Statement on Signing the Cranston-Gonzalez National Affordable Housing Act

It is with great pleasure that I today sign S. 566, the "Cranston-Gonzalez National Affordable Housing Act." In addition to extending and reforming existing housing programs, this Act creates and expands innovative new programs proposed by this Administration. These new programs will advance opportunities for homeownership and economic self-sufficiency in our Nation's most distressed communities. This Act is an exciting bipartisan initiative to break down the walls separating low-income people from the American dream of opportunity and homeownership.

I want to note the contributions of several people to the enactment of this landmark legislation, starting with Secretary of Housing and Urban Development Jack Kemp. Secretary Kemp has brought a unique vision to his job and a commitment to empowerment as a tool to encourage individual dignity and initiative and reward productive work effort.

Many Members of Congress also made significant contributions to the bipartisan effort to produce a housing bill. A few deserve special recognition. Senators Alan Cranston and Al D'Amato have devoted the last several years to the passage of a comprehensive housing bill, and we would not be here today without their efforts. Likewise, I want to recognize the efforts of Congressmen Henry Gonzalez and Chalmers Wylie, whose spirit of cooperation throughout the legislative process helped bring us to this point.

S. 566 contains the Homeownership and Opportunity for People Everywhere -- HOPE -- initiatives that my Administration submitted to the Congress earlier this year. HOPE represents a dramatic and fundamental restructuring of housing policy. It recognizes that the poor and low-income tenants -- not public housing authorities and developers -- are our clients. HOPE will do what traditional programs have not done: empower low-income families to achieve self-sufficiency and to have a stake in their communities by promoting resident management as well as other forms of homeownership.

The cornerstone of HOPE is a program to provide grants to enable low-income families and tenants to become homeowners. HOPE homeownership grants can be used for planning activities, including the development of resident management corporations. They can also be used for rehabilitation and post-sale subsidies to help ensure the success of homeownership. HOPE grants are eligible to be used in public housing and vacant, foreclosed, and distressed single-family and multifamily properties.

The legislation also includes my Administration's Operation Bootstrap -- or Family Self-Sufficiency -- proposal. In the past, public housing was seen as a long-term residence for low-income people. My Administration believes that Federal housing subsidies should serve as transitional tools to help low-income families achieve self-sufficiency, move up and into the private housing market, and join the economic mainstream. The Family Self-Sufficiency Program will ensure that all new housing voucher and certificate assistance is coordinated with employment counseling, job training, child care, transportation, and other services to encourage upward mobility.

S. 566 also authorizes our HOPE for Elderly Independence proposal to combine vouchers and certificates with supportive services to assist the frail elderly. In addition, it authorizes Shelter Plus Care, which couples housing assistance and other services to homeless persons with disabilities and their families.

This Act also reflects the efforts of the Administration and the Congress to enact needed reforms to the Federal Housing Administration's (FHA) single-family mortgage insurance program. These reforms will ensure that FHA is actuarially safe and financially sound. The Act's provisions meet the four principal objectives of my Administration's original FHA reform proposals: the achievement of adequate minimum capital standards by the earliest possible date; insurance premiums that reflect the risk of default; minimum equity contributions by borrowers to protect them and the insurance fund from default risk; and maintaining the emphasis of FHA on low- and moderate-income homebuyers. With these reforms, we will be ensuring the availability of FHA for future generations of families seeking to achieve homeownership.

I am pleased that this Act contains a solution to the preservation and prepayment question that reflects the Administration's basic principles. These include protecting project residents from becoming homeless as a result of a mortgage prepayment; emphasizing alternative prepayment strategies that provide opportunities for homeownership; and honoring the contracts between project owners and the Federal Government.

One important preservation strategy is to provide project owners with economic incentives to maintain their properties for low-income use. I am concerned, however, that the incentives in S. 566 are more generous than are necessary, providing excessive benefits over the long term that will be paid by all taxpayers. Nonetheless, I recognize that this preservation proposal is a compromise and that it represents a good-faith effort by the Congress to meet the Administration's concern that limited Federal funds be provided to those who need assistance.

This legislation provides a new block grant, HOME Investment Partnerships, to promote partnerships among the Federal Government, States, localities, nonprofit organizations, and private industry. These partnerships will seek to utilize effectively all available resources and a wide variety of approaches to meet housing needs.

My Administration has been concerned that the HOME program not become a vehicle for the production of new, federally subsidized rental housing at the expense of other, more efficient and better targeted subsidies, such as rental assistance to poor tenants.

I believe this legislation addresses our concerns, because it provides for a wide variety of uses for HOME funds, including tenant-based assistance. It also imposes higher State and local matching requirements for new construction than for tenant-based assistance or minor rehabilitation. In addition, it requires that 90 percent of HOME funds be targeted to families with incomes at 60 percent or below the area median income.

Unfortunately, this Act also sets aside up to 15 percent of total HOME funds in FY 1992 to be used solely for a rental housing production program. I do not believe that the earmarking of funds for new construction is consistent with the goal of providing States and localities with maximum flexibility to meet their specific affordable housing needs.

I am further concerned that this legislation, in several instances, would relax long-standing provisions of current law that provide a preference for housing assistance for those families who are most in need. Although the Federal Government currently serves about 4.3 million low-income families, there are about 4 million additional families, most of them very low income, whose housing needs have not been met. We should not divert assistance from those who need it most.

Several additional provisions warrant careful construction to avoid constitutional concerns. For example, section 302(b)(7) of the Act calls on the President to appoint one member of the Board of Directors of the National Homeownership Trust to represent consumer interests. In light of the President's power under article II, section 2 of the Constitution, I sign this bill with the understanding that the individual appointed by the President to serve on the Board represents the United States as an officer of the United States. The requirement that this individual represent consumer interests does not constrain the President's constitutional authority to appoint officers of the United States, subject only to the advice and consent of the Senate.

Section 943(e)(3)(A) provides that the National Commission on Manufactured Housing "may secure directly from any department or agency of the United States such data and information as the Commission may require." I sign the bill with the understanding that this provision does not limit the constitutional ability of the President to withhold information, the disclosure of which might significantly impair the conduct of foreign relations, the national security, or the deliberative processes of the executive branch or the performance of its constitutional duties.

Finally, it is the Federal Government's responsibility to ensure that the benefits of Federal programs are offered to individuals in a way consistent with the equal protection guarantee of the Constitution. In that regard, I am concerned about section 958(a) of the Act, which provides a preference to native Hawaiians for housing assistance programs for housing located in the Hawaiian homelands; section 958(d)(1), which defines "native Hawaiian" in a race-based fashion; and section 911, which would exempt this preference from the provisions of the Housing and Community Development Act of 1974 relating to nondiscrimination on the basis of race. This race-based classification cannot be derived from the constitutional authority granted to the Congress and the executive branch to benefit native Americans as members of tribes. I direct the Attorney General and the Secretary of Housing and Urban Development to prepare remedial legislation for submission to the Congress during its next session, so that this Act, and similar provisions in other Acts, can be brought into compliance with the Constitution's requirements.

I am pleased that, in crafting this legislation, the Congress also has modified a number of the rural housing programs administered by the Department of Agriculture's Farmers Home Administration. As a result, these programs will be more responsive to the needs of low-income residents of small towns and rural areas. A significant change is a new program of guaranteed loans for homeownership by low- and moderate-income residents in rural areas. This housing reform will provide assistance to these individuals and families more effectively and efficiently.

In conclusion, this legislation represents true bipartisanship, considerable give-and-take, and good-faith negotiation between the Congress and the Administration. It reforms and reauthorizes existing programs to provide for community development, to operate and modernize public housing, and to assist in meeting the needs of low-income families, the elderly, and the handicapped. In addition, through HOPE, it provides the potential for the redirection of housing policy back toward the poor.

The signing of the "Cranston-Gonzalez National Affordable Housing Act" presents us with an opportunity to renew our commitment to the goals we all share: decent, safe, and affordable housing for all Americans.

George Bush

The White House,

November 28, 1990.