SUBCOMMITTEE MARKUP OF H.R. 12749

Mr. DELLUMS. The subcommittee will reconvene for the purposes of marking up the following three bills, H.R. 10311, H.R. 12117, and finally, H.R. 12749.

*** The Chair further recognizes the gentleman from the District for the purposes of offering the bill, H.R. 12749.

Mr. FAUNTROY. Thank you, Mr. Chairman. I introduced H.R. 12749 to complement a measure which the District of Columbia Council has undertaken, and it does two things. First, it amends section 490 of the District of Columbia Self-Government and Governmental Reorganization Act relating to revenue bonds and other obligations.

Second, it exempts, from the congressional appropriations process, all proceeds derived from the sale of revenue bonds, notes or other obligations issued to finance the activities of any housing authority established by the District of Columbia City Council.

The District of Columbia Council Committee on Housing and Urban Development has unanimously approved and favorably reported a bill creating a District of Columbia Housing Finance Agency. With the passage of H.R. 12749, and the District of Columbia Council's Housing Finance Agency bill, the District of Columbia Government would be authorized to do a number of things. First, it would be able to make direct payments of annual principle and interest to purchasers of revenue bonds. Second, it could borrow money and issue low interest, tax-exempt revenue bonds and notes and pass on savings to stimulate the housing market for low- and moderate-income residents.

Third, it would make loans to sponsors for the financing, construction, reconstruction or rehabilitation of residential housing for eligible persons. It would assign, encumber, sell or otherwise dispose of any real estate or personal property acquired by the agency.

It would enable the Government to invest any funds not required for immediate disbursement, including funds held in reserve, in investments lawful for the District. The Government would also be entitled to consent to any modification with respect to rates of interest, time and payment of any installment of principle or interest, security or any other term of any contract, mortgage loan or contract agreement of any kind to which the agency is a part.

The agency would also be authorized to sell, at public or private sale, with or without public bidding, any mortgage or other obligation held by the agency.

The bill anticipates the raising of funds through the sale of revenue bonds. The City Council's General Counsel observed, "that investors would certainly be cautious of any proposal that subjected annual principle and interest payments to the appropriations process".

H.R. 12749 would remove the element of uncertainty from the minds of bond purchasers and make more secure the financial institutions that would pay a prime role in granting of credit to be secured by the projects financed.

H.R. 12749 will enable the District of Columbia Housing Finance Agency to generate funds from private sources to increase the supply and lower the cost of funds available for residential mortgages and construction loans and help alleviate the critical shortage of adequate housing in the District of Columbia.

At this point, Mr. Chairman, I yield to you.

Mr. DELLUMS. Thank you for your presentation with respect to the bill before us and the Chair is optimistic that the subcommittee will be able to work out language acceptable to both sides. For that purpose, the subcommittee will stand in recess for 3 minutes. [Whereupon, a short recess was taken.]

AMENDMENT TO H.R. 12749

Mr. DELLUMS. The subcommittee will come to order. The Chair now recognizes the gentleman form the District of Columbia for the purpose of offering an amendment to the bill before us, H.R. 12749.

Mr. FAUNTROY. During the course of our hearings and discussion on the Housing Finance Agency, the question has been raised as to whether the local government has the authority to issue bonds without clearance from the Congress.

It is a question which has divided opinions. Our interest here, of course, is to establish a Housing Finance Agency in order to clarify that question and to prepare the committee for further action on that question at a later time, I want to offer an amendment that would make it very clear with respect to the Housing Finance Agency, the local government does have the authority because we delegate it in this legislation.

I have the amendment at the desk and if

Mr. DELLUMS. I would appreciate it if the gentleman would read the amendment.

Mr. BRAUER. Amendment to H.R. 12749, offered by Mr. Fauntroy: Page 1, strike out line 7 and all that follows through page 2, line 5, and insert, in lieu thereof, the following: "(g)(1), The authority of the Council under this section to issue revenue bonds, notes or other obligations, to borrow money, to finance or assist in the financing of undertakings in the area of housing, will be delegated by the Council to any housing finance authority established by it. Any such entity shall exercise such authority by resolution of the entity involved and any such resolution shall not be considered to be an act of the Congress.

Paragraph (2) "The fourth sentence of section 446 shall not apply to (A) the expenditure of funds derived from the sale of any revenue bond, notes or other obligation issued under a delegation under this subsection solely to finance or assist in the financing of the housing activities of any entity established by the Council, or (B) to the payment (as to either principal or interest or both) of any such bond, note, or other obligation."

Mr. DELLUMS. Does the gentleman from the District of Columbia seek further recognition?

Mr. FAUNTROY. I do not. I move, if I am in order, the adoption of this amendment.

Mr. DELLUMS. If the gentleman would hold off for just a moment. Does the gentleman from Ohio have a comment with respect to this amendment?

AMENDMENT BY MR. WHALEN

Mr. WHALEN. I have a couple of comments I would like to make but before I do, would the gentleman from the District of Columbia accept an amendment that instead of the word "authority" that the word "agency" be inserted?

Mr. FAUNTROY. Without question, that is acceptable.

Mr. DELLUMS. Without objection, that language will be considered as part of the amendment.

ISSUES INVOLVED

Mr. WHALEN. Mr. Chairman, I would make two observations. First, as Mr. Fauntroy has pointed out, apparently there is a difference of opinion as to whether or not the District of Columbia Council does have the authority to delegate its authority to another agency to issue revenue bonds.

It does seem to me what we are doing here, by adopting this amendment, is recognizing the fact that the Council does not have that authority. I think we might soften that a bit by putting some language in the committee report stating that, despite adoption of the amendment, it still is the view of the committee that the District of Columbia Council does have that authority.

My second observation is that-this again is one of these last minute affairs. This is a very important issue and yet it was brought to the attention of the subcommittee I guess at the time the meeting occurred.

I think, in the future, if we are going to have an issue of this magnitude that it is encumbent upon the District of Columbia Council to come before us with proposed amendments sufficient time in advance to give staff an opportunity to review the situation.

I don't think any of us here could make any reasonable determination as to whether indeed the City Council has the authority to transfer or not, so I certainly hope in the future the Council takes this into consideration.

Mr. DELLUMS. I think the gentleman's comments are well taken. The Chair would simply like to point out that the question before us this morning is whether or not we shall provide the authority for the District of Columbia to establish a housing finance agency.

COUNCIL'S AUTHORITY TO DELEGATE

I think there is no question but that the need is there. It would seem to me, since the question of the right of the District Council to delegate the function is, at best, a close question, that we certainly should not encumber the District with ambiguous language or certainly an idea that could be litigated in the courts.

While I realize that this is a stopgap measure, my thought would be, if we are in favor of providing this authority for the District of Columbia to establish such an agency, that we ought to provide language in the bill that clearly establishes the notion that the Council, in this instance, does have the authority to delegate its function to another agency, namely the housing finance agency.

For those reasons, the Chair would be in support of the amendment offered by my distinguished colleague from the District, Mr. Fauntroy. I might add one other note in response to a comment made by my colleague from Ohio. It is the desire of the Chair to incorporate into the report accompanying this legislation, that it is the considered opinion of the members of this subcommittee that the Council, in fact, does have that authority at this point, given the fact that it does act as a State, as a county, and as a local government simultaneously.

Given those three roles the District Government plays simultaneously, we believe they do have that authority, however, if there is any need in the future to further clarify this matter, that this subcommittee would be more than happy to consider the question and propose appropriate legislation at a future date that would clarify, for all time, this question.

Mr. FAUNTROY. I thank the Chairman for that assurance, and it was the purpose of the amendment to be rather specific with respect to the delegation of that authority to a housing finance agency that is accomplished by this amendment.

The legislative history suggested by the gentleman from Ohio and by the Chairman, I think are most appropriate and with that, I move, Mr. Chairman.

Mr. DELLUMS. All in favor of the amendment offered by the gentleman from the District of Columbia will say "aye".

[A chorus of "ayes."]

Mr. DELLUMS. Opposed.

[ No response.]

Mr. DELLUMS. The ayes have it and the amendment is agreed to. Mr. FAUNTROY. Mr. Chairman, may I now move adoption of H.R. 12749, as amended.

VOTE ON H.R. 12749, AS AMENDED

Mr. DELLUMS. All those in favor of the bill H.R. 12749, as amended' say aye.

[A chorus of ayes.]

Mr. DELLUMS. All opposed.

[No response.]

Mr. DELLUMS. The ayes have it and the bill passes as amended. The Chair would like to direct the staff to develop whatever technical amendments are appropriate in order that we might report a clean bill to the full committee. Without objection, it is so ordered, and a ciean bill will be favorably reported to the full committee.

Is there any other business to come before the subcommittee? [No response.]

Mr. DELLUMS. If not, the subcommittee stands in adjournment.