le
Mr I//ai» 'Ji ^i^e=arjx^ ib 0-M-^m\ 1 ^mak the ^idi
Mr rf% fiK>cMA:s Mr Chaircar.-'] fascec: ztx: «e Dam ApOH
'/ tit-* V at V.,* ;/■-■.-*.
TrJ: *'MAt%HJi.s An tTjST* ai:? ^i.— .=tT arnfr^tiiryi-a aj tide V?
f-AJtUAMEXTAET Dt'CttlKT
Mr BAinnrrr Mr. Chsdrmar^ I have a poriiaiaeGXaix ii
Mr. Chainrian. I ;ntemi to offer an asendmeni wiiicfa ■%
a titlft VI. Is this the proper time to offer h. or wdoM that be nezl?
Mr. St GeufATN Mr. Chairman, may I be recognized?
The Chairman, If there are no further amendments to title V,
the Chair will etate that the amendment of the gentleman firon
Texa« 'Mr. Bartlett' would be in order.
For what purp^j&e does the gentleman from Rhode Island <Mr. St
Germain f ri»e?
Mr. St Gbrhain. Mr. Chairman, the gentleman woold seek the
indulgence of the Chair for a moment and ask for orderly proce-
dure in tryine to digpo&e of this leg^lation.
If we could alltjw the gentleman from Oklahoma iMr. Watkins)
to be recognized first, his amendment would be title VT, and tlie
other amendment then could be title Vn, so we would dispose of
everything that was noncontroversial and address the controversial
item last.
The Chairman. The Chair recognizes the gentleman from Okla-
homa 'Mr. Watkins).
AMENDMENT OFFERED BY MR. WATKINS
Mr. Watkins. Mr. Chairman, 1 offer em amendment adding a
new title, title VI.
The Clerk read as follows:
TITLE VI-f;UARANTEED LOAN DEMONSTRATION PROGRAM
GUARANTIED LOAN DBUONn'SATION PROORAU
B amended by adding at the •od
"c.VAKAimtD LOAN DEMONSTKATION PROORAM
•Skc, HXi. (a) The Secretary shall, to the extent approved in BDpropriation Ada,
luirry nut the prof{ram established in this section to demonstrate tne elTectivenesi of
utillxiriK the loan guarantee authority provided in this title in connection with State
>) Thf Secretary may insure, and make commitments to insure, loans made b;
liny HtiiUi housinK finance agency or private lender in accordance with terms and
If) lid it 111 riH that are, except as otherwise provided in this section, substantially iden-
ticiil lij tliii tvrmH and conditions eatablisned with respect to loan guarantees author-
iKiHl in Mtction TilTdil,
"((-Xl) l'h(- Stvrctiiry may provide interest subsidies with respect to loans giianm-
twd hy the S<>cn'tnry under this section on behalf of borrowers whose incomes do
iiul fKttHHl i:H) perct'nl of the median income of the area involved. The Secretary
yGoot^le
sh^ {RMcribe regulatioiu establishing the amount of interest subsidy to be made
with reqwct to any such loan and the period for which such interest subsidy shall
be made, except that in no case may such interest subsidy result in the reduction of
the interest rate of a loan to below 1 percent per annum.
"(2) The Secretary shall provide for the recapture of all or a portion of the assist-
ance provided to any borrower under this subsection upon the disposition or nonoc-
CU]>ancy of the property involved by such borrower. Notwithstanding any other pro-
vision of law, such assistance ahall constitute a debt secured by the securi^ instru-
ments provided Iw such twrrower to the Secretary to the extent that the Secretary
may provide for the recapture of such assistance.
(d) Of any amounts approved in appropriation Acts for 1984 for loans under sec-
tion 502 on behalf of borrowers receiving assistance under subparagraph (B) or (C) of
section 521(bX1), $100,000,000 shall be available to carry out the demonstration pro-
gram estafalished in this section,".
Mr. Watkins (during the reading). Mr. Chairman, I ask unani-
mous consent that the Eimendment be considered as read and print-
ed in the Record.
The Chairman. Is there objection to the request of the gentle-
man from Okleihoma?
There was no objection.
[Mr. Watkins addressed the Committee. His remarks will appear
hereafter in the Extensions of Remarks.]
Mr. Gonzalez. Mr. Chairman, I thank the gentleman for yield-
ing, and I just want to corroborate what he said.
We have worked since the last Congress, on rural housing mat-
ters, and this subcommittee has delved into the question of rural
housing extensively. The gentleman from Oklahoma is a former
member of this subcommittee. He is knowledgeable and has quite a
bit of houBing expertise. His amendment, as perfected, is before us
now, and we have had a chance to go over it in detail.
Mr. Chairman, as far aswe are concerned on this side, we accept
the amendment and commend the gentleman for offering this im-
provement to the bill.
Mr. McKiNNEY. Mr. Chairman, will the gentleman yield?
Mr. Watkins. I yield to the gentleman from Connecticut.
Mr. McKiNNEY. Mr. Chairman, the minority side of the aisle has
looked at the amendment offered by the gentleman from Oklahoma
(Mr. Watkins) and we approve of it.
We have on this side of the aisle for a long time said that demon-
stration programs are the way to go. Modern industry in America
calls it "test marketing."
I think that demonstration programs such as the gentleman is
asking for is a wise idea, to tell us whether things are working, and
we will get a chance to look at it in the real context without com-
mitting ourselves totally over the long pull.
Mr. Chairman, I compliment the gentleman from Oklahoma (Mr.
Watkins) on offering his amendment.
Mr. Skklton. Mr. Chairman, will the gentleman yield?
Mr. Watkins. I yield to the gentleman from Missouri.
Mr. Skelton. Mr, Chairman, I want to commend the gentleman
from Oklahoma (Mr. Watkins) for his amendment and for looking
forward and remembering that there is a rural America and there
is a small town America which is terribly important. Were it not
for this amendment and others like it that have been offered by
the gentleman from Oklahoma (Mr. Watkins), certain legislation
would not be complete.
yGoot^le
Mr. Chairman, I think this is the right thii^ to do, and I certain-
ly support the gentleman in what he has done.
Mr. Watkins. Mr. Chfiirman, I appreciate the remarks of the
gentleman from Missouri (Mr. Skelton). I appreciate the efforts rf
the mfgority, and I thank the subcommittee chairman for his pa-
tience and kindness, as well as the chairman of the full committee
and also the minority.
Let me say this, Mr. Chairmfm: I truly feel that with this amend-
ment we can say it is a part of a rural recovery program that I can
truly recommend to my colleagues from rural America who have
been sent by the people in rural areas to this Congress that they
vote for this particular bill if this amendment is adopted.
liie Chairman. The question is on the amendment olTered by the
gentleman from Oklahoma (Mr. Watkins).
The amendment was agreed to.
AMENDME>fT OFFERED BY MR. BARTLETT
Mr. Bartlett. Mr. Chairman, I offer an amendment to create a
title VII.
The Clerk read as follows:
TITLE VII-EXISTING HOUSING PROGRAMS
EXISTING HOUSING PROGRAMS
Sec. 701. Notwithstanding any other provision of this Act, section 5 of the United
States Housine Act of 193?; or section 235 of the National Housing Act to the con-
traiy, any budget authoritjf or contract authority approved for fiscal year 1984 for
title III of this act or section 235 of the National Housing Act shall be available
instead for assistance under section 8(bKl) of the United States Housing Act <^ 1937.
Mr. Bartlett (during the reading). Mr. Chairman, I ask unani-
mous consent that the amendment be considered as read and print-
ed in the Record.
The Chairman. Is there objection to the request of the gentle-
man from Texas?
There was no objection.
The Chairman. The gentleman from Texas (Mr. Bartlett) is rec-
ognized for 5 minutes in support of his amendment.
Mr. St Germain. Mr. Chairman, will the gentleman yield to me?
Mr. Bartlett. I yield to the committee chairman.
Mr. St Germain. Mr. Chairman, I have consulted with the mi-
nority, and what we would like to do at this time is ask unanimous
consent that all time on this amendment and all amendments
thereto expire in 30 minutes, the time to be equally divided be-
tween the majority and the minority.
The Chairman. Is there objection to the request of the gentle-
man from Rhode Island?
Mr. Wyue. Mr. Chairman, reserving the right to object, I have
consulted with the minority, and we have no objection to the re-
quest of the gentleman from Rhode Island.
Mr. Chairman, I withdraw my reservation of objection.
The Chairman. Is there objection to the request of the gentle-
man from Rhode Island?
yGoot^le
There was no objection.
The Chairman. The gentleman from Texas (Mr. Bartlett) is re-
cognozed for 15 minutes.
Mr. Baktlett. Mr. Chairman, I yield myself such time as I may
consume.
Mr. Chairman, in summary, what this amendment would do is
this: It goes to the heart of the new construction which is proposed
in H.R. 1. It is similar to the amendment that I had offered yester-
day to title m but which was withdrawn subject to a point of
order.
What this amendment would do is this: It would delete the $900
million which is included in title III and the $167 million in the
235 pn^ams, title III being for new construction for multifamily
that had been set aside for construction of new units. It would
delete that $1,063 billion of authorized funds and reallocate that
use for assisted housing using existing section 8.
Mr. Chairman, I would emphasize that my amendment would
not reduce the total amount of funds authorized under this bill.
In fact, the amendment offered by the subcommittee chairman
has already done that yesterday, and the Committee on Appropria-
tions had appropriated that same amount. I would commend the
committee chairmfin and the chairman of the subcommittee for
that reduction.
What this amendment did do, Mr. Chairman, would be to simply
realize and acknowledge those scarce resources to the tune of $9.9
billion of assisted housing. We have already agreed to spend those
scarce resources. Those resources of the Federal Government
should all be allocated in a way that would do the most good for
the most number of people.
We have already recognized that scarcity by a reduction of the
committee bill in assisted housing from $12.9 billion, as it passed
out of committee to $9.9 billion as it was approved on the House
floor yesterday and $9.9 billion that has been appropriated by the
Committee on Appropriations.
n 1550
The problem, Mr. Chairman, with that reduction as it is present-
ly drafted in H.R. 1 is that reduction would be fully borne by assist-
ed housing or by existing section 8; so the full $900 million and the
$167 million, without the Bartlett amendment, would be taken
from existing section 8.
I would add that back on to be used by existing section 8, as op-
posed to taking it all out to be used for new construction.
Now, both the new construction program and the 235 program
are not targeted to low-income families that are most in need of
assistance. It makes little sense to subsidize projects, Mr. Chair-
man, even with only a shallow subsidy, with only 20 percent of
t^Ktse units would be available for low-income persons in these days
of scarce resources.
It may be true that the $900 million would technically build
75,000 apartment units in this country, but only 15,000 of those
units would be for lower income families and none of the money
yGoot^le
would go toward assisting with rent. The other 60,000 units wouU
be for middle and upper income families.
As for the 235 program, the same disparity exists, tmly nme ao.
All the funds in section 235 would go to provide homeownenhip fir
more moderate-income families. I do not believe we should utilin
scarce resources to allow someone to buy a home when there are n
many who are in greater need just to be able to pay their rent in
these times.
By adopting this amendment, the $1,067 billion allocated to these
mistargeted programs would be directed toward assisting appnm-
mately 18,000 families of low income under existing section 8 hous-
ing programs.
You can be assured that these funds would be used primarily to
benefit the truly needy, £is opposed to what is now in the bill,
which would be to subsidize developers smd not families.
The administration believes that there is already an adequate
supply of unsubsidized rental housing units which could be used
under a housing voucher program had the committee choeen to
adopt it, but at least could be used under existing section 8. Vacan-
cy rates for all types of property have been slightly over 5 percent
for the past 3 years; and rental vacancy rates exceeded 6 percent
for each of these years. These rates exceed the 5 percent which is
believed to be adequate to allow for normal market turnover.
Additional proof that there is a substantial amount of new units
that are not needed can be seen in the rate of demand for recent^
completed units.
Mr. Chairman, 28 percent of the units completed in 1982 were
not rented until at least 3 months after completion. If there were
such a rental housing shortage, the units would be "grabbed up"
much faster.
There has been a lot spoken on this floor about the word scarci-
ty, and that is what we are doing today is to allocate that scard^
and allocate the funds that have been appropriated by this bill and
authorized by this bill.
The issue here is whether we spend that |1 billion on new con-
struction or whether we spend that $1 billion to assist those fEimi-
lies who are already on the rolls.
There has been lots of talk about fairness and that is spoken
about a lot these days. It is more fair, Mr. Chairman, it is a fairer
allocation of the scarce resources, that those resources be allocated
to the existing section 8 program instead of being diverted away
from families who are in need and allocated toward new construc-
tion of unsubsidized, largely unsubsidized apartment units.
Mr. Chairman, I reserve the balance of ray time.
Mr. St Germain. Mr. Chairman, 1 yield such time as he may re-
quire to the chairman of the sutx:ommittee, the gentleman frcHii
Texas (Mr. Gonzalez).
Mr. Gonzalez. Mr. Chairman, I rise in opposition to this amend-
ment, again feeling very strongly in opposition to it.
The gentleman's amendment would transfer about $900 million
from the new multifamily construction rehabilitation program to
the existing section 8 program. It would eliminate the only thing
that would be oifered to the American people by way of pnrauction
yGoot^le
or new construction. This is the basic critical issue as far as policy
and program is concerned.
Our hearings have amply reafHrmed the critical need in areas of
our Nation that can be served only by the minimal construction
program that this amendment would do away with.
Also, there is $167 million from section 235 homeowners program
which would be transferred to the section 8 program.
There are severed serious problems with the amendment.
First, the amendment would reduce the number of families that
could be assisted. Now, $900 million for the multifamily construc-
tion pr^am will assist an estimated 75,000 families, a minimum
of 15,000 of which have to be low-income families. Priority is given
to projects in this program that will set aside more than the statu-
tory minimum of 20 percent of the units for low-income families; so
potentially more than 15,000 low-income famihes will benefit from
the new pn^am.
If $900 million in budget authority were transferred to the sec-
tion 8 pr<^am, only 15,000 additional low-income families would
be helped.
Second, by deleting the Schumer rental production program—
and let me here have the record reflect the tremendous contribu-
tion by this distinguished young man, the gentlemen from New
York (Mr. Schumer) in this regard — by deleting that rental produc-
tion program, we would be ignoring the bui^eoning problem that is
making it significantly to the point of social danger more diflicult
for families to find affordable rental housing. In many areas of the
countrv, the shortage of rental housing is so great that rents are
skyrocketing, particularly for families with children. The only way
to reduce the pressure created by this shortage is to build new
housing. Hearing eifter hearing h£is amply verified this conclusion.
This is the only program designed to address this need for addi-
tional rental housing. Despite the numerous hearings and testimo-
ny from every single section of the country — particularly the
densely populated areas in which this crying need is amply demon-
strated— the administration steadily argues a need does not exist.
Mr. Mitchell. Mr. Chairman, will the gentleman yield?
Mr. Gonzalez. I am delighted to yield to my distinguished col-
league from Maryland.
Mr. Mitchell. Mr. Chairman, I want to associate myself with the
gentleman's remarks.
I listened to a very persuasive argument over there. In my city
there are some 45,000 people waiting for section 8.
I do not think I or any other Member of this House can be paro-
chial in terms of a particular socioeconomic class. The housing
need is across the board. Certainly we need rental housing units.
Certainly we need new construction units, and although it is the
kind of thing that ordinarily I would vote for based solely on the
need in ray community, I cannot vote for it because ] think we
have got to assume a position that says we are concerned about
housing for edl of our citizens.
I thank the gentleman for yielding to me.
Mr. ScHUBiiER. Mr. Chairman, will the gentleman yield?
Mr. Gonzalez. I am delighted to yield to the distinguished gen-
1 from New York.
yGoot^le
Mr. ScHUMER. Mr. Chairman, I would simply like to say that the
Bartlett amendment, it seems to me, has the world turned upside
down. Here we Democrats have given the criticism of the sectum 8
program, many of those very criticisms coming ^m the other side
of the aisle, have taken those criticisms into account and produced
a new program, a program that is much cheaper than section 8.
Let it be known that the Bartlett amendment would create
15,000 units of housing for the same amount of money that would
create 75,000 units of housing under our program.
We have gone and done programs where localities have control,
and let it be known that the Bartlett amendment is subject to all
the HUD guidelines that so many mayors and GovemorB and
county executives have railed eigainst over the years, while our pro-
gram gives flexibility to the locality.
Let it be known — I am sorry that 1 cannot yield because we have
a limited amount of time, I would be happy to speak to the gentle-
man from Connecticut on his time — let it be known that the Bart-
lett amendment also is only directed at one segment of the popula-
tion, while our program builds more housing for the very lowest
income people and in addition houses some of the working peiq4e
of the country who cannot afford housing, while the Bartlett pro-
gram does not.
So all the criticisms that have been made of the section 8 pro-
gram that we have taken to heart and modified, while unlike Uie
administration saying there ought not to be a housing pn^ram at
all, are taken into account in this legislation and now we get an
amendment that says, "No, don't take those criticisms into ac-
count; rather, go back to the old section 8 programs."
D 1600
Let me say, if I just might, Mr. Chairman, who this program is
supported by, groups that never supported us before. Not only is it
supported by the National Low Income Housing Coalition, and I
find it quite strange that the National Low Income Housing Coali-
tion supports the bill, and yet the gentleman from Texas (Mr. Bart-
lett) is making his argument in the name of the very group who is
supporting our program, but it is supported by the National Multi-
housing Council, the National Leased Housing Association, Ute
Mortgage Bankers Association, the National Association of Home
Builders, the Nationid Housing Conference, the U.S. Conference <rf
Mayors, the National League of Cities, the National Apartment As-
sociation, and the National Association of Housing and Redevelop-
ment Officials, as well as the localities, as well as the low-income
people.
It seems to me that in this program, Mr. Chairman, we have
crafted something that has the coalition from the left to the ri^t
in the housing area united. The only thing, the only thing that can
be said about the prt^ram that the other side is saying about the
program is dismantle it, do not put something new in its place and
go back to the old way.
It will not build new housing the old way. The housing that it
builds is tremendously more expensive. And, Mr. Chairman, I ur^
that the amendment be defeated by people on both sides of the
yGoot^le
aisle who are interested in cost efficiency, who are interested in
spending less, who are interested in housing not only the very tow
income but working people who cannot get housing Eind who are
interested in seeing that this Nation has a housing program once
again.
I thank the distinguished Chairman for yielding and yield back
the floor to him.
Mr. Gonzalez. I wish to thank the gentleman from New York in
turn.
Mr. Watkins. Will the distinguished Chfiirman yield to me?
Mr. Gonzalez. I yield to the gentleman from Oklahoma.
Mr. Watkins. I would like to speak in behalf of the people in
rural America and for ail of the Congressmen that represent rural
people. This amendment would be a disaster, a disaster to multiple
housing programs in rural America.
The Farmers Home Administration has a very limited program.
We have to participate through the multiple housing in HUD to
some extent, but if we shift to the section 8 that comes to rural
areas, that section 8 comes through or has to come through, what
limited money comes, through the Farmers Home Administration
and the Farmers Home Administration people refuse to initiate it.
This amendment would be disastrous to the program in rural
America, to small towns, and rural communities. So I hope all of
the people who represent the small communities, some small com-
muniti^ in this Congress, realize that they will be destroying the
rural housing, the small multiple housing and what little 235 we
can get if this statement is adopted.
Mr. Gonzalez. I thank the distinguished gentleman from Okla-
homa.
I would just wish to add a third point, that is to emphasize what
the gentleman has just said. This amendment would strike $167
million provided for one of the most successful programs that have
been devised by the Congress, the section 235 program, which as-
sists the low- and moderate-income families to become homeown-
ers.
The prt^ram offers the last little whimper of tin ability for home-
ownership for many moderate-income families. This amendment
would eliminate that, even the little, modest programing that we
are asking for in this bill. Given the continuing high interest rates
that presently exist, this program is one of the only ways that the
working families of modest income can become homeowners. By
eliminating this provision, 6,300 new homes will not be built.
Mr. Chairman, may I inquire how much time we have remaining
CD this side?
The Chairman. The gentleman from Texas has 4 minutes re-
Mr. Gonzalez. Mr. Chairman, we reserve the remaining 4 min-
utes.
Mr. Baktlbtt. Mr. Chetirman, I would just take a brief moment
to talk a little bit about rural housing now that the subject has
been introduced. In fact, section 235 would vary nationwide in
urlwn and rural districts combined, as I understand, would build
only 6,300 units nationwide anyway. That amounts to fewer than
37-922 O - 84 - 45
yGoot^le
700
15 units per congressional district for the total urban and rural 235
progTEun.
By contrast, section 502, which is rural housing, which ia in the
bill £uid will not be touched by this amendment, would build over
100,000 units for this coming year, all in rural America.
On the question of section 8, the old way to build housing was
new construction of section 8 apartment units and it did not woi^
very well at all. But what does work a lot better is assisted hous-
ing, using existing section 8 prc^ram. Let private builders build
housing using private money.
Mr. Chairman, 1 yield such time as he may consume to my col-
league from Connecticut (Mr. McKinney).
Mr. McKinney. I thank the gentleman for yielding.
I find myself in a strange quandry here. 1 happen to support the
idea of Dodd-Schumer. 1 happen to support the idea of Dodd-Scbu-
mer through a tax program, too.
But 1 seriously question being able to support it under this
present bill. You see, there is one terrible snag here. We have had
a great deal of criticism about section 8. We have had criticism
that the amendment offered by the gentleman from Texas, Mr.
Bartlett, would only allow for 18,000 section 8's for low income, yet,
in fact, Dodd-Schumer would only allow for 15,000 for low income
with the inclusion now, as 1 would say from some of the conversa-
tions I have heard, that the low income in the Dodd-Schumer hous-
ing, which we could call it, will have to have a section 8 as well. In
fact, the system will not work without a section 8 coming along to
supplement the income within that area.
What we are talking about here is a billion-odd dollars and what
do we do with it. Do we in fact, as the Low Income Housing Coali-
tion, which has somewhat held their nose and jumped for this and
asked first for 100 percent for low income, do we in fact entitle this
one-billion-odd dollars to the low income or do we in fact entitle it
to the middle income and the builders of apartment houses?
Quite frankly I would rather if we are going to give it to the
builders of apartment houses or the builders of ^e 235 housing, all
16 units per congressional district, I would far rather put it into
rental supplemental income. If in fact we had another billion dol-
lars in this bill I would probably be on the floor strongly support-
ing the idea of trying this approach. But I know as well as the
chairman knows, regardless of which political party we belong to,
that that was an absolute impossibility. In fact, one of the only rea-
sons we are sure of that is that the appropriations bill has gone
before with the total amount of money that can go into these pro-
grams.
So what we are really doing is diverting 900-odd million, quite
freuikly, to developers for multifamily production, of which only 20
percent is going to be low income, amd most of which is also going
to have to then be further subsidized by section 8.
If we are going to have the limited amount of money that we
have, it seems to me that that money should go to the low income,
should go to the low income specifically, and the best way to ^ve it
to them is in fact to give it to them through section 8 existing,
which is in fact the cheapest way we can do it.
yGoot^le
701
I have to say something, gentlemen, which puts me in a quandry,
and I am sure that the CNX is taking notes for the next election. I
have supported the 235 program. I have gone to almost every
center there has been 235 housing in this country in the last 13
years, or however long we have had the program. But 235 hous-
ing— and I see the chairman smiling because I think he knows
what I am going to say — is a little bit like a private bill. We in
Connecticut know how to use it and we use it and they know how
to use it maybe elsewhere, and they use it. The consequences of 235
housing becoming a modicum of housing across the Nation, I would
suggest in my friend's rural district, is almost an impossibility.
I am not going to stand here and argue one way or the other, but
if anybody is listening to this debate at this hour I would simply
suggest that you have a mored choice you have to make.
Do you take the limited 900 million to $1.1 billion amd devote it
essentially to those of the low-income category or do you take it
and devote it to a new program which I think has a good future
when we have the money but which will only supply help to the
low income with subsidiary section 8 help along the line also being
required?
D 1610
In other words, a typictil double-dip type of program that we get
involved in because it would not support itself.
In times of financial prosperity, perhaps the best of all ideas.
Right now, I question it, and it is a moral judgment each one of 435
Members of this House will have to make.
I would yield back to the gentleman from Texas (Mr. Bartlett).
Mr. Bartlett. Mr. Chsiirman, I yield to my distinguished rank-
ing member, the gentleman from Ohio (Mr. Wylie), such time as he
may consume.
Mr. Wylie. I thank the gentleman for yielding.
I rise in support of the Bartlett amendment which is now before
us.
As I stated during the debate on the Gonzalez amendment yes-
terday, I oppose the way the $9.9 billion for assisted housing would
be frittered away on the two new programs being addressed in this
legislation.
I think it does a great disservice to the poor to take away over $1
billion from a program to help the truly low-income person and put
it into pn^ams which at best would only be problematical in their
success.
The Bartlett amendment would keep these funds targeted to the
poor rather than permitting multifamily production programs de-
signed more to benefit developers and syndicators than the families
in need of decent and safe and sanitary housing.
The poor are only assured of getting 20 percent of the total units
assisted and as Mr. McKinney stated, even that will require addi-
tional subsidies from section 8. As I said before, I find this a little
odd in light of the committee's effort to require a 51-percent test
for the CDBG program.
I also agree with the effort to redirect the $167 million from the
235 homeownership program back to section 8 existing housing.
yGoot^le
702
When we have such limited resources, we should uot be channeling
even minor amounts into a program designed to subsidize the put^
chase of a home for some precious few moderate income and above
families.
Now let us face the fact, Mr. Chairman: Section 8 is targeted to
those families making less than 50 percent of the median income in
the area. Under 235, a family's income can be as high as 110 per-
cent of the median and for 80 percent of the units imder the new
multiiamily housing program there is no income limit at all. Ehren
for that 20 percent of the units reserved for lower income families
the test is 80 percent of median income.
Clearly the Bartlett amendment targets assistance to the poorest
families and those most in need of assistance.
I also dispute that there is a shortage of new housing starts. I
have statistics here from the National Association of Htnne Build-
ers which estimates that for 19S3 there will be 1,563,000 new starts
for new public and private residential construction; 517,000 of those
new starts will be in multifamily units.
So, I urge my colleagues to support the amendment and perhaps
even help assure that there might be a housing bill wluch the
President could sign.
I yield back the balance of my time to the gentleman from Texas
(Mr. Bartlett).
Mr, Bartlett. Mr. Chairman, I will reserve the balance of my
time.
Mr. St Germain. Mr. Chairman, I yield 1 minute to the gentle-
man from Minnesota (Mr. Vento).
Mr. Vento. I thank the gentleman for yielding.
I rise in opposition to the amendment of the gentleman from
Texas. Frankly, I am somewhat surprised because the new multi-
housing program that is included plus the 235 prc^am represents
a balanced approach to dealing with and providing for nousing
needs.
1 am somewhat suspect because of the current administration's
conduct in the way that the section 8 program has been adminis-
tered. The fact of the matter is that we know that the authorized
money from the Dodd-Schumer program will indeed go for new
multifamily housing. With the appropriation and so forth we still
have a hard battle ahead of us for all of those points.
One of the major uses of new section 8 money has been in recent
years is the conversion of rent supplement prwram units.
The fact of the matter is putting this back into section 8 will
likely produce few new units, especially given the discretion of the
Secretary of HUD, the tendency to use this for the rent supplemen-
tal conversions.
That is an aspect that has not been brought up on this House
floor and Members should be aware of this consequence.
The 235 program works well in specific areas of the country. The
initiative in this measure trys to do something different m the
sense that we are talking about homeownership, not just assisted
housing.
Many times people will work their way out of the assisted 235
part of the program and into a situation where they are paying a
higher rate of interest and more of the subsidy.
yGoot^le
703
Therefore, Mr, ChaimmD, I urge the rejection of this eimend-
ment.
Mr. Babtlett. Mr. Chairman, I yield to the gentleman from Con-
necticut such time as he may consume.
Mr. McKiNNEY. I thank the gentleman for yielding.
Mr. Chairman, there has been some question expressed on the
other side of the aisle about my statement that it would be neces-
sary to bring in section 8 funding to make up a second tier of Fed-
eral funding within this program.
If there is still a question in anyone's mind I would just ask that
they look at page 111 of the bill as reported, section 306:
The amount of aaaistance provided under this title with respect to a project shall
be the least amount that the Secretary determines is necessary to provide, through
the conBtruction or rehabilitation of such project, decent rental or cooperative hous-
ing of modest design that is affordable for families and individuals without other
reasonable and affordable housing alternatives in the private market, including an
amount necessary to make rents for at least 20 percent of the units, as described in
section 307(aX2), affordable for persons and families whose incomes do not exceed 80
percent of the area median income.
Now, what I am trying to say to my colleagues is what then do
you do with the 50, 60, 70, even 78 percent of median-income
people? You must override with a section 8. So that in fact you are
using in a very, very short supply system two forms of Federal fi-
nancing.
I yield to the gentleman (Mr. Bartlett).
Mr, Bartlett. In summary, in present form the bill is not an as-
sisted housing bill as regards this $1 billion. This $1 billion would
be a developer assistance bill. I would ask my colleagues to think of
those tens of thousands of families on the waiting list for section 8
in your districts while we spend this $1 billion to subsidize con-
struction by developers for new apartment complexes.
Mr. St Germain. Mr. Chairman, I yield 1 minute to the gentle-
man from Connecticut (Mr. Morrison).
Mr. Morrison of Connecticut. I thank the chairman for yielding.
Mr. Chairman, I rise to speak strongly in opposition to this
amendment.
In the two programs that this amendment seeks to remove from
this bill we have new initiatives that are critically needed. We
need new rental housing where rental housing is very short.
This prt^am will address the needs for lower income people; it
will help those in the moderate income class who are unable to
find rental housing especially due to condominium conversions.
With respect to the 235 program we have crafted a mixture of
approaches in 235 that will allow single family housing to be
owned under this program, in some parts of the country and will
allow for substantial rehabilitation of two- and three-family hous-
ing in other areas of the country. It is a program that addresses a
crying need, homeownership to the low- and moderate-income
person. This amendment would undermine that very important
aspect of this bill.
I yield back to the chairman.
Mr. St Gehmaw. I yield myself the balance of the time.
Mr. Chairman, I, too, wish to rise in opposition to the amend-
ment now before the House.
yGoot^le
704
Though well-intentioned, I am sure, the actual result (rf the
amendment will be to say to renters, and potential renters aioond
the country in the areas where there is a lack of rental housiiig
available and as a result prices for renting units are skyrocketiog,
that "there will be no relief for you under this l^islation, you the
taxpayers of this Nation, the middle-income people."
It will ask us to trade a new program that will assist 75,000 fami-
lies, at least 15,000 of which must be low income; it will stimulate
new construction or rehabilitation where it is desperately needed
for an additional 15,000 units of section 8, one-fifth of the number
of units. It would ask us to trade 6,300 new units of housing for
2,700 units of section 8. By transferring funds to the section 8 pro-
gram the gentleman would etssist only 17,700 fzimilies instead of as-
sisting 83,000 families as the bill now provides for, through the
rental production and section 235 programs.
□ 1620
Mr. Chairman, I do not believe that the tradeoffs will be worth
it.
I join the previous speakers. We heard from rural America, none
other than Wes Watkins, Mr. Rural America. And we heard from
Chuck Schumer, Mr. City, Mr. Big Apple, Mr. New York,
The two poles, opposite poles, standing here together in concert
in opposition to this amendment, what more could speak so elo-
quently than to see that occur on the floor of this House.
Mr. Chairman, I ask for the defeat of this amendment.
Mrs. RouKEMA. Mr. Chairman, I rise in strong support of the
Bartlett amendment which seeks to strike title III, the multifamily
housing production program and retains the $1,067 billion or lower
income housing programs.
Our current budget situation has led to a significant decrease in
our resources. It is, therefore, imperative that we maximize the use
of our resources by targeting assistence to those that need it the
most.
Title III of the bill would essentially allow the $900 million for
low-income housing programs and the $167 million set aside for the
235 program to be used to subsidize new rentel construction with
only 20 percent tergeted toward low-income persons. Under title
III, developers would have the option of building a subsidized
project with 80 percent of the units targeted toward middle and
upper income groups.
It is unconscionable to think that in tiroes of such limited re-
sources that we would agree to such a pn^ram. Our most pressing
goal is to provide adequate housing for low-income individuals, not
supplement developers and builders across the country.
If title III is allowed to remain in H.R. 1, we will be initiating a
more costly program with shallow subsidies that is tergeted more
toward the middle and upper income levels rather than those we
profess to be trying to assist — the low-income persons.
Mr. Bartlett's amendments would provide approximately 18,000
families of low income with assistance under the existing section 8
housing program versus current title 111 provision which would
yGoot^le
705
spread the same amount of funds between lower-, middle- and
upper-income groups.
Support the Bartlett amendment, and enhance our chances of
passing a long-awaited housing bill this year.
The Chairman. All time has expired.
The question is on the amendment offered by the gentleman
from Texas (Mr. Bartlett).
The question was taken, and the Chairmfm announced that the
noes appeared to have it.
RECORDED VOTE
Mr. Bartlett. Mr. Chairman, I demand a recorded vote.
A recorded vote was ordered.
The vote was tfiken by electronic device, and there were — ayes
120, noes 300, not voting 13, as follows:
Bartlett
Bateman
Bereuter
Bethune
Bilirakis
BlUey
Brown (CO)
Burton (IN)
Campbell
Chandler
Chappie
Cheney
Coats
Conable
Corcoran
Cou^hlin
Craig
Crane. Daniel
Crane, Philip
Dannemeyer
Davis
DeWine
Dickinson
DuDcan
Edwards (AL)
Edwards (OK)
Evans (lA) -
Fiedler
Fields
Franklin
Frenzel
G«kaB
Gingrich
Goodling
Gredison
Gregg
[Rail No. 244]
AYES-12C
Gunderson
Packard
Hansen (ID)
Pashayan
Hansen (UT)
Paul
Hartnett
Petri
Hiler
Porter
Hopkins
Quillen
Hughes
1 unter
Regula
Rid^e
JefTordB
Bitter
Kasich
Roberts
Kemp
Kindness
Rogers
Both
Lagomarsino
Roukema
Latta
Budd
Leach
Schaefer
Lent
Schulze
Uwis (CA)
Sensenbrenner
Lott
Shaw
Lowery (CA)
Shuster
Lujan
Siljander
Lungren
Mact
Skeen
Smith (NE)
Madigan
Smith, Denny
Marriott
Smith, Robert
Martin (NY)
Solomon
McCain
Spence
McCandless
Sundquist
McCollum
McDade
Tauke
McDonald
Thomas (CA)
McEwen
Vander Jagt
McGrath
McKinney
Walker
Michel
Weber
Miller (OH)
Whitehurst
Moore
Whittaker
Moorhead
Winn
Morrison (WA)
Wortley
Nielsen
Wylie
yGoot^le
Ackennan
Downey
Jenkins
Addabbo
Dreier
Johnson
Akaka
Durbin
Jones (NO
AlbosU
Dwyer
Jones (OK)
Alexander
Dymally
Jones (TN)
Anderson
Dyson
Kaptur
Andrews (NO
Early
Andrews (TX)
Eckart
Kazen
Annunzio
Edgar
Kennelly
Anthony
Edwards (CA)
Kildee
Emerson
KoKovsek
Koft^r
AuCoin
English
Erfreich
Barnard
Barnes
Evans (ID
LaFalce
Bates
Pascell
Untos
Bedell
Fazio
Leath
Beilenson
Feighan
Lehman (C;A)
Bennett
Ferraro
Lehman (FL)
Herman
Fish
Leland
Bevill
Flippo
Levin
a.«
Florio
Levine
Foglietta
Foley
FokI(MII
Levitas
B^d
Lewis (FL)
Upinski
Bonier'
Ford (TN)
Uoyd
Bonker
Fowler
Loeffler
Borski
Frank
Long (LA)
BOBCO
Frost
Long(MD)
Boucher
Fuqua
LowTy(WA)
Boxer
Garcia
Luken
Britt
Gaydos
Brooks
Gejdenson
MacKay
Broomfield
Gephardt
Markey
Brown (CAt
Gibbons
Bryant
Gilman
Martin (IL)
Burton (CA)
Glickman
Martin (NO
Byron
Gonzalez
Martinez
Carper
Gore
Mataui
Carr
Gramm
Chappel!
Oarke
Gray
Mazzoli
Green
McCloakey
O^^ho
Guarini
McCurdy
Hall (IN)
McHugh
Coleman (MO)
Hall (OH)
McKeman
Coleman (TX)
Hall, Ralph
McNulty
Collins
Hall. Sam
Mica
Conte
Hamilton
Mikulski
Conyers
Hance
Miller (CA)
Coeper
larkin
Mineta
Courier
larriHon
Minish
Coyne
latcher
MitcheU
Crockett
lefner
Moakley
D'Amours
ertel
Molinari
Daniel
igh tower
Hillis
Mollohan
Daschle
Daub
olt
Moody
de la Garia
orton
Morrison iOT)
Dellums
oward
Mrazek
Derrick
u^tord
Murphy
Dicks
Murthi
Dingell
uckaby
Myers
Dixon
Natcher
Donnelly
Hyde
Neal
Dorgan
Ireland
Nelson
Dowdy
Jacobs
Nichols
yGoot^le
Nowak
O'Brien
Oakar
Oberstar
Obey
Clin
Ortiz
Ottinger
Oxley
Panetta
Patman
Patters(»i
Pease
Pickle
Price
Pritchard
PureeU
Rahall
Rangel
Ratehford
Ray
Beid
Richardson
Binaldo
Rodino
Roe
Rose
RoetenkowBki
Rowland
Broyhill
Erlenborn
Roybal
TaUon
Husso
Tauzin
Sabo
Taylor
Savage
Thomas (GA)
Sawyer
Torres
Scheuer
Towns
Schneider
Traxler
Schroeder
Udall
Schumer
Valentine
Vandergriff
Shannon
Vento
Sharp
Volkmer
Shelby
Sikoraki
Walgren
Watkins
Simon
Weaver
SiaiBky
Weiss
Skelton
Wheat
Slattery
Whitley
Smith (FL)
Whitien
Smith OA]
Williams (MT)
Smith (NJ)
WilUams (OH)
Snowe
Wilson
Snyder
Sofara
Wirth
Wise
Spratt
Wolf
St Germain
Wolpe
IS-
Wright
WyJen
Stenholm
Yates
Stokes
Yatron
Stratton
Young (AK)
Studds
Young (FL)
Stump
Young (MO)
Swift
Zablocki
Synar
Zschau
NOT VOnNG-13
Foreythe
Shumway
Torricelh
Hawkins
Waxman
Heftel
Livingston
D 1630
Messrs. Andrews of North Carolina, Parris, and Broomfield, Mrs.
Martin of Illinois, Mrs. Holt, and Mr. Coleman of Missouri changed
their votes from "aye" to "no."
Mr. Hughes changed his vote from "no" to "aye."
So the amendment was rejected.
The result of the vote was announced as above recorded,
Mr. Berkuter. Mr. Chairman, I rise in opposition to one particu-
lar provision of this bill, section 542, that dealing with RESPA.
Now many Members of Congress have all heard more than they
ever wanted to hear about RESPA in the course of arriving at the
so-called compromise which is included in this bill, and I am reluc-
tant to open the matter for further discussion at this time, but I
feel I must forthrightly express my views on this matter. I am com-
peUed for the simple reason that the compromise included in this
bill is certainly, in my judgment, a questionable public policy
action with respect to American consumers. I opposed last year,
Emd continue t<> oppose, HUD's efforts to revise this aspect of
yGoot^le
708
RESPA law in the manner proposed, in spite of the American Land
Title Association's tacit approval of it.
The saving grace of the new provision is its clear and forthri^it
language concerning the relationship of State law to Federal law
on the controUed-business issue. Thus, for example, the Nebrafdka
Legislature recently passed a bill closely resembling the original
section 518 provision, setting a 20-percent limit on controlled Dusi-
ness. While, as the percentage set is certainly debatable, it is pref-
erable, in this Member's view, to the yet unsatisfactory disclosure
requirements set forth in H.R. 1 as amended.
• Mr. BoNKER. Mr. Chairman, I believe H.R. 1, the Housing and
Urban-Rural Recovery Act of 1983, is vital i^islation for several
reeisons.
First, H.R. 1 provides a long-overdue comprehensive Federal ap-
proach to our Nation's housing needs. The bill continues and ex-
pands a wide range of Federal programs, from FHA mortgage in-
surance and GNMA mortgeige-backed securities to community de-
velopment block grants and low-income assisted housing. In the
simplest terms, H.R. 1 represents a major step toward mf^ing ade-
quate, affordable housing a reality once again for all Americans —
whether they are first-time homebuyers or low-income elderly rent-
ers.
Second, the bill would stimulate substantial construction of
single family and multifamily housing. This is good news for wood
products workers in the Pacific Northwest and homebuilders across
the Nation. These basic industries have just suffered tiirough tiie
most severe recession in over 40 years, and must feel some concern
as interest rates begin to creep back up again, threatening the
fragile recovery they have only begun to feel.
Anally, H.R. 1 is critical for our Nation's elderly. As chairman of
the House Aging Committee's Subcommittee on Housing and Con-
sumer Interests, I have closely followed the development of H.R. 1.
The legislation addresses the immense, current demand for special*
ly designed housing among older Americans, and reci^nizes that
this demand will outy grow as the number of elderly doubles over
the next 50 years. H.R. 1 places high priority on construction of ap-
propriate elderly housing that we so badly need.
The borrowing authority and gross loan limitation provided by
the bill are sufficient to finance 14,000 units of section 202 housing
for the elderly and handicapped in fiscal year 1984. While I believe
more units are needed, the 14,000-unit figure represents a solid
compromise between what we need and what many Members con-
sidering this legislation feel we can afford.
The bill also contains several elements designed to reverse or
prevent regulatory and other actions by the administration that
threaten the continued, successful operation of the section 202 pro-
gremi. These include capping the permissible interest rate for sec-
tion 202 loans at 9.25 percent; limiting the number of efBdengr
units allowed in £my one project to 25 percent; prohibiting equi^
participation by a sponsor; maintaining the section 202 sponsors
right to select a general contractor, limiting the circumstances in
which the HUD Secretary may approve the prepayment of section
202 loans, and assuring that cost limitations for projects reflect tbe
actual costs of construction.
yGoot^le
709
Most noteworthy are the provisions of H.R. 1 that revise and
expand tiie section 202 program as of October 1, 1984. My subcom-
mittee colleague, Mr. Lundine, v/a& the chief author of these provi-
sions and should be commended for his thoughtful work. Under the
new program, the present section 202 financing and subsidy mecha-
nisms would be changed to permit, beginning in fiscal year 1985,
the development of approximately 36,000 units of housing for about
the same amount of budget authority used to assist the 14,000 units
financed by H.R. 1 under the current program for fiscal year 1984.
The administration's resistence to the implementation of housing
production prc^ams, is well documented. Therefore, all of us con-
cerned with elderly housing programs will need to carefully work
together to assure the development of regulations and procedures
necessary for the successful implementation of the revised pro-
gram.
H.R. 1, as amended by Mr. Gonzalez, also includes two seemingly
smfdler provisions of importance that are targeted to the elderly.
First, $4 million is authorized for the congregate housing services
pn^am (CHSP). Initiated in 1978, the CHSP program has proven
its worth as Ein alternative to institutionalization of low-income eld-
erly. As with the section 202 program, the program's funding level
is not as high as I would like but it is high as many feel is afford-
^le.
Second, the legislation permits the use of section 8 existing hous-
ing certificates to assist elderly families who choose to share hous-
ing arrangements with other elderly families. Shared living, of
shared housing as it is sometimes called, is a living arrangement in
which unrelated people live together, each having their own pri-
vate space but sharing common spaces such as the living room and
kitchen. H.R. 1 guarantees that elderly persons who choose to live
in a shared housii^ situation will not suffer a loss of assisted hous-
ing benefits as a result of this choice.
Of m^or importance to every low-income older person are the
provisions of H.R. 1 that reduce the amount of income that assisted
housing tenfints are required to contribute toward rent. The Omni-
bus Budget Reconciliation Act that President Reagan pushed
through Congress in 1981 raised the required rent payments for
low-income individuals from 25 to 30 percent of their total income.
H.R. 1 would reduce that figure to 25 percent again. I strongly
agree with the committee's view that it is unfair to ask the poorest
of our citizens to bear rent increases in a time of economic decline.
Equally important, the legislation requires that HUD return to
its previous practice of excluding extraordinary medical expenses
exceeding 3 percent of income in the calculation of tenant rents.
Recent HUD regulations permit a $300 exclusion for medical ex-
penses exceeding 3 percent of income in the ctilculation of tenant
rente. Recent HUD regulations permit a $300 exclusion for medical
expenses. The effect of this regulation is to unfairly increase the
rente of those who can least afford it — individuals with out-of-
pocket medical care expenditures in excess of $300.
I suspect that £dmost every Member of this body, as well as the
President, has extolled the virtues of our Federal elderly housii^
efforts, Emd the section 202 programs in particular. However, the
approximately 100,000 units constructed under the section 202 pro-
yGoot^le
710
gram are a relatively small part of the assistance provided to the
elderly. For example, under the section 8 new construction and
public housing prt^ams, over 2.3 million units have been con-
structed. Of this amount, over 1.1 million are occupied by older
persons. Thus, the Banking Committee's judgment to continue Fed-
eral involvement in the production of housing will benefit the
present and future elderly citizens of this Nation. In resisting the
administration's attempts to abolish Federal involvement in hous-
ing production, the committee has saved the most effective and efii-
cient of our current programs such as the public housing program
and the Farmers Home Administration's section 515 program. Fur-
ther, it has replaced the most controversial of our housing pro-
grams, the section 8 new construction program, with a new, less
costly multifamily production and rehabilitation program. All of
these production-oriented provisions mean good news not only for
the elderly but for all Americans in need of adequate housing.S
• Mr. RoYBAL. Mr. Chairman, I rise in support of H.R. 1, the Hous-
ing and Urban-Rural Recovery Act of 1983.
As chairman of the Select Committee on Aging, I would like to
commend the distinguished chairman and ranking minority
member of the Banking Committee, Mr. St Germain and Mr.
Wylie, and the chairman and ranking minority member of the Sub-
committee on Housing and Community Development, Mr. Gonzalez
and Mr. McKinney on their continued commitment to improving
the quality of life for our Nation's senior citizens.
I am in strong support of H.R. 1 as orginally reported and regret
that lower authorization levels must be submitted in order to bring
H.R. 1 within the levels set forth in the budget resolution. I believe
that H.R. 1 as originally reported provided minimal levels neces-
sary to meet the low- and moderate-income housing and communi-
ty development needs of our Nation's population. However, we
have not had a housing authorization bill since 1980 and the nega-
tive effect that absence has on our ability to provide the poli^ di-
rection that we expect the administration to follow makes passage
of this year's housing authorization bill imperative. Although, for
example, as an original sponsor of the congregate housing services
program bill, I strongly oppose the reduction of funding for CHSP
from $10 million to $4 million in fiscal year 1984, 1 refilize that we
are forced to try and pass H.R. 1 within unfortunate budget re-
straints and I stand in support of Mr. Gonzalez amendments.
H.R. 1 provides for 14,000 units of section 202 new construction
housing for fiscal year 1984. These units represent the only new
construction activities targeted toward the elderly and handicapped
and I commend the House Banking Committee for their work to
insure this much needed level of autiiorization.
1 also stand in support of Mr. Wortley's amendment which,
would prohibit the Department of Housing and Urban Devel(q>-
ment from selling any mortgages held as security for a loan under
the section 202 program. Last year, as chairman of the Subcommit-
tee on Housing and Consumer Interests of the Select Committee on
Aging, I fought to oppose the prepayment of a section 202 mortgage
and am glad to see that other members are in agreement that
HUD's attempts to divest themself of responsibility for such mort-
yGoot^le
711
gages are inconsifitent with congressional intent regarding the sec-
tion 202 progFEim.
Shared housing is another issue of great concern to older Ameri-
cans which is addressed in H.R. 1 in two important areas. First, it
allows the use of section 8 assistance in existing housing and mod-
erate rehabilitation pri^rams for shared housing by the elderly.
This shared housing language does not add any additional cost to
the Government and in most cases will result in a savings due to
the lower cost of assistance for shared housing. And second, H.R. 1
provides for rural rental assistance for elderly persons who choose
to live in a shared housing arrangement. Shared housing allows
the elderly to not only stay in and maintain their homes, but it
provides them with companionship and support helping to prevent
unnecessary or premature institutionalization.
Another section of the bill which will help reduce the financial
burden faced by many elderly renters of public assisted housing is
the reduction of tenant rent contribution from 30 to 25 percent,
along with appropriate exclusions to income that would be deter-
minwJ before applying the 25 percent contribution level. Such lan-
guage is necessary and extremely important in order to help keep
rent contribution levels fair and Hnancially manageable.
In conclusion, I would like to compliment Representatives Stan
Lundine and Mary Rose Oakar for their part in including impor-
tant provisions regarding elderly housing needs. Their continued
commitment as dedicated and responsible members of both the
Select Committee on A^ng and the Subcommittee on Housing and
Community Development of the Banking Committee is to be com-
mended. I ui^e my colleagues support of this important piece of
legislation.s
• Mr. LowERY of California. Mr. Chairman, I rise in strong sup-
port of the amendment of my colleague from Ohio (Mr. Wylie).
Before I began serving in Congress 2ya years ago, I served as a
city councilman and deputy mayor of the city of San Diego. From
this vantage point, I viewed a situation that dramatically illus-
trates the reaction of the private sector, and the potential results
of this reaction, when rent control becomes a possibility.
In 1978, a proposal was written to appear as a referendum ques-
tion which would have instituted rent control whenever the vacan-
cy rate fell below 5 percent. As the number of signatures necessary
to actually get the question on the ballot mounted, two other very
interesting situations developed — the number of applications to
convert rental units to condominiums increased dramatically, and
the number of applications for building permits for rental units de-
creased just as dramatically.
For example, in 1978, when the rent control proposal was drafted
and petitions began to be circulated, there were applications to con-
vert a total of 6,304 units to condominiums. The following year this
number increasied by 53.6 percent. In 1980, the year the referen-
dum appeared and was defeated, the number of conversion applica-
tions (topped 73.3 percent from the previous year. And only 20 per-
cent of the units covered by these applications were actually con-
verted.
Perhaps even more interesting are the figures on building per-
mits for rental units. Again starting with 1978, there were applica-
yGoot^le
712
tions for 6,071 units or rental housing. In 1979, that figure dropped
by 27 percent; the followii^ year, the number was down an addi-
tional 35.2 percent. The number of applications for 1981 I feel is
the most significant of all — in spite of unprecedentedly high intei>
est rat^, the figure increased by 23.3 percent — after the defeat of
the rent control referendum.
Mr. Chairman, I would like to emphasize to my colleagues that
the rental housing situation in San Diego is, if anythii^, tighter
than the national average. The vacancy rate is consistently about 3
percent. This cuts across all levels of rent — from very moderate to
very expensive. Had the rent control referendum been successful,
the city could have lost several thousand rental units to conver-
sion, and an uncounted number of units never would have been
built at all.
I feel that this is a graphic example of the situation that Mr.
Wylie's amendment addresses. Agmn, I urge a "yea" vote.9
• Mr. Frenzel. Mr. Chairmem, many of the problems with H.R. 1
go far beyond the excessive spending levels. However, most of these
problems have already been detailed by previous speakers and do
not need reiteration now.
Mostly, I am opposed to H.R. 1 because it calls for an increase in
budget authority of over $23 billion which is $15.7 billion above
what the President requested in his budget, or about three times as
much as he asked.
It is my understanding that an amendment wUl be ofi'ered which
will reduce the spending level so that it is more in line with the
HUD appropriation bill passed last month. Many Members applaud
that reduction as a noble attempt at fiscal restraint. I agree that
any reduction is an improvement. However, 1 £ilso believe that the
reduction proposed serves only to highlight the extravagant nature
of this bill.
Housing, perhaps more than any other s^ment in our economy,
is dependent on stable and low interest rates in a good economy.
The high interest rates which spurred the recession were devastat-
ii^ to the building industry, as well as to home buyers £md lenders.
Fortunately, interest rates have come down, and new housing
starts and construction contracts have increased rapidly.
Competition for available loans is increasing. However, interest
rates are still at historically high levels, and current rates are now
at a very delicate point. If there is much upward pressure at all,
there is a chance that the housing recovery will come to a screech-
ing halt. No Government program could undo the resulting damage
to the housing industry, or to those persons this bill is supposed to
help.
The primary reason interest rates will remain high is our inabil-
ity to bring Federal budget deficits under control. Until CongresB
can convince the financial markets and private investors that we
can control Federal spending, it is unrealistic to expect interest
rates to do anything but rise. Already, the Federal Government
borrows over half of all the available private credit in our capital
markets. What remains must meet the needs of a country that is
recovering from a deep recession, so there will be an increasing
demand for the remaining half, putting additional upward pressure
yGoot^le
713
on ratee. Adding another $23 billion of Federal borrowing will only
accelerate the crowding out problem.
I share my colleague etrong desire to see a strong housing recov-
ery. I agree that it is time we consider new housing policies. How-
ever, it should be a prc^am that is Hscally responsible, as well as
programmatically sound. 1 am convinced that the expensive pro-
grams promoted in this legislation will not stimulate a housing re-
covery, but instead will stifle the industry by contributing to the
push on interest rates. •
• Mr. Coyne. Mr. Chairman, shelter is a basic human need. Be-
cause the m^ority of Americans are well housed, it is difficult for
many to imagine the housing deprivation faced by millions of low-
income Americans.
Those of us who have served on public housing authorities, or
who know the slums £ind blighted areas of our communities, have
seen the dismal other America that millions of citizens inhabit. It
is our responsibility to support a measure now before us, H.R. 1,
the Housit^ and Urban Rural Recovery Act of 1983, as amended,
which addresses itself to those conditions.
Housing conditions for millions of Americans in 1983 include
vermin-infested, overcrowded units with plumbing and heating
which do not work, stairways that threaten life and limb, and win-
dows which are broken or inoperable.
A recent report by the General Accounting Office noted that in
my own city of Pittsburgh, 53,631 housing units, or 30 percent of
all units in the city, are substandard. They have structural defi-
ciencies, major building code violations, lack some plumbing facili-
ties, or were vacant 6 months or longer.
Such conditions are hard to accept in a nation as wealthy as our
own. It is all the more unacceptable that this administration would
virtuEilly halt new construction of housing for low income people as
it allows Federal housing assistance to the middle- and upper-class
to rise without control.
We do indeed have a massive, and growing, system of Federal
housing assistance.
I speak of the tax subsidies for homeownership provided by the
Federal tax code. These subsidies, the bulk of which come through
mortgage interest deductions, have roughly doubled in just 4 years.
At this point, I would like to place in the Congressional Record
some f^res on the cost to Federal Government of home mortgage
interest deductions:
FEDERAL TAX EXPENDITURES-DEDUCTIBILITY OF MORTGAGE INTEREST ON OWNER-OCCUPIED
HOMES
Thirty percent of this ever deepening subsidy, according to the
CoDgressional Budget Office, goes to the one tax filer out of 20 who
falls into the $50,000 plus category.
yGoot^le
714
Thirty percent of housing in Pittsburah is substandard. Yet 30
percent of the Federal tax expenditure for homeownership goes to
those with incomes of $50,000 or more.
We need to continue mortgage interest deductions for those who
need them.
But in all fairness, can we allow further cuts in housing for the
poor while we continue to subsidize the purchase of ever more ex-
pensive homes by those in upper-income brackets who need no sudi
aid?
The question before us, I submit, is one of equity. By the reckon-
ing of the Congressioned Budget Office, roughly $10 billion of the
tax expenditures for mortgage interest deductions in 1984 will ben-
efit the 5 percent of the population filing with incomes above
$50,000.
The assistance provided by the Housing and Urban Rursd Recov-
ery Act will aid those who are less fortunate. Most of them will not
have the privilege of itemizing their taxes.
Under title I of this bill the community development block grant
program, the most important ongoing Federal contribution to local
community redevelopment efforts, would receive $3.5 billion. In ad-
dition, the bill restores important provisions of the law repealed 1^
Gramm-Latta which will insure that localities spend at least 51
percent of their CDBG funds to beneHt low and moderate income
persons; that HUD institute application and review requirements
to determine if the law is being carried out; and that citizens will
have broad opportimity to comment at the local level on how funds
are spent.
Mr. Chairman, I would prefer that the funding for the CDBG
program be greater than this bill provides, if we had the budgetaiy
leeway. In recent years, the CDBG allocation for the city of Pitts-
burgh has dropped dramatically, due not only to a loss m popula-
tion, but to an increase in the number of eligible cities as the ag-
gregate amount authorized for the program remained approximate-
ly tne same.
What happens when more pieces are cut from a smaller pie? In
my city, where between 1975 and 1981, $69 million, or 56 percent of
CDBG funds, were spent on housing progreuns, here is what it
means:
Every loss of $15,000 in housing funds means a loss of a home
repair;
For every $10,000 lost in economic development funds, the ci^
loses an ability to create or retain at least two jobs;
Rehabilitation or new construction of bridges — a necessity in an
area with more bridges than any region in the world, save Venice,
Itak— vrill be deferred.
This legislation continues the versatile and effective urban devel-
opment action grant program, a Carter administration initiative
for which the Reagan administration has shown little enthusiasm.
The funding would remain at $440 million, enough to produce or
retain thousands of jobs in the coming year.
At this point, I would like to share with my colleagues some fig-
ures supplied to me by the Library of Congress which demonstrate
how effective the UDAG program is. The Congressional Researdi
Service estimated in 1982 the results of 3 years of funding UDAG
yGoot^le
t $440 million based on both application data and on projections
ased on HUD^enerated survey data compiled after the applica-
ion process. Here is what it found:
SUMMARY OF THREE-YEAR CUMUIATIVE RSCAl YEARS 1982. 1983 AND 1984 AT APPROXIMATELY
$440 MILUON PER YEAR
m.m 180,897
. tl3S.973 U7,823
. te,iit.DOO Wi2.m
H.R. 1 also restores, wisely I think, the housing component in the
TDAG Program. As originally structured, applications for commer-
ial, industrial and housing UDAG Projects were considered equal-
'. This adminstration decided that housing was not a proper activ-
y for the program.
This was a serious mistake in judgment. I offer as em example of
successful UDAG housing grant the Pittsburgh northside revital-
'Ation program. By combining a UDAG with proceeds from a bond
Buance, Uie city improved housing conditions, and thereby the
ousing market, ui six northside neighborhoods.
The northside revitalization project has provided below-market
iterest rate mortgage financing, public improvements, subsidies
x treatment of historic facades, and professional marketing of the
Tea. Between November 1979 and December 1982, the program as-
isted more than 812 units. In July 1982, five new neighborhoods
rere added to the pn^am as more bonds were issued.
The success of this program argues not for fewer housing
JDAG's, but more of them.
Title I of the bill now before us £ilso includes two more provisions
strongly support. One section would revise and expand the exist-
ng urmn homesteading pr(^am. The other establishes a progreim
[esigned to assist directly neighborhood development programs.
VntHe homesteading is clearly a productive use of Federal
Qoneys and properties, it heis not fully realized its potential as a
lousing pn^am for low and moderate income people.
The Houamg and Urban Rural Recovery Act would help the pro-
;ram meet that potential. It revises the homesteading program by
«stricting el^bility to households whose income is 80 percent or
lelow the SMSA median. To make homesteading affordable to low-
ncome fJamilies, H.R. 1 provides $12 million for rehabilitation and
schiiical assistance grants, in addition, it authorizes $12 million
br acquisition of properites. Further, participating localities would,
br the first time, be allowed to use homesteading funds to acquire
nngle family properties which are not federally owned, thereby ex-
panding the homesteading inventory.
With adequate rehabilitation assistance, homesteading can be a
workable program for low-income persons. The city of Pittsbui^h
37-922 O - 84 -
yGoot^le
716
now limits participants in its homesteading prc^ram to low inoHiie
persons. A study by the city of Philadelphia's Omce of HouBing and
Community Development of that city's homesteadine program
found that "successful deed recipients tended to be very low income
individuals." The median household income for participants in
Philadelphia was $5,886, compared to a citywide median of $12,7?7.
By structuring our existing homesteading pri^am to meet the
needs of low income people, we break some important new ground
in Federal housing policy. We can house people most in need rf
shelter while improving our housing stock.
The neighborhood development grant program, authorized at $5
million in this measure, combines the innovation one finds at the
neighborhood level with the resources of the Federeil GovemmenL
I believe this makes for a powerful combination. The neighboi*
hood development grant program would provide matching Federal
funds to nonprofit neighborhood development organizations en-
gaged in activities to improve an area. The amount of a grant
would be from 3 times to 10 times the iimount raised by the neigh-
borhood group, but could not exceed $50,000. Eligible activities in-
clude creating permanent jobs in an area; developing or rehabilitat-
ing housing; establishing or expanding a business; planning, pro-
moting or financing voluntary neighborhood improvement efforts;
and delivery of essential services.
Grants would be awarded based on the amount of economic dis-
tress in a given area, the extent to which activities benefit low and
moderate income persons, and the amount of participation in a
project shown by individuals and businesses in a neighborhood.
"Hie ability to solve problems at the local level is not lacking.
Thousands of neighborhood groups prove this daily. This prt^am
will match the ability of the local problem-solvers with the finan-
cial capacity of the Federal Government. The lack of money has
caused too many worthwhile neighborhood efforts to be stillborn.
An excellent feature of H.R. 1, and one that I think is long ove^
due, is a $25 million demonstration program to make a start
toward bringing welfare-supported housing up to a decent stand-
ard. The Department of Health and Human Services, through
housing allowances for public assistance recipients, already spends
over $5 billion a year for housing. Since at least 30 percent of wel-
fare recipients live in housing that is substandard, this means that
the Federal Government is subsidizing slum housing.
Parenthetically, I might add that this is one reason that many of
us were alarmed at an administration proposal to convert most of
the HUD programs for low-income housing into a housing voucher
program. Without some sort of quality control, this would become a
repetition of the welfare housing allowances. It would be a fuititN
subsidy to some of the most substandard housing, and to some of
the least responsible landlords, in the country.
This demonstration progrsun aims to get two agencies of the Fed-
eral Government, HUD and HHS, to cooperate. For example,
HUD's housing rehabilitation funds would oe targeted to housing
where families on public welfare are living. Another feature (rf the
demonstration is to induce State and local governments to upgroite
this same housing. Code enforcement, social services and teclmical
assistance will all be brought to bear on this housing that is al-
yGoot^le
717
eady, if indirectly, receiving large Federal grants. It may be ditti-
ult to develop the coordination and cooperation envisioned in this
■rogram, but it is well worth the effort to remove the government
rom the slum-perpetuation business.
To increase the production of rental housing, this measure estab-
ishes a UDAG style mechanism of assistance to localities. This
ang overdue progreim is costK:onscious and locally oriented, and
rould provide thousands of new rental unite in areas where there
3 a need. Rental housing need resulting from new household for-
aation will range from 290,000 to 400,000 per year through the
lecade. Many of those households will be composed of female-
leaded low income families, which are the poorest in our popula-
ion. The $900 million provided in this measure will not come close
o meeting that need entirely, but should provide assistance to
(xne 75,000 units.
Mr. Chairman, H.R. 1 as a whole does not come close to meeting
he needs of low income families. The President's Commission on
lousing has reported that of the 20 million households with
ncome below half of the area median, half of the households are
'enters. Only one out of four of those 10 million households lives in
ederally assisted housing. Seven and one-half million households
rith less than 50 percent of area median in income receive no as-
istance at all.
We only make a small beginning at dealing with the scope of our
lousing problem in this measure. It is, however, a beginning. The
idministration would, I am convinced, be happy to see Federal
Lousing effort come to an end. I urge my colleagues to oppose the
ifforts of the administration, and to start to renew our Federal
onunitment to housing by a yes vote on H.R. 1, the Housing and
Jiban Rural Recovery Act of 1983, as amended.^
n 1640
The Chaibman. Are there any further eimendments? If not, the
piestion is on the committee amendment in the nature of a substi-
nte, as amended.
The committee amendment in the nature of a substitute, as
onended, was agreed to.
The Chairman. Under the rule, the Committee rises.
Accordingly, the Committee rose; and the Speaker having re-
lumed the chair, Mr. Mineta, Chairman of the Committee of the
NhtAe House on the State of the Union, reported that that Com-
nittee, having had under consideration the bill (H.R. 1) to amend
ind epctend certain Federal laws that establish housing and com-
Qunity and neighborhood development and preservation programs,
ind for other purposes, pursuant to House Resolution 248, he re-
lated the bUl back to the House with an amendment adopted by
be Committee of the Whole.
Hie Weaker. Under the rule, the previous question is ordered.
b a separate amendment demanded on any amendment to the
lommittee amendment in the nature of a substitute adopted by the
>nnmittee of the Whole?
Mr. &r Gerbiain. Mr. Speaker, I demand » separate vote on the
o-called Bartlett amendment to title V relating to the elimination
yGoot^le
718
of the requirement that Federal Housing Administratioii intenflt
rates be set by law.
The Speaker. Is a separate vote demanded on any other amend-
ment? If not, the Clerk will report the amendment on which the
separate vote has been demanded.
The Clerk read as follows:
EUMINATION or REQUIREMENT Tl
RATES BE Sn' HV lAW
Sec. 514. (a) Sections 3 and 4 of Public Law 90-301 are hereby repealed.
(bXU Section 2(bM5l of the National Housing Act is omeaded to read as follom:
"(5) No insurance shall be granted under this section to any such financial institQ-
. n charges, and contains such other terms, conditions, and restrictions as the Sec-
retary shall prescribe, in order to make credit available for the purpose of this dtk;
Any such obligation with respect to which insurance is granted under this sectian
shall bear interest at such rate as may be agreed upon by the borrower and tbe
linancial institution.",
(2) Section 203<bX5) of such Act is amended to read as follows:
"(5) Bear interest at such rate as may be agreed upon by tbe mortgagor and tbe
mortgagee.".
(3) Section 203(kX3X6) of such Act is amended to read as follows:
"(Bl bear interest at such rate as may be agreed upon by the mortgagor and
the mortgagee;".
141 The first sentence of the first undesignated paragraph of section 207(cX3) rf
such Act is amended to read as follows: "The mortgage shall provide for complete
amortization by periodic payments within such term as the Secretary shall pie-
scribe, and shall bear interest at such rate as may be agreed upon by the mortgagor
and the mortgagee.".
(5) The first sentence of section 213(dl of such Act is amended to read as foUons
"Any mortgage insured under this section shall provide for complete amortization
by periodic payments within such term as the Secretary may prescribe but not to
exceed forty years from the beginning of amortization of the mortgage, and shall
bear interest at such rate as may be agreed upon by the mortgagor and the mortga-
gee.".
(6) The second sentence of section 220(dX4) of such Act is amended to read as fol-
lows: "The mortgage shall bear interest at such rate as may be agreed upon by tbe
mortge^or and the mortgagee and contain such terms and provisions with respect to
the application of the mortgagor's periodic payment to amortization of the principal
of the mortgage, insurance, repairs, alterations, payment of taxes, default reserves.
delinquency charges, foreclosure proceedings, anticipation of maturity, additional
and secondary liens, and other matters as the Secretary may in the Secretary's dis-
cretion prescribe.".
(7) Section 220<hK2Xiii) of such Act is amended to read as follows:
"(iii) bear interest at such rate as may be agreed upon by the mortgagor and
the mortgagee;".
<8) Section 221(dX5) of such Act is amended by striking out "(exclusive" and all
that follows through "mortgage market" and inserting in lieu thereof the followinf
"at such rate as may be agreed upon by the mortgagor and the mortgagee;".
(9) Section 231(cX6l of such Act is amended to read as follows:
"(6l bear interest at such rate as may be agreed upon by the mortgagor and tlw
mortgagee; and".
<10) Section 232(d)(3XBl of such Act is amended to read as follows:
"(Bl bear interest at such rate as may be agreed upon by the mortgagor and
the mortgagee.".
(U) The first sentence of section 234(f) of such Act is amended to read as foUoin:
"Any blanket mortgage insured under subsection <d> shall provide for complete am-
ortization by periodic payments within such terms as the Secretary may proacrtbc
but not to exceed forty years from the beginning of amortization of the romiBisB,
and shall bear interest at stch rate as may be agreed upon by the mortgagor and
the mortgagee.".
yGoot^le
<12) Section 28E(iXS) of nich Act it amended—
lieu thereof "; uid"; and
(C) bv adding the following new subparagraph at the end thereof:
"(F) new interest at a rate not to exceed such per centum per annum on the
anaount of the principal obligation outatanding at any time as the Secretary
flnds necesaary to meet the mortgage market, taking into consideration the
yields on roortKtuna in the primary and aecondair merkets".
(13) Section 240(c)(4) of such Act ia amended to reaa as follows:
"(4) bear interest at rach rate as may be agreed upon by the mortgagor and the
nortgagee;"-
(14) Section 241(bX3) of such Act is amended to reed as foUows:
"(3) bear intMeat at such rate as may be agreed upon by the mortgagor and the
ion 242(dX3)(B] of such Act is amended to read as follows:
"(B) bc«r interest at Buch rate as may be agreed upon by the mortgagor and the
Z) of such Act ia amended to read as follows:
T interest at such rate as may be agreed upon by the mortgagor and the
i: Provided. That the Secretary may agree to a reasonable extension of the
mortga^, the maturity of which is limited by this paragraph to not more
than ten years, if the Secretary determines that unusual or unforeseen circum-
■tances make such extension necessary to avoid undue hardship to the mortgagor;".
Mr. St Gbbhain (during the reading). Mr. Speaker, I fisk unani-
mous consent that the amendment be considered as read and print-
ed in the Record.
The Speaker. Is there objection to the request of the gentlemein
fnnn Rhode Island?
There was no objection.
The Speaker. The question is on the amendment.
The question waa taken; and the Speaker announced that the
noes appeared to have it.
RECORDED VOTE
Mr. Bartlett. Mr. Speaker, I demand a recorded vote.
A recorded vote was ordered.
The vote was taken by electronic device, and there were — ayes
228, noes 194, not voting 11, as follows:
Bethuiw
BOms
BmUmI
d(CO}
It
DON)
[Roll No. 245]
AYES-228
Byron
Crane, Philip
Campbell
Daniel
Chandler
Daschle
Chappell
Daub
Chappie
Davis
Cheney
DeWine
Clarke
Dickinson
Qinger
Dowdy
Oats
Dreier
Coleman (MO)
Duncan
Coleman (TX)
Durbin
Conable
Conte
Dyson
Corcoran
Edwards (OK)
Coughlin
Emereon
Courter
English
Erdreich
Craig
Crane, Daniel
Erienborn
yGoot^le
Evans HA)
&*"
Roemer
Fazio
te"
Fiedler
MacKay
FieldB
Madigan
Rowland
Fish
Marriott
Rudd
FUppo
Martin (ID
Saivyer
Foreythe
Martin (NO
Schaefer
Franklin
Martin (NY)
Schneider
Freniel
McCain
Schulze
Gekas
McCandless
Oilman
McCollum
Shaw
Gingrich
McCurdy
Shelby
Goodling
McDonald
Shuster
Gradison
McEwen
Sikorski
Gramm
McGrath
Siljander
Green
McKernan
Sisisky
' ui^erson
McKinney
Skeen
Michel
Slattery
Hall (OH)
Miller (CA)
Smith (FL)
Hall. Ralph
Miller (OH)
Smith (NE)
Jail. Sam
Molinari
Smith (NJ)
lance
Mollohan
Smith, Denny
Hansen (IDl
Smith, Robert
ansen (UTI
Moody
Snvder
Solomon
Moore
siFr-
Mocrhead
Morrison (WA)
Hillis
Staneeland
Stenholm
olt
Murphy
opkins
Myefs'
Stump
orton
Neal
Sundquist
uckaby
Nelson
&
unter
Nichols
Hutto
Nielsen
Tauke
Hyde
O'Brien
Tauzin
Ireland
Olin
Taylor
. eflbrds
Ortiz
Thomas (CA)
Jenkins
Oxiey
Thomas (GA)
Jones (OK)
Packard
Valentine
Jones (TN)
Parris
Vander Jagt
Kasich
Pashayan
Kazen
Paul
Vucanovich
Kemp
Penny
Walker
Kindness
Petri
Watkins
Kramer
Pickle
Weber
.agomarsino
Porter
Whitehurst
^tta
Pritchard
Whitley
«ach
Pursell
Whittaker
Leath
gSf"
WiHiama (OH)
Lent
Winn
Lewis (CA)
ReKula
Ridiardson
Wirth
Lewis (FL)
Wolf
Lloyd
Ridge
WoriJey
Loemer
Rinaldo
Wylie
Lott
Ritter
Young (AK)
Lowery (CA)
Roberts
Young (FL)
Lujan
Robinson
NOES-194
Zschau
Ackerman
Aspin
Bevill
Addabbo
AuCoin
Biaggi
Akaka
Bates
Boggs
Bolind
Albosta
Bedell
Alexander
Beilenson
Bonior
Annunzio
Bennett
Bonker
Applegate
Berman
Borski
yGoot^le
Hartnett
Pease
Hatcher
Hertel
Ejasi
Howard
Price
Hover
Hut^ard
Rahall
Rangel
RateUbrd
Hughes
Ja^be
Reid
Johnson
Rodino
Jones (NO
Roe
Kaptur
Rose
Kennelly
Roukema
KUdee
Roybal
K^^
Rvmo
Sabo
Koetmayer
Savage
LaFalce
ScheSer
Lantoe
Schroeder
Lehman (CA)
Schumer
Lehman (FL)
Seiberling
Levin
Shannon
Levine
Sharp
Levitas
Simon
Lipinaki
Skelton
LwigOA)
Smith (lAJ
Long(HD}
Snowe
Lowry(WA)
Solarz
Luken
St Germain
Lundine
Markey
ISf"
Marlenee
StokeH
Martinez
Stratton
Hataui
Studds
Mavroules
Swift
Mazzoli
Torres
McaoHkey
Towns
McDade
Traxler
McHuKh
McNulty
Udall
Vento
Mica
Volkmer
MikuJski
WalgPen
Mineta
Waxman
MinlBh
Weaver
Mitchell
Weiss
Moakley
Wheat
Morrison (CD
Whitten
Murtha
Williama (MT)
Natcher
Wilson
Nowak
WiBe
Oakar
Wolpe
ObereUr
Wright
Wyden
Obey
Ottiiger
Yates
Owens
Yatron
Panetta
Young (MO)
Patman
Zablocki
Patterson
NOT VOTING-ll
Livingston
Hawkins
Shumway
Heftel
Torricelll
Leland
yGoot^le
D 1650
So the amendment was agreed to.
The result of the vote was announced as above recorded.
The Speaker. The question is on the committee amendment in
the nature of a substitute, as amended.
The committee amendment in the nature of a substitute, a>
amended, was agreed to.
The Speaker. The question is on the engrossment and third read-
ing of the bill.
The bill was ordered to be engrossed emd read a third time, and
was read the third time.
MOTION TO RECOMMIT OFFERED BY MR. WYLIB
Mr. Wylie. Mr. Speaker, I ofier a motion to recommit.
The Speaker. Is the gentleman opposed to the legislation?
Mr. Wylie. I am, in its present form, Mr. Speaker.
The Speaker. The Clerk will report the motion to reo)mmit
The Clerk read as follows:
Mr. Wylie moves to recominit the bill, H.R 1, to the Committee on Banking, Ft-
nance and Urban AfTairs with instructions to report the bill back to the Hoon
forthwith with the following amendment; Title III is amended by adding the follow-
ing new section:
"Sec. 312. Notwithstanding any other provision of law, assistance under this title
shall not be made available if the unit of general local government, with juriadietioa
over the area in which the project is to be located, has any law, ordinance or other
measure which could control rents on projects built after the date of enactment tf
this section, other than projects developed with State or local government anist-
The Speaker. Under the rule, the gentleman from Ohio (Mr.
Wylie) is entitled to 5 minutes.
The Chair recognizes the gentleman from Ohio.
(Mr. Wylie eisked and was given permission to revise and extend
his remarks.)
D 1700
Mr. Wyue. Mr. Speaker, this is exactly the same amendment
which 1 offered yesterday relative to rent control. We have had ex-
tensive debate on the amendment already. I referred in my debate
on the amendment yesterday to studies which have been conducted
by HUD, by Nobel prize winning economists and editorials all over
the country on the subject of rent control. No one, virtually no one,
disagrees that rent control is a disincentive to the construction d
rental housing.
The problem of rental housing cannot be solved with federaltf
subsidized funds. The problem is too great in those cities whioi
need the capital to construct new rental housing unita. Only the
private sector can provide the necessary capital to do this in cities
such as New York and Washington, D.C., which are worst case sit-
uations, both cities with rent control.
What my amendment says, Mr. Speaker, is that we will help you
solve your problem, but you have got to help yourself. You cannot
receive money under this new multifamily housing program if you
yGoot^le
723
rent controls on new private capital investment in rental
iprojecta
ent^y, local rental controls would not apply to the Federal
uneot. The Secretary of HUD has the authority to fix the
n Govemment-zissisted housing to provide a reasonable
on investment.
iier words, rent controls are no good for the Government,
iv are all right as applied against private builders.
IB not a partisan issue. If I thought it were, I can count
ttoTH. Mr. Speaker, will the gentleman yield?
iVyue, I yield to the gentleman from Wisconsin.
Roth. Mr. Speaker, I think this is a most important issue. I
hope that the House would join our colleague, the gentleman
'hio, in his motion.
e is nothing that is a greater impediment to adequate hous-
this country today than are rent controls. We can look at the
X. There is not a place in this country where we have rent
s where we do not have a case of insufHcient housing. If we
ical we will admit that our policy here will be inconqruent if
not go etlong with the gentleman's amendment, because on
} hand we are saying that we want to spend billions of dol-
Improve housing in this country, and on the other hand we
ring that we are endorsing a poli(^ that empirical evidence
is a policy that does not lend itself to good housing, because
i Oie incentive away from the private entrepreneurs,
ok if we want adequate housing in this country, we have to
the philosophy that the gentleman ft*om Ohio has enunci-
Wtlie. Mr. Speaker, I associate myself with those remarks
ink the gentleman for his contribution.
said, Mr. Speaker, this is not a partisan issue. A Democratic
Republican administration have both spoken out against
ntrols as being counterproductive of the construction of new
housii^. Rent controls are anticonsumer.
a fact that as a general proposition there are more rental
$ units available in nonrent controlled cities than there are
controlled cities.
unendment would have no impact on present renters or on
z housing. It would apply only prospectively, and I want to
diat clear, it would provide cities with a choice as to how
ould approach local rent control practices. It does not force
0 chai^ existing law. It would eliminate a built-in bias that
reward rent control cities. As drafted, cities that would quEil-
try to get funds from the multifamily housing pri^ram in
.1 would benefit and those with the lowest vacancy rates are
it control cities which would benefit.
, some have said to me after the vote yesterday that you are
rent controls, either, but they should be a matter of local
E^rery single Federal program which we have heis some sug-
as to how the taxpayers' money should be used. In funds
lie buildings, we provide that there shall be access ramps. In
: preservations, we provide certain criteria by which this
can be used. In transportation funds, of course, we provide
yGoot^le
724
In yesterday's debate, the gentleman from Texas (Mr. Wri^it)
mistaken ly
The Speaker. The time of the gentleman from Ohio (Mr. Wylie)
has expired.
The gentleman from Rhode Island (Mr. St Germain) is recognized
for 5 minutes.
Mr. St. Germain. Mr. Speaker, I yield such time as he may con-
sume to the majority leader, the gentleman from Texas (Mr.
Wright).
Mr. Wright. Mr. Speaker, I rise in opposition to this motion.
This is not a question of whether you like rent control or not
That is not up to us to decide. It is a question of whether we in the
Federal Government want to arrogate to ourselves the almighty
presumption of denying to cities an opportunity to participate in a
program in which all other cities m^ht participate on the basis of
their own local judgment.
Attempts have been made throughout the years to use this kind
of legislation as a means to browbeat local cities and tell them that
they may not have any form of rent control. That is very ironic,
because at the very same time we apply rent controls of a direct
and indirect sort in our own Federal legislation.
Now, if this motion were to prevail, cities in the States of Massa-
chusetts, New York, New Jersey, and California would he simply
denied the privilege of participating in this program. Some of them
have widely varying forms of rent stabilization agreements. For ex-
ample, in the city of New York and in the State of New York, all
rent controls are wholly voluntary and only the developer who
chooses to enter into that kind of an agreement does so; yet be-
cause of the law which permits it, the city of New York would be
utterly denied the use of any funds under this bill if the recommit-
tal motion of the gentleman from Ohio were to prevail.
The gentleman suggests that rent control may be one of the
things that discourages the construction of new housing. Well, I do
not know whether it is or not. I do know that the main thing that
has been discouraging the construction of new housing is high in-
terest rates.
D 1710
One of the other things that has been discouiBging the construc-
tion of new housing is low tenant incomes. But the truth simply is
that with interest rates at their present levels, higher than tixey
have ever been, as a real proposition above the rate of inflation,
over a prolonged and more sustained period of time, the real inter-
est rate has prohibited the construction of housing. Builders cannot
afford to build houses that they can rent at prices that the average
citizen can afford to pay, because of the high interest rates.
Are you going to deny the participation because of interest rates?
You have just voted against that. Therefore it seems to me that it
would be entirely illogical for us to presume that we are going to
dictate now how local communities govern their own cities, that we
are going to go in and censure their ordinances, and that we are
going to impose our will upon them in a matter so local as the
yGoot^le
725
question of whether or not they are goii^ to apply any form of rent
stabilization.
Always in the past we have voted against it. We voted against it
jresterday in the Committee of the Whole.
I surest to you then, therefore, that the responsible course is to
vote "no" on this motion to recommit and to vote for the bill.
I yield my time back to the gentleman from Rhode Island.
MX. St Germain. Mr. Speaker, I would like to conclude veiy
briefly by stating that the gentleman from Ohio said that we re-
quire access ramps in Federal buildings that are federally subsi-
dized. Certainly. Certainly.
But what he is asking here in this amendment is that we say to
these communities that have decided on their own to have rent
control you cannot have it because Uncle Sam knows better than
you.
If that is the case we should have adopted the amendment that
was offered by the gentleman from New York yesterday that would
say yes, and indeed we will also tell every community in this
Nation what their building codes should be, should they use plastic
tubing and piping or copper tubing and piping, and what the size of
the door should be, and how many entrances and egresses there
diould be, and how many fire escapes.
We have decided over the years that we would not do that be-
cause that is too much interference. Why should we interfere here?
Let these cities make up their own minds.
For those of you from the South and States righters, this is a
States rights issue ftlso.
The Speaker. Withgut objection, the previous question is ordered
on the motion to recommit.
There was no objection.
The Speaker pro tempore. The question is on the motion to re-
commit.
The question was taken; and the Speaker announced that the
noes appeared to have it.
Mr. Wylie. Mr. Speaker, on that I demand the yeas and nays.
The yeas and nays were ordered.
The Speaker. Pursuamt to the provisions of clause 5, rule XV,
the Chair announces that he will reduce to a minimum of 5 min-
utes the period of time within which a vote by electronic device, if
ordered, will be taken on the question of passage of the bill.
ITie vote was taken by electronic device, and there were — yeas
205, nays 217, not voting 11, as follows;
[Roll No. 246)
YEAS-205
Bedell
Byron
Bennett
Campbell
Carney
Chandler
Bethune
BUirakis
Chappell
Bliley
Boehiert
Chappie
Cheney
Broomfield
dinger
Brown (CX»
Coate
Burton (IN)
Coleman (MO)
yGoot^le
Conable
Corcoran
Lagomarsino
Latta
ffi-
Coughlin
Leach
Ritt«r
Courter
Leath
Roberts
Craig
Lent
Crane, Daniel
Levitas
Roemer
Crane, Philip
Lewis (CA)
Rogera
Daniel
Uwis(FL)
Roth
Lloyd
Rudd
Daub
Loeffler
Sawyer
DaviB
Lott
Sch^efer
DeWine
Lowery (CA)
Schneider
Dickinson
Lujan
Schulze
Dreier
Lungren
Mact
Sensenbrenner
Duncan
Shaw
Edwards (AD
MacKay
Shelby
Edwards (OK)
Madigan
Shuster
Marlenee
SiUander
E«ir«ich
Marriott
Skeen
Erlenbom
Martin (ID
Skelton
Evans (lA)
Martin (NO
Smith (lA)
Fiedler
Martin (NY)
Smith (NE)
Fields
McCain
Smith, Denny
Flippo
McCandlesB
Smith, Robert
Forsythe
McCollom
Snyder
Solomon
Franklin
McDade
Fren«fl
McDonald
Spence
Gekas
McEwen
Stenholm
Gibbons
McGrath
Gingrich
Glickman
McKeman
Stump
McKinney
Goodling
Mica
Tallon
Gradison
Michel
Tauke
Gramm
Miller (OH)
Tauzin
Guflderson
Molinari
Taylor
Thomas (CA)
Hall (OH)
Moore
Thomas (GA)
Hall, Kalph
Valentine
Iall,Sam
Morrison (WA)
Vander Jagt
Vandergriff
Murphy
^n (ID)
Myera
Volkmer
ansen (UT)
Nelson
Vucanovich
iarkin
Nichols
Walker
Hartnett
Nielson
Weber
liehtower
O'Brien
Whitehurat
Ortiz
Whittaker
lillis
Oiley
Williams (OH)
Holt
Packard
Wilson
Hubbard
Parris
Winn
luckaby
Pashayan
Wolf
lunter
Patman
Wortley
Hutto
Paul
Wylie
Hyde
Petri
Yatron
Ireland
Porter
Young (AK)
Jefforda
Pritchartl
Young (FD
Kasich
Pursell
Young (MO)
Kemp
Quillen
Zschau
Kindness
Rahall
Kramer
Ray
NAYS-217
Ackerman
Annunzio
Addabbo
Applegate
Herman
Akaka
Aspin
Bevill
Albosta
Barnes
Bisggi
Alexander
Bates
Bc^
yGoot^le
Gram
Patterson
Goarini
Peaae
HaUON)
Penny
HamUton
gfSi
Hatcher
Pickle
Hefner
Price
Hertel
Horton
Rangel
RatSiford
:cA)
Howard
Reid
Richaidaon
(CA)
H^tes
Rinaldo
Jacob*
Hodino
Jenkins
Hoe
Johnfion
Boee
Jones (NO
Roetenkowski
Jones (OK)
Roukema
n(TX)
Jones (TN)
Rowland
Kaptur
Kastenroeier
Russo
Kazen
Sabo
Kennelly
Savage
Kildee
Scheuer
t
m
sxr'
Schroeder
Kostmayer
Seitorli^
arza
LaFalce
Shannon
LantOB
Sharp
Uhman(CA)
Sikorski
Uhinan(FD
Simon
Levin
Sisisky
Levine
Slattery
iy
Upinski
Smith (FL>
Long (LA)
Smith (NJl
Long(MD)
Snowe
Lo«ny(WA)
Solarz
Luke^
Spratt
Lundine
St Germain
r
Harltey
Martinet
Stagcera
Stai^
Hataui
Stokes
Havroules
Stratton
Mazzol)
Studds
lt(CA)
Mcaoekey
Swift
McCurdy
Synar
Torres
IL)
McHuKh
McNufty
Towns
Mikulski
Trailer
MUler(CA)
Udail
Mineta
Vento
Minish
Walcren
Watkins
HitcheU
ta
Moakley
Waxman
Mollohan
Weaver
a>
Moody
Weiss
tn
Morrison (CF)
Wheat
Mrazek
Whitley
Murtha
Whitlen
Natther
Williams (MT)
Neal
Wirth
Nowak
Wise
Dakar
WoLpe
"
Oberstar
Obey
Wright
WyJen
Olin
Yates
■■
Ottinger
Owens
PanetU
Zablocki
yGoot^le
NOT VOTING— 11
Broyhill
Hammerachm idt
Hawkins
Heftel
Hopkins
Livingston
Shumwaf
D 1720
So the motion to recommit was rejected.
The result of the vote was announced as above recorded.
The Speaker. The question is on passage of the bill.
The question was taken; and the Speaker announced that
ayes appeared to have it.
RECORDED VOTE
Mr, Wylie. Mr. Speaker, I demand a recorded vote.
A recorded vote was ordered.
The Speaker. The Chair will remind the Members that this
be a 5-minute vote.
The vote was taken by electronic device, and there were — t
263, noes 158, not voting 12, as follows:
[Roll No. 2471
AYES-263
Ackerman
Qarke
Fazio
Addabbo
Clay
Feighan
Akaka
Clinger
Ferraro
AlboBta
Coelho
Fish
Alexander
Coleman (TX)
Flippo
Anderson
Collins
FloVio
Andrews (NO
Conto
FoKlietta
Foley
FoiJ(Ml)
Annunzio
Anthony
Conyers
Cooper
Aspin
Coughlin
Ford(TN)
AuCoin
Coyne
Fowler
Barnard
Crockett
Frank
Barnes
lyAnioure
Frost
Bates
Daschle
Fuqua
Bedell
Davis
Garcia
Beilenson
de la Garza
GaydoB
Bennett
Dellums
Berman
Derrick
Gephardt
Gibbons
Bevill
Dickinson
Boehlert
Dicks
Gilinan
Dingell
Glickman
B^d
Diiton
Gonzalei
Donnelly
Gore
Bonior
Dowdy
Gradison
Bonker
Downey
Gray
Borski
Duncan
Green
Bosco
Durbin
Guarini
Boucher
Dwyer
Hall (IN)
Boxer
Dymally
fell (OH)
Britt
Ityaon
amilton
Brooks
Early
ferkin
Brown (CA)
Eckart
fanison
Bryant
Edgar
atcher
Burton (CA)
Edwards (CA)
efner
Carper
Erdreich
ertel
Carr
Evana (ID
Hightower
Chappell
Fascell
Horton
yGoot^le
MoUohan
Shelby
Sikorski
1
Mrazek
Simon
Murphy
Sioisky
Murtha
Skelton
Natcher
Slattery
Neal
Smith (FL)
Nichols
Smith (lA)
Nowak
Smith (NJ)
IC)
O'Brien
Snowe
>K)
Oakar
Solan
W
Spratt
Obey
St Germain
Mier
Olin
Ortiz
la-"
y
Ottinger
Stokes
Owena
Stratton
k
Panetta
Studds
Pstman
Sundquist
w
Patteraon
Swift
(CA)
Pease
Synar
tallon
Thomas (GA)
(FU
Pickle
Torres
Porter
Towns
Price
Traitler
PritthanJ
Udall
W
Quillen
Sahall
Valentine
Vento
D)
VA)
R^^ord
Volkmer
Walgren
Watkina
Reid
Bichardaon
Waxman
Ridge
Weaver
Rinaldo
Weiss
1
Rodino
Wheat
Roe
Whitley
Roae
Whitten
IQF
Williams (MT)
WUliams (OH)
Roybal
Wilson
Ri^
Wirth
f
Sabo
Wise
Savage
Wolpe
Scheuer
Wright
Wyden
1
Schneider
W
Yates
Schumer
Yatron
Young (MO)
Shannon
Zablocki
Sharp
NOES-158
tcrx)
Campbell
Daniel
te
Carney
Chandler
Dannemeyer
Daub
Chappie
DeWine
Cheney
Dorgan
Coats
Dreier
Coleman (MO)
Edwards (AL)
Conabie
Edwards (OK)
Emerson
rid
Courter
English
cx»
Craig
Erlenborn
m
Crane. Daniel
Evans (lA)
Crane. Philip
Fiedler
yGoot^le
Fields
Foreytbe
FnnkUn
Freiuel
Gekas
Ginnich
Goodling
Gramm
Gregg
Hall, Ralph
Hall, Sam
Hansen (ID)
Hansen (UT)
Hartnett
Hiler
HiUia
Holt
Hopkins
Huckat^
Hyde
Ireland
Kindness
Kramer
Lagomarsino
Latta
Leath
Lent
Levitas
Lewis (CA)
Lewis (FL)
Livingston
Loefller
Lott
Lowery (CA)
Bethune
Broyhill
Lujan
ix-
Roukeiaa
Madigan
Rudd
Marlenee
Marriott
Schaefer
Martin (lU
Schulze
Martin (NO
Martin (NY)
Shaw
McCain
Shuater
McCandless
SiUander
McCollum
Sk^n
McCurdy
McDonfdd
Smith (NE)
Smith, Denny
McEwen
Smith, Robert
McGrath
Solomon
Michel
Miller (OH)
Spence
Molinari
Montgomery
St^holm
MoodP
Stump
Moore
Tauke
Taudn
Morrison (WA)
Taylor
Myers
Thomas (CA)
Nielson
Vender Jagt
Vandergriff
Oxiey
Packard
Vucanovich
Parris
Walker
Weber
Paul
Whitehurst
Penny
Wbittaker
Petri
Winn
Puiuell
Wolf
Ray
Wortley
Re^ula
Wylie
Ritter
Young (AK)
Roberts
Young (FL)
Robinson
ZeduTu
Roemer
NOT VOTING-12
Mataui
Hawkins
Nelson
Heftel
Leland
Torricelli
The Clerk announced the following pair:
On this vote:
Mr. Matsui for, with Mr. Breaux against.
So the bill was passed.
The result of the vote was announced as above recorded.
A motion to reconsider was laid on the table.
yGoot^le
9bra CtatOMMM I HOUSE OF REPRESENTATIVES I Rsport
latStnion t j No. 98-123
HOUSING AND URBAN-RiniAL RECOVERY ACT OF 1983
the Committae of the Whole Houm on the Stat<« of the
Union and ordered to be printed
Mr. St Gebhain, from the Conunittee on Banking, Finance, and
Urban Affairs, submitted the following
REPORT
HflNORITY, AND SUPPLEMENTAL MINORITY VIEWS
[iBcluding CMt Mtiiiial« of the Congroaaional Budget OfTice]
(To accompany H.R. 1]
The Committee on Banking, Finance and Urban Affairs, to
whom was referred the bill (H.R. 1) to amend and extend certain
Federal laws that establish housing and community and neighbor-
hood development and preservation programs, ana for other pur-
poees. having considerea the same, report favorably thereon with
an amendment and recommend that the bill as amended do pass.
The amendment strikes out all after the enacting clause of the
bill and inserts a new text, which appears in italic type in the re-
[XRiedbill.
Introduction
"Hie Committee bill reauthorizes the important housing and com-
monil^ development programs administered by the Department of
Rousiiig and Urban Development, the rural housing programs ad-
ministered by the Farmers Home Administration, establishes a
new rental housing production pn^ram, makes numerous changes
in program administration, and clarifies Congressional intent in a
' wise array of community development, assisted housing, and rural
honing programs. The basic principle underlying the Committee
Ul is toe historic and successful commitment to safe, decent, and
■Obrdable housing for all the American people. H.R. 1 attempts to
„ ___ people. H.R. 1 attempts t
keep foith with the nation's historic commitment to a comprehen-
37-922 O - 8A -
yGoo<^\q
aive and effective national housing policy. The authorizatiaaB, pro-
grama and directions contained in this bill are not ezbavaf^nt;
they represent a survival program for a national hounng and ooni-
munity development policy. The Committee's reomunendatioDt
contained in this bill are modest in comparison with the housing
need, and are necessary to assure the survival of the most eanntiu
elements of a reasonable national housing and communitr develop-
ment policy.
A major element of H.R. 1 is the attempt to clari^ Congrenuiial
intent regarding the Administration's persistent efforts at disman-
tling support systems already in place that attempt to assist vnl-
nerable people: people without the financial, political, and social
resources to help uiemselves. The Department of Housiiig and
Urban Development and the Department of Agriculture have exer-
cised options regardingprogram administration without reqtectiiig
Congressional intent. These options were taken in program areas
that were not limited by statute. These actions were detrimental to
^e program beneficiaries by limiting access to programs, and hy
causing administrative delay and roadblocks to effective implemen-
tation. In particular, the Committee's efforts are specifically aimed
at strengthening the Community Development Block Grant Pro-
gram so that low and moderate income people are the princq»I
beneficiaries and to ensure that activities are benefiting low wid
moderate income people and that fair housing and citiKen partid-
pation requirements are met.
The Committee has been engaged in a lengthy dispute with the
Department since late 1981 over the directions of the CDBG Pro-
gram, including two different sets of hearings, numerous staff
meetings, and a lengthy series of correspondence attempting to re-
solve uiese differences. The Department has been intransigent in
its omtosition to suggestions from the Committee for coniprnnise.
The Committee, therefore, has exercised its statutory authority to
delay implementation of Departmental rules and reffulations con-
trary to the Committee's understanding of Congressional intoit
Similar differences in rules and r^ulato^ changes involving the
Section 202 Housing for the Elderly and Handicapped, the Public
Housing Lease and Grievance Procedures, and the Farmers Home
Administration's rural housing programs have caused the Commit-
tee to l^islate its intent regarding these prof^tuns rather than
continuing the endless discussions with the Administration's rei»e-
sentativee. The Committee r^rets the necessity of legislating aa
these matters, but after two years of experience further efforts at
the discussion and n^otiating level appear to be futile.
Several new approaches at providing assistance in a cost coo-
scious manner have been developed in this bill. The revised Section
202 Housing for the Elderly and Handicapped and the Rental
Housing Production and Rehabilitation Program attMiqit to pro-
vide additional assisted housing at reduced budget authonty levela
The Committee would have preferred higher budget authraity
levels, but accepts reluctantly tiie reality of Dudget author!^ leveu
reduced by over a half since 1981. The efforts of the Administratun
at ^jrther wholesale reductions are unsconscionable. Its requert for
no new budget authority, as well as the President's Budget propos-
al of robbing prior year assisted housing budget authority to fUad a
yGoot^le
minimum level of assieted housing is an affront to the millions of
low income citizens in need of decent, safe, and affordable shelter.
The Congress enacted levels of assisted housing only to see the Ad-
ministration a month later not heed Congressional direction, but
1^ deferral and rescission requests and administrative delays caus-
ing funds to go unused, in utter disregard of Congressional spend-
ing prioritiee. Tiaa Committee has overwhelmingly rejected the Ad-
ministration's l^islative proposals to set up a housing voucher pro-
gram on two separate occasions in the past year only to see HUD
attempting to implement a voucher program by reducing Section 8
Fair Market Rents without Congressional approval. This Commit-
tee has played a crucial role in the development of housing and
commumty development programs over the last fifty years. This
Administration has chosen to ignore the Committee's important
role. In light of this attitude, the Committee has no choice but to
lenslate in the manner it has in H.R. 1.
The CcHnmittee continues to be frustrated at the Administra-
tion's dilatory approach in implementing programs that Congress
has raacted in the public interest, such as the Solar Bank, the
Temporary Mortgage Assistance Prc^am, and in denying by ref-
lation the lowest income people subsidies Congress provided in the
rural rental housing program. It is also frustrating to the Commit-
tee that the assisted housing being built today and for which the
Administration takes credit for was provided by the prior Adminis-
tration and are the product of the prc^rams that the Administra-.
tion would dismemtle or grossly underfund.
This bill attempts to rectify some of the cruelties inflicted by the
Granun-Idtte Budget Act of 1981, since in a one-vote action, this
Committee was denied its proper role in legislating housing and
community development policies. That vote forced major changes
in national housiiu! and community development policies without
tborouf^ debate whose impact have only become apparent in the
past year. The many efforts embodied in this bill attempt to undo
the inequities perpetrated under the guise of budget reductions.
In this bill, the Committee realises to accept the Administration's
philosophy that government has no role in providing housing to
those who do not have the resources to respond to market forces.
Summary of H.R. 1, as Reported
llie Subcommittee bill, H.R. 1, the proposed "Housing and
Urh&n-Rural Recovery Act of 1983" contains five titles.
Title I contains authorization adjustments euid program amend-
ments concerning the community and neighborhood development
{HTOgrams. The Community Development Block Grant (CDBG) Pro-
gram is reauthorized at a level of $4.5 billion for each of the fiscal
veBTB 1984, 1985 and 1986, of which $65 million is proposed for the
Secretary's Discretionary Fund for each of such fiscal years. The
Urban Development Action Grant (UDAG) Program is also reau-
thorized for three years at a level of $440 million for each of fiscal
yeazB 1984, 1985 and 1986. Authorizations also provide for not more
than: $225 million for Section 108 loat. guarantees; $9 million of ad-
ditional funds for Section 312 rehabilitetion loans with an overall
program level of $69 million; and $18,512 million for the Neighbor-
yGoot^le
hood ReinveBtment Corporation, of which $8 million will be used to
cany out a mutual housing demonstration program.
Amendments to the CDBG program provide that: pursuant to the
Erimary objective, 51 percent of the fimds provided for CDBG ihall
e used for activities that benefit low and moderate income per-
sons; a definition of low and moderate income persona as fanuliei
with incomes not in excess of 80 percent of the median inccnne of
the area; certain communities may continue their entiUenMnt
status r^ardless of a change in their designated cratral citar
status; cities of 45,000 population and urban counties of 180,000
population retain their CDBG entitlement status and growing
urban counties that have a population of at least 190,000 shall be
eligible for CDBG funds. Additional amendments provide that the
amount which may be used for public services be limited to not
more than 20 percent of CDBG funds, except that communitiee cor^
rently expending a higher percentage may continue to do so; com-
munities may make lump sum drawdowns of CDBG for economic
development activities. Also, amendments are included to expand
CDBG application requirements for metropolitan cities and urfaan
counties, to include certifications of: three-year plans, descripticnia
of activities benefitting low and moderate income perscms, Uir
housing compliance, citizen participation requirements, limitatkias
on the assessment of charges for CDBG ftmded public improve-
ments, and of compliance with applicable laws. For States adminis-
tering ttie small cities programs and to a more limited extent, for
small city applicants amendments strengthen existing certification
requirements. All CDBG recipients must certify that mfl»imnTn fea-
sible priority is given to activities that benefit low and moderate
income persons or aid in the prevention or elimination of slums or
blight and that not less than 51 percent of funds will be spent on
activities benefitting low and moderate income persona. Provisioiu
are also included to improve CDBG reporting, review and audit re-
quirements, including the small cities program adminiatered by Uw
States. CDBG recipients may retain pr<%ram income, «u»pt Eltates
may retain program income from small cities grant programa with
a waiver under certain circumstances. For the purpoaee of the Uni-
form Relocation Assistance and Real Property Acquisition Act of
1970, all CDBG assistance shall be considered federal financial as-
sistance and that persons displaced be given relocation assistance.
Provisions clarify the conditions under which credit for benefitiiK
low and moderate income persons may be claimed by CDBG i«ciu-
ents. In addition, shared housing for the elderly is added to the oi-
gible CDBG activities.
Amendments to the Urban Development Action Grant (UDAG)
Pr(^ram direct the Secretary: to guarantee loans for activitiee un-
dertaken by neighborhood nonprofit organizations in oonnectim
with UDAG projects; require applicants to make available UDAG
impact analyses to neighborhood groups; to require a reduced lever-
aging factor for UDAG funded low and moderate income housing,
commercial and industrial projects and for small cities; to mpiiity'"
a reasonable balance between neighborhood, industrial and cmtt-
mercial projects; to prevent HUD from refusing to fund housing ac-
tivities; to require HUD to provide technical assistance to small
yGoot^le
dtiee at a level of $3 million; and to make unincorporated areas in
urban counties eligible for UDAG pockets of poverty assistance.
Amendments also establish a Neighborhood Development Grant
Program funded at $15 million for fiscal year 1984 to finance
neighborhood development activities undertaken bv neighborhood
noaraxifit organizations. Such federal assistance will be limited to
$50,000 per prqject and will be leveraged by private contributions.
The Secretary will have the authority to reject an application if it
ifl inconsistent with community plans.
Additional amendments: provide that HUD may not establish
priorities limiting Section 312 funds for certain activities or for the
receipt of funds based on the receipt, or use of programs other than
urban bomeeteading; expand the Urban Homesteading Program to
intrude multifamily properties and provide funding of $25 million
to transfer single and multifamily properties and $25 million for
rehabilitation and technical assistance grants to be used with the
urban homesteading programs.
Title n authorizes for fiscal year 1984 $729,033 million in con-
tract authority and $12,927 billion in budget authority for the low
income assisted housing prc^ame, including $105 million in con-
tract authority and $2.1 billion in budget authority for public hous-
ing modernization. (CBO estimates this total budget authority
would assist 135,800 units, including 14.000 Section 202 units,
42,800 SectifHi 8 existing units, 20,000 Section 8 moderate rehabili-
tation units, 45,000 Section 8 conversions, and 10,000 public hous-
ingand 4,000 Indian housing units.)
The bill authorizes $1.55 billion for public housing operating sub-
sidies reduces the tenant contribution to rent in assisted housing
fh>m 30 to 25 percent of adjusted income, and establishes in law
deductions to income; permits PHAs to use development funds for
modernization; requires the Secretary to establish annual limits on
puhlic housing development costs; and codifies existing lease and
grievance procedures for public housing. It establishes Section 8
fair market rents at the median rent paid by recent movers; codi-
fies and makes improvements to the current regulatory system for
public housing operating subsidies (Performance Fundmg System);
deletes existing restrictions on the percentage of families with in-
comes between 50 and 80 percent of area median income who can
occupy assisted bousing; and establishes conditions on the demoli-
tion, sale or disposal of public housing projects. It further provides
that utility payments to tenants under the U.S. Housing Act of
1937 or Section 236 of the National Housing Act may not be consid-
ered in determining AFDC eligibility or benefits, and provides that
Section 8 existing bousing assistance may be made available to
SRO housing.
Title n also clarifies the eligibility of State agency projects and
rojects converted from rent supplement and Section 23 to Section
for troubled projects assistance; authorizes $32 million for trou-
bled pn^ects assistance; authorizes $32 million for troubled projects
awriafnnm for fiscal year 1984; and requires the Secretary to amend
Section 236 and rent supplement projects to provide necessary rent
incrooaea. It limits the interest rate on Section 202 loans to 9.25
percent authorizes $628 million in Treasury borrowing authority
and eeteblishes a loan limitation of $667.8 million for fiscal year
yGoot^le
1984 for the Section 202 program; provides a $50 millkm t
for handicapped housing under Section 202 and provides that up to
20 percent of this amount can be used to house peruns relcmed
from residential health treatment facilities; makee other amoid-
ments to the Secretary's authority under the Section 202 program;
and eetablishes a revised method of providing assistance under Sec-
tion 202 b^inning in fiscal year 1985. It authorizes $10 million for
the Congre^te Services Program for fiscal year 1^4; permits Sec-
tion 8 existing housing and moderate rehabilitation assutance to be
used for shered housing for the elderly; amends restrictions in ex-
isting law regarding federal housing assistance for aliens; ami es-
tablishes a $25 million demonstration program to coordinate ^ate
and local efforts to provide adequate housing for families receiving
public assistance. Title II also provides that federal bounng assist-
ance may not be considered as income in determining eligiotlity or
payments under an^ other federal program of assistance; and au-
thorizes $16.66 milhon in contract authority and $166.6 million in
budget authority for assistance up to a KV^year period under the
Section 235 Homeownership Assistance Program. It also provides a
$3 million authorization for a public housing child care demonstra-
tion program.
Title ni authorizes $1.3 billion for fiscal year 1984 for a new pro-
gram to provide assistance to State and local governments for the
construction or rehabilitation of multifamily rental and cooperative
housing in areas with a severe shortgage of affordable housing al-
ternatives. It provides that the assistance may be in the form of
capital grants, loans, interest reduction payments or other compa-
rable forms of assistance; that at least 20 percent of the units must
be available to families with incomes below 80 percent of the area
median income for at least 20 years; and provides a priority in the
selection for projects which exceed the 20 percent low and modei^
ate income tenant requirement.
Title IV contains authorization adjustments and extensions to
the rural housing pr<^ams. It would reauthorize the m^jor FmHA
housing pr<^aniB, generally at the authorization or appropriation
level provided in flscal year 1983. $2.73 billion would be authorised
for Section 502 low income homeownership loans, $400 million
would be authorized for Section 521 rental assistance payments
and $200 million of that amount would support new umts. Addi-
tional reauthorizations include: $25 million for Section 504 home
repair loans, $25 million for Section 504 home repair grants, $25.6
million for Section 514 farm labor housing loans, $25 million for
Section 516 farm labor housing grants (of which not more than 10
percent can be used for assistance to private and public nonprofit
agencies to encourage domestic and migrant farm labor bmisiiig
project development), $1 billion for Section 515 rental housing
loans, $2 million for Section 525 technical assistance grants, $12
million for Section 523 self-help housing n-ants, $3 million for Sec-
tion 523 self-help housing site loans, and $2 million for Section 509
construction defects payments. The defmition of adjusted inctHoe
and the percentage of such income that must be contributed to
mortgage payments or to rent are amended to conform to reuire-
ments of HUD-assisted housing prc^ams. A farm worker housing
project could not be rejected based on other tsrpes of housing needs
yGoot^le
identified in an area. The FmHA loan guarantee program will be
reactivated at a level of $200 million for fiscal year 1984, includ-
ing amounts necessary in connection with a demonstration of the
use of shallow Bubeidies for loans made by private lenders and
guaranteed by FmHA. Other amendments amend the 515 rural
rental program to prevent the Administrator from limiting rental
assistance paymente units in rural rental projects; permit projects
to be built on more than one'site; permit Section 502 inventory
propertiee to be used for rental purposes under Section 514 or Sec-
tion 515; permit extension of the term of Section 502 loans for 5
veazs if neceseary to meet the housing needs of certain low income
Dorrowers, establish a new Rural Housing Preservation Grant Pro-
gram to assist local governments and private and public nonprofit
organizations to carry out rehabilitation projects in rural areas on
behalf of low income tenants and homeowners; and provide $100
million for such grants for fiscal year 1984.
Title V extends the FHA Mor^^e Insurance Programs and the
Secretan's authority to set the FHA interest rate through flscal
year 1984 establishes a limitation on FilA mortgage insurance
commitments of $45.9 billion for fiscal year 1984; clarifies eligibil-
i^ of manufactured homes for FHA Title 11 insurance; makes
public boapitals eligible for FHA Section 242 mortgage insurance;
establishes a demonstration prwram for indexed mortgages; per-
mits FHA to insure multifamily graduated payment mortgages
(GPMs); and maintains current eneigy performance standards in
HUD'S Minimum Property Standards (MPS) but permits FHA to
insure houses meeting nationally recognized model codes or their
local equivalent. It also extends the Emergencv Home Purchase As-
sistance Act of 1974 (Brooke-Cranston) through fiscal year 1984; ex-
tends tlw GNMA Tandem commitment period for certain projects;
establishes a limitation for fiscal year 1984 of $68.25 billion for the
GNMA mortgage-backed securities program; establishes limitations
on second mortgages purchased by FNMA or FHLMC; authorizes
FHLMC to buy State-agency insured mortgages; clarifies FHLMCs
authority to purchase manufactured home loans; increases the
FNMA Board of Directors from 15 to 18 members; makes other
changes to the FNMA Charter Act; and increases existing limita-
tions on conventional multifamily mortgages purchased by FNMA
and FEn^MC. Title V also amends the provisions of the Real Estate
Settlement Procedures Act concerning controlled business arrange-
ments; authorizes $500,000 for the National Institute of Building
Sciences for fiscal year 1984; authorizes $100 million for the Solar
Energy and Energy Conservation Bank for fiscal year 1984, and
makes certain programmatic changes to the Bank; authorizes $300
million for fiscal year 1984 for the DOE Low Income Weatheriza-
titm Program; extends the Federal Flood Insurance and crime and
riot insurance programs through fiscal year 1985; authorizes $8
million for fiscu year 1984 for housing counseling assistance; and
authorizes $24 million for fiscal year 1984 for HUD research, which
includes $2 million for public housing management research and a
atady of public housing modernization needs, $2 million for a study
einA demtmstration prwram of mutual housing associations, and
not less than $10.6 million to assure adequate funding for the
snn^i^l housing survey.
yGoot^le
COMMUNITY DEVBLOPUKNT BLOCK GRANT PROORAM
Authorization
The bill reauthorizes the Community Development Block Grant
Program (CDBG) at a level of $4.5 billion for each of the fucal
years 1984, 1985 and 1986 and amends the statute to restore impor>
tant principles that have governed the program since its creatiai
in 1974 and that were deleted either by the Gramm-Latta amend-
ments to the Omnibus Reconciliation Act of 1981 or by regulatmy
changes imposed by the Reagan Administration.
$4.5 billion is authorized in order to maintain the level of aaist
ance appropriated in fiscal year 1983. This level provides an
amount that would be consistent with an average 4 percent annual
increase since 1980. This level of assistance is necessary to anst
communities across the country that have suffered under the hard-
shipe created by the continuing severe recession. The Committee
has set aside $250 million of any funds appropriated for the CDBG
Program that exceed $3.5 billion in each of the next 3 fiscal years
to target communities that face especially severe problems in meet-
ing their housing and community development needs due to unem-
ployment rates exceeding the national average. This special fiind
allocation will be provided in those fiscal years when Uie averue
unemployment rate exceeds 7 percent on a national basis for the
second and third quarters of the prior fiscal vear and will be allo-
cated according to the existing formulae for the Community Devd-
opment Block Grant Program only to communities that have an
average unemployment rate exceemng 9 percent for the second and
third quarters of the prior fiscal year. Seventy percent of these
funds will be distributed to metropolitan cities and urban counties
while 30 percent of the funds will be distributed to small dtieB
through the States or directly through HUD.
Low and moderate income beneficiaries
As a result of the amendments to the Community Development
Block Grant Pn^am which were adopted when the far-reaching
Gramm-Latta amendments to the Omnibus Reconciliation Act <n
1981 were approved, the Department of Housing and Urban Devel-
opment undertook a comprehensive revision of the rc^nilations gov-
erning the CDBG Program. However, instead of limitine the regu-
latory changes to those mandated by the 1981 Act, HUD proposed
modifications that had the potential for a fundamental redirectiai
of the program away from its primary objective, which is to devel-
op "viable urban communities by providng decent housing and ■
suitable living environment and expanding economic opportunities,
principally for persons of low and moderate income."
Since the agency was singularly unresponsive to the concerns of
the meuority of the members of this Committee, to the issues raised
during comprehensive hearings on these matters in 1981 and again
in December 1982, and to the voluminous comments receivea \g
the agency which were highly critical of these changes, the Com-
mittee has decided that the statute must be modified so that the
yGoot^le
principles that have folded the pn^am and which have been em-
bodied in statute, regulations, as well as Departmental policy over
the years will not be weakened by reflations that fail to assure
that the primary objective of the pr(^am will be met.
When the CDBG Program was initially proposed by the Nixon
Administration, the program provided so much flexibility to local
governments that it more closely resembled a general revenue
sharing program. In rejecting this approach, Cot^ress determined
that in order to receive federal CDBG funds, coitimunities must
assecs their housing and community needs, must design a strategy
to meet those needs and must develop a prt^am individually tai-
lored] for the community which would meet the primary objective
of the Act of providing decent housing and a suitable living envi-
ronment and expanding economic opportunities, principally for
persons <tf low and moderate income.
Ironically, during the first few years of the program, the pro-
gram was governed ^ r^ulations that were not strong enough to
reflect Uie intent of Congress. They were similar to those proposed
by the present Administration, in that they merely restated the
statutory language and resulted in many communities failing to
principally ben^ut their low and moderate income residents. While
HUD revised the regulations in 1978 to require that an applicant's
nogram as a whole shall principally benefit low and moderate
mcome persons and to presume tnat this standard was met if at
]east 75 percent of its mnds were allocated to activities principally
benefiting low and moderate income persons, an attempt was made
in that year to amend the statute to state that benefiting low and
moderate income persons, eliminating slums and blight or meeting
urgent needs were primary and coequal purposes of the Act. That
amendment was rejected and the conferees reaffirmed the original
intent of the program which provides for local assessment of local
needs and the development of local solutions while making clear
that its primary purpose is to develop viable urban communities
princii»lJy for the benefit of low and moderate income persons.
The regulations promulgated in 1978 are the ones the Administra-
tion is now proposing to weaken. Based on the extensive corre-
ntondence received by the Committee and the hearings held in
1981 and 1982, community after community has endorsed the ne-
cessity to retain regulations that provide unequivocal guidance re-
garding the use of CDBG funds for the benefit of low and moderate
income families.
Tlie Committee believes it is important that HUD promulgate
strong and clear r^ulations requiring each recipient community to
expend a nai^ority of its CDBG funds for activities that actually
benefit low and moderate income persons. The maintenance of this
basic principle is particularly necessary when communities are
hard hit by the recession and when the budgets of a wide variety of
federal and state assistance programs are shrinking or stagnatmg.
When less money is available to meet the needs of our citizens, the
funds that are available should be targeted to those low and moder-
ate income families most in need.
In order the assure the continued targeting of funds to low and
moderate income families, the bill requires each entitlement com-
munity and small city to use at least 51 percent of its CDBG funds
yGoot^le
and loan guarantee authority to benefit low and moderate income
families.
In order to assure consistency among the beneficiarieB of the Act,
the bill defines a tow and moderate income person as a fiunily (in-
cluding a single individual) whose income does not exceed 80 per-
cent of the area median income of the metropolitan city or uiiwn
county or, in the case of small cities, the non-entitlement area of
the state. The bill also clarifies the extent to which certain activi-
ties may be considered to benefit low and moderate income fami-
lies. Where acquisition, rehabilitation or construction activitiefl are
carried out by public or private nonprofit entitiee and economic de-
velopment activities are carried out, the activity must either be
carried out in a neighborhood consisting primarily of low and mod-
erate income families and provide essential services for such fiuni-
lies, involve facilities designed primarily for the uae of low and
moderate income families such as a community center or child care
facility, or provide jobs (a msgority of which would be permanoit
jobs for low and moderate income families), in order for the prqject
to be identified as principally benefiting low and moderate income
persons. CDBG funds for an area-wide project may be considered to
benefit low and moderate income families in proportion to the
numbers of such families living in the area served by the project
where the project is clearly designed to meet such families' needs.
Residential property which is acquired or rehabilitated with CDBG
funds may be considered to benefit low and moderate income per
sons only to the extent that such housing will, upon completion, be
occupied by such persons.
It is not the intention of the Committee to require that cities
which use CDBG funds for essential operating expenses and etaef
gency repairs necessary to maintcun the habitwility of houdug
units acquired through tax foreclosure proceedings calculate the
benefit to low and moderate income persons l^ the method con-
tained in Section 105(cX3) as eimended by the bill. Such activitiee
are not "acquisition" or "rehabilitation" as contemplated in the
act, but are necessary minimal expenditures designed to prevent
abandonment or destruction of such housing in primarily low and
moderate income neighbors; low and moderate income benefit
should therefore be ctdculated according to the method contained
in Section 105(cX2) as amended by this bill.
Another amendment is designed to further the primary purpose
of the act; it maintains the requirement in existing regulatioiiB
that entitlement and nonentitlement communities wUl not charge
or assess the real property owned by low and moderate inctnne per-
sons in order to recover the capital costs of or access to public im-
provements funded in whole or in part with CDBG funds. If it is
necessary to assess fees to cover the proportion of the coat of the
improvement that is financed from other sources such as local rev-
enues, FmHA or EPA funds, then CDBG funds should be used to
cover the assessments for the tow and moderate income proper^
owners. All grant recipients must certify their compliance with
this requirement.
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11
Eligible communities
Given the changes in population that have occurred in many
communities since the 1980 Census several amendments are includ-
ed to assure prc^am continuity for certain qualifying communi-
ties. As a residt of the decennial census and changes in criteria for
designating central cities of metropolitan areas, several cities will
lose their entitlement status as central cities beginning in fiscal
year 1984. The bill provides that cities which were designated as
central cities of metropolitan areas shall continue to qualiiy as en-
titlement communities for each fiscal year, if in the succeeding
fiscal year, the city used not less than 75 percent of its CDBG funds
in areas or on projects directly benefiting low and moderate income
families. In onier to provide an adequate opportunity for transi-
tion, a metropolitan city that has a population of 50,000 or more
will be considered to be an entitlement community until the census
indicates its population has reached 45,000 or less and an urban
county that has a population of 200,000 or more will retain entitle-
ment status until the census indicates its population has reached
180,000 or less. In order to accommodate the critical needs of rapid-
ly expanding urban areas, the bill also provides that a county shall
be considered an entitlement urban county if it has a population of
between 190,000-199,999, has a population growth rate of 25 per-
cent or more during the last ten years as measured by applicable
censuses and has not previously qualified as an entitlement urban
county.
Application and review requirements
A great deal of concern has been expressed that the amendments
approved in the Omnibus Budget R^nciliation Act of 1981 and
tne r^ulations promulgated by the Administration to implement
those changes have undercut some of the strengths of the original
CDBG program and have made it extremely dimcult for a careful
nnfirnnmrnt of the impact of the program to be accomplished be-
cause needs assessments, planning responsibilities, reporting re-
quirements and evaluation criteria have no consistency and are too
vague. The Committee concurs with the 1981 amendments that re-
moved the agency's authority to approve or disapprove a communi-
tv's application on the basis of HUD's assessment of the relation-
ship between the community's description of its needs and its pro-
poeal for activities to address those needs. However, the Committee
fimily believes that the process of assessing needs, devising specific
long and short term strategies to meet those needs and describing
CDBG activities that are necessary to carry out those strategies —
all of which must be designed to principally benefiting the low and
moderate income families — is an extremely valuable process and
(dbould be completed as a condition for receiving CDBG funds.
HUD's role will not be to second guess the community proposal but
it will be to provide clear guidance as to the required rational plan-
ning process, to assure that CDBG funds are used as proposed by
the community find to monitor compliance with the primary objec-
tive of the Act.
All recipients, whether metropolitan cities, urban counties or
snail dtlea, must as a condition of receiving funds certify compli-
yGoot^le
ance with the restriction on assessing low and moderate income for
property owners and must certify that its Community Devcdt^iment
Program has been developed to give maximum feasible priori^ to
activities that will benefit low and moderate income famUies or aid
in the elimination or prevention of slums and bli^t and to oamre
that not less than 51 percent of CDBG funds will be used for activi-
ties that benefit low and moderate income faraiiiee. An appIicaliOD
may also describe activities that are designed to meet urgmt needs
that have arisen during the prior 18 months, that pose a serious
and inmiediate threat to the heedth or welfare of the conunuidt^
and for which other financial resources are not available, bi addi-
tion, in developing its proposal for the use of CDBG funds in specif-
ic eligible activities, no recipient may reserve more than 10 percent
of its CDBG funds for unspecified local option CDBG eligible activi-
ties.
Entitlement communities
The bill restores the requirement that existed prior to 1981 that
entitlement communities (which are generally assured funding for
each of the three years authorized in the bill) must certify that it
has prepared a 3-year community development plan which:
identifies housing and commimity development needs, provides a
comprehensive strategy for meeting those needs, and sp«cifie8 short
and long term community development objectives that are consist-
ent with the primary objective of princii^lly benefiting low and
moderate income persons. The community must also certify that it
has formulated a program which describes spedflc activities that
will be undertaken with CDBG funds and that are proposed to
meet identified needs, including the cost, location and extent to
which those activities will ben^t low and moderate income per-
sons. These details fire particularly important so that HUD and in-
terested individuals and community groups can detennine whether
a community's CDBG program has been carried out in compliance
with its plan find with the primary objective of the act. In aoditiiHi,
because the Committee is concerned that care be taken to minimiwt
the displacement of families, particularly low and moderate income
families, when CDBG activities are undertaken, Uie application
must also certify that the community has developed an anti-dis-
placement plan. The anti-displacement plan should describe the ac-
tions a community will take to assist potential displacees to remain
in their neighborhoods where possible and the steps it will take to
mitigate any adverse effects resulting from CDBG limded activities.
The Committee is concerned that the proposed CDBG reffulatiniB
did not stress enough the responsibility for CDBG recipient commu-
nities to affirmatively further fair housing opportunities, so it has
amended the statute to clarify that responsibility for both entice-
ment and nonentitlement communities. It is expected that regula-
tions issued by the Deparbnent will provide clear guidance as to
tjiis resiwnsibility in compliance with the Committee a intent
The bill also restores tne citizen participation requirements that
existed prior to 1981 and clarifies a citizen's right to rain reason-
able access to records r^arding the CDBG funds in sumcient time
for citizens to submit comments to HUD regarding the communi-
ty's CDBG performance. It is important that citiz^is, particularly
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13
low and moderate income persons, have meaningful input into the
development of the CDfiG proposal and to comment on any
changes in the use of funds. The applicant must certiftr that it has
prepared and followed a written citizen participation plan that pro-
vies citizens a meaningful opportunity to participate in the devel-
opment of the propoealfor the use of CDBG funds, encourages sub-
mission of suggestions particularly from residents of blighted
neighborhoods and low and moderate income residents and sched-
ules hearings that permit broad participation. This process must
also assure that citizens receive adequate information regEuding
the amount of CDBG funds likely to be received and the range <h
activities that may be undertaken.
Finally, entitlement community applicants must continue to cer-
tify they will comply with a housing assistance plan (HAP) that
has been approved oy the Secretary and that includes an assess-
ment of the vacant and abandoned dwelling units and their poten-
tial for use to alleviate the housing needs of the low and moderate
income families residing or expected to reside in the community.
Compliance with a HAP requires a community to provide a real-
istic opportunity for the provision of newly constructed, rehabilitat-
ed or decent existing housing for lower income families residing or
expected to reside in that community. While the Committee recog-
nizes that the amount of federal funding available to help commu-
nities meet their low and moderate income housing neeos has de-
creased in the past three years, the Committee does not believe
that lessens a community's responsibility to take aflirmative steps
to meet the goals established in their HAP. For instance, a commu-
nity could provide a density bonus as the amount of lower income
housing in a project increases; provide incentives sucli as tax abate-
ments for, or require that, developers to set aside a portion of their
developments for lower income housing; revise building codes to
permit the construction of housing at the lowest price consistent
with minimEd standards of heEdth and safety; or revise zoning or-
dinances to permit lower cost manufactured homes. Since an enti-
tlement community must as part of its annual CDBG performance
report assess the actions taken to meet its HAP goals, and since
the HUD Secretary must determine whether a HAP has been car-
ried out in a timely manner and may make adjustments in the
CX)BG grant if pn^ress is not being made, it is very important that
ths agency provide clearer guidance in regulations as to a commu-
nity's obligation to meet its HAP goal.
Nonentitlement small cities program
In delegating to the states the responsibilit;^ for allocating the
CDBG funds to the non-entitlement communities and small cities
within its boundaries in 1981, Congress did not intend that a free
hsind be given to the states to create their own CDBG programs
ihaH fail to comply with the primary purpose of the Act or that
impose on the small cities state community development goals that
conflict with the small cities' assessment of their own needs or
with the strat^es that the small city determines will meet those
locally defined needs. After failing to persuade the Department to
inue regulations that provide clearer guidance to the states, that
delineate the responsibilities of tJie non entitlement communities
yGoot^le
14
to comply with the primary objective and other requirementB of
the Act, and that establish uniform standards of accountability, the
Committee has amended the statute to remove any ambiguity con-
cerning these aspects of the prc^ram.
The Committee believes mat states, like entitlement communi-
ties, must take a comprehensive look at their housing and commu'
nity development needs over a three-year period and must develop
a strategy for meeting those needs that is in accordance with the
primary objective of principally benefiting low and moderate
income residents. Since the state does not eutually undertake
CDBG activities but allocates funds to small conmiunitiefl within
the state, there is no requirement that the state describe specific
activities, identify alternative resources or describe an anti-dis-
placement strategy. However, as a condition of receinng funds the
state must certify that it will atHrmatively further fair housing op-
portunities and that it has prepared and followed a more compre*
nensive written citizen participation plan than required under ex-
isting law. In addition, it must consult with units of general local
government in developing the a>mmunity development plan and
the procedure for allocatmg CDBG funds. Applications for assist-
ance from non-entitlement communities must be selected by the
State on the basis of a competitive selection process. The Commit-
tee believes this provision is necessary to avoid situations when
funds are allocated on a per capite oasis or where insufficient
funds are provided to enable recipients to implement meaningful
housing or community development strategies. In addition, an ap-
plication may not be denied on the basis that a local community
has decided to use CDBG funds to carry out a particular activity
eligible under Section 105 of the Act including public service em-
ployment activities permitted under Section 10B(aXS). The Commit
tee is aware of states that have decided not to provide ftinds for
certain CDBG eligible activities. This arbitrary restriction defeats
one of the fundfunental principles of the Act which is that, consist-
ent with the primary objective of the pre^am, a local conununity
should be able to assess its local needs and to proceed with any
CDBG eligible activity that addresses those needs.
The Committee also believes that even in small communities,
CDBG funds will be used more effectively if, in developing applicft-
tions for assistance, those small communities undertake an aaseas-
ment of housing and community development needs, develop at
least single year stratus' to meet those needs in accordance with
the primary objective o? principally benefiting low and moderate
income persons, and identify the costs, general location and esti-
mated low and moderate income benefit of activities proposed to be
undertaken with CDBG funds.
The Committee is fullv aware of the limited resources and per-
sonnel available to small city applicants. Many communities are
governed by a part-time mayor and a single clerk. The Committee
expects the requirements of this section to be met in a simple,
straightforward manner that takes into account the lack of staff re-
sources in such communities. But even in communities with popu-
lations as small as 1,000 to 5,000, it is important that concerned
citizens be able to plan how CDBG funds may be best used to fit
into a comprehensive stratify for alleviating locally identified
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16
needs. Just as it is important that entitlement communities devise
plans to minimize displacement ([Mirticularly of low and moderate
income persons), agree to afHrmatively further fair housing oppor-
tunities, assure full participation of interested citizens in the CDBG
propOBal, and assure low and moderate income property owners are
not assessed for public improvements funded in whole or in part
with CDBG funds, it is important the smaller communities also
clearly understand these responsibilities and certify their compli-
ance with them.
It is equally important that each community, whether large or
small, has the responsibility to assure that the low and moderate
income families hvmg within that community are the principal
beneficiaries of the CDBG funds. While communities are given the
discretion to design strategies to meet their housing and communi-
ty development needs, it is important, particularly in this period of
economic distress, that the most vulnerable members of each com-
munity continue to be the primary beneficiaries of this pn^am.
Performance report
The statute is amended to clarify the responsibility of each com-
munity receiving CDBG funds to submit an annual report on the
activities cturied out pursuant to Title I of the Housing and Com-
munity Development Act. In order to assure that the information
Erovided by these reporta is available in a consistent and compara-
le form necessary for reasonable and fair evaluations, HUD is to
establish a standard form and to request sufficient specific informa-
tion to enable adequate reviews and audits to be undertaken. Being
able to collect and analyze this information in a meaningful way is
v«7 important if Congress is to responsibly assess the impact of
this mwram. Each community must assess the relationship of the
CDBG nmded activities to the primary objective of principally
benefiting low and moderate income families and must compare
the benent that was estimated prior to receipt of funds with the
low and moderate income benefit that was actually achieved. The
annual report must also describe how the activities were carried
out in accordance with the required certifications and how those
activities contributed to the achievement of identified needs and
objectives. In addition, entitlement communities must describe the
steps taken to achieve the HAP goals. Since HUD has the responsi-
bility for determining whether the CDBG Prograoi and the HAP
have been carried out in a timely manner (and preparing and fol-
lowing a HAP is an integral part of a community development
plan), it is expected that the annual performance r^ort will ad-
dress the HAP as well as the CDBG Program itself These reports
are also to include tmy citizens comments concerning the communi-
^ development performance of the unit of local government.
While communities may initially receive CDBG funds on the
basis of certifications that they have complied with the statutory
requirements concerning a needs assessment, the development of a
itrategy, the description of CDBG activities meeting those needs,
the development of an anti-displacement strategy and where neces-
sary, the fulfillment of the HAP goal, it is expected that all of this
information will be retained by the community and will be incorpo-
rated as part of its annual performance report.
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16
Small cities receivine funds from the State must submit theae
annual reports to the State while all other small cities and entitle-
ment communities and each State must submit the report to HUD.
The Secretfiry's responsibility for undertaking reviews and audits
of those communities submitting reports directly to the Secretaiy
remain the same as existing law but each State s responabilitjr re-
garding the oversight of the smEtll cities to which it allocates funds
is clanhed. HUD will conduct reviews and audita of each State to
determine whether funds have been distributed to local govern-
ments within the State in a timely manner and in conformance
with the allocation and competitive selection procedures designated
by the State, carried out all certifications, and required ea^ unit
of general local government to comply with all required certifica-
tions. HUD will also determine whether the State undertook suffi-
cient reviews and audits of such units of local government to deter-
mine whether those small communities undertook its CDBG adtvi-
ties in a timely manner, whether they were carried out in a way
that principally benefited low and moderate income families and
whether the small city has a continuing capacity to undertake the
CDBG activities. The HUD Secretary also has the authority to
review and audit the performance of small cities. The existing au-
thority of the HUD Secretary to adjust, reduce or withdraw aanst-
ance based on a community's failure to comply with any of the re-
quirements of the CDBG Act is retained.
Since the performance report and HUD's audit and review r^
sponsibilities are the primary means by which the Secretary will
determine whether the primary objective of the Act is being met, it
is very important that wie Secretary develop a uniform method for
each community to account for the extent to which its program
benefits low and moderate income persons. The bill would require
each entitlement and non-entitlement community to maintain ade-
quate records, particularly for this purpose.
BOSCBLLANBOUS PROVISIONS
Lump sum drawdown
The program is also amended to permit emy unit of ^neral local
government to request a lump sum draw down of CDBG funds nec-
essary to finance, make feasible or accelerate the implementation
of activities undertaken by public or private non-profit entities that
involve: any real property acquisition; the acquisition, construction,
rehabilitation or installation of public facilities, commercial or in-
dustrial buildings; or planning activities as long as the specific
project is identified in the CDBG plan and will require actual ex-
penditure of funds within two years. Any interest accrued on this
lump sum must be expended on the project.
Program income
Entitlement communities and nonentitlement communities may
retain program income if such income was realized after the initiu
disbursement of grant funds and the prc^am income is used fbr
eligible community development activities. However, where a State
allocates CDBG funds to a nonentitlement community, the State
may require all program income to be paid to the State to fund ad-
yGoot^le
17
ditional community development activities under this program
unleflB the program income ia applied to continue the activity from
which the mcome waa derived. Under those circumstances, such as
the use of program in<»}me to continue a specific rehabiiitation
loan or commercial development loan fund, the small city may
retain the program income.
Uniform relocation assistance
The statute is also amended in order to assuie that families
likely to be displaced Iw activities undertaken with community de-
velopment activities wiU receive sufficient relocation assistance. Of
particular concern to the Committee are families who would have
to move fix>m their homes and small commercial concerns that
would have to relocate their businesses. Assistance should be pro-
vided whether CDBG funds are used by local government, nonprof-
it or profitmaking orsanizations and the level of benefit should be
similar that required by the Uniform Relocation Assistance and
Real Property Acquisition Policies Act of 1970. In order that the
HUD Secretary may determine the reasonableness and appropri-
ateness of the assistance provided, the local government should
keep a record of the actual relocation expenses incurred and the
relocation benefits provided.
Eligible activities
The bill raises from 10 to 20 percent the amount of CDBG funds
any community could use to fUnd public service activities. How-
ever, any community which used more than 20 percent of their
CDBG assistance for such purposes in any of the nscal years 1981
tiirough 1983 could continue to use the highest amount or percent-
age used in {uiy of those three years. Shared housing opportunities
for elderly, disabled and handicapped persons would be eligible for
CDBG funds when developed by neighborhood based nonprofit or-
ranizations. Restrictions similar to those imposed on the UDAG
Program are placed on the CDBG Program so that no funds may be
provided for any project intended to relocate a commercial or in-
dustrial facility from one [region or from one metropolitan area] to
another unless the Secretary, pursuant to a community's request,
finds that the relocation will not significantly and adversely affect
Uie unemployment or economic beise of the area from which the fa-
cility is to be relocated.
SBCRETARV'S DISCRETIONARY FUND
Of the total amount appropriated for the CDBG Program in
fiscal ^ears 1984, 1985 and 1986 not more than $65 million may be
set aside in any year for grants from the Secretary's discretionary
fund. Of the amounts available in that fund not less than $2 mil-
lion in any year shall be used for grants to continue the Communi-
^ Development Work Study Program that has been in effect for
fourteen years. Originally administered under the 701 Comprehen-
dve PUiming Program beginning in 1969, this outsttmding pro-
gram has been very successful in preparing economically disadvan-
taged and minority students for careers in community development
md urban planning. When the 701 Comprehensive Planning Pro-
37--922 0-84-48
yGoot^le
18
gram was terminated at the end of fiscal year 1981, the Woit
Study Program was continued under the Secretary's CDBG discre-
tionary fund. This amendment will assure the continuation of this
valuable pn^ram in colleges and universities that received work
study grants in fiscal year 1983. The bill also authorizes not to
exceed $2.5 million to assist in expediting the close-out of privately
sponsored projects that have a certificate of eligibility for participft-
tion in the New Communities Program. The Secretaiy is also au-
thorized to make grants to a State or unit of general local govern-
ment that has received insufllcient CDBG funds due to a nuacalcu-
lation of its share under Sec. 106 of the Act; this provision restores
some flexibility so the Secretary may correct funding inequitke
that result from miscalculations when CDBG funds are allocated.
CDBG loan guarantees '
The HUD Secretary is directed to enter into commitments to
guarantee notes and obligations for the CDBG Loan Guarantee
Program totalling $225 million in fiscal year; the use of this au-
thority is subject to limits established in appropriation Acts and is
to be used to the extent qualified applications are received. Guar-
antees may be provided only if the issuer certifies that not len
than 51 percent of the amounts guaranteed will be used to benefit
low and moderate income families and that for public improve-
ments assisted with such guarantees, it will follow the same re-
strictions that apply in the CDBG Grant Program related to public
improvement assessments against low and moderate proper^
owners.
URBAN DEVELOPMENT ACHON GRANTS
The Committee authorizes for Urban Development Action Grants
(UDAG) $440 million for each of the flscal years 1984, 1985, and
1986 and makes other amendments to improve this important pro-
gram.
The Committee clarifies that cities of 50,000 persons or more or
urban counties are intended to be eligible for UDAG if they con-
tein a pocket of poverty that has a population of 10,000 persons or
10 percent of the population of the city or urban county, whichever
is less. The Committee also provides that in the case of an urban
county, an identifiable unincorporated community located in that
county may qualify for UDAG if it meets the pocket of pover^ re-
quirements. It also provides that the UDAG applicant's anlaysis of
the impact of proptwed activities on the neighborhood and on resi-
dents, particularly those of low and moderate income, of the nei^
borhood in which the activities are carried out, must be made
available to any neighborhood-based nonprofit organization in the
neighborhood where the proposed activities are to be carried out
Small cities UDAG
The Committee is aware that the House Appropriations Commit-
tee requested the authorization committees of the Congress to ad-
dress uie problem of the underutilization of the UDAG small cities
program funding. It has, therefore, made several provisions which
should result in greater utilization of these funds by small and
yGoot^le
19
rural communities. In reviewing the program and the analysis pre-
pared by the General Accounting Office (GAO), the Committee con-
cludes Uiat little can be accomplished without the full cooperation
of the Secretary in taking; afCirmative action to inform these com-
munities of tbe availabUilty of these funds and to assist them in
developing fundable prcgects.
In fiscal year 1983, the carryover of small cities UDAG funds ex-
ceeds the total one-^ear appropriation for the program, despite un-
onployment levels m nonmetropolitan areas which are even higher
thaia uiose for metropolitan areas and the critical community de-
velopment needs in these areas. Furthermore, in the last funding
round in fiscal year 1982, only about three percent (231 applicants
out of a possible 8,622) of the eligible small cities applied for UDAG
funds; in contrast, fully 78 percent (260 applicants of a possible 334)
of the eligible lai^e cities applied.
Even within the small cities program itself, special problems
exist for those with populations under 10,000. An analysis of the
first three years of the prc^ram found that the smallest communi-
tiee were not only less likely to apply for UDAG funds, but were
also less likely to be approved for funding in comparison with those
cities with populations greater than 10,000. The GAO study found
that, while 9S percent of the eligible municipalities were under
10,000 population, only 56 percent of the grantees were in this size
cat^orv.
llie Committee authorizes the Secretary to establish a technical
assistance program to help small cities develop, prepared fundable
applications for, and implement UDAG projects. The Committee di-
rects the Secretary to make grants, contracts or cooperative agree-
ments to nonprofit technical assistance providers with demonstrat-
ed expertise and experience in community and economic develop-
ment to carry out intensive, sustained technical assistance to
UDAG-eligible small cities, with special emphasis on municipalitifis
that have populations under 10,000, have significant minority pop-
ulations, or l^ve not previously received UDAG funding.
Tlie Committee believes that such a technical assistance effort is
critical if the small cities UDAG program is to realize its consider-
ible potential for job creation in small and rural communities.
ffinoe few small cities have the staff expertise to prepare a funda-
Ue application package, the technical assistance provided by the
Cnnmittee should be made fully available by the Secretary, ^per-
tise is particularly lacking in the smallest, poorest communities
which nave not previously participated in the UDAG program.
llMse special needs cannot be addressed through a delivery system
that is limited to the dissemination of program information. The
Cmnmittee provides that the Secretary shall make available not
Ins than $3 million in each of fiscal years 1984, 1985 and 1986
from the appropriated UDAG amounts to fund the technical assist-
ance activities. The Committee expects that the $3 million it pro-
Tides for technical assistance shall be allocated on a national basis.
Hie Secretary shall permit the leveraging ratios to be as low as
|2 of private investment for each UDAG dollar in any city that has
a ptqnilation of less than 60,000 persons and is not a central city of
I metropolitan statistical area if such amounts are used for proj-
yGoot^le
ects involving industrial plants or facilitiee or housing for low and
moderate income persons.
Allocation of UDAG
The bill restores the requirement that the Secretary shall allo-
cate UDAG grants in a manner which achieves a reesonable bal-
ance among projects designed to: restore seriously deteriorated
neighborhoods; reclaim for industrial purposes underutilized real
property; or renew commercial empWment centers and provides
that the Secretary may not deny a UDAG application because the
assistance is to be usee) solely for the provision of housing.
The Committee has taken these actions to prevent the Secretary
from arbitrarily imposing a requirement on UDAG applicatiaaa
that would eliminate the use of tnis pr<^am for housing or to oth-
erwise direct the program funds to a specific activity. The C(
tee believes that the option as to what activities its UDAG r
is directed toward should remain with the locality and be based on
its assessment of the needs it identifies. This does not mean that
the Secretary should allocate the UDAG funds in three equal oac-
tions. Rather, the Committee intends that the Secretary snould be
guided by the requests in the applications submitted for ITDAG
while assuring that funding is not arbitrarily restricted for any
class of applications.
UDAG loan guarantees
The Committee has added a provision authoriziiifi the Secretaiy
to guarantee the repayment of loans made to neignborhood-based
nonprofit organizations for activities undertaken in areas impacted
by UDAG projects. Guarantees may be made only if: the organisa-
tion is based in a neighborhood in which activities financed with
UDAG funds are being or will be carried out; loan funds are to be
used to finance neighborhood revitalization activities that are de-
signed to meet housing and other related needs of low and moder
ate income persons in the neighborhood and that have been devel-
oped with the approval of the city or urban county receiving the
grant; the tmiount guaranteed at any time does not exceed 90 per-
cent of the outstanding unpaid principal balance of the loan; the
amount of the loan does not exceed 95 percent of the coet of the
neighborhood revitalization activities financed by the loan; the or
^anization meets requirements established by the Secretary; there
18 reasonable assurance of rei»yment of the loan; the guarantee ii
requested by a financial institution in the manner and form »■
quired by the Secretary; the loan is not available firom financial in-
stitutions without the guarantee; and the guarantee meets term
and conditions prescribed by the Secretary with respect to the iih
terest rate and amortization of the loan, security required for thf
loan, proceedings in the event of default, and other matters defiosl
by the Secretary. The Secretary shall give a priority to astdstinf
neighborhood revitalization activities designed primarily to mib-
gate the displacement of low and moderate income perscms that il
likely to occur as a result of commercial or other activitiee in the
neighborhood. The aggregate amount of loans guaranteed durinc
fiscal year 1984 may not exceed 10 percent of the aiqiropriatea
UDAG amounts.
yGoot^le
NEIGHBORHOOD DEVELOPMENT GRANTS
Committee has authorized a new program of grants to eligi-
ighborhood development organizations to assist them to carry
i^borhood development activities.
amount of a grant may be from three to ten times the
it received by the neighborhood organization from individ-
Muineeses or other organizations on the neighborhood, but
i, exceed $60,000 for any neighborhood organization in any
nd the Secretary must establish the highest ratios of federal
rate funds for the most distressed neighhorhoods. Grants may
te made if the neighborhood organization certifies that the
F gereral local government has been notified and provided a
table period of time to comment on the application prior to
salon to HUD. Grants may be disapproved oy the Secretary
I basis of those comjnents only if such comments clearly es-
t that the proposed activities to be undertaken with the
will be plamly inconsistent with local government housing
nnmunity development plans. There must also be a commit-
by the partidpatuig onanizations, businesses and individuals
nde their shsiie of the funds necessary for the proposed activ-
1 the amounts necessary and during the perioa within which
tivities will be carried out.
ats flhall be awarded according to the degree of economic dis-
€ tbe neighborhood, the extent to which the proposed activi-
ill benefit low and moderate income persons, and the extent
ich the businesses and individuals participating in the pro-
activities are representative of all businesses and individuals
neighborhood. The Secretaiy may not in awarding neighbor-
levMOfHuent grants discriminate on the basis of the type of
e activity that is proposed to be carried out.
Secretary must establish a National Neighborhood Develop-
AdivBory Committee to advise the Secretary with respect to
vration of the Neighborhood Development Grant Program,
fe<^veness of the grant selection process and the effective-
f tite program. No eligible neighborhood development ot^ani-
shall be disqualified from receiving grants if a representa-
' that organization serves on the Advisory Committee. In ac-
ice with the requirements of Section 5(b) of the Federal Advi-
•mnmittee Act, the Committee has determined that the func-
nf the proposed advisory committee are not and cannot be
med by one or more agencies or by an existing advisory com-
I, and cannot be performed by enlarging the mandate of an
Of advisory conmiittee.
mle neighborhood development activities include activities
sd to create permanent jobs in a neighborhood, to establish
«md new business, to develop or rehabilitate housing, to de-
wentifl services, or to ^an, promote or finance voluntary
mrtiood improvement efforts. The Committee notes that
digible activities include delivering essential services or
out, promoting or financing voluntary neighborhood improve-
mwts. All five of the activities should be considered equally
a. It is not the Committee's intent that the pn^am should
I solely as a development program, to the exclusion of service
yGoot^le
22
delivery. An eligible neighborhood development organization is on
organization that is organized as a private, voluntary, nonprofit
corporation under state law, is responsible to the residents of the
neighborhood through a governing body made up of at least 51 per-
cent of members that are residents of the neighborhoods, has con-
ducted business for not less than three 3rearB prior to the date of an
application for assistance, operates in a distressed area as '^*^"wi
by UDAG distress criteria, and conducts one or more of the eligiUe
activities primarily for the benefit of low and moderate income per-
sons. The Secretary is directed to issue regulations as are necesBBzy
to implement the Neighborhood Development Grant Program
within 90 days of enactment of this Act and provides an authmita-
tion for appropriation of $15 million for fiscal year 1984.
URBAN HOMESTEADING
The Committee bill revises Section 810 of the Housing and Com-
munity Development Act of 1974 to expand the scope of the federal
urban homesteading effort, target the prc^am to low and modov
ate income families most in need of housing, and provide increased
flexibility to participating localities.
Background. — As a result of hearings held by the Committee in
which testimony was received from the Association of Community
Organizations for Reform Now (ACORN) the Committee was con-
vinced of the need for an expanded homesteading prt^ram. In addi-
tion, however, the Committee was prompted to act because the Ad-
ministration has proposed to charge for properties involved in the
homestead prt^am and thereby gut the low income benefit that
Congress intended the program to have. This, in addition to HUD*!
refiisal to take into account the value of the sweat equity contribu-
tions of homesteading participants — a factor the Committee hat
seen successfully utilized in the rural self-help program — catued
the Committee to adopt major amendments to the existing home-
stead program.
Section 810 was enacted in response to the rapid accumulation of
abandoned housing in urban neighborhoods and a mounting fedenl
inventory of residential properties. It authorizes localities witii
qualified urban homesteading programs to claim vacant sin^
family properties owned by HUD, VA, or Farmers Home. Sectin
810 funds are used to reimburse these agencies for propertin
claimed by localities. The program has stimulated the development I
of homesteading efforts in more than thirty cities and counties, in
all sections of the nation.
Reports and studies issued by the GAO, HUD, the Presidenfi
Commission on Housing, and localities have concluded that awed
equity homesteading is a viable and cost-effective means of provid-
ing housing for low and moderate income families. A 1982 report
by HUD's Office of Policy Development and Research found that
"high quality workmanship and cost reduction through sweat
equity are compatible objectives in an urban homestes^ing pro-
gram , a 1981 City of Philadelphia study found that "succes^nil -e-
cipients tended to be very low income individuals," These oooclu-
sions were reinforced by the personal testimony of low-income
yGoot^le
B at a hearing conducted by the Housing Subcommit-
tee in June, 1982.
Despite the evident efTectiveness of homesteading, it has not
come clow to realizing its potential as a housing resource for the
nation's low and moderate income famiUes, nor has it made a great
impact on the problem of housing iibandonment. The main reasons
for this are that the prc^am was given a low priority, limited
funding and communitjes transferred properties to higher income
families. In eight years of operation, the Section 810 program has
turned over lees than 10,000 housea. By contract, Phuadelphia
alone contains more than 30,000 abandoned units, and there are es-
timated to be more than 200,000 units nationwide which are suit-
able for homesteading, with hundreds of units being added to that
stock every week. HUD itself has concluded that "the potential for
homesteading far exceeds the level of activity to date."
Furthermore, it appears that in many instances local homestead-
ing programs have often failed to serve those most in need of hous-
ing. In 1979, the most recent year for which the data are available,
the average Section 810 homesteader had an annual income of
about $17,730. Only 42 percent of participating households were eli-
gible for Section 8 assistance, and in a few pn^rams none of the
homestead recipients were Section 8 eligible. The 1982 Housing
Subcommittee hearing on homesteading identiiled a number of spe-
cific problems. First, some localities have interpreted the existing
statutory instruction to give "special consideration to the recipi-
mt'a need for bousing" bo liberally that almost any renter house-
hold will qualify. At me same time, localities have established eli-
^tiility standards which directly or indirectly discourage low and
noda*ate inoHne participation. Second, there is simply not enough
rehabilitation assistance available to meet the needs of low income
homesteaders; the shortage of aid reinforces the middle-income ori-
entation (tf local homesteading prc^ams. Third, the inventory of
UUJXnraed single-family properties has been significantly reduced
once 1974, to the point that such properties no longer constitute a
nmjor portion of all vacant or abandoned housing; a larger propor-
tim of the vacant houses are privately owned and tax delinquent.
Fourth) hud's interpretation of statutory language calling for a
"coordinated approach to neighborhood improvement" has led to
the restriction <^ homesteading opportunities to a small number of
neighborhoods. Fifth, the low level of funding has encouraged a
tentative, "demonstration-style" approach to homesteading long
after the Section 810 program ofFlcially graduated from demonstra-
tion status. Sixth, and most broadly, HUD and the migority of lo-
calities have tended to emphasize the property improvement goals
gf the program at the expense of the low-income housing goals.
Hqfor proviaioiu. — The Committee bill would restrict eligibility
to houawolds whose income is 80 percent or below the SMSA
"^^P", and define additional criteria for housing need. It reflects
die Committee's strongly held view that homesteading opportuni-
ttM should be targeted to those most in need of housing. Since
Qwre are far more families in this category than there are vacant
propertiee suitable for homesteading, the Committee does not an-
ticipate that localities will experience any difficulties in locating
yGoot^le
24
eligible applicants with the capacity to make the required repoin
and improvements.
Fun<& {ire authorized for rehabilitation assistance to low and
moderate income homesteaders, with the bulk of the funds taigeted
to very low income househotda. In recc^^ition of the innovative re-
habilitation finance mechanisms developed at the local level in
recent years, the funds are made available in the form of granta to
localities, which may deliver the eissistance to homesteadeiB in any
appropriate form. The Committee particuleirly wishes to encourage
the use of these funds to "leverage" private investment in hounng
rehabilitation. A prevision is included to permit localitieB to use
Section 810 funds to acquire single-family properties which are not
federally owned. The Committee believes that many localities will
be able to obtain suitable properties at relatively little cost throu^
tax sale, donation in lieu of taxes, emd/or purchase of low-ralue
vacant properties directly from private owners or other govenimra-
tal entities. The Committee expects the Secretary to promulgate
rules which will prevent abuses of this provision and will encour-
age localities to use their acquisition funds in the most costefTeo-
tive manner.
The statutory language which had the effect of encouraging lo-
calities to restrict homesteading to a small number of neigUia<-
hoods is deleted. The Committee s intent is to encourage the exten-
sion of homesteading opportunities as widely as poasible within
participating jurisdictions.
The bill raises the federal multifamily homesteading {nrogram
from demonstration to r^ular program status, and intcsrates it
with the single-family effort. Localities are encoragad to ckivelop a
mix of single-family and multifamily homesteading activity wmdi
is Expropriate to the local housing stock.
The Committee authorizes $50 million for urban homesteading
for fiscal year 1984, $25 million will be used to acquire propeititt
and $25 million for rehabilitation and technical assistance grants.
SECTION 312 REHABIUTATION LOANS
The Committee reaffirms its intent to maintain the existing re-
habilitation grant prt^am despite the Secretary's proposals to tet-
minate it or use it for purposes that Congress did not intend. Tlie
Committee rejects the Secretary's restriction of this important iwo-
gram which required that it only be used for single family purposes
in connection with urban homesteading activities and that multi-
family activities be limited on^ to HUD sponsored demonstratioa
programs. Unlike most local CDBG backed rehabilitation loan pio-
grams, Section 312 loans provide deep subsidies highly targeted t»
low income families and areas. It is especially disconcerting to th>
Committee that the Department persists in its efforts to deny the
use of this important prc^am as a tool to stabilize neighbornoodl
of one- to four-family residences. The Committee again wishes to
make clear that it intends that these loans be utilized for one- to
four-family dwellings whether or not those dwellings are pert of
the Urban Homesteading Program. Communities, in their discre-
tion, may also decide to use the funds to rehabilitate multifamily
yGoot^le
The Committee provides an authorization of $9 million in addi-
tional budget authority and establishes a loan limitation of (69 mil-
lion tor the Section 812 Rehabilitation Loan Program for Fiscal
Year 1984. In addition the Committee provides that the Secretary
may not require certain proportions of 312 funds to be used for par-
ticular typee of housing (suc^ as single family or multifamily dwell-
imni) and the Secretary may not establish a priority for receipt of
81^ funds based on the receipt or use of other federal funds for
bousiiig or community development (such as CDBG or Section 8
funds) other than a priority for use in conjunction with the Urban
HcnneBtoeding Program.
NBOHBCttHOOD BBINVESTlifBNT CORPORATION
The Committee authorizes an appropriation of $18,512,000 for
Fiscal Year 1984 for the Neighborhood Reinvestment Corporation.
In addition, the CtHnmittee bill would add a provision requiring
that at the amounts appropriated at least $3 million be used for a
Mutual Housing Association Demonstration which emphasizes re-
habilitation of existing housing. The Committee proposes this dem-
onstraticKi as another means for exploring the viability of the
mutual bousing approach used widely and successfully throughout
Europe and in the Govens area of Baltimore. The Committee ex-
pects that this demonstration be structured along the lines of the
mutual housing association demonstration approved by the Com-
mittee in the Housing and Community Development Act of 1980.
The Committee is very concerned that the members of the Board
of I>irectori t^ the Neighborhood Reinvestment Corporation are
proposing to discontinue the financial support of their organiza-
tions for the budget of the Neighborhood Reinvestment Corporation
in fiscal year 1984. In the Neighborhood Reinvestment Corporation
Act CP.L. 95-657, Title VI), the Committee recognized the value of
the Corporation's authority to receive funds other than federal ap-
propriations in order that it operate as a public corporation rather
Utan an agency of the government. The Committee's strong support
fbr agency participation was most recently reflected by full Com-
mittee action in coiyunction with the Gam-St Germain Depository
Illltitutiinis Act of 1982 (P.L. 95-320) which specifically authorizes
the oititiee represented on the Corporation s Board to provide
fiinds, as w^ as services and facilities, to the Corporation.
Tiu participation by the Federal Reserve System, the Federal
DepOBit Insurance Corporation and Comptroller of the Currency in
the financial support of the Neighborhood Reinvestment Corpora-
tun in fiscal year 1983 was critical to the Corporation's operations
tf a time of declining contributions by the Federal Home Loan
Buik System due to the economic difficulties encountered by the
minff and loan industry.
In adcqiting the provisions of the Gam-St Germain Depository In-
"" 'ion Act enabling the contributions of funds, it was not the
t of the Committee that this financial support be a one-time
___jre. Rather, it was the Committee's exp^^tion, consistent
irith the Neighborhood Reinvestment Corporation Act, that the de-
nts, agencies and instrumentalities represented on the
irhood Reinvestment Board would continue to provide as-
yGoot^le
26
sistance necessary to achieve the objectives and to cany out the
purposes of the Act.
In summary, the Committee commends the Federal Reserve
System, the Federal Deposit Insurance Corporation, the Comptnri-
ler and the Federal Home Loan Bank System for their finandeJ
support totalling $1.2 million in contributions to the operations d
the Neighborhood Reinvestment Corporation in fiscal year 1^3.
The Committee strongly un^es these agencies to maintain their
current levels of support in Fiscal Year 1984 as this funding signifi-
cantly strengthens the Corporation's ability to operate as a public
corporation. Additionally, the loss of this support at a time of in-
creasing federal reductions in domestic prt^ams would result in a
significant reduction in Corporation funding, seriously affecting the
ability of the Corporation to develop and provide support to Nei{^
borhood Housing Services Programs.
Title II— Housing Assistance Prooraus
PART A — LOWER INCXJMK HOUSING PROGRAM
Authorization for low income housing
The Committee bill authorizes the HUD Secretary, subject to ap-
proval in Appropriation Acts, to enter into annual contributions
contracts aggregating not more than $729,033 million in fiscal year
1984 for the assisted housing programs. The maximum amount rf
budget authority that may be obligated with respect to these con-
tracts would not exceed $12,927,147,000. Based on Congressional
Budget Office estimates this amount of funding would be sufficient
to assist approximately 135,800 units, including 14,000 Sec. 8 new
construction or substantial rehabilitation units to be used in con-
junction with Sec. 202, 42,800 units of Sec. 8 existing, 20,000 unite
of Sec. 8 moderate rehabilitation, 45,000 units of conveTSions firom
Rent Supplement, RAP, and Sec. 23 to Sec. 8, 10,000 unite of pubUc
housing, and 4,000 unite of Indian housing.
While this amount of funding represente over a 25 percent de-
crease from the 1982 authorization levels, and a 60 percent de-
crease from the 1981 authorization levels, the Committee wishes to
clearly reaffirm ite continued support for the low-income assisted
housing programs. The Committee feels that the 1983 appropri-
ation level of $8.65 billion was totally insufficient to meet the na-
tion's need for assisted housing, and views ite proposed level as the
minimally acceptable level. The Administration had proposed only
$514 million in new budget authority for the low income assisted
housing pn^rams, and had predicated the migority of funding for
ite fiscal year 1984 program on the availability of recaptured funds
from the deobligation of over 54,000 unite currentiy in the pipeline
and from the proposed deferral of over $3 billion of fiscal year 1983
funds into fiscal year 1984. However, the proposed deferral was re-
jected by Congress, and it now appears clear that only a small frac-
tion if any, of the recaptures assumed by the Administration will
take place. Thus, the amount of new budget authority proposed by
the Administration for 1984 would be enough to fund little more
than what HUD estimates is necessary to provide amendmente to
housing contracte already in place.
yGoot^le
27
bill represents a resounding rejection of the Administra-
Torts to severely restrict the Federal Government in its im-
Fole in providing decent, safe and sanitary housing for the
nne and elderly. The Committee continues to believe that
ting federal assisted housing pr<^am6 have worked well to
their intended purpose of housing the nation's poor and el-
I the case of the Sec. 8 New Construction Prc^am, where
g economic and budget circumstances have increased the
m costs of the prt^am to unacceptably high levels, the
tee has responded by proposing a new, more efficient and
Hy rental production program to address that aspect of the
need.
Committee has also rejected the Administration's proposed
Block Grant rSt)gram. The Committee considered several al-
es for providingmuch needed housing assistance for Indian
iskan Natives. The Committee found these alternatives un-
e to meet the housing assistance needs of these extremely
sple. It also found that the funding levels proposed to sup-
!se alternatives were far below the levels required. In par-
tJie alternative offered by the Administration was woefully
ate in these respects. The Committee was inundated with
^rom individual Tribes and from all of the national Indian
iskan Native organizations ur^ng the Committee to reject
oinistration's proposal. In providing for the reauthorization
ixisting Indian Housii^ Pr<^am and authorizing funding
0 additional units, the Committee expects that the Secre-
II expeditiously make these funds available and desist in
' Indian and Alaskan Natives the housing assistance the
8 intended to provide for these needy Americans. The Com-
las learned that through a number of plainly dilatory tac-
8 Administration has been denying this assistance or
it so difficult for the Tribes to obtain so as to dissuade
om supporting the existing prt^ram and thereby forcing
1 agree to the alternative prop(»ed by the Secretary. The
tee believes such tactics to be unconscionable and will
monitor the Department's periormance to see that such das-
actics are not continued formally, by regulation, or infor-
Y other means.
jommittee believes the Department should reinforce the
[lousing Program rather than attempt to dismantle it, and
use its best efforts in conjunction with the Interdepartmen-
t Force on Indian Housing to ensure that necessary water
'er and roads funds are made available in a timely manner
ort the housing units being funded. The Committee is also
if another proposal under consideration by the Congress at
le, but after serious study, as well as discussions with var-
lian tribes has concluded that this alternative approach to
housing falls short of what is available under current law.
!ommittee bill limits the number of Rent Supplement, RAP,
:. 23 units converted to Sec. 8 to 45,000 units. The Commit-
eves that HUD would not be able to convert the 69,100 it
ipoeed for 1984, and that the additional funds could be
itilized to assist additional households. However, the Com-
lirects the Secretary to ensure that units which are not con-
yGoot^le
verted but which need rent increases are provided amendments ob
a timely basis.
As is ptist years, the Committee bill requires the Secretfuy to al-
locate the assisted housing funds in accordance with the Sec. 213
fair share allocation formula, with the exception that the provisitai
adopted in the Omnibus Reconciliation Act of 1981 that permitB
fungibility between funds for new construction, rehabilitation and
existing housing, and between funds for Sec. 8 and public houaiDg
modernization would be deleted. The Committee behoves that this
provision is inappropriate in light of other provisions in the Ccaii-
mittee bill that would permit fungibility between public houaiiig
development and modernization funds, and in view of the Commit-
tee'a proposal for a new Rental Housing Production Program that
would substantially replace the Sec. 8 New Construction /Substan-
tial Rehabilitation Pn^ram.
In authorizing $105 million in new contract authority for com-
prehensive improvement assistance, the Committee explicitly re-
jects the Administration's proposal to fund public housing modern-
ization with funds recaptured as a result of PHAs canceling proj-
ects in the construction "pipeline". In view of the importance of
modernization activities in reducing operating costs, particularly
energy costs, the Committee believes it would be most imprudent
and impractical to depend on the availability of recaptur^ funds
to finance this program. The Committee has also rejected the pro-
posal by the Administration to phase out the CIAP Program by
1985 and to fund modernization from a captial replacement allow-
ance provided for out of operating subsidies. Although the Commit-
tee had indicated in the House report accompanying the creation of
the CIAP Program that eventually physical improvements would
be funded in such a manner, the transition to such a system can
only take place after the modernization and deferred maintenance
needs of the stock have been addressed. HUD has provided no data
to indicate that this will be the case by 1985.
Tenant rent contribution
The Committee bill reinstates the provision in law deleted by the
Omnibus Reconciliation Act of 1981 that permitted PHAs to fii
income limits for occupancy and rents witn Secretarial approval.
The Committee expects that these rents would be establisned at
least at a level sumcient to cover the debt service and operating
costs of the prmects but in no case higher than 25 percent of a tea-
ant's income. 'The Committee directs the Secretary not to disap
prove rents which have been established so as to encourage the
working poor to continue to live in public housing, and where the
continued occupancy of these familes would promote the economic
and social stability of the project and the economic viability of tbe
PHA,
The bill also reinstates the provision in law which established a
tenant's contribution to rent in the assisted housing programs at 26
percent of adjusted income, thus deleting the provision adopted b^
the Omnibus Reconciliation Act which increased the tenant contri-
bution to 30 percent. The Committee believes that in a time of eco-
nomic recession, it would be grossly unfair to raise the rents of tbe
very low income and the working poor who are the most adversely
yGoot^le
ipacted by an economic decline. The Committee received unpre-
ndented mail and testimony during its hearings as to the ez-
eme hardship the Administration's proposed rent increases would
ive caused.
Hie bill excludes from income, for the purpose of determining a
oant's eligibility and contribution to rent, tlie value of any food
ampB received by the family. Tlie Administration had proposed
at food stamps be included as income for this purpose. The true
equities of this proposal can be expressed no more dramatically
on was done by HUD's Assistant Secretary for Policy Develop-
ent and Research, E. S. Savas, in a memo:
Counting food stamps as income most severely affects
the lowest income, those with the largest families and
those who are living in areas where the value of food
stamps is lai^ly relative to the level of AFDC benefits.
Critics are already suggesting that in some Southern
states HUD tenants will have to pay part of their rent
with food stamps.
Proposals to count foods stamps as income under AFDC
programs as well as other program changes cculd have un-
mtended and, from the point of view of the households af-
fected, disastrous consequences unless a greater degree of
federal oversi^t is exercises at this time. — E. M. Savas,
Tenant Impacts of Recent Policy Changes. (February 24,
1982).
The IrU also excludes from a tenant's income, in the case of any
ihlic assistance payments that include an amount specifically des-
nated for shelter and utilities that is subject to ai^ustment by a
iblic assiBtance agency in accordance with the actual cost of shel-
r and utilities, any amount exceeding the amount of such pay-
ents actually received by or on behalf of the family; and any
cial security payments received by an elderly family living in a
tared housing arrangement in which such elderly family benefits
om sharing the facilities of a dwelling with others in a manner
lat effectively and . eniciently meets their housing needs and
lereby reduces their coet of housing.
Anally, the bill also establishes certain exclusions to income that
ould be determined before applying the 25 percent contribution,
eluding $400 for each minor, disabled or handicapped person, or
odent; $400 for each edlerly person; extraordinary medical e.£-
gisea exceeding 3 percent of income; and child care and other un-
lual unreimbursed expenses related to working.
Finally, the Committee bill also provides that for purposes of de-
imining the amount of operating subsidies to be provided to a
9A during fiscal year 1983, the regulation increasing tenant
ots frxmi 26 to 30 percent shall not be considered to have been
Ebctive prior to February 15, 1983, if prior to the beginning of the
Kal year the PHA was a party to civil litigation to eiyoin imple-
entation of the regulation. ThjB provision will prevent HUD from
w<<>liiring those PHAs who were unable to implement the r^ula-
m earlier than that date by reducing their operating subsidies.
yGoot^le
30
Section 8 existing housing program
The Committee bill recommends continuation of the Sec. 8 Exist-
ing Housing Pn^am. The Administration has proposed to replaet
this pn^am with a "modified certificate" designed along the linea
of the ^perimental Housing Allowance Program (GHAP). While
the current housing program provides a l&-year subsidy that is es-
tablished at a payment level which provides reasonable housing op-
portunities and which takes into account increases costs necessitat-
ed by inflation, the proposed modified certificate would provide a
&-year subsidy at a payment level over 30 percent below the current
level, and would permit amendments to be made to contracts in
place only by diluting that contract or other contracts. The Admin-
istratioD proposal would place no cap on the rents aasisted, thus
permitting tenants to pay more than 30 percent of income. The
effect of this proposal would be to severely constrict the housing
opportunities of low and moderate income persons, particularly
large families and minorities, and increase considerably tm
amount paid for rent by assisted tenants in many supply-oxh
strained areas.
Id order to ensure that an adequate level of aubeidy is made
available to provide reasonable housing opportunities for families
participating in the Sec. 8 Prc^am, the Committee bill requires
that the fair market rental for an area be established at the
median rent paid by recent movers in the area. In order to addren
criticisms that the Fair Market Rents are used as an automatic
rent for each unit, rather than as a ceilii^ rent, the bill codifies
the "rent reasonableness" test in existing regulations which {hv-
vides that the maximum monthly rent shall be reasonable in rda-
tion to rents being chained for comparable units in the private un-
assisted market and shall not be in excess of rents currently being
charged by the owner for comparable unassisted units. Care must
be taken that where an owner has rented his property prior to pai^
ticipating in the Sec. 8 Existing Program, involvement in the pro-
gram does not result in automatic or unreasonable increase in
rents.
The Committee bill further provides that in the case of any Sec.
8 existing housing contract entered into for lees than 15 years, the
Secretary shall offer to renew the contract for 5-year intervals up
to a tottu I&-year period of assistance. The practice of the Depart-
ment has been to enter into Sec. 8 contracts for a 5-year period
with no prosTsion as to renewal by the owner or the PHA, TiuB
Committee provision clarifies Congressional intent that by autbor
izing budget authority for the Sec. 8 Program niiich is expected to
be sufficient for a 15-year period, Congress expects the Departnteot
will execute contracts that will make the assistance available fbr
that period. The Committee expects the Department to report to
the Congress in timely fashion in the event that the Department
determines that as a result of higher than expected cost increasea
insufBcient funds are available to extend these contracts to the ftill
lb-year period.
"nie bill also provides that at the discretion of the oublic housing
ageni^ involved, the Sec. 8 contract m&y/ be attachea either to the
t^ant or to the structure, up to a period of 15 years. Tliis provi-
yGoot^le
sion will encourage landlords who have heretofore been reluctant
to participate in the Sec. 8 I'^riaHng Housing Program to undertake
modest rehabilitation and make these units available by providing
aamirance of a long term contract The Committee believes that ez-
erciae of the option should depend on circumstances in the local '
communis and should be at the discretion of the PHA if beneficial
to the Sea 8 Existing Housing Program in its community.
Income eligibility and economic mix
Hie bill removes the limitation adopted in the Omnibus Recon-
ciliation Act of 1981 on the percentage of families with incomes be-
tween SO and 80 percent of area median income who can occupy
aaristed housing. It further restores to law another provision that
had been deleted by the Reconciliation Act which provides that at
least 80 percent of tiie families in assisted housing shall be very
low income (bdow 50 percent of area median income). The Ccnnmit-
tee believes it critically importeint that moderate income families
be provided housing assistance. The families who would be dis-
placed as a result of the reduced income eligibility criteria — princi-
pally the working poor — provide the backbone of neighborhood sta-
bilication eftbrts, and help to promote the economic viability of
niAs. These families do not earn enough income to afford decent
houaing without some form of subsidy, especially during periods of
high mortgage interest rates. These families would be denied the
(qiportuni^ for decent housing precisely because of their efforts to
improve their living conditions through employment. The Commit- .
tee is cognizant of the argument put forth by the Administration
that because housing resources are scarce, assistance should be lim-
ited to the very low income. The Committee believes that this con-
cern would be better met by increasing the amount of housing as-
sistance provided, rather than by limitii^ the income groups eligi-
ble for assistance.
Limitation on tenant rent increases resulting from conversions
The Omnibus Recenciliation Act of 1981 authorized, effective Oc-
tober 1, 1981, a number of changes regarding tenant rental pay-
inmts in aarasted housing. The changes included a requirement
that all tenants in assisted housing, including senior citizens, recer-
tify th«r incomes annually for the purpose of making any neces-
sary adjustments in tenants' rents, and that any rent increases
caused by the eunendments in the 1981 Act or by the redefinition of
income shall not result in a rent increase of more than 10 percent
during any 12-month period. The Committee has learned that the
10 percent cap on rent increases has not been uniformly followed
with respect to tenants who are being involuntarily converted from
the Rent Supplement Program to the Sec. 8 Program. The bill
therefore clarifies that rents shall not be increased by more than
10 percent annually in connection with the conversion process, in-
dadingtaiants converted to Sec. 8 prior to enactment of this Act.
ITie Rent Supplement Program was authorized by the Housing
and Urban Development Act of 1965. The Act provided that ten-
ants receiving rent supplement pavments were not required to re-
oerti& their income on an annual basis beyond the age of 62. It
was felt that elderly tenants would not ordinarily experience
yGoot^le
32
annual increases in income which were substantial enou^ to war^
rant emnual recertification. Despite the 70 percent cap on rent 8up>
plement payments, meaiy elderly tenants did not experience aigmn-
cant rent increases under the Rent Supplement Program during
their participation in that program. '
In 1982, owners of federally subsidized multifamily housing proj-
ects around the country were afforded the opportunity to convert
from the Rent Supplement Program to the Sec. 8 Pn^p'am Exist-
ing tenants in the buildings were required to recert^ their in-
comes in connection with the conversion process and their rents
were adjusted accordingly' For many senior citizen tenants, the
conversion to the Sec. 8 FVogram and the accompanying recertifica-
tion of incomes resulted in significant rent increases based on ihe
cumulative effect of modest annual increases in Social Security
benefits or pensions which had previously not been taken into con-
sideration. The Committee has teamed that many tenants in thear
70'b and 80'b who have lived in their subsidized projects for over 10
years experienced sudden and substantial rent increases as a result
of the conversion to Sec. 8 and the accompemj'ing recertification <^
their incomes. These increases, particularly for senior citizens,
were an unforeseen and unintentional consequence of the convert
sion and recertification process and would have been dealt with
more explicitly in the 1981 Act had it been anticipated as a prob-
lem.
Under the Committee bill, modest annual increases in Social Se-
curity benefits, pensions, or other public or private sources of
income, which had not previously been taken into consideration in
detennining rents because of the lack of an annual recertilicatitn
refjuirement, shall not be considered cumulatively for the purpose
of unposii^ a sudden and, in many cases, substantial rent increase.
Rather, it is the intention of the Committee that increases in rents
caused by increases in income which took place during a time that
recertification was not required be phased in so that aimual rent
increases do not exceed 10 percent. In the case of elderly tenants
who were converted after October 1, 1981, but before the effective
date of this Act, the Secretary shall increase their rents after tlte
date of enactment of this Act as if the 10 percent annual limitatiai
had been in effect since the time of conversion. The OHnmittee
does not intend that HUD provide any rebates in calculating the
rent sunder this provision.
Public housing operating subsidies
The Committee bill authorizes $1.56 bUlion for public housing op-
erating subsidies for fiscal year 1984. It also codifies the current
regulatory system for allocating the operating subsidies, the Pet-
formance Funding System (PFS), and makes certain improvements
to the formula.
In taking this action, the Committee has rejected the Adminis-
tration's proposal to fund operating subsidies and |Hiblic housuu
modernization on the basis of a modifed Fair Market Rent (FMR)
System. In Oie view of the Committee, the HUD proposal was seri-
ously flawed, since it would have provided funding for PHAs oa the
basis of the demand for private housing in the area, and not on the
basis of the true costs of operating public houisng. Where local
yGoot^le
housing markets are weak, an FMR System will tend to underfund
PHAs. Where the private market is strong and dynamic and a
great deal of new rental housing is being built, the FMR System
will tend to produce windfalls for PHAs in thoee areas. It is worth
noting that HUD's own study of alternative methods for allocating
operating subsidies pointed out these fundamental flaws in adapt-
ingthe FMR system to the Public Housing Pn^am.
The Committee believes that the allocation system for operating
or opera
public h
subsidies must recognize the unique costs of operating public hous-
ing as a result of factors such as age of the stock, tenant popula-
tion, and location of projects. As such, the Committee believes that
the Performance Funding System, which provides subsidy accord-
ing to the costs of operating a prototypical well-managed PHA,
should be retained. However, the Committee bill revises the cur-
rent PFS to correct a number of past problems that have been
identified with the PFS. Many of these changes were suggested in
HUD's own study of alternative methods for allocating operating
subsidies; others have been developed after considerable consulta-
tion with PHAs.
The changes include: a formal review process to correct inequal-
ities and abnormalities that exist in PHA s base year expense level;
inclusion of a specieil distress adjustment factor to reflect the addi-
tional costs of operating in distressed areas; funding of excessive
costs beyond the control of PHAs; replacing the complex and cum-
bersome "delta" factor with a uniform annual adjustment to reflect
the aging of the stock; and providing for year end adjustments to
reflect actual utility costs and inflation rates. In addition, other
specific changes are made in management and make eneigy con-
servation improvements, including: reimbursing PHAs for litiga-
tion expenses incurred in obtaining more favorable utility rates
and permitting 75 percent of the amount recovered in excess of the
litigati(Hi cost to be retained by the PHA; extending the rolling
base period used in computing the utilities expense level from the
current 3-year period to a 5-year period, and permitting PHAs to
keep 75 percent of reduced costs as a result of decreased consump-
tion instead of the current 50 percent, provided such funds are
used for modernization improvements under CLAP; encouraging
PHAs to obtain additional funding sources from other Federal,
state, or local sources; and permitting PHAs to keep 50 percent of
increJased revenues from increased occupancy rates.
The Committee does not intend to foreclose other improvements
to the PFS, and the bill requires the Secretary to report by March
1, 1984, concerning other proposed modifications and improvements
to the formula, particularly incentives for managment improve-
ments designed to reduce long-term costs and provide for a more
efficient operation of projects and delivery of services to tenants.
These additional incentives are to be developed in consultation
with PHAs.
Comprehensive in^rovement assistance program
The Committee bill provides that the Secretary may not recap-
ture any part of any authority allocated prior to fiscal ^ear 1984 to
a public housing agency with respect to public housing develop-
ment for 24 months after date of enactment, and provides that a
37-922 O - 64 - <
yGoot^le
public housing agency may use such autiiority for comprehenBiTe
improvement assistance under Sec. 14 of the U.S. Housing Act of
1937 eifter consultation with its local government. liiiB prorinon
will enable PHAa to bring to construction those projects in the
pipeline which are viable, and permit funds for projects which are
no longer viable to be used for modernization under the dAP Pro-
gram.
The bill aiso contains two provisions which clarify Congrasioiial
intent regarding the CIAP Prc^am. One provision clarifies exist-
ing law to provide that the Secretary may not establish any pref-
erence in allocating modernization assistance based on the type of
activities for which assistance is requested, except in the case of
projects having life threatening health or safety conditions or a sig-
nificant number of vacant substandard units, and where the public
housing agency has demonstrated a capacity to carry out its pro-
gram. Another provision provides that the physical and energy con-
servation standards developed by the Secretary for use under the
CIAP Prc^am shall be consistent with the minimum proper^
standards for multifamily housing as such standards were In effect
on October 1, 1980.
The Committee felt compelled to include these provisions in light
of recent administrative attempts by HUD to establish funding pri-
orities for certain types of modernization activities and to replace
the physical standards presently used under CIAP with the Hous-
ii% Quality Standards used under the Sec. 8 Existing Housing Pro-
gram. In the Committee's view, these proposed changes were in
direct conflict with Congressional intent in adopting the CIAP Pro-
gram. The House Report accompanying authorization of the new
pn^ram noted that one of the problems with past modernization
pn^ams the Committee was attempting to rectify in creating
CIAP was that "[the program] had suffered from constantly shift-
ing priorities and an insensitivity to the needs identified by PHAs
themselves". The Committee Report stressed throughout diat the
CIAP Program was intended to reestablish the preeminent role of
PHAs in the maintenance and management of the public housing
stock and that although the Committee expected the Secretary to
work closely with the PHA and assist the PHA in analyzing its
needs and developing a comprehensive plan for meeting those
needs, "[t]he Committee must emphasize that such a plan should
reflect the priorities of the PHA . . .". The other proposed change
by HUD, to reduce the modernization standard, was similarly in-
consistent with the l^islative intent of the Congress in authoriziiig
CIAP. The proposed standards would have reduced improvements
to only the minimal levels of repair needed to meet local axles and
would have seriously undermined the basic intent of the program,
which is to protect the long-term investment of the Federal Gov-
ernment in the public housing stock by improving its long term
physical durability and its sfifety and liveability for its tenants.
The Committee has therefore acted to amend the CIAP Program to
ensure that the intent of the Congress in authorizing the program
is carried out.
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Limitations on public housing development costs
The Committee bill authorizes the Secretary to annually estab-
li^ and publish reasonable maximum limitations on public hous-
ing development costs, taking into account local prototypes and
locEil variations in land, site improvement, and construction costs.
It also provides that any project for which a development cost
budget has been approved by the Secretary prior to Itecember 6,
1982, shall be subject only to such cost limitations in effect on Sep-
tember 7, 1982.
The Committee has included these provisions as a result of
recent actions by the Department to cap public housing total devel-
opment costs at not more than 160 percent of prototype costs for
detached and semi-detached row or walk-up structures and at not
more than 145 percent of protoWpe costs for elevator buildings.
These limits were developed by HUD based on average costs for
Sec. 8 projects insured under Sec. 221(dX4), and would result in
about one-third of the projects currently in the pipeline not being
able to proceed to construction. The Committee concurs with the
need to ensure that public housing development costs are not ex-
cessive, but believes that any limitations must be developed in ac-
cordance with the particular features of the Public Housing Pro-
gram and taking into account local variations in land, site, and
construction costs.
Public housing lease and grievance procedures
The Committee bill requires the Secretary to establish lease and
grievemce procedures for public housing. HUD has proposed to
repeal existing regulations concerning these procedures. These ex-
isting regulations were initieilly developed in 1971, after extensive
consultation by this Department with representatives of housing
authorities and tenants. They grew out of dissatisfaction with the
practices of some, but not all, PHA's that caused unfairness in the
leasing and operation of PHA projects. They reflected judicial deci-
sions regarding the minimum level of fairness required of govern-
ment agencies which are landlords, and were designed to provide a
realistic means for resolving disputes between tenants and PHA's
quickW and fmrly, before the problems fester and hostilities devel-
o^. hud's power to issue the regulations and the reasonableness of
ite judgment in doing so were sustained in court after court. The
regulations themselves were readopted in 1975, after an extensive
tn^year review by new HUD officials with widespread input from
PHA's, tenants and other members of the public.
Given that history, it is the judgment of the Committee that
these lease and grievance requirements must be retained. Thus, the
bill adds a new subsection to Sec. 6 of the Act, under which the
Secretary must hs regulation require PHAs to maintain grievance
procedures and utilize fair leases. The Committee contemplates
that HUD will meet this obligation by retaining the present regxUa-
tiona. Tba bill provides that the g ievance procedures shall be
available for all disputes between a PHA and an applicant, a
tcoiant or a former tenant. The hearings shall be made available on
an administrative level, because attempting to resolve these mat-
tMV only in court is not a desirable, efficient and effective ap-
yGoot^le
' 36
proach. The procedures must meet the requirements of due proceM,
including (1) adequate notice to the tenant of the grounds for the
PHA'b action; (2) an opportunity for the tenant to examine all rele-
vant documents, records and regulations of the PHA in order to
meet the PHA'b case; (3) a right to be represented by counsel or
other representatives; (4) a right to present witnesses and other evi-
dence and to confront and cross^xamine opposing witnesses; (5) an
impartial decisionmaker; and (6) a decision based solely on the
record and explained in writing. The PHA leases must also not
contain unreasonable, unfair or unconscionable provisions, such as
requirements that the tenants waive rights granted by state or fed-
eral law. Since 1970 HUD has prohibited PHAs from utilisong tiie
following types of unfair clauses: confession of judgment; distraint
clauses; exculpatory clauses; waivers of legal notices; legal proceed-
ings, jury trials and appeals; and clauses requiring tenants to pay
l^al costs regardless of the outcome. The bill requires that those
regulatory prohibitions be retained and that HUD prohibit as well
any additional clauses which are unreasonable. Beyond prohibiting
certain unfair clauses, the bill also requires the leases to contain
certain basic protections. They include clauses obliging PHAs to
maintain the premises in decent, safe and sanitary condition, and
to provide adequate notice before evicting tenants. The Committee
also contemplates that HUD will retain tne existing r^ulations re-
garding these provisions.
Housing tenant reporting requirements
The bill establishes as the responsibility of the PHA to collect
data from tenants for the purpose of determining tenant eligibility,
rental payments, or appropriate dwelling unit size. The Committee
expects tiiat while PHAs will collect and maintain this informa-
tion, the Secretary will have complete access to it. In addition, the
Committee intends that the PHA will require each family to codi^
as to their citizen status for the pur[>ose of determining eligibility.
The bill further limits the ability of the Secretary to require fami-
lies to provide information that duplicates information it has al-
ready provided to the PHA unless such information is requested
pursuant to a survey of a sample population of tenant families or
an audit of the PHA to evaluate the adequacy of its procedures for
determining eligibility and rent.
Conditions on demolition, sale or disposal of a public housing
project
The bill places certain restrictions on the demolition, sale or dis-
posal of public housing projects in whole or in part which are not
done pursuant to Sec. 14(f) of the U.S. Housing Act of 1937 (Com-
prehensive Improvement Assistance Program) and which do not in-
volve the sale of a public housing project to its tenants. The Com-
mittee expects, however, that even though these restrictions do not
appl^ to a sale to tenants, any tenant purchase must result in the
contmued availability of the project for low income tenants. The
purpose of this provision is to ensure that the public housing stock
remains available for housing low income families. It provides that:
the PHA and local government must certify their approral; ttw
project must be substantially unoccupied; the cost of rehabilitatiiig
yGoot^le
37
the project must be greater than replacing it; the Secretary and
the PHA must have developed the plan for demolition, disposition,
and replacement after notification to and consultation with ten-
ants; and the Secretary and the PHA must have entered into
agreements assuring relocation assistance comparable to the assist-
ance provided under the Uniform Relocation Act to any tenant
who is displaced as a result of the demolition or disposition.
In addition, the public housing agency must secure funding com-
mitments from the Secretary or other sources emd such funding
must be committed to replacing the sold, demolished, or otherwise
disposed of units with an equal number of newly constructed or
substantially or moderately rehabilitated units in the same neigh-
borhood. It provides that the Secretary may approve, after consul-
tation with the tenants and tenant groups affected, replacement by
fewer units in the same neighborhood or in one or more difierent
neighborhoods if the Secretary determines that this action will
result in a better living environment for lower income families and
that replacement by an equal number of units is not necessary to
meet lower income housing needs. It permits the conditions regard-
ing substantial occupancy of the projects and rehabilitation cost to
be waived if there are sound social and economic reasons for the
demolition, sale, or other disposition; and if a majority of the ten-
ants affected consent to such action.
In deciding whether a project is substantially unoccupied, the
Secretary should make a determination that the PHA has not en-
gaged in a policy or practice of vacating the units or project to
meet this requirement, to avoid paying relocation benefits or to
avoid invlovittg tenants in the disposition plan. Projects should not
be deemed substantially unoccupied if applicants for public housing
would accept an offer of tenancy in the project or unit. This re-
quirement should not be interpreted as an endorsement of PHA
policies or practices that result in significant numbers of vacant
public housing units.
Hie bill requires PHAs to notify and consult with tenants and
tenant councils and groups in the development of a disposition plan
and the approval of less than one-for-one replacement of units in
the same neighborhood or in more or diflerent neighborhoods. Ma-
jority tenant consent is also required if the substantially unoccu-
pied or cost of rehabilitation requirements are to be waived. This
requirement of tenant involvement should not be interpreted by
HUD as being exclusive of interested groups. In particular, the Sec-
retaiy should take all reasonable steps to ensure that applicants
and other organizations and agencies concerned with housing, low
income families in the community are involved in the disposition
process. Applicants for public housing will have a very different
perspective on the need for low income housing in the community,
and that perspective should not be ignored. As part of the reloca-
tion protections specified in the legislation, the Secretary should
IMnilHi that displaced tenants have a right of first refusal in any
r^ilacement housing. The relocation protections should also be ex-
tended to any family displaced as a result of the development of
rsfdacement housing.
yGoot^le
Section 8 cost limitations
The bill amends Sec. 8(1) of the U.S. Housing Act of 1937 to pro-
vide that in approving cost and rent increases (other than anniml
adjustments to rent) with respect to Sec. 8 projects, the Secretary
shall not establish a percentage or other arbitrary limitation on
such increases. The provision would apply to Sec. 8 proposals re-
ceiving a preliminary reservation of contract authority in fiscal
year 1984 or in any prior fiscal year. The Committee believes that
a fixed percentage cap on cost and rent increases applied to all
projects on a nationwide basis is inconsistent with tiie intent of
Sec. 8(1). The Committee directs the Secretary to examine each re-
quest for increase on a project-by-project basis, taking into account
regional cost difTerences and particular project circumstancea, and
to grant cost and rent increases where justified, as permitted by
statute.
Amounts recovered by public housing agencies
The bill amends the provision adopted in the Omnibus Reconcili-
ation Act of 1981 which permits PHAs to retain, out of judgments
obtained by them in recovering amounts wrongfully paid as a
result of fraud and abuse in the Sec. 8 Program, the greater of the
legal expenses occurred in obtaining such judgments, or 50 percent
of the amount actually collected. It provides that where the PHA
recovers wrongfully paid amounts through other than court ac-
tions, it shall be permitted to retain 30 percent of the amount actu-
ally collected.
Report on neighborhood strategy areas
The bill requires the Secretary, not later than 120 days after
date of enactment, to report to the Congress as to the status of the
program established by the Secretary to provide Sec. 8 assistance
to areas of concentrated housing and community development ac-
tivity (Neighborhood Strategy Areas) under the CDBG Program.
The (Committee heard testimony in its hearings last year ^m
many local governments that had expended considerable funds in
making improvements to targeted neighborhoods in anticipation of
receiving these Sec. 8 commitments. This report will provide the
(^mmittee with a more detailed survey of the extent to which ad-
ditional housing funds may be required to meet the original com-
mitments made by the Department under the NSA Pn^am.
Consideration of utility payments made by public housing tenants
The Committee bill clarifies that utility payments made by
public housing tenants should be considered part of their rent fw
determining benefits under AFDC. Under present law, tenants may
contribute no more than 30 percent of their monthly adjusted
income for housing costs, which includes both rent and utilities.
This amendment will address inequities which result in the case <^
tenants who live in projects with individual utility metering and
who spend 30 percent of their monthly income on utility bills. In
some states, because these tenants pay no rent, they receive less
AFDC benefits per month than public housing tenants who live in
master-metered projects and whose monthly payment to the HIA
yGoot^le
is not broken down by rent or utility payment. This amendment will
require that tenants in public housing be treated equally with re-
spect to AFDC payment whether they live in master-metered or in-
<tividually metered projects.
Single room occupancy housing
The Committee bill permits the Secretary to waive the 15 per-
cent aingle person occupancy limitation for Sec. 8 and public hous-
ing if, following OHiBultation with the public housing agency in-
volved, the Secretary determines that the dwelling unit is neither
being occupied, nor is likely to be occupied within the next 12
months, by families or persons who are elderly, disabled, handi-
capped, displaced, or are a remaining member of a tenant family
due to the condition or location of such dwelling unit, and that
such dwelling unit may be occupied if made available to single per-
sons in circumstances described in r^ulations of the Secretary. It
also provides that assistance under the Sec. 8 Existing Housing
Program may be made available to residential properties in which
some or all of the dwelling units do not contain bathroom or kitch-
en facilities (single room occupancy housing), where the local gov-
ernment in which the property is located and the local public hous-
ing agency certify to the Secretary that the property complies with
local health and safety standards.
PAST B — OTHER AB6ISTBD HOUSING PROQItAHS
(iterating assistance for troubled multifamily housing projects
The Committee bill authorizes for appropriations not to exceed
$32 million for fiscal year 1984 for the Troubled Multifamily Proj-
ects Pr^tram, and extends through fiscal year 1984 the authority
to transfer funds (subject to appropriation) from the Sec. 236 rental
housing assistance fund. This authorization, together with $30 mil-
lion that is expected to be transferred from the Sec. 236 rental
housing assistance fund and $8 million in carryover balances, will
permit a program level of $70 million for fiscal year 1984.
The bill also makes clear that State agency Rent Supplement
and RAP projects tire eligible for Troubled Projects assistance.
These State agency projects represent a small but not insignificant
porUon of the assisted housing stock, emd their continued physical
and financial viability is particularly important in light of the con-
straints the Committee faces in authorizing funding for new units.
The bill also clarifies that Rent Supplement and RAP projects
which are converted to Sec. 8 will continue to remain eligible for
Troubled Projects assistance. Although the Sec. 8 Program will be
able to provide sufficient resources to these projects to enable them
to Aind necessary rent increases, that prt^ram does not provide the
resources necessary to fund physical improvements, install energy
conservation improvements, and provide a reserve for replacing
capital items. The bill will permit these projects to be continued to
be funded with Troubled Projects assistance for those purposes
even after their conversion to Sec. 8.
yGoot^le
40
Housing for elderly and handicapped
The bill increases the limit on Treasury borrowing authority for
the Section 202 Pr^am by $628 million for fiscal year 1984, and
would establish a limitation on gross loans for fiscal year 1984 of
$667.8 million. This amount would be sufficient to finance 14,000
units. The Committee bill also caps the interest rate plus any ad-
ministrative allowance charged for Section 202 loans at 9.25 pn-
cent.
The Committee bill provides that at least $50 million of the
amounts appropriated for the Sec. 202 Program for fiscal year 1984
shall be available for housing for handicapped persons. The bill ex-
pands the definition of the term "handicapped persons" to include
persons who have been released from residential treatment facili-
ties. Although these persons have been deinstitutioneilized, they ar«
often without the ability to meet their daily needs such as shelter.
However, the amount of funds which could be spent for the pur-
pose of housing such persons is limited to 20 percent of the set-
aside.
Last year the Committee held a hearing to investigate several
administrative actions taken by the Department which threatened
the viability of thousands of elderly and handicapped units in the
construction pipeline. These actions included a refusal to grant ex-
tensions of loan reservations which had been routinely granted in
the past, the imposition of cost containment procedures requiring
project sponsors to make changes on nearly completed plans, and
an insensitivity to the difficulties of sponsors in locating suitable
sites for handicapped projects. The purpose of the hearing was to
explore the confusion that had been generated by the Department
making major policy changes and revisions to those changes
through informal memos, of^n with very short notice, and to ex-
plore all^ations that these administrative actions were prompted,
not be a desire to weed out infeasible projects, but by a desire to
cancel projects in order to recapture funding.
As a result of that hearing and other testimony received during
the Subcommittee's general authorization hearings during 1982,
H.R. 6296, the Housing and Urban-Rural Recovery Act of 1982, con-
tained several provisions which directly addressed several elements
of the Sec. 202 Pribram proposed to be changed l^ HUD in radia-
tion, including mortgage limits, escrow contribution requirements,
and competitive bidding requirements. H.R. 6296 was reported fa-
vorably by the Committee on May 11, 1982. Despite this, the De-
partment published an interim rule in the Federal Register on the
same day which contains provisions in direct conflict with the pro-
visions of H.R. 6296. The Committee responded by reporting out a
resolution of disapproval on June 2, 1982, concerning the regula-
tion. The effect of the resolution of disapproval was to delay the
effective date of the regulation for 90 calendar days.
Pursuant to the resolution of the disapproval, the HUD Secre-
tary delayed implementation of the regulation, publishing it on Oc-
tober 6, 1982, as a proposed rule and soliciting public comment
The regulation was puolished as final on March 18, 1983, and
became effective on May 2, 1983. The final rule does not contain
provisions concerning the escrow contribution requirements, but
yGoot^le
41
doee omtain provimona concerning Sec. 202 mortgage limits and
competitive bidding requirements. The Committee continues to dis-
agree with these changes to the Sec. 202 Program and, as such, in-
cludes in the bill several amendments to the Sec. 202 Program
which address uovisions in the regulations as well as other aspects
of the Sec. 202 Program.
First, the Committee hUl provides that unless otherwise request-
ed by the sponsor, a maximum of 25 percent of the units in a
project finaiwed under Section 202 may be efliciency units, subject
to a determination by the Secretary that such units are appropri-
ate for the elderly or handicapped population residing in the vicini-
ty of such project or to be served by such project. The intent of this
provision is to ensure the financial viability of projects in areas
where marketing a higher number of emciency units would
present a difHculty and to clarify that the Secretary shall not
impose a recniiremeDt that a certain percentage of units in such
projects be emciency units.
"Aie bill also rodiiies the current practice which requires a mini-
mum capital investment on the part of the sponsor. This invest-
ment is designed to ensure the commitment of the nonprofit orga-
nization and protect the initial viability of the project. Because the
Section 202 direct loan is intended to cover 100 percent of the cost
of construction and financing, the minimum capital investment is
returned to the sponsor after three years of operation. The Com-
mittee supports the concept of a minimum captial investment and
the bill would direct the Secretary to limit such an investment to
no more than $10,000. The Committee believes that this figure is
sufficient to ensure the commitment of the nonprofit sponsor, but
not BO great as to limit the ability of small nonprofit organizations
representing minority, handicapped and rural elderly from partici-
pating in the program.
By prohibiting the Secretary from requiring an equity participa-
tion ay a sponsor, the bill continues the current practice of provid-
ing Section 202 direct loans that cover the entire cost of developing
a project. It also permits sponsors to include suitable amenities and
design features which enhance the living environment for residents
if ws funds for such amenities are provided voluntarily by the
The bill also permits the use of Section 202 direct loan to finance
congregate living arrangements which require participation of all
residents in a minimum daily meal program. Lack of^ clarity con-
cerning hud's policy regarding meal contracts for Section 202 resi-
dents has led to confusion among sponsors. The bill also provides
ibat the payments for such a meal program may not be considered
a nut of the rental charge for a Section 202 unit.
The bill requires that cost limitations for Section 202 projects
adequately reflect the actual cost of constructing or rehabilitating
bousing which incorporates congregate space emd the special design
features required by elderly and handicapped residents. The provi-
sion reaiiirmB the coi^ressional [>olicy established in Section
202(dX3), stating that HUD shall establish per unit mortgage limits
without regard to other HUD housing programs, including the Sec.
221(dX3) Program. The Committee intends that per unit cost limita-
lionB established for the Section 202 program reflect the Section
yGoot^le
202 program design and actual experience, usiiw the limitationB in
effect on January 1, 1983, as a base, and that tney be adjusted an*
nually to reflect the increased cost of construction.
The bill contains a provision to maintain the right of the n<m-
proflt sponsor of 202 housing to decide when to select and whom to
select as a general contrator to build its project. This right has ex-
isted since the inception of the current 202 pn^ratn in 1974 until
the recent HUD regulation which became effective May 2, 1^.
The Committee feels strongly that this flexibility is essential to the
continued successful participation of nonproflt organizationB in the
program, particularly community-based nonproflt groups. These
groups have brought to the 202 prc^ram a special dedication to de-
velop quality projects, to locate them on good sites, to operate and
maintain the projects conscientiously, and to provide supportive
services to the elderly or handicapped residents.
Most of these nonprofit groups are not in the business of develop-
ing multifamily housing projects. They do not know how. Like
others who do not know how to do something, they hire people who
do know. HUD has often been intolerant of the inexperience oF
nonproflt housing sponsors and its recent regulation demonstrates
this attitude. The regulation would make it difficult for the non-
profit sponsor to obtain the development assistance it needs by, in
effect, requiring most sponsors to wait to get that assistance until
after they have selected a site, determined the size, design, floor
plans, common areas, and amenities of a project; filed an applica-
tion for a 202 loan; undei^one some HUD processing; and prepared
flnal and complete plans and specifications for the project.
Whatever, me purported purpose of the HUD r^ulation may be,
in the Committee's view, its real purpose and effect ia to erode the
role of nonproflt groups in providing housing for the elderly and
handicapped and the Committee rejects that goal. The Committee
bill is intended to give the 202 sponsor an unfettered, real choice of
contractor selection methods. The Committee expUcltlv intends
that the imposition of conditions or limitations b^ HUD tnat would
render any oasis of contractor selection less feasible or de^rable to
the sponsor than another basis of selection would be pndiibited by
this provision.
Finally, the bill provides that the Secretary may not approve
prepayments, sale, or transfer of Section 202 loans unless such
transaction will ensure the continued operation of the project to
the same degree of beneflt to existing and future tenants as pro-
vided for in the original loan agreement. The Committee believes
that a policy on the prepayment of Sec. 202 loans is important in
light of^ recent decisions oy the Department tx> permit prepaymente
on an ad-hoc basis. These Sec. 202 loans were provided to sponson
at below-market rates for the sole purpose of providing affordable
housing for the elderly and handicapped. The Committee is con-
cerned that this housing should continue to be available for its in-
tended beneflciaries for the term of the original loan.
Consolidation of housing assistance for elderly and handicapped
families
The Committee bill contains a revision and expansion of the 202
program of housing for the elderly and handicapped. The revised
yGoot^le
43
program will not be effective until October 1, 1984, in order to pro-
vide adequate time for implementing reflations and procedures to
be developed and for the revised program to be recc^nized in the
budget and ai^iropriations processes. The Committee also intends
to hold extensive hearings on the revised program to ensure that
any potential problems raised by the revised subsidy mechanism
can be promptly addressed by the Committee in future legislation.
The current Sec. 202 Program, as amended by other provisions of
this bill, will continue to be operative in fiscal year 1984. The Com-
mittee expects that with the long lead time provided, there should
be no disruption of continuity in providing assistance for housing
for the elderly and handicapped.
The Committee has long recognized the special housing needs of
the elderly and handicapped. Currently, more than I in every 5
American households is elderly or headed by an elderly adult.
Nearly 16 percent of elderly people live on incomes below the Na-
tion's poverty level, and nearly 20 percent occupy substandard or
inadequate housing. Elderly households generally require housing
units that are smiUler and more easily maintained then those gen-
erally available in the private market. They also require special
design features — such as access ramps, handrails, brighter lighting,
wider doors.and congregate facilities.
The Federal Government has traditionally played a major role in
meeting these special housing needs through variety of housing
programs and financing mechanisms. In the three most recent
fiscal years (1980, 1981, and 1982), for example, approximately
250,000 units of housing for the elderly and handicapped were com-
Sleted under three HUD programs — public housing. Sec. 8, and Sec.
02, for an average of about 84,000 units a year. In fiscal year 1983,
no funds were made available under the public housing pr<^am or
the Sec. 8 program, and only enough funds under Sec. 202 were re-
leased tx> support fewer than 11,000 units for the elderly and handi-
capped.
This sharp drop in assisted housing construction cannot continue
for long without m^or repercussions. Funding commitments made
in prior years have resulted in a large pipeline of projects, many of
which have only recently been completed or are still under devel-
(^ment. As a result, the full impact of recent reductions has not
been felt. Without change, this reduced effort will seriously aggra-
vate current shortages of decent and affordable housing for the el-
derly and handicapped that will take many years to address.
The Conmiittee believes that federal housing assistance for the
low income and elderly has borne more than its share of domestic
budget reductions. However, the Committee recognizes that current
budget constraints will continue for the forseeable future, and that
housing programs must be designed to assist as many families as
possible in the most effective and efficient manner. The revised
program accomplishes this objective by changing the financing and
subsidy mechaJiisms and by various reforms to achieve greater cost
efficiency. It will assist approximately 36,000 units of housing for
the elderly and handicapped for the same budget authority used to
assist Uie 14,000 units provided for in the bill under the current
program for fiscal year 1984. Even 36,000 units is far short of
yGoot^le
44
recent levels, but it is a reasonable start under present budget con-
straints.
Projects developed under the revised pn^ram are to be financed
with direct loans from HUD, as is done under the current ^2 pro-
gram, but the terms and conditions of the loans are significantly
dilTerent. The loan would be repayable in twenty years but would
not bear interest nor would the principal be amortized. Under the
current 202 program, the loan bears interest at the long-erm Treas-
ury borrowing rate and the term of the loan is forty years. The cur>
rent loan is a conventional amortized loan but principal and inter-
est are in effect paid by HUD through Sec. 8 subsioies. In effect,
the loan is both made by HUD and paid by HUD. The Committee
believes that it is unnecessai? and detrimental to the program to
utilize significant amounts of budget authority through these dupli-
catory federal payments. Under the revised pn^ram, there would
be no need for Sec. 8 rent subsidies since the rental charge would
not include a debt service component.
After twenty years, the amount of the advance would be repay-
able in full to HUD unless the owner continues to provide housing
for a substantially similar class of tenants, in which case a portion
of the advfince would be forgiven for each year of continued oper-
ation of the project and the advance would be forgiven in its entire-
ty after forty years. It is expected that manj; nonprofit sponsors
will opt for extended service while profit-motivated sponsors will
either convert the project to other uses or turn the project back to
HUD.
Advances under the revised programs will be made to two cate-
gories of recipients. Advances equal to 100 percent of development
cost will be available to nonprofit corporations, consumer coopera-
tives, and public bodies or agencies. A one year authorization for
fiscal year 1985 of $880 million is provided for this part of the pro-
gram, enough funds to support approximately 18,000 units.
The second categoiy of sponsors includes all the above plus limit-
ed dividend sponsors. For this group, advances would equal 75 per-
cent of development cost and the project would be partially fi-
nemced by a public housing agency (primarily State housing fi-
nance agencies). It is expected that profit-motivated sponsors would
be the primary participants in this part of the program. A one year
authorization of $660 million is provided, or enough to finance ap-
proximately 18,000 units. The Committee expects that HUD wul
delegate to these public housing agencies as much of the adminis-
tration of this part of the program as possible. How the 24 percent
non-Federal share of development costs is provided should also be
determined by the public housing agency involved. It is expected
that transactions would be structured to permit syndication and
that HUD, the sponsor and the public agency will have sufficient
flexibility to devise arrangements to protect any security intereeta
any part may have in a project.
Under either part of the program, not less than 75 percent of the
units in a project must be made available for occupancy by lower
income elderly and handicapped families for a twenty-year period.
The term "lower income families" has the same meaning as under
the United States Housing Act of 1937— families with incomes not
exceeding 80 percent of the median income for the area, acfjuatad
yGoot^le
by family size. There would be no statutory allocation within the
eligible income universe as under existing law, since experience
has shown that such allocations have either been too restrictive so
as to interfere with market needs and project viability or so broad
as to be meaniagless (other than to create unnecessary paperwork).
Lower income families would pay a rent based on the percentage
of income applicable to public housing tenants, currently 30 per-
cent of income (reduced to 25 percent by other provisions of the
Committee's bill). That amount would be the unit rental. The cost
of utilities would be treated as part of the tenant's rental contribu-
tion in the same way as under the current program. A tenant's
rental contribution may exceed the operating costs attributable to
its unit, in which case the excess payment would offset tenant
rents for other units that do not cover operating costs. If the aggre-
gate of tenant rental contributions exceeds all project operating
costs, the excess would be banked for future use in accordance with
HUD regulations to increase reserves or to reduce the future need
for federal operating deficit subsidies.
In order to provide an incentive for low development or operat-
ing costs, the Secretary may lower the required rent-to-income
ratio in those projects that meet cost levels approved by the Secre-
tary.
Elderly and handicapped tenants whose incomes exceed 80 per-
cent of area median would be eligible to occupy up to 25 percent of
units in a project. Many of these elderly or handicapp^ persons
are in need of specially designed housing and are part of the com-
munity the sponsor wishes to serve. These tenants will not be sub-
ject to a statutory rent-to-income ratio but will be required to pay a
rent, in excess of operating costs, that is reasonable and affordable,
in accordance with HUD regulations.
Just as many current 202 projects need Sec. 8 assistance to cover
part of operating costs, it is expected that many projects under the
revised program also will need similar assistance, although to a
lesser extent, if the pr(^am is to serve a substantial number of
low income persons. The bill authorizes contract authority of $41.5
million a year over a twenty-year period, for a total of $830 million
in budget authority. A twenty-year contract would be entered into
with each project owner specifying a maximum annual payment to
cover project operating deficits. 'The project owner would know in
advance how much assistance for this purpose will be available for
the entire period.
The maximum annual payment will be calculated on the basis of
the estimated amount of the first year's operating costs. The Com-
mittee intends that all payments expected to be met from project
incomes be included in operating costs, other than individually me-
tered utilities and gas and electricity charges attributable to dwell-
ing space. For projects that receive advances covering 100 percent
of development ccxit, the maximum annual operating deficit pay-
ment would be 80 percent of the initial annual operating cost. For
other projects, the percentage would be 50 percent. It ts not expect-
ed that in the early years of the project all of the available annual
payments would be needed, as tenant rents should cover a substan-
tial portion of operating costs. Unused contract amounts can be
yGoot^le
46
banked for future use to cover deficits in the project should operat-
ing costs rise faster than tenant incomes.
If a project has qualified for lower rent-to-income ratios because
of cost savings in development or annual operating costs, the above
percentage may be increased by HUD. These adjustments are ex-
pected to be made by HUD in a memner to assure benefits to the
government and the tenants.
The Committee expects that HUD will move rapidly to prepare
implementing regulations for the new program in order to give the
Committee and the public an opportunity to examine them and to
determine whether any problems uncovered in the implementation
process should be addressed by statutory changes prior to the effec-
tive date of the program.
Congregate housing services program
The Committee bill authorizes $10 million for the Congregate
Housing Service Program for fiscal year 1984 and requires that the
Secretary submit to Congress, not later than March 15, 1985, a
report evaluating the efTects of any change in the administration of
the Congregate Housing Prc^ram and any legislative recommenda-
tions for the establishment of a permanent Congr^ate Housing
Services Program.
The Administration did not request Euiy additioned funds for this
pn^am for fiscal year 1984; however, the Committee strongly feels
that it makes sense from both a social and economic standpoint to
continue this pri^am. Congregate housing helps to keep many el-
derly people who are not ill from being placed into nursing homes
simply because they cannot function completely on their own. It
also provides a much less costly alternative to institutionalization.
It is the Committee's belief that the Congregate Services Program
is a viable prc^am and one that the elderly of our nation need and
deserve.
The Committee bill requires the Secretary in his report to in-
clude an assessment of any reorganization or decentralization plan
of program administration and provides that the Secretary may
not implement any administrative decentralization plan until such
report is submitted to Congress. HUD has proposed for fiscal year
1984 a decentralization of the Congr^ate Services Program staff
which would eliminate the two government technical representa-
tives (GTR) positions currently at HUD's Central Office who are re-
sponsible for the coordination of the Congregate Services Program,
and would transfer their functions and responsibilities to the 32
HUD field offices. The Committee strongly feels that ^ transfer-
ring the functions and responsibilities of the Central OfHce staff to
the field offices, the Congregate Housing Services Program will
lack the necessary centralized administration which is so essential
for effective monitoring, evaluation and coordination of this impor-
tant demonstration prc^am. Once the pn^am's administration
has been evaluated and the results of this demonstration have been
carefully analyzed and recommendations made for making the pro-
gram permanent, decentralization may be in order; however, at
this point, the Committee believes that decentralization would be
ill-advised and impractical.
yGoot^le
47
Shared housing for the elderly
The Committee bill includes provisions for assisting elderly fami-
lies to share housing arrangements with other elderly families (in-
cluding handicappeo families). This action is taken in recognition
of the extensive amount of under-utilized housing occupied by el-
derly families who would benefit both flnfincially and socially by
sharing their dwelling unit with another elderly family. The Com-
mittee expects that in permitting the Section 8 existing housing
and moderate rehabilitation programs to be used for this pr<^ram
many elderly homeowners would be able to afford to retain their
homes and the elderly sharing the residence with such homeown-
ers would benefit from the opportunity of having a home to reside
in and companionship as well; a potential benefit to the govern-
ment would result from such arrangements in that such use of a
targe pttrt of the existing housing stock would be highly efficient
and would reduce the demand for newly constructed assisted hous-
tngfor elderly families.
The Committee wishes to clarify that in approving shared hous-
ing arrangement assistance, the Secretary shall only approve such
assistance where the shared arrangement includes a separate bed-
room for the families sharing homes with homeowners. The Com-
mittee believes that with minor exception, such as in communities
where there are large apartment units which would provide ade-
quate space for two families, the Secretary shall require that this
assistance be provided only with respect to single family dwelling
units. The Committee intends this prc^am to be a voluntary alter-
native for the Section 8 program; it does not intend that an elderly
family be required to live in shared housing.
Rent supplement and section 236 programs
The Committee bill contains two provisions to address problems
that have arisen as a result of the refusals by HUD and 0MB to
amend State Agency financed Rent Supplement and Sec. 236 (RAP)
Projects in order to provide necessary rent increases, despite re-
peated express directives by the House and Senate authorizing tmd
appropriating committees to provide these amendments.
Id the case of both HUD insured find State Agency financed proj-
ects, HUD has entered into long term contractual commitments
and obligations for rental assistance. Project owners, lenders, and
bond holders have acted directly in reliance on these commitments.
The Committee believes that the Federal Government has an obli-
gation to ensure the continued availability of these projects for
their low income residents regardless of the source of financing for
the project. As such, the bill requires that the Secretary annually
offer to amend RAP and Rent Supplement contracts to provide suf-
ficient payments to cover necessary rent increases and changes in
the incomes of tenants. It provides that such ofTer shall be made
without r^ard to whether the projects are HUD-insured or State
AgNicy financed, emd that the payment be made on a timely basis.
The bill also provides that any authority that is recaptured as a
result of converting Rent Supplement and RAP projects to Sec. 8 or
for any other reason, shall be utilized first to make payments, in-
dnding amendments, to projects which have not been converted.
yGoot^le
48
without r^ard to whether the projects are HUD-insured or State
Agency finance, and then, to the extent approved in appropriations
Acts, and if not required to make such payments, for use under the
Sec. 8 Existing Housing Program.
Alien restriction
The bill amends restrictions in existing law regarding the provi-
sion of federal housing assistance to aliens to provide that any re-
strictions with respect to aliens other than alien students or their
families shall apply only to those aliens appMng for federal hous-
ing assistance ^ter the date of enactment of this Act, and to pro-
vide that the Secretary shall require every applicant for federal
housing assistance after the date of enactment of this Act to pro-
vide certification as to their citizen status.
Housing quality demonstration program
The bill authorizes a $25 million Demonstration Program to
assist local governments in developing prt^rams designed to im-
prove the quality of the housing occupied by low-income families,
particularly those families receiving public assistance through the
Department of Health and Human Services. It has been estimated
that each year over $6 billion of the total amount of assistance
available under Title IV of the Social Security Act is specifically
idenitifed by states as shelter allowances or are used by assisted
families to cover their housing related expenses. There are no re-
quirements in law that families may receive such assistance only if
tliey live in decent, safe and sanitary housing that meets local
housing codes. Given the difTiculty many poor families have in lo-
cating decent housing or persuading the owners of the building in
which they live to make improvements or repairs in such buildings,
any generic requirement that ties the assistance payments to me
occupancy of standard housing could have a devastating impact if
conditions in the local rental housing market are not taken into ac-
count.
Nevertheless, several communities have made innovative at-
tempts to identify substandard housing in which families receiving
public assistance live, to cite building code violations and to pro-
vide technical assistance, and where necessary, financial assistance
to building owners so that they may improve management prac-
tices and make necessary repairs to bring the housing up to steuid-
ard. Some communities, by state law, have the authority to withold
public assistance shelter allowances for low-income tenants living
in housing that the local building inspectors certify create heal^
and safety violations. Tenants in such buildings cannot be evicted
if the shelter allowances are withheld. If a building is cited, assist-
ance is offered to building owners in several ways. If the owner
agrees to a phased schedule of improvements, the shelter allfiwance
payments are released as the improvements are made. Loans or
f rants, primarily from the community's communi^ development
lock grants funds or Section 312 Rehabilitation Loan Program,
have been provided to the owner, if such funds are necessary.
In addition, several communities have mobilized social service re-
sources to respond to problem tenants in the cited buildings; in
some cases, tenant organizations have been formed which mnk
yGoot^le
cooperatively with the buildinx owner to improve the management
and routine maintenance of the property. Finally, some communi-
ties have been able to persuade the state authorities to vary the
public assistance shelter allowances, so that building owners that
unprove the quality of the housing can charge slightly higher rents
to cover the costs of the improvements, while owners who operate
subetandard buildings will not benefit from an increase and ten-
ants living in such housing may even have their shelter allowances
decreased.
In cases where shelter allowances for families receiving public
assistance have been increased, but several units in the building
are occupied by low-income families who do not receive such assist-
ance, some communities have found that some shallow rental as-
sistance is needed to assure those families are not evicted from tJie
improved property because they cannot afford to pay the increased
rent.
Many communities have separate offices that handle building
code inspections, rehabilitation loans, public assistance payments
and social service referrals. The key to an efllcient and effective co-
ordination of these resources lies at the local government level.
The $25 million Demonstration Program is intended to build upon
the experience of innovative local governments and to assist addi-
tional conununities in devising locally speciflc remedies for a trou-
bling gap in federal policy. It is expected that this demonstration
program will result in generally applicable recommendations for
ways to coordinate public assistance funds provided by the Depart-
ment of Health and Human Services with the programs of the De-
partment of Housing and Urban Development which are directed
to producing decent, safe and sanitery housing.
Exclusion of housing assistance as income
The bill provides that housing assistonce may not be considered
as income for the purpose of determining benents under other fed-
eral assistance programs. This amendment will prohibit states
from reducing AFDC grants for households receiving federal hous-
ing subsidies. Without this amendment, welfare families in subsi-
dized bousing would have less income for non-housing related ex-
penses than welfare families in non-subsidized housing. As a result,
welfare families would be given the choice of decent, subsidized
housing and less AFDC cash assistance for non-housing related ex-
penses, or increased cash assistance through a larger AFDC grant,
but no assurance of decent and afTordable housing. States which
reduce a family's welfare assistance from the standard need of the
family (ratable reduction) will be preven^d from applying a great-
er percentage reduction in the case of tenants receiving federal
housing assistance than is applied for other families.
Sec 235 homeownerahip assistance
The Committee bill provides $16.66 million in contract authority
and $166.6 million in budget authority for fiscal year 1984 for Sec.
235 assistance. These funds will provide homeownership assistance
to families with incomes not exceeding 95 percent of the area
, income by subsidizing the interest rate on the family's
i down to as low as 4 percent. The funds would assist ap-
37-922 O - 84 -
yGoot^le
50
proximately 6,300 householdB, who, despite recent reductions in in-
terest rates cannot afford homeownership without federal assist-
ance.
Unlike the existing Sec. 235 Program, which provides this subsi-
dy for a 30-year period, the bill provides this assistance only for a
10-year period. The Committee believed that the shorter subsidy
period is warranted in view of data which indicate that on tl»
average Sec, 235 assisted families graduate off the subsidy after 7
years. In the event that families still require assistance after the
10-year period, the Secretary would be authorized to provide addi-
tional assistance from a revolving fund which would contain
amounts recaptured as a result of the sale or extended rental of
Sec. 235 properties, any unused contract authority, and any intep
est income earned as result of investing these amounts.
Public housing child care demonstration program
The Committee bill provides for a Demonstration Program for
child care facilities in public housing. The public housing authori-
ties would apply for funding to conduct a Child Care Program and
the awards would be made by the Secretary of Housing and Urban
Development in consultation with child care professionals at the
Department of Health and Human Services as well as other public
and private child care authorities.
The Demonstration Child Care Program is the responsibility of
the public housing authority, but the actual prc^am operation is
expected to be contracted out to qualified agencies. The grant funds
can be used for salaries, which the Committee expects will be based
on local compensation scales, as well as minor renovations startup
expenses, equipment and operating expenses. The Committee also
expects that the operating expenses should be computed on the
basis of no more than $3,000 per child in a project plus equipment
costs, etc. The space for the Child Care Program is to be provided
by the housing authority and Comprehensive Improvement Assist-
ance Program funds can be used to rehabilitate such space.
The Demonstration Program is specifically intended to serve ihe
children living in housing projects, but the Committee believes that
to the extent that space may be available children living outside
the project could be admitted and charged a fee based on a sliding
scale. The Committee, however, expects the prt^ram to be designed
to primarily serve those children within the housing project.
The Committee expects that no other funds received by public
housing authorities would in any way be reduced if a public hous-
ing authority receives a grant under this program.
Although the funds for this Demonstration Program are specifi-
cally restricted to public housing agencies that do not have a Child
Care Service Program, the Committee expects the Secretary to in-
clude in the final report the extent to which fidditional child care
services are needed in public housing agencies that currently have
limited day care facilities.
yGoot^le
iiultifamily rental housing crisis
A Dumber of economic factoni have coincided in recent years to
create a crisis in the availability of affordable rental housing in
certain market areas. Two of these factors — stable or declining real
family income and interest rates running higher than inflation —
are luwly to continue for several years and to increase the demand
for rental housing. If nothing is done to revise the rental housing
market, the shortages which are already acute will become more
severe and result in rising rents or families doubling up. The Com-
mittee has determined that the present market forces in and of
themselves are insufficient to assure the construction of critically
needed, affordable rental housing. The new Multifamily Production
and Rehabilitation Program embodied in Title III of this bill is the
Committee's response to a national need for rental housing.
The Bureau of the Census has reported a 5.5 percent decline in
real family income from 1979 to 1980, the largest decline since
World War n. Depressed family incomes tend to result in fewer
htHnebttyera and more renters. In fact, the increase in the rate of
homeowerehip has slowed in recent years. Since fifty percent of all
renter households have annual incomes of below $10,600, most of
these households and, indeed, many middle income families, cannot
affcnrd the rent need^ to support the high cost of newly construct-
ed units. "Hie resulting gap l»tween high development costs, high
interest costs, and affordable rents has depressed unsubeidized mul-
tifamily rental construction to about 100,000 units annually nation-
wide.
While the supply of new rental housing is decreasing, the esti-
mates of need are rising. It is likely that the rental need resulting
from new household formation will range from 290,000 to 400,000
units per year throughout the decade of the eighties. Many of these
new households are projected to be the least affluent households
comprised of single persons living alone or female headed families.
When losses to the existing stock are added to household formation
statistics, approximately 600,000 rental units per year are needed
to maintain the current supply. Losses to the rental stock include
abandoned and demolished properties, as well as conversions to
l^her income condominium use and non residential purposes.
Without some effort to stimulate the construction of additional
rental housing, it is expected that the rental vacancy rates that
have decrease over the past decade will drop even lower. On a na-
tional basis, the annual Census survey of rental vacancies has
shown vacancy rates dropping from 8.3 percent in 1965 to 6 percent
in 1975 and 5 percent in 1981. In many market areas, such as Chi-
cago, Miami, Denver and Los Angeles, private surveys have shown
the rental vacancy rate is much lower, hovering between 2 and 3
percent. Such tight rental housing markets result in pressures that
increase rents beyond the ability of many families to pay.
HUD's role in multifamily construction
Since 1974, the principal form of federal flnancial assistance de-
signed to make multifamily rental housing available and affordable
yGoot^le
52
has been the Section 8 pn^ram which benefits low-income families
whose income does exceed 80 percent of area median. From 1975
through fiscal year 1981 Section 8 contract authority permitted
gross reservations of 1.922 million rental units, 924 thousand of
which were newly constructed or substantially rehabilitated. AixHit
70 percent of the completed newly constructed units have been as-
signed to the elderly. Both the elderly and nonelderly tenants t^
Section 8 are overwhelmingly very low-income people with incomes
less than 50 percent of median in their communities and mostly
below the official poverty line.
While Section 8 housing has been accepted in virtually all lai^
cities and in many small communities, in rural areas as well as
metropolitan, high and rising costs per family served have made
the new and substantial rehabilitation component of the program
targets of criticism. In 1978, the amount of annual contract author-
ity reserved for each family in privately developed Section 8 new
construction was $4,100. By 1981, the last year the Sec. 8 new con-
struction program was fully operational, the annual amount of con-
tract reservation per unit had risen to $5,300 and was estimated to
rise to over $6,000 per unit in fiscal year 1982. Projecting out over
the 20 or 30 year life of an assistance contract, could mean each
unit would need $80,000 to $120,000 in Section 8 budget authority.
The long-term costs of these contracts are shown as budget authori-
ty and thus appear as especially large and vulnerable components
in one-year federal budget documents.
Given the mounting concern over rapidly rising Federal Govern-
ment outlays and the reluctance of many to accept the hard fact
that residential construction (whether subsidized or not) has
become very expensive, the Committee determined that a less
costly alternative to the Section 8 prc^am must be found to house
our low-income families and to respond to the rental housing crisis
that is affecting all families who cannot afford or do not choose to
buy a home.
New multifamily construction stimulus program
The Committee bill authorizes $1.3 billion for fiscal year 1984 to
subsidize the cost of new construction or rehabilitation of multi-
faraily housing in areas of the country that have a severe shortage
of affordable rental housing. This amount will assist approximat«uy
80,000 to 100,000 units, of which at least 20 percent would be af-
fordable by families with incomes below 80 percent of the area
median income. Hearings held by the Housing Subcommittee elicit-
ed overwhelming support for this proposal from an unprecedented
spectrum of groups who are concerned about the need for an ade-
quate supply of rental housing: the National Governors' Asaod-
ation, the Conference of Mayors, the League of Cities, the National
Low-Income Housing Coalition, the Mortgage Bankers Association,
the National Association of Housing Redevelopment Officials, the
Council of State Housing Agencies, the National Housing Confer
ence, the National Association of Housing Cooperatives, the Na-
tional Leased Housing Association, the National Hispanic Housing
Coalition, the AFL-CIO, and a number of church-related organiza-
tions.
yGoot^le
58
Under this program. States units of local government, areawide
planning agencies and Indian tribes would apply for assistance
which wou^ be used to encourage the construction or substantial
rehabilitation or rehabilitation of multifamily rental housing (in-
cluding mutual housing) or cooperative projects in areas experienc-
ing severe shortages of decent and affordable rental housing oppor-
tunities, as determined by objectively measureable indices. Eli^ble
areas would be determined by the HUD Secretary after taking into
account the extent and change in the amount and level of poverty,
the extent to which housing units are overcrowded, the amount
and duration of single and multifamily rental housing vacancies,
the amount of substandard rental housing, the extent of the lag be-
tween estimated need for rental housing and its production, and
any other objectively measurable conditions specified by the HUD
Secretary wmch would assist in determining whether an area is ex-
periencing a severe shortage of affordable and decent rental hous-
uig for families without reasonable and affordable alternatives in
the area. By working with the private sector, including for-profit
and nonprofit developers, qualified governmental entities would
have broad flexibility in determining what type of financial assist-
ance would be the most cost-effective and useful to respond to pre-
vailing local housing, financial and economic conditions. For exam-
ple, the governmental entity could use the assistance provided in
the form of a capital grant, a loan, as interest reduction payments,
OS land purchase grants or in any comparable form which is de-
sired to reduce project development and operating costs.
W^ile the speciflol governmental entities may apply to HUD di-
rectly for assistance, the bill also permits HUD to contract with a
State or State agency, such as a State housing finance agency, to
administer the program. This dual process is presently used very
effectively in the administration of the Section 8 program. State
housing nnance agencies have played a major role in the ptroduc-
tion of federally-assisted rental housing. Reasonable levels of fund-
ing should be provided to State agencies in recognition of their im-
Ertant function and in order to take advantage of a well-estab-
hed delivery mechanism. However, funds provided to States
through this process are not to be considered a State housing block
grant nor does the Committee intend that a majority of these funds
be distributed through the States. It should be clear that funds ad-
ministered through the State agencies are to be used according to
the same area efigibility criteria, project selection criteria, assist-
ance requirements and other conditions that govern assistance pro-
vided directly from HUD. Any application for assistance which is
submitted to a State agency must be approved by the unit of gener-
al local government where the project is to be located. Even where
a State is administering a program under this section, a unit of
general local government in that State may apply directly to HUD
on behalf of a separate project that is receiving an alternative form
of assistance from the State such as financing through a State
mortgage revenue bond.
SeUction criteria
Pngects are to be selected for assistance on a competitive basis,
taking into account five primary criteria. First is the extent of the
yGoot^le
54
severity of the shortage of decent and affordable rental housing lor
families who have no other reasonable and eiffordable altem^Uves,
such as homeownership, in the area. Second, is the extent of non-
Federal public and private financial assistance or other contribu-
tions such as land or tax abatements which reduce the amount of
assistance needed. This principle of using federal funds to leverage
private and alternative public contributions has been very effective
in the UDAG program and the Committee expect* it to be used ef*
fectively in this pr<^am. In fact, the key to the whole program is
the extent to which cost-effective mechanisms are developed
through creative partnerships between developers, project owners,
local government entities and HUD. There is enough flexibility in
the program to permit the creation of innovative approaches. An-
other selection criteria is the extent to which the project contrib-
utes to neighborhood development and mitigates displacement. A
fourth criteria is the extent to which an applicant has established a
satisfactory performance in meeting assisted housing needs. For
those communities that have developed Housing Assistance Plans
(HAPsI pursuant to their involvement in the Community Develop-
ment Block Grant program, progress in meeting identified needs
may be assessed by reviewing such plans and their implementa-
tion. The Committee expects the Department to estfiblish other ob-
jective means of assessing achievement of this criteria. A final con-
sideration is the extent to which assistance from this pn^ram wiU
stimulate the construction or rehabilitation of the maximum
number of housing units for the least cost, taking into considera-
tion cost differences among areas, among financing alternatives
and among types of projects and tenant being served.
From among the projects selected by the Secretary based on
these criteria, the Secretary shall give priority for assistance to
projects that will provide more than 20 percent of their units for
occupancy by low income families.
The Committee recognizes that construction and land costs may
be substantially higher in one area of the country than another or
that a moderately rehabilitated project could cost substantially leas
than a newly constructed project. In addition, a project designed to
house handicapped persons and a greater number of low income
families than the 20 percent minimum could be more costly than a
project for families. The intention is not to pit against each other
projects that differ so radically. However, in comparing projects
that are located in the same area, or that are designed to serve the
same type tenant, or that have similar financing available, care
should be taken to assure the most cost-effective proposals are se-
lected.
Allocation of funds
The bill requires the Secretary to develop a system for aJlocating
funds in a reasonable manner among various geographic regions,
between urbem and rural areas, between States and local govern-
ments, keeping in mind the purpose of assisting those areas thtf
have the most severe shortage of affordable and decent rental hous-
ing. If areas with the greatest need coincide with areas with tbe
highest construction cost, a reasonable distribution Bysteis should
take those factors into account. The distribution of asBJatancc
yGoot^le
55
among newly constructed, Bubstantially rehabilitated, and moder-
ately rehabilitated projects should not be driven by a policy prefer-
ence imposed by the agency but should be determined by local
housing needs and local market conditions identified in the applica-
tion for assistance.
Amount ofaaaistantx
Tha amount of assistance for each project would be the least
amount required to provide affordable and modestly designed hous-
ing for faioilies without other reasonable and fiffordable alterna-
tives in the private market. In addition, the amount of assistance
would be Buf^cient to provide that at least 20 percent of the units
in any project must be affordable to low income families whose
income does not exceed 80 percent of area median. Any cooperative
project assisted under this program should have a mechanism to
insure afTordabiUty over time for low-income persons who are ex-
pected to occupy at least 20 percent of the units. This can generally
oe accomplished through a limitation on the price of membership
resales for such units.
In addition, at the time of approving applications for funding,
the Secretary must determine that no assistnce will be provided to
penons or families who could afford units in the project without
such Bssiatance. This provision is not intended to alter the basic
market orientation of^ the program. It is intended to provide a
standard for screening applications for funding, not individual fam-
Uies. The Committee does not intend the Secretary to impose
income limits or a fixed rent-income ratio on the nonlower income
tenants. Rather, the Secretary shall seek to ensure that the assist-
ance provided under the program shall be used to reduce rents in
the nonlower income units to a level which reflects the market
rent in the neighborhood in which the project is located, and that
will be affordable by families most likely to rent units in that
neighborhood.
Since the rents charged the low-income tenants cannot exceed 25
percent of their adjusted income, the amount of assistance must be
structured to take this requirement into account. Assuming a total
development cost of $57,750 per imit, a mortgage of $52,000, operat-
ing expenses and utility costs averaging 5 percent per year and a
pre-tax return of 6 percent on the owner's investment, the Congres-
sicnial Budget Office has determined that if the assistance were
provided in the form of an up-front capital grant it would take an
average of approximately $12,000 in federal subsidy per unit to
reduce the mortgage interest rate from a market rate of 11 percent
to an effective mortgage interest rate of 8 percent. The cost of the
aubeidy would be somewhat less if it were provided in the form of a
(me-time up-front mortgage grant. At an effective interest rate of 8
percent, the amount of rent paid by tentuits with incomes above 80
int of the area mediem income would be maintained at an af-
ible level, yet would provide sufficient cross-subsidy to enable
ita with incomes below 80 percent of the area median income
to pay no more than 25 percent of their income for rent. Moreover,
these cost assumptions do not take into account any non-federal
public or private contributions that could be leveraged to reduce
progect costs even further, since the Secretary of HUD has authori-
yGoot^le
ty to review only the rents charged the low income tenants, it is
expected the project developer will conduct a local market analyns
for the other tenants who are expected to live in the buUdingB.
As a condition for receiving assistance, a project owner must
agree to have at least 20 percent of the units occupied by low
income tenants for 20 years. There is no maximum limitatiOD on
the percentage of low income tenants that may occupy the asslBted
building and a project could contain a substantially higher percent-
age where it makes social and economic sense given local condi-
tions. As long as the rents established for the building are within
the fair market rent levels established for the Section 8 existing
fTogram. tenants with those certificates could occupy the project
n fact the project owner must agree for 20 years not to discrimi-
nate against tenants on the basis of their eligihility for or receipt of
a federal, state or local housing assistance or on the basis that they
have children. The owner must also agree that for twenty years the
owner, and his successor in interest, will pass on to all tenants any
reduction in the debt service payments resulting from the assist-
ance and that the rental or cooperative units will not be converted
to condominiums. If these conditions and the agreements required
by the Secretary to assure the financial feasibility of the project
are violated, the owner or his successors in interest would be re-
quired to repay to the Secretary the assistance provided throu^
this program plus the simple interest thereon.
In order to assure the modest design of the project, the maxi-
mum mortgage amount for the project may not exceed the amount
insurable under Section 207 of the National Housing Act, The
mortgage may be insured by FHA if it meets the FHA standards
but that is not a requirement of the program. State and local bonds
issued to finance eligible projects could qualify as Section 11(b) tax-
exempt bonds. Davis-Bacon wage standards will also apply to proj-
ects developed with assistance from this prc^am.
Title IV— Rural Housing
The Committee bill authorizes for rural low and moderate
income housing essentially the same pr(%ram level for Fiscal Year
1984 as that approved by the Congress for Fiscal Year 1983. The
Committee recognizes that even these levels are far below that
which is necessary to meet the level of need in the rural areas of
the nation and are below the levels authorized in prior years. In
recommending the levels included in this bill, the Committee diar»
gards the Administration's call for dismantling the existing struc-
ture of the Farmers Home Administration and replacing it with an
underfunded block grant approach. Such drastic reductions in
housing assistance for the rural areas of the nation cannot be justi-
fied, in the opinion of the Committee, given the fact that rural
areas contain a disproportionate amount of poor families and sub-
standard housing, and are seriously lacking in conventional mmt-
gage credit. Furthermore, the plight of rural communities with re-
spect to their degree of distress and lack of mortgage credit was
vividly made known to the Committee through its extensive hear^
ings and field visits. The Committee received an overwheknin^y
negative reaction from rural communities when the Administra-
yGoot^le
67
n attempted to arbitrarily eliminate those rural communities be-
een 10,000 and 20,000 in population from Farmers Home Admin-
ration (FmHA) eligibility, lius response provided the Committee
ditional firstrhand evidence of the fact that these areas of the
ition continue to have a disproportionate lack of mortgage credit.
this respect, the Committee has included a provision that estab-
hes the eligibility of these communities in statute. The fact is
at the economies of rural areas of all sizes are worse now, under
s present Administration's economic policies, than they were
fore.
Based upon its extensive hearings and field visits in Califorria,
xas, Massachusetts, Maryland, Virginia and Florida, the Com-
ttee has included in addition to the funding levels authorized in
is bill several important provisions to make substantive improve-
;nt8 in the FmHA housing assistance prt^ram. In addition, the
mmittee bill extends to rural areas the Multifamily Rental
lusing Production and Rehabilitation Program contained in Title
, as well as a new program designed to preserve the rural hous-
5 stock. Taken as a whole, the rural assistance authorized by this
should permit an array of housing assistance programs to be
ilized on behalf of residents of rural areas if the FmHA and the
Iministration will make a good faith effort to properly staff and
iplement the assistance provided in the bill rather than delay im-
smenting the prt^ams enacted by the Congress.
Kie Committee is seriously concerned that under the guise of
ncehtrating FmHA staff en'orts on delinquent loans and on the
eds of farmers, the Administration is actually dismantling the
ral housing delivery system through administrative action, and
violation of congressional intent. The Committee is well aware
at FmHA housing assistance loans have a high delinquency rate
id has deplored FmHA's intransigence and refusal to deal efTec-
rely with such delinquencies through added staff and the utiliza-
m of counselling and technical assistance resources provided by
e Congress. As FmHA has consistently testified before this com-
ittee over the years, foreclosures as a result of these delinquen-
is are relatively few and losses actually realized are relatively
w. A policy decision has been made to focus the FmHA on the
xicultural mission of the agency and to move away from its hous-
g mission without approval of the Congress. Since Congress has
it made such a decision, the Committee expects the FmHA and
e Secretary of Agriculture to meet their full responsibilities to
Try out the Congressional intent insofar as their housing mission
concerned. It is deplorable to the Committee that again this year
td despite the demand for assistance FmHA is not making the
nising loan and grant assistance that Congress provided. As of
e date of this report almost three fourths of the current fiscal
tar has expired, yet FmHA has obligated less than 60 percent of
e funds available for rural housing assistance. What is worse in
,e opinion of the Committee is that less than 10 percent of availa-
e RAP, less than 1 percent of available farmworker housing
antfl, 6 percent of rental housing loans, 8 percent of farm\9orker
nuing loans and 15 percent of self-help housing grants have been
fligated from funds available. All of these programs are targeted
low and very low income rural families whose needs are severe.
yGoot^le
The Committee is convinced that this deplorable performance in
the face of the overwhelming demand for these fmids is the result
of a conscious effort by the Administration not to spend funds with
regard to programs that require deep subsidies irrespective of what
Congress intends. The Committee directs the Secretory of Agricul-
ture to desist in foot dragging and make available the funds that
Congress provides in a lawful and expeditious manner.
Toward this end the Committee has included two important pro-
visions. First, it has made clear in statute that fee inspectora and
appraisers shall be used by FmHA in instances where county and
district office stafT workloads would delay processing applicatiMis
for rural housing assistance. Secondly, up to ten percent of sectioD
516 grants for farmworker housing can be used to provide the out-
reach and technical assistance necessary to develop applications for
assistance in behalf of farmworkers. The Committee is aware, as is
the Secretary, that many capable nonprofit public and private or
ganizations can develop and package projects for farmworker hous-
ing, especially for those farmworkers who migrate. The Committee
directs the Secretary to fully utilize these resources.
General authorizations
The Committee bill extends the FmHA authorities for one year
and authorizes a fiscal year 1984 limit of $3,955,600,000 for insured
and guaranteed loans, of which not less than $3,705,600,000 are fiw
loans for borrowers receiving interest credits and $200 million for
guaranteed loans. The Committee bill also requires FmHA. subject
to appropriations, to guarantee the specified amount of loans as
long £18 there are qualified applicants for such loans. The Commit-
tee believes that based on past experience it is not likely that
FmHA would implement the loan guarantee program unless so re-
quired by the Congress. Of the total that is available for guaran-
teed and insured loans not less than $1 billion is made available,
subject to approval in appropriation Acts, for Section 515 rental
housing loans; $50 million for unsubsidized Section 502 loans to
provide the Secretary with sufficient flexibility for administering
properties held in inventory. $25.6 million is authorized for Secticm
514 farmworker housing loans; and $3 million authorized for Sec-
tion 523 site development loans. The Committee bill also authorixee
appropriations of $400 million for rental assistance payments, fS!
which $200 million is for newly assisted families or units; and $50
million for Section 504 home repair loans and grants for fiscal year
1983, of which not more than $25 million is for grants. $25 miUion
is authorized for Section 516 farm labor housing grants, of which
10 percent is available to nonprofit groups for outreach activities in
order to achieve full use of aveiilable loan £md grant funds for div
mestic and migrant farmlabor housing projects; $2 million is au-
thorized for Section 525 technical and supervisory grants, of whkji
50 percent is required to be used for prepurchase and delinquent
counselling; and $2 million is authorized for construction defects
compensation payments under Section 509(c>. The bill also extends
both the Section 515 Rental Housing Loan Program and the Sec-
tion 502 low and moderate income homeowneranip loan authority
for one year, through September 30, 1984.
yGoot^le
59
iformance with the Committee's action which authorizes
ations for FmHA rentfil assistance payments and construe-
cts compensation payments separately, the Committee bill
he authority to fund such payments out of the Rural Hous-
rance Fund.
ime priority
ammittee continues to be concerned about FmHA's lack of
assure that a substantial part of its housing program be
to very low income households. In the 1979 Housing and
lity Development Amendments and again in the 1980 Act,
nress funended Title V to assure that lower income people
rom FmHA prt^ams. In that regard, low-income was de-
80 percent of an area's median income. FmHA was direct-
2h area of the country to assure, to the extent practicable,
percent of its assistence benefit households with incomes
' percent of the area's median income. In addition, the stat-
tent of Title V was clarified to assure that only those
Ids who were occupying housing that was not decent, safe
iry were eligible for FmHA assistance.
3SS expects FmHA to promulgate r^ulations which would
I applications for assistance being ranked in accordance
«na that would reflect housing need in an area, and that
ith the most need for decent, safe and sanitary housing
iive their applications processed first. Regulations designed
iplish that were promulgated by FmHA and subsequently
¥n before they could take effect. In lieu of following these
), the Committee has learned that FmHA is operating on a
ne — first-served" basis contrary to Congressional intent,
omittee directs FmHA to promulgate rules that create a
or selecting applications to be processed that will assure
east 30 percent of the housing assistance benefits very low
louseholds. A related provision would require FmHA to es-
i loan processing and approval system similar to that used
iHy by HUD in the FHA insurance programs and HUD
assistance prt^ams. In this way, builders and developers
areas would be able to obtain preliminary reservations of
irantee, insurance, or interest credit, or housing assistance
; assistance upon the initial submission of an otherwise ac-
application. This would provide a reasonable assurance
II requirements were met with respect to such an applica-
: requested loan assistence and related housing assistance
! available upon final approval of the project. The Commit-
not view these two provisions as conflicting. The priority
1 deals with the ranking of applications and the second
1 deals with the processing of applications submitted. This
on should be uppermost in mind as the FmHA implements
Jiese provisions.
and self-help housing
Committee extends the Section 523 Mutual and Self-Help
id Grant Assistance programs and authorizes J12 million
its for Fiscal Year 1984 and another $3 million for the
Self-Help I^nd Development Fund. In providing this pro-
yGoot^le
60
gram level for Fiscal Year 1984, the Committee wishes to i
clear that the amount that would be provided for the Fund f
ant to section 523(g> is in addition to the amount that the Coi
tee would provide for Section 523(0 grants. The Committee made
an extensive inquiry into the self-help program during field visita
and hearings. The projects it visited and the participants it inter-
viewed provided convincing evidence of the worthiness of this pro-
gram. The FmHA Self-Help Housing Technical Assistance Grant
Program provides the supervision ^nd administrative support nec-
essary for low-income families to build their own homes, lie
grants go to organizations who assist eligible households under
rigid guidelines from FmHA. The FmHA Section 523 program re-
quires and achieves a substantial labor input by the participatitig
families. In the FmHA model, participants are organized in groups
of 6-12 households and each group works 700 to 1200 hoxirs on the
houses. The organizational sponsor provides the technical know-
how and supervision necessary for untrained people to produce
well built, modest dwellings at a cost they can afford. Specialized
components, such as plumbing and heating, are normally sub-con-
tracted.
The Section 523 prt^ram not only assists those who otherwise
could not afford to utilize the FmHA Section 502 reeular hmne-
ownership program, but does so at a savings. A FmHA housing cost
analysis for 34 grantees, which represents approximatly 47 percent
of the self-help program, provides proof of its cost effectiveness: (1)
self-help houses cost $9,152 less than comparable contractor built
units; (2) the $9,152 savings exceeds section 523 average grant costs
of $4,142 by $5,010 per unit; (3) at an average 3 percent interest
paid, the annual interest credit saving to the government is $938;
(4) in 5 years, the interest credit savings will exceed the $4,142 Sec-
tion 523 technical assistance cost; (5) self-help families had adjusted
incomes 12 percent below other 502 borrowers; (6) self-help loans
are restricted to families who do not have sufficient income to qual-
ify for a loan and thus contributing by adding unita to the local
housing stock; (7) the addition to the housing stock resulting from
the homes built under the self-help program provides an economic
stimulus to material suppliers and subcontractors, and contributes
to the local tax base; (8) FmHA self-help families are almost always
first-time home buyers; (9) the non-first time home buyers that par-
ticipate in the program are usually occupants of substandard luius-
ing; and (10) Section 523 grantees must involve local civic and com-
munity leaders who often become catalysts for other rural devel(q>-
ment activities in the community.
There is an increasing capacity to perform self-help housing, na-
tionwide, and an increase in demand for the program. Self-help
housing epitomizes the American dream. The Committee consideri'
it the best example of volunteerism as is often promoted by this
Administration. Therefore, the Committee is hard pressed to on-
derstand why the Administration would eliminate this progTBOi
and why the FmHA is slow in allocating the funds that Coognm
has provided. The Committee believes the Section 523 grant pro-
gram is essential to the process and assures both family and gov-
ernment of the quality of the product.
yGoot^le
61
ital asaistarux payments
Ite Committee is seriously concerned that because of insufficient
ital asaistance payment (RAP) funding and the inclination of the
ministration to limit most rental housing loans to projects which
1 only receive shallow interest credit subsidies the intent of the
igress to target rural housing assistance to low income families
leing thwarted. All Section 514 and 515 loans authorized by the
nmittee must be used for projects that require interest credit
isidies. But these are limited to two percent below the FmHA in-
est rate which clearly is not deep enough to meet the needs of
St low income rural families. In fact, if interest credits were pro-
ed down to zero percent, these families still could not afford the
,t payment that would be required. These families require in ad-
on to subsidized loans, RAP if they are to be able to occupy Sec-
1 614 and 515 projects as Congress intended. The Committee's
ding level is based on the policy of five year RAP contracts and
,t FmHA will require enough RAP for 7,500 renewals of con-
cta and 2,500 units requiring RAP for acquired or transferred
tal projects for a total of 10,000 RAP assisted units, at an esti-
ted cost of $100 million. In addition, $300 million is estimated to
vide RAP suflicient to cover 29,000 of Section 515 units and
iO of Section 514 units to correspond with the level of funding
both rental housing loan prt^ams included by the Committee
fiscal year 1984. TTus level of RAP funding is expected to assure
t the needs of the existing rental housing portfolio are met and
■ug^i RAP funds are available to match the Section 514 and 515
Q levels included by the Committee for newly constructed proj-
3 for flscal year for rural low income renters.
Hon 502 program revisions
^he Committee has included a provision that would clarify that
' loan amounts authorized by the Committee are intended be be
dlable for loans to low income families that require Section 502
US without interest credit subsidies. The Committee never in-
ded to exclude these families from the Section 502 loan program
providing loan authorization levels for low income families in
id of interest subsidy loans. The Committee has also acted to
mit Section 502 loan terms to be extended by five years beyond
' existing 33-year term if such an extension would permit an oth-
rise eligible family to afford a Section 502 financed home after
ennining that it could not afford to meet the required loan pay-
at even with an interest reduction down to one percent. In this
pect, the Secretary is directed to use this authority only after
ermining the affordability of a loan with an interest credit re-
•tioD down to one percent and which by such a Tive-year exten-
n of the loan term will make the loan available for a family. In
lition, the Committee has provided that $50 million of the total
iranteed and insured iimounts provided for fiscal year 1984 may
used for unsubsidized section 502 loans solely to provide the
xvtaiy flexibility in managing his loan portfolio.
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Rural rental housing
The Conimittee has included several provisions to assure tin Sec-
retary will make full use of the Sections 514 and 515 rental bow-
ing pr<^am8 as Congress intended. In this respect the Conunittee
rejects the efforts of the Secretary through r^ulation and otho*
directives to prevent or limit beyond that required in statute the
number of low income families needing RAP in projects sufqxnrtod
by these loans. Provisions are includ^ to direct the Secr^ary to
approve rental tissistance projects otherwise eligible so long as the
need for such projects exist for the low income uimilies intendecl to
be housed in such projects. It also has included provisions to make
clear that it is the intent of the Congress to permit a rental assist-
ance project to be constructed on more than one site. In maiyr
rural areas a site large enough to accommodate a desired project is
either not available or too expensive, while several smaller sites
within the general area are often available at a reasonable cost. Id
addition, the Committee has provided authority for the Secretary
to dispose of Section 502 single family units held in inventory t^
FmHA by permitting such units to be taken over by nonprofit W-
ganizations and public agencies which would make such housing
available under Sections 514 and 515, with RAP where required 1^
the intended low-income occupants. In the Committee's Held visitB
and hearings, it viaa made aware that many Section 502 units lie
vacant because no purchaser qualifying under Section 502 can be
found to take over these homes. In the same area, however, there
are many low income persons who cannot afford to purchase such
housing but who are in need of adequate shelter and could rent
such units if they were made available under Sections 514 and 515.
The Committee wishes to make clear that the Secretary should use
this option only in circumstances when, after a reasonalbe period
of time has elapsed, no purchaser who would be eligible under Sec-
tion 502 can be found.
Tenant grievance and appeals procedures
The Committee, on Title II of this bill, directs the Secretary of
HUD to require by regulation that public housing agencies e^ab-
lish and implement an administrative grievance procedure that
will provide tenants and applicants an opportunity to be heard, in
accordance with the basic saf^uards of due process. The CcHnmit-
tee did not adopt similar language for programs administered iff
the Secretory of Agriculture because it believes that Section SlOlgi
of the Housing Act of 1949 (as amended) already requires the Sec-
retary to estobltsh such administrative process. Indeed, subsequent
to the passage of Section 510(g) in 1978, the Secretary of Agricul-
ture promulgated regulations which substantially complied with
Congress' intent.
In April, 1982 FmHA published in the Federal Register proposed
amendments to the tenant appeals regulations which would violate
Section 510(g) in the following manner; they fail to ensure that ten-
ants facing an eviction have an opportunity for an administrative
hearing; they fail to provide applicants who are denied admission
in FmHA financed housing that also receives Section 8 assistance
an opportunity to appeal such denial; and they authorize landlord
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and tenant associations to violate individual tenant's iwhts by
adopting grievance procedure that fail to conform to either the
statute or the r^ulations.
The Committee believes the regulations are ill-advised and con-
trary to l^islative intent and directs the Secretary not to promul-
gate them and if promulgated to retract them. The Committee's
intent is that a^rieved borrowers, applicants and tenants in hous-
ing assisted by f^iHA be afforded a meaningful administrative pro-
cedure which comports with the basic safeguards of due process.
Tenant rent-to-income ratio
The Committee bill amends the tenant contribution to rent re-
quirement for the purpose of FmHA rental housing assistance pro-
grams to be consistent with the tenant contribution to rent require-
ment included in Title II of this bill for HUD assisted housing pro-
grams. For eligible low income families, the rent paid could not
exceed the highest of (1) 25 percent of adjusted income; (2) 10 per-
cent of gross income; or, (3) for families receiving public assistance
payments, the part of such payments adjusted for actual housing
cost. In addition, the Committee bill would redeflne "income" and
"adjusted income" for the purposes of FmHA housing programs to
mean the same as those terms are defmed for the purposes of HUD
assisted housing pr<^ams. The Committee has learned that, if the
increases in rent to income ratio that were authorized in the 1981
Omnibus Budget Reconciliation Act were implemented, consider-
able hardship might be suffered by low income families, especially
the elderly. In rural areas where incomes, and where frequently
public assistance payments, are very low relative to elsewhere in
the nation, the impact of the higher tenant contribution to rent
could be devastating. The Committee, therefore, directs the Secre-
tary of Agriculture to implement expeditiously the tenant contribu-
tion to rent provisions and the definition of "income" and "adjust-
ed income" contained in this bill. The Committee bill provides that
the amount of interest credit assistance may not exceed the lesser
of the balance of the principal, interest, taxes and insurance
amounts after applying 20 percent of the borrower's adjusted
income. This provision would make uniform the limitation on in-
terest reduction payments and the calculation of the amount of the
borrower's contribution used by FmHA and in the HUD regular
Section 235 low income homeownership assistance programs; this
amendment is necessary to assure the requirements presently spec-
ified in r^ulations are retained.
The Committee recognizes that the Administration has recom-
mended removing the provisions of Section 530 that the Subcom-
mittee approved in 1979 with respect to rent increases. This might
have been appropriate if no rental assistance payment funds were
available as proposed by FmHA, but with payments being made
available through this bill, that recommendation is not necessary
and the Committee directs the Secretary to abide by the provisions
of Section 530 with respect to rent increases.
Farm tabor housing
The Committee undertook an extensive study of and field hear-
ings on the PmHA farmworker housing assistance programs and
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64
migrant farm labor shelter needs in general. It found the most in-
human and abominable conditions in most places where it made
on-site visits. "A disgrace to the nation. . ." wfia a commonly
quoted statement of the Members who learned of these deteriont-
ed housing conditions. Contrary to the protestations of serenl
high-level FmHA central oflice and State oflice officials, the Ccxn-
mittee found a highly uneven approach and an indifference to uti-
lizing existing FmHA authorities and available funds for farm-
worker housing. To the credit of FmHA, however, the Committee
has been advised that the agency has implemented more approivt
ate minimum property standanis that are based upon seasonal
rather than year-round occupancy for projects designed especially
to serve migrant farmworkers. This should result in no longer pre-
venting farmworker projects especially designed to serve migrant
farmworkers from being built simply because they had to built to
full-year occupancy standards.
These requirements made the migrant projects excessively coatJy
and inappropriate for the purpose for which they were intended, ti
addition, the Committee learned that it was common practice in
FmHA to judge the need for a farmworker project in relationship
to the need for other types of housing in the area. Thus where s
critical need for basic shelter for farmworkers, especially migrant
farmworkers, was established. FmHA had often determined that
the need for other housing had to be taken into account. This anat
ysis almost always resulted in denying the farmworker houslDg
project even though inadequate shelter Eiltematives were available
for the workers. Therefore, the Committee bill requires the Secre-
tary, in determining the need for FmHA farm labor housing assist-
ance to only take into account the housing needs of domestic faim
laborers, including migrant farm laborers, in the area. In determin-
ing whether to provide such assistance, the Secretary is required to
make the assistance available without regard to Uie extent and
nature of other housing needs in the area.
Rural housing preservation
The Committee has included provisions establishing a new Rural
Housing Preservation Program to meet the severe need for assist-
ance to rehabilitate, preserve and expand housing for low income
rural residents. The Committee acted to add new rehabilitation ca-
pacity to the existing FmHA authorities because after two years of
hearings, site visits and analyses, it found the existing auuorities
to be insufficient because the amounts eillowed were limit^ to
minor repair, the prt^am was targeted simply to the elderly, and
the beneficiaries were unaware of the availability of the assistance
or lack the sophistication necessary to apply and utilize it. In atkli-
tion, built-in staffing limitations of the PinHA state and country of-
fices preclude the outreach cap>ability necessary for a workable pro-
gram. Many existing local public agencies and private nonprofit or-
ganizations, however, have the capability of organizing, packaging
and developing housing preservation programs on behalf of low
income rural families. By utilizing these organizations and agen-
cies, many existing dwellings and Buildings mat might be convert-
ed for dwelling purposes will be made habitable for low inoMDe
families. The Committee, in addition to providing authority fyt
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65
rental housing purposes, has provided that, where appropriate, low
income owner occupied dwellings may also be included in this pro-
gram. This is in recognition of the fact that in m£my rural areas
rental housing might be inappropriate or that the housing stock in
need of upgrading is mostly comprised of dwellings occupied by low
income homeowners. The form of assistance may include capital
grants, loans, interest reduction payments or other comparable as-
sistance that will reduce costs to make the units eiffordable by low
income persons and to the extent feasible for those whose incomes
are below 50 percent of the area median income. The grants will be
allocated on a competitive basis and shall be reasonably distributed
among the Nation s rural areas. In selecting applications, priority
is given to applications assisting the greater number of persons
having incomes that do not exceed 50 percent of the area income;
the exent to which other funds are leveraged to reduce the cost of
repairs, or to which the activities will be undertaken in rural areas
below 10,000 in population or in remote parts of lai^er rural areas
will be taken into account. Assistance is limited to the least
amount necessary for the housing to be aflbrdable by low income
persons, provision is made to assure that the housing assisted with
the funds provided is available for low income purposes for not less
than 15 years, and assistance may be recaptured by the Secretary
if the conditions of the agreementB made by the recipients of the
assistance are broken. The Committee has provided a $100 million
funding level for this program for Fiscal Year 1984.
Demonstration of interest reduction guaranteed loans
"Hie Committee has established a program to demonstrate the ef-
fectiveness (tf utUizing shallow interest subsidies with privately fi-
nanced loans guaranteed by FmHA. Interest subsidies under this
demonatratiOD are limited to families with incomes that do not
exceed 130 percent of the area median income and are limited to
amounts necessary to reduce the interest rate to not lower than
9Vi percent. The Committee is aware that in several States a simi-
lar approach utilizing State finance agency funds has been used
successfully for housing rehabilitation and is seeking to learn
whether or not a similar approach is effective for new construction.
For the purposes of this demonstration, the amounts necessary for
loan guarantees may be utilized from the new FmHA loan guaran-
tee authority provided by the Committee.
Shared housing for the elderly and handicapped
The Committee bill also makes the shared housing for the elder-
ly and handicapped provisions included in Title II of this bill appli-
cable for use in rural areas by permitting rental assistance pay-
ments to be used by elderly or handicapped families sharing a
home with another elderly family residing in an unassisted single
family bune or a single family home receiving assistance through
Section S02. The Committee expects that the Secretary will be
guided by Um Committee's statements on shared housing that are
contained in other parts of this report
37-922 O - 84 -
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Tttlb V — Pbogsam Auendmknts and ExTKsstom
PAST A — PEDERAL HOUSING ADUINinRATION
FHA mortgage iaauraiux
The Committee bill continues the practice of recent yean in ex-
tending for only one year the authoriW of the Secretary to insure
mortgages or loans under all of the HIID-YHA mortgage or loan
insurance programs contained in the National Housing Act. Since
a housing bill was not passed in 1982, however, a se^tarate me— otb
was enacted into law last year continuing the insuring authorihr ot
the Secretary but only through May 20, 1983. Thus, while the C&m-
mittee bill extends the authority for 1984, it also extends the Secre-
tarys authority for the remainder of 1983.
In the Administration's l^^lative proposal they again recmn-
mended extensive changes to the FHA insurance progrHms. Howev-
er, the Committee continues to believe that in view of the contin-
ued demand for a iixed rate mortgage, i^ is imperative that FHA
retain the long-term fixed rate mortgage as an anchor of stabili^
in the ever changing and complex financial market for home-
buyers.
Flexible interest rate authority
The Committee bill continues for one year the demonstration
[trogram providing the Secretary with authority to administrative-
y set interest rates for FHA-insured mortgage loans to meet the
mortgage market at rates above the statutory Hiwy'""'" At this
time the Committee does not have sufficient (&ta to make any rec-
ommendations with r^ard to the demonstration program.
FHA insurance limit
The Committee bill authorizes the Secretary of HUD to enter
into commitments to insure loans and mortgages under the various
FHA insurance programs with an aggr^ate principal amount not
to exceed $45.9 billion. The Committee expects the Secretary to uti-
lize ftll of the funds avmlable, subject to qualified applicants, and
intends that no arbitrary limit be imposed by either HUD or the
Office of Management and Budget.
Federal Housing Administration general insurance funds
The Committee bill increases the authorization for ai, ,
ations to cover losses of the FHA general insurance Aind to
million.
FHA insurance for cooperatives
The National Housing Act is amended to permit FHA to insuie
mortgages involving individual cooperative units in buildings that
are at least one year old and whose underlying blanket mortgage is
not FHA-insured. In addition, a cooperative houaing corporation
would no longer have to be a nonprofit corporation in order for
FHA to insure mortgages involving the individual cooperative
units in the building. Ttie Committee wishes to clarify that the
203(n) prc^am insures mortgagees who have lent funds to individ-
ual cooperative members for the purchase of shares against default
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on both the individual share loan emd on the cooperative blanket
mortgage, to the extent a default on the blanket mortgage threat-
ens me lender's security in the individual share loan. In the case of
a foreclosure on the blanket mortgage, FHA is expected to accept
assignments and pay claims on individual membership /share
203(n) loans. The Committee expects the Secretary to implement
the 203(n) pr<%ram for use in both subsidized and unsubsioized co-
operatives as soon as possible and to make available 223(0 insur-
ance and co-insurance for cooperative rcflnancing and conversions
at an early date.
FHA inswance for manufactured homes
The bill authorizes FHA insurance under Title II of the National
Housing Act for existing manufactured homes as long as the homes
were built in conformance to the Federal NationfU Manufactured
Housing Construction and Safety Standards and meet minimum
property standards similar to those required of existing homes in-
sured under Title II of the National Housing Act but modified as
appropriate for manufactured homes.
Counseling under TMAP program
The Committee bill requires that the Secretary of HUD provide
counseling services to those families accepted into the Temporary
Mortgage Assistance Program. A homeowner facing default is gen-
erally facing overall financial stress and the Committee believes
that counseling in these situations must be an integral part of
helping these homeowners avoid foreclosure. Counseling is a staff
intensive activity and the Committee expects the Secretary to pro-
vide adequate staff to handle the case load once TMAP is oper-
ational. Also, counseling is a very cost-effective way to safeguard
the investment of the Federal Government as well as preserve the
int^rity of the FHA ir^urance fund. In addition, the Committee is
concerned that inadequate efforts have been made by the Depart-
ment to assure that the regulations proposed to implement the
TMAP Pn^ram will result in equivalent assistance being provided
through the TMAP Program to a homeowner facing default as is
available under the assignment program.
However, more must oe done to provide assistance to owners of
FHA-insured homes who are in default on their mortgage pay-
ments. The Committee is concerned that only 16 percent of the
families who apply for assistance are accepted into the assistance
program. In fiscal year 1982, 27,260 families applied for the assist-
ance program, only 3,800 were accepted, and 19,700 FHA-insured
homes were lost through foreclosure. Given the rising unemploy-
ment rates over the ptist two years, it is distressing that the De-
partment has not increased the percentage of families accepted
mto the program. It is understood that in some large metropolitan
areas, not a single applicant has been accepted into the pn^am in
the last two years.
The Committee recommends more aggressive outreach by the De-
partment to encourage greater numbers of applications for assist-
ance and more reasonable and consistent interpretations of the
guidelines so more families may be helped. The FHA should in-
crease the publicity regarding the availability of the assistiince pro-
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gram and should contact more mortgagorB directly. In addition, the
Department should modiiy the content of the letters mortg^eea
are required to send mortgagors in default. It is FHA's ra^wngiDili-
ty to determine whether a mortgagor queilifles for asedstance or
not. As presently drafted, the notification letter leaves a clear im-
pression that the homeowner has already been determined ineli^-
ble for assistance and must appeal that decision to HUD. For an
unsophisticated homeowner, communication in that form may be
enough to discourage him or her from trying to overcome a pi»-
sumption of ineligibility. A clearer description of the available a^
tions and a referral to a specific homeowner's credit counseling
agency could result in more families receiving desperately needed
help.
The Committee was pleased to note, however, that the Depart-
ment has taken steps to clarify that an unemplos^ed homeowner
will be considered to meet the reasonable prospect requirement Uir
resuming full mortgage payments in the future if the homeowner
has a good prior employment record and has certified that he or
she is actively seeking work. Similar language should be incorpo-
rated in the TMAP r^ulations, and clearly the House of Repre-
sentatives when recently debating and approving the Emergent^
Homeowners Assistance Bill of 1983, assumed that this same lan-
guage would be used in implementing this program.
Mortgage insurance for public hospitals
The Committee bill makes public hospitals eligible for mortgage
insurance under Section 242 of the National Housing Act and en-
courages these hospitals to provide essential services to communis
residents without regard to their ability to pay for such services.
FHA mortgage insurance in American Samoa
The bill amends the National Housing Act to permit the FHA
mortgage insurance programs to be available for property located
in American Samoa.
FHA demonstration program
The Committee bill authorizes a demonstration program under
the Federal Housing Administration to insure alternative mort-
gages in which monthly payments and outstanding principal bal-
ances are adjusted periodically according to percentage changes in
a specified price or wage index.
While permitting this demonstration pn^am as a means of de-
termining if indexed mortgages are a vi3ble alternative during pe-
riods of high or unsteble mortgage interest rates, the Committee is
concerned that provisions permitting the upward adjustment of
outstanding principal could impose risks to borrowers and to the
insurance fund. It is the Committee's intent that the Secretary
study this mortgage concept and issue regulations prescribing con-
ditions and consumer safeguards governing the use of indexed
The consumer safeguards should include adequate information aa
to a borrower's increased liability when agreeing to the terms of
this type of mortgage. A reitlistic schedule of increases in monthly
paymente, as well as increases in mortgage principal over the liie
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of the mortgage, should be included. Consumers should be provided
specific information so they may make a valid comparison between
what their payments and outstanding principal would be according
to Ein indexed mortgage and a level payment mortgage.
Based upon these conditions and upon market demand, the Sec-
retary is instructed to conduct a limited demonstration prc^emi to
extend FHA insurance to indexed mortgagee during the flscal year
ending September 30, 1984.
Minimum property standards
The Committee cautiously endorsed, by a vote to 23 to 22, a pro-
posal to r^lace the current requirement that each building in-
sured by FHA must comply with a federally-mandated building
code (the FHA Minimum Property Standards for multifamily or
single family homes and the National Manufactured Housing
Standards for manufactured homes) with a requirement that each
property insured by FHA shall, with respect to health and safety
matters, comply with one of the nationally recognized model build-
ing codes or with a State or local building code that is based on one
t^ the nationally recognized model building codes or their equiva-
lent. The Secretary of HUD will be responsible for determining the
comparability of the State and local codes to such model codes.
Where no model code has been adopted or where the local code is
not comparable, the Secretary shall select the nationally recog-
nized model building code that shall be used by FHA in that juris-
diction. HUD is directed to maintain energy performance require-
ments for insured homes that are at least as effective in achieving
increases in energy efficiency as the provisions that were included
in the minimum property standards at the beginning of fiscal year
1983.
The Committee acted cautiously for several reasons and will be
monitoring the transition very carefully. First, while there was
sympathy with the notion that requiring an FHA-insured home to
comply with both a federal standard and a local standard might
sometimes be duplicative, there was great reluctance to eliminate a
system that has contributed a great deal to improving the quality
<k both FHA insured and conventionally financed housing m this
countt^. At various times during the almost 50 years since the Fed-
eral Minimum Property Standards have been in use, the federal
government has ledTthe way in: adopting stricter first safety stand-
ards; developing cost-effective enei^y conserving requirements; de-
veloping standards for townhouses, solar homes and underground
housing; testing and certifying new building products and technol-
ogies at no cost to builders, architects and manufacturers; and de-
veloping rehabilitation guidelines. In numerous areas, only after
FHA has taken the lead by modifying the minimum property
standards, have model codes and local building codes followed suit.
In recent years, the minimum property standards have been updat-
ed and revised to eliminate requirements that relate more to indi-
vidual taste and style than to health and safety. Of concern to
mai^ Committee members, however, is that by eliminating the
miniTnum property standards the federal government may be abdi-
cating the lead role in developing responsive building standards
irtiich could encourage the least expensive building alternatives
yGoot^le
70
that are consistent with reasonable health and safety standaida
and result in buildings that operate more efficiently.
Another concern is that the Department is assuming a mmu-
mental task that may encourage a proliferation of altematiTe
building codes. By attempting to certify the comparability of local
codes to any one of the nationallv recc^nlzed model codes, the De-
partment may swamp itself in a bureaucratic moraas. Take for ex-
ample what the Department must do in only one State, New
Hampshire. New Hampshire has 234 towns and cities; (^ tiut
number 49 or 23 percent rely on local codes; 89 or 38 percent have
no codes; and the remaining 96 or 49 percent use either BOCA, the
National Building Code or another major building code. In tiny
New Ham[»hire alone, the HUD Secretary will have to make at
least 136 different determinations r^arding an appropriate code
and will have to institute a sj^tem to monitor future local code
changes in order to assure continued comparability. Nationally be-
tween 4,000 and 5,000 jurisdictions have adopted local building
codes. After determining the equivalency of a local code to a model
building code, an FHA inspector will either have to rely solely m
the judgment of local building inspectors as to health and safe^
matters or will have to become familiar with close to filly or six^
various codes in order to determine whether a building qualifies tm
FHA insurance.
In spite of these reservations, the Committee narrowly approved
the amendment. It is expected that the federal minimum proper^
standards themselves will be considered a nationally recognized
building code so that buildings constructed in such communitieB
that have adopted the FHA MPS or its equivalent will not have to
comply with an alternative building code. It is also expected that
where a State or local agency utilizing tax-exempt financing de-
cides that construction and property standards that exceed model
code equivalent are necessary in order to protect the int^rity of
the project's financial security, such requirements may be impotwH
on FHA-insured projects. Since the FHA minimum property stand-
ards themselves are intended to be the minimum standards re-
quired to meet health and safety concerns, nothing should prohibit
tne imposition of stricter standards. It is also expected that the De-
partment will publish in regulations the standards and procedures
that will be used to determine local code equivalency with nationa^
ly recognized model codes.
Given (1) the simplification, updating and improvements that
have been incorporated into the FHA minimum property standards
recently; (2) the opportunity for the FHA to develop a fair and
open procedure for involving all interested members of the public
and the building community (including builders, architects, engi-
neers, manufacturers, code officials and consumers) in a continuing
process to integrate into the MPS in a timely manner the most up-
to-date technology, least cost alternatives, and new products; (3) the
valuable public services FHA has provided by conducting new ma-
terial ana technology testing reviews for material release bulletins
at no fee for manufacturer, builder or architect; and (4) the exists
me procedure for handling complaints addressing the merits of the
raA standards, the Committee expects the Department to contin-
ue to upgrade and improve the minimum property standards so
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71
they will be available for use on a voluntary basis and could pro-
vide the inspiration for developing a code which is the least restric-
tive and least costly alternative consistent with the need to assure
healthy, safe and durable housing that is energy efficient on a
cost/enective basis over the expected life of the buildii^. In this
r^ard the Committee expects the Department to take into account
the most recent research regarding the effect of mass and new
building systems on the thermal performance of new construction
insured by FHA.
Condominium insurance
The Committee bill increases the maximum insurable mortgage
limit under the Section 234(c) condominium insurance pr<^ram
from 111 to 118 percent of the FHA 203(b) limit, or $79,650, in high
cost areas.
Graduated payment mortgages for multifamily housing
The Committee bill authorizes FHA to insure graduated payment
mortgages on multifamilv projects through September 30, 1984,
with requirements that the Secretary determine that this type of
loan would expand multifamily housing while safeguarding the
mortgagors, tenants or purchasers involved as well as evaluating
the acceptance of the mortgages and loans in the private sector.
The Committee believes that allowing FHA to insure multifamily
GPMs will, in some circumstances, enable multifamily projects to
be developed that would not be feasible with a fixed rate mortage.
Aside from the GPM feature the Committee expects that these
mortgages should be consistent in all aspects with other FHA in-
sured multifamily loans.
PART B — SECONDARY MORTGAGE MARKET PROGRAMS
The Emergency Home Purchase Assistance Act of 1974
The Committee bill extends for one year, until October 1, 1984,
the Emergency Home Purchase Assistance Act of 1974 (Brooke
Cranston).
GNMA mortga^ backed securities
The Committee bill limits the authority of CNMA to enter into
commitments to issue guarantees under the Mortgage-Backed Secu-
rities Prc^ram to $68.25 billion in fiscal year 1984. The Committee
makes clear in this bill that it expects the Association to utilize all
of the authority provided, to the extent there are qualified requests
for guarantees, and that no arbitrary limitation should be placed
on this pn^am by either HUD or 0MB.
The Committee believes that this limit, which is $9.6 billion
above the level requested by the Administration, is necessary to
provide sufficient support to the housing recovery. The level pro-
posed 1^ the Administration is based on the performance of the
mortgage markets during the past three years, a period of histori-
cally low levels of activity. However, reduced interest rates have
released considerable pent-up demand for new housing as well as
created a surge in refinancing. As a result of this increased mort-
gage activity, the GNMA MBS Pn^ram has been operating at com-
yGoot^le
72
mitment levels of an average of $6 billion range each mmth of the
current fiscal year. Moreover, the Committee anticipateB that im-
plementation of the FHA Direct Endorsement Program, under
which lenders will assume responsibility for underwritang and ap-
praising loan appUcations, will further increase activi^ under the
FHA Programs. For these reasons, the Committee belienres that the
$68.25 billion level is the minimal level neceasary to ensure Qui.
mortgage credit is not artificially restricted or mortgage costs in-
creased in a manner that will impede the housing recovery.
Purchase affixed rate mortgages by FNMA and FHLMC
The Committee wishes to express support for the practice of
FNMA and FHLMC to provide a viable secondary market for find
rate mortgages. As a result of changing economic conditi<HiB and
volatile interest rates during the last several ^ears, many lenden
have advocated a greater reliance on alternative mortgage instiu-
ments. Nonetheless, the Amerjcein public has continued to view the
fixed rate mortgage as the preferred means of home purchase fi-
nance, and demand for the fixed rate mortgage has remained fai|^
A recent Louis Harris Poll indicated that 53 percent of Anmicana
preferred the traditional fixed-rate mortgage. The Committee
strongly believes that the secondary mortg^e market should contin-
ue to provide the support necessary for a viable fixed-rate mort-
gage market.
Limitation on participation purchases by FNMA and FHLMC
The bill provides that the statutory limitations governing the
maximum principal obligation of mortgages purchased by I'TMA
or FHLMC shall apply to the whole mortgage, whether FNMA or
FHLMC purchases the entire loan or a participation interest there-
of. The intent of this provision is to ensure that the resources of
these entities, which receive considerable federal benefits and sup-
port, are directed to the middle segment of Uie housing market,
and not to the luxury market.
Purchase of second mortgages by FNMA and FLHMC
The bill provides explicit statutory authority for FNMA and
FHLMC to purchase second mortgages until October 1, 1984. The
maximum principal obligation of such mortgages may not exceed
$50,000 for a single family home or $60,000 for a two- to four-family
home. The intent of this provision is not to abandon the long-held
view of the Committee that FNMA and FHLMC should deal exclu-
sively in mortgages which directly support and assist the sale and
rehabilitation of housing. Rather, in recognition of the serious
problems confronting our nation's thrift and housing industries,
and even FNMA and FHLMC, the Committee has provided that
FNMA and FHLMC may purchase second mortgagee without re-
striction as to the use of the funds for the two fiscal yean foUowing
enactment of the bill. The Committee believes that the ability a
FNMA and FHLMC to purchase second mortgagee will provide a
strong stimulus to the profitability of these institutions and help to
address the imbalance between the low 3Qelds of their long-term
mortgsge portfolios and their short-term costs of money.
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73
FHLMC authority to purchase slate agency insured mortgages
The Committee bill clarifies the authority of FHLMC to purchase
mortgage loans insured in whole or in part by State agencies, lliis
change will provide needed secondary market support to these enti-
ties, which in many cases provide mortgage insurance to low and
moderate income homebuyers who are unable to obtain private
mortgage insurance. State insurance agencies were created to stim-
ulate the flow of private investment capital into housing by creat-
ing a system to insure qualified tending institutions against losses
resulting from non-payment of mortgagee. Although only five State
agencies currently have insurance programs, it is expected that
tnis trend will increase in the future. The Committee expects that
this provision «dll enable FHLMC to act as a partner with State
agencies to increase homeownership opportunities in these States.
Federal National Mortgage Association
Voting rights for stockholders. — The Committee bill deletes the
requirement presently in the FNMA Charter Act that all voting
righta shall be vested only in common stock shareholders. This will
enable FNMA to better utilize the authority given to it in 1982 to
issue preferred stock as a means of augmenting its equity. The
amendment would permit, but not require, the Board to provide
such voting rights as it deems appropriate for preferred stockhold-
ers. The trend among corporations is to grant preferred stockhold-
ers limited voting rights in the event of an extended default in pay-
ment of their dividends. This trend is buttressed by the require-
ments of the New York Stock Exchange (NYSE), which may refuse
to list an issue of preferred stock that does not contain certain lim-
ited voting rights. The NYSE requires, at a minimum, that pre-
ferred stockholders have the right to elect two directors if six con-
secutive dividend payments are missed by the corporation. The
NYSE makes an exception only for those companies which cannot
grant such rights under applicable State law. Since the NYSE ex-
cepts from its general policy preferred stock of companies which
cannot by law confer limited voting rights, the existing Charter Act
provisions should not result in the NYSE's refusal to list FNMA's
preferred stock. Nevertheless, since most companies grant limited
voting rights to their preferred stockholders, preferred stock that
does not have such rights is less acceptable to the markets, and
purchasers would likely demand a higher preferred dividend rate
than they would require if limited voting rights were offered.
Loans on the security of mort^^es. — The Committee bill removes
restrictions in existing law on FTJMA loans made on the security of
mortgages. FNMA was given authority to make loans secured by
home mortgages in the Housing Act of 1961. The authority was one
long sought by the homehuilding industry and was expected to be
lued primarily by homebuilders; however, it has not been used ex-
tensively because of the loan-to-value and term restrictions. During
hi^ interest rate periods, many builders must take back mort-
gages on the homes they build and sell. This financing removes
needed capital from the industi?. Lending institutions with mort-
gage portfolios also often need liquidity sources during such peri-
ods. Secured loans are frequently the preferred means for obtain-
yGoot^le
74
ing this liguidity. Leas restrictive requirements for FN&CA loans on
the security of mortgages will provide lenders and builders a
source of liquidity for loans in lender portfolios and for builderfadd
ntort^ges and permit them to use the pnx»eds to finance the con-
struction of new housing when it is most needed.
Board of directors. — The Committee bill expands the FNMA
Board of Enrectors to a total of 18 members by tid>^ing 3 new share-
holder-elected directors. FNMA has had a 15-per8on Board of Direc-
tors since 1968. Since then, FNMA has become both significantly
larger (currently over $75 billion is assets) and more complex.
Shareholder-elected directors are selected for their expertise in
matters related to FNMA's business. With FNMA's plans to sem
new mortgage customers and markets, and the need for new &
nancing sources, the Committee believes that there is a correqxMid-
ing need for a larger, more diverse Board of Directors.
Powers of HUD Secretary. — The Committee bill requires the
HUD Secretary to report annually to Congress on FNMA's activi-
ties under the Charter Act. This provision will establish an orderljr
framework for annual review of FNMA's secondary market activi-
ties by the Congress.
Approval period. — The bill requires the HUD Secretary to re-
spond to reouests for action under the FNMA Charter Act within
45 days, with a 15-day extension permitted. The bill would chaiue
existing law, which provides for a 75-day review period only in tfie
case of FNMA home improvement and manufactured housing
mortgage praams, and provide the HUD Secretary a reasonable
period in which to make appropriate determinations as required by
the FNMA Charter Act. llie Committee believes that the 4&<alen-
dar-day period, with 15-day extension if necessary, strikes a bal-
ance between the need of FNMA to make timely business decisiona
and the need of HUD to undertake an appropriate review of the
FNMA request. If HUD fails to submit to Congress within the spec-
ified period its reasons for disapproval of a FNMA request, the cor-
poration mav proceed as if the request had been approved. This
provision will enable FNMA to respond quickly and effectively to
changes in the housing finance market and to implement its au-
thorized mortgage programs as needed by the market.
HUD authority over debt obligations. — The Committee bill de-
letes the authority of the HUD Secretary to approve FNBfA is-
suances of obligations to other instruments except for stock and
debt obligations convertible into stock.
GNMA commitment extensions
The Committee bill contains a provision to cover the e-,„
situation where the construction period for a multifamily project
with FHA insurance ia expected by FHA to take longer than tiie
customary 24-month term of a GNMA commitment to purchase the
mortgage after the project is completed. The provision provides for
the extension of any outstanding or future commitment to the fUll
construction period estimated by FHA in the mortgage insurance
commitment, including the 60-day period currently provided for the
completion of the cost certiflcation process, without the imp08iti(»
of additional fees beyond the originid commitment fee. If the exten-
sion of the commitment is needed beyond the FHA-epproved con-
yGoot^le
75
stniction period, then the customary extension fees could be
charged. In order to eliminate unnecessary paperwork, in the appli-
cation and granting of commitment extensions, the Committee ex-
pects GNMA to grant one extension to cover the entire approved
construction period rather than several separate thirty-day exten-
sions.
Study of prepayTtient penalties and the secondary mortgage market
'Che Committee bill requires the HUD Secretary, in consultation
with GNMA, FHLMC, FNMA, and the federal fmancial institution
r^ulatory agencies to study the impact of mortgage prepayment
penalties on the secondary mortgage market. The secondary
market is becoming an increasingly important segment of the hous-
ing market, and the trend toward greater reliance on the second-
ary market is expected to continue. The Committee is concerned
that a lack of call protection through prohibitions on prepayment
penalties may be inhibiting secondary market investment in mort-
gages. However, the Committee believes that if investors are to
gain the advantage of call protection through the use of mortgage
instruments containing prepayment penalties, homebuyers should
in return be provided some benefit such as a below market interest
rate or a prohibition on non-risk-related settlement charges usually
incurred by homeowners upon refinancing. The study therefore di-
rects the Secretary to report to the Congress with analysis of the
scope and impact of prepayment penalties, as well as a proposal for
federally standardized mortgage instruments that will incorporate
features that will make them attractive both to investors and the
homebuyers.
RESPA and controlled business relationships
The Committee bill amends the Real Estate Settlement Proce-
dures Act of 1974 (RESPA) to clarify that controlled business ar-
rangements in federally related mortgage transactions are a per-
missible method of doing business so long as a good faith efTort is
made to disclose the existence of the controlled business relation-
ship at or prior to the time of referral, a written estimate of the
range of charges generally made by the provider is given, and no
person is required to use a particular service provider (with excep-
tions to protect the lender's interest and to allow attorneys to act
as title agents in certain circumstances), and the only payment re-
ceived from the arrangement is a return on the ownership interest
or franchise relationship.
The bill provides that a "controlled business arrangement" exists
when two conditions are present. First, a person who is in a posi-
tion to refer settlement business incident to or a part of a real
estate transaction involving a federally related mortgage loan or
an associate of such person has either an "affiliate relationship
with or a direct or beneficial ownership interest" of more than 1
percent in a provider of settlement services. Second, either the
person in a position to refer business or the associate of such
person (irrespective of who has the ownership interest) directly or
indirectly refers such business to that provider or afHrmatively in-
fluences the selection of that provider.
yGoot^le
76
The term "efliliate relationship" is intended to describe the ida-
tionship among business entities where one entity has effectire
control over the other or is under common control with the other
by a third entity or where an entity is a corporation related to an-
other corporation as parent or subsidiary, characterized by an iden-
tity of stock ownership. The term "beneficial ownership" is intoid-
ed to mean the efTective ownership or the right to use and control
the ownership interest involved even though legal ownei^p or
title may be held in the name or another.
The issue of controlled business has been explicitly considered
and the Committee has adopted language whidi establiahea that
controlled business arrangements do not violate RESPA so long n
certain conditions are met. In doing so, the Committee evaluated
the evidence presented on both sides of the issue and determined
that controlled business referrals should not be prohibited.
The Committee also took steps to impose strong new disctOBun
requirements which assure that the consumer will be informed of
the existence of controlled business arrangements. The r^error in
a controlled business relationship has an obligation to make a good
faith effort to disclose the existence of the relationship at or prior
to the time of the referral. Additionally, an estimate m writing of
the range of chat^es generally made by the provider for the cov-
ered service must also be provided to the person referred unless the
estimate is being provided as part of the discloeure ret^uired undo'
Section 5(c) of l^UBSPA which governs the good foith estuiate of the
charges for settlement services that a lender is required to provide.
The Committee bill also includes a strong anti-tyingprovigion. A
person being referred to a controlled business in a RESPA covered
transaction may not be required to use a particular provider,
unless it is a situation where the buyer, borrower or seller is re-
quired to pay for the services of an attorney, credit reporting
agency or real estate appraiser chosen by the lender to represent
its interest or in the case where an attorney or law firm issues or
arrar^es for the issuance of a title insurance policy acting as an
agent or through a sepeirate corporate title insurance agency oper
ated as an adiunct to its law practice.
The amendment also reinforces the requirement that the only
payment which may be received for the referral of business to s
controlled business entry is a return on the ownership interest or
franchise relationship, unless the payment is for services otherwise
covered by Section 8(c). This provision is not intended to chanse
current law which prohibits the payment of unearned fees, kick-
backs, or other things of value in return for referrals of settlement
service business.
Where the controlled business arrangement involves a franchise
relationship and the person making the referral is a franchise of
the settlement service provider or its a^iliate, there is no acutal
ownership interest on which to base a return to the franchisee.
Therefore, where controlled business arrangements involve sudi
franchise relationships, the thing of value received from the ai-
rangement shall be based upon the franchise relationship. Tbt
Committee recognize that although a franchisee's investment does
not constitute an ownership interest in the franchisor or its affili-
ates, the total investment is nevertheless usually a significant &
yGoot^le
77
nancial undertaking on the part of the franchisee which is em-
bodied in the form of a franchise agreement establishing and con-
tinuing the relationship with the franchisor. It is intended that the
return from the controlled business arrangement in such situations
be based upon the franchise agreement.
If the persons involved in controlled business arrar^ements vio-
late the conditions governing such arrangements, they shall be
jointly and severally liable to the persons whose settlement service
is involved in the amount of three times the amount of the charge
paid for the settlement service plus court costs and reasonable at-
torneys' fees. In addition, depending upon the circumstances, anti-
trust and other remedies may be available.
In addition, the Secretary of HUD or the Attorney General or In-
surance Commissioner of any state in which a violation is occur-
ring is authorized to bring an action to enjoin conduct prohibited
by Section 8,
Section 16 of RESPA is also amended to provide that any action
brotight pursuant to the provisions of Section 8 or 9 of RESPA may
be brought in the United States District Court, or in any other
court of competent jurisdiction, for the district in which the proper-
ly involved is located or where the violation is alleged to have oc-
curred within one year from the date of the occurrence of the viola-
tion. The subsection specifies that actions brought under Section 8
by the Secretaiy of HUD or the Attorney General or Insurance
dommissioner of any state may be brought within three years from
the date of the occurrence of the violation.
The Secretary of HUD is authorized to investigate any facts, con-
ditions, practices, or matters that he deems necessary or proper to
aid in the enforcement of RESPA, to assist him in prescribing rules
or r^ulations, or to obtain information that may serve as a basis
for his recommending further legislation concerning real estate set-
tlement practices, llie Secretary is also authorized to hold such
hearings and subpoena such witnesses or documents as he deems
advisable and the Secretary may obtain the assistance of an appro-
priate United States District Court in enforcing such subpoenas.
The Section also permits the states to impose more stringent
limitations on controlled business arrangements should they so
choose. The Committee is aware that the National Association of
Insurance Commissioners has endorsed a Model Code which would
limit the percent^e of title insurance business that may be in-
volved in a controlled business relationship. Certain states have al-
ready adopted laws that impose stricter limitations.
The provision reflects the Committee's view that, while the dis-
closure and anti-coercion provisions contained in Section 542(b) of
the bill may be the proper approach for the Federal Government to
take at the present time with respect to controlled business rela-
tionships in the context of Section S of RESPA, individual states
may conclude that more stringent limitations, particularly in con-
nection with the problem of controlled business in the area of title
insurance, are needed. Thus, the controlled business amendments
to Section 8 of RESPA should in no way inhibit the individual
states in which controlled business may be a significant problem
from adopting those additional measures that they believe will pro-
tect consumers and competition.
yGoot^le
78
Although consideration was given to tmpoeing a percentage limi-
tation on the amount of controlled business that could be transact-
ed by a controlled title company, the Committee concluded that at
the present time such limitations should not be imposed at the fed-
eral level and that the disclosure and anti-coercion provisiona of
Section 542 might prove sufficient to remedy the problems in this
area. The Committee expects that the Department of Housing and
Urban Development, under the authority provided by new Section
19(c) of RESPA, will monitor the expansion of controlled businen
arrangements, will investigate any real estate settlement practices
that may be in violation of other sections of RESPA or may have a
negative impact on lowering real estate settlement costs for home
purchasers, and will recommend further legislation, if it concludes
that such legislation is needed to protect consumers or encourage
competition in the real estate settlement industry.
National Institute of Building Sciences
$500 thousand is authorized for the National Institute of Build-
ing Sciences,
It was and remains the intention of this Committee, as stated in
Sec. 809(h) of the Housing and Oimmunity Development Act of
1974, that the National Institute of Building Sciences shall not be
indefinitely supported directly by appropriated funds. The objective
continues to be a financially self-sustaining Institute supported by
contracts and grants from federal, State and local governments and
private ot^anizations, as well as other service and membership fees
and charges. However, the Committee is persuaded that this goal
cannot realistically be accomplished in the immediate fiiture. TbB
construction and building products industries that would be expect
ed to provide financial support to NIBS have suffered subetaottal
losses themselves in the fast few years. (Jiovemment support for
badly needed construction related research is dwindling. Given this
period of economic stress, a modest increase in authorized funds is
justified in order to continue an Institute which has the potential
for providing an open forum for the evaluation of changes in build-
ing technol<^, construction standards and t^e Federal role in ra-
couraging the production of affordable housing.
The (Committee is also aware that more than half of the $10 Ini^
lion originally authorized to finance the Institute has never been
appropriated. The additional authorization provided here is within
the ceiling originally set. The Committee expects that the Institute
will immediately take steps to adopt a course of action that will
assure its ability to sustain itself financially within a reasonable
period.
The (Committee further believes that HUD is an essential part-
ner in the effort to achieve this goal. The Institute has demonstrat-
ed its expertise in many activities such as housing rehabilitation
guidelines, manufactured housing construction and safet;^ stand-
ards, building energy performance standards, and materials and
products certification processes. There continue to be many oppor-
tunities for the Department to utilize this expertise in other ways,
for example, in assessing the affordable housing demonstration pro-
gram, creating a national housing technology research agenda and
facilitating the determination of the technical suitability of new
yGoot^le
79
building components, systems and materials, particularly' those
which will improve the quality and reduce the cost of housmg con-
struction and rehabilitation. The Committee expects the Depart-
ment to take full advantage of such opportunities.
Solar energy and energy conservation bank
In December 1980 the Department of Housing and Urban Devel-
opment proposed regulations to implement the Solar Energy and
Energy Conservation Bank. Almost two and one-half years have
passed and a single loan has yet to be awarded. This Committee is
extremely distre^ed by the reluctance of the present Adminintra-
tion to implement a program that has strong Congressional support
and by the failure of the Bank to propose r^ulations that comply
in megor respects with the basic intent of the original program. In
addition, the Administration has attempted to diminish i-he impact
of this pK^am by refusing to award $11 million of the funds ap-
propriated for fiscal year 1983 and by proposing to reprogram these
funds for the Low Income Energy Assistance Pn^am operated by
the Department of Health and Human Services.
Most of the amendments to the authorizing legislation are neces-
sary, not because the basic statute itself is flawed, but because the
department has failed to use its existing authority to assure the
creation of an effective program. The Bank must be flexible enough
to stimulate the wider use of active and passive solar energy sys-
tems and energy conserving measures in order to assist families to
reduce their energy needs and to lessen our national dependence
on foreign fuel sources. Indeed many of the legislative changes
were recommended by representatives of State energy offices that
were unable to persuade the Depeirtment that these changes were
necessary to assure efTective program implementation.
Advisory committees. — Some of the problems apparent in the pro-
posed regulations could have been avoided if the Solar Energy and
Enei^ Conservation Advisory Committees, which are representa-
tive of consumers, lenders, architects and solar and ener^ conserv-
ing product manufacturers had been consulted as the original legis-
lation intended. The bill requires such committees to meet at least
twice each year and the Committee intends the Bank Board to use
the expertise of these committee members.
Two- to four-unit residential buildings. — In order to encourage
owners and tenants of two- to four-unit rental buildings whose
income exceeds 150 percent of the medifm area income and owners
of one unit residential buildings that are rented to take steps to
make such buildings more energy efficient, the bill provides eligi-
bility for the same kind of assistance as multifamily building
owners may receive; the lesser of 20 percent of the cost of residen-
tial energy conservation improvemento or $400 per unit.
Eligible solar energy systems.— The Bank Board has proposed r^-
ulations that would severely limit the types of solar energy systems
and energy conservation measures that may be financed. One of
the primary reasons for creating the Bank was to encourage the
use of a relatively new technology which has great promise for re-
ducing energy needs (active and passive solar energy systems) and
to assist families to make initially costly investments in energy
conserving measures that would prove cost-effective over the life of
yGoot^le
tHe measure. By restricting eligible energy conserving measurat to
those which are projected to save enough enertnr to pay for them-
selves in seven years and by prohibiting the nnanciiig of active
solar energy systems, the Bank flies in the face of clear Congres-
sional intent. Therefore, the bill would not permit the Board to
limit the amount of financial assistance for energy conserving im-
provements based on projected energy savings. In addition, the
Bank would be required to provide fmancial assistance for the in-
stallation in new and existing, single and multifamily residentJal
buildings of passive and active solar space heating or water heating
Systems. The regulations should make it clear that a building
pwner may receive financial assistance in conjunction with the in-
stallation of a solar energy system whether the owner undertakes
the work himself or through a contractor and whether little, mod-
erate, or substantial rehabilitation to his property accompanies the
installation of the solar energy system.
Eligible lending institutions and use of tax-exempt financing.—
The bill also directs the Bank to permit metropolitan cities and
urban counties to receive financial assistance directly in order to
institute their own Solar and Energy Conservation Bank prc^rrams.
; Many m^uor communities have been leaders in developing innova-
tive conservation loan and grant prt^ams and they should not
have to rely on States to permit them' to pfirticipate in the pro-
: gram.
When the Solar Bank was created, it was clearly understood that
participating States and local communities could raise needed capi-
tal for loans to be used in conjunction with bank subsidies by issu-
ing tax-exempt bonds. The proposed r^ulations would prohibit the
use of tax-exempt bonds in conjunction with Bank subsidies al-
though no such limitation is authorized by the legislation. This bill
expressly prohibits the Bank from imposing such a limitation.
Administrative expenses.— The proposed regulations provided to-
tally unrealistic amounts to cover the administrative costs of run-
ning the program and several States indicated that they would be
unable to institute the program if those limits were not chaiued.
The two percent limitation meant that only nine out of the fifty-
one grants were large enough to permit an administrative allow-
ance of $20,000 which is barely sufncient to hire a single employee
to run the program. The Committee bill establishes a limit on ad-
ministrative costs of 10 percent of the grant or $20,000 whichever is
greater and provides that the State may only use half of that
amount for administrative expenses unless the State is the sole ad-
ministrative entity for the program. The statute does not authorize
the Secretary to require matching administrative funds from the
State although States may voluntarily contribute such funds and
the bill would permit the Board to establish a higher administra-
tive cost limit if appropriate.
Allocation of assistance. — The proposed regulations did not cleai^
ly describe the criteria the Bank used to select eligible financial in-
stitutions {which include States, local governments, lending institu-
tions, and even public utilities). Without clear guidance as to the
competitive selection criteria used by the Bank, applicants for as-
sistance do not know how best to structure their programs. The bill
would require such criteria to be published in r^idatitHiB.
yGoot^le
Authoruation. — By increaung the authorization for the Bank
Ax>m $50 millioa to $100 million for fiacal year 1984, the Banking
CiMnmittee asserts its unqualifled support for this program and the
bill provides that appropnated but recaptured funds should be real-
located to eligible nnancial institutione. The implementation of an
effective Bank has limped slowly for too long. It is expected that
the Department will revise the regulations to comply with the
changes authorized by this bill as soon as the legislation is enacted.
HUD reorganization
The Comniittee believes that any proposed HUD Central Office
reoiganizatiem plan must be carefully examined and, therefore,
subject to the same 90-d^ Federal Roister pre-publication provi-
sion, as other profmsed HUD reorganization plans, before a Central
Office reorganization plan may ttuie effect. The Committee is most
concerned that proper administration by HUD of the federal hous-
ing and community development programs be maintained and thus
provides that in evaluating the impact of HUD reorganization
plans, that the required cost benefit analsrses shall also include a
study of the direct and indirect impact on employment in both the
pubuc and private sectors of the local economy affected by such re-
organization plans. The Committee provisions are in response to
concerns that Congressional intent may not be carried out with re-
spect to UDAG national competition and other federal housing and
community development prt^ams under proposed HUD reorgemi-
zation plans and, in addition, plans Committee hearings on the
impact of HUD Field and Central Office reorganization plans.
Weatherization program
$300 million is authorized to continue the Department of Energy
Low Income Weatherization Program in flecal year 1984 at the
same level that was provided in appropriations for fiscal year 1983.
Reducing the energy use of low income families who live in highly
energy inefficient buildings remains a priority of this Committee.
Since a large proportion of low income families live in rental hous-
ing, greater enorts should be made by the Department of Energy to
assure the benefits of this prc^am are extended to low income
families, particularly those living in multifamily rental housing in
urban areas.
FEDERAL INSURANCE PROGRAMS
federal Emergency Management Agency
The Committee bill extends for two additional years through
September 30, 1986, the three federal insurance programs (Federal
Flood Insurance, Federal Crime Insurance and Federal Riot Rein-
surance) administered by the Federal Emergency Management
Agency (FEMA). Since 1978 FEMA has administered these three
insurance programs, and prior to 1978, from the inception of these
mograms, the Department of Housing and Urban Development
UlUD) had this responsibility.
The Committee is concerned that these three insurance programs
have been rel^ated to a minor role in the overall operations of
FEMA. The responsibilities of FEMA are diverse and wide-ranging.
37-922 0-84-52
yGoot^le
The Agency has been charged by the Congress with programs and
directions to respond to natund disasters and the planning and
preparedness for meeting such disasters. In the Committee's view,'
the Agency has not set forth as part of its mission and goals the
role that these insurance programs play in the Agency's oper-
ations.
The Committee regrets that the relationship between the Agency
and this Committee has been so distant. Rarely has the Ageitgr
sought to confer over the operations of the three insurance pro-
grams and the policy directions that the administration has beat
seeking to implement with r^ard to these three inauranc^e pro-
grams. Furthermore, it appears that the three insurance programs
have been lost within the larger scheme of the Agency's prog]
and responsibilities. It is the Committee's hope that a closer v
ing relationship can be developed so that these three insur
pn^ams, which the Committee believes are important elements in
the federal government's responsibilities toward insuring the pro-
tection and safety of its citizens, can be adequately reviewed in a
less haphazard fashion than has been the situation in the past two
years. In enacting the flood, crime and riot insurance prt^rams,
the Congress responded not only to the emergency nature of the
lack of insurance availability and affordability but also was re-
sponding to an attempt to provide a more Stable urban environ-
ment.
During the consideration of the reorganization plan in 1978
transferring these three insurance programs from the Department
of HUD to FEMA, this Committee expressed its misgivings. Almost
five years of experience in FEMA's management of these programs
has confirmed the Committee's doubts as to the 1978 reorganiza-
tion. The Committee will attempt to further scrutinize the oper-
ations of these three insurance prt^ams with the intention of de-
termining whether these three programs be returned to the respon-
sibility of the Department of HUD.
Flood insurance
The Committee bill provides for the extension of the Federal
Flood Insurance Prc^am for an additional two years through Sep-
tember 30, 1985. In extending the regular flood insurance program
and the emergency program, the Committee reaffirms its strong
support of the structure of the program, enacted by the Congress in
1968 and revised ^ain in 1973, that provides essential flood insur-
ance coverage for some two million policyholders with a total in-
surance coverage by the end of fiscal year 1983 of $110 billion. The
flood insurance program provides essential coverage for homeown-
ers and businesses that is unavailable in the private market. The
affordable rates charged by Federtil Flood Insurance Pn^am and
the required areawide flood plan management responsibility of the
program are important elements of a rational dev^opment of hous-
ing patterns of our nation.
The recent heavy flooding in the far west, the south and the Mis-
sissippi Valley attest to the importance of maintaining and con-
tinuing the Federal Flood Insurance Program as it has been struc-
tured over the past years.
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The bill providee an authorization of $58,600,000 for the purposes
of continuing flood elevation studies and surveys. The Committee
directs FEMA to use these funds only for the purpose of, flood ele-
vation studies and surveys.
•nie Committee has been concerned about discussion emanating
from FEMA concerning the possibility of turning the Federal Flood
Insurance Program over to private industry. The Committee is not
aware of any evidence that would indicate that private insurance
carriers presently have the ability to provide affordable federal in-
surance coverage. It cautions the Agency against proceeding with
any plans to turn the Federal Flood Insurance Prc^am, either the
direct insurance or the management of the program, over to pri-
vate companies without review and consultation with the Commit-
tee.
The Committee bill includes a provision directing the Federal
Flood Insurance Administrator not to increase premiums charged
for flood insurance policies beyond the rates in effect on September
15. 1982, and that further the Administrator report to the Congress
not later than December 1, 1983, regarding the premium rate
structure for the flood insurance pn^am. This report shall con-
tain a detailed explanation of all the premium increases charged
during the two-year period ending September 15, 1982, along with
an explanation of any increases in premiums that the pn^am ad-
ministrator anticipates could be made before October 1, 1985. The
Committee is also disturbed over the fact that the Agency has not
consulted with or even advised the Committee either r^arding its
intentions with r^ard to increasing the premium rate structure
for the flood insurance prt^am or prior to the publication of
actual rate increases in the Federal Roister. Since the Agency
authorizing committee, the committee that created this program,
has not deemed it important enough to consult with the authorizing
committee, the committee that created this program, concerning the
rates <duuxed, the Committee is taking this action to restrain any
farther rate increases until satisfactorj^ reasons are given us to why
increases are necessary. The Committee is concerned that the
Administration is attempting to spin off the Federal Flood Insurance
Program to the private sector by forcing up the premium rate struc-
ture tJiat will eventually make the program too expensive for
homeowners and businesses to mainUun.
The Committee bill extends the August, 1983, deadline for the
completion of risk studies in flood-prone communities to September
30, 1987. When the date for completion of these risk studies were
eetablished ten years ago, it was estimated that 5,000 communities
needed to be studied, lliis estimate was increased to almost 17,000
ccmummities. Budget restrictions through the 19708 resulted in the
initiation of fewer studies per year than were initially anticipated.
The Committee believes that this extension to September 30,
1987, is necessary because 24 percent of the communities in the ten
fastest growing SMSAs have not yet been studied. Approximately
4,000 m^ have signiflcant flood hazards and development poten-
tul, sufficient to require a flood elevation study. State and local
flood plain manac^ment programs require the flood data developed
by these studiesTwithout these studies new data would not be pro-
vided for states and communities to make prudent development de-
cisions.
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84
The Committee bill timends two sections of the National Flood
Insurance Act of 1968, as amended, which relate to the jurisdktkMi
of courts to hear and determine actions against the National nood
Insurance Program (NFIP) when claims are disallowed or when the
claimant refuses to accept the amount of the claim allowed. One
section concerns such actions where a pool of companies is operat-
ing the pr(^am, the other, as is presently the case, where the Gor-
ernment is conducting the prc^am.
There is a split of authority as to whether the federal courti
have original exclusive jurisdiction, or whether there is concurrent
jurisdiction with state courts. The litigating position of the Depart-
ment of Justice, and the position the Committee believes to be
better (particularly where the Government is operating the pro-
gram), supports exclusive original jurisdiction in the federal oourta.
Exclusive federal court junsdiction would promote uniformly <rf
decisions on questions of law. Federal law should be controlling, as
matters involving the NFIP involve federal law. The NFIP is not
subject to state insurance laws. These amendments are similar to
recent amendments to the statute relating to Federal Crop Insui^
ance which placed exclusive jurisdiction in the federal courts.
The Committee bill also contains the technical nomenclature
changes designating the Director of the Federal Emergency Man-
agement Agency as the administering officer of the three federal
insurance prt^ams in place of the HUD Secretary. Since FEMA
has been administering these insurance programs since 1979, these
nomenclature changes are necessary to conform the statute to tibe
proper administrative designation.
Crime insurance and riot reinsurance
The Committee bill extends the Urban Riot Reinsurance Pro-
gram and the Crime Insurance Program for another two fiscal
years through September 30, 1985. In doing so the Committee again
has rejected the Administration's request to terminate these two
urban insurance programs. In recommending to the Committee the
termination of these programs, neither the Administration nor the
insurance companies has provided the Committee with an adequate
justiflcation for terminating these two pn^ams. Statements by
both the Administration and the private insurance companies to
the effect that adequate coverage exists in the private market in
urban areas were not adequately supported by any data submitted
to the Committee.
Federal crime insurance. — The Federal Crime Insurance Pro-
gram, which was enacted in 1970, was created for the same reasoD
as the Federal Flood Insurance Pn^am: because of heavy losses,
those insured most subject to risk would be unable to afford insur*
ance coverage without a federal subsidy. Premiums based on actual
loss experience would be prohibitively expensive for those in high
crime areas.
The program, by its nature, was never intended to be self-sus-
taining, llie $140 million in federal losses from crime insurance
are comparable to the far higher $1.5 billion in federal flood insur
ance costs. The losses for both programs reflect the fact that nei-
ther flood insurance nor crime insurance is true insurance. Both
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85
are respomes to the unafTordability of these essential insurance
coverages in high risk areas.
More than 60,000 small businesses and residents, concentrated in
heavily populated, crime-prone urban areas, rely entirely on the
Federal Cnme Insurance Program. Its elimination would be par-
ticularly counter-preductive in those urban areas where attempts
at revitalization by various federal and local efforts and programs
are taking place.
Although there are some States currently participating in the
federal program with relatively few insureds and low levels of
losses, in States with high crime losses, there is no way for the
States to provide the necessary subsidy. In these high crime States,
many small businesses will not survive without the federal pro-
gram.
He subsidy under the Federal Crime Insurance Program is a
mirror image of the subsidy under the Federal Flood Insurance
Program, in the case of crime insurance, non-urban taxpayers sub-
sidize crime insurance losses in urban areas; under the Federal
Flood Insurance Program, urban taxpayers subsidize flood insur-
ance losses in other areas of the country.
Riot niixsurance (the urban property protection and reinsurance
protection and reinsurance program). — The Federal Riot Reinsur-
ance Program was enacted in 1968 in response to the urban riots in
the late 1960b and the difficulties faced by insurers in obtaining
necessary riot reinsurance A^m private companies. The security
provided by Federal Riot Reinsurance encouraged private insurers
to make essential insurance available in urban areas, both through
individual companies and FAIR plans.
The federal program has never cost the taxpayer a cent After
payment of all clauns and expenses, the Federal Government has
realized a profit from the premiums charged to private insurers of
more than $120 million.
Although there heis been a large drop in the number of private
insurers purchasing federal reinsurance this year, it is primarily
because tiie government increased the premiums tenfold, to fund
losses from the Federal Crime Insurance Program. The federal
profit from riot reinsurance testifies to the adequacy of the previ-
ous premium rate. Because the new federal reinsurance rates were
so obviously excessive and because the current private reinsurance
market may be the softest in the history of property insurance,
many insurers chose not to purchase the federal coverage this year.
Moreover, current private insurance market conditions will not
otmtinue indefinitely. Although most insurers believe they are
bettR* inepared today than in 1968 to deal with urban disorders
and riots and even though private carriers carry a large proportion
of urhan insurance risks, the Committee believes that it would be
wiser to continue the federal pr<^am rather than to terminate it
uid then be forced to seek new l^islation in the event of an emer-
gency.
Under the existing law, no insurer is required to purchase the
fedo^ coverage. Those insurers that oppose the prt^am are free
to ignore it Furthermore, the cost of maintaining the federal pro-
gram is minimal and is a small fraction of the premiums received.
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Since its inception in 1968, total program expenses have been only
$4 million.
The Federal Riot Reinsurance Program offers the taxpayer a
cost-free opportunity to assure the continued availability of eoseat
tial insurance in urban areas and this Committee is committed to
the extension of the pr(^ram.
Counseling
The Committee bill authorizes $8 million for counseling to ten-
ants and homeowners to meet the responsibility of teminnr or
homeownership. WhUe the Administration provides no funds in
their fiscal year 1984 budget, the Committee strongly believes that
this pr<^am is needed now more than ever in view of the natkm'g
economic situation and the effect this has had on family incomes.
The Committee also restates the views expressed in prior yean
that this prt^am should not be limited to counseling only those
homeowners who have defaulted. Fre-purchase counseling is of
vital importance to ensure that families do not enter into mortage
commitments that their budgets can not support Tenants, too,
should be eligible for pre-occupancy counseling as this training can
benefit not only the tenants but multifamily building owners fay re-
ducing problems and costs associated with financially overextended
tenants. Counseling is also a very prudent way for HTJD to safe-
guard the integrity of the FHA insurance fund and for the Federal
Government to safeguard its investment in housing assistance and
mortgage insureince. Efforts should be made by the Department to
expand counseling opportunities for families eligible for the FHA
assignment of TMAP pn^rams.
HUD Research
The Committee bill authorizes $24 million for HUD research for
fiscal year 1984.
Of the amount authorized, not less tha $10.6 million is to be pro-
vided for the Annual Housing Survey ( AHS). HUD had proposed to re-
duce funding for the AHS ^m $10.6 million spent in fiscal year 1963 to
$7.7 million for fiscal year 1984, The $2.9 million proposed reduction
would have been acomplished by reducing the number of SMSA's sam-
pled, reducing the size of the samples in some cases from 16,000
households to as low as 4,000 households, and reducing the amount
of data collected. The Committee believes that these proposed re-
ductions would significantly impair the utility of the AHS &>r de-
termining housing need and evaluating existing federal bousing
programs. The AHS is such a critical research tool in the housing
area that the Committee believes that these reductions would have
significant adverse impacts. For this reason the Committee bill pre-
vents HUD from reducing the amount of funds spent for the survey
below the amount spent for fiscal year 1983. It also requires HUD
to consult with the House and Senate Banking Committeea before
making any changes to the Survey so that the full impact of these
changes could be examined before they are implemented. The Com-
mittee does not intend b^ this provision to foreclose the Depvt-
ment from proposing modifications to the AHS so that the data can
be collected more emciently and in a less costly manner. However,
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the bill reauires that such a propoeal must be examined by the
Committee before it can be implemented.
Of the amount authorized, not less than $2 million is to be uti-
lized for imidementation of a reeearch program to be developed in
consultation with PHAs that will identify current problems of
public housing management, specific solutions to those problems,
and incentives for PHAs to implement those solutions. Over the
last decade, HUD'S Office of Policy Development and Research has
sponsored a variefy of ad-hoc research efforts concerning public
hmising management. Previous research activities in this area
were <HDly loosely connected and were not part of a comprehensive
and int^rated approach to examining the issues and systematical-
ly testiiw new approaches to address them. The bill attempts to
rectify these prwlems with past public housing management re-
search by directing the SecretaJQ' to develop and implement a re-
search agenda that will identify current management problems
and how they can be resolved.
In the view of the Committees, management plays a critical role
in determining the success of a public housing development. In cre-
ating the Comprehensive Improvement Amistance Program in
1980, the Coomuttee recognized that improvements in the manage-
ment and operation of projects would often t>e necessary to sustain
physical and energy conservation improvements. It was the Com-
mittee's expectation that HUD would develop management stand-
ards for PhA's to utilize under the ClAP program; however, no
such standards were ever developed. The Committee expects that
as a result of the research efforts authorized in this bill; HUD will
be able to develop those standards. The research should also be
helpful to HUD in determining how to incorporate managemant in-
centives into the Performance Funding System for operating subsi-
dies, as required in Title II of this bill. The Committee also believes
that it is critically important that the Office of Poli^ Development
and Research consult and work closely with the Ofnce of Housing
in carrying out the provisions of this section.
Part of the set-aside for public housing research is also to be used
to provide the Committee with an independent study of the cost of
modernizing the public housing stock, the extent of^ improvements
which have been made under the Comprehensive Improvement As-
sistance Program, and the extent of improvements which are still
needed to be made.
This information will be extremely important to the Committee
in deveit^ing a rationEd plan for funding the modernization needs
of tiie existing public housing stock. A similar cost estimate was
jnmieTed for HUD in 1979, but those estimates are now out of date.
This information is particularly necessarr for the Committee to
have in order for it to be able to adequately evaluate the Adminis-
tration's proposal to phase out the modernization pr<%ram by 1985.
Ttaa bill requires an independent study to be directly submitted to
the Secretary and the House and Senate Banking Committees so
that the report will not get caught up in lengthy 0MB reviews or
be used by the Administration as a vehicle for justifying its propoe-
al to phase out the CIAP program.
An additional $2 million set-aside is also provided for a demon-
'* I program and study of mutual housing associations. The
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Committee finds that mutual housing associations can provide a
flexible mechanism for meeting unique local housing needs (rf low
and moderate income families. The Committee has been {deased
with the development of the mutual housing association demon-
stration conducted by the Neighborhood Reinvestment Corporatioa,
but it also realizes that there are many different models of mutual
housing associations. The Committee expects that the Secretary
will make several grants in order to demonstrate various types «
mutual housing associations. The Secretary shall report to Cod-
gress no later than nne year following enactment of this Act on the
use of demonstration funds and on the ability of various forms of
mutual housing associations to meet housing needs of low and mod-
erate income families. The Committee expects the study to include
recommendations for changes to the National Housing Act neces-
sary to make mortgage Insurance available for mutual housing as-
sociations. OB well as other legislative and regulatory changes nec-
essary to provide greater federal support for this approach to as-
sisting the expansion of homeownership opportunities.
National Housing Partnership
The Committee bill amends the National Housing Partnership by
adding to their purposes the acquisition and financing of housng
as well as the buildmg, rehabilitation, actjuisition and financing rf
commercial, industrial, and retail facilities that provide employ-
ment or services to families and individuals of low and moderate
income. However, the primary purpose of the National Housing
Partnership shall continue to be that of producing and preserving
housing primarily for the benefit of families and individuals of low
and moderate income, and any Income generated by the commer-
cial, industrial and retail activities is to be used for this primaiy
purpose. The corporation can commit an amount not to exceed ^
percent of Its oQulty commitment to housing to the Partnership's
new purpose. The Committee bill authorizes the Partnership to
enter into partnerships, limited partnerships, or joint ventures or-
ganized under applicable State or local law for the purpoees of en-
gaging in the new activities of the Partnership included in the
Committee bill, but the primary purpose of the Partnership shall
continue to be the production and preservation of housing primar
ily for the benefit of families and individuals of low and moderate
income.
Quarterly Report by Secretary of Housing arid Urban Development
The Committee requires the Secretary of HUD, with the coopera-
tion of the federal supervisory agencies to conduct a quarteriy
survey of residentiEd mortgage delinquencies and foreclosures na-
tionwide and to provide this information to Congress. At the
present time, there is no definite information as to delinquencks
and foreclosures on the total number of residential mortgagee and
this information is vital to Members of Congress in their attempts
to accurately evaluate the delinquency and foreclosure situaticHi.
The Committee expects that this survey can be done with a mini-
mal effort on the part of HUD based on the complete cooperaticHi
of the Federal Home Loan Bank Board, the Federal Deposit Insiir
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ance Corporation, the Board of GovemotB of the Federal Reserve
System and the Osmptroller of the Currency.
Technical Amendment to GamSt Germain
Htle Vm of the Gam-St Germain Depository Institutions Act of
1982 allows the States to override the federal preemption of alter-
native mortgage instrument regulations. Gam-St Germain is un-
clear, however, if a State must override all federal r^ulations at
ODCe. This amendment allows the States some flexibility by allow-
ing partial override of the federal preemption.
H.R. 1 — Housing and Urban-Rural recovery Act of- 1983
SBCTION-BY-SBCnON SUMMARY
SHORT TFTLX — SEC. 1
Housing and Urban-Rural Recovery Act of 1983.
FINDINGS AND PURPOSES— SEC. 2
The Congress finds that: the severe economic conditions have ad-
verse^ affected communities; the primary objective of the Commu-
nity Development Block Grant Pribram is to principally benefit
persons of low and moderate income; the Federal Government has
for 50 years made a meaningful contribution in providing shelter
fyr fanulies of low and moderate income and in assisting ^e hous-
ing industry; and it is necesseuy to reeilirm this role to continue
assiBting the housing industry and families by providing homeown-
ershu) and rental housing opportunities. The purpose of this Act is
naSurm the Federal Government's role toward achieving the na-
tional goal of decent, affordable housing and a suitable livii^ envi-
ronment for eveiy American family by establishing and carrying
out housing and community development programs.
TiTU I — COBOf UNTTY AND NkIGHBORHOOD DEVELOPMENT AND
Conservation
ooMHimmr development bloce grant
Primary objective. — Sec. 101(a) provides that, consistent with the
primary objective of the Community Development Block Grant
(CDBG) Prc^ram, not less than 51 percent of the assistance pro-
vided under the CDBG Pn^ram shall be used for the support of
activities that benefit persons of low and moderate income.
Definition of a metropolitan city.— Sec. 101(bXl) amends the defi-
nition of a metropolitan city to include any city in a metropolitan
area that has a population of 50,000 or more until the decennial
census indicates the population of the city is 45,000.
Definition of an urban county. — Sec. 101(bX2) amends the defini-
tion of an urban county within a metropolitan area to permit
urban counties with a population of 200,000 to be considered enti-
tlement counties until the decennial census indicates that the
counts population is less than 180,000. A county shall also be con-
sidered an urban county if it: has a combined population between
190.000-199,000, inclusive; had a population growth rate of not less
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than 25 percent during the most recent IG-jear pmod menwired b]r
applicable censuses; and has not previously qualified as an oifaan
county with a combined population of 200,000.
Definition of low and moderate income. — Sec. I01(bX3) defina
low and moderate income persons as families whose incomes do not
exceed 80 percent of the area median income of the metn^iolitan
city or urban county, (in the case of entitlement grants) or nonai-
titlement portions of the State (in the case of grants to States w
non-entitlement small cities); where applicable such terms iTKliw^*
families consisting of one individual.
Metropolitan city eligibility. — Sec. 101(c) provides that a m^n>
politan city which quaBfied as an entitlement conununi^ in Bscsl
year 1983 because it was defined as a central ci^ of a metropcriitan
area shall continue to qualify for eligibility as an entitlement re-
cipient for fiscal year 1984 and each succeeding fiscal year, if
such city utilizes not less than 75 percent of its CDBG assistance
received for fiscal year 1982 and each succeeding fiscal year in
areas and on projects directly benefiting low and moderate income
persons.
Authorization. — Sec. 101(d) authorizes to be appropriated for the
CIDBG program not to exceed $4.5 billion for each of the fisca!
years 1984, 1985 and 1986.
APPUCATION REttUIREHENTS
Application requirements for metropolitan cities and uHtan coun-
ties.— Sec. 101(e) provides that applications for assistance made by
metropolitan cities and urbeui counties must include:
(1) A certification that the community has prepared a llufie-
Year Plan which sets forth a summary of a tiiree-year commu-
nity development plan which identifies: housing and communi-
ty develoment needs; provides a comprehensive strat^^f fiw
meeting those needs; and specifies both short and long term
community development objectives developed in accordance
with the primary objective and requirements of the CDBG Pro-
gram;
(2) A certification that it has formulated a program which
describes activities to be undertaken to meet community devel-
opment needs and objectives tt^ether with estimated activi^
costs, general location and estimated extent to which the pro-
posed activities will benefit low and moderate income persons;
indicates non-CDBG resources expected to be made available
toward meeting identified needs, activities and objectives, in-
cluding activities designed to revitalize neighborhoods for the
benefit of low and moderate income persons; and specifies an
anti-displacement plan which minimizes direct, indirect and in-
voluntary displacement of low and moderate income persons,
as a result of eligible activities,
(3) Fair Housing Certification that the program is conducted
and administered in conformity with civil rights laws and the
applicant community will affirmatively furtiier fair housiflg
opportiinities;
(4) Citizen participation requirements that applicant must
certify that, prior to application submission, the applicant: has
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91
prepared and followed a written citizen participation plan
which provides citizens an opportunity to participate in the de-
velopment of the application, encourages the submission of
views and proposals, particularly by blighted neighborhood
residents and low and moderate income persons, provides for
timely responses to the submitted proposals, and schedules
hearings at times and locations that permit broad participa-
tion; has provided citizens with adequate information concern-
ing available CDBG funds for proposed community develop-
ment and housing activities, the range of activities that may
be undertaken, and other important requirements; has held
Sublic hearings to obtain the views of citizens on community
evelopment and housing needs; will provide citizens with rea-
sonable access to records regarding the use of funds in sufH-
cient time for citizens to submit comments concerning the ap-
plicant's community development performance; will provide
citizens with reasonable notice of, and opportunity to comment
on, any substantial change proposed to be made in the use of
CDBG funds from one eligible activity to another (except that
nothing may be construed to restrict the responsibility and au-
thority of the applicant for the development of the application
and the execution of its community development program);
(5) Assessments certification that applicants will not attempt
to chai^ or assess fees and amounts to recover capital costs of
public improvements funded in whole or in part with CDBG
funds against properties owned by low and moderate income
persons (including fees made as a condition of obtaining access
to such public improvement) unless CDBG funds are used to
pay the proportion of such fee that relates to capital costs fi-
nanced m>m other revenue sources.
(6) Certification of compliance with this title and other appli-
cable laws.
Application requirement for States that administer the nonentitle-
ment small cities program. — Sec. 101(e) also provides that applica-
tions made by States that administer the non-entitlement Small
Cities Program: must include certifications that the state has fol-
lowed all the requirements imposed on metropolitan cities and
urban countries except the requirements that applicants formulate
a program that lists activities expected to be undertaken to meet
housing and community development needs, identify non-federal
resources and describe and anti^isptacement plan. A State must
also certify that the State has consulted with the non-entitlement
small cities in developing its community development plan and
funding allocation procedure; and the State must describe a com-
petitive selection process for applications from small cities and may
not rc!iect a non-entitlement community's application because it in-
cludes a particular eligible activity selected by the applicant to
meet itfi community development needs.
Application requirement for nonentitlement communities. — Sec.
101(e) also provides that an application made for CDBG funds by a
non-entitlement community must (1) certify that the community
haa developed an anti-displacement plan which minimizes direct,
indirect and involuntary ^placement of low and moderate income
persons, as a result of eligible activities; (2) certify that the pro-
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92
^am is conducted and administered in confonnity with chnl n^dt
laws and the applicant will allinnativel^ further fair houaing op-
portunities; (3) certify that, prior to apphcatjon submisBion. the eq^
plicant: has prepared and followed a written citizen partidpation
plein which is similar to that required of entitlement commimltia;
(4) certify that applicants will not attempt to charge or anpcMB fees
and amounts to recover capital costs of public improvemNitB
funded in whole or in part with CDBG funds from low and moder-
ate income persons, including fees made as a condition of obtaining
access to such public improvements; (5) certify compliance with the
CDBG statute and other applicable laws; and (6) must also certify
that it has prepared a statement which identifies community devel-
opment and housing needs; a strategy to meet those needs together
with estimated costs, general location of activities and estmiatad
extent to which activities will benefit low and moderate income
persons.
Unspeciped local option. — Sec. 101(e) also limits to 10 percent of
aiw CDBG grant the amount of funds that may be used for tmspe*
cified local option eligible community development activities.
Maximum feasible priority to low- and moderate-iiux>me per-
sons.— Sec. 101(e) also provides that all applicants must certify to
the State or Secretary that their community development program
gives maximum feasible priority to activities that will benefit low
and moderate income persons, or aids in the prevention or elimina-
tion of slums or blight and that not less than 51 percent of CDBG
assistance will be used for activities that benefit low and moderate
income persons. An application may also describe activities which
are designed to meet other community development needs that
have arisen during the preceding 18-month period and have a par-
ticular urgency that pose a serious and immediate threat to (he
community's health or welfare for which other financial reeources
are not available.
Vacant and abandoned dwelling units included in HAP. — Sec.
101(f) provides that vacant and abandoned dwelling units shall be
taken into consideration when the entitlement community develops
its annual Housing Assistance Plan (HAP).
REPORTING, REVIEW AND AUniT BBQUISSMBNTS
Performance report requirements. — Sec. 101(g) provides that
CDBG entitlement grantees and States must submit annual per-
formance reports to the Secretary, and non-entitlement small cities
must submit reports to the Secretary or the State concerning their
CDBG activities. The performance reports must include an aflocas
ment by the grantee of the relationship between their funded activ-
ities and: the primary objective and specific objectives of the CDBG
program; the applicant's certifications; the needs and objectives
identified in the application; in the case of entitlement communi-
ties, the actions taken toward the achievement of the housing as-
sistance plan's goals; and in the case of entitlement and non-enti-
tlement communities, the projected and actual benefits to low and
moderate income persons described on a project-by-project basis.
The performance reports shall also: include citizen comments on
the applicant's performance. The Secretary, in order to ensure uni-
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form review of the varioufi progreuns, shall provide a standard per-
formance report form that enables the Secretary or the State to
cooduct adequate reviews and audits.
Review and audits of entitlement communities. — Sec. 101(g) also
provides that the Secretary shall make reviews and audits of enti-
tlement community and non-entitlement communities receiving
funds directly from HUD, not less than annually, to determine
whether grantees have: (1) carried out activities and, where appli-
cable, housing assistfince plans in a timely manner; (2) carried out
activities and certifications in accordance with the primary objec-
tive and requirements of the Act and with other applicable laws;
and (3) a continuing capacity to carry out activities in a timely
manner.
Review and audit of State administered programs. — Sec. 101(g)
also provides that the Secretary shall make reviews and audits, not
less than annually, of States which administer a non-entitlement
small cities program to determine whether States: (1) distributed
their funds to small cities in a timely manner and in conformance
with their distribution methods; (2) carried out their certifications
in compliance with the primary objective and requirements of the
Act and with other applicable laws; (3) required non-entitlement
small cities to comply with their own certifications; (4) made re-
views and audits of small cities to determine whether they satisfied
applicable performance criteria similar to those required of entitle-
ment communities. The Secretary shall also make reviews and
audits, as may be necessary or appropriate, to determine if non-en-
titlement small cities have satisfied performance criteria similar to
those required of entitlement communities.
Recordkeeping reguirements. — Sec. 101(g) also provides that the
Secretary shall require each State, entitlement city and county and
non-entitlement community to maintain records and other infor-
mation to enable the Secretary and the States to conduct adequate
reviews and audits, particularly with respect to the extent to which
activities benefit low and moderate income persons.
Funding allocation adjustments. — Sec. 101(g) retains the existing
requirement that the Secretary, in accordance with review and
audit findings, may adjust, reduce or withdraw CDBG assistance
made available to grantees; except that funds already spent on eli-
gible activities shall not be recaptured or deducted from future as-
sistance.
Lumpsum drawdown. — Sec. 101(h) provides that any unit of gen-
eral local government receiving CDBG funds may, at its request,
receive funds in one payment in an amount which the unit of local
government determines is necessary to help finance, make feasible,
or accelerate implementation of a specific public facility, commer-
cial or industrial activity undertaken by public or private nonprofit
entitiee pursuant to Section 105(aX14) if such project is included in
its most recent statement of activities, and will require expendi-
tures for an eligible activity within 2 years. The Secretary shall
pranirtly make any payment requested following receipt of a local
government's request. This request shall be accompanied by a
statement which describes the reasons why a lump-sum payment is
■y. Any interest accrued on a lumpsum pa3rment received
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by a unit of local government shall be ezpmded on the pngeet for
which auch payment was requested.
Program income. — Sec. 101(h) also provides that redpientB m^
retain program income if such income was realized after the initia]
disbursement of grant funds and recipients agree to use pngram
income for eligible communis development activities. A State may
require as a condition, under the small cities grant program, that a
unit of general local government shall pay to the State any socfa
income to be used by the State to fund additional eligible oonunuu-
ty development activities, except that the State sball waive sodi
condition to the extent such income is applied to continue the ac-
tivity from which the income was derived.
Uniform relocation assistance, — Sec. 101(h) also provides that fin*
purposes of the Uniform Relocation Assistance and R^d Property
Acquisition Policies Act of 1970 all CDBG assistance shall be con-
sidered federal fmancial assistance that requires the approval of a
Federal agency head. Any person displaced as a result of CDBG
funded activities shall be given assistance with CDBG funds to tie
same extent required by the Uniform Relocation Assistance and
Real Property Acquisition Policies Act of 1970. Persons receiving
relocation assistance shall submit to the unit of local govemmmt a
statement detailing actual expenses incurred as a result of (tia-
placement. The unit of local government shall keep the displace-
ment expense statements t<%ether with a summary of the actual
relocation assistance provided in order that the Secretary may con-
duct a review to determine the reasonableness and appropriatenesB
of the relocation assistance.
EUGtBLE Acnvrms
Sec. lOl(i) provides a 20 percent restriction on the use of CDBG
funds for public service activities permitted under Sec. 105(aX^
however, units of general local government which used more than
20 percent of their CDBG assistance for public services in any of
the fiscal years 1981, 1982 or 1983 may use not more than the tu^
est percentage or highest amount of such assistance, whichever
method of calculation yields the higher amount, for public service
activities.
Elderly shared housing. — Sec. lOl(i) also permits shared housing
opportunities for the elderly or disabled to be an eligible CDBG ac-
tivity when developed by neighborhood-based non-profit organiza-
tions or other private or public nonprofit organizations.
Low- and moderate-income benefit. — Sec. 101(j) provides that
where acquisition, construction or rehabilitation activities are car-
ried out by public or private non-profit entities and economic devel-
opment activities are carried out by private for-profit entities, and
the activity is identified by the applicant as principally benefiting
low and moderate income individuals, the activity shall either (1)
be carried out in a neighborhood consisting predominately of low
and moderate income persons and provide essential services for
such persons, (2) involve facilities designed for use predominately
by low and moderate income persons; or (3) involve emplojnnent m
persons, a majority of whom are low Euid moderate income persons.
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95
Areauiide benefits to low- and moderate-income persons. — Sec.
101(j) also proviaes that where an eligible activity is designed to
serve an area generally and is clearly designed to meet identified
needs of low and moderate income persons in such areeis, the
CDBG fiinds allocated to that activity shall be considered to benefit
tow and moderate income persons in proportion to their share of
the population of such area. Acquisition or rehabUitetion of proper-
ty to provide housing shall be considered to benefit low and moder-
ate income persons only to the extent that such housing will, upon
completion, be occupied by such persons.
Sec. 101(j) proviaes that no CDBG assistance may be provided
for any project intended to relocate any industrial or commercial
plant or facility from one area to another, unless the Secretary
nnds that such relocation does not significantly and adversely
affect the unemployment or economic base of the area from which
such plant or facility is to be relocated.
Secretary's discretionary fund. — Sec. 101(k) authorizes of the total
amount appropriated for CDBG, not to exceed $65 million for each
of Uie fiscal years 1984, 1985 and 1986, for grants under the Secre-
tanr's Discretionary Fund. Prom amounts set aside in fiscal years
1984, 1985 and 1986, under the Secretory's Discretionary Fund, the
Secretary may allocate amounts to any State or unit of general
local government that is determined by the Secretary to have re-
ceived insufficient amounts under Sec. 106 as a result of a miscal-
culation of its share of funds. From the amount set aside under the
Secretary's CDBG discretionary fund in any fiscal year, the Secre-
tary shall also meike available not less than $2 million in grants to
institutions of higher education, either directly or through
areawide planning organizations or States, for continuing prc^rams
in effect during fiscal year 1983 which provide assistance to eco-
nomically disadvantaged and minority students who participate in
community development work study programs and are enrolled in
full-time graduate or undergraduate prc^ams in community and
economic development, community planning, or community man-
agement. Grants may be made only to institutions of higher educa-
tion that received grants for such purpose for fiscal year 1983, and
may only be provided to such institutions in the same manner as
grante are provided in 1983. In addition, the amount set aside
under the Secretary's CDBG Discretionary Fund in Emy fiscal year,
the Secretary shall make available not to exceed $2.5 million for
purposes of grants made in behalf of new communities.
CDBG LOAN OUARANTBES
Authorization. — Sec. 101(1) provides that subject to the absence
of qualified applicants and to limits approved in appropriation Acts
the Secretary shall enter into commitments during fiscal year 1984
to guarantee notes and obligations for the purchase or rehabUite-
tion of real property with an aggregate principal amount of $225
millinn
CDBG loan guarantees — low- and moderate-income benefit — Sec.
101(1) also provides that no note or other obligation may be guar-
anteed unless the issuer certifies to the Secretary that: not less
than 51 percent of the amounts received through the issuance of
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9«
the note or other obligation will be used for the support of activi-
ties that benefit low and moderate income persons; it will not at-
tempt to charge or assess fees and amounts agEunst propertieH
owned by low and moderate income persons to recover capital costs
of public improvements, assisted in whole or part with amounts re-
ceived through the issuance of such guaranteed notes or other c&li-
gations (including fees or assessments made as a condition (tf ob-
taining access to such public improvements) unless CDBG funds w
amounts received through notes or obligations guaranteed i
this section are used to pay the proportion of such fees that r
to the capital costs financed from other revenue sources.
PrtmKCtive application of amendments. — Sec. lOl(m) provides
that the amendments includied in Sec. 101 shall apply only with re-
spect to funds appropriated for fiscal year 1984 and thereafter.
URBAN nEVELOPMENT ACTION GKANT9
Authorization. — Sec. 102(a) authorizes to be api^tipriated for
Urban Development Action Grants (UDAG), not to exceed, $440
million for each of the fiscal years 1984, 1985 and 1986.
UDAG pockets of poverty. — Sec. 102(b) clarifies that a city with a
population of 50,000 persons or more or an urban county, may have
an area that qualifies for UDAG if it has a pocket of poverty that
has a population of 10,000 persons or 10 percent of the popiuatkm
of the city or urban county, whichever is less, and meets the exist-
ing distress criteria.
Eligibility of unincorporated areas for UDAG pockets of pov^-
ty. — Sec. 102(b) provides that in the case of an urban county, an
identifiable unincorporated community may qualify for a UDAG if
it meets the requirements for a pocket of poverty.
UDAG applicant's impact analysis. — Sec. 102(c) providee that the
UDAG applicant's analysis of the impact of proposed activities on
the neighborhood and on residents, particularly those of low and
moderate income, of the neighborhood in which the activitiee are
carried out. must be made available to any neighborhood-based
non-profit organization in the neighborhood where the proposed ac-
tivities are to be carried out.
Reduced leveraging factor for small cities UDAG projects involv-
ing industrial plants or facilities or low and moderate income hous-
ing.— Sec. 102(d) provides that the Secretary shall, in considering
the extent to which a UDAG grant will stimulate economic recov-
ery by leveraging private investment, permit the leveraging rales
to be as low as $2 dollars of private investment for each UDAG
dollar to any city that has a population of less than 50,000 persons
and is not a central city of a metropolitan statistical area if such
amounts are used for projects involving industrial plants or facili-
ties or providing housing for low ana moderate income persons.
This reduced leveraging ratio shall apply only to funds appropri-
ated for fiscal year 1984.
Technical assistance to small cities.— Sec. 102(e) requires the Sec-
retary to provide technical assistance to small cities and communi-
ties whose populations are less than 50,000, which are not central
cities of metropolitan statistical areas, and which the Secretary de-
termines will benefit from such assistance which shall include: in-
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97
formation on the availability of UDAG funds^ evaluation of the
needs of the community; development of a UDAG pn^ram to assist
cities in meeting their needs. Also, provides that the Secretary
shall make available not less than $3 million in each of fiscal years
1984, 1985, and 1986 from the appropriated UDAG amounts.
Funding balance between neighborhood, industrial, and commer-
cial projects. — Sec. 102(0 restores the requirement that the Secre-
tary shall allocate UDAG grants in a manner which achieves s rea-
sonable balance among programs that are primarily designed to:
restore seriously deteriorated neighborhoods; reclaim for industrial
purposes underutilized real property; and renew commercial em-
ployment centers.
Housing UDAG.Sec. 102(f) also provides that the Secretary
may not deny a UDAG application because the assistance is to be
used solely for the provision of housing.
UDAG loan guarantees for nonprofit neighborhood organiza-
tions— Sec. 102(i) also provides that the Secretary shall guarantee
the repayment of loans made to neighborhood-based non-profit or-
ganizations.
Criteria for loan repayment of nonprofit organizations. — Loan
guarantees may be made only if: the organization is based in a
neighborhood in which activities financed with UDAG funds are
being or will be carried out; loan funds are to be used to finance
neighborhood revitalization activities that are designed to meet
housing and other related needs of low and moderate income per-
sons in the neighborhood and that have been developed with the
approval of the city or urban county receiving the grant; the
amount guaranteed at any time does not exceed 90 percent of the
outstanding unpaid principEd bEdance of the loan; the eunount of
the loan does not exceed 95 percent of the cost of the neighborhood
revitalization activities financed by the loan; the organization
meets requirements established by the Secretary; there is reason-
able assurance of repayment of the loan; the guarantee is request-
ed by a financial institution in the manner and form required by
the Secretary; the loan is not available from financial institutions
without the guarantee; and the guarantee meets terms and condi-
tions prescribed by the Secretary with respect to the interest rate
and amortization of the loan, security required for the loan, pro-
ceedings in the event of default, and other matters defined by the
Secretary;
Priorities for reducing displacement. — In making guarantees
available, the Secretary shall give a priority to assisting neighbor-
hood revitalization activities designed primarily to mitigate the dis-
placement of low and moderate income persons that is likely to
occur as a result of commercial or other activities in the neighbor-
hood.
iMin guarantee amounts. — Provides that the iiggregate amount
of loans guaranteed during fiscal year 1984 may not exceed 10 per-
cent of tl^ appropriated UDAG amounts.
Insurance for loan guarantees. — The full faith and credit of the
United States is plei^ed to the payment of all guarantees. Any
such guarantees made by the Secretary shall be conclusive evi-
dence of the eligibility of the loan for such guarantee, and the va-
yGoot^le
lidity of any such guarantee so made shall be inconteatable in the
hands of a holder of the guaranteed loan.
Loan defaults. — With respect to any proceedings conducted in
connection with the default of any loan guaranteed, the Secretary
shall have various powers, including the authority to sue and be
sued, institute foreclosure, make payments in lieu m taxes, and sell
property.
NEIGHBORHOOD DEVELOPMENT GBANTS
Sec. 103 creates a new program of grants to eligible nei^ibor-
hood development organizations to assist them to cariy out nei^
borhood development activities.
Grant amounts. — The amount of a grant may be from three to
10 times the amount received by the neighborhood orgamzation
from individuals, businesses or other organizations in the nei^ibor-
hood, but cannot exceed $50,000 for any neighborhood organization
in any year; the Secretary must establish the highest ratios of fed-
eral to private funds for the most distressed neighborhoods.
Local government certifications. — Grants may only be made if the
neighborhood organization certifies that the unit of general local
government has been notiiied and provided a reasonwle period of
time to comment on the application prior to submission to HUD.
Grants may be disapproved by the S^retary on the basis of those
comments only if such comments clearly establish that the pro-
posed activities to be undertaken with the grants will be plainly in-
consistent with the housing and community development plans of
the unit of general local government. In order to receive a grant
there must also be a commitment by the participating organiza-
tions, businesses and individuals to provide tiieir share of the funds
necessary for the proposed activities in the amounts necessary and
during the period within which the activities will be carried out
Selection criteria.— Grants shall be awarded according to the
d^ree of economic distress of the neighborhood, the extent to
which the proposed activities will benefit low and moderate income
persons, and the extent to which the businesses and individuals
participating in the proposed activities are representative of all
businesses and individuals in the neighborhood. In awarding neigh-
borhood development grants, the Secretary may not discnmioate
on the basis of the type of eligible activity that is proposed to be
carried out.
Advisory committee. — The Secretary must establish a National
Neighborhood Development Advisory Committee to advise the Sec-
retary with respect to the operation of the Neighborhood Develop-
ment Grant Program, the enectiveness of the grant selection proc-
ess and the effectiveness of the prc^am. No eligible neighbornood
development organization shall be disqualified from receiving
grants if a representative of that organization serves on the Adviso-
ly Committee.
Eligible activities. — Eligible neighborhood development activities
include activities designed to create permanent jobe in a nei^bor-
hood, to establish or expand new businesses, to develop or rehabili-
tate housing, to deliver essential services, or to plan, promote or fi-
nance voluntary neighborhood improvement efforts. An eligiUe
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neighborhood development ot^anization is an organization that is
organized as a private, voluntary, nonprofit corporation under
State law, is responsible to the residents of the neighborhood
through a governing body made up of at least 51 percent of mem-
bers that are residents of the neighborhood, has conducted business
for not less than three years prior to the date of an application for
assistance, operates in a distressed area as defined by UDAG dis-
tress criteria, and conducts one or more of the eligible activities
primeirily for the benefit of low and moderate income persons.
Regulations and authorization. — Requires the Secretary to issue
r^uuitions to implement the Neighborhood Development Grant
Pn^am within 90 days of enactment of this Act and provides an
authorization for appropriation of $15 million for fiscal year 1984.
HOMESTEADING
Sec. 104 amends the Homesteading Program authorized by Sec.
810 of the Housing and Community Development Act of 1974.
Conveyance ofHUD-owned single-family property. — The Secretary
may transfer, without payment, to any unit of general local govern-
ment or public agency designated by the local government any real
property; that is improved by a one- to four-family residence; to
which the Secretary holds title; that is not occupied by a peison le-
gally entitled to reside on such property; and tiiat is requested by
the local government or agency for use exclusively in a single-
family homesteading program.
Conveyance of HUD-owned multifamily properties. — The Secre-
tary may convey to any unit of general local government or public
agency designated by the local government any real property to
which the Secretary holds title; that the Secretary determines to be
suitable for a multifamily homesteading program that complies
with certain multifamily homesteading requirements; and for con-
sideration, if any, as may be agreed upon between the Secretary
and such unit of general local government or public agency.
Local acquisition of property.— The Secretary may provide fund
to any unit of general local government or public agency designat-
ed by the local government for the acquisition of unencumbered
title to any real property that is improved by a one- to four-family
residence; is not occupied by a person legally entitled to reside on
such property; and is designated by the local government or public
agency for use exclusively in a single-family or multifamily home-
steading program.
Restrictions. — provides that the Secretary may establish reason-
able restrictions on the value and number of properties that may
be acquired.
Single-family homesteading program requirements. — Any single-
family homesteading program carried out by a local government or
public agency designated by the local government shall be consid-
ered a single-family homesteading program that complies with the
program requirements if the Secretary determines that such pro-
gram provides for:
Repairs, improvements, and residency. — the initial conveyance of
vacant residential property by the local government or public
agency without substantial consideration to a family of low or mod-
yGoot^le
100
erate income, upon condition that Buch famUy agrees to r^iair all
defectfi in the property that pose a substantial danger to health
and safety within 1 year of the date of such initial conveyance; a
procedure by which a property title shall be conveyed to any such
family without substantial consideration upon the repair <jS all
such defects, under the condition that such family agrees to: make
repairs and improvements to the property as may be necessaiy to
meet applicable local standards for decent, date, and sanitary hous-
ing within 3 years of the date of initial conveyance; and occupy the
property as a principal residence for a period of not leea uian 5
years, except under such emergency circumstances as may be ee-
tablished by the Secretary.
Selection procedures. — an equitable procedure for selecting the
recipients ot such properties that (1) gives a special priority to ap-
plicants; whose current housing fails to meet standards oi healUi
and safety, including overcrowding; who currently pay in excess of
30 percent of their income for shelter; and who have Uttle pro^tect
of obtaining improved housing within the foreseeable future
through means other than homesteading; (2) excludes applicants
who are currently homeowners; (3) takes into account the appli-
cant's capacity to contribute a substantive amount of labor to the
rehabilitaion process, or to obtain assistance from private sources,
community organizations, or other sources.
Rehabilitation assistance. — a plan for the provision of rehabilita-
tion assistance and technical assistance to recipents of homestead
properties who are in need of the assistance.
Multifamily homesteading program requirements. — A multifamily
homesteading prc^am carried out by any local government or
public agency designated by the local government shall be consid*
ered a multifamily homesteading program that complies with the
requirements if the Secretary determines that the pn^ram con-
tains adequate assurances that (1) the primary use of all homestead
properties following conversion or rehabilitation shall be residen-
tial; (2) not less than 75 percent of the residential occupants of
homestead properties following conversion or rehabilitation shall
be families of low or moder&te income; (3) all dwelling unite in
homestead properties shall be owned by occupants under a limited*
equity cooperative form of ownership; (4) such cooperative may not
be dissolved without permission of the unit of general local govern-
ment or public agency responsible for administering such home-
steading program; (5) entities that are operated for profit shall be
excluded from ownership of homestead properties at all times be-
tween the transfer of properties by the Secretary to the govern-
ment or public agency and the acquisition of such properties by
their occupants subsequent to conversion or rehabilitation; (6) a
substantive amount of the labor required to rehabilitate homestead
properties shall be provided by the occupants of such properties; (7)
rehabilitation assistance and technical assistance shall be availwle
to occupants of homestead properties who are in need of such as-
sistance; and (8) the displacement of any individuals who reside in
homestead properties prior to rehabilitation or conversion shall be
minimized.
Technical assistance. — The Secretary may enter into agreements
with any unit of general local government or public agency desig-
yGoot^le
101
natod by the local government to provide technical assistance to
auch lo(^ government or public agency for the adminiBtration of a
homesteading program that complies with the ptx^am require-
ments and technical assistance to any recipient of property under
any such homesteading pr<^am. Provides that not more than 5
percent of any amount made available under the Homesteading
Program authorization may be used to carry out this technical as-
sistance.
Loiv- and moderate-income rehabilitation grants. — The Secretary
mav assist families of low or moderate income receiving property
under a homesteading prc^am in the rehabilitation of such prop-
erty by providing grants to any unit of general local government or
public agency designated by the local government for the sole pur-
pose of assisting any such recipient within the jurisdiction of the
general local government or public agency. Such grants shall stim-
ulate the rehabilitation of homestead properties by providing capi-
tal grants, loans, interest reduction payments, technical assistance,
and other comparable assistance that the Secretary deems appro-
priate to reduce the costs of homesteading for families of low or
moderate income. Not less than 75 percent of any funds received
by the local government or public agency for any purpose of the
homesteading grants shall be allocated to aid families of very low
income (50 percent of area median income) participating in ap-
proved homesteading prc^ams. All repaid funds shall be used only
for fiidit^ homesteading activities.
Project selection. — In selecting homesteading projects for assist-
ance, the Secretary shall make such selection on the basis of the
extent: (1) of the severity of residential property abandonment in
the area in which the project is to be located; (2) to which the as-
sistance requested from the Secretary will provide the maximum
number of units for the least cost, taking into account the cost dif-
ferences among different areas, Eunong financing alternatives, £md
among the types of projects and homesteaders being served; (3) of
non-Federal public and private financial or other contributions
that reduce the amount of assistance necessary; (4) to which the ap-
plicant has established a satisfactory performance in administra-
tion <rf' homesteading activities, where applicable; and (5) of coordi-
nation of the homesteading pn^ram with other efforts to upgrade
community services and facilities.
Reimbursement to the Veterans' Affairs Administrator and the
Agriculture Secretary.— The HUD Secretary may reimburse Veter-
ans' AiTairs Administrator and the Agriculture Secretary for prop-
er^ that the Administrator or Agriculture Secretary conveys to
any local government or public agencv designated b^ such local
government for use in connection witn a homesteading pr<^Eun
that complies with the Homesteading Program requirements.
Unoccupied residential properties listing. — In order to facilitate
planning for the Homesteadmg program, the HUD Secretary, the
Administrator of Veterans' Affairs, and the Secretary of Agricul-
ture shall, upon the request of any local government or public
agency designated hy the local government provide a listing of all
unoccupied residential properties to which the HUD Secretary, the
Administrator, or the Secretary of Agriculture holds title and that
are located within the geographic jurisdiction of the local govem-
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ment or public agency. Provides that such listing shall be acoeni-
ble to the public during ordinary business hours at the ofTiOGs of
the local government or public agency.
Program reporting and evaluation requirements. — The Secretary
shall conduct a continuing evaluation of any pn^am carried out
pursuant to the Homesteading Pn^am and shall transmit to the
Congress an annual report containing a summary of his evaluation
of all such programs and his recommendations for the future con-
duct of such programs. Provides that each such report shall include
an assessment of the extent to which homesteading programs con-
sider the program benefits and repair requirements relating to
housing need and income in selecting homestead recipients, and an
estimate of the median income of the recipients during the year
covered by such report.
Definition of low or moderate income families. — Defines families
of low or moderate income as families whose incomes do not exceed
80 percent of the area median income involved, as determined 1^
the Secretary with adjustments for smaller and larger families
where applicable such term includes fEunilies consisting of one indi-
vidual.
Definition of families of very low income. — Defines families of
very low income as families whose incomes do not exceed 50 per-
cent of the area median income involved, as determined by the Sec-
retary with adjustments for smaller and larger families; where ap-
plicable such term includes families consisting of one individual.
Authorization. — Of the total amount provided in appropriation
Acts under Sec. 103 for the CDBG pri^ram for fiscal year 1984, not
more than $25 million shall be available for fiscal year 1984 to
carry out the single and multifamily homesteading provisions; not
more than $25 million of the appropriated CDBG funds shall be
available for fiscal year 1984 to carry out the homesteading reha-
bilitation grants and technical assistance.
SECTION 312 REHABILITATION LOANS
Sec. 105 authorizes $9 million in additional budget authority and
establishes a loan limitation of $69 million for the Sec. 312 Reha-
bilitation Loan Program for fiscal yar 1984. The HUD Secretary
may not require certain proportions of 312 funds to be used for par-
ticular types of housing (such as single family or multifamily dwell-
ings) and the Secretary may not establish a priority for receipt of
312 funds based on the receipt or use of other federal funds for
housing or community development (such as CDBG or Section 8
funds) other than a priority for use in conjunction with the urban
homesteading program.
NEIGHBORHOOD REINVESTMENT CORPORATION
Sec. 106 authorizes $18,512 million for the Neighborhood Rein-
vestment Corporation for fiscal year 1984, $3 million of which shall
be utilized to carry out a mutual housing demonstration program.
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TrrtE II — Assisted Housing
PART A — LOWER INCOME HOUSING AUTHORIZATION
Low income assisted housing
Sec. 201(a) authorizes for appropriation on or after October 1,
1983. $12,927 billion in additional budget authority and $729,033
million in additional contract authority for the low income assisted
housing pn^rains. Of the amount of contract authority authorized
to be appropriated, at least $105 million is to be utilized for Public
Housing Modernization; at least $95,229 million is to be utilized for
Section 8 New Construction in conjunction with the Sec. 202 Pro-
gram; at least $99,494 million is to be utilized for Sec. 8 Moderate
Rehabilitation; at least $172,557 million is to be utilized for Sec. 8
Existing Housing; not more than $129,218 million may be utilized
for conversions of Rent Supplement and Sec. 23 units to Sec. 8; and
at least $84,034 million is to be utilized for public houisng, of which
at least $26,749 million is to be utilized for Indian housing. [The
Congressional Budget Office estimates that these amounts would
assist approximately 135,800 units, including 14,000 Sec. 8/Sec. 202
units, 42,800 Sec. 8 existing units, 20,000 Sec. 8 moderate rehabili-
tation units, 45,000 conversions of Rent Supplement and Sec. 23
units to Sec. 8, 10,000 public housing units, and 4,000 Indian hous-
ing units.]
Public housing operating subsidies authorization
Sec. 201(b) authorizes not to exceed $1.55 billion for public hous-
ing operating subsidies for fiscal year 1984.
Tenant contribution
Authority to set income limits and rents in public housing and
tenant contribution to rent in public housing and Sec. 8. — Sec.
202(aXl) amends Sec. 3(a) of the U.S. Housine Act of 1937 to pro-
vide (1) that except as otherwise provided in Act, income limits for
occupancy and rents in public housing shall be fixed by the public
bousing agency and approved by the Secretary, and (2) that a fam-
ily's rent in public housing or Sec. 8 may not exceed the higher of
25 percent of monthly adjusted income, 10 percent of gross income,
or the welfare rent.
Definition of income.— Sec. 202(aX2) defines the term "income"
for purposes of the 1937 Act to mean income from all sources of
each member of the household, excluding temporary or sporadic
income, gifts, reimbursements for medical expenses, inheritances,
workers compensation, and educational scholarships; minor's
income; payments for foster care; relocation assistance; food stamp
assistance and other federal assistance received by the family; in
the case of any public assistance payments that Include an amount
speciHcally designated for shelter and utilities that is subject to ad-
justment by a public assistance agency in accordance with the
actual cost of shelter and utilities, any amount exceeding the
amount of such payments actually received by or on behalf of the
family; and any social security payments received by an elderly
family living in a shared housing payments received by an elderly
family living in a shared housing arrangement in which such elder-
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104
ly family benefite from sharing the faciUtiee of a dwelling with
others in a manner that effectively and efficiently meets their
housing needs and thereby reduces their cost of housing.
Definition of adjusted income— Sec. 202(aX3) defines the term
"adjusted income" for purposes of the 1937 Act as income lesB: $400
for each minor or ha ndicap[>ed /disabled person, $400 for each el-
derly person, unreimbursed medical expenses which exceed 3 per
cent of family income, care for minors or disabled/handicapped ex-
penses related to working, and other unusual uareimbuiwd ex-
penses related to working.
Section 236. — Sec. 202(b) reduces the tenant contribution to rent
under Sec. 236 of the National Housing Act (Rental Assistance Pay-
ments) from 30 to 25 of a family's monthly adjusted income, and
provides that the terms income and adjusted income for purposes
of that section shall have the same meaning as under the U.S.
Housing Act of 1937.
Rent supplement.— Sec. 202(c) increases the amount of rental as-
sistance under Sec. 101 of the Housing and Urban Development
Act of 1965 (Rent Supplement) from the lesser of 70 percent of the
fair market rent or the amount by which the fair market rent ex-
ceeds 30 percent of the tenant's adjusted income to the lesser of 70
percent of such rent or the amount by which such rent exceeds 25
percent of the tenant's adjusted income.
Limitation on nnt increases. — Section 202(dXl) limits to not more
than 10 percent any annual increase in a family's rent payments
as a result of these amendments or any other change in federal
law.
Waiver of single person occupancy limitation
Sec. 203 provides that the Secretary may waive the 15 percent
single person occupancy limitation for Sec. 8 and public housing if,
following consultation with the public housing agency involved, the
Secretary determines that the dwelling unit is neither being occu-
pied, nor is likely to be occupied within the next 12 months, by
families or persons who are elderly, disabled, handicapped, dis-
placed, or are a remaining member of a tenant family due to the
condition or location of such dwelling unit, and that such dwelling
unit may be occupied if made available to single persons in circum-
stances described in regulations of the Secretary.
Comprehensive improvement assistance
Recapture and use of public housing development funds. — Sec.
204(a) provides that the Secretary may not recapture any part of
any authority allocated prior to fiscal year 1984 to a public housing
agency with respect to public housing development for 24 months
after date of enactment, and provides that a public housing agency
may use such authority for comprehensive im^ovement assistance
under Sec. 14 of the U.S. Housing Act of 1937 after consultation
with its local government.
Funding preferences.— Sec. 204(b) clarifies existing law to provide
that the Secretary may not establish any preference in allocating
modernization assistance based on the type of activities for which
assistance is reauested, except in the case of projects having life
threatening health or safety conditions or a significant number at
yGoo<^\q
vacant substandard units, and where the public housing agency has
demonstrated a capacity to can^ out its program.
Standardg.— Sec. 204(c) provides that the physical and enei^
conservation standards developed by the Secretary for use under
the CIAP Program shall be consistent with the minimum property
standards Tor multifamily housing as such standards were in effect
on October 1, 1980.
Limitations on public housing developing costs
Sec. 205 authorizes the Secretary to annually establish and pub-
lish reasonable maximum limitations on public housing develop-
ment costs, taking into account local prototypes and local vari-
ations in land, site improvement, and construction costs. It also
provides that any project for which a development cost budget has
been approved by the Secretary prior to December 6, 1982, shaill be
subject only to such cost limitations in effect on September 7, 1982.
Lease and grievance procedures in public housing
Sec. 206 provides that the Secretary shall require public housing
' i (1) to establish and implement an administrative griev-
ance procedure that will provide tenants and applicants an oppor-
tunity to be heard, in accordance with the basic saf^uards of due
process but not less than as set forth in 24 CFR 866.56 throi^b
866.59 as in effect on March 1, 1983, r^arding public housing
agency actions or failures to act that adversely affect their rights,
duties, welfare or status; and (2) to utilize leases that (A) do not
contain unreasonable terms and conditions; (B) obligate the public
housing agency to maintain the projects in a decent, sfife and sani-
tary condition; (C) require the public housing agency to give ade-
quate written notice of termination of the lease, which shall not be
less than (1) 14 days for nonpayment of rent; (ii) a reasonable time
when the health or safety of other tenants or public housing
agency employees is threatened; and (iii) 30 days in all other cases;
and (D) require that the public housing asencv shall not terminate
the tenancy except for serious or repeated violation of the terms or
conditions of the base or for other good cause.
Fair market rents for sec. 8 existing
Sec. 208 requires the Secretary, with respect to fair market rents
applicable during fiscal year 1984 and thereafter, to establish (and
at least annually update) fair market rents for the Sec. 8 existing
program at the median rent paid by recent movers in the area, and
provides that the actual rent approved for the project must meet a
rent reasonableness test.
lAmitation on duplicative public housing tenant reporting require-
ments ^
Sec. 209 provides that each public housing agency operating a
lower income housing project must establish an adequate procedure
for determining the eligibility of and rent to be paid by families ap-
plying for occupancy in, or occupying, dwelling units in suui
proiect. It provides tnat public housing agencies, in carrying out
such responsibility, may only require families to provide informa-
tion that is directly related to accomplishing fair housing objectives
yGoot^le
106
or determiniiu; eligibility, rental payments, or appropriate dwsUing
unit size. It further provides that the Secretaiy may not require
any family to provide any information to the Secretaiy that ini|di-
cates information provided by such family to the public houmng
agency, unless the information is requested pursuant to (1) a
survey of a sample population of such families; or (2) an audit of
such public housing agency to evaluate the adequacy c^ its proce-
dures for determining eligibility and rent. It also provides tJiat tiie
Secretary may not maintain any record with respect to a fonily
applying for occupancy in, or occupying, any dwelling unit in a
lower income housing project, unless such record is neoeasaiy to
the investigation by Uie Secretary of a specific allegation of fraud
by the family in its application for occupancy or reporting of
income.
Annual contributions contract
Term of Sec. 8 existing contract. — Sec. 209(a) provides that in the
C£ise of any Sec. 8 existing contract in effect on or after date on «t-
actment which is made for less than 15 years, the Secretaiy shall
offer to renew the contract for additional 5-year intervals, up to a
total of 15 years.
Attachment of Sec. 8 assistance payments. — Sec. 209(b) provida
that assistance payments to the owner shall either be attached to
the tenant or to the structure in the discretion of the public hous-
ing agency, eind that, in the case of payments attached to the Btnu>
ture, the contract may be renewed up to a total period of 15 years.
Limitation on rent increases in conversions
Sec. 210 limits any rent increases resulting ftmn conversion of
assistance from Sec. 101 of the HUD Act of 1965, Sec. 236 of tbs
National Housing Act or Sec. 23 of the U.S. Housing Act of 1937 to
Sec. 8 or as a result of any amendments made tnr this Act to not
more than 10 percent annually in the case of elderly tenants. It
also provides that in the case of any such conversion of assistance
occurring after October 1, 1981, and before the enactment date of
this bill, the rental payments due after such date by any elderly
tenant benefiting from such assistance on the date of such conver-
sion, shall be computed as if the 10 percent limitation had been in
effect on the date of ci
Qilculation of public housing operating subsidies
Sec. 211 (a) and (b) amend Sec. 9 of the U.S. Houaii^ Act of 19S7
to provide that operating subsidies shall be allocated in accordance
with the provisions of 24 CFR 890 as in effect on March 1, 1983
(Performance Funding System) except that such provision sludl be
revised as follows: (1) to include a formal review process for the
purpose of providing such increases to the allowable expense level
of a public housing agency as necessary to correct inequities and
abnormalities that exist in the base year expense level of nidi
public housing agency find to reflect changes in operating circum-
stances since the initifil determination of such base year expense
level; (2) to include amounts determined by the Secretary to be nec-
essary to reimburse pubUc housing agencies experiencing excessive
costs that are beyoiid their control and the full extent of irtiidi
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107
were not taken into account in the original distribution of funds for
the fiscal year involved; (3) to modify the method of adjustingto
allowable expense level of a public housing agency under 24 CFR
890.105(dX3) to provide for an annual one-half of 1 percent increase
to such level to take into account aging of the public housing stock,
and to provide for such adjustments as may be necessary to teike
into account significant changes in the number or type of housing
units operated by such public housing agency; (4) to include as an
allowable expense the unreimbursed cost of any litigation or ad-
ministrative proceeding in which a public housing agency is a
party to obtain a more favorable utility rate, except that (a) anv
amount recovered as a result of such litigation or proceeding shall
be deducted from the allowable expenses of such public housing
agency, as such amounts are recovered, up to the total cost of such
litigation or proceeding to such public housing agency, and (b) 75
percent of any amount recovered in excess of the cost of the litiga-
tion or proceeding shall be retained by such public housing agency;
(5) to provide for an adjustment to the public housing agency's al-
lowable expense level to reflect the higher cost of operating a lower
income housing project in an economically distressed unit of gener-
al local government, which adjustment shall be based on the extent
of growUi lag, the extent of poverty, and the age of housing in the
local government involved, ^md such other criteria as the Secretary
determines will ensure that the allowable expense level accurately
reflects the higher cost of operating a lower income housing project
in an economically distressed local government; (6) to provide for a
^ear-end adjustment to the allowable expense level of public hous-
ing agency in any case in which the actual inflation rate is more
than or less than the estimated inflation rate and in any case in
which actual utility rates and utility consumption are more than
or less than estimated utility rates and utility consumption, except
that the Secretary shall only provide 50 percent of any increased
expenses due to increased utility consumption; (7) to modify the
method of computing the public housing agency's utilities expense
level by utilizing a nxed base period of 4 years for the flrst public
housing agency fiscal year following the date of enactment of this
Act and a fixed base period of 5 years thereafter; (8) to provide that
75 percent of any decrease in the utilities expense level of a public
housing agency due to decreased consumption shall be retained by
a public housing agency, to be used according to the Comprehen-
sive Improvement Assistance Program requirements; (9) to provide
that any additional funds procured by a public housing agency for
operation from other Federal, State or local programs or from pri-
vate sources shall not be deducted from assistance provided under
this section; (10) to provide that not more than 50 percent of any
incrreased revenues resulting from increased occupancy rates may
be computed tn determining the amount of assistance available to
a public housing agency under this section; and (11) to provide that
if, in any fiscal year the funds that have been appropriated for
such fiB(»l year for use under this section are less than the total
amount that the Secretary has determined is necessary to make
payments pursuant to the formula established under this section
for such fiscal year, payments shall be reduced on a pro rata basis
and distributed promptly. Any alternative distribution system de-
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108
veloped by Uie Secretary must be done through reifulation; and
such pro rata payments shall not be delved by the d^felopmeDt or -
implementation of any alternative aroroach to distribution.
Sec. 211(a) also provides that not later than January 1 of eadi
year, including the year in which this sentence becomes riteciive,
the Secretary shall trfinsmit to the Congress a report setttng forth
detailed estimates of the amount of assistance required undwr the
formula established in this section, and any recommendations tat
Eroposed modifications of such formula. It also provides that not
Iter than March 1, 1984, the Secretary shall transmit to the Con-
gress a report setting forth recommendations for modificationB to
the formula established under this section and other legislative and
regulatory changes necessary for the purpose of providing incen-
tives to public housing agencies to implement management im-
provements designed to reduce long-term costs and provide for
more efficient operation of projects and delivery of services to ten-
ants, which recommendations shall be developed in consultation
with public housing agencies.
Sec. 211(c) provides for the purposes of determining the amount
of payments to be made during fiscal year 1983 undo* the annual
contributions for operation of lower income housing projects, the
HUD rule entitled "Gross Rent — Public Housing Pn^ram", pub-
lished on May 4, 1982 (47 Federal Register 19120), may not be con-
sidered to have been effective before February 15, 19S3, with re-
spect to any public housing agency that was, before the beginning
of such fisckl year, a party to a civil action to enjoin implementa-
tion of such rule.
Income eligibility
Sec. 212 deletes the provision adopted in the Omnibus Reconcili-
ation Act of 1981 which restricted in the Sec. 8 and Public^ Houmng
Programs the percentage of families with Incomes between 50 and
80 percent of area median income, and provides tliat at least 30
percent of the families assisted under Sec, 8 must be very low
income (below 50 percent of median income).
Demolition, sale, or disposal of public housing projects
Sec. 213 amends the U.S. Housing Act of 1937 to provide that no
public housing project may be demolished, sold or otherwise dis-
posed of (including any demolition or disposal conducted pursuant
to Sec. 6(f) of the Act or otherwise), in whole or in part, unless (I)
the public housing agency and the unit of general local government
concerned have certified their approval; (2) such project is substan-
tially unoccupied; (3) the cost of rehabilitating such project would
be greater than replacing it; (4) the Secretary tmd the public hous-
ing agency have developed the plan for demolition, disposition and
replacement after notification to, and consultation, with, the affect-
ed tenants and tenant councils; (5) the Secretary and such agen^
have entered into agreements assuring relocation assistance (com-
parable to the assistance provided under the Uniform Relocation
Assistance and Real Property Acquisition Policies Act of 1970} to
any tenant who is displacied as a result of the demolition or disposi-
tion; and (6) the public housing agency has secured funding com-
mitments from the Secretary or other sources and such nmding
yGoot^le
has been committed to replacing the sold, demolished or otherwise
disposed of units with an equal number of newly constructed or
Bubstantlally or moderately rehabilitated units in the saipe neigh-
borhood; except that the Secretary may approve, after consultation
with the tenants and tenant groups affected, replacement by fewer
units in the same neighborhood or in one or more different neigh-
borhoods if the Secretary determines that this action will result in
a better living environment for lower income families and that re-
idacement by an equal number of units is not necessary to meet
lower income housing needs.
The bill provides that these requirements may be waived if there
are sound social and economic reasons for the demolition, sale or
other disposition and if a majority of the tenants affected consent
to such action. It also provides that the provisions of this section
shall not apply to the side of a public housing project to its tenants
or to demolitions to which Sec. 14(0 of the U.S. Housing Act of 1937
applies.
Amounts recovered by public housing agencies
Sec. 214 amends the provision in existing law which permits
public housing agencies to retain up to 50 percent of any l^al
judgment obtained in recovering amounts wrongfully paid as a
result of fraud or abuse under the Sec. 8 Program to include
amounts recovered through actions other than legal proceedings.
Section 8 cost limitations
Sec. 215 prohibits the Secretary from establishing percentage or
other arbitrary cost limitation with respect to contract authority
reserved under the Sec. 8 Pribram.
Neighborhood strategy area program report
Sec. 216 requires the Secretary, not later than 120 days after
date of enactment, to report to the Congress as to the status of the
program established by the Secretary to provide Sec. 8 assistance
to areas of concentrated housing and community development ac-
tivity (Neighborhood Strategy Areas) under the CTBG Prc^am.
Consideration of utility payments made by assisted housing tenants
Sec. 217 provides that, notwittutanding any other provision of
law, for purposes of determining eligibility or the ^lraount of bene-
fits payalsle under AFDC, any utility payment made by a person
living in a dwelling unit in a lower income housing project assisted
under the 1937 Housing Act or Sec. 236 of the National Housing
Act shall be considered to be a rental payment.
Single room occupancy housing
Sec. 218 provides that assistance under the Sec. 8 Existing Hous-
ing Pn^am may be made available to residential properties in
wUch some or all of the dwelling units do not contain bathroom or
kitchen facilities (single room occupancy housing), where the local
government in which the property is located and the local public
houfdng agency certify to the Secretary that the property complies
with 1<^ health and safety standards.
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110
Public housing child care demonstration program
Authority to carry out demonstration program. — Sec. 219(a) pro-
vides that the Secretary shall, to the extent approved in appmph-
ation Acts, carry out a demonstration program of making fp-ants to
public housing agencies (PHAs) to assist them in providing child
care services for lower income families who reside in public hous-
ing and are headed by eligible persons. It provides that the Secre-
tary shall design the program to determine the extent to which the
availabilitv of child care services in lower income housing projects
facilities the employability of eligible persons who head such rami-
lies.
Conditions of assistance. — Sec. 219(b) provides that the Secretai;
may make a grant to any PHA only if: (1) the PHA does not have a
child care services program in operation prior to receipt of assist-
ance under this program; (2) the PHA agrees to provide suitable
facilities for the provision of child care services; (3) the child care
services program of the PHA will serve preschool children during
the day, elementary school children after school, or both, in order
to permit eligible persons who head the families of the children to
obtain, retain, or train for employment; (4) the child care services
program of the PHA is designed, to the extent practicable, to in-
volve the participation of the parents of children benefiting from
the program; (5) the child care services pn^ram of the PHA is de-
signed, to the extent practicable, to employ in part-time positions
elderly individuals who reside in the lower income housing project
involved; and (6) the child care services program of the PHA com-
plies with all applicable State and local laws, regulations, and or-
Selection criteria.^Sec. 219(c) provides that the Secretary in pr>
viding grants shall: (1) give priority to lower income housing proj>
ects in which reside the largest number of preschool and elemen-
tary school children of lower income families headed by eligible
persons; (2) seek to ensure a reasonable distribution of such grants
between urban and rural areas and among lower income housing
projects of varying sizes; and (3) seek to provide such grants to the
largest number of lower income housing projects practicable, c(ki-
sidering the amount of funds available under the demonstration
program and the financial requirements of the particular child
care services pn^ams to be developed by the applicant PHAs.
Fonr. and procedures. — Sec. 219(d) provides that grant applica-
tions shall be made by PHAs according in such form and according
to such procedures that the Secretary may prescribe. It provides
that any PHA receiving a grant may use such grant only for oper-
ating expenses and minor renovations of facilities necessary to the
provision of child care services.
Periodic evaluations. — Sec. 219(e) provides that the Secretary
shall conduct periodic evaluations of each child care services pro-
gram for purposes of: (1) determining the effectiveness of the PHA
program in providing child care services and permitting eligible
persons who head lower income families residing in public houmng
to obtain, retain, or train for employment; and (2) ensuring compli-
ance with the demonstration program provisions. It also provides
that the demonstration program may not be construed as author-
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Ul
izing the Secretary to establish any health, safety, educational, or
other standards with respect to child care services or facilities as-
sisted with grants.
Definitions. — Sec. 219(0 defines the term "eligible person" as an
individual who is the head of a household and (1) is unmarried; (2)
is legally separated from his or her spouse under a decree of di-
vorce or separate maintenance; (3) maintains a separate place of
residence from his or her spouse and such spouse is not a member
of such household; or (4) whose spouse is an elderly, disabled or
handicapped person. It defines the term "lower income families" as
families whose incomes do not exceed 80 percent of median area
income. It deHnes the term "lower income housing project" as
housing developed, required or assisted by PHA and public housing
as lower Income housing; and it defines the term "public housing
agency" as any State, county, municipality or other governmental
entity or public body which is authorized to engage in or assist in
the development or operation of lower income housing.
Report.— Sec. 219(g) provides that not later than the expiration of
the 2-year period following the bill's enactment date, the Secretary
shall prepare and submit to the (Congress a detailed report setting
forth the Secretary's findings and conclusions as a result of carry-
ing out this demonstration program. It provides that the report
sluill include any recommendations of the Secretary with respect to
the establishment of a permanent program of assisting child care
services in lower income housing projects.
Authorization. — Sec. 219(h) authorizes to be appropriated an
amount not in excess of $3 million for fiscal year 1984 for the dem-
onstration program, and provides that any amounts appropriated
shall remain available until expended.
PART B — OTHER ASSISTED HOUSING PROGRAMS
Troubled projects
Eligibility. — Sec. 221(a) clarifies that assistance shall be made
available under the Troubled Projects Program to eligible projects
whether or not they are insured under the National Housing Act.
Sec. 221(b) provides that projects converted from assistance under
the rent supplement and rental assistance payments pr<^ams to
assistance under Sec. 8 may continue to be eligible for Troubled
Projects assistance.
Authorization. — Sec. 221(c) authorizes $32 million for Troubled
Multifamily Projects Operating Assistance for fiscal year 1984.
Transfer of funds for RHAF.—Sec. 221(d) extends through fiscal
year 1984 the period for which funds can be transfered n'om the
Sec. 236 Rental Housing Assistance Fund.
Sec. 236 assistance
Requirement to make amendments. — Sec. 222(a) amends Sec. 236
of the National Housing Act to require the Secretary to offer annu-
ally to amend contracts entered into with project owners under
Sec. 236(0(2) (Rental Assistance Payments) to provide sufficient
payments to cover necessary rent increases and changes in the in-
comes of tenants. It provides that such offer shall be made without
r^^rd to whether the projects covered by such contracts are sub-
yGoot^le
112
ject to mortages inBured under this Act, and that the Secretaiy
shall take such actions as may be necessary to enaure that pay-
ments, including payments that reflect necessary rent increaMi
and changes in the incomes of tenants, are made on a timely bau
for all units covered by such contracts.
Use of recaptured authority.— Sec. 222(b) amends Sec. 236 to no-
vide that any authority that is recaptured either as the result of
the conversion of housing projects assisted under Sec. 236(fX2) to
contracts for assistance under Sec. -8 or otherwise shall be utilind
by the Secretary to the extent necessary (A) for the purpose at
making assistance payments, including amendments, with nspect
to housing projects (whether or not subject to a mortgage insured
under this Act) that remain covered by assistance under Sec
236(0(2); and (B) to the extent approved in appropriations Acts, and
if not required to provide assistance under this section, for the pur^
pose of providing assistance under the Sec. 8 Existing H<Hising Pto-
gram, which assistance shall be in addition to any ^Jier funds ait
thorized and approved for use under Sec. 8.
Elderly and handicapped housing
Elderly and handicapped housing interest rate limitation. — Sec.
223(a) limits the interest rate on sec. 202 loans to not to exceed 9.25
percent with respect to loan agreements entered into after Septem-
ber 30, 1982.
Authorization. — Sec. 223(b) authorizes an increase in Treasury
borrowing authority for the Sec. 202 Prc^am for fiscal year 1984
of $628 million.
Loan limitation. — Sec. 223(c) establishes a loan limitation of
$667.8 million for the Sec. 202 Program for fiscal year 1984.
Handicapped housing set-aside. — Sec. 223(d) amends Sec. 202(h) of
the National Housing Act to provide that at least $50 million of the
amounts appropriated for the program for 1984 shall be made
available for handicapped housing, and to expand the definition of
persons eligible for such housing to Include persons who have been
released from residential health treatment facilities. It provides
that not more than 20 percent of the handicapped housing aet aside
shall be made available for the development of rental housing and
related facilities for persons who have been released from residen-
tial health treatment facilities.
Program amendments.— Sec. 223(e) limits the number of efficien-
cy units in 202 projects to 25 percent unless otherwise requested by
the sponsor; and limits to $10,000 the amount of the sponsor escrow
fund that the Secretary may require. It prohibits the Secretaiy
from: (1) requiring a sponsor equity participation; (2) prohibiting a
sponsor from voluntarily providing funds from other source for
amenities and other features of appropriate design and construc-
tion suitable for inclusion in such projects; or (3) prohibiting a re-
quired meals pn^am. It also provides that no provision of the
1937 Housing Act shall be deemed to prohibit a meals program or
to require that payments under such a program be considered a
part of a unit's rental charge. It provides that per unit cost limita-
tions established by the Secretary must reflect design features nec-
essary to meet the needs of elderly and handicapped residents; pro-
vides that the Secretary shall aqjust per unit cost limitations in
yGoot^le
U8
set on January 1, 1983, and thereafter not less than once annu-
y to reflect changes in the general level of construction coBts;
] provides that the basis on which a contractor to be employed
tne development or construction of a project assisted under Sec.
! is selected shall be determined by the project sponsor or bor-
der. The section further provides that the Secretary may not ap-
tve prepayments, sale, or transfer of Sec, 202 loans unless such
nsaction will ensure the continued operation of the project to
I same degree to benefit to existing and future tenants as pro-
ed for in the original loan agreement.
tsolidation of housing assistance for elderly and handicapped
families
iuthority to make assistance available. — Sec. 224(a) amends the
nretary's authority under Sec. 202(a) of the Housing Act of 1959
make assistance available for housing and related facilities for
erly and handicapped families to provide that assistance may be
kde available to any private nonprofit corporation, consumer co-
irative, or public body or agency in amounts up to the total de-
.optnent cost of the housing provided it is constructed in an eco-
mical manner and without elaborate or extravagant design or
tterials. In addition, it also authorizes the Secretary to make as-
tance available in an amount up to 75 percent of the total devel-
naent cost of such housing to those entities and limited profit
jnsors if part of the financing is provided by a state or local
using agency, and provides that to the maximum extent practica-
ti the state or local housing agency shall administer the assist-
ce.
Form and conditions of assistance. — Sec. 224(a) provides that as-
tance shall be in the form of a deferred payment, noninterest
aring advance repayable to the Secretary after 20 years, and that
the project continues to serve elderly and handicapped families
th substantially similar incomes after the termination of the 20-
ar period, the Secretary may forgive a portion of the advance for
ch year of continued service and may forgive the entire advance
the end of 40 years of such continued service. It further provides
at the Secretary shall require that during this initial 20-year
riod not less th^m 75 percent of the units in a project assisted
ider this section shall be made available for occupancy by lower
come families, as defined in Sec. 3(b) of the United States Hous-
g Act of 1937.
Use of repayment and income from outstanding loans. — Sec.
14(b) provides that repayments and income to the Sec. 202 fund
lall be available, subject to appropriation, to cover increases in
an amounts approved by the Secretary.
Authorization. — Sec. 224(b) authorized to be appropriated for the
vised Sec. 202 pri^am for fiscal year 1985 $880 million for assist-
ice to sponsors eligible for assistance covering up to 100 percent
development costs, and $660 million for assistance to sponsors el-
ble for assistance covering up to 75 percent of development costs.
provides that any sums appropriated shall remeiin available until
[pended.
Conforming changes.— Sec. 224 (c) and (d) make conforming
langes to Sec. 202(aX6) and 202(cXl) of the Housing Act of 1959 to
37-922 O - 84 -
yGoot^le
114
substitute references to the term "loan" with reference to the tenn
"assistance made available".
Rental charges. — Sec. 224(e) provides that during the initial 20-
year period, rents paid by lower income families occupying pn^jecta
assisted under this section shall be determined in accordance widi
the provisions of Sec. 39(a) of the Housing Act of 1937, except that
the Secretary may reduce the percentage of income paid for roit
specified in such Sec. 3(a) for any project with development costa or
operating costs below levels that are established by the Secretanr.
It is also provides that rents for units occupied by elderly or hanrn-
capped families who are not lower income families shall be ap-
proved by the Secretary.
Authority to provide operating assistance. — Sec. 224(e) authoriuB
the Secretary to enter into contracts with Sec. 202 projects ownen
for up to 20 years to make payments to cover any part of the cosb
attributed to units occupied (or as approved by the Secretary held
for occupancy) by lower income families that are not met froin
project income. It provides in the case of a project eligible for as-
sistance in an amount up to 100 percent of development coeta, tin
annual contract amount shall not exceed 80 percent of the initial
project operating costs, and in the case of a project eligible for a»
sistance in an amount up to 75 percent of development cost, the
annual contract amount shall not exceed 50 percent of the initial
project operating costs. It further provides that: any contract
amounts not used by a project in any year shall remain available
to that project until the expiration of the contract; in the case of a
project that has qualified for lower tenant rent contributions, the
Secretary may enter into contriicts in amounts in excess of the
amounts described; and. that the Secretary is authorized to enter
into such contracts aggregating not more than $41.5 million per
year with the aggregate amount that may be obligated over the du-
ration of the contracts not to exceed $830 million.
Eligibility for tax exempt financing. — Sec, 224(f) provides that ob-
ligations issued by state and local housing agencies with reepect to
projects assisted under Sec. 202 shall qualify as tax exempt bonds
under Sec. 11(b) of the U.S. Housing Act of 1937.
Effective date. — Sec. 224(g) provides that these provisions are ef-
fective on Octo)>er 1, 1984, except that existing law will continue to
apply to projects with loans or loan reservation using authority ap>
S roved in Appropriations Acts for fiscal years beginning prior to
seal year 1985,
Congreate housing
Report— Sec. 224(a) provides that not later than March 15, 1!^,
the Secretary shall prepare and submit to the Congress a report
evaluating the effects of any change in the administration of the
congregate housing services program established in this title. It
provides that such report shall include an assessment by the Secre-
tary of any plan for the reorganization or decentralization of the
administration of such program, and any legislative recommenda-
tions of the Secretary for the establishment of a permanent congre-
gate housing services program, and that until such report is sub-
mitted to the Congress, the Secretary may not implement any plan
for the decentralization of the administration of such prc^ram.
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115
Authorization. — Sec. 225(b) authorizes $10 million for the Congre-
gate housing Services program for Racsd year 1984.
Shared housing for the elderly
Sec. 226 permits Sec. 8 Existing Housing and Moderate Rehabili-
tation assistance to be used in coi^unction with shared housing for
the elderly as such persons are defined in Sec. 3(b) of the U.S.
Housing Act of 1937 and directs the Secretary to develop minimun
property standards for such housing.
Rent supplement program
Amendments to projects. — Sec. 227(a) amends Sec. 101 of the
Housing and Urban Development to offer annually to amend con-
tracts entered into with housing owners under Sec. 101 to provide
sufficient payments to cover necessary rent increases and changes
in the incomes of tenants. It provides that such offer shall be made
without r^ard to whether the housing covered by such contracts
are subject to mortgages insured under this Act, and that the Sec-
retary shall take such actions as may be necessary to ensure that
pajTments, including payments that reflect necessary rent increases
and changes in the income of tenants, are made on a timely basis
for all units covered by such contracts.
Use of recaptured authority. — Sec. 227(b) amends Sec. 101(e) to
provide that any authority that is recaptured either as the result of
the conversion of housing projects covered by assistance under such
section to contracts for assistance under Sec. 8 or otherwise shall
be utilized by the Secretary to the extent necessary (1) for the pur-
pose of contracting for assistance payments, including amend-
menta, with respect to housing projects (whether or not subject to a
iliort|;age insured under the National Housing Act) that remain
covered by assistance under Sec. 101; (2) if not required to provide
asBistance under Sec. 101, and notwithstanding any other provision
rf law, for the purpose of contracting for assistance payments
under Sec. 236(fX2) of the National Housing Act (Rental Aseistfince
Payments); and (3) to the extent approved in appropriation Acts,
and if not required to provide assistance pursuant to paragraphs (l)
and (2), for the purpose of providing assistance under the Sec. 8 Ex-
isting Housing Pro-am which authority shall be in addition to any
oUier funds authorized and approved for use under Sec. 8.
Alien restriction
Sec. 228 amends the restrictions in existing law regarding the
provision of federal housing assistance to aliens to provide that any
restrictions with respect to aliens other than alien students or
their families shall apply only to those aliens applying for federal
housing assistance after the date of enactment of this Act, and to
provide that the Secretary shall require every applicant for federal
housing assistance ^lfter the date of enactment of this Act to pro-
vide certification as to their citizen status.
Demonstration project for families receiving public assistance
Congressional findings.— Sex:. 229(a) establishes Congressional
findings r^arding the need for the Demonstration Program.
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Purpoee-^Sec. 229(b) establishes as the purixwes of the program
the provision of assistance to units of general local government and
their designated agencies in order to develop a program that will
(1) encourage the upgrading of housing occupied primarily by lower
income families, including families receiving assistance under the
aid for families with dependent children pr<^am establiahed under
Title IV of the Social Security Act; (2) provide for better coordina-
tion at the local level of the efforts to assist families reoeivmg
public assistance from the Department of Health and Human Snr-
ices so that these families will be able to occupy affordable houaiiy
that is decent, safe, and sanitary and that, if necessary, Is r^iabOi-
tated with funds provided by the Department of Housing and
Urban Development.
Authority to carry out demonstration program. — Sec. 229(c) Wr
thorizes the Secretary of HUD to carry out the demonstration to
the extent approved in appropriation Acts.
Authority to make grant. — Sec. 229(d) provides that in carrying
out the demonstration project, the Secretary shall make grants to
units of general local government, or designated agencies thereof
to carry out administrative plans approv^ by the Secretary, and
that the Secretary may make grants to States to provide technical
assistance for the purpose of assisting such units of generetl local
government to develop and carry out such plans.
Eligibilityfor assistance.— Sec. 229(eXl) provides that grants nuqr
be made to States and units of general local government and agen-
cies thereof that apply for them in a meinner and at a time deter
mined by the Secretai? and that, in the case of units of general
local government and their agencies, are selected on the basis of an
administrative plan described in such application.
Administrative plan. — Sec. 229(eX2) provides that no such admin-
istrative plan shall be selected by the Secretary unless it sets forth
a plan for local government activities that are designed to (1) re-
quire or encourage owners of rental housing occupied by lower
income families to bring such housing into compliance with local
housing codes; (2) provide technical assistance, loans, or grants to
assist such owners to undertake cost-effective improvements (rf
such housing; (3) work with the State to establish and implement a
schedule of local shelter allowances for recipients of assistance
under Title IV of the Social Security Act based on building quali^
that will be applicable to buildings involved in this program; aiu
(4) coordinate local housing inspection, housing rehabilitation loan
or grant assistance, rental assistance, and social service programs
for the purposes of improving the quality and affordabillty of bous-
ing for lower income families.
Eligible use of funds. — Sec. 229(e) provides that funds received
from any grant made by the Secretary to a unit of general local
government shall be made available for use according to the ad-
ministrative plans and may be used for (1) technical assistance or
flnancial assistance to property owners to u[^ade housing projecto
described below; (2) temporary rental assistance to famihes who
live in buildings assisted under their pn^ram and who are eligible
for, but are not receiving, assistance under Sec. 8, except that such
families shall not include families receiving assi^ance under TiUe
IV of the Social Security Act, and the amount of such rental assist-
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117
nay not exceed 20 percent of each grant received under this
a, (3) housing counseling and referral and other housing re-
services; (4) expenses incurred in administering the program
d out with funds received under this section, except that such
Bes may not exceed 10 percent of the grant received under
jction; and (5) other appropriate activities that are consistent
iie purposes of this section and that are approved by the Sec-
ditiotia on assistance. — Sec. 229(f) provides that grant recipi-
liall agree to (1) provide a 15 percent matching contribution
ids or value of services carried out in connection with the pro-
(2) permit the Secretary and the General Accounting Oflice
lit its books in order to assure that the funds received under
action are used in accordance with the section; and (3) other
and conditions prescribed by the Secretary for the purpose of
ng out this section in an effective and efficient manner.
vtion criteria. — Sec. 229(g) provides that the Secretary shall
88 recipients at least 20 units of general local government (or
designated agencies) and that the selection of proposals for
ig shall be based on criteria that result in a selection of pro^-
lat will enable the Secretary to carry out the purpose of this
a in an effective and efHcient manner and provide a euffi-
amount of data necessary to make an elvaluation of the dem-
ition project carried out under this section.
ort. — Sec. 229(h) requires the Secretary to transmit, not later
March 1, 1984, to both Houses of the 0)ngres8 a detailed
, concerning the findings and conclusions that have been
}d by the Secretary as a result of carrying out this section,
with any l^islative recommendations that the Secretary de-
les are necessary.
horization. — Sec. 229(i) authorizes to be appropriated an
it not in excess of $25 million for fiscal year 1984.
lion of housing assistance as income
230 provides that notwithstanding any other provision of
he value of any assistance paid with respect to a dwelling
inder the United States Housing Act of 1937, the National
as Act, Section 101 of the Housing and Urban Development
" 1965, or Title V of the Housing Act of 1949 may not be con-
d as income or a resource for the purpose of determining the
lity of, ur the amount of benefits payable to, any person
in such unit under any other federal program of assistance.
R :iS5 homeownership assistance
■.itation on term of assistance payments. — Sec. 231(a) provides
issistance payments under Sec. 235 pursuant to any new con-
entered into after September 30, 1983, that utilizes authority
ved in Appropriation Acts for einy fiscal year beginning after
late, may not be made for more than a KX^year period.
id for provision of additional assistance. — Sec. 231(b) estab-
in the Treasury a fund which, to the extent approved in Ap-
lations Act, may be used by the Secretary to provide assist-
3ayment8. It provides that amounts deposited into such fund
include any amount recaptured as a result of the sale or ex-
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118
tended rental of the property, any authority to make anistance
payments that is committed for use in a contract but is unused be-
cause the mortgage, loan, or advance of credit involved is refi-
nanced or because such assistance payments are terminated or bu»
pended for other reasons before the original terminati<Hi date of
such contract, and any interest income received as a result of in-
vesting amounts deposited in the fund in excess of amounts dete^
mined by the Secretan to be currently necessary to make assiat-
ance payments in the United States or government agency obliga-
tion. It provides that in the case of any homeowner who after Uw
10-year period of assistance is determined by the Secretary to be
unable to assume the full pajrments due under the mortgage, loan,
or advance of credit involved, the Secretary shall, to the extent of
the availability of amounts in the fund, contract to make, and
make, continued assistance payments on behalf of such home-
owner, end that such continued assistance payments shall be made
in an amount determined in accordance with the method for dete^
mining such payments under Sec. 235 and for such period as the
Secretary determines to be appropriate.
Authorization. — Sec. 231(c) provides that the aggregate amount
of outstanding contracts to make assistance payments under Sec
235 subject to approval in Appropriation Acts shall be increased by
$16.66 million on October 1, 1983, and that the aggr^ate amount
that may be obligated over the duration of such contracts may not
exceed $166.6 million.
Issuance of commitments and reservations. — Sec. 231(c) provides
that the Secretary shall begin issuing new commitments and reaei-
vations to provide mortgage insurance and assistance payments
under the revised Sec. 235 prc^am before expiration of the 30-day
period following the approval in any appropriation Act of budget
authority for the section after the date of enactment of this Act
Removal of limitation on entering into new contracts for assist-
ance payments.— Sec. 231(c) deletes restrictions in existing law on
the Secretary's authority to enter into new contracts for assistance
payments under Sec. 235 after September 30, 1982.
Tftle III — Housing Production Program
Short title
Sec. 301 provides that this title may be cited as the "Rental
Housing Production and Rehabilitation Act of 1983".
Statement of purpose and authority
Purpose. — Sec. 302(a) provides the purpose of the program is to
encourage the construction, substantial rehabilitation or moderate
rehabilitation of multifamily rental or cooperative housing for
those families without other reasonable and affordable housing al-
ternatives in the private market.
Authority.— Sec. 302(b) authorizes the HUD Secretary, to extent
funds are appropriated, to provide assistance for multiffimily rental
(including mutual housing associations) and cooperative housing if
yGoot^le
119
such cooperative housing has resale structure which maintains af-
fordability for the required percentage of lower income families.
Eligible applicants. — Sec. 302(c) provides that assistance shall be
made available to States, units of general local government or des-
ignated state or local government agencies including areawide
planning organizations.
Use of funds. — Sec. 302(d) provides that States, units of local gov-
ernment or their agencies shall use assistance by providing capital
grants, loans, interest reduction payments, land purchase grants or
other comparable assistance to stimulate construction or rehabilita-
tion of projects.
Administration of funds. — Sec. 302(e) authorizes the Secretary to
enter into contracts with a State or its agency to administer the
assistance provided under this pr<^am.
Ana eligibility criteria
Sec. 303 provides that eligible projects must be located in an area
experiencing a severe shortage of decent rental housing opportuni-
ties for families without other reasonable and afTordable housing
altematives in the private market, and authorizes the Secretary to
issue r^ulations that set forth minimum standards for determin-
ing eligible areas, taking into account poverty, housing overcrowd-
ing, rental housing vacancies, amount of sutxitandard rental hous-
ing, extent of rental housing production lag, and other objectively
meesurable conditions specified by the Secretary.
Pnt/ect selection criteria
Sec. 304(a) provides that the Secretary shall select eligible proj-
ects for assistance on the basis of the extent of the severity of
shortage of decent rental housing in the area; non-federal public
and private contributions that reduce project cost; the project's con-
tribution to neighborhood development and lessening of displace-
ment; the applicant's past performance in meeting assisted housing
needs; and tjie extent to which the assistance will provide maxi-
mum number of units for least cost, considering cost differences
among areas, flnancing alternatives, types of projects and tenants
served.
Sec. 304(b) provides that from among the eligible projects select-
ed by the Secretary, the Secretary shall give priority for assistance
to projects that exceed the requirements that for a 20-year period,
20-percent of the units must be occupied or available for low
income persons and families.
Allocation of assistance
Sec. 305 requires the Secretary to assure a reasonable distribu-
tion of funds among eligible areas in geographic r^ons, between
metro and non-metro areas, among states and units of local govern-
ment or their agencies, and in addition, reasonable distribution
among newly constructed, sutrntantially rehabilitated, and moder-
ately rehabilitated projects on the basis of local housing needs and
market conditions.
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Amount of assistance
Sec. 306 provides that assistance shall be the least amount neces-
sary to provide decent housing of modest deei^ which is afFoid-
able, including the amount necessary to make rents for at least 20
percent of the units affordable for families whose income is SO per
cent of area median income or below. It also provides that in deter
mining the least amount of assistance necessary to provide rental
or cooperative housing, the Secretary shall determine, at the time
of approval of the project, that no assistance will be provided to
persons or families who can afford units in the project without
such assistance.
Terms and conditions of assistance
Project requirements. — Sec. 307(a) provides that the owner of the
project must agree to assure compliance with the program's re-
quirements and assure financial feasibility of the project. In addi-
tion, the project owner must assure, for a 20-year period, that: 20
percent of units must be occupied or available for low income fami-
lies; any reduction in debt service payments as a result of assist-
ance under the program must be passed on to tenants; the project
owner will not discriminate against tenants that have a minor
child or children who will be residing with them or on the bans
that tenants are receiving federal. State or local housing aasiflt-
ance; and the owner will not convert the units to condominiums. It
also provides that: the maximum amount of the mortgage may not
exceed the amount insurable under Sec. 207 of the National Hous-
ing Act; the project must contain five or more dwelling units and
be used predominantly for residential purposes; and me State or
local government must certify that assistance will be made availa-
ble in conformance with Fair Housing laws.
Sanctions. — Sec. 307(b) provides that if the owner or his or her
successor fails to meet the requirements for assistance under this
section during the applicable period, the assistance must be repaid
with interest; provides that the assistance shall be considered a se-
cured debt.
Secretarial approval of rents. — Sec. 307(c) requires Secretarial ap-
proval for rents charged for low and moderate income tenants in
the project; provides that such tenants may not pay more than 25
percent of their adjusted income for rent, including utilities; that
at least 30 days prior written notice shEill be required for rent in-
crease; and that u the Secretary does not disapprove emy submitted
schedule of rents within 60 days, such rents shall be considered a|>-
proved.
Financing
Sec. 308 provides that State and local bonds issued to finance an
eligible project or projects qualify as tax exempt bonds under Sec
11(b) of the U.S. Housing Act of 1937; and that prqject mortgages
may be insured under Title 11 of the National Housing Act.
Labor standards
Sec. 309 provides that Davis-Bacon labor standards shall apply to
projects developed with assistance under this program.
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121
ftegulations
Sec- 310 requires the Secretary to issue regulations necessary to
»rry out the provisions of this title no later than six months after
its enactment date.
Authorization
Sec. 311 authorizes to be appropriated $1.3 billion for fiscal year
1984 for assistance under this title.
Title IV — Rural Housing
Pr(%ram Authorization Levels
Sec. 401(a) authorizes an overall loan activity level for the Farm-
era Home Administration's housing programs of $3,955 billion for
Fiscal Year 1984 for insured and guaranteed loans. Of this amount
not less than $3,705 billion is to be available for subsidized loans to
pei«)ns having incomes of 80 percent of the area median income or
below and a provision is included to permit loans to be made out of
this amount to low income persons who do not require interest
credit subsidies and $200 million is to be available to guarantee
loans made by private lenders to persons having incomes above 80
percent of the area median income. Of the total activity level au-
thorized, $1 billion is to be available for section 515 rental housing
loans; not more than $50 million may be made available for unsub-
sidized section 502 loans in connection with section 502 loan trans-
fers and sales of property held in the FmHA inventory. In addition,
$25.6 million is authorized for section 514 farm labor housing loans
and not more than $5 million in advances are provided by extending
the existing authorization for these programs through Fiscal Year
1984.
Sec. 401(a) also extends existing authorizations through Fiscal
Year 1984 of: $50 million for Sec. 504 low income home repair loans
and grants, of which not more than $25 million is for Sec. 504 very
low income repair grants; $25 million for Sec. 516 farm labor hous-
ing grants, of which not more that 10 percent may be used for
rnts to nonprofit ogranizations for farmworker housing outreach,
million is authorized for Sec. 525 supervisory and technical as-
sistance grants of which 50 percent shall be available for purchaser
Euid delinquent borrowers counselling. Additional authorizations
eiao include such sums as may be necessary for payments on notes
Euid other obligations issued by the Secretary and for the adminis-
tration of Sec. 235 and 236 of the National Housing Act and Sec. 8
of the United States Housing Act of 1937; and $2 million for Sec.
509(c) construction defect payments.
Sec. 401(a) also adds a provision requiring the Secretary to use
the loan guarantee authority, as approved in Appropriation Acts,
so long as there are qualified applications for such loans.
Sec. 401(b) extends through flscal year 1984 the Secretary of Ag-
riculture's authority to insure loans for rental and cooperative
housing.
Sec. 401(c) extends through fiscal year 1984 the Secretary of Ag-
riculture's authority to insure below market interest rate loans for
rural borrowers.
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122
Sec. 401(d} authorizes $400 million for rural rental
payments, of which at least $200 millioD is to be used to assist ten-
ants living in Sec. 514 and 515 newly constructed and subetantiaUjF
rehabilitated rental housing.
Sec. 401(e) authorizes $12 million for Sec. 523 self-help housing
technical assistance grants and $3 million of additional funding m
the Sec. 523 self-help development fund loan program.
Rural housing insurance fund amendments
Sec. 402 amends Section 517(j) to remove the authority at the
Secretary of Agriculture to utilize the Rural Housing Insuranoe
Fund (RHIF) for making rental assistance payments under SectJon
521(aX2) and the authority to utilize the Fund for maWing oonstnifr
tion defects compensation payments pursuant to Section SOSdH
since both will be funded through direct authorizations for appro-
priations.
Tenant contribution
Sec. 403 conforms the definition of Income and adjusted income
with that applied to the HUD assisted housing programs as amend-
ed by this bill in Sec. 202. For rural rental housing assistance [ro-
grams, the tenant contribution to rent shall be the high^ of (1) ^
percent of adjusted family income, (2) 10 percent of gross &nitly
income, or (3) the portion of the family's welfare payment designat-
ed for housing cost. In addition, provisions are included bo that
tenant rental payments may not be increased by more than 10 per
cent per year, and that the provisions in this section will be effiec-
tive with respect to any rent due on or after the date of enactment
Section 502 loan terms
Sec. 404 authorizes the Secretary of Agriculture to extend the
term of any Sec. 502 loan not to exceed 5 years if such an extenatm
will be necessary in order to permit on otherwise eligible low
income borrower to afford to participate in the Sec. 602 program.
Section 502 interest credits
Sec. 405 provides that interest credit assistance made to Sec. 502
borrowers shall not exceed the lesser of (1) the balance of the
monthly principal, interest, taxes and insurance payment remain-
ing after applying 20 percent of the adjusted income of the mortga-
gor; or (2) the difference in the amount of the monthly principal
and interest payment due under the mortgage and thie payment
due if the mortgage carried one percent interest rate.
Fee inspectors and appraisers
Sec. 406 authorizes the Secretary to utilize fee inspectors and ^>-
praisers to process loan and grant applications where a county or
district ofllce is unable to expenditiously process applications and
provides that the Secretary may include the cost of such aervices in
the amount of each loan and grant.
Determination of farmworker housing need
Sec. 407 provides that for the purposes of Sec. 514 or 516 farm-
worker housing assistance, the Secretary shall take into considera-
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e housing needs only of domestic farm labor, including mi-
annworkers, in the area and provides that the determina-
all be made without regard to other housing needs in the
vntal housing loans
108(a) provides that rural rental housing loans may be made
purpose of utilizing as rental or cooperi.tive housing for low
persons, without regard to whether or not Sec. 521 rental
ice payments will also be utilized to assist such persons, ex-
Sec. 502 dwellings that the Secretary holds or is likely to
a result of the transfer or foreclosure of such dwellings and
spect to which eligible Sec. 502 applicants that might pur-
luch dwellings have not been identified afer a reasonable
408(b) provides that for the purpose of determining the
feasibility of any rental assistance project, applicants for
i requiring rentiU assistance payments shall only be re-
to demonstrate that a market exists for persons and families
I of and eligible for rental assistance payments. For projects
ng to use assistance provided by a State or other political
sion that is similar to the assistance provided under Sec.
>plicants shall be required to demonstrate that a market
'or persons and families eligible for rental assistance, that
:tB for such assistance are to be made for a period not less
years, and that such rental assistance shall be made availa-
ble State or political subdivision not less frequently than en-
requires the Secretary to establish standards for housing
ated facilities rehabilitated or repaired under Sec. 515 that
8 than standards for newly constructed rental housing but
will provide decent, safe and sanitary housing; provides that
Tetary may not deny Sec. 515 or Sec. 521 assistance on the
liat the project involved is to be located on more than one
at the Secretary may not deny Sec. 515 loans on the basis
intal assistance payments may be required in connection
ich loans; or promulgate any regulation that will have the
rf denying occupancy to eligible persons on the basis that
arsons require rental assistance payments; also, deletes the
r that was given to rental projects in which 40 percent or
)f the project units were to receive rental assistance pay-
ion of rural area
i09 provides that a rural area with a population in excess of
but below 20,000 is el^ble to participate in PmHA housing
US through the end of the fiscal year 1984, as long as it has
us lack of mortgage credit for lower and moderate income
B.
elderly housing
410 provides that rural rental assistance payments shall be
ted for elderly and handicapped persons who elect to live in
bousing in a single family dwelling and provides that the
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Secretary shall issue minimum property standards or modify slitt-
ing standards for such shared housing.
Processing of applications
Sec. 411 provides that in processing applications for FmHA as-
sistance the Secretary shall give priority to applications from pv-
sons having the lowest incomes and the great^ housing needs or
to applicants whose projects will serve such persons. In m«lriTig 8»
sistance available, the Secretary shall provide a preliminary rean^
vation of assistance at the time of the initial approval of tba
project.
Rental housing preservation grants
Sec. 412 provides for a new program of rental housing preann-
tion grants to units of general local government, Indian tnbes, pri-
vate and public nonprofit organizations for housing repair and r^
habilitation projects for low income persons in rural areas; that
such assistance may be provided for rental housing and for multi-
family cooperative housing that has a resale structure that main-
tains affordability for low income persons, and if determined neces-
aaTV to low income homeowners.
Use of funds. — The assistance must be used to stimulate the
repair and rehabilitation of rental or limited equity cooperatiie
buildings, and may include single-family dwellings occupied by or
to be occupied by low income persons. If the Secretary aeterminei
that such rental or cooperative housing is inappropriate the mest
the needs of such persons in any area, oy provioing capital granb,
loans, interest reduction payments, or comparable assistance to
reduce shelter costs for low income persons and, to the extent feasi-
ble, for persons with incomes of 50 percent or lees of area median
income.
Administration of funds. — The Secretary is authorized to enter
into contracts with units of general local governments or nonprofit
organizations to carry out repair and rehabilitation activities sub-
ject to rules, regulations and procedures promulgated by the Secre-
tary.
Allocation of funds. — In allocating assistance, the Secretary shall
seek to ensure that there is a reasonable distribution of such asEost-
ance among eligible rural areas throughout this Nation.
Project selection criteria. — The Secretary shall select projects for
assistance on the basis of (1) the extent to which the activities will
assist low income persons in need of adequate shelter (with a priv-
ity to applications for projects that assist the maximum number of
persons and families whose incomes do not exceed 50 percent of the
area median income); (2) the participation of other public or private
organizations providing financial assistance to lower the cost of
such projects, or to which activities will be undertaken in rural
areas having populations below 10,000 or in remote parts of other
rural areas; and (3) the extent to which the repair and rehabilita-
tion activities may be expected to result in achieving the greatest
degree of repair or improvement for the least cost per unit (ff
dwelling.
Amount of assistance. — The amount of assistance ia limited to
the least amount that the Secretary determines is necessary to
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repair and rehabilitate housing that will provide decent, safe and
sanitary housing for low income persons.
Tenns and conditions of assistance. — Assistance will be made to
rental or cooperative housing only if: the project owner agrees to
assure compliance with the program's requirements and assures
that the project is financially feasible; the project owner agrees
that repaired and rehabilitated units will be occupied or available
for occupancy by low income persons for not less than a 15-year
period; tiie project owner will pass on to tenants any reduction in
debt service payments resulting from this assistance; the project
owner will not discriminate against tenants receiving other hous-
ing assistance, and the owner will not convert the units to condo-
, miniums during the 15-year period; units of local government and
nonprofit organizations that apply to administer the assistance will
certify that they will conform with the provisions of P.L. 88-352
'2 and 90-284 (the Fair Housing laws); the owner agrees to en*er into
J and abide by written leases which provide that: any proposed rent
J increase shall be reviewed by the unit of local government or non-
3 inofit organization which also shall determine any increase as jus-
T titled and reasonable; tenants may be evicted only for good cause
I and tenants may appeal to an impartial hearing officer any deci-
.j aion which is detrimental to their tenure and well being. For home-
7 owners projects assistance may be provided only if there is compli-
f ance with: the Fair Housing Laws; in addition any other require-
« menta that the Secretary may establish to carry out the purposes
I of this section. This section also provides that the unit of local gov-
I ernment or nonprofit oi^anization utilizing the assistance will su-
( pervise and inspect repairs and rehabilitation undertaken by using
persons other than employees of the local government or nonprofit
organization; and that periodic reports to the Secretary will be
made by the local government or nonprofit organizations utilizing
tjie assistance.
Failure to carry out agreements. — Provides that if owners of prop-
erties assisted under this section fail to carry out the agreements,
the project owner or successor must repay the assistance with in-
terest and that any assistance provided shall constitute a debt and
shall be secured by the security instruments provided by the owner
to the Secretary.
Project rents. — Provides that rents charged low income tenants
must be approved by the Secretary; shall not exceed 25 percent of
their a4JU8ted income; and, shall not be increased without 30 days
prior written notice. Also, rent schedules submitted to the Secnv
taty shall be deemed approved by the Secretary, within 60 days
after receipt of schedule, unless such schedule is disapproved.
Recapture of assistance. — Provides that the assistance will be re-
captured by B^HA upon any disposition of housing that involves a
discontinuation of the use of housing for low income persons as re-
quired by this section.
Advance payments. — The Secretary shall make advances of the
assistance as necessary to carry out the program.
Definition of unit of general local government— h unit of general
kcal government is any borough, city, county, parish, town, town-
ship, village, or other general purpose State political subdivision.
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126
R^ukUions. — The Secretai; must ii
carry out the provisions of this
after enactmeoL
Authorization. — SlOO million is authorized for fiscal year 1984 k
assistance under this section and not more than 10 penent tk(
Eimounts of the assistance may be used by the units of general ked
government and nonprofit organizations for administiative a-
penses in carrying out the program.
Guaranteed loan demonstration program
Sec. 413 authorizes such sums as may be necessary for the Secr»
tary of Agriculture to establish a program to demonstrate the efftfr
tivenesB of providing shallow interest credit subsidies to el^pUe
persons purchasing their homes with FmHA euatant«ed loam h
encourage State housing finance agencies ana private lenden to
make mortgage financing available in rural areas. For the far-
poses of the demonstration, the Secretary is authorized to subndtK
the interest rate of loans guaranteed by FmHA down to 9M per-
cent for borrowers with a4justed incomes of mA more than 130 per-
cent of the area median income. Provisitais are included to require
that the subsidy shall be a secured debt which is subject to recap-
ture on the disposition or nonoccupancy of the property by the
borrower.
Farm labor housing
Sec. 414 provides that the Secretary shall, to the extent approved
in appropriation Acts, utilize not more than 10 percent of the
amount appropriated for Sec. 516 grants for financial assistance to
eligible private and public nonprofit agencies to encourage the d^
velopment of domestic and migrant farm labor housing projects.
TrrLE V — Program Amenouents and Extensions
Extension of mortgage insurarux programs
Sec. 501 of the bill extends through fiscal year 1984 {Septembff
30. 1984), the authority of the Secretary of Housing and Urtan De-
velopment to insure mortgages or loans under certain HUD-FHA
mortgages or loan insurance programs contained in the National
Housing Act. Under existing law, these authorities will expire on
May 20, 1983.
Subsection (a) extends through fiscal year 1984 Sec. 2(a) — proper-
ty improvement and manufactured home loan inBuranceprogranis.
Subsection (b) extends through fiscal year 1984 all FHA mort-
gage insurance programs under the authority of the HUD Seen-
tary including Sec. 203 — basic home mortgage insurance; Sec. 207—
rental housing insurance; Sec. 213 — cooperative housing insurance;
Sec. 220— rehabilitation and neighborhood conservation housingin-
surance; Sec. 222 — mortgage insurance for servicemen; Sec. 223—
miscellaneous housing insurance, including insurance in older, de-
clining urban areas and for existing multifamily housing prtgecte;
Sec. 231— housing for the elderly; Sec. 232 — nursing homes; Sec
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127
J3 — experimental housing; Sec. 234 — condominiums; Sec. 237 —
wcial risk mortgages; Sec. 240 — homeowner purchases of fee
imple title; Sec. 241 — supplemental loans for multifamily housing
rmects; Sec. 242 — hospitals; and Sec. 243 — homeownership for
liddle-income families.
Subsection (c) extends through fiscal year 1984 Sec. 221 — housing
n- moderate income and displaced families.
Subsection (d) extends through fiscal year 1984 Sec. 235 — home-
wnership for lower income families.
Subsection (e) extends through fiscal year 1984 Sec. 236 — rental
nd cooperative housing for lower income families.
Subsection (f) extends through fiscal year 1984 Sec. 244 — mort-
ue insurance on a co-insurance basis.
Subsection (g) extends through fiscal year 1984 Sec. 245 — gradu-
ted payment mortgages and loans.
Subsection (h) and (i) extends through fiscal year 1984 Sec.
09(f) — Armed Forces-related housing.
Subsection (i) extends through fiscal year 1984 Sec. 1002(a) — land
evelopment insurance.
Subsection (k) extends through fiscal year 1984 Sec. 1101(a)—
lortgage insurance for group practices.
Texible interest rate authority
Sec. 502 extends through fiscfil year 1984 the Secretary's authori-
f administratively to set interest rates for FHA-insured mortgage
lans to meet the mortgage market at rates above the statutory
laximum.
imitation on aggregate amount which may be insured under the
National Housing Act
Sec. 503 extends for flscal year 1984 the authority for FHA to
nter into insurance commitments up to an aggr^ate principal
mount not to exceed $45.9 billion, and requires the Secretary to
nter into commitments up to that amount subject to the absence
f qualified applicants.
'ederal Housing Administration general insurance fund
Sec. 504 increases by $252.9 million for Fiscal year 1984 the au-
borization for appropriations to cover losses of the FHA general
Qsurance fund.
Sec. 505 provides that individual cooperative units in buildings
rhose construction was completed one year prior to the application
jT FHA insuremce are eligible for mortgage insurance and the co-
perative no longer has to be nonprofit to be eligible for insurance.
ianufactured housing
Sec. 506 provides FHA Title n insurance for existing manufac-
ured homes that were constructed in compliance with the 1974
oanufactured bui co -uction safety standards, if the man-
iCurtured homi i k »uuilar to the minimum property
tandards for ei ng i i red under Title II.
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Temporary mortga^ assistance payments
Sec. 507 provides that the HUD Secretary must provide counsel-
ing under the Temporary Mortgage Assistance Program (TMAF)
Program.
Insurance for public hospitals
Sec. 508 makes public hospitals eligible for mortgage insuranoe
under Sec. 242 of the National Housing Act, and encourages public
hospitals to provide esBential services to community residents with-
out regard to their ability to pay for such services.
FHA insurance in American Samoa
Sec. 509 makes all FHA insurance programs available in Amni-
can Samoa.
Indexed mortgages
Sec. 510 permits a demonstration program for alternative ana-
tages in which monthly payments and outstanding principal bal> j
ances ere adjusted periodically according to percentage cluuigea in
a specified price or wage index.
Minimum property standards
Sec. 511 maintains the energy performance requirements incor-
porated in the minimum property standards in enect prior to Sep-
tember 30, 1982, and provides that with respect to health and
safety, properties insured under the National Housing Act dull
comply with one of the nationally rec<%nized model building codes
or with a State or local building code, which has been based on the
nationally rec(%nized model building codes or their equivalent
Also provides that the Secretary shall be responsible for detenniD-
ing the comparability of the State and local codes to nationally rec-
ognized model building codes and for selecting, for compliance pur-
poses, an appropriate nationally reo^nized model code where no
such model code has been adopted or where the Secretary deter
mines the adopted code is not comparable.
Condomium insurance limits
Sec. 512 increases mortgage limits for FHA condominium insur
ance to 118 percent of the raA maximum of $67,600 in the case of
condominium units in high cost areas.
Graduated payment mortgages for multifamily housing
Authority to insure.— Sec. 513 amends the Sec. 246 Graduated
Payment Mortgage Program to provide that the Secretary ma^
insure, under any provision relating to multifamily housiiw pn^)-
ects, mortgages and loans with provisions of varying rates of amor
tization corresponding to anticipated variations in prpject income,
to the extent the Secretary determines such mortgages or loans (1)
have promise for expanding housing opportunities or nteet special
needs; (2) can be developed to include any saf^uards for mortga-
gors, tenants, or purchasers that may be necessary to offset speoal
risks of such mortgages; and (3) have a potential for acceptance in
the private market.
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Conditions on principal obligations insured. — Sec. 513 provides,
notwithstanding any other provision of this title authorizing the
Secretary to insure GPMs, the principal obligation of a mortgage or
loan insured pursuant to this subsection (1) may not exceed initial-
ly the percentage of the initial appraised value or replacement cost
of the property involved that is required by the provision of this
title under which such property is insured; and (2) thereafter (in-
cluding all interest to be deferred and added to principal) may not
at any time be scheduled to exceed 100 percent of the projected
value of such property.
Property value. — For purposes of this subsection, the projected
value of a property shall be calculated by the Secretary by increas-
ing the initial appraised value of such property at a rate not in
excess of 2.5 percent per annum.
Date of issuance. — A mortgage or loan may not be insured after
Fiscal Year 1984 except pursuant to a commitment entered into
prior to such date.
PART B — SECONDARY MORTGAGE MARKET PROGRAMS
Extension of Emergency Home Purchase Assistance Act of 197 ^
Sec. 521 extends through Fiscal Year 1984 the Emergency Home
Purchase Assistance Act of 1974 (Brooke-Cranston).
GNMA mortgage-backed security program
Sec. 522 continues the GNMA Mortgage-Backed Securities Pro-
gram at $68.25 billion for Fiscal Year 1984, and directs the Associ-
ation to enter into commitments up to this amount subject to the
abBen<% of qualified applicants.
Limitations on participation agreements by FNMA and FHLMC
Sec. 523 clarifles that the statutory limits on first mortgages pur-
chased by FNMA and FHLMC apply to the whole loan whether or
not a partial interest is purchased.
Purchases of second mortgages by FNMA and FHLMC
Sec. 524 authorizes FNMA and FHLMC to deal in mortgages se-
cured by a subordinate lien for a two-year period until October 1,
1985, and establishes maximum mortgage limits for such purchases
of $50,000 for a one-family residence and $60,000 for a two- to four-
family residence.
FHLMC Authority to purchase State agency insured mortgage loans
Sec. 525 authorizes FHLMC to purchase loans insured by State
agencies.
Federal National Mortgage Association
Voting rights for stockholders-Sec. 526(a) deletes the require-
ment that all voting rights shall be vested only in common stock
shareholders.
Loans on the security of mortgages.— Sec. 526(b) deletes the re-
quirements in existing law that (1) Euiy loan, extension or renewal
thereof made by FNMA shall not exceed 90 percent of the unpaid
principal balances of mortgages securing such loan; and (2) the
37-922 O - 84 - 55
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180
terms of such loans may not exceed twelve months, with extensions
or renewals also limited to twelve-month terms.
Board of Directors. — Sec. 526(c) increases the number of m^nbers
on the FNMA Board of Directors from 15 to 18, and provides that
the additional members shall be elected annually by the sharehold-
ers.
HUD authority over obligations.— Sec. 526<dXI) deletes the refer
ence contained in Sec. 309(h) of the FNMA Charter Act to the Sec-
retary of HUD's authority over FNMA obligations. Sec. 526(dX2)
amends the reference to the Secretary's authority over FNMA obli-
gations contained in Sec. 311 of the CTiarter Act to restrict the Sec-
retary's approval of FNMA obligations to issuances of stock and
debt obligations convertible into stock.
Report. — Sec. 526(e) requires the HUD Secretanr to report to the
Congress not later than June 30 of each year on FNMA's activities.
Approval period. — Sec. 526(f) requires the HUD Secretary to re-
spond to requests for approval or action under the FNMA Charter
Act within 45 days, with a 15-day extension permitted.
FHLMC authority to purchase manufactured home loans
Sec. 527 permits the Federal Home Loan Mortgage Corporation
to purchase manufactured home loans whether secured by person-
al, real, or mixed property.
Limitation on purchase of conventional nwr^age on multifamily
properties by FNMA and FHLMC
Sec. 528 increases the limitation on the maximum principal obli-
gation of convention multifamily mortgages purchasied by FNMA
and FHLMC from 125 percent to 240 percent of thoee limits estab-
lished in 207(cX3) of the National Housing Act.
GNMA commitment extensions
Sec. 529 amends Section 305(b) of the Federal National Mortgage
Association Charter Act to provide that if any commitment issued
to purchase a mortgage insured under the Act is for a number of
months less than the number of months of the construction period
of the project involved as estimated by the Secretary in a commit-
ment for mortgage insurance, extensions of the issued commitment
shall be granted without the imposition of additional fees beyond
the initial commitment fee, except that customary fees for the ex-
tension of such commitments may be chained for periods in excess
of the number of months of such approved construction period.
Study of prepayment penalties and the secondary mortgage market
Sec. 530 provides that not later than 180 days after the bill's en-
actment date, the Secretary, following consultation with the Board
of Directors of FNMA, the Board of Directors of FHLMC, the Presi-
dent of GNMA, the Board of Governors of the Federal Reserve
System, the Federal Home Loan Bank Board, the Comptroller of
the Currency, and the National Oedit Union Admmistration
Board, shall submit to the Congress a report regarding mortgage
prepayment penalties and their impact on secondai^ mor^ige
market activities. Such report shall uiclude — (1) a review of «ate
laws and r^ulations regarding prepayment penalties; (2) an evalu-
yGoot^le
131
ation of the impact of prepayment penalties on the ability to at-
tract investors to the secondary mortgage market; (3) an analysis of
existing authority for lenders to the secondary mortgage market;
(4) an analysis of existing authority for lenders to offer mortgage
instruments containing prepayment penalties; and (5) a proposal
for federally-standardized mortgage instruments that would con-
tain prepayment penalties in combination with features that would
be attractive to prospective purchasers of homes, including below-
market interest rates and prohibitions on non-risk related settle-
ment charges normally incurred by homeowners upon refinancing.
PART C — OTHER PROGRAMS
Report regarding program changes
Section 541 provides that the HUD Secretary transmit a report
to Congress not later than Janurary 1, 1984, on the system the De-
partment uses in issuing rules, handbooks and memorandums
which establish pr(%ram requirements and change these require-
ments. Any changes in HUD pn^rams that aFTect the eligibility for
or benefits to applicants receiving assistance under these programs
shall be published in rules subject to the Administrative Proce-
dures Act.
Real Estate SettleTnent Procedures Act
Definitions. — Section 542 defines the term, "controlled business
arrangement," as: an arrtmgement in which (1) a person who is in
a position to refer business incident to or a part of a real estate
settlement service involving a federally-related mortgage loan, or
an associate of such person has either an affiliate relationship with
or a direct or beneficial ownership interest of more than one per-
cent in a provider of settlement services; and (2) either of such per-
sons directly or indirectly refers such business to that provider or
affirmatively influences the selection of that provider; tuid defines
tiie term "associate" as: (1) a spouse, parent, or child of a person in
a position to refer settlement business; (2) a corporation or business
entity that controls, is controlled by, or is under common control
with such person; (3) an employer, officer, director, partner,
franchisor, or franchisee of such person; or (4) any person who has
an agreement, arrangement, or understanding, with a person in a
position to refer setUement business, the purpose or substantial
effect of which is to enable the person in a position to refer settle-
ment business to benefit financially from the referrals of such busi-
ness.
Disclosure of controlled business relationship. — Provides that
nothing in Section 8 kickbacks and unearned fees prohibitions
shall be construed as prohibiting controlled business arrangments
so long as (A) at or prior to the time of the referral a good faith
effort is made to disclose the existence of such an arrtu^ement to
the person being referred and, in connection with the referral, to
provide such person a written estimate of the range of charges gen-
erally made by the provider to which the person is referred, except
that where a lender makes the referral, this requirements may be
satisfied as part of and at the time that the estimates of settlement
charges and the special information booklet, are provided as re-
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182
quired under Sec. 5(c) of RESPA; (B) such person is not required to
use any particular provider of settlement services, and (C) the only
thing of value that iB received from the arrangement, other than
the payments permitted under this subsection, is a return on the
ownership interest or franchise relationship. Also provides that it
is not considered a violation of the kickback and unearned fees pro-
visions for a lender to require a buyer, borrower or seller to pay for
the services of an attorney, credit reporting agency or real estate
appraiser chosen to represent the lender's interest or for an attOT-
ney to issue a title insurance policy directily as an agent or
through an agency operated as an adjunct to his practice.
Liability for violation of RESPA provisions
Any person or persons who violate the prohibitions or limitationi
of Sec. 8, (the controlled business, anti-kickback and unearned foea
provision) shall be jointly and severally liable to the person or per-
sons charged for the settlement service involved in the violation, in
an amount equal to three times the amount of any charge raid for
such settlement service. The HUD Secretary, the Attorn^ General
of any State or the Insurance Commissioner of any State may
bring an action to enjoin violations of RESPA provisions. In private
actions instituted for RESPA violations, the court may award to
the prevailing party the court costs of the action together with re^
sonable attorneys fees.
State law governing controlled busings. — No provision of State
law or r^ulation that imposes more stringent limitations on con-
trolled business arrangements shall be considered to be inconsiBt-
ent with the requirements of Section 8 of RESPA.
Jurisdiction o/" courts. —Any action pursuant to the provisions of
RESPA Sees. 8 and 9 may be brought in the United States District
Court or in any other court of competent jurisdiction, for the dis-
trict in which the property involved is located, or where the viola-
tion is alleged to have occurred, within one year from the date of
the occurrence of the violation, except that actions brought by the
Secretar)^, the Attorney General of any State, or the Insurance
Commissioner of any State may be brought within 3 years firom the
date of the occurrence of the violation.
Authority of the HUD Secretary. — The Secretary may investigate
any facts, conditions, practices, or matters that may be deemed
necessary or proper to aid in the enforcement of the provisions of
this Act, in prescribing of rules and r^ulations thereunder, or in
securing information to serve as a basis for recommending fiirliier
legislation concerning real estate settlement practices. To aid in
the investigations, the Secretary is authorized to hold such hear-
ings, administer such oaths, and require by subpoena the attend-
ance and testimony of such witnesses and production of such docu-
ments as the Secretary deems advisable. Any district court of the
United States within the jurisdiction of which an inquiry is carried
on may, in the case of contumacy or refusal to obey a subpoena of
the Secretary issued under this section, issue an order requiring
compliance therewith; and any failure to obey such order of the
court may be punished by such court as a contempt thereof.
Implementation. — These RESPA provisions shall become effective
on January 1, 1984.
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National Institute of Building Sciences
Sec. 543 authorizes $500,000 for Fiscal Year 1984 for the National
Institute of Building Sciences.
Solar energy and energy conservation bank
Sec. 544(a) make air conditioning systems having better than
average energy efficiency and any residential or commercial
enei^ audit eligible for bank subsidies.
Sec. 544(b) requires the Solar Enei^ and Energy Conservation
Advisory Committees to meet at least twice annually at the call of
their chairpersons.
Sec. 544(cXl) permits owners or tenants of two- to four-unit resi-
dential buildings whose incomes exceed 150 percent of the area
median, or in the case of a single-family residential building that is
availabale for rent and is owned by a person whose income exceeds
150 percent of the median area income, to receive bank subsidies of
the lesser of 20 percent of the cost of the energy conservation meas-
ures or $400 per dwelling unit.
Sec. 544(cX2) prohibits the Bank Board from limiting amount of
assistance available for energy conservation measures based on the
projected energy savings of such measures.
Sec. 544(d) directs the HUD Secretary to issue regulations within
90 days of enactment which: (1) make active solar systems eligible
for assistance, and the purchase and insteillation of passive and
active type solar space heating and water heating systems in new
and existing residential buildings and multifamily residential
buildings; (2) permit entitlement communities to apply directly to
the Bank for assistance; (3) permit the use of tax exempt financing
in connection with bank subsidies; (4) prohibit making an energy
audit a prerequisite for receiving bank assistance; (5) limit adminis-
trative expenses to 10 percent (or a higher percentage determined
by the Secretary) or $20,000 whichever is higher; not more than
half of these funds may be used by a State for its administrative
expenses, except that if any State is the sole administrative entity
in such State with respect to financial assistance under the Solar
Bank, the State may use all of the amount for such expenses; (6)
establish criteria for allocating funds to eligible financial institu-
tions; and (7) provide that any unexpended funds that are recap-
tured by the Bank shall be reallocated to eligible financial institu-
tions.
Sec. 544(e) increases the authorization for the Solar Bank to $100
million for Fiscal year 1984.
Department of HUD reorganization procedures
Sec. 545 provides that a reorganization plan involving the central
office of HUD shall also be subject to the 90-day period after publi-
cation in the Federal Register before it may take effect; and, with
r^ard to the impact of HUD reorganization plans, that the re-
quired cost benefit analyses shall also include a study of the direct
and indirect impact on employment in both the public and private
sectors of the local economy affected by such plans.
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Weatheriaition program
Sec. 546 authorizes $300 mUlion for fiscal year 1984 for the DOE
Low Income Weatherization Program.
Flood ii
Sec. 547 extends the Flood Insurance Program for two yeais
through September 30, 1985; limits the premiums to be cbaned
under this program to those in effect prior to September 15, \9S2i
and requests a report from the Federal Insurance AdmiiuBtratkni
on the increases in rates two years prior to September 15, 1982,
and an explanation of any anticipated increases in premiums m-
pected to be made before October 1, 1985; extends the August 19S3
deadline for completion of risk studies in flood-prone communitiss
by September 30, 1987; confers original exclusive jurisdiction upon
a U.S. District Court on issues involving flood insurance; changes
the designation of administrative officer from HUD SeCTetary to
the Director of the Federal Emergency Management Agency.
Crime and riot insurance
Sec. 548 extends the Crime and Riot Insurance ProgramB
through September 30, 1985.
Counseling
Sec. 549 authorized $8 mUlion for fiscal year 1984 for the Hous-
ing Counseling Program.
Research authorization
Sec. 550 authorizes $24 million for HUD research for fiscal year
1984. Of the amount authorized, $2 million is to be provided tor a
research program that would identify public housing management
problems and provide solutions to these problems, as well as devel-
op incentives to implement these solutions, and for a report to be
prepared by an independent Arm concerning (1) the costs, estimat-
ed on a national, r^onal, and State basis, of bringing the existing
public housing stock into conformance with (a) the property and
enei^ conservation standards established by the Secreta^ under
the Comprehensive Improvement Assistance Pn^ram (CIAP) provi-
Bions, as such standards were in effect on March 1, 1983; and (b) all
applicable federal requirements relating to the accessibility of such
housing to handicapped persons; (2) the extent of the improvements
relating to property, energy conservation, and acccssibili^ to
handicapped persons that have been made or are to be made by
public housing agencies with assistance provided under the CIAP
through September 30, 1983; and (3) the eunount of additional as-
sistance required under CIAP to finance the costs estimated in the
study. The section also provides that the report shall be submitted
to the Secretary and the Congress on the same date, not later than
March 1, 1984.
Sec. 550 further provides that of the amount authorized, not leas
than $10,600,000 shall be provided for collection of a data series on
national, r^onal, and local economic and housing market condi-
tions, for which the Secretary shall utilize the method of collectiiw
such data series utilized by the Secretary for fiscal year 1983,
yGoot^le
135
except that the Secretary may revise such method following consul-
tation regarding such propoeed revisions with the Committee on
Banking of both Houses.
Sec. 550 also provides that the amount authorized lor HUD re-
search $2 million is provided for the Secretary to study, and con-
duct demonstrations of, the capacity of mutual housing associations
to provide housing to families in a cost-efficient manner. It pro-
vides that for purposes of such demonstrations, the Secretary may
make grants to nonprofit mutual housing associations for projects
to provide housing to low and moderate income families which
shall emphasize the rehabilitation of existing housir^. It further
provides that not later than the expiration of the 12-month period
foUowing the bill's enactment date, the Secretary shall submit to
the Congress a report setting forth the results of the studies and
demonstrations conducted under subsection. This report shall in-
clude any legislative recommendations determined by the Secre-
tary to be necessary or appropriate as a result of such studies and
demonstration s.
National housing partnership
Sees. 551 (a) and (b) amend the Charter of the National Housing
Partnerships, to authorize the NHP to plan, initiate or carry out
the acquisition and financing of housing, and the building, rehabili-
tation, acquisition, and financing of commercial, industrial, and
retail facilities that provide employment or services to families and
individuals of low and moderate income, except that the production
and preservation of housing primarily for the benefit of families
and individuals of low and moderate income shall remain the pri-
mary purpose of the corporation and the income generated by the
commercial, industrial and retail activities shall be used for such
purpose. Sec. 551(b) provides that the total equity commitment of
the corporation to commercial, industrial, and retail facilities that
are not directly related to a housing project shall not exceed 25
percent of its equity commitment to housing activities.
Sec. 551(c) authorizes the NHP to enter into partnerships, limit-
ed partnerships, or joint ventures organized under applicable State
or local law for the purpose of engaging in the acquisition, develop-
ment, financing, construction, rehabilitation, and management of
housing and related facilities, except that the production and pres-
ervation of housing primarily for the benefit of families and indi-
viduals of low and moderate income shall remain the primary pur-
pose of the partnership.
Quarterly report by Secretary
Sec. 552 provides that the Secretary, with the cooperation of the
Federal Home Loan Bank Board, the Federal Deposit Insurance
Corporation, the Board of Governors of the Federal Reserve
System, and the Comptroller of the Currency, shall conduct a
survey during each 3-month period following the date of the enact-
ment of this Act of residential mortgage delinquencies and foreclo-
sures, and transmit to the Congress during each such period a
report setting forth the results of the study conducted during the
previous such period.
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186
Each report shall include information (1) with respect to tiie
number of residential mortgage foreclosuree, and the number of 60-
and 90-day residential mortgage delinquencies, in the Nafion and
in each State; and (2) identify separately conventional mortgagee
and mortgages insured under the National Housing Act, Titie V rf
the Housing Act of 1949, or guaranteed under Title 38, United
States Code.
Multifamily mortgage forecloeure
Sec. 552 amends Sec. 367(b) of the multifamily Mortgage Foreclo-
sure Act of 1981 (which requires the Secretary as a omdititm ami
term of sale by the Secretary of a project acquired throu^ foreclo-
sure proceeding under that Act, to require that the purchaser coo-
tinue to operate the property under the terms of the federal loan
r^ulatory agreement program or insurance program provided with
respect to the property) to extend the requirement to properties ac-
quired by the Secretary pursuant to other forecloeure procedures.
Alternative mortgages transactions
Sec. 554 amends Sec. 805<c0 of the Gam-St Germain Depositwy
Institutions Act of 1982, which permits States to override the feder
al pre-emption of alternative mortgage instrument regulattons, t?
permitting States to piutially ovemde the federeil pre-emption.
STATEMENTS REQUIRED IN ACCORDANCE WITH HOUSE Rin.ES
In accordance with clause 2a)<2){B), 2a)(3), and 2fl)(4) of Rule XI
and clause 7(a) of rule Xm of tiie Rules c^ the House of Repre-
sentatives, the following statements are made.
COMMriTEE VOTE (RULE XI, CLAUSE B(1X2XB»
A voice vote was taken in favorably reporting the bUl.
The Committee states that no findings or recommendations (hi
oversight activity conducted in accordance with clause 4(cX2), rule
X of the rules of the House of Representatives have been submitted
by the Committee on Govemmeot Operations for inclusion in this
report. The Committee's Subcommittee on Housing and Communi*
ty Development conducted nine separate oversight hearings and
three separate field hearings during the past year, hearing finun
over three hundred witnesses from public ofHcials, program
beneficiaries, industry people, and witnesses from the general
public. Numerous provisions in H.R. 1 are the result of the foldings
and conclusions of these oversight and field hearings. Based on
these hearings, the Committee urges the enactment of H.R 1, as
amended.
The Committee notes that its Subcommittee on Housing and
Community Development and t^e Subcommittee on Manpower and
Housing of the Government Operations Committee have begun
joint undertakings regarding oversight of HUD programs and poli-
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cies, and expects recommendations and findings that might result
in further l^islation.
ECTIMATE OF COST TO BE INCURRED (RULE XIII, CLAUSE 7(A) (II (2))
In addition to the information provided pursuant to clause
2(IX3XC) of Rule XI of the Rules of the House of Representatives,
the Committee provides the following information with respect to
the cost to the United States in carrying out H.R. 1 in fiscal year
1984 and in each of the five succeeding years:
[Cost estimate supplied by CBO estimate to be contained in a
supplemental report.]
llie Committee has not received a similar estimate of such costs
from a government agency.
U.S. Congress,
Congressional Budget Office,
Washington, D.C., May 13, 1983.
Hon. Fernand J. St Germain,
Chairman, Committee on Banking, Finance and Urban Affairs,
U.S. House of Representatives, Baybum House Office Building,
Washington, D.C.
Dear Mr. Chairman: The Congressional Budget Office is unable
to prepare a cost estimate for H.R. 1 prior to the filing of the
report. Our analysis of the bill is underway and the estimate will
be provided to the Committee for the record.
Sincerely,
Auce M. Rivun, Director.
Inflation Impact Statement
Prepared in compliance with Clause 2<1KBX4) of Rule XI of the
House of Representatives.
This legislation authorizes, modifies and continues certain feder-
al laws relating to housing, community development and neighbor-
hood preservation. As such, it has potential impact upon the level
of prices, as well as productive activity. It would be unlikely that
new inflationary pressures or expectations would be generated by
enactment of this program. On the contrary, it may serve to stabi-
lize costs and prices of housing and related facilities by adding to
supplies during a period of excess capacity in the construction in-
dustry.
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MINORITY VIEWS ON H.B. 1
BACKGROUND
Once again the Committee on Banking, Finance and Urban Af-
fairs has reported out an omnibus housing bill without any attempt
to gain consensus support. The bill is $15.7 billion over President
Reagan's recommendation and $8 billion over the amount appropri'
ated last year. H.R. 1 represents an updated version of last year's
housii^ bill which the House leadership realized could not be
passed and was never brought to the Floor. There has been little
willingness evidenced by the sponsors of this legislation to come up
with a compromise which meets any of the concerns expressed l^
the Minority.
While the Administration's bill may not be the best legislaticKi
we can come up with, we are nevertheless disturbed that few of the
proposals were given even the slightest consideration by the Major-
ity. Such an approach leads to unnecessary confrontation and
forces all parties into more rigid positions. It also will lead to a
more difficult Conference with the Senate, which has developed a
compromise package with input from both sides. If the M^ority in-
sists on this rigid legislative positioning, we will probably be facing
a veto which could render months of hard work futuile.
Two years ago, the M^ority put the housing bill in the Budget
Resolution to "protect" it from Minority amendments. But, the Ma-
jority's efforts were thwarted with the adoption of Gramm-Latta.
Last year, the Migority came up with a housing bill that was so for
over budget that it was never even considered on the House Floor.
This year it may get past the House Floor, but unless a greater
degree of compromise is evidenced by the Mfyority, we may well
have another year without a housing authorization bill.
coMMUNrrv development
H.R. 1 would increase the authorization level for the Communis
Development Block Grant program by 27 percentum while nt^ so
subtly attempting to repeal the worthwhile changes that have been
made in the CDBG area the last few years. We question such a
large increase at a time of supposed budget restraint and are con-
cerned about a number of the proposed changes.
Specirically, this bill would negate many of the actions taken in
the last two years to provide entitlement jurisdictions with tbt
flexibility to mshion their own CDBG program to meet their own
needs and conditions and to reduce local paperwork burdens.
Changes made in 1981, as part of the Budget Reconciliation Act,
eliminated the formal application requiremet for entitlement com-
munities and relied on performance reviews to assure compliance
with pr(^am requirements. In spite of the fact these changes were
(232)
yGoo<^\q
universally welcomed by the units of local government, and in spite
of the fact they have only recently been implemented, and in spite
of the fact that there is no evidence that they have not been benefi-
cial in the operation of the block grant program, the Majority de-
termined that communities must be told how they are to review
their needs and what information must be gathered to develop
their programs. If it had not been for an amendment by Repre-
sentative Bartlett, communities would have been required to
submit voluminous records for review by HUD. Under the amend-
ment, this requirement was reduced to having communities certify
that they have complied with all the requirements of the CDBG ap-
plication process.
We believe that there are stroi^ arguments in favor of maintain-
ing local flexibility in both the CDBG entitlement program and the
State-run small cities program. With respect to the small cities pro-
gram, which was enacted in 1981, there has been a preliminaiy
report from the General Accounting Office giving the States high
marks on the prt^ress they have made in implementing the provi-
sions. It found that "grantees and unsuccessful applicants general-
ly viewed the State- Administered programs favorably.' When
asked to compare the State prc^ram's award process, ability to
meet local needs, flexibility in determining population groups to
serve, and assistance to local communities wi^i the past HUD pro-
gram, both grantees and unsuccessful applicants rated the State
program as being "equivalent or better."
H.R. 1 would also establish a statutory requirement that not less
than 51 percent of the CDBG funds must be used to beneff t persons
of low and moderate income. Once again, not only is there no evi-
dence this change is required, but the record indicates the complete
opposite. Both the Department's Annual Reports to Congress and
studies by the Brookings Institution show that, historically, entitle-
ment cities expend approximately 60 percentum of their block
grant funds in low- and moderate-income census tract areas. There-
fore, it would appear that the purposes for which this provision is
included in the bill are being adequately met without the addition
of this unwarranted restriction on the ability of State and local of-
ficials to administer their local CDBG prc^ams based on their as-
sessment of State and local needb and priorities.
Nevertheless, in the spirit of compromise, Representative McKin-
ney offered an amendment in Subcommittee that would have effec-
tively established a 51 percent test, but spread out over a three-
year period. This would have guaranteed that the objectives of the
Majority had been met, but would have also provided some needed
flexibility for the units of local government to manage their pro-
grams in a manner that was most cost efficent. It would allow, for
example, a community to use all of one year's CDBG funds to ac-
quire land at an early stage and at a lower cost so long as the next
two program years allocated sufficient funds to beneflt low- and
moderate-income persons, and that the overall three-year segre-
gate of the program principally benefited such persons. An id^ti-
cal provision had been adopted on a bi-pfirtisan basis in the Senate
version of the housing bill. As we have previously indicated, howev-
er, there has been no willingness to compromise on this Commit-
tee's version of the bill, llus amendment, along with other Minor-
yGoot^le
294
ity efforts, met with a legiedative stifF-«rm in the form of a ■
party-line vote.
Another Minority amendment, which would have made CDBG
funds available for the construction of new housing for low- and
moderate-income families, was narrowly rebuffed in Full Commit-
tee. This provision, which would only have permitted such activi-
ties in neighborhood strategy areas, designated by local govern-
ments, would have provided the tsrpe of Hexibility needed to ad-
dress the total scope of problems fficed by many communities.
Clearly, with the addition of $1 billion in funding for this program,
there is room for allowing this added activity, if a community
deems it is necessary.
H.R. 1 continues the excessive spending trends of the past in
authorizing almost $13 bilUon in new spending for HUD assisted
housing prc^ams. This exceeds by over $4 billion the amounts ap-
proved in last year's appropriations bill, and is an increase of (1£L5
billion over what was requested by the Administration. While we
may not be committed to the Administration's numbers, we do feel
that maintaining fiscal year 1983 levels is called for by this coun-
try's budgetary problems and looming deficits.
The Majority s bill also attempts to overturn cost containmcait
requirements in existing law by rolling back the public bousiiig
tenant rent contributions from 30 per centum to 25 per centum of
income. The effect of this change alone will be to increase outlays
for fiscal year 1984 by more than $400 million, and that figure will
increase to $777 million by fiscal year 1988. "The total of increased
outlays over this five-year period will exceed $3 billion. Also, the
previously enacted targeting provision, directing assistance to
lower income families (50 per centum of area median income or
lower) would be repealed, and eligibility would be restored to fami-
lies earning up to 80 per centum of area median income. This ex-
pansion of the universe of eligible recipients raises some serioiu
concerns, given the necessarily limited fundit^ resources. To make
matters worse, other sections of this bill greatly liberalize and
expand the definitions and allowable deductions for the determina-
tion of gross adjusted income to which the rent requirements are
applied. This will assure that prior inequities and complexities will
be reactivated for all HUD assisted housing programs.
Efforts on behalf of the Minority and the Administration to pro-
vide for at least a modest demonstration program to test the feasi-
bility of the proposed rental voucher program were rebuffed in
Committee by the Majority. Obviously, there are a number of mem-
bers who have concerns about adopting a voucher system as a total
replacement for exiting programs. However, one would think that
a middle ground between ^e all-voucher and the no-voucher ap-
proaches could easily have been accommodated within the nearly
50 per centum increase in assisted housing funding over the last
year.
The bill also codifies the cost-base performance funding system
as a permanent method for assurit^ ever increasing and costly
public housing operating subsidy allocations, and authorizes $1.5o
yGoot^le
295
billion for this program. Ironically, this Committee has repeatedly
criticized the performance funding system over the years. This
change was made to thwart the Administration's attempt to ration-
alize the program. While the Administration's proposal may not be
the best approach, we do not think the confrontational tack of codi-
fying the performance funding sj'stem is any better. In addition, an
effort to improve the efficiency and management of the public
housing program, through an amendment by Representative Bart-
lett requiring minimum tenant rents and providing increased funds
for child care the crime prevention, was rejected by virtually a
straight party-line vote in Committee.
SINGLE-FAMILY PRODUCTION
The bill contains a provision which surprisingly reactivates the
Section 235 homeownership program and calls for a $166 million
increase in spending to subsidize homeownership at a time when
general interest rates for mortgages in the economy are declining
and home sales are booming. Clearly there is little or no justifica-
tion for such a program, except for a few select homebuilders in
certain areas of the country that have relied heavily on this pro-
gram. The program has been generally discredited and represents
an example of extreme horizontal inequity. It does not warrant
being extended — let alone being funded.
BifULTlFAMILY HOUSING PRODUCTION PROGRAM
The bill proposes to resurrect the $1.3 billion subsidy program to
subsidize production of rental and co-operative housing units which
was included in last year's ill-fated housing bill. The subsidy could
be in the form of capital grants, loans, interest subsidies, land pur-
chase grants or other assistance and is a classic example of a pro-
gram designed to subsidize projects rather than individuals. In fact,
to be eligible, a project need only provide 20 percent of the units
for persons and families whose income does not exceed 80 per
centum of the areas median income. Admittedly, there is some lan-
guage in the bill setting out a vague priority for projects which pro-
vide over 20 percent of the units for low- ana moderate-income
families, but contrast that with the 51 percent test which would be
required under the Community Development Block Grant Pro-
gram. This is particularly ironic since the CDBG pn^am was
originally designed to give maximum flexibility to local officials in
the use of these funds. The Majority's new program appears to be
designed more for syndicators than lower income famflies. And, it
also comes at a time when rental vacancy rates are climbing.
There is no shortage of capital for new construction, and we should
let the market address those types of projects.
There are a number of questions concerning this new program.
For instance, why should the Federal government subsidize a
project when only 20 percent of the units go to people with incomes
under 80 percent of median? When the budget is as tight as it is,
shouldn't there be more concern about these lower income people
than there is for the syndicators? There is also a question about
the mechanism of this program. If this program is funded, would it
not be more efficient to add it to the Community Development
yGoot^le
Block Grant Program with an appropriate additim to the liit cf
eligible activities? Even a modincation of this approach with a
more rational budgetary impact, such as that developed by the
Senate in its version of the housing bill, would be far prefnabla
The requirement in the Majority's proposal to target aaaistaiiee
to areas of severe rental shortages b^ the question of providiiig
Federal assistance to bail out local governments, which are aggra-
vating the problem, through rent control, which serves as a disin-
centive to private production. Why should Federal programs be en-
acted to overcome local disincentives? Local govemmentB must
b^n to accept the responsibility for their actions and not merdy
play politics at home while seeking aid from others.
RENT CONTROL
If the authors of the new $1.3 billion program are correct, that
there is a great need to increase the Nation's stock of rented and
cooperative housing, we question, the wisdom of this new produc-
tion pn^ram which will primarily tend to increase the deficits and
pressure interest rates upward. Besides, if the need was that great,
only the private sector could provide the necessary capital. One
might ask then, why the private sector has not done so in areas
that are in need of additional rental units. We believe that one oi
the major reasons is that the private sector has been discouraged
from seeking profits in the rential market due to rent control.
Virtually no one disagrees that rent control — and even the mere
threat of rent control— is a disincentive to rental housing devek)p-
ment. This Committee, only three years ago, said so, and the full
House by a 77 vote margin went on record as saying no. Even
President Carter's former HUD Secretaries Patricia Harris and
Moon Landrieu and President Reagan's Commission on Housing
agree.
Without an amendment to deny these new funds to communities
that place rent controls on new non-subsidized projects, we are
afreiid the communities that do the most to discourage new con-
struction through rent control will be the leading candidates for re-
ceipt of the funds. The project selection criteria puts a heavy em-
phasis on the severity of the shortage or rental housing. These are
the rent control cities. This would reward areas that refuse to help
themselves and do so at the expense of communities that are trying
to solve the rental housing shortage.
RURAL HOUSING
The Rural Housing section not only continues the almost unbro-
ken upward trend in authorizations for the Feirmers' Home Admin-
istration prc^ams, but adds two additional programs. One pro-
gram, a $100 million Rental Rehabilitation Grant program, is
almost a mystery to the Committee. There has never been any tes-
timony in support of the program. In fact, there have never been
any hearings, period. Sucha proposal, untested by the fire of legis-
lative hearings, is bound to have defects. Predictably, therefore, the
Majority was still offering periecting and clarifying amendments
during the Committee process. This naturally raises the question
yGoot^le
297
as to how many defects remain, and as to why, if the program is
needed, the Mtuority was reluctant to subject it to hearings.
The second program is just the opposite. The Guaranteed Loan
Prt^ram is not new and its defects are well known. A similar Gur-
anteed Loan program existed for several years in PmHA and was
considered a failure. At that time, of the $500 million available,
only ?2 million was ever obligated. The program was eventually
deuithorized. We must admit that underlying our concern for most
of Title IV, and this particular pn^am, is ihe general question of
how to get control over credit assistance prt^rams. As our col-
league. Representative Bethune, has repeatedly pointed out, Feder-
al lending programs are growing faster than Federal spendii^ pro-
grams. This simply exacerbates the problems.
CONCLUSION
For reasons of process, program levels and programmatic
changes, we could not support H.R. 1. While we may not all agree
on the objections to H.R. 1 expressed in these views, we do agree
that as a whole, it represents a step backward in both time emd
substance. Obviously we don't disagree with every provision in
H.R. I, but we would remind our colleagues that even a stopped
clock tells the correct time twice a day.
As a total package, H.R. 1, represents an authorization of ap-
proximately |25 billion for liscal year 1984, which is about $8 bil-
lion above the amount appropriated last year. With all the talk
about budget deficits, H.R. 1 emlxxlies a 43 percentum increase of
fiscal year ISSS's funding levels— a far cry from freezing spendir^.
In addition, pn^ram changes will add to outlays which are not re-
flected in the budget authority numbers, such as the rollback of
tenant rents. The efTect is an aggravation of our budget deficits at
a time when we should be doing all we can to reduce outlays and
allow for the economic recovery to continue.
Chalmers P. Wyue.
Stewart B. McKinnbv.
George Hansen.
Jim Leach.
Ron Paul.
Ed Betthune.
Norman D. Shumway.
Stan Parris.
Bill McOjllum.
George C. Wortley.
Marge Roukema.
Bill Lower v.
Doug Bereuter.
David Dreier.
John Hiler.
Thomas J. Ridge.
Steve Bahtlett.
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SUPPLEMENTAL NUNORITY VIEWS OP HON. MAKGE
ROUKEMA
1 am in agreement with virtually all of the points expreaaed in
the Minority Views. However, I would like to express my <Uffer«Me
with the position taken on rent control.
The case against rent control is most compelling. Numerous stud-
ies have been performed examining the effects of rent control aa
particular housing market areas. Nevertheless, the fact r«naiiu
that the characteristics of each local housing market are unique to
that locality. Thus, findings which apply to one area do not neces-
sarily apply to the other.
It is precisely this recognition of the differences that occur
among the needs of localities that has caused a long overdue reex-
amination of Federal involvement in local decisions. Federal inter-
ference in local rent control decisions is totally inconsistent wi^
this healthy trend toward more state and local authority and thus
should be rejected.
Makgs Rouksua.
o
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»rHCoNCBE83 I HOUSE OF REPRESENTATIVES ( R^pt. 9a-123
IstSestton J I Part 2
HOUSING AND URBAN-RURAL RECOVERY ACT OF 1983
JuNi 7, 1983,— Ordered Ui printed
Mr. St Gbrbiain, from the Committee on Banking, Finance and
Urban AiTairs, submitted the following
SUPPLEMENTAL REPORT
[To accompany H.R. 1]
[Including ccst eetimate of the Congressional Budget Office]
This supplemental report corrects cerain technical errors in the
report submitted on May 13, 1983 (H. Rept. 98-123, pt. 1) for the
bill (H.R. 1), as reported, by (1) providing additional information
with respect to the coet estimates of the Committee and the Con-
gressional Budeet Office; and (2) showing changes in existing law
made by the bill, as reported, that were incorrectly stated in part 1
of the report.
U.S. CONGRKSS,
CONGRKSSIONAL BUDGET OmCB,
Washington, D.C.. June 6, 1983.
Hon. Fernand J. St Germain,
Chairman, Committee on Banking, Finance and Urban Affairs,
U.S. House of Representatives, Raybum House Office Building,
Washington, B.C.
Dear Mr. Chairman: Pursuant to Section 403 of the Congres-
sional Budget Act of 1974, the Congressional Budget OfHce has pre-
pared the attached cost estimate for H.R. 1, the Housing and
Urban-Rural Recovery Act of 1983.
Should the Committee so desire, we would be pleased to provide
further details on this estimate.
Sincerely,
James Blum
(For Alice M. Rivlin, Director).
Congressional Budget Office — Cost Estimate
June 6, 1983.
1. BUI number: H.R. 1.
2. Bill title: Housing and Urban-Rural Recovery Act of 1983.
3. Bill status: As ordered reported by the House Committee on
Banking, Finance and Urban Affairs, May 13, 1983.
u-ooso
37-922 O - 84 - 56
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4. Bill purpose: The bill would amend various laws relating to
and provide additional funding for the federal government's bow-
ing and community and economic development programs. Provi-
sions are included that would roll back the rent increases for ten-
ants of assisted housing that were enacted during the first aesskm
of the 97th Congress. The bill would also create a new housing sub-
sidy pn^am desired to encourage the production of multdiaiiiily
housing.
The bill would also extend authorizations for various communis
development programs for fiscal years 1984, 1985 and 1986 and
make substantive amendments to the governing provisions of tn-
eral programs. In addition, the bill authorizes up to $250 million in
Community Development Block Grants (CDBG's) annuallv for
areas that are experiencing specific leveb of unemployment. Prori-
sions of the bill would require (unless sufficient applications are
not submitted) the Secretary to commit $225 million for gueiranteed
loans in fiscal year 1984 under authority of the CDBG program and
up to $44 million in loan guarantees for activities supported by tlw
Urban Development Action Grant (UDAG) program.
5. Estimated cost to the Federal Government:
The estimated budget impact of the bill is summarized belovr:
trifynctioi450:
iett«cti».GaO:>
..M
EWnaW ouBws
For fiscal year 1984, the bill would authorize the release in ap-
propriations acts of over $4.45 billion in direct lotm authority. Tt»
estimated budget impact of the use of this authority is reflected in
the table above. The bill would also allow the HIJD Secretary tfl
guarantee loans made by private lenders and investors totaling
$114 billion. Of this amount, $68 billion would be for mortgage-
backed securities guaranteed by the Government National Mort-
gage Association (GNMA). Since these securities are, themselves,
backed by federally insured mortgages, the GNMA involvement
would result in no additional guarantee liability. Th3 use of the re-
maining $46 billion in loan guarantee authority would represent
additional contingent liabilities to the federal government that
yGoot^le
could result in foture claims payments. This potential budget
impact is not included in this cost estimate.
Basis of Estimate:
The bill authorizes the annual appropriation of $4,500 million for
fiscal years 1984, 1985, and 1986 for community development
Brants and annually allocates up to $4,060 million of these funds
lor Community Development Block Grants (CDBG) and $440 mil-
lion for Urban Development Action Grants (UDAG). For the pur-
poaes of this cost estimate, outlays for the UDAG program have
been estimated based on recent spending experience for that
program.
Section 101 of Title I expands the list of activities that are eligi-
Ue for lump sum drawdowns of CDBG grants to include activities
dwible under section 105(aX14) of the Housing and Community De-
VW>pment Act of 1974. This provision substantially broadens the
list of activities for which the grantee can receive grant money
E'or to paying for the incurred expense. Grantees requesting this
bursal must use any income earned from such early receipt for
activities eligible for the original grant.
Since the extent to which grantees will utilize this provision is
not known, the impact on CDBG spending is difficult to estimate.
Prudent grantees would be expected to take advantage of the in-
vestment income opportunities offered by such a provision. For the
purpose of this estimate, the Congressional Budget Office has as-
nimed that 5 percent of all funds authorized in fiscal year 1984
would fall under this provision and that that percentage would
grow to 15 percent by fiscal year 1986. This provision does not alter
the total spending for CDBG activities, but it should accelerate the
transfer of funds from HUD to the grantee.
Title 1 also allocates, from the $4,500 million authorized in fiscal
year 1984, $50 million for urban homesteading. In addition to this
allocation from the omnibus authorizations included in section 101,
the bill authorizes $9 million in fiscal year 19S4 for the rehabilita-
tion loan prc^am, $15 million for neighborhood development
grants and $18.5 million for the Neighborhood Reinvestment Cor-
poration. CBO has estimated that funds for each of these programs
would be obligated and disbursed in a manner similar to existing
HUD programs.
The estimated budget impact of Title I follows:
\.i21 im UI8 1M1
yGoo<^\q
3^
In addition, the bill authorizes the Secretary to guarantee up to
$225 million in loans to CDBG grantees and up to $44 million ii
loans to UDAG erantees. All such guarantees represent a contia-
gent liability of the federal government in the event of a d^JEUilt bf
guarantee recipient.
Section 8 and public housing commitments. — Title II of the UU
would authorize $729 million m additional contract authori^ fiir
flscal year 1984 to fund assistance contracts and contract arnrad-
ments under HUD'S section 8 and public housing lower-income
housing progranu. Assuming full appropriation, this amount repre-
sents the maximum annual federal eiq>enditures fiimi the ncnrlj
provided authority. The bill would also limit total enenditura
over the assumed 15-to-30 year contract terms to $12,927 million.
With the various specifications in the bill for the use of this aih
thority, and estimated 136,000 units could receive assistance con-
tracts. Of this number, 14,000 are assumed to be newly built erf sub-
stantially rehabilitated units for the elderly and handicapped and
14,000 would be new units in public housing projecta. The bill
would also limit the amount of authority that could be used to coo-
vert other forms of federal rental subsidies to assistance under sec-
tion 8. This limitation would be expected to allow the conversion of
about 45,000 units. In addition, the $12.9 billion includee $2.1 IhI-
lion that would be used for the modernization and improvement of
existing public housing projects.
Outlays from the full use of the additonal authority provided b;
this bill are estimated at about $32 million in 1984, increasing to
$583 million in 1988. These projected outlays include the effects of
the bill's proposed changes in tenant contribution requirements on
units assisted with 1984 authority.
Tenant rent contributions. — The Omnibus Budget Reconciliation
Act of 1981 (Public Law 97-35) increased the rent payment re-
quired of most federally assisted tenants to 30 percent m adjusted
income. Provisions were included, however, that would cause the
increase to be implemented over several years. If enacted, H.R I
would eliminate this increase altogether. Assuming that the rent
provisions contained in Public Law 97-35 would be nilly in force bj
the b^inning of fiscal year 1987, the proposed rdl-back would in-
yGoot^le
e outlays associated with section 8 authority already provided
le Congress by an estimated $174 million in 1984, rising to
million in 1988. Eliminating the rent increase for public hous-
enants would lower income for public housing agencies but
1 affect federal outlays only to the extent that operating subsi-
lyments to those agencies are increased in the future to take
account the anticipated loss. If the losses were fully offset by
ased operating subsidy payments banning in fiacai year
—the first year following the authorization period covered by
>ill — outlays could increase b^ $300 million m that year, with
ional costs rising to $408 million in 1988.
tratin^ asststarux. — This bill would authorize Hscal year 1984
>priations of $1.55 billion for public housing operating subsi-
and $32 million for troubled projects operating assistance. It
iSBUmed that these amounts would be fully appropriated; out-
ue based on program experience.
ttal assistance contract amendments.— Title II would require
to offer annually to amend all contracts that provide rental
;ance payments under section 236 of the National Housing Act
:tion 101 of the Housing and Urban Development Act of 1965.
lill would also provide that any authority recaptured because
3 conversion of section 236 or section 101 assistance to section
first used to make these amendments.
e authorization levels included in this cost estimate are the
ints estimated to be suf^cient to accommodate only the
al rent increases for the years 1984-1988 and to maintain
same rent levels for the remaining life of the contracts (a»-
d to be 30 years at the beginning of 1984). Assuming a 5 per-
Euinual growth in both project operating expenses and tenant
les, the aggregate amount necessary to allow for contract
idments on all units for each of the next 30 years is estimated
$4.7 billion. It should be noted that these estimates probably
sent minimiuns. They assume, for example, that all units cur-
y estimated for conversion to section 8 in 1983 would be con-
d and further, that the conversion authority contfiined in Il.R.
jld be fully used. These assumptions substantially reduce the
>er of units eligible for contract amendments. If, as would be
ded by H.R. 1, annual amendments were assured, it is possible
project owners would not be willing to convert to shorter-term
m 8 contracts. If the eissumed 1984 conversions were not to
■, the funendment authority requirement for that year would
ase to an estimated $1.4 billion and the aggr^ate long-term
could be expected to be almost $7.3 billion.
indicated above, the bill provides that any authority reca|>-
1 because of the conversion of section 101 or section 236 proj-
to section 8 would be available for contract amendment. If
nvions currently scheduled for 1983 occur and if the bill's 1984
OBton authority is fully used an estimated $2.0 billion of au-
ty would be recaptured. This amount would be more than suf-
it to meet amendment requirements for the next five years. To
•stent 1984 conversions do not occur, recaptured authority
i, of course, be reduced.
meownership assistance. — H.R. 1 would authorize the appro-
ion of $166 million for 1984 commitments under HUD's sec-
yGoot^le
tion 235 low-income homeownerahip program. Tlie
vided by this program is the amount required to keep the bniiB-
owner's mortgage payment at 20 percent of income or the amottnt
necessary to reduce the borrower's eflective mortgage intereit ratt
to 4 percent whichever is lesser. The bill contains a
would limit the assistance term to 10 years. Assuming annual bor-
rower incomes of $13,000 to $14,000 in 1984 (about 50 percent of
median) and a market interest rate of 11.5 percent, the fiindB au-
thorized by the bill would assist about 6,200 households.
Housing for the elderly and handicapped, — H.R. 1 would
ize the appropriation of $668 million of direct loan authoritj
commitment m 1984 under HUD's section 202 elderly and handi-
capped housing loan program. The annual interest rate chaiged «■
these loans would be limited to 9.25 percent. ISese loans aie madi
to nonprofit project sponsors and are repayable with interest ow
40 years. Currently, the tenants in newly built unita financed witt
section 202 loans also receive federal rental subsidies. Tlie loan ao-
thority along with the section 8 rental assistance authorind bj
H.R. 1 are estimated to be sufficient to support tbe constructko at
14,000 units and then to make those units available to veiy low-
and low-income households. The budget outlays in this cost Mti-
mate that are attributable to the 1984 loan authorization reflect
loan disbursements less principal and interest repayments. Spend-
ing resulting ft-om the rental assistance payments is included in
the total section 8 and public housing outlay estimates.
In addition to the 1984 funding authorizations, H.R 1 containa
provisions that would amend substantially the methods by litiA
federal elderly and handicapped housing assistance would be pro-
vided. These changes would be effective oeginning with fiscal year
1985. Under the proposed program amenunents, ctnistructioo fi-
nancing would no longer be provided in the form (^ interest^bear
ing loans but, rather, as interest-free advances pajrable after 20
years. In order to be eligible for these advances, at least 7S percent
of the units in a project would have to be available to lower incons
households. After the 20-year period, a portion of the advance could
be forgiven for every year the project continued to meet program
requirements. After a total of 40 years the advance could be forgir-
en entirely.
Currently, section 202 assistance is available only to nonpn^t
sponsors and only in funounts representing 100 percent of pngect
construction costs. (These restrictions are not included in sectton
202 of the Housing Act of 1959 but, for the past several years, have
been included in appropriations acts.) If enacted, H.R. 1 would pro-
vide a separate funding authorization for projects where the feder
al participation is limited to 75 percent of construction costs. H.R 1
would authorize the appropriation for use in 1985 of $880 million
for projects receiving 100 percent federal financing and $660 mil-
lion for the 75 percent projects. Combined, these authorizatioafl
could support 1985 commitments for an estimated 36,000 units.
Federal outlays would be expected to occur mainly in 1987 and
1988 reflecting project planning and construction schedules.
Another signiflcant change to section 202 contained in the bill is
the proposal to provide federal pajnnents to subsidize pnnect oper-
ating expenses that are attributable to units occupied liy lower
yGoot^le
OGOme tenants. For a project that is financed entirely by HUD, the
innual Bubsidy amount would be limited to 80 percent of its flrst-
>ear operating costs — 50 percent for projects partially financed by
he federal government. These operating subsidy contracts would
iBve 20-year terms. The bill authorizes the appropriation of $830
oillion for operating subsidy contract commitments in 1985.
^wwiial expenditures over the 20-year contreict period could not
occeed $41.5 million. The estimated subsidy outlays included in this
net estimate are based on the assumption that 75 percent of all
inits are occupied by lower income tenants and that rents paid by
beee households would be limited to 25 percent of incomes.
Other. — The bill contains an authorization of $10 million to pro-
tide certain eidditional services to elderly or handicapped residents
off housing administered by public housing agencies or nonprofit
OOfporationa. This estimate assumes that HUD would enter into 3-
fa>r ooDtracts with the administering agencies.
^le bill would also authorize the appropriation of $25 million for
t new demonstration program designed to u[^ade lower-income
■omrine and to coordinate federal, state and local housing assist-
mce. Grants would be made to state and local governments to fund
nrious activities consistent with the purposes of the prc^am. Re-
tdfnents would be required to contribute an amount equal to 15 per-
Dsnt of the grant but would be allowed to meet this requirement by
the contribution of services. The outlay estimate assumes that
funds would b^in to be disbursed in fiscal year 1984 and expended
by the end of 1985.
"Hie estimated budget impact of Title II follows:
ia3
m
*I0
m
S12
St3
1J*7
9H
IjMt
153
*1
151
3S
ISS
4T
IH
53
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1
17
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17
17
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UM
TITLE III — MULTIFAHILY HOUSING PRODUCnON PBOaSAM
Title ni of the bill would establish a new muItifatniW hon
pn^am and would authorize the appropriation of $1.8 Dillim
this purpose. Assistance under this proeram would go to states and
local governments or their designated agencies md be used hf
them to encourage the construction or reh^ilitation of multifiunig'
rental and cooperative housing projects. This assistance would thai
be passed on to project owners through various means indudiiif
loans, capital grants, interest reduction payments or any otW
method deemed appropriate by the HUD Secretary. This eethnato
assumes that subsidies will be in the form of capital grants or in-
terest reduction grants payable at the time of permanent Gngac-
ing. No long-term federal commitments are assumed.
The estimated budget impact of this program is as folknra:
TFTLE IV — RURAL HOUSING
Current law contains a wide variety of programs throu^ whidi
the Farmers Home Administration (FmHA) provides low- and mod-
erate-income housing assistance in rural areas. These range ttxaa
very specialized grant programs to direct mortg^[e loans from the
rural housing insurance fund (RHIF), generally involving de^ in-
terest rate subsidies. Total 1983 activity for these programs ia ex-
pected to exceed $3.4 billion, most of which will be in the form of
Bubsidized-interest-rate mortgages. Subject to appnqniatioos, the
bill would authorize fiscal year 1984 assistance totaling $4L547 mU-
lion, including $3,781 million for direct loans, $166 million fior
grants, $400 million for rural rental assistance payments md $200
million for loan guarantees.
Rural housing loans and rental assistance. — Of the $3,781 million
authorized for direct loans, the bill would require $S,706 million to
be made available to subsidized homeownerahip and multffiBtmily
project borrowers. These borrowers are eligible for interest craditB
that could result in elective interest rates as low as 1 percent per
year. In line with current activity, this estimate assumes that tow-
mcome homeownership loans would be made at an average effec-
tive interest rate of 3.0 percent per year. The authorisation fbr
yGoot^le
guaranteed loanB would not be expected to have any budget impact
within the five-year estimate period.
The bill would authorize the appropriation for 1984 of $400 mil-
lion for FmHA's rural rental assistance program. Of this amount,
^00 million would be available only for units that are newly built
or substantially rehabilitated, the financing for which would be
jHtmded through FmHA's 1984 loan commitments. The outlays in-
cluded in this cost estimate are based on the assumption that the
rental assistance contracts would cany five-year terms.
Rural housing grants. — The bill would create a new grant pro-
gram through which funds could be provided to state and local gov-
ernments, Indian tribes and other eligible recipients in order to re-
habilitate housing owned or occupied by low- and very low-income
faouaeholds. The bill would allow up to £100 million to be appropri-
ated for this purpose in 1984. It is assumed that the full $100 mil-
liMi would be obligated in 1984 with grant disbursements occurring
over three years. In addition to the new pro-am authorization, the
L bill would make available for appropriation in 1984 $66 million for
- existing grant programs. This amount is expected to be disbursed
at rates consistent with program experience.
The estimated budget impact of Title IV follows:
«
TITLK V — PROGRAM AMENDMENTS AND ESTIMATES
Part A — Federal Housing Administration mortage insurance pro-
grams
Title V of this bill would extend HUD's authority to insure mort-
SQgB loans under various sections of the National Housing Act.
These programs result in contingent liabilities to the federal gov-
ernment and could have significant budget impact in any given
Eeven thou^ they are intended to be actuarially sound in the
run. No budget impact for these programs is included in this
ate.
Title V would also authorize the appropriation of an additional
$263 million to cover losses in the General Insurance Fund of the
Federal Housing Administration (FHA). litis money would be used
to pay insurance claims and other liabilities of the fund. Without
sucn an appropriation, these claims and liabilities would be paid
with funds borrowed from the U.S. Treasury. Thus, this provision
is expected to have no additional budget impact.
yGoot^le
B ipecific autlKMizatioiM for m*>
I e jurisdiction t^tiw Commit
ci iges to other HUD
Part C— Other pnjgranu
This portion of Title V i
eral miBcellaneous pr
tee and makes vari« (M
Program authorizatiu spediieu in uut portion of "nUe V
the following
National Institute of Building Sciences. — Sectiim 543 would in-
crease from $500,000 to $1 million the fiscal year 1984 authoriK-
tion of appropriations for the National Institute of Building 8dh
ences. The estimated budget impact of this authoriiation ' "
UrMwn.aaBMtf'
Solar Energy and Energy Conservation Bank. — The bill auttxr-
izes the appropriation of |100 million in fiscal year 1984 for tiie
Solar Energy and Energy Conservation Bank. It also directs ttie
Bank to revise its regulations to allow for the direct funding of cw
tain city and county programs, and to implement other ptdicia
specified in the bill.
This estimate assumes that the Solar Energy and Energy Conser-
vation Bank will issue new regulations within the 90 day limit im-
posed by the bill, and that cooperative agreements with states and
localities will be approved in the last quarter of fiscal year 1984.
Consistent with the current regulations, the outlay estimate as-
sumes that the Bank will disburse the funds as the states and lo-
calities incur costs, and that all of the funds will be spent within
one year. The estimated budget impact of this authorization fU-
lows:
Weatherixation program.— The bill specifieB that at least $300
million of the $399 nullion authorized for certain energy conserva-
tion programs in 1984 is to be appropriated for the Department cf
Energy's (DOE) weatherization program. This provision earmark-
ing funds for the DOB's weatherization program can be acoHnmo-
dated within the existing authorization, and is expected to have no
significant impact on the rate of disbursements for these programs.
Approximately $99.5 million of the $100 nullion authorind fi>r
the Solar Energy and Energy Conservation Bank is expected to be
available for funding state and local programs. The bill specifies
that at least 10 percent of the program funds may be used to cover
yGoot^le
11
state and local administrative expenses, and these amounts are ex-
pected to be sufficient to fully cover such costs.
Flood and crime and riot insurance. — The bill extends the au-
thori^ erf the Director of the Federal Emergen<^ Management
AgBDcy (FEMA) to carry out the activities of the National Insur-
ance Development Fund (NIDF) and National Flood Insurance
Fund (NFIF) through September 30, 1985 and to continue direct
and reinsurance activities of the NIDF through September 30,
1988. The bill also authorizes the appropriation of $58.6 million in
fiscal year 1984 for flood studies by FEMA. For the purposes of this
estunate, CBO has projected the budget impact of these extensions
based on the recent experience of the two programs. The estimates
reflect the obligation to honor policies after the authority to issue
the underljring insurance has expired.
Hie estimated budget impact of these insurance programs follow:
HUD research. — The bill authorizes the appropriation of $24 mil-
lion for fiscal year 1984 for authorized research activities of HUD.
The estimated budget impact of this prc^ram follows:
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ISIt
WnMirdi:
lir
16
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u
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Housing counseling assistance. — The bill authorizes the appropri-
ation of |8 million in fiscal year 1984 for HUD's Housing Counsel-
ing Assistance program. The budget impact of this provision fol-
[AM
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2.0
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yGoot^le
12
6. EBtunated coat to State and local gmcr
Housing and Urban Development grants to local gorcn-
ments under this bill would total appnnimatdy $4,543 miDiaa in
fiscal year 1984, approximately P^O millioa kas than the H9 U>.
lion appropriated is fiscal year 1 ) i which included a mipptoiiiM ,
tal $1.0 billion for CDBG). While t ! grants do not require q^sci^
ic matching contributions by gram, n apimts, the local eoata ofa^
ministering such funds are home by redfaent govemnieati. Hm.
level of funds authorized by this bill i not expected to increan tts:
costs.
The new $25 million demonstration grant program authorind M
title n would require the recipients to contrunite an amount e^Dll
to 15 percent of the funds received. This requirement would be Mt
isfied by the contribution of services. Ten percmt <^ the gmt
could be used to meet administrative costs.
7. Estimate comparison: None.
8. PrevkniB CBO estimate: On May 16, 1983 the Congresskxd
Budget Office prepared a cost estimate for S. 1338, the Housing aid
Community Elevelopment Act of 1983, as ordered reported by ths
Senate Committee on Banking, Housing and UrlMUi AfEsiis oa
April 13, 19S3. That bill differed from this one in several agBiS-
cant areas.
The Senate bill authorized and provided funding for a raital nnit
rehabilitotjon and development grant program (funded at $860 mi-
lion for fiscal year 1984) that has no counterpart in this MIL Tin
Senate bill also repealed authority for the S12 rehabilitation *
program and liquidated all outstanding government
regarding the New Communities Program, llie Houae 1»I1
neitha* m these changes.
The Senate bOl also terminates activities of the Federal Bmsr-
gency Management Agengr's (FEMA) crime and riot insuzance pro-
grams on October 1, 1%3, whereas the House bill would ssttad
these activities to October 1, 1985, while freesing insurance pniai-
ums at October 1, 1982 levels.
In addition to these changes the House bill would provide sli^it-
ly larger authorizations for a variety of community developinant
programs administered by HUD. In total, the House bill would, if
enacted, provide approximately $560 million more in fiscal yesr
1984 for those programs than would the .Senate bill.
For HUD'S assuted housing programs, S. 1338 would authoriM
the appropriation of $9.8 billion for 1984 compared to the $16.3 tril-
lion contained in H.R. 1. "nie Senate bill does not include the mul-
tifamily production program in H.R. 1 nor the proposed changes to
the elderly and handicapped housing program.
Overall, S. 1338 contains total estimated authorizations of $26.8
billion for the five fiscal years 1984-1988 and estimated outiays to-
taling $19.5 billion. H.R. 1 would authorize an estimated $35.0 bil-
lion for the same five-year period with outlays estimated at $24.9
billion.
9. Estimate prepared by: Brent Shipp (226-2860) and Lin Umi
(226-2860).
10. Estimate approved by: C. G. Nuckols (fin- James L. Num, As-
sistant Director lor Budget Analysis).
yGoot^le
Chanok in Exibtino Law Made by the Bill, as Rbported
lUa portion of the supplemental report shows changes in exist-
ng law made t^ the bill (H.R. 1), as r^wrted, that were incorrectly
teted in the repcni submitted on May 13, 1983 (H. Kept. 98-123, pt.
X Bdatter underlined was incorrectly stated in part 1 of the report.
lafisrence should be made to part 1 of the rc^rt for changes made
7 the bill, as reported, in other portions of the laws included in
lUB suppl^nental report.
In compliance with clause S of Rule Xm of the Rules of the
Eioiue (tf Representatives, changes in existing law made by the bill,
M reported, are shown as follows (existing law propoaed to be omit-
tad is enclosed in black brackets, new matter is printed in italic,
rMTrt'"C ^v ui which no change is proposed is shown in romanh
UNrrsD States Housing Act or 1937
JUmVAL CONTRIBUTIONS FOR LOWER INCOME HOUSING PROJECTS
fipfl) The Secretav may enter intii f»intrartn for annunl tyintrihu-
%fia AygrBCTtfng not more than $7,875,M9.()00 per annum, which
■mrijirt ffhflll hP in<rrB««pH~hv tl'A^iJJwOQO on QctAer 1. im.
■ — ■ on Oc iober 1. 1981. andbvS789.0SS.000oH
IditifiE *1 authority to enter into such oon-
jgact» provided on or after (X t>er 1.^1980. shall be effective only
■■ p|w.ii amounts as i^flY *P ff proved in appropriation Acta. In ad-
dftiiim. the aggregate amount ^hich mav pc tyUffted wwr the du-
l^cm of the oontracta may not not exceed t31.20q.000.000 with rfr
■iBCt to U» additional authority prwided on October 1. 19§0.
finfll •18.087.370.000 with respect to the additioniJ authOTitv pro-
TUad on October 1. 1981. and tlSMf'ijf.OOO with respect to the
"•mtionai authority provided on October 1, 198S. TTie Secretary, in
lirilMT *)|y aHHitionJal authority to enter int<; such contracts pro-
BQ on and after October 1. 1980. shall adminitrter the proyams
authorized by this Act to woyide aasistance. to the maximum
extent practicable, conaistent with section 213(d) of the Housing
apd Qommunity Bevelopment Act of 1974.
National Housing Act
TITLE n-MOBTGAGE INSURANCE
s
BKNTAL HOUSING IN8URAMCX
Sk. 207. (a) As used in this section—
yGoot^le
888
14
(7) The term "State" includes the several States, and PiHftoi i
Rico, the District of Columbia, Guam, the Trust Territory of tbs, |
Paciflc Islands, American Samoa, and the Vinrin l«lntnfa ■ i
HOME0WNER8HIP FOR LOWBR INCOHB PAMIUIS
Sec. 235. (a) • * *
(cXD [TheJ Subject to the second sentence of this paragraph, Hk
assistance payments to a mortgagee by the Secretary on Mialf of ■
mortgagor shall be made during such time as the mortgagtH* ihill
continue to occupy the property which secures the mort^ige: Pm-
vided. That assistance payments may be made on behalf of a bm»
owner who assumes a mortgage insured under subsection <i) or (jXt
with respect to which assistance payments have been made CB
behalf of the previous owner, if the homeowner is approved by the
Secretary as eligible for receiving such assistance: Provided fvimm.
That the Secretary is authorized to continue making such aiBlt-
assignedto Uie Seen-
ance payments where the mortgage has been
tarv. Aasiatance payments pursuant toanvnei
after September SO. 198S. that utiliza authority
oriatUmActs for any fiscal year beeinninsafjer such dt
be made for more than a 10-year period. The payments
an amount not exceeding the lesser of—
(A) the balance of the monthly payment for principal, iiit»
est, taxes, insurance, and mortgage insurance premium da
under the mortgage remaining unpaid after applying 20 [Nf
centum of the mortgagee's income; or
(B) the difference between the amount of the monthly pa^ j
ment for principal, interest, and mortgage insurance premnuu
which the mortgage is obligated to pay under the mortgHt '
and the monthly payment for principal and interest «^ich t£e
mortgagor would he obligated to pay if the martsage were ts
bear interest at the rate of 1 per centum per Annum (4 pa-
centum per annum in the case of a mor^;age described in nib-
section (o)).
BBNTAL AND COOPBRATtVE HOUSING FOR LOWSB INCOBCB PAMIUB
Src. 236. (a) • • •
(fXl) For each dwelling unit there shall be established with the
approval of the Secretary (A) a basic rental charge determined on
the basis of operating the project with payments of principal and
interest due under a mortgage bearing interest at the rate of 1 per
centum per annum; and (B) a fair market rental charge determined
on the basis of operating the project with payments (tf principal, in-
terest, and mortgage insurance premium which the i '
yGoot^le
obligated to pay under the mortgage covering the project. The
x«ntal for eadi dwelling unit shall be at the baaic rental charge or
ipndi greater amount, not exceeding the fair market rental charge,
^■a represents [30] 25 per centum of the tenant's adjusted income.
'^Vith respect to those projects which the Secretary determines have
:— parate utility metering for some or all dwelling unite, the Secre-
[-tary is authorized —
I (i) to permit the basic rental charge and the fair market
I rental charge to be determined on the basis of operating the
project without the payment of the cost of utility services used
by such dwelling units; and
(ii) to permit the charging of a rental for such dwelling units
at such an amount less than [30J $S_peT centum of a tenant's
■^justed income as the Secretary determines represents a pro-
\ pOTtignate decrease for the utility charges to be paid by such
^ tenant, but in no case shall such rental be lower than [25J 20
& per centum of a tenant's adjusted income.
OHADUATBO PAYMENTS AND INDEXED H(»TGAGB
ha 245. (a) • • •
fdJfl) Tht: Secretary mav insure, under anv provaioa of this title
t^fffine to mtltifamilv housing pmiects, morteaees and loans with
Brovifi
BOttdl
tions of varrinf rates of amortization cmrespoi^inji to antici-
variations in project income, to the extent the Secrete^ deter-
f^iina such mortWjjW or loans (AJhave promise for expandirx hous-
wtf pDOortunities or meet soecial needs- (B) can be developed to in-
[ i^igfi any safeguards for morifgagors. tenants, or purchasers th^
^mav be necessary to offset Boecial risks of such rnorteaaes: and (C)
amwe apotmhal for acceptance in the private markeL
(K Niftwithstandine anv other prooision of this title, the principal
flMtfllpon of a morteojie or loan insured pursuant to this aubsec-
f^ may not exceed initially the percentage of the initial op-
oraiaed valite or replacement cost of the orooerty involvai'ihat
u required by the provision of this title under which such prop-
erty la insureOj and
iB) thereafUr ^including all interest to be deferred and added
to Dnncipaumaynotatany time be schedulea to exceed~IOO
percent of the projected value of such property.
(3y3?or purposes of this subsection, the projected value of a proper-
ty »hall be calculated by the Hecretary by increasing the initial ap-
praised value of such property at a rate not in excess of 2.5 percent
W A "nMrtiiaae or loan may not be insured pursuant to this sub-
semmt after September 30. 1984, except pursuant to a commitment
eiUmd into prior to such date.
yGoo<^\q
16
HoustKO Act or 1949
TITLE V— FARM HOUSING '
;. 521. (aXlXA)
(2XA) The Secretaiy shall make and insure loans under this ne-
tion and sections 514, 516, and 517 to provide rental or cooporatifB
housing and related fEicilities for persons and familw^i of low
income in multifainily housing projects, and shall make, and oot-
tract to make, assistance payments to the owners of sucdi rental m
congregate, or cooperative housing in order to make available to
low-income occupants of such housing rentals at rates commensB-
rate to income and [not exceeding 25 per centum of inccHueJ not
exceeding the highest of the following amounts, rmauled to (fte
nearest dollar (I) 25 percent of the family's monthly adjiMti
income; (II) 10 percent of the family's monthly income; or (JIDifOie
family is receiving payments for welfare assistance from a /wlBe
agency and a part of such payments, adjusted in accordance wiUi
the family's actual housing costs, is specifically designated kf tadt
agency to meet the family « housing costs, the pmtion of sikm —
menti that is so designated. Such assistance navmenti
made on a unit basis and shall not be made ibr b
centum"of the units in any ops project.
project is financed by y loan under aeyUwi 5]
capped housinit. by a loan under section 51'
nonprofit owner or bv a loan under eection 614 and a grant u^S
section 516. such msigtonce '"^1 pc made jw uolo 100 per ctaituro
nf «M ^mit^ g"**.]*?* "f™" ™? Secretary determinee wich actaoa a
neccMsory or feasible, he shall make such payments with re
ch payments y
. rin apimmt
more than 70 per centum rftfie unite. |[m approyiny prnjartin^
aasisttmce under this paragraph, the Seaietary shall give a priori^
to proiecte in which assistance^ is provided w> 4o per centum ot
fewer of the units contained in the proiect.1
Section 3 or Pubuc Law 90-801
An ACT To unend chapter 87 of title SB of the Unitod StatM Coda with iwpKt ts
the vetenuu home loon proKTsni, to amend the National Hoowic Act with ■•■
ipect to interest ratea on uuurad mortgagea, and for other purpoata.
Sec. 3. (aXl) Notwithstanding the provisions of si
207(cX8), 213(d), 220(dX4), 220(hX2Xm), 221{dX5), 2Sl(cX6),
232(dK3XB), 234(0, 235(jX2XC), 236gX4XB), 240(cX4). 241(bX8X
242(dX3XB), and 1101(cX4) of the NaUonal Housing Act regardiiig
yGoot^le
17
;he maximum interest rates which the Secretary of Housing and
Urban Development may establish for certain mortgage insurance
srograms authorized by that Act, the Secretary is authorized, until
[May 21, 1983,] October 1, 1984. to set the maximum interest
*ate8 for such programs at not to exceed such per centum per
innum on the amount of the principal obligation outstanding at
my time as he finds necessary to meet tiie mortgage market,
aking into consideration the yields on mortgagee in the primary
md secondary markets, and during that time the interest rates so
(et shall be deemed to be for all purposes, except those provided for
a paragraph (2), the interest rates m effect under the provisions of
Hud section 203(bX5) and the other sections referred to above: Pro-
tadad. That in determining the rate to be applicable for the said
■action 203(bX5) prc^ram, the Secretary shall consult with the Ad-
ainistrator of Veteran's Affairs regarding the rate which the Ad-
ninistrator considers necessary to meet the mortgage market for
guaranteed or insured home loans to veterans under chapter 37 of
itle 38, United States Code. Notwithstanding the provisions of sec-
Km 2(b) of the National Housing Act r^arding the maximum in-
arest rate which may be establi^ed for obligations with respect to
irtlich insurance is granted to financial institutions under section 2
]f euch Act, the Secretary of Housing and Urban Development is
llao authorized until the date specified in the preceding sentence,
» set the maximum interest rate for obligations with respect to
irhich insurance is granted under such section, at such level as he
Suds necessary to meet the loan market, taking into consideration
ibe yields on home improvement and manufactured home loans. In
letting rates, the Secretary shall seek to minimize uncertainty and
peculation in connection with mortgage and loan transactions in-
flired under the National Housing Act, and when effective rates on
mne mortgages and other such loans are rising, the Secretary
diall exercise the authority to set the interest rates for such mort-
gage and loan insurance programs with sufficient frequency to pro-
note the objective Uiat discount points payable in connection with
iKRigages and loans insured pursuant to such pn^ams should be
Solar Energy and Energy Conservation Bank Act
RULES AND REGULATIONS
Ski. 520. (a) As soon as practicable, but not later than 180 d^ya
riter the date of the enactment of thifl subtitle, the Board shall
Mch firial rql^ and rqwlatJqiH .qg, the Board deten
neccoonrv to carry out this subtitle, includmg rules and regulations
tft giWf^*^ that th^re will be no fraud in the provision of financial
jp^^tance thro 'i grants under this subtitle, except that any final
nihs and r^u lOns with respect to multifamily residential, com-
■922 O - 94 - 57
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,-.■ agrJCTill — ■■ . ^- —
days after sucn date but not later than 270 daw after «ndi date
mercial. or
Itural b«"'Miii|pi may be
Action 422 or the Enxbgt Conbkkvation in BssnifG BmuMMoa
Act (» 1976
AUTH<niZAT10N OF APPS«WB1ATM»IS
Sic. 422. Iliere is authorized to be appn^iriated for purpoMi of
carrying out the weatberizatkm program under this part, the sam
of $55,000,000 for the Gscal year ending on Sqitember 30, 19T7, the
sum of S130,000.000 for the fiscal year aiding an September 90,
1978, the sum of $200,000,000 for the fiscal year ending on Septem-
ber 30, 1979, the sum of $200,000,000 for the fiscal year ending oa
September 30, 1980, the sum of $200,000,000 for the fiscal year
ending on September 30, 1981, such sums to remain available oottl
expended. Of tkt fitnds authorized by section 106S(l) of the Onud-
bus Budget Reconciliation Act of 1981 for energy conaeroation fir
the fiscal year ending September 30. 1984. not less than S3O0.OOO.OOO
is authorised to be appn^triated to carry out the aeatherization pro-
gram under this part.
National Flood Insukanck Act or 1968
CHAPTER I-THE NATIONAL FLOOD INSURANCE PROGRAM
BASIC AUTHOanr
Sic. 1304. (a) To carry out the purpoaes of this title, the [Secre-
tary of Housing and Urban DevelopmentJ Director of the Federal
Emergency Management Agency ia authorized to ertablidi and canr
out a national flood insurance program which will enable interest-
ed persona to purchase insurance against loss resulting from physi-
cal damage to or loas of real property or personal property related
thereto arising from any flood occurring in the United States.
NATURE AND UBOTATION OF INSUKANCE COVKBAGE
Sec. 1306. (a) • * •
(b) In addition to any other terms and conditions under eubeec-
tion (a), such regulations shall provide that —
(1) any flood insurance coverage based on chai^eable premi-
um rat^ under section 1308 which are lees than the eetimated
premium rates under section 1307(aXl) shall not exceed —
(A) in the case of residential properties —
(i) $35,000 aggregate liability for any single-familf
dwelling, and $100,000 for any residential structure
containing more than one dwelUng unit
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19
(ii) $10,000 aggr^tate liability per dwelling unit for
any contents related to such unit, and
(iii) in the States of Alaska and Hawaii, and in the
Virgin Islands and Guam, the limits provided in
clause (i) of this sentence shall be: $50,000 aggr^ate
liability for any single-family dwelling, and $150,000
for any residential structure containing more than one
dwelling unit;
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Calendar No. 216
SSmCONGUSB
HOUSING AND COMMUNITY DEVELOPMENT
ACT OF 1983
REPORT
OFTHB
COMMITTEE ON BANKING, HOUSING,
AND URBAN AFFAIRS
UNITED STATES SENATE
TO ACCOMPANY
together with
ADDITIONAL VIEWS
W
May 23 (It^islative day May 16), 1983— Ordered to be printed
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COMttmEX ON BANKING, HOUSmO, AND UBBAN AFPAIBS
JAKE OARN. Utali. Chairmaii
JOHN TOWER. TcxM WILUAH PBOZMIKE, Wkhbhi
JOHN HEINZ. PeonqdvMUi ALAN CRANnTm. CUiConda
WnilAH L ARHSntONO. ColandD DCWAU) W. SIBGIA im, BOct^B
AUONSE U. D'AHATO. New Yort PAUL S. SARBANES. MarTbod
mjme GORTON. WMhii«Uo CHRISmVEB J. DC«D; r.-~M-^
PAULA HAWKIN& Ploridi ALAN J. MKM). Dtna
HACK HATTINGLY. G«sia JW SASSER. Tmmmmt
CHIC HBCHT. NenlB FRANK K LAU1CNBBRO. Nn Jmiq
PAUL TRIBLE. Virgiiiia
11 Damn WaU, Staff Dirtelor
KcKHinf A. UcLbiIN. Miiuiity Staff Dirtdar
PHiur A. SumoH. fibononut fir Hautaig and UriKut Affairt
SuBoomumB on Housofo and Uiban Aftabs
JOHN TOWER. TntM, Choimon
JAKE GARN. Uuh DONALD W. RIEGtA Jb, BI
JOHN HEINZ. Peiuujlwiu JW 8ASSER, Thuhhw
ALFONSE H. D'AHATO, New Yort FRANK R. LAUTENBEHC, Nvo J«cnj
SIADE G<HtTON. WMhinBtoo WUiiAH PSOmiR^ Wwanm
PAULA HAWKmS. Flarida ALAN CRANSTON, CAlifbrnia
PAUL TRIBUE. ViigiDia PAUL S. SARBANES. Harrland
Pr^ a RuKDiS. Staff Dinetor
W, Donald Camfibi. Minarity Staff Diirclir
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CONTENTS
Title n. — Community and neighborhood devek^noit....
Title m.— Housing assiatance programs....
The housing pas^ment c€ ''"
_. . e program
Public housing accreditation and operating ii
Miscellaneous changes
Funds provided in title III ft
Title v.— Rural houE
Title Vl.'-'Pnigram amendments and extensions, extension of Federal
Housing Administration mortgage insurance programs
Title VII.— Mortgage default asaistance
Jection-by-sectioD --'-■-
Title I.— Rental
eh^ilil
Section 201: Autho
Section 202: Ot>jiective at program and use of fiinds
Section 203: State small cities program ~
Section 204: Public services _
Section 205: Amendments to statements of M!ti<ritJiM ...
Section 206; Lump sum drawdown,. _
Section 207: Review and evaluation ~ _
Section 208: Guarantee programs
Section 209: Urban development action grants
Section 210: Eligible CDBG activities
Section 211: Repealers
Section 212: Miscellaneous amendments
' n 213: Urban homestaading ...
Section 214: Neighborhood development demonstrations
Title 111. — Housing assistance programs
Section 301: Allocation and use of assisted housing authority
Section 302: Modified section 8 existing housing assistance program....
Section 303: Amendments aHecting tenant rents or contributions
Section 304: Public housing accreditation...
Section 305: Increased authority for management flexibility and foi
payments for operation of lower income housing projects ...
Section 306: Comprehensive improvement ai
Section 307: Demolition and disposition of public hi
Section 306: Financing limitatio:
e for troubled multifamil; housing
Section 310: Housing for the elderly and handicapped....
Section 311: Repeal of new construction authority
Section 312: Housing demonstration
Sections 313 and 314: Section 2
program
Section 315: Amendment to section 214 of the 1980 ai
Section 316; Pets in elderly housing
Section 317: College housing
Title IV. — Insurance program
Section 401: Crime and riot insurance
Section 402: Technical amendments
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IV
Section-by-aectioD analyiii— Continued
Title IV. — Iiuurance program — Continued
Section 403; Extension of flood iniurance auUMHitie*
Section 404: Judicial review _
Section 405: Study of sinkhole inauranoe
Title v.— Rural housing „ ™ ™
Section 501: Short title -., _„..__..„
Section 502: DefinitionB „
Section 503; Section 502 aniHidmenta „ -„—„.„„., ■^.
Section 504: Rehabilitation loaiui __.._„ ■ —
Section 505: Technical aervicea and peat arch
Section 506; Standaida for adequate housiiig _..__„____.-__-.
Section 507: General authority of the Secretiuj — -.._._«.^^_^ ~
Section 508: Amendment to nction 611 ~.
Section 509; Repeal of Bection 512 _
Section 510; Authoriiation __....—...—,,_.„_.»__-
Section 511: Section 515 amendments „
Section 512: Insured rural housing loans
Section 513; Rental aaslatanoe tenant caotributioa __._..._._»_
Section 514: Rural trainees „ „„..
Section 515: Technical and supervisory ■■datjtmf _„
Sectim 516: Condominium housing
Section 517: FHA insurance -
Section 51S; Rural housing pnservation grant pnigrBm „
Section 51 9: M iacellaneous
Title VI.— Program amendments and extensions
Section 601; EztensioQ of Federal Housing Adminirtration mortgage
insurance programs
Section 602: Authorization for appropriations to cover loaaea to the
general insurance fund
Section 603; Rc«earch authorizations
Section 604; Special assistance and emeigennr mortgage purchase
assistance funds of the Government National Mortgage Alaociation
Section 605: Elimination of requirement that FHA interest rates be
set by law _
Section 606; Amendment to section 36T(bX2XA) of the Hultifomily
Mortgage Foreclosure Act of 1981 ^..
Section Gv!: Treatment of FHA single family premiums
Section 608: GNMA and FHA limitations
Section 609: Repeal of requirement to publish prototype houong
costs for one- to four-family dwelling units
Section 610: Increased loan limits for manufactured homes and lots
under title I of the National Housing Act
Section 611: Authority for refinancing manu&ctured homn under
title 1 of the National Housing Act
Section 612; Chan^ in maximum loan-to-valne ratio for modestly
priced single famUy homes
Section 613: Non-occupant single family mortgagon „.
Section 614: Premium charges for insurance ofaltamatiw movtiMP
Section 615: Shell home construction _
Section 6IG: Payment claims without HUD acquisition of title
Section 617: Discretionary authority to regulate rants or charges
Section 61S; Mortgage insurance for manufactured home parks for
the elderly
Section 619: Removal of refinancing limitations on certain multifam-
ily projects
Section 620: Assignment of section 221(«X4) mortgage to GNMA
Section 621; Repeal of section 221, btiy-Gack proviaion
Section 622: Federal Housing Administration insurance for condo-
Section 623: Graduated payment mortgages for multifamily and
single family housing...
Section 624: Aitjustable rate mortgages for single family housing
Section 625: Shared appreciation mortgages — single family
Section 626: Shared appreciation mortgages for multifamilj| housing...
Section 627; Demonstration authority to insure home equity conver-
sion mortgages for elderly homeowners
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Sectkm-by-aection analysia — Continued
Title VI.— Piwrsm amendments and extensions — Continued
Section G^: Prepayment
Section 629: Structural defects in VA-approved, FHA-inaured t
Section 630: iWe of payment of mortgage insurance premiums
Section 631: Neighborhood Reinvestment Corporation
Section 632: Cooperative housing
Section 633: National Institute of Building Sciences
Section 634: Reinsurance demonstration
Section 635: Cancellation of debt owed tlie ^"reasury and liquidation
program
the Treasur
Section 636: National Housing Partnership 79
Title VII.— Mortgage default assistance 79
Regulatory impact statement 82
Additional views of Senatora Gam, Tower, Trible, Hecht, Mattingly, and
Gorton 95
Additional views of Senator Armstrong 97
Additional views of Senators Ri^le, Cranston, SarbaneSi Dodd, Dizon, Saaser,
and Lautenberg 122
Additional views of Senators D'Amato, Dodd, Cranston, Richie, Hawkins,
Sarbenes, lautenberg, and Heinz 126
Additional views of Senators lautenberg and D'Amato 129
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Calendar No. 216
98th Congress |
1st Sation }
HOUSING AND COMMUNITY DEVELOPMENT ACT OF 198S
Hay 23 (legialative day Hay 16), 1963.— Ordered to be jninted
Mr. Gabn, from the Committee on Banking, Housing, and UiImii
AfTairs, submitted the following
REPORT
together with
ADDITIONAL VIEWS
[To
The Committee on Banlui^, Housing, and Urban Affairs, having
considered the same, reports favorably a committee bill to amend
and extend certain Federal laws relating to housing and communi-
ty development, and related programs, and for other purposes, and
recommends that the bill do pass.
History of Legislation
The Subcommittee on Housing and Urban Affairs, has held a
series of hearii^s on legislation and issues pertinent to the Com-
mittee approval of this bill.
A hearing on the outlook for housing and mortgage finance was
held on February 14, 1983. The Administration's housing and com-
munity development legislation for the Department of Housing and
Urban Development (S. 644) and general reauthorization issues
were the subject of hearings on March 8, 9, and 10, 1983. Hearings
on the Administration's legislation for the housing programs ad-
ministered by the Farmers Home Administration and Indian hous-
ing were held on March 23, 1983. The full Committee met on April
13, 1983 and ordered the bill favorably reported by voice vote.
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Explanation op the Bill
TITLE I. — RENTAL REHABILITATION
Title I provides basic authorization to the Secretary to make
rental rehabilitation and new construction grants to states and
local governments within a new Section 122 of the Community De-
velopment Act of 1974. Grants would be made available to help
support the rehabilitation of privately owned real property and, in
communities with severe housing shortages, the construction of
new rental units.
TITLE II. — OOMUUNTTV AND NEiaHBORHOOD DEVELOPMENT
Title n reauthorizes the community development block grant
and urban development action grant programs for three years. Rel-
atively few changes are made to the programs however require-
ments for targetting the community development program princi-
pally for the benefit of law and moderate income families have
been clarified. Two new demonstrations are added to the urban
homesteading program and the committee has endorsed a demon-
stration of activities through voluntary organizations.
TTTLB HI. — HOUSING ASSIBTANCE PROGRAMS
Title III of the Committee bill makes significant modifications to
subsidized housing programs administered by the Department of
Housing and Urban Development. Paced with continuing rapid
growth of federal outlays for housing subsidies, the Committee has
directed its attention to improving the operations and efficiency of
ongoing housing assistance programs while maintaining the stock
of subsidized housing already bmlt.
The two principal initiatives recommended by the Committee are
the housing payment certificate program and reform of public
housing operations. Housing payment certificates will add a 'shop-
ping incentive" feature to the current Section 8 existing housing
program. A public housing accreditation commission and new in-
centives for management improvements will improve the operation
of public housing projects. Numerous other cheinges are also made
to housing assistance programs.
THE HOUSING PAYMENT CERTIFICATE PROGRAM
Drawing upon HUD's experience with the current Section 8 ex-
isting housing program and the Experimental Housing Allowance
Program, a ' housing payment certificate pr<^am" is created in
Title in of the bill. This housing payment certificate pr<^ram will
improve the Section 8 existing housing program bv giving very low-
income families more flexibility to "shop around' for housing best
suited to their needs. If a family leases an apartment at a lower
rent than the program payment standard, it can keep any savii^.
The family is allowed to lease a more expensive unit if it chooses to
pay the excess. This shopping incentive will give assisted tenants
the same choice between housing and other needs that they would
exercise in using their own money. This choice by tenants will con-
strain the inflationeiry impact on rents in the current Section 8
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program where landlords often just raise rents up to the maxunmn
fair market since tenants get no savings from a lower reit. "Hie
shopping incentive feature is the essential element of the Adminis-
tration's "housing voucher" proposal and has been accepted by the
Committee as a way to bring some discipline of market transse-
tions to tenants in the existing housing program.
The housing payment certificate program also will imintive the
responsiveness of the subsidies to local rental market cKwngfw In
the current Section 8 program, fair market rent ceiling are in-
creased automatically by HUD regulation applied arooiid the ooon-
try. As indicated above, landlords generally just raise rents up to
the ceiling each year. In the housingjpayment certifkate program,
the local public housing agencies (PHA's) administering the pn>-
gram are given the discretion to adjust assistance pnnneDtn during
the 5 year contract term based on local rental market conditioaa
These adjustments are paid for by the PHA from an extra 10 pep
cent funding beyond the estimated assistance payments in the tint
year and from any amounts that become available through higher
tenant incomes or through tenants dropping out of the program.
The PHA can also use these extra funds to bring more very low
income families into the program thus giving the PHA an incm-
tive to hold down assistance increases.
Finally, the new housing payment certificate prosram will focus
assistance on the neediest families. Except for families now receiv-
ing subsidies under expiring Section 8 contracts that may be ctn-
verted to the new program, families entering the program must
have very low income (of less than 50 percent of the area median
income with adjustments for family size). Local public housing
agencies must ^so give priority to families who occuf^ substand-
sml housing, are involuntarily displaced, or are paying more than
one-half their income for rent.
With r^ard to the payment standards which set the initial
target rent level in the modified certificate program, the Commit-
tee believes it is essential that the payment standard be set at a
realistic level. If it is too low, tenants will face increasing difficult
in finding standard quality apartments and will, in effect, be forced
to pay more than the statutory ceiling of 30 percent of Income as
the contribution to rent. Consequently, the Committee bill directs
the HUD Secretary to establish payment standards on the basis of
a formula set forth in a r^^ulation within 60 days after date of en-
actment that will thus be subject to Congressional and public
review. The payment standard must be based on rents of decent,
safe and sanitary housing in the local area using recently available
data reflecting the rents that 45 percent of families recently
moving into apartments have paid for standard quality bousing.
The HUD Secretary can set a lower figure if factual information
regarding rents in apartments actually available for rent supports
a determination that the 45 percentile is excessive.
PUBUC HOUSING ACCREDITATION AND OPERATING SUBSIDIES
The Committee bill contains a m^or restructuring of the public
housing program in order to assure its continuing viability, to en-
hance the professionalism of public housing authorities, and to add
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incentives for management improvements to the system for distrib-
ubsidies.
: is the oldest federal housing program for low
uting operating subsidies.
Public housing is the c „ , „
income people. lYie President's Commission on Housing noted that
the 1.2 million households living in public housing have incomes
averaging only 28 percent of median family income. Moreover,
public housing accommodates households which are especially difTi-
cult to place m the private rental market, including many single-
parent, minority, and large families. Because public housing oper-
ating subsidies require a separate, annual authorization and appro-
priation, the cost of the program is evident. Yet, again according to
the President's Commission on Housing, the 1981 costs of public
housing (debt service plus operating subsidies) were approximately
equivalent to the direct Federal subsidy that would have been re-
quired for public housing tenants had they been in the Section 8
existing housing prt^am. While coats do vary widely from project
to project, public bousing costs are not out of line witn those of pri-
vate rental housing.
llirough the restructuring prc^am, the Committee intends to
meet three objectives:
Establish clear standards for the professional administration
of all aspects of management of the program by local public
housing authorities;
Deregulate, to the maximum extent consistent with the spe-
cific requirements of law, the operation of those public housing
projects which are efficiently managed and;
Create incentives for local PHA s to improve management
efficiency and reduce operating costs.
'Hie Committee proposes a new system for overseeing the operat-
ing of the nearly 3000 local public housing agencies now running
public housing. A Public Housing Accreditation Commission is es-
tablished with 13 members representing housing authorities, local
governments, and low-income tenants. The Commission is charged
with 3 tasks: to establish standards for accrediting PHA's which
are efficiently and professionally managed, to establish and imple-
ment procedures for evaluating PHA's against those standards, and
to establish remedies or sanctions for PHA's which do not meet the
standards and thus do not become accredited. The Commission's
proposals for carrying out each of these tasks would be implement-
ed upon acceptance by the HUD Secretary. Finally, the Commis-
sion would also make recommendations to the Secretary about spe-
cialized training and education for public housing managers and
about the distinction between ongoing maintenance activities to be
funded by operating subsidies and m^or replacement items to be
funded by discretionary grants from HUD.
llie Committee bill provides the legislative vehicle for a reassess-
ment of public housing subject to the overriding concerns that the
program provide adequate housing for low income households at
the lowest feasible cost to the federal government. The separation
of public housing authorities into "accredited and non-accredited"
categories will provide substantial deregulation of most authorities
while improving professional housing management practices. This
separation will permit HUD to focus its attention and resources on
troubled authorities, with the intent and purpose of working with
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those local agencies to resolve their problems and convert them to
accredited status. The goal is to have all authorities become accred-
ited authorities.
The Committee Bill also modifies the current performance fund-
ing system for distributing public housing operating Bubsidies.
First, greater certainty of funding levels for PHA's is achieved by
requiring that the funding system be specifled by regulation before
the start of a flscal year and remain unchanged uiroughout the
year and that adjustments be made to reflect actual inflation rates.
Second, housing authority managers would face greater incentives
for efficiently managing public housing because the system would
edlow the PHA to retain cost savings achieved and would remove
subsidy payments for vacant housing units.
MISCELLANEOUS CHANGES
Title III also makes numerous other changes to housing assiit-
ance programs. These are identified more completely in Ute
section-by-section analysis, but the more important provisions are:
1. New reservations of housing assistance in fiscal year 1984
under the basic programs are limited to $7,651,476,000 budget
authority and $504,061,000 annual contract authority.
$4,346,310,000 of this could be funded from deobli^tion and re-
capture of prior reservations under HUD's projections. Hie
program activity allowed by this total is as follows:
FUNDS PROVIDED IK TITLE III FOR SUBSIDIZED HOUSING. FISCAL YEAR 1984
rnF»*n«l
— -Sir
bmmm
Huini Hrment nrlHiuta:
m tees - „
W 1.719
a*
Sectm B— tiislini houswg
H.™
mja
UOUM
mm
^M
IH
W
IDLSOO
uusm
2. Other authorizations in Title 111 are $1,500,000,000 for
public housing operating subsidies, $667,800,000 for loans
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under the 202 pTX)graiii to finance 14,000 elderly housii^ units,
and $10,000,000 per year through flsca] year 1986 for the asso-
ciated congr^ate services program.
3. The Section 8 new construction and substantial rehabilita-
tion programs are repealed except for obligations entered into
before fiscal year 19S4 and for use of Section 8 assistance to
elderly housing financed with 202 program loans. The long-
term {20-40 year) contractual obligations and other costly fea-
tures of these pr<%rams have led the Committee to adopt a pro-
gram of up-front housing grants. Title I of this bill contains the
rental rehabilitation and development program as a substitute
for the Section 8 new construction programs.
TITLE IV. — FLOOD, CRIME, AND RIOT INSURANCE PROGRAMS
Title rV extends the crime insurance and riot reinsurance pro-
^rexa through September 30, 1983. The Committee intends that this
insuring authority will be permanently terminated on that date
and directs FBMA to inform all participating insurers of this ter-
mination. The Crime Insurance program has only 56,873 policies in
force and over 71 percent of those policies are concentrated in
three of the thirty participating jurisdictions. The state of New
York alone holds 58 percent of the contracts in force. The Commit-
tee feels that this small level of participation does not warrant a
federal program and that state and private solutions can be found.
The Riot Reinsurance Program covered over 300 companies in
the 1980-1981 contract year, and this year only 17 companies are
participating. This and other available evidence indicates that an
adequate private market now exists for reinsurance, and the need
for a federal government program has been eliminated.
The Committee has extended the authority for FEMA to make
new contracts for flood insurance through September 30, 1985. The
authority to continue the mapping studies to provide detailed flood
insurance risk maps has not been extended. FEMA originally esti-
mated that the mapping would be completed within a fifteen year
period, ending on September 30, 1983. Of the 17,157 communities
participating in the pn^am, 7,264 communities are in the regular
pn^ram and have had the detailed mapping process completed.
However, 9,893 communities remain in the emergency phase of the
program. The Committee feels that the majority of the remaining
areas are not high risk areas and do not require costly and exten-
sive mapping. Therefore, PEMA is instructed to use the Flood
Hazard Boundary Maps to determine the risk premium rate for the
area. If these determinations are not felt to be an adequate reflec-
tion of risk, the rating may be appealed and a detailed mapping
study will be required. Restudies will also be done in areas which
are in the regular phase and file an appeal or request a restudy for
reasons such as substantial development or a natural disaster. The
Committee feels that this process will save the Federal government
up to $200 million in unnecessary mapping fees and will not
threaten the soundness of the insurance prt^am.
The Committee has also authorized a study on the feasibility of
ezfumding the flood insurance program to cover damage or loss
which arises from sinkholes.
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TITLB V. — RURAL HOUSING
The Committee on Banking, Housing and Urban Affairs, in its
review of the Farmers Home Administration's housing pngrams,
has identiHed three m^ior programmatic objectives. The Committee
intends to improve targeting of assistance to the most neeifar per-
sons Emd families in rural areas; make it possible to proviefe Ml
costly housing; and account for the cost and budgetary impact of
these programs.
In evaluating the housing problems faced by low income resi-
dents of rural areas, it was clear that the benefits of the FtaiHA
prt^rams have not reached very low income persons. The Commit-
tee has provided that on a national level at least forty percent of
the single family homes Hnanced under Section 502 must be occu-
pied by very low income persons or families. In order to provide a
degree of flexibility, the Committee has required that each State
m^e at least 30 percent of the units available to very low incwne
families which is consistent with existing law. In the multifamily
bousing prc^am, all of the units which are constructed or beonne
vacant must be occupied by low or very tow income families. To the
extent rental assistance is available, not more than 10 percent of
the units constructed before the effective date of this Act may be
occupied by low income families. In newly constructed projects only
5 percent of the units may be leased to low income families, and at
least 95 percent must be rented to very low income families.
In order to achieve these targeting goals, it will be necessary to
make the units more affordable by reducing their cost. The Qnn-
mittee has afforded both builders and borrowers the flexibility to
use one of several construction codes. A residential project would
be approved if it meets one of the following codes: the FmHA mini-
mum property standards; the HUD minimum property Btandanli
for mortgages insured under Title II of the National Housing Art;
the standanls contained in any of the voluntary national building
codes; or in the case of manufactured housing, the standards cre-
ated from Title VI of the Housing and Community Development
Act of 1974 and the installation, structural and site requirements
which apply under Title II of the National Housing Act.
The Committee has authorized a Rural Housing Preservation
Grant program which would allow states, counties, general units of
local government, Indian tribes and private nonprofit organizations
to compete for funds to administer a housing rehabilitation pro-
gram. This initiative recognizes the need to improve substanwrd
housing conditions in rural areas and capitalizes on the cost effec-
tiveness of this means of providing additional adequate housing for
very low income housing.
liie Section 504 rehabilitation program has been amended so
that very low income families may receive a loan, grant or combi-
nation loan and grant to improve their residence. The Secretary
has been given greater latitude in the type of rehabilitation activi-
ties which can be undertaken as he may finance minor repairs
which do not necessarily bring a unit up to building code stand-
ards. He may also set a maximum amount for rehabilitation activi-
ty which would allow for more extensive repairs.
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The Committee has also authorized the Secretary to subsidize
ens for manufactured housing under Section 502, provided that it
eets specific construction, installation, and site requirements and
andards generally established by HUD prc^ams. Extension of
lis program to manufactured housing will further expand the
railability of affordable housing to many low income families in
iral aretis. The Committee recognizes manufactured housing com-
-iaes a substantial segment of new home sales each year, especial-
in rural areas. Nearly 36 percent of new home sales last year
ere manufactured houses, and sixty percent of those units are
und in rural areas. Manufactured housing represents an accept-
>le, and durable home which appreciates in value at a rate equiv-
ent to that of a comparable site built home. Manufactured hous-
g can silso play em important role in providing rental housing.
lie 1980 Annual Housing Survey estimates that four million
K^le live in manufactured homes on leased land in communities
* parks throughout the country, 60 percent of which are in rural
■eas.
lie Congressional Budget Office testified before the Committee
lat:
. . . rural housing loan programs involve both near-term
expenditures and long term costs that are not apparent in
the budget at the time that loan commitments are made.
The absence of this information makes it difficult to reach
informed judgments regarding the appropriate volume of
annual lending, or the desirability of alternative ap-
proaches to providing rural housing assistance.
The Committee has responded to CBO's urging to alter present
idget practices in order to provide more complete information,
ransactions with the Federal Financing Bank in the form of Cer-
ficates of Beneficial ownership will be treated as borrowing and
ill appear on-budget. This will result in a true reflection of the
nount of lending done by the FmHA for housing. Although this
ay increase the budget by between 3 and 4 million dollars annu-
ly, it will not affect the on and off budget outlays in any year. In
Idition, the Committee is not currently provided with any esti-
ates of the subsidy costs associated wiUi the level of lending au-
lority it provides. In order that Congress make an informed deci-
on, the Committee has required that the FmHA submit an esti-
ate of the potential long term obligation for subsidy costs with
le submission of the Annual Budget. This measure does not re-
lire that funds be authorized upfront for subsidy expenses, but
■ovides a benchmark for Congress to gauge its decisions by.
Title VI contains the program amendments and extensions of
sderal Housing administration mortgage insurance programs and
iscellaneous amendments. Highlights of this title include:
Elimination of the requirement that FHA interest rates be
Bet by law;
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Tlw nngie. lomp^ain mortgaffe nwniaiiee |«raiiiiM ^ PHA
tingle fomUy kiaiH;
An increase in the Loan-to-Talne ratio mohiiig in a hbiDv
downpajioent required on FHA knns;
Expansiiw of the Butxeasful Graduated Pajiiiieut linrtpfe
prcigriun;
Introduction of Adjustable Rate and Shared i
mortgages;
A demonstration program of home equi^ conv
gages to reduce the financial hardships of elderly i
A demcmstration of insuring riiell homes for completian faf
the homebuyer: and
A demonstration program of the feasAnlity of contraetim
with private mortgage insurers.
TTTLC Vn, — MORTGAGE IMTALXT AflBBTANCB
Title VII, the Unemployed Homeowners' Relief Act of 1983,
wuuld authorize Federal guarantees of loans when they arc neces-
sary to help involuntarily unemployed or underemployed bcane-
owners avoid loss of their homes through foreclosure.
The recession, with its unusual severity and persistence, has
plunged hundreds of thousands of hard working families into deep
financial crisis. Although now the worst may be over nationally,
even optimistic forecasts project that a healthy recovery is stUl
many months away in a large number (A areas m the country.
In economically distressed areas, the financial health <^ nunt-
gage lenders has eroded. Residents in the community have had b)
draw down their savings to pay lining expenses. Businesses and
consumers have had to slow down their loan payments. Funds
available to a local flnancial institution have shrunk. Many tenders
can thus be forced by short-tenn legal considerations to take ac-
tions, such as home foreclosures, that conflict with the long-term
best interest of themselves and their community.
The harsh results of that crisis are soaring rates of mortgage de-
linquency and foreclosure, which rose to extremely high levels
during the first quarter of 1983. In March, the delinquency rate for
conventional loans reported by the Federal Home Loan Bank
Board, stood at 2.24%, nearly double the average for the previous
10 years. In 1982, more than 185,000 families had their homes in
foreclosure, more than at any time since the great Depression.
Tens of thousands of families continue to face the loss of their
homes, through no fault of their own and despite great efforts to
remain current in their mortgage payments. According to the
Center for Real Estate and Urban Economics in Berkeley, over
80% of the recent Increase in mortgage delinquencies and foreclo-
sures can be attributed to the high levels of unemployment.
The high rate of foreclosures has become a nation^ problem that
calls for an emergency response. The Committee recognizes that
the great majority nf private lenders have shown an extraordinary
degree of forebearance on delinquent loans. Those efforts are to be
highly commended and should be encouraged by public policy. The
Committee also recc^nizes that foreclosure, regrettably, may be un-
avoidable or the most prudent course for some homeowners.
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10
The Committee is convinced that Congress by providing tai^eted
Federal assistance can help tens of thousands of familes retain
their homes. These families are now threatened with the loss of
their homes even though they have realistic prospects of regaining
their employment and income. Title VII of the bill would authorize
such assistance in the form of Federal guarantees on loans ex-
tended by private lenders under carefully defined circumstances.
The Secretary of HUD, acting through GNMA, would be author-
ized to guarantee up to $750 million in loans to homeowners who
have suffered a substantial loss of income through no fault of their
own. Guaranteed loans could be large enough te cover payments
for up to 24 months plus 3 months of arrears. Loan proceeds would
be deposited in an interest bearing escrow account from which
monthly costs of mortgage principal and interest, insurance and
taxes would be paid.
The Committee would target the assistance on those homeowners
who most need it by limiting the guarantees to those cases in
which:
Pavments have been delinquent for 3 months;
All other usual remedies have been exhausted;
The default is otherwise unavoidable because of involuntary
unemployment or underemployment;
The homeowner had a good credit record prior to loeii^ his
ITiere is a reasonable prospect that the homeowner can
resume full mortgage payments;
Credit counselling is available to the homeowner;
The mortgage is on a principal residence; and
The original mortgage principal was below the present FHA
limits.
The Committee intends that the guaranteed loans be available
after all reasonable and customary forbearance measures have been
exhausted, including the liquidation of nonessential real or person-
al property of the borrower.
To msure that private lenders will carefully evaluate the risk of
default on the guaranteed loan, they would be required to assume
10 percent of any loss on the guaranteed loan. The loan would bear
an interest rate determined by the Secretery of HUD to be reason-
able. The rate would reflect the market rate on similar loana after
taking into account the reduced risk of loss provided by the Federal
guarantee.
A homeowner receiving assistance would be required to pay as
large a share of the monthly costs as his resources permit, but no
less than 5 percent of the amount due monthly. Repayment of the
Cranteed loan would have to b^n within 24 months after the
1 is made and be completed in the subsequent 12 years.
Once a mortgage assistimce loan is guaranteed, if^the originator
sells the loan to other investors, the loan would also carry a
GNMA guarantee of timely payment of principal and interest to
those investors. This guarantiee, while not increasing the Govern-
ment's ultimate risk of loss under the program, would make it pos-
sible for tenders to convert the loan asset into cash and enable
lenders to relieve cash flow problems created by high deltquency
rates.
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11
Federal regulatory agencies — the Federal ResMve Board, the
Federal Home Loan Bank Board, the Comptroller of the Cuiren^,
the National Credit Union Administration Board, and the Direc-
tors of FDIC and FSLIC — would be required to take prtufent ac-
tions to encourage forbearance on defaulted home mortgages and
to have mortgage lenders inform homeowners of this assistance
when foreclosure is initiated.
SBcnoN-BY-SBcnoN Analybib
TITLE I. — RENTAL BEHABnJTATION
Section 122 (a) provides basic authority for the Rental Rehabilita-
tion and Development Grant program. Authorizes the Secretary to
provide modified Section 8 certificates to units of govenunent ad-
ministering a rehabilitation or new construction program. Tlie cer-
tificates are provided to minimize the displacement problems often
caused by rehabilitation projects. The certificates are to be pro-
vided to families becoming tenants in buildings to be rehabilitated
with incomes of less than 50 percent of the median inctnne for the
area or to lower income tenants displaced from buildings assisted
by this program.
The Secretary is expected to provide a rental assistance certifi-
cate for the needs indicated but in amounts no greater than needed
to assist the estimated number of units to be bo rehabilitated. How-
ever, the Secretary should ensure that certificates are provided for
rehabilitation projects before providing certificates on the basis (^
new construction projects.
Subsection (aXlXC) provides basic authority for the Secretary to
make grants for new construction projects.
Subsection (aX2) authorizes $850,000,000 for the program as a
whole. Grant funds are authorized at $300,000,000 for 1984 with
$30,000,000 or A% of the amount appropriated, which ever is less,
available for the Secretary to fund special needs for programs of
substantial rehabilitation or new construction. Chie miUion dollars
is available for the Secretary to provide technical assistance to
states and cities to assist in the development of rehabilitation pro-
grams that maximize the effect of the federal funding, to improve
local prt^ams with poor performance, and to develop the capaci^
of governments to effectively develop and administer a program of
rehabilitation. The use of funds under this section is not limited to
the provision of technical assistance in connection with Section
122. $550 million is available for housing payment assistance certif-
icates.
Subsection (2XbXl> provides for direct allocation of grant funds to
be made to cities of 50,000 or more in population, urban counties
and states by formula. The formula composition, which is left to
the Secretary's discretion aheW use as factors low income renter
population, rental market conditions, overcrowding of rental hou»
ing, the condition of the rental housing stock and other objectively
measurable conditions as required. A state's allocation shall be
based on the above factors for population not located in cities of
more than 50,000.
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12
ection (bX2XA) authorizes the Secretary to establish mini-
lUocations for direct allocations where a lesser amount would
I pro-am infeasible. When a city's allocation falls below the
am allocation amount its allocation shall be added in the
allocation.
ection (bK2XB) authorizes the Secretary, beginning in
} to make adjustments to allocations 15 percent above or
the formula amount for performance in achieving the low-
ite income benefits objectives of the bill,
adjustment of a grantee's allocation on the basis of program
nance is fundamentally different from past housing pro-
Instead of requiring rents at an establisned level or other
»ry controls, the program uses an incentive system to en-
e performance.
ection (bXSXA) requires a city or a State to submit a pro-
lescription for the Secretary's approval prior to the receipt of
t. The description shall describe the proposed prc^am and
es to be assisted, certify that the grantee consulted with the
show the evidence of the grantee s capacity to undertake a
m, the financial feasibility of the program, indicate the selec-
iteiia to be used in selecting projects, the effect of the pro-
>n neighborhood preservation, and certify compliance with
ghts and other appUcable laws. The Committee intends the
:tion review and evaluation to judge an application on an
basis.
use the principal purpose of this section is to expand the
lility of affordable and decent housing and most cities can
»nomically meet this need through a program of rehabiilta-
le Committee expects most communities to operate rehabili-
prc^ams. However, the Committee rect^piizes that in some
lew construction may be necessary to improve the availabil-
ippropriate rental housing. Because new construction is seen
exception to the re^Iar prt^am, an applicant is requred to
ie specific conditions that make a program of new construc-
asonable for that area. Specifically, subsection (bX3XB) re-
that the Secretary fmd that an area is experiencing a severe
!e of rental housing, that it has very low vacancy rates, and
program of other than rehabilitation is needed to improve
opportunities, or to advance a neighborhood preservation
A program of new construction is expected to be operated
the constraints of a yearly grant allocation,
ncourage innovation, full use of available funds, effective
n administration, and performance, subsection (bX3XC) au-
s the Secretary to make grant awards up to 120 percent of
ocation provided to a city under paragraph 1 to the extent
nds are available. The Committee expects funds to be availa-
ere cities and states do not choose to apply for funds or
applications have been denied.
on (bXSXD) requires that at least 70 percent of the assistance
lienefit lower income families but gives the Secretaiy discre-
reduce the percentage requirement to 50 percent where the
; cannot feasibly develop a program under a higher percent-
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18
Subsection (4KA) gives the Secretary authority to limit allocation
of modified Section 8 certiflcates to the number of units to be rAa-
bilitated by a city or a state. To the extent that authority for certif-
icates is available the Secretary shall make thoae certificates arail-
able on the basis of the number of units to be constructed under
the provisions of (dXl).
Subsection (bXlKB) permits the grantee to provide assistance fra-
a period of up to one year for units rehabilitated or develcqied and
requires that all very low income tenants of buildings to be rdia>
bilitated under this program be offered assistance under the modi-
fied Section 8 certificate program. To the extent of available au-
thority, housing assistance may be provided to existing tenanla
with incomes of 50 to 80 percent of area median income at the dit-
cretion of the local agency. In no case shall housing assistance be
provided to families with incomes of more than 50 percent of
median income if the family was not a tenant in a building to be
rehabilitated under this section.
Subsection (bK5) requires the Secretary to review each grantee's
progress and performance in carrying out a program as described
in its application, in carrying out activities in a timely manner,
and in the use of funds in accordance with taw. The Secretary may
reallocate funds among other grantees where grantees are not pe^
forming as expected.
For states that distribute funds to local governments for adminis-
tration, the Secretary shall review performance in terms of timely
distribution, and the state's review of local performance.
The Secretary may adjust, reduce, or withdraw resources as ap-
propriate in accordance with the findings of the reviews. Amounts
that become available through action under this section shall be
reallocated in the year in which they become available as deter-
mined by the Secretary.
Subsection (bX6) allows grantees to shift up to 20% of its grant
funds for the purpose of creating additional housing payment as-
sistance certificates or shift up to 20% of its certificate fiinds fot
the purpose of additional rehabilitation or construction grants.
Subsection (bX7) requires grantees to submit annual performance
reports and the Secretary to undertake annual reviews and audits
of grantee performance. The subsection also permits the Secretary
to adjust, reduce or withdraw resources as review and findings may
indicate. Such resources would be reallocated to other grantees in
the succeeding final year.
Subsection (bX8) permits the Secretary to carry forward and real-
located in the next fiscal year any unobligated funds from the cur
rent fiscal year.
Subsection (c) establishes the basic requirements of the program.
Rehabilitation assistance is limited to residential rental property in
low and moderate in some neighborhoods as chosen by the grantee.
The rehabilitated units shall meet the housing quality standards
established for section 8. Subsection (cX3) limits the grant provided
for rehabilitation or development to 50% of the total cost of the re-
habilitation. However, in special circumstances where reflnancing
costs and the nature of the project increase the rehabilitation costs
substantially, the Secretary may approve assistance up to 50 pei^
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14
ent of total development costs including the cost of refinancing
nd acquisition.
Subsection (cK4) prohibits rental restrictions such as rent control
} be placed on properties assisted under this program, except as spe-
ificaUy required by (a)(6)(A) for 20 percent of the units in develop-
lent projects.
Subsection (cX5) prohibits discrimination against families receiv-
og rental assistance by owners of units assisted under this pro-
ram.
Subsection (cX6) requires that to the maximum extent practicable
orrowers shall be personally liable for any new project indebted-
ess. However, this provision may be waived in cases where the
ecretary determines that the application of this requirement will
oduly restrict the use of the prt^ram, where there are projects in-
(dving new construction, where syndication will allow greater lev-
rage of private funds, and in other cases where the Secretary de-
snnines that personal liability is not practicable.
Subsection (dXD establishes the requirements for prc^rams
rhich include new construction or rehabilitation which is bo costly
a to be comparable to new construction. Cities are permitted to de-
elop programs which include new construction of rental or cooper-
tive housing provided that the Secretary approves the pr<^am
nd the pn^am can be carried out within the amount of the allo-
ation for that city. Where a city chooses to build new units, that
itv will be expected to build those units within the restrictive
ales contained in Section (dX2).
Subsection (dX2XA) requires an owner of a newly (instructed
reject to enter into agreements to assure compliance with all
ules and restrictions of the program and to agree to such condi-
Lons as may be required to assure financial feasibility.
Subsection (dX2XB) requires that a newly constructed project
lust maintain 20% of the units constructed in occupancy or be
vailable for occupancy by lower income families for 10 years. This
equireroent is in direct contrast to the requirement in the regular
ehabilitotion program where low income occupancy is a perform-
nee goal which has an effect on subsequent grants. In the new
onstruction program, low income occupancy is a mandated re-
uirement.
Subsection (dX2XC) requires an owner to pass on to tenants re-
.uction in costs due to the assistance provided. It prohibits an
wner from refusing to rent to a family solely because the family is
eceiving assistance under section 8(d) of the Housing Act of 1937.
Subsection (dX2Xc) prohibits the conversion of rental or cooperative
projects to condominium ownership unless the low income occupan-
y requirements of (DX2XB) continue to be met.
Subsection (dX2XD) estoblishes additional requirements that limit
otal mortgage principal amounts to the limits contained in Section
Xn of the National Housing Act. It also establishes authority for a
Tantee to estoblish a reasonable interest rate and other conditions
ffl projects.
^bsection (dX3XE) requires that a new construction project must
ontain five or more units and must be used primarily for residen-
ial purposes.
Subsection (dXSXA) requires an owner of a project to repay any
MsistaRce received under this section plus interest if the owner
yGoot^le
15
£uk to coatinuallr meet the low income oocnpaacj i
for 10 rears. In 'd/3XB; tlie authonty of the pre»MiM a
taUislwd ai a lien against the propertj.
SubMction <dfit tttabtjthut that the L _ _
the Housing Act of 1937 to indude housing i
Sobaecttoo fdX5f authorized i . .
Uiis sectioa to be eligiMe for insoranee under the National I
Act.
Subsection laHGltA) recpiiies that rrats for units to be "*ff*rtiiiiinf
in low income oocuinncy be apfffwed by the grantee ud ttk
thoae rents not exceed 30% of the income of a fiuwly wfaoae ineaHt
is 'A the '"*■<''*" inoome in theaica.
Subwctioo 'dfSXBl provides that rmts aobmitted Ibr mapnni
under fdJiSjIAf will be deemed to be apfnwed if the giwrtee has not
acted within 60 days. It further provides that a grantee cannot
place restrictions on any of the rents for units not »wai*i*»;T»ii far
occupancy for low income fMinilMwt under subparagrai^H (Aj aad
fBj.
Subsection (d/IBfc) indicates that state or local rent controls nugr
not be applied to structures assisted under this sectian. However,
gmerally applicable program rules governing assistance program
other than those anthorized under this section shall not be pre-
empted by this subsection.
Subsection (eltl} authorizes states to administer grants not direct-
ly administered by cities under subsection (bKZXA). A state's grant
Mall be used for areas not administering their own grants but not
in areas which are eligible for assistance under Title V of the
Housing Act of 1949. Under this section a state may administer its
own prc^am or distrUnite resources to eligible local govemmeDls.
A city with a population over 50,000 may enter into an agreement
with its state to have the state administer its program on its
behalf.
Subsection (eX2> makes the state-run program optional, with
HUD administering the resources where states choose not to ad-
minister a program. HUD administration may include cities ov^
50,000 population in that state which choose not to administer
their own program.
Subsectimi (f) requires the Secretary to establish regulations gov-
erning relocation payments and standards.
Subsection (g) pronibits the use of any federal funds under tiiis
program for the payment of administrative «tpenses.
Subsection OiKl) requires the Secretary to establish regulations
which support national historic preservation olgectives by requir-
ing reliabilitation that would meet historic preservation standards
for historic buildings or by providing the Advisory Council on His-
toric Preservation an opportunity to comment.
Subsection (hM2) exempts projects from NEPA requirements
beyond those required under the CDBG Act.
Subsection (i) defines grantee for this program to be equivalent
to the use of the term in the CDBG Act of 1974. It also permits the
formation of consortia of gecwraphicatly proximate units of general
local governments to apply tor assistance on behalf of their mem-
bers. This subsection further permits consortia whose combined
population exceeds 50,000 to be treated as an eligible city.
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Subsectioii (b) and (c) makes ccmforminK amendments for the
changes amtained in this section.
Subsection (d) provides: In the case of a mortgage insured under
Sectitm 223lfi of the National Housing Act on a property which is
eligible for rental rehab grants, Section 244 National Housing Act
coinsurance includes provisions that —
(1) insurance benefits equal the sum of (A) 90% of the mortgage
on tiie date of institution of foreclosure proceedings (or on the date
d acquisition of the property otherwise alter default), and (B) 90%
of interest arrears on the date benefits are paid: (2) the mortgagee
remit to the Secretary 90% of any proceeds of the property, includ-
ing sale proceeds, net of the mortgagees actual and reasonable
costs related to the property and the enforcement of security; and
(Si payment of benefits oe made in cash, unless the mortfcagee sub-
mits 8 written request for debenture payment. No commitment for
insurance under this authority may be issued on or after October 1,
1985. (sec. 7(a))
Subsection (e) provides: In the case of any purchase or refinanc-
uig of a property eligible for rental rehab grants under Section
^3(f) of Uie National Housing, Secretary may — (A) include reha-
bilitation costs of not to exceed {20,000 per unit, with up to 25%
more for specific properties where cost levels so require; (B) permit
gubordinated liens securing up to the full amount of mortgage fi-
nancing provided by State or local governments or agencies there-
of; and (C) pay benefits in cash unless the mortgagee submits a
written request for debenture payment, (sec. 7(b))
Subsection (f) meikes conforming amendments in accordance with
the foregoing Section.
htle n. — comhuntfy and nsighborhood DBVELOPMKfrr
Section $01: Authorizations
Section 201(a) amends section 103 to authorize no more than
$3,966,000,000 to be appropriated for each of the fiscal years 1984,
1985 and 1986 for community development block grants and urban
development action grants.
Section 201(b) amends section 107(a) by providing that of the
total amount appropriated under Section 103 for each of the fiscal
y^is 1984, 1985 and 1986 not more than {100,500,000 may be set
aside in the Secretary's discretionary fund for grants under subsec-
tion (b). Of this set aside, $50,000,000 for each year must be made
available for grants to Indian tribes.
Section 201(c) amends section 119(a) to provide that of the
$3,966,000,000 authorized under section 103, not more than
$440,000,000 for each fiscal year is aveiilable for urhan development
action grants.
Section SOS: Objective of program and use of funds
Section 202 amends section 101(c) by providing that each grant-
ee's program must also meet the objective of the title i.e. that the
grantee s prt^am must principally benefit lower moderate income
persons.
Sectiwi 202(b) amends section 104(bX3) to further reinforce the
principal benefit test by overlaying the so called three-pronged test
yGoot^le
17
language for project eligibility with the requirement that the use d
funds taken as a whole, over a period spediied bj' the grantee of
not more than three years, must principally benefit persona cS low
and moderate income.
Section SOS: State small cities program
This section deletes the 10% state match or buy in provifflon
from the certification requirements imposed on states operatiiig
the small cites block grant. Experience has shown that participat-
ing states have exceeded this requirement therefore making ita
continuation an unnecessary paperwork burden.
Section 203(bXl) requires a state electing to run the small dtiea
block grant after FY 1984 to permanently run the program as long
as it continues to be authorized. This provision does not mandate
total state administration but rather minimizes the posBibili^,
under the present law, that a state could elect in one year to ad-
minister the program and elect not to administer it in the succeed
ing year. It is the Committee belief that states, as they gain addi-
tional experience with this program, will have no difHculty assum-
ing permanent responsibility for its administration in the future.
Section 203(bX2) provides that the Secretary shall administer the
small cities pn^ram in states where the state government elecll
not to participate.
Section 203(c) is a conforming amendment.
Section 203(d) permits states to withhold a larger share of funds
to cover administrative expenses in running the small cities block
grant. Beginning in FY 1984, a state may deduct the first $100,000
of its expenses from grant funds and then 50 percent of any addi-
tional expenses in excess of $100,000, provided the adtuticmal
amount in excess does not excess 2 percent of the total grant
amount. The Committee recognizes that many states running this
program are approaching the post review and evaluation procesi
which entails considerable administrative expense. Since the Com-
mittee places emphasis on the quality of the review process, it be-
lieves additional funds are warranted to support this responsibility.
Section 203(e) amends section 106(dX3) by deleting subparagrajui
(c). The amendment requires that any amounts aflocatcd for use
under paragraph (1) wluch are not received by the state for any
fiscal year oecause of a failure to meet the requirements section
104 (a) or (b), or which become available as a result of actions
against the state under the section regarding the performance
report for the remedies for noncompliance will be added to the
amounts allocated to all states for the succeeding fiscal year. Funds
received as a result of actions against units of general local govern-
ment in nonentitlement areas of the state or as a result of the
closeout of a grant made by the Secretary in nonentitlement areas
will be added to the amounts allocated to the state in the same
fiscal year that the funds become available. If the state does not
receive a grant in that year, the amount will be added to the
amount allocated to all states for the next fiscal year. This provi-
sion is intended to add an incentive for the Pi^oper oversight and
management of the activities undertaken with CDBG funding. This
does not allow the state or unit of general local government to re-
ceive the same funds again despite its mishandling of the alloca-
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ti<Mi. The Committee, in adopting the change, intends that reallo-
cated funds be made available to localities in a timely manner and
not used to reduce a future request for appropriations.
Section S04: Pubic services '
Section 204 provides a permanent waiver to cities whose public
Bervices expenditures exceed the 10 percent limit is current law.
The allowable amount permitted under this waiver may not exceed
the greater of the dollar amount or the percentage of its FY 1983
CDBG grant which was allocated to public services under previous
waivers. This amount becomes a ceiling in subsequent fiscal years
and in no case may it be calculated on the basis of any funds re-
oedved under or made available by Public Law 98-8, the so called
emergency jobs legislation.
Section SOS: Amendments to statements of activities
Section 205 requires that any grantee modifying or amendii^ ita
ttatement of activities in a fiB<^ year must subject the amendment
or modiHcation proposal to the same public notice and comment
procedure applicable to the original program description under
Section 104(aX2) of the Act.
Section 206: Lump-sum drawdown
Section 206(a) slightly changes the rehabilitation program lump-
nim drawdown process of Section lOi^gXD of the Act by requiring
hat substantial disbursements of the amount drawn down and
ilaced in a revolving loan fund must occur within 180 days after
7ef»ipt of the drawdown from Treasury. It is the Committee's in-
iention that grantees not "pack" funds in bank accounts for long
jeriodfi earning interest without the intended rehabilitation activi-
7 conunencing expeditiously. This should present no difficulty to
Mxnmunities which plan the execution of their rehabilitation pro-
prams well and can time receipt of the drawdown consistent with
the start up of their programs. "Substantial disbursements," while
not tied to any fixed quanitity or percentage of the funds in the
revolving loan account, should be taken to mean that the grantee
has begun to make a significant number of its planned loans on a
rMular basis.
Section 206(b) provides for conditions under which a grantee may
receive payment of its block grant allocation or portion thereof on
an advance basis rather than on the usuiU reimbursable basis. The
Committee believes that communities should be enabled to make
efficient and effective use of block grant funds appropriated by
Congress. Under certain circumstances, a lump-sum drawdown
may be necessary to expedite a project, make a project feasible, lev-
erage private financing, or otherwise make project implementation
more effective or efficient. Therefore, the C>>mmittee believes that
the lump-sum drawdown should be available to grantees as a man-
agement tool but only to facilitate the achievement of specific,
identified local community development objectives. The Committee
intends that communities be precluded from using the lump-sum
drawdown simply to earn interest income from the investment of
unused block grant funds.
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19
Subtction 'b; tluTcface permiu a e
sum dnrvdown wtvn ^hat commtm^ de
muxmary bj help finance, make ftariblc a
tkm '^ certain eox^/xiiJc develapcaeDt pttycta. Grantees «aaU
have di«crecv:n u decide viiec toe lainp-sam drawdown ■■ ohm>
nary, and HLD would be expected to Cacilhaie the loc^ ■*—•*■'"
Ben«fita of t>w lumpsum drawdown. incIodiDg anj iiin ii^ twiw^
w>uld have u> aorue to the project fen- which it wac leceiied. Td be
(^li^hU; for a 1-jmp-fum drawdovii. a- project would have to be io-
cluded in the coinmunit7''9 current statement of ■iliiili*i and be
carriiw] out by public or prirate non-pnifit entities. '^'pM* acttn-
tias oMild include:
Acquisition of real property.
Acquisition, construction, reconstrtictioa. lehabilitatkm. or
installation of:
'1; public Cacilities, site impromnents, and ntilitieB, and
'2t commercial or industnal buildings and other leal
property improvetnents; and planning.
The lumpsum pasmient, together with any interest earned,
would have to be expended for the specified project within two
years.
Section ^OT: Review and evaluation
Section 207 amends section l(>4(dj of the Housing and Conununh
ty Development Act of 1974 to require that the grantee submit ■
performance and evaluation report to the Secretary regarding then-
activities along with an assessment of the relatimubip of the activi-
ties to the objectives of the title and those submitted in the state-
ment of activities under the requirements of subsections (a) and
<bX3). Section 207 also requires that this report be available to the
ctti2ena in the grantee's jurisdiction. The grantee will determine
the manner in which and times when this report will be available.
The report should indicate the program's accomplishments, the
type of changes in the individual program objectives, how the pro-
i;ram should be changed as a result of the grantee's experience,
and an evaluation of who benefited directly from the program. Hie
Secretary should encourage and assist national associations of enti-
tlement grantees and states to develop and recommend uniform
record keeping, performance reporting and evaluation reporting re-
quirements for their respective groups. These recommendatiani
should be made within one year after the enactment of the Hous-
ing and Community Development Act of 1983 and contingent on
the Secretary's approval and consultation with tiie benencianes,
should be established for use by the grantees.
The Committee's clear intention is to substantially strengthen
the qualitative character of the post grant evaluation process in
order that this report become not just a measure of compliance -
with the requirements of the program but also a tool by which a
grantee can objectively measure its progess toward its community
development goals, inform its citizens of that progress and amend
its pri^ram or develop new goals in the future. It is also designed
to underscore the importance of a grantee's adherence to the pri-
mary benefit objectives of the CDBG program and to encourage the
grantee the extent practicable to take better and meaaureable ac-
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count of how its programs directly as well as indirectly benefit both
low and moderate income persons. Finally, it permits organizations
representing grantees to become more directly and actively in-
volved in helping to shape the evjiluation and reporting process.
The Committee particularily wants to encourage work already well
underway by the Council of State Community Affairs Agencies to
develop a reporting and evaluation process for use by state govern-
ments administering the small cities block grant.
Section SOS: Guarantee program •
Section 208 amends the Community Development Block Grant
loan guarantee program to ensure that communities first seek fi-
nancing without the use of a HUD guarantee. The Committee be-
lieves that local communities should be given the administrative
tools they need to include larger projects in their communi^ devel-
(qnnent plans and to carry out their plans expeditiously. Tne loan
guarantee program is therefore retained but limited to use in those
circumstances where the guarantees are necessary to permit timely
execution of program plans.
This section is intended to encourage communities to leverage
private financing for eligible community development projects. The
Committee expects the Secretary to require communities to certify
that they have made a good faith effort, consistent with timely
project execution, to obtain financing without the Federal guaran-
tee. However, the Committee does not intend that communities be
subjected to an overly burdensome or time consuming requirement
to prove that, absent the guarantee, financing could not be ob-
tained, or the project could not proceed.
Section 2(^: Urban development action grants
Changes to the UDAG program are few in number and primarily
intended to increase participation by cities under 50,000 population
in the program.
Section 209(a) provides a $2 million authorization for technical
assistance grants to states or their agencies, state associations of
munich>alities, or university run municipal technical advisory serv-
ices. These institutions are all in a unique position to assist small
communities prepare applications, negotiate deals and otherwise
move through the competitive process. This provision is designed
primarily to permit the cited institutions to play a direct and
active role on behalf of the smtill community. Funding under this
section is designed largely for skill building and educational pro-
frame, not necessarily to support administrative structures in the
mstitutions.
Section 209(b) permits geographically proximate communities
and their non-urban counties to form consortia which can submit
single UDAG applications on behalf of its members. Eligibility cri- '
tena however, remain the same as if a sii^le community were ap-
plying. The consortium is to be treated as a single entity in det«r-
"»ning whether it meets the requirements of the programs.
Section 209(c) This amendment establishes the Committee's
intent that the UDAG program continue to be administered as an
open, uniform national competition that awards Federal assistance
where it will do most to create jobs, leverage private investment
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and stiengUicn the ecoDomics of <
guabiog strength of the UDAG p _
refinement of each project apfMieatioD in competitioo witt all
othen ftijm acnm the country. A national wniwiilkai
matent review proceaa enablea the program boch to
maximum public beoeftt at the least cost in Federal eapeudilMe
and to assure private investors of prompt oonsideiation of prapOMd
projects. The Committee is concerned by reporta of plans to ptewat
communities fnao having their UDAG applications oonsidered h
the national underwriting office until their legional ofiioe eOBa*
ers the anriicatim to be complete. No area or regional office gf
HUD should have authority to delay or preclude consideraticB «f
■ ■ - ■ the r
an aralication for assistance by the Secretary in the i
UDAG cnnpetition.
The eflectivenesB of this cranpetiticm depends upaa the r*^**!***
cf an integral team of UDAG underwriting ^lecialists that is ade-
quately staffed, highly competent and eqierienced in private detd-
opment. The Committee encourages the Secretary to enaUe HUD
area ofFioes to provide local cooununities with nearfagr tapfcni^j as-
sistance in the preparation of UDAG applJcatiooa. However, the
Committee finnly believes that any expansion of tedinical anirt-
ance to local communities should not cnne at the mieiiae cf tte
quality or stafGag of the UDAG underwriting team that »*'«"''»^
ters the national competition.
Section 209(di adds the concept of the nei^iborhoixl statirtin
area, as defined by the U.S. Bureau of the Cmsus, to the list of
subcity or urban county areas which may become the focus d
UDAG eligibility. Ita addition to the Act and the language of 209(e)
recognizes among other things, that many leas economically dis-
tressed counties may have within their boundariea. communitin
which historically and even geographically are reoogniaed &t
having the community identity and attributes of a municipalib
save the fact that they are unincorporated. Through this Mditio™
census definition, ad<Utional fociu can be brou^it to bear on sodi
E laces which in fact have economic conditi<Kia rendering thnn djgi-
le for UDAG a "
Section 210: Eligible CDBG activities
Section 21(Xa) would amend section I05(a> of the Housiiig and
Community Development Act of 1974 to make clear that all puUic
facilities, with the exception of buildings for the general conduct of
eovemment, are eligible for block grant funding. Title I currmtly
has two provisions dealing with public facility elapbilit?. Section
105'aK2) originally purported to be an exclusive &tiiw and con-
tains restrictions on items that are eligible. For example, Gie pro-
tection facilities are only eligible if they are located in or serve des-
ignated community development areas. However, sectiut 105(aX14);
as amended by section 309(f>5) of the Omnibus Budget Bacondli-
ation Act of 1981, made "public facilities" eligible without restric-
tion.
This proposal would eliminate the restrictions in section
10.5(aX2),thus clarifying public facility eligibility. It would also
make clear that facilities for the general conduct of government
are not CDBG eligible. This exclusion is c<Hi8i8tent with general
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Federal policy excluding general governmental expenses from eligi-
bility for Federal grant assistance.
Section 210(c) is intended to encourage the development of inno-
vative or prototypical uses of CDBG funds by removing some of the
uncertainty of a project's eligibility prior to the expenditure of
funds. Under this provision, the Secretary can issue an advisory
opinion for such a project on request of a grtrntee and that opinion
would protect the project's eligibility in a post grant review or
audit unless the grantee materially changed the nature of the
project on which the opinion was based. This provision is not
meant to unleash a wholesale run on the Secretary's oflice for
opinions on any questionable project. Rather, it is designed to en-
courage the imaginative design of innovative projects which can
serve as prototypes for other grantee's programs.
Section 211: Repeahn
Section 211(a) would repeal the Rehabilitation Lofin Program
contained in section 312 of the Housing Act of 1964. This Pn^ram
authorizes direct loans to property owners and tenants to finance
^ rehabilitation of residential and business properties.
lliese functions are eligible for funding under a number of exist-
ing eligible activities in ^e Community Development Block Grant
Program and Title 1 of the Committee proposal.
For example, section 105(aX4) includes as an eligible activity the
rehabilitation of buildings and improvements, including the financ-
ing of public or private acquisition of privately-owned properties
for rehabilitation and the rehabilitation of those properties. Section
105(aX14) provides that block grants may be used, among other
thixigs, to finance the rehabilitation of commercial or industrial
buildings or structures and other commercial or industrial real
property improvements. Finally, section 105(aX15) fillows block
grants to be used for a wide range of rehabilitation activities un-
dertaken by neighborhood nonprofit groups, local development cor-
porations and minority-enterprise small business investment com-
panies. In addition, special funding for rental rehabilitation is pro-
posed in the Department's Rental Rehabilitation initiative. In light
of these existing and proposed authorities, continuation of the
Section 312 Prt^am is no longer desirable.
llie proposal would, however, retain provisions of section 312
concerning the creation and uses of the program's revolving fund.
The provisions would be retained to ensure tnat funds for servicing
and liquidating section 312 loan contracts would be available.
Unused funds would revert to the Rental Rehabilitation and Devel-
opment Grant prcwram in Title I.
The provision also would make clear that the monies in the re-
volving fund for liquidating programs may be used for necessary
expenses (including the use of private contractors) for servicing (in-
cluding protection of security) and liquidating section 312 loans.
Section 211(b) would repeal the Surplus Land Pr<^am contained
in section 414 of the Housing and Urban Development Act of 1969.
Section 414 permits the (jreneral Services Administration to trans-
fer surplus Federal real property to HUD and the Department of
Agriculture for sale or lease at fair value for use for predominantly
low- and moderate-income housing.
yGoot^le
Since its inception, this program haa been infi^uuitly uaed.
Fourteen properties have been transferred since 1970. Nine addi-
tional properties are in the pipeline. This limited activi^ over such
a long period does not justify the costs involved — staff, travel,
etc. — in maintaining the program. Moreover, the program is ad-
ministratively inefficient, since it intetjects HUD anaFmHA be-
tween GSA and the ultimate purchaser/lessee of the property in-
volved.
In addition to repealing section 414, this proposal would permit
HUD and FmHA to dispose of surplus property after the eRective
date of this Act if either Secretary had requested GSA to transfer
the land prior to the effiective date of this Act. This is neceasarr to
assure that adequate time is afforded the Secretaries to complete
processing of projects in the pipeline at the time of enactment of
the 1984 legislation. The Committee urges GSA to make prompt de-
cisions r^arding any transfers requested by HUD or FmHA.
Section 414 presently provides that land conveyed to a private
entity will revert to the United States if it is used for other pur-
poses within 30 years (20 years with Federal approval) after its
transfer for use as low-and moderate-income housing. The repeals
specifically provides that this provision will continue to be in force
and effect for all properties transferred pursuant to section 414 to
which it applies.
Subsection 211(c) would repeal provisions of the Urban Renewal,
Open Space Land and Neighborhood Facilities Programs in ort^
to reduce Federal involvement in decisions which are are appropri-
ately made at the local level.
Paragraph (1) of subsection (c) would repeal section 106(g) of the
Housing Act of 1949. This provision requires localities to obtain a
transient housing study before an Urban Renewal Plan can provide
for the construction of hotels or other transient housing in the
Urban Renewal area. The study is to assure that there is a need
for this type of housing in the area. This requirement would be de-
leted, since the decision concerning whether to permit transient
housing is one that should be made by local authorities who are
most familiar with local zoning and marketing conditions.
Paragraphs (2) and (3) of subsection (c) would eliminate provi-
sions in the Open Space Land and Neighborhood Facilities Pro-
grams which prohibit, without Federal approval, the conversion of
land or property obtained with assistance under the programs for
uses other than those intended at the time the ^ant was miade.
These changes would remove cumbersome restrictions and give the
locality discretion in determining the appropriate use of its land
or pro[>erty, and would thereby promote the effort to decentralise
the decisionrntilung process and speed its return to local control.
The locality in which the Itmd and/or property is situated is best
able to determine what is the most appropriate use of its resources
and whether or not a conversion to another resources luid whether
or not a conversion to emother use is consistent with its needs and
objectives.
Specific provisions to be repealed include:
Section 703(d) of the Housing and Urban Development Act of
1965. This authority prohibits a conversion in the use of nei^
borhood facilities during a 20-year period following the grant,
yGoot^le
24
unless HUD approves the conversion based on the finding that
the conversion is in accordance with the then-applicable pro-
gram of health, recreational, social, or similar community serv-
ices in the area, and is consistent with comprehensive planning
For the development of the community in which the mcility is
Ifjcated.
Section 704 of the Housing Act of 1961. This provision pro-
hibits a conversion of open space land to uses not originally ap-
proved by HUD unless HUD approves the conversion under
r^ulations requiring findings that (1) there is other compara-
ble lemd available for substitution; (2) the conven>ion is needed
for orderly growth and development,; and (3) the conversion is
in accord with the comprehensive plan for the urban area.
The second sentence of section 706 of the Housing Act of
1961, which gives the HUD Secretary general authority to
deny approval of the conversion of land for which a grant was
made to acquire interests to guide future urban development.
Section 212: Miscellaneous amendments
Section 212(a) would amend section 102 of the Housing and Com-
munity Development Act of 1974 to substitute 0MB for the Depart-
ment of Commerce as the entity which designates Metropolitan
Statistical Areas and makes other determinations for purposes of
the Community development Block Grant Program.
This is a technical correction. The responsibility for establishing
MSA's and their central cities is now witii OMB, as is the responsi-
bility for establishing the criteria for the Secretary to use in deter-
mining the extent of poverty, liiis transfer of functions from the
Department of Commerce to OMB was made pursuant to Executive
Order 12318, issued on August 21, 1981.
Section 212(b) amends section 102(aX4) by providing that those
entities which were defined as "metropolitan cities" until the de-
cennial census of 1980 indicated that the population of the city was
less than 50,000 shall continue to be considered metropolitan cities
until September 30, 1984.
Section 212(c) protects the entitlement status for a one year
period for cities once designated as a central city of an MSA even if
the MSA ceases to exist or some other city is designated as the new
central city of the MSA.
Section 212(d) permits a central city which fell below 50,000 pop-
ulation in the decennial census to enter an urban county three
year funding cycle prior to the time that the current three year
cycle terminates. This provision eases the impact of loss of entitle-
ment eligibility for cities whose population no longer qualifies
them for that status.
Subsection 212(e) amends section 104(aXl) of the Act to require
grantees in the Community Development Block Grant program to
include in their proposed and final statements information on the
use of funds made available in previous years and the relationship
of such uses of funds to the community development objectives
identified by the grantee. The requirement is limited to funds made
available subsequent to the pn^ram amendments enacted by the
Omnibus Budget Reconciliation Act of 1981.
yGoot^le
25
A cardinal principle of a block grant is the accoimtabili^ of re-
cipienta to their citizens for their performance in meeting program
objectives. Section 104(aX2XB) currently requires that grantees pub-
lish a proposed statement of community development objectivea
and projected use of funds in such manner as to anord affected citi-
zens an opportunity to comment, among other things, on the grant-
ee's community development performance. However, the statute
currently does not prescribe that the content of the statement in>
elude a report on previous activities. The amendment is intended to
nil this gap and conforms this aspect of the program to the require-
ments generally applicable to other block grant legislation pursu-
ant to Title XVlI of the Omnibus Budget Reconciliation Act d
1981.
Subsection 212(f> amends section 106(b) of the Act to provide
that, in computing the entitlement amount for metropolitan cities
and urban counties which have formed consolidated governments,
the allocation shall be eaual to the sum of the amounts the metro-
politan cities and the oalance of the consolidated Rovemment
(treated as an "urban county" for this purpose) would have re-
ceived if they had not consolidated. The computations would only
be undertaken where data are available from the Census Bureau.
Further, the amendment would only apply to consolidations which
take place on or after October 1, 1983 and only to consolidations
which incorporate all metropolitan cities which received an entitle-
ment grant in the year before the consolidation and the entire
urban county which received a grant in such year.
The current Community Development Block Grant (CDBG) fund
allocation system can serve as a disincentive for local governments
(cities and counties) to form consolidated governmental units. As
an example, the population growth in the outlying part of Vat
county would probably offset the growth lag in the core city, reeul^
ing in little or no growth lag for the consolidated government as a
whole. Since population growth lag greatly affects the CDBG for-
mula outcome, this would likely mean the loss of the benefit the
metropolitan city would otherwise receive through its l^g. There-
fore, the grant that a consolidated government would receive would
be less than the sum each individual entity now receives. This
result discourages consolidations.
The Department believes that the CDBG program fund allocetioD
system should not discourage local decisions to form consoUdated
governments. The proposed amendment would assure that consoli-
dation would not reduce the total available for the consolidating
governments, emd, therefore, not be a disincentive.
Section 212(g) amends section 106(c)(1)(B) to clarify that in the
instance that a citv has funds withheld, they may not receive any
portion of the fun<]s when such funds are reallocated in the subse-
quent fiscal year.
Section 212(h) amends section 106(0 of the Act to allow for a pro
rate increase of all metropolitan city and urban county entitlement
amounts if the formula allocation system fails to distribute all
amounts available. This technical proposal is similar to the present
pro rata reduction feature, which is applied in the event funds are
insufficient to meet formula allocations. Technical changes are also
made to this latter provision to clarify its coverage.
yGoot^le
The amount of an entitlement grant is determined by a dual for-
mula which coDsists of population, extent of poverty and over-
crowded housing on the one hand, and extent of poverty, age of
housing and growth lag on the other. For each element (except
growth lag), the value for each entitlement grantee is di\idefl by
the ¥alue for all metropolitan statistical areas (MSA's>. Sini:^
HSA'a encampasB areas in addition to metropolitan cities and
aiben counties, the value derived ^m the sum of the ratios for
each formula, considered separately, is always less than 1. It is
therefore possible that the sum of all entitlement shares can
amount to less than the amount of funds available for allocation to
entitlement cities and counties. This possibility can be expected to
increase as a result of recent criteria revisions which will incorpo-
rate additional nonentitlement areas within MSA's.
This technical change in section lO&f is prnpoeed in anticipation
of such an event, and provides a mechanism to assure allocation of
all funds if the need should occur.
Section 212(i) would amend section 107(b>(4i of the Act to clarify
HUD's authority to award grants, cooperative argeements or con-
tracts to a variety of qualified groups to provide technical assist-
ance to CDBG and UDAG grantees.
A recent opinion of the General Accounting Office (GAO) has
clouded HUDs l^al authority to award cooperative agreements to
many of these oiganizations. The GAO opinion results from the ap-
plication of the Federal Grant and Cooperative Agreement Act of
1977 to HUD's technical assistance program. Speciflcally, GAO
found that the statement in the last sentence in section 107(bX4),
that the HUD Secretary can provide technical assistance ". . , di-
rectly or through contracts . . ." with certain intermediary groups,
takes arrangements between HUD and those groups ouUiae thi>
coverage of section 6 of the Federal Grant and Cooperative Agrvv-
ment Act of 1977, which prescribes when the use of cooperntivi>
sgreements is permissible. GAO concluded that the arrangemetitji
do not qualify as cooperative agreements because GAO viewiid $nw\\
arrangements onlv as a substitute for the provision of tschnii'nl na-
sistance "directly ' by HUD sttiff and, therefore, an primsrilv i\ir
the direct benefit of the Federal Government and only im-idvut^llv
for the benefit of the pantees. ^
The Department does not believe that the intent itf •(n--.
107(bX4) should be read so narrowly. In order to mno«v «■■% — JU'
tion, this proposed amendment would clari^ HUD's s«iS"-''> - »
provide technical assistance to such intenDMiarJM in t^' — >' -x
peditious and cost-effective manner, and would fsdlitav "*•* ""• * ' ■
thority to assist qualified groups to provids tec)in*.>A' «^ *\- v'""-
a broader basis without designation by the Wtitt. .■«■ *■- -^- ■- ' x'^''
govemmentbeuig assisted by the group. ' • ••^^■
Sactian 8]ll>^~niendB section 112 br •^'iAi'K ^< ■/
loMlflliir '•"v retain inco mt. '<■!■-
ta^dV^ jrfrom ifa «. i^ys.:^. ,,,'.'.;, '^tj
^^^^ nedbvt »««v-. .^.. .,-....„„;,
^^ "*-' ' «k^M, ,.. . ,,..^
yGoo<^\q
27
tary for submisBion of statements required by section 104(a) dtall
be for, but not necessarily in, the fiscal year for which funidB are
made available. As a general matter, the overwhelming majority of
statements are submitted within the same fiscal year fin- wiiich
funds are appropriated. But in a few cases it may be deairable to
provide flexibility in establishing the deadline for States and enti-
tlement communities. Such flexibility could be most pertinent in
instances where funds are appropriated very lat« in the fiscal year,
newly eligible citiea or urban counties are participating in the enti-
tlement mode for the first time, or States are gearing up for initial
administration of the Small Cities Program.
Section 2120) amends section 119(i) providing that after FY 83,
any UDAG funds set aside for small cities which remain unobligat-
ed for 2 succeeding fiscal years may be made available for metnh
politan cities and urban counties.
Section 213: Urban homesteading
Section 213(a) would authorize $17 million for the Urban Home-
steading Prt^am for FY 1984, and such sums as may be necessary
for the program for FY 1985.
Subsection (b) contains a series of amendments to permit HUD
and the governmental entities carrying out urban homesteading
pr<^ams to charge consideration in connection with the transfer
of homestead properties to the entities and to the ultimate owner-
occupants. Existing law requires HUD to transfer properties to
local entities without payment, and requires conveyance of the
property to the homesteader to be "without substantial considera-
tion."
These amendments recognize the fact that free transfer is not
always necessary to successful homesteading. Thus, HUD would be
given discretionary authority to set a transfer price for individual
homesteading properties at a level conducive to attracting home-
steaders, while at the same time stretching scarce Federal re-
sources over more homesteading properties. States and localities
would be free to charge whatever consideration they deem appro-
priate for these properties, subject to the requirement tiiat hafr of
their "gain" would nave to be refunded to HUD.
Subsection (c) would authorize three new demonstratiim pro-
grams. In the first, HUD is to demonstrate the feasibility and desir-
ability of using a variety of homesteading and related techniques to
encourage the reuse of HUD-owned multifEunily properties for pri-
marily residential use, in which the dwelling units would be under
a cooperative or condominium form of ownership. The Secretary
would transfer suitable properties to the State or local government,
which would be responsible for managing the disposition and reha-
bilitation of the property at the local level. The transfer would in-
clude such terms and conditions as would be agreed between the
Secretary and the responsible agency, including the right of the
Secretary to assure that such use m fact occurs. The program
would concentrate on the transfer of properties with approximately
30 units.
The program would be designed to spur local interest in dealing
with deteriorated multifamily housingstock in creative and inno-
vative ways. Among other things, HUD would encourage new ap-
yGoot^le
proachee to multifamlly homesteading, Buch as "condoeteading."
'CondoBteading" would permit homesteaders to build equity, and
could be used to encourage people of middle income to invest and
live in deteriorated buildings and neighborhoods. HUD would also
encourage creative financing techniques for rehabilitation, which
would r^ult in the maximum leverage of public funds.
The Budget assumes participation by up to 15 localities and the
transfer of at least 15 properties, with an average acquisition price
of $200,000 (30 unit properties at $6,50Q per unit average). Since
the Department intends to vary the level of subsidy for property
acquisition by requiring a down payment or equity commitment by
the homestead entity, the total number of transfers could increase
by as much as 50 percent.
Finally, the proposal would authorize the use of homesteading
Aindfi for technical assistance in connection with the demonstration
pn^ram consistent with current authority under the single family
Urban Homesteading Program.
In the second demonstration, the Secretary must use up to
(4,400,000 of budget authority to implement a pri^am demonstrat-
ing the feasibility of providing assistance to lower income families
ao that they can rehabilitate a conveyed property. The amount of
assistance would be based on the designated payment standard for
the area and should be used to reduce the debt service on a reha-
bilitation loan. The assisted family may not make a monthly pay-
ment on the loan, the mortgage or other housing costs, which is
less than the minimum payment that the family would make
under section S.
In the third demonstration, the Secretary is to use up to
$5,000,000 of the amount appropriated for this section to determine
the feasibility of assisting state or local governments or their agen-
cies to purchase real property improved by a one to four family
residence which is not occupied, is designated by a state or gener^
unit of local government for use in a single family homestead pro-
gram, and wiU be conveyed to a low or moderate income individual
or family, provided that they agree to repair all substantial defects
within one year from the date of conveyance, meet applicable local
building code standards and make the property their principal resi-
dence for at least five years. The Secretary should give preference
to demonstrations that involve the acquisition of properties ac-
quired by the city because of tax foreclosure. The Secretary is re-
quired to submit a report to Congress not later than March 1, 1985,
which would evaluate the success of the demonstration as a means
Ot increasing the stock of housing available for the homesteading
program and include recommendations for improving the prc^am.
In general, the Committee wants to increase lower income home
ownership opportunities and believes the urban homesteading pro-
gram may be one of the most cost effective ways to achieve this
goal. The demonstration pri^ama are designed not only to test
new ideas but to find ways to increase the stock of housing availa-
ble to the homesteading prc^am. The Committee expects the Sec-
retary to cany out all three demonstrations expeditiously and to
report to Congress with recommendations at the earliest opportuni-
ty.
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The Committee commends the Department for the formatioa of
its district heating/cooling prt^am and hopes that the program
will continue in FY 84. Twenty eight cities were awarded PhBaa I
feasibility studies in FY 82 and at least three of those cities have
received Phase 11 awards so far in FY 83.' Initially over 100 cities
applied for assistance in studying district heating/cooling and the
Committee expects the program to complete Phase 11 aM. begin a
new round of Phase I grants in FY 84 to respond to this demand.
District heating/cooling^ using steam or hot water, is the m^jor
ener^ infratructure of many cities. If existing systems are not ade-
quately mmntained and rehabilitated these cities could face even-
tual abandonment of their systems. Such abandonment would
result in severe destabilization of mfmy central business districts
that HUD is attempting to revitalize. New systems can promote de-
velopment within areas that need revitalization and can offer ]oBg
term stabilized energy costs and environmental improvements.
HUD's district heating program should address how cities can over-
come project/ development complexities that result when district
heating/ cooling systems are coupled with urban waste-to-energy
systems.
The importance of district heating/ cooling and its national appli-
cability can be seen in the 1983 ground breakiiu; of the urst
modern hot water district heating systems in the UTS.: Baltimore,
MD; Piqua, OH: Trenton, NJ; and St. Paul, MN. The Committee
commends the role that HUD programs played in these projecte,
particularly the application of Urban Development Action Grants,
and encourages the Department to continue to identify such oppor-
tunities.
Section 214: Neighborhood development demonstration
The Committee bill would authorize a $15 million Demonstration
Pribram to assist neighborhood organizations to carry out commu-
nity development activities through an innovative matching grant
mechanism. Designed to encourage greater financial self-sumciency
on the part of non-profit neighborhood development ^oups, the
program would provide federal matching funds of up to $50,000 per
organization on the basis of charitable contributions which organi-
zations raise from individuals, businesses, and religious institutions
in their areas. Different matching ratios would be establi^ed for
participating organizations based upon the size and economic condi-
tion of the community in the which those organizations operate, al-
though the ratio could not be lower than 50/50. In selecting partici-
pating organizations for the demonstration program, the C«mmitr
tee intends that the Secretary shall place particular weight upon
the strategy which the organization presents for achieving greater
long term, private-sector support.
It is also the Committee's intent to help neighborhood organiza-
tions to form community partnerships with business and govern-
ment by providing federal funds with a minimum of strings and
red tape. These funds shall be used to the greatest extent feasible
as a pool of seed capital with which to leverage additional private
and public sector investment in neighborhood development. To en-
courage this entrepreneurial perspective on partnership formation,
the Secretary shall require from each applicant organization a
yGoot^le
30
business plan which specifies leveraging opportunities and experi-
oice. This business plan shall be carefully evaluated is selecting
particiieting organizations from the applicants.
The Demonstration Pr<%ram is focused upon distressed areas of
citiee that qualify for federal assistance linder the UDAG eligibility
criteria. The Committee intends that organizations which work on
a multi-community or county-wide basis in sparsely populated
rural areas, but which otherwise meet the criteria for eligibility es-
tablished in Section 214(aX3) and which propose to work in a de-
fined neighborhood within a UDAG eligible small city, shall be eli-
gible for federal matching grants under the Neighborhood Develop-
ment Demonstration Program.
The Committee bill requires HUD to plan, monitor, and evaluate
the Demonstration Program systematically and to submit periodic
reports to Congress. A formal program evaluation is authorized to
Erovide the Committee with the basis for future l^:i8lative action.
Ip to 5% of the funds authorized for the Demonstration Program
are set aside for these purposes.
TTTLE III. — HOUSING ASSISTANCE PROGRAMS
Section 301: Allocation and use of assisted housing authority
Section 301(a). The current requirements regarding allocations of
housing assistance contained in Section 213(d) of The Housing and
Community Development Act of 1974 are modified to require that
the "fair share" allocation formula be specifically established by
r^ulation. This "fair share" distribution will apply to Section 202
elderly housing loans, any housing payment certificates that are
not linked with the rental rehabilitation and development program
or with formerly assisted units, and any other funds that become
available under housing assistance programs.
Existing provisions are retained which require that (a) allocated
funds first oe made avetilable for other areas in the State before
reallocation to another State and (b) HUD must accommodate the
desires of State and local governments regarding the type of hous-
ing assistance, subject to the limits of total available funds. Under
these provisions the use of recaptured or deobligated funds would
follow this procedure: first, the State or locality with the original
allocation could choose to use the funds for another type of housing
assistance such as modified certificates; second, if the original locaT
ity could not obligate the funds, then other parts of the original
State could choose to use them for any legal type of housing assist-
ance; finally, if the Secretary determines that the funds cannot be
used in the State during the fiscal year, then funds could be made
available in another State. The Committee intends that recaptured,
deobligated, or newly appropriated funds be committed by the end
of the fiscal year so the Secretary should set clear deadlines by
which States and localities must decide the type of housing assist-
ance desired and by which funds must be obligated in a State
before losing them to another State.
In amending the statute governing the allocation and use of as-
sisted housing authority, the Committee intends that the Secretary
oi HL.i should continue to monitor the use of Federal housing as-
sist; . i>y local communities to ensure that the assistance is used.
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81
to the maximum extent practicable, to meet needs and goals identi-
fied in local housing assistance plans. The Committee believes both
that local communities should be encouraged to carefully defiiie
their own housing needs and the HUD must monitor local use of
Federal assistance so that it accomplishes established goals.
This section of the bill also replaces the current set-aside for non-
metropolitan areas of between 20 and 25 percent of each year's
funds. Assistance under the housing payment certificate program is
required to be set-aside for up to 2,000 units for use with the rural
housing preservation grant pri^ram.
Section 301(aX3) authorizes up to $100,000,000 for emeiKencv
shelter assistance grants to be made from the HUD Secretarys
housing discretionary fund. These grants would be used by local
governments and nonprofit oi^anizations to operate emerfcency
shelters.
Section 301(b). Limitations for new reservations of housing assist-
ance in FY 1983 are set at $7.65 billion budget authority and $504
million annual contributions contract authority. From total annual
contributions funds, no more than $230.4 million can be used for
the Section 8 existing housing program or amendments to Section
236 or rent supplement program contracts, $51.9 million for the
housing payment certificate program, $120.2 million for public
housing amendments, modernization, demolition, or disposition.
$4.35 billion of these funds are expected by HUD to be available
from deobligations and recaptures. The bill also authorizes new ap-
propriations if n
Modified section 8 existing housing assistance program Section SOS:
The new housing payment certificate program is established in
this section through several specific amendments to Section 8.
First, Section 302(a) amends Section 8(h) of the United States Hous-
ing Act of 1937 to permit, under Annual Contributions Contracts
(ACCs) executed after enactment of the Housing and Community
Development Amendments of 1983, assistance contracts using ^e
new payment standard for family-selected existing housing. It is
anticipated that all new ACC's providing Section 8 Elxisting Hous-
ing subsidies after FY 1983 will be under the modified program,
except for "project-based" Existing Housing subsidies in connection
with Rent Supplement, Section 236 RAP and Section 23 Conve^
sions.
Section 302(b) amends Section 8(c) to retain most of the features
of the current Section 8 prc^am authority, but aspects of that au-
thority formerly contained in Section 8(d) have been merged into
subsection (c) as well. Thus, subsection (8Xd), completely revised,
will describe the new housing payment certificate program as a
component of the Section 8 Existing Housing Assistance Program.
Three changes in Section 8(c) are proposed. First, fair market
rents must be the same as the rent used to establish the payment
standard in the new program. Second, this subsection clarifies that
the 90-day notice by the owner to the tenant of possible rent in-
creases after contract expiration applies only to new and sub-rehab
projects, as clearly stated in the Conference Report on the 1981 -
Act. Third, tenant selection policies are modified by adding a new
preference for families who are paying more than half their income
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82
for rent Fourth, the local housii^ authority is allowed to adjust
tbe paymmt standard up or down by up to 20 percent for cat^o-
ries of families or types of units provided the adjustment will not
reinure any additional funds from HUD. The PHA must consult
with the local government and the public about the adjustment.
This flexibility will enable PHA'b to adapt the schedule of rents
published by HUD to the local market so that the maximum
number of families can find and actually rent standard housing.
Section 302(c) establishes the housing payment certificate pro-
gram in a new Section 8(d).
This new subsection (dXD requires the Secretary to establish pay-
ment standards (based on dwelling size and type) for different
market areas, and to use these standards to determine the monthly
assistance amount. Payment standard levels must be designed so as
to assist families in securing decent, safe and sanitary housing and
include an amount for utilities. The payments must be based on a
formula in a r^ulation prescribed by HUD within 60 days after
enactment. The formula roust be based on the most recent data for
rents paid by recent movers, be set at the 45 p>ercentile of rents
unless the Secretary finds this is excessive for a particular area, be
a4}u8ted by the Secretary if the PHA presents factual information
about excessive time for certificate holders to find apartments, and
include an amount for utilities. The Committee accepts the sound-
ness of the basic principle of setting a payment standard and pro-
viding recipients with a wider choice of housing than is currently
possible under the Section 8 program. There is evidence that under
the Experimental Housing Allowance Program rents tended to be
lower than under the Section 8 existing program, and that, al-
though rents clustered around the standard, a substantial number
of EHAP participants paid either higher or lower rents. The Com-
mittee is concerned, however, at testimonv that the payment stand-
ard tentatively proposed by HUD would have been so low that re-
cipients would, in fact, have had no option but to pay more than
the program envisages. The standards finally adopted by HUD
should be adequate to provide reasonable housing choice to recipi-
ents without requiring them to exceed the statutory tenant contri-
bution.
The new Section 8(dX2) sets out the basic formula for determin-
ing the assistance paid to a family under the modified certificate
program, llie formula sets the monthly assistance payment at the
amount by which the payment standard exceeds 30 percent of the
family's monthly adjusted income. However, this formula is subject
to a minimum rent" exception. The assistance payment also may
not exceed the amount by which the actual rental (i.e. rent to the
owner plus the allowances for utilities) exceeds the greater of 10
percent of family income or the welfare shelter component identi-
fied by the HUD Secretary.
Proposed new Section 8(dX3) allows only those families deter-
mined to be very low income (i.e. at or below 50 percent of area
median) to quality for assistance under the modified certificate pro-
gram, unless the femiily had been previously receiving assistance
under the United States Housing Act of 1937. Preference is re-
quired to be given to families which, at the time they are seeking
anstance, occupy substandard housing, are Involuntarily dis-
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placed, or are paying more than 50 percent of family inoome for
rent. The first two of these preference criteria are alr^dy included
in the United States Housing Act of 1937. The high rent burden
preference is established in this pri^am, the other Section 8 pro-
grams and the public housing program in recognition of the fact
that families with a high rent burden have greater need for hous-
ing assistance. These preferences follow the recommendations of
the President's Commission on Housing in an effort to assure that
the limited number of certificates and other assistance which can
be made available under current budget constreiints go to famiUes
with the greatest housing needs. The substandard preference
should apply to households whose present accommodations are seri-
ously substandard, or present a threat to health or safety (as distin-
guidfied from relatively minor code violations). The involuntary dis-
placement preference should include homelessness, reflecting past
displacement, as well as displacement from any factors beyond the
reasonable control of the family, even if no public action is directly
or indirectly responsible for the displacement.
Subsection (dj<4) would authorize the Secretary to override the
normally applicable preference criteria in order to use annual con-
tributions contract authority for special purposes. Thus, the Secre-
tary, under the modified program could use certificates for (1) fami*
lies who previously were assisted under the public housing or
present Section 8 program, (2) eligible families occupying units in
formerly assisted projects acquired by the Secretary, or (3) families
in units being rehabilitated under the Rental Rehabilitation and
Development Program,
Subsection <dK5) limits payments for vacant units to the month
during which the tenant leaves the unit.
Under subsection (dX6), contracts with a public housing agency to
administer the modified certificate program would be for an initial
term of five years. PHA's would be required to inspect a unit se-
lected for occupancy by a family holding a certificate and to deter-
mine that the unit met housing quality standards set by HUD
before any assistance payment could be made. Thereafter the PHA
is required to make annual or more frequent housing quality in-
spections. If a dwelling unit failed inspection, no assistance pay-
ment could be made unless the failure was promptly corrected and
the PHA verified the correction.
Under subsection (dX7) public housing agencies are allowed to in-
crease the assistance payments annually during the 5-year contract
period to assure continued afford ability. Under the annual contri-
butions contract the PHA receives 10 percent more funds than the
estimated assistance needs in the first year. Any tidjustments to
the assistance payments must be paid for from these additional
funds plus any funds which become available because of families
dropping out of the program. Funds not needed for adjustments
can be used by the PHA for aiding additional families. The PHA is
required to consult with the local government and the public re-
garding the trade-off between higher subsidies and assisting more
families.
In subsection (dXS) the PHA is allowed to commit up to 5 percent
of its certificates to lower income cooperatives or mutual housing if
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34
it detennines this 5-year commitment will maintain affordability of
this housiiig for poor femilies.
Subsection 302(d) amends Section 8(j) of the United States Hous-
ing Act of 1937 to accommodate a certificate program for families
renting manufactured homes and spaces or manufactured home
spaces.
Section 302(0 exempts the establishment of the specific amounts
for fair market rents or payment standards from Congressional
review procedures. The Committee believes that formal
Congressional and public review of the formula and methodolc^y
for detenninin^ rents is suflicient to allow the particular figures to
merely be published in the Federal Roister.
Amendments affecting tenant rents or contributions
Section 303:
This section makes changes in the 1937 Act and in the gradual
implementation provisions of the Omnibus Budget Reconciliation
Act of 1981 occasioned by the new modified certificate program.
In Section 303(a) the requirement for annual review of family
income has been moved from Section 8(cK3) to Section 3(a) of the
Act, to make the same annual recertification requirement applica-
ble to both the present Section 8 authorities and the new modified
Section 8 program. Also, the rent pavment formula in Section 3(a)
of the Act is revised to provide that the 3(a) formula does not apply
to "rents" paid by certUicate holders under the modified Section 8
Existing Housing Program. (A similar, but not identical formula
for determining assistance levels under the modified program is set
out separately in the revised Section 8(dX2) of the 1937 Act.) Certif-
icate holders under the modified program will pay "rent" at levels
higher or lower than those provided for in 3(a), depending upon the
Snce of housing selected by those families and the amount of subei-
y produced by application of the payment standard formula.
In Section 303(b), Section 3(b) of the Act is Eunended to clarify
that the Secretary may establish income ceilings higher or lower
than 50 percent of meaian on the basis of the Secretary's findings
that such variations are necessary because of unusually high or
low family incomes. The Secretary already has this adjustment au-
thority for establishing income ceilings higher or lower than 80
percent of median, and comparable authority at 50 percent of
median is appropriate, especially in light of the continued shift of
emphasis toward assistance for very low-income families.
In Section 303(c) the value of food stamps is excluded from
income determinations under housing programs as occurs in cur-
rent r^ulations.
In Section 303(d), the Secretary is required to exclude medical
costs that exceed 3 percent of gross income in determining the ad-
justed income of elderly families. This requirement is the same as
m current regulations.
Section 303(e) modifies the requirement for a minimum rent
equal to the "shelter allowance ' portion of public assistance
gnmta. Currently this applies only if the State specifically desig-
nates a shelter allowance and adjusts the allowance based on the
family's actual housing costs. With the modifications in the bill, a
minimum rent will be established for all public assistance recipi-
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35
enta as the amount identified by the Secretai; (but no move than
30 percent). The Secretary can prescribe a4juatment8 to the "ahd-
ter allowance" minimum rent. Such an adjustment is expected to
be made, for example, to avoid forcing a lai^ welfare-aided family
to pay higher rent than a similar family with the same inoome bat
from other Bources. This change to minimum rents will not impoae
an undue hardship on currently subsidized families because it is
subject to a cap on rent increases of 10 percent per year i^iic])
have been maintained by the Committee from legulation enacted
in 1981.
Sections 303 (e) and (f) amend the provisions of Section 322(i) of
the Omnibus Budget Reconciliation Act of 1981 which give the Sec-
retary discretion to gradually phase in the rent increases (from 25
to 30 percent of adjusted income) for tenants receiving nnrriBtHnrf
when that Act was enacted. Rent increases resulting from Uiil
phase-in and from changes in Federal laws or regulations dealing
with what benefits can be "counted" as income for housing assist-
ance purposes are limited by this provision to 10 percent a year.
Subsection (e> of this Section provides for the gradual phase-in of
rent increases caused by the shift to a payment standard-based
housing payment certificate program and extends the gradual
phase-in feature of the 1981 Act to tenants occupying aeaisted hous-
ing at or before the time regulations implementing the housing
payment certiflcate pn^am become effective. This subsection also
applies the 10 percent annual limit on rent increases to increasee
arising from regulations.
The provisions require the Secretary to assure that no family as-
sisted at the time the housing payment certificate amendments are
implemented would experience an increase in rent or contribution,
as appropriate, greater than 10 percent in any 12-month period, if
that increase were attributable to (1) percentage-of -income in-
creases mandated by the Omnibus Budget Reconciliation Act of
1981; (2) housing payment certificate program amendments in this
bill and (3) any other provision of Federal law or r^ulation unless
the increase comes from increases in income unrelated to the
amendments, laws, or reflations. Any combination of these fac-
tors— which would otherwise cause a family's statutory contribu-
tion toward the cost of assisted housing to increase by more than
10 percent a year— would be limited to 10 percent per year. In ad-
dition, the amendments would apply these gradual implementation
provisions to the determination of a family's contribution under
the new housing p>ayment certificate pn^am. Tenants who were
not occupying assisted housing at the time the housing payment
ceriiflcate amendments are implemented would be subject to imme-
diate rent payment or contribution determinations in accordance
with applicable law, with no "phase-in". However, any such tenant
who was occupying assisted housing at the time of a (^ture)
change in Federal law redefining which governmental benefits are
required to or may be consider^ as income would have the effect
of such a change in law limited by a 10 percent cap.
Subsection (f) excludes housing assistance from treatment as
income in other Federal programs.
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Subsection (g) repeals Section 322(i) of the Omnibus Budget Rec-
Midliation Act be<»use it is replaced by the provisions of Subsec-
tion (e) described above.
Section S04: Public housing accreditation
Section 304 establishes the Public Housing Accreditation Com-
mission ("the Commission") by adding a new section 17 to the
Housing Act of 1937.
The new section 17(a) puts the Commission within HUD and
specifies the appointment of its 13 members; with 4 appointed by
the Council of LEirge Public Housing Agencies, 4 by the Nationiu
Association of Housing and Redevelopment OfHcials, 2 by the
Public Housing Agency Directors Association, 1 jointly by the Na-
tional League of Cities and U.S. Conference of Mayors, and 2 by
the National Low Income Housing Coalition. The HUD Secretary
can make appointments if any organization fails to within 60 days
of enactment. Thirty days aSter all appointments are made, the
first meeting of the Commission must occur at which the members
. elect their chairman.
In new section 17(b) the Commission is charged with setting its
own rules and schedules. Its meetings must be open to the public.
The functions of the Commission are set forth in the new section
17(c) as: (1) establish accreditation standards for professional man-
agement of public housing agencies both for operating public hous-
ing projects and the Section 8 pri^am; (2) establish eveduation pro-
cedures; (3) establish sanctions or remedies for PHA's which do not
become accredited; and (4) make recommendations to the HUD Sec-
retarv includii^ which items of maintenance and repair will be the
mA 8 responsibility (funded as part of regular operating subsidies)
and which items will be nuyor systems replacements and thus eligi-
ble for HUD discretionary grants from the new major systems re-
placement fund described under Section 396(c).
Under the new Section 17(d), the Commission is authorized to
apply different standards, evaluation procedures, and accreditation
periods for different classes of PHA's such as past performance,
size of the PHA, or whether or not the agency received operating
assistance. The Commission must also determine the length of an
accreditation period, a termination mechanism, and an appeal pro-
cedure.
Requirements for carrying out the evaluation responsibilities of
the Commission are set forth in 17(e). These include that evalua-
tions be done by teams of PHA ofBcials or housing management
specialists from an area outside the HUD region in which the PHA
is located.
Subsection 17(f) contains the procedures for establishing the ac-
creditation standards and system. Within eight months of its first
meeting, the Commission shall publish proposed accreditation
standards, evaluation procedures, termination and appeal mecha-
nism and remedies for non-accredited procedures. The HUD Secre-
tary may then accept or reject the Commission's proposals in each
of tiioee areas. This HUD veto of the Commission gives the Depart-
ment appropriate review over the "peer review" process inherent
in the accreditation Commission concept.
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Funding for the Commission's operations is established in
Section 17(g>. While it develops its recommendations (described
above in 17(f)), the Secretary will provide personnel and funds.
After that, the Commission is financed by accreditation fees
charged to PHA's.
Section SOS: Increased authority for management flexibility and for
payments for operation of lower income housing projects
Section 305 modiHes the performance finding system under
which operating subsidies are distributed to PHA's.
Part (a) authorizes $1,500,000,000 for FY 1984.
Part (b) requires the continued use of a performance funding
system (PFS) which establishes standards for the costs of operating
a prototype well-managed public housing agency. The Committee
intends that the current PFS system basically remain in place but
that certain improvements should be incorporated based on the
need for updating the system since its establishment and for in-
creasing financial incentives for good management of public hous-
ing. Under the statute the PFS must include (a) regular adjust-
ments in allowable expense levels which reflect the continually
changing costs of running a prototype project; (b) annual adjust-
ments for inflation (so-called "retrospective adjustments"); (c) 50-50
sharing between HUD and the PHA of savings in energy costs; (d)
provisions allowing the PHA to keep funds it receives from sources
other than rents; (e) provisions removing subsidies from vacant or
deprogrammed units by fiscal year 1986; (0 a plan for proportional
reductions in the event total operating subsidy appropriations are
insufBcient; and (g) by FY 1985 a 15 percent ^lowance for ongoing
repairs and maintenance by PHA's that are accredited.
Part (c) provides for multi-year (up to 3 years) contracts with
accredited PHA's. The terms of the contract require that: they
submit data annually to permit the Secretary and the Commission
to determine that an agency continues to be in compliance with the
contract and the law and applicable r^ulations; agencies be per-
mitted maximum flexibility to establisn and implement, at the
local level, its own management, financial and operating proce-
dures; agencies adequately maintain the physical condition of hous-
ing projects, serve the households required to be served by the law
and meets other requirements of this Act governing the operation
of lower income housing projects. These provisions contemplate
maixmum deregulation and minimal day-to-day supervision by the
Secretary of PHA's consistent with the basic requirements of the
National Housing Act.
In Part (e) the terms of contracts with PHA's that lose accredita-
tion are spelled out. These agencies enter into a one-year contract
with the Secretary. The contract emphasizes correcting those condi-
tions which led to loss of accreditation in order to permit the
agency to regain that status. The Secretary is given authority to
apply the remedies or sanctions adopted by the Commission in
order to expedite the correction of the adverse conditions which
exist in that agency.
Part (0 is a transition provision providing 1-year contracts
during FY 1985 for PHA'a which have not yet been evaluated by
the accreditation Commission.
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Part (g) establishes a m^or systems replacement fund from
which the Secretary will make grants for major repairs or replace-
ment of building systems or for major management system im-
provements. These limited purpose grants, along with the 15 per-
cent additional operating subsidy for ongoing repair and mainte-
nance, will replace the current comprehensvie improvement assist-
Section SOS: Comprehejisive improvement assistance
Section 306 modifies the current comprehenisve improvement as-
sistance program (CIAP) to reflect the changes in PFS and the
major systems replacement fund described above in Section 305.
First CIAP is to be used during the transition period before PHA's
are evaluated for accreditation to assure that all housing units
meet habitability standards and that the maximum number of
PHA's can meet physical condition standards to become accredited.
CIAP is then repealed on October 1, 1985, except as applied to
PHA's which have never become accredited because of poor physi-
cal condition of their projects.
Section 307: Demolition and disposition of public housing
Section 307. A new Section 18 is added to the !'.S. Housing Act
of 1937 to authorize approval by the HUD Secretary of demolitaton
and disposition of public housing. Demolition or disposition is now
allowed but only in the context of a complete plan and HUD fund-
ing for comprehensive improvements to all projects managed by a
PHA.
As long as a shortage of low rent housing persists, the Commit-
tee believes that every effort should be made to retain the present
stock of public housing. However, some public housing buildings
ore BO obsolete by their condition, location, or other factors that no
feasible program of modification can return the building to useful
life. The bill therefore includes reasonable and workable restric-
tions which nevertheless allow the demolition and/or disposition of
public housing projects or parts thereof, if there is no reasonable or
viable alternative to bring the project back to useful life. If the con-
dition of the project is such that it would be less expensive to de-
molish and replace it than to rehabilitate it, or if the location is
such as to preclude use, or the density is so high that the project
should be "thinned out", the Secretary may approve an application
under this section only if families to be ejected, and local govern-
ment ofllcials, have been consulted. Any tenants to be displaced
must be given assistance to relocate to other standard housing.
In cases where the PHA requests permission to dispose of a
public housing project, the Secretary can approve the application
only if other conditions are also met; (a) retention of the property
is not in the best interests of the tenants because of adverse
changes in the surrounding area or better opportunities for a more
effective or efiicient lower income housing project, and (b) the pro-
ceeds of the disposition will be set aside to retire outstanding bonds
and any extra proceeds used by the PHA to improve other public
housing projects, to provide assistance under Section 8, or develop
other public housing opportunities. Committee does not require a 1
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for 1 replacement, the availability of vouchers is not soffident
reason to drop public housiiig units ^m stock.
TTie Committee believes that priorities for the public houaang
program at this time should be the modernization of existing struc-
tures and the completion of projects that are already in the pipe-
line.
The Committee's bill would continue the serious efForts now un-
derway to modernize the existing public housing stock of 1:2 mil-
lion units. Mfiny of these units are energy inefficient and otherwise
costly to operate. Many fail to meet present day standards for
decent, safe and healthful housing; some are vacant and uninhala-
table. The Congress has directed that a concerted effort be iniWfit^
under the Comprehensive Improvement Assistance Program to
bring these units up to standard and extend their useful lives. The
Committee believes that priority should be given to ensuring that
the valuable public investment in public housing will be well-man-
aged and maintained on an ongoing basis.
With r^ard to any additional public housing, the Conunittee be-
lieves that priority should also be given to clearing the backlog of
the public housing units that were approved in prior years but
have not yet been constructed. Given uiese priorities, the Commit-
tee does not anticipate that the Congress will provide budget au-
thority for the construction of additional public housing in FY
1984. Nevertheless, the Committee recommends continuation of the
present l^islative authority for the development of low income
public housing under the Housing Act of 1937, since, in the future,
the Congress may provide additional funding.
Section SOS: Financing limitations
This section prevents HUD from contracting with the Federal K-
nancing Bank to make interest differential payments in connection
with FFB financing of tax exempt public housing lotms and re-
quires that these loans continue to be sold in the tax exempt secu-
rities market. The Committee is concerned that repeated and
varied proposals are made by HUD to turn public housing financ-
ing into tuable securities without presenting any analysis of cost
savings to the government. The Committee notes that sales of tax
exempt public housing notes and bonds has successfulW resulted in
the lowest borrowing costs (now around 5 percent) of^any similar
program.
Section 309: Operating assistance for troubled multifamily housing
projects
Would amend Section 201 of the Housing and Community Devel-
opment Amendments of 1978 to delete the Secretary's discretionary
authority to provide oeprating subsidies under Section 201 to trou-
bled multifamily housing projects which, though HUD-assisted, are
not covered by a mortgage which is insured or was formerly in-
sured under the National Housing Act.
Section SIO: Housing for the elderly and handicapped
This section amends the Section 202 pn^ram of housing for the
elderly and handicapped. Under the Section 202 program, the FVed-
eral Government makes direct loans to project sponsors to use in
yGoot^le
40
developing rental housine that is specifically designed to meet the
needs of we elderly and tumdicapped. The bill provides authoriza-
tion for $667 million in direct loans for the development of no more
than 14,000 units of Section 202 housing. In addition, the bill (1)
directs the Secretary to assure the inclusion of special design fea-
tures and congr^ate space necessary to meet the needs of elderly
and handicapped; (2) encourages the provision of small and scat-
tered site group homes and independent living facilities for non-el-
derly handicapped persons and families; and (3) permits any spon-
sor to voluntarily provide funds from other sources for appropriate
amenities if they are not financed or subsidized with Federal
money. A $10,000,000 per year authorization through FY 1986 is
also provided for the associated Congregate Housing Services pro-
gram.
Section 311: Repeal of new construction authority
This section repeals the numerous references to new construction
and substantial rehabilitation contained in the Section 8 program
authorities. These costly forms of assistance for rehabilitation and
new construction have been replaced by the Rental Rehabilitation
and Development Grants. The new construction authorities are re-
tained, however, for obligations made before fiscal year 1983 and
for elderly housing projects financed with Section 202 loans.
Section SIS: Housing demonstration
Authorizes the Secretary, beginning October 1, 1983, to under-
take a demonstration and evaluation of programs to meet the spe-
cial housing needs of older Americans. Up to $10 million is author-
ized to be used from the Secretary's housing discretionary fund
contained in Section 213(dX4).
Section SIS and S14- Section 236 assistance and rent supplement
Sections 313 and 314 require amendments to contracts for 236
and rent supplement assistance, respectively, in unita which were
not financed with a HUD-insured mortgage. These amendments to
State-insured projects would only cover the number of units in a
building occupied by tenants receiving assistance prior to the date
of enactment and is limited by the limitation on new commitments
of annual contributions authority contained in 5<cK5XA) of the 1937
Housing Act. This provision is intended to ensure that lower
income families in subsidized housing do not face rent increases
due to higher operating costs simply oecause they live in a State-
insured building rather than a FHA-insured building.
Section 315: Amendment to section S14 of the 1980 act
Section 315 tunends limitations on housing assistance to certain
aliens to avoid undue hardship where members of the family are
legal citizens and to provide a transition period of up to six months
before ineligible families must be evicted.
Section 316: Pets in elderly housing
Section 316 prohibits owners or operators of federally assisted
housing that is designated for elderly or handicapped tenants from
yGoot^le
i under Section 1223 and 1231, which refer to crime insur-
e and riot reinsurance reapectively, that the powers under Title
Xn wiU terminate on September 30, 1983.
Section 40S: Technical amendments
Section 402(a) amends Section 1370<aX6) of the National Flood In-
surance Act of 1968 by deleting the definition of "Secretary" and
adding a definition of the term 'Director" which means Director of
the Federal Emergency Management Agency.
Section 402(b) amends Section 3(aX6) of the Flood Disaster Pro-
tection Act of 1973 by deleting the deHnition of "Secretary" and
adding a definition of the term "Director" which means Director of
the Federal Emergency Management Agency.
Section 402(c) amends Section 1304(a) of the National Flood In-
surance Act of 1968 by changing the reference to the "Secretary"
of Housing and Urban Development Agency,
Section 402(dXl) changes each reference to "Secretary" in the
National Flood Insurance Act of 1968 or in the Flood Disaster Pro-
tector Act of 1973 to "Director" except in the instance that "Secre-
tary" refers to a Secretary of a department other than the Depart-
ment of Housing eind Urban Development.
Section 402(dX2) changes each reference to "Secretary's" in the
National Flood Insurance Act of 1968 or in the Flood Disaster Pro-
tection Act of 1973 to "Director's" except in the instance that "Sec-
retary's" refers to a Secretary of a department other than the De-
partment of Housing and Urban Development.
Section 402(e) amends Section 15(e) of the Federal Flood Insur-
ance Act of 1956 which provides for funds and Treasury borrowing,
by changing the reference to "Secretary" in the first and third
places it appears to the "Director" of the Federal Emergency Man-
agement Agency.
Section 402(f) amends Section 1201 of the National Housing Act
by adding subsection (c) which defmes the term "Director" as the
Director of the Federal Emergency Management Agency.
Section 402(g) amends Title XII of the National Housing Act by
replacing each reference to "Secretary" with "Director".
Section 402(h) amends Section 1340(aX2) of the National Flood In-
surance Act of 1968. This section authorizes the Secretary to deter-
mine whether a flood insurance prc^ram which consists of an in-
dustry program with Federal financial assistance cannot be carried
out or if the operation would be assisted by the Federal govern-
ment assuming responsibility for flood insurance under title XII. If
the Secretary were to make such a determination, he is authorized
to carry out the program utilizing insurance companies and other
insurers, officers and employees of the Department of HUD and
other officers and employees of any executive agency or both of
these groups. This provision is amended by deleting the reference
to "omcers and employees of the Department of Housing fuid
Urban Development.'
Section 402(i) amends Section 1232(2) of the National Housing
Act which provides that in carrying out his responsibilities, the
Secretary may utilise insurance companies emd other insurers as
well as officers of the Department of Housing and Urban Develop-
ment and other officers and employees of any executive agency, or
yGoot^le
4S
memberB of both of these groups. This provision is amended by de-
leting the reference to "officers and employees of the Department
of Housing and Urban Development, and."
Section 402[j) amends Section 1247 of the National Housing Act
wiiich provides that the Secretary has the functions, powers and
duties authorized in Section 402, except subsection (cX2), (d) and (0
of the Housing Act of 1950. This amendment would gpedfy that
these functions, powers and duties refer to those of the Secretary of
the Department of Housing emd Urban Development.
Section 403: Extension of flood insurance authorities
Section 403(1) amends Section 1319 of the National Flood Insur-
ance Act of 1968 which authorizes the Secretary to enter into new
contracts for flood insurance through September 30, 1982, by ex-
tending the authority through September 30, 1985.
Section 403(2) amends Section 1336(a) of the National Flood In-
surance Act of 1968 by adding that the expiration of authority does
not affect the continued availability of insurance to communities
currently participating in the prt^am or to owners of property
who have made a contract of flood insurance for the property
before the expiration of the flood insurance prc^am.
Section 403(3) amends Section 1307 by adding subeection (D
which authorizes the Secretary to estimate the risk premium rate
for an area, where appropriate, based on an assessment of the flood
risk zones as established by the flood hazard boundary map for
that area.
Section 403(4) amends Section 1360 toy adding that the Secretair
may conduct studies to estimate premium rates and must establish
the risk premium rates for the types and classes of properties in-
sured under Section 1336, the emet^ncy phase of the program, no
later than August 1, 1983.
Section 404: Judicial review
Section 404 amends Section 1333 of the National Flood Insurance
Act of 1968 which provides that the insurance oimpanies and other
insurers which form the industry flood insurance pool may adjust
and pay all claims for proved and approved losses covered by flood
insurance. In the case where the claimant refuses to accept the
amount allowed or the claim, the claimant may institute an action
on the claim against the company or other insurer within one year
after the mailing of the notice of disatlowment or partial disallow-
ment in the U.S. district court for the district in which the insured
property is situated. Jurisdiction is conferred on the U.S. district
court to hear and determine the action regardless of the amount in
controversy. This section is amended to specify that the U.S. dis-
trict court has original exclusive jurisdiction over this action.
Section 405: Study of sinkhole insurance
Section 405 authorizes the Federal Emergency Management
Agency to make a grant to a nonprofit organisation, educational in-
stitution or afUliated agency or entity, or State or local agency to
flnance a study of the feasibility of expanding the national flood in-
surance pr<^ram to cover damage or loss arising from sinkholes.
yGoot^le
45
Btruction Safety Standards. According to an assesBtnent by HUD
these standards are, on an a^^regate basis, comparable in en^vy
performance with the HUD Minimum Property StandaJrds. "me
Secretary may make information available as to Uie benefits associ-
ated with available energy savings techniques. The borrower mav
request additional energy efficiency mechanisms, if the^ are afford-
able to him.
The Committee intends that the FmHA .will act in an expeditious
manner in implementing this program.
Section 503(b) repeals Section 527 of the Housing Act of 1949
which authorizes the Secretary to include mobile homes and mcdule
home sites in the definition of "housing" and prescribes minimntn
property standards for the mobile home and ite site. The language
is unnecessary as the construction standards and site requiremeDtfl
are provided m Section 502 by Section 503(a). The terms and condi-
tions for loans on manufactured homes have been made consistent
with those provided for all other homes financed through Section
502.
Section 503(c) amends Section 502(a) by deleting the limitation on
the interest rate chained on loans made under Section 502 and the
requirement that loans may be conditioned on the borrower pajring
any fees and charges specined by the Secretary. This restriction on
the interest rate has been superseded by authority provided in
Section 521(aXlXB) and is unnecessary in this section. The provi-
sion allowing the borrower to prepay the Secretary as an escrow
agent has also been deleted.
Section 503(d) amends Section 502(bX3) which provides that
except in the case of guaranteed loans, the borrower will refinance
the balance of his loan through a private lender when his income
increases to the extent that it is sufficient to make the required
payments. Section 503(d) deletes the reference to guaranteed loans.
This reierence is unnecessary since the authority for guaranteeing
loans made by private lenders has been deleted.
Section 504: Rehabilitation loans
Section 501 amends Section 504 of the Housing Act of 1949 which
authorizes the Secretary to make a grant or combined loan and
grant to an eligible borrower, provided they cannot qualiiy for
Section 502 or 503. The repairs made under tins section must make
the dwelling safe and sanitary and remove alt health hazards. The
cost for the repairs may not exceed $5,000 if assistance is made in
the form of a grant or $7,500 if a combination loan and grant is
made. The provision amends this section by authorizing the Secre-
tary to make a loan, grant or combined loan and grant to an eligi-
ble very low income applicant provided that the improvements
make the unit safer, more sanitary or remove health hazards. The
Secretary is authorized to determine a maximum amount which is
ipropriate for both loans, grants and combined loans and grants.
le Committee feels that assistance for rehabilitation should be
available to eligible recipients regardless of their ability to qualify
for Section 502 loan in order to improve their housing conditions.
This language does not require that the home be brought up to
code and allows for partial rehabilitation or improvements which
respond to immediate threats to the health and seifety of the resi-
S^
yGoot^le
dent The Committee intends however that the Secretary will es-
tablid loan end grant limits which will be sufficient to accommo-
date extensive rehabilitation of substandard units.
Section o(S: Technical services and research
Section 505 amends Section 506(b) of the Housit^ Act of 1949
vhich authorizes the Secretary to conduct research, technical stud-
ies and demonstrations in order to improve the architectural
design, cost efTectiveness and utility of dwellings. The amendment
vould allow the Secretary to permit housing demonstrations which
do not meet existing standards if it does not adversely affect the
health and safety of the population. Not more than $10,000,000
may be set aside for the purpose of these demonstrations and the
Secretaiy must submit a report on the results of these activities to
Congress at the close of the flscal year. This provision is intended
to aUow the use of new, more efTicient types of housing which may
not meet certain technical standards or agency regulations. Appli-
cants utilizing this authority must submit supportive engineering
data when less than minimum standards would be applicable as
well as to document the feasibility of the proposal. The Committee
does not intend that this funding is to be used for administrative
lading or for research purposes.
Section 506: Standards for adequate housing
Section 506 amends Section 509(a) which authorizes the Secre-
tary to determine standards of adequate housing by requiring the
Secretary to accept a building for fmancing if it meets one of the
followimr standanls; the minimum property standards prescribed
by the Secretary; the minimum property standards prescribed by
the Secretary of Housing and Urban Development for mortgages
insured under Title 11 of the National Housing Act; the standards
in any of the voluntary national model building codes; or in the
case of manufactured housing, the standard referred to in Section
502(e). The Committee intendis that each borrower will have the
ability to select the code which is most appropriate in his particu-
lar case. This does not preclude the Secretary from refusing to fi-
nance a building which exceeds any living space, amenity, design,
or other limitation which the Secretary may prescribe in order to
avoid unnecessary or excessive costs. Section 506 also incorporates
the energy saving techniques and standards established by the Sec-
retary into Section 509(a) and repeals Section 529. The Committee
feels that these codes ensure the construction of adequate housing
while allowing builders and borrowers more flexibility at the local
level. The aim of this provision is to build less costly housing for
low and very low income families.
Section 507: General authority of the Secretary
Section 507 amends Section 510(e) which provides the conditions
under which the Secretary may purchase, sell or dispose of proper-
ty. The provision would allow for the transfer of Section 502 inven-
tory properties for use as rental or cooperative units under Section
51o. These units would be transferred to private nonprofit organi-
zations or public bodies with mortgages containing repayment
terms of up to fifty years. If the transfer of units contributes to the
yGoot^le
47
provisioD of housing for very-low income persons, the transfer' m^
be made at the lesser of the appreiised value or the Fanner's Home
Administration's investment. This provision directs FmHA to ap-
prove the transfer of units not readily resaleable within the
Section 502 program for use as rentals whenever the units are
within reasonable proximity for management purposes and the
organization and application is eligible and Gnandally sound. This
transfer should only take place in the event that the homes In in-
ventory cannot be transferred to an eligible tow or very, low income
family.
Section 508: Amendment to section 511
Section 508 repeals the provision contained in Section 511 which
limits the total principal amount of notes and obligations pur-
chased by the Secretary of the Treasury between July 1, 1956 and
October 1, 1969 to not more than $850,000,000.
Section 509: Repeal of section 512
Section 509 repeals Section 512 which authorizes the Secretary to
make commitments for contributions pursuant to loans made
under Section 503 of no more than $10,000,000 between July 1,
1956 and October 1, 1969.
Section 510: Authorization
Section 510(a) adds a new subsection (a) to which places a limita*
tion of $3,262,000,000 on the amount of loans which may be made
or insured by the Secretary during fiscal year 1984. Of this total
amount not more than the following amounts are available under
subsection (a): 502 loans— 2,300,000,000; 504 loans— 10,000,000; 514
loans— 12,000,000; 515 loans— 940,000,000.
Section 510<(a) also authorizes to be appropriated not more than
the following amounts for fiscal year 1984 under section 513(b): 504
grants- 105,000,000; 509(c)— 1,000,000; 516—10,000,000; 523—
10,000,000.
This subsection also authorizes funds to meets payments on notes
or other obligations issued by the Secretary under Section 511 in
order to administer the provisions of Sections 235 and 236 of the
National Housing Act and Section 8 of the United States Housing
Act of 1937.
Section 510(a) authorizes the Secretary, under subsection (c) to
enter into rental assistance contracts authorized in Section
521(aX2XA) aggregating not more than $230,000,000 during fiscal
year 1984.
Section 510(b) and (c) extend the authority provided under
Section 515(bX5) and 517(aXl) from May 20, 1983 through Septem-
ber 30, 1984.
Section 510(d) repeals Section 521(aX2XD) which authorizes the
Secretary, the extent approved in appropriation Acts, into enter
rental assistance contracts aggregating not more than $230,000,000
under Section 521(aX2XA) during the fiscal year ending on Septem-
ber 30, 1982.
Section 510(e) amends Section 523(f) by deleting the provision
which authorizes not more than $5,000,000 for this section during
yGoot^le
48
fiscal year ending 1982, and by extending the authority to enter
into a loan or contract fi^m May 20, 1983 to September 30, 1984.
Section 510(f) amends Section 523(g) by deleting the authoriza-
tion of no more than $3,000,000 for fiscal year 1982. Subsection
523(g) was amended to provide that not more than $5,000,000 be
made available from the self-help Housing Land Development
Fund during fiscal year 1983.
Section 511: Section 515 amendments
Section 511(a) amends Section 515 of the Housing Act of 1949 to
provide a new subsection which requires the Secretary to consider
the value of a person or family's assets when determining their
income. This should be done in a manner that is consistent with
the method used by the Secretary of HUD for the value of assets
under the U.S. Housing Act of 1937. This provision is based on a
finding from the Inspector General's report which stated that
many of the tenants residing in these units have substantial assets
and is consistent with the (Committee's goal of ensuring that assist-
ance be targetted to the most needy persons or families.
The Secretary must also require that housing constructed under
Section 515 is modest in design and does not exceed the amount of
living space necessary for the expected number of occupants. The
Secretary is prohibiteid from entering into a contract for new units
if they exceed the sizes specified in the applicable construction
standards established by the Secretary. This provision requires that
while assisted housing should not be of inferior quality or design, it
Ediould be suitable for the community in which it is built and
should not have unnecessary amenities which increase the cost of
the units.
Section 511(a) further requires that the Secretary limit increases
in contract rents for newly constructed or substantially rehabilitat-
ed projects to the lesser of the actual operating cost increases in-
curred or the amount of actual operating cost increases incurred
with respect to comparable rental units in the same market area
which are suitable for occupancy by families assisted under Section
515. Where no comparable dwelling units exist, the Secretary has
the authority to approve contract rent increases according to the
best available data regarding operating cost increases in rental
dwelling units. This provision is intended to require that the Secre-
tary allow increases in contract rents only if the operating costs of
comparable units are taken into account. This will allow the Secre-
tary to make determinations based on market indicators.
The Secretary must limit cost increases in newly constructed or
substantially rehabilitated units to those due to unforseen factors
beyond the owner's control, design changes required by the Secre-
tary or the local government, or changes in fmancing approved by
the Secretary. The Secretary should also give preference to projects
which are to be located on donated tracts of land if it makes the
projects more cost effective. This is not intended to give a prefer-
ence to larger more affluent communities which may be able to
donate land but have a lesser need for very low income housing,
nor is it intended to result in the construction of projects on inap-
propriate sites.
yGoot^le
49
Section 511(a) alao requires that management fees not be ezcee-
sive when a Pfoiect is managed by the developer or an afBliate of
the developer. This provision is the result of the fmcliiigs of a
report by the Office of the Inspector General which states that by
forming separate management firms borrowers have increased
their profits and circumvented profit limitations specified by
FmHA instructions. In cases where the borrower's management
firm managed the projects, there were indications that a substan-
tial portion of the management fees represented profit. Exoessive
fees charged by a borrower's management firm result in unearned
profits for the borrower, and eventually result in rental increases
which will burden low income tenants and result in additional
rental assistance costs to the Federal government.
Subsection (a) further requires that to the extent that rental aa-
sistance is available under Section 521(aX2), not more than 10 per-
cent of the dwelling units which were available for occupancy
before the effective date of the Renttil Housing Amendments erf'
1983 and are leased on or after this effective date will be available
for leasing by low income families, rather than very low income
families. In the case of units which are available for occupancy on
or after the effective date of this Act, not more than five percent of
the units will be available for leasing by low income families other
than very low income families. In no event may units which
become available for occupancy under this section after the effec-
tive date of the Rural Housing Amendments of 1983 be occupied b^
families with income above that defined as low income. This provi-
sion is consistent with the targetting restrictions imposed on the
assisted housing programs administered by HUD and furthers the
committee's goal of assisting the most needy of families.
Section 511(b) amends Section 515 to provide that loans may be
made to owners who would be otherwise eligible under this section
to purchase and convert single family residences to rental units of
two or more dwellings. The Secretly is currently authorized to
make these conversions. However, this language should encourage
low income tenant owners to participate in the activity.
Section 511(c) amends Section 515(aX2) by deleting the require-
ment that loans made under Section 515(a) bear an interest rate
determined by the Secretaiy which may not exceed the maximum
rate provided in Section 202(aX3) of the Housing Act of 1959.
Section 515(bX2) is amended by deleting the stipulation that loans
made under Section 515(b) must bear an interest rate determined
by the Secretary which may not exceed the maximum rate pro-
vided in Section 203(bX5) of the National Housing Act.
Section 511(d) amends section 515(c) by providing that loans
made or insured for cooperative housing may be made for detached
units including those on scattered sites. The Committee feels that
cooperative units on scattered sites may be more appropriate in
some communities than multifamily units in smaller, more remote
rural areas.
Section 511(e) amends Section 515(c) by providing that a borrow-
er must submit a market survey indicating a need for low and very
low income rental housing in the community where the project is
to be located and which meets the requirements specified by the
Secretary. If the proposed project requires the allocation of rental
yGoot^le
50
agBigtance pajrments, the Secretary may only require that the bor-
rower demonstrate that market exists for persons and families eli-
gible for rental assistance payments. After this is established, the
Secretary is required to allocate the amount of authority required
to make the project feasible, provided that the authority is availa-
ble, llie Office of the Inspector General concluded that FmHA
should provide an indepth analyses of market surveys to insure
that a need actually exists for rental housing m order to avoid the
vacancy problems encountered in many projects which are located
in remote areas. The language also prohibits the requirements for
dual market surveys which demonstrate that there is a need for
moderate income rental housing in the community in case the
project must be sold from the government's inventory. This process
mcurs excessive cost and delay and is unnecessary if an adequate
demand exists for very low income.
S«:tion 511(f) amends Section 515(dXl) which defines the term
"houBuur" to include manufactured home rental parks where
either the lots or both the lota and the homes are available for use
1w occupants eligible under Section 515. The Committee intends
that manufacture homes with or without land and manufactured
hcnne leased land sites be eligible for assistance under the Section
515 rental program.
The Committee believes that manufactured home rental commu-
nities are an appropriate form of housing for rural low income fam-
ilies, elderly and handicapped persons and provide to such persons
an opportunity of homeownership without the added financial
burden of land owner^p.
Section 512: Insured rural housing loans
Section 512(aXl) amends Section 517(a) to provide that the
amount of a loan made or insured under Section 502 to low income
families cannot exceed the amount necessary to provide adequate
housing which is modest in size, design and cost. The authority to
make and insure loans under this section has been extended from
May 20, 1983 to September 30, 1984. No loans may be made subse-
quent to that date unless a prior commitment was made.
Section 512(aKl) deletes the provision that loans made to persons
of low or moderate income may not bear an interest rate which ex-
ceeds 5 percent per year, and that loans made to borrowers who
are other than low or moderate income may bear interest and pro-
vide for insurance or service charges at rates comparable to the
combined rate of interest and premium charges in effect under
Section 203 of the National Housing Act,
Section 512(aX2) amends Section 515(b) by making a techniciil
change to revise the numbering of subsection (bXA).
Section 512(aX3) deletes Section 517(d) and the second sentence of
subsection (e). Section 517(d) authorizes the loan guarantee pro-
gram which allows the Secretary to insure the payment of princi-
pal and interest on loans made by lenders other than the United
States cmd on loans made from or purchased by the Rural Housing
Insurance Fund which are sold by the Secretary. The second sen-
tence of subsection (e) provides that the guaranteed loan program
be operated separately from the insured loan program and that no
fuivb designated for one pn^ram may be transferred to another
yGoot^le
51
program. The Committee intends to have loans made by private
lenders insured through HUD's FHA program.
Section 512(b) amends Section Sl'nh) which provided that any
sale of loans individually or in blocks will be treated as a sale ot
assets for the purposes of Budget and Accounting Act (tf 1921 al-
though Uie Secretary acts as trustee, and holds the debt instru-
ments and holds or reinvests repayments. Section 512(b) provides
that the Secretary establish and maintain a reserve against lonooo
on loans insured under the Rural Housing Insurance Fund. The
Secretary must submit, as a part of the Budget of the United
States, a report which provides the proposed amount to be set aside
as a reserve for the Rural Housing Insurance Fund, and the esti-
mated amount which might be required to provide interest credits
during the term of outstanding loans made from the fund and
during the full life of loans proposed to be made irom the fimd
during the coming fiscal year. While the Committee realizes that
because of factors such as the transfer and sale of properties and
the graduation of borrowers to private lenders, the full amount of
the subsidy estimated for 502 loans may not be necessary, this full
amount represents the potential long term obligation for the Fede^
al government. Section 512(b) also provides that any transactions
with certificates of Beneficial Ownership wilt be treated under gen-
erally accepted budget and accounting practices for participation
certificates for purposes of chapter II of Title 31, under United
States Codes. The Committee feels that it is essential that Congress
must know the full cost of these programs in order to make an in-
formed decision as to the appropriate levels of funding.
Section 512(c) repeals Section 517(n) which provides that guaran-
teed loans can be made only to borrowers of moderate or above-
moderate income.
Section 512(d) repeals Section 517(o) which requires that at least
60 percent of the loans made under Sections 502 and 515 must bene-
fit persons of low income, and that at least 30 percent of the assists
ance available in any area of any State in a Hscal year must, to the
extent practicable, beneHt persons with incomes below 50 percent
of median income.
Section 512(e) establishes a new Section 517(n) which provides
that the Secretary must promulgate rules and reflations whidi
encourage the rehabilitation or purchase of existing buildings in
order to provide housing which is economical in cost. The Commit-
tee feels that rehabilitation offers a viable and cost effective means
of providing adequate housing to very low income families, in areas
which have available housing stock.
Section 512(e) also provides a new subsection (o) which requires
the Secretary to prescribe criteria which will assure that assistance
is provided to families with the greatest need, residing in remote
rural areas. The Ommittee has directed the Secretary to prioritize
applications submitted by persons and families b^ed on th^
degree of need and their current living conditions. The Committee
is concerned that the Secretory has not directed sufficient atten-
tion to assuring that those most in need receive the services of
FmHA. This amendment requires him to establish a process where-
by the lowest income persons and families living in the worst hous-
ing will be identified and given priority consideration in i
yGoot^le
To further this end, the Secretary should require owners of rental
loaean^ projects financed by FmHA to eetablish waiting lists for
tdniission, appl3an£ the same priority. Housing taken into FmHA's
nventory by foreclosure or otherwise should only be disposed of in
I manner to benefit low-income persons and families living in inad-
■qaate housing unless a buyer fitting that description cannot be
aund after a reasonable marketing effort.
'tetion 51S: Rental assistance tenant contribution
Section 513(a) amends Section 521(b) of the Housing Act of 1949
J indicating that in the case of a project which is financed under
iecdon 515 or 514 before the effective date of the Rural Housing
amendments of 1983 and receives rental assistance, the rent for
mants receiving this assistance cannot exceed thirty percent of
itiusted income. In the case where a 515 loan has been approved
Eobre the effective date and where interest credit is provided, the
inant's rent cannot exceed the greater of 30 percent of their ad-
i^bed income or the rent level established on the basis of a 1 per-
mt interest rate on debt service. The rent for a unit financed
oder Section 514 or 515 cannot be increased by more than 10 per-
snt in any twelve month period, unless the increase is attributable
} an increase in the tenant's income. Section 512(a) also provides
lat in the case of manufactured housing where rental assistance
> provided, the monthly payment for principal and interest on the
lanufactured home and for lot rental and utilities cannot exceed
0 percent of income.
Section 513(bXl) amends the first sentence of Section 521(aX2XA)
'Mch provides that units financed under Sections 514, 515 and 517
e rented to tenants at rates which do not exceed 25 percent of
beir income. Section 513(b) requires that tenants contribute the
ighest of: 30 percent of their monthly adjusted income; or, if the
anants are receiving welfare payments from a public agency, the
ortion which is identified by the Secretary of HUD under Section
of the United States Housing Act of 1937. The rent paid by a
enant cannot increase by more than 10 percent during any twelve
lonth period, unless the increase is a result of an increase in
acome. Section 513(bX2) deletes the provision that rental assist-
nce payments are to be made for more than 70 percent of the
jiits in Jiny project, except when the project serves elderly or
landicapped persons or farm laborers. The provision giving prior-
ity to projects which have 40 percent or fewer of the units receiv-
og rental assistance when approving applications has also been de-
sted.
Section 513(c) amends Section 530 which provides that the Secre-
ary may not approve any increase in rental payments for units
/here tenants are paying more than 25 percent of their incomes
inless the project owner is receiving or has applied for rental as-
istance payments. Section 513(c) changes the reference to 25 per-
ent of the tenant's income to 30 percent of the tentant's income.
Section 513(d) amends Section 521 by providing that the Secre-
ary must extend expiring contracts for those units occupied by low
ocome families when entering into contracts for rental assistance.
lie remaining funds should be used for contracts which assist very
3w income famiUee occupying projects which are committed after
yGoot^le
53
fiscal year 1983. If additional fimdB are available, the Secretary
should provide additional assistance to existing units which would
be occupied by very low-income families. Section 513(dX2) also au-
thorizes the Secretary to transfer rental assistance contract author-
ity from projects where the authority is unused and not needed to
projects where the authority is needed.
Section 514-' Rural trainees
Section 514 repeals Section 522 of the Housing Act of 1949, which
authorizes the Secretary to provide housing and related facilities
for trainees and their families, who are enrolled in courses to im-
prove their employment capability.
Section 515: Technical and supervisory assistance
Section 515(a) amends the last sentence of Section 525(b) of the
Housing Act of 1949, which authorizes the Secretary to require re-
payment of loans made under Section 525 under the terms and con-
ditions he may require when the housing is completed (or sooner.)
Section 515(a) deletes the provision which would authorize the Sec-
retary to cancel any part or all of the loan if he determines that it
cannot be recovered from the proceeds of a permanent loan made
to finance the rehabilitation or construction of the housing. Section
515(b) repeals Section 525(c) which authorizes no more than
$5,000,000 for Section 525 grants and no more than $5,000,000 for
Section 525 loans for the fiscal years ending June 30, 1975, June 30,
1976, and September 30, 1979. Section 515(b) also repeals the provi-
sion that any funds appropriated should remain available until ex-
pended and any funds authorized hut not appropriated for any
fiscal year may be appropriated for any succeeding nscal year.
Section SIS: Condominium housing
Section 516(a) amends Section 526(a) which authorizes the Secre-
tary, in his discretion and under the terms and conditions he may
prescribe, to make loans to low or moderate income families for Uie
purchase of condominium units, by deleting the Secretary's discre-
tion in making loans under this Section. Section 516(b) also amends
Section 526(c) which authorizes the Secretary in his discretion and
under the terms and conditions he may prescribe, to make or
insure blanket loans to a borrower of ownership where each unit is
eligible for a loan or insurance under Section 626. This provision is
amended by deleting the Secretary's discretion in making blanket
loans under this section.
Section 516(b) amends Section 526 by providing that the Secre-
tary may not refuse to make or insure a loan under Section 526
unless the project or units to be financed are higher in cost on a
per unit basis than single family detached units in the same area,
taking into account management and other condominium fees, or if
the project or units do not otherwise meet the requirements i^ the
section. The Secretary may not provide financing if it would result
in the displacement of low or very low-income persons or families
unless relocation assistance is provided for these tenemts.
The Secretary should encourage the use of condominium housing
for low income persons and families, as it presents a unique oppor-
tunity for homeownership to those families who may not be alms to
yGoot^le
54
afford a single family detached home. The Committee expects how-
ever that t£e Secretary, in providing flnancing for condominium
conversion, will make every effort to enaure that low income or
very low income renters are not displaced and if displacement must
occur, these renters are provided assistance for relocation housing.
Section 517: FHA inBunmce
Section 517 adds Section 531 to Title V of the Housing Act of
1949 to authorize the Secretary to act as an agent of the Secretary
of HUD to recommend insurance of any mortgage which meets the
requirements of Section 203 of the National Housing Act. The Sec-
retary may also provide assistance under Section 521 to borrowers
irho are defined as low income in Section 501, in order that they
might reduce the down payment or monthly mortgage payment on
their loans. The Secretary has the authority to establish loan limits
and to provide assistance through a lump sum principal payment
or credit at the time of the purchase rather than through periodic
payments. The Committee feels that FHA insurance can be utilized
to a greater extent in rural areas in order to involve more private
lenders in making loans. The authority to assist low income fami-
lies in obtaining FHA insured mortgages through an upfront write-
down or interest rate reduction is a much more cost effective
means of providing housing assistance than the current rate ad-
ministered by FmHA. This would reduce the Federal government's
role as a direct lender and would eliminate any long term obliga-
tions for subsidy assistance.
Section 518: Rural housing preservation grant program
Section 518 amends Title V of the Housing Act of 1949 by adding
Section 532 which is entitled "Housing Preservation Grants".
Section (a) authorizes the Secretary to make grants to eligible
grantees which include: private nonprofit organizations, Indian
tribes, general units of local government, counties, States and con-
sortia of other eligible grantees. These grantees are all considered
equal and the award of funding will be made on the basis of the
merits of each application according to the criteria set out by the
Secretary. The grants should be used to rehabilitate single family
housing in rural areas which is owned by low and very low-income
persons or families or multifamily rental properties which serve
low and very low-income tenants. The Secretary may also use the
modified Section 8 housing assistance payments provided by the
Secretary of HUD to minimize the displacement problems often
caused by rehabilitation projects. The housing assistance payments
are to be provided to families in buildings to be rehabilitated with
incomes of less than 50 percent of the median income for the area
at the request of the grtmtee.
Subsection (b) authorizes J100,000,000 for each of the fiscal years
1984, 1985 and 1986 for rehabilitation grants made under this
section. The remaining $5,000,000 authorized in Section 513(bXl)
should be used for grants authorized under Section 504. Grant
funds appropriated under Section 532 will remain available
through the end of the fiscal year after the fiscal year in which
they were made available.
yGoot^le
56
Subsection (c) provides that the funds appropriated for the pur-
pose of this section will be distributed by the Secretary to the
states on the basis of an allocation formula. The Secretary must
issue a r^ulation containing a formula which is based on the aver-
age of the ratios between: the population of the rural areas in that
state and the population of the rural areas of all states; the extent
of poverty in the rural areas in that state and the extent of poverty
in the rural areas of all states; and the extent of subetandara houB-
ing in the rural areas of that State and the extent of s
housing in the rural areas of all states. Subsection (c) al
that any funds which are allocated to a state but uncomm5tted to
grantees will be transferred to the State FmHA ofHce, to be used
for rehabilitation grants authorized under Section 504.
Subsection (cX2XA) authorized the Secretary to receive state-
ments of activities from eligible grantees and allocate housing pay-
ment certificates based on the amount of displacement of very low
income persons or families which would result from rental remibili-
tation funded under this section. Each grantee would request the
use of housing payment certificates in order to avoid the displace-
ment of very low income persons or families currently residing in
units rehabilitated by the grantee. Subsection (cX2XB) provides Qiat
the Secretary may include any terms and conditjons he feels are
appropriate m making annual contributions contracts for the hous-
ing payment certiHcates. The Secretary is authorized to include a
provision which would require the grantee receiving the contract
authority to make the authority available to eligible tenants resid-
ing in the structures rehabilitated with assistance from this subsec-
tion.
Subsection (dXD provides that eligible grantees may submit a
statement of activity to the Secretary. The Secretary may desig-
nate the State FmHA office to receive and award grants to eligibk
recipients based on the criteria set by the Secretary and allows the
program administrator to set a date for the submission erf' these
statements. The statement of activity should describe the activities
each entity will undertake and the projected progress in carrying
out these activities during the fiscal year. This statement must be
made available to the public for comment. Subsection (dX2) re-
quires the grantee to consult with and consider the views of respon-
sible local officials in preparing the statement.
Subsection (dX3) requires the Secretary to evaluate the merits of
each statement on the basis of criteria set by the Secretary whidi
include the extent to which the proposed pn^ram would: serve
very low income families; leverage available funds to supplement
the Housing Preservation Grant Program; minimize displacement
of very low income persons and families; alleviate ovetxnx>wding in
rural residences inhabited by low and very low income famiBes;
and minimize the use of grant funds for administrative purposes.
The Secretary may include additional criteria in evaluating the
statements and should also assess the demonstrated capacity of the
grantee to carry out the program as well as the financial feasibility
of the prc^am.
Subsection (e) requires that rehabilitation programs asBisted
under this section be used to provide loans or grants to owners of
single family housing in order to cover the cost of repairs and im-
yGoot^le
56
provements. Loans or grants may also be made to owners of multi-
umily housing provided that the assistance does not exceed 50 per-
cent of the total costs associated with the rehabilitation of the
structure. This assistance must benefit rural residents who are low
and very low income persons or families, without displacing the
current residents of the units to be rehabilitated. The rehabilita-
tion must raise the health and safety standards to meet those spec-
ified in one of the following building codes: the minimum standards
prescribed by the Secretaiy of HUD for mortgages insured under
Title n of the National Housing Act; the standards contained in
any of the voluntary national model building codes or; in the case
of manufactured housing, the standards referred to in section 502
of this Act. Eligible activities may include, but not be limited to:
Provision of adequate plumbing;
Repair of replacement wells or septic tanks;
Preliminary costs related to the installation of central water
and waste water systems;
Additions to the existing unit to relieve overcrowding;
Replacement or repair of electrical wiring;
Weatherization ;
Exterior repair;
Major structural replacements or repairs; and
Any other improvement or repair deemed necessary and in
the public interest.
The owner of a rental structure rehabilitated with assistance
under this section may not refuse to rent a dwelling unit in the
structure to a family because they receive a housing payment cer-
tificate.
Subsection (f) provides that the Secretary must make a review
and audit, a least on an annual basis, to determine whether the
grantee has carried out its activities in a timely manner and in ac-
cordance with any requirements of the section. The Secretary must
determine that the grantee has a continuing capacity to carrv out
the rehabilitation activities in a timely manner and that the hous-
ing p^ment certificates have been administered in accordance
with the Secretary's requirements. The Secretary is authorized to
a4JU8t, reduce or withdraw allocated funds or take any other action
which is appropriate given the findings of the review emd audits.
Resources already expended on eligible activities cannot be recap-
tured or deducted from future resources allocated to the grantee. If
any funds are recaptured, they must be reallocated to any grantee
or grantees selected by the Secretary, durig the same year.
Subsection (g) authorizes the Secretary to prescribe any neces-
sary rules and regulations within ninety days after the date of en-
actment of this section.
Subsection (h) requires that the Secretary establish procedures
which support national historic preservation objectives and assure
that any activity which would affect property that is included or
eligible for inclusion on the National Register of Historic Places
must reasonably meet the standards for rehabilitation issued by
the Secreta^ of the Interior. The appropriate State Historic Pres-
ervation Officer must have an opi>ortunity to comment on the spe-
cific rehabilitation plan. The Advisory Council on Historic Preser-
vation must also have the opportunity to comment on cases in
yGoot^le
which the grantee, in consultation with the State Historic Preser-
vation Council, cannot meet the standards or would adversely
affect historic property.
Subsection (i) requires that the Secretary submit a report to Ccm-
gress no later than one hundred and eighty days after the close of
each fiscal year. The report must describe the progress made in ac-
complishing the objective of the section and summary of the use of
funds during the preceding year. Grantees must submit the informa-
tion necessary for the completion of this report.
Section 5 IS: Miscellaneous
Section 519 amends Title V of the Housing Act of 1949 by adding
Section 633, "Review of Rules and Regulations". This section re-
quires that no rule or regulation may oecome effective unless it
has published for public comment in the Federal Register for at
least sixty calander days. The Secretary must transmit all rules
and regulations to the Chairman and ranking Member of ^e Com-
mittee on Banking, Housing and Urban AfTairs of the Senate and
the Committee on Banking, Finance and Urban AffUrs of the
House at the time they are sent to the Federal Re«;i8ter for public
comment. This subsection does not apply to a rule or r^ulation
which the Secretary issues on an emergency basis. The Ccmunittee
feels that this provision ensures that there is ample opportunity for
comment on any regulations formulated by the Farmers Home Ad-
ministration without putting unnecessary overeight responsibilities
on Congress.
TITLE VI. — PROGRAH AMENDMENTS AND EXTENSIONS
Section SOI: Extension of Federal Housing Administration mortgage
insurance programs
Section 601 of the bill extends (through September 30, 1985) the
authority of the Secretary of Housing and Urban Development to
insure mortgages or loans under certain HUD-FHA mortgage or
loan insurance programs contetined in the National Housing Act. A
technical amendment has also been included to make clear, for au-
thorities proposed for extension, that the authority to mtjte com-
mitments to insure under these programs also is extended through
September 30, 1985. An extension through September 30, 1983 is
proposed for the section 235 program of homeownership for lower
income families.
Under existing law, the authority of the Secretary of Housing
and Urban Development to insure mortgages and loans under
these programs will expire on May 20, 1983. After that date, the
Secretary may not insure mortgages or loans under any of the
megor HUD-FHA insuring authorities contained in the National
Housing Act, except pursuant to a commitment to insure issued
before that date.
Insuring authorities which will expire on May 20, 1983 and are
proposed for extension through September 30, 1985, include those
for the following HUD-FHA mortgage or loan insurance programs:
title I — property improvement ana manufactured home loan insur-
ance; section 203 — basic home mortgage insurance; section 207—
rental housing insurance; section 213 — cooperative housing insur-
yGoot^le
ance; section 220 — rehabilitiatlon and neighborhood conservation
bou^ng insurance; section 221 — housing for moderate-income and
displaced families; section 223 — miscellaneous housing insurance,
including insurance in older, declining urban areas and for existing
multifamily housing projects and hospitals; section 231 — housing
for the elderly; section 232 — nursing homes; section 233 — experi-
mental housing; section 234 — condoroinums; section 237 — special
mortgagors; section 240 — homeowner purchases of fee simple title;
section 241 — supplemental loans for multifamily housing projects,
health facilities and energy conserving improvements; scK^tion
242 — hospitals; section 243 — homeownership for middle-income
families section 244 — mortgage insurance on a coinsurance basis;
section 245— mortgage insurance on graduated payment mortgages;
and tiUe X — land development. The text of the extension for
section 246 appears in the proposed rewrite of that provision in
section 324 of this biU.
The proposed extensions of the above-listed mortgage insuring
authorities are designed to guarantee the continued availability of
FHA mortgage insurance and thus to maintain and enhance the
Department's capacity to contribute to achievement of the national
housing goal of 'a decent home and a suitable living environment
of every American family."
Section 235(m) is extended through September 30, 1984 in order
to assure that units in the pipeline can be insured. No insurance
can be made after that date.
Section 242, the insuring authority for hospitals, is amended to
allow hospitals owned by public agencies to be insured.
Elztensions have not been included for the following provisions of
the National Housing Act: section 235(q) (countercyclical economic
stimulus), section 236 (rental and cooperative housing for tower
income families), section 222 (mortgage insurance for servicemen),
title Vm (armed forces-related housing) and title XI (group prac-
tice facilities).
The section 235(q) authority (countercyclical economic stimulus),
scheduled to expire on May 20, 1983, is not proposed for extension.
This emergency authority has never been activated.
Section 236 was routinely extended until May 20, 1983 by H.J.
R^lution 612. It had previously been extended until September
30, 1982 to permit projects in the pipeline to be processed. Most
such projects have now been processed or cancelled, and those still
in the pipeline have secured commitments which will make possi-
ble the provision of insurance after May 20, 1983 pursuant to a
commitment to insure made before that date. Thus, there is no ne-
cessity to extend the insuring authority.
The program of mortgage insurance for servicemen under section
222 would be permitted to expire on May 20, 1983. Military person-
nel. Coast Guard personnel and employees of the National Oceanic
and Atmospheric Administration certified as requiring housing by
the Secretaries of Defense, Transportation and Commerce, respec-
tively, are eligible under this program. However, since the Depart-
ment of Defense no longer participates in the program, it has
fallen into disuse. In FY 1981 only 260 mortgages were insured,
and in FY 1982 this number fell to 11.
yGoot^le
While the section 244 coinsurance program ia proposed for exten-
sion, the limitation contained in section 244(d) wiU be permitted to
expire. That provision limits the amount of mortgages and loans
which may be coinsured before May 21, 1983, to 20 percent of the
aggregate principal amount of all mortgages and loans insured
under Title 11 of the Act each year. The 20 percent limitation ap-
plies separately to multifamily and single family mortgages.
With respect to multifamily mortages, HUD anticipatea a drop in
the overall amount of multifamily mortgage insurance written in
the FY 1983-1984 period. This will occur at a time when HUD has
developed coinsurance regulations for the purchase or refinancing
of multifamily properties (under section 223(0) and fw private
lender financmg of new construction or substantial rehabiutation
(under section 221), The coincidence of the finticipated decrease in
the overall amount of multifamily insurance to be written and in-
creased policy and program emphasis upon coinsurance makes the
existing 20 percent limitation of section 244(d) an inhibitiiu factor
in carrying out FHA multifamily operations. Expiration of the re-
striction will permit a more extensive and more effective FHA mul-
tifamily insurance program than would otherwise be possible.
With respect to single family insurance, HUD estimates that
both applications and the amount of insurance written in fiscal
year 1983 and fiscal year 1984 will exceed the fiscal year 1982 level.
Although sii^le family operations may continue to work within the
20 percent limit for the present, HUD will be Trmlrmg improve-
ments in its coinsurance r^pjlations with a view towud mafcing
the coinsurance approach more attractive to lenders. HUD antici-
pates a Bubstfintial increase in coinsurance activity as a conse-
quence.
The benefits of coinsurance are clear and compelling: it maxi-
mizes the role of the private sector, it Tedaceajproceeang time
through del^ated processing, and it limits HUD's exposure to
losses through risk-sharing. By permitting expiration of the cur-
rent 20 percent restriction, increased cooperation and direct in-
volvement of the private sector in FHA insurance programs will be
enhanced.
The authority to insure armed forces housing under title VIII of
the National Housing Act (sections 809-810) is not proposed for ex-
tension beyond the current May 20, 1983 expiration date. These
programs have been inactive for several years — no insurance was
written under their authority during fiscal years 1981 and 1982
and no applications for insurance are currently pending.
Finally, there has been little activity under the Title XI authori*
ty to insure Group Practice Facilities, suggesting that whatever
need exists is being met adequately by the private market. Accord-
ingly, no further extension of this authority is being sought.
Section 602: Authorization for appropriations to cover loeaes to the
general insurance fund
Section 602 amends section 519(0 of the National Housing Act to
authorize the appropriation of such sums as may be necessary to
cover losses of the General Insurance Fund. Existing law contains
an overall ceilii^ on the amounts which may be appropriated for
this purpose, which would be removed by this amenoment.
yGoot^le
Losses sustained as a result of the sale of acquired property are
not a function of the amount authorized for appropriations to re-
store the losses. The losses represent the difference between the
purchase price of units acquired through the Department's insur-
ance activities, expenses incurred through maintenance and repair,
and the proceeds realized from sale of these properties. The author-
ization does not limit the loss but merely places a limitation on the
amount which may be sought in recompense for losses already sus-
tained. The present authorization limitation requires the Depart-
ment to seek an increase in the amount authorized for appropri-
aUon before an appropriation to restore the losses can be enacted.
The proDosal would sunplify this process by removing the limita-
tion ana authorizing the appropriation of me sums necessary for
this purpose.
Section SOS: Research authorizations
Section 603 authorizes the appropriation of $18 milUon in flscal
year 1984 and necessary sums for fiscal year 1985 for the Depart-
ment's Research and Technology Prc^am. Particular areas of
study in fiscal year 1984 will include:
The efficiency and effectiveness of assisted housing programs
through reforms of existing programs and evaluation of alter-
native programs;
Issues relating to the De|>artment's mortgage insurance pro-
grams, including alternative housing fimmce mechanisms
&uch as alternative mortgage instruments), alternative tax
and other financial incentives for housing, and the role of sec-
ondary mortgage markets;
Encourai[ement of affordable housing and homeownership by
reducing the component costs of housing (costs of development,
building, financing, and operating);
The effectiveness of the Department's community develop-
ment programs;
Better methods of community management and delivery of
local government services;
Successful neighborhood strategies;
New or improved approaches to urban economic developing,
including the Administration's Enterprize Zone Program; and
Issues related to fair emd nondiscriminatory housing.
Inclusion of the |18 million funding authorization for fiscal year
1983 is a te<^inical amendment to reflect the amount which was in
fact appropriated for Research and Technolc^y for that year.
Section 604: Special assistaiux and emergency mortal^ purchase as-
sistance funds of the Government National Mortgage Associ-
ation
In these programs, GNMA borrows funds from the U.S. Treasury
to finance mortgage purchases, up to commitment levels approved
by Congress. GNMA then places these mortgages in its inventory
or sells them to private investors at a discount which reflects cur-
rent market yields. The diiTerence between the price at which
GNMA purchases mortgages and the price at which these mort-
gages are then sold to private investors is a subsidy to encourage
tiie construction of certain types of housing. No monies have ever
yGoot^le
61
been appropriated to fund this subeidy. GNMA uses the proceeds of
mortgi^ sales to retire its Treasury debt and to finance its oper-
ations.
Section 604 repeals sections 305 and 313 of the Federal National
Mortgage Association Charter Act, but with a savings clause re-
garding purchases or commitments to purchase mortgages under
these sections prior to their repeal. As a technical ccnifonning
amendment section 3(b) of the Emergency Home Purchase Assist-
ance Act of 1974 would also be repealed. The Administration does
not intend to reactivate the EMPA function or seek an exteataoa of
its SAF commitment authority. The Tandem Program used in SAF
and EMPA is an excessively expensive method of increasing the
housing supply. Moreover, this costly subsidy often tends to braefit
those with little or no need for financial assistance in order to
obtain decent, safe and sfmitary housing.
Section 605: Elimination of requirement that FHA interest rates be
set by law
Section 605 amends the insuring authorities in the National
Housing Act which are proposed for extension beyond fiscal year
1983 to allow an insured mortgage or loan to bear interest at a rate
agreed upon by the borrower and the lender. These authorities are:
title I — property improvement and manufactured home loan insur-
ance; section 203 — basic home mort^tge insurance; section 207—
rental housing insurance; section 213 — cooperative housing insur-
ance; section 220 — rehabilitation and neighborhood conservation
housing insurance; section 221 — housing for moderate-income and
displaced families; section 231 — housing for the elderly; section
234 — condominiums; section 240 — homeowner purchases of fee
simple title; section 241 — supplemental loeina for multifamily hous-
ing projects, health facilities find energy conserving improvements;
and title X — land development.
The proposal would repeal section 3 of P.L. 90-301— HUITs inter-
im authority to establish maximum FHA interest rates — as vrell as
section 4 of that Act, which established a commission on interest
rates which expired in 1969.
Section (bXlD amends section 235 of the National Housing Act to
provide for continuation of the Secretary's authority to set interest
ceilings essentially in the same manner as is authorized under
present law. Since the section 235 subsidy is the difference betwerai
the actual interest rate on the mortgage and a below market rate
set by HUD, to allow negotiated interest rates in this pn^rram
might prove prohibitively expensive.
The administered ceiling on the FHA contract interest rate has
outlived its usefulness. The ceiling is an outdated manifestation erf'
concern that some lenders would take advantage of buyer igno-
rance and charge an "above market" rate of interest. MortgKe
rates were relatively stable in the post World War II years by
today's standards, but differed among various r^ons of the coun-
try. This difference relfected the relatively greater demand for
funds in some areas and the immobility of mortga^ funds across
regions. In the interest of promoting a truly national mortgage
market and facilitating the flow of funds between r^ons, FHA at-
tempted to set a national mortgage rate.
yGoot^ie
62
Over the jiears the perception has developed that, by setting a
ceiling, FHA determines mortgage interest rates. This is simply not
the case. FHA mortgages are sold to investors at market yields. In-
vestors discount the loans to bring the yield up to those available
on alternative investments. These discount "pointe," although they
cannot Ic^cally be charged directly to the borrower, can be ultimate-
ly passed on indirectly, typically in the price charged by the seller.
H<wtgage markets are now national in scope and extremely com-
petitive. Homebuyers can readily obtain information on the proper-
ty and 95 percent of the "appraised value" in excess of $25,000. No
amendment to this and other loan-to-value ratio requirements was
included in the 1982 Reconciliation Act.
By longstanding administrative practice, the Department has cal-
culated ma«imiiTn loan-to-value ratios on a basis which included
closing costs in "appraised value." Consistent with this practice,
the Department intends to include also the amount of the up-front
premium as an element of "appraised value" for the purpose of cal-
culation of the maximum loan-to-value ratio. The result of this will
be that in the case of loans which are at the maximum ratio before
consideration of the up-front premium, the required downpayment
will be increased by the percentage resulting from the applicable
loan-to-value ratio (5 percent in the case of a loan coverwi by the
ratio provision cited above where the value exceeds $25,000).
Subsection (a) would correct this unintended result by providing
in oneplace the general authority to increase, by the amount of
the MIP, the otherwise applicable single family maximum mort-
gage amount — irrespective of whether the amount is arrived at as
a result of the relevant dollar or loan-to-value limitation. Subsec-
tion (b) contains the technical conforming amendmenta to each
section of the National Housing Act affected by this provision. Sub-
section (c) requires the Secretary to make a finding and report to
Congress that this action along with the increase in the loan to
value ratio will not affect the actuarial soundness of the insurance
fund.
In addition to statutory provisions directly addressing downpay-
ment requirements, the amount of the required downpayment is
also aflected by maximum loan-to- value ratios. For example,
section 203(bX2) of the National Housing Act provides that insured
loans may not exceed an amount equal to the sum of 97 percent of
the first $25,000 of the "appraised value" of the going rate for a
mortgage loan, and can n^otiate for themselves a market interest
rate. Thus, the ceiling is no longer needed.
The recent volatility in interest rates has made the ceiling ex-
tremely difficult to administer. The FHA ceiling must reflect cur-
rent market interest rates if homebuyers are to obtain mortgage
credit. When interest rates move by as much as five discount
points within a week, as they have in the recent past, it becomes
increasingly difficult to administer the contract interest rate effec-
tively.
In summary, the FHA will follow the conventional mortgage
market by letting the borrower and lender determine the mortgage
interest rate.
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63
Section 60S: Amendment to section SS7(bX2XA) of the MuUifamUy
Mortgage Foreclosure Act of 1981
Section 606 allows for the use of Section 8 certificatea in anisting
tenants of foreclosed projects.
Section 607: Treatment of FHA single family premiama
Section 607 makes certain technical corrections relating to the
treatment of mortgage insurance premiums (MIKb) under HUD**
single family mortea^ insurance programs. HUD is propoeiiig to
implement by r^ulation its authority to charge a single, lum[^«um
MIP covering the full term of the mortgage at the time the loan ia
closed. As part of implementing the new Bystem, HUD propoaed
last year to amend certain sections of the Naticmal Housiiig Act to
increase the otherwise applicable ma»iTptim dollar mortgage
amounts by the amount of the MIP, and to exclude the amount of
the premium from "cost of acquisition" for purpoeea of detemuning
minimum down payment requirements. Congreaa enacted theae
proposals as section 201 of the Omnibus Budget Reconciliation Act
of 1982.
One of the purposes of the amendmenta was to permit the home-
buyer to add the amount of the MIP to the amount of the insured
loan, thereby assuring that implementation of the new system
would not Increase existing downpayment requirements. Because of
their placement, however, the amendments did not completely ful-
fill this intent.
Section 608: GNMA and FHA limitations
Section 608 amends section 306 of the National Housing Act to
allow GNMA to make commitments to issue guarantees up to the
aggregate amount of $68,250,000,000 during fiscal year 1984.
Section 531 of the Nationd Housing Act is amended to allow
FHA to make commitments to insure loans and mortgagee up to
the aggregate principal amount of $46,000,000,000 in fiscal ytnt
1984.
Section 609: Repeal of requirement to publish prototype housing
costs for one- to four-family dwelling units
Section 609 repeals section 904 of the Housing and Community
Development Act of 1977, which requires HUD to prepare and pub-
lish annually prototype housing costs for one- to four-family dwdl-
ing units for each of the approximate 650 housing market areas in
the United States.
Preparation and publication of prototype costs under section 904
is expensive and unnecessary. The legislative history provides no
specific reason for the requirement to prepare and publish this in-
formation other than for "public" information. Tlwee figures are
not used for operation of any HUD program. Neither the general
public nor emy public agency or private entity has expressed the
view that the information is useful. The main area of comment has
been from mortgagees, builders and developers challenging the ac-
curacy of the figures.
yGoot^le
64
Section SIO: Incretued loan limits for manufactured homes and lots
under title I of the National Housing Act
Secti<Hi 610(a) of the bill amends section 2(b) of the National
Housing Act to increase the maximum loan limits for manufac-
tured bomea, lots and home-and-lot combinationB under the title I
program. The maximum loan amounts would be increased to
|i0,5()0 for manufactured homes (60 percent of the section 203(b)
mortgage limit); $13,500 for lots (20 percent of the 203(b) limit); and
$64,000 for combination home and lot loans (80 percent of the
203(b) limit). High-cost area adjustments would be authorized as de-
scribed below, llie revised home limits would apply to till manufac-
tured homes, irrespective of the number of modules.
These increases in the title I loan limits are needed to reflect the
risiiig costs for manufactured homes, land acquisition and site
preparation. Based on present trends, the price of a new multi-
module home is expected to average $37-39,000 by 1984. Developed
lot prices vary greatly from one part of the nation to emother, but
amounts in the range of $12-14,000 are not unusual.
TTie new loan limits are related to the basic mortgage limit for
siiit^e family homes under section 203(b) of the Act, but are adjust-
ed for the lower sales prices and different site development and
foundation requirements where manufactured housing under the
title I program is involved. Since there is a considerable overlap in
unit sizes and sales prices between single-module and multi-module
homes, there is not longer any necessity for diiTering maximum
loan amounts for single-module and multi-module homes.
Subsection (b) would authorize the Secretary to increase the
maximum limits for lot loans and for combination home-and-lot
loans in high-cost areas to the extent the Secretary deems neces-
sary. However, the percentage increase from the basic loan limits
could not exceed the percentage by which the maximum loan
amount for a one-family residence in the area is increased by the
Secretary under section 203(bX2) of the National Housing Act. The
Secretary is authorized to increase the section 203(b) dollar limit
for one-family residences on an area-by-area basis by up to the
lesser of 133H percent of that limit or 95 percent of the median
one-family house price in the area.
This provision would make title I insurance available in those
market areas where the higher costs of land acquisition and site
development are the nuyor factors limiting the program's useful-
ness. This subsection would replace the Secretary's existing author-
ity under section 2(bX2), which limits high-cost area adjustments
for lot loans and combination loans to $7,500. The provision in
section 2(bX2) authorizing the Secretfiry to increase the dollar limit
on loans for manufactured homes or lots in Alaska, Guam or
Hawaii by up to 40 percent would remain unchanged.
Manufactured homes constitute a significant portion of the hous-
ing market. In 1982, manufactured homes represented more than
25 percent of all new single family homes constructed in the
United States. This proposal would permit the Department to serve
better the needs of low- and moderate-income homebuyers by ex-
panding their options to purchase a home.
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Section Sll: Authority for refinancing manufactured homei tmdtr
title 1 of the National Housing Act
Section 611 amends section 2(b) of the National Hounng Act to
permit owner-occupied manufactured homes or home and lot ccnn-
binations which were purchased witiiout title I insurance to be refi-
nanced under title I.
The Housing and Community Development Amendments of 1981
amended title I to authorize the refinancing of a manufactured
home lot under title I, even if it was previously purchased without
such assistance, so long as the refinancing is in connection with the
purchase of a home to place on the lot. "nds proposal would extend
this refinancing authority to situations where Uie home (or home
and lot combination) was previously purchased without title I in-
surance, if the home was construct^ in accordance with standards
established under section 604 of the National Manufactured Hous-
ing Construction euid Safety Standards Act of 1974, la owner-occu-
pied and otherwise meets the requirements for title I insurance.
The proposal is consistent with the policy of eliminating unneces-
sary restrictions and discriminatory treatment of manufactured
housing. It would permit manufactured homes to be treated the
same as site-built homes with repaid to refinancing under an FHA
insurance program.
Section €12: Change in nuxximum loan-to-value ratio for modestly
priced single family homes
Section 612 amende section 203(bX2) of the National Housing Act
to increase the maximum loan-to-value ratio for homebuyers pur-
chasing modestly-phced single family homes.
The current loan-to-value provision in section 203(bX2) estab-
lishes, for most cases, a mEiximum mortgage amount on a one^
four-family residence as the sum of 97 percent of the first $25,0()0
of appraised value and 95 percent of such value in excess of $25,000
(su^'ect to the maximum dollar limits prescribed in section
203(dX2)). Section €12 would permit a maximum mortgage amount
of 97 percent of the first $50,0(K) of appraised value and 95 percent
of such value in excess of $50,000 again subject to the maximum
dollar limits.
The amendment would significantly reduce the downpayment re-
quirement for purchasers of modestly priced siztgle fanuly housing.
Reducing the initial cash investment should permit more low- and
moderate-income, first-time home buyers to own their own homes.
The Committee is concerned that this reduction in the required
downpayment not result in the FHA insurance program facing ex-
cessive insurance claims. Thus the bill requires the Secretary to
find and report to Congress that this reduced downpayment will
not adversely affect the actuarial soundness of the FHA fimd.
Section 633: Non-occupant single family mortgagors
Section 613 provides higher maximum mortgage amounts for
non-occupant owner one- to four-unit dwellings insured under
section 203(b) of the National Housing Act.
Present law limits the principal amount of an owner-occupant
mortgage which may be insured under section 203(b) to the ieaaet
yGoo<^\q
of specified ddlar amounts or amounts resulting from specified
loan-to-value ratios. Thus, the maximum insurable amount for a
topical single family home is the lesser of $67,500 or the sum of 97
percent of the first $25,000 of value and 95 percent of the remain-
der. Section 203(bXS) of the Act limits the maximum insurable
amount for investor-owners to 85 percent of the owner-occupant
ceiling. Thus, for a typical single family home, the limit is 85 per-
cent of S67,500, or $57,375.
I%i8 anwndinent would set the investor limit at the lesser of the
otherwise applicable dollar amount or 85 percent of the appraised
value of the property as of the date the mortgage is accepted for
insurance. This would make the maximum dollar amount which
may be insured for investors the same as that for owner-occupants,
while at the same time restricting the percent of value which could
be insured for investor-owners to 85 percent of appraised value,
lie proposed change would help Btimulate investor interest in one-
to four-unit dwellings, thereby resulting in increased rental hous-
ing supply.
Section S14-' Premium charges for insurance of alternative mortgage
instruments
Section 614 allows the Secretary to fix insurance premiums sepa-
rately for the different alternative mortgages subject to the current
cap of one percent.
Section 615: Shell home construction
Section 615 of the bill amends section 203(k) of the National
Housing Act to permit the Secretary to insure, on a coinsurance
basis pursuant to section 244 of the Act, mortgage loans (including
staged advances made during construction) for the purchase and
construction of single family "shell homes" for occupancy by the
homebuyer. No more than 30,000 mortgages covering shell homes
could be insured pursutmt to this authority.
The authority would be similar to that now provided in section
203(k) for the rehabilitation of family dwellings. The insured ad-
vances ordinarily would cover the costs of acquisition and prepara-
tion of the home site; purchase of and construction by a contractor
of the "shell home;" and exterior/interior finishing work, some or
all of which may be done by the homebuyer.
At the time of closing for purchase of the lot, the lender would
release only those funds needed to finance the acquisition and
preparation of the site and the purchase and construction of the
'shell." The remaining mortgage proceeds would be disbursed only
at various stages based upon the lender's inspection and certifica-
tion that the completed work met all applicable HUD and local
standards.
The maximum mortgage limit for a shell home would be limited
by the provisions of section 203(bX2) which apply to the basic FHA
single family mortgage program. As was proposed by the Depart-
ment for FY 1983 for all FHA single family programs (except
section 235), and is proposed by section 306 of this bill, the interest
rate on shell home loans would be a matter to be negotiated by the
bcnrrower and the lender.
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67
"Hie Secretary would encoura^ borrowers, to the nazhnom
extent poesible, to contribute their own labor to the cmnpletion of
the home. The amount of work to be done by the buyer would
depend on his or her relative skill levels. A oontributim trf labw
would reduce the amount of the mortgage, increase the borrower'tf
equity, and make htnneownership more anordable.
Innovative self-help housing programs to help homebuyera
reduce the cost of home purchases have been developed throughout
the country. Thev have included the use of modular houBing and
prefabricated and other types of partially constructed housing, in
addition to shell housing. These tvpes of self-help programs in the
non-FHA market are often unavailable to homebuyers traditionally
served by HUD — moderate-income and fiist-time buyera — because
of the cost of high interest rates on interim or construction finaioo-
ing and the lack of guaranteed permanent, long-term fiiunring
after completion of construction. Tiaa proposal is deaigned to make
this type of bousing alternative available to the traditional FHA
homebuyer and, thus, extend the availability of afibrdable housing
to many more Americans.
Section 616: Payment ofciaims without HUD acquisition of title
Section 616 amends section 204(a) of the National Houidng Act to
give HUD discretion to permit mortgagees to submit claims on
forecloeed insured sin^ family properties and be paid without
transferring title to HUD.
Under the current eysteim, the mortgagee must transfer title or
assign the mortgage to HUD before a claim for the full amount of
indebtedness can he paid. The mortgagee acquires title after de-
fault 1^ either a deed in lieu of foredbeure or hy bidding the prop-
er^'s outstanding indebtedness at the foreclosure sale and being
the highest bidder. Title is then transferred to HUD. Upon convey-
ance of title, HUD pays 90 percent of the claim (i.e., 90 percent of
the outstanding indebtedness). HUD also reimburaee the mortgagee
for operation, maintenance and a portion of the forecloeure ex-
penses. Once title is determined to be marketable, HUD pays the
remaining 10 percent. Upon transfer of title, HUD is responsible
for holding costs, marketing and sale of the property.
Subsection (a) would permit HUD to pay off the insurance claim
without requiring transfer of title, where thepropertr is sold at
forecloeure for at least its fair market value (FMV), with such ad-
justments as the Secretary deems appropriate. Mortgagees would
continue to be required to notify the Secretary of doault and the
institution of forecloeure. Before the forecloeure sale, HUD would
establish the property's FMV through use of an appraiser or by
other appropriate means, and make any needed adjustment to that
amount. The amount HUD would pay to the mortsagee should
forecloeure be necessaipr would be the lesser of the unerence be-
tween (1) the outetanding indebtedness and the atlju^ed FMV or
(2) the outstanding indebtedness and the sale price received at the
forecloeure sale. HUD would continue to reimburse mortgagees for
operation, maintenance and a portion of the foreclosure expenses,
'nius, assuming an insured property with an adjusted FltfV of
$20,000 which is sold for that amount and an outstanding ind^ted-
ness of $30,000, HUD would pay the mortgagee $10,000, plus i«im-
yGoot^le
r txpeasea. If a bid at the forecloeure sale were re-
ceived for $21,000, HUD would pay $9,000, plus expenses.
If DO Inds were received at we forecloeure sale for at least the
pR^ier^B adjusted FMV, the mortgagee would bid at the sale,
transfer title and file a claim with HUD in accordance with the
current program. Taking the example above, if a bid were received
for $9,000, the mortgagee would bid more and convey title to HUD.
HUD would then pay the mortgagee as it does now under the cur-
The proposed system would be implemented by r^utations as a
standard feature of all single family insurance programs, and
would apply with respect to mortgages insured pursuant to com-
mitments issued on or after the provision's effective date, and, with
mortgagee approval, with respect to insured mortgages for which
commitments were insured before that date. Claims where title is
acquired by the mortgagee through a deed in lieu of foreclosure
would be processed in accordance with currant practice.
As with the current prt^am, if a default were due to cireum-
Btances beyond the mortgagor's control, the Secretary would be
able to take an assignment of the mortgage as provided by section
230 of the National Housing Act. Claims on assigned mortgages
would be paid to mortgagees in accordance with current practice.
In addition, mor^igors would remain eligible for Temporary Mort-
age Assistance Payments as provided by section 230 of uie Act.
liiis proposal would not affect the coinsurance program under
section 244 of the National Housing Act.
For insurance claims paid under the new system, the proposal
would reduce HUD outlays significantly. HUD would not be re-
sponsible for holding, marketing and sfue costs for properties sold
at foreclosure for at least the adjusted FMV. In addition, unlike
the current system, HUD would only be paying a portion of the
total outstancung indebtedness at the time the daim is paid. Thus,
upfront outlays and overall costs would be cut. This approach is
consistent with the Administration's policy of making use of pri-
vate sector expertise wherever possible. Not only would the Federal
role in free market activities be reduced to the greatest extent pos-
sible, but also the procedure would be similar to that used by the
private mortgage insurance industry. In addition, because the fore-
closure sale and subsequent avfiilability of the property for resale
would be expedited, the potentially deleterious effect on the sur-
rounding neighborhood from the property standing vacant for a
long period of time would be reduced.
Section 617: Discretionary authority to regulate rents or charges
Section 617(a) removes language in section 207 of the National
Housing Act mandating that the Secretary r^ulate project rents
and rates of return, and would substitute discretionary authority in
the Secretary to provide for such r^ulation. This change (and the
parallel amendment of section 234(dK2) contained in subsection (b»
would conform these authorities to other National Housing Act
multifamily authorities (sections 220(dX2XA), 221(DX4), and 231)
iriiich provide for discretionary authority to r^ulate rents and
charges.
yGoot^le
lie purpose of these changes is to permit the Department to
der^Tulate rent levels in unsubsidizad, insured prpjects. Deregula-
tion is expected to help assure the fUiandal stability of inrared
Erojects, and will reduce administrative costs for the Department
y eliminating the review and processing of applications fm* rmt
This deregulation would apply to existing mortgages as well as to
future unsubeidized project mortgagee. An«r appropriate regula-
isting mortgagors would be invited to amend th^ regulatory
agreements to remove requirements for HUD ap[Hroval of rmt in-
creases. The Department would, however, reserve the rif^t to
resume regulation of rents and charges for any such project m the
future.
Section 618: Mortgage iTuuraitce for jnanufactured home parka for
the elderly
Section 618 amends section 207(bX2) of the National Hounng Act
to permit the insurance of manufactured home parks designed ex-
clusively for Dccupan^ by the elderly. Present law statee that the
insurance of section 207 mortgages is intended to fjacilitate particu-
larly the production of rental accommodations "suitable for family
living." Section 207(bX2) goes on to prohibit the provision of insur-
ance under section 207 unless the mortgagor certifies under oath
that there will be no discrimination "vy reason of the fact that
there are children in the famil;^. . . ."
The amendment would retam this basic rule, but would provide
language clari^ring that exception may be made with regard to
manufactured home parks deeigned exclusively for the elderly.
Recent surveys indicate that about one-third of all manufactured
home units are occupied by elderly persons. Since section 207 is the
only authority for insuring manuractured home rarksj the change
in section 207(bX2) is necessary to meet the need fbr uisurance to
develop parks designed, constructed and managed for occupancy
exclusively by the elderly.
Section 619: Removal of refinancing limitations on certain multi-
family projects
Section 619 amends the mortgage limit provisions of sections
220(dX3), 221(dX3) and 221(dX4) of the National Houung Act to fa-
cilitate refinancing to perform substantial rehabilitation. Currently
under these provisions, the limits on mortgages for substantial re-
habilitation of properties are based upon the sum of the cost of
repair plus the value of the property before rehabilitation. Howev-
er, where there is an existing mortgage, and application to insure a
new mortgage under one of these provisions is made, the mortgage
limits would be based upon the sum of the estimated cost of repair
plus the existing indebtedness (rather than the value of the proper
ty before repair). The amendment would delete the latter formula,
so that the mort^iage limits would be the same for refinancing as it
is for new financmg for substantial rehabilitation.
The limitation involving existing indebtedness for refinancing in
the current laws prevents owners from realizing any of their eoui^
if they wish to rehabilitate a project and retain ownership, 'nus
yGoot^le
70
forces sales <^ the ^(^rties if the owners are to realize any equity
from t^ pK^ecte. This limitation is contrary to a policy of encour-
agiiig rehabUitation and retention of, rental property by present
owners. As a result of this inequity, many projects re<tuiring reha-
bilitation cannot receive the benents of rehabilitation without the
sale to another owner.
Section 620: Assignment of section S21(gX4) mortgages to GNMA
Section 620 amends section 221(gX4) of the National Housing Act
which permits mortgagees holding section 221 mortgages which are
not in default to assign them — twenty years from the date of insur-
ance endorsement — to the Secretary, and to receive the benefits of
The purpose of section 620 is to authorize the Secretary to direct
mortgagees exercising this assignment option to deliver the mort-
gage and credit instruments directly to the Government National
Mortgage Association. Upon such an assignment to GNMA, the
rights of the mortgagee would be identical to those provided in the
present law. The proposal would, however, establish a more effec-
tive provess within HUD for dealing with these assignments.
GNMA, acting as agent for the Secretary, would take delivery of
the mortgages. However, FHA would contmue to process the claims
on these mortgages and assure that all assignments are I^ally suf-
ficient and properly completed. GNMA would pay for them with
debentures issued pursuant to the current procedure outlined in
section 221(gX4). lliese debentures would be debited against the
FHA fund. Upon sale of the loans, GNMA would provide the pro-
ceeds to FHA. GNMA would be reimbursed for all administrative
costs.
Without this amendment, FHA could continue to be responsible
for taking as^nment and servicing these mortgages, but an in-
crease in stamna in HUD'S Office of Finance and Accounting
would be required, since that office is not prepared to take on the
additional responsibility caused by the forthcoming eligibility of
numerous section 221 mortgages for 2Q-year assignment.
Explicit statutory authority to instruct mortgagees to transfer
these mortgages directly to GNMA would eliminate the paperwork
and time delays within HUD involved in requiring receipt of the
mortgages by the Office of Finance and Accounting, and subse-
quent transfer to GNMA for purposes of handling d^enture issu-
ance and subsequent sale of the mortgages.
GNMA has greater experience in nandling such sales, and will
also be in a position to apace" its sales, so that HUD mortgcwes
will not be sold in competition with GNMA's own mortgage sales.
Section 621: Repeal of section 221 buy-back provision
Section 621 amends section 221(gX4) of the National Housing Act
to eliminate the "buy-back" feature of that provision with respect
to commitments to insure under section 221 entered into on or
after the effective date of the Housing and Community Develop-
ment Act of 1983. Section 221(gX4) now permits mortgagees to
assign to HUD current mortgages which are in their 20th year of
amortization. HUD exchanges the mortgages for debentures at the
going rate for the face value of the outstanding debt because of the
yGoot^le
current high interest rates, it has become more and more
gsouB for mortgageefl to aasi^ mort^ges to HUD and take deb
turee at the "eoing rate" of interest. Tnis proposal would avud
pected future losses to the FHA insurance funds based on '
transacted after the provision's effiective date.
Section 622: Federal Housing Administration insurance for amdo-
minium units
Section 622(a) changes the restrictions on the number of investor
owned units in a condominium by requiring that 80 peromt of the
Federal Housing Administration insured units be owner occupied.
Section 622(b) allows the mortgage limits to equal those for a
single family home in that area.
hi the case of a unit in a project which was converted from
rental housing, no insurance can be provided unless the oonversimi
occurred more than one year prior to the application for insurance
or the applicant was a tenant, or the conversion was sponsored by
a tenants organization representing a majority of the householders
in the project.
Section 6SS: Graduated payment mortgages fw multiftanily and
single family housing
Section 623 amends section 245 of the National Housing Act to
consolidate the separate authorities now ctmtained in secttcais 245
<a) and (b) into a single graduated payment mortgage (GPM) au-
thority for one- to four>family dwellings in accoraance with the
more generous limitations now contained in section 245(b), and to
eliminate certain restrictive features of the present section 245(b)
GPM program. In addition, amendments are proposed in a new
subsection (c) to make possible the use of GPM's for multifamily
projects.
'The proposed revisions to section 245(b) would delete the thresh^
old requirement that a mortgagor be unable reasonably to afford to
finance a purchase by means of any other mortgage insurance pro-
gram. This change would make any otherwise qualified mortgagor
elifdble for an insured graduated payment mortgage.
The requirement limiting section 245(b) insurance to mongt
who have not owned dwelling units within the preceding 1
years would be stricken.
Finally, restrictions on the number of mortgagee or the aggre-
gate amount of initial principal obligation of mortgages insured
under section 245 are also proposed to oe removed.
Section 245(c) as proposed to be amended would provide authori-
tv for GPM's for multifamily insured pngects. A major deterrent to
the production of multifamily housing is the high cost of financing.
Availability of GPM's would assure lower principal and interest
pavmente on the mortgage in the early years of a project. I^ter, as
debt service payments increased, reasonable rental increases would
cover these costs. Use of the GPM approach in the multifamily c(m-
text would assist the slu^ish rental housing market without the
twlp of Federal subsidies.
GPM's for multifamily projects would not, however, have re-
quirements identical to those applicable to single family insuring
authorities. The initial prinapel obligatitm of a multifamily mort-
yGoot^le
gage would not be pennitted to exceed the percentage of value or
reiriacement coat required by the particular title II insurii^ au-
tfaorit7 with which the GPM authorization was linked. During the
term of tiie mortgage, the principtil obligation (including interest
deferred and added to principal) would not be permitted to exceed
the property's projectea value at any time.
Projected value'' of a multifamily project would be determined in
the same manner as under the current section 245 for single family
dwelUnas — by means of a HUD calculation based on the initial
value (U the property, projecting increased value at a rate not to
exceed 2^ percent per year.
Authority under section 245 would expire September 30, 1985.
Section SS4: Adjustable rate mortgages for single family housing
Section 624 amends the National Housing Act by adding a new
section 247 to provide authority for HUD to insure single family
Adjustable Rat« Mortgages (ARM's) on a limited basis. Under the
authorial insurance activity would be limited to 125,000 mortgages
in any fiscal year. Interest rate adjustments would be indexed to a
national interest rate index which the Secretary of HUD would
speciiically approve in regulations. This authority would expire
Sefrt»mber 30, 1985.
These FHA-insured adjustable rate mortgages would include
saf^uards for the consumer. To protect participating howeowners,
statutory limits would control the size and frequency of interest
rate adjustments. A limit of one adjustment per year, with maxi-
mum increases in the interest rate of 1 point a year and 5 points
over the life of the mortgage, would be established. The mor^agae
would be required to provide information to the mortgagor describ-
ing particular features of the variable rate mortgage, including a
hraothetical "worst case" payment schedule.
At present, HUD cannot insure a mortgage financed with a vari-
ble interest rate. When inflation rates and interest rates are high,
the ARM is likely to become a primary mortgage instrument avail-
able to a purchf^r in the conventional market. In that event, it
would be desirable for FHA to be able to offer a choice between
arm's and fixed-rate mortgages.
Section SS5: Shared appreciation mortgages — single family
Section 625 proposes a new section 248 of the National Housing
Act which would provide authority for HUD to insure Shared Ap-
preciation Mortgages (SAM's) for single-family housing, including
cooperatives. Insurance activity would be limited to 50,000 mort-
gages in any fiscal year.
Because of current economic conditions, including high and vola-
tile interest rates, alternative mortgage instruments such as the
SAM should be insurable by FHA in order to supplement the
standard, fixed-rate mortgage, and to provide homebuyers with an
alternative to the Department's Graduated Payment Mortgage
(GPM) program and the proposed Adjustable Rate Mortgage
(ARM). SAM's make possible substantial reductions in down pay-
ments, early year monthly mortgage payments or both, in return
for a percenta^ share of any appreciation accruing to the proper-
iy. The SAM is particularly well suited to prospective secondary
37-922 O - 84 -
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73
market purchasers; to the extent effective yields are keyed to im^
erty appreciation, such mortgages in most cases vriU provide a
direct hedge against inflation.
Under this amendment a lender's share of the appreciated value
of the property or share in the cooperative will be due and payable
at the time the insured property is sold or transferred, or, in tiw
event there is no such sale or transfer, upon payment of the mort-
gage.
The Secretary shall prescribe safeguards for buyers and owners
which will include maximum sharing provisions and full disclosure
of the terms and conditions of the mortgage contract.
In the event of a default, the mortgagee will have a right to
make an insurance claim, but insurance benefits will not include
the mortgagee's share of net appreciated value.
This proposal reflects HUD's intent to serve fint-tiine home-
buyers, and to generally upgrade the Department's insuring au-
thority to be responsive to current needs and effective in the cur-
rent mortgage market.
Section 626: Shared appreciation, mortgages for muUifamily housing
Section 626 amends the National Housing Act iy adding a new
section 249 to provide authority for HUD to insure Shared Appte-
ciation Mortgages (SAM's) for multifamily housing. This authority
would expire September 30, 1985. In addition, subsections (b)
through (e) would amend sections 207(c)(3), 220(dX4), 221(dX6), and
231(cX5), respectively, to allow HUD discretion to insure loans
which do not completely amortize over the loan term, whether or
not a multifamily SAM mortgage is involved.
Under the SAM approach permitted by section '626(a), the multi-
family developer would benefit from a lower interest rate on the
mortgage loan, in return for the lender's receiving a share of any
appreciation in the value of the property.
Recent economic conditions have made the production of multi-
family rental housing difficult, and lenders remain cautious. A par-
ticular problem facing the multifamily housii^ industry is the re-
luctance of lenders to invest in fixed-rate mortgages of 30 or 40
years duration. Alternatives to traditional long-term mortgage in-
struments need to be insurable by HUD in order to stimulate un-
subsidized rental construction.
The multifamily SAM proposed would allow HUD to insure loans
of 15 years or longer which have level payment amortization stJied-
ules which would completely amortize in 30 years or lees. Mortga-
gors would be allowed to take advantage of the ^nerally tower in-
terest rates available for shorter term financing. The lender's share
of the appreciated value would be due and payable at the time the
insured property is sold or transferred or at the exiuration of the
loan term.
Used either in tandem or separately, the multifamily SAM pro-
posal and the proposed discretion in ^e Secretary to insure mort-
gages which do not provide for complete amortization will substan-
tially lower the monthly mortgage payments on multifamily loans
and ther^y encourage the production of rental housing.
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74
Section St7: Demonstration authority to insure home equity- conver-
sion mortgages for elderly homeowners
Section 627 amenda title II of the National Housing Act by
adding a new section 250 to authorize the Secretary to insure up to
1,000 home equity conversion mortgages for elderly homeowners on
a demonstration basis. These mortgages would reduce the financial
hardships of elderly homeowners by permitting them to tap accu-
mulated equity to meet expenses such as paying maintenance, tax,
utUity and other living expenses without being forced to move. The
authority to insure the mortgages would expire September 30,
1986.
The increasing number of elderly persons has far-reaching rami-
fications which have been chronicled by many studies, articles,
public and private debates, and governmental inciulries. The need
to develop new pn^ams for elderly homeowners is underscored by
the fact mat a significeuit portion of the elderly population has sub-
stantial home equity, but is burdened by limited incomes and high
housing costs, llie proposal would demonstrate the feasibility and
desirability of insuring home equity conversion mortgages as a
means of addressing this problem.
Although home equity conversion mortgages are a relatively new
concept, they appear to offer a reasonable way of improving the
income level and quality of life of a significant number of elderly
homeowners by providing access to accumulated equity. Programs
have been initiated in California, Wisconsin, New York, and New
Jersey by public or not-for-profit groups, with the assistance of pri-
vate or public contributions. The programs include the marketing
of the mortgages, interest rate reduction opportunities, and the
provision of interest-free or reduced interest rate deferred loans for
home rehabilitation. There is currently in the planning and oi^-
nizing stage a major private endeavor designed solely for the pur-
pose of financing home equity conversion mortgages.
It is too early to evaluate the effect and scope of these programs.
However, initial results support the view that home equity conver-
sion mortgages can meet the legitimate needs of some elderly
homeowners. These early assessments indicate, also, that public
and private entities want HUD to take a more active role in the
area of home equity conversion mortgages.
The demonstration program would be designed to: (1) concentrate
use of ITHA-insured equity conversion mortgages in a few get^aph-
ic areas and provide guidance, as needed, to encourage participa-
tion of mortgage lenders and increase their familiarity with the
program; (2) identify and evaluate various forms of home equity
conversion mechanisms to assure that the interests of homeowners,
lenders, investors and the Federal government are appropriately
protected; (3) ascertain whether there is a need for a HUD role
and, if so, the appropriate extent of HUD involvement in this area;
and (4) determine the extent of need anA demand for equity conver-
sion financing.
To ensure that effective consumer protections are afforded elder-
ly homeowners who may wish to participate in the program, iMir-
ticipating lenders would be required to provide each prospective
borrower at the time of application with a written statement ex-
yGoot^le
75
plaining the home equity conversion mortgage, including the ^rpe
of mortfcage being onered, its speciflc terms and a clear ezpkuuh
tion of its effect on such matters as tax and estate planning and
eligibility for certain government benefits, grants or pensions.
Subsection (a) sets forth the purposes of the demonstration pro-
gram to include: the insuring of home equity conversion mortgages
to assist elderly homeowners in converting a portion of their home
equity into liquid assets, and the securing of data to determine the
extent of need for the prc^am and the appropriate scope and
nature of the Secretary's participation in the home equity conver-
sion mortgage market.
Subsection (b) sets forth definitions of "elderly homeowner" and
"home equity conversion mortgage", and subsection (c) would au-
thorize the Secretary to insure 9uch mortgages after a determina-
tion that such morteages, in addition to having the potential to
meet the special needs of elderlv homeowners and increase partici-
pation by private lenders, include saf^fuards for mortgagors to
offset the special risks of such mortgages.
Subsection (d) prescribes the requirements for eligibility of a
mortg^e, including that the mortgage be secured by a property de-
signed principally as a one-family residence and that it oe executed
by a mortgagor who is the owner-occupant of the property and who
meets the prescribed minimum age. The maximum mortgage would
be limited to that established for a one-family residence in section
(bX2) of the National Housing Act and may not exceed 90 per
centum of the appraised value of the property. The mortga^ would
permit the interest rate to be fixed or acyusted periodically as
agreed to by the parties and would contain provisions for full satis-
faction of the obligation satisfactory to the Secretary.
Subsection (e) establishes that mortgages insured under this
section are eligible for insurance benefits provided in section 204 of
this Act.
Subsection (f) contains the consumer safeguards noted above.
Subsection (g) limits the Secretary's authority to insure mort-
gages under this section to a total number of mortgagee not to
exceed 1,000, and would set September 30, 1986 as the nnal date fbr
insurance of such a mortgage, except for commitments to insure
which are issued on or before that date.
Subsection (h) authorizes the Secretary to enter into such con-
tracts and agreements and to undertake such studies as the Secre-
tary determines are appropriate to the purpose of the demonstra-
tion.
Subsection (i) provides for preemption of any State constitution,
statute, court decree, common law, rule or public policy limiting or
prohibiting sharing appreciation, increases in outstanmng balances
after execution of the mortgage, disbursement of mortage pro-
ceeds over an extended time, or requiring that the term of tJie
mortgage be fixed.
Subsection (j) authorizes the Secretary to make any disburse-
ments to the mortgagor required by a mortgage insured under this
section or by an ancillary contract in the event of default by the
party responsible for payment. The Secretary is further authorized
to take any action necessary to obtain repayment of such disburse-
ments including, but not limited to: accepting an assignment of the
yGoot^le
insured mortgage, calculating the amount and making the pay-
ment of an insurance claim on such assigned mortgage, requiring a
junior mortgage from the mortgagor to secure repayment of funds
advanced by the mortgagor, and imposing premium chaiges. Ac-
tions undertaken by the Secretary would preempt any State or
local law prohibiting or limiting such actions. Payments would be
made from the General Insurance Fund.
Section 628: Prepayment
Section 628 adds to Title 11 of the National Housing Act instruc-
tions r^arding the evaluation of requests by project owners for the
prepayment of the mortgage.
Ine Secretary may not accept an offer of prepayment unless the
project no longer meets a need for low income rental housing in
the area or that the needs of the families in the project can more
efficiently and effectively be met through other federal housing as-
sistance. The tenants must be notified of the prepayment request
and provided opportunity to comment. There must be a relocation
plan that will provide comparable housing for tenants who will be
displaced.
In the case of prepayments where the Secretary's approval is not
required, the Secretary may offer assistance under Section 8 to pre-
vent the owner from prepaying.
Section 629: Structural defects in VA-approved FHA-insured new
homes
Section 629 amends section 518(a) of the National Housing Act,
which authorizes the Secretary to make expenditures to correct or
compensate for structural defects in single family homes which
were approved for FHA insurance prior to construction. As amend-
ed, section 518(a) would specify that the Secretary may also correct
or compensate for structural defects in FHA-insured new homes
which were approved for loan guaranty by the Veterans Adminis-
tration prior to construction.
Section 203 of the National Housing Act states that VA loan
guaranty, insurance or direct loan approval prior to the beginniiu;
of construction may be substituted for the Secretary's approvaT
The proposal would clarify that VA approval is the equivalent of
the Secretary's for purposes of correcting or compensating for
structural defecta
Section 630: Time of payment of mortgage insurance premiums
Section 630 amends section 530 of the National Housing Act to
clarify that the Department's obligation to collect mortgage insur-
ance premiums on a monthly basis, and to charge interest for late
payment of monthly premiums, applies only to the Department's
single family programs. The amendment would permit continu-
ation of the existing practice of collecting premium payments from
multifamily mortgagees on an annual basis, with interest payable
only in the case of later remittance of the annual payment. Month-
ly collection of premiums would, of course, not apply in the case of
mortgages subject to up-front premium collection requirements.
In the past, HUD has not required monthly collection of premi-
ums for its multifamily mortgages. Premiums for those prc^ams
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are paid by the mortgaRor in advance and are escrowed by the
mortgagee. Collection of these premium payments on a monthly
basis would increase paperwork and wovUd be staff-intensive, u
would also unnecessarily disrupt existing finance and accoonting
operations, which are geared to annual receipt of such payments.
As amended, section 530 would continue to require that premi-
ums be paid "promptly upon their receipt from the borroirer" in
the case of the single familv programs, but would require, for all
other insuring authorities, tnat premiums be paid "promptly whoi
due to the Secretary" (i.e., annually). Interest payable to the Secre-
tary would continue to be required for late payment of premiums,
but such interest would accrue beginning twen^ days afler the
mortgagee's receipt of premium payments from the borrower in the
case of single-family mortgages, while in the multiffimily programs,
interest would be due for the period b^inning twenty days after
the premium payment's due date.
Section 631: Neighborhood Reinvestment Corporation
Section 631 reauthorizes the Neighborhood Reinvestment Corpo-
ration through 1985 at a funding level of $15,512,000 for each year.
Section 6SZ: Cooperative housing
Section 632 improves the ability of the Secretary to insure mort-
gages made on cooperative units. Loans can be insured if the Secre-
tary has examined and does not disapprove any underlying financ-
ing of a cooperative more than a year old.
Section S3S: National Institute of Building Sciences
Section 633 authorizes the National Institute of Buildinx Sci-
ences through 1985 and allows the Secretary to contract with the
National Ii^itute of Building Sciences to adopt end implement
procedures for the review and acceptance of building systems, com-
ponents, products and materials.
Section 634: Reinsurance demonstration program
Section 634 authorizes HUD to conduct a demonstration program
in order to determine whether the processing of FHA mortgages on
1 to 4 famUy residences by private mortgage insurers can reduce
government administrative costs, risk bearing, and the time re-
quired for processing. The demonstration wotud be limited to two
r^ons of the country and could not result in a loss of HUD em-
ployment. Eligible private insurers would be required to share any
losses on mortgages insured, and to carry out processing activities
under terms set by the Secretary. HUD would be required to ewalu*
ate the demonstration, including its effect on the characteristics
and acturial soundness of the mortgage portfolio wholly held in the
General Insurance Fund, and to report its findings by March, 1985.
Section 635: Cancellation of debt owed the Treasury and liquidation
of new communities program
Section 635 authorizes liquidation of the New Communities Pro-
gram imd contains provisions needed for its orderly termination.
This program was fust authorized in title IV of the Housing end
Urban iJevelopment Act of 1968, and was reauthorixed with certain
yGoot^le
78
Btatutory amendments in title VII of the Housing and Urban De-
velopment Act of 1970. Between February 1970 and July 1979,
HUD approved 16 hew communities, of which 13 were financed in
part with the proceeds of the sale of debentures guaranteed as to
principed and interest by the Secretary.
Section 635(a) authorizes liquidation of the program and the
transfer of the assets and liabilities of the New Communities Re-
volving Fund to HUD'a Revolving Fund (Liquidating Programs) Ac-
count. The New Communities Revolving Fiind was established to
Srovide for the timely payments of liabilities incurred as a result of
ebenture guarantees. This revolving fund includes fees and
income received in the program, and tne statute provides that, in
the event of a shortfall in the revolving fund, obligations may be
issued to the Secretary of the Treasury in order to borrow suffi-
cient monies to cover these costs. The costs of salaries and expenses
for operating the New Communities Program, including adminis-
trative and non administrative expenses, have also been funded
from the revolving fund. Interest accrues on the Treasury borrow-
ing at rates periodically established by the Treasury. Because of in-
terest compounding and because the return on disposition of assets
acqiiired by foreclosure or otherwise has been substantially smaller
than the costs of paying off the guaranteed debentures, f revolv-
ing fund has accumulated a debt to the Treasury estimated to be
$399 million at the end of Fiscal year 1983.
The transfer which section 635(a) authorizes would take place
upon enactment of section 635(a) and approval of the transfer in an
appropriation Act.
Section 635(b) makes clear that the authority governing HUD's
Revolving Fund (Liquidating Programs) is sufficient to permit all
necessary functions regarding the liquidation of the program to be
performed. The second sentence of this subsection is based directly
on the New Communities Revolving Fund's authority under section
717(c) of title VII, and is also intended to assure that there will be
adequate authority for the liquidation. Residual program personnel
would no longer be paid from the New Clommunities Revolving
Fund but would be paid from the Department's Salaries and Ex-
penses, HUD account.
Section 635(c) would confer Treasury borrowing authority on the
Secretary, and contains conventional language concerning the Sec-
retary of the Treasury's reciprocal duties and powers. The central
purpose of the borrowing authority is to assure that payments on
guaranteed debentures can be made, notwithstanding the cash posi-
tion of the Revolving Fund (Liquidating Programs) at any given
time. This authority would also permit the redemption of deben-
tures, if the levels of the Treasury borrowing rate made such action
advantageous to the Government. Were this borrowing authority
omitted, HUD would be vulnerable to claims by debenture holders
of impairment of their rights.
Section 635(d) provides that the Secretary's duty to repay princi-
pal and accrued intei^st on obligations issued to the Treasury for
the New Communities Program is cancelled, upon transfer of the
New Communities Fund's assets and liabilities to the Revolving
Fund (Liquidating Programs). The cancellation of this debt to the
Treasury, estimated to be $399 million at the end of fiscal year
yGoot^le
79
1983, is proposed because it is unrecoverable, and tbe cost o( servic-
ing it is est^latii^. Id fiscal year 1983 alone, the interest to Tresft-
ury is estimated to be $34.5 million. If the debt to Treasury re-
mains outstanding, the interest in 1984 is estimated to be more
than $37 million. To continue to service this debt would require
further borrowings from the Treasury, creating more debt that will
forever be beyond the capability of the pftigram to repay. Cancella-
tion of the debt will clefir the books and allow the New Cmnmuni-
ties Program to be terminated. In 1984, it is expected that program
costs (excluding any Treasury interest) can oe funded Gram pro-
gram funds. However, depending on the timing of receipts and the
transfer to the Revolving Fund (Liquidating Programs), additional
borrowings from the Treiasury during the year tor the New Com-
munities Program may be necessary. In any event, under the au-
thority of the Revolving Fund (Liquidating PragnunsX amounts in
the fund which cue excess to its needs are required to be paid to
the Treasury at least annually.
Section 635(e) repeals titles IV and VII except for those sections
technically necessary to remain in effect in order to enable the De-
partment to meet its obligations under these titles. A savings
cLause is also included for those guarantees already made under
titles IV and VII.
The proposed cancellation of obligations, including principal and
accrued interest, is patterned on the anak)gou8 le^isution for the
Saint Lawrence Seaway Development Corporation, 33 U.S.C.
§ 985(b) (as to interest) and §311, Department of Transportation
and Related Agencies Appropriation Act, 1983, Pub. L. 97-369 (as
to principal).
Section 636: National Housing Partnerships
Section 636 authorizes the Corporation to engage in the develop-
ment of commercial facilities which are ancillary to housing proj-
ects to the level of 15 percent of the Corporation's activity. This ex-
pansion of the activities is consistent with changes made for thrift
institutions under the Gam-St Germain Act passed last year.
TITLE Vlt. — HORTGAGE DEFAULT ASSmANCB
Section 701. The short title of Title VII is the "Unemployment
Homeowners' Relief Act of 1983".
Section 702 provides authority to the Secretary of Housing and
Urbaii Development, acting through the Government National
Mortgage Association (GNMA), to miake commitments to guarantee
and to guarantee junior mortgage loans to help involuntarily un-
employed or underemployed homeowners avoid foreclosure. GNMA
would guarantee timely payment of principal and interest to those
who made or purchased such loans. Authority to make commit-
ments to guarantee would expire on September 30, 1985.
Section 703 establishes eligibility requirements for the guaran-
tees. Subsection (a) provides that, to be eligible, the mortgagor
must have experienced a substantial reduction in family income as
a result of involuntary unemployment or underemployment that
was caused by the recession or other economic adversity beyond
the mortgagor's control. The reduction in income would have to be
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Bevere enough to prevent the mortgagor from making full mort-
gage payments. Before a mortgagor could be eligible for a guaran-
tee, the mortfpagor would have to exhaust other reasonable flnan-
dal remedies, such as the liquidation of non-essential personal and
real property and the application of family savings in excess of an
amount that could be reasonablv considered necessary for essential
or emergency needs. Secondly, tne mortgagor must be in default on
a mnele family dwelling that is the mortgagor's principal residence.
Thira, the mortgagor must have had a good record or mortgage
payments prior to the mortgagor's current unemployment.
Subsection (b) limits assistance under this title to those mort-
gages that: Are secured by a one-family dwelling, including a man-
ufactured home or a unit in a condominium or a cooperative, that
is the principal residence of the mortgagor; are not insured b^ the
Federal Housing Administration or the Fanners Home Administra-
tion, which provide other forms of default assistance; and had an
original principal balance that was not greater than the FHA
limits for mortgages on similar property that are in effect when
the mortgagor applies for assistance under this title.
Subsection (c) requires the Secretary, before issuing a guarantee
under this title, to find that forbearance remedies had been ex-
hausted and that foreclosure would result if the guarantee were
not provided. The Committee intends that private mortgagees and
moigagors be strongly encouraged to make a good taiui effort to
exhaust all reasonable and customary forbearance measures with-
out ibe use of Federal guarantees so that assistance under this title
will be available where it is most needed. Although the Committee
chose not to include in statutory language specific forbearance
standards as preconditions of assistance, procedures described in
Part 4 of the Servicing Guide of FNMA and in Section 4 of the
Servicers' Guide of PHLMC are useful guidelines.
In addition, the Secretary would have to find that there is a rea-
sonable prospect that the mortgagor will be able to resume full
mortgage payments.
Section 704 specifies requirements for the guaranteed loans. Sub-
section (a) limits the amount of a guaranteed loan to the total of
the monthly payments that would become due during the subse-
quent 24-month period plus three months of arrears. Eligible mort-
gage payments include principal, interest, taxes, ground rent,
hazard insurance, and mortgage insurance related to the first and
any other senior mortgage on the mortgagor's principal residence.
A guaranteed loan may also include an additional amount to cover
interest payments on tne loan that become due in the period before
the mortgagor's repayment obligation begins. The Committee con-
cluded that the size of the loan to be guaranteed should be deter-
mined on a case-by-case basis and not on an arbitrary, fixed per-
centage of the homeowner's equity. The decision on the size of the
guaranteed loan that is prudent should take into account such fac-
tors as the future resources that the mortgagor can reasonably be
expected to receive and the strength of the mortgagor's desire to
retain the home.
The mortgagor would have to contribute a portion of the month-
ly mortgage payments. The mortgagor's share, as determined
under r^ulations established by the Secretary, would be as large
yGoot^le
81
as could reasonably be expected after taking account of the mort{[a-
gor's financial condition but at least 5 percent of the monthly pay-
ment due.
Subsection (b) requires lenders to enter into several agreements
before receiving a guarantee under this title. First, in order to
assure that a lender carefully assesses the risk of default under the
guarantee, a lender would be required to assume 10 percent of any
loss on a guarantee mortgage. Second, the lender would have to de-
posit the loan proceeds in an interest bearing escrow or trust ac-
count. This account would be used to pay monthly mortgage costs,
interest on the guaranteed loan for up to 2 years, and any prepay-
ment of the guaranteed loan. It is the intent of the Committee that
the escrow or trust accounts earn interest at the market rate for
accounts with comparable terms. Third, the lender would be re-
quired to pay to the mortgagor any amounts remaining in the
escrow or trust account after all obligations related to the guaran-
teed loan are fullflUed.
Subsection (c) provides that once a loan is guaranteed, if the
originator sells the loan in the secondary market, any purchaser of
the loan would be guaranteed timely payment of interest during
the period prior to commencement of the mortgagor's repayment
obligation and of 100 percent of principal and interest in later
years. This would enable lenders to ease cash flow problems, which
may be especially important in areas with high delinquency rates.
It is expected that the Federal National Mortage Association and
the Federal Home Loan Mortgage Association would facilitate
access to the secondary market. In the event that a mortgagor de-
faults on a guaranteed loan that had been sold in the secondary
market, the original lender's obligation to assume 10 percent of
any loss would remain in efl'ect, and GNMA would be responsible
for collecting the lender's share of any loss.
Subsection (d) provides that a mortgagor would have to begin re-
paying the guaranteed loan within 24 months and that the loan
would be fully amortized over the subsequent 12 years.
Subsection (e) prohibits a guarantee from being made on a loan
that, in the determination of the Secretary's bears an excessive in-
terest rate or fee. The Committee intends that the Secretary
permit lenders to charge fees that are reasonable and customary as
well as interest at the market rates for comparable loans after
taking into account the reduced risk of lose that is provided by the
Federal guarantee. The Secretary is expected to apply this test so
that (1) financial benefits of the Federal assistance are, to the
maximum extent practicable, passed through to unemployed home-
owners and (2) appropriate incentives to participate in the program
are given to lenders.
Subsection (f) provides the Secretary with administrative flexibil-
ity needed to implement the progriun promptly and efHciently.
Section 705 requires the Secretary to provide a guarantee under
this title when a HUD-approved lender certifies that (1) the mort-
gage default assistance loan conforms to the requirements of the
title and is secured by a lien on the mortgagor's principal resi-
dence, (2) the mortgagor meets the eligibility requirements of the
program, and (3) the lender or its agent has provided appropriate
credit counselling to the borrower. Trie lien that secures a guaran-
yGoot^le
teed loan would be junior to those that exist when the guarantee is
extended.
Section 706 requires the Secretary to issue final regulations to
implement this title not later than 30 days after enactment. The
section also gives the Secretary authority needed to protect the fl-
nandal intent of the United States in the event of a default on a
guaranteed loan. This includes authority to acquire, handle, im-
prove or dispose of property.
Section 707 requires the Secretary and Federal supervisory agen-
cies prior to January 1, 1984 to take prudent action, such as the
easing of regulatory requirements, that would encourage financial
institutions and mortgagees to forbear on delinquent home mort-
^ges. Federal supervisory agencies include the Federal Reserve
Board, the Federal Home Loan Bank Board, the National Credit
Union Administration Board, the Comptroller of the Currency and
the boards of directors of FDIC and FHLMC. The Committee in-
tends that these measures be forceful so that unemployed home-
owners will be helped to avoid foreclosure, wherever practicable,
wi^out use of guarantees under this title.
TTie section also requires the Secretary and the supervisory agen-
cies to direct mortgagees, promptly after initiating foreclosure pro-
ceedings, to inform mortgagors of assistance that is available under
this title.
Section 708 pledges the full faith and credit of the United States
to the payment of guarantees under this title. The section also au-
thorizes the Secretary to impose an up-front guarantee fee of not to
exceed 1 percent.
Section 709 limits the aggregate amount of guarantees outstand-
ing at any time to $750 million.
Regulatory Impact Statement
In compliance with paragraph 11 of Rule XXVI of the standing
Rules of the Senate, the Committee makes the following statement
r^arding the regulatory impact of the bill.
_ : of the proposal to create a rental rehabilitation and
housing development block grant will substantially reduce regula-
tory and administrative burdens on entitlement grants be replac-
ing the heavy application and compliance burden of the previous
Section 8 and other housing assistance programs. Not only does the
new program require a simplified application procedure, but per*
mits state and local governments considerable flexibility in design-
ing and implementing locally conceived assistance programs.
Title II is a reasonably straight forward reauthorization of the
community development block grant and urban development action
grEtnt programs. Changes is existing law are relatively minor and
designed largely to improve prt^am flexibility and clarify legisla-
tive intent. As such, they are expected to require little change in
existing regulations.
yGoot^le
Title III mfikes a Bignificant contribution to derf«uIation by sub-
stantially reducing the number of n^ulations and the amount of
supervision with which the large m^ority of public housing agen-
cies must contend. Changes in the operating subeidy distribution
mechanism are tantamount to a block grant approach requiring
reapplication for agencies once every three years.
l^tle ni also repeals all Section 8 new construction and substan-
tial rehabilitation program authority except that which is required
for the continuation of the Section 202 program for handicapped
and elderly housing assistance.
Title IV repeals the Federal Urban Riot Reinsurance and Crime
Insurance programs and therefore would eliminate the body of reg-
ulation necessary to implement these programs. The Federal Flood
insurance program is reauthorized and uie migor change in that
pn^ram involves terminating the so-called emergency program
and converting cities in an emergency program status to uie regu-
lar program. Because of insufficient funding and tedious mapping
process, the conversion of flood prone communities to the regular
pn^ram was projected to take significantly larger than the 15
years originally envisioned. Since the Ccnninittee proposal envi-
sions a major alteration to the program, new regulations imple-
menting the change are required. We believe, however, that this
requirement is offset by the overall simplification of the program,
the savings in program costs, and the ultimate benefits to property
owners policy holders.
Changes to existing rural housing programs operated t» the
Farmers Home Administration are designed to improve beneficiary
targetting, reduce construction costs, and bring portions of the pro-
gram which are currently ofT budget, on budget. There is one new
[in^am created which will require new r^ulations and guide-
ines. Other changes will involve amendments to eidsting regula*
tions, but will result considerable, desireable programmatice re-
forms.
Title VII creates a new program of guarantees for loans to in«-
vent mortgage foreclosures. Tms prc^am requires the HUD Secre-
tary to issue final regulations within 30 days of enactment. llieBe
regulations will affect participating mortgage lenders and must
specify the particular types of mortgagors and homeowners eligible
for guaranteed loans the requirements of the loan contract, and the
terms of GNMA's payment of claims on guaranteed loans that go
into default. In addition, the Title requires the Federal Reserve
Board, the Federal Savings and Loan Insurance Corporation, the
Office of the Comptroller of the Currency, the Federal Deposit In-
surance Corporation, and the National Credit Union Administra-
tion to establish procedures which encourage forebearance by all fi-
yGoot^le
84
nanctal institutions and which require all financial institutions to
notify any homeowner entering foreclosure procedures about the
assistance available under the Title.
The remainder of the bill will have no substantial regulatory
impact.
Changes in Existing Law
In the opinion of the Committee, it is necessary to dispense with
the requirements of subsection 4 rule XXIX of the Standing Rules
of the Senate in order to expedite the business of the Senate.
U.S. Congress,
Congressional Budget Office,
Washington. D.C.. May 16. 1983.
Hon. Jake Garn,
Chairman, Committee on Banking, Housing, and Urban Affairs,
U.S. Senate, Dirksen Senate Office Building, Washington, D.C.
Dear Mh. Chairman: Pursuant to Section 403 of the
Congressional Budget Act of 1974, the Congressional Budget Office
has prepared the attached cost estimate for the Housing and Com-
munity Development Act of 1983.
Should the Committee so desire, we would be pleased to provide
further details on this estimate.
Sincerely,
James Blum
(For Alice M. Rivlin, Director).
Congressional Budget Office — Cost Estimate
May 16, 1983.
1. Bill No.: Not yet assigned.
2. Bill title: Housing and Community Development Act of 1983.
3. Bill status: As order reported by the Senate Committee on
Banking, Housing and Urban Affairs, April 13, 1983.
4. Bill purpose: The bill would make major changes to low-
income housing programs administratered by the Department of
Housing and Urban Development (HUD). Except for housing for
the elderly and handicapped, all section 8 new construction author-
ity would be repealed and a new section 8 housing voucher pro-
gram would be created. The bill would also alter the means by
which operating and maintenance subsidies are provided to public
housing authorities. A new loan guaratee program would be cre-
ated under which HUD would guarantee se<K»nd mortgage loans
made by private lenders to defaulted mortgage borrowers. Addi-
tional funding would be authorized for various other ongoing hous-
ing-related programs.
In addition, the bill creates a new rental rehabilitation grant
program that would expand the role of the federal government in
that area while repealing the existing 312 rehabilitation loan pro-
gram. Other communmity development assistance programs would
be amended by provisions of this bill, and specific authorizations
are provided for fiscal years 1984 and beyond for several HUD pro-
grams.
yGoot^le
86
(By tim yon, ■ Mfen d MUn)
ISti ]«6 IMI
;;D 319 198 lU
TITLE II. — COMMUNITY AND NEIGHBORHOOD DEVELOPMENT
Community development block grants. — The bill authorizes the
annual appropriation of $3,966 million for fiscal years 19S4, 1985,
and 1986 for community development grants and allocates $3,526
million of these funds for Community Development Block Grants
(CDBG) and $440 million for Urban Development Action Grants
(UDAG) annuEdly. The bill speciflcally sets aside $50 million each
year from the CDBG discretionary fund (funded at not more than
$100.5 million each year) for grants to Indian tribes. For the pur-
poses of this cost estimate, outlays for the UDAG program have
been estimated based on recent spending experience for that pro-
gram. Section 206 of Title 11 expands the list of activities that are
eligible for lump sum drawdowns of CDBG grants to include activi-
ties eligible under section 105(aX14) of the Housing and Community
Development Act of 1974. This provision substantially broadens the
list of activities for which the grantee can receive grant money
prior to paying for the incurred expense. Grantees requesting this
disbursal must use any income earned from such early receipt for
activities eligible for the original grant.
Since the extent to which grantees will utilize this provision is
not known the impact on CDBG spending is difficult to estimate.
Prudent grantees would be expected to take advantage of the in-
veotment income opportunities offered by such a provision. For the
purpose of this estimate, the Congressional Budget Office has as-
sumed that 5 percent of all funds authorized in Ascal year 1984
would fall under this provision and that that percentage would
grow to 15 percent by fiscal year 1986. This provision does not alter
the total spending for CDBG activities, but it should accelerate the
transfer of funds from HUD to the grantee.
Title 11 also repeals all authorizations resulting from Section 312
of the Housing Act of 1964 (rehabilitation loan fund) and transfers
all unobligated funds to the rehabilitation grant prc^am author-
ized by title I of this bill. This provision would transfer to the new
rehabilitation grant program the repayments of principal and in-
terest on loans previously disbursed under authority of the 312
loan program. The CBO estimates that amount to be in excess of
$70 million in fiscal year 1984, declining annually thereafter.
Title II also authorizes the appropriation of $17 million in fiscal
year 1984 and such sums as may be necessary in fiscal year 1985
for the urban homesteading program. CBO has estimated an au-
yGoot^le
thorization level for fiscal year 1985 by actjusting the 1984 level for
inflation.
The estimated budget impact of Title II follows:
iM
3J)57
im
220
3St
330
TFTLE 111. — HOUSINQ ASSISTANCE PROORAlffl
Emergency housing grants. — Title IH of the bill would authorize
the HUD Secretary, subject to appropriation acts, to make up to
$100 million in grants to local governments, Indian tribes aiul non-
profit orgemizations to provide emergency shelter and services to
the homeless. No additional appropriations are authorized for this
purpose. If the program were to be implemented, funding would
come from spen(hng authority otherwise available to HUD.
Section 8 and public housing commitments. — Title III would alter
substantially HtJD's low-income housing subsidy programs. Except
for housing for the elderly and handicapped in projects financed
with section 202 loans, authority to enter into assistance contracts
with developers of newly constructed or substantially rehabilitated
housing would be repealed. In addition, a new form of assistance
contract would be authorized using five-year certificates (vouchers)
issued to public housing agencies on behalf of qualifying house-
holds. Under the voucher proposal, the annual contract value
would be set equal to 110 percent of the estimated yearly subsidy
requirement, thus providing for housing cost increases. This cost
estimate assumes a first-year payment of $2,300 per household, re-
sulting in an aggr^ate federal commitment of $12,600 for each
five-year contract.
Title III of the bill would amend section 5(c) of the United States
Housing Act of 1937 to allow HUD to enter into 1984 assistance
contracts totaling $7,651 million over the contract terms. Althou^
new appropriations would be authorized, the bill instructs HUD t
use first any unobligated funds available from prior appropriation
Under the various funding set-asides included in the bill, the $7.'
billion could support section 8 assistance contracts for abo
103,000 units, plus $2 billion in additional commitments for t
^'^•ming modernization program. About 14,000 of the ur
•nicted for the elderly and handicapped (
yGoot^le
With the exception of the units for the elderly and handicapped,
most of the 1984 commitments would be expected to go in support
of housing already receiving some form of federal assistance.
In addition to the $7.65 billion provided in title III of this bill,
the appropriation of $550 million in voucher assistance would be
authorized in title II. This would support about 40,000 units, all of
which would be associated with title II's rental rehabilitation block
grant prc^am.
The $7.65 billion would also provide funding for fiscal year 1984
contract amendments in accordance with sections 313 and 314 of
the bill. These sections would require HUD to offer annually to
amend contracts that provide rental assistance payments under
section 236 of the National Housing Act or section 101 of the Hous-
ing and Urban Development Act of 1965. This requirement would
only apply to housing that was financed with mortgages that are
not insured under title II of the National Housing Act — about
33,700 units. The 1984 authorization level of $187 million included
in this cost estimate is the amount estimated to be sufficient to ac-
commodate only the 1984 rent increases and to maintain those
same rent levels for the remaining life of the contracts (asumed to
be 30 years), should all eligible project owners accept the amend-
ment offer. Assuming a 5 percent annual growth in both project op-
erating expenses and tenant incomes, the aggregate amount neces-
sary to allow for contract amendments on all 33,700 units for each
of the next 30 years is estimated to be $1.4 billion.
Public housing operating assistance. — If enacted, the bill would
establish within HUD a Public Housing Accreditation Commission.
This commission would set efficiency standards for the manage-
ment and operation of low-income housing projects and the admin-
istration of section 8 housing assistance. The commission would
also establish procedures for the evaluation of public housing agen-
cies to determine whether an agency meets and continues to meet
these efficiency standards. An agency that has been accredited by
the commission would be eligible for an operating assistance con-
tract with a term of up to three years. Beginning in fiscal 1985 an
ciccredited agency would also receive payments for a repair and
maintenance fund equal to 15 percent of its allowed nonutility op-
erating expenses. Initially the expenses of the commission would be
paid for from funds otherwise available to HUD. Eventually, how-
ever, the commission would charge fees for its services. Title III
would authorize the appropriation of $1.5 billion for 1984 operating
assistance obligations. It is assumed that outlays from this authori-
zation would be consistent with past experience.
Troubled projects operating assistance. — The bill would authorize
the continued use of excess rents collected pursuant to section
236(g) of the National Housing Act for assistance to certain trou-
bled multifamily housing projects. No additional authority is pro-
vided.
Housing for the elderly and handicapped. — The bill would au-
thorize, for 1984, $667.8 million for HUD^s section 202 elderly and
handicapped housing loan program. The number of units receiving
assistance from these funds could not exceed 14,000 and the use of
the authority would be subject to approval in appropriations acts.
yGoot^le
Stf
The outlays shown in this estimate are loan disbursements lees in-
terest and principal paymentfi.
Congregate housing services — The bill contains an authorization
of $10 million for each of the years 1984, 1985 and 1986 to provide
certain additional services to elderly or handicapped resideDts of
housing administered by public housing agencies or nonprofit cor-
porations. This estimate assumes that HUD would enter into three-
year contracts with the administering agencies.
Older Americans' housing demonstration. — If enacted, title HI
would require the HUD Secretary to carry out during fiscal year
1984 a program to develop, demonstrate and evaluate methods that
would assist older homeowners who are experiencing certain hous-
ing-related problems. These homeowners would include those who
wish to sell but are unable to acquire or rent a smaller unit with-
out assistance, or those who wish to remain in their houses but are
unable to pay the associated maintenance and operating costs. The
costs of the demonstrations and evaluations and studies required
by this provision would be limited to $10 million. Although funding
would be subject to approval in appropriations acts, additional ap-
propriations for this purpose are not authorized. Expenses would be
met from funds otherwise available to the Department.
The estimated budget impact of Title III follows:
SKtiai 8 ind puWc housmg coBnirtiwnts
ErtmutKl outUys ;i
Piiilc housne opBjIins 5ijt6«f«
EslniHlrt ouIUp .... BIS
RtnUI usstincc conlrjcl anwrUinHils
Hullwrulioii lewl \V
tsbfiuted outlays 6
Hnnine (m It* eWerty and *a«im>»t
AulbKUition levtl 669
ErtimjtKl outlay;
low
tunnnnlionlMl ... ... 9.B30
Eslinuted nmayi 855
l«
W
3M
353
((66
TTrLE IV. — INSURANCE PROGRAUS
Crime and riot insurance.— TiiXe IV extends the authority of the
Director of the Federal Emergency Management Agency (FEMA) to
carry out activities associated with the national insurance develop-
ment iprogram to September 30, 1983 from May 20, 1983, and pro-
vides for the orderly termination of all legal responsibilities result-
ing from such insurance activities. This title also extends the au-
thority of the Director to carry out the activities authorized by the
Flood Disaster Protection Act of 1973, as amended, from May 20,
1983 to September 30. 1985. This authority will allow the Director
yGoot^le
f
jP^atinue to issue flood insurance policies during that period. For
r?^ purposes of this estimate, CBO has projected the bucket impact
' 'hese two provisions based on the recent experience of the two
?'^t^rams and information provided by FEMA concerning the or-
^Zi^ phase-out of the crime and riot insurance programs,
IPpATie bill also authorizes the appropriation of $1 million to allow
JT]^^-^ ^ make a grant to study the feasibility of expanding the
D.-f5^?**i Insurance program to cover damage or loss arising from
^"^^cljoies.
■"-■xe estimated budget impact of Title IV follows:
TITLE v.— RURAL HOUSING
-^^Y^^^'''**'* 1*^ contains a wide variety of programs through which
^*X« Farmers Home Administration (FmHA) provides low- and mod-
.^^'ate-income housing assistance in rural areas. These range from
^^^^ry specialized grant programs to direct mortgage loans from the
^"Vjral housing insurance fund (RHIF) generally involving deep in-
^;^rest rate subsidies. Total 1983 activity for these programs is ex-
**«cted to exceed $3.4 billion, most of which will be in the form of
^Xibsidized-interest-rate mortgages. Subject to appropriations, the
v^ill would authorize fiscal year 1984 assistance totaling $3,618 mil-
lion, including $3,262 million for direct or guaranteed loans, $126
trillion for grants and $230 million for rural rental assistance pay-
Xnents.
Rural housing loans. — Of the $3,262 million authorized for loans,
the bill would allow up to $2,300 million to be used for single-
family homeownerghip assistance and up to $940 million for loans
to finance the construction or rehabilitation of low-income rental
units. The hill further specifies that after its enactment not less
than 40 percent of the houses financed with single-family loan as-
sistance must be occupied by very low-income households. Similar-
ly, to the extent rental assistance is available, virtually all rental
units financed by the FmHA would be restricted to very low-
income tenants. Income levels defined as low-income and very low-
income would be consistent with the Secretary of Housing and
Urban Development's determinations under the United States
Housing Act of 1937, For this estimate it was assumed that the
loan activity authorized would take the form of direct federal
loans. Single-family mortgages were assumed to average $41,000,
with interest rates of 1 percent for very low-income borrowers and
3 percent for low-income households.
yGoot^le
91
Treatment of asset sales. — The budget impact of rural houaing
loans shown in this cost estimate also includes the projected effect
of the change in the treatment of asset sales proposed in the bill.
Currently, FmHA offsets large portions of its outlays and budget
authority requirements through the sale to the Federal financing
Bank (FFB) of certificates of beneficial ownership backed by FmHA
loans. Since FFB outlays are off-budget, this procedure obscures
the actual impact on the U.S. Treasury of rural housing programs.
The bill would alter this situation for the RHIF by defining these
transactions as borrowing rather than as asset sales. Although this
change would not change program costs, its effects on the unified
budget would be substantial. In fiscal year 1982, the FmHA sold
almost $5.2 billion of housing related notes to the FFB— about $3.1
billion associated with mortgage loans newly disbursed in that
year. The current Congressional Budget Office baseline estimates
assume loan disbursements of $3.4 billion in 1984 and over $15 bil-
lion for the years 1985 through 1988. In the baseline, this activity
is entirely offset by note sales to the FFB. Under the bill's proposed
accounting change, these transactions would be treated as agency
borrowing and would represent doUar-for-dollar increases to budget
authority and outlays.
Rural housing grants.— -The bill would create a new grant pro-
gram through which funds could be provided to state and local gov-
ernments, Indian tribes and other eligible recipients in order to re-
habilitate housing owned or occupied by low- and very low-income
households. The bill would allow up to $100 million for this pur-
pose in the years 1984 through 1986. It is assumed that the full
$100 million would be obligated in 1984 with grant disbursements
occurring over three years. In addition to the new program author-
ization, the bill would make available for appropriation in 1984 $26
million for existing grant programs. This amount is expected to be
disbursed at rates consistent with program experience.
The estimated budget impact of Title V follows:
In the absence of the change in the treatment of asset sales to
the FFB, the budget impact of Title V would be as follows:
yGoot^le
92
[B|r tiieil fon, • MU
19M
IMS
i9te
mi
IW)
5!
149
7!
ISl
TITLE VI. — PROGRAM AMENDMENTS AND EXTENSIONS
-Afortgage insurance and guarantee authorities. — The bill would
^>c-tend and make certain amendments to HUD's authority to
'^^-^ure mortgages under various sections of the National Housing
'^^^ist;. Provisions are also included that would allow the HUD Secre-
*-^».x-y to insure adjustable rate mortgages, shared appreciation mort-
^^iges and, on a demonstration basis, equity conversion mortgages.
These programs result in contingent liabilities to the Federal
^-iovernment and could have significant budget impact in any given
year even though they are intended to be actuarially sound in the
\ong run. Total mortgage insurance commitments would be limited
to J46 billion in 1984. In addition, the Government National Mort-
gage Association's (GNMA) authority to issue guarantee commit-
ments for mortgage backed securities would be limited to $68 bil-
lion. No budget impact for these programs is included in this esti-
mate.
Title VI would also authorize the appropriation of such sums as
may be necessary to cover losses in the General Insurance fund of
the Federal Housing Administration (FHA). This money would be
used to pay Insurance claims and other liabilities of the fund.
Without such an appropriation, these claims and liabilities would
be paid with funds borrowed from the U.S. Treasury. Thus, this
provision would have no additional budget impact.
HUD research. — The bill authorizes the appropriation of $18 mil-
lion annually for fiscal year 1984 and 1985 for authorized research
activities of HUD.
Neighborhood Reinvestment Corporation. — The bill authorizes the
appropriation of $15,512,000 annually for fiscal years 1984 and 1985
for transfer to the Neighborhood Reinvestment Corporation.
Liquidation of the new communities program. — Provisions of title
VI allow for the orderly termination of all outstanding government
responsibilities resulting from the new communities fund author-
ized by the Housing and Urban Development Act of 1968. The bill
would transfer all outstanding assets and liabilities of the fund to
HUD's liquidation revolving fund and would provide for the legal
cancellation of any resulting debt owed to the U.S. Treasury as a
result of operations of the fund. The Administration has estimated
that this provision would result in the cancellation of approximate-
ly $399 million in intragovemmental debt. Such a debt cancellation
has no net budget impact since the actual cost to the government
occurred when the original guarantee was honored.
The estimating budget impact of Title VI follows:
yGoot^le
TITLE VII — HOMEOWNERS REUEF
If enacted, title VU of this bill would create a new federal loan
guarantee program. With the authority provided, the HUD Secre-
tary would guarantee the timely repayment of second loans made
by private lenJerg to homeowners experiencing temporary difficul-
ty in meeting their existing mortgage obligations. The guarantee
assistance would be available only to those in financial difficulty
because of involuntary unemployment or underemployment whose
mortgages are not insured under the National Housing Act or as-
sisted under title V of the Housing Act of 1949. Also, a guarantee
would be provided only if the lender has indicated his intention to
foreclose, all available forbearance remedies have been applied and
the HUD Secretary determines that there is a reasonable possibil-
ity the assisted homeowner would be able to resume full payment.
Tlie amount of guarantees outstanding at any one time would be
limited to $750 million and the guarantee authority would expire
at the end of fiscal year 1985.
The principal amount of the guaranteed second loan would in-
clude not more than 95 percent of the payments due under the
original mortgage for principal, interest, taxes and insurance for
up to 24 months after the date of the loan plus a three-month ar-
rearage payment. In addition, an amount representing accrued in-
terest from the date of the loan until the repayment period begins
would be included in the loan. The Secretary wo. .Id be authorized
to collect a guarantee fee of 1 percent of the loan amount and it is
assumed that this fee would also be capitalized. Within 24 months
from the second loan origination date, the homeowner would
resume full responsibility for the original loan expenses and begin
repaying the second loan amortized over a period of not more than
12 years. In case of default, the federal government would cover 90
percent of the second loan's unpaid balance. If the loan were sold
in the secondary market, the government's liability would be 100
percent.
The amount of the federal guarantee that would be required in
each situation depends upon the household's total housing expenses
and the length of time assistance would be required. These factors,
in turn, determine the number of households that could be aided
by the funds authorized in the bill. Based on conventional loan ac-
tivity by savings and loan associations over the past 10 years, it
was assumed for this cost estimate that the monthly mortgage pay-
ment of an assisted household would average about $460 including
taxes and insurance. Experience under the Federal Housing AtT
ministration's section 203(b) insurance program indicates that
yGoot^le
maintenance and utility costs could be ewected to increase total
monthly housing expenses to about $600. Further, it was assumed
for this estimate that federal payments would be required for 24
months. These assumptions imply that $750 million in guarantee
authority would aid about 65,000 homeowners if the assistance
were set at the maximum 95 percent of mortgage expenses. If the
household contribution were set at 15 percent rather than 5 per-
cent, households served could increase to about 72,000. It should be
noted, however, that the estimated number of households served is
verv sensitive to the assumptions used. As an example, an increase
of $100 in the assumed average monthly mortgage payment would
decrease the number of households served by 15,000. Similar in-
creases could be expected if the monthly mortgage payment charac-
teristics of households served are coorespondingly lower.
This cost estimate includes only the budget effects of the guaran-
tee fees collected by HUD — $7.5 million in 1984. The eventual cost
of the program will, however, depend on the loan default rates of
assisted homeowners and the resulting claims payments required
of the federal government. Because i^ uncertainties as to the finan-
cial characteristics of borrowers and the stringency of underwriting
standards that would be applied, it is not possible to develop firm
estimates of claim costs. Given the 24 months allowed from the
guarantee dates until the repayment obligations begin, it is very
unlikely that claims will occur before fiscal year 1986. Beyond this
point, it appears that the default risk is significant. Under the as-
sumptions listed above, a household with an annual income of
$22,000 would use about 25 percent of income for its mortgage pay-
ment. Total housing expenses, including maintenance and utility
costs, would require about 32 percent of income. If, after a period of
reduced income requiring 24 months of assistance, the homeowner
were once again to achieve a level of $22,000, combined housing ex-
penses would require over 43 percent. (This assumes a second loan
of $13,800 at an interest of 12 percent amortized over 12 years.) De-
pending on other fixed expenses, this demand on income may trig-
ger a default. If reemployment occurs at higher income levels, the
situation would improve. Were underemployment to remain a prob-
lem into the repayment period and the borrower's income were
$15,400 (70 percent of the former level of $22,000), housing- related
expenses would consume 62 percent of income. For such borrowers,
a default would be more likely.
6. Estimated cost to State and local governments;
Department of Housing and Urban Development grants to states
and local governments under this bill would total $4,266 million in
fiscal year 1984, $630 million less than the $4.9 billion appropriated
in fiscal year 1983 (which included a supplemental $1.0 billion for
CDBG). While these grants do not require specific matching contri-
butions by grant recipients, the local costs of administering such
funds are borne by recipient governments. The level of funds au-
thorized by this bill is not expected to increase these costs.
7. Estimate comparison: None,
8. Previous CBO estimate: None.
9. Estimate prepared by: Brent Shipp and Lin Lloyd,
10. Estimate approved by: James L, Blum, Assistant Director for
Budget Analysis.
yGoot^le
ADDITIONAL VIEWS OF SENATORS GARN, TOWER. TRIBLE,
HECHT, MATTINGLY, AND GORTON ON TITLE VII OF THE
COMMITTEE REPORTED BILL
We want to make it clear at the outset that we have tremendous
compaasion for the families which, through economic circumstances
involuntarily imposed on them, face the prospect of losing their
home through an inability to make timely mortgage payments. For
most American families, a home is not only their principal asset
but has intrinsic psycholc^cal value far beyond the dollar worth of
the property.
We must oppose, however, the Federal assistance program pro-
posed in Title VII of this bill. We think this financial assistance, in
any form, to families facing foreclosure on their homes, while well
intentioned, is the wrong kind of help.
We believe that a combination of lender forebearance on mort-
gages, adequate counseling and in the longer term, a healthy, grow-
ing economy, is the preferable solution to this problem.
Mortgage lenders, be they commercial bankers or savings and
loan executives, have every incentive to forbear to the maximum
extent possible on mortgages in threat of default. It is not in a
lender's best interest to assume possession of a residential proper-
ty, attempt to protect and maintain it and, perhaps, be forced to
sell it at a loss. As the providers of mortgage money to the commu-
nity, lenders are reluctant to foreclose on their mortgagees who
otherwise have honored financial commitments and have been good
customers of the institutions.
The assistance proposed by Title VII of the Committee's bill
poses what appears to us to be significant problems. First and fore-
most, the proposal would impose on families which are already
hard pressed an additional and significant debt burden. While for
some families this new loan might be manageable, for others, the
burden may be too great either because employment is unavailable
or they are not, for other reasons, able to regain their full financial
viability. In this case both the family and the government loses.
The family loses its home, and the government loses on the bEdance
of the second mortgage that it has guaranteed.
Moreover, we think the proposed assistance is not sufficiently
targeted to deal only with the conditions in areas of the country
where the high unemployment problem is concentrated.
In addition, as the economy continues on its present course,
mortgage delinquencies are already declining and will continue to
decline. Therefore, the commitment period envisioned by the bill,
i.e. through 1985, is too long.
Finally, both in the long run and the immediate future, the most
permanent solution to this problem is the economic recovery which
has begun and which must be fostered by our every action, we now
see encouraging evidence that people laid off in the steel, construc-
(95)
yGoot^le
96
tion and automobile industries are beginning to go back to work in
ever increasing numbers. In particular, we do not believe this to be
the time to add another quarter of a billion dollars tb the federal
debt market. The government directly or through its myriad of
agencies currently consumes as much as 70 percent of the available
investment capital forcing the price of private capital ever higher.
That is exactly opposite to a needed stimulus for economic recov-
ery.
For these reasons, we oppose this provision. We will oppose it
when the Senate taJces it up for consideration and will offer an
amendment on the Floor similar to one offered by Congressman
Wylie in the House, which provides a more active r^ulatory ap-
proach to encouraging lender forbearance.
Jake Garn.
John Towbr.
Paul S. Trible, Jr.
Chic Hbcht.
Mack Mattingly.
Slade Gorton.
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ADDITIONAL VIEWS OF SENATOR WILLIAM L. ARMSTRONG
I. OVERVIEW
S. 1338 is a budget busting housing subsidy bill which should not
even be considered, let alone passed, by the Senate.
The U.S. economy is finally staggering out of a recession caused
or, at least, seriously aggravated by large federal budget deficits.
But the whole world is nervously eyeing the $1.2 trillion in deficits
projected for the next five years with a general fear that such defi-
cits will send our economy into a tailspin and pull other nations
down with us.
Under the circumstances, it seems extraordinarily unwise for the
Senate Banking Committee to recommend a bill which creates
seven new HUD programs, adds billions to projected deficits and,
at the same time, fails to protect those who have the most to lose
from the failure of subsidized housing programs — the poor and ill-
housed.
The bill recommended by the committee calls for:
Housing vouchers, similar in concept to food stamps, and with
the same potential for explosive cost growth. Although funded for
only 60,000 persons in this bill, approximately 12 million people
meet the legislative eligibility standards.
Mortgage foreclosure relief, a $750 million loan guarantee pro-
gram, on which no hearings have been held before committee
mark-up.
Rehabilitation and Development grants, a program with funding
double that proposed by the Administration which would permit
anyone to receive federal money to fix up their house, build new
housing, etc. . , . regardless of income or financial need!
Demonstration projects which overlap and may pre-empt private
sector efforts.
A new public housing policy making committee, not requested by
the Administration, nor is the Administration represented on the
committee.
PHA capital replacement fund, also not requested, for good
reason.
No Davis-Bacon reform which could save $500 million.
$40 billion in BA above the President's request (1984-88), accord-
ing to the Office of Management and Budget.'
$11.9 billion in Outlays above the President's request (1984-88),
again, according to the Office of Management and Budget.
$18 billion in higher guarantee authority for the Federal Hous-
ing Authority and Government National Mortgage Administration
than was requested by the Administration.
yGoot^le
$2 billion more in lending authority for rural housing prt^ams
than was requested by the Administration.
Increasing subsidized rents to levels 13 percent higher than re-
quested by the Administration.
As I review these staggering proposals, 1 cannot help wondering
whether the Administration and Congress realize the magnitude of
resources already committed to federal housing. Of the $363 billion
obligated to federal housing programs, some $263 billion remains to
be spent. We now provide housing assistance to 5.6 million units
and 13 million Americans. If Congress did not commit a single ad-
ditional dollar, another 300,000 units are already authorized to be
provided by 1988. I believe Congress would be foolish to authorize
additional federal housing assistance at this time. Yet the Adminis-
tration over the next five years projects new housing authoriza-
tions of $47.9 billion over amounts already committed providing an
additional 446,000 subsidized units.^ The Senate Banking commit*
tee then proposes $40 billion in spending higher than what the Ad-
ministration requested. How can such spending levels, new housing
prc^ams and changes in current programs proposed in the Senate
authorization bill can be justified in view of existing commitments
and the prospect of gigantic deficits?
II. OBJECmONS TO SENATE BILL
A. New housing programs
The history of federal housing policy amply shows that most
housing prx^rams are ill-conceived. Time after time, a program is
b^un, then expanded and eventually becomes so large and the
problems so manifest that Congress finally comes to its senses and
scuttles the progreun . . . only to begin new prc^ams. Yet, of
course, the bill for the previously discredited prt^rams is left to
future generations to pay.
From this perspective, the additional spending and new pro-
grams contained in this bill are apt successors to the long line of
flawed federal housing programs. But at a time when the govern-
ment cannot afTord the housing programs already in place, both
the Administration and Congress are proposing new programs that,
in many instances, are illogical and counter-productive. These new
programs contained in this bill include:
(1) Rental Rehabilitation and Development Grants; (2) Housing
Vouchers; (3) Mortgage Foreclosure Relief for the Unemployed and
the Underemployed; and (4) Public Housing Accreditation Commis-
sion.
Let's consider the details of each of these new initiatives.
1. Rental rehabilitation and development grants
fa) Program Expansion. — This program was first proposed by the
Administration in January. In less than two months, the Senate
Banking committee has:
Doubled funding for the program.
:nt and Budget. Housing
I; Oirice of the Budget Fi
yGoot^le
Dramatically changed the nature and scope of the program. No
longer will the program only provide grants to rehabilitate existing
housing; but will also provide grants to help develop new units of
housing! Moreover, grants need only flnance "primarily" residen-
tial refd estate projects rather than "exclusively" residential prop-
erU- as was first proposed.
Expanded the program so that grants can be provided for acqui-
sition of property, not just rehabilitation.
Authorized assisted units to receive federal insurance guaran-
tees.
Created a "Secretary's Discretionary Fund" for $30 million that
was not even requested by the HUD Secretary.
Authorized $1 million in technicfd assistance not requested by
the Administration.
Permitted unspent funds left after terminating the Section 312
rehabilitation loan program—another failed housing development
pn^ram that, ironically, the Banking committee wants to termi-
nate with this bill — to be transferred to the new "improved" reha-
bilitation program.
All at a time when the federal government is projecting $200 bil-
lion in diflcits.
Perhaps this new program could be justified if it were tightly
written, urgently needed, millions of Americana were demanding
its enactment and offered ironclad guarantees that the money
would be spent wisely and efficiently.
Of course this is just wishful thinking. Let me quote from an
April 1983 analysis by the General Accounting Office which states
that this could lead to subsidies which are:
(1) ". . . targeted at housing units without adequate consider-
ation for benefiting needy renter households,
(2) "have costs higher than necessary to improve the housing
conditions of lower income households,
(3) "have the potential for significant displacement of lower
income household,
(4) "have little evaluation information avEulable." '
While it is true that some GAO concerns were addressed by pro-
visions added to the committee bill. Congress would be foolhardy to
commit to this program until each of these concerns is addressed,
and GAO, HUD and 0MB verify these potential problems will not
(b) Lack of financial accountability. — In addition this rental re-
habilitation proposal lacks financial accountability as well. For ex-
ample, records on incomes of households in determining eligibility
or their citizenship occupying rehabilitated housing are not explic-
itly required by the bill. In a study conducted by GAO of 64 com-
munities which had implemented some previous rental rehabilita-
tion loan programs, only 23 of the communities were able to verify
incomes of households benefiting from the rehab program. In addi-
tion, these cities used various forms of calculating income limits — if
they did keep records — some based on Section 8 or some independ-
ent method by which income and demographic data was not effi-
ciently kept.
yGoot^le
Rental rehabilitation should be specifically targeted to neighbor-
hoods of low income housing projects. Many of tlie cities surveyed
by GAO were found to have "pockets" of middle income households
which participated in the rehab program. In essence, much of the
money was going to other than needy households.
(c) Secretary's discretionary fund, — This bill creates a Secretary's
Discretionary Fund of $30 million, and directs only that funds are
to be spent for substantial rehabilitation or construction projects.
This slush fund was not requested by HUD. In my view, discre-
tionary funds of this size are inappropriate in government no
matter who is in control. Again, history proves my point.
The Section 8 new construction program became notorious con-
tracts which were given to developers who, coincidentally, contrib-
uted significant campaign sums to reigning politicians. During the
previous Administration, newspaper headlines screamed "Housing
and Politics: The Way it Works, "A Donation to Carter Unlocks
HUD Dollars," "Friends of the Governor Thrive on Housing
Funds," "Politicians Steer Section 8 Profits to Allies." It is interest-
ing to note that on the last day of the Carter AdministratioQ, HUD
released more than $2 billion in Section 8 contracts out of the Sec-
retary's Discretionary Fund.
In short, providing $30 miUion in discretionary funds without
adequate guidelines can only be labeled as poor pubUc pohcy.
(d) Targeting. — Federal assistance programs are generally not
tainted to help the truly needy, since less than 8.3 percent of all
federal assigtaijce is means-tested.
This proposed rental rehabilitation program is no exception and
is far from being targeted to those most in need. No income limit is
imposed on those who qualify to receive the grants to rehabilitate
bousing, and for as much as 50 percent of the funds provided there
is no income limit on those living in the units once rehabilitated.
This failure to target the program works directly against our suc-
cessful efforts of the past three years to insure that future housing
subsidies be made available only to the very low income. In fact,
one result of this bill is to make some eligibility requirements more
generous than in the entire history of the Department of Housing
end Urban Development.
The new eligibility standards are at best veiv complicated to ex-
plain (and incidentally, are radically different from all other HUD
eligibility standards that they must now enforce). This new pro-
gram has not one, but three sets of eligibility standards. First, all
grants must be spent in neighborhoods whose median incomes are
leas than 80 percent for the area. Literally thousands of neighbor-
hoods across this country would meet this standard. How can the
government insure that the most needy neighborhoods will receive
priority funding?
The next standard of eligibility is even more faulty. This bill
specifies that 70 percent (and in some cases 60 percent) of benefits
must help those earning less than SO percent of median
income ... or about 30 million families. But what happens to the
rest of the money?
Thirty percent of this assistance could potentially go to anyone
r^ardless of income.
yGoot^le
For rumple, a wealthy individual who wants to renovate a
townhouse in a blighted Washington, D.C. ai«a could recrave a
grant to renovate hu property, and then live in it. Althou^ one
may argue this is not Ukely to haf^en, the fact is this bill permits
opening the door to soch sdiemes.
Yet the story doesn't end here — llie eligibility standards take
even a more tortured twist The bill states that men a multifamily
project is granted approval for assistance only 20 percent of this
units need be made available to lower incmne families, l^iere is no
income limit for these living in the rest of the units! In the part,
the Genera] Accounting Omce has repeatedly told Congress that
these eo-called partially essential projects are the most exprasive
and inefficient use of housing subsidy.
Now for the final blow. Newly built units which are pert of this
program and are subject to a rent control system that — incredi-
bly— provides proportionately greater tenant subsidies to moderate
income families and less to very low income families.
M Quadruple subsidies. — It is a mistake for Congress to review
any single federal housing program in isolation. Almost all federal
housing programs are overIap|ring or attempt to patch past pro-
grams. Section 202 low interest loans build units for elderly per^
sons assisted under Section 8. Farmers Home Administration low
interest loans build units assisted under several types of housing
subsidies. Section 8 new construction units receive guaranteed
tenant inoome, lower-cost construction financing, and often have
federally backed mortgage insurance.
This new program is no exception. In fact, this program could be
coupled with at least three other forms of direct federal subsidy. In
summary it is conceivable that an owner may rehabilitate a unit of
housing and not put a single penny of his own money or be exposed
to any risk of default Here is how:
This bill allows grants to supply up to 60 percent of the cost of
rehabilitating a unit yet if this is not enough an owner can apply
for another grant for another 50 percent of the cost from any cAher
federal program, including the Community Development Block
Grant. Once built, a tenant living in such a unit is eligible to re-
ceive direct tenant subsidy available under a new Section 8 pro-
gram created under this bill (see the "housing voucher" section of
these views). If the unit is newly constructed, it is also eligible for
tax-exempt financing. Finally, the mortgage can be insured by the
federal government so that the owner faces little if any economic
risk for default. How could the government be more generous!
(P New construction. — Although the Administration does not re-
quest such authority, the bill permits grants to help build new
units of housing despite the federal government's pest proven in-
ability to build inexpensive, low-cost housing.
Congress terminated new starts for the Section 8 program for
this very reason. Even Congress — which rarely says no to extrava-
gant uses of tax dollars — realized that the Section 8 new construc-
tion program was a horrible mistake.
Now Just a few months after terminating Section 8, Congress is
about to embark on a wholly new program.
Why does Congress so abjectly fail in its efforts to build new
housing? Here are a few reasons:
yGoot^le
102
1. New bousing is built under the rules of Davis-Bacon, meaning
that labor cost are usually far higher than labor costs for other
Ti of housing
CtMigress never initially authorizes or appropriates enough to
build a new unit ... so the new units either run deficits — which
future Congresses will be required to make up — or Congress has to
fwk over more money up front to get the project built.
3. Numerous federal rules govern construction of new housing,
and compliance increases costs. For example, housing must be built
according to standards written in the National Environmental
P&liw Act
4. These rules discourage owner-developer participation. To offset
this, HUD must offer other inducements to encourage participa-
tion . . . and that only increases costs. For example, under Section
8 construction, developers were required to invest Uttle, if any, of
their own money in the project.
liiere are other factors far too numerous to mention that drive
up costs for building federal housing. Congress will Uve to regret a
decision to use this pn^ram to provide units of new construction.
(g) Interferes with prudent Federal-State-local government rela-
tionshipe. — This bill contains a rather curious provision that if a
state or local government chooses not to administer this new pro-
gram (and I would think most would have every reason not to) then
the Secretary of HUD must administer the program for the state.
If a state or community has elected not to participate in the pro-
gram, the federal government should have absolutely no businesB
m initiating such a scheme in a local community.
Some of those to whom I have expressed these concerns say we
need not worry since "after all, it is only $300 million."
Histoi^ mocks this contention. When section 8 began in 1974, it
did so with an initial appropriation of just $42 million. In less than
a decade, Congress committed $150 billion to this discredited pro-
gram.
If the senate fails to kill this new pn^ram, in all probability a
future Senate will have to . . . but only after billions will have
been spent needlessly and foolishly as we have done so many times
before. Why have we never learned from these lessons of the past?
$. Housing vouchers
Another new housing program included in this bill is the Modi-
fied Section 8 Existing Housing Assistance progrfun.
This program is being sold as the efficient, modest, affordable
and equitable way to replace the horrible Section 8 new construc-
tion prt^ram. That sort of sales job ontv increases my apprehen-
sion. After all, that is exactly the way Section 8 was sold to Con-
gress as being efficient, modest, affordable and equitable way to re-
place the Section 236 program, which replaced the Section 221 pro-
gram ... all of which are in addition to the public bousing pro-
gram, the Section 235 program, rural housing, coU^e housing, etc.
The question I have is this: Will those who are in the Senate ten
years ^m now. scratch their beads and ask what in the world
were we thinking of when we create this monster?
yGoot^le
108
I believe the answer is yes. Here is the wa^ this program works.
Public housing authorities will provide certiiicates (or vouchers) to
eli^ble families to cover the difference between thir^ percent of
their adjusted income and the cost of a rental housing unit. A
"payment standard" based on the rental cost of modesuy priced
standard quality housing of various sizes and tsrpes in a particular
area would be used in combination with the family's income to de-
termine the amount of federal subsidy to be provided. A participat-
ing ffunily could choose a unit with a rent abeve the payment
standard, but the family would not receive any additional subsidy
and would absorb the Eraditional cost. A family could also choose a
standard quality unit with a rent below the payment standard and
would be able to retain the savings. Thus, families would be able to
decide for themselves how much they axe willing to pay in order to
live in better housing units or neighborhoods.
This program is being sold as the best way to reduce federal
housing costs on the theoi? that it is cheaper than Section 8. Pro-
ponents argue that under Section 8, landlcmte have raised rents to
match rent levels the federal government is committed to subsi-
dize. Under the HUD proposal, the opportunity for tenants to nego>
tiate rent levels should nold down rents and subsidy levels— in
theory.
Sounds good, right?
Consider the following facts:
This program will only save money if the so-called payment
standard is lower than the fair market rent standard. It is true
that in proposing this program, HUD developed a payment stand-
ard that is likely to be lower than the currently used fair market
rent standard.
But what did the Senate Banking committee do lees than two
months after the proposal was sent to Congress? It liberalized the
payments standard, and made the subsidy more generous. Here's
now:
First, it set payment and fair market standards at levels 13 per-
cent higher than levels initially proposed b^ the Administration.
Second, it allows public housing authorities to set rents 20 per-
cent higher than levels projected oy the Administration. Then ttie
bill allows PHAs to retam 50 percent of the rent savings resulting
from tenants finding units below the payment standard . . . and
tenants may have less overall incentive to find cheaper housing,
and projected savii^ may not materialize.
It is interesting that tms approach by the committee funds fewer
units, but at subsidies substantially greater than the Admimstra-
tion proposes. Keep in mind this is only two months after the pro-
posal was submitted. If the past is any lesson, future Congresaes
will enact more generous subsidies and expand the number of units
provided.
Just take a look at the eligibility standards the bill inrovidee. Al-
though the committee used an eli^bility standard that is now used
for housing prt^rams, Uterally millions of families will meet the
proposed eligibility standard of fifty percent of median area
mcome.
While millions axe eligible, the initial Administration proposal
proposed funding 80,000 units of housing with this new certificate
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Fi
104
program. This is only a drop in the bucket of potential need as de-
fined by the bill, liere will soon rise a great clamor by public
housing authorities and tenant organizations for more certiflcatee,
hi^er subsidies.
These certificates are extremely valuable. Many Americans pay
more than 50 percent of their gross income for bousing. But from
tile many eligible, the lucky few who receive assistance could pay
only thirty fwrcent of adjusted income for rent. To give such a gin
to some eligible families but not others is grossly discriminatory.
Congress is likely to resolve such a dilemma by agreeing to expand
the program to all who qualify even though the tax[>ayeTS are al-
ready assisting some 13 million Americans. The bill, in effect, cre-
ates an ocean of demand and irresistible political pressure to fulfill
that demand.
3. Mortgage Foreclosure Relief Act
By a vote of 11-7, the Banking committee, without benefit of
hearines beforehand, approved tiie "unemployed and underem-
ployed Mortgage Default Assistance Program. This $750 million
Federal loan guarantee program provides a second mortgajge for a
homeowner to make his first mortgage loan payments— in other
words, a government bailout for a homeowner unable to make
monthly mortgage payments.
Like other federal housing assistance prt^ams, this mortgage
assistance program also is not targeted to the needy. No income or
asset test is required to qualify; in fact a homeowner need only
have "incurred a substantial reduction in income as a result of in-
voluntary unemplovment or underemployment." The definition of
"underemployment ' is left to the imagination, since the bill does
not define it. In addition, no limit exists for the amount of the first
mortgage which homeowners can have and still be assisted. For ex-
ample, a wealthy homeowner with two homes, several cars and
other assets could still qualify for this federal loan guarantee.
While I applaud the spirit which motivates senators to propose
legislation to help those strapped by mortgage payments they are
unable to make, this legislation is likely to do more harm than
good for those intended to benefit from tlus assistance.
The program actually provides an incentive to mortgage holders
to foreclose. The program requires lenders to indicate an intent to
foreclose in order for homeowners to be eligible for the guarantees.
Also the bill essentially encourages a debt-strapped homeowner to
take on further debt only digging a deeper hole of debt. For exam-
ple, a homeowner with a 13 percent mortgage for 80 percent of the
average existing home price of $68,000 would be paying $604 per
month. After being assisted by this program be would owe $819 per
month, an increase of 35 percent in debt payments.
Moreover, the total loan value would be in excess of 100 percent
of the purchase price. This greatly increases the probability of ulti-
mate foreclosure on the home. The result — this program may actu-
ally create a federal grant to delinquent homeowners pr<^ram, not
simply a loan guarantee program. By increasing the total debt on
the home beyond conventional bank lending standards, the risk of
a direct federal outlay occurring is very high.
yGoot^le
106
4- The Public Housing Authority Accreditation Commission
The Senate bill also contains a new accreditation commission —
Section 304. The bill assignB to this privately appointed commission
authority to set and administer standards for accreditation of
public housing agencies. The commission would act as an independ-
ent entity empowered to formulate standards and administer ac-
creditation for public housing authorities and at the same time be
subject to the Department of Housing and Urban Develo|anent,
subject to the HUD Secretary.
Tliis arrangement is unworkable amd violates the appropriate
and proper roles of the Deptirtment of Housing and Urban Devel-
opment in overseeing the use of federal funds and to assist public
housing authorities in their management. Although ostensibly
under HUD, The Secretary would have no role in commission ap-
pointments, no control over use of personnel, no control over use of
funds or involvement in establishing performance standards or par-
ticipation in the accreditation processes. The Secretary could only
approve or reject the final draft before it is published in the Feder-
al Register. We already have an agency, HUD, with the authority,
matched with responsibility and accountability to the President
and Congress. Why do we want to diffuse the administration of
public housing with little or no responsibility to HUD or Congress?
Furthermore, this proposal would at best interfere with the past
progress made in developing an efficient, workable certification
process currently in operation. The establishment of performance
and accreditation standards is a tested, accepted procedure which
has been developed by HUD and voluntary associations with the
case of expert panels and individual professionals' assistance. It is
difficult to predict the decisions of this commission — but one thing
is clear; it would destroy the years of cumulative work in develop-
ing the new existing structure.
In addition, from a philosophical perspective, the commission cre-
ates bad federal precedent. Unlike many study commissions cre-
ated by Congress, this one has both operating and r^ulatory func-
tions without proper accountability. A privately appointed commis-
sion would regulate and set standards for federal assistance prcK
grams. This commission would also accredit other units of govern-
ment and perform other "federal" functions and decision-making.
Such a delegation is poor policy.
It is not surprising the National Association of Housing and Re-
development officials (NAHRO) have voiced strong opposition to
the proposal. This organization which works closely with public
housing authorities across the country decisively rejects the pro-
posal.
B. Expansion of existing programs
This bill also makes costly changes to current programs which
will:
Result in outlays by 1988 $1.3 billion higher than the Adminis-
tration projects even though the same number of units will be as-
sisted. The committee bill establishes a new fair market rent
system to determine subsidy levels. The effect will be to raise fair
yGoot^le
106
market rents 13 percent above the Administration's proposed
levels.
Not count food stamps as income in determining either eligibility
for housing or the amount of housing subsidy to be received.
Prohibit the inclusion of housing assistance in determining eligi-
bility for all other domestic assistance programs, an issue not prop-
erly within the jurisdiction of the committee.
Accelerate spending in the Community Development Block Grant
ProfTram by permittmg local governments to draw down grant
funds by demand rather than according to spending need.
These are just a few of the many undesirable changes to current
programs included in this bill. But two issues deserve close scruti-
ny: (1) Proposed changes in income eligibility and, (2) Failure to
repeal Davis/Bacon as it applies to federal housing.
1. Income eligibility
This bill makes a m^or change by adding a little noticed provi-
sion to exclude the value of housing assistance from tenant's
income for the purpose of any other federal law. Although few in
words, this change has extensive impact. The provision is clearly a
substantive change to all domestic assistance prc^ams including
those not within the jurisdiction of the Banking committee. For ex-
ample, this change affects the Aid to FamUies with Dependent
Children (AFDC) program. This program is in the Finance commit-
tee's jurisdiction, and this change is opposed by both the Chairman
and the Ranking Minority Member of the Senate Finance commitr
teee. Let me quote from their December 8, 1982 letter to the Bank-
ing committee:
"The treatment of income is perhaps the most fundamental ele-
ment of a public assistance program.
"Clearly, Congress made an important policy decision when it
adopted the Administration proposal permitting states to count
housing subsidies as income. Currently, two states (Or^on and
North Carolina) have elected to utilize the offset. At least 10 addi-
tional states count housing assistance in the form of cash payments
as income. Repealing the option would have a disruptive effect on
these states and their AFDC programs. It would also be a violation
of the principle this Committee has followed when considering
changes to income maintenance programs; that in a time of scarce
resources, federal benefits should be targeted to those most in need
and that all resources available to the family should be considered
when determining benefit amounts."
In addition to the exclusion of housing assistance as income for
purposes of determining eligibility and assistance for other federal
programs, the bill excludes the counting of food stamps as income
m determining housing eligibility. Clearly, food stamps are in kind
income that have cash value and should be included when deter-
mining housing subsidy eligibility.
3. Davis-Bacon
No only is the bill deficient for what it contains, it is also defi-
cient for what it does not contain . . . namely, repeal of the Davis-
Bacon Act.
yGoot^le
107
Davis-BacoD sets government dictated wage and hour guidelines,
and in almost all cases, substantially increases labor costs. The
Davis-Bacon Act applies to federal construction projects, including
the construction rehabiliation and maintenance of assisted housing
projects.
Huge savings would occur if Davis-Bacon were repealed acroos
the board, and particularly if federal bousing were exempted. Con-
sider the following:
The General Accounting OfBce, which advocates outright repeal,
',"" ', ■ substantially
rehabiliated units of housing Davis-^con increases costs $160 mil-
estimatee that for each 100,000 newly constructed or sun
lion. Since 800,000 new Section 8 units have been built, cumulative
savings had Davis-Bacon been repealed would be $1.28 billicm . . .
money that could have been saved, or alternatively, provide addi-
tions housing for the elderly or handicapped.
GAO recently studied HXJD's Section 8 rental housing assistance
[>rogram. In their report they stated, "varous federal, state and
ocal officials and developers told us that the Act significantly in-
creased the cost of the Section 8 new construction proeram in par-
ticular areas." Two areas spocifically noted were Southern Califor-
nia where cost increases due to the Act were estimated from 5 to
15 percent and Pennsylvania where the estimated cost increases
ran^ted from $1000 per housing unit to 15 to 25 percent for the
entire Noject
The National Homebuilders Association has estimated that at
least 10 percent of the development costs of HUD programs will go
toward higher construction and iidministrative costs because tk
Davis-Bacon. HUD funded housing aid covered by Davis-Bacon is
approximately $4 billion. If we repealed Davis-Bacon for all HUD
programs, including Section 8, new construciton, rehabilitation,
and public housing programs for 1982, Homebuilders estimate a
savings of federal dollars of $407.5 million in the first year alone.
Many other problems exist with Davis-Bacon, and it continues to
be impractical to administer. The GAO charged that the Depart-
ment of Labor has failed to consistently determine permiseible
Davis-Bacon wages, and have not developed an effective system to
Slan, control or manage the data collection, compilation and wage
etermination functions.
Davis-Bacon discourages the efforts of minorities to enter the
construction crafts, says GAO. Davis-Bacon discriminates against
minorities for three reasons: (1) the concept of a minimum rate, (2)
high apprentice rates and (3) discouragement of minority contrac-
tors.
If there was no minimum rate, contractors could, in many in-
stances, give up the expertise and expense of the skilled craftsman
in favor of the inexpensive unskilled laborer. The Act discourse
the use of minorities on federal construction projects. Apprentice
rates are often set so high as to favor use of the more skilled jour-
neyman over the apprentice. Minorities have used cat^ories such
as helpers and trainees as a me^or means of entry into the con-
struction industry when not barred by Davis-Bacon.
The Department of Labor's disposition toward union rates dis-
courages minority contractors, a vast majority of whom are open
shop, from bidding on federal projects. This not only hurts minority
yGoot^le
108
employraent, but alao contradicts federal procurement policies
aimed at encouraging minority enterprises.
During testimony before the Senate Labor subcommittee in late
April, Chicago housing authority commissioner, Renault A. Robin-
Bon, outlined the outrageous federal pay scales of housing authority
maintenance employees.
"We did a survey last year," Robinson told subcommittee sena-
tors, "to determine how much overtime we paid to our 216 elevator
mechanics. We spent, in a ten-month period last year in overtime
alone — not counting the regular 40-hour week — $3 million. The
highest employee took home $80,000 in overtime. Now if you figure
that out * * * he NEVER slept * * * he just stood there in the ele-
vator."
m. HIOTOSY OF FAILURB IN FEDERAL HOUSING PROGRAMS
Since 1937, more than $360 billion has been committed to federal
Bubaidized housing; 90 percent of this enormous sum was obligated
in the last eight years alone. Some 13 million Americans live in 5.6
million subsidized units. By this standard, Congress might appear
to have been sensitive to the poor. On close inspection, however,
the facts show federal housing is not only insensitive to the poor,
but is also intellectually and fiscally bankrupt.
From 1937 to 1%9, public housing was the m^or federal housing
i>ragram. Construction of the units was federally financed, and
ocal public housing authorities (PHA'b) operated the units. Be-
cause of the low-cost financing, rents were reduced, and made
available to the poor. No federal operating subsidies were used, and
virtually all PHA's met their costs, and even established reserves
to meet replacement and emergency costs.
Yet concerns were raised that this system created instant public
housii^ ghettos, and that tenants paid too much of their incomes
for rent. Rushing to the rescue, Congress enacted requirements
that tenants were to pa^ no more than 25 percent of their income
toward rent. While assisting tenants, this reduced the operating
income of PHA's, so Congress created another new program — PHA
operating subsidies designed to keep PHA's solvent.
This cure proved almost worse than the disease, however. ^
1975, all large PHA's had exhausted their reserves, operating defi-
cits mounted forcing Congress to enact larger and larger operating
subsidies. We are to the point now where last year there were
383,000 units located in PHA's that were flnancially distressed to
the point of bankruptcy.
PHA's have not rented units that have become vacant because
they lack the money to do so. Incredibly, PHA's have told
congressional committees that they are thinking about boarding up
additional units that are currently occupied.
In the sixties, Congress was not just concerned about excessive
tenant contributions to rent. It also wanted to stimulate private
ownership of subsidized housing — in itself a noble goal. So Congress
launched a series of rental subsidy pn^ams that directly subsi-
dized owners and landlords renting to low-income tenants. Again,
the cure proved worse than the disease. The costs and inequities of
these programs — known as Section 235, 236, and 221 programs — led
yGoot^le
109
to critical reports by the General Accounting Office. Costs rose so
high that a (Residential impoundment of the funds was ordered.
Even BO, today Congress still funds commitments made under these
pre^amB, and will continue to do so for the next decade.
In 1974, Congress approved a new housing program — Section 8.
This program rose like a phoenix out of the ashes of the previously
discredited prc^ams. It was hailed as the solution to the nation s
low-income housing problems. It was said the new program bor-
rowed all the best features of earlier housing programs. But from
the start. Section 8 proved ill-conceived, poorly managed, and scan-
dalously costly. Its initial appropriation was modest — only $42 mil-
lion. But in eight short years Congress committed to Section 8
more than $145 billion. Some one million units were built or
leased, and 200,000 are awaiting occupancy. The Congressional
Budget Office at one point estimated that a newly constructed
Section 8 unit could have a lifetime cost of more than $500,000. Eli-
gibility was so broad that 30 million Americans — a GAO figure —
were eligible for the subsidy. Abuses abound. Published reports
documented that Section 8 was a program for the "greedy, not the
needy." Elaborate housing was built that lined the pockets of the
developers at the expense of the poor. Other scandalous practices
were reported:
Section 8 contracts were given to developers who, coincidentally,
contributed significant campaign sums to reigning politicians.
Ill^^ aliens were housed in subsidized units.
Those with incomes exceeding Section 8'b fdready broad eligibil-
ity standards lived ih units built for the poor.
Newspaper and magazine headlines screamed "Billion Dollar
Nightmare at HUD," "Very Poor Last in Line to Receive Federal
Housing Assistance;" "Taj Mahal in New York: Simptoms of Rent
Subsidy Headaches," "Housing and Politics: The Way It Works."
In 1982, Congress finally woke up to the horrors of Section 8,
slashed funding for new commitments by 40 percent, and adopted
program reforms.
Even with these desirable changes, the fact remains that in
future years Congress will have to spend more money to bail out
this program. Poor budgeting and dismal planning plagues Section
8 with a huge unfunded liability — estimated by the Congressional
Budget OHlce to be as large as $50 billion— just to keep existing
Section 8 units available to the poor.
Before embarking on new housing adventures, this Congress
must understand exactly what our situation is today after this long
history of Housing Programs. We need to understand what we have
already committed and the obligations that have already been fas-
tened on the taxpayers, both in direct, deHned commitments as
well as the other unfunded obligations that have been built into
our structure.
yGoot^le
110
A. ^tending already committed to Federal housing
Of the $363 billion CongresB has committed to federal housing
programs, less than $90 billion has been spent. That means that u
Congress did not commit an additional dollar to these programs, at
least $263 billion is obligated to be spent over the next forty
years . . . quite a l^acy for future generations to pay.
Even these figures understate costs since they do not take into
account the value of spocial tax advantages and federal financing
often associated with housing programs, nor does it include future
funding that will be necessary to finance deficits in housing al-
ready provided.
Tms year there are 5,680,000 units of housing which are directly
subsidized — either in direct tenant subsidies or low-interest loans —
by the federal government, housing about 13 million people.
In addition, another 364,805 units are not yet occupied for which
Congress has previously obligated the government to build. Again,
if Congress does not commit any additional money and only fulfills
present obligations, three hundred and sixty thousand units of
bousing will be provided this decade.
Using President Reagan's 1984 houair^ budget assumptions, in
the next five years, the government will commit another $25.9 bil-
lion in new long-term spending for pn^ams within the Depart-
ment of Housing and Urban Development. This additional $25.9
billion will provide flnancing for another 234,000 units. But that's
not all. The Department of Agriculture's Farmers Home Adminis-
tration proposes to commit an additional $22 billion to its low-
income housing prc^ams and that will provide an additional
212,000 units.
E!ven these budget figures do not tell the full story about future
spending. These figures fail to reflect the overly optimistic assump-
tions of the President's budget in revealing the potentially large
deficits in housing programs. Current housing policy makes it im-
possible for public housing authorities to meet their spending obli-
gations and their only recourse is to seek assistance from the feder-
al government. Also, as a result of Congress initially flailing to pro-
vide adequate resources to finance the Section 8 and other housing
programs, Congr^ will be forced to appropriate more money to
keep already subsidized housing project in operation.
Contrary to the prevailing vnsdom in Congess and the media,
there have not been and will likely not be any actual budget cuts
in housing programs during the first term of the Reagan Presiden-
cy. These are the facts:
Housing outlays have and will continue to increase each year
during President Reagan's flrst term.
At least one million additional subsidized units will be occupied
between 1981 and 1985.
Between 1985 and 1988, another 163,000 units are projected to be
occupied (not counting increases in units provided through rural
housing programs).
It is true that the spending totels proposed by the Administra-
tion and provided in the committee bill are much lower than th(se
proposed during the 1970s. It is also true that'in 1981, during the
neyxlay of cutting taxes and spending during the so-called "Reagan
yGoot^le
Ill
Revolution," the Congress did reduce by $23 billion the spending
commitments proposed by President Carter for new housing end
community developments to be made in 1981 and 1982. But these
reductions will not show up in actual outlay reductions until 1984
and 1985. That is because as much as three years lapse between
the time Congress appropriates funds, and the time tne money is
actually spent. While there were other spending restrain changes —
increasing tenant contributions to rent, for example — these will
take as long as five years to become fully effective.
The bottom line is this: The total savings realized from b
restraint will not reduce federal outlays during President S
first term. But even with full implementation of all budget s
federal outlays will still rise each year this decade
Incredibly, the "spending cuts" in federal housing programs con-
stituted 52 percent of total budget savings in the iii«t year of the
so-called Reagan revolution that was to achieve a balanced budget
by 1984.
Yet, I believe a strong case can be made that rather than reduce
spending in federal housing. Congress and the Administration actu-
silly acceleratod spending ^ authorizing additional financing subsi-
dies for 74,000 new units of housing that otherwise would not have
been built.
In sum. Congress has to date committed $363 billion to federal
housing and almost all of that since 1970. Less than $90 billion has
been spent to meet these obligations leaving future generations at
least $263 billion to pay, assuming no additional commitments are
made and that projected deficits do not materialize. Five million
units are already subsidized . . . and by 1988, 6.3 million units will
receive subsidy. And far from cutting actual spending, the Congress
has, at best, only slowed future increases in spending.
R Actual and potential unfunded obligations in Federal housing
A review of Commitments to Housing to date still does not tell
the whole story of where we stand today on Public Housing. We
must go further and understand HUD Budgeting Practices which
have now created a huge unfunded liability. This has come about
through three nunor practices: 1} Amendments, 2) Project Reserves
and 3) Rent Supplement programs. They add up to a colossal faux
pas in federal housing policy and add billions in unfunded obliga-
tions whose magnitude cannot be accurately measured.
1. Amendments
This innocuous sounding budget concept ia the cover used to hide
billions of dollars in costovemins run up in the construction and
rehabilitation of federally subsidized units. The sums involved are
lai^. Since 1978 alone, some $20.5 billion in "amendment
funds" . . . have been committed by Confess. Additional billions
will be needed in the future. In fact, this bill alone provides at
least $3 billion in long-term spending for cost overruns. The need
for amendment funds originated as follows:
In the past. Congress has told HUD that it must build a certain
number of units, and theoretically Congress provides adequate au-
thorizations to build those units. HUD then allocates the money to
build the Congressionally determined number of units. Yet, these
yGoot^le
112
authorizations in virtually every case have been insufficient to pay
for the unit . . . but HUD has already committed the government
to build the unit. Therefore, HUD has no choice but to ask Con-
gress to fork up more money — the so-called amendments — to pay
for the previously authorized unit.
Here is an example. Suppose HUD in 1980 entered into a con-
tract with a developer for a Section 8 contract. HUD then reserves
a certain amount of budget authority — that Congress mandated —
for this project. For a variety of reasons, construction will not
begin until 1982. In the interim, costs have increased, and the de-
veloper cannot build the project for the money initially reserved.
So HUD has to reserve additional budget authority for these past
projects, and the authority is reflected in requests to Congress in
the form of additional amendments.
This policy is nothing more than a shell game. HUD submits and
Congress approves the budget supposedly with enough funds to
build a certain number of units. Onen these estimates are underes-
timated . . . but it serves the political purpose of reducing — al-
though deceptively — full prc^am costs. Only much later will Con-
gress pay the full bill for previously author^ed units . . . once the
commitments are made.
Second, knowing that amendment money is always available,
there is little incentive for developers to reduce costs. Keep in mind
that developers frequently are paid on the basis of a percentage of
the costs of the total project . . . thus . . . the more dollars, the
greater the percentage . . . the greater the need for amendments.
According to HUD, all of the 800,000 Section 8 newly constructed
units have required additional amendment funds before they could
be built. Therefore, repeatedly Congress has initially understated
total a»ts and then deceptively escalated the authority allocated to
these units by using future amendments to cover the actual costs.
S. Project reserves
Even with the coet-overrun amendments just described, total
housing costs are still understated because Congress has not pro-
vided enough money to pay future costs. In fact, this bill proposed
to begin the first wave of what will likely be a tidal wave of addi-
tional dollars that Congress will be asked to commit just to keep
currently occupied Section 8 units operational. In part, Section 8
units are financed on the project reserve concept. HUD takes the
first year costs of operating a project — total rents, maintenance,
repair and other expenses — and multiplies these costs times the
number of years for the contract, usually twenty years.
Yet over the course of a twenty year period, costs will rise. These
additional costs are paid out of the project reserve. This reserve is
the income derived from tenant contributions to rent. The theory
underlying this practice originates from tenant rent contributions
which will rise with inflation and along with other increases in op-
erating costs.
Like so many theories that comprise federal housing policy, this
project reserve theory is beginning to crumble. In reality funds
used in some project reserves have been diverted to other than in-
tended purposes, tenant income and their contributions to rent are
not likely to rise with inflation. In addition, other economic as-
yGoot^le
113
sumptions used to determine project levels may be overly optimis-
tic.
For the first time this year, HUD was forced to request that Con-
gress appropriate an additioanl $6.7 million in 1984 for project re-
serve funds. The Administration now projects that it will nave to
spend at least $75 million in each of the following four fiscal years
to keep project reserves adequate and housing projects solvent.
Moreover, I am informed these figures also are underestimated
. . . the potential for future prcgect reserves required in each of the
next 25 years may be lar^. HIID is now conducting an intensive
review to determine the amount needed for project reserves.
The bottom line is this: Congress is foolish to begin even one, let
alone seven new programs and to expand further funding for cui>
rent programs when we face the prospect of spending billions just
to keep the doors open for currently provided housing.
S, Section 236: Rental assistance program
Because of horrible mistakes made when the Section 236 rent
supplement program b^an in 1968, the federal government faces a
potentially huge unfunded liability that the federal govenmient is
responsible for, and eventually must pay.
Rent supplement and the rental assistance programs were cre-
ated without em adequate mechanism to pay for future cost in-
creases. Because most projects are insured by the federal govern-
ment against default, the federal govertunent is responsible to pay
obligations if defaults occur. The effect of this deficiency is to
expose the government to large risk in the future.
To its credit, the Administration foresaw this problem, and the
1984 budget proposed a solution that would reduce the govern-
ment's risk. This solution, however, is not included in the Senate
committee bill.
The Administration proposed ending the rent supplement rental
assistance progreun, and converting all insured units to the Section
8 pr(^ram. Specifically, the Administration wants to recapture all
unspent funds in the Section 236 program, convert these funds in
the Section 8 pn^am, and use the converted funds to pay for cur-
rently non-budgeted rent and cost increases in the Section 236
units. After these costs were properly financed, HUD proposed Con-
gress rescind the left-over funds. This conversion would apply only
to insured projects; non-insured projects — those projects unani^
by stale housing finance agencies — would be responsible for fund-
ing future cost increases that are above amounts funded by HUD.
The Senate bill rejects this approach. Instead, the bill requires
HUD to offer increased subsidies to cover future cost increases for
all rent supplement units . . . including both insured and non-in-
sured projects. Because it is optional, not mandatory, for the
project sponsor, few conversions would result and for a number (^
reasons. Yet while the committee bill creates the obli^tion, it does
not provide enough money to meet this obligations. Depending on
which economic assumptions are used, Congress in the next thirty
years may need to commit $8 billion in new money to keep the
rent supplement operational if conversions do not result. The com-
mittee bill authorizes S3.2 billion to meet this and — important to
note — other future obligations. So under the committee bdl, the un-
yGoot^le
114
funded obligation by the government is at least $5.4 billion, and po-
tentially more, depending on how much of the $3.4 billion author-
ized by the committee is spent on rent supplement and rental as-
sistance amendments.
V. SUMMARY
Experience teaches us that public housing legislation leads to un-
controllable costs, waste, abuse and failure. Congress should never
again pass new housing legislation without careful study, extensive
hearings and full debate along with an extensive review of previous
programs and critical evaluation of how they are working. This 1^-
ialation has not undergone anything resembling such scrutiny.
The defects in this bill are only a few that ] have identifled after
only a cursory review of its provisions. I could discuss al length
other undesirable provision . . . the huge increase in lending au-
thority for rural housing, the Federal Housing Administration and
the Government National Mortgage Administration, the provisions
for a new, capital subsidy and replacement fund, defects in the
method for computing public housing operating subsidies, the in-
clusion of a new rural housing preservation grant pn^am, the lib-
eralization of the prohibition against providing assisted housing to
illegal aliens ... it seems like an endless list.
But my basic point is this. The bill cannot and should not pass
bearing any resemblance to its present form. Why then are propo-
nents arguing for its passage?
Here are a few arguments I have heard for the bill. "The Senate
bUl is better than the House bill." That's true . . . the Senate bill
has half to two-thirds the spending levels in the House bill. But
that alone is no reason to pass this bill. In fact, the opposite is true
... it is reason to defeat this bill so that no version of the House
bill will pass.
I have also been told, "We have to pass this bill because the
House is holding hostage the International Monetary Fund bill
until successful adoption of a housing authorization legislation." If
true, the Senate should reject such flagrant extortion. Committing
an additional $21 billion in new spending as the price to help inter-
national governments keep their loan agreements is absurd . . .
and a price I am not prepared to pay.
I have also heard that, "We must pass this bill. After fill, we
have not had an authorization bill in two years." So what? Then
there is, "If we don't pass an authorization, the Appropriations
committee will do so anjrway." Mayi>e . . . but again, no reason to
pass an absurd bill now.
Finally, there is the argument that there are "urgent unmet
housing needs to fill." Yes, it is true. But no matter how many bil-
lions Congress spends, it will never be able to fully satisfy those
needs. And it surely never will if Congress continues to blindly and
unthinkingly spend money on untorgeted rehabilitation grants,
Davis-Bacon, and subsidies for the wealthy.
It is easy to oppose legislation, and not propose constructive al-
ternatives. What housing policies do I endorse? Here is what I
think should be done immediately:
yGoot^le
115
1. Full recapture of every unspent and uncommitted dollar
within the Department of Housing and Urban Development
and Farmers Home Administration.
2. Inventory every federal housii^ project in the United
States and the territories. Determine which units that we are
now paying for that are either uninhabited or in need of seri-
ous repair and determine how much is needed to bring each
unit to an acceptable level of habitability, using local stand-
ards as the benchmark.
Over the next five years, as many as 100,000 units of public
housing which the Federal Government is financing will be
either uninhabited or should be abandoned. Why build new
housing, or provide additional housing until these units are de-
molished, renovated or paid for?
3. Determine future levels of spending that will be needed to
erase current or projected deficits. Right now, two-thirds of all
units are located in public housing authorities that are near
bankruptcy. What needs to be done to erase these deficits, re-
plenish reserves, modernize their housing stock and make
them energy efficient and less costly?
In the future, almost all long-term Section 8 newly con-
structed units will have to have additional appropriations
beyond what is already committed. Using intermediate as-
sumptions, what are the projected deficits? Can recaptured
funds be held in reserve to pay these obligations?
4. Immediate repeal of Davis-Bacon and other regulations re-
sponsible for increased costs, including the National Environ-
mental Policy Act as it applies to subsidized housing, the use of
federal building code standards, etc.
5. Provide no additional subsidies until we know for certain
we have reduced waste, targeted assistance to the needy, and
are fully able to meet current and future obligations.
6. Of course, the best housing policy is one that would help
permanently to lower interest rates. To keep interest rates
down we must reduce the future deficits now projected. Rather
than freeze spending levels, this bill actually increases spend-
ing and thereby does nothing to solve our country's basic eco-
nomic problems and opens the door for future increases in in-
terest rates.
According to rumors circulating as of May 16, 1983, numerous
changes to the bill reported by committee have been proposed and/
or made. To what extent, if any, these changes may alleviate these
concerns, I do not know.
But these rumors emphasize that this bill should not be sched-
uled for floor debate. Unless very significant changes are made, the
bill is imworthy of passage; but changes of the magnitude needed
ought to be made in committee, not on the floor. With tight dead-
lines on many items of "must" legisUiiton, the Senate should not be
asked to rewrite this bill on the floor.
yGoot^le
DEPARTMENT OF HOUSING AND UR8AN DEVELOPMENT-COMPARISON OF BUDGET AUTHORITY AND
OUTLAYS; CARTER BUDGET, REAGAN BUDGET. AND ACTUAL
Actui . — ._ _ — 33,3S0.4 20,014.;
OOtfi-
Oter . _. ... . . 13J(M.9 1SJ07.4
(Miv _ U.m* I3.934.S
Acfj »J)3J.4 ».4»,S
Outlay increases in 1981 were due primarily to interest rates in>
creasing and remaining at substantially higher levels than project-
ed for l^e balance of the year. For 1982 the Reagan Budget project-
ed lower interest rates which did not fully materialize.
yGoot^le
i
iiHi
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i
iiiii
ii ill
i
11111
|i ill
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5
IPii
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1
EeSSS
p ill
i
asssa
SsSwS
ii ill
1
3SE«S
3| ^!l
i
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Si. '31
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11
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yGoot^le
DEPARTMENT OF HOUSING AND UR8AN DEVELOPMENT-SUBSIDIZEO HOUSING PROGRAMS, UNITS
EUGIBLE FOR PAYMENT/TOTAL UNIVERSE INaUOING PIPEUNE, 1985-88
cMBini 1^,000 U45,877 1^,000 1,21)6,000 1,171.000 1,171,000 1,161,000 1,161,000
m/sdi<»» 77S.2» gl7,I5< mm IZG.IM I0B.»1 (3S.1M 117^98 BU.154
ntna 1.491,!73 II95.60! 1.57J,*80 miM l.iUm l,65i.69! 1.711J80 I.71S.709
atfkm*.... 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000
v 236 346.000 346.000 345,000 345,000 344,000 344.000 343.000 343.DD0
m 235 206,000 ;06.000 199,000 IW.OOO 192.000 192.000 liJ.OOO ii7,000
SiMU 4.071,571 4,125,633 4,142,778 4,173,963 4,164,661 4,215,646 4,234.671 4,265^63
m 221 (BNR) (8,000 (8,000 88,000 88,000 18,000 88.000 86.000 UM
■MCbMi 8 uiils. 14,800 UJOO 14,800 14,800 14,800 14,800 14.800 14,1011
rKMtvdm. 78,700 78,700 78,700 78.700 78,700 78.700 78.700 78,700
v 202 (ot^inl
ognm) ;S.OO0 gS.OOO 25.000 25,000 25,000 25,000 25J00 JiJOfl
ToU .._.., 4.278,071 4.J32.133 4.349,278 4^80,463 4,391,161 4,422,346 4,441.178 4,472,363
SELECTED INDICES OF PROGRAM COSTS-HUD HOUSING ASSISTANCE PROGRAMS
Seani236 (odHtatKM)
. 1232.905.2 tl5.GI6.J 17,966.0 15,1276 t5.2H.4 $1,907.4 t3MI.7
20.244.6 1,017.9
28,094.3 1213 2S
. 12,415.8 46.0 ZII.4 - ,
Section 221((I)(3) BMIR iMiUatllt
Ion bilana)
GNMA landnn (<bnunt on mortme
293,659.1 16,103.7 7jtl3 5,12Ti
1,281.6 1,636.5 1374.9
FHA-GI/SR1 (losses m salts) ....
<3a7.117i 18.975.4 10.4(2.2 7,440.8 7,158.7 10.645.1
ANNUAL CONTRIBUTIONS FOR ASSISTED HOUSING BUDGET AUTHORITY UTILIZED FOR AMENDMENTS
(1978-88)
tcm
EtMWM
im
im
OK
isai
im isu-
IM4
1H5 I9K
1!«7
13K
W*c lamt
SMion 8
K74.1
2^3.2
W7,4
1,B73.S
1956.0
3,223.1
035,4
3,D07.3
1372.1 11,187.0
4,020.0 1,406.2
145.0
...^^.^,.„_„
llM
■■■ 175,0,
2,310.9
4,179 1
436.0
99.0 17.0
75.0
Hm. Lt7l-ll (tan v I r
yGoot^ie
SKNTAL REHABILITATION CKANTB
HUD plans to replace the section 8 Moderate Rehabilitation and
section 312 Rehabilitation Loans programs with a new rental reha-
bilitation grants program.
Perspective
The Administration is requesting $150 million for Racsi year
1984 to implement a new rental rehabilitation grants proenim.
This program would provide grants to States and units of focal gov-
ernments for up to one-half of the cost of rehabilitating both sinde-
family and multifamily rental properties. An estimated 30,000
rental units would be rehabilitated under the program in fiscal
year 1984. This proposed rental rehabilitation program has the po-
tential to be enective in upgrading a badly deteriorated rental
housing stock, but without specific congressional guidance regard-
ing program objectives and approaches. States and local govern-
ments mil tend to design programs which (1) are targeted at hous-
ing units without adequate consideration for benefiting needy
renter households, (2) have costs higher than necessary to improve
the housing conditions of lower income households, (3) have the po-
tential for significant displacement of lower income households,
and (4) have little evaluation information available.
Based on past work, GAO believes that many communities eligi-
ble to receive rental retud>ilitation grants would probably use low
interest loans to rehabilitate single-family housing, although they
estimate a greater need to rehabilitate and provide assistance to
multifamily rental housing for lower income households. Eligible
communities would have wide discretion to determine the type and
level of rehabilitetion assistance. Under the Community Develop-
ment Block Grant (CDBG) program, which has many similarities to
the proposed program, nearly half of the entitlement cities have
undertaken some rental housing rehabilitetion, but far fewer cities
have had extensive recent experience in designing, implementing,
or evaluating rental rehabilitation programs. The CDBG program
has no explicit tergeting criteria for rehabilitetion and many com-
munities emphasized rehabilitetion of single-family housing, while
reporting that renters were in greater need of assistance. Further,
the most common subsidy mechanism used by CDBG communities
was low interest loans, which has resulted in substantially higher
average per unit rehabilitetion costs than other financing ntetliods
such as grante and interest subsidy payments.
The rental rehabilitetion grante program could encourage com-
munities to allow unnecessary improvemente in order for the reha-
biliteted units to be marketable and competitive with other non-
subsidized unite. The higher rehabilitetion coste associated with
these improvements imply higher rents, which heightens the poten-
tial that low-income families will be displaced in mvor of the more
afHuent. Rentel rehabilitetion grants would be used to subsidize -
the cost of rehabititeting rental properties at competitive market
rente rather than at rente affordable to lower income households.
yGoot^le
120
Under past rehabilitation programs there has been a tendency by
corotnunitiee to allow repairs beyond those necessary to bring sub-
standard and deteriorating units up to code. The Administration
estimates that the average cost to rehabilitate a rental unit is
$10,000. Based on a recent survey of 64 CDBG communities, howev-
er, GAO found that the average rehabilitation costs per unit (ex-
cluding a few cities with very lugh costs) were less than $7,000 per
unit. Although housing payment certificates would be provided to
eligible low-income renters to help them afford the rehabilitated
units, these units would not be affordable by many low-income
households without housing certificates if sizable rehabilitation ex-
penses resulted in substantial increases in rents. Early indications
are that rehabilitation costs under the Administration's rental re-
habilitation demonstration program are much higher than under
CDBG. In the past, housing rehabilitation programs have been con-
ditioned on the use of the housing for lower income households.
Actual experience under the past prt^ams, however, has shown
that, in the absence of clear guidelines on targeting, many commu-
nities fail to assure that benefits go to lower income households.
Furthermore, program evaluation has been rel^ated a minor
role in local rental rehabilitation programs. Our past research on
the CDBG program has identified several problems relating to the
reliability of data used to report program activities and benefici-
aries. Unless program evaluation is made an integred component of
any new rental rehabilitation program, evaluation information will
be inadequate to effectively administer the program.
Questions
How would eligible communities be selected? Will housing need
be the major factor?
What is the average funding level that eligible communities will
receive and how many units will this enable them to relud>ilitate?
Are the anticipated funding levels for individual communities
going to be sufficient to have a substantial impact?
What is the extent of Federal technical assistance that the De-
partment anticipates will be needed to help communities design,
implement, and evaluate programs?
Will there be any limits and/or controls established on the type
and amount of rehabilitation assistance allowed on a given project
to ensure that only substandard units are brought up to code at the
minimum cost feasible?
Will project owners be required to pass on to the tenants any re-
duction in costs resulting from the rehabilitation assistance pro-
vided?
How will projects that are funded through the rental rehabilita-
tion grants program be tai^eted to low-income families and what
assurances are there that the rehabilitated units will remain avail-
able to low-income families for any reasonable period of time? Will
low-income occupancy be a mandated requirement for a specific
number of years?
Will project owners be prohibited from converting rehabilitated
projects to condominium ownership? Is the Department considering
establishing any requirements to recapture subsidies provided to
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unita occupied by other than low-income householdB or for any
other reason?
What specific program performance criteria and reporting re-
quirements will the Department impose to ensure that program ob-
jectives are met and that the program is being administered effeC'
tively? Will project owners be required to provide verified income
and demographic information to local adnmistering agencies? Will
these agencies be required to submit annual reports to the Depart-
ment showing what they have accomplished?
Will the Department report to the Congress on a periodic basis
as to the overall progress of the program, including consolidated
verified information fix>m all State and local governments and in*
formation on costs, services delivered, and program beneficiaries?
What sanctions or penalties does the Department anticipate im-
posing for Don-compliance with specific performance criteria and
reporting requirements?
Contact: William J. Gainer, 426-1780.
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ADDITIONAL VIEWS OF SENATORS RIEGLE, CRANSTON,
SARBANES, DODD, DDtON, SASSER, AND LAUTENBERG
The Houflii^ and Community Development Act of 19d3, as re-
ported by the Committee, is prudent legislation that would contin-
ue pn^ess in meeting the nation's urgent housing needs. It was
developed in a genuine, bipartisan effort to deal with complex prob-
lems and to accommodate diverse interests.
We believe the Senate should give this bill full and favorable
consideration without delay. Certain provisions of the bill respond
to conditions that require immediate action. Others would update
the law to make needed improvements in the efficiency of housing
and community development programs.
We regret that no housing legislation was enacted last year, and
we are deeply concerned that, in the void, the Administration has
tried to amend programs through administrative actions that are
inconsistent with the intent of Congress. To prevent continued ero-
sion of Congressional control over Federal housing and develop-
ment policy, we believe that the Senate should act promptly on the
Committee bill.
The Committee bill is a m^jor improvement over the legislative
proposals that the Administration submitted to the Congress in
January. First, the Committee's rental rehabilitation and construc-
tion grant program, in contrast to the Administration proposal,
recc^nizee tnat a balanced Federal housing policy must help pro-
duce new housing in those local markets that have a shortage of
decent rental housing, particularly for elderly persons and large
families. The new pn^ram would allocate $300 million by formula
to States and localities for use as grants, loans or other forms of
assistance. Under the prt^am, localities could combine flexible fi-
nancing tools with short-term rental assistance in order to expand
the supply of rental housing available to lower income persons and
families in their area.
Second, the "Unemployed Homeowners' Relief Act of 1983", Title
VII of the Committee bill, would help thousands of unemployed
homeowners avoid the tragic loss of tneir homes through foreclo-
sure. Without requiring direct Federal outlays, the bill would pro-
vide up to $750 million in mortgage default assistance by partially
guaranteeing private loans. Lenders would have appropriate incen-
tives to carefully check the credit worthiness of applicants — th^
would have to bear 10% of any loss. Stringent criteria for eligibil-
ity, which were suggested by housing and finance industrygroups,
would be applied oefore any assistance were provided. "The Act
would encourage lender forbearance by directing Federal regula-
tors to waive or relax existing requirements that inhibit forbear-
ance by lending institutions. It would require all customary for-
bearance remedies to be exhausted before a guarantee could be pro-
vided. The Federal assistance would have to be repaid and would
(IZ2)
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128
only be available to homeowners whose credit record was good
before they tost their jobs. Homeowners would be required to con-
tribute as much as they can to the monthly mortgage costs, but not
lees than 5% of the amount due. Assistance would be temporaty,
covering up to 24 months plus 3 months arrears and requiring re-
payment to begin at the end of that period. Assistance CQula be
provided onlj; to homeowners who are involuntarily unemployed
and who live in the home that is threatened with foreclosure.
Third, the bill continues a strong Federal commitment to com-
munity development. It reaffirms that the primary national pur^
pose of the Community Development Block Grant program is to
benefit low and moderate income people. The Committee bill would
emphasize the extent to which lower income persons directly bene-
fit from local community development programs by providing for
improved record keeping and program evaluation. It rejects the Ad-
ministration's proposal to include housing construction as an activ-
ity eligible for funding under CDBG — a change that would have
jeopardized the program's future by diverting funds from needed
development activities. The bill rejects the Administration's propos-
als to terminate the lump sum araw down and Section 108 loan
guarantees. It instead reinforces these important tools and thus
gives local communities greater operating flexibility to carry out
their development programs and achieve the program's national
objectives more efficiently.
Fourth, the bill rejects proposals that would weaken the UDAG
program. It would continue funding at $440 million and would pre-
vent UDAG funds from going unused when an insufficient number
of applications are submitted by small cities.
The bill reafllrms the intent of the Congress that UDAG be ad-
ministered as a national competition. That national competition
has enabled the UDAG prt^am to provide the greatest public
benefit at the lowest cost. We have been troubled by reports that
HUD has had plans to devolve UDAG underwriting responsibilities
to R^onal Atuninistrators, the lowest level of political appointees.
The Committee's bill unequivocally rejects such a change in the
UDAG prcwram and makee it clear that HUD area and re^onal of-
fices should not have authority to interfere with a local communi-
ty's right to have its UDAG proposals fairly considered in the na-
tional competition.
Fifth, the bill rejects Administration proposals for assisted hous-
ing that would have reduced "fair market rents", counted food-
stamp subsidies as income and capped medical deductions at $300.
We are convinced that the Administration's proposed changes
would force families into decaying neighborhoods if thev are to re-
ceive housing assistance and would effectively kill tne housing
voucher pn^am in many communities. We believe the Committee
bill provides a more realistic level of housing assistance to partici-
pating families.
Sixth, the bill responds to the critical housing needs of the elder-
ly and handicapped with authorization for the construction of
14,000 new units of specialty designed housing. It would permit
leased housing assistance to be offered to additional low income
families, although the number would be sharply reduced in re-
sponse to intense budgetary pressures.
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124
Seventh, the Committee bill evidences a clear determination to
ensure that public housing is weU-managed and maintained. The
publicly-owned housing stock consists of 1.3 million units and rap-
resents a public investment of over $65 billion. The units are
aging — some are over 40 years old. Many have been inadequately
maintained because of a continuing shortage of funds. Failure to
conserve this stock of low income housing would squander an im-
Ejrtant national asset. The bill gives [irioritv to modeniizing pub-
clv-owned, low-rent units and to providing local housing agencies
with adequate operating resources. The Cwnmittee does not antici-
pate construction of new public housing units in fiscal 1984 except
for those projects that are already in the processing pipeline. We
note that the so-called pipeline umts are concentrated m a relative-
ly few localities and that clearing the pipeline will not provide new
low rent units in many communities where they are needed. How-
ever, we concur in deferring aid for new construction this year.
Eighth, the bill also authorizes levels for PHA insurance and
GNMA guarantees of mortgage-backed securities that are needed
to adequately support the housing recovery that appears finally to
be underway.
Ninth, the bill rejects the Administration's proposal to slash
funding of existing rural housing programs delivered through
Farmers Home and to substitute an untested block grant to be ad-
ministered b^ States. The Committee's action is a welcome change
from its position last year and reflects a bipartisan effort to im-
prove the nation's rural housing delivery system.
Although we support these and a number of other provisions, we
nevertheless cannot endorse the Committee bill wiuiout reserva-
tion. We are particularly concerned that the rural housing title
would make important changes affecting Farmers Home that were
inadequately considered and could adversely affect residents of
rural areas. While we are pleased that increased targeting provi-
sions would encourage Farmers Home to provide more financing
for manufactured housing, we are concerned that tighter targeting
in the Section 502 Homeownership program may force an unsound
reliance on alternative mortgage instruments to qualify low income
persons. The result of that change could be an unacceptable in-
crease in defaults above the current high level. We are also con-
cerned about inflexible targeting in the Section 515 multifamily
renttil program, a reduction in energy standards and technical pro-
visions related to bringing the Farmers Home housii^ programs
onbudget. We agreed to include rural housing provisions only on a
conditional beisis. We believe that the Senate must have more in-
formation concerning the consequences of these proposals before
they are considered on the floor.
Second, the bill would create a new "Commission on Accredita-
tion" for public housing agencies. We believe that peer review and
peer assistance are promising ideas for containing operating costs
and improving public housing management. However, it is our
view that this provision in its current form raises serious l^al and
administrative questions that should be resolved before floor action
is taken.
Finally, the Committee bill does not address problems that have
emerged in the nation's secondary mortgage markets. Congress ee-
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125
tablisbed the mE^or secondary market instititicMU — FNMA, GNMA,
and FHLMC — to stabilize and expand the flow of credit into hous-
ing. Since the last several years of economic turmoil have serious-
ly disrupted the nation's housing finance system, we believe that
^le Congress must place the problems of the secondary mortgage
market very high on its agenda. The secondary market must be
greatly strengthened and expanded over the next few years if the
U.S. housing industry is to fiilly recover from its worst slump since
the Great Depression and if the nation's growing population is to
have an adequate supply of housing credit. In our view, this year's
housing bill should include those modest measures that would
streng^n the ability of existing secondary market agencies to
support the housing recovery. More extensive proposals for the
long-term restructuring of the secondary mortgage markets should,
we believe, be the subject of major hearings during the session of
Congress.
The Committee is now giving careful consideration to these and
other provisions of the bill. We expect that the Committee will
soon agree on a bi-partisan package of refinements that will re-
solve many of our remaining concerns. We therefore uige that this
legislation be promptly considered and approved by the S^iate.
Donald W. Rnai^ Jr.
Alan Cranston.
Paul S. Sarbanbs.
Chkistopkr J. DODD.
Alan J. Dixon.
Jim Sasskh.
Frank R. Lautcnbebo.
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ADDITIONAL VIEWS OF SENATORS D-AMATO, DODD.
CRANSTON, RIEGLE, HAWKINS, SARBANES. LAUTEN-
BERG, AND HEINZ
When the Congreee enacted the "Urban Property Protection and
ReinBurance Act of 1968," it found that the deterioration of the
inner city areas of many of our cities was poeiiig a serious threat to
the national economy and that this deterioration was being acceler-
ated by the inability of businesses and residents of these blighted
areas to obtain adequate property insurance coverage:
"the vitality of many American cities is being threat-
ened by the deterioration of their inner city areas; respon-
sible owners of well-maintained residential, business, and
other properties in many of these areas are unable to
obtain adequate property insurance coverage against fire,
crime, and other perils; the lack of such insurance cover-
age accelerates the deterioration of these areas by discour-
aging private investment and restricting the availability of
credit to repair and improve property therein; and this de-
terioration poses a serious threat to the national econ-
omy. ..."
Unfortunately, this statement is as true today as it was in 1968.
President Reagan's support for the creation of uri)an enterprise
zones implicitly recc^^izes the need to devise special, national solu-
tions to combat the deleterious effects of urhan blight. Clearly,
businesses wil not locate in these areas if they cannot secure ade-
quate insurance protection for their properties at reasonable rates.
Therefore, we continue to support the federal crime insurance
program and the federal riot reinsurance prc^am as two prt^ams
that are well designed to fill the need for affordable property msur-
ance in our urban areas and are disappointed that the Committee
failed to adopt an amendment to reauthorize them, by a 9-9 tie
vote.
While several studies have documented both the unavailability
and unaffordability of basic property insurance in many of our
urban areas — including studies by the Federal Insurance Adminis-
tration of crime and fire insurance in 1970 and 1978, respectively —
no comparable work has been presented to the Committee to dem-
onstrate that the problems no longer exist. We simply don't under-
stand how one can expect to experience a renaissance in our blightr
ed urban areas if thousands of small businesses and homeowners in
our high crime areas cannot secure insurance against loss property
due to criminal activity.
It has been stated that the federal crime insurance pn^ram is
not a national one, yet presently 27 states and the District of Co-
lumbia are enrolled in it. Nineteen jurisdictions make federal riot
reinsurance available.
(126)
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127
Another reason cited for terminating the programs is the dra-
matic dropoff in the number of companies ttiat purchase federal
riot reinsurance — from 300 in Septeniber, 1981, to 19 during fiscal
year 1983 — and a decline in the utilization of the crime program —
trom approximately 81,000 in 1981 to 59,000 today. Not surprising-
1t, these declines have coincided with Jeffrey Bragg's tenure as
Federal Insurance Administrator. Mr. Bragg has increased the riot
reinsurance premiums by 1000 percent over the past two years and
the crime premiums by 50 percent. During this time, the Federal
Insurance Administration has prohibited tiny marketing or promo-
tion of these programs. Mr. Bragg, in a recent interview with the
National Underwriter, stated that, "When I came here I thought it
would be easier than it was to convince Congress to terminate
these programs (the riot and crime prc^rams). Fve learned that to
do what I wanted to do, I would have to do it administratively
through the authority vested in my position." We are unaware that
any administrative authority exists to terminate these pn^ams
that were established by the Congress, but this statement makes it
easy to understand why policy sales have declined over the past
two years.
As to the potential for the sale of more policies, it is well worth
noting the comments made by the Superintendent of the New York
Insurance Department, James Corcoran, at the Banking Committee
hearings. He said that, "extensive utilization of the program in
New York is primarily due to the efforts by the New York State
Insurance Department to publicize the existence of the program."
He concluded that, "I have no doubt that if other states were to
adopt a pn^am, similar to New York, of publicizing the benefits
of feder^ crime insurance to the consumer, that you would see a
higher utilization of the program in other States." This view is but-
tr^sed by two GAO reports that found that many people in the eli-
gible areas did not know the pn^ram existed and, if they had,
would have purchased the insurance.
Mr. Bragg also has alleged that there no longer is a need for the
program. At the Banking Committee hearing, he stated that "it is
clearly within the resources of the private aedOT and the State r^-
ulatory authorities to provide for each State. . . ." Again, the real
world experience of Superintendant Corcoran is instructive. He tes-
tified that the annual "premium for a residential burglary and
theft policy in the amount of $10,000 obtained from a licensed pri-
vate insurer for a person living in Brooklyn, N.Y., would be $220
(almost twice the cost of the $120 federal crime insurance premi-
um). . . . However, this rate is laively unused by the insurance in-
dustry. . . . Most companies woulabe unwilling to insure these in-
dividuals even at that rate." In short, Mr. Corcoran confirmed the
underling basis for the federal crime insurance program — that
crime insurance ts either unavailable or unaffordable in high crime
areas in many of the urban centers of this Nation.
In 1982, when this Committee passed the D'Amato-Dodd amend-
ment to reauthorize both the crime insurance and riot reinsurance
programs, the bill called for a study by the Comptroller General on
the marketing of crime insurance to residents of high crime urban
areas. The 1983 D'Amato amendment would have required such a
study also. Frankly, we think it makes far better sense to deter-
yGoot^le
128
mine why a program isn't working completely aa intended bdore
considering its elimination. Absent such a study, we don't know
whether the availability and afTordability problems have cleared
up, or whether the program has not been marketed properly.
We hope that the Congress will reconsider this matter and con-
tinue the crime insurance and riot reinsurance programs until
such time as a responsible and comprehensive study shows that
there no longer is a need for them.
Alfonbs, H. lyAMATO.
CHRiffropHBB J. Dodo.
AiAN Cranston.
Donald W. Ribolc, Jr.
Paula Hawkins.
Paul S. Sabbanbs.
Frank R. Lautknrkbo.
JohnHunz.
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ADDITIONAL VIEWS OF SENATORS LAUTENBERG AND
D'AMATO
As our votes to favorably report the Housing and Community De-
velopment Act of 1983 indicate, we are in support of moving the
legislation to the Senate floor. It is important that the Congress
adopt a housing bill this year.
Unfortunately, the Housing and Community Devel<vment Act of
1983 includes a provision in Section 101, subsection 122 (cX4) and
(dX6) which preempts local authority by prohibiting rent r^ulation
on properties rehabilitated or constructed with assistance provided
under this section. We object to this provision.
Rent control is a local issue. This is a position publicly shared by
the U.S. Conference of Mayors, the National League of Cities ai^
the Secretary of Housing and Urban Development, Samuel Pierce.
Rent control is a controversial issue, particularly in communities
with low vacancy rates and rent levels which test the means of
many of our citizens.
It is not necessary, perhaps not poesible, to take a simple pro or
con position on rent r^ulation. lite question is whether it is the
Federal Government's role to apply a general prohibition as the
price of a local or state government receiving federal assistance for
housing rehabilitation.
The General Accountig Office report submitted to this Commit-
tee on March 9 pointed to the potential displacement of existing
tenants in housing rehabilitated under pn^rama such as that au-
thorized in this bill. In one city, they found that 60 percent of the
tenants were displaced. The Ck>mmittee has gone to great lengths
to limit displacement, but the lifting of local rent r^ulation will
work counter to the protective provisions adopted. We are especial-
ly concerned that the Committee's action on rent control could
result in displacement of tenants in our stotes. It is for this reason
that we object to federal preemption of rent control as contained in
this legislation.
Frank R. Lautenbero.
Alfonse M. D'Amato.
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