Kit Bond

Mr. BOND

Mr. BOND. I yield the remaining time to the Senator from Maryland.

Mr. BOND. Madam President, I appreciate the Senator from Ohio raising this issue. I agree with him that the project he has described in Cincinnati would appear to be well-suited for the EDI program.

Mr. BOND. I agree with my colleagues Senator Connie Mack and Senator Alfonse D'Amato, in urging HUD to reinstate a fair and adequate time period for public review of these important new rules. In fact, it was my amendment in 1996 which halted HUD's attempt to remove the important public notice and comment provisions of the rulemaking procedure. On August 16, 1996, HUD issued a regulation entitled, ``Rulemaking Policies and Procedures; Proposed Removal of Part 10.'' The Fiscal Year 1997 VA-HUD Appropriations Act included my amendment to safeguard the notice and comment procedure contained in the Part 10 regulation. Last year, the VA-HUD Appropriations Act for Fiscal Year 1998 contained a provision which in practical effect makes the notice and comment procedure part of the permanent law. While HUD can provide for good cause waivers of the sixty-day comment period, the regulation states that such waivers should only be made when the procedure is ``impracticable, unnecessary or contrary to the public interest.'' I do not believe that HUD has met any component of this threshold in this instance. HUD's current public rulemaking procedure were not adopted by accident. In fact, they were adopted in an effort to respond to past program abuses and were considered an essential component of HUD reform. Given HUD's ongoing systemic management difficulties, it is incumbent upon HUD to abide by the rules of public notice and comment rulemaking. Waivers of public notice requirements will not contribute to the much-needed reform of HUD's management problems. Public participation and input are critical aspects to avoiding unintended consequences in the rulemaking process. HUD's new proposed rules have followed soon after a series of massive ``Super-NOFA's,'' or Notices of Funding Availability which announce the availability and competition for dozens of HUD grant programs. Many local government agencies and community-based housing organizations are still in the process of finalizing their applications for these important HUD programs. Most organizations--including local public housing authorities, community-based non-profit corporations and resident organizations--have limited capacity to wade through and analyze HUD's new proposed regulations, in addition to applying for funding. HUD's decision to unilaterally waive the sixty-day comment period compounds this problematic situation. I therefore join my colleagues in strongly urging HUD to extend the review and comment period for the proposed rules issued on June 30, 1998.

Mr. BOND

Mr. BOND. Mr. President, it is always good to see our former colleague on the VA-HUD committee come to the floor to talk about the difficult issues. We certainly appreciate his kind comments. The VA-HUD-Independent Agencies is a very challenging and interesting area. He raised the question about the increase in spending; and to explain that will perhaps give my colleagues some idea why this is such a complex area. The total spending includes--total spending is about $93 billion-- includes $22 billion in mandatory spending for veterans administration categories. That is about a $4 billion increase over fiscal year 1998. The increase is attributable largely to the following--about a $1.5 billion increase in veterans administration, primarily mandatory spending, things over which our subcommittee has no control. In addition, there is, HUD figures, about $2.6 billion over last year's figure. And that is because money was taken from section 8 contracts earlier in the year to pay for a supplemental. This is the budget that is always raided. And the broader Appropriations Committee has raided these section 8 contracts. That would be good except for the fact that the cost of renewing section 8 contracts in HUD continues to escalate. In fiscal year 1997, we needed $3.6 billion in budget authority to renew existing section 8 contracts. Because we had moved to shorter and shorter term contracts, from multiyear contracts down to 2-year and 1- year contracts, it then shot up to $8.2 billion in budget authority for fiscal year 1998, the current year; and it jumps to $11.1 billion in fiscal year 1999. That is the result of the length of the contracts. But it means, in order to continue providing the same assistance we do currently under section 8, we have to have about $2.9 billion more in budget authority for fiscal year 1999 than we did for fiscal year 1998. If you say we do not want to increase it, it means, in essence, that we are going to have to take away section 8 housing contracts and kick people out. That is just a simple choice. I must oppose the amendment of my good friend from Oklahoma to strike the increase in FHA mortgage insurance limits for high-cost areas and to offset that with an increase of 6 basis points to the fees that Ginnie Mae charges for servicing costs. The first point we need to make is that the FHA mortgage insurance increase is a bipartisan proposal, a bipartisan congressional proposal, that enjoys wide support from both Republicans and Democrats in this body. I do not see this modest increase as growing government. Rather, the FHA mortgage increase represents an approach to fill a gap that allows Americans of modest means--moderate-income Americans--to own their own homes, one of the great American dreams for all families. The FHA was established in 1934 as a result of nearly impossible lending conditions during the Great Depression, and in over 60 years the public-private partnership of FHA and private lenders has enabled more than 25 million families to realize the dream of home ownership. Moreover, the FHA Mortgage Insurance Program supplements and complements the role of private mortgage insurance by assisting families who do not have adequate resources to meet the private mortgage markets' downpayment requirement, which is often 20 percent of the mortgage amount. While the private mortgage insurance market has made tremendous strides in providing new products to assist families in purchasing homes, many families would be unable to purchase their home without the benefit of FHA mortgage insurance. In brief, the Senate VA-HUD fiscal year 1999 appropriations bill provides modest increases in the FHA mortgage insurance limits, raising the floor from 38 percent of the Freddie Mac conforming loan limit, or about $86,000, to 48 percent of the conforming loan limit, or some $109,000. It establishes a new ceiling for high-cost areas from the existing 75 percent of the conforming loan limit, or some $170,000, to 87 percent of the conforming loan limit, or some $197,000. And let me indicate where these higher loan limits would be implemented. Right now--this is a chart which shows the United States. The colors of the chart indicate where the low rate, the base limit, is in place. These are the areas in blue. This is where the base lending rate would go from $86,000 to roughly $109,000. The green areas on here are 95 percent of the local median. The high-low rate, the one which is being challenged in this amendment which is raised to $197,000, would be in these few red areas on the East Coast--essentially, Boston, New York, Washington, DC area, Denver, CO, and California along the coastline. The rest of the country is not affected by the increases in the higher-end loan limit. I think the legislation seeks to strike a reasonable balance to promote additional home ownership and would allow home ownership for some 30,000 families, 20,000 in high-cost areas and 10,000 basically nonurban areas. In particular, these new FHA mortgage insurance limits will help in nonurban areas where the price of new housing has escalated beyond the capacity of first-time home buyers to use FHA mortgage insurance to buy a house in some areas because the FHA lower- limits financing is not available for construction of first homes for families of workers with lower wages. The problem is that the existing FHA mortgage insurance limits do not reflect the higher cost of new homes. New homes cost more than existing homes because of the cost of materials and labor. In addition, there are many other expenses. For example, the cost to develop new housing subdivisions is expensive because of the cost of utility hookups, environmental requirements, local taxes and surcharges for things like schools, roads, fire protection, as well as the cost of buildable land. Currently, the median price for a new home is $142,000, while the median price for an existing home is $126,500, for a $15,500 difference. Now, this difference is very important for Missouri as well as the rest of the Nation. Home ownership in housing construction has been and always will be a locomotive for the U.S. economy. In addition to the jobs created through the development of new housing, many nonurban areas in particular will be able to provide the affordable housing that is so critical to attracting new business and to maintaining existing businesses. I have talked with people in areas just outside the metropolitan Kansas, MO area, in areas of north Missouri, where they are benefiting from new jobs coming into the area but they are strangled because the new jobs bring in people who can't get housing. They can't get affordable housing. This is one of the critical needs for people in those areas so that they can continue to create jobs and see their communities grow. They need to have affordable housing. I am hoping that the raising of the lower limit will enable them to get FHA financing and build new homes. Now, I don't want to confuse anyone. As I said, Senator Nickles' amendment does not seek to reduce the increase to the FHA mortgage insurance floor, the one I was just talking about, as provided in the VA-HUD 1999 appropriations bill. Senator Nickles' concern, as well as those of his colleagues, is that the proposed new mortgage insurance limit of $197,000 for high-cost areas is too high. In particular, in a ``Dear Colleague'' letter, Senators Nickles, Mack, Allard, Kohl, and Feingold state that to qualify for a mortgage of $197,000, a family would need an income of at least $75,000. Well, $197,000 is a lot of money for a house. That cost, however, is the reality in many areas and it needs to be addressed. In addition, I think it is fair to say that $75,000 is not an extraordinary amount of income for a family. For example, it means that a two-income family, a schoolteacher and a firefighter, will be able to live in a community in which they serve. This is important. I do not think we should lose sight of the importance of mixed-income communities while providing opportunities for home ownership. Moreover, as part of Secretary Kemp's FHA reform initiative as enacted in the National Affordable Housing Act, Price Waterhouse conducts an actuarial review of the FHA Mutual Mortgage Insurance Fund on an annual basis. From the perspective of actuarial soundness, NAHA mandated a fund to achieve a capital ratio of at least 2 percent by fiscal year 2000. However, the fund reached a capital ratio of 2.81 percent in fiscal year 1997 and is expected to reach 3.21 percent by fiscal year 2000. Moreover, the projected economic value of the Mutual Mortgage Insurance Fund was $11.3 billion at the end of fiscal year 1997. This represents a more than $14 billion increase in the value of the fund since Secretary Kemp's reforms in 1990, when it was a negative $2.7 billion. In addition, the FHA Single Family Mortgage Insurance Program is self-sustaining, has not cost the American taxpayer any money in its entire existence. Insurance premiums and loan loss recovery proceeds pay for all costs incurred in the administration of the program, leaving sufficient reserves from an actuarial perspective to pay all future claims. I note that Senators Nickles, Mack, and Faircloth have developed a number of very worthwhile reforms to the FHA mortgage insurance program which have been agreed to and will be included in the next managers' amendment. As with my colleagues, I remain concerned over HUD's capacity to administer its many programs, including its FHA mortgage insurance programs. These FHA management reforms would require that each lender provide a comparison of FHA mortgage funding with three of a lender's most frequently employed mortgage loan structures, an annual study by GAO on steering by lenders to FHA, and a requirement that HUD submit an initial report within 60 days annually on how HUD plans to correct mortgage problems in the FHA Single Family Mortgage Insurance Program. Finally, I have concerns about any changes to the Ginnie Mae servicing structure. I have been advised that any change in the servicing fee will likely result in increased home ownership costs to families, with estimates that it could cost consumers some $250 million per year and price some 15,000 home buyers out of the market each year. I have a letter from a significant group of veterans organizations that I will place at the end of my statement for the Record from the AMVETS, Disabled American Veterans, Non Commissioned Officers Association, Blind Veterans Association, and Paralyzed Veterans of America, saying that any increase in Ginnie Mae fees will result in an added cost to lenders which will invariably be passed on to VA loan recipients. We estimate that even just a 6-basis-point increase in the Ginnie Mae guarantee fee will cost VA borrowers over $67 million annually, with a typical veteran paying over $250 in upfront closing costs. With the veterans already struggling to afford their first homes, this cost increase would be devastating. I expect the argument of my colleagues will be that lenders currently receive a fee for servicing FHA-insured mortgages of 38 basis points, almost double the fee that lenders receive for servicing loans in the private sector. For example, as opposed to the 38 basis points lenders receive in service fees under FHA, lenders receive between 20 and 25 basis points for servicing fees associated with conventional mortgages guaranteed by Fannie Mae and Freddie Mac. Nevertheless, Ginnie Mae operates significantly different from Fannie Mae and Freddie Mac, particularly when Fannie Mae and Freddie Mac take on the responsibility that all security holders receive their payments, whereas the servicer is responsible for the pass-through on a Ginnie Mae security, and where a servicer fails, it is no longer permitted to participate in a Ginnie Mae program. That is a significant responsibility and merits additional fees. I send this letter of July 14 to the desk. It happens to be addressed to the distinguished occupant of the Chair. This is a letter from AMVETS, Disabled Veterans, Non Commissioned Officers, Blind Veterans, and the Association of Paralyzed Veterans of America. I ask unanimous consent to have it printed in the Record.

Mr. BOND. I thank the Senator from Michigan for his interest. As he knows, the Senate report and bill do not speak directly to the Great Waters program. But, barring action on any amendment specifically to reduce that program, I see no reason that the Senate conferees would not accept the House statement.

Mr. BOND. I would be pleased to engage in a colloquy with the Senator from Florida on what I do understand is a project that will have a positive impact on the drinking water supply or the residents of Central Florida. Mr. Mack. I thank the chairman. Through the Sweetwater Branch/Payne's Prairie Stormwater Protection Initiative, the City of Gainsville, Florida is attempting to tackle a very critical and complex problem that confronts not only Gainesville, but ultimately the drinking water supply of much of Central Florida. The Sweetwater Basin, which emanates above and beyond Gainesville, runs through some of the oldest sections of the City. The Sweetwater Basin discharges into a very critical natural resource in Florida, known as Payne's Prairie, a natural reserve park owned by the State of Florida. It is home to a number of plants and animal species that are unique to Florida. As these discharges move further through the system, they discharge into what is called the Alachua Sink, a major natural sink hole that drains directly into the Florida Aquifer. The City has taken the initiative to bring together the State, the County and a broad array of environmental resources and interests in order to tackle the problems that result from contaminated runoffs which seriously impact the health of Payne's Prairie and ultimately the Florida Aquifer. The City is trying to address the problem now, in order to prevent a more serious deterioration. Unfortunately, this is a problem and a project that is beyond the scope and reach of this one small city.

Mr. BOND. Has Gainesville been working with other jurisdictions concerning this initiative?

Mr. BOND. I understand your concerns, and the reasons for you support of this project. This project would appear to warrant support as a special demonstration project through the Environmental Protection Agency. Do I understand that the City of Gainesville has been devoting its own resources towards the resolution of this problem and is fully committed to a financial partnership on this project?

Mr. BOND. I appreciate Senator Craig's concern for the City of McCall, its environment, the burdens imposed by federal requirements, and the very real need that this and other communities have to comply with federal mandates as economically as possible. I will be happy to work with the Senator to examine this proposal more thoroughy. If we can determine that this project does, indeed, qualify for existing EPA programs, we will see what can be done to address this need. epa grant programs for planning future growth

Mr. BOND. I am happy to respond to my colleague from Utah that EPA has a number of programs that can assist organizations like Envision Utah in preparing for future growth demands. Clearly, EPA's mission of protecting the environment includes management of resources such as open space by encouraging sound urban planning. I encourage the EPA to look at any grant program that might help Envision Utah meet its goal of preparing Utah for future growth.

Mr. BOND. I have a managers' amendment to offer, and I offer it en bloc. It has been cleared on both sides. First, there are a number of technical amendments. Second, for Senators Campbell, Stevens, and Mack, there are several amendments to ensure Native American groups are eligible for HUD drug elimination grants and the HUD rural housing and economic development. Third, for Senator D'Amato, we are continuing the authority for the HUD G-4 auction program. Fourth, we are allowing HUD to use data on multifamily housing developed by the Multifamily Housing Institute. Fifth, this amendment would require all agencies under the bill to provide detailed salaries and expenses information. In addition, we are including Senator Frist's amendment which authorizes OSTP, the Office of Science and Technology Policy, to conduct a study on methods for evaluating federally funded research and development. We have also included an amendment for Senator Wellstone providing for a 12-month notice to tenants before prepaying the mortgage of a preservation project. Owners who have already filed notice would not be impacted. We appreciate Senator Wellstone's providing this amendment. We had been hoping we could have adopted this one a number of weeks ago. Finally, we included a number of reforms of the FHA which we believe are very sound and responsible provisions. They are from Senator Nickles, Senator Mack, and Senator Faircloth to direct HUD to improve the management of FHA. I send this amendment to the desk and ask for its consideration en bloc.

Mr. BOND. I ask unanimous consent reading of the amendment be dispensed with.

Mr. BOND. I ask unanimous consent that it be designated as a Bond and Mikulski amendment.

Mr. BOND. I move to reconsider the vote.

Mr. BOND. Again, my sincere thanks particularly to my colleague from Maryland for her fine staff. My thanks to our staff for staying with us. I think we have set a record for debate, for expeditious handling of VA/HUD bill. We are grateful, No. 1, to the leadership, Senator Daschle and Senator Lott, for giving us such a propitious time to expedite the consideration of this measure. Let me extend my special thanks to the occupant of the Chair and all of the floor personnel, including the pages, of the Senate for staying with us to quarter to 12, and perhaps a little later. We appreciate your willingness. This has helped us move forward.

Mr. BOND. Mr. President, I ask unanimous consent that the votes ordered with respect to the amendments offered to the VA-HUD appropriations bill occur in the order they were offered, beginning at 9 a.m. tomorrow morning as under the previous order. I further ask that no second-degree amendments be in order to the amendments.

Mr. BOND. For the information of all Senators, the voting schedule for Friday morning is as follows: The Wellstone amendment regarding veterans compensation. I understand that the chairman of the budget committee will raise a point of order with respect to this amendment so the vote will be on a motion to waive the budget act with respect to the Wellstone amendment. Following the Wellstone vote the Senate will vote on or in relation to the Murkowski amendment regarding Alaska veterans, followed by a vote on or in relation to the Nickles FHA amendment, followed by a vote on or in relation to the Burns amendment regarding NASA indemnification, followed by a vote on or in relation to the Sessions amendment regarding NASA funding. It is hoped that following the preceding amendment votes the Senate will immediately move to final passage of the VA-HUD Appropriations Bill. unanimous consent agreement Mr. President, I ask unanimous consent that when the Senate completes all action on S. 2168, that it not be engrossed and be held at the desk. I further ask that when the House of Representatives companion measure is received in the Senate, the Senate immediately proceed its consideration; that all after the enacting clause of the House bill be stricken and the text of S. 2168, as passed, be inserted in lieu thereof; that the House bill, as amended, be read for a third time and passed; that the Senate insist on its amendment, request a conference with the House on the disagreeing votes of the two Houses thereon, and the Chair be authorized to appoint the following conferees on the part of the Senate: Senators Bond, Burns, Stevens, Shelby, Campbell, Craig, Mikulski, Leahy, Lautenberg, Harkin, and Byrd; and that the foregoing occur without any intervening action or debate. I further ask unanimous consent that upon passage by the Senate of the House companion measure, as amended, the passage of S. 2168 be vitiated and the bill be indefinitely postponed.

Mr. BOND

Mr. BOND. Mr. President, I ask unanimous consent that there now be a period for the transaction of routine morning business, with Senators permitted to speak therein for up to 10 minutes each.

Mr. BOND

Mr. BOND. Mr. President, I send an amendment to the desk and ask for its immediate consideration.

Mr. BOND. Mr. President, I ask unanimous consent that the Finance Committee be discharged from further consideration of S. Con. Res. 88, and further, that the Senate proceed to its immediate consideration.

Mr. BOND. Mr. President, I ask unanimous consent that amendment to the concurrent resolution be agreed to, the resolution, as amended, be agreed to, the amendment to the preamble be agreed to and the preamble, as amended, be agreed to, the title amendment and the title, as amended, be agreed to, the motion to reconsider be laid upon the table, and that any statements relating to the resolution appear at this point in the Record.

Mr. BOND

Mr. BOND. Mr. President, I ask unanimous consent that the Senate now proceed to the consideration of calendar No. 461, S. 2143.

Mr. BOND. Mr. President, I ask unanimous consent that the committee substitute amendment be agreed to, the bill be considered read the third time, and passed, the motion to reconsider be laid upon the table, and that any statements relating to the bill appear at this point in the Record.

Mr. BOND. Mr. President, I ask unanimous consent that the Senate now turn to S. 2316, introduced yesterday by Senator McConnell.

Mr. BOND. Mr. President, I send an amendment to the desk on behalf of Senator Ford and ask for its immediate consideration.