ECONOMIC DEVELOPMENT GRANTS.

SEC. 232. ECONOMIC DEVELOPMENT GRANTS. (a) Grants.— (1) In general.—Section 108 of the Housing and Community Development Act of 1974 (42 U.S.C. 5308) is amended by adding at the end the following new subsection: 108 STAT. 367 “(q) Economic Development Grants.— “(1) Authorization.—The Secretary may make grants in connection with notes or other obligations guaranteed under this section to eligible public entities for the purpose of enhancing the security of loans guaranteed under this section or improving the viability of projects financed with loans guaranteed under this section. “(2) Eligible activities.—Assistance under this subsection may be used only for the purposes of and in conjunction with projects and activities assisted under subsection (a). “(3) Applications.—Applications for assistance under this subsection may be submitted only by eligible public entities, and shall be in the form and in accordance with the procedures established by the Secretary. Eligible public entities may apply for grants only in conjunction with requests for guarantees under subsection (a). “(4) Selection criteria.—The Secretary shall establish criteria for awarding assistance under this subsection. Such criteria shall include— “(A) the extent of need for such assistance; “(B) the level of distress in the community to be served and in the jurisdiction applying for assistance; “(C) the quality of the plan proposed and the capacity or potential capacity of the applicant to successfully carry out the plan; and “(D) such other factors as the Secretary determines to be appropriate.”. (2) Conforming amendment.— Title I of the Housing and Community Development Act of 1974 (42 U.S.C. 5301 et seq.) is amended— (A) in section 101(c) in the second sentence, by inserting “or a grant” after “guarantee”; and (B) in section 104(b)(3), by inserting “or a grant” after “guarantee”. (b) Use of UDAG Recaptures.—Section 119(o) of the Housing and Community Development Act of 1974 (42 U.S.C. 5318(o)) is amended by inserting before the period the following: “, except that amounts available to the Secretary for use under this sub-section as of October 1, 1993, and amounts released to the Secretary pursuant to subsection (t) may be used to provide grants under section 108(q).”. (c) UDAG Retention Program.— (1) Amendment.—Section 119 of the Housing and Community Development Act of 1974 (42 U.S.C. 5318) is amended by adding at the end the following new subsection: “(t) UDAG Retention Program.—If a grant or a portion of a grant under this section remains unexpended upon the issuance of a notice implementing this subsection, the grantee may enter into an agreement, as provided under this subsection, with the Secretary to receive a percentage of the grant amount and relinquish all claims to the balance of the grant within 90 days of the issuance of notice implementing this subsection (or such later date as the Secretary may approve). The Secretary shall not recapture any funds obligated pursuant to this section during a period beginning on the date of enactment of the Multifamily Housing Property Disposition Reform Act of 1994 until 90 days after the 108 STAT. 368issuance of a notice implementing this subsection. A grantee may receive as a grant under this subsection— “(1) 33 percent of such unexpended amounts if— “(A) the grantee agrees to expend not less than one- half of the amount received for activities authorized pursuant to section 108(q) and to expend such funds in conjunction with a loan guarantee made under section 108 at least equal to twice the amount of the funds received; and “(B) (i) the remainder of the amount received is used for economic development activities eligible under title I of this Act; and “(ii) except when waived by the Secretary in the case of a severely distressed jurisdiction, not more than one-half of the costs of activities under subparagraph (B) are derived from such unexpended amounts; or “(2) 25 percent of such unexpended amounts if— “(A) the grantee agrees to expend such funds for economic development activities eligible under title I of this Act; and “(B) except when waived by the Secretary in the case of a severely distressed jurisdiction, not more than one- half of the costs of such activities are derived from such unexpended amount.”. (2) Implementation.—Not later than 10 days after the date of enactment of this Act, the Secretary shall, by notice published in the Federal Register, which shall take effect upon publication, establish such requirements as may be necessary to implement the amendments made by this subsection.