HomeMy WebLinkAboutR-78-0036RFC/bbb
1/11/78
RESOLUTION NO. ` 3 V
A RESOLUTION CONDITIONALLY APPROVING ALLOCATION
OF FUNDS FROM UNITED STATES FEDERAL REVENUE SHARING
FOR 1977/78 AND UNEXPENDED PRIVATE NON-PROFIT
AGENCY FUNDS FROM 1976/77 AS WELL AS UNEXPENDED
CITY OF MIAMI DAY CARE FUNDS FOR 1976/77 FOR FUNDING
SOCIAL SERVICE PROGRAMS AND AUTHORIZING THE CITY
MANAGER TO ENTER INTO APPROPRIATE AGREEMENTS WITH
SOCIAL SERVICE AGENCIES IMPLEMENTING SUCH PROGRAMS4
SUBJECT TO CERTAIN CONDITIONS.
WHEREAS, on November 10, 1977, the City Commission appropriated
Federal Revenue Sharing Funds for Social Services in the amount
of $1,043,053.00 by passage of Ordinance No. 8722; and
WHEREAS, the herein allocations are made contingent upon
the negotiations with the Dade County School Board regarding reim-
bursement of funds owed to the City of Miami;
NOW, THEREFORE, BE IT RESOLVED BY THE COMMISSION OF THE
CITY OF iIAMI, FLORIDA:
Section 1. The unexpended Federal Revenue Sharing balance
for 1976/77 of the Private .ton -Profit Agencies and. the City of
Miami Day Care Program in the amount of $130,000 is hereby reallo-
cated to be used for Social Services Programs for fiscal year 1977/78.
Section 2. The allocation of funds from Federal Revenue
Sharing Funds is hereby approved for the period commencing January 1,
1978 and ending September 30, 1978, for the funding of Social Services
programs to be carried out through the Social Services Agencies
listed below:
Agency "DOCUMENT I D.
TOFUNDINOPOSED
tYG
(1) Belafonte Tacolcy
(2) Belafonte-Tacolcy-Sports Development
(3) Catholic Service Bureau - St. Luke's
Overtown Recreation
ITEM NO.
(4) Catholic Charities - St, Luke's
Miami Bridge
() Coconut Grove Family Clinic
4
(6) Coconut Grove Optimist Club
$ 17,161.82
11,000.00
51,126.26
8,161.14
75,000,01
8,250,02
CITY COMMISSION
MEETING OF
1978
7�R36
RESGWTiON F�()8.
a
Section 4, The City Manager is hereby authorized to enter.
4
Agency
TOTAL PROPOSED
FUNDING .._
(7) Dade County Schools -After School Care $ 1425017,23
(8) First United Methodist Church 6,701.26
(9) J.E.S,C.A-Multi-Purpose Center
for the Elderly (Coconut Grove) 36,036.46
(10) J.E.S.C.A-Multi-Purpose Center
for the Elderly (Culmer) 265273,98
(11) Little Havana Activities Center 80,517.62
(12) St. Alban's Day Care 51,187.50
(13) City of Miami - Dept. of Parks and
Recreation Handicapped Programs 33,825.01
(14) City of Miami Office of Community
Affairs Day Care Program 159,750.00
(15) Douglas Gardens Adult Senior Day Care 74,000.01
(16) Tenant Education Association of Miami
(Culmer) 12,375.00
(17) Borinquen Health Care Center/Puerto Rican
Opportunity Center (Wynwood) 20,624.54
(18) Women in i)istress 4,385.25
(19) D.C. Community Schools 52,500.01
(20) Action Community Center, Inc. -
Transportation for the Aged
(21) YMCA of ':greater Miami - Community
Youth Project (Allapattah)
(22) Uicky Cruz outreach of Florida, Inc.,
Youth Center (Little Havana)
(23) Youth Co -Op - Bridge Counseling Program
(Little Havana)
(24) Industrial Home for the Blind
Administration and Evaluation of Social
Services Programs
20,047.50
13,750.01
10,312.51
45,000.00
5,000.00
39,645.05
TOTAL $ 1,005,198.19
Section 3. The above allocations to the listed agencies
will be made on a monthly reimbursement basis of 1/9 of the amount
shown subject to the approval of the City of Miami every thirty
(30) days.
into agreements with the aforementioned agencies implementing
their respective Social Service Program, subject to the conditions
and limitations contained herein.
78-36
4
ATTEST
PASSED AND ADOTPED this llth day of January 4 1978,
, • ,
H C31.)..NGIE CITY CLERK '
PREPARED AND APPROVED BY:
MAURICE A. FERRE
ROBERT F. CLARK
ASSISTANT CITY ATTORNEY
APPROVED AS TO FORM AND CORRECTN=:
,1
GE _RGE iKNOX, JR.
CITY ATTORNEY
-3-
NAY° R
t 3 6
FrOPo$Pd., Fedenetaevef+ue ha ,i_Og,. Fundsu_1977/18,
propused Funds ,,,° Un xpended Agehcy Funds from' 76/77
Unexpended City,Df Miami Day Care Funds 76/77
Federal ReN.0190 'Sharl.0g_EXPend _tunes t bate
4 allocated to 76/77 FRS Agencies to be used as carry•
over funds
• f rrotht_Q einat_ ningto be__.A11oca.ted
Proposed._Expenditures_ with Remaining Funds
Health
Coconut Grove Family Clinic
(Coconut Grove)
City of Miami - Parks and Recreation Dept.
Programs for the Handicapped (City Wide)
Hot Meals
First United Methodist Church of Miami, Inc.
Community Center - Hot Meats Programs (Downtown)
James E. Scott Community Association, Inc.
Multi -Purpose Center for the Elderly (Coconut Grove)
James E. Scott Community Association, Inc.
Multi -Purpose Center for the Elderly (Culmer)
Little Havana Activities Center
Geriatric Nutrition Program (Little Havana)
Day/Evening Care
City of Miami - Office of Community Affairs
Day Care Programs (City Wide)
Miami Jewish Home and Hospital for the Aged -
Douglas Gardens Senior Adult Center at Legion Park
(Edison Little River)
St. Alban's Day Nurser, - Family Day Care Program
(Coconut Grove)
St. Lukes - Miami Bridge
$i,043,0S3.00
66,000.00
64.�, 000.00
Remaining to be
Allocated
$. 75,000.01
33,825.01
6,701.26
36,036.46
26,273.98
80,517.62
159,750.00
74,550.01
51,187.50
8,161.14
R78
3 6, •
41c4t
trk PlOYM t
Delaftinte TaeoleY A h Vocational Training
and Employment Program (Model Cities)
ReArkatiork
Service Bureau 'I St. Luke's Educational Center,
Inc. (Culmer)
Optimist Club of Coconut Grove
Youth Sports Activity (Coconut Grove)
Belafonte Tacolcy - Sports Development
(Edison Little River)
Dade County School System
After School Care (City Wide)
Sub -Iota
Office.of Community Affairs
Administration
76/77 agencies not recommended for funding phase out
funds 1/12
•
GRAND TnTAL
* , r,`", t-'.t,"'•."-34ttfkr•p•Rtfgita•Z•4•V•..,,,,,n,,e:iAi:t,••,,••*•34•TAZ.k!:•€'•N'•''•Pfittk'S,.i.r,'"•4:
ReMlainin§ tO be
AllOWAP,
$ 17,161482
S1,126.26
8,250,02
11,000.00
_142,017.23
$773,397.18
$ 35,645.05
$ 19,888.28
$841,091.65
R 7 8 - 3 6
4
SFe0 ARY PUNO)Watt
1NF0RMAI10NNAND_ REFERRAL
1) Tenant Education Association of Mimi
(Culmer)
2) 8orinquen Health Care Center/Puerto Rican
Opportunity Center (Wynwood)
3) Women In Distress
(City Wide)
4) D.C. Community Schools
(City Wide)
TRANSPORTATION
1) Action Community Center, Inc.
Transportation for the Aged
(City Wide)
RECREATION
1) YMCA of Greater Miami
Community Youth Project
(Allapattah)
r
COUNSELING
1) Nicky Cruz Outreach of Florida, Inc.
Youth Center
(Little Havana)
2) Youth Co -Op
Bridge Counseling Program
(Little Havana)
ADDITIONAL COMMISSION SUGESTION
industrial Some for the blind
"TOTAL
Amount Needed
to Continue
ki Allocation Secondary Fund(
o Dale_ _ Agenci_ 3 . ..
4,125.00 $ 12,375.00
6,875.46 20,624.54
1,462.08 4,385.25
17,499.99 52,500.01
6,682.50 20,047,50
4,583.31 13,750.01
3,437.49 10,312.51
15,000.00 45,000.00
.$59,665.83 $178,994.82
$ 5,000.00
R78"36
USE OF COMMUNITY DEVELOPMENT FUNDS
FOR
SOCIAL SERVICES PROGRAMMING
Social Services funded by Community Development must be directed toward
improving the communityys public services and facilities, including those
concerned with employment, ctime prevention, child care, health, drug abuse,
education, welfare or recreational heeds and which ate directed toward
coordinating public and private development programs.
Social service programs under Community Development must be presented to
the community during at least two public hearings for their review and com-
ment.
Criteria for funding:
1. Projects must provide service for residents of comprehensive
neighborhood revitalization areas (CUR).
2. At least two thirds (2/3) of the residents receiving service
must reside within the CNR.
3. The public service must either be a new service or a quanti-
fiable increase of an existing service above that which has
been provided from local or state sources in the twelve calen-
dar months prior to submission of a block grant.*
Revenue sharing dollars are considered local funds by HUD.
Exception: If HUD determines that the decrease in the level
of service was the result of events not within the control of
the applicant.
4. Public service program must have first been denied funding
under other Federal programs. A written turndown letter from
a Federal Agency must be received by the agency requesting
funds before Community Development funds can be used.
5. The social service program must be necessary or appropriate to
support physical development activities to be carried out within
CNR areas.
The fourth Community Development funding year for the City of Miami will begin
on June 16, 1978. Funds will be available for expenditure after the Environ-
mental Review and Request for Release of Funds processes are complete, probably
by August 1, 1978.
* See attachment "Summary of the Housing and Community Development Act of 1977",
page 5, par. 8.
R 7 S - 3 6
1
SUMMARY
OF THE HOUSING
AND COMMUNITY
DEVELOPMENT
ACT OF 1977
U.S. DEPARTMENT
OE HOUSING AND URBAN
DEVELOPMENT
OCTOBER 1977
1
SUMMARY
.OFTHE HOUSING
AND COMMUNITY
DEVELOPMENT
ACT OF 1977
U.S. DEPARTMENT
OF HOUSING AND URBAN
DEVELOPMENT
OCTOBER 1977
" irkSlaftWowa,,ewkorturow*
4
SUMMARY OF THE
HOUSING AND COMMUNITY DEVELOPMENT ACT OF 1977
The Housing and Community Development Act of 1977 is omnibus legislation which makes a number of
significant changes in the Nation's housing and community development and related authorities. The new law
contains nine titles as follows:
• Community Development (Title I)
• Housing Assistance and Related Programs (Title II)
• Federal Housing Administration Mortgage Insurance and Related Programs (Title III)
• Lending Powers of Federal Savings and Loan Associations; Secondary Market Authorities (Title IV)
Rural dousing (Title V)
• National Urban Policy (Title VI)
. Flood and Riot Insurance (Tide VII)
• Community Reinvestment (Title VIII)
. Miscellaneous Provisions (Title IX)
CbMMUN1tV bEVPLOPMEN?
The community development block grant program — HUD's primary vehicle for providing community
development assistance — was enacted in 1974 with a three-year authorization. Title I of the new law authorizes
funds for another three years and makes a variety of changes in the program. Title 1 also extends and authorizes
appropriations for the section 312 rehabilitation loan program and the section 701 comprehensive planning
program, and increases the maximum section 312 loan arnount fot residences. The major features of title I
are as follows.
Cornmunity Development dock Grant Program
Program objectives. The new law adds, as a specific block grant objective, the alleviation of physical and
economic distress through the stimulation of private investment and community revitalization in areas with
population outmigration or a stagnating or declining tax base. It also specifies that the block grant purpose of
fostering coordinated and mutually supportive housing and community development activities is to be "by
Federal agencies and programs, as well as by communities."
City determinations. Under the new law, towns or townships are deemed "cities" for block grant purposes if
"incorporated places" within their boundaries have entered into agreements with them to undertake or to assist
in the undertaking of essential community development and housing assistance activities. Prior law denied city
status to towns or townships which have "incorporated places" within their boundaries. In addition, a city which
is a "metropolitan city," because it has a population of at least 50,000, remains so until the decennial census
Indicates that its population is below 50,000.
Urban county determinations. Existing law affords units of general local government located within an "urban
county," and in which the county has essential community development and housing assistance powers, the
option of having their demography included in the county's total (thereby making them eligible for a share of
the county's entitlement), or having their demography excluded, and seeking direct funding from the discretionary
balances. The new law prescribes procedures for exercising this option.
Under the new law, "urban counties" must notify, prior to a date set by the Fig. acretary, any such incor-
porated unit of government whose population is included in the county population of its opportunity to have its
population excluded. If a unit of government does not elect to have its population so excluded, it will be counted
in the county population until it elects to exclude its population by notifying the county, on or before a date set
by the Secretary.
Moreover, a county is considered +n "urban county" for block grant purposes if, in addition to meeting the
powers test contained in existing law, the county has a population in excess of 100,000, a population density
of at least 5,000 persons per square mile and contains within its boundaries no "incorporated places."
Authorizations
Basic block grant program. The new law authorizes the appropriation of not to exceed $3.5 billion, $3.65
billion and $3.8 billion for fiscal years 1978, 1979, and 1980, respectively, for the basic block grant program.
Any amount authorized for any fiscal year, but not appropriated for such fiscal year, may be appropriated for
any succeeding fiscal year.
Financial settlement fund. Not to exceed $100 million is authorized to be appropriated for each of fiscal
years 1978, 1979 and 1980 for grants to localities requiring supplemental assistance which cannot be provided
under the allocation provisions of section 106 for the financial settlement and, to the extent feasible, the com-
pletion of projects and programs terminated by the block grant program (primarily urban renewal). This pro-
vision replaces the "urgent needs" authorization for appropriation under the prior law.
Urban development action grants. The new law authorizes the appropriation of not to exceed S400 million for
each of fiscal years 1978, 1979, and 1980, for grants under the new Urban Development Action Grant Program,
described infra.
2
4
.uiidinl priorities•. If amounts appropriated for the basic block grant progtarn (sec. 103 (a) (1) of the 1974
Act), the financial settlement of categoricals (sec. 103 (b) of the 1974 Act) and urban development action grants
(new sec. 103 (d) of the 1974 Act) are Tess than amounts authorized, the hew law requires that sums available
first be used to fund up to the hill amount authorized in any fiscal year for the basic program, second for the
financial settlement of categoricals and third for urban development action grants.
SA set•aside. The new law allocates $350 million, $265 Million, and $250 million from approptiations for
fiscal years 1978, 1979 and 1980, respectively, for hold -harmless and non -entitlement communities in SMSAs.
Of these amounts, riot more than $175 million and $25 Million may be used for hold -harmless purposes in fiscal
years 1978 and 1979, respectively. The effect of the provision is to guarantee, subject to the provision discussed
below respecting grant reductions in the case of funding deficiencies, at least $175 million, $240 million and
$250 million for the SMSA discretionary balance for fiscal years 1978, 1979 and 1980, respectively. (In fiscal
year 1980, no amounts will be used for hold -harmless purposes since hold -harmless phases out completely in that
year.)
Application fleguirernents
Community development plan summary. Under the new measure, the summary of the three-year community
development plan required to be included in block grant applications must identify housing, as well as com-
munity development needs.
Program description. The new law adds requirements that:
the program description of community facilities and public improvements insure full opportunity for
participation by, and benefits to, the handicapped;
the application describe a program to improve conditions for low- and moderate -income persons residing or
expected to reside in the community and to foster neighborhood development in order to induce higher -
income persons to remain in, or return to, the community.
Citizen participation plan. The block grant program has included citizen participation requirements since its
inception, but the new law restates and adds to the required elements of citizen participation. Under the re-
vised requirements, an applicant must provide satisfactory assurances that, prior to submission of its application,
it has:
prepared and followed a written citizen participation plan which
provides citizens an opportunity to participate in the development of the application
encourages the submission of views and proposals, particularly by residents of blighted neighborhoods
and citizens of low- and moderate -income
provides for timely responses to the proposals submitted
. schedules hearings at times and locations which permit broad participation;
provided citizens with adequate information concerning the amount of funds available for proposed com-
munity development and housing activities, the range of activities that may be undertaken, and other
important requirements;
• held public hearings to obtain the views of citizens on community development and housing needs; and
provided citizens an opportunity to submit comments concerning the applicant's community development
performance.
The new law also continues the provision in prior law that nothing in the citizen participation requirements
shall restrict the applicant's responsibility and authority for application development and program execution.
A complementary addition to the law requires that citizen comments with respect to the applicant's perform-
ance must be included in the grantee's annual performance report concerning activities carried out with block
grant funds. The Secretary is directed to consider such comments, as well as the views of other citizens and other
available information, in carrying out the Secretary's audit and review responsibilities set out in section 104 (d)
of the Housing and Community Development Act of 1974.
3
Mi l l l I I I 111IIr 11il ■ 1
Waiver of requirements tot small communities. prior law authorized the Secretary to waive certain block grant
application requirements for communities under 25,000 population located outside "urbanized areas" only in the
case of such communities' first application for a block grant and only for certain types of activities. the new law
replaces these restrictions with a provision permitting the Secretary to waive such requirements where the appli-
cation does not involve a comprehensive community development prograrti, as determined by the Secretary.
Adjustment in discretionary grant amounts. The Secretary is authorized to adjust, reduce, or withdraw grants
made from the metropolitan and nonmetropolitan discretionary balances or to take other action with respect to
such grants as appropriate in accordance with the reviews and audits conducted under section 104 (d) of the 1974
Act, except that funds already expended on eligible block grant activities cannot be recaptured or deducted froth
future grants made to the recipient. This authority is in addition to that contained in section 111 of the Housing
and Community Development Act of 1974.
State role in discretionary grant selection process. The Secretary is authorized, in connection with areawide
agency review of and comment on block grant applications, to provide an opportunity for a State to participate
in the selection process for funding discretionary grants to localities within the State. Such participation may
include, as determined practicable by the Secretary, the incorporation of State growth and resource coordination
policies in funding decisions on such grants, or such other arrangements, excluding administration of discre-
tionary grants, as the Secretary deems appropriate.
Grant drawdown for rehabilitation programs. HUD is required to permit, on a case-by•case basis, grant re-
cipients to draw down, in one payment, amounts designated in the grant application and approved by the Secre-
tary for the establishment in a private financial institution of a revolving loan fund to finance rehabilitation
activities described in the community development program. Rehabilitation activities must begin within 45 days
of payment by HUD.
HUD is to establish standards to assure that amounts deposited result in "aopropriate benefits in suppurt of"
the recipient's rehabilitation program, including at a minimum one or more of the following elements (or such
other criteria as HUD determines):
leverage of block grant funds so that participating financial institutions commit private funds for loans in
the rehabilitation program in amounts substantially in excess of block grant deposits;
commitment of private funds for rehabilitation loans at below -market interest rates or with repayment
periods lengthened or at higher risk than would normally be taken;
provision of administrative services in support of the rehabilitation program by the participating lending
institution; and
provision that interest earned on deposits be used in a manner which supports the community's rehabili-
tation program.
Housing Assistance Plans -- new requirements. Housing Assistance Plans submitted as a part of block grant
applications, in addition to the content required by previous law, must:
as a part of the applicant's survey of existing housing stock, identify housing stock which is in a deterio-
rated condition;
specify a realistic annual goal for the number of lower -income persons to be assisted;
in the case of annual goals for subsidized rehabilitation, make adequate provision to assure that a pre-
ponderance of persons assisted should be of low- and moderate•income; and
in indicating the general locations of proposed housing for Iower•income persons, include as objectives the
restoration and rehabilitation of stable neighborhoods to the maximum extent possible and the reclamation
of housing stock where feasible through the use of a broad range of techniques for restoration, including
provision of a reasonable opportunity for tenants displaced as a result of reclamation activities to relocate
in their immediate neighborhoods.
Income groups to be benefited. Block grant applicants must certify, amoung other things, that their community
development programs have been developed to give maximum feasible priority to activities benefiting low -and
moderate•income families. (Low- or moderate -income families under prior law.)
4
Community devel,ipment needs with ' particnlat iitgency". The neW law requires that an application setting
forth community development needs having a "particular urgency" have such urgency because existing conditions
pose a serious and immediate threat to tha health or welfare of the community, and other financial resources are
not available.
Application disapproval. The new law adds, as a basis for disapproval of block grant applicatiohs, noncom-
pliance with the requirements of the block grant program "vvith specific regard to the primary purposes of
principally benefiting persons of low and moderate income or aiding in the prevention or elimination of slums
or blight or meeting other community development needs having a particular urgency."
Neighborhood revitalization activities. Applicants must include, as part of the required statement of resources
other than block grants which are exnected to be made available to meet identified needs, activities designed to
revitalize neighborhoods for the benefit of low- and moderate -income persons.
t=ligible Activities
Comprehensive strategy. The new law requires eligible block grant activities to consist of those which assist
in carrying out a comprehensive strategy for meeting the community development and housing needs and pri-
orities identified in the application, giving primary attention to activities benefiting low- and moderate -income
persons and neighborhoods, aiding in the prevention or elimination of slums or blight, or meeting other com-
munity development needs having a particular urgency.
Rehabilitation. The new law specifically permits block grant recipients to provide financial assistance to
private entities to acquire for rehabilitation, and to rehabilitate, privately owned properties. It also removes
the requirement that the rehabilitation of privately owned properties be "incidental to other activities."
Economic development. The neW law removes economic development as an eligible supportive public service
activity under section 105 (a) (8) of the Housing and Community Development Act of 1974. It also adds a new
paragraph to section 105 (a) making eligible for block grant funding activities which are carried out by public
or private nonprofit entities and are appropriate to meeting the needs and objectives of a recipient's community
development plan, including:
acquisition of real property;
acquisition, construction, reconstruction, rehabilitation, or installation of (i) public facilities, site improve-
ments and utilities, and (ii) commercial or industrial buildings or structures and other commercial or
industrial real property improvements; and
planning.
Public services. Block grant funds cannot be used for public services if such services were provided by the
recipient, through tund: raised by the recipient or provided by the State In which it is located, within 12 months
preceding the application, unless HUD finds that their discontinuation was due to events not within the appli-
cant's control.
Grants to neighborhood organizations. The new law adds, as an eligible use of title I assistance, grants to
ncighborhood•based nonprofit organizations, local development corporations or Small Business Investment
Companies to carry out a neighborhood revitalization or community economic development project in further-
ance of block grant objectives.
Allocation and Distribution of Funds
88.4sic grant determinations. The new law allocates block grants to metropolitan cities and urban counties
according to a dual formula. Under this new approach, cities and counties are entitled to receive a formula
amount equaling the yteater of amounts calculated under the present formula or a second formula, riming factors
of growth lag, poi,••rty and age of housing. weighted .20, .30 .end .50, respectively.
"Age of housing" means the number of existing housing units constructed before. 1940, based on Census data.
"Extent of growth lag" means the difference between the current population of a metropolitan city or urban
county and the population it nave nap f !.s population growth rate between, 1960 and the date of the
most recent population count nad been equal to the growth rate of all metropolitan cities over the same period.
5
Ir II 1 1 I Aril 1lil
Phase -down of held -harmless funding. The new law retains provisions in the 1974 Act respecting the phase -
down of hold -harmless funding: i.e., recipients will receive two-thirds of the excess of hold -harmless over formula
entitlement in fiscal year 1978 and one-third in fiscal year 1979, with no hold -harmless arnounts provided in
fiscal year 1980. Under the new IaW, however, hold -harmless phases down against the higher of amounts com-
puted under the present or the new formula.
Exclusion of hold -harmless localities frorn grant determinations. the new law requires exclusion of units of
general local government and Indian tribes which "are entitled to" ("receive," under prior law) hold -harmless
grants from computations to determine urban county basic grant amounts, and discretionary grant allocations
for metropolitan and nonmetropolitan areas.
Basic grant phase -in. Basic grant phase -in provisions are limited to funds approved for distribution to metro-
politan cities and urban counties in fiscal years 1975, 1976 and 1977. The effect is that all formula entitlement
communities will receive full formula amounts in fiscal year 1978 and thereafter.
Small Communities
Discretionary balances allocation. The new law provides for the allocation of the discretionary balance for
metropolitan areas on a State -by -State basis. (Prior law made this allocation for each metropolitan area.)
The Act also provides for the allocation of the SMSA and non-SMSA discretionary balances according to a
dual formula, with allocations being the higher of amounts determined under the existing allocation formula
or a second formula, using as factors age of housing, extent of poverty and population, counted 2.1/2 times,
1.1;'2 times and once, respectively.
The Secretary is required to make pro rata reductions of allocations to compensate for any difference between
the total to be allocated and the total amounts available.
Comprehensive community development program. The Secretary is authorized to make multi -year grant
commitments, for periods up to three years, to smaller localities within and outside SMSA's having compre-
hensive community development programs with provision for Tower -income housing, subject only to the avail-
ability of appropriations. In making such commitments, the Secretary m_;;t give special consideration to smaller,
hold -harmless communities presently carrying out comprehensive comrnunit•, development programs oeiore
making new commitments.
The Secretary is required to establish for commitment localities an annual amount which is meaningful in
relation to the community's size and proposed program, and to consider such factors as the locality's engaging
in economic redevelopment activities, past performance in community development activities, prior and present
block grant funding levels, function as a regional center of economic development and activity, potential for
having increased employment as a result of community development activity, physical and economic deteriora-
tion, age of housing stock, extent of poverty, impact on the locality's growth of national policy or direct Federal
program decisions, the extent to ::hith ^ - ''calitv'< activity or pronram of activities nncessary to a1'•'viate a
serious threat to health or safety, the capacity of the ;u..duty to carry out such programs, and any other factors
deemed by the Secretary to be relevant to carry out the purposes of the block grant program.
The Secretary is also required to distribute discretionary funds to ensure that a reasonable proportion of
grants is available to localities ;'ot seeking functc.,; --.Dr comprehensive community development programs.
Study on small cities. The Secretary of Housing and Urban Development is directed to conduct a study, and
to report to the President and the Congress within one year „f••?r the date of enactment of the Act with recom-
mendations, on the formation of a national policy on the developmental needs of small cities. In carrying out the
..tudy, the Secretary is directed to:
take steps to improve the data available about small cities;
suggest means of reducing the duplication in government programs in jurisdictions which affect small
cities: and
consider au rt e.Jr" differences and similarities between small and large - •:s, particularly in the areas of
housing, growth, development patternc, infrastructure, education, eneri'. • •::rs and social development,
In addition, the report is to include alternative verifiable formulae to .,ed in the distribution of block
grant funds available for allocation to small cities. "Small cities," for purpu.,,, of the study, are defined as cities
which are not entitled to annual grants under Title I of the Housing and Community Development Act of 1974.
6
Ail 1 1 i i i uu
Reallocation. the new taw removes the requirements that funds be reallocated during the same program period
in which they are allocated. it also requires the Secretary to reallocate funds which are determined not likely to
be fully obligated "within a reasonable time." Previous law required reallocation of surds which were not likely
to be fully obligated during the same program period in which they were allocated.
Waiver of eligibility. the Secretary is authorised to determine the date by which a smaller community must
indicate Whether it will waive its hold -harmless entitlement. prior law required waivers to be Made not later than
30 days prior to the beginning of any program period. The provision also expressly authorites single -year waivers.
beficiency in grant amounts. If the total amount available for distribution under section 106 of the 1974 Act
in fiscal years 1978 or 1979 is insufficient to meet all basic grant and hold -harmless needs, and funds are not
otherwise appropriated to meet the deficiency, the Secretary is to make up the shortfall through a pro rata
reduction in all entitlement and discretionary amounts, including arnounts set aside for the SMSA balance.
Secretary's 13iscretionary Fund
Extension of fund. The Secretary's Discretionary Fund is extended through fiscal year 1980.
Percentage set -aside. The percentage of block grant appropriations to be set aside for the Fund is increased
from 2 percent to 3 percent.
Indians. The new law provides for the discretionary funding of Indian tribes solely from the Secretary's
Discretionary Fund. Indian tribes also qualify for grants from the Fund to meet emergency community develop-
ment needs caused by federally -recognized disasters.
The Secretary is authorized to waive, in connection with grants to Indian tribes, the nondiscrimination and
labor standards requirements set out in sections 109 and 110 of the 1974 Act, but grants may not be made to a
tribe unless satisfactory assurances are provided that its program will be conducted in conformity with Title II
of Public Law 90.284, which contains civil rights safeguards applicable to tribal affairs.
The new law also includes "Alaskan Native Villages" in the listing of entities which may be deemed
"Indian tribes," and adds the requirement that only tribal entities which are considered eligible recipients
under the Indian Self -Determination and Education Assistance Act, or under General Revenue Sharing, are to
be considered "Indian tribes" under the block grant program.
Technical assistance. The new law makes States, units of local government, Indian tribes, and area -wide plan-
ning organizations eligible for grants from the Discretionary Fund for the purpose of providing technical as-
sistance. The Secretary may also provide such technical assistance directly or through contracts.
Disaster set -aside. The new law reduces from 25 percent to 15 percent the percentage of amounts set aside in
the Discretionary Fund for each year which may be used for grants to meet emergency community development
needs caused by federally -recognized disasters.
Loan guarantee. The new law makes several changes in the existing section 108 loan guarantee authority:
guaranteed indebtedness may additionally include the rehabilitation of real property owned by the block
grant recipient;
the requirement that the real property to be acquired serve or be used in carrying out eligible block grant
activities which are identified in the community development application and are the subject of block
grants is eliminated;
the prohibition against a guarantee in behalf of any agency designed to benefit a private individual or
corporation is eliminated;
the total outstanding obligations guaranteed for any locality may not exceed three times the grant amount
approved under section 106 of the 1974 Act for such locality;
block grants (including program income derived therefrom) are specifically authorized for use in the pay-
ment of principal and interest (including such other costs as HUD may prescribe) on guaranteed obligations;
• the security requirements which Localities were required to meet in order to obtain guarantees under prior
law are replaced with requirements that the locality:
(i) enter into a contract for repayment of guaranteed obligations
7
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r1
(ii) pledge any grant approved or for which the locality may become eligible under the block grant
program
(iii) furnish, at the Secretary's discretion, such other security as HUD deems appropriate, including
increments in local tax receipts generated by activities assisted under the block grant program or
disposition proceeds from the sale of land or rehabilitated property;
the total amount of outstanding obligations guaranteed on a cumulative basis is limited to $3.5 billion, or
such higher amount as may be authorized to be appropriated pursuant to sections 106 and 107 of the 1974
Act for any fiscal year:
guaranteed obligations are required to be taxable (prior law permitted guaranteed obligations to be taxable
or tax exempt at the option of the issuer); and
. the amount of grants which the Secretary is authorized to make to defray interest costs on guaranteed
obligations must be approved in appropriations Acts.
Reporting requirements. The new law requires the Secretary, not later than September 30, 1978, to report to
the Congress with respect to the adequacy, effectiveness and equity of the formula used for allocation of block
grant funds, with specific analysis and recommendation as to the feasibility of using factors of impaction (such
as adjusted age of housing and extent of poverty) as a measurement consideration and of using a single formula
based on the current factors or others, including regional or area differences in income and cost of living.
The term "impaction" means the intensity, measured in terms of absolute numbers and proportions, of each
needs factor.
"Adjusted age of housing" means the arithmetic product of the age of housing in the metropolitan city or
urban county multiplied times the ratio between the age of housing in the metropolitan city or urban county and
the predicted age of housing in such city or county.
"Predicted age of housing" means the arithmetic product of the housing stock in the metropolitan city or
urban county multiplied times the ratio between the age of housing in all metropolitan areas and the housing
stock in all metropolitan areas.
"Housing stock" means the number of existing housing units based on Census data and referable to the same
point or period in time.
("Age of housing" is defined above in connection with Basic Grant Determinations.)
Urban Development Action Grants
UDAG program. The new law establishes an Urban Development Action Program as a major new initiative
for the Nation's distressed urban areas. Under this program, the Secretary is authorized to make urban develop-
ment action grants from amounts approved in appropriations Acts to severely distressed cities and urban counties
to help alleviate physical and economic deterioration through reclamation of neighborhoods having excessive
housing abandonment or deterioration, and through community revitalization in areas of population outmigration
or stagnating or declining tax base. These grants are in addition to other forms of Federal assistance, including
assistance provided under the block grant program. They are designed to take advantage of unique opportunities
to attract and leverage private investment into severely distressed communities.
Eligibility criteria. The Secretary will establish by regulation eligibility criteria:
assuring that action grants are made only to cities and urban counties that have demonstrated results in
providing housing for persons of low- and moderate -income and in providing equal opportunity in housing
and employment for low- and moderate -income persons and members of minority groups;
setting forth minimum standards for determining the level of physical and economic distress of cities and
urban counties for action grant eligibility, taking into account factors such as the age and condition of
housing stock (including residential abandonment), average income, population outmigration, and stag-
nating or declining tax base.
Application for action grants. Applications for urban development action grants must:
include documentation of eligibility for grants in accordance with criteria prescribed by the Secretary;
describe a concentrated Urban Development Action Program, setting forth a comprehensive action plan
and strategy to alleviate physical and economic distress through systematic change;
include the activities to be undertaken in the Program, together with their estimated costs and general
locations;
indicate public and private resources which are e*pected to be made available toward achieving the action
plan and strategy described above;
provide satisfactory assurances, prior to application submission, that the applicant has net specific citiZeh
participation requirerents similar to those required for applicants for block grants; and
meet the application requirements containers in section 104 (a) of the 19/ 4 Att.
The Urban Development Action Program Most be consistent with the Community Development Program
described in section 104 (a) (2) of the 1974 Act, the HAP described in section 104 (a) (4) of the Act, and where
it exists and is in effect, the overall economic development plan (OEDP) as provided for in section 202 (b) (10)
of the Public Works and Economic Development Act of 1965, but only in the event and after such time as the
OEDPs are required to be consistent with Community Development Programs. It also must be developed so as to
take advantage of unique opportunities to attract private investment, stimulate investment in restoration of
deteriorated or abandoned housing stock, or solve critical problems resulting from population outmigratiort or
stagnating or declining tax base.
To the extent that the HAP application requirements have been satisfied in connection with a block grant,
such requirements are deemed met for action grant purposes.
Selection criteria. The Secretary will establish selection criteria, Which must include:
as the primary criterion, the comparative degree of physical and economic distress among applicants, as
measured (in the case of a metropolitan city or urban county) by the differences in the extent of growth
lag, the extent of poverty, and the adjusted age of housing in the metropolitan city or urban county;
• other factors determined to he relevant by the Secretary in assessing the comparative degree of physical
and economic deterioration in cities and urban counties; and
at least the following other criteria:
(i) demonstrated performance of the city or urban county in housing and community development
programs;
(ill impact of the proposed Urban Development Action Program on the special problems of low- and
moderate -income persons and minorities:
(iii) extent of financial participation by other public or by private entities;
(iv) extent of assistance to be made available by the State;
(v) impact on the physical, fiscal, or economic deterioration of the city or urban county;
(vi) extent to which the Program describes activities representing a special or unique opportunity to
meet local priority needs or block grant objectives; and
(vii) feasibility of accomplishing the Program in a timely fashion within the grant amount available.
Eligible activities. Urban development action grants are not limited to activities otherwise eligible under the
block grant program. but may include such additional community development and neighborhood development
and conservation activities as HUD determines to be consistent with action grant purposes. Action grants may not
be used for business loans or industrial development, unless the Secretary first consults with and coordinates such
assistance with other Federal agencies which make funds available for similar activities.
In addition, action grants may not be used for projects intended to facilitate the relocation of industrial or
commercial plants or facilities, unless HUD finds that the relocation does not significantly and adversely affect
the unemployment or economic base of the area whence the relocation is proposed.
Allocation of action grants. The Secretary is required to allocate action grants so as to achieve a reasonable
balance among programs designed primarily to restore seriously deteriorated neighborhoods, to reclaim for in-
dustrial purposes underutilized real property, and to renew commercial employment centers. Not less than 25
percent of action grants must be used for cities under 50,000 population which are not SMSA central cities.
Reviews and audits. The Secretary is required, at least on an annual basis, to review and audit action grant
recipients to determine progress made in carrying out activities substantially in accord with approved plans and
timetables. HUD may adjust, reduce or withdraw grants and take other appropriate action based on reviews and
audits. except that funds expended on eligible activities may not be recaptured or deducted from future grants.
Reports. The reports submitted to Congress under the block grant program must contain a listing of each
unit of government receiving, and amounts of, action grants, as well as a brief summary of the projects funded,
the extent of financial participation by other public or private entities, and the impact on employment and
economic activity of such projects during the previous fiscal year.
9
i
Seem n %12 fleha bilitation Program
The new law:
. extends tG October 1, 1979, the period within which obligations pursuant to section 312 May be entered
into;
. authorizes the appropriation of not to exceed $60 Million for the program for fiscal year 1978; and
'sets the maximum 312 loan amount for residences at 827,000 per dwelling unit.
L°ortiprehehsive Planhing
The new law authorizes the appropriation of not to exceed $76 million for fiscal year 1978 to carry out the
purposes of section 701 of the Housing Act of 1954.
Effective Date
The amendments made in title I of this Act are effective October 1, 1977.
HOUSING ASSISTANCE AND RELATED PROGRAMS
Public Housing and Section 8 Amendments
The new law provides additional funding authorizations for the public housing and Section 8 housing assist-
ance payments programs and for public housing operating subsidies, and makes a number of other changes re-
garding these programs. Specific changes are as follows:
Contract authority. Additional annual contributions contract authority of S1,159,995,000 is authorized,
subject to release in an appropriation Act, to be made available on October 1, 1977 for the public housing
and Section 8 housing assistance payments programs. Of this additional authority, at least S42.5 million must
be reserved for the modernization of low-income housing projects; at least S197,139,200 must be reserved for
low-income housing projects permanently financed by State housing finance or State development agencies;
and at least S120 million must be reserved for low-income housing projects for the elderly or handicapped
permanently financed with loans made pursuant to section 202 of the Housing Act of 1959.
Operating subsidies. An additional authorization of S685 million for operating subsidies for public housing
projects for fiscal year 1978 is to become available on or after October 1, 1977.
High-rise limitations on Section 8 units. The Secretary is directed to prohibit, after the date of enactment of
the new law, high-rise elevator Section 8 projects for families with children unless there is no practical alterna-
tive.
Unoccupied Section 8 units. The new law permits the continuation for one year of housing assistance pay-
ments equal to the debt service attributable to a Section 8 dwelling unit which is unoccupied beyond 60 days,
regardless of whether the unit is in a project that is financed with an FHA -insured mortgage. Previously, in the
case of FHA•insured Section 8 projects, such payments for unoccupied units could be made only if the project
were FHA co-insured.
PHA management of Section 8 units. A public housing agency is expressly authorized, with the approval of the
Secretary, to assume all management and maintenance responsibilities of existing, new or substantially rehabil-
itated Section 8 units, even if the agency also administers the Section 8 contract for the unit.
Study of payments in lieu of taxes. The Secretary is directed to undertake a study of payments in lieu of
State or local property taxes made by public housing agencies under the United States Housing Act of 1937.
10
A report on the status and adequacy of these paynents is to be tubmitted to the Congress within one year after
enactment of the new law,
Leased Housing
the new law would specifically preserve the renewal rights, to the niaximurn term permitted by law, of any
owner under a lease entered into under section 23 of the pre•1974 version of the United States Housing Act of
1937 for low -rent housing in private accomritodations, if that lease were entered into prior to the establishrhent
by the Secretary of a policy or procedure regarding the rights of an owner under a section lease. Under prior
law, this right was implicitly included among the rights generally reserved to owners under these circumstances
pursuant to section 208 of the Housing and Community Development Act of 1974.
Housing for the Elderly or Handicapped
the measure contains the following new requirements with respect to the section 202 direct loan program
for housing for elderly or handicapped persons:
. development costs for projects assisted under section 202 must be determined without regard to the mort-
gage limits applicable to elderly housing projects insured under section 231 of the National Housing Act.
the Secretary must issue regulations requiring that the processing of any application for a loan for a section
202 project and the processing of any application for Section 8 housing assistance payments with respect
to housing units in the same project be coordinated in an economical and efficient manner.
Urban Homesteading Demonstration
The amount of appropriations authorized for fiscal year 1978 for the urban homesteading demonstration
program is increased from S5 million to $15 million. These funds are used to reimburse the FHA insurance
funds for the aggregate fair market value of properties transferred for use in the program and to provide techni-
cal assistance.
Research Authorization
The appropriation of not to exceed S60 million is authorized for HUD's research and development
activities in fiscal year 1978.
Section 235 assistance for cooperatives. The eligibility requirements for assistance under section 235 are
broadened to include families who are members of a cooperative association operating a housing project
financed with a mortgage insured under section 221(d) (3) of the National Housing Act.
Section 236 Tax and Utility Subsidies
The new law makes a number of changes in the tax and utility subsidy payments program under section
236 of the National Housing Act. including the following:
The Secretary is directed to contract to make tax and utility subsidy payments to the extent of monies
in the section 236 tax and utility subsidy reserve fund and funds authorized in appropriation Acts.
The Secretary is directed to make tax and utility payments up to the amount by which the sum of in-
creased utility costs and local property taxes exceeds the initial operating expense level established for the
project. Prior law provided for the computation of payments on a per unit basis.
. Subsidy payments are required to be used by the project owner solely to effect reductions in the basic
rental charges established for the project, and are intended to result in an immediate, comparable
reduction in the basic rental charges established for the project.
• 11
1
1
Contracts for these payments are to be for a one year period, with provisions allowing for periodic
adjustments in the amount of payments to take into account the occurrence of utility cost or tax
increases, and may be continued, with appropriate adjustrnent3, to the extent approved in appropriation
Acts.
The initial operating expense level for contracts for section 236 assistance entered into prior to the
enactment of the Housing and Comtunity Development Act of 1977 is to be established not later than
180 days after the date of enactment of the new law.
These changes in the section 236 prograrn will become effective on October 1, 1977 and will be
applicable to any period commencing on or after that date.
Tax and utility subsidy payments shall be made unless the Secretary finds that the cost increases are not
reasonable or not comparable to increases affecting other rental projects in the community. Prior law
permitted these payments only if these cost increases were found to be reasonable and comparable.
Reflection of HAPs in Punt" Allocations
To the maximum extent practicable, the Secretary is to assure that funds available for specific HUD
housing assistance programs must be allocated in accordance with the goals described in the local, State or
other housing assistance plans (HAPs) approved by the Secretary under the Community Development Block
Grant Program, and that these funds are utilized to meet the relative needs of different areas and communities
as reflected in data regarding such conditions as population, poverty, housing overcrowding or vacancies, and
the amount of substandard housing. The programs to which this requirement applies are:
. the public housing and Section 8 programs under the United States Housing Act of 1937;
. the homeownership and rental and cooperative housing programs for lower income families under
sections 235 and 236 of the National Housing Act;
. the rent supplement program under section 101 of the Housing and Urban Development Act of 1965;
and
. the housing for the elderly and handicapped program under section 202 of the Housing Act of 1959.
Extension of New Communities Special
Planning Grants Authority
The new law extends section 720 of the Housing and Urban Development Act of 1970 for one year
through September 30, 1978. That section authorizes the Secretary to make financial assistance available to
private new community developers and State land development agencies for planning new community
development programs.
Treasury Draw Authority
The measure contains a provision amending section 14(b) of the Federal Reserve Act to reinstate and extend
until October 1, 1977, the Treasury Department's draw authority on the Federal Reserve Banks, and to rein-
state and extend until September 30, 1977, the authority of the Federal Reserve Banks to purchase United
States obligations directly from the Treasury up to a limit of $5 billion outstanding at any one time.
12
PHA MDflfGADE iN§UfAND€ AND Ri:LAt b AU?HD ifii
the new law extends and Makes a variety of other changes in HUD -BHA mortgage insurance and related au-
thorities. Specific changes include the EXterision of HUD/PHA Insuring authorities. Authority to insure Mortgages or loans under HUD -PHA rflort-
gage insurance programs under the National Housing Act is extended for one year through September 30, 1078,
the insuring authorities affected are:
title 1 - property improvement and Mobile home loan insurance;
section 203 - basic home mortgage insurance;
section 207 - rental housing insurance;
section 213 cooperative housing insurance;
section 220- rehabilitation and neighborhood conservation housing insurance;
section 221 • housing for moderate income and displaced families;
section 222 - mortgage insurance for servicemen;
section 223 • miscellaneous housing insurance, including housing in older, declining urban areas and housing
for existing multi -family housing projects;
• section 231 - housing for the elderly;
section 232 - nursing homes;
section 233 - experimental housing;
. section 234 • condominium insurance;
section 235 • homeownership for lower -income families;
section 236 • rental and cooperative housing for Tower -income families;
section 237 - special mortgages;
. section 240 • homeowner purchase of fee simple title;
• section 241 • supplemental loans for multifamily housing projects;
section 242 • hospitals;
section 243 • homeownership for middle -income families;
• section 244 • mortgage insurance on a co-insurance basis;
section 245 • mortgage insurance on an experimental basis;
Title V II I • armed forces related housing;
. Title X • land development; and
. Title XI • group practice facilities.
13
1
Sxtentioti of fieiiib)e ifitetest Pate attthOPity, the Secretary of HUD's authority administratively to set PHA
maxintium interest rates to Meet the Market at rates above the statutory maximum of 6 percent iS extended for
one year through September 30, 1978,
ihtreases in PHA maximum mortgage amounts. PHA maximurn insurable mortgage amounts are increased as
follows:
Sections Single family home mortgage limits for the basic section 203 program, as well as for rehabilita-
203, 220, tion and neighborhood conservation housing (section 220), housing for Servicemen (section 222)
222, and and condoniiniurns (section 234) are increased to $60,000, Limits for single-family housing in
234: outlying areas (section 203 (i)) are increased to 75 percent of this amount,
The limits for two- and three-family uhits and for four -family units under the sections 203 and
220 programs are increased to $65,000 and 575,000 respectively.
Section Mortgage limits for single-family homes for moderate income and displaced families under the
221 (d) (2) section 221 (d) (2) program are increased to S31,000, and to $30,000 for families of five or
more persons. High cost area limits for these mortgages are increased to $36,000 and to $42,000
for families of five or more, Section 221 (d) (2) limits for two-family units are increased to
$35,000 , and to $45,000 in high cost areas.
Limits for three-family units insured under section 221 (d) (2) are increased to $48,600 ($57,600
in high cost areas), and the four -family unit limits for mortgages insured under section 221 (d) (2)
are increased to $59,400 ($68,400 in high cost areas);
Section The single-family mortgage limit under the subsidized homeownership section 235 program is in-
235: creased to $32,000. Where the housing is either in a high cost area or is for a family of five or more
persons, the section 235 mortgage limit is increased to $38,000, and where both of these factors
exist, the limit is increased to $44,000. Mortgage limits for two-family dwellings under the section
235 program are increased to $44,000, and, in high cost areas, to $49,000.
Decreases in FHA downpayment requirements. The measure decreases the amount of downpayment required
under the basic section 203 program, as well as for rehabilitation and neighborhood conservation housing
(section 220), for housing for servicemen (section 222), and for condominiums (section 234). The new down -
payment provisions retain the requirement under prior law for a downpayment of 3 percent of the first S25,000
of the appraised value of the dwelling, but require a downpayment of only five percent of the appraised value in
excess of the first $25,000. As was the case under prior law, no downpayment is required with respect to the
first S25,000 of appraised value if the mortgagor is a veteran and the mortgage is insured under section 203.
However, in the case of section 203 mortgages covering new homes which the Department has not approved for
mortgage insurance prior to construction, a downpayment of 10 percent of the entire amount of the appraised
value of the property is required, regardless of whether or not the mortgagor is a veteran.
Title 1 home improvement and mobile home loans. The following changes are made in the requirements re-
garding the mortgage amount and maturity of Title I home improvement and mobile home loans;
. The loan ceiling for property improvement loans is raised to $15,000.
The loan ceiling for mobile home loans is raised to $16,000 and to $24,000 for mobile homes composed of
two or more modules. The Secretary may, by regulation, increase these amonuts by no more than 40 per-
cent in Alaska, Guam or Hawaii.
The maturity term for home improvement loans is increased from twelve years and thirty-two days to
fifteen years and thirty-two days.
The maturity terms for a loan to finance the purchase of a mobile home composed of two or more
modules, and to finance the purchase of a mobile home of two or more modules and a developed or
•14
undeveloped lot for the borne, are increased from twenty year and thirty-two days to tWehty-three
years and thirty-two days.
Experimerital fiflarieing. Several changes are made in the Departrnent's experimental financing authority
(section 245 of the National Housing Act), under which the Secretary of HUD may insure Mortgages and loans
with varying rates of amortization corresponding to variations in family incorhe. these changes indludet
, Removal of the limitation placing the use of this authority on an experimental basis,
Removal of the restriction limiting the outstanding aggregate principal amount of Mortgages that may be
insured pursuant to this authority,
Limitation of the principal obligation (including all interest to be deferred and added to principal) of any
mortgage insured pursuant to this authority to 97 percent of the appraised value of the mortgaged pro-
perty, However, where the mortgagor is a veteran, a mortgage which is insured under section 203 of the
National Housing Act pursuant to this section 245 experimental authority may have the higher loan to
value ratio permitted under section 203 with respect to veterans (100 percent of the first S25,000 of
appraised value).
. Provision for a limited preemption of State restrictions on interest rates which might otherwise apply to
mortgages insured pursuant to this authority solely because of the method provided for payment of prin-
cipal and interest under the terms of a section 245 graduated payment mortgage. This preemption is de-
signed to overcome the problem presented in a number of States where there is substantial uncertainty
as to whether State restrictions on interest rates apply to the addition of deferred interest to principal, or
to the charging of interest on interest, under graduated payment mortgages.
A change in the caption of section 245 to "Graduated Payment Mortgages."
Section 235 subdivision limitations. The measure imposes a specific statutory restriction prohibiting section
235 mortgage insurance of more than 40 percent of units in a subdivision after the effective date of the new
law. However, this limitation does not apply to any rehabilitated unit, or to a unit or subdivision which is or
will be located in an established urban neighborhood or area, where the Secretary has determined that a sound
proposal is involved and that an aggregation of subsidized units is essential to a community -sponsored overall
redevelopment plan.
Mortgage insurance in communities affected by Indian land claims. The measure provides for a limited new
program of section 203 mortgage insurance in communities where widespread foreclosures and distress sales
are likely to result from temporarily impaired economic conditions due to Indian land claims. Under this
program, the Secretary is authorized to encourage or provide directly for forbearance, assignment of mortgages
to HUD or other appropriate relief, and to modify the powers and responsibilities under the basic section 203
home mortgage program as necessary because of the special nature of the mortgage involved.
The program is available only in communities meeting the above conditions, and where fifty or more indivi-
dual homeowners were joined as parties defendant, or were members of a defendant class, prior to December 31,
1976 in litigation involving claims to ownership of land in the community by an American Indian tribe, band or
Nation, The Secretary must also determine that these claims are reasonably likely to be settled by court action
or otherwise.
in a community meeting these criteria, a mortgage will be eligible for insurance under this program without
regard to the usual statutory restrictions such as those relating to the mortgagor's reasonable ability to pay,
economic soundness, and marketability of title, if the mortgagor is an owner -occupant whose ability to con-
tinue timely mortgage payments has been aignificantiy impaired by reduced income due to involuntary unem-
ployment or ur.ter•entptoyment as a direct resutt of the community's temporarily impaired economic condition.
Mortgage insurance in militarily impacted areas. The measure substantially revises HUD authority to provide
mortgage insurance covering property located near military installations in federally impacted areas. Under this
authority, HUD may insure, under any section of title II of the National Housing Act, a mortgage executed in
15
connection with the construction, repair, rehabilitation, or purchase of property so located, even if conditions
in the area are such that one or more of the usual eligibility requirerents for mortgage insurance cannot be
Met. In exercising this authority, the Secretary of HUD Must determine that the benefits involved outweigh
the risk of probable cost to the Goverhrnent. The Secretary of Defense Must also have certified that there is
no reasonably forseeable intention to curtail substantially the assignment of personnel to the installation,
Mortgage insurance prep iums and other charges May be established by the Secretary of HUD as necessary
to assure the actuarial soundness and fiscal integrity of the program. In addition, the Secretary of HUD may
prescribe terms and conditions relating to insurance under this program as the Secretary finds necessary and
appropriate and which are, to the maximum extent possible, consistent with provisions otherwise applicable to
mortgage insurance and payment of insurance benefits.
Mortgages insured under the program will be the obligation of the HUD/FHA Special Risk Insurance Fund.
Mortgage insurance premiums with respect to resale of cooperative units (section 203 (n1). The measure
specifies that mortgage insurance premiums under section 203 (n) of the National Housing Act for loans to
finance the resale of cooperative units in FHA -insured projects need not be the same as premiums fixed for
mortgages insured under other provisions of section 203, except that in no case may section 203 (n) premium
charges exceed 1 percent per year.
Mortgage insurance for hospitals and nursing homes. The following changes are made in HUD authorities
relating to insurance for hospitals and nursing homes:
No mortgage insurance premium will be charged in connection with a hospital mortgage insured under
section 242 of the National Housing Act with respect to the amount of the principal and interest
guaranteed by the Department of Health, Education and Welfare in Connection with assistance for non-
profit teaching facilities hospitals under title VII of the Public Health Service Act.
The State agency certifications required for HUD insurance of a nursing home or other facilities under
section 242 of the National Housing Act, may be made by a State agency designated under section 1521
of the Public Health Service Act, as well as under section 604 of that Ac;.
LENDING POWERS OF FEDERAL SAVINGS AND LOAN ASSOCIATIONS;
SECONDARY MARKET AUTHORITIES
Home Owners' Loan Act, The new law contains a number of amendments to the Home Owners' Loan Act of
1933, including the following:
Construction loans. The new law permits Federal savings and loan associations to make construction loans
in amounts not exceeding the greater of (A) the sum of their surplus, undivided profits and reserves, or
(6) five percent of their assets (rather than three percent of assets as under prior law).
. Single family dwelling limitations. The Imitation on real estate loans for single-family dwellings which may
be made by Federal savings and loan associations is increased from 555,000 to $60,000 and only the
amount of a loan in excess of S60,000 will be counted against the 20 percent of assets limitation contained •
in suction 5 (c) of the Home Owners' Loan Act (rather than the entire amount of any such loan, as pre•
v ,..., y required).
Farm property. Federal savings and loan associations are authorized to make line of credit construction
loans with respect to primarily farm real estate, as well as to residential real estate as authorized under
previous law.
16
undeveloped lot for the home, are increased from twenty years and thirty-two days to twenty•three
years and thirtytwo days.
Experimental financing. Several changes are Made in the Department's experimental financing authority
(section 245 of the National Housing Act), under which the Secretary of HUD May insure mortgages and loans
with varying rates of amortization corresponding to variations in family income; these changes include:
Removal of the limitation placing the use of this authority on an experimental basis.
Removal of the restriction limiting the outstanding aggregate principal amount of Mortgages that May be
insured pursuant to this authority.
Limitation of the principal obligation (including all interest to be deferred and added to principal) of any
mortgage insured pursuant to this authority to 97 percent of the appraised value of the mortgaged pro-
perty. However, where the mortgagor is a veteran, a mortgage which is insured under section 203 of the
National Housing Act pursuant to this section 245 experimental authority may have the higher loan to
value ratio permitted under section 203 with respect to veterans (100 percent of the first $25,000 of
appraised value).
Provision for a limited preemption of State restrictions on interest rates which might otherwise apply to
mortgages insured pursuant to this authority solely because of the method provided for payment of prin-
cipal and interest under the terms of a section 245 graduated payment mortgage. This preemption is de-
signed to overcome the problem presented in a number of States where there is substantial uncertainty
as to whether State restrictions on interest rates apply to the addition of deferred interest to principal, or
to the charging of interest on interest, under graduated payment mortgages.
A change in the caption of section 245 to "Graduated Payment Mortgages."
Section 235 subdivision limitations. The measure imposes a specific statutory restriction prohibiting section
235 mortgage insurance of more than 40 percent of units in a subdivision after the effective date of the new
law. However, this limitation does not apply to any rehabilitated unit, or to a unit or subdivision which is or
will be located in an established urban neighborhood or area, where the Secretary has determined that a sound
proposal is involved and that an aggregation of subsidized units is essential to a community -sponsored overall
redevelopment plan.
Mortgage insurance in communities affected by Indian land claims. The measure provides for a limited new
program of section 203 mortgage insurance in communities where widespread foreclosures and distress sales
are likely to result from temporarily impaired economic conditions due to Indian land claims. Under this
program, the Secretary is authorized to encourage or provide directly for forbearance, assignment of mortgages
to HUD or other appropriate relief, and to modify the powers and responsibilities under the basic section 203
home mortgage program as necessary because of the special nature of the mortgage involved.
The program is available only in communities meeting the above conditions, and where fifty or more indivi-
dual homeowners were joined as parties defendant, or were members of a defendant class, prior to December 31,
1976 in litigation involving claims to ownership of land in the community by an American Indian tribe, band or
Nation. The Secretary must also determine that these claims are reasonably likely to be settled by court action
or otherwise.
In a community meeting these criteria, a mortgage will be eligible for insurance under this program without
regard to the usual statutory restrictions such as those relating to the mortgagor's reasonable ability to pay,
economic soundness, and marketability of title, if the mortgagor is an owner -occupant whose ability to con-
tinue timely mortgage payments has been significantly impaired by reduced income due to involuntary unem-
ployment or under -employment as a direct result of the community's temporarily impaired economic condition.
Mortgage insurance in militarily impacted areas. The measure substantially revises HUD authority to provide
mortgage insurance covering property located near military installations in federally impacted areas. Under this
authority, HUD may insure, under any section of title II of the National Housing Act, a mortgage executed in
15
connection with the construction, repair, rehabilitation, or purchase of property so located, even if conditions
in the area are such that one or More of the usual eligibility requirements for mortgage insurance cannot be
met. In exercising this authority, the Secretary of 1-IUD &Must determine that the benefits involved outweigh
the risk of probable cost to the Government, The Secretary of Defense must also have certified that there is
no reasonably forseeable intention to curtail substantially the assignment of personnel to the installation.
Mortgage insurance prerniuriis and other charges May be established by the Secretary of HUD as necessary
to assure the actuarial soundness and fiscal integrity of the program. In addition, the Secretary of HUD may
prescribe terms and conditions relating to insurance under this program as the Secretary finds necessary and
appropriate and which are, to the maximum extent possible, consistent with provisions otherwise applicable to
mortgage insurance and payment of insurance benefits.
Mortgages insured under the program will be the obligation of the HUD/PHA Special Risk Insurance Fund.
Mortgage insurance premiums with respect to resale of cooperative units (section 203 (n)). The measure
specifies that mortgage insurance premiums under section 203 (n) of the National Housing Act for loans to
finance the resale of cooperative units in FHA -insured projects need not be the same as premiums fixed for
mortgages insured under other provisions of section 203, except that in no case may section 203 (n) premium
charges exceed 1 percent per year.
Mortgage insurance for hospitals and nursing homes. The following changes are made in HUD authorities
relating to insurance for hospitals and nursing homes:
No mortgage insurance premium will be charged in connection with a hospital mortgage insured under
section 242 of the National Housing Act with respect to the amount of the principal and interest
guaranteed by the Department of Health, Education and Welfare in connection with assistance for non-
profit teaching facilities hospitals under title VII of the Public Health Service Act.
The State agency certifications required for HUD insurance of a nursing home or other facilities under
section 242 of the National Housing Act, may be made by a State agency designated under section 1521
of the Public Health Service Act, as well as under section 604 of that Act.
LENDING POWERS OF FEDERAL SAVINGS AND LOAN ASSOCIATIONS;
SECONDARY MARKET AUTHORITIES
Home Owners' Loan Act. The new law contains a number of amendments to the Home Owners' Loan Act of
1933, including the following:
. Construction loans. The new law permits Federal savings and loan associations to make construction loans
in amounts not exceeding the greater of (A) the sum of their surplus, undivided profits and reserves, or
(B) five percent of their assets (rather than three percent of assets as under prior law).
Single family dwelling limitations. The limitation on real estate loans for single-family dwellings which may
be made by Federal savings and loan associations is increased from $55,000 to $60,000 and only the
amount of a loan in excess of $60,000 will be counted against the 20 percent of assets limitation contained
in section 5 (c) of the Home Owners' Loan Act (rather than the entire amount of any such loan, as pre-
viously required).
. Farm property. Federal savings and loan associations are authorized to make line of credit construction
loans with respect to primarily farm real estate, as well as to residential real estate as authorized under
previous law.
16
I
Property thipreiVeltietit lOarit. The amount of non-insured or tion,guaranteed property ittiPrverrient loans
which nay be Made by Federal savings and )oat associations is increased from $16,000 tO $16,000.
deletion of investment limitations. the new law removes the "20 percent of assets" limitation previosuly
required with respect to the aggregate amount of investments which may be thade by Federal savings and
loan associations on the security Of property having More than four dwelling units, or oh non-residential
property,
Additionally, the Federal Home Loan Bank Act is amended to provide that the dollar limitation oh home
mortgages which a Federal Home Loan Bank may accept as collateral security for an advance will be the same
(now S60,000) as the limitation provided under the first proviso in section 5 (c) of the Horne Owners' Loan Act
of 1933.
GNMA home purchase assistance. The Secretary has interim authority, under previously existing lavv, to direct
the Government National Mortgage Association to purchase mortgages whenever inflationary or other economic
conditions negatively affect the housing industry and result in a reduction in the volume of home construction
or acquisition which threatens the economy or the orderly achievement of national housing goals. The new law
authorizes the Secretary, to the extent feasible and consistent with the primary purpose of stabilizing housing
production, to direct GNMA to purchase mortgages under this interim authority in order to promote home-
ownership opportunities for moderate -income families.
Mortgages executed to finance rehabilitation or acquisition and rehabilitation of housing in older or de-
clining neighborhoods may also be purchased by GNMA under this authority. The Secretary is authorized to
prescribe regulations governing the exercise of the authority granted by the new law.
The S42,000 pet dwelling unit limit on the amount of mortgages purchased pursuant to this interim
authority is increased by the new law to $49,000 in the case of any property with respect to which assistance
payments under Section 8 of the U.S. Housing Act of 1937 are being or will be made, if such housing is lo-
cated in a geographic area where the Secretary has authorized such an increase on the basis of a finding that
cost levels so require. Limitations in the previous law on the sales price of dwelling units on which mortgages
are Purchased by GNMA under this authority are also raised (from S52,000 to $55,000) in the case of Section 8
housing in high -cost areas.
GNMA's purchases and commitments pursuant to this authority (which is contained in section 313 of the
National Housing Act) are limited to $7.5 billion during fiscal 1978. The new law also extends the interim
authority to October 1, 1978.
Conventional mortgage purchase limitations on FNMA and FHLMC. The new law provides that conventional
mortgages eligible for purchase by FNMA or by FHLMC may have a principal amount up to 25 percent above
the mortgage limits set under section 5 (c) of the Home Owners' Loan Act for savings and loan institutions (set
under the new law at $60,000).
FNMA study. The new law requires the Secretary to conduct a review of the financial operations of the
Federal National Mortgage Association and undertake a study of the extent to which the activities of the
corporation meet the purposes of the FNMA Charter Act. The review and study is required to be completed
and transmitted to the Congress on or before July 1, 1978.
RURAL HOUSING
Authorizations for rum) housing programs. Title V of the Housing Act of 1949 is amended to extend for one
year, through Septrimuer 30, 1978, authority under the Farmers' Home Administration rural housing programs.
The n.qv Live r.iso increases, from S8U million to $105 million the authorizations for appropriations for both
the :.ecuon 504 Invv,incume rehabilitation loan and grant program and the section 516 financial assistance
program for low -rent housing for domestic farm labor.
17
1
Also extended through Septerftber 30, 1978 are FmHA's authorities to insure loans for rental or cooperative
housing and related facilities for elderly or moderate -income persons or families ih rural areas, and to Make
grants or loans for mutual and self-help housing.
Waiver of refiftahtiflg requirement. the new law amends the Housing Act of 1949 to waive, with respect to
guaranteed loans, the requirement that section 502 rural home loans contain the borrower's agreement that he
will refinance the loan indebtedness through private credit sources whenever the Secretary of Agriculture de-
terrines that the borrower's circumstances permit and that he is able to do so under reasonable terms and
conditions.
Separate operation of rural housing insurance fund. The measure requires that the guaranteed loan program
under Title V of the Housing Act of 1949 be operated separately from the insured rural housing loan program,
and prohibits funds designated for one program from being transferred to the other.
Income requirements. Loans guaranteed under section 517 of the Act (from the Rural Housing Fund) may be
made only to borrowers with above -moderate incomes.
Interest rate on rural housing loans. Title V loans, when made as guaranteed loans, will bear interest rates
negotiated between tite borrower and the lender. This replaces previous statutory controls on such interest rates.
Deletion of escrow requirement. The law authorizes FmHA to allow a borrower to prepay escrow items such
as taxes and insurance without the necessity of the Secretary of Agriculture's segregating such funds. The Secre-
tary of Agriculture is also authorited, after October 1, 1977, to advance to the borrower's account such funds as
may be necessary to make up for temporary deficiencies of prepayment. Such advances will be charged to the
borrower's account and shall bear interest.
Compensation for construction defects. The Secretary of Agriculture, after October 1, 1977, may make
expenditures to correct structural defects, pay the claims of owners of property arising from such defects, or
acquire title to property, with respect to any unit or dwelling newly constructed during the period beginning
eighteen months prior to the date of enactment of the Housing and Community Development Act of 1977.
Such assistance must be requested by the owner of the property within eighteen months after financial as-
sistance was rendered under Title V of the Housing Act of 1E+49, except that for properties for which assistance
was made available within the eighteen months prior to enactment of the 1977 Act, owners have eighteen months
from the date of enactment to request assistance.
The Secretary of Agriculture is authorized to prescribe regulations finder which expenditures and payments
may be made to correct, or compensate owners for, construction cetects. Such expenditures may oe paid from
the Rural Housing Insurance Fund, and decisions of the Secretary regard'ng the approval or disapproval of claims
for such compensation are not subject to judicial review.
Authorization of loan insurance for farm labor nousing in areas outside the United States. The Secretary of
Agriculture is authorized under the new law to make farm labor housing loans and grants in Puerto Rico and
the Virgin Islands (as well as in the United States as provided in previous law), to persons who are U.S. citizens
or are legally admitted residents of the U.S., Puerto Rico or the Virgin Islands.
Additional purposes for which insurance fund may be used. After October 1, 19— •gad as approved in ap-
propriation Acts, the new law permits payments from the Rural Housing lnsuranc:, • -a to cover advances for
prepayment items and to make expenditures for the correction of construction defi.;ts as authorized in the
new law.
.4,ur ;i housmg for the elderly and handicapped. All references to "elderly persons" or "elderly families" in
T.t.e of the Housing Act of 1949 are extended to include handicapped persons or families. Standards under
which the Secretary of Agriculture may issue regutauu..., c' determine circumstances under which a person
shall be considered handicapped for purposes of the new law are also prescribed.
Congregate housing for the elderly and handicapped. Congregate housing facilities for elderly or nandicapped
families who are essentially independent but require some supervision and central services are eligible for direct
18
or insured loans under the new Act. Equiprrtent specifically designed for the use of elderly or handicapped
families shall not, under the new law, be considered elaborate or extravagant for purposes of direct or insured
loans. Congregate housing is defined to mean housing in which sortie of the units May trot have kitchen facilities,
and in which a central dining facility is provided. Such housing is also perrrlitted to be utilized in conjunction
with educational and training facilities.
Definition of "developmentally disabled person." In connection with the broadened eligibility of
handicapped persons under the new law, the measure also contains a definition of "developmentally disabled
person" broadened to include a list of mental disabilities which are to be included ih the term "handicapped
person."
Loans to benefit persons of low income. The measure explicitly requires that at least 60 percent of loans
made pursuant to FmHA single family and rental loan programs be for the benefit of persons of low income.
Rural housing research. The Secretary of Agriculture is directed to establish a research capacity within the
Farmers' Home Administration with authority to undertake, or to contract with any public or private body to
undertake, research authorized by existing law. Previously, the Secretary was only authorized to contract with
public or private bodies if needed research could not feasibly be performed through Department of Agriculture
personnel or by land-grant colleges.
Rural rental assistance. The new law directs the Secretary of Agriculture to make and insure loans for low-
income rental or cooperative housing and related facilities in multifamily projects, and to make rental assistance
payments for up to 20 percent of the units in such projects, and for more than 20 percent where necessary
or feasible. Under the previous law, discretionary authority existed for the Secretary to make or insure such
loans, or to provide such rental assistance payments.
Taxation of FmHA•acquired property. Farmers' Home Administration is specifically authorized to pay State
or local taxes on acquired property, other than property used for the agency's own administrative purposes,
beginning with taxes due from January 1 of the current year.
No tax may be imposed or collected by a State or local governmental entity, however, if the tax is based on
the value of any notes or mortgages or other lien instruments held by or transferred to the Secretary;
notes or lien instruments which are made, assigned or held by a person otherwise liable for such tax, or
the value of any property conveyed to the Secretary, insofar as the tax is on the instrument, or on the
privilege of conveying or transferring, or the recordation of an instrument. The failure to pay such taxes
shall not be a ground for refusal by the State or local government body to record or file such documents.
nor will it prevent the enforcement of the provisions of instruments related to a conveyance, in any State
or Federal court.
The new iaw also retroactively approves tax payments previously made on properties held by FmHA, declares
that such payments need not be refunded, and provides that no officer or employee of the United States shall be
liable for having authorized such tax payments prior to their having been authorized in the new law.
NATIONAL URBAN POLICY
Short title and statement of purpose. Amendments to the Housing and Urban Development Act of 1970
change the short title of title VII of that Act from "Urban Growth and New Community Development Act of
1970" to "National Urban Policy and New Community Development Act of 1970." The Statement of Purpose
of the 1970 Act is amended to refer to the development of a "national urban policy" (referred to in previous
law as "urban growth policy"), and to include among the purposes of the Act the conservation of energy sources
and the support of development to assure good housing.
Findings. Congressional findings contained in the 1970 Act are amended to emphasize changes in patterns of
urban settlement and in population distribution, and in the economic bases of urban areas — rather than urban
yrow th — as the principal source of urban problems. Energy is specified as one of the natural resources adversely
affected by these pattern cnanges.
Report on national urban policy. The new law deletes previous requirements for a report to Congress on Urban
Growth, in favor of a biennial Presidential Report on National Urban Policy, which will include data on patterns
19
of urban development and trends affecting the well-being of urban areas, along With an examination of the
housing and community development problems experienced by cities undergoing a growth rate Which equals or
exceeds the national average. The first report is due during February, 1978.
FLOOD INSURANCE PROGRAM
Flood insurance extensions. Authority to enter into new contracts for flood insurance under the National
Flood Insurance Program is extended for one year through September 30, 1978. Authority to provide subsidited
flood insurance under the so-called "emergency program" in communities which have adopted minimum flood
plain management measures and for which the necessary actuarial rate and flood hazard elevation studies have
not yet been accomplished is also extended for one year through September 30, 1978.
Flood insurance studies. The appropriation of not to exceed S108 million is authorized for fiscal year 1978 for
flood insurance studies under the National Flood Insurance Act of 1968.
Sanctions under Flood Disaster Protection Act of 1973. The measure removes a provision under prior law
prohibiting federally supervised, approved, regulated, or insured lending institutions from making, increasing,
extending, or renewing any loan secured or to be secured by improved real estate or a mobile home located or to
be located in an area which has been designated as having special flood hazards, if the community in which such
area is located is not participating in the National Flood Insurance Program. It provides instead that such lending
institutions be required to notify a purchaser or lessee obtaining a loan secured by real property in a designated
special flood hazard area as to whether disaster relief assistance will be available for that property in the event of
a flood disaster. The measure also changes prior law so as to prohibit Federal financial assistance uncle; the
Disaster Relief Act of 1974 in connection with a flood for acquisition or construction purposes in such areas,
but to perrnit such assistance following non -flood related disasters.
Limits of coverage under National Flood Insurance Program. In the case of properties for which flood
insurance premiums are determined at actuarial rates, the measure permits substantially higher "second layer"
coverage limits than under prior law. Prior law limited "second layer" coverage for all properties to an amount
equal to the amount of first layer coverage authorized for that type of property. Under the new law, additional
coverage is to be made available to every insured upon renewal and to every applicant for insurance, as follows:
. for residential property structure coverage, the new law authorizes up to $150,000 of second layer
for dwelling contents coverage, th. new law authorizes up to S50,000 of second layer coverage,
. for business properties which are owned, lease°, or operated by smau business concerns, the new iaw
authorizes second layer structure and contents coverage aggregating up to (1) $250,000 plus (2) $200,000
multiplied by the number of small business occupants, provided that structure coverage cannot exceed
S250,000 of the total.
In the case of church propert!,!s and ceopertres other tnan these residential or small o' ;ness properties, the
amount of "second layer" coverage remains unchanged from prior law.
The increased "second layer" coverage provided under the new law is to be made available at actuarial rates.
However, the flood insurance purchase requirements of section 102 of the Flood Disaster Protection Act of 1973
do not apply to the increased second layer coverage provided under the new law, but only to the total limits
previously authorized (twice the amount of first layer coverage).
Purchase of flood -damaged properties. The Secretary's existing authority to purchase flood -damaged pro-
perties is expanded to permit the purchase of property which:
• has incurred significant flood damage on at least three occasions over a five-year period and on each occa-
sion the cost of repair, on the average, equalled or exceeded 25 percent of the value of the structure at the
time of each flood event; or
• has sustained damage as a result of a single casualty of any nature under circumstances such as that a
statute, ordinance or regulation precludes its repair or restoration or permits repair or restoration only at a
significantly increased construction cost.
20
Loatit for elevation of &triaged property. The new law authorizes the Secretary of HUD to make IOW -interest
(2 percent) 10•year loans to homeowners for the purpose of elevating single-family dwelling structures which are
located within a "regulatory floodway" and insured under the National Flood Insurance Program. Such loans are
authorized in cases where the structure has suffered damage from any casualty (flood or non -flood) and where
the Secretary deterrhiries that the repair, reconstruction or substantial irhprover ent of the structure Will be made
more effective, from the standpoint of prudent flood plain management, by elevation so that the structure
will not interfere with the flow of water from the base flood Within the floodway. Appropriations of not to
exceed $4,500,000 are authorized for this purpose.
Appeals of determinations under natiohal flood insurance program. The new law authorizes the Secretary of
HUD to establish administrative procedures for appeals of the Secretary's identification of a flood prone area
under the Flood Disaster Protection Act of 1973. The appeal may be made by the community, or by an
owner or lessee of real property within the community who believes his or her property to have been inad-
vertently included in a special flood hazard area by the identification. The Secretary is required to reimburse
communities or individuals for the expense of surveying, engineering or similar services in connection With a
wholly or partially successful appeal.
The measure also requires that reimbursement be made in connection with wholly or partially successful
appeals of proposed Secretarial determinations of flood elevations. In the case of either type of appeal, reins-
bursement may not be made for legal services or contingent fees, and the amount of reimbursement is based on
that portion of the reasonable value of all reimbursable services which reflects the ratio of the successful portion
of the appeal to the entire appeal. Appropriations of not to exceed $250,000 are authorized for implementing
each provision regarding appeals.
COMMUNITY REINVESTMENT
Congressional findings and purpose. Title VII I of the new Act may be cited as the "Community Reinvestment
Act of 1977". The Act cites Congressional findings that:
regulated financial institutions are required by law to demonstrate that their deposit facilities "serve the
convenience and needs of the communities in which they are chartered to do business;"
a community's convenience and need includes the need for credit services, as well as deposit services; and
regulated financial institutions have a continuing and affirmative obligation to help meet the credit needs of
the local communities in which they are chartered.
The purpose of the title is to require appropriate Federal financial supervisory agencies (defined as the Comp-
troller of the Currency, Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corpora-
tion and the Federal Home Loan Bank Board) to use their authority, when examining financial institutions, to
encourage such institutions to help meet the credit needs of their local communities, "consistent with the safe
and sound operation of such institutions."
Requirements. Each Federal financial supervisory agency, in connection with its examination of a financial
institution within its jurisdiction, must assess the institution's record of meeting the credit needs of its entire
community, including low- and moderate -income neighborhoods, consistent with the institution's safe and
sound operation. The institution's record, as revealed by such examination, must be taken into account in the
supervisory agency's evaluation of an institution's "application for a deposit facility," defined as an
application for:
a charter for a national bank or Federal savings and loan association;
. deposit insurance in connection with a new chartered State bank, savings bank, savings and loan association
or similar institution;
the establishment of a domestic branch or other facility with the ability to accept deposits of a regulated
financial institution;
• the relocation of the home office or a branch office of a regulated financial institution;
. the merger or consolidation with, the acquisition of the assets of, or the assumption of the liabilities of a
regulated financial institution requiring approval of a Federal supervisory agency pursuant to existing laws;
the acquisition of shares in, or the assets of, a regulated financial institution requiring approval of a Federal
supervisory agency pursuant to existing laws.
• 21
ii)iiefriefttfg regulations. Each Federal financial supervisory agency is to publish regulations to carry out the
purposes of the Community ReinvestMerit Act, to take effect within 390 days from the date of enactment.
Reports to Congress. The supervisory agencies are to include, in their annual reports to the Congress, a section
outlining the actions taken to carry out responsibilities assigned in the Community Reinvestment Act.
MISCELLANEOUS PROVISIONS
Special Assistant for Indians and Alaska native programs. A new Special Assistant for Indian and Alaska
native programs, to be responsible for coordinating all HUD programs relating to Indian and Alaska native hous-
ing and community development, is established within HUD.
The Secretary of HUD is directed to submit (not later than
which:
describes the Department's actions relating to Indians and Alaska natives during the current year and a
projection of activities during the succeeding years;
estimates the cost of projected activities for succeeding fiscal years;
provides a statistical report on the conditions of Indian and Alaska native housing; and
recommends legislative, administrative and other actions, as the Secretary deems appropriate.
Mobile home safety standards. Under existing law, the Secretary of Housing and Urban Development has
regulatory powers related to mobile home construction and safety standards. The new law directs the Secretary
to exclude from such regulation any structure which the manufacturer certifies in a form prescribed by the
Secretary, is:
. designed only for erection or installation on a site built permanent foundation;
not designed to be moved once so erected or installed;
. designed and manufactured to comply with a nationally recognized model building code or an equivalent
local code. or with a State or local modular building code recognized as generally equivalent to building
codes for site -built housing, or with minimum property standards adopted by the Secretary; and
to the manufacturer's knowledge, not intended to be used other than on a site -built permanent foundation.
Civil and criminal penalties are provided if any person submitting a certification has reason to know, in the
Exercise of due care, that such certification is false or misleading in a material respect.
Homeownership counseling. The Secretary of HUD is authorized to provide homeownership counseling
services to owners of single family dwellings assisted under Title iI of the National Housing Act, in addition to
homeowners assisted under section 235 of that Act, for whom counseling was already required to be provided in
previous law.
Decern
ber 1 of
each year) a report to Congress
Prototype housing costs. Beginning in calendar year 1979, the Secretary of Housing and Urban Development
is directed to prepare and to publish annually prototype housing costs for one- to four -family dwelling units for
each housing market area in the United States, as determined by the Secretary.
Costs for an area are to be determined on the basis of the Secretary's identification and estimate of reasonable
construction and other costs (including allowances for the cost of land and site improvements) for various types
and sizes of new one• to four -family dwelling units designed for various segments of the housing market of the
area, as determined by the Secretary.
In determining prototype costs, the Secretary is authorized to take into account:
. the need for durability required for economic maintenance;
. need for amenities suitable to assure a safe and healthy family life and neighborhood environment;
. the application of good design and quality in architecture;
. the need for maximum conservation of energy; and
. the advice and recommendations of local housing producers.
The Secretary is authorized to take such action as necessary to develop, aggregate and evaluate information
necessary for the timely development, implementation and maintenance of the prototype housing cost system.
22
October 1977
HUD-380.2•PA
11111 111111 1101
•
rdE AY, 00 Za AS, 1977
PART I11
D E R7 'J.N OF
HOUSiG AND
UPL'AN
DcV..Oa 4
Office of Assistant Secretary
For Community Pinning and
Deve op m n t
COMMUNffY
DEVELOPMENT BLOCK
GRANTS
Eligible Activities, Applications for
Entitlement Grants, Urban Development
Action Grants
R78-36
ii iu i�i gun .
(ip) Folitidatiofte aftd plat!otrte fOt
@it tiehte 3fted.
(12) Pede+ttefatft iraltb afial tcalkted:3.
tit) Flood and draifidge fecfaties,
casee *here assistance tot such facilities
has been deterrnMed tie be unavailable
under other Federal laws or p. eerams
ptutuar:t to the provisions of 4 570.601.
The tertn "flood and drainage facilities"
theans those utidcrtakinrts designed tei
influence or affect tie ftot is a natural
tater couted (such as a rivet, stream,
lake. estuar , bay, ocean or tatertz+itteht
stream) and eecludee stotm ea•eft.
(di Cleafante activitiei. Clearahce.
defnolitiote and t•etnovai of buildups and
itnprovernents. including tnovetieht of
structures to other sites. Detziclition of
Men assisted housing units may only by
undertaken pursuant to a plan approved
by Hi;ij
(e) Public services. Provision of public
services-nifoli:dnx labor. supplies and
rnatrria:s) which are directed toward
lriproci.ng the community's tublic serve
ices and facilities. ineludtn.; tncse cote
cerned :with errpioy:nent. crane preven-
tion child care, health. dreg abase. edu-
cation. welfare. or recreattonai to eas. and
which are directed toward c;,ordir:ati.ng
public and private development pro-
grams. Such serrtces may be provided
by State or local r: ire nth, quast-
nubiic. private er nonprofit agencies se-
lected by the applicant for funds pro-
vided under the; ?art. Public ser,eces
must meet the foilowts;g criteria
t 1 . Peelie eervices :fiat be provided
for resident.; of comprehensive neighbor-
h,»l rot:tall:at:on cr sirr.iisr areas in
which b1Jce crar t :Masted physical de-
velooment aZtivIties are SMnp carried
out In e concentrated manner. Such pub-
lic sernces may be suepr_rtea with block
grant fume.; for no mo: e than three years
after the cernpiet:on of such physical de-
velopment activities. For the purpose of
this ,^.ara' aph:
1) Physical deve!or ment activities in-
clude cry those described in ` 370.:01
ea, throu.h id f? through (hi, and
tki. and 1 ee0.202 through 1 570.203.
(Ii) The phrase ''concentrated man-
ner" shall mean that, the blocs grant as-
sisted physical development att.:s:t:es are
being carried out in a coordtnatect man-
ner to serve a common obatet,ve cr pur-
pose pursuant to a lfcaaly develoaed plan
or strategy in a comprehensive neigh-
borhood revitalization area.
12) Such services most tie directed to-
vrard meeting the needs of resident.; of
such areas. Block grant reanstance may
be provided for such ,:ereeces only in
those instances where two-thirds of
those persor;s receiving the public service
are resident; of the comprehensive neigh-
borhood revitalisation area.
(3) A public service must be either •i,
a new ser:•ice. or i lie a quartneabie in-
crease in the level of a ser;:ce above that
which has been provided from local
or State sources :n the tw•e:ve calendar
months prior to submission of the
block grant application. (An exception to
this reetirernent with regard to State -
funded ser:ices may be made if HUD de-
termines that the decrease in the level of
PROPOSO RILES
a Service *as the result of events Plot
teal:sift lite control of the applicart.)
4) Federal assistance in providing of
securing such public seftices Must have
been applied for and denied of not made
available pursuant to the provisions of
5t3.6Oi.
+5) Publle terrices must be detef:i
tnined by the applicant to be necessarry
or appropriate to supptitt the phyttcal
developiitent activities to be dart -led out
xithi.r comprehensive fieighbofhaod ft=
.ttali.atiori areas. The speCiffd deternii=
nation of support tot each proposed Pub,
tic service LS not requited tee be included
in the application, but the applicant
rust briefly describe the relationship of
the public service to the physical devei=
opment activities. herb 'z•iil accept the
appiicant's detertrtination that a public
sett' ice 1s neceesary and appropriate to
support the physical development ac-
tivities unless ;mere is substantial evi= •
deuce to the contras:, lei which case
additional information or assurances
ma; be requested froin the applicant
prior to a determination of clig,billty.
(L irttethn asrstatice. Interim as-
sstance to alleviate harmful conditions
where immediate public action is deter,
rained by the applicant to be necessary.
inc' edi:.g:
The repairing of streets. side-
walks. parks. playground.. publicly
owned atilittes and public facilities;
(2; The improvement of private
properties to the extent tzecessar; to
eliminate immediate dangers to public
health. safety or ve:lave:
• 3, The establishment of temporary
public alayerounds on vacant Iand: and
i 4! The execution of non -routine gar-
bage. trash and debris removal, stz•eet
clearing, .now removal and similar ac-
tivities.
co Payment of the non -Federal share
required m ccnnecton with a Federal
grant-in-aid program undertaken as
par. of the block grant activities. Pro-
vided, That such payment shall be limi-
ted to activities otherwise eligible under
this subpart.
h) Urban renewal completion. Pay-
ment of the cost of completing an urban
renewal pro,ect funded under Title I of
the Sousing Act of 1949 as a.tiended.
Partner information regarding the eli-
gibility of such costs is set forth in
5`0.301.
i Relocation. Relocation payments
and assistance for individuals, farnities.
his:nesses, nonprofit organization:, and
farm oueratiors displaced by activities
asserted under this Part. Further infor-
mation regarding the eligibility of re-'
location costs :s set forth in 1 570.ti02.
(j) Less of rental income. Payments to
housing owners for losses of rental in-
come incur red in holding for temporary
periods housing •:nits to be utilized for
the relocation cf individuals and families
displaced by program act:vitie:. assisted
under this Part.
vk, Removal of architectural barriers.
Special protects directed to the removal
of material and architectural barriers in
publicly owned and privately owned
buildings, facilities and improvements
which restrict the mobility and accessi-
6i
bility of eIderh' Or balidlCiPPed Petkifit.
§ It0.262tl,ble ftYliiiitittlt)Mt Mid
pliesefivatioe fietfvititabo
pliant assistance may beused tot the
folloaviag activities tot tho teitabilitatiof
of buildings and iniprdveaie1its:
<ai Rehabiiitatioft of public residehtiaf
Sttuctufe3. Rehabilitation of publicly
o0.-tied or acquired properties tot use of
resale tip the ptbvisioti Of housitzg,
t b) Ptthlid housitp tiiodc+fiftcdtidit.
fetoderfii .atioh and ltioderhi±atioh pima
king df publicly-otatied 1od*-indorne bout*
ing ' esciuditig, the hew ttobstrUCtion of
office facilities for such public housing).
.(18. Block giant tutees ftlit also be peon
sided by an applicant to a public housing
agency to be used (of othef'rLse eligible tic.'
ttctt1 s, e.q- public set:ices such security and
day care meeting ate requirements of f Std.*
201 (e i and planning and policy=plaitntng•
managensent activi ties utrdef 1570.206 re-
toted to public housing improeetaehtee
et) Rehabilitation by nonprofit eiitiA
ties. Acquisition and rehabilitation of
properties by private nonprofit entities
for use or resale in the provision of
housing:
id) Rehabilitation matefiaLs. Provi-
sion of building materials, including
paint. to be used by homeowners or
tenants for rehabilitation of properties.
f e) Rehabilitation finaitcinq. The fi-
nancing of rehabilitation of privately
owned residential, non-residential, and
mixed -use properties through the direct
use of block grant funds in the provi-
ston of assistance, such as grants. loans,
loan g iarantees and interest supple-
ments, for:
e 1, Costs of rehabilitation of proper-
ties, including, repair directed toward
cure of an accumulation of items of
deferred maintenance. replacement of
principal fixtures and components of
existing structures, and renovation
through alteration, additions to, or en-
hancement of existing structures, which
may be t.ndtrtaten singly, or in combi-
nation:
12. fief nancira existing indebtedness
secured by a property being rehabilitated
if such refinancing is necessary or ap-
propriate to the execution of a Commu-
nity Development Program:
1 3 e Measures to increase the efficient
use of energy in structures being assisted
through such means as installation of
storm windows and doors, siding, wall
and attic insulation, and conversion,
modification or replacement of heating
equipmer.t; or
.41 Financing of costs associated with
the connection of residential structures
to water distribution Lures or local sewer
collection lines, but not payment of as-
sessments which are ineligible pursuant
to ; 570.206(h).
'f) Code enforcement. Code enforce-
ment in designated comprehensive
neighborhood revitalization areas in
which such enforcement, together with
public improvements and services to be
provided, may be expected to arrest the
declir.e of the area,
tg) Historic preservation. Rehabilita-
tion, preservation, restoration and ac-
FEPERAL REGISTER, VOL. 42, NO. 205--TUESOAT, OCTOBER 25, 1977
111111111111 Dill I1u
COMMUNITY btVELOPME iT i3Ll' GK GRANTS
Subpart l;—Eligible Activitiet
§ 5ft1.200 Ltkililc netiiitim
t al Grant assistance for a Camtnunitr
Developrncnt Program mat• be tised only
for the following activities:
(1) Acquisition in whoie or in part by
purchase. lease. donation. or otherwise.
of real property tir.cluding ait rights.
water rights, and other interests there-
in). Which Le—
i') Eli;hted, d#terioratcd, deteriorate
Ins-, undeveloped. or inappropriately de-
veIoped from the etandpoint of sound
community development and growth. as
determined by the recipient purstiant to
State and local laws:
Appropriate for rehabilitation or
cori'ereation neti'.tie.3:
Appropriate for the preservation
or restoration of hist_•rie Sites, the beau-
tification of tarnan land. the eo1i erva-
Lion of open spaces. natural resources.
and scenic are: a, the ;:r'ovr.-ion of rec-
reational opportuni'ices. or the guidan.e
of urban delves );anent:
(iv) Ta be tired ! r the provision of
public :v:orks. facilities, and irnprove-
tnent.; elIentle ter ae4.iietance under para-
c-raph 'a) nap of this section: or
iv) To be u:ed for other public put. -
pores. inch:dina the conversion of land
to other usee where necessary or appro-
priate to the community development
preerar .
(24 .'ticquieitt:..n, construction, recon-
struction. rehabilitation, or installation
of only the fol'owina public works, pub-
lic! facilities. and site or other impreve-
inents:
i Neir_hborhoxi facilities which (A,
are de: itined to nerve a particular neigh-
borhood and provide services for that
area. except that such facilities may
serve an entire community of under 10.-
000 population: '13) provide health, rec-
reational. social, or similar community
services; (C) may Le either ein,1e pur-
pose or multlpurpo=e in nature.
(iiSenior centers.
tali Insure:: properties. (including
privately owned properties for which
there is public access).
(iv, Utilities.
(ea Streets, street lights, traffic sig-
nals, :fens, street furniture. trees, and
other normal appurtenances to streets.
but excluding expre:;sways and other
limited peters ways.
(vi) ester and sewer facilities, except
for sewage treatment works which are
described as ineligible its 570.2011a).
tviii Foundations and platforms for
air rights tires.
(via!) Pedestrian malls and walkways.
(ix) Parks, playgrounds. and other fa-
cilities for recreational participation.
(x) Flood and drainage facilities in
cases where assistance for such facilities
has been determined to be unavailable
under other Federal laws or programs
pursuant to to the provisions of § 570.607.
(xi) Parking facilities. solid waste dis-
po,;ll facilities (including permanent en-
eite equipment integral to the operation
of a Sanitary landfill), and tire protec-
tion equipment and facilities which are
located in or serve areas its which other
Published by
aetivities included in the cornniunity de-
velopmcnt pro rrann described in
:303,hi are to be carried out.
+itii) Centers for the handicapped. For
the purpose of tills paragraph. the teriri
"center for the handicapped" shalt mean
any single or multipurpose facility Which
:leeks to assist persons with phpstcal.
Mental, developmental and.. or eotional
impairtnents to became more fmunctional
inembers of the community by providing
programs or services which may include,
but are not limited to. recreation. educa-
tion. health care. social development, In-
dependent living, phcstcalrehabilitation
and vocational rehabilitation: but e-
ciud ng ape facility. the primary nine -
lien of which ie. to provide residential
care. en a 24-hour day basis tench as a
group home or halfway house). For ex-
e mple. a ) iteitered workshcp would be a
eingte parpo::e center for the handl-
capped, and a facility providing several
cervices for the handicapped would be a
inttitipurpose center for the handicapped.
both of which are eligible for assistance.
.731 Code enforcement in delineated
^re.i.i which are deteriorated or doted -
ore ' " i!I and :n which such enforcement.
toitether with public itnprovetnetits and
e:•vicc•s t) be provided. may be expected
:o arrest the cleiliiae of the area.
14i Clearance, dernalitirm. removal,
and rehabiiit.iti )n of buildings and im-
provements. including 1 i, interior assist -
amp to alleviate harmful conditions in
•.vhieh immediate pulite art ion is needed:
lit rehabilitation of acquired properties
for gage or resale un the mint -inn of huus-
intt: •iii) dement and modernieation
but not pea• construction) of publicly
owned low-income hou'ting: and lit') II-
n.tn,ir.; rehabilitation of privately
nr,cl properties throu'"h the direct use
•.: fend in the provision of grants. loans,
loae guarantees, and interest supple-
ments v. hen provided in conne;tian with
Gther phv'sicel development activities de-
scribed in the community development
!neer:tin whl-h are eli'ihle for assistance
under this Part. Loans tor the rehabili-
t.atIan of residential property may iti-
eluiie an amount to refinance existing in-
rL.-,htednes: seettre•i by such property if
eiteh refinancing is necessary to enable
the loan recipient to atnortiee, with a
monthly payment of not more than 20
per annuli of the average monthly in-
-co:ne of the ban recipient. such loan
and ;any other indebtedness secured by
the property of the loan recipient.
• 5± Special projects directed to the re-
moval of material and architectural
barriers which restri.t the nobility and
-accessibility of elderly and handicapped
persons.
(6, Payments to housing owners for
losses of rental income incurred in hold-
ing for temporary periods housing units
to be utilized for the relocation of indi-
viduals and families displaced by pro-
gram activities assisted under this Part.
(7) Disposition. through sale, lease,
donation, or otherwise of ;any real prop-
erty acquired pursuant to this Part or its
retention for public purposes, provided
that the proceeds from any such disposi-
tion shall be cxpendec' only for activities
in accordance with tits Part,
THE BUREAU nF NATI(.NA1. AFFAIRS.
00:0600
HDR RVa83
5a23x77
(8) Provision of Mitotic services which
ate directed toward iinproving the coin=
ftttunity's public services and facilities.
including those concerned With employ,
iihent, economic development, crime Pre.,
Vention, child care, health, drug abuse.
education. welfare. or recreational needs,
and Which are directed toward coordinat=
ing public and private development pro=
grams. Such services may be provided
by State or local government.. quasi=
public. private, or nonprofit agencies
Selected by the applicant for funds pro-
vided under this Part. Public services
Must Meet the following criteria:
(I) Public services must principally
serve residents of those areas identified.
by census tracts or enumeration districts.
on the maps and in the Community De-
velopment Program submitted pursuant
to § 570.303'b) its which physical deve1-
optnent activities are to be carried out
with assistance provided tinder this Part.
Such services must he directed toward
meeting the needs of residents of such
areas and funds available under this Part
for such services may only incidentally
be used to serve other residents of the
applicant jurisdiction.
(11) The applicant's Community he-
velopment Progratn must indicate that
Within the areas referred to to paragraph
(a) (8) (I) of this section, other physical
development activities assisted under this
Part shall be carried out in a concen-
trated Manner. Such physical develop-
ment activities include only those de-
scribed in § 570.200(a) (1)-15±, (71, and
(91-• 10'. The phrase '.concentrated
manner- i.halI paean that the physical
development activities are being carried
out in a coordinated manner to serve a
common objective or purpose pursuant
to a locally developed plats or strategy in
a geographically delineated area. such as
an urban renewal area, a concentrated
code enforcement and rehabilitation area,
or similar area with a comprehensive,
physical development program for neigh-
borhood Improvement, conservation, or
preservation.
(iii t Public services assisted under this
Part must not be otherwise available. For
the purpose of this paragraph. "not be
otherwise available" paeans a new service
is being assisted or that there is a quan-
tifiable increase in the level of a service
above that currently being provided from
local sources. Also, Federal assistance in
providing or securing such services must
have been applied for and denied or not
made available pursuant to the provisions
of § 570.607.
(iv) Such services must be determined
first by the applicant to be necessary or
appropriate to support the physical de-
velopment activities identified within the
same delineated areas set forth in the
Community Development Program. The
specific determination of support for
each proposed public service in an appli-
cation for assistance under this Part is
not required to be included in the appli-
cation. Rather, having determined that
each public service to be included in an
application complies with the support
requirement, the applicant shall indicate
the appropriate relationship within the
description of short-term objectives in
the Community Development Plan Sum-
INC., WASHINGTON, D.C. 20037
1