42 U.S.C. § 1440 — State housing finance and development agencies
submitted 52 years ago by Pub. L. 93-383 to r/title-42-THE-PUBLIC-HEALTH-AND-WELFARE · 1,909 words · no verdicts yet
This section encourages State housing-finance and development agencies to finance low- and moderate-income housing, neighborhood revitalization, jobs, and land-use policies. It authorizes guarantees, interest grants, a revolving fund, technical help, labor standards, and enforcement powers.
(a) The purpose is to encourage effective State housing-finance and development* agencies that can finance or carry out activities to: (1) provide housing and related facilities through land acquisition, construction, or rehabilitation for low-, moderate-, and middle-income* people and families*; (2) revitalize slums and blighted areas and support sound neighborhood growth; (3) increase jobs for unemployed and underemployed people through industrial, manufacturing, and commercial development or redevelopment; or (4) carry out State land-use and preservation policies, including advance land acquisition when consistent with those policies. The HUD Secretary must encourage maximum private and nonprofit developer participation.
(b)(1) An agency qualifies only if the Secretary finds it fully empowered and adequately authorized at least to carry out or help carry out subsection (a)(1). (2) “State housing finance or State development agency” means a public body, agency, publicly sponsored corporation, or instrumentality of one or more States designated by the Governor or, for an interstate agency, Governors. “State” means a U.S. State, the District of Columbia, Puerto Rico, or a U.S. territory or possession. “Secretary” means the HUD Secretary. This section does not otherwise define those quoted terms.
(c)(1) The Secretary may guarantee or commit to guarantee bonds, debentures, notes, and other obligations issued by these agencies for development activities furthering subsection (a)(1) or (2). Obligations solely for subsection (a)(1) may be guaranteed only for slum or blight revitalization under title I of the 1937 Act or another program the Secretary accepts for that purpose. (2) The Secretary may grant or promise grants covering no more than one-third of interest on agency obligations financing these activities. (3) No obligation may receive this help unless its interest is federally taxable under subsection (h)(2), but a guarantee cannot be required for, or prevent, other Federal help. (4) The United States pledges its full faith and credit for principal, interest, and redemption premiums. A Secretary guarantee conclusively proves eligibility and cannot be challenged by a holder. (5) The Secretary may charge reasonable guarantee fees. (6) Congress may appropriate sums needed for interest-grant contracts; payments may not exceed $50 million yearly before July 1, 1975, and that maximum increases by $60 million on that date. Guaranteed outstanding principal may not exceed $500 million at one time.
(d) The Secretary must reasonably ensure guaranteed obligations are issued only to approved or qualifying investors, or publicly offered with approved underwriting; bear a satisfactory interest rate; contain satisfactory repayment and maturity terms; and protect U.S. security interests through suitable subrogation, lien, tax, cost-certification, escrow, trusteeship, and related provisions.
(e)(1) The Secretary may establish a revolving fund for timely guarantee liabilities and Treasury obligations. It consists of fees, recoveries under security and subrogation rights, repayments and interest and other guarantee receipts, Treasury-obligation proceeds, and appropriated sums. Money not currently needed must be held, deposited, or invested in U.S. obligations or lawful fiduciary, trust, or public-fund investments. (2) The Secretary may issue enough obligations to the Treasury to perform guarantee functions, with maturities and interest set by the Treasury Secretary. The Treasury Secretary must buy them using public-debt transactions funded by securities under 31 U.S.C. chapter 31, whose authorized purposes include these purchases. (3) Despite other property laws, the Secretary may pay from the fund all expenses of acquiring, handling, improving, or disposing of property obtained through security, subrogation, or other recoveries.
(f) The Secretary may directly or through contracts provide technical help to State agencies planning and carrying out development activities furthering this section.
(g) Contractors and subcontractors must pay laborers and mechanics prevailing local wages determined by the Labor Secretary under 40 U.S.C. §§ 3141–3144, 3146, and 3147. This applies to residential construction only when designed for eight or more families. Assistance cannot be provided without adequate assurance that the standards will be maintained. The Labor Secretary has the authority and functions under Reorganization Plan No. 14 of 1950 and 40 U.S.C. § 3145.
(h)(1) In addition to other authority, the Secretary may, before or after default, contract to extinguish on default an agency’s redemption, equitable, legal, or other interest in a mortgage, deed, trust, or other instrument held for U.S. security; foreclose or bring actions to enforce rights; bid for and buy guaranteed-property interests at foreclosure or other sale; and after acquisition complete, administer, remodel, convert, dispose of, lease, or otherwise deal with the property. The Secretary may also pursue to final collection, by compromise or otherwise, claims acquired through security, subrogation, or other rights. (2) Interest paid to a purchaser or successor on an obligation issued by an agency that elected this assistance must be included in gross income under title 26 chapter 1.
It is the purpose of this section to encourage the formation and effective operation* of State housing finance agencies and State development* agencies which have authority to finance, to assist in carrying out, or to carry out activities designed to (1) provide housing and related facilities through land acquisition, construction, or rehabilitation, for persons and families* of low, moderate, and middle income*, (2) promote the sound growth and development of neighborhoods through the revitalization of slum and blighted areas, (3) increase and improve employment opportunities for the unemployed and underemployed through the development and redevelopment of industrial, manufacturing, and commercial facilities, or (4) implement the development aspects of State land use and preservation policies, including the advance acquisition of land where it is consistent with such policies. The Secretary of Housing and Urban Development shall encourage maximum participation by private and nonprofit developers in activities assisted under this section.
A State housing finance or State development agency is eligible for assistance under this section only if the Secretary determines that it is fully empowered and has adequate authority to at least carry out or assist in carrying out the purposes specified in clause (1) of subsection (a).
For the purpose of this section—
the term “State housing finance or State development agency” means any public body or agency, publicly sponsored corporation, or instrumentality of one or more States which is designated by the Governor (or Governors in the case of an interstate development agency) for purposes of this section;
the term “State” means any State of the United States, the District of Columbia, the Commonwealth of Puerto Rico, or any territory or possession of the United States; and
the term “Secretary” means the Secretary of Housing and Urban Development.
The Secretary is authorized to guarantee, and enter into commitments to guarantee, the bonds, debentures, notes, and other obligations issued by State housing finance or State development agencies to finance development activities as determined by him to be in furtherance of the purpose of clause (1) or (2) of subsection (a), except that obligations issued to finance activities solely in furtherance of the purpose of clause (1) of subsection (a) may be guaranteed only if the activities are in connection with the revitalization of slum or blighted areas under title I of this Act [42 U.S.C. 5301 et seq.] or under any other program determined to be acceptable by the Secretary for this purpose.
The Secretary is authorized to make, and to contract to make, grants to or on behalf of a State housing finance or State development agency to cover not to exceed 33⅓ per centum of the interest payable on bonds, debentures, notes, and other obligations issued by such agency to finance development activities in furtherance of the purposes of this section.
No obligation shall be guaranteed or otherwise assisted under this section unless the interest income thereon is subject to Federal taxation as provided in subsection (h)(2), except that use of guarantees provided for in this subsection shall not be made a condition to nor preclude receipt of any other Federal assistance.
The full faith and credit of the United States is pledged to the payment of all guarantees made under this section with respect to principal, interest, and any redemption premiums. Any such guarantee made by the Secretary shall be conclusive evidence of the eligibility of the obligation involved for such guarantee, and the validity of any guarantee so made shall be incontestable in the hands of a holder of the guaranteed obligation.
The Secretary is authorized to establish and collect such fees and charges for and in connection with guarantees made under this section as he considers reasonable.
There are authorized to be appropriated such sums as may be necessary to make payments as provided for in contracts entered into by the Secretary under paragraph (2) of this subsection, and payments pursuant to such contracts shall not exceed $50,000,000 per annum prior to July 1, 1975, which maximum dollar amount shall be increased by $60,000,000 on July 1, 1975. The aggregate principal amount of the obligations which may be guaranteed under this section and outstanding at any one time shall not exceed $500,000,000.
The Secretary shall take such steps as he considers reasonable to assure that bonds, debentures, notes, and other obligations which are guaranteed under subsection (c) will—
be issued only to investors approved by, or meeting requirements prescribed by, the Secretary, or, if an offering to the public is contemplated, be underwritten upon terms and conditions approved by the Secretary;
bear interest at a rate satisfactory to the Secretary;
contain or be subject to repayment, maturity, and other provisions satisfactory to the Secretary; and
contain or be subject to provisions with respect to the protection of the security interests of the United States, including any provisions deemed appropriate by the Secretary relating to subrogation, liens, and releases of liens, payment of taxes, cost certification procedures, escrow or trusteeship requirements, or other matters.
The Secretary is authorized to establish a revolving fund to provide for the timely payment of any liabilities incurred as a result of guarantees under subsection (c) and for the payment of obligations issued to the Secretary of the Treasury under paragraph (2) of this subsection. Such revolving fund shall be comprised of (A) receipts from fees and charges; (B) recoveries under security, subrogation, and other rights; (C) repayments, interest income, and any other receipts obtained in connection with guarantees made under subsection (c); (D) proceeds of the obligations issued to the Secretary of the Treasury pursuant to paragraph (2) of this subsection; and (E) such sums, which are hereby authorized to be appropriated, as may be required for such purposes. Money in the revolving fund not currently needed for the purpose of this section shall be kept on hand or on deposit, or invested in obligations of the United States or guaranteed thereby, or in obligations, participations, or other instruments which are lawful investments for fiduciary, trust, or public funds.
The Secretary may issue obligations to the Secretary of the Treasury in an amount sufficient to enable the Secretary to carry out his functions with respect to the guarantees authorized by subsection (c). The obligations issued under this paragraph shall have such maturities and bear such rate or rates of interest as shall be determined by the Secretary of the Treasury. The Secretary of the Treasury is authorized and directed to purchase any obligations so issued, and for that purpose he is authorized to use a public debt transaction the proceeds from the sale of any securities issued under chapter 31 of title 31, and the purposes for which securities may be issued under such chapter are extended to include purchases of the obligations hereunder.
Notwithstanding any other provision of law relating to the acquisition, handling, improvement, or disposal of real and other property by the United States, the Secretary shall have power, for the protection of the interests of the fund authorized under this subsection, to pay out of such fund all expenses or charges in connection with the acquisition, handling, improvement, or disposal of any property, real or personal, acquired by him as a result of recoveries under security, subrogation, or other rights.
The Secretary is authorized to provide, either directly or by contract or other arrangements, technical assistance to State housing finance or State development agencies to assist them in connection with planning and carrying out development activities in furtherance of the purpose of this section.
All laborers and mechanics employed by contractors or subcontractors in housing or development activities assisted under this section shall be paid wages at rates not less than those prevailing on similar work in the locality as determined by the Secretary of Labor in accordance with sections 3141–3144, 3146, and 3147 of title 40: Provided, That this section shall apply to the construction of residential property only if such property is designed for residential use for eight or more families. No assistance shall be extended under this section with respect to any development activities without first obtaining adequate assurance that these labor standards will be maintained upon the work involved in such activities. The Secretary of Labor shall have, with respect to the labor standards specified in this subsection, the authority and functions set forth in Reorganization Plan Numbered 14 of 1950 (64 Stat. 1267), and section 3145 of title 40.
In the performance of, and with respect to, the functions, powers, and duties vested in him by this section, the Secretary, in addition to any authority otherwise vested to him, shall—
have the power, notwithstanding any other provision of law, in connection with any guarantee under this section, whether before or after default, to provide by contract for the extinguishment upon default of any redemption, equitable, legal, or other right, title, or interest of a State housing finance or State development agency in any mortgage, deed, trust, or other instrument held by or on behalf of the Secretary for the protection of the security interests of the United States; and
have the power to foreclose on any property or commence any action to protect or enforce any right conferred upon him by law, contract, or other agreement, and bid for and purchase at any foreclosure or other sale any property in connection with which he has provided a guarantee pursuant to this section. In the event of any such acquisition, the Secretary may, notwithstanding any other provision of law relating to the acquisition, handling, or disposal of real property by the United States, complete, administer, remodel and convert, dispose of, lease, and otherwise deal with, such property. Notwithstanding any other provision of law, the Secretary shall also have power to pursue to final collection by way of compromise or otherwise all claims acquired by him in connection with any security, subrogation, or other rights obtained by him in administering this section.
With respect to any obligation issued by a State housing finance or State development agency for which the issuer has elected to receive the benefits of the assistance provided under this section, the interest paid on such obligation and received by the purchaser thereof (or his successor in interest) shall be included in gross income for the purposes of chapter 1 of title 26.
Source credit: (Pub. L. 93–383, title VIII, § 802(a)–(h), Aug. 22, 1974, 88 Stat. 722–724; Pub. L. 98–479, title II, § 203(l)(4), Oct. 17, 1984, 98 Stat. 2231.)
- 1974Enacted · Pub. L. 93-383 · 88 Stat. 722
- 1984Amended · Pub. L. 98-479 · 98 Stat. 2231
A history note hasn’t been published yet. The record shows enactment by Pub. L. 93-383 on 1974-08-22.
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