[House Hearing, 107 Congress]
[From the U.S. Government Publishing Office]




                DEPARTMENTS  OF  VETERANS  AFFAIRS  AND

                 HOUSING  AND  URBAN  DEVELOPMENT,  AND

                  INDEPENDENT AGENCIES APPROPRIATIONS

                                FOR 2003

_______________________________________________________________________

                                HEARINGS

                                BEFORE A

                           SUBCOMMITTEE OF THE

                       COMMITTEE ON APPROPRIATIONS

                         HOUSE OF REPRESENTATIVES

                      ONE HUNDRED SEVENTH CONGRESS
                             SECOND SESSION
                                ________
            SUBCOMMITTEE ON VA, HUD, AND INDEPENDENT AGENCIES
                   JAMES T. WALSH, New York, Chairman
 TOM DeLAY, Texas                    ALAN B. MOLLOHAN, West Virginia
 DAVID L. HOBSON, Ohio               MARCY KAPTUR, Ohio
 JOE KNOLLENBERG, Michigan           CARRIE P. MEEK, Florida
 RODNEY P. FRELINGHUYSEN, New Jersey DAVID E. PRICE, North Carolina
 ANNE M. NORTHUP, Kentucky           ROBERT E. ``BUD'' CRAMER, Jr., 
 JOHN E. SUNUNU, New Hampshire       Alabama
 VIRGIL H. GOODE, Jr., Virginia      CHAKA FATTAH, Pennsylvania     
 ROBERT B. ADERHOLT, Alabama        
                                    
 NOTE: Under Committee Rules, Mr. Young, as Chairman of the Full 
Committee, and Mr. Obey, as Ranking Minority Member of the Full 
Committee, are authorized to sit as Members of all Subcommittees.
          Frank M. Cushing, Timothy L. Peterson, Dena L. Baron,
         Jennifer Miller, and Jennifer Whitson, Staff Assistants
                                ________
                                 PART 6

                     DEPARTMENT OF HOUSING AND URBAN
                               DEVELOPMENT

                              

                                ________
         Printed for the use of the Committee on Appropriations
                                ________
                     U.S. GOVERNMENT PRINTING OFFICE
 79-991                     WASHINGTON : 2002




                       COMMITTEE ON APPROPRIATIONS

                   C. W. BILL YOUNG, Florida, Chairman

 RALPH REGULA, Ohio                  DAVID R. OBEY, Wisconsin
 JERRY LEWIS, California             JOHN P. MURTHA, Pennsylvania
 HAROLD ROGERS, Kentucky             NORMAN D. DICKS, Washington
 JOE SKEEN, New Mexico               MARTIN OLAV SABO, Minnesota
 FRANK R. WOLF, Virginia             STENY H. HOYER, Maryland
 TOM DeLAY, Texas                    ALAN B. MOLLOHAN, West Virginia
 JIM KOLBE, Arizona                  MARCY KAPTUR, Ohio
 SONNY CALLAHAN, Alabama             NANCY PELOSI, California
 JAMES T. WALSH, New York            PETER J. VISCLOSKY, Indiana
 CHARLES H. TAYLOR, North Carolina   NITA M. LOWEY, New York
 DAVID L. HOBSON, Ohio               JOSE E. SERRANO, New York
 ERNEST J. ISTOOK, Jr., Oklahoma     ROSA L. DeLAURO, Connecticut
 HENRY BONILLA, Texas                JAMES P. MORAN, Virginia
 JOE KNOLLENBERG, Michigan           JOHN W. OLVER, Massachusetts
 DAN MILLER, Florida                 ED PASTOR, Arizona
 JACK KINGSTON, Georgia              CARRIE P. MEEK, Florida
 RODNEY P. FRELINGHUYSEN, New Jersey DAVID E. PRICE, North Carolina
 ROGER F. WICKER, Mississippi        CHET EDWARDS, Texas
 GEORGE R. NETHERCUTT, Jr.,          ROBERT E. ``BUD'' CRAMER, Jr., 
Washington                           Alabama
 RANDY ``DUKE'' CUNNINGHAM,          PATRICK J. KENNEDY, Rhode Island
California                           JAMES E. CLYBURN, South Carolina
 TODD TIAHRT, Kansas                 MAURICE D. HINCHEY, New York
 ZACH WAMP, Tennessee                LUCILLE ROYBAL-ALLARD, California
 TOM LATHAM, Iowa                    SAM FARR, California
 ANNE M. NORTHUP, Kentucky           JESSE L. JACKSON, Jr., Illinois
 ROBERT B. ADERHOLT, Alabama         CAROLYN C. KILPATRICK, Michigan
 JO ANN EMERSON, Missouri            ALLEN BOYD, Florida
 JOHN E. SUNUNU, New Hampshire       CHAKA FATTAH, Pennsylvania
 KAY GRANGER, Texas                  STEVEN R. ROTHMAN, New Jersey    
 JOHN E. PETERSON, Pennsylvania
 JOHN T. DOOLITTLE, California
 RAY LaHOOD, Illinois
 JOHN E. SWEENEY, New York
 DAVID VITTER, Louisiana
 DON SHERWOOD, Pennsylvania
   
 VIRGIL H. GOODE, Jr., Virginia     
   
                 James W. Dyer, Clerk and Staff Director

                                  (ii)




 
DEPARTMENTS OF VETERANS AFFAIRS AND HOUSING AND URBAN DEVELOPMENT, AND 
              INDEPENDENT AGENCIES APPROPRIATIONS FOR 2003

                              ----------                              

                                           Tuesday, March 19, 2002.

                HOUSING AND URBAN DEVELOPMENT DEPARTMENT

                               WITNESSES

MEL MARTINEZ, SECRETARY, U.S. DEPARTMENT OF HOUSING AND URBAN 
    DEVELOPMENT
RONALD ROSENFELD, PRESIDENT, GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
ROY BERNARDI, ASSISTANT SECRETARY FOR COMMUNITY PLANNING AND 
    DEVELOPMENT
JOHN C. WEICHER, ASSISTANT SECRETARY FOR HOUSING/FEDERAL HOUSING 
    COMMISSIONER
MICHAEL LIU, ASSISTANT SECRETARY FOR PUBLIC AND INDIAN HOUSING
ANGELA ANTONELLI, CHIEF FINANCIAL OFFICER
MELODY FENNEL, ASSISTANT SECRETARY FOR CONGRESSIONAL AND 
    INTERGOVERNMENTAL RELATIONS

                    Chairman Walsh's Opening Remarks

    Mr. Walsh. The subcommittee will come to order. Ladies and 
gentlemen, it is my pleasure to welcome you to the start of our 
hearing on fiscal year 2003 appropriations for the Department 
of Housing and Urban Development.
    I am very pleased to have back with us in his second 
appearance before the subcommittee, Secretary Martinez. Welcome 
back, Mr. Secretary. It is good to see you. You have been at 
the helm of one of the most important and challenging 
departments of the Federal Government for just over a year now. 
Few agencies in the Federal Government have such a direct and 
important impact on people's lives. Improving the management 
and delivery of HUD programs has been your highest priority 
over the last year, and we look forward to hearing from you on 
the changes in improvements that you have made so far and your 
future plans in this area.
    In fiscal year 2003, the Department is seeking a total of 
$31.3 billion, a net increase of $1.18 billion over 2002 
enacted. The request includes $2.6 billion in increases in 
selected programs, offset by $1.5 billion in program reductions 
and increased offsetting fee collections.
    Again this year, the largest increase in HUD's Budget, $1.9 
billion, occurs in Section 8 contract, of which $1.8 billion is 
solely for renewal costs associated with existing Section 8 
contracts.
    The Budget also includes increases for home ownership 
programs, affordable housing production and public and assisted 
rental housing programs.
    As we talked about last year, simply increasing funding for 
HUD programs will not necessarily solve the affordable housing 
needs of the country. There will be much discussion over the 
coming year on how to best address the affordable housing 
problems. As you probably are aware, the Millennial Housing 
Commission will be reporting to us very, very soon. It is an 
important discussion, one that needs to be had. Any meaningful 
discussions require all of us to take an honest look at the 
effectiveness of current programs so that we can make informed 
decisions when improvements need to be made and where 
additional investments are needed.
    I think it is important to note that HUD's Budget has grown 
by over 30 percent in the last 5 years. As we discussed last 
year, a significant pipeline of funds continues to exist in 
many HUD programs. Every dollar not yet spent represents a 
service not yet provided or a need not yet met. Working with 
you last year, we were able to put in place some measures which 
we hope will result in speedier capital improvements in public 
housing. We look forward to working with you to continue to 
make progress in improving the delivery of service to HUD's 
clients.
    Mr. Secretary, we will continue to do our very best to 
ensure that you have the tools you need to meet the challenges 
ahead. We are glad you are with us today, and after Mr. 
Mollohan offers his opening remarks, we would ask that you 
summarize your testimony, and we will include your full 
statement in the record.
    At this point I would like to recognize my colleague and 
friend, Mr. Mollohan of West Virginia.


                     MR. MOLLOHAN'S OPENING REMARKS


    Mr. Mollohan. Thank you, Mr. Chairman. I would like to join 
in welcoming the Secretary to testify today before our 
Committee. Mr. Secretary, HUD has now completed one budget 
cycle under your watch, and I am pleased that your budget 
submission maintains funding levels for most of HUD's programs. 
In light of the difficult budget situation that surrounds 
domestic discretionary programs, level funding might be a good 
start. However, you submission does contain a very large cut to 
public housing capital funds, and again proposes to eliminate 
the Rural Housing and Economic Development Program. It also 
proposes a new legislative initiative, one that is turning out 
to be somewhat controversial, that would allow public housing 
authorities to secure private financing for capital 
improvements. I will be very interested in hearing you talk 
about these funding levels and new financing proposals. I join 
the Chairman in welcoming you here today. Thank you for your 
good work during the year, Mr. Secretary.
    Mr. Walsh. Thank you. And also I will recognize that 
Congressman Frelinghuysen and Congresswoman Meek are here to 
begin the hearing.
    Mr. Secretary, please proceed.

                  SECRETARY MARTINEZ'S OPENING REMARKS

    Secretary Martinez. Thank you, Mr. Chairman, and Ranking 
Member Mollohan. We appreciate the wonderful cooperation that 
we have had with the Committee during the past year, and also 
the hard work that the Committee did to provide us with a very 
good budget this past year and to support our initiatives. We 
appreciate that very, very much.
    As you indicated, it is a $31.5 billion budget, and we 
think it is about a 7 percent increase, which again--as Ranking 
Member Mollohan indicated, I think is a decent level funding 
and increases in some areas. It is a good place to begin, and I 
am pleased that we have been able to secure that. Today, I was 
reading the forecast that there would be deep cuts in the HUD 
Budget. The forecasts are incorrect and I am very pleased to be 
able to say that.
    We had a very strong housing market in the past year, a lot 
of good things happened and we think the housing market was, in 
many ways, responsible for bringing the country out of 
recession and out of the doldrums. We are continuing to be 
committed. The President is very committed to the idea of 
continuing to increase homeownership, especially among minority 
families. I know that affordability of housing, Mr. Chairman, 
as you pointed out, is a very difficult issue. We read in depth 
about it in the Washington Post on Sunday, and it is an issue 
not just in the metropolitan Washington area, but around the 
country, and I do look forward to the recommendations of the 
Housing Commission. We have been keeping in close contact with 
the co-chairs of that group and have had some input and some 
conversations with them, which I think will be very positive as 
we go forward.
    In terms of homeownership, we continue to believe that that 
is a very important initiative. The American Dream Downpayment 
Fund, we are asking a $200 million level of funding for that 
which we think will help an additional 40,000 first-time home 
buyers. The tax credit for developers of single-family 
affordable housing, we also believe we will continue to promote 
home ownership in a very important and positive way.
    We also have asked in our Budget tripling the funding for 
the Self-Help Home Ownership Program, the SHOP Program, which 
allows organizations like Habitat for Humanity to do the work 
they do, and we think an additional 3,800 homes to 
disadvantaged Americans could be provided through that 
particular program.
    The Section 8 voucher towards home purchases is also 
continuing to be in the budget, and we think that is an 
important initiative as well. We recognize that there is a need 
for continued rental housing, so that 34,000 new vouchers are 
requested in this budget, in addition to continuing the level 
funding. I do point out that $16.9 billion of our Budget is 
committed to the Section 8 program, which is more than 50 
percent of the overall budget authority for the Department. So 
that is a very significant commitment.
    We have had some very good news in our FHA multifamily 
housing program. We notice that the reduction in the insurance 
premium that is been suggested for this budget year will assist 
and encourage more FHA multifamily housing construction. I am 
just going to rapidly run through my notes.
    I would like my complete statement to be a part of the 
record. In interest of time, I will simply say that I am 
looking forward to working with the Committee through this 
budget process as we did last year in a very positive and 
cooperative way, and I do look forward to continuing our work 
together. One of the things I would like to say at the outset, 
is I recognize that there are some concerns in the reporting 
from our Department, and let me assure you that we--I take that 
very, very seriously, and the Assistant Secretaries do as well, 
and we will ensure that the fullest reporting possible is made 
to the Committee in a timely and responsive way.
    That is our goal, and I have so directed, and I anticipate 
that that will be carried out. So those areas where there have 
been concerns, I assure you that we have taken those concerns 
very seriously and are diligently working to overcome those 
problems.
    So with that, Mr. Chairman, I will just be happy to try to 
answer your questions as we go forward.
    Mr. Walsh. Thank you very much, Mr. Secretary. Your full 
statement will appear in the record. And thank you for your 
positive response to that desire on the part of the Committee 
for reporting.
    [The information follows:]

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    
    Mr. Walsh. We will go in 10-minute segments so each member 
will have an opportunity to ask questions and receive answers 
for a 10-minute period, and the shorter the question, the 
shorter answer, the more questions you get in.
    It can work both ways, obviously.
    Secretary Martinez. Sir, I won't filibuster you, I promise.
    Mr. Walsh. Prior to Mayor Bernardi's mayoralty in Syracuse, 
his predecessor had a budget director who he used to send up to 
the common council to answer our questions. The mayor would 
come up before the council, but the budget director would, and 
you would ask him a 5-second question and you would get about a 
15-minute answer. He had mastered the art of filibustering 
legislature. So I don't recommend that to you, but it does 
work.
    Secretary Martinez. As I indicated to you, our Assistant 
Secretary is here, and I do intend to call on him freely to 
fully answer your questions as we go forward.

                               SECTION 8

    Mr. Walsh. Thank you. The Department's budget request 
includes a total of $17.5 billion for Section 8, a net increase 
of almost $2 billion above the fiscal year 2002 appropriation. 
This includes $16.9 billion exclusively for Section 8 renewal 
costs, which is a net increase of $1.9 billion over 2002.
    Aside from veterans medical care, Section 8 funding 
requirements continue to be the biggest growth item for our 
Subcommittee, driven primarily from the cost to maintain 
existing Section 8 contract renewals. Since fiscal year 2000, 
this Subcommittee has increased funding for Section 8 by over 
$5.3 billion, even after subtracting out the rescissions taken 
from section 8 recaptures.
    When the fiscal year 2003 costs are added, this account 
will have grown 80 percent in just 3 years. It is no surprise 
that Section 8 now accounts for 52 percent of HUD's total 
budget, and will continue to consume larger and larger chunks 
of the budget each year. Every year this Subcommittee has to 
make some tough funding choices elsewhere in this bill to 
ensure that HUD has the full amount it claims it needs for 
Section 8 renewals. So I am sure that you share our growing 
frustration when year after year we see huge amounts of Section 
8 funds never getting spent. I realize there are no easy 
solutions to this problem, but it is a problem I want to work 
with you to solve this year.
    The underutilization of vouchers which continues to be 
concentrated in the same small number of PHAs and the impact 
that has on your budget estimates continues to be a major 
source of this problem. I hope we can make some improvements in 
this area.

                                 SEMAP

    Mr. Secretary, last year you indicated that problem with 
Public Housing Administration management of Section 8, as well 
as HUD oversight of Section 8, were major factors contributing 
to the voucher underutilization. At HUD's request, we earmarked 
$10 million for HUD systems for assessing PHA management of 
their Section 8 programs, SEMAP, with the expectation that this 
system would enable HUD and the Congress to better understand 
and correct the problem.
    We asked HUD to provide a report to the committee 
identifying the poor performing PHAs and the specific 
corrective actions taken to improve their performance. 
Unfortunately, while HUD provided some information after the 
report's deadline, the Department did not provide the report as 
we requested. Therefore, we are unable to determine what and 
where the problems are, how they are being fixed and whether 
SEMAP has successfully identified poor performers.
    So can you help us better understand what you have found to 
date, specifically how SEMAP is working, to what extent is 
underutilization concentrated in the same PHAs, which PHAs and 
what management changes are necessary to improve those PHA 
performances, and when can we can expect to see results.
    Secretary Martinez. First of all, Mr. Chairman, I think 
that you articulated the problem precisely well. I think that 
the continuing growth of Section 8 in our Budget is a serious 
concern that not only in the management side, but also as a 
policy matter we should address going forward. I believe that 
the actions of the committee in instituting the SEMAP is a good 
and correct. I don't believe that we have done a good job of 
reporting back to you on this, and we need to improve and do 
better at that, and I intend to get involved in that personally 
to see that that occurs.
    I don't think there is any question that we can identify 
the problem areas. SEMAP having only been in effect for a year, 
we have not fully been able to get our arms around it, but we 
do see some patterns emerging that I think would be helpful for 
the Committee to have.
    At this point, I am going to ask Michael Liu, our Assistant 
Secretary of Public and Indian Housing, who directly 
administers this part of our budget, to comment on it further.
    Mr. Liu. Thank you, Mr. Secretary. Mr. Chairman, and 
members of the Committee, first of all, let me echo the 
Secretary's concerns, which I share, about our need to 
certainly provide you with the information that is desired, 
which we all need to make a better determination as to where we 
are on Section 8 and as to whether or not SEMAP is, in fact, 
the kind of tool that it has been purported to be. We hope to 
have that, I think, much more extensive in terms of what we all 
expect, within 2 weeks. That can actually lay out a much more 
detailed picture for all of us as to what SEMAP is all about.
    To date, I do think we can--there are some points of 
important information which we can relay to give us some sense 
that SEMAP is collecting some information of use. I think the 
real issue is can we link it to future performance and 
improvements in the program. First of all, it seems that there 
were four major areas where housing authorities are falling 
down. Lease-up rates, contract inspections, the calculation of 
tenant rents and annual reexaminations. Those are the four 
major testing items that housing authorities are failing on.
    We have identified 237 that would be categorized as 
troubled. The overwhelming majority of those in terms of the 
number of housing authorities are smaller housing authorities, 
153. This does give an indication that at least in terms of the 
types of housing authorities that we will be addressing, in 
terms of the number which are troubled, that this is a 
manageable issue. Sixty-two--and then the balance are moderate 
or larger housing authorities.
    So again, these are some indications that we are getting 
some information which will allow us to deal with the issue, 
and we have estimates of the cost of technical assistance that 
we can bring to bear, depending on the size of the housing 
authority.
    Mr. Walsh. Mr. Liu, can you tell me what percentage of the 
larger housing authorities where we have seen the majority of 
the problem have gone through SEMAP?
    Mr. Liu. What percentage of the larger housing authorities 
have actually gone through the SEMAP process?
    Mr. Walsh. Yes.
    Mr. Liu. And been ranked according to SEMAP?
    Mr. Walsh. Yes.
    Mr. Liu. We have--right. Approximately 54 have gone through 
the SEMAP process, and about 25 of those 54, about 46 percent, 
are ranked as troubled under the SEMAP scoring process.
    Mr. Walsh. And of the universe of large PHAs, what percent 
does 54 make up?
    Mr. Liu. We are trying to determine that the--the 
information base is a merged database right now, and that is 
one of the frustrations that I have had over the past few weeks 
is trying to extract that type of analysis, but we will have 
that for you at the end of the year.
    Mr. Walsh. Well, how many large PHAs are there in the 
country?
    Mr. Liu. Over 5,000 units--I think there are 
approximately--at least----
    Secretary Martinez. I guess it is 54, so we----
    Mr. Liu. 54.
    Mr. Walsh. So that is most of the--if not all of the large 
public housing authorities have been reviewed under SEMAP?
    Mr. Liu. Right. All but 69, which are going through now.
    Mr. Walsh. And you said about half of them or a little 
over--about half of them----
    Mr. Liu. Percent----
    Mr. Walsh. Are not performing.
    Mr. Liu. Right.

    [Agency Note: Assistant Secretary Liu's testimony regarding 
large housing authorities reflected data from a preliminary 
report. Based on the latest SEMAP reports, 235 out of a total 
of 304 large and extra large housing authorities have gone 
through an initial SEMAP scoring process, with the remaining 
ones going through the SEMAP process now. Of the 235 that have 
been scored, 6 percent have been scored troubled. While the 
testimony points out that the vast majority of troubled 
agencies under SEMAP are small, the small percentage of large 
and extra large authorities that are troubled account for the 
vast majority of HUD Section 8 funds.]

    Mr. Walsh. And you will have specific recommendations for 
them?
    Mr. Liu. Yes.
    Mr. Walsh. As you may remember, we had--well, I don't want 
to get into the capital fund--I will get into that later.
    Secretary Martinez. Mr. Chairman, if I may just to fully 
answer that, I think if you look at the packet, large housing 
authorities are defined by 5,000 units and over. The bulk of 
the money problem rests there.
    Mr. Walsh. Right.
    Secretary Martinez. That is clear, because when you have 25 
of them at 5,000 units a pop, that is an awful lot of our 
Section 8 vouchers, and the underutilization problem, in terms 
of the numbers, is clearly there. So that is where we need to 
focus our attention.
    Mr. Walsh. All right. As we work through to improve these 
PHAs and HUD's management of Section 8 funds, we can't continue 
to simply rely on trying to recapture excess funds after the 
fact. This process results in billions of dollars sitting 
unused for years and calls into question the credibility of 
HUD's funding request. We need to do a better job of estimating 
the actual funding needs up front as we do with every other 
account in this bill.
    Do you agree that improvements can be made in the way HUD 
determines its true funding needs for this account, and can we 
work together between now and the time this bill is marked up 
to get a truly defensible estimate for Section 8 funding for 
2003?
    Secretary Martinez. Yes and yes, and we will work very 
closely with the Committee to try to arrive at that. I don't 
think there is any doubt that your queries make us better and 
think that these are issues that we need to focus close 
attention on, because I get frustrated when I see the 
recaptures and when I see the unspent funds. When you see the 
gravity of the need, it is something we have got to address and 
get a handle on.
    Mr. Walsh. I thank you for that positive response. To make 
the point, the budget request for 2003 assumes a $1.1 billion 
offset in Section 8 recaptures. In 2001, there is $5.4 billion; 
and in 2000, there is $7.6 billion. So obviously, there is not 
a whole lot of science in that estimate, and we need to be more 
accurate on what the real needs are, because those funds are 
dear and are needed elsewhere within the budget housing and 
otherwise.
    Thank you. I will return to those questions when it comes 
back around.
    Mr. Mollohan.

                      POSSIBLE SECTION 8 PROBLEMS

    Mr. Mollohan. Thank you, Mr. Chairman. Mr. Secretary, to 
follow up just a little bit on the Chairman's questions. I 
think you were on C-SPAN this week?
    Secretary Martinez. Yes sir. It was yesterday, in fact.
    Mr. Mollohan. You did a nice job----
    Secretary Martinez. Thanks.
    Mr. Mollohan [continuing]. For the part I heard. And I am 
sure you did a good job in the rest of your appearance.
    I was struck by one of the questions, and I didn't hear 
very much of it because I don't live very far away from the 
Capitol. I was listening to it as I was driving in. A lady 
called in about Section 8, and--as I remember it, she made two 
points and asked questions about them. One was alleged 
impropriety in the Section 8 program, suggesting that the same 
applicant would apply for Section 8 in one community and then 
go to another community, I guess in the same State, and apply. 
And this was a pattern, or she was alleging it was a pattern, 
and I just wondered if you would comment on that.
    Secretary Martinez. I think what she was getting at is by 
applying in multiple locations, not that that person would get 
multiple vouchers, because they actually probably could not do 
that, but I think it was that they were appearing as a 
statistic in a multiplicity of places, and therefore adding to 
the waiting list, is kind of what I took from the question. But 
I am not sure where the question exactly was coming from in 
terms of the specificity of it. I would be concerned if someone 
could go apply from one community to another and get a number 
of vouchers, and then, I guess, resell them in the market, or 
something like that. So----
    Mr. Mollohan. Well, I must say I didn't get it either, but 
I was just going to ask and I am not even sure I got all of 
your answer.
    Secretary Martinez. It is hard to know exactly--it is just 
hard to know what the concern was, but----
    Mr. Mollohan. Well, are these kinds of problems part of the 
Section 8 program?
    Secretary Martinez. Not that I am aware of. That came out 
of left field. I was thinking it was really more in the vein of 
just occupying spaces on the waiting list, hoping to get one 
somewhere. You know, I think that is what it was getting at, 
but I could be wrong.
    Let me say, you know that, our Office of Inspector General 
is much more focused on these kinds of issues, and I think that 
we can expect them to continue to do a good job they are doing 
and----
    Mr. Mollohan. Well, if there were a problem, I am sure it 
would be on your desk.
    Secretary Martinez. But I have not heard of that being an 
issue.

                   SECTION 8 VOUCHER UNDERUTILIZATION

    Mr. Mollohan. This question of Section 8 vouchers not being 
utilized in certain areas, to what extent is it a problem with 
Section 8, and what do you propose to do to address it?
    Secretary Martinez. I don't think there is any question 
that that is a serious, serious problem, and there are some 
communities where, very legitimately, Section 8 doesn't work 
well because of the marketplace, because of the fact that 
people might get a voucher but really can't utilize it. We find 
that that may not necessarily be the reason why 
underutilization occurs.
    We believe it to be more of a management issue. But I think 
that one of the ways in which, as we go forward we should think 
about this project, or problem, is to allow those that do not 
utilize them to lose the vouchers, or some portion of them. And 
a permanent basis, because the problem currently is that you 
might allow another community to pick up the vouchers, but they 
don't keep them for year after year, then that becomes a 
problem. So if there is a pattern of underutilization, then we 
would decide to simply reallocate the vouchers to those 
communities that use 100 percent of them and are dying for 
more.
    Mr. Mollohan. I guess in some way that is rough justice, 
but what is going to happen to the low-income people that we 
are supposed to be serving? It begs the question of whether the 
private market the only solution to this problem?
    Secretary Martinez. We should do two things: We should try 
to help--and we are going to very much do that--the management 
problems in these housing authorities that we can now, through 
the SEMAP process, more closely identify. We should send a 
management team and try to deal with them. It is, as Secretary 
Liu said, a management problem, we think, because of the 
numbers. It is not like we were dealing with 1,000 housing 
authorities.
    But I do think that the burdens of the marketplace would 
probably force more efficiencies. Ultimately, at the end of the 
day, these are problems that would have to be enforced locally. 
If there is enough local pressure to the mismanagement of a 
housing authority, at some point, I think the better answer 
would be what we can achieve from Washington; try to determine 
how a small housing authorityin some community far from here 
goes about the business of utilizing their vouchers. I just don't know 
that we can have enough management to deal with all of these problems, 
so there has to be self-enforcement, and I think that the burdens of 
the marketplace might sometimes be good enforcement.
    Mr. Mollohan. If it were an isolated problem I might be 
more attracted to that solution, but as I understand the 
problem, it is systemic. There is a lot of nonuse of Section 8 
vouchers out there, and it is not geographically isolated.
    Secretary Martinez. Well, when you look at the large 
housing authorities--and there are 25 of them--that are 
underutilizing their 5,000 plus vouchers apiece, you know, I 
think that you are looking there at the huge part of the 
problem, is those 25 public housing agencies in very large 
communities that have way underutilized their allocations. But 
the threat of losing them alone, I think, would help them to 
find a better way to get a handle on their problem. I think.
    Mr. Mollohan. Are you pursuing that policy?
    Secretary Martinez. Well, that is something they think we 
should consider, and I would love to continue the conversation 
with the committee to see where we might go with it. I think it 
would be a two-track approach. One would be provide them with 
some management help, but at the end of the day, I think their 
failure and the burden of their failure, ought to create enough 
local pressure to where the mayor becomes concerned, and then, 
you know, with that concern comes concern to the Commissioner 
of the Housing Authority. This is not rocket science. This is 
just property management.
    Mr. Mollohan. I understand. But I know you would be 
concerned about the amount of time that sort of an approach 
would take, and what is going to happen to the people who are 
supposedly going to benefit from the program in the meantime.
    Secretary Martinez. I think we need to be proactive in 
helping the people that are now on some waiting list, and in 
fact, the vouchers are going unused, but I think also the other 
being held out there as a possibility might be an interesting 
approach to take as well.
    Mr. Mollohan. Can we expect you to be coming forward with a 
specific plan?
    Secretary Martinez. We are going to have a plan for you, 
and we should have already had it for you from what I see, and 
we will have it in the very near future.

                           AFFORDABLE HOUSING

    Mr. Mollohan. In the Sunday Washington Post, there was an 
article about how fewer working families are finding affordable 
housing options in this region. It seems to be a national 
trend. Could you comment on the growing problem of affordable 
housing in the United States?
    Secretary Martinez. I think it is clearly a growing 
problem, and I think it is not just limited to this 
metropolitan area. But I think many others also have a similar 
problem. I think that clearly we have to look at ways in which 
we can continue to encourage housing production. I think that 
the Millennial Housing Commission coming back with some 
recommendations will be a very important part of that. We have 
tried to do some of that by raising the FHA multifamily loan 
limits, and we have had great success with that. We did that a 
year ago with your cooperation, and we believe that the 
response to that is having a tremendous effect, particularly in 
communities where there was not a lot of FHA multifamily 
construction because of the cost factor. So when we see 
communities that had, for years, not participated now 
participating, we get encouraged that is going to make a 
difference.
    I don't think that this is a problem that we can solve with 
one solution, and certainly not one governmental global 
solution, but I think a multiple number of avenues to pursue 
might provide us with some answers, and I am encouraged by what 
I hear from the Millennial folks as to what they will be coming 
back to us with, and I would look forward to their report, 
which I think is only a month or so from now. But clearly, this 
is a national progress, and this is a growing problem that I 
think we should be concerned with.
    Mr. Mollohan. We are looking forward to the Millennium 
report as well.
    Is there objective data out there that would give us more 
of a handle of what the affordable housing problem or crisis is 
and what the trend line looks like?
    Secretary Martinez. We have been doing some of that, and I 
would be glad to call on Housing Commissioner John Weicher to 
help with that. We were just looking at ways in which we can 
more easily demonstrate, graphically, what the problem seems to 
be, and how to get a handle on it. So we are working on how to 
do that, but in the meantime--there you are.
    Dr. Weicher. Thank you, Mr. Secretary. The main thing that 
HUD produces on the affordability problem is our annual worst-
case needs report, which looks at the ability of low-income 
renters to afford decent housing and the housing conditions in 
which they live. And the last report which covers data through 
1999 indicated a little bit of a decline in the number of 
renters facing worst-case need problems, from 4.9 million 
nationally to 4.5 million nationally.
    With respect to homeowners, we typically do not put 
together any kind of report on that, because the low-income 
homeowners are fairly unusual. They tend to be older people who 
bought their home when they were younger and are still living 
in it, or they are owners in rural areas.
    I did go back and look at the FHA data on loans that we 
have insured in the Washington area, and we insure about 30,000 
home purchase loans per year in the Washington metropolitan 
area, and the income range of the people that we are serving, 
most of them are between $30,000 a year and $60,000 a year in 
income, below the median income for families in the Washington 
area. So FHA is really the prime vehicle that the Government 
has for helping moderate-income families and middle-income 
families become first-time home buyers with VA and the Rural 
Housing Service as the other two main programs that we have.
    Mr. Mollohan. Would you agree or disagree with the 
Washington Post on the point of the article?
    Dr. Weicher. I think as a family that is working its way 
into the middle class is certainly going to have trouble buying 
a first home. We have known for many years that the biggest 
problem that families have in becoming homeowners is the 
ability to accumulate the up-front cash cost, the downpayment 
and the closing costs, and that is, of course, what we try to 
deal with in FHA and also in VA. But I think that we also have 
families who have been on welfare, and we also have families 
who are recent immigrants. And for them, as they work their way 
into the middle class, it is a stretch to get the ability to 
buy that first home.
    Mr. Mollohan. Thank you. Thank you, Mr. Secretary.
    Mr. Walsh. Thank you.
    Mr. Frelinghuysen.

                         VOUCHERS FOR DISABLED

    Mr. Frelinghuysen. Thank you, Mr. Chairman. Mr. Secretary, 
let me congratulate you and the administration for elevating in 
your budget documents the need to address problems of housing 
for people with disabilities. I harped on that on the 7 years I 
have been on this committee, and just looking at your budget 
summary, I think you deserve a lot of congratulations for 
highlighting it, putting it on an equal basis with programs for 
older people, although, certainly, we never want to set up a 
competitive environment. So many of my questions are going to 
focus on the needs of people with disabilities.
    The administration's budget proposes to make $40 million 
available for nonelderly people with disabilities from the 
total HUD request of $204 million for incremental vouchers in 
fiscal year 2003. These dollars would allow for funding of 
approximately 7,900 vouchers for nonelderly people with 
disabilities who have lost or are expected to lose access to 
public and assisted housing as a result of projects and 
developments being designated as elderly only.
    If Congress accepts this recommendation, it would bringthe 
7-year total for this Committee's effort--and this has been 
bipartisan--to nearly $300 million, which is a lot of money. I am 
grateful that you have included these funds and the particular language 
in your appropriations request. I do remain extremely concerned that 
these funds are not getting to the individuals for whom they are 
designed for a number of reasons. In other words, you have made the 
commitment, but there seems to be some obstacles that prevent the dream 
from being realized.
    I am most alarmed by the fact that it has been reported to 
me that these vouchers, if not used within a year, are not 
going to people with disabilities but to the general Section 8 
population. As you are aware, these vouchers were designed to 
offset the ongoing loss of public housing, due to the 
designation of elderly only public and assisted housing. Public 
housing authorities are designating more and more units as 
elderly only, and assisted housing providers continue to do the 
same.
    Could you update the Committee on HUD's efforts to 
implement and monitor this program?
    Secretary Martinez. Well, sir, you have been a strong 
advocate, and we have heard your concerns, and I think that is, 
in great measure, a part of why the budget response is what it 
is. But also, I know that the President has been very committed 
in this area as well. As you know, the Administration initiated 
the New Freedom Initiative, which tries to address the needs of 
people with disabilities as a priority, and we have undertaken 
a number of activities at HUD to assist people with 
disabilities.
    We have a number of things HUD is awarding this year, more 
than $60 million in fair housing grants to fund fair housing 
organizations nationwide in an effort to fight housing 
discrimination, including discrimination against persons with 
disabilities. In fiscal year, 2002 the FHA will increase the 
number of disability rights compliance reviews over the already 
increased number in the year 2001. We have also awarded a $1 
million contract to develop and implement a training and 
technical guidance plan on a national scale to assist the 
building industry in complying with Fair Housing Act 
accessibility requirements.
    All of these things, along with a number of other things we 
have been doing, I think, will all inure to the benefit of 
people with disabilities and their accessibility to that issue.
    Now, with respect to the utilization of Section 8 vouchers, 
which I think is more specifically your question of whether or 
not these vouchers are now being lost, I know that is a concern 
and I know that has occurred. What I don't know is--Michael, 
can you address how we might----
    Mr. Frelinghuysen. Is it partially the NOFA process?
    Mr. Liu. Yes sir, and what we are considering for the 2002 
NOFA.
    Mr. Frelinghuysen. Maybe you can just define that acronym.
    Mr. Liu. Notice of Funding Availability for 2002. We have 
moved the prior guidance that had, in fact, put those vouchers 
back into the voucher pool after the turnover period. So for 
going forward, these vouchers will remain available for the 
beneficiaries that they were intended for.
    Mr. Frelinghuysen. But in your narrative in the budget 
summary, you say if a sufficient number of applications for 
these vouchers are not received, the PHAs may use them for any 
other disabled individuals on the PH waiting list, or they can 
then go back into the general population. Right?
    Mr. Liu. Well, since that was printed, we have had meetings 
with various organizations and advocates for the disabled, and 
the result of that has been this action in regards to our 
upcoming 2002 Notice of Funding Availability, where the 
guidance that would allow those vouchers to go back to the 
general voucher pool has been removed.
    Mr. Frelinghuysen. It has been?
    Mr. Liu. Has been removed, sir, yes.
    Mr. Frelinghuysen. That is good.
    Mr. Liu. Yes, sir.

                   PHA ALLOCATION PLANS FOR DISABLED

    Mr. Frelinghuysen. There was mounting evidence--and this 
may be germane--that when public housing authorities file what 
they call their allocation plans to designate elderly only 
housing, many do not make a request for disabled vouchers. How 
does HUD's approval process measure the housing needs of people 
with disabilities in these cases to ensure that the PHAs' plan 
includes an accurate view of the housing needs of people with 
disabilities in each community?
    Mr. Liu. We are continuing to work with the housing 
authorities on this issue. There is a problem in many 
communities with the ability to identify potential clients and 
customers that might qualify for these vouchers. We are in 
discussions with both national and local organizations to 
partner them with the housing authorities to help the housing 
authorities do a better job with those assessments. We have a 
contract with a group called the Technical Assistance 
Collaborative, to assist housing authorities generally across 
the country in this area of planning. A lot of it is 
information, our continuing need to work with housing 
authorities to let them know what this resource is, how to 
manage it better and to hold them accountable for the promises 
that they make in the applications for these vouchers.
    Mr. Frelinghuysen. How do you know they have actually 
applied for them? They submit their allocation plans----
    Mr. Liu. Yes.
    Mr. Frelinghuysen [continuing]. Contingent on if the PHA 
seeks vouchers, but how do you actually make sure they have 
applied for them?
    Mr. Liu. Well, this is not mandatory on the part of the 
housing authorities. This is an optional item for them. So as I 
indicated, what we are doing is working collaboratively and 
through technical assistance that we are providing to the 
housing authorities to, in fact, get them involved in the 
process of identification and applying for the vouchers for 
this reason.

                           HOUSING INVENTORY

    Mr. Frelinghuysen. For a number of years, I have been 
seeking an inventory of Federal-assisted housing. What is 
available for people with disabilities? This is to get a 
complete inventory of Federally assisted housing for people 
with disabilities. Last year I asked you to compile the 
inventory of all accessible housing. To my knowledge, I don't 
think the committee has received the report. This is the whole 
issue of measuring. In other words, I am congratulatory in 
terms of what you have done, but in reality, how do we know we 
have achieved our objectives if we don't actually have some 
standard by which to measure it, which is why we insistently 
have called for an inventory of this type of housing, not only 
the public sector but privately-owned assisted housing 
properties?
    Dr. Weicher. Mr. Frelinghuysen, we are doing two things. We 
are in the process of modifying our rental assistance 
certification system, our database for FHA assisted housing, to 
identify which units in the assisted inventory are accessible 
to persons with disabilities. We will be incorporating that 
modification of the data system in June, and we will have a 
report by the end of the year. Separately, we are also going to 
our field offices.
    We have 18 multifamily Hubs in 33 multifamily program 
centers around the country, and we are asking them to provide 
information on the number of units in the entire FHA inventory, 
both the assisted inventory and the insured unassisted 
inventory. That is about 30,000 projects, to see how many units 
in that inventory are accessible. As we collect that 
information, field office by field office, we will post it on 
our Web. It will become available on a geographic basis, and we 
expect that data to start becoming available on the Web in the 
fall.
    Mr. Frelinghuysen. This has been a request by this 
Committee for 3 or 4 years, and I think we need to get about 
it. As more PHAs are designated as elderly only, considering 
all the waiting lists for people with disabilities, they appear 
to be more and more shut out of the process. And it is 
difficult to measure, unless you usethe power that you have to 
get that information from all of those responsible parties.
    Dr. Weicher. Yes.
    Mr. Frelinghuysen. Thank you, Mr. Chairman.
    Mr. Walsh. Thank you, Rodney.
    Mrs. Meek.

                 UNDERUTILIZATION OF SECTION 8 VOUCHERS

    Mrs. Meek. Thank you, Mr. Chairman, and I want to welcome 
Secretary Martinez, and I just want to remind the committee 
that Secretary Martinez is a Floridian. We are very proud of 
him, and he is doing a good job. And we are going to continue 
to look at housing as we should, and that is, I think, if I may 
talk just a little bit about the questions which our Chairman 
asked on Section 8.
    I have been trying to, in my entire tenure on this 
Committee, to pay more attention to Section 8, and that we know 
where most of the housing needs are in this country with low-
income people. And HUD has tried over the years to reach this 
population. It isn't easy. It is a difficult thing to do to 
provide this kind of housing, but I am concerned about the 
underutilization problem and the fact that much of what this 
Committee has talked about this morning perhaps could be 
resolved through policy changes, not necessarily on this 
Subcommittee, and that this problem has been brought to the 
attention of this Subcommittee, in that it doesn't seem 
statutorily sound to be able to convert some of the Section 8 
monies to other parts of housing where it could be utilized for 
everyone.
    It could be utilized, perhaps, if it were to go into home 
funds or some other HUD program where it could be utilized and 
meet the needs of these people. The problems here are people 
problems, as I perceive it, in that there are people out there 
who need this housing, and we do have the resources, and much 
of it is left in Section 8. And it is reprogrammed or 
reauthorized or recaptured, and the people problems are still 
there. The paper problems are solved, because you are able to 
recapture it and utilize it in another capacity. I think the 
Chairman's questions were right on in terms of the needs here.
    I would just like to focus your attention to the fact that 
you responded to Mollohan and Walsh on Section 8 funds, but we 
know that the vouchers cannot be wholly solved by management 
problems. You must look at the root causes as to why these 
Section 8 vouchers are not being used. That is why I feel that 
it is a function of an Authorizing Committee to look at these 
problems, and I am sure Secretary Martinez and your staff can 
bring--put this in such a perspective, that it can be done in 
terms of an authorizing committee.
    I find out in Miami and in many other low-income 
communities--and I work very closely with the low-income 
housing coalitions in this country. They have seen this problem 
all the way through, because whenever--just look at the fact 
that most of--the housing market is so tight, that it is very 
difficult if you hand someone a Section 8 voucher and expect 
them by magic to run out there and find someplace. It just 
doesn't happen. So when you are dealing with reality, you know 
that the housing market is tight, so you have got to look at 
how can you expand this and get the kind of partnerships to 
loosen up the market so people can find jobs--homes.
    And even when we have vouchers for the people, they have to 
go miles and miles to find a place to stay, far from where they 
can find a job. So I don't want to go into all of this, but I 
want to make it very plain that I don't think that the solving 
of this particular problem would rest with this subcommittee. 
It would need to come from a direct policy change that will 
give HUD the authority to do some of the things that it needs 
to do to solve this problem. And I am hoping that we will be 
able to find those innovative places, and we are hoping, Mr. 
Secretary, that you can give me a quick answer on that if you 
will help put together a kind of proposal for the Housing 
Committee, the authorizing committee to look at.
    Secretary Martinez. Well, I think, you know, you are 
touching a very delicate problem and a serious issue, and I 
know the recapture is a problem every year. I would love to see 
those monies remain in housing, I understand the difference 
between the functions that we each have. So I would leave that 
to the discretion of the Committee, but I think in terms of the 
utilization issues, in terms of the availability of housing for 
voucher recipients to find suitable housing, I think those are 
very, very serious problems, and we would love to work with you 
and try to, you know, study the issue and come back with some, 
you know, quantitative type of at least analysis of the problem 
so we can begin to tackle it.
    This has been a problem that has been around for a number 
of years and doesn't seem to be getting any better. So we are 
willing to work with you on that.

                           EMPOWERMENT ZONES

    Mrs. Meek. Thank you, Mr. Secretary, and I think the only 
way we will get this problem resolved is to take it down to the 
policy level.
    My next question has to do with the round II empowerment 
zones. Last year the President recommended quite an increase in 
empowerment zone monies, and we funded it very sparingly, but 
he did propose that. This particular budget year he has not 
proposed any funds for empowerment zones. It sort of puts us in 
a very tight bind to have Round II empowerment zones and 
wherein Government came out with a very beautiful scenario, Mr. 
Secretary, as to how empowerment zones would work and to get 
things started. And now we come back this year with very little 
room to work on.
    Now, someone is making some very drastic changes, and we 
have made very drastic commitments out here in the community to 
work with the private sector, and all of the zones have not 
been guilty of holding the money as much as you would see here. 
They have not held on to the money, particularly in my 
community has tried to use its empowerment zone funds.
    I would like for you to speak to that, because I just know 
tax incentives won't solve all of this.
    Secretary Martinez. You have touched on both of the issues, 
one is whether or not it is tax incentives that work best. In 
some of these areas we have found that some of the best success 
seems to come from the area, you know, of the tax benefits 
involved. But I think also the fact that utilization of the 
funds has not been all that it should be. I mean, less than 21 
percent of the total appropriations has been utilized so far. I 
think those are the two reasons why the budget is as you find 
it.
    Let me ask Assistant Secretary Bernardi to comment on that 
as well.
    Mr. Bernardi. Congresswoman Meek, as the Secretary 
indicated, only $58 million out of the $285 million total has 
been drawn down so far. That is about 20 percent for the 15 
Round II empowerment zones. Obviously, it takes years to put 
things into the planning process, but we made the decision not 
to request additional funds in fiscal year 2003, and to have 
the empowerment zones, not only to Round II, but the 8 Round II 
the 40 renewal communities that we just designated, take 
advantage of the opportunity for the $22 billion that will be 
available in tax incentives. As they continue forward and 
utilize those funds and drive down the balance, as the 
Secretary indicated, only 21 percent has been expended so far--
we would like to see a little more progress, especially from 
the Round II zone funding.
    Mrs. Meek. I would wish you would look at a little bit more 
closely at that, because it is much of the money has--it just 
doesn't happen by fiat that you do these projects, and it does 
take time and they must have some kind of loan pool to get 
these projects off the ground. They must have the land and all 
of that. You understand that, and I do wish that you could look 
a little bit more affirmatively at how to make the empowerment 
zone work. It will work, and it won't just be another Federal 
project that we put money in to get people in the private 
sector involved, then we back out of that commitment.
    Mr. Bernardi. Well, the partnership, obviously, of the 
Federal Government providing grants, the $225 million that 
those Round II empowerment zones can draw down, and the private 
using the tax incentives is working. We fully hope that, in 
those distressed areasthat were designated empowerment zones, 
in the next few years we can see some great strides. I would be happy 
to----
    Mrs. Meek. I would like to talk with you about it.
    Do I have any more time, Mr. Chairman? My last question?
    Mr. Walsh. Yes, you do.

                              CDBG PROGRAM

    Mrs. Meek. I would just like to talk a little bit about the 
CDBG program. This past week we have done a lot of discussion 
on Community Development Block Grant funds and the fact that 
that is the one thing that is still left out there for not only 
low-income but all the way--all income levels in this country, 
but we find at least it has been found that in many instances 
CDBG money is not being used to primarily, as you say or 
principally is the word you used, to benefit low- and moderate-
income people, and it is not being used to prevent--it is not 
being used for economic development. Now, this isn't system-
wide, but it is being done, and my question is what measures 
will HUD use to be sure that jurisdictions stick to your letter 
of the law? I am wondering if you have looked into this, or 
have you been able to measure whether or not these 
jurisdictions are really meeting the 70 percent goal? In the 
past I don't think so, because CDBG has seemed to me like a 
little political football many times. You want to keep the 
males happy. So in doing so, I don't know whether you have 
reached that 70 percent. Would you speak to that please sir.
    Secretary Martinez. Well first of all I know that we share 
the goal that CDBG funding should be targeted to low-income 
communities. There is no question that is what is intended by 
the statute and where it should go. We have a report that is 
going to be due--was due in February of 2002 on HUD's oversight 
and targeting of CDBG funds to lower income persons, and the 
report should be coming to the Congress very shortly, and we 
think it is supposed to fact that the CDBG program is highly 
targeted for the most part. Secretary Bernardi, is there 
anything else you would like to add to that?
    Mr. Bernardi. The report is going to indicate that it is 
much more than 70 percent for low- and moderate-income 
targeted. It will be about 80 percent, and we are very pleased 
this year with the $95 million additional monies that will be 
put into the CDBG program. And Congresswoman Meek, you are 
absolutely correct. We mayors throughout the country really 
enjoy that program. It offers great flexibility. It allows the 
opportunity for housing and for public facilities. It also 
provides the opportunity for economic development. But, you 
know, we are committed at HUD to making sure that the program 
runs effectively. I am very pleased that the untimeliness issue 
that we have been facing over the last several years has been 
reduced substantially in the entitlement communities. There 
were 310 that were untimely. Now it is down to about 109, and 
we continue to work in that direction to provide the dollars, 
have them expended timely and have them go where they are 
intended--to low- and moderate-income folks.
    Mr. Hobson. Ms. Meek, I am sure if you wouldn't mind my 
interrupting, Syracuse is doing pretty well, aren't they, sir?
    Mr. Bernardi.  We have managed to receive our fair share.
    Mrs. Meek. That is my buddy. So I let him talk on the time.
    Mr. Hobson. He was the mayor of Syracuse----
    Mrs. Meek. I know. He speaks like a mayor, too.
    Mr. Bernardi.  I hope that is good.
    Mrs. Meek. I just want you to keep in mind that many times 
this would principally benefit low- and moderate-income. It is 
stretched a little bit to the point that sometimes that 51 
percent that you use for low income stretches a little bit too 
far and it looks like it is 70 or 80 percent when it really 
isn't because you do take in this bridge or whatever you build 
downtown does--you think sometimes stretched it lower- and 
moderate-income. I want you to think about that.

                          SERVICE COORDINATORS

    My last question has to do with the service coordinators in 
public housing. There is a great need for those coordinators. 
Can someone speak to that? Is that Mr. Liu?
    Secretary Martinez. Mr. Liu might be able to.
    Mr. Liu. Yes, ma'am.
    Mrs. Meek. All right. Why did you cut them, Mr. Liu?
    Mr. Liu. Why did we cut the service coordinators? We still 
have a significant portion of our budget allocated for the 
family self-sufficiency program coordinators. We believe that 
the number is sufficient based on the past demand and we also 
see the strong possibility of greater commitments from the 
local communities who work with housing authorities to 
supplement the amount of dollars that we have allocated in our 
budget for the FSS coordinators.

    [Agency Note: HUD did not cut funding for Service 
Coordinators, but in fact, increased funding for the Family 
Self-Sufficiency (FSS) program and maintained the same level of 
funding for Resident Opportunities for Supportive Services 
(ROSS) as in fiscal year 2002.]

    Mrs. Meek. But you are principally basing it on your 
recaptures, aren't you, which makes it tentative?
    Mr. Liu. It is an estimate, yes.
    Mrs. Meek. Well, it is very much needed and I wish you 
would look at this as being a major need in HUD to have people 
who can really look at--particularly in elderly public housing 
you do need these service coordinators and you need people who 
will pretty much see that the social aspects of housing are 
met, and I appreciate your looking a little more closely at 
that.
    I have more questions, Mr. Chairman, and I will submit them 
for the record or the next round.
    Mr. Walsh. Thank you. The next will be Mr. Price.

                                 RESPA

    Mr. Price. Thank you, Mr. Chairman. Mr. Secretary, I would 
like to add my welcome to you and your colleagues. We 
appreciate your being here this morning and your testimony.
    I want to start with a rather complex subject, but I think 
an important one and one where the Department's direction is 
not entirely clear, at least to me, and I hope we can shed some 
light on it. It has to do with policy under the Real Estate 
Procedures Assessment Act, or RESPA, as it pertains to yield 
spread premiums. As I understand it, HUD has advised that 
alleged violations of RESPA should be considered on a case-by-
case basis, which will have the effect of making class actions 
in this area much more difficult.
    I think it is important before getting any further into 
this to point out that there are many responsible brokers 
throughout this country who do not engage in this practice and 
who are in fact working to prevent it. I am happy to say that 
in North Carolina our Association of Mortgage Professionals has 
helped craft a strong law in our State legislature which 
requires brokers to make efforts to secure loans that are, 
quote, reasonably advantageous to the borrower considering all 
circumstances, end quote.
    But we do know there are abuses and they need to be 
addressed, and I wonder how HUD can reasonably argue that a 
class action lawsuit should not be allowed when the court found 
in the Culpeper case that yield spread premiums were simply not 
part of a legitimate service. In that case, as I understand it, 
lenders were providing yield spread premiums to brokers solely 
on the basis of the interest rate on loans without any 
relationship to services actually provided by brokers.
    Now, in that kind of circumstance where there is a series 
of cases obviously linked by this abuse, why shouldn't class 
action suits be permitted, why indeed wouldn't they be the 
normal recourse?
    Secretary Martinez. Let me first of all clarify the 
misunderstanding that has occurred in that regard. It is not 
HUD's position to make any judgment about whether class action 
lawsuits should or should not take place or would or would not 
be appropriate. It isn't in our purview and it isn't our 
intent. What we understand, in regards to yield spread premium, 
as you indicated, it is a legitimate tool that a potential 
homeowner may utilize in order to defray some of the closing 
costs or settlement costs at the time of closing and assist 
them in purchasing a home that they otherwise might not be able 
to purchase given the difficulty of putting together the down 
payment and the other attendant expenses. They can then prorate 
over the life of the loan those closing costs.
    There have been abuses in the way that yields spread 
premium has been utilized by some brokers and lending 
institutions, in fact that they have not really provided an 
additional service to the consumer but in fact have merely been 
obtained for putting the consumer in a loan higher than they 
would qualify, for which is an unethical and a bad practice.
    What we did was, having looked at the Culpeper decision and 
realizing that the Culpeper Court said that HUD's rules 
regarding premiums were ambiguous, we sought to clarify the 
ambiguity by restating the longstanding view of yields spread 
premium that HUD has held. Whether or not that clarification 
has impact on the class action lawsuits that may be pending is 
not something within the providence of HUD.
    That is for the courts to determine and for the litigators 
to decide how they should approach their cases. We have not in 
anything we have done intended to get involved in the lawsuits, 
but merely to clarify what had been obviously perceived to be 
an ambiguity by the courts in terms of the issue of yields 
spread premium. By doing so, what we are seeking to do is to 
preserve yields spread premium as a tool that consumer 
advocates have indicated to us is important for consumers to be 
able to access homeownership and otherwise might not be able to 
do if yields spread premium was not available to them.
    So we believe we have done two things. Number one is 
clarify HUD's rules which have been longstanding and needed to 
be reasserted and, secondly, to try to maintain as a viable 
tool to the home purchaser the financing option of yields 
spread premium. Now, more than that, and this is a long answer 
and, Mr. Chairman, I know you wanted me to try to not be a 
filibuster but this is a very complicated issue and, 
Congressman Price, I appreciate your bringing it up because it 
is darn important.
    At the same time we did that clarification, we issued some 
of the initial parts of what we will continue to work on as 
RESPA reform, which requires disclosure of broker fees and 
upfront disclosure and transparency to the potential borrower 
of all issues pertaining to the relationship with brokers. We 
believe with the RESPA process that we are engaged in, with the 
participation of consumer groups, lending institutions, and 
everyone else, including brokers, that we will have a process 
for the real estate settlement that will be modernized, more 
enhanced, more consumer friendly, more transparent and that 
will enable the consumer to shop and shop at an early point for 
the best possible product they can buy.
    I believe that at the end of the day the best regulator 
will be the marketplace, with the assistance of HUD providing 
some direct guidelines on how the settlement process ought to 
take place.
    Mr. Price. Thank you. Those are helpful clarifications. I 
infer from your answer that you think the test suggested in the 
Culpeper case is a reasonable one; that is, that the yield 
spread premium, the legitimacy, should depend on the services 
provided by the broker and also the commensurability of those 
services with compensation provided. You basically accept that. 
There are these reports though, and I want to make sure I 
understand this. It has been reported that HUD rendered the 
opinion that yield spread premium transactions must be 
considered on a case-by-case basis because too much depends on 
the details of the individual cases. That has been interpreted 
to discourage, if not rule out the propriety of a class action 
approach.
    Secretary Martinez. That is a wrong conclusion. We did not 
render such an opinion. That may be the inference some will 
draw from the clarification to our rule. All we did was clarify 
the rule and then begin to take steps to make the loan 
application and closing process more consumer friendly and more 
transparent and open to competition.
    Mr. Price. All right. That is helpful. I am looking here at 
a headline in a newsletter which----
    Secretary Martinez. Unfortunately I don't control those.
    Mr. Price [continuing]. Renders that interpretation; so you 
can understand why I am asking the questions.
    Secretary Martinez. I think that interpretation has been 
given by some, and I think this is a very difficult issue and 
that has been the perception of some, but at the end of the day 
the rule clarification is all that we did. The impact it will 
have on the class action lawsuits is for the courts to 
determine.
    Mr. Price. All right. And I take it that you are also 
testifying here that you are continuing to pursue action with 
respect to yield spread premiums?
    Secretary Martinez. Absolutely. I think that the practices 
that are reported in the decisions, in the cases are despicable 
and they are wrong and should not be permitted and they fall 
outside of what ought to be the kinds of activities protected 
or condoned by our RESPA process. So let me say that in 
addition to these actions we have beefed up our RESPA 
enforcement in the last few weeks. We have collected over $1.2 
million in RESPA enforcement settlements. These are 
unprecedented actions by HUD, and I am quite proud of that and 
I think at the end of day as we go through this process I think 
you will see that we are taking very strong action that ensure 
that consumers are protected to the extent we can protect and 
that practices by lenders that are inappropriate are not 
allowed to continue.
    Mr. Price. So your testimony is that under RESPA you are 
able to take steps to ensure that mortgage brokers don't 
receive kickbacks for----
    Secretary Martinez. That is right.
    Mr. Price [continuing]. Those higher than necessary 
interest rates on unwitting borrowers and that you are looking 
at ways thatyou can further rein in such abuses?
    Secretary Martinez. Absolutely. And not only that, we are 
also looking at upcharges as a despicable practice, a practice 
that a lending institution may contract for an appraisal of the 
home for $150 and then charge the borrower $300. That was the 
subject of the Etcheverry case and we are also making it clear 
that HUD rules do not permit such upcharges.
    Mr. Price. Do you have any estimate now as to whether you 
might be suggesting legislative changes in these areas?
    Secretary Martinez. We are first going to tackle the 
regulatory changes that we can make to ensure that we do the 
best we can. Those things we cannot do regulatorily we will 
then be proposing legislative changes to you as well.

                            OMHAR--ITAG/OTAG

    Mr. Price. Thank you. Let me move now to the status of 
Multifamily Housing Assistance Restructuring, or OMHAR. The 
North Carolina Low Income Housing Coalition is one of many 
grantee organizations that is charged with administering OTAG 
and ITAG grants and, like many other grantees, has struggled to 
keep the programs afloat over the last several months.
    Now, this particular organization reports that they have 
now received reimbursements for program expenses through last 
September but they are very concerned about the future of the 
program. As you know, this was linked with charges of 
antideficiency act violations by OMHAR. Has HUD determined if 
an antideficiency act violation was in fact made by OMHAR?
    Secretary Martinez. There is an Inspector General 
investigation on this. We opted to allow the Inspector General 
to lead the investigation on this. The preliminary reports that 
we received back from the Inspector General suggested that 
perhaps a violation had not occurred. We initially thought that 
there had been a violation and that is why we went ahead and 
notified the Congress at the earliest possible time. We have 
asked and have made comments on the initial reports from the 
Inspector General and we are asking to take an additional look 
at the point of obligation issue, which was not clarified in 
their initial report, and we are looking for them to come back 
to us in the very near future with a fuller report on the issue 
of whether in fact there was an ADA violation.
    What we have done is moved ahead with the $11 million 
appropriation which we received and gone ahead and made 
payments to all of the participants, and regrettably this was 
delayed in happening because of the difficulty in 
reconstructing records and creating what would not have been a 
new set of ADA violations. So we have been careful as we go 
forward. In that care, we did delay some payments, but now all 
of the contract recipients have been paid through current year 
and we are in the process of looking at beginning payments for 
current year obligations and those should be beginning to be 
made in the next 30 days or less.
    Mr. Price. So you do intend, then, to fund the OTAG and 
ITAG programs----
    Secretary Martinez. Yes.
    Mr. Price [continuing]. To ensure those programs can move 
forward. What about the resumption of payments on the contract 
with the Corporation for National Service for the VISTA 
volunteers to the program?
    Dr. Weicher. We have authorized the payment----
    Secretary Martinez. This is Commissioner Weicher. I am 
sorry.
    Dr. Weicher. Excuse me. Mr. Price, we have authorized the 
payment of the last $600,000 on the agreement we had with the 
Corporation for National Service for VISTA and that completes 
the $3 million that was originally agreed to back in 1998.
    Mr. Price. That takes the program through what date?
    Dr. Weicher. That covers everything that was committed to 
in the original agreement between HUD and the Corporation for 
National Service. We have paid all of the invoices that we have 
received for work performed by the grantees in both 2001 and 
1998, the two rounds of funding and also VISTA. And we have 
notified grantees that we are prepared to receive invoices 
beyond those we have already received for work that has already 
been performed. Going forward, Congress appropriated $11.3 
million last year, part of it, $1.5 million specifically for 
going forward, the other $8.8 million being for funds that 
might be needed either to cover past deficiencies or possible 
deficiencies, past obligations or for grants going forward.
    We are still determining how much of that additional money 
we need to have for the work that has been done in the past. We 
had to pay $600,000 for fiscal 1998 grants out of our new 
appropriation because we did not have sufficient funds to cover 
the obligations to individual grantees from 1998. We will have 
to fund part of the 2001 grants out of that, up to $4.4 
million. We don't yet know how much. We have to fund the cost 
of the IG audit out of that appropriation and we have to fund 
other obligations entered into in 1998 beyond the ones we 
already have received and paid. The remainder becomes available 
going forward for 2002 and 2003.
    Mr. Price. Well, this is important work, as you know, and 
these grantees are on the line often operating on very thin 
margins. We do need to offer assurance as firmly and as quickly 
as possible as to what they can count on.
    Mr. Walsh. Mr. Price, I am sorry. Your time has long 
expired now.
    Mr. Price. Thank you. I will wait until the second round 
for other questions.
    Mr. Walsh. Mr. Sununu.

                GOVERNMENT-SPONSORED ENTERPRISES (GSES)

    Mr. Sununu. Thank you, Mr. Chairman. Welcome, Mr. 
Secretary. I would like to give you a chance to talk about 
something noncontroversial. Unfortunately, my first question is 
about the GSEs. In the President's budget he talked about the 
growth of the GSEs relative to the growth of the mortgage 
market. GSEs have been growing a bit faster than the mortgage 
market and we have talked here and I have spoken to the Budget 
Committee in hearings about the growth of new products and the 
challenges that can present particularly for OFHEO. In your 
budget submission there was discussion of a team GSE that you 
have put together to draw staffing from different areas.
    Could maybe we begin by just having you talk a little bit 
about that team GSE, what are their objectives, how large of an 
organization is that and what do you hope that they might be 
able to achieve in the near term?
    Secretary Martinez. First of all, let me say that in terms 
of the GSE regulation, while the OFHEO does the regulating in 
terms of new programs, it does come into the purview of HUD 
itself and we do look forward to looking closely at any new 
product offerings that the GSEs might be interested in. This 
obviously has come as an issue that has garnered increasing 
interest, including today, a continuing editorial scrutiny and 
suggestions of concern.
    I think that the GSEs are very important to the housing 
market and the economic vitality of our country, but also their 
health and well-being is equally important; so our hope and 
interest is to continue to allow OFHEO to play the regulatory 
role it has in the past but perhaps even with an enhanced role 
as we look forward to what is obviously a very huge part of our 
economy and a need for appropriate government oversight.
    So that is the goal of whatever we are putting together, is 
to make sure that we are given the resources and the attention 
necessary to something that has become a real serious concern 
to many in the country.
    Mr. Sununu. How big of a group will this team be and will 
they be the point for reviewing new products?
    Secretary Martinez. Why don't you answer?
    Dr. Weicher. Mr. Sununu, the team within HUD draws from the 
four offices that have some involvement with GSE issues, the 
Office of Housing, Office of General Counsel, Office of Policy 
Development and Research, and Office of Fair Housing and Equal 
Opportunity, and we work together on issues relating to GSEs on 
a day-to-day basis.
    Mr. Sununu. Primarily in the area of new product offering 
or all regulatory issues?
    Dr. Weicher. All issues. The Secretary has 
generalregulatory authority according to the 1992 statute----
    Mr. Sununu. How does the group interact with OFHEO?
    Dr. Weicher. OFHEO's primary responsibility is for the 
safety and soundness regulation, a capital standard. We 
certainly talk to each other but that is their responsibility 
and not the responsibility of the offices within HUD that are 
working with the Secretary general regulatory authority.
    Mr. Sununu. Are there plans for adding staff or expanding 
the expertise within OFHEO?
    Dr. Weicher. That is----
    Secretary Martinez. OFHEO would have to address that issue. 
I don't think we are in the position to be able to address 
that.
    Mr. Sununu. So your goal here is to I guess complement----
    Secretary Martinez. Mr. Falcon is here with OFHEO and he 
has taken the chair rather quickly; so I will allow him to take 
that opportunity.
    Mr. Sununu. He has a wealth of experience in understanding 
how the hearing process works. So please, Mr. Falcon.
    Mr. Falcon. Thank you, Mr. Secretary and Congressman 
Sununu. We do interact with HUD by virtue of our responsibility 
as the enforcement arm for any violations by the enterprises, 
whether they fall in the purview of safety and soundness or in 
the aspects of mission regulation as well and we do this 
budget--it does include a request for additional resources in 
the form of 24 additional FTEs.
    Mr. Sununu. 24 FTEs. And a dollar figure?
    Mr. Falcon. Our budget is $27 million this year and it will 
go to $30.3 million.

                         PROGRAM AUTHORIZATIONS

    Mr. Sununu. Thank you very much. Mr. Secretary, there are a 
couple of new programs relating to homeownership, a quadrupling 
of the American Dream down payment fund that you presented and 
the allowance of the Section 8 vouchers to be used for down 
payment. Will those require reauthorization and what is the 
sort of the administration's plan for the timing of 
reauthorization that might be required before we can act as an 
Appropriations Committee?
    Secretary Martinez. Yes, they will require reauthorization 
and in terms of the timing, was there a timing question? I am 
sorry.
    Mr. Sununu. Yes. It is always nice to have the 
authorization done before we write the appropriations bill----
    Secretary Martinez. Right. The legislation has not been 
brought over yet, but we are working on it. And probably within 
10 days it should be here.

                              CAPITAL FUND

    Mr. Sununu. Thank you. Last year there were reforms made as 
part of our bill to the capital fund in the way that that is 
handled to try to better control the disbursement of funds, 
prevent unexpended obligations from remaining on the books for 
3, 4, 5, 6 years and to reward those housing authorities that 
were effective in disbursing their capital funds.
    Can you provide the committee some information about the 
implementation of those reforms, what has been completed and 
what remains?
    Secretary Martinez. First of all, let me say I think those 
reforms were very important and are going to have a long-term 
positive effect in public housing. Let me ask Secretary Liu to 
specifically tell you about the implementation of them.
    Mr. Liu. Sir, this has been a challenge for us, but we are 
poised now to act on the QHRWA reforms. We will be later this 
week discussing potential extensions for those housing 
authorities that meet the extension requirements as proposed by 
QHRWA and for those that have not we are in the process of 
putting together a notice and notification to those housing 
authorities that 1998 and 1999 funds from the capital fund will 
be recaptured.
    Mr. Sununu. I am sorry. The amount of the recapture?
    Mr. Liu. The amounts to be recaptured will be approximately 
$6 million. Now, that could change upon the final review.

                PUBLIC HOUSING DRUG ELIMINATION PROGRAM

    Mr. Sununu. Last year in your budget and in the final 
conference report, we eliminated funding for the drug 
elimination grant program. There was a commitment within the 
administration to try to identify funds within the Department 
of Justice that might be able to supplant some of the funds 
that would be removed from programs at the local level in 
housing authorities that had been effective in achieving their 
goals. Can you bring us up to date on the utilization of those 
funds and to what extent have you been able to provide some 
guidance to Justice regarding the support of those programs 
that had been using their funding effectively in reducing drug 
use in public housing?
    Secretary Martinez. First of all, I think that some of the 
funding would have gone into the operating fund of the housing 
authorities. So a number of those dollars were preserved and 
not in any way changed. I think, in fact, almost an entire 
amount of what had been previously budgeted, in addition to 
that there is a pretty large number of unspent funds in the 
drug elimination grant funding remains. So there has been no 
crisis and no programs have stopped because there is still a 
lot of money in the pipeline.
    We have continued to work with the Justice Department and 
with others to try to come up with a team approach to how we 
approach public housing drug issues. I should say, by the way, 
that the ``one strike you are out'' issue which is so important 
to enforcement of drug problems in public housing was before 
the United States Supreme Court about a month ago and I thought 
that the arguments were very favorable to the legislative 
position that the Congress has taken on that issue and I think 
that will continue to be of some help.
    Can you add some specifics to it?
    Mr. Liu. We have had a series of meetings with the 
Department of Justice. The General Counsel and myself have 
another one scheduled this Friday to discuss the issues of 
public safety as they are related to public housing. We have 
committed resources to funding to the Department of Justice 
weed and seed program and their Notice of Funding Availability 
does currently include reference to the partnership with HUD in 
regard to that program. We are having conferences, one coming 
up on the West Coast in the first part of April, to highlight 
good practices, successful practices by housing authorities 
utilizing their operating subsidies and partnerships with local 
entities to have a broad-based approach to the issue of public 
safety which the drug problem is certainly part of.
    Mr. Walsh. The gentleman's time has expired.
    Mr. Sununu. Mr. Secretary wanted to add one point----
    Secretary Martinez. I wanted to add that there is $531 
million unspent in the program as of December 31.
    Mr. Walsh. Thank you. Mr. Hobson.
    Mr. Hobson. Mr. Secretary, welcome.
    Secretary Martinez. Thank you, sir.

                          LOAN CLOSING PROCESS

    Mr. Hobson. Let me ask a question, how many people here are 
from HUD? How many of you have ever attended a HUD loan closing 
on a residential or commercial property or had one yourself? 
Not very many out of the group. I think next year what we ought 
to do is have a loan closing here and see how long it takes and 
see how many people understand what is going on, and how many 
people understand the costs for each service and how much 
competition there is in those services. Then, maybe we could 
begin to work at some of the problems in loan closings.
    I was in the mortgage banking business a long time ago, and 
I just refinanced my residence. It was not a VA or a HUD loan, 
but it still took forever because we now have the marketplace 
where everything has to be sold not for your own portfolio 
because it is going to go into the marketplace. My wife darn 
near killed me because I didn't show up and she had to sign 
twice, once for me and once for her and she said she'll never 
do that ever again. She has power of attorney. I think we have 
to look at this. They don't understand the underwriting. They 
don't understand the credit report or what is on it if they get 
to see it at all, who did the appraisal, what the cost for it 
and then all the other disclosures forms. I don't know what 
they are disclosure for because they are not disclosure for the 
people in the room, only for the people who prepared them. I 
have got some other questions I want to ask you but we should 
have brought a loan package with us today. I think that is a 
problem in the industry. Another problem is when you get people 
in that don't have the ability to have their own lawyer and 
somebody gets ahold of them and starts doing some of these 
rear-end financing deals and they have no idea, all they know 
is what my payment is a month, and they hope they know what 
that is because by the time everything else is added on, it 
isn't always what they thought it was going to be and when they 
get to the closing they are embarrassed to say. It is a 
problem.
    Secretary Martinez. If I may, a little over a year ago I 
moved and I acquired a new residence up in this part of the 
world and it was the first time I have been to a house closing 
in many, many years and as an attorney most of my professional 
life I was just shocked and astounded at how long it took, how 
little transparency there was to the process, how little I know 
about what I was being charged for, and let me say, by the way, 
the people who handled my closing did everything proper, 
ethical and fine. We are talking about the process, not about 
them.
    So I want to make that very clear because I have been 
quoted on this a number of times. The fact is that that sort of 
spurred me on to the idea we have got to do something about 
this process. It doesn't make much sense and people kind of say 
you are the problem now because it is HUD. I think HUD is part 
of the problem. I think the lending industry needs to take a 
good look at themselves. I have asked that they do that and 
have been pretty forceful in some of my statements when I have 
spoken to the mortgage bankers. I think there are also State 
and local regulations that need to be addressed because I am 
told the package this thick is not because of what we do at HUD 
but partially because of State and local action as well.
    So hopefully this mock process we are talking about that 
will take place a year from now, we will have some things in 
place that will make that process better, and we are doing it 
in two ways. One is we are going to continue to go forward, as 
I said earlier, with the RESPA reform and RESPA review, but in 
addition to that, so that we can get at the second part of the 
problem, which is being done by State and local, we are going 
to bring everyone together and ask for a consortium to come 
together from State and local so that we can thin out that 
process. One of the goals that we have is to have early 
disclosure of fees and all that has to do with the loan process 
so that before a person is invested in the particular loan, 
they have an opportunity to shop it and as they shop it between 
different vendors, I believe that more transparency will come 
into the process because competition is a wonderful thing.
    Mr. Hobson. I think in the real estate business certain 
institutions are going to control the whole thing before it is 
over. And when I was in the mortgage banking business we could 
not, for example, own the title agency. As a matter of fact 
when I got my first loan--it was a residential loan and we just 
did title opinion, didn't have title insurance. Now you have 
title insurance, but it is a whole different world and it has 
gotten so complicated that I think the individual is left out. 
So I am glad you refinanced. It must have been a good yield at 
that time. It is getting better now, maybe you should do it 
again.

                      PUBLIC HOUSING MISMANAGEMENT

    Let me ask another question along that line. I talked to 
your predecessor about a problem in my city and district with 
the public housing authority and I mentioned this the other 
day. In 1988, HUD's Inspector General uncovered that the 
Springfield, Ohio Metropolitan Housing Authority sent over 
$25,000 to nonexistent companies for building materials, spent 
$2,000 in expenses not related, and lost $195,000 income over 
17 months due to delays in repairing and renting apartments. 
This was put on the troubled HUD list and they sent some pretty 
good specialists, I might say, to fix this problem. The problem 
was when they got in, they found out that no one, not even HUD 
had authority to rout boards members who didn't do their job or 
who they wanted to get rid of.
    So you can't begin to fix something if you don't have the 
authority to get in and change the board, and I think you need 
to figure out how you get the authority to do that and how you 
get the authority for better control over who nominates people. 
Some of you people said it was state authority but I would like 
some paper on how that is done. I am talking about a small 
city, not a larger community where this is happening. But 
people who get on these boards have no idea about anything 
relating to the housing or the authority or what they are 
supposed to do and when you come in to try to fix it you don't 
have the authority to do it.
    Secretary Martinez. You hit on a very important problem and 
one that is probably the biggest frustration to me in the past 
year is to see the continuity of problems in localhousing 
authorities by mismanagement and sometimes worse. I should always point 
out that this is a very small minority of the housing authorities. The 
majority are----
    Mr. Hobson. But those are the ones who hit the paper.
    Secretary Martinez. But you keep seeing the ones that are a 
problem. Let me ask Mr. Liu because when we spoke the other day 
he wasn't with us and he can have some specifics to you on your 
issue. Mr. Liu.
    Mr. Liu. We do have the ability through our contractual 
arrangements, our ACC agreements to be more aggressive. I think 
part of the problem in the past has been that HUD has not 
exercised its authority in regards to our contractual 
arrangements with the housing authorities to move aggressively 
when we do discover a myriad of possibilities of noncompliance. 
One of the areas that we can move on but we have been slow in 
the past to do so is in the area of conflicts of interest, 
which is I believe a number of the issues as related to 
Springfield did relate to that in regards to the authority and 
the commissioners. We can provide you more detail as to the 
various avenues of compliance that we can----
    Mr. Hobson. All they wanted to do was to be able to get rid 
of somebody who is on a board and they couldn't do that and 
there was one person who stayed on who refused to quit. A lot 
of people quit. One said I am not quitting and you don't have 
any way to remove that person.
    Mr. Liu. We will take a look at that. We have found in the 
past that when that opinion has been rendered that we can't do 
anything. One thing we haven't looked at is the underlying 
contract that we have with the Housing Authority and their 
ability to perform, and if they don't perform HUD has wide 
latitude, extremely wide latitude, to take appropriate action.

                FHA DOWN PAYMENT SIMPLIFICATION PROGRAM

    Mr. Hobson. The last thing I want to ask right now in this 
round is the FHA down payment simplification program makes FHA 
loans easier to understand and more affordable for home buyers. 
The program has been extended twice since its inception as a 
pilot program and it is going to expire at the end of this 
year. I know this is one of those authorizing issues but 
sometimes this committee is forced to deal with those 
proposals. Do you support the legislative proposals to make the 
FHA down payment simplification formula permanent and what kind 
of actions are you going to take?
    Secretary Martinez. Housing Commissioner Weicher is going 
to address it.
    Dr. Weicher. We do support it, Mr. Hobson. We supported the 
FHA down payment simplification legislation and we will be we 
hope working with you all to pass it.
    Mr. Hobson. Last, I want to say thank you to you for--I 
called you about an underwriting decision and fortunately it 
worked out fine and I appreciate it.
    Mr. Walsh. Thank you. Ms. Kaptur.

                             HUD AND RUSSIA

    Ms. Kaptur. Thanks, Mr. Chairman. Welcome, Mr. Secretary, 
good to have you here this morning and maybe I will just begin 
with a statement that I think you have a very important job and 
unlike the Secretary of Interior or the Secretary of Defense or 
the Secretary of Energy and many other Secretaries I can 
mention, you really help average American families gain an 
economic stakehold and develop real equity and there aren't too 
many Federal departments that actually do that directly. So I 
consider the role of the Department of Housing and Urban 
Development critical in maintaining and expanding an American 
way of life for all of our people and I have several questions. 
One is nothing domestic. It is actually a foreign relations 
issue, and that is I have been meeting for several years now 
along with some of my colleagues in trying to help the nation 
of Russia develop a free enterprise system and probably one of 
the major challenges they face is the development of a mortgage 
market and some of the officials from Russia have visited some 
of your folks over at HUD.
    I am not sure who, but they have now set up a Federal 
mortgage agency, which is at the very beginning and they are 
working with Fannie Mae. I know that the name of their entity 
there is Gostroy and they would very much like to sign an 
agreement with HUD much like you have with other countries. It 
doesn't involve any money. It is just an acknowledgment of 
where they stand in terms of their current efforts. I am 
wondering if someone from your office might contact us or if we 
might put a meeting together to get this thing jump started 
because time is awasting.
    Secretary Martinez. We would be glad to do that.
    Ms. Kaptur. This is a no brainer. It has been done with 
other countries and it is really important that we get this 
moving. So I thank you for that.

                                  CDBG

    I want to just make an observation if I am reading the 
materials I have been given properly. The court programs that 
HUD operates, Community Development Block Grant program, as I 
read your submission, there is a $300 million cut that is 
recommended.
    Secretary Martinez. The CDBG program?
    Ms. Kaptur. Yes.
    Secretary Martinez. I am sorry. That relates to earmarks 
and obviously you know OMB's position on that but it relates to 
the specific earmarks in last year's budget.
    Ms. Kaptur. You are cutting those out?
    Secretary Martinez. Right. In other words----
    Ms. Kaptur. So what Congress knows doesn't matter. I hear 
what OMB is saying and we don't agree with them. We have 
particularized knowledge. Their processed knowledge sometimes 
is worse than Velveeta cheese.
    Mr. Walsh. If the gentlelady will yield for just 2 seconds.
    Ms. Kaptur. Do they eat Velveeta cheese in Syracuse?
    Mr. Walsh. Not at all, but I did notice that there are at 
least $600 million in executive earmarks in this same bill, so 
they have more than doubled what we are accused of doing.
    Ms. Kaptur. Thank you, Mr. Chairman. That is very important 
information to place on the record.

                         CAPITAL FUND REDUCTION

    In the public housing capital fund I read the budget 
submission as a reduction of $417 million. Is that correct?
    Secretary Martinez. That is correct.

                              SECTION 202

    Ms. Kaptur. Then as our population ages and the very 
successful section 202 program for the elderly and handicapped 
in the direct loan program, it is rather curious if my numbers 
are right that the direct loans appear to be going down. For 
2001 we had a direct loan level of $7.804 billion; for 2002, 
$7.623 billion, and proposed 2003, $7.403 billion, which looks 
this way to me, along with outlays also going down in each of 
those years. 2001 there was a reduction of $462 million for 
outlays, 2002, $484 million, and for 2003, $529 million in 
outlays.
    I just came out of a neighborhood in Chicago over the 
weekend where I was meeting with a lot of senior citizens 
andthe average senior there gets about $580 a month in their Social 
Security check and this was a gentrifying neighborhood, and I said to 
the ladies--most of the people were ladies. I said how much does rent 
cost in this neighborhood? $600. There is no way--I mean there is no 
way they are going to make it.
    So my concern, Mr. Secretary, and I will just ask 
specifically on 202 here, how many applications has HUD 
received for the 202 program in the last fiscal year and how 
many were able to be funded? Does somebody out there who 
manages----
    Secretary Martinez. Commissioner Weicher will be able to 
address that.
    Dr. Weicher. Section 202 and 811 are programs within the 
Office of Housing. They are non-FHA programs. With respect to 
the direct loan program, what we were reporting in the budget 
are loan repayments from year to year on the days when we did a 
direct loan program which we terminated I believe in 1991 or 
1992.
    Ms. Kaptur. You are doing guaranteed now----
    Dr. Weicher. We are now making direct grants of $783 
million, if I have the number correct, for the 202 program and 
$251 million for the 811 program and we are holding those 
levels constant in this year's budget. We are proposing to 
provide the same level of funding this year as we did last year 
in each of those two categories separately.
    Ms. Kaptur. In the grant program----
    Dr. Weicher. That is right. Our repayments are showing up 
larger from year to year because loans are--because the older 
loans are being repaid. So we bring in $484 million this year 
and we are expecting to bring in $529 million next year and 
what you are seeing is essentially an offsetting receipt as 
these old direct loans continue to be repaid.
    Ms. Kaptur. What were the number of applications just in 
the 202 that were received and how many were you able to fund? 
Not the dollar amount but how many groups out there are trying 
to get help?
    Dr. Weicher. I will have to provide that information for 
the record. I can tell you the competition is fierce. Whenever 
we make funds available, and of course we have a scoring 
system, there is great concern about any change in scoring, 
even a change in scoring of a point because on a scale of 0 to 
100 we have a lot of people clustering at the 90, 85 range and 
a single point matters a lot.
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    Ms. Kaptur. I thank you for that. I just want to make the 
observation that because of the significance of housing and 
creating equity in this country I think to short-change in this 
arena is really maybe penny-wise and pound-foolish down the 
road. So I may hold a different point of view than others on 
this, but 202 in our community is absolutely successful. Every 
single group that has done a 202, if you could see and I know 
you have been in some of those projects, Mr. Secretary, these 
are win-win-win programs and now with the frail elderly, with 
the population aging, it seems to me that somebody better take 
a look at this over there and I was struggling myself in fact 
in this neighborhood I was in. I said what kind of fraternal 
sponsors could we have around here? You have got these big 
empty churches. We could put housing in there, trying to help 
them out. Ballpark, do you think you get ten applications for 
every one you fund?
    Dr. Weicher. No. I will have to give you the numbers, but 
there is not that disparity.
    Ms. Kaptur. Five to one maybe?
    Dr. Weicher. I shouldn't say, Ms. Kaptur. I can't give you 
that number.

                           SHELTER PLUS CARE

    Ms. Kaptur. All right. We will submit some questions to the 
record on that also. I wanted to commend the Secretary for the 
efforts you are making on an interagency basis on the homeless 
and particularly those that have severe mental illness, and one 
of the questions I had in terms of your budget, and I am trying 
to understand this just to make sure all the parts fit together 
here, in the Shelter Plus Care program, there appears to be 
some shortage of funds because of a lack of renewing expiring 
rent subsidies under that program. Could this adversely impact 
our ability to meet the incredible need in our country to deal 
with people who are--homelessness isn't their chief problem. 
Their chief problem is illness.
    Secretary Martinez. Clearly the way we are approaching the 
budget this year will not result in that. This was a forward 
funded program, a program that was funded for 2 years. So we 
are not asking for funds for this year because they were funded 
in the prior budget year. So what we will do is in the year 
2004 we will have to come back to you with probably a request 
for $190 million to continue funding. The Administration has 
made a decision not to forward fund programs but deal with them 
on a year-to-year basis. So while there will be no loss of 
funding to anyone in the programs this year because it had 
already been budgeted and funded, we will need to come back to 
you in the future and it will obviously have to be part of the 
budget process in the future.

                  INTERAGENCY COUNCIL ON THE HOMELESS

    Ms. Kaptur. In the interagency group that you are setting 
up, Mr. Secretary, when will the person be hired?
    Secretary Martinez. A person is hired, a person is on 
board. It is Phillip Mangano and he happens to be here and I 
would love for you to meet him, so I will ask him to stand.
    Ms. Kaptur. All right, sir. We support your work. We are 
very interested in it.
    Secretary Martinez. We are going to have a real dynamo on 
our hands and he is going to make a real difference for a lot 
of families. I am delighted to have him on board. He has got a 
wonderful record in Boston and he will be a welcomed addition 
to our team and this whole interagency task force. We are 
asking for doubling of their budget this coming year and I am 
delighted the President chose to activate it and to bring Mr. 
Mangano on board.
    Ms. Kaptur. One of the first bits of information I would 
appreciate from you, Mr. Secretary, perhaps from Mr. Mangano, 
would be to provide for the record the current architecture of 
funding that exists in different agencies to deal with those 
who are chronically mentally ill who may have a dual diagnosis 
of substance abuse as well but not only that, and to give us a 
sense of funding and how you view the current array of Federal 
programs. That would be very helpful so that as you move 
forward we all begin from the same song sheet.
    Mr. Walsh. The gentlelady's time has expired. Thank you for 
yielding me those few seconds to make that point on earmarks. I 
agree with you.
    Ms. Kaptur. Mr. Chairman, could I get my 10 seconds?
    Mr. Walsh. You have got 10 seconds. You will have to submit 
the answer for the record.
    Ms. Kaptur. I am going to ask you for the number of public 
housing authorities over which you have oversight and in how 
many of those do you have fully operational credit union 
programs to help the residents deal with the serious practices 
of some of these check cashing outfits around this country.
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    Mr. Walsh. Thank you. Mr. Cramer.

                                HOPE VI

    Mr. Cramer. I think I should yield more time to Ms. Kaptur. 
She has done well here. But Mr. Secretary, welcome again before 
the subcommittee. It is a subcommittee very interested in the 
work that you and your colleagues do, and our communities 
depend on you. I want to give you the chance, and some of my 
questions have been covered by the questions of my colleagues, 
to talk about the HOPE VI program and I regret that I came in 
beyond the point where you made your remarks but I scanned your 
statement to see. How is that program working in the last 2 
years? How much money have you spent but, more particularly, 
how many grants have been awarded? And if you need to provide 
me with some of this information for the record, I can 
understand that.
    Secretary Martinez. Thank you. Yes, we may have to do just 
that. I think HOPE VI, as I mentioned, in some frustrations in 
some of the areas, HOPE VI is one of the great things we do. It 
has been a very positive program and has done a tremendous 
amount of good work. We have from its commencement in 1993 to 
2001 grant funding totals of approximately $4.55 billion and 
only $1.7 billion has been spent so far, so there is still an 
underutilization problem.
    Mr. Cramer. Why is that?
    Secretary Martinez. I think because so much has been 
concentrated in certain parts of our country. The fact is in 
this new NOFA coming out we are tweaking it ever so slightly to 
allow perhaps for a broadening of the utilization of the HOPE 
VI program. This is up for reauthorization this year. We 
believe it should be a continued program. We will have some 
recommendations and suggestions on how we can continue to 
improve the program. There seems to be chronic criticisms of 
displacement issues, sometimes families that may get displaced 
during the construction inevitably but also who may not be able 
to return to the new rebuilt site. So I think we need to keep 
an eye on the purpose of HOPE VI, we need to continue to ensure 
that we are providing enough affordable and subsidized housing 
within the new project so that people are taken care of. But 
overall it is a great program that has done an awful lot of 
good and we are delighted.
    Mr. Cramer. Let me jump in here. As I understand it, the 
funding for the program has remained consistent at $574 million 
over the last several fiscal years, and I want you to or 
someone to talk to me more about the process that is involved. 
I mean we have substantial moneys that are unspent but this is 
the premier program that allows the communities to demolish and 
replace severely distressed public housing units. It seems to 
me from my analysis of it that more of the money goes to the 
larger urban areas and that the smaller areas, and I happen to 
represent a smaller area that have stood in line for a number 
of years in many cases, we can't get our grants awarded and yet 
you are telling me you are not spending the money but what are 
you doing with it and how did the process work if it doesn't 
allow smaller communities to be doing the same thing that the 
larger communities do?
    Secretary Martinez. I am sympathetic to what you say. I 
think you are precisely right in terms of the history of the 
program. I believe that in the new NOFA that will be coming out 
for HOPE VI that you will see something pleasing to you in that 
regard because we have attempted to do the very thing that you 
point out needs to be done, which is to allow smaller 
communities, communities in different parts of the country to 
have a fair opportunity to compete for the dollars.
    I am going to defer to Mr. Liu on the specifics and to 
answer the other part of your question.
    Mr. Liu. Mr. Cramer, we share the concerns that you have 
raised. We see some great successes in HOPE VI, but when we 
look at the program from a macro level, as pointed out by the 
Secretary, when we have over $4 billion over 6 to 10 years 
which has been allocated and only $1.6 billion which has been 
obligated or expended, this raises some serious concerns. The 
process by which we have been monitoring the program has placed 
HUD in the position of being a developer with the housing 
authorities and that perhaps is an issue that we are going to 
reexamine and looking at very closely both in the 2002 NOFA and 
in issues and implementation should we get reauthorization.
    Mr. Cramer. I want to encourage you to reexamine because it 
is alarming to me that when my largest housing authority 
received a very small demolition grant but then for 2 or 3 
years has been denied the second phase of that and you have got 
billions of dollars that are unspent, now I am willing to wait 
in line and willing to hear if there are reasons why they 
should not be granted but in my State alone, in the entire 
State, north to south, Birmingham is the only public housing 
agency that has been successful with this program, and I think 
it deserves your complete relook and to make sure that those 
moneys are more effectively spent.
    Mr. Liu. Two things to address this quickly, one, you are 
right, the program as initially envisioned was designed to deal 
primarily with the larger housing authorities in a certain part 
of the country. Number two, as we examine the problems in 
obligations and expenditures, we do have the ability to 
recapture funds from those housing authorities, HOPE VI 
grantees that are not utilizing the moneys, and then 
reprogramming them back into the HOPE VI program for other 
grantees.
    Mr. Cramer. Well, either today or probably later for the 
record, I understand that last year 16 grants were awarded and 
that included 15 cities. Could you provide me with a dollar 
amount and where those grants were awarded so that I can help--
--
    Secretary Martinez. We can certainly do that. I know there 
are major cities in our country that year after year have been 
receiving HOPE VI grants. You have to understand they were the 
problem with public housing. We are talking about Chicago, some 
of the most horrible examples. Now they have received so many 
public grants that they are having a hard time getting the 
money out the door and getting the process----
    Mr. Cramer. Other parts of the country sit there with 
distressed public housing----
    Secretary Martinez. Over the past year as we have come into 
the job, recognizing that misallocation, we have worked with 
the NOFA process to ensure a broader distribution of HOPE VI 
opportunities. So I think what we are doing is going to have 
the desired effect that you seek and we look forward to 
providing you with the information you asked.
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    Mr. Cramer. I want to add as well on the issue of the FHA 
down payment simplification program, it was music to my ears to 
hear you say that you would advocate that that be made 
permanent.
    Thank you, Mr. Chairman.
    Mr. Walsh. Thank you. Mr. Fattah.

             HUD'S EFFORTS IN PHILADELPHIA'S NEIGHBORHOODS

    Mr. Fattah. Thank you, Mr. Chairman, and let me welcome the 
Secretary again to the committee. Let me ask one parochial 
question and then move to some broader issues. As you know, the 
City of Philadelphia has launched--a neighborhood 
transformation initiative that places some $300 million into 
blight removal, as well as thinking through how the city deals 
with a whole host of issues that HUD has been intimately 
involved in over the years in Philadelphia both in terms of 
vacant structures and new housing development, and how to 
create more affordable housing in the city. I would like to 
give you an opportunity on the record to indicate whether you 
have had internal discussions, and how you see HUD being able 
to interface with a major city as it attempts to deal with 
decades of declining neighborhoods.
    Secretary Martinez. Well, Congressman Fattah, I think what 
you are doing in Philadelphia where Main Street is involved is 
very, very impressive and commendable, and we want to work with 
you on it because it is obvious that a very serious local 
partnership has emerged and what we ought to do is try to come 
in as a facilitator, once this whole cooperative effort between 
industry, private sector, and government has come together.
    I have met with the mayor. As you know, we have been to 
Philadelphia. I think that, specifically, how we will 
cooperate, I guess, depends on what programs might be 
available, but you have my assurance that what is happening in 
Philadelphia we think is very important and very commendable 
and it has our fullest support.
    Mr. Fattah. Well, my hope is that maybe the Department, 
under your direction, could set up an interface with the city 
in a significant way to look at how the city's $300 million is 
going to be spent, and to what degree does HUD's programming in 
Philadelphia, both in terms of public housing and other 
approaches--can be leveraged in a meaningful way so that this 
initiative is successful.
    We don't have a major city in our country that has been 
able to tackle these problems with complete success. I think 
the Philadelphia initiative is the largest that has ever been 
attempted with the use of local funds. I also think you want to 
encourage local communities to find resources for this purpose, 
so it would seem to me that HUD should be an enthusiastic lead 
partner in this effort.
    Secretary Martinez. You are completely right, and I think 
it is remarkable what has been done locally; and we should be 
there to help, so I think your suggestion is a good one. We 
should try to find a way that we can put a little task force 
together to work with the mayor and continue to be supportive 
anywhere we can and make sure that--you know, whether it might 
be our FHA, REO properties, or whether it is through HOPE VI or 
whatever other means we have available, to make sure that we 
are working in concert with the city.

                           HOMELESS PROGRAMS

    Mr. Fattah. I am going to follow up with you, and hopefully 
we can move aggressively.
    Let me ask you about the consolidation of the homeless 
programs and the reactivation of the council. There is some 
concern that consolidating the homeless assistance programs, 
which I know you see as a cost-cutting approach, may diminish 
some of the specialized focus on some of the populations, for 
instance, homeless children. If you could, please comment.
    Secretary Martinez. We think this consolidation is going to 
make the program more effective. It is going to get the money 
out, instead of in 18 months, in 3 months. We think that is all 
very positive, and frankly we think that at the end of the day, 
other than the fact that it is a change, it is not going to 
have an impact on the programs that are currently being funded. 
That is not the intent. I think the idea is to make the grant 
process more cohesive and to allow us administratively to do a 
better job, but it is not intended to have an outcome that 
would be different than what is currently taking place in the 
homeless grant communities.
    So we believe that it is going to be a positive--but in 
terms of all the different programs that come under this 
consolidated effort, we are not seeking to steer the money one 
place or away from another. Quite the contrary. We want to 
continue the programs that are there. We want to, in fact, have 
Mr. Mangano to input what he sees in how we can bring other 
agencies--you know, HHS may have a children's program that they 
are trying to do which may have some connection with the 
homeless issue. And so as we let Mr. Mangano do his work, I 
think that we will find not only a continuation but maybe even 
better ways in which we can connect with the grantees in what 
they are trying to do.

                   EMERGENCY FOOD AND SHELTER PROGRAM

    Mr. Fattah. Lastly, we note that the FEMA program that 
deals with people who are displaced through natural emergencies 
and who are homeless is being shifted to HUD.
    Secretary Martinez. That is correct. Again, it is a 
consolidation of a program that deals with homeless issues, and 
it didn't make much sense for that to be at FEMA. And I am not 
sure historically why it ended up at FEMA. You may have a----
    Mr. Bernardi. It is a $153 million allocation for emergency 
food and shelter, and the thought was to bring all such 
emergency homeless assistance under one purview at HUD. There 
is a National Board of Governors that runs that program. There 
will be no programmatic changes, and once they make the 
allocation to the various jurisdictions, local boards make the 
determination as to how the money is spent.
    Congressman, if I may, in Philadelphia--Philadelphia is one 
of the cities that is utilized to the maximum, so there is an 
awful lot of economic development going on in that great city.
    Mr. Fattah. Well, we are very happy with the development, 
and we hope to maybe lift those caps so that we could utilize 
108 a little bit more.
    Thank you.
    Secretary Martinez. Congressman, I also wanted to--just as 
a small commercial advertisement for us, that it is kind of 
encouraging that OMB would encourage FEMA to shift the program 
over to HUD. I think that shows a little confidence that may 
have not been present in the HUD of past.
    Mr. Fattah. Mr. Secretary, a lot of confidence has been 
placed on you from a lot of different quarters, and I want to 
thank you for your assistance in Philadelphia with your 
different approaches. This new initiative, though, I think is 
something that really deserves your attention, because if it is 
successful, other local communities might amass significant 
local resources to attack problems that presently are only 
being addressed through Federal funds. It could be an 
opportunity for a real partnership if we can create a success 
story in the neighborhoods of Philadelphia.
    Secretary Martinez. Thank you, sir.
    Mr. Fattah. Thank you. Thank you, Mr. Chairman.
    Mr. Walsh. You are welcome, sir.
    Mrs. Northup.

                     HUD/HHS ROLES FOR THE HOMELESS

    Mrs. Northup. Thank you. Welcome, Mr. Secretary. We are 
delighted to have you, and I specifically am delighted to have 
you. You make an enormous impact on my district. It is an urban 
district, and we are very eager to look at the emerging 
programs and to take full advantage of them.
    I would like to follow up from some previous years about 
some questions regarding homeless programs and sort of what the 
role of HUD is, what the role of Health and Human Services is, 
and what sort of coordination might be important to better 
address the challenges of the homeless.
    I have looked in my district and looked at--as we know, for 
many of the homeless, the challenge of mental health, mental 
illness is an enormous part of their challenge. And while I 
think we were so right in the 1960s to think of 
institutionalization as the last resort, we certainly haven't 
gotten it right yet about how to provide a comprehensive 
program that better serves the homeless; specifically, those 
that are mentally ill.
    And my concern is that as Health and Human Services 
programs seem to be less and less effective and adequate, that 
HUD is being called on to develop those services to provide 
more and more programs. And while I don't object to those 
programs, I don't think there will ever be enough dollars in 
them if we don't start spending Health and Human Services money 
better.
    So I guess what I am asking is: Could you go over there and 
tell them what they need to do?
    Secretary Martinez. Well, you know, when I came into this 
responsibility that was one of the early decisions that I made, 
was that, in fact, we were being burdened, and I don't mean 
that--it is part of our job, but, you know, there was not a 
fair share of the burden in terms of the homeless problem. So 
early on, Secretary Thompson and I met, and as aresult of our 
meeting, he was very receptive and to understand that in fact it is a 
shared responsibility.
    A lot of these problems, unless we get the mental health 
dollars, unless we get the other health dollars available 
through HHS, a lot of this population is getting missed.
    So as a result of that, we began a working group, a task 
force, between HHS and HUD where we are attempting to do what 
you just suggested, sometimes successfully, sometimes less 
successfully. Bureaucracies are very attractable, and that 
means our bureaucracy. But as a result of that synergy that 
Secretary Thompson and I created, we went to the White House 
and asked the President to reactivate the Interagency Council 
on the Homeless, which has given rise to Philip Mangano, who 
was introduced a few moments ago, who is going to be the head 
of that new interagency working group.
    As a result of his coming on board--and he has just come on 
board this week--we will have the opportunity to more closely 
focus the resources of HUD in the shelter areas where they 
belong; make sure we are getting the health dollars out of HHS 
to the homeless population where they can best do what they 
can; and we can also interact with VA, also look at what other 
homeless programs there might be.
    In the past, we would have been looking at FEMA. Now FEMA 
has incorporated that into our program. And in doing so, I 
think we will come up with a much better solution to the 
problem of homelessness, so much so that I felt encouraged 
enough to challenge us that in the next 10 years we should end 
chronic homelessness, that in fact this is an attainable goal 
and it is something that if we approach it comprehensibly like 
this, we might be able to make a difference.
    And, you know, when I was a former local official in Orange 
County, Florida--and I am not filibustering you--I think I 
mentioned this the other morning when we met, is the fact that 
our jail had so many people in it that were, frankly, mentally 
ill or addicted.
    Mrs. Northup. In our jail.
    Secretary Martinez. And so that is a serious, serious 
problem, and while we may have made some progress in the 1960s, 
we are a long way to getting it right. What we are doing today 
is not very compassionate.

                COORDINATION OF EFFORTS FOR THE HOMELESS

    Mrs. Northup. Well, I asked the question about it because 
you both talked to Health and Human Services, because I do 
think that Secretary Thompson is very committed to this.
    I would like to raise another area, though, in that you 
have to effect where the dollars go, and whether they go there 
effectively, if you are going to change programs. And most of 
the Federal dollars, I believe, that go to mental health, flow 
through Medicaid, through the mental health, mental retardation 
centers, that are the only billing agent in every region for 
mental health services. And, as there seems to be a broad 
realization, that they do a lot of cherry-picking. They serve 
people that show up at 1 o'clock on Wednesday for their 
appointment, and the homeless don't do this.
    So, while the homeless could access the programs, you know, 
to really serve the homeless, you have to have a much more 
comprehensive approach that, you know, includes going to where 
they are and providing for their physical needs, too. I am not 
sure that Medicaid or CMS, is as engaged in this as they need 
to be, and that if the inadequate portion of this equation--and 
I have a strong feeling about where the inadequate portion is--
is still allowed, their direct billing abilities, without 
having to become real partners in this, that you don't ever 
really transfer the money to the most chronic needs, the most 
serious needs. And, yes, instead we have the problem in our 
jails. We have families that don't have the answers they need. 
We have the homelessness. And none of those are a good approach 
to addressing the challenges of the mentally ill.
    Secretary Martinez. Well, I think you have pointed out a 
very serious problem, and I am delighted that you were able to 
make that point, because Philip Mangano, as I say, is here with 
us, and I know Philip will be looking to address that issue. 
And maybe we should even discuss some of the specifics with you 
so that we might use it as a laboratory of what may be taking 
place in many other communities.
    Mrs. Northup. Well I would love to work with you and work 
with you not just for my district, but I do believe that we 
already have enormous amounts of money in the system and that--
--
    Secretary Martinez. I think we do.
    Mrs. Northup. And that----
    Secretary Martinez. Yes, $1.1 billion a year is what is in 
our budget this year. That is a lot of money, and you know----
    Mrs. Northup. And that doesn't even include, if you look at 
the pie chart from the State of Kentucky--I mean, from my 
district--7 percent come in Federal funds for mental health--
the area of mental health, mental retardation, 44 percent come 
from Medicaid billings.
    Secretary Martinez. But, you know, the $1.1 billion doesn't 
include those monies that should filter at some point to some 
homeless person, and they typically don't.
    Secretary Bernardi wanted to make a comment on this as 
well.
    Mr. Bernardi. Mrs. Northup, the numbers that are there are 
approximately all the homeless that are out there; but for 80 
percent, it is an episodic occurrence. They go from emergency 
to transitional to permanent housing. It is that 20 percent 
that they call chronic homeless or long-time homeless 
individuals that are out there, those that are mentally ill, 
those that have substance abuse situations. Of the $1.1 billion 
that the Secretary mentioned, approximately 50 percent of HUD's 
funds go for housing, and the other 50 percent for support 
services.
    So I think what the Secretary has initiated with Secretary 
Thompson, and now with the Interagency Council on the Homeless, 
is to bring all of the support groups and support services 
together and make a determination to take a homeless person off 
the street, provide them with the housing that they need. But 
then the other services that follow that are so very, very 
important, whether it is training, whether it is referral 
because of an addiction, job training, employment. I believe 
this Interagency Council being reactivated is going to answer a 
lot of the concerns that we have. Of course, we also have the 
National Institute of Mental Health at NIH. You know, I would 
invite you to include them in on this--there are some 
innovative approaches to helping people that struggle with this 
over the course of their lifetime. I am afraid that sometimes 
the public sector, as I see it right now, is the last to get 
the word of what the new approaches are, what the possibilities 
are to intervene more effectively. So I would like to work with 
you.
    Mr. Chairman, have I used up all of my time?
    Mr. Walsh. You have 1 additional minute.

                         HOPE VI IN LOUISVILLE

    Mrs. Northup. Okay. Well, let me just take this 
opportunity, then, to thank you. We have a HOPE VI program in 
Louisville. We are disappointed we don't have another one. We 
are still hoping that one will come. But the one we have has 
been very successful, and, as I understand, it has been fairly 
flexible. You all have continued the flexibility under which it 
has started. You know, that has been so important to this 
district. I invite you to come. I think you would be really 
pleased to see such an effective program where mixed income--
very mixed income, everything from public housing to 
professionals live in this neighborhood. Their children play on 
the same ball team together. They are growing up together. The 
units are sold because it is a very exciting place to live, and 
I would invite you to come and look at it.
    Secretary Martinez. Thank you very much. I will do that.
    Mrs. Northup. Thank you, Mr. Chairman.
    Mr. Walsh. Thank you. That concludes the first round. I 
think we will give the witnesses an opportunity to take a 
break.
    Secretary Martinez. Thank you.
    Mr. Walsh. We will take a 5-minute recess.
    [Recess.]

                    UNOBLIGATED/UNEXPENDED BALANCES

    Mr. Walsh. The Subcommittee will come to order. We ask the 
witnesses to return to the desk, and we will try to get through 
this second round with some speed. I will begin, and what I 
would like to talk a little bit about is some of the 
unobligated and unexpended balances that HUD has accumulated. 
Last year we talked at length about the continuing inability of 
HUD and its partners to spend the money Congress has provided. 
If we look at fiscal year 2001 spending, it appears no real 
progress has been made in reducing the backlog of unspent 
funds.
    Excluding Section 8, which we have discussed somewhat, 
excluding it at the end of fiscal year 2001, HUD and its 
partners have not yet spent $41.3 billion provided in fiscal 
year 2001 and prior years, of which $7.7 billion has not yet 
even been obligated.
    I would like to note that this total does not include the 
$14.5 billion appropriated in fiscal year 2002 programs. So if 
you add that up, it becomes quite a sum; actually, over $55 
billion. Mr. Secretary, that represents a 3-year backlog of 
unspent funds, and it seems to be the same programs that 
continue to have the largest backlogs.
    Let me give you some examples: $10.1 billion remains 
unspent in CDBG, $10.1; $6.95 billion in elderly and disabled 
housing--that is 7 years' worth of funding, including $2.7 
billion not yet obligated; $6.8 billion in public housing 
capital fund; $3.9 billion in homeless programs, over 3 years' 
worth of funding, of which $1.4 billion had not yet been 
obligated; $3.2 billion in the HOPE VI program, 5 years' worth 
of funding; and $4.5 billion in the HOME program.
    With some pipeline of funds expected, the backlog in HUD 
programs is much greater than I think any of us can or should 
accept. Every dollar not yet spent represents a need not yet 
met.
    You testified last year that better management by HUD and 
its partners was the key to solving this problem. You indicated 
that several program management reviews had been complete, or 
would be completed shortly and changes would be implemented. 
What specific management changes has HUD implemented in any of 
these programs since last year, and how will these changes help 
reduce the backlog?
    Secretary Martinez. Well, Mr. Chairman, I think you point 
to a very serious and longstanding problem that HUD has in the 
utilization of funds, and a lot of it, of course, depends on 
HUD's partners to utilize the funds in a timely fashion.
    Clearly, when we talk to some of our partners, we recognize 
that any funds that have not been properly spent, that 
ultimately there is a family that hasn't been helped. And we 
take that very seriously and we recognize that as a serious 
problem.
    What we have been trying to do at HUD is to try to make 
sure that we have a program that we can measure with each of 
these areas in terms of management reviews, in terms of follow-
up. You have listed basically all of the significant programs 
that HUD has, with CDBG, elderly, disabled or PIH, homeless, 
all of the above are programs that obviously have unspent 
balances that are well beyond what should be anticipated.
    I would say that the problem really lies in the ability of 
HUD's partners to utilize the funds, and I believe that 
recapture is an option, and that recapture should be a threat, 
and if that is a real threat--back to what we were discussing 
with Congressman Mollohan, that that is not necessarily getting 
the help where it needs to go--I think that threat has to be 
there, because ultimately it will force local partners to do 
right or risk the loss of funding and it will be reauthorized 
to go elsewhere.
    So with regards to specifics--I am looking for a little 
help here. There seems to be a little reluctance to come up. 
Maybe we can interpret that to be, you know, the lack of a good 
handle on a very difficult problem.
    Mr. Walsh. Well, we need some specifics, whether you can 
provide them today or provide them in writing. Last year we had 
a general response, a sympathetic response to the question, but 
a lack of detail. We really do need some detail on how you are 
going to deal with these things in an era of shrinking budget 
surpluses. These funds become very attractive for rescission, 
and I don't think any of us want to rescind funds that we 
thought were priorities when we appropriated them. In most 
cases, you requested those. So we really need some specifics 
here, and if you can provide those now, that would be great. If 
not, then we would need them in writing.
    Secretary Martinez. Mr. Chairman, I think you are correct 
in wanting some specific answers, and I think that we should 
provide those, and I think certainly we can provide and we 
should provide, as best we can, in writing. And if we are 
prepared to do so today, I am happy to call on Secretary 
Bernardi for CDBG and Secretary Liu for PIH.

                        CDBG UNEXPENDED BALANCES

    Mr. Bernardi. Mr. Chairman, for CDBG, you are correct, it 
is about $9 billion. We have implemented a program to bring the 
grantees into a timeliness factor, and if they have over and 
above 1\1/2\ times their most recent grant 60 days before they 
are to received another grant, we have a program in place now 
where we are going to take what they have over, starting at 15 
percent, and then each year that they are over, take additional 
monies away. However, the fact is in a lot of situations, much 
of that money has been committed. It just hasn't been spent.
    But we need to do a better job of tightening that up, and 
as I mentioned earlier, our untimeliness now has gone from 310 
entitlement communities down to about 110. So we are moving in 
the right direction, but we need to do more.

                    PUBLIC HOUSING UNEXPENDED FUNDS

    Mr. Walsh. Thank you. Mr. Liu.
    Mr. Liu. Mr. Chairman, on the Public Housing Capital Fund, 
as I mentioned earlier, we stand poised to implement QHWRA on 
the recaptured provisions there. We have laid out a process, 
step by step, that we will be utilizing in this round as well 
as for the future. And I will admit that has been quite a 
process, and we appreciate the assistance that we have received 
from your staff in working with us on that.
    In regards to HOPE VI, as I mentioned, as the Secretary 
mentioned, the issue of backlog and unobligated and unexpended 
funds is one of the weaknesses that we see in the program. One 
of the management tools that we are going to require is that 
going forward, we want to see project schedules with the 
application. It is rather astounding to me to find out that up 
until--well, through the 2001 cycle--project schedules were not 
required as part of HOPE VI applications. So that grantees, 
once they got the awards, subsequent to receiving the money, 
then, quote, ``negotiate with HUD on time lines.'' There was no 
formal approval process for extensions of those time lines.
    We now have that in place. Those are some significant 
management changes in that program that we are looking at. Also 
I will mention--without mentioning the specific city--that we 
are preparing some significant recapture notices to some HOPE 
VI grantees.

                    REAUTHORIZATION OF HUD PROGRAMS

    Mr. Walsh. My time has expired. Let me just ask you if you 
could submit it in writing. Many of these programs, including 
HOPE VI, are up for reauthorization this year, and I would be 
interested in hearing your thoughts on what changes you would 
recommend to the authorizing committees to make these programs 
work better to help to get the money out. And you can submit 
that in writing.

    [Agency note: Please refer to the Agency's response to 
Chairman Walsh's Question #1 submitted for the record following 
the hearing transcript.]

    Mr. Walsh. Mr. Mollohan.

                 PUBLIC HOUSING REINVESTMENT INITIATIVE

    Mr. Mollohan. Thank you, Mr. Chairman, Mr. Secretary.
    Capital funds, Mr. Secretary; last year you justified a 
fairly substantial cut to the capital fund because of the 
backlogs. What was that cut last year?
    Secretary Martinez. Seven hundred million dollars.
    Mr. Mollohan. This year you are proposing a $417 million 
cut based upon your initiation of a new leveraging program to 
work with the private sector to get project-based refinancing 
strategies.
    Secretary Martinez. Correct.
    Mr. Mollohan. There is some support out there for this 
program but also a lot of concerns, and opposition pending 
resolution to those concerns. I would like for you to talk 
about this a little bit. And I guess my first concern is that 
it is an idea, and I think before it becomes an initiative it 
should be tested and more fully developed, particularly when 
you are justifying a $400 million cut to the fiscal year 2003 
budget based on it.
    Secretary Martinez. I think you make a good point in that 
regard, and I think it is one of those issues where we are 
trying to innovate. We think it has a lot of potential positive 
good, and I don't think that the cut ought to be viewed in any 
way punitive. In fact, I think the backlog issue we dealt with 
last year--thanks to your committee's work in a very forceful 
way--and I think it is going to help us going forward.
    So I think the idea is that there will be private financing 
sources available. If those were not to materialize, I 
certainly would understand the need for the Committee to 
appropriately fund the capital fund. It is not intended as a 
cut in what is needed or what is available to public housing 
authorities, but it was more of a management tool in order to 
facilitate moving into this new program.
    Mr. Mollohan. Do you think we will be able to make those 
determinations between now and when this bill is finished?
    Secretary Martinez. I think there is some real skepticism 
about the private financing options, which I don't think are 
well founded. I think it is going to be successful, and I think 
we have some good examples that are ready to go on this.
    So to the extent we can provide data over the next few 
weeks on this, that would give you some comfort. But at the 
same time, I would certainly understand the Committee's view of 
funding of the Capital Fund.
    Mr. Mollohan. Prematurity is the concern we just talked to. 
The other concern I might have is the evenhandedness of how 
this might be implemented. I understand it is conceivable that 
there may be some authorities out there that could implement 
this program, but there are going to be an awful lot that 
aren't, and the cut would impact across the board, would it 
not?
    Secretary Martinez. Well, the cut is across the board. The 
idea, of course----
    Mr. Mollohan. So any authority--excuse me, I don't mean to 
interrupt you, but any authorities that could take advantage of 
the program fine. But what about those that----
    Secretary Martinez. Well, hopefully we would be able to 
allocate for them with--I mean, if we can bring in $400 million 
of private money, that would suggest that we don't need $400 
million of Government money. So----
    Mr. Mollohan. Again, I didn't make my point, or you don't 
agree with it. I am saying it would be unevenly beneficial. 
This program would not be beneficial to all of those 
authorities that are experiencing reductions. So that even if 
it were successful, even if it were beneficial, it would only 
be successful for a few authorities, and therefore those that 
it were not applicable to would definitely be experiencing 
cuts.
    Mr. Liu. Mr. Mollohan, that really depends on the housing 
authority and where they perhaps may line up in regards to the 
backlog which was mentioned, anywhere from $7 to $10 billion in 
capital fund backlog in the aggregate, and many of those 
housing authorities that may believe they may be suffering also 
have backlog dollars to spend. And certainly, we understand 
that this is a tool, not a panacea, to deal with some of the 
needs of deferred maintenance. We have had a lot of interest 
from--close to 15 or 20 housing authorities that are ready to--
--
    Mr. Mollohan. Respectfully, you are not saying that in 
disagreement with my point, are you?
    Mr. Liu. No, I am not disagreeing with your point. What I 
am saying is that there are housing authorities that have, as 
part of a $7 to $10 billion backlog, have dollars available in 
their Capital Fund.
    Mr. Mollohan. I understand, and we talked at length about 
this backlog last year and about the spend-out rates. But all 
things being equal, only some authorities would be able to take 
advantage of this program, and that assumes you got it up and 
working within the 2003 cycle--all I am really talking about 
here is timing. We are not even into the merits of a program, 
because you haven't brought the program forward in a mature 
sort of way. I am talking about it being premature. And also if 
you were to try to implement it, would be very uneven, and to 
that extent, implementation there are going to be some housing 
authorities that are going to have less access to Capital Fund 
money.
    These are 2 years running of serious cuts to the Capital 
Fund. You have proposed to cut--if I add this up, and I am sure 
I am not doing it right, $1.1 billion.
    Secretary Martinez. I would say that, you know, it isn't 
the intent to further go into the Capital Fund in that way, and 
that as the Committee goes forward, I suppose we made a 
proposal and then it is up to the Committee to take it forward 
from there. I understand the points that you make, and I think 
they are very valid and legitimate.
    Mr. Mollohan. I appreciate the opportunity to talk with 
you, Mr. Secretary, and your people about these issues. Thank 
you, Mr. Chairman.
    Mr. Walsh. Mr. Knollenberg.

                 DETROIT HOUSING AUTHORITY AND HOPE VI

    Mr. Knollenberg. Chairman, thank you, and welcome, Mr. 
Secretary. Glad to have you here.
    I want to get right quickly into a matter that is focused 
in Michigan. It is the Detroit housing commission, and I know 
you are aware of some of the problems there. You will remember 
that the HUD IG report that was released last year, found that 
the Detroit Housing Commission cannot account for some $18 
million in HUD HOPE VI funds. Subsequent to that, the housing 
commission has denied many of these allegations and claims it 
can provide documentation for the $18 million.
    I have asked the U.S. attorney in the eastern district of 
Michigan to step into the matter and look into it. We are going 
to, in fact, discuss this sometime in April. The HUD OIG 
recommended that HUD declare the housing commission in default 
of the HOPE VI grant agreements and place the administration 
under a receivership.
    I noticed this recommendation was included in the IG's 
semi-annual report to Congress, dated September of 2001. You 
may not have had time, but somebody on staff has had time to 
read this report, and I just wonder what your response would be 
to the recommendation by the IG, and also would you support a 
move for a receivership, and what is the time frame for this 
decision?
    Secretary Martinez. We have worked with the Inspector 
General to reach a management decision about the review and 
closure of each of the audit recommendations that were listed 
in that audit. HUD has until September 13th of 2002 to close 
their monetary findings, and March 2003 to act upon the 
recommendations dealing with possible receivership and 
sanctions against the former and current executive director of 
the Detroit Housing Commission.
    In the interim, HUD has established a zero threshold for 
the Detroit Housing Commission that requires that the Detroit 
Housing Commission send all of its change orders to HUD for 
review and for approval. So that is where we are.
    Mr. Knollenberg. Is that taking place right now, that zero 
threshold?
    Secretary Martinez. Yes.
    Mr. Knollenberg. And how long has that been in place?
    Mr. Liu. It has been in place since the issuance--about 2 
months since the issuance of the IG report.
    Mr. Knollenberg. So it has been in effect for several 
months.
    Mr. Liu. Yes, sir.
    Mr. Knollenberg. Is that being abided by?
    Mr. Liu. To the extent we can get cooperation from the 
housing authority, yes, it is being abided by.
    Mr. Knollenberg. And in light of the coming reauthorization 
of HOPE VI, what reforms are you considering or suggesting that 
might be implemented to enhance performance and accountability?
    Mr. Liu. We are going to focus in on project readiness. 
That is, require that the applicants be much more project-ready 
in regards to financing, project schedules, and all of the 
elements that go to making a project successful and ready to 
go.
    Currently, for instance, an applicant does not have to have 
all of its zoning in place. An applicant does not have to have 
all of its financing in place. An applicant, as I mentioned 
earlier, does not even have to have its project schedule in 
with the application. These are basic to any type of successful 
projects which we are going to require and look for in the 
future. We are going to require that any extensions of any 
deadlines provided in that application have to come back to us 
for approval. It is clearly an open field for the type of 
problems we see in some of the problem projects where that has 
not been in place in the past. So those are some of the issues 
that we are looking at as we move forward in reauthorization, 
sir.
    Mr. Knollenberg. And I appreciate, Mr. Secretary, your 
working with us on this, and your staff as well. My concern is 
that maybe the housing directors, don't properly understand the 
program locally. Would you suggest that is true?
    Secretary Martinez. Well, clearly, it is a management 
breakdown, and I don't think there is any question about that. 
And now, unfortunately, you know, we can do some things, but I 
think the drastic steps of receivership are pretty strong, and 
we prefer to work with the local authorities to the extent 
possible.
    We have done it. In fact, we have done it recently in the 
case of New Orleans. But it is really a last resort sort of 
method for the most part.
    Mr. Knollenberg. I know you stated last year in your 
testimony that you are going to try to move forward with some 
program to decertify people that weren't up to the----
    Secretary Martinez. Well, clearly.
    Mr. Knollenberg [continuing]. The management level. Is 
there anything along that line that might be applied here, or 
would that be a little premature to suggest----
    Secretary Martinez. Well it is probably a little premature, 
but we would look to the IG's guidance on what they find in 
their investigation as it completes, and then pursue it from 
there.
    Mr. Knollenberg. Thank you. I think my time has probably 
expired, hasn't it? Yeah. Thank you.
    Thank you, Mr. Secretary.
    Mr. Walsh. Thank you, Joe.
    Mrs. Meek.
    Mrs. Meek. Thank you. Because I have only 5 minutes, Mr. 
Secretary, I don't want you to answer. Just give me a nod on 
some of this.
    Secretary Martinez. I will give a code like that.

                PUBLIC HOUSING DRUG ELIMINATION PROGRAM

    Mrs. Meek. First of all, I am interested in the drug 
elimination grants that you turn over to the Department of 
Justice. I don't know what they have done with the money, and 
have they done anything and have there been results? And if I 
can get a quick answer on that, I will get to my other one.
    Secretary Martinez. We are working on it and we are very 
encouraged with what we are doing. We are talking about the 
weed and seed program being involved, and we are doing some 
things that are very positive, but we are going to continue to 
keep you posted on it.

                        LEAD-BASED PAINT PROGRAM

    Mrs. Meek. And I want to commend you on your lead safety 
program. It is judged to be an effective program, but it is a 
big, big problem, Mr. Secretary. And I do know what is being 
done in terms of your lead-based rules and the children that 
are involved in all of these public housing projects.
    I also want to know what is being done in all of these 
foreclosed homes that you are selling to low-income people. HUD 
lets them--there are over 30,000 of them out there being sold 
to low-income people, and they have all of these lead-based 
paint hazards.
    Secretary Martinez. We are increasing the funding for lead-
based abatement. In this budget--I don't have the figure in 
front of me, but there is a substantial commitment there. 
Sixteen million dollars is what the request is this year--I am 
sorry, an increase by $16 million. I didn't have my notes in 
front of me.
    So we think that represents a very strong commitment to, 
you know, healthy homes, which we are working with EPA on and 
jointly trying to tackle the issues of not only lead but also 
mold and other health problems that exist in the home which, 
frankly, in Florida may be even more relevant than lead-based.
    Mrs. Meek. So you are doing things to see that the children 
will be protected. What kind of program does HUD have to get 
the word out that these things do exist? And it is a problem of 
lack of knowledge in many instances.
    Secretary Martinez. Well, we work with the landlords. We 
work with, you know, all the public housing agencies. I am sure 
we also do some work through our REO FHA program to make sure 
that people know of the problem and that the abatement is 
taking place, that we do the things we need to do to eradicate 
the problem and make sure that it doesn't continue.
    FHA, I know, does some of these things in terms of the 
rehabilitation that we pay for when we put homes out on the 
market.
    Dr. Weicher. If we know of a problem, if we know of a lead 
hazard, we disclose it on any of the properties that we sell. 
And if we are doing rehabilitation, as the Secretary said, the 
rehabilitation includes lead testing and abatement.
    Mrs. Meek. And would you submit for the record the number 
and amount of applications that were submitted by citizen 
States in the last grants you had for hazard and healthy homes, 
as well as the number and amount that you funded?
    Secretary Martinez. Okay.
    Mrs. Meek. Can you do that?
    Secretary Martinez. Yes, ma'am, we can.
    [The information follows:]

           Number and Amount of Lead Hazard Abatement Grants

    Below are the number and amount of lead hazard control grant 
applications submitted for fiscal year 2001.
    Lead Hazard Control Grant Program: 97 applications totaling $219.5 
million. Of this, 23 were funded totaling $59 million.
    Healthy Homes Program: 84 applications totaling $71.3 million. Of 
this, 14 were funded totaling $8.1 million.

    Mrs. Meek. Thank you. Have you told the cities and the 
counties that you aren't going to give any more extensions on 
the lead paint?
    Secretary Martinez. I am told it is a case-by-case basis, 
and so what we try to do is not have a blanket policy in one 
direction or the other. We take them one case at a time.
    Mrs. Meek. Do I have another minute?
    Mr. Walsh. Yes, you do.
    Mrs. Meek. Okay. So if you find out they are not compliant, 
what will you do?
    Secretary Martinez. Well, you asked me to nod, so I am 
nodding.
    Mrs. Meek. Okay.
    Secretary Martinez. I am going to get back to you. We will 
have to give you more detail. So I appreciate your interest in 
this issue, and I think that it is very important, and I don't 
mean in any way to make light of it, but I think that it would 
be--I just don't have a good answer for you on that one.
    [The information follows:]

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    
    Mrs. Meek. Thank you, Mr. Secretary. You are such a 
pleasing person, I won't ask anything that is going to try in 
any way to make you disgruntled.
    Secretary Martinez. I am feeling fine, thank you. You 
Floridians have to stick together, I think.
    Mrs. Meek. That is right. When will the NOFAs go out, Mr. 
Secretary?
    Secretary Martinez. March 26th.
    Mrs. Meek. Thank you very much. Thank you, Mr. Chairman.
    Mr. Walsh. The gentlelady still has an additional minute.
    Mrs. Meek. Oh, that is really great.
    Secretary Martinez. It is all that nodding I have been 
doing.

                      SECTION 8 FAIR MARKET RENTS

    Mrs. Meek. Mr. Secretary, I am back again on Section 8. If 
it is at all possible, I think HUD should look a little bit at 
its inside operation in terms of your fair market rents. It is 
very difficult for developers to really fit into your fair 
market rents, and that is why we can't get anyone to build 
these homes in the places we want them to build for the Section 
8 certificates.
    If you can in some way look at--tell me how many Section 8 
substances, both project-based and tenant-based, do you 
anticipate the project losing around the country as a result of 
fair market rents? We are being told that the fair market 
rents, that is one of the reasons why many developers are not 
building places where these people can use these Section 8 
certificates.
    Secretary Martinez. Dr. Weicher is going to provide you 
with an answer to that.
    Dr. Weicher. With respect to the project-based assistance, 
of course we are not--we do not have a program of providing 
project-based assistance for new Section 8 projects. That 
program has been terminated for some time. In the Office of 
Multifamily Housing Assistance. Restructuring the fair market 
rents, the rent levels are being set to encourage preservation 
of that stock, but within the guidelines established by 
Congress, so that we are not, in fact, oversubsidizing these 
projects, many of which were oversubsidized for the first 20 
years after they were built.
    And we can provide you with a breakdown of how many units 
we are preserving and how many units are going to market rents.
    [The information follows:]

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    
    Mrs. Meek. Well, we want to commend the President for 
putting more money in the hopper, but more is needed in that 
the needs of people--people who have needs do need housing, and 
we do need--we are being told over and over that more money is 
needed, and the coalition of the--the National AIDS Coalition, 
with whom I work, is asking for more money, and it is money 
that is needed. And I do hope that you will take that into 
consideration.
    And my last one has to do with some of the----
    Mr. Walsh. The gentlelady's time has expired.
    Mrs. Meek. Thank you, Mr. Chairman. You are nice, too.
    Mr. Walsh. I have been accused of the opposite of that 
sometimes.
    Mr. Frelinghuysen.
    Mr. Frelinghuysen. Mr. Chairman, Mrs. Meek has a good run 
on it.
    Mr. Walsh. She did.
    Mr. Frelinghuysen. It is a pleasure to follow. Good to see 
this love-in between the Floridians. I am not sure how far it 
will get you.
    Mrs. Meek. You be careful.

                            ADA AND OLMSTEAD

    Mr. Frelinghuysen. I will. I want to compliment you and the 
President on the reactivation of the Interagency Council on the 
Homeless and giving it more money. Is there a similar group 
addressing the many obligations and expectations required under 
ADA and the Olmstead decision? I would think that all Federal 
agencies would be----
    Secretary Martinez. There is not----
    Mr. Frelinghuysen [continuing]. Into superdrive on these 
types of issues.
    Secretary Martinez. There is a working group, I am told, a 
White House working group in the implementation of Olmstead. It 
is not to the level of what the Interagency Council is, because 
that--you know, that is statutory and all of that. But there is 
a working group at the White House, I am being told.
    Mr. Frelinghuysen. And I understand actually in your budget 
you have something which might be described as vouchers that 
relate to the likelihood of the Olmstead decision being, shall 
we say, the law of the land; as I understand the 
administration's budget request, $6 million for vouchers tied 
to State efforts to implement the Olmstead decision and further 
the goal of moving people with disabilities from institutional 
settings into the community. A full implementation of Olmstead 
by the States, is a part of the President's the New Freedom 
Initiative. Isn't that correct?
    Secretary Martinez. That is correct.
    Mr. Frelinghuysen. Is HUD proposing to tie allocation of 
these vouchers directly to planning and nursing hometransition 
grants allocated by the Centers for Medicaid and Medicare at HHS?
    Secretary Martinez. Mr. Frelinghuysen, we will have to get 
back to you on that. I am not sure----
    Mr. Frelinghuysen. I think what this underlines is that 
there are linkages here between HHS and HUD on these issues?
    Mr. Marcus. If I may--thank you, Secretary, Congressman. 
What I would like to add is that HUD has been involved in the 
White House's working group, which is a very high-level group 
coordinating all of the various departments and agencies. And 
we are working with--talking with HHS to see what we can do 
here, so it is a very high priority for the White House that we 
are participating in.
    Mr. Frelinghuysen. So there will be linkages between, for 
instance, housing authorities and Olmstead obligations?
    Mr. Marcus. That is one of the policy areas that we are 
talking about quite a bit now. Now, as a result, the dialogue 
has not yet been finalized, but it is certainly something we 
are looking at.
    Mr. Frelinghuysen. And perhaps most important--and I know 
immediately upon the Secretary being confirmed you did meet 
with the Consortium for Citizens with Disabilities, and just 
would like to get from you public assurances as we move in this 
direction, that advocates and families that are involved will 
also be allowed to participate, and prior to information in 
these discussions.
    Secretary Martinez. Absolutely. We have had an ongoing 
dialogue with groups, and they do come, and we welcome them, 
and their input is appreciated. And I think as it goes forward 
in this process, that their input would be invaluable to have.
    Mr. Frelinghuysen. Thank you very much. Thank you, Mr. 
Chairman.
    Mr. Walsh. Thank you. Mr. Price.

                            SECTION 202/811

    Mr. Price. Thank you, Mr. Chairman. Mr. Secretary, I would 
like to return briefly to the topic you were discussing at 
length with Mr. Frelinghuysen; namely, housing for the 
disabled. Maybe you could provide another angle or vision on 
the level of need there and the extent to which we are meeting 
the need. And then I would like to discuss with you the 
proposed transfer of the emergency food and shelter program 
from FEMA to HUD.
    Just quickly on housing for the disabled, and focusing on 
the Section 811 program, the Administration is requesting $251 
million for Section 811. That is an increase of $10 million 
over fiscal 2002. But when you look at that more closely, you 
see that the amounts required for renewing project rental 
assistance contracts and renewing mainstream Section 811 
vouchers will increase from $24.3 million to $38 million. That 
is a difference of $13.7 million. In other words, there is 
actually a slight cut of about $3.7 million in funding for new 
Section 811 projects.
    I think this needs to concern us, because there is not a 
single rental housing market in the United States where a 
person with a disability, trying to live on Federal 
supplemental security income benefits, can afford to rent a 
modest one-bedroom apartment. Surveys show that hundreds of 
thousands of people with disabilities who want housing are 
unable to find it.
    So I want to ask you--and if you can provide this orally, 
that is good; if not, maybe you can provide it for the record. 
But I wonder if you could provide the number of Section 811 
applications submitted to HUD last year and how many of those 
actually receive funding.
    And then, second, if you could estimate the amount of 
funding it would take to meet the demand as reflected in 
meritorious Section 811 applications.
    Dr. Weicher. Mr. Price, I do not have that information as 
to the number of applications or the funding level that will be 
required. We can provide that for the record. We can say that 
we are, in fact, proposing to accommodate both the same level 
of new grants for Section 811 and the increase required for 
mainstream voucher renewals within our budget, and we are doing 
this partly by a reduction in the funding that is transferred 
to the working capital fund. That is being cut by $700,000.
    We are also reducing the appropriations for conversion to 
assisted living from $50 million to $30 million because that 
has never--we haven't ever obligated as much as $30 million in 
past years. This past year we obligated $21 million, and we 
funded every acceptable proposal. And we are also anticipating 
$9 million in recaptures, and we have recaptured $10 million or 
more in each recent year. So we are able to fund all the 
mainstream voucher renewals, the additional $9 million in 
mainstream voucher renewals. We are able to fund $54 million in 
new mainstream vouchers, and we are able to fund $162 million 
in new grants and PRAC awards for Section 811.
    Mr. Price. One hundred sixty-two?
    Dr. Weicher. That is $162 million in new capital grants and 
associated PRAC awards for fiscal year 2003.
    Mr. Price. Thank you, that is helpful. And if you would 
provide these figures I requested on the demand for Section 811 
funds.
    [The information follows:]

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                   EMERGENCY FOOD AND SHELTER PROGRAM

    Mr. Price. Now, for the emergency food and shelter program 
and its transfer, you know, there has been some discussion 
about that, and part of that discussion has to do with the 
efficiency we have seen at FEMA in delivering these funds. My 
understanding is it has generally taken FEMA 2 months to 
deliver EFSP funds to recipients once appropriations have been 
enacted, and that the administrative costs of the program at 
FEMA have been less than the 3 percent, so that is a pretty 
good track record.
    Do you know what the comparable time frame is for HUD 
homeless programs, for example, or any other point of 
comparison? What are the administrative cost percentages are? 
Obviously, what I am looking for is assurances that we could 
meet something like those FEMA numbers with this program 
transfer.

                     Transfer of FEMA Funds to HUD

    It is HUD's intent to allocate Emergency Food and Shelter funds in 
the same or nearly same, time frames as the current FEMA/National Board 
process. While the Administration's proposed bill corrects some issues 
on appointment authority and delegation of decision-making on grants 
that dates back to President Reagan's signing of the program's initial 
authorization, we believe that these changes will not significantly 
alter our goal to maintain the basic delivery mechanism and its rapid 
delivery of resources to needy clients.

    Secretary Martinez. Well, sir, the transfer of these funds 
to HUD is, I think, in recognition that we do handle all other 
similar funding in terms of homeless assistance and things of 
that nature, and while I think the time frames that FEMA has 
been able to achieve are commendable, I think that certainly 
the administration feels that HUD is a place where this can be 
handled in an effective and efficient way.
    We can provide you with time frames. I don't know that I 
can provide you with those right now. Our hope is that--our 
plan is, for the consolidated grant proposals for homeless, 
that we will be getting the money out the door in 90 days. So I 
think that is largely comparable to what FEMA has been doing.
    Mr. Price. That is comparable to what you would like to 
achieve for this transfer.
    Secretary Martinez. Correct.
    Mr. Price. Do you have any figures on administrative costs?
    Secretary Martinez. No, I don't have any figures on 
administrative costs. So I will be glad to try to provide those 
for you as to what--the question would be, more specifically, 
what is the administrative cost of HUD to administer homeless 
grant programs.
    Mr. Price. Well, what administrative cost for this program 
do you anticipate at HUD, compared to what we have seen at 
FEMA?
    The budget request is $153 million for EFSP in fiscal 03. 
That is a 9.3 percent increase above the 2002 level and that is 
a welcome increase. But United Way and some other advocacy 
organizations, of course, have recommended higher levels, as 
you know, and I wonder if you have any kind of independent fix 
on the level of demand for EFSP programs, the degree to which 
the budget request would meet the demand?
    Mr. Bernardi. Sir, the National Board governs the day-to-
day activities, to answer your last question, and they have 
been doing it for 19 years and doing it very effectively. With 
the transfer of this program into HUD auspices, we are not 
really going to be doing anything differently than what has 
been done. The program has been transferred, but the National 
Board, on a day-to-day basis, runs the operation. They provide 
the funding to the local boards, and the local boards carry out 
the programs.
    I don't have an administrative cost number that would----
    Mr. Price. Well, do you have any----
    Mr. Walsh. The gentleman's time----
    Mr. Price. My time has expired. I am sorry. If you could 
provide for the record a rationale for the funding level 
requested, namely the $153 million requested for 2003. Thank 
you, Mr. Chairman.
    [The information follows:]

           Rationale for $153 Million for EFSP Funding Level

    The 9.3 percent increase was based upon a recognition that needs 
have gone up for emergency assistance during the economic downturn. The 
increase reflects this increased need.

    Mr. Walsh. Thank you. Mr. Goode.

                           SECTION 8 VOUCHERS

    Mr. Goode. Thank you, Mr. Chairman. First I want to say 
thanks to HUD for working with Danville, Virginia on our HOPE 
VI grant. We appreciate being selected last June, and we will 
work with the city on that.
    The second thing I wanted to ask you, I am a firm believer 
in home ownership and prefer that to rental, although I know 
there are situations where rental help is the only way you can 
assist certain families. How is the program coming to utilize 
Section 8 vouchers to transfer people from renting to home 
ownership?
    Secretary Martinez. Well, we believe that is one great 
added tool to assist people to become homeowners, in addition 
to the American Dream Down Payment Initiative which we are also 
proposing here. The program is essentially just getting going, 
so there is no track record as such yet that I can tell you. 
But we believe it is going to be a great tool to allow renters 
to progress into home ownership.
    Do we have any figures on it so far? Michael Liu is our 
Assistant Secretary of Public Housing.
    Mr. Liu. Mr. Goode, the program--which is new--initial 
information is still coming in. But as of the end of last year, 
it looks like that across the country, there have been 200 home 
closings, upwards of 200 home closings under the program. The 
number of housing authorities that are getting involved are 
growing all the time. We have very active partnerships with the 
various GSEs, nonprofit organizations, such as the Neighborhood 
Reinvestment LISC, Enterprise Foundation, and the program is 
just going to grow.
    Mr. Goode. If I may, Mr. Chairman, do you have any--I guess 
it is not--it is too soon to have a track record on how those 
that are in transition are making payments?
    Mr. Liu. Yes. It is much too early right now, sir.
    Mr. Goode. That is all I have, Mr. Chairman. Thank you.
    Mr. Walsh. That concludes the second round. I would ask if 
there are any members who have the need to ask questions of the 
witness, that they would like to have responses now as opposed 
to having them submit answers for the record.
    Mr. Knollenberg, we will give him an opportunity to ask his 
question, and we will give Mrs. Meek an opportunity to ask her 
question and then we will conclude the hearing.

                   COMMUNITY DEVELOPMENT CORPORATIONS

    Mr. Knollenberg. Thank you, Mr. Chairman. My quesiton 
concerns the Community Development Corporations, the CDCs. I 
know there have been some local articles about that, primarily 
by the Washington Post. I think there is a two-part series this 
last week. And in that report, I know you are well aware of it, 
HUD was supposed to sell some 50,000 vacant homes nationwide to 
nonprofit groups who would repair them and in turn, obviously, 
sell them to moderate-income families. It has been shown that 
for-profit developers were the ones that were actually 
benefiting from the situation and not home buyers.
    There was an IG audit, and in that audit they stated that 
HUD should consider eliminating the program. What is your 
response to that statement and to that report?
    Secretary Martinez. I don't think we should eliminate the 
program. I think what we should do is manage and administer the 
program in the way it was intended, and I think this particular 
example in the local area that you speak of that was the 
subject of the articles, there was a series of waivers that 
were granted to the not-for-profit which clearly did not have 
the capacity to undertake the project they were undertaking.
    And so these rules are there in terms of experience, in 
terms of background, to have the demonstrated ability to carry 
out the project. And when the rules are waived, then inevitably 
these are the results one can get. The fact is that immediately 
upon knowing of the problem, HUD moved swiftly to end the 
project. And, in fact, I would like for Mr. Weicher to give you 
some details on that, because it was, I think, pretty swift 
action that we took. But I don't think it should be the end of 
the program. I think the program is----
    Mr. Knollenberg. Before you do that, though, were thereany 
communities around the country who have had similar problems and, if 
so, how many?
    Secretary Martinez. One other?
    Dr. Weicher. One other.
    Mr. Knollenberg. Only one?
    Dr. Weicher. It was in New York. I am sorry, it was San 
Bernadino.
    Secretary Martinez. Oh, okay.
    Mr. Knollenberg. So there are three?
    Dr. Weicher. No. Two.
    Mr. Knollenberg. New York is out. Yes, please.
    Dr. Weicher. In the Washington area, a partner which was a 
nonprofit did not have the capacity to do the job that we 
expect a nonprofit to do in rehabilitating and disposing of 
property, and they hired a for-profit contractor to do the work 
for them.
    Mr. Knollenberg. Why did they do that?
    Dr. Weicher. Why did they do which?
    Mr. Knollenberg. Why did they hire a for-profit to--because 
they weren't able or capable----
    Dr. Weicher. They were not able----
    Mr. Knollenberg. Is that something that HUD would allow?
    Dr. Weicher. No.
    Mr. Knollenberg. You didn't know?
    Dr. Weicher. No, we did not know. When we learned that they 
had a disagreement with the for-profit, we suspended them. We 
learned that they had the agreement--we received the copy of 
the agreement on October 12th. On October 24th we suspended 
them. They submitted to us a proposal for how they would do it 
differently in February. We found that unsatisfactory, and we 
rejected the proposal, and the original year's agreement 
expired on March 7th, and they are no longer participating in 
the program.
    Mr. Knollenberg. Do you provide any kind of assistance to 
groups of that kind, technical assistance, so that they are 
aware of what they can or cannot do?
    Dr. Weicher. In some areas, the ACA partner was given a $5 
million neighborhood improvement grant, which I believe was 
authorized in the fiscal year 2000 budget. The Washington group 
applied for that in the previous administration, and was not 
given the money. They did not have the money for them. They 
were allowed to participate. They received several waivers in 
the previous administration. They were allowed to participate 
if they could find a source of financing in the private sector, 
and a bank provided them with a line of credit, and it was on 
that basis that they went forward.
    Mr. Knollenberg. So you see this, then, as something that 
will not happen again?
    Dr. Weicher. Not if we can help it, Mr. Knollenberg.
    Mr. Knollenberg. Thank you.
    Mr. Walsh. The gentleman's time has expired. The gentlelady 
from Florida has graciously offered to submit her remaining 
questions for the record, which would allow us to conclude our 
hearing today.
    We thank the Secretary and his able deputies for their 
thoughtful responses to our questions. We will submit 
additional questions for the record. We would appreciate a 
prompt response, and the hearing is adjourned.
    [The information follows:]


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                               I N D E X

                              ----------                              

              DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

                                                                   Page
Accelerated Claims Demonstration.................................   480
ADA and Olmstead.................................................    64
Affordable Housing...............................................    16
American Dream Downpayment Fund..................................   405
Anti-Deficiency Act..............................................   290
Assisted Living Conversion Grants................................   159
Authorization for Insular Areas Funding..........................   122
Budget Justifications............................................   493
Capital Improvements to Low-Income Elderly Housing...............   389
CDBG Program......................................23, 35, 121, 125, 465
    Unexpended Balances..........................................    54
    Timely Expenditure Standard for State CDBG Program...........   123
    Formula Changes/Colonias.....................................   317
Colonias Gateway Initiative......................................   128
Community Development Corporations.........................70, 384, 419
Community Service and Self-Sufficiency...........................   260
Continuum of Care Process and Block Grants.......................   440
Credit Unions and Public Housing.................................   411
Disabled Housing:
    Vouchers....................................................17, 155
    PHA Allocation Plans.........................................    19
Downpayment Assistance Initiative..............................165, 448
Elderly and Service Issues.......................................   473
Emergency Food and Shelter Program.....................48, 68, 276, 336
Emergency Supplemental Funding/New York..........................   285
Empowerment Zones/Enterprise Communities...................22, 139, 457
Faith Based Initiatives..........................................   381
Family Self-Sufficiency Coordinators.............................   117
Federal Housing Administration...................................   360
    Down Payment Simplification Program.........................34, 383
Federalization...................................................   313
FHA and GNMA Expansion.........................................408, 410
Formula Status of Nonentitlement Communities in Hawaii...........   123
Full Implementation of QHWRA Timeliness Requirement..............   188
Ginny Choice.....................................................   371
Government-Sponsored Enterprises (GSEs)..........................    29
Healthy Homes....................................................   354
Historically Black Colleges and Universities:
    Funding......................................................   375
    Technical Assistance.........................................   490
HOME.............................................................   339
    Downpayment Assistance Initiative............................   169
    Matching Requirements........................................   170
Homeless Programs..........................................48, 261, 640
    HUD/HHS Roles................................................    49
    Coordination of Efforts......................................    50
    Homeless Assistance Grants:
        Recaptures...............................................   270
        Management Information Systems...........................   272
    Continuum of Care............................................   398
    Mental Illness...............................................   431
Homeownership....................................................   414
HOPE VI....................................................43, 215, 418
    Louisville, Kentucky.........................................    52
    Detroit, Michigan............................................    57
    Homeowner Mix................................................   392
Housing Counseling...............................................   172
Housing Inventory................................................    19
Housing Opportunities for Persons with AIDS (HOPWA)..............   456
HUD and Russia...................................................    35
HUD's Efforts in Philadelphia's Neighborhoods....................    47
Interagency Council on the Homeless..............................    39
Interest Reduction Payment Rehabilitation Grants...............452, 470
Lead.............................................................   346
Lead Poisoning and Lead-Based Paint............................474, 484
Lead-Based Paint Program.........................................    59
Loan Closing Process.............................................    32
Management Agenda................................................   280
Manufactured Housing.............................................   403
Mark-to-Market Program...........................................    63
Office of Healthy Homes Research on Mold in Rental Housing.......   491
OMHAR--ITAG/OTAG.................................................    27
Opening Remarks of Chairman Walsh................................     1
Opening Remarks of Ranking Member Mollohan.......................     2
Opening Remarks of Secretary Martinez............................     3
Oversight and Technical Support for Public Housing Authorities...   380
PRAC Renewals....................................................   149
Program Authorizations...........................................    30
Public Housing Assessment System.................................   197
Public Housing Capital Fund...........................31, 194, 298, 427
Public Housing Drug Elimination Program.....................31, 58, 441
Public Housing Mismanagement.....................................    33
Public Housing Operating Study...................................   206
Public Housing Reinvestment Initiative..........................55, 174
Public Housing Unexpended Funds..................................    54
Questions for the Record.........................................    72
Reauthorization of HUD Programs.................................54, 212
Recaptures.......................................................   151
Resident Opportunities and Self-Sufficiency Program..............   316
RESPA............................................................    24
Rural Housing and Economic Development...........................   322
Salaries and Expenses............................................   367
Secondary Mortgage Market........................................   409
Section 108 and Brownfields......................................   131
Section 202/811..................................................36, 65
    Unexpended and Unobligated Balances..........................   145
Section 8........................................................10, 69
    Possible Problems............................................    13
    Voucher Underutilization.......................14, 20, 75, 455, 479
    Fair Market Rents............................................    62
    Incremental Vouchers.........................................    92
    Tenant Protection Vouchers...................................    98
    Administrative Fees..........................................   102
    Mortgage Payment Program.....................................   110
    Downpayment Assistance Program...............................   114
    Amendments...................................................   120
    Management Assessment Program................................   356
Section 811 Tenant-Based Renewals................................   435
Self-Help Homeownership Opportunity Program......................   377
SEMAP............................................................    10
Service Coordinators/Congregate Services..............24, 161, 450, 468
Shelter Plus Care................................................    39
    Renewals.....................................................   438
Supportive Housing Program Grants................................   267
Unobligated/Unexpended Balances..................................52, 72

                                
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