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Page:United States Statutes at Large Volume 82.djvu/582

 540 68 Stat. 620. 12 USC 1723a.

FNMA, exemption from taxation.

Officers and employees.

Post, p. 546. 80 Stat. 564. 5 USC 83318348.

PUBLIC LAW 90-448-AUG. 1, 1968

[82 STAT.

(z) Section 309(a) of such Act is amended— (1) by striking out "The Association" and inserting in lieu thereof "Each of the bodies corporate named in section 302(a)(2)"; (2) by striking out "by its board of directors, to adopt, amend, and repeal bylaws governing the performance of the powers and duties granted to or imposed upon it by law;"; (3) by striking out "conduct its business" and inserting in lieu thereof "conduct its business without regard to any qualification or similar statute"; (4) by striking out "the Association may deem" and inserting in lieu thereof "it may deem"; and (5) by striking out "the purposes of the Association" and inserting in lieu thereof "its purposes". (aa) Section 309(c) of such Act is amended— (1) by striking out " (1) "; (2) by striking out "The Association" and inserting in lieu thereof " (1) The Association"; (3) by striking out ", and (2) the Association shall, with respect to its secondary market operations under section 304 after the cutoff date referred to in section 303(d) of this title, pay annually to the Secretary of the Treasury, for covering into miscellaneous receipts, an amount equivalent to the amount of Federal income taxes for which it would be subject if it were not exempt from such taxes with respect to such secondary market operations"; and (4) by adding at the end thereof the following new paragraph: "(2) The corporation, including its franchise, capital, reserves, surplus, mortgages or other security holdings, and income, shall be exempt from all taxation now or hereafter imposed by any State, territory, possession. Commonwealth, or dependency of the United States, or by the District of Columbia, or by any county, municipality, or local taxing authority, except that any real property of the corporation shall be subject to State, territorial, county, municipal, or local taxation to the same extent as other real property is taxed." (bb) Section 309(d) of such Act is amended— (1) by inserting " (1) " immediately following " (d) "; (2) by striking out "Chairman of the Board" and inserting in lieu thereof "Secretary of Housing and Urban Development"; (3) by striking out "agents," and inserting in lieu thereof "agents of the Association,"; and (4) by adding at the end thereof the following new paragraph: " (2) The board of directors of the corporation shall have the power to select and appoint or employ such officers, attorneys, employees, and agents, to vest them with such powers and duties, and to fix and to cause the corporation to pay such compensation to them for their services, as it may determine; and any such action shall be without regard to the Federal civil service and classification laws. Appointments, promotions, and separations so made shall be based on merit and efficiency, and no political tests or qualifications shall be permitted or given consideration. Each officer and employee of the corporation who is employed by the corporation prior to the termination of the transitional period referred to in section 810(b) of the Housing and Urban Development Act of 1968 and who on the day previous to the beginning of such employment will have been subject to the civil service retirement law (subch. I l l of ch. 83 of title 5, United States Code) shall, so lon^ as his employment by the corporation continues without a break in continuity of service, continue to be subject to such law; and

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for the purpose of such law his employment by the corporation without a break in continuity of service shall be deemed to be employment by the Government of the Ignited States. The corporation shall contribute to the Civil Service Retirement and Disability Fund a sum as provided by section 8334(a) of title 5, Ignited States Code, except so Stat. seg. that such sum shall be determined by applying to the total basic pav (as defined in 5 U.S.C. 8331(3) and except as hereinafter provided) ^^ s'^'- -'64. paid to the employees of the corporation who are covered by the civil service retirement law, the per centum rate determined annually by the United States Civil Service Commission to be the excess of the total normal cost per centum rate of the civil service retirement system over the employee deduction rate specified in section 8334(a) of title 5, United States Code. The corporation shall also pay into the Civil Service Retirement and Disability Fund such portion of the cost of administration of the fund as is determined by the United States Civil Service Commission to be attributable to its employees. Notwithstanding the foregoing provisions, there shall not be considered for the purposes of the civil service retirement law that portion of the basic pay in any one year of any officer or employee of the corporation which exceeds the basic pay provided for in section 5312 of title 5, United States Code, on the last day of such year. Except as provided in this 8° ^tat. 46o. subsection, the corporation shall not be subject to the provisions of title 5, United States Code." ' so Stat. 378. (cc) Section 309(e) of such Act is amended— es Stat. 620. (1) by striking out "body corporate created by section 302 and 12 USC 1723a. inserting in lieu thereof "bodies corporate named in section 302(a)(2)"; (2) by inserting ", 'Government National Mortgage Association'," immediately following " 'Federal National Mortgage Association' "; and (3) by striking out the second sentence and inserting in lieu thereof the following: "Violations of the foregoing sentence may be enjoined by any court of general jurisdiction at the suit of the proper body corporate. I n any such suit, the plaintiff may recover any actual damages flowing from such violation, and, in addition, shall be entitled to punitive damages (regardless of the existence or nonexistence of actual damages) of not exceeding $100 for each day during which such violation is committed or repeated." (dd) Section 309(g) of such Act is amended to read as follows: y.Ztt"^!,!^!^^"^^ banks, custodians. " (g) The Federal Reserve banks are authorized and directed to act as depositaries, custodians, and fiscal agents for each of the bodies corporate named in section 302(a)(2), for its own account or as fiduciary, Ante, p. 536. and such banks shall be reimbursed for such services in such manner as may be agreed upon; and each of such bodies corporate may itself act in such capacities, for its own account or as fiduciary, and for the account of others." (ee) Section 309 of such Act is amended by adding at the end thereof the following new subsection: " (h) The Secretary of Housing and Urban Development shall have general regulatory power over the Federal National Mortgage Association and shall make such rules and regulations as shall be necessary and proper to insure that the purposes of this title are accomplished. No stock, obligation, security, or other instrument shall be issued by the corporation without the prior approval of the Secretary. The Secretary may require that a reasonable portion of the corporation's mortgage purchases be related to the national goal of providing adequate housing for low and moderate income families, but with reasonable economic return to the corporation. The Secretary may examine and audit the books and financial transactions of the corporation, and

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license: Creative Commons - Attribution Share-Alike - https://creativecommons.org/licenses/by-sa/4.0/


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Page:United States Statutes at Large Volume 82.djvu/584

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68 Stat. 622.

PUBLIC LAW 90-448-AUG. 1, 1968

[82 STAT.

he may require the corporation to make such reports on its activities as he deems advisable." (ff) Section 311 of such Act is amended— (1) by striking out "the Association" and inserting in heu thereof "either of the bodies corporate named in section 302(a)(2) "; and (2) by adding at the end thereof the following: "All stock, obligations, securities, participations, or other instruments issued pursuant to this title shall, to the same extent as securities which are direct obligations of or obligations guaranteed as to principal or interest by the United States, be deemed to be exempt securities within the meaning of laws administered by the Securities and Exchange Commission; but all such issuances shall be made only with the approval of the Secretary of Housing atid Urban Development." PARTICIPATIONS

soltlTieT' 12 USC 1717.

^^^^^- ^^^''^^.Section 302(c)(5) of the National Housing Act is amended by inserting at the end thereof the following: "In the event that the insufficiency required by the trustee is on account of principal maturities of outstanding beneficial interests or participations authorized to be issued pursuant to paragraph (4) of this subsection, or pursuant hereto, the trustee is authorized to elect to issue additional beneficial interests or participations for refinancing purposes in lieu of requiring any trustor or trustors to make payments to the trustee from appropriated funds or other sources. Each such issue of beneficial interests or participations shall be in an amount determined by the trustee but not in excess of the aggregate amount which the trustee would otherwise require the trustor or trustors to pay from appropriated funds or other sources, and may be issued without regard to the provisions of paragraph (4) of this subsection. All refinancing issues of beneficial interests or participations shall be deemed to have been issued pursuant to the authority contained in the appropriation Act or Acts under which the beneficial interests or participations were originally issued." MORTGAGE-BACKED

12 u*sc f7^9

12 USC 1721.

SECURITIES

^^^* ^^^' ^^^ Section 304 of the National Housing Act is amended by adding at the end thereof the following new subsection: " (d) To provide a greater degree of liquidity to the mortgage investment market and an additional means of financing its operations under this section, the corporation is authorized to set aside any mortgages held by it under this section, and, upon approval of the Secretary of the Treasury, to issue and sell securities based upon the mortgages so set aside. Securities issued under this subsection may be in the form of debt obligations or trust certificates of beneficial interest, or both. Securities issued under this subsection shall have such maturities and bear such rate or rates of interest as may be determined by the corporation with the approval of the Secretary of the Treasury. Securities issued by the corporation under this subsection shall, to the same extent as securities which are direct obligations of or obligations guaranteed as to principal and interest by the United States, be deemed to be exempt securities within the meaning of laws administered by the Securities and Exchange Commission. Mortgages set aside pursuant to this subsection shall at all times be adequate to enable the corporation to make timely principal and interest payments on the securities issued and sold pursuant to this subsection." (I3) Section 306 of such Act is amended by adding at the end thereof the following new subsection:

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 82 STAT. ]

PUBLIC LAW 90-448-AUG. 1, 1968

" (g) The Association is authorized, upon such terms and conditions jis it may deem appropriate, to guarantee the timely payment of principal of and interest on such trust certificates or other securities as shall (1) be issued by the corporation under section 304(d), or by any other issuer approved for the purposes of this subsection by the Association, and (2) be based on and backed by a trust or pool composed of mortgages which are insured under the National Housing Act or title V of the Housing Act of 1949, or which are insured or guaranteed under the Servicemen's Readjustment Act of 1944 or chapter 37 of title 38, United States Code. The Association shall collect from the issuer a reasonable fee for any guaranty under this subsection and shall make such charges as it may determine to he reasonable for the analysis of any trust or other security arrangement proposed by the issuer. I n the event the issuer is unable to make any payment of principal of or interest on any security guaranteed under this subsection, the Association shall make such payment as and when due in cash, and thereupon shall be subrogated fully to the rights satisfied by such payment. Any Federal, State, or other law to the contrary notwithstanding, the Association is hereby empowered, in connection with any guaranty under this subsection, whether before or after any default, to provide by contract with the issuer for the extinguishment, upon default by the issuer, of any redemption, equitable, legal, or other right, title, or interest of the issuer in any mortgage or mortgages constituting the trust or jx)ol against which the guaranteed securities are issued; and with respect to any issue of guaranteed securities, in the event of default and pursuant otherwise to the terms of the contract, the mortgages that constitute such trust or pool shall become the absolute propert}^ of the Association subject only to the unsatisfied rights of the holders of the securities based on and backed by such trust or pool. The full faith and credit of the United States is pledged to the payment of all amounts which may be required to be paid under any guaranty under this subsection. There shall be excluded from the total amounts set forth in subsection (c) the amounts of any mortgages acquired by the Association as a result of its operations under this subsection." (c) Section 5136 of the Revised Statutes (12 U.S.C. 24) is amended by adding at the end thereof the following: "Ninth. To issue and sell securities which are guaranteed pursuant to section 306(g) of the National Housing Act." (d) The first proviso of section 21(aj (1) of the Banking Act of 1933 (12 U.S.C. 3 7 8 (a)(1)) is amended by inserting ", or issuing securities," immediately following "investment securities". (e) Section 5(c) of the Home Owners' Loan Act of 1933 (12 U.S.C. 1464(c)) is amended by adding at the end thereof a new paragraph as follows: "Any such association may issue and sell securities which are guaranteed pursuant to section 306(g) of the National Housing Act."

543

^"'e- P- 542. ^8 Stat. m e. and note. 63 Stat. 432. 1490."^^ ^^^^ , ss Stat. 284; ^^7f*|tat^Y2^63 38 USC isoi.

^g^l^^JJy^'^' '^^ s*^* ^32.

SUBORDINATED AND (ONVERTIBLE OBLIGATIONS

SEC. 805. Section 304 of the National Housing Act is amended by adding thereto (after subsection (d) as added by section 804 of this Act) the following new subsection: "(e) For the purposes of this section, the corporation is authorized to issue, upon the approval of the Secretary of the Treasury, obligations which are subordinated to any or all other obligations of the corporation, including subsequent obligations. The obligations issued under this subsection shall have such maturities and bear such rate or rates of interest as may be determined by the corporation with the approvaf of the Secretary of the Treasury and may be made redeem-

^^ Stat. eis. ^^ "^^ ^^^^'

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1,JL968

\&2 SmL

able at the option of the corporation before maturity in such manner as may be stipulated in such obligations. Any of such obligations may be made convertible into shares of common stock in such manner, at such price or prices, and at such time or times as may be stipulated therein. The total principal amount of such subordinated obligations which may be outstanding at any one time shall not exceed two times the sum of (1) the capital of the corporation represented by its outstanding common stock and (2) its surplus and undistributed earnings at such time. The outstanding total principal amount of such obligations, which are entirely subordinated to the obligations of the corporation issued or to be issued under subsection (b), shall be deemed to be capital of the corporation for the purpose of determining the aggregate amount of obligations issued under subsection (b) which may be outstanding at any one time. Obligations issued by the corporation under this subsection shall, to the same extent as securities which are direct obligations of or obligations guaranteed as to.principal or interest by the United States, be deemed to be exempt securities within the meaning of laws administered by the Securities and Exchange Commission. The corporation shall insert appropriate language in all of its obligations issued under this subsection clearly indicating that such obligations, together with the interest thereon, are not guaranteed by the United States and do not constitute a debt or obligation of the United States or of any agency or instrumentality thereof other than the corporation. The corporation is authorized to purchase in the open market any of its obligations outstanding under this subsection at any time and at any price." SPECIAL ASSISTANCE

79^stat°493^^' 12 USC 1720.

AUTHORIZATION

^^^- ^^^- Section 305(c) of the National Housing Act is amended— (1) by striking out "and" after "July 1, 1967,"; and (2) by striking out the period and inserting in lieu thereof ", and by $500,000,000 on July 1, 1969." AMENDMENTS TO OTHER

u us^c f72^i note. jJltVt^^'^' 42 USC 1452b. 79 Stat. 669. 42 USC 3534.

^2^^sc 31 u^c 846^

73sta^482.

LAWS

^^^- ^P"^- (^) Section 306(b) of the Housing Act of 1959 is amended by striking out "Federal National Mortgage Association pursuant" and inserting in lieu thereof "Government National Mortgage Association pursuant". (^) Section 312(d) of the Housing Act of 1964 is amended by striking out "Federal" and inserting in lieu thereof "Government". (c) Section 5(b) of the Department of Housing and Urban Development Act is amended— (1) by striking out "The Federal" and inserting in lieu thereof "The Government"; and (2) by striking out ", and the position of the President of said Association is hereby allocated among the positions referred to in section 7(c) hereof". (^^ Section 7(b) of the Department of Housing and Urban Development Act is repealed. (^) Section 101 of the Government Corporation Control Act is amended by striking out "Federal National Mortgage Association" and inserting in lieu thereof "Government National Mortgage (f) Section 13(4)(F) of the Public Buildings Act of 1959 is amended by striking out "Federal" and inserting in lieu thereof "Government".

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545

(g) Section '6 (b) of the Participation Sales Act of 1966 is amended »« sta^ le?. by striking out "secondary market operations carried on by the Fed- note. eral" and inserting in lieu thereof "the Government". (h) Section 1820(e) of title 38, United States Code, is amended by 78 Stat. soo. striking out "Federal National" in three places and inserting in lieu thereof, in each such place, "Government National". (i) Section 709 of title 18, United States Code, is amended by strik- es Stat. 609. ing out "Federal National Mortgage Association" each place it appears and inserting in lieu thereof, in each such place, "Government National Mortgage Association". (j) Section 5136 of the Revised Statutes is amended by inserting 12 USC 24. "or the Government National Mortgage Association" immediately following "Federal National Mortgage Association". (k) Section 11(h) of the Federal Home Ix)an Bank Act is amended 6o'*star622^^' by inserting "or the Government National Mortgage Association, in 12 USC 1431. the stock of the Federal National Mortgage Association" immediately following "Federal National Mortgage Association". (1) Section 16 of the Federal Home Tx>an Bank Act is amended by inserting "or the Government National Mortgage Association" immediately following "Federal National Mortgage Association". (m) Section 5(c) of the Home Owners' I ^ a n Act of 1933 is amended "^^ ^ta^ 132. by inserting "or the Government National Mortgage Association," immediately following "Federal National Mortgage Association" and by inserting "or the stock of the Federal National Mortgage Association" immediately after "any other agency of the United States". (n) Section 8(8)(E) of the Federal Credit Union Act is amended g/gtaj^n""' by inserting "or the Government National Mortgage Association" 12 USC 1757. immediately following "Federal National Mortgage Association". EFFECTIVE DATE

SEC. 808. The amendments made by this title shall be effective from and after a date, no more than one hundred and twenty days following the date of enactment of this Act, as established by the Secretary of Housing and Urban Development. Notice of the establishment of such effective date shall be published in the Federal Register at least thirty days prior thereto.

P u b l i c a t i o n in Federal Register.

SAVINGS PROVISIONS

SEC. 809. (a) No cause of action by or against the Federal National Mortgage Association existing prior to the effective date established pursuant to section 808 shall abate by reason of the enactment of this title. Any such cause of action may thereafter be asserted by or against the appropriate corporate body named in section 302(a)(2) of the National Housing Act. (b) No suit, action, or other proceeding commenced by or against the Federal National Mortgage Association, or any officer thereof in his official capacity, prior to the effective date established pursuant to section 808 shall abate by reason of the enactment of this title. A court may at any time thereafter during the pendency of any such litigation, on its own motion or that of any party, order that the litigation may be maintained by or against the appropriate corporate body named in section 302(a)(2) of the National Housing Act or the appropriate corresponding officer thereof. TRANSITIONAL

PROVISIONS

SEC. 810. (a) On the effective date established pursuant to section 808 of this Act, each share of outstanding nonvoting common stock, with a par value of $100 per share, of the Federal National Mortgage

^"'e- p- 536.

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Ante, p. 539. FNMA, Board of Directors. Transitional period.

59 Stat. 597. 31 USC 841 note. GAO audit.

PUBLIC LAW 90-448-:AUG. 1, 1968

[82 STAT-

Association shall be changed into and shall become one share of voting common stock, without par value, of such corporation. (b)(1) The provisions of section 308(b) of the National Housing Act (as added by section 802(y)(7) of this Act) shall be applicable only to the extent that its provisions do not conflict with this subsection. (2) For a transitional period after the effective date established pursuant to section 808 of this Act, the board of directors of the Federal National Mortgage Association shall consist of nine persons. For a term expiring on the date of the first annual meeting of the corporation's stockholders, all members of the board shall be appointed by the Secretary of Housing and Urban Development. For a term beginning on such date, seven members of the board shall be appointed by the Secretary, and two members shall be elected by the common stockholdei^s. For subsequent terms beginning prior to the termination of the transitional period, five members shall be appointed by the Secretary, and four members shall be elected by the common stockholders. For each term beginning prior to the termination of the transitional period, the Secretary shall appoint as a member of the board the president of the corporation. During the transitional period, the president of the corporation shall be appointed by the President, by and with the advice and consent of the Senate, and may be removed from office by the President for good cause. (3) The transitional period referred to in paragraph (2) shall come to an end at such time as the board of directors shall find, with the approval of the Secretary, that not less than one-third of the corporation's common stock is owned by persons or institutions in the mortgage lending, homebuilding, real estate, or related businesses; but in no event shall it end sooner than May 1, 1970, or later than May 1, 1973. (c) From the effective date established pursuant to section 808 and until the retirement of the last of the outstanding shares of its preferred stock, the Federal National Mortgage Association shall be deemed to be a wholly owned corporation for the purposes of the Government Corporation Control Act. Notwithstanding the foregoing provisions of this paragraph, the financial transactions of the Federal National Mortgage Association shall continue to be subject to audit by the General Accounting Office for such period as there may be outstanding obligations of the Federal National Mortgage Association which are guaranteed as to principal or interest by the Government National Mortgage Association. (d) Those persons who are the officers and employees of the Federal National Mortgage Association immediately prior to the effective date established pursuant to section 808 shall become the officers and employees of the Government National Mortgage Association on such date. The Federal National Mortgage Association and the Government National Mortgage Association shall provide by contract for the conditions and methods under which and by which the Federal National Mortgage Association during the transitional period may employ those individuals who are employees of the Government National Mortgage Association on such effective date; and may provide by contract for the operation by either of such corporations of any of the functions of the other. The Secretary of Housing and Urban Development shall make every reasonable effort to place in other comparable Federal positions any individuals who are career or career-conditional employees of the Government National Mortgage Association on such effective date and who are subsequently during the transitional period neither employed by the Federal National Mortgage Association nor retained by the Government National Mortgage Association.

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 82 STAT. ]

PUBLIC LAW 90-448-AUG. 1, 1968

TITLE IX—NATIONAL HOUSING PARTNERSHIPS STATEMENT OF PURPOSE

SEC. 90L The Congress finds that the vplume of housing being produced for families and individuals of low or moderate income must be increased to meet the national goal of a decent home and a suitable living environment for every American family, and declares that it is the policy of the United States to encourage the widest possible participation by private enterprise in the provision of housing for low or moderate income families. The Congress has therefore determined that one or more private organizations should be created to encourage maximum participation by private investors in programs and projects to provide low and moderate income housing. CREATION OF CORPORATIONS

SEC. 902. (a) There is hereby authorized to be created a private corporation for profit (hereinafter in this title referred to as the "corporation"). The corporation will not be an agency or establishment of the United States Government. The corporation shall be subject to the provisions of this title and, to the extent consistent with this title, to the District of Columbia Business Corporation Act (D.C. Code, sec. 29-901 etseq.). .... es Stat. 179. (b) Whenever the President finds it in the national interest to do so, he may cause the creation of an additional corporation or additional corporations to carry out the purposes of this title. All the provisions of this title shall thereupon become applicable to each such corporation, and to the limited partnership formed by it pursuant to section 907. (c) Nothing in this title shall be construed to preclude private persons from creating other corporations and organizing other partnerships, joint ventures, or associations for the purposes set forth in this 1 itle as the purposes of the corporation and the partnership described in section 907. PROCESS OF ORGANIZATION

SEC. 908. (a) The President of the United States shall appoint, by and with the advice and consent of the Senate, incorporators of the corporation, one of whom shall be designated by the President to serve as chairman. The incorporators shall serve as the initial board of directors until the first annual meeting of stockholders or until their successors are elected and have qualified. (b) The incorporators shall take whatever actions are necessary or appropriate to establish the corporation, including the filing of articles of incorporation as approved by the President. (c) The incorporators shall also arrange for an initial offering of shares of stock in the corporation and of interests in the partnership described in section 907 of this title. If the incorporators deem it advisable in order to carry out the purposes of this title, the initial offering may be made upon terms which require the purchase of other securi ties of the corporation or of interests in such partnership. DIRECTORS

SEC. 904. The corporation shall have a board of directors (hereinafter in this section referred to as the "board"), consisting of fifteen members. Three members of the board shall be appointed by the President of the United States, by and with the advice and consent of the Senate, effective on the date on which the other members are

547

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[82 STAT.

elected, and for terms of three years or until their successors have been appointed and have qualified, except that the first three members of the board so appointed shall continue in office for terms of one, two, and three years, respectively, and any memlber so appointed to fill a vacancy shall be appointed only for the unexpired term of the director whom he succeeds. Twelve members of the board shall be elected by the stockholders. FINANCING THE CORPORATION

SEC. 905. The corporation shall have the power to create and issue the number of shares stated in its articles of incorporation. Such shares may be divided into one or more classes, any or all of which classes may consist of shares with par value or shares without par value, with such designations, preferences, voting powers, and special or relative rights and such limitations, restrictions, or qualifications thereof as shall be stated in the articles of incorporation. The articles of incorporation may limit or deny the voting power of the shares of any class. PURPOSES AND POWERS OF THE CORPORATION

SEC. 906. (a) I n order to achieve the objectives and carry out the purposes of this title, the corporation is authorized to— (1) plan, initiate, and carry out, pursuant to Federal programs or otherwise, the building or rehabilitation of housing and related facilities primarily for the benefit of families and individuals of low or moderate income; (2) buy, own, manage, lease, or otherwise acquire or dispose of property in connection with the developments, projects, or undertakings referred to in paragraph (1); and (3) provide such funds as may be necessary to accomplish the developments, projects, or undertakings referred to m paragraph (1). (b) Included in the activities authorized to the corporation for the accomplishment of the purposes indicated in subsection (a) of this action are, among^ others not specifically named— (1) to enter nito partnerships, limited partnerships, joint ventures, and other associations with individuals, corporations, and private and governmental agencies, organizations, and institutions; (2) to act as manager or general partner of any such partnership, venture, or association; Research con (3) to conduct or contract for research and studies related to tracts. the development, demonstration, and evaluation of improved techniques and methods of constructing, rehabilitating, and maintaining housing; (4) to provide technical assistance to nonprofit corporations, limited dividend corporations, and others with respect to the planning, financing, construction, rehabilitation, maintenance, and management of housing for low and moderate income families and individuals; Loans or grants. (5) ^Q make loans or gTauts including grants of interests in housing and related facilities, to nonprofit corporations, limited dividend corporations, and others, in carrying out its activities under subsection (a) of this section; and (6) to hire or accept the voluntary services of consultants, experts, advisory boards, and panels to aid the corporation in carrying out the purposes of this title. (c) To carry out the foregoing purposes and engage in the foregoing activities, the corporation shall have the usual powers conferred

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upon a stock corporation by the District of Columbia Business Corporation Act. (d) Nothing in this title shall have the effect of waiving or otherwise affecting the applicability of the provisions of the Davis-Bacon Act (40 r. S. C. 267a—276a-5), or any other law rec^uiring compliance 49 Stat. lou; with labor standards, in the case of any construction to which such ^* ^'^*' ^^*' provisions would otherwise apply. NATIONAL

HOUSING

PARTNERSHIP

SEC. 907. (a) The corporation is authorized to arrange for the formation, as a separate organization, of a limited partnership (hereinafter in this title referred to as the "partnership") under the District of Columbia Uniform Limited Partnership Act (D.C. Code, sec. 41-401 et seq.) for the purpose of engaging in any of the activities authorized for the corporation under section 906 of this title, and to enter into a partnership agreement governing the affairs of such limited partnership. (b) The partnership shall be subject to the provisions, to the extent consistent with this title, of (1) the District of Columbia Uniform Limited Partnership Act and (2) those provisions of the District of Columbia Uniform Partnership Act (D.C. Code, sec. 41-301 et seq.) made applicable by section 6(2) of that Act (D.C. Code, sec. 4 1 305(2)). Notwithstanding any inconsistency between the provisions of such Acts, or of any other law, and the provisions of this section, the partnership organized pursuant to this section shall be deemed to have the legal status of a limited partnership. (c) The partnership is authorized to enter into partnerships, limited partnerships, or joint ventures organized under applicable State or local law for the purpose of engaging in low and moderate income housing developments, projects, or undertakings in particular localities. (d) The corporation shall be the general partner in the partnership. The capital of the partnership and the contributions of the partners shall be in such amounts and at such times as are set forth in or pursuant to the partnership agreement. (e) The partnership agreement shall include provisions designed to assure that (1) the partnership shall participate in low and moderate income housing developments, projects, or undertakings in a manner designed to encourage the participation therein of local interests, and (2) in any such development, project, or undertaking the partnership shall not subscribe to more than 25 per centum (including equity investments made in services or property) of the aggregate initial equity investment unless, in the judgment of the corporation as general partner, the balance of the required equity investment is not readily obtainable from other responsible investors residing or doing business in the local community. (f) The partnership agreement may without limitation (1) permit each of the stockholders of the corporation to become a member of the partnership as a limited partner, (2) authorize the inclusion of other limited partners in addition to the stockholders of the corporation, (3) provide that the assignee of the partnership interest of a limited partner of the partnership who is also a stockholder of the corporation may not become a substituted limited partner unless he also acquires the assignor's stock of the corporation, and (4) include provisions requiring that the corporation as a general partner approve the substitution or addition of a member of the partnership. (g) A corporation which is a limited partner in the partnership shall not become liable as a general partner by reason of the fact that

76 Stat. ess.

76 Stat. 636.

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rf c^* c*ode^4i401. ° ^

PUBLIC LAW 90-448-AUG. 1, 1968

[82 STAT.

(1) such corporation is a holder of shares of voting stock of the corporation constituting not more than 5 per centum of the total number of outstanding shares of such stock and exercises any of the rights (including voting rights) of a holder of such shares, and/or (2) a person who is an officer or director of such corporation (or of another corporation which controls or is subject to the control of, or is under common control with, such corporation) is a director of the corporation and performs the duties of that office. The interest of a limited partner in the partnership shall not be treated as a stock interest in the corporation, notwithstanding that such interest of a limited partner may be proportionate to his stock interest in the corporation. (h) The certificate of the partnership and any amendment thereof required by the District of Columbia Uniform Limited Partnership '^^^ shall be executed and acknowledged by the corporation as member and by each other member of the partnership or his attorney-in-fact duly authorized by power of attorney in writing. The corporation may execute and acknowledge the certificate and any amendment thereof as attorney-in-fact for any member, member to be substituted or added, or assigning member, by whom the certificate or amendment is required to be executed and acknowledged and who has appointed the corporation as such attorney. REPORT TO CONGRESS A N D RECORDS

SEC. 908. (a) The corporation shall submit an annual report to the President for transmittal to the Congress within six months after the end of its fiscal year. The report shall include a comprehensive and detailed report of the operations, activities, and financial condition of the corporation and the partnership under this title. (b) The accounts of the corporation and of the partnership shall be audited annually in accordance with generally accepted auditing standards by independent certified public accountants or independent licensed public accountants certified or licensed by a regulatory authority of a State or other political subdivision of the United States. ANTITRUST LAWS

38 Stat. 730. ^^'

SEC. 909. Nothing contained herein shall affect the applicability ^f ^\^Q Federal antitrust laws to the activities of the corporation and the partnership created under this title and of the persons participating therein or in partnerships, limited partnerships, or joint ventures with either of them. R I G H T TO R E P E A L, ALTER, OR A M E N D

SEC. 910. The right to repeal, alter, or amend this title at any time is expressly reserved. AMENDMENT TO B A N K I N G

Ante, p. 547.

LAWS

SEC. 911. Paragraph "Seventh" of section 5136 of the Revised Statutes (12 U.S.C. 24) is amended by adding at the end thereof the following: "Notwithstanding any other provision in this paragraph, the association may purchase for its own account shares of stock issued by a corporation authorized to be created pursuant to title IX of the Housing and Urban Development Act of 1968, and may make investments in a partnership, limited partnership, or joint venture formed l>ursuant to section 907(a) or 907 (c) of that Act."

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TITLE X—RUEAL HOUSING HOUSING

FOR LOW AND MODERATE I N C O M E

PERSONS AND

FAMILIES

SEC. 1001. Title V of the Housinsr Act of 1949 is amended by addiiis: at the end thereof the following new section:

63 Stat. 432. ^^ 1490."^^ ^ ' ' ^"

' ' L O A N S TO PROVIDE O C C U P A N T - O W N E D, R E N T A L, A N D COOPERATIVE H O U S I N G FOR LOW A N D MODERATE I N C O M E PERSONS AND F A M I L I E S

"SEC. 521. (a) Notwithstanding the provisions of sections 502, 517 (a) and 515, loans to persons of low or moderate income under section 42 USC 1472, 502 or 517(a)(1), and loans under section 515 to provide rental or ^'*^^' ^^^^' cooperative housing and related facilities for persons and families of low or moderate income or elderly persons and elderly families, shall bear interest at a rate prescribed by the Secretary at not less than a rate determined annually by the Secretary of the Treasury taking into consideration the current average market yield on outstanding marketable obligations of the United States with remaining periods to maturity comparable to the average maturities of such loans, adjusted to the nearest one-eighth of 1 per centum, less not to exceed the difference between the adjusted rat^. determined by the Secretary of the Treasury and 1 per centum per annum: Provided, That such a loan may be made only when the Secretary determines that the needs of the applicant for necessary housing cannot be met with financial assistance from other sources including assistance under section 235 or 236 of the National Housing Act: Provided further, That interest on loans under Ante, v>p. ^n, section 502 or 517(a) to victims of natural disaster shall not exceed ^'^^' the rate which would be applicable to such loans under section 502 without regard to this section. "(b) Housing and related facilities provided with loans described in subsection (a) shall be located in rural areas; and applicants eligible for such loans under section 502 or 517(a)(1), or for occupancy ^^^^^f^^l^'^'^' of housing provided with such loans under section 515, shall include 1487, 1485. otherwise qualified nonrural residents who will become rural residents. "(c) There shall be reimbursed to the Rural Housing Insurance Fund by annual appropriations the amounts by which nonprincipal payments made from the fund during each fiscal year to the holders of insured loans described in subsection (a) exceed interest due from the borrowers during each year; and the Secretary from time to time may issue notes to the Secretary of the Treasury under section 517(h) to obtain amounts equal to such unreimbursed excess payments, pending the annual reimbursement by appropriation," HOUSING

FOR RURAL

TRAINEES

SEC. 1002. Title V of the Housing Act of 1949 is amended by adding after section 521 (as added by section 1001 of this Act) the following new section: " H O U S I N G FOR R U R A L TRAINEES

"SEC. 522, (a) Upon the application of any State or political subdivision thereof, or any public or private nonprofit organization, the Secretary is authorized, after consultation with the Secretary of Labor, the Secretary of Health, Education, and Welfare, the Secretary of Housing and Urban Development, and the Di^ector of the Office of Economic Opportunity, and after the Secretary determines that the housing and related facilities cannot reasonably be provided in any other way, to provide financial and technical assistance for

- 6 0 0 O - 69 - 38

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the establishment, in rural areas, of housing and related facilities for trainees and their families who are residents of a rural area and have a rural background, while such trainees are enrolled and participating in training courses designed to improve their employment capability. The selection of training sites and location of housing shall be made with due regard to the economic viability of the area, and only after consideration of a labor area survey and full coordination among all (xovernment agencies having primary responsibility for administering related programs. '•(b) Housing and related facilities assisted under this section shall be safe and sanitary, constructed in the most economical manner, and of modest design, giving due consideration to the purposes to be served and the needs of the occupants, and may, in the discretion of the Secretary, include mobile family quarters. I)esign and location shall be such as to facilitate, as feasible, the use of such housing and related facilities for other purposes when no longer needed for the primary purpose. "(c) The applicant shall contribute the necessary land, or funds to acquire such land, from its own resources, including land acquired by donation or from funds repayable under subsection (e) or borrowed from other sources. " (d) No financial assistance shall be made available under this section unless, to the extent and for the periods required by the Secretary, the applicant agrees that^— "(1) such housing will be maintained at all times in a safe and sanitary condition m accordance with standards prescribed by State or local law, or, in the absence of such standards, with requirements prescribed by the Secretary; "(2) priority shall be given at all times, in granting occupancy of such housing and facilities, to the trainees and their families described in subsection (a); and "(3) rentals charged them shall not exceed amounts approved by the Secretary after considering the portion of the actual total family income which the family can afford to pay for rent while meeting its other immediate needs during occupancy. "(e) The Secretary may make advances pursuant to any contract for financial assistance under this section at such times and in such manner as may be specified in the contract. Such advances for the purchase of land shall be repayable with interest and within a period not to exceed thirty-three years and may be made upon such security, if any, as the Secretary requires. Advances for other purposes may bo made repayable with or without interest or nonrepayable, as determined by the Secretary on the basis of the anticipated income and cost of operation of the housing and related facilities and the ability of each applicant to finance such facilities. Any advances shall be limited to cover the capital costs of constructing such facilities, plus interest on borrowings to cover such costs. "(f) Should housing and related facilities assisted pursuant to a contract under this section be sold to an ineligible transferee or diverted to a use other than its primary purpose within a period specified in the contract, all advances made under such contract shall be repaid to the Secretary, up to the amount of the sales price or the fair value of the property as determined by the Secretary, whichever is higher, with interest from the date of the sale or diversion. If no suitable alternate use of the property is available, as determined by the Secretary, after the purpose of this section can no longer be served, the property shall be returned to its original condition by the recipient of the assistance. " (g) Interest charged on advances made under this section shall be at a rate, prescribed by the Secretary, which shall be not less than a

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rate determined by the Secretary of the Treasury taking into consideration the current average market yield on outstanding marketable obligations of the United States with remaining periods to maturity comparable to the average maturities of such loans, adjusted to the nearest one-eighth of 1 per centum, less not to exceed the difference between the adjusted rate determined by the Secretary of the Treasury and 1 per centum per annum, as determined by the Secretary. " (h) The Secretary shall prescribe regulations to insure that Federal funds expended under this section are not wasted or dissipated. "(i) As used in this section (1) the term 'related facilities' shall "Related faciiiinclude any necessary community rooms or buildings, infirmaries, utili- ''^^' ties, access roads, water and sewer services, and the minimum fixed or movable equipment determined by the Secretary to be necessary to make the housing reasonably habitable by trainees and their families; and (2) the term 'trainee' means any person receiving training under "Trainee." any federally assisted training program. " (j) There are authorized to be appropriated such sums as may be Appropriation. necessary to carry out this section." APPROPRIATIONS

SEC. 1003. Section 513 of the Housing Act of 1949 is amended— %ll^^- ^^^' (1) by striking out "and (e) " and inserting in lieu thereof yg stat! 793' " (e) "; and 42 USC usa. (2) by inserting before the period at the end thereof the following: "; and (f) such sums as may be required by the Secretary to administer the provisions of sections 235 and 236 of the National Housing: Act". Ante, pp. 477, •=

498. P U R C H A S E OF LAND FOR B U I L D I N G

SITES

SEC. 1004. Section 514(f)(2) of the Housing Act of 1949 is 75 Stat. ise. amended^^ "^^ • (1) by striking out "and" before " (B) ", and (2) by inserting before the semicolon at the end thereof the following: "and (C) land necessary for an adequate site". MUTUAL AND SELF-HELP

HOUSING

SEC. 1005. Title V of the Housing Act of 1949 is amended by adding 42 USC 1471after section 522 (as added by section 1002 of this Act) the following ^'*^°' new section: "MUTUAL AND SELF-HEI>P HOUSING

"SEC. 523. (a) The purposes of this section are (1) to make financial assistance available on reasonable terms and conditions in rural areas and small towns to needy low-income individuals and their families who, with the benefit of technical assistance and overall guidance and supervision, participate in approved programs of mutual or self-help housing by acquiring and developing necessary land, acquiring building materials, providing their own Tabor, and working cooperatively with others for the provision of decent, safe, and sanitary dwellings for themselves, their families, and others in the area or town involved, and (2) to facilitate the efforts of both public and private nonprofit organizations providing assistance to such individuals to contribute their technical and supervisory skills toward more effective and comprehensive programs of mutual or self-help housing in rural areas and small towns wherever necessary.

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Contract authority.

Self-Help Fund.

Ante, pp. 477, 498. Ante, p. 551.

Loans.

Considerations.

PUBLIC LAW 90-448-AUG. 1, 1968

[82 STAT.

" (b) I n order to carry out the purposes of this section, the Secretary of Agriculture (in this section referred to as the 'Secretary') is authorized— "(1)(A) to make grants to, or contract with, public or private nonprofit corporations, agencies, institutions, organizations, and other associations approved by him, to pay part or all of the costs of developing, conducting, administering, or coordinating effective and comprehensive programs of technical and supervisory assistance which will aid needy low-income individuals and their families in carrying out mutual or self-help housing efforts; and " (B) to establish the Self-Help Housing Land Development Fund, referred to herein as the Self-Help Fund, to be used by the Secretary as a revolving fund for making loans, on such terms and conditions and in such amounts as he deems necessary, to public or private nonprofit organizations for the acquisition and development of land as building sites to be subdivided and sold to families, nonprofit organizations, and cooperatives eligible for assistance under section 235 or 236 of the National Housing Act or section 521 of this Act. Such a loan, with interest at a rate not to exceed 3 percent per annum, shall be repaid within a period not to exceed two years from the making of the loan, or within such additional period as may be authorized by the Secretary in any case as being necessary to carry out the purposes hereof; and "(2) to make loans, on such terms and conditions and in such amounts as he deems necessary, to needy low-income individuals participating in programs of mutual or self-help housing approved by him, for the acquisition and development of land and for the purchase of such other building materials as may be necessary in order to enable them, by providing substantially all of their own labor, and by cooperating with others participating in such programs, to carry out to completion the construction of decent, safe, and sanitary dwellings for such individuals and their families, subject to the following limitations: " (A) there is reasonable assurance of repayment of the loan; " (B) the amount of the loan, together with other funds which may be available, is adequate to achieve the purpose for which the loan is made; " (C) the credit assistance is not otherwise available on like terms or conditions from private sources or through other Federal, State, or local programs; " (D) the loan bears interest at a rate not to exceed 3 per centum per annum on the unpaid balance of principal, plus such additional charge, if any, toward covering other costs of the loan program as the Secretary may determine to be consistent with its purposes; and " (E) the loan is repayable within not more than thirtythree years. "(c) I n determining whether to extend financial assistance under paragraph (1) or (2) of subsection (b), the Secretary shall take into consideration, among other factors, the suitability of the area within which construction will be carried out to the type of dwelling which can be provided under mutual or self-help housing programs, the extent to which the assistance will facilitate the provision of more decent, safe, and sanitary housing conditions than presently exist in the area, the extent to which the assistance will be utilized efficiently and expeditiously, the extent to which the assistance will effect an increase in the standard of living of low-income individuals participating in the mutual or self-help housing program, and whether the

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assistance will fulfill a need in the area which is not otherwise being met through other programs, including those carried out by other Federal, State, or local agencies. " (d) As used in this section, the term 'construction' includes the "construction." erection of new dwellings, and the rehabilitation, alteration, conversion, or improvement of existing structures. "(e) The Secretary is authorized to establish appropriate criteria applicants, °^ „„^J|^i^'/"^ and procedures in order to determine the eligibility of applicants for criteria. " """ ' " " the financial assistance provided under this section, including criteria and procedures with respect to the periodic review of any construction carried out with such financial assistance. " (f) There are hereby authorized to be appropriated for each fiscal Appropriation. year commencing after June 30, 1968, and ending prior to July 1, 1973, such sums, not in excess of $5,000,000 for any such fiscal year, as may be necessary to carry out the provisions of this section. No grant or loan may be made or contract entered into under the authority of this section after June 30, 1973, except pursuant to a commitment or other obligation entered into pursuant to this section before that date. " (g) There are hereby authorized to be appropriated for the pur]X)ses of subsection (b)(1)(B) not to exceed $1,000,000 for the fiscal year ending June 30, 1969. and not to exceed $2,000,000 for the fiscal year ending June 30, 1970. Any amount so authorized to be appropriated for any fiscal year which is not appropriated may be appropriated for any succeeding fiscal year or years. Amounts appropriated under this subsection shall be deposited in the Self-Help Fund, which shall be available without fiscal year limitation for making loans under subsection (b)(1)(B). Instruments and property acquired by the Secretary in or as a result of making such loans shall be assets of the SelfHelp Fund. Sums received from the repayment of such loans shall be deposited in and be a part of the Self-Help Fund." TITLE XI—URBAN PROPERTY PROTECTION AND REINSURANCE SHORT TITLE

SEC. 1101. This title may be cited as the "Urban Property Protection and Reinsurance Act of 1968." FINDINGS AND DECLARATION OF PURPOSE

SEC. 1102. (a) The Congress finds that (1) the vitality of many American cities is being threatened by the deterioration of their inner city areas; responsible owners of well-maintained residential, business, and other properties in many of these areas are unable to obtain adequate property insurance coverage against fire, crime, and other perils; the lack of such insurance coverage accelerates the deterioration of these areas by discouraging private investment and restricting the availability of credit to repair and improve property therein; and this deterioration poses a serious threat to the national economy; (2) recent riots and other civil commotion in many American cities have brought about abnormally high losses to the private property insurance industry for which adequate reinsurance cannot be obtained at reasonable cost, and the risk of such losses will make most lines of property insurance even more difficult to obtain; (3) the capacity of the private property insurance industry to provide adequate insurance is threatened, and the continuity of such property insurance protection is essentia] to the extension of credit in these areas; and (4) the national interest demands urgent action by the Congress to assure that essential lines of property insurance, including lines providing protection

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[82 STAT.

against riot and civil commotion damage will be available to property owners at reasonable cost. (b) The purposes of this title are, therefore, to (1) encourage and assist the various State insurance authorities and the property insurance industry to develop and carry out statewide programs which will make necessary property insurance coverage against the fire, crime, and other perils more readily available for residential, business, and other properties meeting reasonable underwriting standards; and (2) provide a Federal program of reinsurance against abnormally high property insurance losses resulting from riots and other civil commotion, placing appropriate financial responsibility upon the States to share in such losses. AMENDMENT OF THE NATIONAL HOUSING ACT

SEC. 1103. The National Housing Act is amended by adding at the end thereof the following new title: "TITLE XII—NATIONAL INSURANCE DEVELOPMENT PROGRAM "PROGRAM AUTHORITY

^°^'^^pp 558,

560, 563.

Rj'P°'"t t° Congress

"SEC. 1201. (a) The Secretary is authorized to establish and carry out the programs provided for in parts A, B, and C of this title. " (b)(1) The powers of the Secretary under this title shall terminate on April 30, 1973, except to the extent necessary— " (A) to continue reinsurance in accordance with the provisions of section 1223(b) until April 30, 1976; " (B) to process, verify, and pay claims for reinsured losses and perform other necessary functions in connection therewith; and " (C) to complete the liquidation and termination of the reinsurance program. "(2) On April 30, 1976, or as soon thereafter as possible, the Secretary shall submit to the Congress, for its approval, a plan for the liquidation and termination of the reinsurance program. "ADVISORY BOARD; MEETINGS, DUTIES, COMPENSATION, AND EXPENSES

"SEC. 1202. (a)(1) There is established an Advisory Board (hereinafter called the 'Board') consisting of nineteen members appointed by the Secretary. Members of the Board shall be selected from among representatives of the ^ n e r a l public, the insurance industry, State and local governments including State insurance authorities, and the Federal Government. Of these members of the Board, not more than six shall be regular full-time employees of the Federal Government, and not less than four shall be representatives of the private insurance industry and not less than four shall be representatives of State insurance authorities. "(2) The Secretary shall designate a Chairman and a Vice Chairman of the Board. "(3) Each member shall serve for a term of two years or until his successor has been appointed, except that no person who is appointed while a full-time employee of a State or the Federal Government shall serve in such position after he ceases to be so employed, unless he is reappointed. " (4) Any member appointed to fill a vacancy occurring prior to the expiration of the term for which his predecessor was appointed shall be appointed for the remainder of that term.

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" (b) The Chairman shall preside at all meetings, and the Vice Chairman shall preside in the absence or disability of the Chairman. I n the absence of both the Chairman and Vice Chairman, the Secretary may appoint any member to act as Chairman pro tempore. The Board shall meet at such times and places as it or the Secretary may fix and determine, but shall hold at least four regularly scheduled meetings a year. Special meetings may be held at the call of the Chairman or any three members of the Board, or at the call of the Secretary. "(c) The Board shall review general policies and shall advise the Secretary with respect thereto, and perform such other functions as are specified in this title. " (d) The members of the Board shall not, by reason of such membership, be deemed to be employees of the United States, and such members, except those who are regular full-time employees of the Government, shall receive for their services, as members, the per diem equivalent to the rate for grade GS-18 of the General Schedule under section 5332 of title 5, United States Code, when engaged in the per- s use 5332 formance of their duties, and each member of the Board shall be allowed travel expenses, including per diem in lieu of subsistence, as authorized by section 5703 of such title for persons in the Government so Stat. 499. service employed intermittently. "DEFINITIONS

"SEC. 1203. (a) When used in this title, unless the context otherwise requires, the term— "(1) 'environmental hazard' means any hazardous condition that might give rise to loss under an insurance contract, but which is beyond the control of the property owner; "(2) 'essential property insurance' means insurance against direct loss to property as defined and limited in standard fire policies and extended coverage endorsement thereon, as approved by the State insurance authority, and insurance for such types, classes, and locations of property against the perils of vandalism, malicious mischief, burglary, or theft, as the Secretary by rule shall designate. Such insurance shall not include automobile insurance tind shall not include insurance on such types of manufacturing risks as may be excluded by the State insurance authority; "(3) 'inspection facility', with respect to any State, means any rating bureau or other person designated b j the State insurance authority to perform inspections under fair access to insurance requirements plans under part A; " (4) 'insurer' includes any insurance company or group of companies under common ownership which is authorized to engage in the insurance business under the laws of any State; "(5) 'pool' means any pool or association of insurance companies in any State which is formed, associated, or otherwise created for the purpose of making property insurance more readily available; " (6) 'losses resulting from riots or civil disorders' means losses resulting from riots or civil disorders under policies for standard lines of property insurance for which reinsurance is offered under section 1221, as determined under regulations of the Secretary; "(7) 'property owner', with respect to any real, personal, or mixed real and personal property, means any person having an insurable interest in such property; "(8) 'person' includes any individual or group of individuals, corporation, partnership, or association, or any other organized group of persons;

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[82 STAT.

"(9) 'reinsured losses' means losses on reinsurance claims and all direct expenses incurred in connection therewith including, but not limited to, expenses for processing, verifying, and paying such losses; " (10) 'standard line of property insurance' includes— " (A) fire and extended coverage; " (B) vandalism and malicious mischief; " (C) other allied lines of fire insurance; " (D) burglary and theft; " (E) those portions of multiple peril policies covering perils similar to those provided for in subparagraphs (A), (B), (C),and (D); " (F) inland marine; " (G) glass; " (H) boiler and machinery; " (I) ocean marine; " (J) aircraft physical damage; and " (K) such other lines generally offered to the public which include protection against damage from riot or civil commotion as the Secretary by regulation may designate; " (11) 'State' means the several States, the District of Columbia, the Commonwealth of Puerto Rico, the territories and possessions, and the Trust Territory of the Pacific Islands; "(12) 'urban area' includes any municipality or other political subdivision of a State, subject to population or other limitations defined in rules and regulations of the Secretary and such additional areas as may be designated by the State insurance authority; and "(18) 'year' means a calendar year, fiscal year of a company, or such other period of twelve months as may be designated by the Secretary. "(b) The Secretary is authorized to define, by rules and regulations, any technical or trade term, insofar as such definition is not inconsistent with the provisions of this title. "PART A—STATEWIDE PLANS To ASSURE FAIR ACCESS TO INSURANCE REQUIREMENTS "FAIR PLANS

"SEC. 1211. (a) Each insurer reinsured under this title shall cooperate with the State insurance authority in each State in which it is to acquire such reinsurance in establishing and carrying out statewide plans to assure fair access to insurance requirements ( F A I R plans). " (b) Such plans must be approved by, and administered under the supervision of, the State insurance authority, or be authorized or required by State law, and shall be designed to make essential property insurance more readily available in, but not necessarily limited to, urban areas. Such plans may vary in detail from State to State because of local conditions, but all plans shall contain provisions that— "(1) no risk shall be written at surcharged rates or be denied insurance coverage for essential property insurance unless there has first been an inspection of the risk, without cost to the owner, by an inspection facility and a determination by the insurer, based on information in the inspection report and other sources, that the risk does not meet reasonable underwriting standards at the applicable premium rate; "(2) inspections under the plan may be requested by the property owner or his representative, the insurer, or the insurance

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agent, broker or other producer, and such requests need not be made in writing; "(3) the absence of a building owner or his representative during an inspection shall not preclude a tenant seeking insurance from obtaining an inspection under the plan; "(4) following the inspection, a copy of the inspection report shall be promptly sent by the inspection facility to the insurer or insurers, or to an all-industrv placement facility referred to under section 1212, as may be designated by the person requesting the inspection; "(5) after the inspection report is received by an insurer, it shall promptly determine if the risk meets reasonable underwriting standards at the applicable premium rate, and shall promptly return to the inspection facility the inspection report and provide an action report setting forth— " (A)(i) the amount of coverage it agrees to write; and if the insurer agrees to write the coverage with a surcharge (if such a surcharge is authorized by the State insurance authority), the improvements necessary before it will provide coverage at an unsurcharged premium rate; and "(ii) the amount of coverage it agrees to write if certain improvements specified in the action report are made; or " (B) the specific reasons it declines to write coverage; "(6) if the insurer declines the risk, or agrees to write the coverage sought on condition that the property will be improved, it shall also promptly send a copy of both the inspection and action reports to the property owner and the State insurance authority, and at the time the insurer sends such reports to the property owner, it shall also explain his right, under applicable State laws, to appeal the decision of the insurer to the State insurance authority, setting forth the procedures to be followed for such appeal; " (7) all policies written pursuant to the plan shall be promptly written after inspection or reinspection and shall be separately coded so that appropriate records may be compiled for purposes of performing loss prevention and other studies of the operation of the plan; "(8) the inspection facility shall submit to the State insurance authority and to the Secretary periodic reports setting forth information, by individual insurers, including the number of risks inspected under the plan, the number of risks accepted, the number of risks conditionally accepted and reinspections made, the number of risks decHned, and such other information as the State insurance authority may request; "(0) notice will be given to any policyholder a reasonable time prior to the cancellation or nonrenewal of any risk eligible under the plan (except in case of nonpayment of premium or evidence of incendiarism), to allow ample time for an application for new coverage to be made and a new policy to be written under the plan, and the insurer shall, in writing, explain to the policvholder the procedures for obtaining an inspection under the plan in the notice of cancellation or nonrenewal; and "(10) a continuing public education program will be undertaken by the participating insurers, agents, and brokers to assure that the plan receives adequate public attention.

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[82 STAT.

"ALL-INDUSTRY PLACEMENT FACILITY

"SEC. 1212. Any plan under this part shall include an all-industry placement facility doing business with every insurer participating in the plan in the State, and shall provide that this facility shall perform certain functions including, but not limited to, the following: "(1) seeking, upon request by or on behalf of any property owner requesting an inspection under the plan, to distribute the risks involved equitably among the insurers with which it is doing business; and "(2) seeking to place insurance up to the full insurable value of the risk to be insured with one or more insurers with which it is doing business, except to the extent that deductibles, percentage participation clauses, and other underwriting devices are employed to meet special problems of insurability. "INDUSTRY COOPERATION

"SEC. 1213. (a) Each insurer seeking reinsurance under this title shall file a statement with the State insurance authority in each State in which it is participating in a plan under this part, pledging its full participation and cooperation in carrying out the plan, and shall file a copy of such statement with the Secretary. "(b) No insurer acquiring reinsurance under this title shall direct any agent or broker or other producer not to solicit business through such a plan, nor shall any agent, broker, or other producer be penalized by such insurer in any way for submitting applications for insurance to an insurer under the plan. "PLAN EVALUATION

"SEC. 1214. (a) I n accordance with such rules and regulations as the Secretary may prescribe, each State insurance authority shall— "(1) transmit to the Secretary any proposed or adopted plan, or amendments thereto; and "(2) advise the Secretary, from time to time, concerning the operation of the plan, its effectiveness in providing essential property insurance, and the need to form a pool of insurers or adopt other programs to make essential property insurance more readily available in urban areas of the State. "(b) The Secretary may, after full consultation with the Board, by rules and regulations, modify the plan criteria set forth under this part, if he finds, on the basis of experience, that such action is necessary or desirable to carry out the purposes of this title. The Secretary may also, with respect to any State, waive compliance with one or more of the plan criteria, upon certification by the State insurance authority that compliance is unnecessary or inadvisable under local conditions or State law. " P A R T B—REINSURANCE COVERAGE "REINSURANCE OF LOSSES FROM RIOTS OR CIVIL DISORDERS

"SEC. 1221. (a)(1) The Secretary is authorized to offer to any insurer or pool, subject to the conditions set forth in section 1228, reinsurance against property losses resulting from riots or civil disorders in any one or more States. "(2) Reinsurance shall be offered to any such insurer or pool only on all standard lines of property insurance enumerated under subparagraphs (A) through (E) of section 1203(a) (10) together, and any insurer or pool purchasing such reinsurance shall also be eligible,

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to purchase reinsurance on any one or more standard lines of property insurance enumerated under subparagraphs (F) through (J) of section 1203(a) (10) or which may be designated by regulation pursuant to subparagraph (K) of that section. " (b) Reinsurance coverage under this section may be provided immediately following the enactment of this title to any insurer or pool in any State on a temporary basis, and on such terms and conditions as may be agreed upon, and coverage under such terms and conditions may be bound with respect to any such insurer or pool by means of a written binder which shall remain in force not more than ninety days and shall expire at the earlier of either— " (1) the termination of such ninety-day period, or "(2) the effective date of any governing contract, agreement, treaty, or other arrangement entered into between the insurer or pool and the Secretary under section 1222 for the purpose of providing reinsurance coverage against losses resulting from riots or civil disorders. " (c) No reinsurance shall be offered to any insurer or pool in a State after the expiration of the written binder entered into under subsection (b), unless there is in effect in such State a plan as set forth under part A and the insurer or pool is participating in such plan, and unless, in the case of an insurer m a State where a pool has been established pursuant to State law, the insurer is participating in such a pool. "REINSURANCE AGREEMENTS AND PREMIUMS

"SEC. 1222. (a) During the first year following the date of the enactment of this title, the Secretary is authorized to enter into any contract, agreement, treaty, or other arrangement with any insurer or pool for reinsurance coverage, in consideration of payment of such premiums, fees, or other charges by insurers or pools which the Secretary, after full consultation wth the Board, deems to be adequate to obtain aggregate reinsurance premiums for deposit in the National Insurance Development Fund established under section 1233 in excess of the estimated amount of insured riot losses during the calendar year 1967, on the assumption that a substantial proportion of the property insurance written will be reinsured under this title, and thereafter the Secretary may increase or decrease such premiums for reinsurance if it is found after full consultation with the Board and the National Association of Insurance Commissioners that such action is necessary or appropriate to carry out the purposes of this title. "(b) Reinsurance offered under this title shall reimburse an insurer or pool for its total proved and approved claims for covered losses resulting from riots or civil disorders during the term of the reinsurance contract, agreement, treaty, or other arrangement, over and above the amount of the insurer's or pool's retention of such losses as provided in such reinsurance contract, agreement, treaty, or other arrangement entered into under this section. "(c) Such contracts, agreements, treaties, or other arrangements may be made without regard to section 3679(a) of the Revised Statutes of the United States (31 U.S.C. 665(a)), and shall include any terms and conditions which the Secretary deems necessary to carry out the purposes of this title. The premium rates, terms, and conditions of such contracts with insurers or pools, throughout the country, in any one year shall be uniform. " (d) Any contract, agreement, treaty, or other arrangement for reinsurance under this section shall be for a term expiring on April 30, 1969, and on April 30 each year thereafter, and shall be entered into within ninety daj^s after the date of the enactment of this title or within ninety days prior to April 30 each year thereafter, or within ninety

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days after an insurer is authorized to write insurance eligible for reinsurance in a State which it was not authorized to write in the preceding year. "CONDITIONS or

REINSURANCE

"SEC. 1223. (a) Subject to the provisions of subsection (b), reinsurance shall not be offered by the Secretary in a State or be applicable to insurance policies written in that State by an insurer— " (1) after one year following the date of the enactment of this title, or, if the appropriate State legislative body has not met in regular session during that year, by the close of its next regular session, in any State which has nc^t adopted appropriate legislation, retroactive to the date of the enactment of this title, under which the State, its political subdivisions, or a governmental corporation or fund established pursuant to State law, will reimburse the Secretary, in an amount up to 5 per centum of the aggregate property insurance premiums earned in that State during the preceding calendar year on those lines of insurance reinsured by the Secretary in that State during the current year, such that the Secretary may be reimbursed for amounts paid by him in respect to reinsured losses that occurred in that State during a calendar year in excess of (A) reinsurance premiums received in that State during the same calendar year plus (B) the excess of (i) the total premiums received by the Secretary for reinsurance in that State during a preceding period measured from the end of the most recent calendar year with respect to which the Secretary was reimbursed for losses under this title over (ii) any amounts paid by the Secretary for reinsured losses that occurred during this same period; " (2) after thirty days following notification to the insurer that the Secretary finds (after consultation with the State insurance authority) that there has not been adopted by the State, or the property insurance industry in that State, a suitable program or programs, in addition to plans under part A, to make essential property insurance available without regard to environmental hazards, and that such action is necessary to carry out the purposes of this title; except that this paragraph shall not become effective until two years after the date of the enactment of this title, or at such earlier date as the Secretary, after consultation with the State insurance authority, may determine; " (8) after thirty days following notification to the insurer that the Secretary, or the State insurance authority, finds that such insurer is not fully participating— " (A) in the plan in the State; " (B) where it exists, in a pool; and " (C) where it exists, in any other program found by the Secretary to aid in making essential property insurance more readily available in the State: Provided, That the Secretary shall not make any such finding with respect to any insurer unless (i) prior to making such finding the Secretary has requested and considered the views of the State insurance authority as to whether such finding should be made, or (ii) the Secretary has made such a request in writing to the State insurance authority and such authority has failed to respond thereto within a reasonable period of time after receiving such request; "(4) following a merger, acquisition, consolidation or reorganization involving one or more insurers having lines of property insurance in the State reinsured under this title and one or more

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insurers with or without such reinsurance, unless the surviving company— " (A) meets the criteria of eligibility for reinsurance, other than as provided under section 1222(d); and " (B) within ten days pays any reinsurance premiums due; or "(5) upon receipt of notice from the insurer or pool that it desires to cancel its reinsurance agreement with the Secretary in the State. " (b) Notwithstanding the foregoing provisions of this section, reinsurance may be continued for the term of the policies written prior to the date of termination or nonrenewal of reinsurance under this section, for as long as the insurer pays reinsurance premiums annually in such amounts as are determined under section 1222, based on the annual premiums earned on such reinsured policies, and for the purpose of this subsection, the renewal, extension, modification, or other (hange in a policy, for which any additional premium is charged, shall be deemed to be a policy written on the date such change was made. "RECOVERY OF P R E M I U M S; STATUTE OF L I M I T A T I O N S

"SEC. 1224. (a) The Secretary, in a suit brought in the appropriate United States district court, shall be entitled to recover from any insurer the amount of any unpaid premiums lawfully payable by such insurer to the Secretary. " (b) No action or proceeding shall be brought for the recovery of any premium due to the Secretary for reinsurance, or for the recovery of any premium paid to the Secretary in excess of the amount due to him, unless such action or proceeding shall have been brought within five years after the right accrued for which the claim is made, except that, where the insurer has made or filed with the Secretary a false or fraudulent annual statement, or other document with the intent to evade, in whole or in part, the payment of premiums, the claim shall not be deemed to have accrued until its discovery by the Secretary. " P A R T C—PROVISIONS or GENERAL APPLICABILITY "CLAIMS AND JUDICIAL REVIEW

"SEC. 1231. (a) All reinsurance claims for losses under this title shall be submitted by insurers in accordance with such terms and conditions as may be established by the Secretary. " (b)(1) Upon disallowance of any claim under color of reinsurance made available under this title, or upon refusal of the claimant to accept the amount allowed upon any such claim, the claimant may institute an action against the Secretary on such claim in the United States district court for the district in which a major portion (in terms of value) of the claim arose. "(2) Any such action must be begun within one year after the date upon which the claimant received written notice of disallowance or partial disallowance of the claim, and exclusive jurisdiction is hereby conferred upon United States district courts to hear and determine such actions without regard to the amount in controversy.

U.S. district courts, jurisdiction.

u FISCAL I N T E R M E D I A R I E S AND SERVICING AGENTS

"SEC. 1232. (a) I n order to provide for maximum efficiency in the administration of the reinsurance program under this title, and in order to facilitate the expeditious payment of any funds under such jjrogram, the Secretary may enter into contracts with any insurer, pool,

Contract authority.

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,

[82 STAT.

or other person, for the purpose of providing for the performance of any or all of the following functions: "(1) estimating or determining any amounts of payments for reinsurance claims; " (2) receiving and disbursing and accounting for funds in making payments for reinsurance claims; "(3) auditing the records of any insurer, pool, or other person to the extent necessary to assure that proper payments are made; "(4) establishing the basis of liability for reinsurance payments, including the total amount of proved and approved claims which may be payable to any insurer, and the total amount of premiums earned by any insurer in the respective States for reinsured lines of property insurance; and " (5) otherwise assisting in any manner provided in the contract to further the purposes of this title. "(b)(1) Any such contract may require the insurer, pool, or other person, or any of its officers or employees certifying payments or disbursing funds pursuant to the contract, or otherwise participating in carrying out the contract, to give surety bond to the United States in such amounts as the Secretary may deem appropriate. "(2) In the absence of gross negligence or intent to defraud the United States— " (A) no individual designated pursuant to a contract under this section to certify payments shall be liable with respect to any payment certified by him under this section; and " (B) no officer of the United States disbursing funds shall be liable with respect to any otherwise proper payment by him if it was based on a voucher signed by an individual designated pursuant to a contract under this section to certify payments. a NATIONAL INSURANCE DEVELOPMENT F U N D

79- Stat. 472. • — -"•

12 USC i735d.

"SEC. 1233. (a) To carry out the programs authorized under this title, the Secretary is authorized to establish a National Insurance l>evelopment F u n d (hereinafter called the 'fund') which shall be available, without fiscal year limitations— "(1) to make such payments as may, from time to time, be required under reinsurance contracts under this title; "(2) to pay such administrative expenses as may be necessary or appropriate to carry out the purposes of this title; and "(3) to repay to the Secretary of the Treasury such sums, including interest thereon, as may be borrowed from" him for purposes of such programs under section 520(b). „ ^^^ r^^^ ^^^^^^ ^j^ J j ^^ Credited with— "(1) reinsurance premiums, fees, and other charges which may be paid or collected m connection with reinsurance provided under part B; " (2) interest which may be earned on investments of the fund; " (3) such amounts as may be advanced to the fund from appropriations in order to maintain the fund in an operative condition adequate to meet its liabilities; "(4) receipts from any other source which may, from time to time, be credited to the fund; and "(5) funds borrowed by the Secretary under section 520(b) and deposited in the fund. "(c) If, after any amounts which may have been advanced to the fund from appropriations have been credited to the appropriation from which advanced (including interest thereon at the rate prescribed under section 520(b)), the Secretary determines that the moneys of the fund are in excess of current needs, he may request the investment of such amounts as he deems advisable by the Secretary of the Treasury in obligations issued or guaranteed by tfie United States.

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" (d) A n annual business-type budget for the fund shall be prepared, transmitted to the Congress, considered, and enacted in the manner prescribed by law (sections 102, 103, and 104 of the Government Corporation Control Act (31 U.S.C. 847-849)) for wholly-owned Government corporations.

565

59 Stat. 597; 61 Stat. 584.

"RECORDS, A N N U A L STATEMENT, A N D AUDITS

"SEC. 1234. (a) Any insurer or pool acquiring reinsurance under this title shall furnish ithe Secretary with such summaries and analyses of information in its records as may be necessary to carry out the purposes of this title, in such form as the Secretary, in cooperation with the State insurance authority, shall, by rules and regulations, prescribe. The Secretary shall make use of State insurance authority examination reports and facilities to the maximum extent feasible. " (b) Any insurer or pool acquiring reinsurance under this title shall file with the Secretary a true and correct copy of any annual statement, or amendment thereof, filed with the State insurance authority of its domiciliary State, at the time it files such statement or amendment with such State insurance authority. " (c) Any insurer or other person executing any contract, agreement. Recordkeeping requirements. or other appropriate arrangement with the Secretary under section """"'"""""" ° 1222 or section 1232 shall keep reasonable records which fully disclose the total costs of the programs undertaken or the services being rendered, and such other records as will facilitate an effective audit of liability for reinsurance payments by the Secretary. Ac e s " (d) The Secretary and the Comptroller General of the United ords, ce tsc. to recStates, or any of their duly authorized representatives, shall have access for the purpose of investigation, audit, and examination to any books, documents, papers, and records of any insurer or other person that are pertinent to the costs of any program undertaken for, or services rendered to, the Secretary. Such audits shall be conducted to the maximum extent feasible in cooperation with the State insurance authorities and through the use of their examining facilities. "STUDY OF REINSURANCE AND OTHER PROGRAMS

"SEC. 1235. (a) The Secretary is authorized and directed to conduct a study of reinsurance and other means to help assure— " (1) an adequate market for burglary and theft and other property insurance in urban areas; and "(2) adequate availability of surety bonds for construction contractors in urban areas. "(b) The Secretary shall submit the results of this study, together with appropriate recommendations, to the President and Congress no later than one year following the date of the enactment of this title. UOTHER STUDIES

"SEC. 1236, (a) The Secretary is authorized to undertake such studies as may be necessary to carry out the purposes of this title including, but not limited to, inquiries concerning— " (1) the operation of plans under part A; " (2) the extent to which essential property insurance is unavailable in urban areas; " (3) the market for private reinsurance; and "(4) loss prevention methods and procedures, insurance marketing methods, and underwriting techniques. " (b) To such extent and under such circumstances as may be practicable and feasible, the Secretary shall conduct any study authorized

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under this section in cooperation with State insurance authorities and the private insurance industry. "GENERAL POWERS

64 Stat. 78; 12 USC 1749a. 60 Stat. 237. 5 USC 551

"SEC. 1237. I n the performance of, and with respect to, the functions, powers, and duties vested in him by this title, the Secretary shall (in addition to any authority otherwise vested in him) have the functions, powers, and duties (including the authority to issue rules and regul^ttions) set forth in section 402, except subsections (c)(2), (d), and (f), of the Housing Act of 1950. Any rules or regulations of the Secretary shall ouly be issued after full consultation with the Board and after notice and hearing, if granted, as required by the Administrative Procedurc Act.

et seq. " SERVICES A N D F A C I L I T I E S O F OTHER A G E N C I E S — U T I L I Z A T I O N OF

PERSONNEL, SERVICES, FACILITIES, x\ND INFORMATION

"SEC. 1238. The Secretary may, with the consent of the agency concerned, accept and utilize, on a reimbursable basis, the officers, employees, services, facilities, and information of any agency of the Federal Government, except that any such agency having custody of any data relating to any of the matters within the jurisdiction of the Secretary shall, to the extent permitted by law, upon request of the Secretary, make such data available to the Secretary. "ADVANCE PAYMENTS

"SEC. 1239. Any payments which are made under the authority of this title may be made, after necessary adjustments on account of previously made underpayments or overpayments in advance or by way of reimbursement. Payments may be made in such installments and on such conditions as the Secretary may determine. "TAXATION > "SEC, 1240, (a) The National Insurance Development Fund, including its reserves, surplus, and income, shall be exempt from all taxation now or hereafter imposed by the United States, or by any State, or any subdivision thereof, except that any real property acquired by the Secretary as a result of reinsurance shall be subject to taxation by any State or political subdivision thereof, to the same extent, according to its value, as other real property is taxed. " (b) Any measures undertaken by any State to meet or to fund its obligations under section 1223(a)(1) shall not be the subject of any retaliatory or fiscal imposition by any other State. "SEC. 1241. There are hereby authorized to be appropriated such sums as may be necessary to carry out this title." FINANCING
 * APPROPRIATIONS

79 Stat. 472. 12 USC i735d.

SEC. 1104. Section 520(b) of the National Housing Act is amended i^y. inserting " (1) " after "necessary" in the first sentence, and hj striking out the period at the end of such sentence and inserting in lieu thereof ", and (2) to make payments for reinsured losses under title X II of this Act: Provided, however, That borrowings to make payments for reinsured losses under title X II shall be limited to

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$250,000,000 or such further sum as the Congress, by joint resolution, may from time to time determine." FEDEILVL INSURANCE

ADMINISTEATOR

SEC. 1105. (a) There is hereby established in the Department of Housing and LTrban Development the position of Federal Insurance Administrator. (b) Section 5815 of title 5, United States Code, is amended by 81*^^3^63^^^' adding at the end thereof the following new paragraph: "(91) Federal Insurance Administrator, Department of Housing and Urban Development." C L A R I F Y I N G AMENDMENTS TO ACTS REFERRING TO DISASTERS

SEC. 1106. (a) Section 7(b)(1) _ of the Small Business Act is J^ Stat.^asj. amended by inserting ", riots or civil disorders," before "or other catastrophes". (b) Section 101(c)(2)(E) of the Housing and Urban Development Act of 1965 is amended by striking out "natural". ^9 Stat. 451.^ (c) Section 111 of the Housing Act of 1949 is amended by striking 70 sta^ \^io\! out "the Secretary" after "disaster," and inserting in lieu thereof "or si Stat. 21. which the Secretary has determined is in need of such redevelopment " ^ ^^'^ ^'^^^' ^ or rehabilitation as a result of a riot or civi] disorder, he". (d) Section 203(h) of the National Housing Act is amended by ^^ ^t^^^- 592. inserting "riot or civil disorder," before "or other catastrophe". Relief to con(e) No person who has been convicted of committing a felony dur- victed felons, ing and in connection with a riot or civil disorder shall be permitted, prohlbin'on! for a period of one year after the date of his conviction, to receive any benefit under any law of the United States providing relief for disaster victims. TITLE X II — DISTRICT OF COLUMBIA INSURANCE PLACEMENT ACT SHORT TITLE

SEC. 1201. This title may be cited as the "District of Columbia Insurance Placement Act". DECLARATION OF F URP OS B

SEC. 1202. The purposes of this title are— (1) to assure stability in the property insurance market for property located in the District of Columbia; (2) to assure the availability of basic property insurance as defined by this title; (3) to encourage maximum use, in obtaining basic property insurance, of the normal insurance market provided by authorized insurers; and (4r) to provide for the equitable distribution among insurers of the responsibility for insuring qualified property in ihe District of Columbia for which insurance cannot be obtained through the normal insurance market and to authorize the establishment of a joint underwriting association in the District of Columbia to provide for reinsuring of basic property insurance without regard to environmental hazards.

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