WASHINGTON -- The House Banking Committee this week approved legislation to permit the use of tax-exempt private-activity housing bonds in conjunction with the HOME housing affordability program.

Under the legislation, state and local governments would be allowed to count the value of their multifamily and mortgage revenue bond issuances in the contributions they make to the program that are eligible for federal matching funds.

The measure is part of a broader package needed to reauthorize HOME and several other housing programs that expire this year. The full House is expected to act on the packagae in late July, after lawmakers return from the Democratic National Convention, a banking committee spokesman said.

The Senate Banking Committee is expected to approve a much narrower bond provision for the HOME program today, when the panel is scheduled to vote on the reauthorization legislation. Staff members have circulated a draft proposal that would permit states and localities to count only 25% of the value of their private-activity housing bond issues toward the match.

Created by Congress in 1990, the HOME program requires the federal government to match contributions that state and local governments make to low-income rental and home ownership projects.

In passing the law. Congress failed to specify what types of contributions would be considered eligible for federal matching funds. In 1991, the Department of Housing and Urban Development sparked controversy within the housing industry when it published regulations that allow only general obligation bonds to count toward the matching requirement. The committees' bills would make private-activity housing bonds eligible as well.

Housing industry officials said they were pleased with the House committee's action on the reauthorization bill, but were concerned that the HOME bond provision could be watered down before final enactment.

Fashioning a housing bill in the Senate has been much more difficult than in the House. Housing lobbyists said there have been a number of internal disagreements that have caused the date for the drafting session to be postponed three times.

In drafting its bill, the House panel also approved $2.1 billion for the HOME program in fiscal 1993, an increase from the fiscal 1992 level of $1.5 billion. The Senate panel has not said what level of funding it will support. Housing industry lobbyists, meanwhile, have urged Congress to approve $3 billion for 1993.

The bill approved by the House committee also includes a provision that would modify HUD regulations governing the ability of private, nonprofit organizations to acquire low-income units under a program to preserve affordable housing.

Nonprofits are expected to buy many of the properties with mortgages financed with 501(c)(3) bonds and insured by the Federal Housing Administration. But the housing industry has complained that some of HUD's regulations for the program make the mortgages, and in turn the debt financing, too costly.

One such rule requires that the term of the mortgages be no more than 20 years. The committee's bill would lengthen that term to 40 years.

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