Connie Mack

Mr. MACK

Mr. MACK. Mr. President, under the ``mark-to-market'' title that is contained in the VA-HUD appropriations conference report, a strong priority to public entities is provided to act as participating administrative entities [PAE]. It is expected that qualified public entities will handle most of the work under this program. However, in instances where a qualified public entity is not available, the Secretary of Housing and Urban Development [HUD] is provided flexibility in selecting other qualified entities such as nonprofit and for-profit entities. To ensure that these entities do not use their positions as PAE's for unfair financial benefit, the bill contains an important provision that would prevent conflicts of interests by PAE's. It is my understanding that this provision was included to permit the Secretary to establish guidelines that would prevent conflicts of interest by a PAE that provides financing or credit enhancement as part of the restructuring process. Further, the provision allows the Secretary to establish guidelines to deal with other conflicts of interest issues that would prevent PAE's, especially nonprofit and for-profit private entities, from using their roles as PAE's in the restructuring program that go beyond the public purposes outlined in the legislation. I would like to ask Senator Bond if this is also his understanding of the bill.

Mr. MACK. Mr. President, I understand that the VA-HUD appropriations conference report contains important renewal policy provisions related to expiring section 8 contracts. I would like to ask Senator Bond if my understanding is correct.

Mr. MACK. The Senator from North Carolina is correct. This provision was contained in the legislation as it was initially reported out of the Banking Committee as part of the committee's reconciliation bill. At that time, the Banking Committee's report made it clear that nothing in the section was intended to be interpreted to impose any new regulatory mandate on Fannie Mae and Freddie Mac to continue existing section 8 contracts in their current subsidized form.

Mr. MACK. Mr. President, I want to congratulate the chairman of the VA-HUD Subcommittee, Senator Bond, for crafting a measure that carefully balances a wide range of competing and diverse interests. I believe this conference report deserves the strong support of all Senators. I am especially pleased that this bill contains legislation I introduced, along with Senators D'Amato, Bond, and Bennett, and cosponsored by Senators Domenici, Chafee, Faircloth and Grams, to reform the Nation's assisted and insured multifamily housing portfolio. It is unusual to have extensive authorizing language in an appropriation. However, title V of this bill, the Multifamily Assisted Housing Reform and Affordability Act, balances both fiscal and public policy goals. It will save scarce Federal resources over both the short and long term while preserving the affordability and availability of decent and safe rental housing for lower income households. About 20 years ago, the Federal Government encouraged private developers to construct affordable rental housing by providing mortgage insurance through the Federal Housing Administration [FHA] and rental housing assistance through the Department of Housing and Urban Development's [HUD] project-based section 8 program. In addition, tax incentives for the development of low-income housing were provided through the tax code until 1986. HUD's section 8 assisted and FHA-insured multifamily housing program has created thousands of decent, safe and affordable housing properties. However, the current program allows some owners to receive more--often far more Federal dollars than necessary to maintain their properties. Further, a portion of the rental stock suffers from poor management or has become physically distressed. Thus, in some cases, taxpayers are paying costly subsidies for inferior housing. We are on the verge of a funding crisis in the renewal of HUD's expiring section 8 rental assistance contracts. Indeed, HUD Secretary Cuomo has called the section 8 contract renewal problem ``the greatest crisis HUD has ever faced.'' Over the next several years, a majority of the section 8 contracts on the 8,500 FHA-insured properties will expire. If contracts continue to be renewed at existing levels, the cost of renewing these contracts will grow from about $2 billion in fiscal year 1998 to $5.2 billion in fiscal year 2002 and more than $7.7 billion 10 years from now. The total cost of renewing all section 8 project-based and tenant-based assistance would grow from $9 billion in fiscal year 1998 to as much as $18 billion in fiscal year 2002 without policy changes. Federally assisted and insured housing serves almost 1.6 million families with an average annual income of $7,000. About half of the households are elderly or contain persons with disabilities. Many of these developments are located in rural areas where no other rental housing exists. Some of these properties serve as anchors of neighborhoods where the economic stability of the neighborhood is dependent on the vitality of these properties. If the project-based contracts are not renewed, residents and communities would be adversely affected. Further, most of the underlying FHA-insured mortgages--with an unpaid principal balance of $18 billion--will be forced into default. The Banking Committee began its examination of what is commonly referred to as the ``mark-to-market'' issue more than 2 years ago. Since that time, we have received extensive input from all of the potential stakeholders in this issue, including residents, project managers, low-income advocates and project residents, State and local interests, the financial community, and HUD. The version of the bill we are considering today reflects negotiations with all parties that have occurred since its original introduction as S. 513 in March. It is a consensus bill that helps to ensure that residents, communities and the Federal investment in the housing are protected at a cost we can afford. At a Housing Subcommittee hearing in June, HUD Secretary Cuomo raised some administration concerns about S. 513. We have attempted to address those concerns and provide a reasonable degree of flexibility for HUD in its overall administration of the mortgage restructuring program and also to provide reasonable opportunities for the use of tenant-based assistance after restructuring. I appreciate the cooperation of Secretary Cuomo in helping to move this important legislation forward. I want to thank Senator D'Amato, chairman of the Banking Committee, for his ongoing, strong support for this legislation. In addition, I appreciate the support of Senators Sarbanes and Kerry. From the outset, mark-to-market has been a bipartisan effort, and those Senators have made invaluable contributions to the final version of the legislation. I want to touch briefly on some of the bill's major provisions and the compromises that are reflected in the conference agreement. First, the bill ``marks'' rents on oversubsidized properties to comparable market rents or to 90 percent of area fair market rents. The underlying mortgages would be restructured so they could be supported by the new rents. In some cases, higher rents could be permitted if necessary to support proper operations and maintenance costs. These exceptions are principally intended to assure the continued viability of projects, generally serving the elderly, located in rural areas. Second, the bill also recognizes that HUD lacks the staffing capacity and expertise to oversee effectively its portfolio of multifamily housing properties or to administer a debt restructuring program. Accordingly, the bill would transfer the functions and responsibilities of the restructuring program to capable third parties, preferably State and local housing finance agencies, who would act as participating administrative entities [PAE's] in managing this program. The language concerning third parties has been modified from its original form partially in order to accommodate concerns raised by the administration. These changes will increase HUD's flexibility to partner with a variety of public, nonprofit, and for-profit entities that have expertise in affordable housing, while also providing an exclusive time period for applications submitted by publicly accountable entities. Under the revised language, public entities--State and local housing finance agencies [HFA's]--would be given an exclusive time period to submit proposals to serve as PAE's. Criteria for the selection of PAE's would be based on the applicant's demonstrated experience and expertise in multifamily financing and restructuring and the capacity to work with low-income residents and communities. Further, selection would be based on the PAE's ability to perform the portfolio restructuring in a timely, efficient, and cost-effective manner. I would like to emphasize that the Secretary would be required to select housing finance agencies as PAE's if they meet the selection criteria. I strongly believe that, based on the housing finance agencies' track records and mission that they are by far the most viable entities to carry out the responsibilities under this program and to balance the financial and social policy goals of the bill. Accordingly, it is my expectation that State and local HFA's would be responsible for most of the properties under mark-to-market, as evident by the significant participation of public entities under HUD's fiscal 1997 mark-to-market demonstration program. Third, owners who clearly violate housing quality standards would no longer be tolerated. The bill screens out bad owners and managers and nonviable projects from the inventory and provides tougher and more effective enforcement tools that will minimize fraud and abuse of FHA insurance and assisted housing programs. Fourth, the conference bill revises the original version of S. 513, which had called for the exclusive use of project-based rental assistance after restructuring. Under the conference agreement, project-based assistance would be maintained on properties located in markets where there is inadequate available affordable housing and for those that predominantly serve elderly or disabled populations. For the remaining inventory, PAE's would be provided the discretion of either maintaining project-based assistance or providing tenant-based assistance. The PAE's decision on the form of assistance would be based on factors related to the local market, the stability of the project, resident choice, and the impact on the community. This decision would only be made after consultation with affected owners and appropriate public officials, and significant participation by affected residents. Fifth, the conference agreement establishes a new Office of Multifamily Housing Assistance Restructuring, headed by a Presidentially appointed Director, within HUD to oversee the restructuring process. The bill makes it clear that the Director will be answerable and be accountable to the Secretary, but will free of undue Secretarial interference in the conduct and decisionmaking of the office. Last, the bill provides tools to recapitalize the assisted stock that suffers from deferred maintenance. It provides the opportunity for tenants, local governments and the community in which the project is located to participate in the restructuring process in a meaningful way. Residents would also be empowered through opportunities to purchase properties. Mr. President, I would like to emphasize how important it is that we are addressing this issue this year. Delays will only harm the assisted housing stock, its residents and communities, and the financial stability of the FHA insurance funds. I would add that, as we face an explosion in the cost of section 8 contract renewals, we cannot afford to pay more than is reasonable to renew expiring contracts. This legislation will protect the Federal Government's investment in assisted housing and ensure that participating administrative entities are held accountable for their activities. It is also our goal that this process will ensure the long-term viability of these projects with minimal Federal involvement. It is a sincere effort to reduce the cost to the Federal Government while recognizing the needs of low-income families and communities throughout the Nation. In closing, I want to commend Senator Bond and his counterpart in the House, Congressman Jerry Lewis, for their cooperation in acting to avert a potential section 8 contract renewal crisis. This is a bipartisan proposal that both reduces unnecessary Federal expenditures and represents good and thoughtful Federal housing policy. Regulation of Insurance by HUD

Mr. MACK

Mr. MACK. Mr. President, the key issue in this debate is a simple one: Will we enforce the campaign laws already on the books or not? Will we concoct some new layer of confusing and complex rules and regulations to distract the voters from the real issue, or will we do the right thing? Are we going to insist that campaigns and candidates follow the current rules, or are we going to keep changing the laws each time there is a new scandal? If we can't--or won't--even enforce the laws we have now, what makes us think that a new set of laws will be more effective? The Senate and the American people have witnessed a flood of testimony in recent weeks and months about illegal foreign contributions, influence peddling, and money laundering at the highest levels of our Government. The Attorney General has finally called for an investigation in the face of mounting evidence that, to many of us, clearly warranted a special investigator months ago. Now, here we are debating a bill on the floor of the Senate that will not only add new regulations and restrictions to the people's ability to participate in the election of their own representatives, but which ignores the violations of campaign laws that apparently have already taken place. How does that play with the American people? I doubt it goes over too well. Sure, Americans are distrustful of all the money in campaigns. They are right to be suspicious when they read about Buddhist nuns being used to funnel foreign money into a Presidential campaign or the Lincoln bedroom being used to cozy up with big-money campaign contributors. And they are also right to be dubious of what is going on here, because I think they understand and we are not tackling the real issue at hand. We are trying to divert their attention away from the simple fact that our campaign laws are not being enforced. This is the kind of cynicism that justifies the American people's distrust and apathy toward Washington politicians. History teaches us that when any law is not enforced, whether campaign law or any other law, the people lose confidence in the system, whether it is the criminal justice system or the electoral system. When violations of the law go uninvestigated and unpunished, we send the message that the law doesn't matter. We destroy one of the core principles of our government--that we are a nation of laws, not of men--and the law applies equally to everyone--not just to some and not others. We aren't doing anything to restore the American people's confidence in their Government until we begin to deal with this fundamental issue: Do the current campaign laws matter enough to be enforced or are they just an arbitrary system that can be followed or ignored depending on what is convenient for a campaign? The answer to this question must be emphatic--the laws that are here to protect our political system must be enforced vigorously. Nothing less is acceptable. Mr. President, there is a second reason the voters are dubious about our seriousness for cleaning up campaign finance violations. Many of these voters are angry that their hard-earned money goes to candidates they don't agree with. This happens through what essentially is extortion by the unions. Many hard-working union workers have part of their paycheck sent to political campaigns they don't support. Yes, by codifying the Beck decision, this bill tries to make sure that non-union members don't have their paychecks extorted for political use. But union members are left in a position of having to choose between their job or their first amendment right to support the candidate of their choice. With more and more union members voting Republican in recent years, it's no wonder that the liberal union bosses are working to make sure this form of political blackmail is protected. Some will say this is no different than PAC's using their money to support candidates that a contributor may not agree with. Well if the Sierra Club or the National Rifle Association or any other similar group uses your money to support a candidate you disagree with, you can stop giving your money to that group and its PAC. It's a voluntary choice. But that's not possible in a union--at least not without putting your job at risk. No, Mr. President, this effort does nothing to fix what's broken. There are all sorts of schemes to make television stations give candidates free air time, and to regulate what can and can't be said in political commercials. And there are even provisions that would have the Federal Government establishing State and local campaign restrictions. All of this adds up to putting chains around our fundamental first amendment rights. The courts have repeatedly held that communications which do not expressly advocate the election or defeat of a candidate are not subject to regulation by the Government. But the proponents of this bill would make the Federal Election Commission into the politics police. They would determine whether a reasonable person would know that an ad is advocating the election or defeat of a candidate or not. This would send a chill through our political process. Now the Government would decide what is reasonable or not. It is exactly the kind of temptation to tyranny that the Founding Fathers were protecting the American people from when they adopted the first amendment. Supporters of this bill contend there is too much money in politics. What they're saying is, they think there's too much free speech, too much involvement by free people expressing their views. But isn't that exactly what we want--more involvement and more participation? More candidates are running for office now than ever. Voters now have more options than ever. Placing further limits on speech will effectively drive more citizens from the process. We should stop this misguided effort and do what the American people really want--and that is to enforce the laws that have been on the books for years. Only by doing so will we restore their confidence in the political and electoral system that is supposed to send us here to do their bidding. Mr. President, I urge all my colleagues on both sides of the aisle to make enforcing our current laws the No. 1 priority and put aside this effort to construct yet another monstrosity of bureaucracy and complexity that will add to American's skepticism of Washington.

Mr. MACK

Mr. MACK. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.

Mr. MACK. Mr. President, I suggest the absence of a quorum.

Mr. MACK

Mr. MACK. Mr. President, I ask unanimous consent that Senator DeWine be added as a cosponsor to my amendment.

Mr. MACK. Mr. President, what is the pending business before the Senate?

Mr. MACK. Mr. President, this amendment was offered last Thursday. We still have not had one Member come to the floor to speak in opposition to it. It has received support from both sides of the aisle and is supported by Senator Abraham, the chairman of the authorizing subcommittee. It has received positive editorial support from a wide array of newspapers, including the Washington Times and the New York Times. It has also received the endorsement of Empire America. Yesterday I introduced into the Record a letter of support from Jeanne Kirkpatrick, Jack Kemp, William Bennett, Lamar Alexander and Steve Forbes. This is a narrowly targeted amendment which merely ensures that Central Americans receive the due process which they were originally promised. It is focused on an identifiable group of people and ensures their opportunity to apply for suspension of deportation. It is not a grant of immunity. I have not been able to obtain an up-or-down vote on my amendment, so I will be moving to table my own amendment. I will oppose the motion to table, and ask for the support of my colleagues in opposing the motion to table. So, Mr. President, I therefore move to table amendment No. 1253. Mr. President, I ask for the yeas and nays.

Mr. MACK. Mr. President, I ask unanimous consent that this vote be delayed until 12:15.

Mr. MACK

Mr. MACK. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.

Mr. MACK. Mr. President, just to close this portion of the debate, there may be some that are saying, why are we doing this now? I ask people to try to put themselves in a position of a group of people who have, in fact, played by the rules, as was so eloquently laid out by Senator Abraham, and now there is the great potential that the rules could be changed on them and they would be denied due process. That is fundamentally wrong. I want people to think about what it must be like to wake up each morning and wonder whether you are going to be one of those that will be the subject of deportation. Think about the fear that must be going through that family, that mother or father, when that child goes off to school that afternoon or that morning. What is going to happen? Are they going to receive a notice of deportation? I know that our Nation does not want to impose that kind of fear on people. That is counter to everything that we believe. So again, I ask those who have listened to this debate and will be voting to vote in favor of this amendment.

Mr. MACK. Again, I mention those particular editorials because I think it gives you a sense of the range of support, both Democrat and Republican, from conservative to those considered liberal, who support our action and support this amendment. Mr. President, there are several things I need to do. I ask unanimous consent that Senator Santorum be added as an original cosponsor.

Mr. MACK. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.

Mr. MACK. Mr. President, I ask unanimous consent that editorials from the Miami Herald, New York Times, and Washington Times be printed in the Record, also.

Mr. MACK. Mr. President, I suggest the absence of a quorum.

Mr. MACK. Mr. President, I want to thank Senator Abraham not only for his eloquent statement but also his understanding of the matter of why we have ended up in this situation of having to deal with this issue on an appropriations bill. Again, I appreciate both your effort and your staff's effort over this last week or 10 days to try to keep making the effort to see if there was some way we could come to some agreement that would not have to put the Senate through this debate. So again, your counsel was invaluable, and I appreciate your presence on the floor as the chairman of the Subcommittee on Immigration of the Judiciary Committee. It is very meaningful to have your support, and we thank you very much. Just a couple of other comments, Mr. President. I wanted to indicate some of those who are supportive of this legislation. I have a letter from Empower America that is signed by Jeane Kirkpatrick, former Ambassador to the United Nations; Jack Kemp, former Member of Congress and former Secretary of HUD; William Bennett, former Secretary of Education; Lamar Alexander, former Secretary of Education; and Steve Forbes. All of them are supporting the legislation, making some of the same points that have been made already in the debate this morning. They urge support of the bill. ``We urge you to join in standing in solidarity with free people and democratic governments of our Central American neighbors and friends.'' The point they stressed in the letter is that the Central American countries, who, in essence, we went to bat for in the 1980's to protect democracy and to move them toward freedom and capitalism, today are still struggling in that battle. To send several hundred thousand individuals back into an environment, for example, in Nicaragua, where the unemployment rate is 60 percent, would destabilize those countries, which would be just the opposite of the effort that we made in the 1980's. Again, I appreciate their letter and their support of this legislation. To give you a sense of the range of support, my colleague from Florida mentioned several editorials. I don't want to duplicate those editorials, but I ask unanimous consent that letters from Empower America and the National Restaurant Association be printed in the Record.

Mr. MACK

Mr. MACK. Mr. President, I ask unanimous consent that the Committee on Labor and Human Resources be authorized to meet for a hearing on tobacco settlement during the session of the Senate on Tuesday, September 30, 1997, at 10 a.m.

Mr. MACK. Mr. President, I ask unanimous consent on behalf of the Governmental Affairs Committee special investigation to meet on Tuesday, September 30, at 10 a.m., for a hearing on campaign financing issues.

Mr. MACK. Mr. President, I ask unanimous consent that the Committee on Foreign Relations be authorized to meet during the session of the Senate on Tuesday, September 30, 1997, at 4:00 p.m. to hold a House/ Senate conference.

Mr. MACK. Mr. President, I ask unanimous consent that the full Committee on Environment and Public Works be granted permission to meet to consider S. 1180, the Endangered Species Recovery Act of 1997, Tuesday, September 30, 9:30 a.m., Hearing Room (SD-406).

Mr. MACK. Mr. President, I ask unanimous consent the Committee on Energy and Natural Resources be granted permission to meet during the session of the Senate on Tuesday, September 30, for purposes of conducting a full committee hearing which is scheduled to begin at 9:30 a.m. The purpose of this oversight hearing is to receive testimony on the impact of a new climate treaty on U.S. labor, electricity supply, manufacturing, and the general economy.

Mr. MACK. Mr. President, I ask unanimous consent that the Committee on Banking, Housing, and Urban Affairs be authorized to meet during the session of the Senate on Tuesday, September 30, 1997, to conduct a hearing of the following nominees: Laura S. Unger, of New York, to be a commissioner of the Securities and Exchange Commission; Paul R. Carey, of New York, to be a commissioner of the Securities and Exchange Commission; Dennis Dollar, of Mississippi, to be a member of the National Credit Union Administration Board; Edward M. Gramlich, of Virginia, to be a member of the Board of Governors of the Federal Reserve; Roger Walton Ferguson, of Massachusetts, to be a member of the Board of Governors of the Federal Reserve; and Ellen Seidman, of the District of Columbia, to be a director of thrift supervision.

Mr. MACK

Mr. MACK. Mr. President, I now ask that the Senate stand in recess.