
From the U.S. Code Online via GPO Access
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[Laws in effect as of January 23, 2000]
[Document not affected by Public Laws enacted between
  January 23, 2000 and December 4, 2001]
[CITE: 42USC1440]

 
                 TITLE 42--THE PUBLIC HEALTH AND WELFARE
 
                      CHAPTER 8--LOW-INCOME HOUSING
 
                SUBCHAPTER III--MISCELLANEOUS PROVISIONS
 
Sec. 1440. State housing finance and development agencies


(a) Statement of purpose; participation by private and nonprofit 
        developers in activities assisted

    It is the purpose of this section to encourage the formation and 
effective operation of State housing finance agencies and State 
development agencies which have authority to finance, to assist in 
carrying out, or to carry out activities designed to (1) provide housing 
and related facilities through land acquisition, construction, or 
rehabilitation, for persons and families of low, moderate, and middle 
income, (2) promote the sound growth and development of neighborhoods 
through the revitalization of slum and blighted areas, (3) increase and 
improve employment opportunities for the unemployed and underemployed 
through the development and redevelopment of industrial, manufacturing, 
and commercial facilities, or (4) implement the development aspects of 
State land use and preservation policies, including the advance 
acquisition of land where it is consistent with such policies. The 
Secretary of Housing and Urban Development shall encourage maximum 
participation by private and nonprofit developers in activities assisted 
under this section.

(b) Determination of eligibility for assistance; definitions

    (1) A State housing finance or State development agency is eligible 
for assistance under this section only if the Secretary determines that 
it is fully empowered and has adequate authority to at least carry out 
or assist in carrying out the purposes specified in clause (1) of 
subsection (a) of this section.
    (2) For the purpose of this section--
        (A) the term ``State housing finance or State development 
    agency'' means any public body or agency, publicly sponsored 
    corporation, or instrumentality of one or more States which is 
    designated by the Governor (or Governors in the case of an 
    interstate development agency) for purposes of this section;
        (B) the term ``State'' means any State of the United States, the 
    District of Columbia, the Commonwealth of Puerto Rico, or any 
    territory or possession of the United States; and
        (C) the term ``Secretary'' means the Secretary of Housing and 
    Urban Development.

(c) Guarantee of obligations issued by agencies; grants to agencies for 
        interest payments on obligations; maximum amount of grants; 
        prerequisites for guarantee; full faith and credit pledged for 
        payment of guarantee; effect and validity of guarantee; fees and 
        charges for guarantee; authorization of appropriations for 
        grants; maximum amount of obligations guaranteed

    (1) The Secretary is authorized to guarantee, and enter into 
commitments to guarantee, the bonds, debentures, notes, and other 
obligations issued by State housing finance or State development 
agencies to finance development activities as determined by him to be in 
furtherance of the purpose of clause (1) or (2) of subsection (a) of 
this section, except that obligations issued to finance activities 
solely in furtherance of the purpose of clause (1) of subsection (a) of 
this section may be guaranteed only if the activities are in connection 
with the revitalization of slum or blighted areas under title I of this 
Act [42 U.S.C. 5301 et seq.] or under any other program determined to be 
acceptable by the Secretary for this purpose.
    (2) The Secretary is authorized to make, and to contract to make, 
grants to or on behalf of a State housing finance or State development 
agency to cover not to exceed 33\1/3\ per centum of the interest payable 
on bonds, debentures, notes, and other obligations issued by such agency 
to finance development activities in furtherance of the purposes of this 
section.
    (3) No obligation shall be guaranteed or otherwise assisted under 
this section unless the interest income thereon is subject to Federal 
taxation as provided in subsection (h)(2) of this section, except that 
use of guarantees provided for in this subsection shall not be made a 
condition to nor preclude receipt of any other Federal assistance.
    (4) The full faith and credit of the United States is pledged to the 
payment of all guarantees made under this section with respect to 
principal, interest, and any redemption premiums. Any such guarantee 
made by the Secretary shall be conclusive evidence of the eligibility of 
the obligation involved for such guarantee, and the validity of any 
guarantee so made shall be incontestable in the hands of a holder of the 
guaranteed obligation.
    (5) The Secretary is authorized to establish and collect such fees 
and charges for and in connection with guarantees made under this 
section as he considers reasonable.
    (6) There are authorized to be appropriated such sums as may be 
necessary to make payments as provided for in contracts entered into by 
the Secretary under paragraph (2) of this subsection, and payments 
pursuant to such contracts shall not exceed $50,000,000 per annum prior 
to July 1, 1975, which maximum dollar amount shall be increased by 
$60,000,000 on July 1, 1975. The aggregate principal amount of the 
obligations which may be guaranteed under this section and outstanding 
at any one time shall not exceed $500,000,000.

(d) Requirements for guaranteed obligations

    The Secretary shall take such steps as he considers reasonable to 
assure that bonds, debentures, notes, and other obligations which are 
guaranteed under subsection (c) of this section will--
        (1) be issued only to investors approved by, or meeting 
    requirements prescribed by, the Secretary, or, if an offering to the 
    public is contemplated, be underwritten upon terms and conditions 
    approved by the Secretary;
        (2) bear interest at a rate satisfactory to the Secretary;
        (3) contain or be subject to repayment, maturity, and other 
    provisions satisfactory to the Secretary; and
        (4) contain or be subject to provisions with respect to the 
    protection of the security interests of the United States, including 
    any provisions deemed appropriate by the Secretary relating to 
    subrogation, liens, and releases of liens, payment of taxes, cost 
    certification procedures, escrow or trusteeship requirements, or 
    other matters.

(e) Revolving fund for payment of liabilities incurred pursuant to 
        guarantees and payment of obligations issued to Secretary of the 
        Treasury; composition; availability, issuance of obligations to 
        Secretary of the Treasury for implementation of guarantees; 
        amount, maturity, rate of interest, and purchase by Secretary of 
        the Treasury of obligations; payment of expenses and charges

    (1) The Secretary is authorized to establish a revolving fund to 
provide for the timely payment of any liabilities incurred as a result 
of guarantees under subsection (c) of this section and for the payment 
of obligations issued to the Secretary of the Treasury under paragraph 
(2) of this subsection. Such revolving fund shall be comprised of (A) 
receipts from fees and charges; (B) recoveries under security, 
subrogation, and other rights; (C) repayments, interest income, and any 
other receipts obtained in connection with guarantees made under 
subsection (c) of this section; (D) proceeds of the obligations issued 
to the Secretary of the Treasury pursuant to paragraph (2) of this 
subsection; and (E) such sums, which are hereby authorized to be 
appropriated, as may be required for such purposes. Money in the 
revolving fund not currently needed for the purpose of this section 
shall be kept on hand or on deposit, or invested in obligations of the 
United States or guaranteed thereby, or in obligations, participations, 
or other instruments which are lawful investments for fiduciary, trust, 
or public funds.
    (2) The Secretary may issue obligations to the Secretary of the 
Treasury in an amount sufficient to enable the Secretary to carry out 
his functions with respect to the guarantees authorized by subsection 
(c) of this section. The obligations issued under this paragraph shall 
have such maturities and bear such rate or rates of interest as shall be 
determined by the Secretary of the Treasury. The Secretary of the 
Treasury is authorized and directed to purchase any obligations so 
issued, and for that purpose he is authorized to use a public debt 
transaction the proceeds from the sale of any securities issued under 
chapter 31 of title 31, and the purposes for which securities may be 
issued under such chapter are extended to include purchases of the 
obligations hereunder.
    (3) Notwithstanding any other provision of law relating to the 
acquisition, handling, improvement, or disposal of real and other 
property by the United States, the Secretary shall have power, for the 
protection of the interests of the fund authorized under this 
subsection, to pay out of such fund all expenses or charges in 
connection with the acquisition, handling, improvement, or disposal of 
any property, real or personal, acquired by him as a result of 
recoveries under security, subrogation, or other rights.

(f) Technical assistance to agencies for planning and execution of 
        development activities

    The Secretary is authorized to provide, either directly or by 
contract or other arrangements, technical assistance to State housing 
finance or State development agencies to assist them in connection with 
planning and carrying out development activities in furtherance of the 
purpose of this section.

(g) Labor standards

    All laborers and mechanics employed by contractors or subcontractors 
in housing or development activities assisted under this section shall 
be paid wages at rates not less than those prevailing on similar work in 
the locality as determined by the Secretary of Labor in accordance with 
the Davis-Bacon Act, as amended [40 U.S.C. 276a et seq.]: Provided, That 
this section shall apply to the construction of residential property 
only if such property is designed for residential use for eight or more 
families. No assistance shall be extended under this section with 
respect to any development activities without first obtaining adequate 
assurance that these labor standards will be maintained upon the work 
involved in such activities. The Secretary of Labor shall have, with 
respect to the labor standards specified in this subsection, the 
authority and functions set forth in Reorganization Plan Numbered 14 of 
1950 (64 Stat. 1267), and section 276c of title 40.

(h) Protection of guarantees issued by United States; inclusion by 
        purchaser in gross income of interest paid on obligations issued 
        by agencies

    (1) In the performance of, and with respect to, the functions, 
powers, and duties vested in him by this section, the Secretary, in 
addition to any authority otherwise vested to him, shall--
        (A) have the power, notwithstanding any other provision of law, 
    in connection with any guarantee under this section, whether before 
    or after default, to provide by contract for the extinguishment upon 
    default of any redemption, equitable, legal, or other right, title, 
    or interest of a State housing finance or State development agency 
    in any mortgage, deed, trust, or other instrument held by or on 
    behalf of the Secretary for the protection of the security interests 
    of the United States; and
        (B) have the power to foreclose on any property or commence any 
    action to protect or enforce any right conferred upon him by law, 
    contract, or other agreement, and bid for and purchase at any 
    foreclosure or other sale any property in connection with which he 
    has provided a guarantee pursuant to this section. In the event of 
    any such acquisition, the Secretary may, notwithstanding any other 
    provision of law relating to the acquisition, handling, or disposal 
    of real property by the United States, complete, administer, remodel 
    and convert, dispose of, lease, and otherwise deal with, such 
    property. Notwithstanding any other provision of law, the Secretary 
    shall also have power to pursue to final collection by way of 
    compromise or otherwise all claims acquired by him in connection 
    with any security, subrogation, or other rights obtained by him in 
    administering this section.

    (2) With respect to any obligation issued by a State housing finance 
or State development agency for which the issuer has elected to receive 
the benefits of the assistance provided under this section, the interest 
paid on such obligation and received by the purchaser thereof (or his 
successor in interest) shall be included in gross income for the 
purposes of chapter 1 of title 26.

(Pub. L. 93-383, title VIII, Sec. 802(a)-(h), Aug. 22, 1974, 88 Stat. 
722-724; Pub. L. 98-479, title II, Sec. 203(l)(4), Oct. 17, 1984, 98 
Stat. 2231.)

                       References in Text

    This Act, referred to in subsec. (c)(1), is Pub. L. 93-383, Aug. 22, 
1974, 88 Stat. 633, as amended, known as the Housing and Community 
Development Act of 1974. Title I of the Housing and Community 
Development Act of 1974 is classified principally to chapter 69 
(Sec. 5301 et seq.) of this title. For complete classification of this 
Act to the Code, see Short Title note set out under section 5301 of this 
title and Tables.
    The Davis-Bacon Act, as amended, referred to in subsec. (g), is act 
Mar. 3, 1931, ch. 411, 46 Stat. 1494, as amended, which is classified 
generally to sections 276a to 276a-5 of Title 40, Public Buildings, 
Property, and Works. For complete classification of this Act to the 
Code, see Short Title note set out under section 276a of Title 40 and 
Tables.
    Reorganization Plan Numbered 14 of 1950, referred to in subsec. (g), 
is Reorg. Plan No. 14 of 1950, eff. May 24, 1950, 15 F.R. 3176, 64 Stat. 
1267, which is set out in the Appendix to Title 5, Government 
Organization and Employees.

                          Codification

    Section was enacted as part of the Housing and Community Development 
Act of 1974, and not as part of the United States Housing Act of 1937 
which comprises this chapter.


                               Amendments

    1984--Subsec. (e)(2). Pub. L. 98-479 substituted ``chapter 31 of 
title 31'' for ``the Second Liberty Bond Act'' and ``such chapter'' for 
``that Act''.

                  Section Referred to in Other Sections

    This section is referred to in section 1437c of this title; title 12 
section 1464.

                                     
