CREATION OF BANK

SEC. 802. There is hereby created a body corporate to be known as the Urban Development Bank, which shall have succession until dissolved by Act of Congress. The bank, which shall be an independent agency of the United States Government, shall maintain such offices as may be necessary or appropriate in the conduct of its business. Neither the bank nor any of its functions, powers, or duties shall be transferred to or consolidated with any other department, agency, or corporation of the United States Government unless the Congress shall otherwise by law provide.

BOARD OF DIRECTORS

SEC. 803. (a) The bank shall have a board of directors which shall consist of fourteen persons, one of whom shall be the president of the bank. The President of the United States, by and with the advice and consent of the Senate, shall appoint the directors, not more than three of whom shall be officers or employees of the United States and at least seven of whom shall be persons identified with or representative of State or local government.

(b) The board of directors shall meet at the call of its chairman, who shall require it to meet not less often than once each month.

(c) The President, by and with the advice and consent of the Senate, shall appoint a president of the bank, who shall serve at the pleasure of the President. The president shall be chairman of the board of directors. Subject to the general policies of the board, the management of the bank shall be vested in the president and he shall be the chief executive officer of the bank.

INITIAL EXPENSES

SEC. 804. In order to facilitate the formation of the bank, the Secretary of Housing and Urban Development is authorized to pay its initial organizing and operating expenses. There is authorized to be approprlated a sum not to exceed $1,000,000, which sum shall be available for the purposes of this section for a period of three years from the date of the enactment of this Act.

FUNCTIONS

SEC. 805. (a) The bank is authorized, subject to the provisions of this section, to make commitments to purchase, and to purchase, service, or sell, on terms and conditions determined by the bank, any obligation (or participation therein) of a State or local government; except that no obligation may be purchased under this title if the income from such obligation is exempt from Federal taxation.

(b) Purchases made by the bank shall be in accordance with sound and prudent development banking principles. No commitment for any purchase shall be entered into, and no purchase shall be made, unless the bank determines that the proceeds of such purchase will be used by the borrower to finance capital expenditures for public works and community facilities serving community needs (including works and facilities which are or could be part of a community development program assisted under title VI of the Housing and Urban Development Act of 1971).

(c) The bank shall develop criteria to assure that projects assisted by it are not inconsistent with comprehensive planning for the development of the community in which the projects to be assisted will be located or disruptive of Federal programs which authorize Federal assistance for the development of like or similar categories of projects.

(d) Any obligations purchased pursuant to this section may be in an amount not exceeding the total capital cost of the project to be financed with the proceeds thereof; shall be secured in such manner and be repaid in such period, not exceeding forty years, as may be determined by the bank; and shall bear interest at a rate determined by the bank which shall not be less than two-thirds of the current average yield on outstanding obligations of the bank as of the last day of the month preceding the date on which the purchase is made.

OBLIGATIONS OF THE BANK

SEC. 806. (a) The bank is authorized, with the approval of the Secretary of the Treasury, to issue and have outstanding obligations having such maturities and bearing such rate or rates of interest as may be determined by the bank. Such

obligations may be redeemable at the option of the bank before maturity in such manner as may be stipulated therein. The aggregate amount of obligations of the bank outstanding at any one time shall not exceed $5,000,000,000, which amount shall be increased by $5,000,000,000 on July 1, 1973, and by $5,000,000,000 on July 1, 1974. The full faith and credit of the United States is pledged to the payment of all obligations issued pursuant to this subsection with respect to both principal and interest. The bank is authorized to purchase in the open market any of its outstanding obligations.

(b) In addition to the obligations of the bank authorized to be outstanding in subsection (a) of this section, the bank is authorized to issue obligations to the Secretary of the Treasury. The Secretary of the Treasury is authorized to purchase any such obligations in order to insure the financial integrity of the operations of the bank, and for such purpose the Secretary of the Treasury is authorized to use as a public debt transaction the proceeds of the sale of any securities hereafter issued under the Second Liberty Bond Act, as now or hereafter in force, and the purposes for which securities may be issued under the Second Liberty Bond Act as now or hereafter in force are extended to include such purchases. Each purchase of obligations by the Secretary of the Treasury under this subsection shall be upon such terms and conditions as to yield a return at a rate not less than a rate determinated by the Secretary of the Treasury, taking into consideration the current average yield on outstanding marketable obligations of the United States of comparable maturities. The Secretary of the Treasury may sell, upon such terms and conditions and at such price or prices as he shall determine, any of the obligations acquired by him under this subsection. All redemptions, purchases, and sales by the Secretary of the Treasury of such obligations under this subsection shall be treated as public debt transactions of the United States.

(c) The receipts and disbursements of the bank in the discharge of its functions shall not be included in the totals of the budget of the United States Government and shall be exempt from any annual expenditure and net lending (budget outlays) limitations imposed on the budget of the United States Government. In accordance with the provisions of the Government Corporation Control Act, the President shall transmit annually to the Congress a budget for program activities and for administrative expenses of the bank, which budget shall also include the estimated annual net borrowing by the bank from the United States Treasury. The President shall report annually to the Congress the amount of net lending of the bank, including any net lending created by the net borrowing from the United States Treasury, which would be included in the totals of the budget of the United States Government if the bank's activities were not excluded from those totals as a result of this subsection.

FEDERAL PAYMENT TO THE BANK

SEC. 807. (a) With respect to such amounts of purchases made by the bank as may be specified in appropriation Acts, the Secretary of Housing and Urban Development is authorized to make, and to contract to make, annual payments to the bank in such amounts as are necessary to equal the amount by which the dollar amount of interest paid by the bank on account of its obligations exceeds the dollar amount of interest received by the bank on account of purchases made by it pursuant to section 805 of this Act.

(b) There are hereby authorized to be appropriated to the Secretary of Housing and Urban Development such sums as may be necessary to carry out the provisions of the title, including such sums as may be necessary to make the annual payments required by contracts entered into by the Secretary pursuant to subsection (a) of this section.

GENERAL POWERS

SEC. 808. The bank shall have power

(1) to sue and be sued, complain and defend, in its corporate name and through its own counsel;

(2) to adopt, alter, and use a corporate seal, which shall be judicially noticed;

(3) to adopt, amend, and repeal by its board of directors such bylaws, rules, and regulations as may be necessary for the conduct of its business; (4) to conduct its business, carry on its operations, and have offices and exercise the powers granted by this title in any State without regard to any qualification or similar statute in any State;

(5) to lease, purchase, or otherwise acquire, own, hold, improve, use or otherwise deal in and with, any property, real, personal, or mixed, or any interest therein, wherever situated;

(6) to accept gifts or donations of services, or of property, real, personal, or mixed, tangible or intangible, in aid of any of the purposes of the bank; (7) to sell, convey, mortgage, pledge, lease, exchange, and otherwise dispose of its property and assets;

(8) to appoint such officers, attorneys, employees, and agents as may be required, to determine their qualifications, to define their duties, to fix their salaries, and to require bonds for them and fix the penalty thereof; and

(9) to enter into contracts to execute instruments to incur liabilities, and to do all things necessary or incidental to the proper management of its affairs and the proper conduct of its business.

TECHNICAL ASSISTANCE

SEC. 809. (a) The bank is authorized to provide technical assistance to State and local governments in the preparation and implementation of comprehensive development projects and programs, including the evaluation of priorities and the formulation of specific project proposals. The bank may charge appropriate fees for its services under this subsection.

(b) The bank is also authorized to undertake research and information gathering activities, and to facilitate the exchange of advanced concepts and techniques relating to municipal growth and development among State and local governments.

AUDIT OF FINANCIAL TRANSACTIONS

SEC. 810. (a) The financial transactions of the bank shall be audited by the General Accounting Office in accordance with the principles and procedures applicable to commercial corporate transactions and under such rules and regulations as may be prescribed by the Comptroller General of the United States. The audit shall be conducted at the place or places where the accounts are normally kept. The representatives of the General Accounting Office shall have access to all books, accounts, financial records, reports, files, and all other papers, things, or property belonging to or in use by the bank and necessary to facilitate the audit, and they shall be afforded full facilities for verifying transactions with the balances or securities held by depositaries, fiscal agents, and custodians.

(b) The expenses of any audit performed under this section shall be borne out of appropriations to the General Accounting Office, and appropriations in such sums as may be necessary are authorized. The bank shall reimburse the General Accounting Office for the full cost of such audit as billed therefor by the Comptroller General, and the General Accounting Office shall deposit the sums so reimbursed into the Treasury as miscellaneous receipts.

(c) A report of each such audit for a fiscal year shall be made by the Comptroller General to the President and to the Congress not later than six months following the close of such fiscal year. The report shall set forth the scope of the audit and shall include a statement (showing intercorporate relations) of assets and liabilities, capital, and surplus or deficit; a statement of surplus or deficit analysis; a statement of income and expense; a statement of sources and application of funds; and such comments and information as may be deemed necessary to keep the Congress informed of the operations and financial condition of the bank, together with such recommendations with respect thereto as the Comptroller General may deem advisable, including a report of any impairment of capital or lack of sufficient capital noted in the audit. A copy of each report shall be furnished to the Secretary of Housing and Urban Development, to the Secretary of the Treasury, and to the bank.

TAX EXEMPTION

SEC. 811. The bank, its property, its franchise, capital, reserves, surplus, security holdings, and other funds and its income, shall be exempt from all taxation now or hereafter imposed by the United States or by any State or local taxing authority; except that (1) any real property and any tangible personal property of the bank shall be subject to Federal, State, and local taxation to the same extent according to its value as other such property is taxed, and (2) any and all obligations issued by the bank shall be subjected both as to principal and interest to Federal, State, and local taxation to the same extent as the obligations of private corporations are taxed.

OBLIGATIONS AS LAWFUL INVESTMENTS, ACCEPTANCE AS SECURITY

SEC. 812. All obligations issued by the bank shall be lawful investments (and may be accepted as security) for all fiduciary, trust, and public funds the investment or deposit of which is under the authority or control of the United States or of any officer or officers thereof. All stock and obligations issued by the bank pursuant to this title shall be deemed to be exempt securities within the meaning of laws administered by the Securities and Exchange Commission, to the same extent as securities which are direct obligations of or obligations guaranteed as to principal or interest by the United States.

PREPARATION OF OBLIGATIONS

SEC. 813. In order to furnish obligations for delivery by the bank, the Secretary of the Treasury is authorized to prepare such obligations in such form as the board of directors may approve, such obligations when prepared to be held in the Treasury subject to delivery upon order by the bank. The engraved plates, dies, bed pieces, and so forth executed in connection therewith shall remain in the custody of the Secretary of the Treasury. The bank shall reimburse the Secretary of the Treasury for any expenditures made in the preparation, custody, and delivery of such obligations.

ANNUAL REPORT

SEC. 814. The bank shall, as soon as practicable after the end of each fiscal year, transmit to the President and the Congress an annual report of its operations and activities.

AMENDMENTS RELATING TO FINANCIAL INSTITUTIONS

SEC. 815. (a) The sixth sentence of the seventh paragraph of section 5136 of the Revised Statutes, as amended (12 U.S.C 24), is amended by inserting "or obligations of the Urban Development Bank," immediately after "or obligations, participations, or other instruments of or issued by the Federal National Mortgage Association or the Government National Mortgage Association,".

(b) Section 5200 of the Revised Statutes, as amended (12 U.S.C. 84), is amended by adding at the end thereof the following new paragraph:

"(14) Obligations of the Urban Development Bank shall not be subject to any limitation based upon such capital and surplus."

(c) The first paragraph of section 5(c) of the Home Owners' Loan Act of 1933, as amended (12 U.S.C. 1464(c)), is amended by inserting “or in obligations of the Urban Development Bank;" in the second proviso immediately after "any political subdivision thereof;"

(d) Paragraph (2) of section 14(b) of the Federal Reserve Act, as amended (12 U.S.C. 355), is further amended by inserting ", or any obligation of the Urban Development Bank" immediately before the period at the end thereof.

DEFINITIONS

SEC. 816. As used in this title

(1) the term "bank" means the Urban Development Bank created by section 802 of this Act;

(2) the term "State" means the States of the United States, the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, American Samoa, and the Trust Territory of the Pacific Islands, or any agency or instrumentality of a State;

(3) the term "local government" means any county, municipality, or other political subdivision of a State, or any agency or instrumentality thereof, or any school or other special district created by or pursuant to State law; and (4) the term "obligation" means any bond, note, debenture, or other instrument evidencing debt.

AUTHORIZATION FOR APPROPRIATIONS

SEC. 817. There are authorized to be appropriated without fiscal year limitation, such sums as may be necessary to carry out the purposes of this title.

TITLE IX-PLANNING AND MANAGEMENT

STATEMENT OF FINDINGS AND PURPOSE

SEC. 901. (a) The Congress finds and declares

(1) that the ability of our system of government to respond effectively to the needs of all citizens depends upon the strength and capabilities of State and local governments;

(2) that the Federal grant-in-aid system has not given sufficient recognition to the need to work through and to strengthen elected officials of State and local government and regional combinations thereof;

(3) that State and local governments and regional combinations thereof must be aided in developing their planning and management capabilities if they are to fully carry out their responsibilities in the Federal system and if the fullest effectiveness of Federal expenditures is to be achieved;

(4) that existing Federal grant-in-aid programs tend to provide assistance in specific functional areas to specialized agencies and have not tended to strengthen the overall planning and management capabilities of elected State and local officials; and

(5) that, while basic reliance should be placed on State and local resources to support the improvement of State and local planning, decisionmaking, and management capabilities, the Federal Government must provide additional assistance if the Federal system is to be strengthened and the welfare of all citizens promoted. (b) It is therefore the purpose of this title

(1) to strengthen general purpose units of government and regional combinations thereof at the State and local levels (with major emphasis on actions by States to modernize both their own governmental machinery and that of their local governments) in order that such governments may use their revenues more effectively to cope with the complex problems they are faced with in a manner responsive to the economic and social needs of all affected citizens;

(2) to assist State and local governments in solving planning and management problems, including those resulting from the increasing concentration of population in metropolitan and other urban areas and the outmigration from and lack of coordinated development of resources and services in rural areas; to facilitate comprehensive planning and management for urban and rural development, including coordinated transportation systems, on a continuing basis by such governments; and to encourage such governments to establish and improve planning and management staffs and techniques on an areawide basis, and to engage private consultants where their professional services are deemed appropriate by the assisted governments; and

(3) to further the achievement of the national housing goal and a national urban growth policy by encouraging the development of local housing goals and by encouraging the States to take a larger role in land use and development planning.

SEC. 902. As used in this title

DEFINITIONS

(1) the term "Secretary" means the Secretary of Housing and Urban Development;

(2) the term "State" means any State of the United States, the Commonwealth of Puerto Rico, Guam, and the Virgin Islands;

(3) the term "locality" includes any city, county, or other unit of general local government, the District of Columbia, any territory or possession of the United States, or metropolitan or other multijurisdictional area which the Secretary, guided by any criteria in an applicable State planning and management program, determines forms an economic and socially related development region, taking into account such factors as present and future population trends and patterns of urban growth, location of transportation corridors,

66-842-71-3