[House Hearing, 108 Congress]
[From the U.S. Government Publishing Office]
THE SECTION 8 HOUSING
ASSISTANCE PROGRAM:
PROMOTING DECENT AFFORDABLE
HOUSING FOR FAMILIES AND
INDIVIDUALS WHO RENT
=======================================================================
HEARINGS
BEFORE THE
SUBCOMMITTEE ON
HOUSING AND COMMUNITY OPPORTUNITY
OF THE
COMMITTEE ON FINANCIAL SERVICES
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED EIGHTH CONGRESS
FIRST SESSION
__________
MAY 22, JUNE 10, 17, JULY 1, 2003
__________
Printed for the use of the Committee on Financial Services
Serial No. 108-31
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HOUSE COMMITTEE ON FINANCIAL SERVICES
MICHAEL G. OXLEY, Ohio, Chairman
JAMES A. LEACH, Iowa BARNEY FRANK, Massachusetts
DOUG BEREUTER, Nebraska PAUL E. KANJORSKI, Pennsylvania
RICHARD H. BAKER, Louisiana MAXINE WATERS, California
SPENCER BACHUS, Alabama CAROLYN B. MALONEY, New York
MICHAEL N. CASTLE, Delaware LUIS V. GUTIERREZ, Illinois
PETER T. KING, New York NYDIA M. VELAZQUEZ, New York
EDWARD R. ROYCE, California MELVIN L. WATT, North Carolina
FRANK D. LUCAS, Oklahoma GARY L. ACKERMAN, New York
ROBERT W. NEY, Ohio DARLENE HOOLEY, Oregon
SUE W. KELLY, New York, Vice Chair JULIA CARSON, Indiana
RON PAUL, Texas BRAD SHERMAN, California
PAUL E. GILLMOR, Ohio GREGORY W. MEEKS, New York
JIM RYUN, Kansas BARBARA LEE, California
STEVEN C. LaTOURETTE, Ohio JAY INSLEE, Washington
DONALD A. MANZULLO, Illinois DENNIS MOORE, Kansas
WALTER B. JONES, Jr., North CHARLES A. GONZALEZ, Texas
Carolina MICHAEL E. CAPUANO, Massachusetts
DOUG OSE, California HAROLD E. FORD, Jr., Tennessee
JUDY BIGGERT, Illinois RUBEN HINOJOSA, Texas
MARK GREEN, Wisconsin KEN LUCAS, Kentucky
PATRICK J. TOOMEY, Pennsylvania JOSEPH CROWLEY, New York
CHRISTOPHER SHAYS, Connecticut WM. LACY CLAY, Missouri
JOHN B. SHADEGG, Arizona STEVE ISRAEL, New York
VITO FOSSELLA, New York MIKE ROSS, Arkansas
GARY G. MILLER, California CAROLYN McCARTHY, New York
MELISSA A. HART, Pennsylvania JOE BACA, California
SHELLEY MOORE CAPITO, West Virginia JIM MATHESON, Utah
PATRICK J. TIBERI, Ohio STEPHEN F. LYNCH, Massachusetts
MARK R. KENNEDY, Minnesota ARTUR DAVIS, Alabama
TOM FEENEY, Florida RAHM EMANUEL, Illinois
JEB HENSARLING, Texas BRAD MILLER, North Carolina
SCOTT GARRETT, New Jersey DAVID SCOTT, Georgia
TIM MURPHY, Pennsylvania
GINNY BROWN-WAITE, Florida BERNARD SANDERS, Vermont
J. GRESHAM BARRETT, South Carolina
KATHERINE HARRIS, Florida
RICK RENZI, Arizona
Robert U. Foster, III, Staff Director
Subcommittee on Housing and Community Opportunity
ROBERT W. NEY, Ohio, Chairman
MARK GREEN, Wisconsin, Vice MAXINE WATERS, California
Chairman NYDIA M. VELAZQUEZ, New York
DOUG BEREUTER, Nebraska JULIA CARSON, Indiana
RICHARD H. BAKER, Louisiana BARBARA LEE, California
PETER T. KING, New York MICHAEL E. CAPUANO, Massachusetts
WALTER B. JONES, Jr., North BERNARD SANDERS, Vermont
Carolina MELVIN L. WATT, North Carolina
DOUG OSE, California WILLIAM LACY CLAY, Missouri
PATRICK J. TOOMEY, Pennsylvania STEPHEN F. LYNCH, Massachusetts
CHRISTOPHER SHAYS, Connecticut BRAD MILLER, North Carolina
GARY G. MILLER, California DAVID SCOTT, Georgia
MELISSA A. HART, Pennsylvania ARTUR DAVIS, Alabama
PATRICK J. TIBERI, Ohio
KATHERINE HARRIS, Florida
RICK RENZI, Arizona
C O N T E N T S
----------
Page
Hearings held on:
May 22, 2003................................................. 1
June 10, 2003................................................ 25
June 17, 2003................................................ 73
July 1, 2003................................................. 113
Appendixes:
May 22, 2003................................................. 151
June 10, 2003................................................ 173
June 17, 2003................................................ 279
July 1, 2003................................................. 467
WITNESS
Thursday, May 22, 2003
Liu, Hon. Michael, Assistant Secretary, Public and Indian
Housing, Department of Housing and Urban Development........... 6
APPENDIX
Prepared statements:
Ney, Hon. Robert W........................................... 152
Oxley, Hon. Michael G........................................ 155
Clay, Hon. Wm. Lacy.......................................... 156
Harris, Hon. Katherine....................................... 157
Sanders, Hon. Bernard........................................ 158
Liu, Hon. Michael............................................ 161
Additional Material Submitted for the Record
Velazquez, Hon. Nydia M.:
Letter to the Appropriations Subcommittee on Veterans
Affairs, Housing and Urban Development, May 21, 2003....... 166
WITNESSES
Tuesday, June 10, 2003
Ceaser, Terri, Section 8 Tenant, Hopewell, VA.................... 28
Dowling, Telissa, President, Resident Advisory Board, New Jersey
Department of Community Affairs, Guttenberg, NJ................ 29
Duncan, R. E., Chairman, Board of Commissioners, Topeka Housing
Authority, Topeka, KS.......................................... 50
Garrelts, Craig A., Executive Director, Hocking Metropolitan
Housing Authority, Logan, OH, on behalf of National Leased
Housing Association............................................ 31
Henriquez, Sandra, Executive Director, Boston Housing Authority,
Boston, MA on behalf of Council of Large Public Housing
Authorities (CLHPA)............................................ 52
Hernandez, Tino, Chairman, New York City Housing Authority, New
York, NY....................................................... 54
Inglis, James M., Executive Director, Livonia Housing Commission,
Livonia, MI and Senior Vice President, National Association of
Housing and Redevelopment Officials, Washington, DC............ 55
Marchman, Kevin, Executive Director, National Organization of
African Americans in Housing, Washington, DC................... 57
Molloy, Neil, Executive Director, St. Louis County Housing
Authority, St. Louis, MO, on behalf of Public Housing
Authorities Directors Association (PHADA)...................... 58
Showe, Andrew, Vice President, Showe Management Corporation,
Columbus OH, on behalf of National Multi Housing Council,
National Apartment Association, and Columbus, Ohio Apartment
Association,................................................... 34
Thompson, Barbara, Executive Director, National Council of State
Housing Agencies, Washington, DC............................... 36
APPENDIX
Prepared statements:
Ney, Hon. Robert W........................................... 174
Clay, Hon. Wm. Lacy.......................................... 175
Waters, Hon. Maxine.......................................... 177
Ceaser, Terri................................................ 179
Dowling, Telissa............................................. 183
Duncan, R. E................................................. 189
Garrelts, Craig A............................................ 198
Henriquez, Sandra............................................ 203
Hernandez, Tino.............................................. 210
Inglis, James M.............................................. 216
Marchman, Kevin.............................................. 239
Molloy, Neil................................................. 243
Showe, Andrew................................................ 260
Thompson, Barbara............................................ 265
Additional Material Submitted for the Record
Dowling, Telissa:
Written response to questions from Hon. Gary G. Miller....... 271
National Association of Realtors, prepared statement............. 272
National Affordable Housing Management Association, prepared
statement...................................................... 276
WITNESSES
Tuesday, June 17, 2003
Crowley, Sheila, President, National Low Income Housing
Coalition, Washington, DC...................................... 105
Egan, Conrad, President and CEO, National Housing Conference,
Washington, DC................................................. 75
Husock, Howard, Alfred Taubman Center for State and Local
Government, John G. Kennedy School of Government, Harvard
University, Cambridge, MA...................................... 77
Katz, Bruce J., Director, Center on Urban and Metropolitan
Policy, The Brookings Institution, Washington, DC.............. 80
Khadduri, Jill, Principal Associate, Abt Associates Inc.,
Bethesda, MD................................................... 81
Marraffa, Henry Jr., Councilmember, Gaithersburg, MD, appearing
on behalf of the National League of Cities..................... 107
O'Hara, Ann, Associate Director, Technical Assistance
Collaborative, Boston, MA on behalf of the Consortium for
Citizens with Disabilities Housing Task Force.................. 108
Olsen, Ed, Professor of Economics, University of Virginia,
Charlottesville, VA............................................ 84
Sidor, John, Principal, The Helix Group, Harpers Ferry, WV....... 110
Turner, Margery Austin, Director, Metropolitan Housing and
Communities Center, The Urban Institute, Washington, DC........ 86
APPENDIX
Prepared statements:
Ney, Hon. Robert W........................................... 280
Clay, Hon. Wm. Lacy.......................................... 282
Crowley, Sheila.............................................. 284
Egan, Conrad................................................. 310
Husock, Howard............................................... 313
Katz, Bruce J................................................ 319
Khadduri, Jill............................................... 329
Marraffa, Henry Jr........................................... 335
O'Hara, Ann.................................................. 343
Olsen, Ed.................................................... 351
Sidor, John.................................................. 388
Turner, Margery Austin....................................... 400
Additional Material Submitted for the Record
Crowley, Sheila:
The State of the Nation's Housing............................ 411
Husock, Howard:
``Let's End Housing Vouchers''............................... 455
Olsen, Ed:
Follow-up response to questions from Hon. Nydia M. Velazquez. 463
WITNESSES
Tuesday, July 1, 2003
Burger, Eugene, Eugene Burger Management on behalf of the
National Leased Housing Association, Washington, DC............ 123
Farber, Jeff, Chief Operating Officer, L.A. Family Housing
Corporation, Los Angeles, CA................................... 140
Franklin, Matthew O., Director, California Housing and Community
Development, Sacramento, CA.................................... 116
Gross, Larry, Executive Director, Coalition for Economic
Survival, Los Angeles, CA...................................... 137
Jackson, Carlos, Executive Director, Los Angeles County Community
Development Commission and Housing Authority of the County of
Los Angeles.................................................... 119
Jackson, John, Head Organizer, Los Angeles ACORN................. 138
Martin, Beverly, voucher program owner........................... 136
Peters, Chanda, voucher recipient................................ 132
Schwartz, Ruth, Executive Director, Shelter Partnership, Inc..... 142
Shelton, Thomas K., Partner, Greystar Real Estate Partners and
President of the National Apartment Association National Multi
Housing Council Joint Legislative Program...................... 125
Smith, Donald J., Executive Director, Housing Authority of the
City of Los Angeles............................................ 118
Thompson, Leona, voucher recipient............................... 134
Triesch, Larry, Assistant Deputy Director, Long Beach Housing
Authority...................................................... 121
APPENDIX
Prepared statements:
Ney, Hon. Robert W........................................... 468
Burger, Eugene............................................... 470
Farber, Jeff................................................. 474
Franklin, Matthew O.......................................... 478
Gross, Larry................................................. 482
Jackson, Carlos.............................................. 488
Jackson, John................................................ 500
Martin, Beverly.............................................. 504
Peters, Chanda............................................... 505
Schwartz, Ruth............................................... 507
Shelton, Thomas K............................................ 512
Smith, Donald J.............................................. 518
Thompson, Leona.............................................. 546
Triesch, Larry............................................... 548
Additional Material Submitted for the Record
Franklin, Matthew O.:
Governor Gray Davis, letter, June 27, 2003................... 551
Waters, Hon. Maxine:
Letter from James K. Hahn, Mayor of Los Angeles, July 1, 2003 553
THE SECTION 8 HOUSING
ASSISTANCE PROGRAM:
PROMOTING DECENT AFFORDABLE
HOUSING FOR FAMILIES AND
INDIVIDUALS WHO RENT--DAY 1
----------
Thursday, May 22, 2003
U.S. House of Representatives,
Subcommittee on Housing and
Community Opportunity,
Committee on Financial Services,
Washington, D.C.
The subcommittee met, pursuant to call, at 2:03 p.m., in
Room 2128, Rayburn House Office Building, Hon. Robert Ney
[chairman of the subcommittee] presiding.
Present: Representatives Ney, Green, Tiberi, Harris,
Waters, Velazquez, Carson, Lee, Sanders, Watt, Clay, Miller,
and Davis.
Chairman Ney. [Presiding.] Today, the subcommittee will
hold the first in a series of hearings to examine the current
operation and administration of the Section 8 housing choice
voucher program and to review various proposals intended to
make the program more efficient and cost-effective.
The Section 8 housing assistance program was authorized
under Section 8 of the U.S. Housing Act of 1937. It is a major
vehicle providing rental assistance to low-income families and
individuals commonly referred to as the Section 8 voucher
program. It is the largest program in the Federal government
that subsidizes the housing costs of low-income households. It
is administered Federally by HUD, but is managed locally by the
public housing authorities, also known as PHAs.
For fiscal year 2003, over $12 billion was provided for the
voucher program, accounting for more than one-third of the HUD
discretionary budget. Through the housing choice voucher
program, eligible families can receive subsidies called
vouchers to reduce their rent in housing units owned by private
landlords. This is different from the public housing program
which allows eligible families to move into low-rent housing
units owned by the Federal government. Over the years, the
program has often been criticized for its inefficiency. More
than $1 billion are recaptured from the program every year
despite long waiting lists for vouchers in many communities.
The rising cost of the Section 8 program and some of the
administrative concerns have caused many in Congress and the
Administration to conclude that the program is in need of
reform. The omnibus appropriations bill for 2003 adopted
proposals to address the rising costs of the Section 8 program.
Provisions were included that for the first time base the
appropriation for Section 8 renewal program on the total amount
necessary to renew all housing units currently under lease,
rather than on the baseline number of units allotted to each
public housing authority. The rationale for this change was
that there have been no significant improvements in the
utilization rate of these funds for the last five years. The
omnibus bill also created a central reserve fund that the PHAs
can use to supplement the rental subsidy costs of vouchers not
reflected in their annual financial statements. This will allow
the PHAs to lease up to their baseline levels if possible.
In its fiscal year 2004 budget proposal, the administration
proposed converting the Section 8 housing choice voucher
program into a State-administered block grant. This legislation
would dramatically change the way the Section 8 voucher program
is funded and operated. The administration's proposal would
convert the Section 8 tenant-based voucher program and the
Section 8 project-based voucher program to a State-run block
grant called Housing Assistance for Needing Families, HANF.
While I recognize, as the administration does, that we have to
constantly seek ways to improve America's communities and
strengthen housing opportunities for all citizens, particularly
for our poor, I also recognize the issue of reforming Section 8
is a contentious one.
However, it is an issue that I do believe deserves debate
and a sustained debate, so all interested parties should and
shall be heard. To that end, beginning today, I intend to hold
a series of hearings on the overall Section 8 program and the
administration's HANF proposal, receiving testimony from groups
and individuals across the spectrum. This is a very important
discussion and is one that I will be fully engaged with in the
days ahead.
With us today to discuss the administration's view is Mr.
Michael Liu, Assistant Secretary for Public and Indian housing
at HUD. The administration has put forth a sweeping proposal,
and without objection I would like to be lenient with the
allotted amount of time for testimony today to give the
assistant secretary the opportunity to explain the
administration's proposal. I have also introduced a bill by
request in the administration on dealing with the issue.
With that, I would see if we have comments from our ranking
member.
Ms. Waters. Thank you very much, Mr. Chairman. I certainly
appreciate this hearing that you have organized.
The housing choice voucher program, commonly referred to as
Section 8, named after the section of the U.S. Housing Act that
authorized it, is the largest Federal low-income housing
assistance program. The Section 8 voucher program currently
serves about two million families at an annual cost of over $12
billion. Some 2,600 housing agencies, mostly local, administer
the program. H.R. 1841, HANF, Housing Assistance to Needy
Families, your bill, would convert the Section 8 voucher
program to a block grant, transferring its administration to
the 50 States, and giving them discretion over allocation of
funds.
Directly or indirectly, Section 8 supports over four
million apartments. Roughly one in seven renters nationwide
benefit from some form of Section 8 assistance. Of the four
million Section 8 households, about 35 percent, 1.4 million,
have portable vouchers. The HANF proposal would fundamentally
change the Federal funding systems for tenant-based housing
assistance from one based on actual cost to a block grant that
simply distributes Federal appropriations among States. One of
the Stated goals of the administration for HANF is to improve
the under utilization of the Section 8 program. However, with
the recent passage of HUD's funding year 2003 budget, block
granting the program to States for this reason is unnecessary,
as the problem of under utilized vouchers has already been
addressed. The budget provides only enough funds to ensure that
every family currently assisted under the program will continue
to be assisted, rather than continuing the policy of funding
all vouchers, even if they are not being used.
Senate VA-HUD Appropriations Subcommittee Chairman Kit
Bond, in a Statement at a March 6, 2003 subcommittee hearing,
said, and I quote, in my opinion, HANF is premature. The VA-HUD
funding 2003 appropriations bill created a new funding
structure for Section 8. Vouchers where public housing
authorities receive the funding for all vouchers in use and for
any vouchers that can be used up to a PHAs authorized level.
This funding approach should result in a more realistic
assessment of Section 8 funding needs, and reduce the need to
go through the annual ritual of rescinding large amounts of
unused excess Section 8 assistance. I think it will take
several years to ensure the reliability of this new funding
system, but I am optimistic that will become a good gauge of
both the actual cost and the use of vouchers.
A January, 2002 GAO report compared the six active Federal
housing programs and found that Section 8 vouchers were the
most cost-effective. Historically, funding for block grants
such as HANF has failed to keep pace with inflation. Under
HANF, funding levels would be based on inflation-adjusted
figures, as opposed to current policy which bases renewal
funding on actual housing costs. Between 1998 and 2003, rents
rose by 25 percent. Over the same period of time, the consumer
price index increased by 12 percent. Even at inflation-adjusted
levels as suggested by the administration, housing assistance
is likely to erode steadily under HANF.
If funding levels fall behind the program's needs, as
likely will occur, States will either have to contribute their
own funds to the program or reduce assistance to low-income
families and elderly and disabled individuals in one or more of
the following ways: reduction of the number of families that
receive housing vouchers, despite the fact that three out of
four low-income families eligible for vouchers already go
without assistance because of funding limitations. A reduction
in the number of vouchers would make the shortage of affordable
housing even larger by cutting costs, by shifting assistance to
higher-income families. Such families need smaller subsidies to
be able to afford housing. As a result, the average cost of
providing housing vouchers to these families is smaller than
the cost of serving poor families. Also cutting costs by
shifting rental burdens to families participating in the
program. This can be accomplished by requiring families to pay
more than 30 percent of their income for rent, or reducing the
total amount of rent that a voucher could cover, thereby making
fewer housing units accessible to voucher families.
There is a lot more here, but I think that which I have
shared with you basically describes my concerns about HANF. I
am very, very worried about this program, Mr. Chairman. This is
one of the most significant programs to assist poor people that
we have in this country. I come from a State where we have a
$35 billion deficit. If you block grant that money to my state,
they are going to take some of it and use it for other things.
Or if they needed to subsidize it in any way, they could not do
it because we just do not have the money. So I would like to
hear from others today about your legislation, but I think that
this would be one of the greatest shifts in a program that I
have seen certainly since I have been in the Congress of the
United States, and maybe historically.
I yield back the balance of my time.
Chairman Ney. The gentlelady yields back the balance. Does
the gentleman have a written statement?
Mr. Green. No public statement, thank you.
Chairman Ney. We will send you a bill for that. The
gentlelady from New York?
Ms. Velazquez. Thank you, Mr. Chairman.
I would like to thank the chairman and ranking member for
holding this important hearing today. I would also like to
thank Assistant Secretary Liu for testifying.
The Section 8 program is a vital safety net for our most
at-risk families. It provides vouchers that allow families the
flexibility to receive government-subsidized rental housing in
the private market. The tenant-based program gives low-income
families the opportunity to move into housing they could not
otherwise afford. This gives parents more say in what schools
their children attend and more opportunity to live closer to
their place of employment and public transportation.
However, the Section 8 program is struggling. As a result
of chronic underfunding, only one-fourth of low-income
households that are eligible for vouchers receive any Federal
housing assistance. Additionally, landlords are opting out of
the project-based program and many more are refusing to rent to
new voucher tenants. The President says he has the solution;
the Housing Assistance for Need Families block grant. President
Bush expects us to believe that block granting the Section 8
program will not reduce the number of families assisted. He
expects us to believe that it will not shift burdens to low-
income families. Mr. Chairman, I believe the President has made
his lack of commitment to Section 8 abundantly clear.
In fiscal year 2001, 79,000 new vouchers were appropriated.
That was the last year of the Clinton administration. As soon
as President Bush took office, the number of new vouchers
dropped to 18,000. In fiscal year 2003, no new vouchers were
appropriated. The current HUD budget proposal calls for a mere
5,500 new vouchers. Mr. Chairman, there are hundreds of
thousands of families on waiting lists. While the rhetoric
coming out of the administration is that they are creating new
housing opportunities for low-income communities, the reality
is that they have systematically ignored them for the past two
and a half years. HANF will seriously undermine the financial
and moral integrity of Section 8. It creates an unnecessary and
costly new layer of bureaucracy, and eliminates flexibility in
the program. It will result in no new housing opportunities,
and potentially limit the length of time tenants can receive
Section 8 benefits.
For these reasons, I authored a letter with my colleague
from New York, Mr. Nadler, asking appropriators to fund 79,000
new Section 8 vouchers this year. This letter was signed by 66
members of Congress, including every Democrat on this panel. I
will ask unanimous consent, Mr. Chairman, that this letter be
inserted in the record today.
Chairman Ney. Without objection.
[The following information can be found on page 166 in the
appendix.]
Ms. Velazquez. I understand the chairman intends this to be
the first in a series of hearings on this topic, and I commend
him for this decision. We must consider the suggestions of a
full range of expert witnesses before rushing to a markup. I
believe that the current proposal will not only fail to address
the needs at hand, but will make our housing crisis even worse,
leaving more families out of assistance and out in the cold.
Thank you, Mr. Chairman. I yield back the balance of my
time.
Chairman Ney. I want to thank the gentlelady. Also, without
objection, all members' opening statements will be made part of
the record.
The gentlelady from California?
Ms. Lee. Thank you, Mr. Chairman. I want to also thank you
and Ranking Member Waters for convening this hearing, and to
the assistant secretary, thank you for being here.
Today, we all know that our nation is facing an affordable
housing crisis; 4.9 million families across the nation pay over
50 percent of their income or rent often for substandard
housing. Even when the economy was strong, rising housing
prices kept safe, decent, affordable housing out of the reach
of millions of American families. The combination now of a weak
economy and rising housing and rental prices has created a
situation for low-income families that is very untenable.
The Section 8 voucher program has been the principal form
of assistance for low-income families, the elderly, and we
cannot forget the disabled also. Only 15 percent of Section 8
voucher recipients live in high-poverty neighborhoods, as
compared to approximately 54 percent of public housing
residents. Clearly, showing the success of integrating
communities through the Section 8 voucher program is what we
are beginning to see.
So I recommend that we look at how the Section 8 program
performs after the changes that were made during last year's
appropriations cycle. We should also look at the issue of
recaptures and bring in our local housing leadership and
tenants to talk about the real problems with local housing
affordability and potential solutions. Block granting will not
work. This proposal I believe goes in the wrong direction. Most
importantly, I think we must increase the flexibility and
funding for vouchers in order to eliminate our long waiting
lists, recruit more landlords, and broaden our pool of
affordable rental units. That is the direction I think we need
to go in.
The Housing Assistance for Needy Families fails to
effectively address the needs of the Section 8 voucher program
and would compound our nation's growing challenges with our
housing and state budget crisis. So I think that we do, as the
ranking member and Congresswoman Velazquez indicated, I think
we need to look at this. We need to have more discussion and we
need to try to come up with a bipartisan approach to this. I
look forward to working with members of the administration,
HUD, and with members of this committee on, really, I believe
what amounts to saving our Section 8 program, because I think
going in this direction truly will possibly eliminate it for
many of our communities.
Thank you, Mr. Chairman, and I yield the balance of my
time.
Chairman Ney. I thank the gentlelady, who yields back the
balance of her time.
The gentleman from North Carolina, do you have an opening
statement?
Mr. Watt. Thank you, Mr. Chairman. I will not take the full
time, but I would just thank the witness for being here, and
for being available to answer questions.
I am all in favor of improving the Section 8 program. In
parts of my congressional district, it works; in other parts,
it does not work. But I am not sure that I understand how
simply passing the problem along to the States addresses that.
I do not necessarily view that as an improvement in the Section
8 program. I suspect what you will get are some improvements in
some places and some substantial un-improvements in other
places. One thing we know for sure is that there will not be
the body of information and experience that has been built up
about the Section 8 program by HUD over all of these years,
because in effect what we are doing is telling States to start
doing something that they have not been doing in the past. I am
not sure I understand how that improves the situation. It gets
it off of HUD's plate. It passes the buck, but somebody has got
to do the hard work.
So I am looking forward to hearing how we think this
improves the Section 8 program, not just moves it from one
location to another location. So if I can get some answers to
that, either in your opening statement; I was looking at your
opening statement and it is just kind of like we assume that
this movement somehow improves the program. I do not see the
structural definition of how that occurs, other than just the
assumption. So I hope you can address that as we move along,
and I will yield back the balance of my time.
Chairman Ney. The gentleman yields back the balance of his
time.
We want to welcome Mr. Liu to the committee; the Assistant
Secretary for Public and Indian housing. Without objection,
your written statement will be made part of the record.
Welcome.
STATEMENT OF HON. MICHAEL LIU, ASSISTANT SECRETARY, PUBLIC AND
INDIAN HOUSING, DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT,
WASHINGTON, DC
Mr. Liu. Thank you very much, Mr. Chairman, Ranking Member
Waters, and members of the committee. I appreciate the
opportunity to appear before you today to discuss H.R. 1841.
The purpose of the Housing Assistance for Needy Families,
or HANF proposal, is to improve the delivery of tenant-based
assistance to very low-income families. We believe that it will
accomplish this objective by retaining the core elements of the
tenant-based assistance program, while stripping away the
unnecessary requirements and regulations that are not central
to the program's fundamental mission. The current program's
basic concept is still sound. However, there are serious
shortcomings with its design and effectiveness. This is
evidenced by two very troubling figures. Over $1 billion of
tenant-based assistance have been annually recaptured by
Congress; and two, HUD pays upwards of $1 billion in over-
subsidy due to errors resulting from the current complicated
restrictive program rules which we do have. So on the one hand,
money goes unused and thousands of eligible low-income families
do not receive subsidies. On the other hand, the government is
paying too much for what is used. Reforming and simplifying the
program can eliminate both of these staggering problems and
provide more, not less housing, to those in need.
In addition, HUD must administer the voucher program
through rules and regulations in a one-size-fits-all mode to
over 2,500 entities throughout the nation, half of which
administer only 250 or fewer vouchers. The sheer number of
local administrative entities has significantly diminished
HUD's ability to provide quality assistance to the program and
to monitor and accurately measure performance. Under H.R. 1841,
HUD would be authorized to make grants available to States to
provide tenant-based rental and homeownership assistance,
either directly or through local entities, to eligible
families. I repeat, we are authorized to make grants to the
States. We are not mandating that the States take on this
program. States who want to take on this program would have to
apply with a plan, and we would have to approve that plan.
We believe the States, those who accept this challenge,
would be able to make more timely and informed policy and
funding decisions based on local need and market conditions, as
compared to administrators back here in the beltway in
Washington, D.C. These decisions include moving unused funding
to heavy demand areas of the State at any given time during the
fiscal year; something that takes HUD many weeks, if not
months, to attempt to implement; and then tailoring the program
to better address the practices of the local market and needs
of the community.
States would have the ability to contract with the most
effective entities to manage the program in any given area of
the State, fostering greater accountability and competition in
the program. State administration would reduce the
administrative burden associated with running the program by
consolidating many of the administrative duties currently
replicated by every single PHA in a single state, such as
reporting and budget. HANF would retain and expand portability
of tenant-based assistance to all areas of the country,
including those few areas not currently covered by the voucher
program. State administration would eliminate the burden of
portability moves within a State which account today for over
three-fourths of all moves between PHA jurisdictions. Moves
between States would also be easier to accomplish. The number
of vouchers available to the State at a given time through
normal turnover would permit the State to absorb the family
into its own program and eliminate the cumbersome billing
process which currently exists among PHAs across state lines.
Some concerns have been raised that the HANF grants may be
more susceptible to budget cuts as a block grant or that
increases in rents would out-pace inflation. We believe just
the opposite would be true. Because the changes brought about
by HANF would facilitate greater utilization, the funding
levels would be more sustainable and justifiable compared to
the current program which Congress just this year adjusted
funding levels to account for under utilization. Some assert
that block grants have been more vulnerable to cutting in the
annual appropriations process than others. In fact, the funding
history of the very similar affordable housing type of program,
the HOME block grant program, just does not support this
suggestion. In the President's fiscal year 2004 budget, the
requested appropriation for the HOME program is 14 percent
higher; that is adjusted for inflation; than in the program's
very first year. The program has in fact received regular
annual increases since 1993.
We believe that support in the budget and appropriations
process for programs does depend in good part on their
performance. By strengthening the performance of the housing
choice voucher program, the administration's proposal would
increase the chances that future funding increases will be
provided by Congress. I want to point out that our 2004
requests for HANF is over $900 million than our fiscal year
2003 proposal. Under 1841, annual funding would be adjusted by
a formula that would take into consideration data specifically
tied to housing costs, not just inflation in general, as well
as the number of the families assisted, extent of poverty,
state performance, and funding utilization.
Another misconception is that States would be able to
divert HANF funds for other purposes. Our legislation is clear
that the program would be limited to tenant-based rental and
homeownership assistance and the costs of administering those
grants. Conversion to the HANF program would maximize the
number of families receiving housing assistance, without
shifting assistance away from those families with the most
need. The initial amount of the HANF grant would be equal to
the sum of all voucher funding currently provided to public
housing agencies in the State. The States would be required to
maintain assistance for at least as many families as are
currently served, and families under the voucher program at the
time of the conversion to HANF would continue to receive
tenant-based rental assistance under the current regulations
through fiscal year 2009. In addition, any family participating
in the homeownership voucher program at the time of the
transition to HANF would continue to receive homeownership
assistance under the same terms and conditions as the current
program. Lenders can continue to underwrite loans with the full
assurance that the rules under which they base those loans
would not be impacted by the conversion of the program.
A major goal of 1841 is to simplify and reduce the
administrative burden on the program providers. For instance, a
significant problem plaguing the voucher program is the
unacceptable error rate of approximately $1 billion a year on
the calculation of adjusted incomes and rental subsidies. One
of the root causes of the problems is the myriad of different
rules covering what qualifies as annual and adjusted income,
coupled with numerous temporary full and partial exclusions and
income disregards. There are even rules which talk about
capitalization of indebtedness; rules involving depreciation of
assets; hard to believe when we are talking about a population
that really we are not considering those types of issues when
we are looking at them.
These policies, however well intended, and many of them
directed by past Congresses, have simply made income
determinations a far too complicated process. Under HANF, all
income determinations would be based on gross incomes. States
would have the flexibility to set the percentage of gross
incomes that families would be required to contribute as their
share of the rent, but that percentage could not exceed 30
percent. Under the current voucher program, families may choose
to pay more for higher-priced rental units if they wish.
In summary, 1841 offers us an opportunity to make
significant improvements to the housing voucher program. It
moves administrative decisionmaking out of Washington, closer
to the communities and families affected, along with program
flexibility to address local needs. States would have the means
to take actions that may be necessary so that program funds are
expended promptly and most effectively. Importantly, the HANF
program provides government support of self-sufficiency efforts
for assisted families, efforts to reduce homelessness, and to
help the disabled live independently. It does this by
facilitating greater coordination with state-administered
programs relating to education and job training and child care
and health care, inclusive of programs like TANF and One-Stop
Career Centers.
I thank you again for this chance to testify, and I look
forward to answering any questions you might have. Thank you,
Mr. Chairman.
[The prepared statement of Hon. Michael Liu can be found on
page 161 in the appendix.]
Chairman Ney. I want to thank you for your testimony. They
have also called two votes, but we will try to get some
questions in and then vote and then return.
I just wanted to give you an example, and I do not know if
you have looked at this or how it would be written, but in my
own state there was a grab of TANF monies, and those monies
which should have gone into, in my opinion, the work program
went into supplement Head Start. Now, it is not legal and I did
not think it was then, but it was done based on the fact that
somehow they did education for parents; there was some clever
way to remove, or as I used to say, appropriate or steal those
funds over, whichever way you want to put it. I did not agree
with what they did. If you do this, how do you craft this so
you make it crystal clear that funds cannot be used for any
purpose but exactly what traditionally the PHAs have used them
for?
Mr. Liu. Mr. Chairman, we fully anticipate that in review
of the plans from the States that we will be obviously looking
to ensure that their plans to make clear that the funds will be
used for a tenant-based voucher program. Secondly, in the
initial phases of the program, we believe that it is very
likely that we will monitor more than just one a year, probably
at six-month intervals, again just to ensure that there is
compliance with the program requirements, compliance with their
plans, so that these types of intrusions on the intent of the
program are mitigated and certainly are prevented to the extent
that we can.
Chairman Ney. Just to follow up on that, because again I
think that we would have to look at other options or what
options would be out there, if the governor of a State would
not in fact comply and somehow said, look, I think these monies
could be shifted and supplemented for; I cannot think of an
example right now, but the Head Start was the best example. Do
you sue the governor if the State is running a program? Because
technically, you cannot use Federal dollars. HANF money, in my
opinion, cannot be used to supplement Head Start money that the
State of Ohio, for example, should have put in. So what
happens, I guess; has anybody thought that out?
Mr. Liu. We have a range of options in the event that a
State oversteps its bounds or is not compliant with the program
outlines. We can take back the program administration. There is
no question in the legislation that the Secretary has the power
to do that. We can withhold funds until we are satisfied that
the State has righted its ways or assured us that it will not
proceed down the wrong path. We have the ability to penalize
the administrators involved through civil as well as
potentially criminal actions. So we think that we have an array
of tools that we can use to prevent those things from
happening, Mr. Chairman.
Chairman Ney. The gentlelady from California, do you have a
question?
Ms. Waters. Thank you very much, Mr. Chairman.
This may be a question that is easily answered and
everybody else may understand except for me. What if a State
decides it does not want to take the block grant?
Mr. Liu. Then HUD will administer the program under the
guidelines as outlined in 1841. In other words, we will
administer the program with the entities within the State that
we feel are good performers, know how to manage the program,
and with the flexibility and simplicity which we feel the State
was intended to at the start to be managed by.
Ms. Waters. Obviously, the administration of this program
demands a large number of personnel to do it. So if all of the
States decided they were going to take the block grant and
administer the program, that means you would have to kind of
get rid of this part of HUD. Is that right?
Mr. Liu. Absolutely not, Ranking Member Waters. The history
of HUD over the past, prior to this administration, because we
have increased our personnel at HUD.
Ms. Waters. What are you going to do with all these people
who used to administer Section 8?
Mr. Liu. Right now, these people are basically looking
through paper, doing rote type of work. We want to free these
people to provide the type of quality assistance, technical
assistance, qualitative thinking that right now we have to go
outside the agency to get and to pay millions of dollars for.
We want to use our staff to do the type of qualitative work
with the State entities and their partners in making this
program more efficient and better.
Ms. Waters. We are going to have to go, but I am concerned
about all of this monitoring that you are going to do that you
cannot do now. What you are basically saying is that HUD cannot
do it now. But then you tell us, you are going to make sure the
States do it because you are going to set up all these
monitoring systems. Now you are trying to tell me you are going
to take all of these employees and you are going to use them to
do something related to the program, while my state and other
States are going to be using part of this block grant to put up
whole new systems by which to administer the program, which is
extreme duplication. What are you doing and why are you doing
this? Don't answer now, we have to leave. We will come back.
Mr. Liu. I will answer you, Ranking Member Waters.
Chairman Ney. If the gentleman will hold, we will be back.
[RECESS]
Chairman Ney. We will begin again, and we will go for
questioning to Mr. Green.
Mr. Green. Mr. Liu, I guess the biggest question I have is
what do you see as the main barriers to increased participation
in the Section 8 rental program? What is it that we should be
doing to attack those barriers?
Mr. Liu. The main barrier is, as I have outlined,
congressman, one, simplification; getting back to the basics of
what the program was intended to do, to help people with low
income so that they do not pay more than 30 percent of their
gross income; very simply. We have over the years created layer
upon layer of different directions, many well intended, where
in fact we have problems now in figuring out just who qualifies
and does not qualify for the program. We end up, as I stated,
paying $1 billion more than we should for those vouchers that
we use, and then for the vouchers that we do not use, we lose
$1 billion on the back end.
Number two, we have a very inefficient system currently in
trying to make use of these precious dollars; over 2,600
entities, over half of them manage fewer than 250 vouchers. We
spend $10 million extra just to take care of so-called troubled
agencies. Those administrative, as well as programmatic in
terms of policy, are the biggest barriers.
Mr. Green. You have in both your written testimony and your
response just now, you have put some dollar figures on
inefficiencies and anecdotes and examples. Do you have any idea
program-wide what kind of savings we are talking about?
Obviously, you must believe that there are savings. I think
that is the philosophy behind what you are trying to do or what
you are proposing to do. Do you have any idea what those
numbers would mean, and therefore what the increased
participation could mean?
Mr. Liu. Very, very roughly in terms of cost savings, from
a very conservative estimate of anywhere from $150 million
upwards to; the difficult part is how do you value the type of
quality assistance that we are not giving now that we could
give to managers of the program. That is difficult to quantify,
so that could be another $100 million, maybe more.
Mr. Green. Okay, thank you. Mr. Chairman, I have no more
questions.
Chairman Ney. The gentlelady from New York?
Ms. Velazquez. Thank you, Mr. Chairman.
Mr. Liu, I am disturbed by what I believe to be a large
number of misleading statements in your testimony. To cite two,
on page three you said, ``some assert that block grants have
been more vulnerable to cutting in the annual appropriation
process than others, so that block-granting vouchers means that
funding is less likely to keep pace with inflation in the
future. The funding history of HUD's HOME block grant for
housing does not support this argument.'' However, provisional
data from the CBO indicates otherwise, and I have it right
here. During the current administration, funding for HOME and
CDBG has increased by only 4 percent, while inflation has been
6.1 percent.
Then, additionally, on page four, you said, ``States will
have the flexibility to set the percentage of gross income that
families would be required to contribute as their share of the
rent, but that percentage could not exceed 30 percent.'' Yet
the language in H.R. 1841 clearly says that, and I quote,
families may choose to pay more to secure better quality
housing. To me, this indicates that HUD will expect, and as the
budget crisis gets worse, HUD will encourage any family who
wants safe, decent housing as opposed to just a roof over their
head, to pay more. Yet that is not what you imply in your
testimony.
How do you respond to these contradictions, and how can we
believe your testimony?
Mr. Liu. First of all, they are not contradictions,
congresswoman. The number you gave from CBO is the combined
CDBG and HOME figure. The HOME figure is in fact adjusted for
inflation at 14.7 percent since the start of the program. For
the specific fiscal years you mentioned, the increase is at
10.7 percent. Secondly, in regards to what the legislation
States, the legislation clearly States the maximum that the
State could impose. Currently, as the program exists now, that
any one family could pay is 30 percent of gross income. Excuse
me; in terms of the ability of a family to pay more if they
wanted to, that is the status quo right now. If a family wants
to pay more than 30 percent more, they can. So there is no
contradiction, congresswoman.
Ms. Velazquez. You said that block grants are not
susceptible to inflation; eroded due to inflation. But when you
look to the block grants, big block grants----
Mr. Liu. There has been an increase in CDBG. I did no
mention CDBG in my testimony. I mentioned HOME as the program
that we feel is most comparable because HOME program; I said
HOME program. That is very specific. The example that we used
in our testimony is the HOME program.
Ms. Velazquez. Someone said that block grants have been
more vulnerable. I think that is clear English.
Sir, how will owners respond to the fact that vouchers will
no longer be permanently awarded to participating families? How
do you respond to arguments that they will be worried about
renting to voucher holders because they know that they could be
terminated at any time, even if they have always paid the rent,
and they are still income-eligible?
Mr. Liu. Congresswoman, the program currently is based on
annual contracts, annual leases, by and large, in the various
communities that have the program. Landlords are not promised
now lifetime commitments on the part of the agencies, nor would
they be permitted to be counting on lifetime contracts or
leases with tenants in the future. The program will be managed
as it is now. Private sector landlords would sign leases with
tenants. Those tenants will be by and large on an annual basis.
Ms. Velazquez. What about if there is a change in family
income during the year?
Mr. Liu. Currently, if there is a change in family income
and the family goes over income, the housing authority is
supposed to make adjustments to the rent paid by that family.
If they are in fact ineligible, if they become ineligible, then
the housing agency does have the right to terminate that lease.
That is under the current program.
Ms. Velazquez. And if their income goes down?
Mr. Liu. And if their income goes down, the housing agency
has the ability and they have the responsibility to adjust the
rent paid by that family accordingly.
Ms. Velazquez. How will that happen if the block grant has
already been distributed?
Mr. Liu. The block grant will be in terms of the sums
provided to the States. The State will still have to administer
the program through leases made with private landlords, just as
they are done right now.
Chairman Ney. The time has expired, but I would note we can
go into a second round afterwards. What I would like to do at
this time is I had yielded part of my time to the gentlelady
from California so we could both get a question in. So I have
got one more and then we will go on to the gentleman from North
Carolina.
The question I have, if this was a recapture problem, did
the omnibus fiscal year 2003 bill, did it take care of the
recapturing?
Mr. Liu. The omnibus bill took care of the recapture issue,
but it did not take care of the programmatic issues, nor did it
take care of effective utilization issues. Through the reserve
fund and through the ability to reallocate, it took care of the
recapture issue, but it did not take care of the complexity
issue. It did not take care of the over-subsidy issue. It did
not take care of the administrative issue that we have to deal
with all these very small entities, thousands of different PHAs
that we have to work with now, Mr. Chairman.
Chairman Ney. The reason I asked that, most of the thrust
of what I have always heard of why this is needed is because of
the recapture issue; the money has come back to Washington and
did not get out to the people. So naturally, I was thinking if
the omnibus bill took care of the recapture issue, why would we
have to proceed? But you are saying there are other factors
that would cause the block-granting beyond the recapture issue,
correct?
Mr. Liu. Absolutely, Mr. Chairman, absolutely.
Chairman Ney. That makes a whole difference; I will do a
second round of questions. If it was just an issue of
recapture, one would think that what a housing authority does
not use within a State it could automatically shift back to the
State, so it does not come back to Washington to be decided
whether it was recaptured or not. That could be corrected in a
measure.
Mr. Liu. Yes.
Chairman Ney. You are saying that it is issues of
utilization, and what else was it?
Mr. Liu. Administration, a better delivery system,
complexity of the program so that we can do away with the
current problem of for the vouchers we do use, we essentially
end up paying $1 billion more than we should be.
Chairman Ney. How much more?
Mr. Liu. Over $1 billion.
Chairman Ney. For?
Mr. Liu. For over-subsidies. In other words, we have found
out that our agencies have such a difficult time in calculating
income requirements, whether it is for new tenants or
recertifications, that we end up paying more than we should be.
And then finally, the ability to, from a case management
standpoint for providing the best social service playing field
for these families, we believe that working with the States who
also have primary responsibilities in so many of these programs
relating to education, job training, the TANF programs, career
training programs, that it only makes sense, good sense, to
combine the housing component; not the resources, but the
program delivery alongside these other programs.
Chairman Ney. At this time, we will move on to the
gentleman from North Carolina.
Mr. Watt. Thank you, Mr. Chairman.
Mr. Liu, how much is HUD now spending to administer the
Section 8 program?
Mr. Liu. The full total amount of the program has
fluctuated over the past few years between $12 billion and $14
billion for the tenant-based program.
Mr. Watt. That is the administration cost?
Mr. Liu. That is the overall program. For the
administration, we have----
Mr. Watt. I am looking for the administration. Has HUD done
a calculation of what it costs now to administer the program?
Mr. Liu. $1.2 billion.
Mr. Watt. $1.2 billion, Okay. And how many employees is
that? How many employees do you have administering the Section
8 program?
Mr. Liu. That $1.2 billion is what we----
Mr. Watt. I did not ask you whether that; I assume the
employees, the salaries are included in that, but how many
employees administer the Section 8 program?
Mr. Liu. I could not give you that figure because the
number----
Mr. Watt. If you can get that for me later.
Mr. Liu. I can get that for you.
Mr. Watt. Okay, alright. As I understood what you said in
response to Ms. Waters's question, you are not going to cut any
of those employees.
Mr. Liu. I need to clarify that. The $1.2 billion is what
we provide to the housing authorities currently to pay for
their administrative costs.
Mr. Watt. That is not the question I asked, though, Mr.
Liu. I want to know how much; has HUD done a calculation of
what it costs HUD to administer the program?
Mr. Liu. It is about $15 million.
Mr. Watt. $15 million, okay. And you still do not know, I
assume, how many employees HUD is using to do that? If you will
get that information for me.
Mr. Liu. I can get that for you, sir.
Mr. Watt. Okay. Let me just raise some concerns that I have
based on your testimony, which I think is very conclusory in
the way it is presented, but raises more questions than it
answers. First of all, starting at the end, with the comment
that you just made in response to Mr. Ney's question, you say
that this is more efficient because it does this by
facilitating greater coordination with state-administered
programs related to education, job training, child care and
health care, inclusive of other state-administered Federal
programs like TANF and One-Stop Career Centers. Yet there is no
mixing of resources, and for the life of me I cannot understand
how this process makes it more efficient if there is not going
to be any mixing of resources.
Number two, you say on page four of your testimony that
there is an unacceptable error rate of approximately $1 billion
in the calculation of adjusted incomes and rental subsidies. I
assume that those errors are not being made by HUD; they are
being made at the local level. Is that correct?
Mr. Liu. Yes, sir.
Mr. Watt. Okay. So it is not HUD that is incompetent; it is
whatever agencies are administering the program in local
communities that are doing incompetent monitoring, and you are
still going to have some income criteria, so somebody in the
local community is still going to have to administer those, I
assume.
Mr. Liu. Yes, sir.
Mr. Watt. Okay. And so do you have discretion now; does HUD
have discretion now to contract with somebody other than
housing authorities to administer Section 8?
Mr. Liu. If the housing authority falls into what we call
``troubled status.''
Mr. Watt. Okay. And then you would have to snatch it back
and administer it yourself, not contract with somebody else,
right?
Mr. Liu. We would probably, through a contract, then
administer the program with potentially----
Mr. Watt. Are you doing that anywhere?
Mr. Liu. Yes, we are.
Mr. Watt. Okay. So you have found some places where they
were just so inept that you had to get somebody else to do it.
You are saying the State is more likely to be able to find
somebody else than the Federal government is?
Mr. Liu. We think the States are closer to the action.
Mr. Watt. I understand that the State is closer to the
action, but this is Federal money that we are administering,
and if we are going to cut all the strings that are attached to
it, it seems to me we ought to get out of the housing business
and let the States collect the money and we would not be
involved in the process at all. The Federal objective here, I
take it, of Section 8 is to provide decent; we have a national
policy to provide decent and affordable housing to people
throughout the country. I think me and Mr.--what is the guy's
name who ran against Hillary Clinton in New York? Mr. Lazio and
I had about a two-hour debate on the floor of the House where
he was trying to eliminate that from the housing bill. Finally,
he relented. Our national objective still is to provide safe
and affordable housing to every American citizen; not a right,
but an objective. What I hear you saying is we are going to
pass that objective to the States and rely on them to achieve
the national objective that we have set. If we have a national
objective, it seems to me, and we are going to use national
money, it seems to me that we ought to be ultimately
accountable for the use of this money. I just do not see that
this block granting approach either adds efficiency; we are
going to keep the same number of employees and the States are
going to come up with a new infrastructure at the State level.
They may contract with new people at the local level to
administer the program who have no experience in doing it. So
we are likely, it seems to me, to end up with an inordinately
more inefficient program than we have now. I am just having a
lot of trouble understanding that.
Chairman Ney. The time has expired.
Mr. Watt. I thank the gentleman.
Chairman Ney. We will have another round of questions. I
want to move on, and then we can come back, so if you could
hold that. Can you answer that?
Mr. Liu. Very quickly. I would just point out that in fact
today 34 States have experience with the program and manage
some form of the Section 8 program. We have national objectives
for many areas of domestic policy; in agriculture, in health,
in education; and the States manage many parts of those
programs.
Chairman Ney. Thank you.
Mr. Tiberi?
Mr. Tiberi. Thank you, Mr. Chairman. I apologize for coming
in late.
Mr. Liu, I was dealing with a HUD constituent matter, you
can appreciate that. Just kind of following up on Mr. Watt's
thoughts, he and I are agreeing more and more lately, which I
am not sure is scarier for me or scarier for him. But in terms
of the States, if you could share with us your thoughts
regarding States' roles in this issue. Let me give you an
example and have you respond.
The chairman and I have served in the State legislature in
Ohio. Ohio right now is going through, like many other States,
a budget crunch. One of the things that the State does not do
right now is really deal with housing. They have an agency
within the Department of Development that deals with housing
from a macro standpoint in terms of bonds. But in terms of
actually administering a housing program like the Columbus
Metropolitan Housing Authority does today, they simply are not
capable of doing it and do not do it.
So my question is two-fold, if you could give me your
thoughts on the theory behind the program, if it became the law
of the land. How would States like Ohio have to structure and
beef up and provide a bureaucracy for such a program and
oversight for such a program? And number two, what would happen
to housing authorities today as we know it, in terms of their
right to exist, as well as the employees that they have today?
I know they are concerned, at least in Ohio, that they would be
put out of business.
Mr. Liu. Thank you for your question, congressman. I, too,
have served in a State legislature. My home state is Hawaii,
where it has a very active housing program, where it does
administer a very active loan program. As I mentioned earlier,
the legislation in our proposal is not a mandatory program on
the part of the States. If the States did not feel that this is
the right time for them; if they felt that this was, for
whatever reason, not the right program for them to come in for,
they need not be part of the application process. In which
case, HUD would manage the program.
Mr. Tiberi. Let me share with you, though, my concern.
Maybe I did not express it very well. Ohio is going through a
budget crunch, and they look, wow, here is some money that
maybe we can put into the Department of Development and try to
do what HUD is trying to do, maybe for even less money. Many
argue that the system is already balkanized. Could this
balkanize it worse, when you do not have, really, in some
States a bureaucracy, and States would be attracted to the fact
that there is this pot of money coming from HUD, let us grab it
and try to deal with this issue?
Mr. Liu. The program, first of all, would have to be used
for a tenant-based program. There would not be the ability, and
it is written into the law; there would be monitoring to that
effect that they could not use these funds for other than a
tenant-based voucher program. The easiest way for a State, and
we think a logical way for a State to deal with the issue of a
quick ramp-up to be able to administer the program, would be to
contract with those entities within their States which are
doing a good job now; those larger entities that have
substantial programs which are in fact meeting many of the
requirements of even the current complicated situation that we
have.
In Ohio, 34 percent of the agencies there are of the small
category. That is not an insignificant number. Very easily, the
State could contract with those housing agencies that do well,
such as the one in the town that you mentioned, in Columbus, to
continue managing the program.
Mr. Tiberi. Excuse me, Mr. Chairman, one last question. If
that is the case, then under the scenario today, under the
theory that you have provided to us under this bill, that let
us push it back to the State level, why not just push it back
to the local level to start with under that theory?
Mr. Liu. Because we believe the States right now are
uniquely situated because of the other types of social service
self-sufficiency programs that they are a key player in, in
order to manage the program on a regional basis. Local entities
are very local in their outlook, in their city or town. The
voucher, because we want to give the portability aspects the
greatest amount of flexibility and because most of the
portability which we see in the voucher program lies within
specific States, really sets itself up as the States are in
fact the best entities that we see to manage this program.
Mr. Tiberi. Just to follow up, Mr. Chairman, you do not
have any concern with respect to States who do not have that
ability in abusing that right, that effort?
Mr. Liu. We believe that we will have enough of a
monitoring presence to mitigate those concerns, sir.
Chairman Ney. I thank the gentleman. Do you want to co-
author that bill with me? Okay.
Mr. Davis from Alabama?
Mr. Davis. Thank you, Mr. Chairman.
Mr. Liu, good afternoon to you. Let me, if I can, pick up a
little bit on Mr. Tiberi's questions and maybe go in a slightly
different direction. There is one layer of concerns, I suppose,
that States strapped for cash as they are, will take money that
should go to housing and use it for other purposes. There is a
more subtle concern that I have got. It is that a lot of States
have significant disparities in their urban and rural housing
needs, or at least the people who are sitting in state capitals
have a perception of that. As you know, in most States, State
Legislatures are affected by the population. They are
determined by the population, so the urban areas have a lot of
votes; the rural areas do not.
I am concerned about the fact that if this program were
transferred to the States as you and the administration want,
that it would give the States an enormous amount of flexibility
to discriminate, if you will, between urban and rural areas.
Are there any particular strictures or provisions in place that
would prevent States from reallocating funding in ways that
might discriminate against rural areas, or even in some cases
against urban areas?
Mr. Liu. Congressman, the legislation would require us
within 12 months of enactment to come up with a formula that
looks at the number of families being served, extent of poverty
within the State, cost of housing within the State, the
performance of the State in administering grant amounts under
this Act or others, the extent to which the State has any funds
previously appropriated under the Act, and other measurable
items. To the extent that there may be a concern and issues
regarding rural versus urban, the Secretary has indicated that
is certainly something that we can work on with this committee
and others in developing that formula once this is enacted.
Mr. Davis. And just if I can follow up on that, Mr. Liu,
that I think is a point worthy of being followed up on because
as you know, once this is down-loaded and sent to the States
with all the things that HUD is doing, monitoring what the
State of Alabama does with respect to York and with respect to
Birmingham is not exactly going to be high on the priority
list. So the concern that I think some of us would have is
whatever changes are made, there need certainly to be some
provisions in place. For example, Medicaid right now has
certain rules and provisions that require States to allocate
funding in ways that do not discriminate across regions.
Let me move to one other area. It is my understanding that
under the changes that you have proposed, that some of the
income-targeting would also be changed. Right now, it is my
understanding that about three-fourths of the money under
Section 8, or three-fourths of the vouchers, I should say, have
to go to what are classified as low-income tenants; people that
fall within a certain median range. As I understand it, that
could be reduced to as low as 55 percent. Is my understanding
accurate, first of all?
Mr. Liu. We would have the ability to waive the 75 percent
requirement down to 55 percent, which still preserves the
majority of the vouchers going to those at 30 percent or below
of median income. But currently under the program, under the
current targeting requirements, we find housing authorities
having a difficult time providing vouchers to seniors who do
not qualify because they may be getting more under Social
Security; to those under the TANF program who because of their
new work involvement are earning more than the required, or
just above the 30 percent level. So while we preserve the basic
parameters of the program as they exist today, we believe that
the flexibility to allow the States to request waivers from HUD
that could not do it on their own, is a reasonable one because
we do preserve that a majority; at a minimum 55 percent; would
still have to be at that level.
Mr. Davis. Let me cut you off just in the interests of
time. My concern with that, Mr. Liu, is that may be a fairly
noble goal to get more seniors involved in the program, and of
course there is nothing that would require States to reallocate
the money to seniors. My concern is that at a time when the
economy is in such dire straits, we are potentially singling
out the most vulnerable people for cuts. That leads to my last
area of questions. Right now, as I understand it, States can
impose a minimum rent requirement of $50 a month, which doing
the math, is $600 a year. Now, it strikes me as being somewhat
curious public policy at a time when unemployment is rising and
when poverty is rising in some parts of this country to raise
the rents on people who are in this program, because of their
limited ability to pay rent in the first place. That certainly
does not strike me as good policy, and it does not strike me as
a good selling point for the administration either.
Mr. Liu. Fewer than 8 percent of the families would be
affected by the $50 rent requirement.
Mr. Davis. But it would be the poorest 8 percent, though,
would it not, Mr. Liu?
Mr. Liu. No, no. Our analysis shows that those who would be
affected by the $50 are those that right now are claiming
certain exclusions from income; exclusions that would not be
available because we are simplifying that whole formula to 30
percent of gross income.
Mr. Davis. Mr. Chairman, I think my time has expired.
Chairman Ney. I want to thank the gentleman.
Mr. Clay of Missouri?
Mr. Clay. Thank you, Mr. Chairman.
Thank you, Mr. Liu, for being here today. You know, if
block grants follow their historical pattern and the funding
levels erode over a period of years, why would you consider
this approach for Section 8 vouchers? Are you interested in
sustaining the program or letting it erode over a period of
years? We already know that most States would not have the
funds to take over the slack caused by the Federal reduced
funding. Is this a method of eventually killing the program?
Mr. Liu. Absolutely not, congressman, although I appreciate
your concern. Our intent here is to put the program back on a
much more sound footing, so that it can perform at a level that
we would all be comfortable with so that in fact we can ask for
more dollars in the future. Our proposal for 2004 is over $900
million more than our request in 2003. I think that is a
specific sign that we are not looking to erode or kill this
program.
Secondly, as I mentioned earlier and it was included in my
testimony, we cite the HOME program, a block grant program for
affordable housing, as indicative of a block grant program that
has in fact increased since its inception; increased to the
tune of 14 percent since the first year of its coming into
play. The administration's 2004 proposal is significantly
higher than the 2003 proposal.
Mr. Clay. Well, predicting an increase would indicate that
you predict an increase in the number of people qualifying for
the Section 8 program.
Let me also get back to the line of questioning by Mr.
Davis, along the States administering the block grant program.
I come from Missouri, a Midwestern state. What entity in
Missouri do you envision being able to administer the Section 8
funds? I mean, I am sure your staff maybe can help you answer
that, but just give me an example of who you would look to,
what entity would you look to in Missouri to do this?
Mr. Liu. We would look to see in a State like Missouri,
which I do understand the history there, that we would think
they would be wise to look toward housing agencies now that are
doing a good job in your State of administering the program,
and by contract having them do the work for that, and combining
the inefficient operators in the State of Missouri with the
larger and better-operated programs, which solves many of the
issues of delivery. If there were a concern and Missouri
decided they did not want to get into the program, they do not
have to.
Mr. Clay. Oh, it is optional?
Mr. Liu. It is not a mandatory program. Yes, sir.
Mr. Clay. Optional.
Let me also point to a tenant management-run group in St.
Louis called Carr Square Village. Representative Waters grew up
in that community. It is run by a tenant management group. It
is a troubled site. Yet, no action has been taken on that site.
Do you have any background information on it? Could you let me
know what you plan to do there? Can you shed some light on it?
Mr. Liu. Are you specifically mentioning Carr Square?
Mr. Clay. Yes, I am mentioning Carr Square Village, yes.
Mr. Liu. Yes, Carr Square, we have taken action, sir. We
have moved in court to take over that tenant management
association. They have challenged us and we are now in a court
battle with that TMC group.
Mr. Clay. So that is a pending court case?
Mr. Liu. It is in court right now.
Mr. Clay. And if you prevail in court, then you will
contract out with an agency that takes over troubled sites?
Mr. Liu. We will have to find a unique way to deal with
that because that is actually an old HOPE I site.
Mr. Clay. Yes.
Mr. Liu. It is a very complex situation.
Mr. Clay. And it is very troublesome for us in the
community who had so much hope for the project and would like
to see some action taken in the very near future on it.
Mr. Liu. We have. We have, through our enforcement center.
Mr. Clay. I thank you very much, and that concludes my
questioning. Thank you.
Ms. Carson of Indiana. Mr. Chairman?
Chairman Ney. Does the gentlelady have a question?
Ms. Carson of Indiana. Thank you very much, Mr. Chairman.
Chairman Ney. I am sorry. Would the gentlelady yield?
Ms. Carson of Indiana. I am sorry.
Chairman Ney. I am sorry. Mr. Sanders is next, and then the
gentlelady.
Mr. Sanders. Thank you, Mr. Chairman.
Mr. Chairman, I would ask unanimous consent that my
statement be placed in the record.
Chairman Ney. Without objection.
[The prepared statement of Hon. Bernard Sanders can be
found on page 158 in the appendix.]
Mr. Sanders. Okay. Mr. Chairman, I was also very pleased to
hear everybody's respect for the role that States play in our
national system. I would hope that that respect would remain
when we deal with the Fair Credit Reporting Act, and I look
forward to widespread support from your side of the aisle to
not preempt States from passing stronger consumer protection,
because I will use the record to show how much we respect
States' rights and how good States do things. We will look
forward to your support when we move to the Fair Credit
Reporting Act on that.
Mr. Liu, thank you very much for being with us today. My
first question is a pretty simple one, and again because of
time constraints, I am going to ask you to be brief. I
apologize for that. We have about four million American
households who are paying over half of their limited incomes on
housing. We have in the course of a year in terms of
homelessness in the United States, we are going to have about
1.3 million children at one time or another living out on the
streets. Do we have a housing crisis in the United States of
America?
Mr. Liu. We have a concern with all families of low income,
sir.
Mr. Sanders. Do we have a housing crisis in America, in
your judgment?
Mr. Liu. What we have, sir, is in regions, in certain areas
of our country, we certainly do have very difficult housing
situations, but it does not stretch across the country in all
areas.
Mr. Sanders. Boy, that was a good answer; very impressed by
that. Let the record show that I think we have a serious
housing crisis, which is why among other things we have 195
cosponsors on legislation called the National Affordable
Housing Trust Fund, which would build 1.5 million affordable
units over the next 10 years. The point is, I do not think the
administration does think we have a crisis, which is why I
think we are not getting the kind of support that we need for
affordable housing.
Mr. Liu, my deep impression is that this administration is
not strongly supportive of affordable housing. In the year
2001, 79,000 new Section 8 vouchers were appropriated. That was
in 2001. But in the year 2002, despite what I consider to be a
major housing crisis, that number dropped to only 18,000, and
for 2003, no new Section 8 vouchers were appropriated. Can you
tell me why in the midst of what I consider to be a severe
housing crisis, we have seen a drop to zero in terms of new
housing Section 8 vouchers?
Mr. Liu. Congressman, our budget from 2000 to 2003, and
inclusive and then adding on 2004, has increased our request by
over $2 billion for the Section 8 program.
Mr. Sanders. But Mr. Liu, you know that is a bit
disingenuous as an answer, because you have not added new
housing vouchers, unlike previous administrations, but more
importantly what you are saying is you are obligated by law to
pay the rent for a certain number of vouchers. Rents have
soared, and you have paid those rents. Isn't that why we have
seen an increase in expenditures?
Mr. Liu. Congressman, we have made requests of upwards of
34,000 for new incremental vouchers, and we did not get them
funded.
Mr. Sanders. From whom?
Mr. Liu. From this Congress.
Mr. Sanders. The administration has requested 34,000; okay,
Mr. Chairman, I would just note for the record that Mr. Liu has
told me something that I did not know, that he says that the
administration has requested 34,000 new Section 8 vouchers,
which the Congress did not----
Mr. Liu. This was in 2003.
Mr. Sanders. This was in 2003. Mr. Chairman, if I could,
Mr. Liu made that presentation. I do not know; I am assuming it
is accurate. We would hope that you would; is that accurate?
Chairman Ney. I am told it is accurate.
Mr. Sanders. I would hope that you would use your influence
or have the chairman of this committee help us with those
34,000 new Section 8 vouchers.
The other question that I want to ask, Mr. Liu, is that my
understanding; and please correct me if I am wrong here; but
the requirement that 75 percent of vouchers go to extremely
low-income families could be reduced to as low a number as 55
percent. And the limitation that no vouchers can go to families
with incomes over 80 percent of local area median income is
modified to permit elderly and disabled families with incomes
of over 80 percent of median income to receive assistance.
Doesn't this create a situation where some of the lowest income
people in our country might be denied Section 8 vouchers, while
some upper income people will receive those vouchers? Isn't
that a problem?
Mr. Liu. Our current program allows for the exceptions for
seniors and disabled, as you read there, congressman. The
legislation does permit HUD to grant waivers to the States,
with justification, to lower the 75 percent requirement down to
55 percent. However, I do point out that we can currently
provide waivers for that requirement for housing agencies under
the current program.
Chairman Ney. The time has expired.
Mr. Sanders. One last question?
Chairman Ney. Let us move on to Ms. Carson.
Mr. Sanders. Okay. Thank you.
Chairman Ney. The gentlelady from Indiana?
Ms. Carson of Indiana. Yes, sir, thank you very much, Mr.
Chairman. I will not take a moment. I was really learning a lot
from Congressman Sanders.
In Indianapolis, as in St. Louis, we have a major project
there that just is not working. Unfortunately, it is not
anybody's fault. Designed as a senior citizens complex and
because of the rules, they began to integrate everybody into
that system; people that were recently released from mental
institutions, people that were released from prisons were
integrated into this senior citizens complex, and just created
havoc. At this point, the Wye Baker Terrace is I think being
consumed by HUD. I have been begging HUD for years to let us do
something. My question is, when you have to pull back out of a
project like that, what do you do? Do you put it on the market
for sale? Or do you seek out new management?
Mr. Liu. It depends on the program, congresswoman, and I am
not specifically up to speed on that site that you mentioned.
If it is a troubled public housing site, we can mandate that
housing agency to get new management. We can take over the
agency.
Ms. Carson of Indiana. This is a Section 8 operation.
Mr. Liu. If it is a Section 8 complex, we can take over
that property; HUD can take over that property to manage it
itself, if need be. We can take it over. Is it a multi-family
insured----
Ms. Carson of Indiana. It was designed specifically for
senior citizens. That was the origin of it, and then it just
turned out into----
Mr. Liu. HUD has the power to take over and manage that
site.
Ms. Carson of Indiana. I think you are going to take it
back, but I was wondering; well, we can talk about that later.
In your Statement, I was trying to find it right quick, are
you integrating both vouchers for Section 8 and homeownership
as well into this project?
Mr. Liu. We mentioned homeownership because currently for
the last year and a half, we have had a homeownership option
with our Section 8 program, where qualified Section 8 holders
in certain agencies that provide this option can use their
voucher to go to the bank, find a home that they can afford and
purchase, and that voucher, the monthly voucher value can be
used to write-down the monthly mortgage expense for periods of
between 10 and 20 years.
Ms. Carson of Indiana. Okay. So if I am on Section 8, I can
take my Section 8 voucher and replace that with a down payment
on a home?
Mr. Liu. Not a down payment, but it can help to defray your
monthly mortgage costs. It can help underwrite the mortgage.
Ms. Carson of Indiana. Okay, question. If I am in a Section
8 qualified unit that is being provided for by Section 8, and I
want to buy that unit, I can use that voucher to buy the unit
that I am in?
Mr. Liu. If the owner wants to sell it to you; if you can
come up with an agreement with the owner.
Ms. Carson of Indiana. I do not want to belabor the point.
I was just trying to understand it. But it does not apply to
somebody that is not a current Section 8 recipient. For
example, this high rate of unemployment in my district; high
rate of foreclosures in my district in Indianapolis remain
unabated, and people are losing their homes through no fault of
their own. The jobs are vanishing.
Mr. Liu. I see.
Ms. Carson of Indiana. Could they become instantly eligible
for Section 8 to use the money for a mortgage payment?
Mr. Liu. No.
Ms. Carson of Indiana. It would be a damned good idea.
Thank you, Mr. Chairman, I yield back.
Chairman Ney. Would you like to ask another question?
Ms. Carson of Indiana. I am through. Thank you, Mr.
Chairman. I yield back. Thank you very much.
Chairman Ney. Ms. Waters?
Ms. Waters. No, I suppose that my question was answered in
my absence, about the administering of the program. If not, I
will talk with you about it at a later date. But let me just
say this, even though my chairman is sitting here and he is
carrying the bill, this bill is scaring the living daylights
out of a lot of people. We do not know what it means. Some of
us are afraid that this is the first step toward the
dismantlement of HUD, and that worries us an awful lot. And so,
we are going to have to fight and oppose the direction of my
good friend's legislation. It will be a friendly fight, but it
is going to be a tough one. We just do not think that a change
of this magnitude is in the best interests of the folks who
need the program out there.
Chairman Ney. I thank the gentlelady. I would note there
are going to be 50 minutes worth of votes, so the chair would
note that some members may have additional questions for the
panel, which they wish to submit in writing. Without objection,
the hearing record will remain open for 30 days for members to
submit written questions, and for the witnesses to place their
response in the record.
The hearing is adjourned.
[Whereupon, at 3:50 p.m., the subcommittee was adjourned.]
THE SECTION 8 HOUSING
ASSISTANCE PROGRAM:
PROMOTING DECENT AFFORDABLE
HOUSING FOR FAMILIES AND
INDIVIDUALS WHO RENT--DAY 2
----------
Tuesday, June 10, 2003
U.S. House of Representatives,
Subcommittee on Housing and
Community Opportunity,
Committee on Financial Services,
Washington, D.C.
The subcommittee met, pursuant to call, at 10:00 a.m., in
Room 2128, Rayburn House Office Building, Hon. Robert W. Ney
[Chairman of the subcommittee] presiding.
Present: Representatives Ney, Green, Bereuter, Miller of
California, Hart, Tiberi, Waters, Velazquez, Carson, Lee, Watt,
Clay, Miller of North Carolina, Scott, and Davis. Also present
was Representatives Ryun and McCotter.
Chairman Ney. I want to welcome you. Today the subcommittee
holds the second in a series of hearing to examine the Rental
Vouchers Program and the various proposals intended to make the
program more efficient and cost effective.
The Housing Choice Voucher Program is HUD's largest
program, both in terms of annual budget authority and units
under contract, and it is currently administered by
approximately 2,600 State and local agencies.
While the costs of the program remains sound, the program
has often been criticized for its inefficiency. More than a
billion dollars is recaptured from the program every year
despite long waiting lists for vouchers in many communities. I
think, frankly, that recapture probably is what has stirred
this debate.
The rising costs of the Section 8 program and some of the
administrative concerns have caused many in Congress and the
administration to conclude that the program is in need of
reform. Last month the administration appeared before this
subcommittee to discuss the housing assistance for needy
families, or HANF, proposal as outlined in its fiscal year 2002
budget proposal.
On May 2, 2003, HUD Assistant Secretary Michael Liu
testified that States would be able to make more timely and
informed policy funding decisions based on local need and
market conditions as compared to administrators in Washington,
D.C. These decisions include moving unused funding to heavy
demand areas of the State at any given time during the fiscal
year and tailoring the program to better address the practices
of the local market and needs of the community.
Our two panels today, and I want to welcome the panels,
consist of tenants, local public housing authorities, the
industry groups directly affected by Section 8 programs. I look
forward to hearing the different perspectives, and would like
to welcome all of our distinguished witnesses as we continue to
discuss the ways to improve America's community and strengthen
housing opportunities for all of its citizens.
I also want to note that I have done a bill by request to
the administration to get the whole issue out there for
discussion purposes, without a conclusion frankly on my part in
either direction. Also it is the goal of the subcommittee, and
we have talked with the ranking member, Ms. Waters of
California, to have a thorough discussion and debate on this
issue and to have hearings not only here in the U.S. Capitol,
which we appreciate you all coming the distance that you have,
but also take the hearings out to communities both large and
small, in varied parts of the United States to also receive
input so that more people will be able to attend that hearing
process, and our ranking member will be here.
Right now I will defer for an opening statement to Mr.
Scott of Georgia.
[The prepared statement of Hon. Robert W. Ney can be found
on page 174 in the appendix.]
Mr. Scott. Thank you very much, Chairman Ney. I appreciate
this opportunity. Let me commend you for your continuous hard
work on this issue, and thank you for holding this important
hearing today regarding the Section 8 program and the
administration's proposal to change this important program.
I also wanted to thank the distinguished panel of witnesses
that we have today. Thank you for coming and giving your
testimony.
First, let me say, Chairman Ney, that I believe that no
Federal program should be sacrosanct. From time to time
Congress should ask if a particular policy is working and if it
can be improved. Now, with that being said, I cannot understand
how block granting the Section 8 program will help or improve
the current system which provides housing opportunities for
needy families.
In my State of Georgia, nearly 200,000 low income people
are served under the Section 8 program through approximately
200 local housing authorities. These officials understand at
the local level the local real estate markets, the local
housing issues far better than our good friends, the good folks
at the State Capitol.
And, finally, I am concerned about the effect that changes
to the Section 8 program would have on residents who are moved
out of communities as part of the HOPE VI Revitalization
Project. Several questions certainly need to be addressed here
today, and one of which to housing authorities is this: How
would the hypothetical block granting of the Section 8 program
affect the overall operation of your housing authority?
That to me is the fundamental question we have got to
answer today. It just seems to me that this process is working.
We have to really answer the question, why these changes, and
will our local communities be better impacted for this.
I have some serious questions on that, Mr. Chairman, and I
look forward to this very interesting discussion this morning.
Thank you.
Chairman Ney. I want to thank the gentleman from Georgia
for his statement, and I will defer now to Mr. Green of
Wisconsin.
Mr. Green. No opening statement.
Chairman Ney. Thank you. Mr. Miller.
Mr. Miller of North Carolina. No.
Chairman Ney. Mr. Bereuter.
Mr. Bereuter. No.
Chairman Ney. With that, I also I would like to submit for
the record a Statement, without objection, the Statement from
the National Association of Realtors and the Institute of Real
Estate Management, to the subcommittee. Hearing no objection,
it is part of the record.
[The following information can be found on page 272 and 276
in the appendix.]
Chairman Ney. I would also note to the witnesses there is 5
minutes allotted time. When the clock turns yellow, you have
got about a minute left. When it turns red, it will conclude
your testimony. But we would also accept, without objection,
hearing no objection, all of your written testimony for the
record.
So the 5 minutes is basically just to summarize, and then
it will be open to questions from the Members. On Panel I, I
want to welcome Panel I, Terri Ceaser is the first Section 8
voucher tenant appointed to serve on the Board of Directors of
the Virginia Housing Development Authority. She is enrolled
full time in a Master's program for career and community
counseling with an expected graduation date of December 2004.
Early congratulations on your graduation.
Ms. Telissa Dowling is the President of the Resident
Advisory Board of the New Jersey Department of Community
Affairs. The board represents 19,000 voucher holders throughout
New Jersey. Ms. Dowling also serves as a member of the Board of
the National Low Income Coalition.
Craig Garrelts has been the Executive Director of the
Hocking Metropolitan Housing Authority--great county I would
note in the State of Ohio, and a great district in the 18th--
for over 19 years. He received the 1997 National Award of Merit
and Program Innovation in Affordable Housing from the National
Leased Housing Association, on whose behalf he is appearing
today. Also, Secretary Martinez recently paid us a visit down
to Hocking County.
Andrew Showe, Vice President of Showe Management
Corporation based in Columbus, Ohio, where he works with 60
projects in a Section 8 program. He is an Ohio licensed real
estate broker and a certified assisted housing manager. He also
serves on the Board of the Ohio Apartment Association.
Barbara Thompson is the Executive Director of the National
Council of State Housing Agencies.
I want to welcome all of the people here to testify today.
Appreciate you coming to the United States Capitol. We will
begin with Ms. Ceaser.
STATEMENT OF TERRI CEASER, TENANT, HOPEWELL, VIRGINIA
Ms. Ceaser. Chairman Ney, Ranking Member Waters, other
members of the subcommittee. I am Terri Ceaser, and I live in
Prince George County, Virginia. Thank you for your invitation
to address you this morning.
I am here today as a Section 8 tenant, not representing an
organization or agency. I have had the good fortune to be a
recipient of the Section 8 voucher issued by Prince George
County Housing Authority since 1994. I was first approved for a
voucher and was placed on a waiting list for a voucher in 1990.
I had separated from my husband and was employed as a secretary
at Prince George High School. I was not receiving any child
support and did not earn enough money to afford rents on decent
housing.
We lived in a house that was too small, in poor condition,
exposed electrical wiring, dangling pipes and an unsafe porch.
When my name came up to the top of the list and I was issued a
housing voucher, I was able to move my children to a decent,
affordable home in a safe neighborhood.
This is the home at which I have raised my children. My
oldest graduated from college this May. My middle child has
finished his second year in college, and my youngest is in high
school now.
Not only are my children busy with their studies, but I am
also hitting the books. I just completed a lifelong dream of
obtaining a Bachelor's Degree, and am enrolled full time in a
Master's program preparing myself for a career in community
counseling. I will complete graduate school in December 2004.
While still in undergraduate school, I did a class project
on the Section 8 housing voucher. Mrs. Hampton Wade, the
Director of the Prince George Housing Authority was very
helpful with this program. Sometime after I had completed my
project, Ms. Wade recommended me for the position on the
Virginia Housing Development Authority Board of Commissioners.
I was honored to be chosen by Governor Warner to serve.
My family's story is an example of the success of the
Section 8 voucher program, but I did not want to give the
impression that our life has been easy. Completing my education
and making sure that my children do well in school requires
choices and sacrifices. We must adhere to a very strict budget
with no cushion, but the sacrifice is worth what we will
achieve. Section 8 has afforded me the opportunity to provide
my family with a stable and safe environment. So I consider
this a hand up, not a handout.
I face each day with the determination to succeed, to
improve my life and to continue to make a better life for my
children. Section 8 continues to make this possible, because
decent affordable housing in a decent neighborhood is
available. Knowing that I do not have to make a choice between
feeding my family and paying rent is a tremendous weight that I
bypass, all because of Section 8.
I am not an expert on Federal housing policy, but I am
expert on my family and my community. As such, I have very deep
concerns about HUD's proposal to take the Federal Section 8
housing program that has a proven track record of success and
currently helps 2 million families and turn it over to States
that may not be able to do as well, much less even want to
administer the program.
Under the program's current structure, the Prince George
Housing Authority administers 175 vouchers and has 100 percent
utilization rate since 1989. The Prince George Housing
Authority has never turned back any voucher funds. Further,
there are 110 families on the waiting list in Prince George. We
do not need to dismantle our program and start over. What we
need is more vouchers.
I want to call attention to three problems that I see in
the HANF proposal. The first idea is that the housing voucher
program needs to be to changed so it will be more like the
welfare program TANF. This seems to be based on the mistaken
notion that most people who receive Section 8 vouchers are also
on TANF. In fact, the income of most households that rely on
vouchers to be able to afford housing comes from employment,
pensions or disability income.
Other concerns is one that will not affect me directly
since the Governor has already made a commitment to ensuring
tenant representation on the State board. But some governors
may not be interested in the perspective of tenants and may do
away with the current requirement as far as Section 8.
My single largest worry is that there is no assurance that
the program will continue to be funded at a level that will
keep up with rising housing costs. The point of the Section 8
housing voucher program is to make sure that low income housing
people can afford to live in a decent house. If you approve
this proposal, Section 8 vouchers could end up with their
current homes being unaffordable and having to move to poor
quality housing in unsafe neighborhoods, causing disruption in
jobs and schooling.
I hope that each of you will take a careful look at this
proposal and what it could do to our community. Once you do
this, I am sure you will agree that this is a bad idea.
Thank you for the opportunity to share my thoughts.
[The prepared statement of Terri Ceaser can be found on
page 179 in the appendix.]
Chairman Ney. I want to thank you. Next witness.
STATEMENT OF TELISSA DOWLING, PRESIDENT, RESIDENT ADVISORY
BOARD, NEW JERSEY DEPARTMENT OF COMMUNITY AFFAIRS
Ms. Dowling. Good morning, Chairman Ney, Ranking Member
Waters and members of the subcommittee. I am very honored to
testify about the Section 8 program. I am testifying today on
my own behalf. I will not be telling you that the voucher
program is perfect, but I know from personal experience how the
voucher program can help low income people find stable housing
and better their lives.
I first received a voucher in 1996 from the New Jersey
Department of Community Affairs through its transitional
housing program. I now reside in Guttenberg, where both my
daughter and I were able to improve our educational
opportunities. My daughter is 14 years old now and is already
talking about going to college.
When I first received my voucher, I was on public
assistance and homeless. But within a year I was able to leave
the welfare program with the help of the Section 8. It gave my
life the stability I needed to be able to attend school, and my
studies helped my community work service at the Public Housing
Authority into a job. So I was able to leave welfare.
I received my associate's degree in public policy and urban
studies in 2000. I recently became a program manager of a
housing resource center. Without a voucher I would not have
been able to get my degree. I might not have a job, and my
daughter and I would still be homeless.
My studies also gave me the knowledge and confidence to
participate as a tenant. When the New Jersey Department of
Community Affairs announced the formation of a resident
advisory board as required by the Quality Housing and Work
Responsibility Act of 1998, I understood that this would be the
opportunity for me to provide input. I was elected as President
of my RAB in 2001 and serve now on behalf of 19,000 voucher
holders. I now serve on the boards of the National Low Income
Housing Coalition and ENPHRONT, a national public housing
residents' organization.
From my experience the proposal to change the voucher
program into a block grant to the States is a bad idea, to say
the least. First, I do not want States to have that kind of
flexibility that the block grant proposal will allow. I know
that it is important to hold on to rules that the Federal
Government has established so that taxpayers and Congress will
know that the money is being used well to help those most in
need. Turning the program into a block grant would give States
so much flexibility that it will be detrimental to the very
people that the Federal housing assistance is supposed to help.
Another problem with the block grant is its effects on the
opportunity for tenants to provide input. Under the block
grant, States would not be required to have a resident advisory
board. My State has obviously done the right thing already, but
other States may not be as enlightened as mine.
I also do not believe that having States administer both
TANF and the block grant will guarantee good coordination.
Additionally, only approximately 13 percent of the people
receiving vouchers are even on welfare.
One program that helps voucher tenants improve their
economic circumstances is the Family Self-Sufficiency Program.
FSS provides subsidized savings in case management for voucher
tenants seeking better employment opportunities. But States
will not be required to continue this program under the block
grant.
My experience has shown me that the poorest people have the
most trouble affording housing, but the block grant would allow
States to reduce the percentage of extremely low income people
admitted to the program from the current 75 percent to 55
percent.
It is also very important to me and other voucher holders
that we do not have to pay too much of our limited income in
rent. But the block grant would change the general rent
standards, and tenants could be required or would be required
to pay significantly more than 30 percent of their income for
rent.
Another problem is whether tenant based rental assistance
under the block grant would be able to help people live in
better neighborhoods. The subsidy that the States would pay
might not be enough to let tenants live in neighborhoods that
have better housing, schools, and job opportunities.
My biggest worry is that the funding of the block grant
will not keep up with the need over time, and that could cause
States with even good intentions to have to make changes that
would hurt tenants in the program. The block grant will divorce
Congress from direct responsibility for individual vouchers,
making it easier for Congress to avoid keeping up with the real
increases in housing costs.
For all of these reasons, I respectfully and strongly
recommend that Congress continue the current system of
allocating specific numbers of vouchers to local and State
housing agencies under the general framework that exists today.
There are some ways to improve the voucher program without
turning it into a block grant, and I testified about some of
these improvements last year. I hope that you will consider
improvements to the program that are not as radical, risky and
insensitive as the block grant.
Thank you.
[The prepared statement of Telissa Dowling can be found on
page 183 in the appendix.]
Chairman Ney. I want to thank you. Next, Mr. Garrelts.
STATEMENT OF CRAIG A. GARRELTS, EXECUTIVE DIRECTOR, HOCKING
METROPOLITAN HOUSING AUTHORITY, LOGAN, OHIO, ON BEHALF OF THE
NATIONAL LEASED HOUSING ASSOCIATION
Mr. Garrelts. Mr. Chairman, and the members of the
subcommittee, my name is Craig Garrelts. I am the Executive
Director of Hocking Metropolitan Housing located in Logan,
Ohio. I am representing the National Leased Housing
Association, whose members include owners, managers of Section
8 housing, as well as public housing agencies that administer
the Section 8 voucher program.
We appreciate the opportunity to testify on H.R. 1841, the
administration's block grant, or HANF program, which is
proposed as a replacement for the Section 8 voucher program.
We urge the subcommittee to reject this proposal. It is a
rash proposal, advanced under the guise of reform, that can
damage a form of housing assistance that has had decades of
bipartisan support.
The Section 8 subsidy has been a powerful and versatile
tool for almost 30 years. It can serve the very poorest who
need substantial help, to helping those who only need shallow
assistance to live in affordable and decent housing.
Among its specialized functions, Section 8 has been used to
replace older forms of subsidies that are less flexible, and in
the process has preserved older projects and improved
affordability for tenants. All told, over 1.9 million families
receive rental assistance from the Section 8 certificate
program.
The Section 8 program has been the most successful housing
assistance program of any housing program at any time. The
major problem we have with the program is we just don't have
enough of it. Recently, it became quite a common complaint that
not all of the funds appropriated each year have been used.
Until this year, appropriations were sized based on an
assumption that every authorized voucher would be used for a
full 12 months. No one expected this to occur, and the funds
were routinely recaptured and rescinded. The recisions reduced
the cost of each year's appropriations to the amount actually
used for the program. So there was no ongoing adverse fiscal
impact from this method of calculating appropriations.
When a problem did arise it was the result of disagreements
with the appropriation committees and taking the recisions to
offset nonhousing appropriations. For fiscal year 2003, and
presumably beyond, the appropriators have taken actions to
minimize recaptures, and therefore the potential loss to
housing programs of the Section 8 recisions being allocated for
other uses.
But today we are more interested not in the recaptures or
the recisions, but trying to help as many families as possible
use the authorized level of vouchers assigned to each
community. Here, action by the voucher administrator and HUD
has steadily improved utilization rates. Industry groups and
HUD have encouraged administrators, primarily local housing
authorities, to take aggressive steps to increase leasing
rates. National utilization rates have risen from 91 percent 2
years ago to 95.3 percent as of this January.
We look forward to improving upon this in the future. By no
means is this current program a failure. However, we believe
the proposed HANF program, if enacted, would be a failure. HUD
says the Section 8 program has grown too complex and that by
block granting the program to the States it would be simpler.
On the contrary, if this proposal is enacted, the current
Section 8 program would remain the major program for several
years, with all of the so-called complexity. And one or two
additional programs with different rules would coexist with the
program. How would this be simpler?
To illustrate, all tenant-based voucher holders would be
grandfathered for 5 years under the terms and conditions of the
Section 8 program. Holders of project based vouchers and those
receiving home ownership assistance would be grandfathered for
10 or more years under the old rules. Assuming 1.9 million
families are grandfathered and the annual turnover rate is 10
percent, at the end of the first year 1.71 million voucher
holders would still be covered under the current system, while
190,000 vouchers would be turned over to the States for the
block grant program. At the end of year 5 we would still have
1.1 million vouchers under the current program, and about
800,000 that have gone over to the block grant program.
HUD complains that the Section 8 program requires it to
deal with a large number of local public housing agencies.
These are the local hands on administrators who, among their
many duties, screen and select tenants, check their incomes,
find a deal with landlords who agree to participate in the
program. They inspect the unit for housing quality standards
and lead-based paint requirements, determine maximum subsidies
within the HUD established parameters, and select and negotiate
with owners who wish to participate in the project-based
program.
The Section 8 program as it currently exists requires that
public housing authorities be the administrators. The language
of H.R. 1841 would result in the continuation of this
administrative structure for the grandfather vouchers, with the
exception that an additional layer with associated costs would
be added.
The movement of funds from HUD to the State to a new
administrator and then the landlords would extend the process.
We are then more really worried what is going to happen to the
families.
Mr. Green. [Presiding.] Mr. Garrelts, if you could
summarize your testimony. The red light has gone on. We will,
of course, be reading your full written testimony as well.
Mr. Garrelts. Our final concern is with the families,
because the change within the program, changing from the basic
rent of 30 percent of adjusted income to 30 percent of gross
income would have a tremendous impact upon the individual
families. And an example cited in our testimony, the net result
would be a 25 percent increase in rent to the families.
We are also concerned about making sure that we have
landlords participate in the program.
Mr. Green. Mr. Garrelts, I need you to wind your testimony
up. We have other witnesses we need to get to as well.
Mr. Garrelts. Thank you. On behalf of National Leased
Housing, we appreciate the opportunity to testify today.
[The prepared statement of Craig A. Garrelts can be found
on page 198 in the appendix.]
Mr. Green. Great. Thank you. I apologize for having to cut
you off.
Before I turn to Mr. Showe, I would like to turn to the
ranking member of the subcommittee, Ms. Waters, for her opening
statement at this time.
Ms. Waters. Thank you very much, Mr. Chairman.
I appreciate the opportunity to get my statement on the
record. I do know that you want to move on with the testimony.
However, it is important that as we move into this very, very
difficult area and address the proposal of the administration
that everyone is clear on how we stand on this.
The housing choice voucher, commonly referred to as Section
8, named after the section of the U.S. Housing Act that
authorized it, is the largest Federal low income housing
assistance program. The Section 8 voucher program currently
serves about 2 million families at an annual cost of over $12
billion. Some 2,600 housing agencies, mostly local, administer
the program. H.R. 1841, the Housing Assistance to Needy
Families legislation, would convert the Section 8 voucher
program to a block grant, transferring its administration to
the 50 States, and giving them discretion over allocation of
funds, directly or indirectly.
Section 8 supports over 4 million apartments. Roughly 1 in
7 renters nationwide benefit from some form of Section 8
assistance. Of the 4 million Section 8 households, about 35
percent, or 1.4 million, have portable vouchers. The HANF
proposal would fundamentally change the Federal funding system
for tenant based housing assistance, from one based on actual
cost to a block grant that simply distributes Federal
appropriations among States.
With the passage of HUD's funding year 2003 budget, block
granting the program to States for this reason is unnecessary
as the problem of under utilized vouchers has already been
addressed. If funding levels fall behind the program's needs,
as likely will occur, States will either have to contribute
their own funds to the program or reduce assistance to low
income families and elderly and disabled individuals.
A National Association of Redevelopment Officials report
shows States would face a 1.1 billion to 1.8 billion in costs
to close the funding gap created by the administration's block
grant proposal. California represents a large component of the
Section 8 program, with 14 percent of the Nation's vouchers and
16 percent of the Nation's leased vouchers. I am concerned that
assistance to families currently participating in California's
Section 8 programs would be jeopardized under the new proposal.
Under the current Section 8 Housing Choice Voucher Program
in California, the average per family rental assistance cost
per year is approximately $8,364. The funding shortfall for
California to cover 87,018 low income families is at $8,364 per
family, and for over a 5-year period would equal $727,878,552.
My question to this administration is, what happens to
working families who cannot afford decent apartments under this
proposal if States implement a time limit? Only 20 percent of
housing choice voucher holders receive welfare benefits. The
other 80 percent rely on earned income, pensions or disability
income. The need for housing assistance is driven by local
housing market conditions and rental housing cost inflation. So
using the TANF model is inappropriate.
The uncertainty of block grant funding could have a greater
impact on the use of vouchers to support home ownership.
Vouchers can only be used to support home mortgages to the
extent that mortgage lenders are confident that funding will
continue to be available for the length of the mortgage.
Again, I do not believe that a block grant to the States is
the best way to realize improvements in Section 8 program, and
we need to continue this dialogue to find solutions that work.
I thank you for the opportunity to put that on the record,
Mr. Chairman. I will yield back the balance of my time.
Mr. Green. I thank the gentlelady for her opening
statement. And we would turn to Mr. Showe to resume testimony
from the panel.
STATEMENT OF ANDREW SHOWE, VICE PRESIDENT, SHOWE MANAGEMENT
CORPORATION, COLUMBUS, OHIO, ON BEHALF OF THE NATIONAL MULTI
HOUSING COUNCIL, NATIONAL APARTMENT ASSOCIATION, AND COLUMBUS
APARTMENT ASSOCIATION
Mr. Showe. Thank you, Mr. Chairman, Ranking Member Waters
and distinguished members of the subcommittee. My name is
Andrew Showe. I am Vice President of Showe Management
Corporation, past President of the Columbus Apartment
Association, and current member of the board of Ohio Apartment
Associations, and a member of the National Apartment
Association.
I am also a member of the National Multi Housing Council, a
national association representing the Nation's larger and most
prominent apartment firms, and NMHC operates a joint
legislative program with the NAA, an industry group
representing over 30,000 apartment executives and
professionals. It is my pleasure to testify today on behalf of
both organizations.
NMHC and NAA commend you, Chairman Ney, for your
leadership, and we thank the members of the subcommittee for
your valuable work in addressing affordable rental housing in
America. We also commend the U.S. Department of Housing and
Urban Development Secretary, Mel Martinez, and the
administration for their interest in improving the Section 8
Housing Choice Voucher Program.
We too believe it is critical to meet the housing needs of
low and moderate income families and believe that improving the
Section 8 program is a central part of meeting these needs.
However, we urge Congress and HUD to enact reforms to the
existing Section 8 program that will encourage apartment owner
participation and in turn increase housing availability to
voucher holders.
Although it is well intentioned, we think HANF will not
reduce the administrative costs to participating property
owners and will not maximize program benefits for residents.
Instead, the proposed legislation could create new obstacles to
apartment owner participation without alleviating existing
burdens. The net result can be fewer available apartments for
voucher residents.
We wholeheartedly support the Section 8 program as a means
for private housing owners to provide affordable rental housing
for families who need it. We believe that more apartment owners
would participate if the cost of renting to voucher residents
were more comparable to the costs of serving unsubsidized
residents. We propose the following recommendations to achieve
this goal.
First, we urge continued funding for the existing program
structure administered by HUD. Historically many criticized the
Section 8 appropriation structure because too much funding
remained unused each year. Effective this year, Congress
enacted changes to minimize recaptures, and, moreover, national
utilization rates have risen to nearly 96 percent. We believe
that the existing successful appropriations structure should be
supported, and we have considerable concerns about a proposed
State level funding structure in HANF.
Next, we propose speeding up the move-in process by
amending the inspection procedures. We propose allowing PHAs to
conduct unit inspections within 60 days after the resident
moves in. PHAs could also conduct building-wide rather than
unit by unit inspections in certain cases, and rely upon recent
inspections.
Alternatively, PHAs initially could inspect a
representative sample of units in order to certify that the
building and communities are eligible. This would reward well
managed properties and allow PHAs to focus their scarce
resources elsewhere.
The apartment industry relies on seamless turnover, and
delays caused by unit by unit inspections deter participation.
As proposed, Section 11 of the bill would extend the existing
inspection requirement to HANF, and do nothing to fix the lost
revenue problem.
Finally, we urge HUD to enact a more efficient process for
PHAs to apply for higher fair market rents that are more
reflective of submarket rents. We also propose program changes
that will allow PHAs to raise the payment standard to 120
percent of FMR without HUD approval and afford PHAs an
increased flexibility to request higher payment standards when
necessary. FMRs must be set high enough to encourage owners'
participation, and in turn create a sufficient supply of
apartments and choices for voucher holders.
We thank HUD for raising the current FMR level to the 50th
percentile in 39 high cost areas, but that level is
insufficient in areas with outdated FMRs and in certain high
cost submarkets. In many areas of my home State of Ohio, FMRs
have not been updated in years and are well below market rent
in both high cost and moderately priced areas.
In summary, we believe that the existing Section 8 program
with improvements I have just noted will make affordable
housing more affordable to more Americans. Thank you.
[The prepared statement of Andrew Showe can be found on
page 260 in the appendix.]
Mr. Green. Thank you for your testimony. Ms. Thompson,
welcome.
STATEMENT OF BARBARA J. THOMPSON, EXECUTIVE DIRECTOR, NATIONAL
COUNCIL OF STATE HOUSING AGENCIES
Ms. Thompson. Thank you, Representative Green, Ranking
Member Waters, and members of the subcommittee. Thank you for
the opportunity to testify on the administration's proposal to
block grant Section 8 voucher funding to the States. I am
Barbara Thompson, Executive Director of the National Council of
State Housing Agencies.
Mr. Chairman, NNCSHA is grateful to Chairman Ney for
stepping forward in defense of the low income housing tax
credit when it was threatened by the administration's dividend
tax relief proposal. Thanks to his intervention and that of
Representative Frank and many other members of this
subcommittee, housing credit apartment production is protected
under the recently enacted tax bill.
Now, we ask your help in enacting the Housing Bond and
Credit Modernization and Fairness Bill, H.R. 284. This bill
repeals the MRB 10-year rule, updates MRB purchase price
limits, and makes housing credit development viable in very low
income communities. We thank the Chairman and the 20 other
members of this subcommittee who have cosponsored H.R. 284. If
you have not cosponsored this legislation, we urge you to join
the 253 House Members who have and urge your House leaders to
enact it in tax bill this year.
NNCSHA also is grateful to Chairman Ney for introducing the
Housing Assistance for Needy Families Act. NNCSHA neither
supports nor opposes this legislation, but we believe it
deserves Congress' full consideration. NNCSHA supports a
voucher block grant in concept. However, we have taken a
neutral stance on the administration's plan because of our
serious concerns about the adequacy of the program funding and
flexibility it proposes.
Section 8 vouchers are one of our most important affordable
housing tools, but the voucher program is not meeting its
potential. Its complex rules and regulations block innovation,
drive up costs, discourage private sector involvement, and
confuse customers and administrators.
The decentralization of funding to more than 2,500 PHAs
complicates program administration, increases costs, prevents
maximum utilization of funds and frustrates regional and
statewide housing strategies. If implemented with sufficient
funding and flexibility, HANF could resolve many of the current
program's problems and create new opportunities for voucher
use.
States have the capacity to administer the voucher program.
States possess a multi-decade record of responsibility,
effectiveness, and accountability in administering tens of
billions of dollars in housing assistance. They possess
statewide sophisticated financial asset management and
administrative oversight capability. Many States already
administer Section 8.
States are uniquely positioned to administer Federal
housing resources. They understand local housing needs and
markets, while bringing a State and regional perspective to
problems that cannot be solved within municipal boundaries.
States can ensure housing funding is applied where it is most
needed and integrated with other public investments in their
communities.
Moreover, States have the ability to bring together State
agencies and resources. State agencies are partners, for
example, with welfare agencies to coordinate TANF funds with
housing assistance. The voucher program, adequately funded and
rationally regulated, would benefit from State administration.
States' knowledge of local housing markets, access to other
housing and nonhousing resources, ability to respond to
changing local circumstances and prioritizing needs across
States would overcome many of the voucher program's current
limitations.
Federal oversight would be more efficiently concentrated on
50 entities. However, HANF must not be an underfunded mandate.
We urge Congress to safeguard vouchers and the low income
families who depend on them by authorizing mandatory voucher
spending in an amount at least adequate to finance all
currently authorized vouchers. Authorizing legislation must
also specify that funds would be adjusted annually to cover
cost increases.
To work HANF must be a flexible program. It must be free
from unnecessary and burdensome Federal requirements. HUD
regulation must be limited to that necessary to assure
nondiscrimination and accountability for the use of funds to
achieve goals Congress sets. Performance standards must not
compel States to respond to Federal priorities rather than
their own.
In conclusion, exploring ways to improve the Section 8
voucher program is timely and appropriate. A block grant to the
States merits Congress' examination and NNCSHA is available to
assist you in that effort.
Thank you.
[The prepared statement of Barbara Thompson can be found on
page 265 in the appendix.]
Mr. Green. And thank you, and thank all of the members for
their testimony. I will begin with questions.
Ms. Thompson, you indicated that your organization supports
voucherizing in concept, but you were neutral on this
particular proposal. What would your organization support? What
is it that you would like to see in a voucher program that you
would support?
Ms. Thompson. We believe this proposal, the idea of block
granting the voucher program at least deserves a serious look.
We feel, however, that this proposal, the administration's
proposal, fails to do two essential things: One, to assure
States that they would have adequate funding. We share the
concerns of all of the panelists here that what the
administration has proposed would not protect States from
funding cuts over time, and that is unacceptable.
In addition, it does not give States the flexibility they
would truly need to achieve the efficiencies that the
administration believes a voucher block grant would achieve. So
we would need to see guaranteed funding, mandatory spending,
which has been done under other programs like the TANF program,
for example. States would need to know from year to year that
they were going to get sufficient funds, not only to provide
for the families who currently receive them, but to cover
increased costs over time. And, frankly, we would like to see
new voucher program money in this program. No new vouchers have
been appropriated by Congress for several years, yet only one
in four families qualified to receive voucher help gets it.
So our view is let's fund the program, not only at a level
that will cover families who currently receive the assistance,
but let's grow this program to meet the need.
Mr. Green. So to summarize, you are looking for more money
and more flexibility?
Ms. Thompson. Lots more money and lots more flexibility.
Mr. Green. You added the lots into that.
What I would invite you to do is take a look at the
specifics of the proposal from the administration, and if you
could supply to us some written suggestions and language
suggestions, I think that would be useful as we go through this
process.
Ms. Thompson. I would be pleased to do that.
Mr. Green. Thank you. Mr. Garrelts, what recommendations
would you have with respect to the current program that would
make it more effective, more cost effective and more efficient
in its administration?
Mr. Garrelts. Well, the current program, the housing
authorities are the primary administrators, and we are the
local--being the local administrators, we have to work day to
day with the landlords and the tenants. There is a basic cost
there to the program that can't be avoided. We do have the
management of the actual case for each individual client.We do
have to do all of the contracts with the landlords. We have the
requirements to maintain updated computer systems that
communicate data to the Federal Government. Our basic program,
especially in my area, which is a very rural area, there is not
a whole lot of fat in the program to be done.
There is a discussion within the HANF program to reduce the
number of inspections, and I understand that landlords may like
that but our experience has been that we especially work with a
lot of mom and pop type landlords. And if they can avoid
repairs, they will do so.
But our annual inspections assure that those properties are
maintained. That is a cost to the program, but we need to
continue forward for doing annual inspections of those units if
we want to keep good housing stock. So the basics of the
program, at least at the local level, there is not a whole lot
of fat to be cut out.
Mr. Green. I am not necessarily suggesting that cutting fat
is what we are looking at as much as making the program operate
more smoothly. Is it your testimony that we can't enact reforms
that make it operate more efficiently and more cost
effectively?
Mr. Garrelts. If we would allow, again at the local level,
the individual communities to address the variances in the
markets at the local level with some HUD oversight for doing
variances for, as was mentioned about fair market rents, that
is an issue. In my case we have experienced a very tight market
where we have an inadequate supply of housing, allowing us to
adjust our fair market rents high enough to generate new
construction because we are not--I will use our example--in the
last 10 years we had an 11 percent growth of our population.
During that period of time, that amounted to 1,100 families
added to our community. During that period of time we only had
47 new apartments built. The fair market rent in our area was
not high enough to generate enough interest from local
developers to build any more rental housing. Then we throw in
the overall economic status of our community is that 48 percent
of our county are eligible for the program. Now, that is very
typical in rural areas, is that we have--our median income is
low. We do not have a lot of job opportunities available.
Therefore, the rent burden is very high for families. So the
flexibility needs to be at the local level so we can adjust,
either by increasing our fair market rents so that new
development can occur, or reducing it if we have plenty of
housing stock available, reducing the fair market rent in order
to fill the vacancies that exist.
Mr. Green. Thank you.
Ranking Member Waters, questions?
Ms. Waters. Thank you very much, Mr. Chairman.
How many panelists can tell me what their waiting lists are
for Section 8 in that area? Do you have any idea?
Ms. Dowling. Good morning. I can give you an approximate
number. Because we are a Statewide agency, we have roughly
about at least 8- to 9,000 in different areas throughout the
State. We roughly, I would say, have a good 17,000 on the
waiting list as a total throughout the whole State.
Ms. Waters. That is what State?
Ms. Dowling. New Jersey.
Ms. Ceaser. Yes, ma'am. As far as Prince George County,
Virginia is concerned, right now there are 110 families that we
have on our waiting list.
Ms. Waters. 110 families?
Ms. Ceaser. Yes, ma'am.
Mr. Garrelts. In our community, because of the very tight
market condition, when I say we have no waiting list it is a
little misleading, is because we are issuing vouchers upon
demand when people walk in the front door. We have a hundred
families every month searching for units. That is how we are
able to maintain our hundred percent utilization, that although
we are not maintaining a waiting list, that is because we put
every one on the street to search.
Ms. Waters. Thank you.
Ms. Thompson, do you have any information about waiting
lists for Section 8 vouchers?
Ms. Thompson. No specific information on specific States. I
can tell you we constantly hear there is simply not enough
assistance to meet the needs of families eligible for it. That
is why we think it is so important to get beyond this
discussion of simply maintaining funding for the current
families served. Why aren't we also talking about trying to
meet the needs of the many families who are not served?
Ms. Waters. How many of you believe that if this is block
granted that your well-funded States with all of their balanced
budgets are going to reduce the number of folks waiting for
Section 8? How many believe that?
Okay. Just to add to what you think, the State of
California, we have a $350 billion deficit. Not only can we not
take care of the many services, many of those services we have
done well with over the years, I believe that that legislature
would be looking to cut, reduce, do whatever they could to get
that budget down. So I would not--so I certainly would not want
this to be block granted to my State.
Ms. Thompson. I would agree with that concern. And
California, as you know, Congresswoman, is not the only State.
Many States are facing very severe budget deficits. So we share
your concern. Many, many States confront that. That is why we
feel it is so essential, and we could only support something
like this if the funding was truly mandatory, funding that was
guaranteed to flow from the Federal Government to the States in
a sufficient amount to cover the needs of families in the
program, new families getting into the program, and to cover
increased costs over time.
Otherwise, you are absolutely correct. The States could
never assume this. They cannot pay for this program. This would
only work if the Federal Government continues to support it
adequately, just administer it through the States. So we agree
with you. That is one of the major reasons, Congresswoman, we
have not endorsed this proposal.
Ms. Waters. Well, I want you to oppose it because--for
everything that you have said. I understand you are wanting to
have a debate, but you know, I am afraid that this
administration is trying to literally get rid of too many
programs that the people really rely on and that the States--we
cannot count on the States to really continue these programs
and administer these programs. In some cases, even through
maybe not Section 8, but Head Start and others, they would
actually siphon off the dollars from these programs to help
reduce those deficits.
I was reminded from a Californian I said 350. But it is $38
billion rather than 350.
Ms. Velazquez. 350 was the tax cut.
Ms. Waters. Mr. Chairman, just one more thing. Everybody
that I have listened to, and I haven't heard everyone, talked
about the fact that the vouchers are not keeping up with the
real market rates out there, and I suspect that is true. Again,
you know, California is off the scale. I mean, the rents have
just exploded. The cost of housing is just off the scale. So
unless we increase the value of these vouchers, I don't know
how apartment owners are going to make it. I think it is very
important for everyone to continue to say that.
It doesn't matter whether they remain with the Federal
Government or, God forbid, if it you know transferred to the
State, the fact of the matter is we need to increase the value
of those vouchers. Does everyone agree on that?
Mr. Miller of California. [Presiding.] The gentlelady's
time has expired.
Thank you. Ms. Thompson, you commented that you expected a
guarantee from the administration, and that is very difficult
because that is our responsibility. We can set a program up but
it has to be funded through the appropriators, and an example
would be the Buyer Down Payment Assistance Program. We enacted
a program, but it has never been appropriated, so we have never
been able to benefit from this program.
Looking at the things that were mentioned, I mean the
concern about the program, the shortages, I know, Ms. Waters,
when we had a hearing last year, Los Angeles County came
forward and said their vacancy factor was 3 percent, which
meant that they were a hundred percent occupied. The conclusion
I drew at that point was you have got X amount of vouchers
chasing a limited amount of units.
And Barney Frank and I introduced a bill, H.R. 1985, which
increases the FHA loan limits for multifamily, hoping in some
way to move people into a place they own. And I think I like
the Down Payment Assistance Program, the concept of taking a
person who is reliant upon renting a unit and knowing that
their rents continue to increase--as you stated, they have in
the marketplace year after year--if we can give those people a
voucher and let them buy a home, then their rents are capped at
a certain limit until they own that unit. That is how I think
you create more Section 8 housing out there, if you can get
people to a situation, whether we do it with FHA limits, and we
can help them with vouchers through the HUD program to go out
and buy their own home, that they can take pride in and say
this is mine until I die and leave it to my kids.
But it gets them off the system, because if you look at a
person who is relegated to Section 8 for 5 years or 10 years,
you look at what they were paying originally, and 10 years
later you look at what they are paying in rent. The concept of
having that person's rent remain consistent from the day they
buy it, that is really interesting to me, to be able to get
somebody in a home.
I was a developer for years. It is tough, and you talked
about building units. The problem we have in many communities,
I have seen, I know so many developers who try to do it, when
they go a community and they say they want to build Section 8
housing there is an outcry from the neighbors in many cases.
Yet when you have communities that would accept them, there is
generally no vacant land. We passed a bill out of this
committee on brownfields, allowing the local communities to
take these polluted sites, to clean them up and we can build
affordable housing within communities who want them and need
them. But it appears to be a circle conversation here that we
are trying to put people in units that just aren't available.
But I would like to hear your opinion on the vouchers for
people getting in new homes, be able to buy them.
Ms. Dowling. The only reason I say that is because this
bill doesn't even mention anything about the Section 8 home
ownership component at all. That was my question. What happens
to that? Because last year we came and we spoke about that. How
do we improve it? And now we have got people actually doing
what they need to do as far as paying, cleaning up their credit
reports, getting into schools, and because we are under the
impression that we are going to take the Section 8 voucher and
now become a home owner. We understand that it was for 15
years, but at least my mortgage would be paid. Now that is even
taken off the table.
Mr. Miller of California. I hope the appropriations
committee funds that this year. I think it is an extremely
important program to get people into a home that they own. I am
on the advisory board for a group called Hart, it is a
nonprofit. They put about 50,000 families, first time home
owners, into homes. It is 100 percent private dollars. They
give them the down payment to help them get in the home.
Ms. Dowling. You know, God forbid if you block grant this
program, I can't get a mortgage from anywhere if they don't
know if my funding is going to be paid the following year. So
now you take my dream back from me.
Mr. Miller of California. I have to back up to what Ms.
Waters said. There are some States I wouldn't mind block
granting, but it would scare me to death in California today.
We have some funding in the Federal programs for seniors as
an example that the last 2 years didn't get passed through,
because they didn't have a budget on time, they get capped
basically for cash flow purposes for the State. When the State
finally passed a budget, some of these dollars tended to
disappear, and that bothers me. But you know when we are
looking at a program that almost 10 percent is eaten up in
administrative costs, that bothers me. That is a concern,
because that seems like an excessive amount.
And, yes, I know there is some people who own units need a
little oversight. But I don't believe everybody is a bad
renter. There is not everybody out there who owns units that
when they get a call from their tenant will not acknowledge
that there is a problem and fix it.
Ms. Dowling. But that is only being done because tenants
are not allowed to be at the table, because you cannot tell
me--in my area, that is what helped me a lot in the State
of New Jersey. I am very fortunate because we have a State law
that protects our Section 8 voucher holders where people can't
discriminate if they are renting to them.
But our biggest thing was getting the word out to the
residents. We had so many vouchers, and we need to hit the
street to utilize these vouchers or the Federal Government is
going to take the money back. And we went up from 78 percent
utilization to 98 percent overnight. And that----
Mr. Miller of California. My time has expired.
Ms. Dowling. I was so excited about the fact that we had
the law that gave us the opportunity to be at the table, and I
think that is why we don't need to block grant this program. We
just need to go back to what we put on the table. We worked 2
years to put some very good suggestions on the table about the
Section 8 program and all of the changes that have occurred,
and we never even got the opportunity to see one of those
changes implemented, and now you just want to do away with the
program.
Mr. Miller. Thank you. Mr. Scott from Georgia.
Mr. Scott. Thank you very much, Mr. Chairman. I appreciate
this. This is just a terrible, terrible idea, and it is my hope
that we will not move forward with this effort.
Mr. Scott. I served for, well, over 20-some years in the
State legislature as Chairman of the Rules Committee and on the
Budget Committee, and I can assure you that Ms. Waters is
absolutely right, States will use this money any way they can,
for anything other than for block granting. States are not
equipped to handle this. We do not even have a Housing
Department in the State of Georgia. Taking it and moving it
away from the local communities is not the right thing to do.
There are just so many areas; it reduces assistance to low-
income, it weakens the low-income protections, it curtails
tenant protections. It is just a bad, bad, bad piece of
business.
I certainly am sympathetic to your concerns, Ms. Thompson.
I am glad to see that you are at least neutral on this issue.
But I would say that the major argument of HUD, in terms of
having to deal with 2,600 more entities, is really flimsy. That
is what they are there for. They are a Federal agency. They are
equipped to handle. They handle hundreds of thousands of
contacts with other folks, 13,000 subcontractors with Section 8
already, nearly 4,000 public housing units. And just to say
that they are having difficulty with another 2,600 is sort of
superfluous.
Let me ask a couple of questions for the local housing, if
you could just give me very briefly what changes,
hypothetically, would be in place if we were to go forward with
this. I think it is important for you to get on the record what
impact that would have on these local housing authorities if
such a thing would go forward.
Mr. Garrelts. Well, I think one of the things that may
occur is there is no mandate to the States to distribute the
funding in the manner in which we are currently receiving it.
So in our case, in Ohio, and probably in Georgia, where you
have many rural housing authorities serving small populations,
we may end up in a competitive process in order to retain the
housing resources we have within our State. I have already had
discussions with my peers in Ohio that if that opportunity was
available, the larger cities would go after every dollar they
could to bring into the cities, which after all is where a
larger population center is, and they would like to take all
the dollars into their coffers. So that would certainly have an
impact upon the rural housing authorities throughout the
country if the State would allow that type of process to occur.
I think that is certainly a concern that we would have from a
small housing authority.
Ms. Dowling. But also, with this new bill, if you block
grant it, it goes from helping 75 percent of the extremely low-
income people to only 55 percent. And then if you block grant
it, that means the housing authorities are now going to look
for people that are making well above the extremely low-income
people to actually bring them on board to help offset that
voucher. Because once you give them the vouchers, what the
State will do locally is set. If a voucher at a certain amount,
like $500, then you will have to find someone where their 30
percent will offset the $500.
So now my extremely low-income people are still homeless,
yet HUD keeps saying they want to do away with homelessness.
This will create a cycle of even more homelessness and now
touch on families that become homeless. It is just not a good
thing at all. It is just going to be terrible, really terrible.
Mr. Garrelts. She brought up an interesting issue about the
80 percent of median and the very low-income target population
we have now. I think that, within the guise of this HANF
proposal, there is a thought that you would reach a higher
income group through this proposal. But, actually, if you look
at the payment standard and you do the actual mathematical
calculations, in many markets, and this is not going to be true
of all markets because this is a market-driven issue, certainly
this would not necessarily be the case in Connecticut that has
very high rents, but in Ohio, Georgia, Indiana, Illinois, where
you have a mix of rents, when you do the mathematical
calculations for the family, if you have a family approaching
80 percent of median, and you do 30 percent of their income
requirement for their housing cost, more than likely it will
exceed the payment standard established by the State.
It does that now under the fair market rent schedule that
we have. In my county, in Hocking County, Ohio, if I have a
family at 80 percent of median and I do the mathematical
computations, 30 percent of their family income is greater than
my fair market rent standard, so they get no assistance.
Mr. Miller of California. [Presiding.] The gentleman's time
has expired.
The language in the bill does clearly state that the same
amount of people have to be helped through block granting, you
cannot decrease it from 75 to 50 percent. So that statement is,
in fact, not accurate based on the language of the bill itself.
Ms. Dowling. But when you go back and use----
Mr. Miller of California. No, that wasn't open for a
response.
Ms. Hart is recognized for 5 minutes.
Ms. Hart. Mr. Chairman, I'm interested in a response,
actually, from Mr. Garrelts and Mr. Showe, if that is correct,
regarding how you would envision, considering that you are now
dealing with housing projects where 20 percent of the voucher
system's funds are connected to the specific units themselves
under the project-based voucher program, when a PHA enters into
an assistance contract with an owner for those units, it is for
a specified unit, a specified term. Do any of you, first of
all, deal in project-based vouchers? I'm assuming you do, but
maybe I'm wrong.
Mr. Showe. I can respond to that. Our organization does
have project-based rental assistance, however, it was contracts
entered into directly with HUD. I realize there are those
tenant-based vouchers that can be assigned to privately-owned
houses, but my company does not have any of those units
available to be assigned to our company. In our experience, we
have solicited trying to get those types of permanent tenant-
based assistance assigned to our apartment units and we have
found, in dealing with the different housing authorities, that
they did not have sufficient funding to go do that. So that is
our experience.
Ms. Hart. Okay.
Mr. Garrelts. In our experience, we attempted to try
project-based programs on a couple of occasions. But working in
a tight marketplace, where we are trying to obligate the owners
for a 10-year contract, they just were not interested because
they had a line out their front door, and they could lease as
many units as they wanted to. So having a project-based
certificate just had no value to them. So we could not interest
them at all.
Then again, with our fair market rents----
Ms. Hart. Could you not interest them because of----
Mr. Garrelts. They had so many folks. if you have a unit in
my community, you would have five people wanting to rent that,
and you do not need to have any assistance to get those clients
in there because they will pay the rent.
Ms. Hart. Okay.
Mr. Garrelts. It may be unique--well, it is not unique when
you go around the country. There are many marketplaces that are
like this right now, where the demand for units exceeds the
supply. And in those types of circumstances, project-basing is
really of no use because the owner doesn't need that. Project-
basing works in those weak markets in which the marketplace has
too many units for clients. And then in those types of cases,
the owners really like that because then they are guaranteed
some money for their units whether or not they are occupied.
I shouldn't say this, whether or not they are occupied or
not, because that is not totally true, but they are at least
guaranteed they are going to get someone referred to them to
fill that unit within a reasonable time.
Ms. Hart. Do you envision any change to that under the new
HANF block grant proposal? Do you think that would change the
situation at all?
Mr. Garrelts. Under the new HANF program, they have not
defined anything as it relates to project-based vouchers or
certificates. And as I understand it, there is a new HUD rule
that is coming out on project basing that is going to be
implemented, and certainly that would have, or HANF would have
a negative impact on that new rule. I have not seen the new
rule, but I understand that the industry is pretty happy with
that.
Ms. Hart. Okay. Mr. Showe, anything additional?
Mr. Showe. I guess from our perspective we feel the public
housing authorities do a terrific job in administering the
Section 8 vouchers, and as far as the ownership of these
different properties are concerned, the most important thing to
do is to allow it to be transparent whether they are a Section
8 renter or whether they are a conventional renter. And the
ways to make that happen is to eliminate the lease addendum in
order to allow our managers to work off of one lease agreement.
Because it causes tremendous confusion in training and
administration of the lease rules and policies when you have to
have two separate leases for the Section 8 voucher holders as
compared to a conventional rental unit.
The other factor is we lose a lot of money trying to get
the inspections scheduled for the individual apartment units.
Sometimes it takes up to 30 to 45 days to schedule those
inspections when in fact the family is ready to move in
immediately. So not only do we lose but the voucher holder
loses too because they are anxious to move in and find housing.
Ms. Hart. So is that red tape experienced by both of you as
far as the whole system itself?
Mr. Garrelts. No, I think that is a market-driven issue. In
our community we are able to respond very rapidly. Within
basically 10 days of a request to go out and do an initial
inspection, we are able to do that quickly. But if you go into
large population bases, and again this gets back into the basic
staffing requirements in order to do the program, in large
population bases where you may have 5,000 or 6,000 units in an
area, they do not have 5,000 or 6,000 inspectors. So it is a
little tough to get the inspectors around to inspect. If they
are leasing out 400 units in a month, and that is not an
unusual number that could occur, you just physically cannot
have enough people around to go do those inspections.
Mr. Gary Miller. The gentlewoman's time has expired. Miss
Velazquez is recognized for 5 minutes.
Ms. Velazquez. Mr. Garrelts, you state in your testimony
that you believe H.R. 1841 has the potential to have a
dampening effect on landlord participation in the Section 8
program. You make specific mention of potential for problems
with the project-based Section 8 program.
Would you please expand on this conclusion and indicate if
you believe this effect is likely on both the tenant and
project-based program or only one of the two?
Mr. Garrelts. For the project-based program, it is of great
importance, in order to attract an owner to participate in the
program, that it is an easy process for them. Any extra
administrative burden thrown at them is an extra cost for them,
and they have that operating cost to be concerned with. So if
under the HANF program we would go forward and we would still
have the old existing project-based certificates in place, they
are grandfathered, you would have the problem that that
management company would be faced with two different sets of
rules. So you have just violated the basic principle of keeping
it simple. The management company would be real reluctant to
continue participating in project-based units if they have
different rules to follow.
The same would occur within just the regular tenant-based
program where the tenant is going out and searching. You have a
tenant that has a grandfather voucher. They go out and call on
a landlord, walk up to the landlord and say I would like to
rent your unit. The landlord is accustomed to our program, they
rent him up, they know the paperwork and everything is just
fine. The next tenant comes along and says I have a new voucher
under the proposed rule and I have all these different things I
have to do. Suddenly the landlord is saying, I don't want to
learn anything new.
Most of the landlords want to be able to keep their
management relatively easy to do. They have staff they have to
train. The process of keeping everything standardized is very
important.
Ms. Velazquez. Thank you. Ms. Thompson, in your testimony
you cite approximately $1 million in annual Section 8
rescissions as one of the most significant symptoms of problems
with the current Section 8 system. Yet in the fiscal year 2003
appropriations bill steps were taken to better account for
Section 8 funds and ensure fewer rescissions. Given these new
changes to the Section 8 program, doesn't it make sense to see
the results of those changes before authorizing a complete
overhaul of the program?
Ms. Thompson. Certainly steps were taken in the most recent
appropriations bill to avoid those kinds of large recaptures in
future years, but that doesn't solve the under utilization
problem.
We don't think an answer to under utilization is to simply
take back the money you gave to PHAs. That's effectively what
Congress is trying to do. They are trying to identify just how
much money is really being used, and in case we are wrong we
will create this little contingency fund. But our answer is,
wait a minute, we want to see all authorized vouchers used. And
we think a way to do that is to create the program flexibility
that will lead to higher utilization as the HANF proposal could
do.
Ms. Velazquez. So tell me, how is rescission issue answered
through the proposed changes?
Ms. Thompson. I don't think the rescission or recapturing
or avoiding recaptures solves the problems that vouchers cannot
be used in all communities. We think a program that has more
flexibility to move those vouchers around the State so they can
be used to change payments standards where necessary to
increase usage--we think this is what needs to happen, not just
taking the money back if it doesn't get used.
Ms. Velazquez. How do you respond to concerns that State
flexibility will make it harder for voucher holders to move
between States?
Ms. Thompson. To move from State to State? We have many
housing programs now where the rules are different from State
to State and the housing industry manages those rules fine. You
already have portability issues, even within States, under the
current program. So I don't see that as a barrier. In fact, we
think it is an advantage that States with very different local
conditions can design a program that meets their needs, not one
that looks like every other State.
Ms. Velazquez. Thank you. Thank you, Mr. Chairman.
Chairman Ney. Thank you. Ms. Lee.
Ms. Lee. Thank you, Mr. Chairman.
Let me just thank you again for this hearing, and I want to
associate myself with the remarks of our Ranking Member from
California, Ms. Waters, who kind of laid out what many of the
issues are in California as it relates to Section 8 housing.
Me, coming from northern California, for example just in
Oakland alone, we have 8,000 people on the waiting list for
Section 8 housing. Section 8 housing is such an important
instrument for affordable housing. I hate to see it going in
the opposite direction, which I think this bills takes it. I
don't think this will strengthen Section 8 and provide for more
adequate housing for those who are on waiting lists, but, in
fact, provide less housing for less individuals.
A couple of things I just wanted to ask, I guess Ms.
Thompson and Ms. Dowling. One is this new legislation allows
now for the State to contract with or to designate any agency,
whether it is a public housing authority or not, just any
agency, to act on behalf of the Feds in terms of providing
Section 8 housing. How do you see this in terms of, one, the
political ramifications of this, and, two, in terms of just the
discriminatory or the possible discriminatory ramifications of
allowing any agency that has not been involved with housing to
become part of this process in terms of administering the
program?
Quite frankly, this provision really does scare me to
death. Ms. Thompson, then Ms. Dowling, please.
Ms. Thompson. We think the flexibility that the legislation
gives States to work with partners, both existing PHAs and
other entities, is important. We know that the States would
impose standards, high standards, on who would qualify to do
that work. We believe that many PHAs currently operating, good
PHAs, and the vast majority of them are very effective, would
continue to be the States' partners in this program.
Ms. Lee. How do you know that, though?
Ms. Thompson. In talking with our State agencies, they
report to us that the vast majority of PHAs in their States are
very effective. They see themselves stepping more into the role
of HUD, hopefully, with a lot less regulation and bureaucracy,
than stepping into the role of the PHAs.
Ms. Lee. You don't see any politicizing of this as a
possibility?
Ms. Thompson. Certainly, there will probably be some PHAs
that States will prefer not to work with, based on their track
record, but we think, on the whole, the very effective network
will be preserved and the partnership between the States and
the local PHAs would be an effective one, much more effective.
Ms. Lee. Then why wouldn't we just use existing public
housing authorities, if they are so effective?
Ms. Thompson. I think it is important to give States the
ability to decide whether or not to work with them. There may
be entities in some localities that would be more effective
than the existing PHA. We all know there are some, though
limited in number, ineffective PHAs. So that flexibility is
important.
But, remember, what we are trying to do here is create a
program where States can come up with different requirements so
it is not a Washington-driven program. And HUD can't oversee a
program like that, 2,600 different programs around the country.
But, States can, and we think they can do it well. But, again,
I want to stress only with adequate resources and flexibility,
which this proposal does not provide.
Ms. Lee. What about standards and requirements?
Ms. Thompson. We think----
Ms. Lee. And nondiscrimination?
Ms. Thompson. We think certain standards are appropriate.
This legislation contains a lot of them already. If you were to
go in this direction, we would want to work closely with you to
determine what are the appropriate standards. Certainly Federal
standards, in terms of who is served under this program, would
be appropriate. We would just hope that they would not be
extensive, such as the requirements under the existing program.
Ms. Lee. Ms. Dowling, what do you think in terms of the
questions I asked?
Ms. Dowling. Well, first of all, I know straight off, I can
keep it simple, there is going to be a lot of discrimination
going on. That's why we had to implement a law within the State
of New Jersey to protect our voucher holders.
And as far as the other, there is no mechanism within any
State I know, other than the State of New Jersey. The residents
come out and participate. We will fight and, hopefully, it will
be done properly within the State of New Jersey, but that is
not going to happen across this country. You're going to have
the ``good old boy'' network getting back in charge, and
saying, you know what, we're going to take care of you if you
can get me some votes coming up out of your area.
So we are going to have even more discrimination. It's
going to be worse than what it ever was before. Everything we
fought to get here within the last 30 years with civil rights
is going to go right out the window, and I can't make it more
simple than that.
Ms. Lee. Thank you very much.
Finally, let me just say that I find it very ironic that
generally those pushing this, the Republicans especially, this
type of initiative, support local control. But in this instance
now, we are going to another form of State control, I guess,
and taking really away the local control aspect of Section 8.
For me, this is backwards and will hurt us in the long run.
Ms. Dowling. But you know what, I think great minds think
alike, because that was the first thing when I read the bill,
it was like, ``oh, you know what, this is going to break up a
lot of strongholds across this country.'' And that's exactly
what they're going to do with it.
Ms. Lee. Thank you.
Chairman Ney. Thank you. We appreciate the witnesses on the
panel, appreciate your testimony, and thank you for coming to
the U.S. Capitol.
We will move on to Panel II, and we will have a couple of
introductions.
Mr. R.E. ``Tuck'' Duncan, Chairman, Topeka Housing
Authority, Topeka, Kansas; Ms. Sandra Henriquez, Administrator,
Boston Housing Authority, Boston, Massachusetts, appearing on
behalf of Council of Large Public Housing Authorities (CLHPA);
Mr. Tino Hernandez, Chairman of the New York Housing Authority,
New York, New York; Mr. James Inglis, Executive Director,
Livonia Housing Commission, Livonia, Michigan, and Senior Vice
President, National Association of Housing and Redevelopment
Officials, Washington, DC; Mr. Kevin Marchman, Executive
Director, National Organization of African-Americans in
Housing, Washington, DC; and Mr. Neil Molloy, Executive
Director, St. Louis Housing Authority, St. Louis, Missouri,
appearing on behalf of Public housing Authorities Directors
Association (PHADA).
We now will defer to Mr. Ryun for an introduction of Mr.
Duncan.
Mr. Ryun. Well, first of all, I want to thank the Chairman
for allowing me the opportunity address this subcommittee. I am
grateful that you have scheduled a series of hearings on this
important subject and specifically applaud you for the balanced
set of witnesses you have selected.
I will be very brief, but I am extremely pleased to have
the opportunity to welcome a constituent of mine to the
subcommittee, Mr. Tuck Duncan. He is the Chairman of the Board
of Commissioners for the Topeka Housing Authority in my
district. Tuck truly is working on the front lines of this
issue we are discussing, and his commitment is not only
signified by his appearance here, but it shows as to how
significant he believes this is.
I believe that you will benefit tremendously from the
experience and expertise that Tuck has acquired from his
services in Topeka. This is an excellent opportunity to hear
from someone who knows, firsthand, the issues surrounding this
debate.
Tuck, thank you for being here, and thank you for the work
you do for everyone in Topeka, and I return my time to the
Chairman.
Chairman Ney. Mr. McCotter, for an introduction.
Mr. McCotter. Thank you, Mr. Chairman, and the entire
subcommittee for kindly allowing me to welcome and introduce
one of my constituents and one of your panelists this morning.
Since 1977, Mr. Jim Inglis has been the Executive Director
of the Livonia Housing Commission, which tirelessly and
effectively serves approximately 1,500 low and moderate-income
Livonia families through a wide range of State, local and
Federal programs. In fact, under Jim's leadership, the
Commission has been rated a high performer by HUD's Public
Housing and Section 8 Voucher Assessment Systems. Further, his
peers have recognized his outstanding achievements, and Jim
currently serves as Senior Vice President of the National
Association of Housing and Redevelopment Officials.
Jim, welcome, and thank you for appearing before this
committee to testify on the issue of affordable housing. And
good luck on the flight back, because I know you like to fly
about as much as I do. Northwest will be kind to you, and tell
my mother I am behaving out here.
Thank you, Mr. Chairman.
Chairman Ney. I thank our two members for their
introductions, and with that we will go straight into the
testimony, starting with Mr. Duncan.
STATEMENT OF ROBERT E. ``TUCK'' DUNCAN, CHAIRMAN, TOPEKA
HOUSING AUTHORITY, TOPEKA, KS
Mr. Duncan. Thank you, Mr. Chairman.
First, as a former miler and cross-country runner, I must
say I am humbled to have Congressman Ryun introduce me. It has
placed me in seventh heaven. And if my spouse of 29 years heard
that I said I was humbled, she would probably find that
amazing, but nonetheless.
Mr. Chairman and Ranking Member, I am greatly pleased to be
here this morning. The committee has already accepted our
remarks for part of its record, and I am not going to read my
remarks. I have a few notes and comments I would like to make,
and I would like to try to briefly respond to some issues that
have been raised by some of the questioning of the other
committee members.
As Congressman Ryun noted, I am a volunteer. I am one of
those uncompensated persons on the front line of the Board of
Commissioners throughout the country and those 2,600 housing
authorities, save one or two larger housing authorities. We
were a troubled agency in Topeka, Kansas, in 1999, as so
declared by HUD when I went on to the advisory board. We, for a
couple of years, worked to get ourselves extracted from under
the aegis of the city government and became an independent
governmental entity under our municipal housing laws in 2001,
and it has been my pleasure to serve as Chairman ever since.
The first thing I would note is that I think if there are
housing authorities out there that are in trouble, I think HUD,
quite candidly, has been slow to recognize them and, therefore,
slow to act. So if I have one recommendation it is, the first
thing is that the sooner we identify those local housing
authorities that are in difficult times, the sooner we get in
and try to provide them with assistance.
I congratulate HUD in working with us, and I guess I am one
of the few who perhaps feel that we have had some really great
Federal-local partnerships. But for the work of the TARC office
out of Cincinnati and the work of the Kansas City area office,
I am not sure we would be as good a housing authority as we are
today.
In my comments, I noted that when we started we had a
vacancy rate of almost 20 percent in public housing, and we
were only using 60 percent of our vouchers. So we were one of
those housing authorities that had under utilized vouchers and
you were recapturing money, and we were accruing those funds
and having to pay it back in the following year, because we
were getting the money, were spending it, et cetera. So what
did we do? Well, we simply applied some very lean management
principles of business in order to try to make ourselves
effective landlords in public housing and effective
administrators of a Section 8 program. Today, my vacancy rates
are less than 3 percent in public housing, and we have 100
percent utilization of our vouchers.
The point of that is, that by applying public sector
management principles, you can run an effective program. Now, I
was here at your first hearing, I happened to be in business, I
listened to the Secretary's comments. I guess my difference is
that I see housing as a national problem that requires national
solutions. I don't see how 50 different approaches for solving
this problem and 50 different slowly dwindling, patched-
together funding stream combinations are going to be an
improvement. I guess I have more faith that the Congress and
the Federal agencies can address these issues than perhaps some
others do.
I notice that Congress and HUD have already enacted a
number of reforms, such as the Quality Housing and Work
Assistance Act in 1998, the final rule received in 1999, the
notices received in 2000. I guess what I see is that merely
creating the States in the in between is creating a series of
50 or 60 mini-HUDs. We don't need a series of mini-HUDs. We
already have them; they are called the regional offices, and we
can work with the regional offices just as effectively as we
can with the State governments.
Additionally, I think you should, as Congress, give it some
time before the reforms take place. In essence, before we
reform the reforms, let's see if the first set of reforms are
having some impact. Like any investment, you don't expect your
profits or your return quickly. You try to take a long-term
approach. Based on HUD's own March 2000 Section 8 reports I
think there already is an awareness, both nationally and at the
front line, that we must improve performance. If we hear
nothing else today, we must improve performance if for no other
reason than the participants of this program deserve our best
efforts.
The question's been asked, how many are on waiting lists? I
checked this morning before I came in, and I have 1,525 on the
waiting list. I have about 1,100 vouchers. Part of the problems
that we are having are there are no incentives for landlords to
get involved in this program. If you want to have housing, you
have to have landlords under Section 8. And you want to have
quality, good neighborhoods, because one of the problems is
mobility; move people out of areas where the fair market rents
allow you to rent into areas where the fair markets otherwise
wouldn't allow you to rent. And we have difficulty there. That
is one of the goals. I don't see that the State is going to
know any more about that than I do.
Well, 5 minutes goes fast. I will be glad to respond to any
questions that the committee may have, and I have some specific
recommendations if you are so interested.
Thank you, Mr. Chairman.
Chairman Ney. I thank the witness. And, again, the
testimony can be submitted for the record that you have in
writing, without objection, and we will go on to the next
witness.
[The prepared statement of Robert E. Duncan can be found on
page 189 in the appendix.]
STATEMENT OF SANDRA HENRIQUEZ, ADMINISTRATOR, BOSTON HOUSING
AUTHORITY, BOSTON, MA, APPEARING ON BEHALF OF COUNCIL OF LARGE
PUBLIC HOUSING AUTHORITIES (CLHPA)
Ms. Henriquez. Good morning, Mr. Chairman, Ranking Member
Waters, and members of the subcommittee. My name is Sandra
Henriquez, and I am the Executive Director of the Boston
Housing Authority. Today, I am here representing the Council of
Large Public Housing Authorities, CLHPA, whose members manage
over 30 percent of the Nation's Section 8 tenant-based
assistance, primarily in large urban areas. Thank you for
allowing me to testify before you on the Section 8 Rental
Assistance Program and the administration's proposal to block
grant Section 8 rental vouchers to the States.
The Section 8 Rental Assistance Program is a great success
by any measure. Not only is there no evidence that block
granting voucher funds to States will improve the program,
there are indications that this proposal will undermine Section
8 success. National utilization rates have increased 6 percent
over the past year, from 89 percent to slightly now over 95
percent. If this trend continues, the average national lease-up
rate could reach 97 percent by July of this year. And in Boston
our success rate increased from 85 percent to its current 100
percent. This success indicates strongly that we will not
continue to see large amounts of unspent funds as in recent
years, and the program does not need significant reform.
Devolution to the States, however, will undermine this success.
Section 8 rental vouchers are an important resource for
families with extremely low incomes. It has been estimated that
less than a quarter of those eligible for vouchers and other
forms of low-income housing assistance actually receive any
form of aid. The remainder live in substandard housing, double-
up with family and friends, pay more than 50 percent of their
income for housing or are homeless. Section 8 rental vouchers
help solve this problem for nearly 2 million households.
Unfortunately, this proposal would result in the program's
serving fewer of the neediest families. The block grant
proposal includes changes in income-targeting requirements and
the evaluation factors for the program that will push States to
serve higher-income families and support the lowest quality
housing in poorest neighborhoods because this is all the
program will be able to afford.
The current legislative proposals would enable States to
divert voucher funds to State programs and possibly, depending
upon how HUD defines supporting activities, could enable States
to divert voucher funds to a range of nonhousing programs.
States block grants would also add an additional layer of
bureaucracy and cost to what is essentially a local program.
The block grant proposal erroneously argues that States
will be more responsive to local markets than HUD, even though
it is the local housing authorities that currently administer
the program and develop and maintain relationships with local
landlords. The cost of the additional layer of bureaucracy
cannot be ignored. The evolution of the Massachusetts State
Rental Housing Assistance Program, called the Mobile Rental
Voucher Program, is illustrative of my concern with block
granting the Section 8 voucher program. The administration's
budget calls for $100 million of Section 8 funds to be set
aside for start-up costs, which instead should be used to
support 15,000 vouchers for families in need.
The bill also adopts a most disastrous provision from the
2003 Omnibus Appropriations Bill that caps the amount of earned
administrative fees a public housing authority can maintain to
use for low-income housing purposes. The Boston Housing
Authority currently uses this earned administrative fee to fund
a variety of low-income housing programs, including a security
deposit program for homeless families, lease-up counselors who
assist homeless families in Boston to find housing; bridge
loans for HOPE VI and redevelopment activities to support
operating costs of public housing, since these funds have been
severely cut in recent years.
There is interconnectedness among these housing programs.
The flexibility to use this earned fee for a variety of low-
income housing program is crucial to maintaining a cost
effective, low-income housing strategy that meets local needs.
Limits and caps on this funding, coupled with splitting the fee
between two layers of bureaucracy, States and localities, will
make it even more difficult to administer the program
effectively.
And even though Section 8 is successful, we agree with the
administration that the program could be even better if HUD
were to provide localities with more regulatory flexibility to
meet the changing needs in the local real estate markets. HUD
already has the authority under the current law to make the
program less complicated, enabling local housing authorities to
use Section 8 funds more creatively, for things such as tenant
counseling enhanced security and deposits improvements to
ensure the quality of the Section 8 stock.
Another proposal that would help housing authorities better
use Section 8 would be greater flexibility regarding the
location of project-based units, the process of procuring
project-based developers, and the number of units that can
receive project-based subsidy in a building. All of those would
go a long way towards creating more housing choices for needy
families.
For all these reasons, CLPHA strongly encourages Congress
to reject the proposal to block grant Section 8 rental vouchers
to the States and, instead, please encourage HUD to grant more
flexibility to housing authorities administering the Section 8
program so that we can better address the local housing needs
in our communities. Thank you.
Chairman Ney. Thank the witness for her testimony.
[The prepared statement of Sandra Henriquez can be found on
page 203 in the appendix.]
Chairman Ney. Mr. Hernandez.
STATEMENT OF TINO HERNANDEZ, CHAIRMAN, NEW YORK CITY HOUSING
AUTHORITY, NEW YORK, NY
Mr. Hernandez. Chairman Ney, Ranking Member Waters, members
of the committee, I am Tino Hernandez, Chairman of the New York
City Housing Authority. On behalf of Mayor Michael R.
Bloomberg, thank you for this opportunity to testify about the
housing assistance for needy families block grant proposal.
New York City has much at stake in your deliberations. The
New York City Housing Authority is the largest public housing
agency in North America, providing housing and direct-rent
subsidies to 633,000 low- and moderate-income residents in the
five boroughs of New York City. Our conventional public housing
program comprises 345 developments, encompassing 2,702
buildings and 181,000 apartments which provide housing for
419,000 residents.
NYCHA's Section 8 program currently has 85,928 vouchers
under contract. New York City administers one of the Nation's
most extensive Section 8 programs. New York City is the
Nation's third largest, after the entire States of California
and Texas. In New York City total, we have approximately
105,000 Section 8 vouchers. NYCHA contracts 85,928 vouchers
serving 214,000 residents, and we have 27,694 participating
landlords. Our sister agency, Housing Preservation and
Development, oversees 19,000 vouchers, with 5,300 participating
landlords.
New York City's Section 8 program is among the most
successful in the United States. NYCHA's voucher utilization
rate is currently at 98 percent, and HPD is now at 100 percent.
Local control, at the local level, is the key reason for New
York City's success in administering the Section 8 program.
Housing conditions vary widely from city to city and localities
best understand their housing needs. No State agency can know a
local market as a city or locality can.
In New York City, we have been able to tailor the Section 8
programming to meet the unique needs of our real estate market.
We are able to set fair market rent levels by neighborhood,
acknowledging the varying rents within New York City
communities. We are able to be responsive to the needs of
landlords with the goal of gaining greater participation in the
Section 8 program. We have streamlined the processing of rent
payments to landlords. We have shortened the approval process
for Section 8 transfers and rentals. We have automated
inspections, introducing technology. We have automated rent
calculation systems, minimizing errors. And we pay holding fees
to landlords for apartments for processing time.
The scarcity of affordable housing in the New York City
market is dramatic. The New York City vacancy rate is among the
lowest in the country. Within the context of local control,
NYCHA has been able to work closely with Mayor Bloomberg and
its sister housing agencies to ensure that the City's
priorities are addressed. NYCHA's Section 8 program is an
integral part of the New York City's strategy to deal with
special populations, such as victims of domestic violence and
homeless families, and we do that on a regular basis.
New York City, working in collaboration with the Mayor's
office and also with HPD, has also unveiled an important major
housing program which will result in the production of 65,000
additional units of affordable housing over the next 4 years.
The Mayor's program will preserve existing housing stock,
produce additional housing, and identify development
opportunities, all of which are supported by the Section 8
program's role in preserving the existing housing stock.
Under the Section 8 block grant proposal, we have concluded
that we would be adding an unnecessary and costly third-party
administrative layer. HANF will not improve the delivery of
tenant-based housing assistance. It would only complicate it,
and the distribution of Section 8 vouchers will become more
problematic. We believe that this particular proposal could
disrupt the success of New York City's program, and we strongly
believe that the Section 8 program should be administered at a
local level.
Thank you.
Chairman Ney. I thank the witness.
[The prepared statement of Tino Hernandez can be found on
page 210 in the appendix.]
Chairman Ney. We will move on now to Mr. Inglis.
STATEMENT OF JAMES M. INGLIS, EXECUTIVE DIRECTOR, LIVONIA
HOUSING COMMISSION, LIVONIA, MI, AND SENIOR VICE PRESIDENT,
NATIONAL ASSOCIATION OF HOUSING AND REDEVELOPMENT OFFICIALS,
WASHINGTON, DC
Mr. Inglis. Good morning, and thank you for the opportunity
to testify before the committee, Mr. Chairman and Ranking
Member Waters. It is a pleasure to be before the committee. My
name is Jim Inglis, and I am Executive Director of the Livonia,
Michigan Housing Commission.
The Livonia Housing Commission assists approximately 1,500
families with affordable housing and community development
programs. I am here today representing the National Association
of Housing Redevelopment Officials, and I currently serve as
their Senior Vice President. NAHRO is the oldest housing
community development organization in the United States, having
over 19,000 members.
There are several concerns I have regarding the HANF
proposal which we would like to outline today. First of all,
the funding shortfalls. The major concern in this program is
that in the out years, the next 5 years, housing assistance
payments will be reduced by $1.1 billion to $1.8 billion over
the next 5 years. The reason is that the Consumer Price Index
rate of inflation and HUD's automatic adjustment factors will
not keep up with rents increasing in the Section 8 market. In
addition, the administrative fees are proposed to be capped at
10 percent of the housing assistance payments. It is our
concern that would represent a 13 percent cut for most housing
agencies across the country, thereby reducing their ability to
provide needed housing assistance and counseling to Section 8
clients. That would reduce the landlord outreach, housing
counseling, and support for local residents.
What would happen if these funding shortfalls take place in
the funding out years is that the States will be faced with
several very serious questions. First of all, how would they
increase rent burdens or reduce the value of the voucher to
make sure they are assisting a sufficient number of families?
Two, will they use State revenue to make up that shortfall? I
doubt it, given the situation now in most States. Or, three,
which is likely the most palatable option for the States, would
be to reduce assistance to low- and moderate-income families
under the Section 8 program, which these charts provide
information on.
The issue of cost containment has always been one Congress
has been concerned about, and one thing that should be
acknowledged is in the 2003 appropriations bill, we now have a
way of making sure we reflect the actual cost of housing and
the number of units that are leased in the market based on
quarterly information we are providing to the Department of
Housing and Urban Development. This has, in fact, eliminated
the large recapture issue that Congress was concerned about in
the past. So in terms of cost containment, I applaud Congress
for that work they did in the appropriations bill to now
accurately reflect the cost to administer the program.
There is one other concern we have, relative to
grandfathering, if it goes to the States. The States are
required to administer the program under the current rules.
However, there are provisions within HANF that say if there is
insufficient funds to operate the program, there is a loophole
for the State to reduce that assistance, which no longer
provides a safety net for residents but basically a trapdoor.
These residents will no longer be able to receive assistance
under the program.
The current Section 8 Housing Choice Voucher program is
highly successful, and I think that is one point that needs to
be made. The Millennial Housing Commission Report, mandated by
Congress, indicates the program is flexible, cost-effective and
successful. Housing choice voucher leasing rates have continued
to increase. In the year 2000, it was 92 percent, year 2002 it
went up to 94, and HUD's own projection is by the year 2004, it
will go up to 96 percent, and the charts being put up reflect
this. The concern we have is that 96 percent is an excellent
utilization rate and leasing rate, and only in Washington does
HUD determine that to be insufficient or a failure by the local
housing agencies. Again, this is a highly successful rate under
the voucher program.
Basically, the program is already a block grant. It is a
block grant to the local unit of government, the lowest local
unit of government, which really is the most practical
administrative agency within the State. The local unit of
government is involved in local planning. They have
relationships with landlords, local decision-making, local
accountability, they can actually address local issues relative
to the market, and so really we have a block grant program that
goes to the local unit of government which is most effective.
The under utilization issue is really not an issue. As you
can see, since the initiation of QHWRA, leasing rates have
continued to go up along with voucher utilization and the
number of families being served in the program. Under HANF, we
expect these numbers will continue to go down in the future.
Flexibility? The members of the committee have asked about
flexibility. We believe HUD has the tools now to provide
regulatory relief to smaller agencies. There was an August 2002
interim proposed rule that has not been released by the
Department, we encourage them to do that for smaller agencies.
Also, complete the project-based voucher rule, which has been
recently withdrawn. Timely reallocation of unused vouchers.
There are some agencies that can't use vouchers, and if they
would timely reallocate those to other agencies, that would
greatly assist the program. And, lastly, give us the
flexibility to work within a changing market condition, to
adjust fair market rents to make the program work.
Again, the biggest recommendation that I have from my
agency is we have 752 vouchers, we have a waiting list of 6,000
people, and there is just not enough supply for the demand
people have for the Section 8 Housing Choice Voucher program.
So I encourage more resources that would go to the local
communities to assist in the program.
Thank you very much.
Chairman Ney. I thank the witness for his testimony.
[The prepared statement of James M. Inglis can be found on
page 216 in the appendix.]
Chairman Ney. The next witness.
STATEMENT OF KEVIN MARCHMAN, EXECUTIVE DIRECTOR, NATIONAL
ORGANIZATION OF AFRICAN AMERICANS IN HOUSING, WASHINGTON, DC
Mr. Marchman. Chairman Ney, Ranking Member Waters, my name
is Kevin Marchman, and I am the Executive Director of the
National Organization of African-Americans in Housing.
This morning, we have heard from voucher users, local
program administrators, industry leaders, apartment owners,
resident leaders. All have said this proposal is not needed and
perhaps unwise. All have said improvements need to be made. HUD
agrees. I suggest over a year's time that the administration
convene a representative group, as they have recently done with
this HOPE VI Program, and discuss and suggest needed changes
and improvements to the program.
The Section 8 Voucher Program is the bedrock of the
Nation's affordable housing program, not the States'. Each
administration seeks to make improvements to this program, to
make it more flexible, more responsible. Indeed, when I was
responsible for the administration of this program, we
preliminarily explored the option or the possibility of block
granting this program. We rejected it for some of the same
reasons you have heard this morning. Again, I believe that HUD
is earnest in wanting to improve the Section 8 Voucher Program.
I believe the way to do that is to convene a group, perhaps a
Secretary's task force, for the improvement of the Section 8
Voucher Program and report back to this committee in a year's
time with administrative solutions.
Thank you very much.
Chairman Ney. I thank the gentleman for his testimony.
[The prepared statement of Kevin Marchman can be found on
page 239 in the appendix.]
Chairman Ney. Mr. Molloy.
STATEMENT OF NEIL MOLLOY, EXECUTIVE DIRECTOR, ST. LOUIS COUNTY
HOUSING AUTHORITY, ST. LOUIS, MO, APPEARING ON BEHALF OF PUBLIC
HOUSING AUTHORITIES DIRECTORS ASSOCIATION (PHADA)
Mr. Molloy. Thank you, Mr. Chairman, my name is Neil
Molloy. I am the Executive Director of the St. Louis County,
Missouri Housing Authority.
Today I am representing the Public Housing Authority
Directors Association, PHADA. PHADA represents over 1,900 men
and women who serve as the executive directors of America's
local housing authorities. We wish to go on record, and I will
try not to repeat what everybody else has said, and that will
make it a little bit difficult, but first you heard from a
former member of this body, Representative Susan Molinari of
the Millennial Housing Commission that the Housing Choice
Voucher program is a success, and it is the linchpin for low-
income families in the private housing market. The second
recommendation from the Millennial Housing Commission asked for
more funds on an annual basis. That is what is really needed to
make the program work.
I want to talk specifically about one of the proposals in
HANF. PHADA represents many of the smaller agencies that run
programs of 250 units or less in the voucher program. There are
some assumptions in this proposal about cost. These programs
represent about 7 percent of the total program but they are
very critical to the local market in these small towns and
rural America. These programs were specifically designed to
deal with many problems with senior housing, people who are on
fixed incomes, receive small pensions or small Social Security
payments. And if the local rural community and that housing
authority did not have these vouchers, you would have a
terrible housing crisis in these communities. HUD should just
deregulate the small housing authorities, stop calling them a
burden, because they are not, they are a very valuable asset to
the small towns of America.
As a former member of the Missouri General Assembly, with
nine years of service on the Appropriations Committee, I served
with Representative Clay, I have a little experience dealing
with State bureaucracies and their capacity. In Jefferson City,
bureaucrats like to treat legislators like mushrooms, keep them
in the dark and feed them lots of manure. I imagine it's the
same here. I think this proposal for HANF came out of a
mushroom farm in the basement of HUD instead of the tenth
floor. But what really scares me about HANF is the absolute
chaos it would create in the program. Can you imagine having 50
different policies for a national housing program? This program
has developed incrementally over three decades, and it works.
It needs some fine-tuning, some minor adjustment, but the
program really does work.
In his testimony before this committee, Secretary Liu 15
essentially told you that HUD is going to spend $15 million
a year to continue the program, even if they switch it to the
States, and they are not going to cut any employees. I think
this is just creating a new level of bureaucracy and
administration that is not needed, and I think it is a really
poor use of taxpayers' money. As previously mentioned, the $100
million to ramp up the States could house almost 16,000
families for a year. That would be, in my opinion, a sin and a
shame.
Finally, if the program is a block grant, it States
specifically in Section 6(d)(2) that if there is not enough
money, the States will have to make their best efforts to fund
all the current voucher holders. Well, in my State, Missouri,
the General Assembly is meeting today to cut teachers, to cut
State employees, to cut social programs, health programs,
education programs. They do not have the capacity. What will
happen if this grant goes forward, if HANF goes forward, States
will use the money like they have used the tobacco money, they
will substitute it for declining general revenues whenever they
have a problem. Housing is not the first priority in the State
of Missouri, and I don't believe it is the first priority in
any of the States.
Finally, HANF will mean a real rent increase for residents.
What I am talking about is when you go from adjusted income to
gross income to base your rent on and you go from $25 to a
minimum of $50, that affects the people who are on the fixed
incomes and the very lowest income, and it also affects people
who went to work. Because a TANF check or a Social Security
check is gross income. A paycheck is not gross income, it's net
income. So we are going to set our rents on the gross income,
which is unfair to these working families.
Finally, if the program is not broken, please don't break
it. When HUD came to you and said, we can't regulate this
program, it's too complicated, it reminds me of the old cartoon
character Pogo, and his famous words, ``We have met the enemy,
and it is us.'' when this body, in 1998, with the former
Chairman of the committee, Representative Lazio, passed QHWRA,
the preamble it said the purpose of the bill was to deregulate
well-run housing authorities. Quite frankly, that has not
occurred. It should be the responsibility of this committee to
ensure that HUD does that.
We know how to do the programs. If we could make things a
little simpler, a little less complicated, the program would
work fine, but it definitely needs more appropriations. We have
6,000 vouchers, we are at 102 percent utilization and we have
6,000 people currently on our waiting list. And we only open up
our waiting list about every 2-1/2 years to allow people to
come on to the list on a lottery system.
So there is a great demand out there, and it is time for us
to do something. Thank you.
[The prepared statement of Neil Molloy can be found on page
243 in the appendix.]
Chairman Ney. I want to thank the witnesses.
I am just going to make one statement, and then I will
yield to members who will want to ask questions, and we have a
time factor here.
I am torn on this now. At one point in time, I think
everybody was running to the Capitol and saying it's broke, the
money is being taken back by the Congress, and we have to do
something about it. Now, all of a sudden the money is not
necessarily brought back through the appropriations process.
But that doesn't mean that some things aren't, I don't want to
say maybe two broken legs, but maybe a broken arm along the
line.
I apologize for having to come in and out, I had two
commitments, but I have the testimony, and some of the things
I'm interested in hearing are what you think are some problems.
I will get away from the word broke, but there are some
problems. I think at the end of the day, if individuals, for
whatever reasons, the States, suspicion of the States, whether
it will work or not, whether a State will opt in, the housing
authorities go away and all of a sudden the States say, here,
take it back, and now, you recreate it. I can give you a whole
bunch of scenarios that are alarming. On the other hand, HUD
itself has pointed out that monies were returned, they weren't
used. Now, because of an act of Congress they aren't returned,
but does that mean the system doesn't need some type of repair?
I hope as this progresses, that advocacy groups, the
housing authorities, tenants, the large housing authorities,
the small, the medium-sized, the rural, the urban can get
together. And if there are admitted problems out there, could
come together with some consensus of how those are repaired or
fixed. So maybe the patient doesn't need open heart surgery,
but maybe you need to do some exploratory. So I understand
where you are all coming from, but I hope down the road a lot
of ideas can be jelled around to see what happens at the end of
the day.
So I appreciate your testimony, and with that, I will defer
to the Ranking Member, Ms. Waters.
Ms. Waters. Thank you very much, Mr. Chairman.
We were just talking about what we could possibly do to
offer some alternatives to this block granting. I am opposed to
it certainly, but I think as we move to fight this idea, we do
have to come up with a few things that we could do.
Let me just raise these questions. First of all, I think
there needs to be more money. I personally would like to see
money to help offset the capital cost, particularly small
landlords with certain number of units, et cetera. It seems to
me that when you have to put on a new roof or do some capital
repairs, that perhaps we should try and offset those costs in
some way. I don't know.
Someone mentioned here today, the question about the
inspections process and some other things. I think we have to
keep in mind that we cannot and we should not have slum
properties, and we have to make sure that they are inhabitable,
they are livable, they are a good environment to raise children
and families. Is there anything in this area that you consider
unreasonable, that could be changed or that could be looked at
in a different way as it relates to the inspection process?
I don't know what is required after each family moves out,
what the landlord is required to do. Is that reasonable? Are
there complaints of any of the landlords relative to the
amounts of monies that they are mandated to spend? I guess that
would be for so-called rehab, upkeep, et cetera? Is there any
room there for discussion?
Mr. Inglis. Yes, through the HOME program there is a rental
rehabilitation, where they can take low-interest loans to
assist in the rehabilitation of the property so we can
facilitate working with landlords in that area. We have done a
lot of work with our landlords on lead-based paint issues,
asbestos issues, and we continue to work with our landlords on
local housing inspection ordinance issues. So there are a lot
of different programs that we can work with our landlords to
mitigate some of the issues relative to housing quality.
I concur, housing quality is the key to the program. We
want to make sure we are housing people in safe and affordable
housing, but we need to make sure we work with our landlords,
we have good partnerships with our landlords. We meet with them
on a regular basis to make sure we understand their needs and
what we can do for them. And I believe there are Federal
programs at our housing agency, because we are a housing and
community development program.
Ms. Waters. Do cities set aside any CDBG or HOME or any of
those monies for the upkeep of any of these properties? I don't
even know if that is appropriate.
Mr. Inglis. I don't think the Department has set aside, but
we, as a local agency, in putting together our consolidated
plan or our agency plan could do so in making sure that we look
at these resources and make some programs available for the
local landlords, especially the smaller landlords, as you are
concerned with.
Ms. Waters. Any other thoughts? Thank you.
Ms. Henriquez. If I might. In Boston, we have been talking
with other housing agencies who also administer Section 8
vouchers when we do orientations with our landlords about what
is expected, what are the housing quality standards they have
to hit, we then array for them programs they might go after if
they want to get into the program but need a little help on the
capital side. And, in addition, we have been working with the
States to try to pilot a program to provide an incentive for
particularly smaller landlords to come into the program.
For instance, a repair that needs to be done to a hot water
heater. Is that worth a $300 advance? Is there something we can
do in the short-term that gets them over the hump to meet the
quality inspection they have to do through? So we are looking
at those kinds of incentives to help people come into the
program who might otherwise be on the fence?
Mr. Molloy. Some of the comments from the gentleman from
the Multifamily Council about streamlining the process could
work. You have to be careful on how it is done. You have to
make sure the quality is there in the inspection process.
One of the other problems that comes up, we are a
jurisdiction, in St. Louis County, with 93 municipalities, and
we have Section 8 vouchers all over the county. A number of the
municipalities have local occupancy permits and their own
inspection programs. So sometimes it becomes onerous for
landlords at that level to go through our inspection and a
municipal inspection. And if something is not fixed, and
depending on the severity of the item, they have 24 hours to
fix emergency items, or up to a further period of time to fix
nonemergency items. We could do that.
I think the Millennial Housing Commission also had some
recommendations.
Ms. Waters. Could we look at memorandums of understanding
where you have several jurisdictions that have various laws
relative to inspections, upkeep, et cetera, so that if you get
memorandums of understanding, one, hopefully ours, HUD could be
the lead agency to determine?
Mr. Molloy. I think it would be very difficult for HUD to
negotiate with the local communities because most of them are
very suspicious of HUD for a lot of good reasons. But I believe
you could probably do that on a local area. Maybe try to have
joint inspection programs, try to coordinate that. But it does
become a hassle for the landlords, and we try to speed that
process up as much as we can.
Ms. Waters. Well, that may be an area that we could take a
look at.
Let me tell you what my concerns are. With the housing
market being what it is, and landlords able to get market rents
for their properties, I don't know why many of them are going
to want to be in Section 8 at the rate that the market is
performing. So I want to do something to give a little bit of
an incentive.
So if each of you would think about that and feed that
information back to us, I would be very grateful. Thank you.
Chairman Ney. Thank you.
Ms. Velazquez.
Ms. Velazquez. Thank you, Mr. Chairman. I would like to
take this opportunity to welcome my Chairman from the New York
City Housing Authority. Mr. Chairman, I am just really amazed
to see that here in Congress some people are always advocating
about flexibility and local control, but--and they have been
good at staying on message. But it seems that on this
legislation they lost that page.
I would like to ask the Chairman of the New York City
Housing Authority, were you consulted when this legislation was
being put together?
Mr. Hernandez. No.
Ms. Velazquez. So they didn't consult with any of the
people that are running this local authority?
Mr. Hernandez. I always have to check with my staff. I was
not personally consulted.
Ms. Velazquez. But we continually say that you people at
the local level, you know best what works and what doesn't
work. But when it comes to drafting legislation that supposedly
makes the reforms that are needed for Section 8, we do not
consult with you.
So let me consult with you, Mr. Chairman. The bill now
pending before the committee will limit the fee to 10 percent
of an agency's allocation. Can you tell me what uses the city
puts to the fee, whether you believe a 10 percent ceiling on
the fee is appropriate and whether you favor greater
flexibility regarding the use of the fee by the local agency?
Mr. Hernandez. We have been able to use the administrative
fee really for a variety of purposes. One is that we have had--
since I have been Chairman, one of the things that we have done
is that we have put a lot of emphasis on the Section 8 program
because we believe it is probably one of the best vehicles to
be able to provide housing for low- and moderate-income New
Yorkers.
So through the fees, we have been able to do all of the
improvements that I have articulated earlier. We were able to--
because I thought that it was important to really deal
internally to create efficiencies that would--as business
practices, pay landlords on time, to be able to facilitate the
inspections, we moved to handheld computers so that we would be
able to do inspections in a very timely or expeditious basis.
We have used that.
In New York City we have always used administrative fees
for other housing purposes. They have been tied to being able
to round off a financial package for new developments or
substantial rehab so that we would be able to put project-based
Section 8 certificates within new housing as a way of expanding
affordable housing in New York City.
So we think it is a key component of the program.
Ms. Velazquez. Would any of the other witnesses like to
comment?
Mr. Duncan. Briefly, if you cap fees on reserves, all you
are going to do is make people spend money that they would not
otherwise spend, because they are not going to be able to
accumulate funds for some other, greater purpose.
I expect the fees with 85,000 vouchers in New York is
considerably more than the fees for 1,200 vouchers in Topeka,
Kansas. It is going to take me a little more time to collect
those reserves. So capping is really contrary to any type of
entrepreneurship that you want to put into the program.
Ms. Velazquez. Thank you.
Mr. Duncan, in your testimony you said that HUD already has
within its existent framework the ability to improve Section 8
through regulatory reform.
Given this, do you believe any legislative changes are
necessary at this time?
Mr. Duncan. Well, one--in the real world, I am an attorney.
One of the things I do is I represent wholesalers, so I am
familiar with attempting to try to have business practices that
reduce the number of points of contact. I understand HUD's
desire to want to limit the number of points of contact that it
has when it is dealing with housing authorities that have less
than 250 vouchers.
But I don't think the State is the way to do it. I do think
Congress should consider, maybe there is a de minimis level of
vouchers, which in light of, if you looked at my testimony, I
mean, you have got to have a law library to know what the heck
to do to run these programs.
So there may be cooperatives between small housing
authorities or contracting with other housing authorities that
may be more effective and reduce the number of points of
contact. But I suspect that Congress is going to have to set
that limitation, whether that is 50, 100 or 249, I don't know.
But when I was on the school board in Topeka, Kansas we had
interlocal agreements with other school boards to operate a vo-
tech school. We couldn't have done it on our own, but with
eight or nine other school boards, we were able to operate a
vo-tech school. I think that is something that helps accomplish
what HUD wants, reducing points of contact, makes things more
efficient and yet keeps us on a local level with knowing local
market conditions.
Mr. Molloy. Thank you.
In Missouri, one of our local housing authorities has
gotten affected by this new rule and the cap on admin fees.
They are over the 105 percent level, so they won't earn any
fees. They have been saving up money for 25 years. They are
planning to use the money to build a homeless shelter in
Joplin, Missouri. Then the city would take that area where the
old homeless shelter was, redevelop it for economic
development, they would have a new shelter, you would have
economic development in the city. But this rule that HUD
imposed has really sort of put that on hold.
I think if you look at other Federal programs, and when
they deal with indirect costs, a lot of Federal programs have
indirect costs that are way in excess of 15 percent, and they
don't have provisions for recapturing funds or requiring people
to administer programs and not get paid for it. I think that
provision that was put in the law last year was a mistake. It
needs to be repealed.
We have used admin funds to build community centers in
communities that have Section 8 tenants and public housing
tenants, to provide education programs and sports programs.
Housing authorities have used the money wisely. If they don't,
there should be a local responsibility, and the appointing
authority can appoint a new board and, you know, change the
management.
Chairman Ney. The time has expired.
Mr. Watt.
Mr. Watt. Thank you, Mr. Chairman.
Mr. Marchman, you made my ears perk up when you said that
HUD has a working group working on revising HOPE VI.
Mr. Marchman. Yes.
Mr. Watt. That is news to me. I asked the HUD officials
about it when they came over to testify, what they were doing
to look at HOPE VI. The only thing I was aware of was that the
President has recommended terminating HOPE VI.
Tell me what--I know this has nothing to do with Section 8,
but do you know something I don't know?
Mr. Marchman. I can't say that. But, I think it is 2 weeks
ago or so, the assistant secretary convened a group of
individuals to talk about the HOPE VI program and/or
alternatives to the program.
It came as a surprise to many, inasmuch as public housing
residents weren't invited or participated or were involved in
that decision-making; that, in large part, the industry groups
did not know. And while I don't speak for a----
Mr. Watt. Who was on the working group?
Mr. Marchman. I can't tell you. I believe that there were
individuals representing developers, people representing people
in the tax credit markets, people representing, I believe,
housing authorities, or at least one.
But, I believe--and as I said, I don't speak for HUD any
longer--I think it was their attempt to be responsive to
Congress in terms of looking at the HOPE VI program and
alternatives to the program.
And my suggestion and my testimony is, a more----
Mr. Watt. I understood what you were saying. You were
saying a working group for Section 8 vouchers would be
appropriate too. So maybe they will follow that recommendation
since we recommended a working group about 6 months ago for
HOPE VI. So maybe they listen to these things.
Mr. Hernandez, one of the things that Mr. Martinez
testified--or maybe it wasn't him, whoever came over to testify
about this block grant approach on Section 8--was that it was
going to give more flexibility to the States to contract with
different providers to administer the Section 8 voucher
program.
Did I understand you to say that New York City has two
different providers, your department and something called
Housing Preservation, and you have some Section 8 vouchers and
they have some Section 8 vouchers?
Mr. Hernandez. Correct. We have two housing agencies, the
New York City Housing Authority, which is my agency, which is
an agency that essentially manages all of the property of
conventional public housing and, in addition to that, has a
Section 8 program of over 85,000 vouchers.
We have another agency, our sister agency, the Department
of Housing Preservation and Development, which is really the
development arm of New York City. They handle a lot of the
affordable housing development and they also have a program, a
Section 8 program.
We work collaboratively. The HPD tends to have an approach
with Section 8----
Mr. Watt. Well, let me--I just want to be clear on what you
said, to clarify. So HUD is now contracting with two separate
agencies in New York City?
Mr. Hernandez. Correct.
Mr. Watt. Would there be any value, in your estimation,
to--well, first of all, before I get to that, I assume they
have some flexibility now to do that; otherwise they wouldn't
be able to do that?
Mr. Hernandez. Sorry? That HUD----
Mr. Watt. That HUD has flexibility to contract with
different agencies to administer the Section 8 program now?
Mr. Hernandez. Correct.
Mr. Watt. Would there be value, in your estimation, to
having the State come in and have you and Housing Preservation
start to bid against each other to run the Section 8 voucher
program, so that one agency in New York would do it all?
Mr. Hernandez. Congressman, I would essentially be echoing
most of the concerns that have been expressed here already.
It has already been indicated that in New York State, for
instance, the State is facing a major budget deficit. The
language is uncertain about how the State would formulate this
program. We would be concerned that resources could be diverted
for other purposes, as well as that Section 8 assistance could
be diverted within the State.
Moreover, it is our contention that it is really the
locality of the City of New York that has the relationships
with the landlords and that understands really the marketing
trends within New York City.
Mr. Watt. My time is about up. I want to ask one more
question. We have asked two panels now. I haven't heard anybody
say they favor this. Even the State housing authority agency
organization on the last panel said that they were indifferent
about it. I guess they would be the beneficiaries of State
administration. And they didn't even advocate.
Is there anybody on this panel who supports this?
Mr. Hernandez. I would say that--as my esteemed colleague
indicated, I do believe that HUD may have some legitimate
concerns that need to be looked at, points of contact, and the
regulatory environment, which I think, by the way, they can
reform without this bill.
Mr. Watt. How do you administer a Section 8 program
anywhere without points of contact? I mean, you have got to
have points of contact. Someone is going to have to have points
of contact with them, either the State has got to have points
of contact with them----
Mr. Duncan. Congressman, you can streamline the number of
points of contact.
Mr. Watt.--as between HUD and the number of points of
contact. But somebody down the line is still going to have
points of contact; otherwise, you are not going to have any
supervision.
Mr. Duncan. You would have it. As long as you end up with a
cooperative, or somebody who is close to the customer. Let us
not forget, it is the customer, the tenant, the working poor,
that we need to be most concerned about; start there and work
back up the line. And once we do that, then we can have an
effective, streamlined process by which to get these funds into
place.
Mr. Hernandez. For New York's City's purposes, we have an
effective, viable model being the point of contact for HUD in
New York City.
Mr. Watt. Thank you.
Mr. Miller of California. [Presiding.] Mr. Davis.
Mr. Davis. Thank you, Mr. Chairman. Let me welcome all of
you all, and I associate myself with a lot of the comments that
frankly all of you have made, and the panel before you.
One of you made the observation that if the program is not
broke, don't break it. It appears that this program is joining
the long list of Head Start, Medicaid, and several other
programs, including HOPE VI, that don't appear to be broken in
a lot of ways, but that the administration wants to reexamine.
Let me focus on one specific problem that some of us are
concerned about. It is what is going to happen to the money
behind Section 8 if it is block-granted. Most of us have the
old experience from our political science classes that when you
block-grant a program, that typically the funding does not keep
pace with, in this instance, rental costs, for example.
Can any of you address that? What do you expect to be the
financial consequences in terms of a lot of States, in that
they have this new burden thrust upon them, given the fiscal
crisis a lot of States are facing now.
Ms. Henriquez. If I might, I would like to talk a bit about
what happened in Massachusetts. About 20 or so years ago the
State of Massachusetts had the foresight, and should be
commended for starting its own State-like Section 8 program.
And, it is now called, the Mobile Rental Voucher Program.
And at the time, it was keeping pace with the marketplace,
vouchers were being used by residents; and over time, as the
pressures on the State budget were beginning to catch up and
the rental market in Boston, particularly, was heating up,
those vouchers then no longer kept pace with their fair market
rent.
The State then tried to contain the costs in a number of
ways. First, they changed eligibility so that higher-income
people could get vouchers, therefore, diminishing the amount of
subsidy hit to the State. When that didn't work, because the
rental market kept heating up and heating up, the State then
decided that they would charge--would increase the percent of
one's income one paid for rent from 30 percent to 35 percent.
And so numbers of people were then leaving the program.
When that didn't contain costs, they then flatly decided to cap
the program, so there was no growth opportunity at all. As real
estate prices began to continue to escalate, more and more
landlords were opting out of the program because they couldn't
get the rents they wanted. Landlords wanted to help, they
wanted these stable, ongoing incomes that came in from the
program, but they could clearly make more in the marketplace or
make more in the Section 8 program.
My agency went from 604 such vouchers several years ago,
now down to just a little over 250 vouchers, or a decrease of
62 percent in the number of families that I can serve under
that program.
Massachusetts now faces a projected $3 billion deficit. I
hear 38 billion for California, so I think--but it is all
relative; it is all local. So 3 billion for us is huge in the
State. I am fearful that with block-granting Section 8 to
Massachusetts, or to any State having the same sorts of hot
real estate markets and deficit spending in their budgets, this
program will also then die. It will help less and less people
because it will not keep pace.
If I could just add one more thing--I am sorry. Fundamental
to all of this is that there has always been historically a
commitment on the part of the Federal Government for housing
programs, especially to support low- and moderate-income
families and individuals. We continue to take a walk from that
Federal commitment on a moral and ethical level.
Mr. Davis. One of the things that I am hearing from all of
you is that there is no significant support in the housing
community for this kind of wholesale change in Section 8. A lot
of you who work on these programs on the ground say there is no
empirical need to make this kind of a wholesale change.
So it would seem fairly clear to me that what the
administration is doing in some sense is trying to undercut the
attractiveness of the program and trying to really lessen the
political commitment to the program.
All of you kind of agree with that, that it is the
underlying agenda? Nod your heads to that.
Mr. Duncan. I can't read that into it. I would assume that
there is some effort to try to streamline and become more
efficient and apply some more efficient principles. I think it
is misleading, though, to use the term HANF, because it seems
to imply something closely akin to TANF, and only 13 percent of
my voucher participants are welfare recipients.
So this is not a welfare program and should not be viewed
as such. It is a program to assist working poor, elderly who
are on fixed incomes, and SSI persons, and particularly in my
community, when we close State hospitals, persons who are
mentally challenged that have no place to live.
Mr. Davis. Mr. Chairman, if you would indulge me for 30
seconds, I do want to pick up one area and get Mr. Inglis to
focus on this.
One of the things that I have noticed with the Section 8
program is that it is disproportionately concentrated in urban
areas, and that is a matter of common sense, I suppose, to some
extent because of the lack of housing stock in rural areas.
But can you talk for a second about what strategies might
exist to increase the rural penetration of Section 8?
Mr. Inglis. I think the major concern with going to the
State is how are the resources going to be allocated in the
future? Are they going to get to the rural areas? Are they
going to get to the communities where the local housing
authority is the main housing provider in the area?
They are the one-stop shopping agency for public housing
and for Section 8, and they have a variety of housing tools to
address the needs in rural communities.
It is a concern of ours that with this allocation,
reallocation of funding, some of the States may play politics
with the reallocation, and they may end up going more to urban
areas and not to some of the suburban and rural communities
that have a high amount of need.
So your point is well taken, in that we are very concerned;
especially, we believe that the rural agencies are probably
going to suffer most with this proposal.
Mr. Davis. Let's assume a current baseline for a minute.
Let's say for whatever reason we keep the program exactly as it
is. What can be done within the context of the current program
to increase the rural penetration?
Mr. Inglis. I think the basic thing is getting back to the
flexibility, using the tools that were provided by the Quality
Housing and Work Responsibility Act of 1998 and implementing
those.
Project basing is one. We still do not have a final rule on
project basing.
We also do not have a deregulation final rule on small- and
medium-sized agencies, which was proposed in August of 2002,
and had very strong support by the Department. They reduced the
comment period to 30 days because they wanted to get it on the
street. It is still not on the street today. So there is no
deregulation.
Mr. Miller of California. The time has expired. Thank you.
Mr. Clay.
Mr. Clay. Thank you, Mr. Chairman. Let me also thank all of
the witnesses for being here to help us do our work. I really
wish that Secretary Martinez was here; he was here a couple of
months ago. And perhaps someone from HUD is here; they can
report back as far as the transcripts of this testimony, and
let him know that his testimony has been refuted.
He told us a couple of months ago that the reasoning behind
turning over Section 8 voucher programs to the States is
because of local housing authorities' deficiencies and
inefficiencies in administering the programs. He said--claims
that now almost half of the States administer Section 8 through
vouchers. And so I find this testimony in contrast to his.
Let me ask, Mr. Molloy, who also hails from Missouri and
who--we served together in the State legislature in Jefferson
City. You made an interesting analogy of mushrooms and
politicians. Can you go over that again for me?
Mr. Molloy. Well, I think most members of this committee
have served in legislative bodies or in local government and
have had that experience of a lack of information to make a
policy decision.
And I think this current HUD administration has not been
forthright with sharing that information with policymakers on a
timely level. You need that information to make the correct
decisions.
And I think HUD needs to share that information with this
committee.
Mr. Clay. With both of us having served in Jefferson City,
how would you envision this program--this block grant being
administered out of Jefferson City, the State capital of
Missouri? What agency would get it? How would decisions be
made? How do you envision that?
Mr. Molloy. Most likely it would be the Missouri Housing
Development Commission, which has headquarters in Kansas City.
They do the tax credit program.
To give you an example, about 4 or 5 years ago, they
administered a Tenant-based Section 8 program. They gave it to
local housing authorities, because they weren't doing an
adequate job on their lease-up rates.
So they turned the Tenant-based program over to the local
housing authorities. I think it would be chaos. I appreciate
the competency of our local State housing finance agency, but I
still think changing this program from the current Federal
model to a State model would be an absolute disaster.
I think we would lose thousands of landlords if they had
the prospect of having 50 different sets of rules, particularly
the landlords that operate in a multi-State environment. It
would just drive them absolutely crazy.
And I think it would also drive the tenants nuts with
coming up with a new set of rules, and then having this overlap
period of 6 years where you have the existing current voucher
program and this new voucher program, having two different sets
of rules.
We have gone through that before, when we switched the
certificate program to the voucher program. I think everybody
on this panel who has a Section 8 staff can tell you the
headaches the staff went through during that conversion
process.
Starting up a new program would be a disaster.
Mr. Inglis. This proposal is what is best for HUD, in terms
of administrative ease. That is not what it is about. It is
about assisting people and do we want to continue with the
Federal commitment of assisting low-income working families and
elderly and disabled persons in our country. And this should
not be about administrative ease for the Department.
This should be a well-thought-out program that continues to
assist low-income people in this country and also looks at
assisting more people in the future.
Mr. Clay. That is a great point.
Mr. Duncan. May I comment very briefly? The irony is, HUD
is still going to deal with us as a public housing agency. And
there has been a lack of consideration about the
interrelationship. I may have two lists, one for public housing
and one for Section 8, but I am dealing with the same
constituency. So I may be able to put them in public housing
until they work themselves up the Section 8 line.
It is going to be less productive for the person of
economic--who is in economic distress, needing housing, and HUD
is still going to deal with us.
Mr. Clay. Mr. Hernandez, tell us, does New York have a
waiting list for Section 8 vouchers?
Mr. Hernandez. About 146,000 people are currently on our
waiting list.
Mr. Clay. How do you envision the State of New York, if
they were to get the block grant, how would they alleviate that
waiting list through this program?
Mr. Hernandez. I have expressed concerns about that. Part
of what New York City does is, through our Section 8 program,
we provide a priority preference to homeless families and
victims of domestic violence as well as disabled individuals.
And in addition to that, as part of our plan to expand
affordable housing, we use Section 8 to deal with development
of new affordable housing in substantial rehabilitation of
buildings, which is part of the Mayor's plan moving forward.
Mr. Clay. I thank you all for your answers, and thank you.
Chairman Ney. Ms. Velazquez.
Ms. Velazquez. I would like for--Mr. Hernandez, for you to
expand on your Statement to--your answer to Mr. Clay. The
65,000 units of housing that the City of New York envisioned,
how do you think it will be impacted by the block-granting of
Section 8?
Mr. Hernandez. The Mayor released a vision of a housing
plan to create 65,000 units of affordable housing really by
doing two things; one is to preserve housing, the other one is
to expand housing throughout the city.
Part of the way that our sister agency, HPD, has done
development in the past, and will continue to do it, is by
utilizing Section 8 and being able to really round off the
economic package to be able to deal with housing.
Moreover they use it for mortgage--to help with mortgage
payments. They also help to really do--to do housing for people
they move into apartments.
We are working--we have a revolving solicitation right now
to offer Section 8 vouchers for anyone that is doing new
construction or substantial rehabs as a way of being able to
expand our Section 8 pool as well.
So it is an integral part of our plan, moving forward, as
we do this.
Ms. Velazquez. Thank you.
Thank you, Mr. Chairman.
Chairman Ney. [Presiding.] I want to thank you. Any further
questions?
I would note that some members may have additional
questions for this panel which they may wish to submit in
writing. Without objection, the hearing record will remain open
for 30 days for members to submit written questions to the
witnesses and to place their responses in the record.
I want to thank both panels for your time and indulgence
and your time here in Washington. Thank you.
[Whereupon, at 12:30 p.m., the subcommittee was adjourned.]
THE SECTION 8 HOUSING
ASSISTANCE PROGRAM:
PROMOTING DECENT AFFORDABLE
HOUSING FOR FAMILIES AND
INDIVIDUALS WHO RENT--DAY 3
----------
Tuesday, June 17, 2003
U.S. House of Representatives,
Subcommittee on Housing and
Community Opportunity,
Committee on Financial Services,
Washington, D.C.
The subcommittee met, pursuant to call, at 2:07 p.m., in
Room 2128, Rayburn House Office Building, Hon. Robert Ney
[chairman of the subcommittee] presiding.
Present: Representatives Ney, Tiberi, Waters, Velazquez,
Watt, Clay, Scott and Davis.
Chairman Ney. [Presiding.] The subcommittee will come to
order.
I want to welcome the witnesses to the Hill and appreciate
your testimony on this important issue. I also would just
remind you that the lights will be activated. When you begin to
speak, it will be green. Yellow means you have about a minute,
and then red, we would ask you to summarize and complete your
Statement. Also without objection, hearing no objection, any
written statements you have will be part of the record.
Today, the subcommittee holds its third in a series of
hearings to examine the current operation and administration of
the Section 8 housing choice voucher program and review various
proposals intended to make the program more effective and cost-
efficient.
Since the 1970s, rental vouchers have been a mainstay of
the Federal housing policy. Currently, the Section 8 housing
voucher program supplements rent payments for approximately 1.5
million individuals and families. While the concept of the
program remains sound, the program has often been criticized
for its inefficiency. More than $1 billion is recaptured in the
program every year, despite long waiting lists for vouchers in
many communities.
Michael Liu, Assistant Secretary of Public and Indian
housing at the Department of Housing and Urban Development,
testified at the first hearing on May 22, 2003. His testimony
focused primarily on the Administration's proposal entitled
``Housing for Needy Families,'' or HANF. HANF would reform the
Section 8 housing choice voucher program into a State-
administered block grant program.
I will dispense with the rest of my written statement, and
without objection make them part of the record because we are
going to have a vote and I want to make sure you get your ample
time. Then we will come back. I just want to say this is a very
serious issue, obviously a contentious issue. I have introduced
a bill at the request of the Department. We are having hearings
in the Capitol and we fully intend to have hearings in
different parts of the United States on this issue.
So with that, I will see if there are any opening
statements.
[The prepared statement of Hon. Robert W. Ney can be found
on page 280 in the appendix.]
Ms. Velazquez. Thank you, Mr. Chairman.
I am glad to be here for this third in a series of hearings
on the administration's Section 8 block grant proposal. This is
an important issue that must be fully vetted from all angles. I
thank the Chairman and Ranking Member for the thorough review
of HANF and look forward to the testimony of today's witnesses.
Over the course of these hearings, we have heard many concerns
raised about the block grant proposal, and the indications are
that there are more to come.
The history of these hearings has reminded me of Secretary
Rumsfeld's discussion of known knowns, known unknowns, and
unknown unknowns. By using the Secretary of Defense's words, I
am not trying to compare housing block grants to the war on
terrorism. But for tenants with nowhere else to go, this is
very much a matter of survival. We began with the known knowns,
the concerns which we agree are likely to come to pass. HANF
will likely result in lifetime limits on benefits. It will
create an unnecessary and costly extra layer of bureaucracy,
severely limit the number of new families brought into the
program, and splinter the Section 8 program into 50 individual
State programs.
Then, we heard from witnesses on some of the known
unknowns, the concerns for which there are no answers. Will
HANF reduce the number of families currently receiving
benefits, due to the eroding value of block grants? Will it
eliminate the flexibility of vouchers? Today, I am interested
in hearing about two more of these known unknowns. First, will
block granting dampen landlord participation in the program?
Currently, HANF includes no assurance of continued funding of
existing vouchers from year to year. It also gives States the
authority to cut the subsidy level of vouchers and place
lifetime limits on benefits, leaving Section 8 families with
nowhere to live. Wouldn't this force landlords to undergo
lengthy and expensive legal eviction processes for each of
their tenants, and thereby discourage their participation in
the program? The Administration has failed to adequately weigh
in with answers.
Second, how do we know that in a time of fiscal
constraints, the Section 8 block grant will actually be used
for housing? What is to prevent a governor from playing
favorites with the vouchers and rerouting them to different
neighborhoods, opening the door to corrupt mismanagement of the
program? Are there safeguards to prevent such an occurrence?
The unknown unknowns are out there waiting to throw additional
barriers in the paths of tenants and landlords. By the time
they are discovered, they will have already done their damage.
Is that a risk we want to take, or should we just accept the
one thing I know for sure: HANF will not work.
When looked at from this point of view, this hearing begins
to take on the feeling of a work of Dr. Seuss. And as happens
in all of his work, I fear this proposal has the potential to
end with a move from the sublime to the ridiculous.
Thank you, Mr. Chairman.
Chairman Ney. I thank the gentlelady for her statement.
Mr. Scott of Georgia?
Mr. Scott. Mr. Chairman, we have so many panelists, I will
just move on to the panel.
Chairman Ney. I want to thank the members and introduce the
panel. Conrad Egan is the Executive Director of the National
Housing Conference, having previously served as Executive
Director of the Millennial Housing Commission. He is currently
the Chairman of the Fairfax County, Virginia Development and
Housing Authority. Howard Husock is the Director of Case
Studies, Public Policy and Management at Harvard University's
Kennedy School of Government. He is also a research fellow at
the Kennedy School Taubman Center for State and Local
Government. Currently, he is the Director of the Manhattan
Institute Social Entrepreneurship Initiative.
Bruce Katz is a Vice President and Senior Fellow at the
Brookings Institution here in Washington, D.C. He is the
founding director of the Brookings Center on Urban and
Metropolitan Policy. Prior to his appointment at Brookings, Mr.
Katz was chief of staff to Henry Cisneros, former secretary of
HUD. Jill Khadduri is a principal associate at Abt Associates,
Incorporated, a social science research firm based in
Cambridge, Massachusetts and Bethesda, Maryland. From 1988 to
2000, she was the Director of Policy Development at HUD's
Office of Policy Development and Research.
Dr. Ed Olsen is a professor of economics at the University
of Virginia in Charlottesville, Virginia. He has been involved
in housing policy analysis since the late 1960s and has served
as a consultant to HUD during five administrations. Dr. Olsen
has published extensively on the effects of public housing,
housing allowances and rent control. The last panelist is
Margery Austin Turner. She directs the Urban Institute's
Metropolitan Housing and Community Center here in Washington,
D.C. She is a nationally recognized expert on urban policy and
neighborhood issues, with much of her current work focusing on
the Washington metropolitan area.
I want to welcome all the panelists and we will start with
Mr. Egan.
STATEMENT OF MR. CONRAD EGAN, PRESIDENT AND CEO, NATIONAL
HOUSING CONFERENCE, WASHINGTON, DC
Mr. Egan. Thank you, Mr. Chairman. It is a pleasure to be
here today. As you indicated, I am the former Executive
Director of the Millennial Housing Commission, and I will speak
principally today from that standpoint. The Millennial Housing
Commission was created by Congress a short while ago, which
appointed its 22 Commissioners and its co-chairs, former
Representative Susan Molinari and Dick Ravitch, and asked the
commission to come back no later than May 30 of last year with
a report on how particularly this Congress, but also other
parts of the Federal government could do a better job to
support good housing for all Americans. We did produce our
report on time and within budget. I hope that the comments I
will make today will be some indication of the return on
investment that the Congress made in the commission.
One of the things that the Commission was asked to do and
which I will focus on today is to examine whether the existing
programs of the Department of Housing and Urban Development
work in conjunction with one another to provide better housing
opportunities for families, neighborhoods and communities, and
how such programs can be improved with respect to such purpose.
I am quoting, Mr. Chairman, from the statute. The Commission
responded in many ways to that charge.
One of the programs that they focused on was the Section 8
housing assistance program. I will repeat the recommendation
that the Commission put forward. It is under the title ``Expand
and Strengthen the Housing Choice Voucher Program to Improve
the Access of Extremely Low-Income Households to the Private
Housing Stock.'' If I could quote from the introductory part of
that recommendation: Since the 1970s, the housing voucher
program has effectively assisted millions of lower-income
renters, particularly extremely low-income households, who were
most likely to have severe affordability problems and/or live
in inadequate housing.
Because the program is flexible, cost-effective and
successful in its mission, the Millennial Housing Commission
believes housing vouchers should continue to be the linchpin of
a national policy providing very low-income renters access to
privately owned housing stock. In addition to that, the
Millennial Housing Commission recommends appropriation of
additional funds for substantial annual increments of vouchers
to address the housing problems of extremely low-and very low-
income families who lack access to other housing assistance.
The Commission also pointed out the important relationship
between the Section 8 housing assistance program and
homeownership.
The Commission did go on, though, to recommend some
improvements to the program. I will just briefly list them. The
detail is in my statement and my colleagues I am sure will also
have additional detail in addition to those who preceded this
panel here today. First of all, it is important to improve
utilization and success rates. Secondly, it is important to
increase landlord participation, and I particularly appreciate
Representative Velazquez's question in that area and I hope we
can explore it when we have an opportunity. Thirdly, it is
important to link the Section 8 program to housing production
programs. It is important to link vouchers to work opportunity
and self-sufficiency initiatives. It is also important to link
vouchers to non-housing programs. As you can see the Commission
liked this word ``link.'' They used it a lot.
Finally, the Commission recommended allowing a more
flexible use of Section 8 project-based units. I realize this
hearing is not the subject of that particular item, but I would
hope that the subcommittee could at some point devote some time
and attention to that. This is what I call the mobility option
for project-based subsidies in order to keep them in the
housing portfolio and to provide for better preservation and
revitalization of project-based properties assisted by the
Section 8 program.
In conclusion, Mr. Chairman, let me summarize the
Commission's position on the Section 8 housing assistance
program thusly. First, the program works well in its current
form. Second, it could be improved by implementing the above
recommendations. And third, substantial annual increments of
additional funds should be appropriated to better address the
housing problems of extremely and very low-income families, and
to increase opportunities for homeownership.
Thank you, Mr. Chairman.
[The prepared statement of Conrad Egan can be found on page
310 in the appendix.]
Chairman Ney. I want to thank you.
Mr. Husock?
STATEMENT OF MR. HOWARD HUSOCK, ALFRED TAUBMAN CENTER FOR STATE
AND LOCAL GOVERNMENT, JOHN F. KENNEDY SCHOOL OF GOVERNMENT,
HARVARD UNIVERSITY, CAMBRIDGE, MA
Mr. Husock. Thank you very much, Mr. Chairman. It is a
privilege to address the subcommittee once again.
The proposal to rename and restructure the Section 8
housing choice voucher program as housing assistance for needy
families or HANF should be considered among the most promising
housing proposals in many years. Its promise lies in the
potential it holds for considering housing policy not in a
vacuum, but in the context of domestic social policy more
broadly, and thereby potentially encouraging long-term
improvement in the life choices and prospects of those
households whose rent is paid for by a housing voucher.
HANF, of course, sounds a lot like TANF, the core public
assistance program, and well it should. For although largely
unacknowledged in our recent focus on physical improvements to
public housing or the drive to increase the number of housing
vouchers actually utilized, the fact of the matter is that
there are demographic overlaps, significant ones, between the
public assistance population and the housing assistance
population, such that common supervision at the State level is
a logical new step. HUD reports, for instance, that among non-
elderly, non-disabled heads of households receiving housing
vouchers, 28 percent, that is 219,000 households nationwide,
are also current recipients of TANF. Like TANF recipients, they
are predominantly comprised of single-parent families. HUD
reports that of 1.01 million non-elderly, non-disabled Section
8 households, 783,000, that is 78 percent, are headed by single
parents.
Indeed, it is important to keep in mind when considering
housing policy that although we hear frequent alarms, it is an
exaggeration to say that we have a general housing
affordability crisis in the United States. Affordability,
rather, is a problem for the elderly, poor, and the disabled,
and particularly single-parent families with children. HUD has
reported indeed that only 8 percent of voucher holders are two-
parent families with children.
Section 8 vouchers, moreover, are a means through which new
single-parent families prone to long-term poverty, headed
primarily by young mothers, can be established in the first
place. Indeed, between April 2002 and April 2003, 13,600 new
voucher holders, 6 percent of all new admissions to the
program, were under 21 years of age. Such households are
typically the focus of a wide range of social service
interventions from job training to nutrition programs.
It is common sense, then, for our housing voucher policy to
be considered and administered in the same context as our
larger social policy. That is a policy which could be
summarized since the welfare reform act as one of short-term
assistance meant to enable long-term self-improvement and self-
reliance. To that might be added discouraging those who are not
economically ready to start their own households from starting
them. The centerpiece change of the HANF proposal, the creation
of the housing voucher block grant, and a shift in program
administration from the local to the State level, may help us
achieve those goals.
Local public housing authorities, which have historically
administered Section 8, have a narrow mandate to provide safe
and sanitary housing. But given who lives in our subsidized
housing, the programs must be more broadly considered and
aligned specifically with the goals which state governments are
asked to implement, not just through TANF, but through other
social programs as well, including the administration's current
efforts to encourage marriage and two-parent families.
A block grant and state administration of Section 8 can set
the stage for a period of housing policy innovation, much as we
saw state governments experiment, many successfully, for
instance HHS Secretary Thompson in Wisconsin when he was
Governor there, with welfare-to-work programs in the early
1990s, even before the passage of TANF and in fact presaging
that passage. Not that all States will move in new directions.
Some may prefer the current approach and they will be allowed
to continue it. But other jurisdictions may choose otherwise
and seek to craft new housing policies in conjunction with
broader state transitional assistance policies.
Such policies could indeed involve a time limit, or they
could involve a declining public share of rent payment over the
fixed lifetime of a voucher, as well as a combination with
social services such as financial counseling and household
management. Such approaches are not merely hypothetical. They
have been in use effectively, for instance, by the Charlotte,
North Carolina housing authority since 1993, in Congressman
Watt's district, for some of its public housing tenants. State
government, however, is more likely to have the capacity to
undertake such policy innovations and far more likely to be
inclined to do so if those considering social policy broadly
are also those reviewing housing policy.
It is a mistake, in my view, to see the problems with
Section 8 to date as lying mainly in the high turnback of
unused appropriations or in the need to convince more property
owners to accept more voucher holders. It is highly likely that
most property owners in areas of reasonably strong demand will
choose and continue to choose to avoid the complications that
Federal program participation brings with it. It is far more
likely for voucher holders to become concentrated in areas of
weaker demand, and indeed program data from HUD again shows
that in 11 of 25 cities that HUD surveyed, there are
neighborhoods in which voucher holders constitute 25 percent or
more of the population. I believe Senator Mikulski has called
these ``horizontal ghettos.''
The southern suburbs of Chicago where Section 8 has been
particularly controversial, I would hope that this committee
might have hearings in that area if possible, have absorbed for
instance 58 percent of the Cook County Housing Authority's
vouchers. The majority of the voucher holders who have moved
from the District of Columbia to its suburbs have moved to
Prince George's County. In Philadelphia, 45 percent of voucher
holders inhabit just two of the city's five major
neighborhoods, South Philadelphia and Northeast Philadelphia.
If you visit the south suburbs of Chicago, you will meet local
elected officials and residents, many of them African American,
who will express grave concern about this phenomenon, fearing
the effects of such concentration on the social fabric of their
communities.
As I wrote in the Manhattan Institute publication City
Journal, in south suburban Chicago, with one of the highest
concentration of voucher holders in the country, lower middle
class African American residents complained. They thought they
had left bad neighborhoods behind, only to find the Federal
government is subsidizing bad neighborhood effects to follow
them. Vikkey Perez of Richton Park, Illinois, owner of Nubian
Notion Beauty Supply, fears that the small signs of disorder
she sees with voucher tenants, un-mown lawns, shopping carts
left in the street, are symbols of potential neighborhood
undermine. ``Their lifestyle does not blend with our suburban
lifestyle,'' she told me. Kevin Moore, a hospital administrator
and homeowner in nearby Hazelcrest, Illinois, complained that
children in voucher homes went unsupervised and that boom-boxes
played late in the night. ``I felt like I was back on the west
side,'' he said, referring to the neighborhood where he grew up
and had worked hard to leave behind.
If voucher concentration is probable for economic reasons,
it is important for program guidelines to encourage voucher
beneficiaries to take steps to end or reduce over time their
assistance. In fact, such encouragement is just as important in
areas where voucher concentrations are low as where they are
high.
[The prepared statement of Howard Husock can be found on
page 313 in the appendix.]
Chairman Ney. I am sorry to have to interrupt. We have got
5 minutes left on a vote, so what we need to do is to go over
and vote. We have two 5-minute votes after that, which will be
10 minutes, and we will be back. I apologize for the
unpredictability of the votes, but we will be back. The
committee will be in recess, returning upon the call of the
Chair.
Thank you.
[RECESS]
Chairman Ney. The committee will come back to order. I
think we had finished the time of Mr. Husock, and we will move
to Mr. Katz.
STATEMENT OF MR. BRUCE J. KATZ, DIRECTOR, CENTER ON URBAN AND
METROPOLITAN POLICY, THE BROOKINGS INSTITUTE, WASHINGTON, DC
Mr. Katz. Thank you, Mr. Chairman, for the opportunity to
testify today on the performance and potential of housing
vouchers. I will just make four basic points drawn from my
written testimony.
First, housing vouchers are a critical and generally
successful component of Federal housing policy. They are unique
among Federal housing programs in that they allow the recipient
rather than the developer to decide where a family lives. This
gives families greater choice in metropolitan rental markets,
and by so doing enables them in theory to move to areas of
growing employment and quality schools. Vouchers are therefore
the only Federal housing program that recognizes the radical
decentralization of labor markets that has taken place over the
past 30 years, and they are the only Federal housing program
that tries to replicate for low-income renters what all middle-
class households enjoy, the ability to make decisions on
housing in connection with decisions on jobs and schools.
Second, vouchers and the administration of vouchers are not
perfect and need improvement. I emphasize four shortcomings in
my testimony. Success and utilization rates are not where they
should be. Landlord participation remains a constant challenge,
as Conrad mentioned. Central city recipients, minority
recipients, elderly recipients and recipients with disabilities
all face special challenges in exercising choice in the market.
And administration of the voucher program remains highly
fragmented and insular: too much devolution in a sense, and too
little accountability and competition.
My third main point is that the Administration's proposal
to block grant vouchers to the States is not the right reform.
I think this proposal has multiple fatal flaws. In my view,
States are not the place to vest administration of the program.
The voucher program is about markets and housing markets for
the most part are metropolitan and in many parts of the country
actually cross state lines. I believe block granting for the
States would actually complicate, rather than streamline
voucher administration, given the absence of an adequate
delivery system in most States. The proposal would require the
creation of a new layer of governance that does not now exist
and could be a recipe for administrative chaos in the short
term. I am also concerned that the shift to a block grant could
substantially alter the method by which Congress determines
funding for the voucher program. In the real world, rents rise,
and any program that wants to leverage private sector
participation needs to reflect that simple fact. In the event
that block grant funding is not sufficient to cover the
program's needs, States would probably take one of several
actions: shift assistance to households with more moderate
incomes; require recipients to pay a higher share of their
income for rent; or limit the ability of households to use
vouchers in low-poverty areas. All these funding scenarios
could have a profound impact on which landlords participate in
this program, since in the end what landlords want is certainty
and predictability in program rules and funding levels.
Finally, I believe the effort to model voucher
administration after welfare reform is misguided. The simple
fact is that vouchers serve a much broader universe of
households than welfare recipients. Only 13 percent of voucher
recipients receive a majority of their income from welfare
benefits. The preponderance of voucher holders either work or
are elderly or have disabilities. The voucher program is in
essence not simply the housing equivalent of welfare. If we
want housing to work with welfare, we need a strong voucher
program.
Fourth, I believe the voucher program does need reform. I
recommend that Congress give voucher recipients the tools they
need to exercise choice in the market. Information is one such
tool. Why shouldn't every voucher recipient have ready access,
easy access to information about rental housing vacancies,
school performance and employment accessibility so that they
can make informed housing decisions, essentially, the rental
market equivalent of the multiple listing services used for
homebuyers? I specifically recommend that Congress authorize
and fund HUD to test the feasibility of making information on
metropolitan housing markets and school performance transparent
and accessible.
I also recommend that Congress try to match the
administration of vouchers to the real geography of housing
markets in metropolitan areas. I think Congress should
experiment with a continuum of metropolitan approaches to
voucher administration that include collaborative activities
among local PHAs, the competing-out of administrative
responsibilities to private sector entities both for-profit and
nonprofit, as well as in some places the actual consolidation
of separate agencies. I discuss this further in my written
testimony. Again, I believe metropolitan areas, not States, are
the right geography for thinking about housing policy and
rental assistance.
So in conclusion, the voucher program has been a mainstay
of Federal housing policy for the past 30 years. More than any
other Federal housing program, it places power and resources
where it belongs, in the hands of low-income renters. By so
doing, it enables them to make decisions about housing, jobs
and schools in a unified way. The program, and particularly the
administration of the program, does need some improvement, but
reform needs to proceed in a measured and responsible way to
avoid making the cure worse than the disease.
Thank you very much.
[The prepared statement of Bruce J. Katz can be found on
page 319 in the appendix.]
Chairman Ney. I thank the gentleman for his testimony.
Ms. Khadduri?
STATEMENT OF MS JILL KHADDURI, PRINCIPAL ASSOCIATE, ABT
ASSOCIATES INC., BETHESDA, MD
Ms. Khadduri. Thank you, Mr. Chairman. I appreciate the
opportunity to be on this panel.
My name is Jill Khadduri and I work at Abt Associates, a
national social science research firm. My company has done most
of the basic program evaluation on the voucher program from the
1970s until now. We also provide technical assistance to
voucher program administrators. Examples of research we have
done recently that may be of particular interest to this
committee include a study of voucher utilization rates, a study
of voucher success rates, and a study of the circumstances that
may bring a voucher program into conflict with residents of the
neighborhood.
Mr. Chairman, the voucher program is not flawed. Its basic
design is sound and it is an effective program for meeting the
housing needs of low-income households, particularly families
with children, the poorest households, and people with
disabilities. At the same time, the idea of consolidating
administration of the voucher program at the State level is
very attractive. It would overcome some of the relative
shortcomings of the voucher program.
However, it is essential that any such consolidation into a
State block grant should have four features. First, the choice-
based character of the voucher program must be preserved.
Second, any flexibility for States to alter the structure of
the subsidy formula, impose time limits, or alter the housing
quality inspection should be carefully tested and evaluated
before all States have such flexibility. Third, the program
should have clear performance goals and reporting requirements,
including preservation of the requirement to report household
level data in standard format. Finally, the annual
appropriation of funds for the program should be tied to
maintaining current numbers of families assisted at adequate
assistance amounts for each household, and a steady program
growth to reduce the unmet need for rental housing assistance.
Let me turn to the results of some of our recent studies to
tell you why I believe the voucher program is not in crisis.
The utilization problem is well on its way to being solved.
What we found when we did intensive case studies at 48 housing
authorities is that many of the programs that had been using
their voucher funds at low rate made substantial improvements
once they got the word from HUD that funds not used would be
taken away. We also found that many of the housing authorities
with low utilization rates had staffing problems. The voucher
program director had left and basic program functions such as
issuing new vouchers had ground to a halt. An important finding
of that study is that while it is relatively more difficult for
housing authorities in difficult market conditions to use all
their voucher funds, good program administrators find ways of
doing so.
Success rates for families, as I am sure this committee
knows, are not the same as utilization rates for local
programs. Not all families who are issued vouchers succeed in
using them, but a large fraction does so. Our study of voucher
success rates at urban PHAs found an overall success rate of 69
percent in 2000. Success rates were high for all types of
households. They were high for all racial and ethnic groups.
They were high for people with disabilities and they were
especially high for those households with the lowest incomes.
Vouchers are not harmful to neighborhoods. The isolated
cases of neighborhood conflict that we studied in 1999 and 2000
showed that neighborhood concerns about vouchers can be avoided
by program administrators who are alert for possible over-
concentration of vouchers in small areas. They can be overcome
when administrators act quickly when a complaint arises to find
out the facts of the case and work actively with neighborhood
groups. A common theme of this study is that good program
administration is at the heart of the distinction between
excellent and inadequate program results. The voucher program
design is sound.
Having said that, there are some very good reasons to
consolidate program administration at the State level and to
give the States greater discretion over some features of the
design of the program. The advantages of state-level
administration are, first, States would be in a position to
rationalize the administration of the program which now is
fragmented into more than 2,500 entities. Many administer very
small numbers of vouchers and are inefficiently staffed.
Overlapping jurisdictions confound good program administration.
Our utilization study found that there were often not two,
but three programs operating in the same geography, to the
confusion of low-income families and owners of rental housing.
Our neighborhood relations study found that overlapping
jurisdictions made it difficult to avoid and to solve
neighborhood conflict. It was hard for a housing authority to
tell where another administrator's vouchers were being used. It
was hard for a neighborhood group to know who was in charge.
Second, state administration would help overcome the
barriers that currently exist to the use of vouchers across
jurisdictional lines. Third, States would be in a good position
to coordinate the voucher program with other programs that
serve needy populations, welfare reform and services for people
with disabilities, for example. Finally, if we are to
experiment with changes to the basic design of the voucher
program, States are the right level for this to happen. States
have more freedom than the Federal government to experiment
with controversial changes such as time limits. At the same
time, they have more ability than local housing authorities to
create carefully designed and evaluated experiments.
I am not going to respond directly to the Administration's
proposal for a block grant called HANF, Housing Assistance for
Needy Families. Instead, I will elaborate on the four features
that I said at the outset were essential to any proposal that
Congress might decide to enact in a consolidated administration
at the State level. First, the choice-based nature of the
program should be preserved. We already have a housing block
grant. It is called the HOME program. Permitting States to
attach vouchers to housing developments would make a voucher
block grant no different from HOME and would threaten the
budgets for both programs.
Second, while state administrators of a voucher block grant
should have immediate flexibility in some features of program
design, features that go to the heart of the program such as
time limits and the program's housing quality standard and also
the structure of the subsidy formula should be permitted only
after being very carefully tested and evaluated rigorously. I
recommend modeling this feature of any voucher block grant on
the AFDC state waivers that preceded welfare reform. Individual
States should be permitted to implement such changes only with
careful experimental design and evaluation of results.
Third, legislation enacting a voucher block grant should
include performance goals and measures and should mandate the
continuation of the collection of household-level data on
income levels, demographic characteristics, subsidy amounts and
the location of housing units. This is essential so that
Congress and the American public know what they are paying for.
It is also essential for estimating budget levels for the
program, what is needed to sustain the current program level,
and what is needed for the program to grow.
Finally, the legislation enacting a voucher block grant
should include explicit statutory language relating the
program's funding level to housing needs. Only such a
congressional declaration of intent and good data on households
served and subsidy levels will overcome the fears of those who
believe that a voucher block grant would mean the loss of the
Federal commitment to meeting the housing needs of low-income
renters.
Thank you, Mr. Chairman.
[The prepared statement of Jill Khadduri can be found on
page 329 in the appendix.]
Chairman Ney. Thank you. I thank the witness for your
testimony.
Mr. Olsen?
STATEMENT OF MR. ED OLSEN, PROFESSOR OF ECONOMICS, UNIVERSITY
OF VIRGINIA, CHARLOTTESVILLE, VA
Mr. Olsen. Thank you, Mr. Chairman. I welcome this
opportunity to talk with you and the members of your committee
about reform of the housing choice voucher program. I speak
from the perspective of a taxpayer who wants to help low-income
families, albeit a taxpayer who has spent the last 30 years
studying the effects of low-income housing programs.
Given the current economic slow-down and the added expense
of fighting international terrorism, it is clear that little
additional money will be available for low-income housing
programs over the next few years. The question is how can we
continue to serve the families who currently receive housing
assistance and serve the poorest families who have not been
offered assistance without spending more money. The answer is
we must use the money available more wisely. Research on the
effects of housing programs provides clear guidance on this
matter. It shows that tenant-based housing vouchers provide
equally desirable housing at a much lower total cost than any
type of project-based assistance under any market conditions.
My written testimony summarizes the evidence.
These results imply that we can serve the current
recipients equally well that is, provide them with equally good
housing for the same rent and serve many additional families
without any increase in the budget by shifting resources from
project-based to tenant-based assistance. The magnitude of the
gain from this shift would be substantial. The smallest
estimates of the excess cost to project-based assistance imply
that a total shift from project-based to tenant-based
assistance would enable us to serve at least 900,000 additional
families with no additional budget.
These findings have important implications for how the
Federal budget for housing assistance should be spent. First,
the money currently spent on operating and modernization
subsidies for public housing should be used to provide tenant-
based vouchers to public housing tenants as proposed by the
Clinton Administration and by Senator Dole during his
Presidential campaign. If housing authorities are unable to
compete with private owners for their tenants, they should not
be in the business of providing housing.
Second, contracts with the owners of private subsidized
projects should not be renewed. Instead, we should give their
tenants portable vouchers and force the owners to compete for
their business.
Third, the construction of additional public or private
projects should not be subsidized. No additional money should
be allocated to HOPE VI, there should be no new HUD production
programs, and the indexing of the low-income housing tax
credits for inflation should certainly be rescinded until a
careful analysis of the cost-effectiveness of this program
overturns the results of the recent GAO study.
Fourth, Congress should declare a moratorium on further
project-based assistance under the housing choice voucher
program until it can consider the results of a study that
compares the cost-effectiveness of already committed project-
based vouchers with tenant-based vouchers.
Finally, if Congress decides to convert the housing choice
voucher program to a housing block grant to the States, it
should require that the entire budget for the program be used
for choice-based assistance. Evidence indicates clearly that
States will devote the bulk of an unrestricted housing block
grant to project-based assistance.
These reforms will give taxpayers who want to help low-
income families more for their money by greatly increasing the
number of families served, without spending more money or
reducing support for current recipients.
The usual objections to exclusive reliance on tenant-based
vouchers have little merit. Tenant-based vouchers get
recipients into adequate housing faster than production
programs, even in the tightest housing markets, and they are
more cost-effective than production programs in all market
conditions. Production programs do not have a perceptibly
greater affect on neighborhood revitalization than tenant-based
vouchers, and we do not need production programs to increase
the supply of adequate housing.
Unlike other major means-tested transfer programs, housing
assistance is not an entitlement, despite its stated goal of a
decent home and a suitable living environment for every
American family. This feature of housing assistance is a
historical accident, and it is not defensible given the methods
currently available for delivering housing assistance. It is
impossible to justify providing assistance to some families,
while denying it to other families with the same
characteristics. If we provide housing assistance at all, it
should be an entitlement to everyone who is eligible. If anyone
is eligible, it should be the families with the lowest incomes.
Contrary to popular opinion, this does not require spending
more money on housing assistance. It can be achieved without
additional funds by shifting money from less cost-effective
methods for delivering housing assistance to choice-based
vouchers as soon as current contractual commitments permit, and
reducing gradually the large subsidies received by current
voucher recipients.
I urge the committee to take the bold steps necessary to
serve the poorest families who have not been offered housing
assistance, and I appreciate the willingness of the members of
the committee to listen to the views of a taxpayer whose only
interest in the matters under consideration is to see that tax
revenues are used effectively and efficiently to help low-
income families.
[The prepared statement of Ed Olsen can be found on page
351 in the appendix.]
Chairman Ney. Thank you.
Ms. Turner?
STATEMENT OF MS. MARGERY AUSTIN TURNER, DIRECTOR, METROPOLITAN
HOUSING AND COMMUNITIES CENTER, THE URBAN INSTITUTE,
WASHINGTON, DC
Ms. Turner. Thank you, Mr. Chairman.
I would like to highlight three points from my written
testimony that is based on research conducted in my center at
the Urban Institute, but also by other researchers inside and
outside of government.
First, the housing choice voucher program is tremendously
effective and beneficial, although it is not working as well as
it can and should be. We know how to make vouchers work better,
and I suggest three strategies in particular that could improve
outcomes for voucher recipients.
Third, there is no reason to expect that States would
voluntarily adopt any of these promising strategies under a
block grant. Instead, it seems more likely that they would
implement untested changes that risk undermining the current
success of the voucher approach. I would like to just elaborate
a bit on each of those points.
The most important advantage of the voucher program is that
it gives recipients the freedom to choose the kinds of housing
and the kinds of locations that best meet their needs. As a
result, many voucher recipients today live in healthy
neighborhoods that offer social, educational and economic
opportunities for themselves, but most importantly for their
children. The current program certainly does not work perfectly
in this regard.
First, vouchers have not been as effective in promoting
neighborhood choice and mobility for minority recipients as
they have been for white recipients. In addition, as others
have said, there are some families who receive vouchers, but
are not able to find a house or an apartment in which they can
use that voucher. There are a lot of reasons for that problem,
including shortages of moderately priced rental housing, tight
market conditions, racial and ethnic discrimination, landlords
who are not willing to participate in the program, and
sometimes ineffective local program administration. There is a
growing body of experimentation around the country and research
that suggests three very promising strategies for addressing
these issues and strengthening the housing choice voucher
program. First, vouchers should be linked with mobility
counseling and housing search assistance. In experimental
programs, housing authorities that have partnered with
nonprofits to help voucher recipients learn about neighborhoods
available to them, track down homes and apartments for rent in
those neighborhoods, and negotiate effectively with landlords
have been able to open up more options for these voucher
recipients, resulting in greater mobility to low-poverty
neighborhoods and racially mixed neighborhoods, especially for
families from distressed inner-city communities who might
otherwise have difficulty in the private market.
Second, local housing authorities need to strengthen their
landlord outreach and the services and incentives they provide
to landlords who participate in the voucher program. There are
several programs that have had success in expanding the options
and choices open to voucher recipients by reaching out to
landlords, listening to the concerns that they raise about the
way the program operates, solving the red tape and other
problems with program administration, and in some cases
offering financial rewards to landlords who accept some of the
most difficult to place families.
Third, HUD should be promoting regional collaboration and
even regional administration of the voucher program. In most
urban areas, the voucher program is administered by too many
different local housing authorities, each operating in a single
city or county. This fragmentation makes the program very
confusing for families, but also for landlords, and it
interferes with the portability feature that should allow
families to move anywhere they want to in the region with their
voucher.
Housing authorities in some metropolitan areas have
addressed some of these issues by entering into mutual
agreements that make their operations much more efficient and
coherent. But HUD should be taking an active role in
encouraging collaboration of that kind and testing the
effectiveness of more comprehensive regional program
administration.
Under a block grant, it is conceivable that some States
might choose to implement one or more of those promising
strategies, but it seems unlikely, absent any strong
programmatic mandate or incentive system. Instead, it is more
likely that the quality of local program administration would
deteriorate, particularly given the fiscal distress that many
States are currently experiencing. Some States might use a
block grant's flexibility to implement untested innovations
like time limits or reduced subsidy levels that could undermine
the success we have seen with vouchers and worsen the housing
hardships that low-income families face.
So instead of resolving the fundamental dilemma of
inadequate funding for affordable housing in this country, a
block grant would make housing hardship into a State problem,
rather than a Federal problem, and it would open the door to
untested program changes that could undermine the proven
strengths of the voucher approach. Thank you.
[The prepared statement of Margery Austin Turner can be
found on page 400 in the appendix.]
Chairman Ney. Thank you for your testimony, and all the
witnesses.
I have just a couple of questions, and anybody can feel
free to answer. Basically, I wondered if you considered HANF
good, just kind of cut to the chase, is HANF good or is it bad?
It is not a trick question. It is just a yes or no.
[LAUGHTER]
Is it good or is it bad? The other thing I would want to
ask is, do we need to change the way we administer the program?
If you want to start in either direction.
Mr. Egan. Mr. Chairman, to answer your first question, I
would say that given what my colleagues have said here today
and what others have said, that without some very, very
fundamental changes to the current proposal, that HANF would
not be a positive development. Secondly, there are many things
that can be done to improve the program. My colleagues again
here today have stated many of them, and I will not repeat
them, but I think the more that we can increase utilization,
involve landlords, connect with service and self-sufficiency
opportunities, that the greater the success of the program will
be.
Mr. Husock. HANF is good, because it will allow positive
experimentation. We heard the same kinds of alarms sounded
before the 1996 Welfare Reform Act, and things have worked out
rather well in terms of encouraging self-sufficiency. The
thrust of my remarks was let's line up social policy with
housing policy. The populations are very similar, and let's
allow States rather than housing authorities, which do not have
the capacity to innovate, to take on that challenge.
Mr. Katz. HANF is bad, because the State infrastructure is
just not in place for administering housing, and housing is
just not the same as welfare reform. There are radical
differences here that we need to understand. Voucher reform is
needed to make choice for all low-income recipients real by
matching up housing, schools and jobs. I think the major issue
is to try to have more of a metropolitan approach to voucher
administration, which is the way markets operate.
Ms. Khadduri. HANF is a step in the right direction, but as
currently designed, I do not think it should be enacted. First,
it does not preserve the choice-based character of the voucher
program, if I read the draft legislation correctly, the
introduced legislation correctly. I also do not think it has
the explicit mandates for reporting of household-level
information that would be essential in order to overcome the
fears of many who have testified before this committee, that
what we are looking at is a block and cut scenario. I think in
order to avoid such scenarios, the Congress needs to continue
to know how many families are assisted, who those families are,
where they live, and how much subsidy money they are getting. I
do not think that the legislation as currently drafted and
introduced provides those guarantees.
I share the concerns of many others who have testified
about such program changes as time limits. I think I would
agree more with Mr. Husock that lining up vouchers with other
elements of welfare policy is something that needs to be done,
and we have not gone far enough in doing it. But I think we
should approach it in small steps and carefully test those
steps, as was the case before the enactment of welfare reform.
Mr. Olsen. I would say that if HANF block grant money is
not limited to choice-based assistance, it will be a disaster.
But beyond that, I think we should have severe restrictions on
the targeting on the poorest people, just as we have under the
current program, with no discretion on the part of the
Secretary to overrule that.
Ms. Turner. HANF is a bad idea. It does not address the
problems that we know exist in the voucher program, and it runs
the risk of creating much more serious problems. If there is
going to be a serious consideration of real reform of the
voucher program, it should focus on getting the program
administered more rationally at a regional, at a metropolitan
level so that it works really effectively in terms of outreach
to landlords and real housing choice for families.
Chairman Ney. Thank you, and welcome to Congress. It was
three to three.
I yield to our ranking member, Ms. Waters of California.
Ms. Waters. Thank you, Mr. Chairman. Let me just say to
you, Mr. Chairman, that no one will be able to accuse you of
not really doing a great job on Section 8. I think this is our
third hearing, so you certainly have brought in a lot of voices
for us to hear with all of these hearings. I appreciate the
panelists who are here today.
I was particularly struck by some interesting research that
was done by one of the panelists that happened to conclude that
somehow housing policy encourages single-parent families and
provides a subsidy to single-parent families, when in fact we
should be teaching single-parent families how not to be single-
parent families, and somehow this policy just exacerbates the
problem. Also in this paper, it appears to be a lot of
knowledge and information about the use of Section 8 vouchers
by minorities who move into neighborhoods where they take their
unsupervised children and play boom-boxes.
I would like to know if this extensive and very scholarly
research that is contained in this paper also helps us to
understand what happens, and first of all, are there whites
that use Section 8 vouchers? I guess my question would be
directed toward the scholar from the John F. Kennedy School of
Government, Mr. Howard Husock. In your research, can you tell
me about whites who use vouchers and what happens when they
move into suburban areas? What does your research show about
the size of their boom-boxes or anything else?
[LAUGHTER]
Mr. Husock. Thank you very much for the opportunity to
respond, Congresswoman Waters. I would just like to point out
for the record that I was quoting minority homeowners who were
expressing that concern. So it is fine to characterize my
remarks as reflecting some sort of antipathy toward minority
aspiration, but I can assure you that that is the farthest
thing from the truth.
Ms. Waters. Oh, I am sorry. I guess what I was asking, are
you able to quote any whites about what happens when people
with vouchers move into their neighborhoods?
Mr. Husock. The particular essay that I wrote that included
those interviews was based on interviews with minority
homeowners because of the concern that I had for their property
values. So I was not looking at white neighborhoods. But if
white people were moving in and playing boom-boxes next to
black people, that would be just as serious a problem in my
opinion, nor would I assert that that could never happen.
Ms. Waters. And how predominant is the playing of these
boom-boxes? Do they play them all evening, on Saturdays or
Sundays? What does your research show you?
Mr. Husock. I think you would have to ask Mr. Moore of
Hazelcrest, Illinois, who I quote as saying that. I am sure if
you hold hearings in south suburban Chicago, and I hope you
will, because you will find that there is a large group of
African American homeowners who are very concerned about this
program. He would be glad to apprise you of the extent of boom-
box playing.
Ms. Waters. In addition to your scholarly research on boom-
boxes, could you describe more to me about the unsupervised
children of people who have vouchers? How does it compare with
people who don't use vouchers? Where is it predominantly
showing up? Just how big is this problem of unsupervised
children does your research show? What can you tell us about
this?
Mr. Husock. I was quoting one individual who said that.
Ms. Waters. Okay. That is fine. Now, do you have any
information in your research about discrimination that was
described by one of the panelists who indicated that oftentimes
minorities do not have the opportunity to use their vouchers in
certain areas and in certain ways because they are
discriminated against? Did you find that in your research?
Mr. Husock. I did not research that topic. However, as you
see in my prepared remarks, I examined HUD's research on
concentration and inferred from that high degree of
concentration that existed, that it may be inevitable that
concentrations of Section 8 families develop because private
property owners with other options appear to choose not to rent
to Section 8 voucher holders, as evidenced by significant
concentrations that we are seeing.
Does that mean that no discrimination occurs? It is
probably an economic discrimination. It is probably
discrimination based on not wanting to participate in Federal
programs, but we are seeing significant concentrations. We can
rail against that and say, well, we must do, as other panelists
have suggested, more to counsel people to get into other
neighborhoods and to open up those neighborhoods.
At the same time, I think we have to expect that that is
going to be a very difficult road. That is why I welcome the
possibility of social policy experimentation at the State
level, because if you are going to have significant
concentrations or you are going to have some individuals moving
into areas in which they are pioneers, if you will, then I
think it is very important that there be strong guidelines that
align Section 8 policy with TANF and other social policy
elements of the Federal government. This is because my concern
lies with the aspirations of upwardly mobile families,
particularly upwardly mobile minority families who I think are
very concerned about this program, as I am sure you are aware.
Ms. Waters. Are you aware that 48 percent of all the
Section 8 vouchers are with whites?
Mr. Husock. I don't really understand myself to be making a
race-based argument. If you understand it that way, then I
regret that, but that is certainly not my intention. My focus
is on the economics of Section 8 and on the possibility of how
we can encourage Section 8 families to themselves become
upwardly mobile. I am suggesting that the TANF Act gives us a
blueprint that we can apply to housing assistance. The fact
that there has been friction and people express themselves
perhaps crudely and I quote them, and I can therefore be open
to caricature, well, I am sorry, but that is certainly not my
intention here.
Ms. Waters. Well, certainly I need to share with you that
when a panelist appears before this committee, and particularly
one from Harvard with a paper that talks about unmowed laws and
shopping carts left on the street, and particularly quoting
minorities and referencing minorities in relationship to
unsupervised children and boom-boxes, that is racist, sir.
Mr. Husock. I take strong exception to the idea that
quoting African American homeowners making such remarks would
be regarded as racist on my part. I am not quite sure how you
jump to that conclusion.
Ms. Waters. What is racist on your part is that you come in
representing that you are from John F. Kennedy School of
Government, without any respectable research, and you tend to
use some isolated comments to describe a group of people. That,
sir, is racist. Now, if you don't understand that, then we need
to come up to Harvard and help them to understand the
difference between using descriptions that are extremely
negative, assigning it to one group of people without any data
or research to support it. Yes, sir, that is racist.
Mr. Husock. May I point out for the record that in the
quotation that the Congresswoman is referring to, I do not
refer to the race of the Section 8 families.
Ms. Waters. Yes, you do in many ways.
Mr. Husock. I refer to the race of the minority homeowners.
Ms. Waters. We know how the language is couched, sir. We
have been in this business for a long time, particularly I. And
I understand exactly what you are saying and I do not like it.
Now, you have a right to say it, but I have a right to tell you
I don't like it. Thank you very much and I yield back the
balance of my time.
Chairman Ney. The time has expired.
Mr. Scott of Georgia?
Mr. Scott. Yes, I certainly find the line of questioning
very interesting. It could stand some illumination in the fact
that for your information, the consumption of boom-boxes and
the hip-hop music that corresponds with it now has now moved
over from being a predominantly African American consumption to
being a predominantly white consumption, thanks largely to
Eminem.
[LAUGHTER]
At any rate, I hope that this very exercise and this line
of questioning shows the seriousness of this issue and the
concerns of this committee that we not cause any more
aggravation with the Section 8 program. It is having enough
difficulties as it is. I do recall the line of questioning. Our
friend from Harvard appeared before this committee when we were
doing all we could to make sure that we continued the HOPE VI.
It just appears to me that there is a consistency in your
testimony that tends to not be complimentary of what I think is
the best direction of this committee, one, to save HOPE VI and
reinstitute it, and certainly to save the good points of
Section 8.
But I do find very interesting, you know, when you use
research papers and you write, you may use a quote, you may go
anyplace, but the intent of the research paper is not governed
by anything other than the driver of that car. You are the
driver of the car. It just seems to me that you may go out to
find various things that may substantiate your position.
But at any rate, I just wanted to get some clarification of
why you mentioned this in your report. As I have written in the
Manhattan Institute publication City Journal in suburban
Chicago, with one of the highest concentration of voucher
holders in the country, middle-class African Americans complain
that they thought they left the ghetto behind, only to find
that the Federal government is subsidizing it to follow them. I
am trying to figure that out. And then you go on to say that
Vikkey Perez of Richton Park, Illinois, owner of Nubian Beauty
Supply, fears that the small signs of disorder that have come
with the voucher tenants, the unmowed laws and shopping carts
left in the street, and could undermine the neighborhood.
``Their lifestyle,'' she says, ``does not blend with our
suburban lifestyle.''
The point I am trying to get at is why would you go there?
What are you trying to accomplish there if it is not racially
charged, because it is not the case in many of the instances
where Section 8 has been used. I am just wondering why would
you go there.
Mr. Husock. I went to south suburban Chicago on the
recommendation of those who were familiar with the Section 8
program, because I was told there was great concern about the
implementation of the program there. I would just like to point
out for the record that the scholar William Julius Wilson has
talked about the declining significance of race and the
importance of social class difference as an important
determinant of overall social policy.
That is what you are seeing in south suburban Chicago. You
are seeing people from different social classes involved in an
unfortunate, somewhat acrimonious arrangement. I understand
that this does not apply to every situation. The paper that you
are holding in your hand was my written testimony. It is not a
research paper and I did not represent it as such. But I think
that a candid account of the potential for friction between
social classes should be part of a reasonable discussion about
Section 8 that need not be characterized as it has been.
Mr. Scott. I guess what I am trying to get at is what is
your point? You continue to make, even to go further, even go
beyond using quotes, you come to some conclusion that says if
voucher concentration is probable for economic reasons, it is
important for program guidelines to encourage voucher
beneficiaries to take steps to end or reduce their need for
such assistance over time. In fact, such encouragement is just
as important in areas where voucher concentrations are lower.
Again, go to the south suburbs of Chicago and you will meet
minority, first-time homeowners criticizing Section 8 in terms
far stronger than I would dream of using here for, in their
view, supporting households which they see as having brought
problems to their neighborhoods.''
Mr. Husock. Yes.
Mr. Scott. That just troubles me because I just think it is
like finding a needle in the haystack. We have so many great
stories about how Section 8 has revitalized communities and
what a great program it is. It just seems to me that you tend
to go out of your way here to bring some information and come
to some conclusion. Again, just as the gentlewoman from
California said, it is not just coming from somewhere. You are
coming from, you are making a Statement from arguably one of
the most respected institutions in America, next of course to
Florida A&M University, which incidentally last year received
more merit scholars than did Harvard.
[LAUGHTER]
But we really have got to kind of pull the cover over some
of these kinds of statements so that we don't give the
credibility to them. This is just a little bit overblown here.
I just want to call attention to that. You are certainly free
to come to any conclusions, but it just seems to me there is
some rather narrow purpose on this here that we certainly want
to make sure that we raise the temperature on and let you know
that we certainly are not in accord with them on this
committee, and we find that they are certainly not received in
a positive way, because we know of too many very positive
cases. I guess really to take African Americans and put these
words into them to say, it really tends to goad us, certainly
me, the wrong way.
Mr. Husock. Candidly, I included that in my testimony
because I thought that you would be interested, not because I
was seeking to characterize it. I truly indeed thought that you
would want to know honestly, from the bottom of my heart, I
thought you would want to know what I believe was the suffering
that I encountered in that room when I met with those
homeowners. I thought you would want to know that and that you
would care, and that is why I put it in there. If I have
offended because of that, I truly regret that.
Mr. Scott. The point that I am bothered about is the fact
that not that they are there, people can say things, but from a
person in your position to come and to make a blanket
concluding statement of negativity about this program. I do not
question that. I mean, we do not know whether that happened or
not. You say it happened, but the mere mention of using, from
people who need the program the most to be the ones as the
carrier of this, and with your credentials. So that is my
point.
I yield back.
Chairman Ney. The time of the gentleman has expired.
I don't know about Florida A&M, but as a graduate of The
Ohio State University, we have a warm spot in our heart for
Miami.
[LAUGHTER]
Mr. Watt?
Mr. Watt. Thank you, Mr. Chairman.
We have a little private joke going up here about the
Chairman passing over me. Let me see if I can get us out of the
anti-Husock posture and on to another subject. I saved you last
time you were here, Mr. Husock.
[LAUGHTER]
Mr. Husock. I remember that, too.
Mr. Watt. I did you that favor last time.
Mr. Husock. I wrote you that letter.
Mr. Watt. This is getting to be habit-forming here.
[LAUGHTER]
Let me applaud Mr. Katz and Ms. Turner for emphasizing a
point, both of them independently, that I think is very
important and I don't want to go unnoticed here. Both of you
mentioned the need for Section 8 voucher recipients to have a
broader base of information about available housing. I think
Mr. Katz referred to it as a multiple listing of Section 8
availability.
I want to emphasize to the chairman and other members that
in last year's housing bill, which did not go any further after
it passed our community virtually unanimously, but there was a
provision that sanctioned something called the socialserve.com
program that has been used in Charlotte and some of the
surrounding areas where they have come up with a really good
listing of apartments that are available for low-income people,
landlords who take Section 8 vouchers, all different kinds of
criteria. They have developed this and we actually were able to
get some assistance for the continuation and expansion of that
program. It would be similar to a multiple listing of low-
income housing availability.
Second, I want to, not to beat up on Mr. Husock, but to
give Mr. Katz and Mr. Husock the opportunity to debate back and
forth. Mr. Husock said that 28 percent of the recipients of
Section 8 vouchers are also TANF recipients. For the life of
me, I cannot figure out why you would take a 28 percent rate
and say that that justifies treating the program in exactly the
same way that you treat TANF. I would think that the 72 percent
that is left might dictate how you treat the program, but that
is not the point I want to make. Mr. Katz said that it is about
13 or 14 percent, but either way it is a fairly small fraction.
It is not even one-third of the recipients are recipients of
welfare.
So Mr. Husock, how do you get from even a 28 percent usage
rate being welfare recipients to the conclusion that somehow
the same model, even if we accept that the TANF model is a good
model, which some of us do not accept, but if you accept that,
I don't see how you get from 28 percent to the whole thing
ought to be treated as a welfare program.
Mr. Husock. A couple of things. First on the data itself, I
specified 28 percent of non-elderly, non-disabled. If you
include elderly and disabled, you get to a lower figure, as Mr.
Katz did. So we are not really disagreeing about the figures.
Mr. Watt. Well, that even more makes me concerned about
what you said.
Mr. Husock. Okay. I got the idea that they ought to be
aligned because 28 percent, or whatever percentage you take, is
still over 200,000 families in this country. That is a lot of
people.
Mr. Watt. Yes, but you have 800,000 people who are not. Why
should they be following the model of welfare? They are not on
welfare.
Mr. Husock. What we do not know, I think, is whether it is
fair to say that the TANF families are current TANF recipients.
My concern is whether we are, as Congresswoman Waters pointed
out about my concern about single-parent families, whether we
are encouraging formation of families which are going to go on
to have a lot of, you know, are prone to high poverty.
Mr. Watt. You are making a different point. What is the
rationale for not doing that, Mr. Katz?
Mr. Husock. Right. We don't know how many there are, so it
is not necessarily a bad idea to say there ought to be a time
limit, which is where I am going with this.
Mr. Watt. I am not suggesting it is a bad idea. I am just
trying to figure out how you think it is a good idea, how you
take 28 percent and make it a good idea. I think I could make
the case that 72 percent makes it a bad idea a hell of a lot
more than 28 percent making it a good idea. I wasn't even
trying to do that.
Mr. Katz, go ahead.
Mr. Katz. I just wanted to reinforce your point. TANF is
very different from housing. The first difference is that
States were administering welfare prior to TANF. They were
administering the AFDC program. They were experimenting with
the program. They were getting waivers from the prior
administration. So there was expertise. There was an
infrastructure of administration on welfare that does not exist
at the State level on housing. That is number one.
Number two, I think the real conversation we should be
having is how does housing serve as the platform for helping
welfare recipients make the transition to work. And then how
does it reward work once welfare recipients have made that
transition? Because once they have made that transition, it is
not like they are earning sufficient wages to afford housing in
most metropolitan markets in the United States.
So I think the HANF connection between housing and welfare
is a really curious one. I think we have got to understand the
role housing assistant can play in helping welfare recipients
make the transition to work, and then stay in work, because the
affordability problem does not go away even after employment.
Mr. Egan. Mr. Chairman, with your permission could I add to
that?
Chairman Ney. Yes.
Mr. Egan. I would like to speak from experience at the
local level. As the Chairman indicated, I am the Chairman of
the Fairfax County, Virginia Redevelopment and Housing
Authority. I am struck with the ``therefore'' answer here. Just
because the States administer TANF, therefore why should the
voucher program also be administered by the States. Our
experience is that where the connections with jobs, day care,
transportation, supportive services are made are at the local
level. We make those connections. I do not see therefore the
HANF proposal, as I indicated earlier, adding any value to
those relationships. In fact, my staff contends that they in
fact would detract value from those relationships.
Mr. Watt. Thank you.
Mr. Chairman, I don't want to ask another question. I do
want to make two very quick points, though. Number one, I am
distressed that Mr. Husock seems to think that we should still
be in the business of experimenting with poor people. That is
one point and that is not a question.
Second, for the life of me, I have not been able to figure
out what Ms. Khadduri, the point that you were making which
contrasts substantially I think with the point that Ms. Turner
was making, that simply putting something at the State level
makes it more effective. If that were the case, I don't know
why we are even involved in the Section 8 program. I mean, we
ought to just get out of the business and let the States do it.
That is not a question. There are a couple of points in your
testimony where you just kind of assume that something is
better because it is not here. I do not necessarily accept
that.
Thank you, Mr. Chairman.
Chairman Ney. Thank you.
Mr. Clay?
Mr. Clay. Thank you, Mr. Chairman, Ranking Member Waters,
and good afternoon, witnesses.
Let me try a more targeted approach. Let me ask Mr. Olsen
first, you stated that the housing choice voucher program is by
far the most cost-effective program of housing assistance in
the United States. Why do you want to change it? Tell me how
the conversion to block grants will make the Section 8 voucher
program better? And how will it be better for recipients?
Mr. Olsen. Actually, Ms. Khadduri would probably be better
for answering this because what I know about this is really by
reading a paper that she wrote. I think the advantages of going
to block grant are not really large, but she argues and I agree
with her that it will improve the portability of vouchers
across different areas. There would also be some administrative
savings by not having multiple housing authorities dealing with
the same geographical area.
Mr. Clay. I will get to Ms. Khadduri. I want you to answer.
OLSEN: Okay. I think those would be the main ones. I think
I am forgetting one, but I don't regard it as large. I think
the best-case scenario is that it would improve the program
slightly. It has its flaws, but I think this is a very fine
program.
Mr. Clay. I just wanted to hear your thinking along those
lines.
Ms. Turner, you talked about portability of vouchers by
region. Let me ask you out of ignorance, could HUD institute
this policy now?
Ms. Turner. I think HUD could be doing a lot to encourage
the housing authorities in a region to collaborate with each
other more effectively, to share waiting lists, to share
application forms, and to streamline the process when families
want to move from one jurisdiction to another. But HUD could go
further. It could launch a demonstration inviting a regional
institution in a metropolitan area to test the effectiveness of
region-wide program administration, really assuming the
responsibilities that are currently performed by individual
housing authorities.
Mr. Clay. You also raised the concern that States could use
the block grants for untested methods. I guess that is somewhat
sounding the alarm, that it could be a disaster to do this.
Ms. Turner. Yes, I think it could. Again, unlike TANF where
we currently have no evidence on what would happen if there
were time limits, what would happen if subsidy levels were
reduced, what would happen if other cost saving restrictions
were imposed on this program. We can make some assumptions. I
think those kind of changes in the program would undermine
landlord participation, undermine families's ability to move to
neighborhoods of their choice, and leave working families
living in unaffordable housing without the assistance they need
to pay high rent levels.
Mr. Clay. Thank you.
Let me ask for the entire panel, if you could each approach
this question and try to come up with a response. Why are we
going to take a successful program, send it to the States, and
create problems for systems that are not adequate to administer
the Section 8 program? If you could just start on that end and
give it a shot.
Mr. Egan. Mr. Clay, thank you. Let me just build upon my
earlier comment and speak mainly from my experience at the
local level in Fairfax County. We have found that the kind of
things that make for a successful program at the local level
are a high degree of landlord participation, the opportunity to
increase utilization rates, to provide mobility counseling and
other kinds of supports that happen at the local level. We
don't see the State adding value to those activities. We do not
understand why putting the decision making power in Richmond
would make the program work better in Fairfax County.
Mr. Clay. And that relationship is derived from the local
PHA and the Federal government.
Mr. Egan. I cannot imagine why a landlord in Fairfax
County, who we work with very carefully and closely and
supportively, would be aided and helped and encouraged to
participate any better in the program by someone in Richmond
developing that relationship.
Mr. Clay. Thank you.
Mr. Husock?
Mr. Husock. Before Governor Thompson of Wisconsin became
HHS Secretary and initiated his welfare to work program, we
didn't know what the results of that were going to be either.
So if we were to initiate adjustments in the Section 8 program
based on encouraging long-term self-sufficiency and upward
mobility, and to do it on a waiver basis as was suggested by
Dr. Khadduri, I believe, such that the default would be on the
States to demonstrate that there was a reasonable chance and
they had thought their innovations out in a rigorous way, I
don't think there is any reason to presume that we are courting
danger. Again, we saw experimental, I guess that is a
politically incorrect word here, work pre-TANF. And we can see
the same kind of thing again on a waiver basis, nothing
precipitous, but I think that there is no reason to presume
that States are going to follow it up.
Mr. Clay. But Mr. Husock, this is not a debate about TANF.
I think the jury is still out on that. I mean, so what? We have
dumped people off of the TANF rolls, and we do not know what
has happened to those people. We don't know what their plight
is. Some have been successful, but not all. So let's not
compare TANF to HANF because I do not think it is similar. I
really don't.
Because I am running out of time, I would like to go to Mr.
Katz, and thank you for your answer.
Mr. Katz. When I was in the government, what we used to
call this kind of proposals was an ``OMB special.''
[LAUGHTER]
This is a proposal that from my perspective is designed to
cut the budget over time, to de-couple funding decisions from
market pressures, from rent increases, and basically push the
problem down to state governments, which obviously at this
point in time are under dire fiscal stress. So I think we know
what ultimately is behind this kind of proposal.
Mr. Clay. Thank you.
Ms. Khadduri?
Ms. Khadduri. I guess I differ from Mr. Katz in that I am
willing to assume that those who have proposed administration
at the State level do so out of the best of motives, rather
than out of the worst of motives. I do think that consolidating
the administration of the program at the State level could make
it a great deal more efficiently operated.
As I said in my testimony and I have enlarged on it
elsewhere, the program really has become a crazy quilt of lots
of tiny little administrators of programs and of overlapping
jurisdictions within a metropolitan area. Sometimes the city
and the county administer vouchers in the same place. It does
not make any sense, and it does get in the way of effective
program administration because landlords do not know what the
rules are since they are dealing with two different housing
authorities. Families don't know which waiting list to get on.
I also think that the possibility for coordination of goals
and processes for linking the voucher to other social programs
is something that really ought to make us consider state-level
administration. For example, programs for people with chronic
mental illness and with developmental disabilities, by and
large those policies are created and implemented at the State
level. This is a population that uses the voucher program a
great deal, but it has been difficult to serve that population
as effectively as it might be with vouchers because of the
disconnect between the local administration of the vouchers.
Mr. Clay. And after all of that having been said, will you
take into consideration the dire financial straits that our
States are experiencing now, and you still have confidence that
they will be able to administer this program in a manner where
they will not go in and try to manipulate that funding for
other areas.
Are you still confident that the States are capable of
doing that? I mean, look, these States are really dying on the
vine. They are in big trouble financially. And yet you are
confident we can give them this block grant and that they will
focus all of that funding towards Section 8 programs,
especially those States that do not have any experience in
housing? I know my time is up.
Ms. Khadduri. As I said before, I think this should be a
voucher program. I think the use of the program should be
limited to tenant-based assistance, either rental assistance or
homeownership assistance, but that States should not be given
broad flexibility to use the program for other kinds of
housing-related things.
Mr. Clay. Thank you, and I am sorry for going over, Mr.
Chairman.
Chairman Ney. We are overtime on this one, I wanted to
note.
Mr. Davis?
Mr. Davis. Thank you, Mr. Chairman. I thought we were at
the NBA 5 minutes for a second, and not real-time 5 minutes.
Mr. Husock, I was a little bit tempted to start with you
earlier, but my friend from North Carolina, Mr. Watt's, effort
at salvation only got you to purgatory, so I am going to leave
you alone at that point.
What I do want to do, though, is start with Dr. Turner. One
of the observations that you make, Dr. Turner, I suppose is
somewhat related to some of Mr. Husock's observations. It is
the fact that, whether it is racially based or whether it is
based on some kind of class stigma, you name the basis of the
stigma, there has been an effort on the part of some people to
stigmatize the program, and certainly some communities have
reacted perversely or negatively to Section 8 people ``coming
into the neighborhoods.''
Can you talk for a second about how we can grapple with
that problem? How we can deal with the problem of better
educating people about Section 8? Because I think, number one,
there is enormous misconception about it. I think Ms. Waters's
point is certainly accurate that the majority of people in the
program are members of, I hesitate to say majority, because I
guess that would vary from State to state, but certainly a
large number are white or Caucasian. That is a common
misconception about the program, that it is mainly blacks or
Hispanics.
Another common misconception about the program is that a
significant number of people on it are on welfare. Even by Mr.
Husock's account, it is only 28 percent. So how do we grapple
with some of the various stereotypes and misconceptions that do
exist around this program?
Ms. Turner. Thank you. I think that is an important
challenge for the program, to overcome the stereotypes in
receiving communities and also the stereotypes among landlords.
In general, families who receive Section 8 vouchers have been
quite successful in getting access to neighborhoods all over
the metropolitan area. The program does not result in very much
clustering. There are some exceptions to that, and those
exceptions are cause for concern, but they are the exception,
they are not the rule. Our research suggests that when that
kind of clustering occurs, it is because of the persistence of
race-and ethnicity-based discrimination and segregation in
housing markets. It is because so many doors are closed to
voucher recipients that they end up becoming clustered, often
in the few neighborhoods that have not slammed their doors.
Mr. Davis. Let me ask you a larger question, if I can take
advantage of a chance to get into a slightly broader area, we
recognize that there is an enormous amount of discrimination
that still goes on in housing in this country, and the
consequence of it is that our schools are re-segregating.
Another consequence of it is that successful programs such as
this end up getting stigmatized.
How do we, as a practical matter, deal with that larger
issue of integrating our neighborhoods in the context of using
this kind of a program? Can you talk about ways that we could
possibly better use Section 8 to accomplish the goal of
integrating neighborhoods?
Ms. Turner. It is obviously going to take more than the
Section 8 program to win the fight against segregation and
discrimination. But of all our housing programs, Section 8
offers the most in this regard because it gives individual
families the freedom to choose where to go and it lets one
family at a time make a neighborhood choice and move into a
neighborhood. When the program is used effectively, families of
all races get a chance to look at the neighborhoods available
to them; neighborhoods where they are race predominates;
neighborhoods where they would be in a minority; look at them
and decide is this the neighborhood that offers a better life
for me and my children.
When the program works well, they get help making that move
and an effective housing authority would be reaching out to
that receiving community, not sending up alarm bells if there
is somebody new moving in here, but watching and being ready to
help that family and help the community overcome any challenges
of misunderstandings that might arise.
Mr. Davis. Let me turn to a slightly different question in
the time that I have left. There are at least two or three of
you on the panel who have expressed some sympathy with the idea
of decentralizing this program, if you will. I am not quite
sure that I understand that argument. Number one, it is already
a program that is decentralized. It is primarily administered
at the local level as it is. I could see it if we were talking
about a Federally administered program that you wanted to
devolve into the local communities. This is, in effect, a
locally administered program that you want to shift back up to
the States. It is kind of the opposite of the usual Federalism
thrust.
Let me ask those of you who are sympathetic to the goals of
HANF, why not simply find ways to strengthen our local housing
authorities, which seems to me to be a slightly more rational
response to this problem?
Mr. Husock. I actually have some sympathy with that point
of view. I think that HANF seems to be the vehicle, candidly,
that could serve to practically become a means to adopt some
changes in the program. But as I pointed out in my testimony,
in Congressman Watts's home town of Charlotte, I think the
housing authority there is doing a great job, because you
happen to have an executive director who was bold and willing
to experiment and not afraid of getting called names for trying
out a voluntary time limit.
If more housing authorities were encouraged to act in those
directions, that I think would be a very positive thing. So I
do not rule out the idea that housing authorities can do a good
job. It just seems to be as a practical matter, we are more
likely to get quicker change by aligning social and housing
policy at the State level.
Mr. Davis. If the chair would give me an additional minute
or so let me try to make one additional point that I do think
comes to mind as I listen to a lot of you. There is talk from
at least some of you about the utility of putting this program
in the hands of the States, and you are making the usual
arguments about experimentation and about innovation. I think
we have heard all those arguments before.
One thing that strikes me as being very different, though,
is the complete absence of standards that HANF would contain
for what makes for a successful program. It is one thing to say
to the States, go forth and innovate, go forth and create, but
we are not giving them very many standards.
Mr. Husock, you just outlined the kind of local program
that you think works. That is well and good. The problem is
that HANF does not do a very good prescriptive job of saying
this kind of program works or that kind of program doesn't
work. So I will just close with this observation that if we are
even going to seriously consider as a committee and as an
institution adopting HANF, which I hope we don't, but if we are
going to consider doing that and if we are going to consider
making these kinds of changes, it strikes me that we have to at
least staple some genuine standards onto the administration of
Section 8. Otherwise it will become simply survival of the
fittest and that will not be a good thing for a lot of people
dependent on this program.
Thank you, Mr. Chairman.
Chairman Ney. Ms. Velazquez is next, but Mr. Scott, did you
have a comment?
Mr. Scott. Yes, I just had one point I wanted to make right
quick. I appreciate your giving me my time. The other point I
wanted to discuss was that it just concerns me, of all the
things about this move, is the move to the States. Let me tell
you why. I served in the State legislature of Georgia for 28
years, served 20 in the senate, and all of those years on the
Budget Committee. One of the things that bothers me about this
is there is no cry coming from the States of ``give me this
program.'' Many of them said they really don't want it; many of
them are not equipped to handle it; they have no housing
experience; there are no housing authorities there.
The other thing is, these are block grants going down to
States, many States of which have constitutional amendments to
have balanced budgets, which means quite frankly that if those
funds are not dedicated, the only way they can be dedicated is
to come with laws that the legislature will pass that they
cannot be touched. None of those things are coming with this.
This is money being given.
So we really have some very fearful concerns that have not
been addressed that to give this program to the States is just
like throwing red meat out into the lion's den, to paraphrase a
word.
Mr. Davis. Would you yield for a second, Mr. Scott? Mr.
Chairman, if you will just let me make one brief follow-up
point.
Chairman Ney. I will note that it will be on Ms.
Velazquez's time.
Mr. Davis. I can do it in 20 seconds, Ms. Velazquez.
Chairman Ney. I will give you 10.5 seconds.
Mr. Davis. Okay. One of the things that really keeps
occurring to me is that whenever we talk about transferring
these responsibilities to the States, has anybody ever bothered
to ever poll the Governors or the Governors Association to ask
them if they want these things? Those of you who are advocating
that, has anybody even bothered to poll the Governors
Association and ask them? Okay, I read that as a no. Thank you.
Mr. Scott. That is my point.
Chairman Ney. We will turn to the gentlelady from New York
who has extended time.
Ms. Velazquez. Thank you, Mr. Chairman.
Mr. Husock, I am sorry to have missed the earlier
questioning of this panel. I understand, however, that several
of my colleagues addressed negative implications and the tone
of your testimony. I am glad that I went to another meeting so
that I took some fresh air. I really was outraged by your
testimony and your subjectivity. I resent the fact that we
invite witnesses who can come here, read a Statement such as
yours, and then say that those things cannot be attributed to
you because these are words of other people. I don't know if
what you wrote quoting other people was true or not.
Anyway, so let's discuss not what you are attributing to
other people what they said, but let's discuss part of your
testimony that can be attributed to you. You advocate time
limits on short-term assistance to enable long-term reliance.
Approximately 70 percent of people on vouchers are already
working. How will terminating their assistance help these
families to improve their situation and achieve self-
sufficiency?
Mr. Husock. My concern is the formation or, candidly, is
inviting more people to participate over time by encouraging
the formation of new households that are in need. I am hopeful
that if we had a time limit, and maybe it should be a time
limit for new households, for new enrollees, because we should
not change the rules in the middle of the game. I take the
point.
If we can set the rules such that those who are enrolling
in the program now understand, and this is how it was done in
Charlotte. In Charlotte, the time limit was linked up with HOPE
VI and those who were entering the HOPE VI program projects,
they said, okay, this is a really good new unit and we think
that in order to enroll in this program and to move into this,
you ought to think about a five-year voluntary time limit. That
is the way that Charlotte proceeded. I think that is really a
national model.
I am not endorsing a blanket time limit. I am saying we
ought to look to the States to experiment. If States in their
wisdom under the guidance of elected officials such as yourself
think it is precipitous to move people off of Section 8, and we
don't really even have data, by the way, on how long people
stay in Section 8. HUD is not keeping that data and
disseminating it, to my knowledge, so it may be that most
people are not even on the program that long and it would not
even be that big of a change. But it would be a big change for
people who are coming into the program for the first time. I
think a voluntary time limit or perhaps a mandatory time limit
under some States's or localities's aegis is worth trying in a
well-evaluated way, as Dr. Khadduri has said.
Ms. Velazquez. Mr. Olsen, I am intrigued by the proposal
that you set out in your testimony to have PHAs success rate
determine rates to which they can over-extend vouchers. How
would you handle the potential problem of more families finding
a home than there are vouchers available? Who then decides
which family gets the voucher? What would you do to make up the
time lost to the family searching for a home, only to be denied
a voucher? How would you compensate the landlord for any income
lost as a result of potential tenants who were turned away
believing the voucher holder would move in?
Mr. Olsen. I think that we should expect that everyone who
is offered a voucher would use it. We have had an Entitlement
Housing Assistance Program. We tried it during the experimental
housing allowance program, an entitlement program, the
participation rate was less than 50 percent. Those vouchers
were much less generous than the current vouchers. Their cost
was about $3,000 a year, rather than $6,000 a year in today's
prices.
It is often said, people afforded vouchers can't find a
unit. It is not that the unit is not there. The units are
there. It is a question of how much incentive people have to
find them. And when you had an entitlement program, many people
chose not to, some of them went out and searched and simply
could not find a unit within the amount of time they were
willing to devote to it. But these were largely people who were
eligible for the smallest subsidies. People eligible for very
small subsidies just decided they were not going to do it. That
has been found in the Section 8 voucher program. The
participation rate is highest among the poorest people. Why?
Because they receive the largest subsidy for finding a unit.
Ms. Velazquez. But let's take New York, for example.
Mr. Olsen. Yes.
Ms. Velazquez. There are almost 100 percent of vouchers
being used, and then the units are not there.
Mr. Olsen. Well, the units must be there if all of the
vouchers are used. Are you saying all of the people are getting
into units?
Ms. Velazquez. What I am saying is we are facing a housing
crisis in New York City, and the same way in Los Angeles and
other urban cities across the country.
Mr. Olsen. Usage is not going to be a problem, certainly in
the current situation, because there are about 30 times as many
families eligible for vouchers who already live in units that
meet the program's standards as there are vouchers to allocate.
In the current situation, there can never really be a problem
of using all of the vouchers. This is a matter of
mismanagement. When they are not used, in my book it is a
matter of mismanagement by local housing authorities, not
adjusting their over-issuing of vouchers to the success rates
they have actually observed.
It is like college admission officers. If college admission
officers did as poorly as some of the housing authorities, not
all of them, as some of them, they would not be around. They
would not have the job that much longer. So I view low
utilization rates as a failure of administration by local
housing authorities.
Ms. Velazquez. Thank you, Mr. Chairman.
Chairman Ney. Thank you.
Ms. Waters, any additional questions?
Ms. Waters. If I may, Mr. Chairman. You have been very
generous and gracious with your time. We did not have an
opportunity to delve into this idea that somehow this housing
program could teach morality. I am really concerned about the
thinking that we encourage with Section 8 single-parent
families, by giving women, single-parent women housing, somehow
we support the idea that they are not married, or we support
the idea that they are having babies out of wedlock. I am very
bothered by that.
Let me ask, what would you suggest we do with single-parent
households that need housing, that qualify for housing? How
would you develop a policy that would encourage them to get
married, if that is some kind of value that you think should be
inserted into this policy? How would you do that, Mr. Husock?
Mr. Husock. I meant to point out just the figures speak for
themselves, that the largest group of those who receive Section
8 housing vouchers are single-parent families, especially among
non-elderly, non-disabled. So I think it is a program that
addresses that group, I think that is incontrovertible.
My thought was that if for new enrollees particularly, over
time they had the sense that this was a declining subsidy,
perhaps not a precipitous cut-off, but a decline over time,
again something that jurisdictions can consider, then they
would make life choices, maybe they would say, gee, the rent is
going to go up and if I want to buy this unit, maybe it is
worth thinking about whether I want to make some kind of a
lifestyle choice that would have some sort of co-household
head. This is a category of HUD's too.
Ms. Waters. I am sorry. I want to make sure I understand
your Statement. It was kind of couched in some interesting
language. You are saying that find somebody with enough money
to help you pay the rent and get married. It is an economic
decision?
Mr. Husock. I am suggesting that financial incentives could
play a role, sure.
Ms. Waters. That is very interesting. Thank you very much.
Chairman Ney. A question I had, and I want to get to the
second panel, but a quick question I had, Mr. Katz, you were
talking about urban metropolitan areas and some consolidation.
Do you have any thoughts about the smaller areas where you have
30 or 40 vouchers, you know, rural or small areas?
Mr. Katz. I think that is an interesting question as to who
ultimately should bear responsibility for administering the
program in non-metropolitan areas. Perhaps that is where the
States should play a role. Now, some of those smaller areas are
obviously right at the fringe of metropolitan areas, directly
in the path of growth. From my perspective, I would consider
them to actually be part of the metropolitan areas, even if
they are not defined as such.
I still think the question of who administers is different
from the question of how the funding arrangement is set out,
and all the other programmatic restrictions and issues that
have been discussed today. So I think this question of who
administers is separate from some of the programmatic issues
that have been discussed. That is why, from my perspective, the
HANF proposal, whether it is for an entire state or just for
non-metropolitan areas, is very troublesome.
Chairman Ney. Thank you.
I want to thank the panel. I think you have been a
tremendous panel and I appreciate your time here up on the
Hill. Thank you.
Panel two can come forward, thank you. We had panel one and
panel two, and we moved to panel three.
[LAUGHTER]
Let me just introduce the witnesses. Sheila Crowley is
President and CEO of the National Low Income Housing Coalition.
She is a member of the board of the National Housing Trust, the
Poverty and Race Research Action Council and the Technical
Assistance Collaborative. Dr. Crowley lectures widely on the
issues of social policy, social justice and legislative
advocacy. Welcome to the Hill.
Henry Marraffa, Jr., has served on the Gaithersburg City
Council since 1995. He is testifying today on behalf of the
National League of Cities, where he serves on the Community
Economic Development Steering Committee. Ann O'Hara is a co-
founder and Associate Director of the Technical Assistance
Collaborative in Boston, Massachusetts. Previously, she served
the Commonwealth of Massachusetts as the Assistant Secretary
for Housing and Director of Rental Assistance Programs. John
Sidor has 25 years of experience in the housing and community
development field and is currently a public policy management
consultant. He is also adjunct faculty member in the graduate
program of strategic leadership at Mountain State University in
Martinsburg, West Virginia.
I want to welcome the panel. Thank you for your indulgence
of the time waiting. We will begin.
STATEMENT OF MS. SHEILA CROWLEY, PRESIDENT, NATIONAL LOW INCOME
HOUSING COALITION, WASHINGTON, DC
Ms. Crowley. Chairman Ney and Ranking Member Waters, thank
you very much for the opportunity to testify today on the
housing voucher program. I am Sheila Crowley. I am President of
the National Low Income Housing Coalition and I am representing
our members who share the goal of ending the affordable housing
crisis in America and who have substantial experience with and
expertise on the housing voucher program. We understand the
program's value, its issues, and its challenges.
We have advocated with Administrations and Congresses of
both parties to expand and improve the program since it began
in 1974, which coincides with the founding of the National Low
Income Housing Coalition. We consider the housing voucher
program to be a co-equal partner in what we see as the trio of
solutions to the affordable housing crisis, that is production,
preservation and income subsidies. We strenuously oppose the
proposal to convert the Section 8 housing voucher program to a
block grant.
This committee has carefully studied the depth and breadth
of the affordable housing crisis and has come to the same
conclusions as many others that there is a serious shortage of
housing units that are affordable for the lowest income
households. The latest analysis of the affordable housing
crisis is contained in the 2003 state of the nation's housing
report issued by the Joint Center for Housing Studies of
Harvard just this morning. I would like to request that copy of
the report be placed in the record.
Chairman Ney. Without objection.
[The following information can be found on page 411 in the
appendix.]
Ms. Crowley. Okay. I think you will find this to be of
satisfactory scholarly rigor.
Despite housing being the one bright spot in an otherwise
dismal economy, the Joint Center reports that three in ten U.S.
households have housing affordability problems, and 14.3
million households are spending more than half of their income
for their housing. Three-quarters of these are households that
are in the bottom income quintile and the gap between the
number of renter households in the bottom 20 percent of income
and the number of housing units they can afford now stands at
two million.
Our assessment of the housing voucher program is that it is
essential. It is largely successful. It should be funded at an
increased level, and it is in need of reform. Problems that
have inhibited voucher utilization can be grouped into three
categories: administrative shortcomings, discrimination against
voucher holders, and the lack of modestly priced housing stock.
H.R. 1841 only addresses the administration of the voucher
program and does so, in our opinion, in a heavy-handed and off-
target manner. The rationale to block grant the voucher program
to States in order to improve its administration fails to
recognize substantial improvement in voucher utilization in the
last two years, and indeed the information that we have gotten
most recently from HUD is that the utilization rate is now over
95 percent.
There are numerous reasons to reject this proposal. I have
reviewed many of them in my written testimony. You have heard
many of them from other panelists. But let me say that its
greatest flaw is the failure to guarantee that the funding of
the housing voucher program would keep pace with housing costs.
States would be unable to continue to serve the same number of
low-income people at the level needed to assure housing
affordability, much less expand assistance to help the many
thousands of people on housing voucher waiting lists.
Protestations that erosion of the voucher program is not
the intent of the proposal notwithstanding, the mounting
Federal deficit and the corresponding debt that it will create
will force harsh measures in the not-too-distant future. In the
current fiscal environment, converting the housing voucher
program to a block grant is best understood as stage-setting
for future cuts to the program.
There are several straightforward things that Congress can
do to improve voucher utilization, some of which were in H.R.
3995, your omnibus housing bill from the last Congress, and in
bills in the Senate. First, HUD has the option to reallocate
unused vouchers from one administering agency to another, and
Congress should require reallocation from communities that
cannot use all their housing vouchers to those who can, and to
the extent possible keep those housing vouchers in the same
region. The threshold for reallocation should be quite high, a
95 percent utilization rate.
Second, Congress should enact reforms that will incentivize
owners of rental property to participate in the program, in
particular making the inspection process more flexible and less
time consuming for owners, a proposal that was detailed in H.R.
3995. And third, Congress should establish a housing success
fund or other mechanism to help housing voucher holders find
and access available housing with funds for application fees,
credit checks, security deposits and the like, as well as
supporting housing search assistance, outreach and counseling
and those kinds of things.
We know that some landlords decline to accept housing
vouchers because they object to the people who are voucher
holders. Congress should consider a testing program that would
attempt to discern the extent to which discrimination against
voucher holders violates Federal fair housing laws. Ultimately,
the success of the housing voucher program does depend on the
availability of safe and affordable housing.
This committee came to bipartisan agreement last year on
the need for some new form of investment in housing production.
Many others have come to that agreement. So in closing, I would
like to urge the committee to take up H.R. 1102, the National
Affordable Housing Trust Fund Act of 2003, which now has 200
cosponsors in the House, at your earliest possible convenience.
Thank you for inviting me here today.
[The prepared statement of Sheila Crowley can be found on
page 284 in the appendix.]
Chairman Ney. Thank you.
Next witness?
STATEMENT OF MR. HENRY MARRAFFA, JR., COUNCILMEMBER,
GAITHERSBURG, MD, ON BEHALF OF THE NATIONAL LEAGUE OF CITIES
Mr. Marraffa. Chairman Ney, Ranking Member Waters, members
of the subcommittee, my name is Henry Marraffa. I am a council
member of the City of Gaithersburg, Maryland and a member of
the National League of Cities, and I serve on the Community and
Economic Development Steering Committee. It is my pleasure to
be here today to testify on behalf of the National League of
Cities and over 18,000 municipalities across the country, on
the proposed changes to the Section 8 housing assistance
program.
Section 8 housing, also known as the Housing Choice Voucher
Program, is a key part of the Federal government's efforts to
addressing an ongoing national housing crisis through the
private housing market. The NLC believes a radical change in
the nation's largest low-income housing program will
substantially damage a program that is effective in providing
housing assistance to low-income families, the elderly and
disabled individuals.
H.R. 1841, the Housing Assistance for Needy Families
legislation, poses significant threats to the success of the
Section 8 program. In particular, the National League of Cities
is concerned with specific provisions of the legislation that
threaten, one, the overall level of Federal funding and the
funding structure of the program; number two, the reduction in
and constraints on assistance available to low-income families;
number three, local control over housing programs; and number
four, an increase in administrative burden.
Currently, Congress adjusts funding each year based on
changes in actual costs to ensure that housing agencies have
sufficient funds to cover all the vouchers they have used. H.R.
1841 makes no provision for adjusting total block grant funding
based on housing costs, general inflation or any other factor.
The formula proposed would only consider housing costs to
decide the percentage of the total funding provided for the
block grant nationally that would go to each state, not the
cost of the housing at the local level.
If Federal funding falls behind the program's needs, States
would have to contribute their own funds, which they sorely do
not have right now, or scale back the programs. They will do
this in a number of ways: by reducing the number of families
that receive housing vouchers; by shifting housing assistance
to higher income families; they also will shift rent burdens to
families participating in the program; or limiting
opportunities to use vouchers to escape the high-poverty areas.
As things stand now, three out of four low-income families
eligible for vouchers do not receive housing assistance because
of funding limitations. In Montgomery County alone, where I
live, we have approximately 62,000 residents who cannot afford
the market rate of $1,180 for a two-bedroom apartment. Our
voucher program has a waiting list that is currently at 4,370.
Local flexibility is the key to the success of the Section
8 voucher program. Public housing authorities, with the
cooperation of local governments, have a long history of
administering the voucher program in a way that supports
families and ensures accountability and protects the public's
interest. For instance, in my city of Gaithersburg, the Housing
Opportunity Commission of Montgomery County, with which we
work, administers the Section 8 voucher program currently to
4,292 lease vouchers. That is a 96 percent utilization rate. We
actually do not have enough vouchers.
Finally, one of the most problematic aspects of the
proposal is the State's ability to discriminate against sub-
state areas. A state could shift vouchers from one community to
another community; provide more administrative resources to one
area to the exclusion of another; or even bar the use of
vouchers in certain regions. This is politics at its worse.
Such a discriminatory action would be detrimental not only to a
local community not in good standing in the State, but also
would ill-serve the overall needs of the low-income people
living there.
In conclusion, while the Section 8 voucher program has been
successful across the country, the National League of Cities
recognizes, along with most everyone else who has testified,
that the program is not perfect. Perhaps some of the technical
aspects of the program should be revisited by the experts who
administer the programs. The National League of Cities is
committed to assisting Congress and this administration in such
a review. Local government and public housing authorities
belong and should remain the front line to play a primary role.
I would like to state for the record that the National
Association of Counties, the National Association of Local
Housing Finance Agencies, and the National Community
Development Association share our strong commitment to local
control and endorse the position of the National League of
Cities as reflected in our testimony today and our written
testimony.
I would like to especially thank the Center on Budget and
Policy Priorities and the Council on Large Public Housing
Authorities for their technical assistance in preparing this
testimony. I appreciate the opportunity to be in front of you
all on behalf of the National League of Cities, and I would be
happy to answer any questions at the end.
Thank you very much.
[The prepared statement of Henry Marraffa Jr. can be found
on page 335 in the appendix.]
Chairman Ney. I want to thank you.
Next witness?
STATEMENT OF MS. ANN O'HARA, ASSOCIATE DIRECTOR, TECHNICAL
ASSISTANCE COLLABORATIVE, BOSTON, MA, ON BEHALF OF THE
CONSORTIUM FOR CITIZENS WITH DISABILITIES HOUSING TASK FORCE
Ms. O'Hara. Chairman Ney, Ranking Member Waters, and
members of the subcommittee, I would like to thank you as well
for the opportunity to provide testimony today on H.R. 1841. I
do so on behalf of the Consortium for Citizens with
Disabilities, a coalition of approximately 100 consumer
advocacy provider and professional organizations who advocate
with and on behalf of people with disabilities and their
families.
My work has been to expand access to Section 8 vouchers and
other Federal housing programs for people with disabilities. My
professional experience includes 6 years overseeing the
Commonwealth of Massachusetts's statewide Section 8 program.
The CCD Housing Task Force represents people with disabilities
who have very low incomes, including three million who rely on
Federal supplemental security income payments of $550 a month.
They are participants in the program. They are on waiting lists
for the voucher program, or they are trying to get on waiting
lists. They live in institutions, in nursing homes, in board
and care homes that are substandard, in emergency shelters, or
at home with aging parents who don't know how the rent will be
paid once they die.
Two weeks ago, we released a study, Priced Out in 2002,
which found that people with disabilities receiving SSI in the
United States today need to pay 105 percent of their monthly
income in order to rent an apartment at the HUD fair market
rent. A deep housing subsidy like Section 8 is the only way to
solve a housing affordability gap of this magnitude. In the
past 8 to 10 years, the Section 8 program has become a lifeline
for people with disabilities, particularly since more than
400,000 units of public and assisted housing are now designated
as elderly-only.
The CCD Housing Task Force is strongly opposed to the block
grant proposal. We believe that a block grant modeled after
TANF has virtually no relevance to people with disabilities or
to elderly households or families that work, for that matter,
who comprise the vast majority of Section 8 participants. We
believe that Congress should continue to have the direct
responsibility for ensuring adequate funding for all vouchers
and for establishing Section 8 policies. And we believe that
the Section 8 program should continue to be targeted to the
most critical housing needs in our country today, those of
extremely low-income people.
We would like to point out a few specific concerns
regarding the legislation. As others have said, the block grant
is very likely to cap program expenditures as rents rise. As a
result, the number of households inevitably would go down or
the rent paid by the tenant would inevitably go up. Neither of
these options is acceptable to the disability community.
Second, with a flexible block grant, state administrators
could easily redirect voucher funding away from people with
disabilities to serve more popular political constituencies.
They could implement time limits that would be disastrous for
people with disabilities whose impairments are not subject to
arbitrary time limits. And they could implement policies that
segregate people with disabilities, rather than promote
community integration.
We strongly oppose new targeting policies in the
legislation that would permit higher-income households,
including those for people with disabilities above 80 percent
of median income. There are other housing programs that can
assist people at these income levels. Fourth, a block grant
proposal would end the congressional strategy to provide
Section 8 vouchers for people with disabilities who are no
longer eligible to move into elderly-only buildings. It could
also jeopardize 10,000 vouchers currently funded from the
Section 811 appropriations.
Finally, there is ample evidence that a State-administered
block grant will not work; that the transition would cause
chaos in a program that, despite its problems, continues to
work well. Many States have not done a good job running Section
8. Many States do not want to administer a block grant program,
and others lack the capacity to do so.
Section 8 relies on an important third partner, the
landlord. Any radical change proposed would prompt many
landlords to sit on the sidelines. Tenants would also be
uncertain about the future of their rent subsidy, a situation
that would be disastrous for people with disabilities who have
nowhere else to turn.
We believe there are reforms and improvements which could
be made to the voucher program. They have been mentioned by
almost every speaker, like increasing local flexibility in
setting maximum rents, flexibility that was actually in the
program before Quality Housing and Work Responsibility Act was
passed in 1998. We believe that vouchers should be linked more
effectively to affordable units, especially accessible housing
developed with HOME or tax credit financing. We believe that
PHAs should be able to get access to voucher success funds for
landlord outreach housing search and other costs associated
with helping people find housing.
Chairman Ney. I am sorry to interrupt, but they have called
a vote, so if we can get a brief summary on yours because we
might have some questions.
Ms. O'Hara. In conclusion, Mr. Chairman, we would like to
see Congress and HUD work together to seek solutions to these
issues.
Thank you.
[The prepared statement of Ann O'Hara can be found on page
343 in the appendix.]
Chairman Ney. Thank you.
Mr. Sidor?
STATEMENT OF MR. JOHN SIDOR, PRINCIPAL, THE HELIX GROUP,
HARPERS FERRY, WV
Mr. Sidor. Yes, thank you, Mr. Chairman and subcommittee
members. I appreciate the opportunity to speak to you.
Let me just simply summarize my comments and say while I
think the voucher program is a pretty good program, and
probably a key component of national housing policy, it has two
flaws that I think make it less effective than it should be and
over time will make it a less effective program particularly.
And that is, we tend to put vouchers where there are relatively
few jobs for people of modest skills and education levels, and
vouchers tend to be used in isolation from other resources,
particularly human development resources.
I have prepared a Statement in which I elaborate on both
these points. It shows an indication of where jobs are and
where vouchers are, and the disconnect, and shows some examples
of state administration. Twenty-eight States administer the
program, having an average voucher administration of 6,600. I
think their networks of delivery systems really can overcome
both these issues of providing vouchers where jobs are and
using vouchers in conjunction with other resources.
Therefore, I support the idea in concept of a State-
administered voucher program, not a HANF program, but a State-
administered voucher program in which States have the option to
administer the program, modeled something like the CDBG
program.
Is that a quick enough summary?
[The prepared statement of John Sidor can be found on page
388 in the appendix.]
Chairman Ney. Thank you.
I will be very quick because of the series of votes. I want
to ask Ms. O'Hara, did you say 105 percent of the income level
for a person who has a disability?
Ms. O'Hara. Yes. That is the national average.
Chairman Ney. You mean 105 percent is paid for the
apartment?
Ms. O'Hara. It would cost 105 percent of the Federal SSI
monthly payment to rent an apartment priced at the one-bedroom
fair market rent.
Chairman Ney. We would like to pursue that further, just
because the average is 30 percent, if a person does not have a
form of a disability.
Ms. O'Hara. That is right.
Chairman Ney. The question I wanted to ask Ms. Crowley, is
there anything that you think needs changing? I read your
testimony, so I am clear where you are at on Section 8. Are
there some ideas you would have that things do need changing
within the administration of this program? Are you saying we
keep it right as it is?
Ms. Crowley. I certainly think that there are ways to make
the administration more efficient. For example, authorities
that have a small number of vouchers, could create some sort of
consortia. That would make more sense. I certainly think that
the work that Bruce Katz has done on metropolitan understanding
of regional areas contributes to understanding how it is that
housing markets work, and that if housing authorities could in
fact come together and figure out how to do regional
administration, that would make a lot more sense than a lot of
this overlap.
On the small ones I live in this little city of
Fredericksburg, Virginia. The State of Virginia administers the
voucher program for about 40-some different small jurisdictions
that do not have their own housing authorities. Three of them
were together in Fredericksburg and surrounding counties. It
was very inefficient. And so those three jurisdictions came
together in and of themselves, made the decision to do it on a
regional basis, contracted with a nonprofit that was doing
other kinds of housing programs, building housing with tax
credits and those kinds of things, but has housing expertise,
and got the Virginia Housing Development Authority to agree to
that, made a proposal, and that is going very nicely.
So there are certainly lots of options that are available
and that I think we should encourage them as much as possible
Chairman Ney. Thank you.
The gentlelady from California?
Ms. Waters. I am fine, Mr. Chairman. There is one thing
that I have not given enough thought to, but I want to, and
that is support for landlords. I want to find out the problems
that are associated with the landlords and why some do not want
to accept vouchers, and see if the bureaucracy has grown so
much that it is discouraging them, and see what we can do; see
if there are any real problems there. That is one area I am
going to pay a little bit of attention to. The other is
automatic. We support the program as it is and are opposed to
moving this to the States. The one area where I think we can do
something is working with landlords.
Ms. Crowley. If I may, that certainly was an area that was
addressed in H.R. 3995 last year and that could easily be
incorporated into a much less drastic piece of legislation.
Chairman Ney. Thank you.
Mr. Sidor, one quick question or clarification. You support
block granting it, but you do not support HANF?
Mr. Sidor. I think that is true. I think that they should
have the option of administering a flexible voucher program,
not HANF as proposed in the legislation.
Chairman Ney. Thank you.
The chair notes that some members may have additional
questions for the panel which they may wish to submit in
writing. Without objection, the hearing record will remain open
for 30 days. Hearing no objection, it is open for 30 days for
members to submit written questions to these witnesses and
place their responses in the record.
With that, we will conclude the hearing. I want to thank
you for your time on the Hill.
[Whereupon, at 4:54 p.m., the subcommittee was adjourned.]
THE SECTION 8 HOUSING
ASSISTANCE PROGRAM:
PROMOTING DECENT AFFORDABLE
HOUSING FOR FAMILIES AND
INDIVIDUALS WHO RENT--DAY 4
----------
Tuesday, July 1, 2003
U.S. House of Representatives,
Subcommittee on Housing and
Community Opportunity,
Committee on Financial Services,
Washington, D.C.
The subcommittee met, pursuant to call, at 10:30 a.m., at
the California Science Center, Los Angeles, California, Hon.
Robert W. Ney [chairman of the subcommittee] presiding.
Present: Representatives Ney and Waters.
Chairman Ney. I want to say hello to all the witnesses and
everybody in the room. And this is a--I think it's the fourth
hearing on the issue of the Subcommittee on Housing and
Community Opportunity. My name is Bob Ney.
I'm a Congressman out of Eastern Ohio, I'd like to
introduce someone, who is no stranger to anyone in this room,
Congresswoman Maxine Waters of California. And this is the
Section 8 Housing Assistance Program. And today the
subcommittee continues its efforts to examine the current
operation and administration of the Section 8 Housing Choice
Voucher Program and review various proposals intended to make
the program more efficient and cost-effective.
Voice. Excuse me, sir. Your volume needs to go up a little
bit. I can't hear you.
Chairman Ney. Okay. We'll do that. Usually there is a lot
of hot air that comes out of Washington. Just need to direct it
to the microphone.
And again, this is the fourth hearing in the series and the
first field hearing on the Section 8 program. So we're very
happy to be here for the first hearing outside the Capitol.
Michael Liu, Assistant Secretary of Public and Indian
Housing Department of Housing and Urban Development testified
at the first hearing on May 22nd, 2003. On June 10th, the
subcommittee heard testimony from representatives from tenant
organizations, landlord and development organizations, large
and small public housing agencies, and the State housing
finance agencies.
On June 17th, the subcommittee heard witnesses from the
academic community and advocacy groups from around the nation.
Since the 1970s, rental vouchers have been a mainstay of
Federal housing policy. Currently the Section 8 Housing Voucher
Program supplements rent payments for approximately 1.5 million
individuals and families.
While the concept of the program remains sound, the program
has often been criticized for its inefficiency. More than a
billion dollars is recaptured from the program every year,
despite long waiting lists for vouchers in many communities
throughout the United States.
The rising costs of the Section 8 program and some of the
administrative concerns have caused many in Congress and the
administration to conclude that the program is in need of
reform.
Among the reforms that have been discussed is the
administration's proposal to replace Section 8 tenants' housing
vouchers with the State-managed blocked grants.
I have introduced this bill upon request of the
administration. And for those of you not familiar with the
``upon request,'' it throws the bill out for discussion. And as
Chairman of the subcommittee, I've agreed to do that so we can
discuss this issue, both in the Capitol and across the U.S.
Rather than contracting with the estimated 2,600 separate
public housing authorities, as HUD currently does, the
department, under this provision, would allocate funds to the
50 States, which could then work with public housing agencies
or other entities to administer the voucher program.
As well as examining the merits of this proposal, the
subcommittee continues to discuss other avenues for reform. And
I would also encourage people, if they are not in support of
this proposal, to also give us ideas if you feel there are
needs or ways to reform.
This afternoon our two panels consist of government and
nongovernment experts from the Los Angeles metropolitan area on
the Federal government's primary program addressing the housing
needs of low income renters, Section 8.
I look forward to hearing the different perspectives and
would like to welcome all of our distinguished witnesses as we
discuss voucher utilization in the high cost areas, such as Los
Angeles, and ways to improve America's communities and
stressing housing opportunities for all citizens.
I just want to say, before deferring to my colleague, that
I appreciate the work of Congresswoman Maxine Waters, both
within the U.S. Capitol, Washington, D.C., and also outside on
many issues, not just this particular issue. We've been able to
pass a couple significant pieces of legislation out of the
housing subcommittee on a bipartisan basis. And I just
appreciate the time that she has spent.
And this is the recess, and she's dedicated two solid days
to issues here in California. So it's been a great working
relationship.
[The prepared statement of Hon. Robert W. Ney can be found
on page 468 in the appendix.]
Chairman Ney. And with that, I'm going to defer to our
ranking member, gentlelady from California.
Ms. Waters. Thank you very much, Mr. Chairman.
I'd like to welcome you all to this very important hearing
that we are having here today. But I'd like to say a very
special word of thanks to my colleague, Chairman Ney, for
coming to Los Angeles and holding this hearing.
As he mentioned, this is the first field hearing that has
been held in this Congress. He took time from his break to be
here. He could be in his own district, or he could be taking a
vacation, like many of the rest of our colleagues are doing at
this time, but he honored my request to be here. And I'm very
appreciative for that, and I welcome him.
Yesterday we had a most important hearing on the Community
Development Block Grant Section 108 Loan Guarantee Program in
the City of Los Angeles. So this is his second day here where
he has spent hours yesterday, and will be spending hours today,
dealing with these concerns that I have addressed and asked him
to come out for.
Let me just say that we are concerned about how we can use
our positions to get something done in this country. This is a
bipartisan effort, looking at CCG and Section 108 and housing
funds that we send from the Federal government to our city in
an attempt to make sure they're utilized in the best way
possible.
On Section 8 he certainly did not have to do this, because
he was asked by the administration to carry it, to put it out
there so that we'd create the discussion. He certainly didn't
have to hold this hearing today. But I'm very pleased that he
is doing it.
And I think working together we may be able to provide some
leadership for both of our caucuses and to this administration
about Section 8.
With that, I'm going to turn it back over to you, Mr.
Chairman, to call on your witnesses.
Chairman Ney. Before we begin, behind us--why don't you
raise your hand if you're staff of either side of the aisle,
give them a round of applause.
And with that let me just introduce the panel.
Matthew Franklin, Director of the California Housing
Community Development, Sacramento, California; Donald J. Smith,
Executive Director, Housing Authority of the City of Los
Angeles; third is Carlos Jackson, who was here yesterday,
Executive Director, Los Angeles County Community Development
Commission; also Larry Triesch, Assistant Deputy, Long Beach
Housing Authority, Long Beach, California; Eugene Burger,
Eugene Burger Management, on behalf of the National Leased
Housing Association, Washington, D.C.; and Thomas K. Shelton,
Partner, Greystar Real Estate Partners, and President of the
National Apartment Association, and also appearing on behalf of
the National Multi Housing Council of Phoenix, Arizona.
I would also note to all the witnesses that the members may
have additional questions for this panel which they may wish to
submit in writing.
Without objection, the hearing record will remain open for
30 days for members to submit written questions of these
witnesses and place their responses on the record. Hearing no
objection, that will be the format.
Chairman Ney. The other thing I would note is we have a
timer, and we would ask--and it will beep and that means you
went five minutes. We would ask for five minutes. And now
anything you have without objection will be submitted. If you
have additional written testimony for the record. But if you
could kind of try to hold to the timer for five minutes because
we have a second panel we will make sure we'll finish.
With that we will begin with Mr. Franklin. Welcome.
STATEMENT OF MATTHEW O. FRANKLIN, DIRECTOR, HOUSING AND
COMMUNITY DEVELOPMENT, STATE OF CALIFORNIA
Mr. Franklin. Thank you, Chairman Ney and Congresswoman
Waters, for the opportunity to testify today and thank you for
holding this hearing in California.
As you may be aware, prior to joining the Davis
administration, I served in several senior positions at HUD
from 1997 to 2001, and have seen firsthand the good work you
both do on housing issues, and also have done a lot of work
with your staff, Mr. Jones and Mr. Olson, two of the hardest
working Hill staffers on housing issues. So we really
appreciate you taking the time to get out here.
Under Governor Davis' leadership, the State of California
is leading the nation in providing state funding and programs
to meet its citizens' housing needs. In his first term, the
Governor appropriated over $500 million for the development of
affordable housing. This amount is three times greater than any
prior California Governor appropriated in their entire term.
And then last year, the Governor, along with the
legislature, and most importantly, the people of California,
passed Proposition 46, which is a $2.1 billion bond to support
development of affordable housing. This is the largest housing
bond in the nation and the largest in California history.
The Housing Choice Voucher Program is a key component of
our efforts to meet the housing needs of low-income families.
Last year the State received approximately 258,000 vouchers,
which were administered by a network of 104 public housing
agencies.
The State of California, through my department, Housing and
Community Development, also administers vouchers in 12 rural
counties. We administer about 780 vouchers.
Voucher assistance generally serves extremely low income
Californians, those earning less than 30 percent of area median
income. The average California household receiving a voucher
has an income of less than $14,000.
55 percent of participants are families with children, many
of them headed by a single parent, most often a single mother.
47 percent of those served are households headed by elderly or
disabled persons.
Despite a difficult housing market in much of the State,
the California PHAs and the State have been generally
successful in ensuring high utilization. The Statewide average
utilization rate is 96 percent. And for the piece that the
State administers, we currently have a 95 percent utilization
rate.
However, the State does face many challenges. We are, as
I'm sure you're aware, home to 18 of the 25 highest cost
housing markets in the country. In these areas, rents have been
rising at double-digit rates for several years, and vacancy
rates are well below 5 percent.
When combined with the low production of new housing units
during the 1990s, these factors make it difficult for voucher
holders to identify housing at the prescribed program rents in
high cost areas. However, our single biggest problem with the
HCV program in California is woefully inadequate funding.
According to the 2000 census, only 17 percent of
California's low-income households are actually assisted by the
program.
In regard to HANF, the Davis administration is concerned
that the legislation would eliminate the existing commitment to
fully fund all authorized vouchers and accommodate renewal
costs at the real rate of growth in rents.
In my view, this is the single most problematic feature of
the proposed legislation. As you know, under the current
system, Congress is committed to renewing all existing
vouchers, with an annual adjustment in funding that accounts
for increases in program costs and rents.
This system ensures that the number of families served does
not decrease over time, and it is designed to empower program
participants by paying a fair market rent for housing.
HANF would substitute this system of safeguards for one
that would simply block grant funds to participating States,
with no specific commitment for renewal funding or annual
increases.
In the past, Congress has utilized the CPI or other like
indices to facilitate annual adjustments for other similar
state block grant programs. Using CPI for this program would be
a disaster for the people of California.
According to the Center for Budget Policy and Priorities,
over the last several years rents nationwide have increased at
a rate equal to more than twice CPI. In California, where
housing costs are the highest in the nation, the gap between
annual rent increases and CPI is likely to be even greater.
HUD's own annual adjustment factors for project-based
Section 8 in California indicate annual increases three to four
times CPI in the past year.
If program funding does not keep pace with rents, the
number of Californians served by the program would steadily
decline over time. The only way to offset this erosion in
program funding would be to target the program to higher income
families or to require participating families to pay a larger
share of their income for rent, actions that the Davis
administration does not support.
The program funding mechanism prescribed by HANF also would
appear to preclude the possibility of future incremental
voucher funding, something that is desperately needed in
California.
By wiping out the Congressional commitment to fully fund
voucher renewals and account for real program costs, HANF
would, in my view, seriously undermine the Housing Choice
Voucher Program.
It would eliminate one of the program's most valuable
features, its focus on serving extremely low income families,
and it would create unacceptable hardship on participating
families by substantially increasing their rent burden.
There are many other ways to improve the current program
without sacrificing this assured funding.
I would join others who have advocated for funding for
mobility counseling and assistance programs for voucher
recipients; funding for aggressive landlord outreach, service
and incentives programs wherein PHAs continuously recruit new
landlords to participate in the program, and importantly,
regional collaboration, something HANF does contemplate, or
regional administration of the voucher program to help address
administrative barriers to portability.
Thank you very much for this opportunity.
[The prepared statement of Matthew O. Franklin can be found
on page 478 in the appendix.]
Chairman Ney. Thank you.
Chairman Ney. Mr. Smith.
STATEMENT OF DONALD J. SMITH, EXECUTIVE DIRECTOR, HOUSING
AUTHORITY OF THE CITY OF LOS ANGELES
Mr. Smith. Good morning, Chairman Ney. Welcome to Los
Angeles.
Congressperson Waters, thank you and Chairman Ney for
bringing the important work of the Congress to our city.
My name is Don Smith, and I returned to be the executive
director here in 1994. In 1975, I was the responsible manager
for starting the Section 8 program at the Authority.
Since the initial 1,500 certificate allocation, the program
has tried to keep pace with the increased need for decent and
safe housing. 70,000 households are on the waiting list, with
4,000 new households registering each month. 50,000 allocated
Section 8 resources meet only a small portion of the desperate
needs----
Chairman Ney. Move the microphone just a little closer.
Mr. Smith. Sure--the desperate needs of these very low
income and low income families seniors and the disabled.
Just as the housing authorities in Ohio work closely
together, so do we in Southern California, with programs
tailored to meet local markets, local governments, and most
importantly, close to the needy people we serve.
The administration's HANF proposal, and you have heard most
of the arguments in your hearings, promises to ease monitoring
through 50 States, rather than 2,600 Section 8 providing local
housing authorities.
The proposal seems directed at the increasing outlay of the
program. It would also give the States new policy and program
flexibility. We do understand that it would have discretion on
subcontracting.
If I believe the program is broken at the service delivery
level, I would support looking to a realignment of efforts to
effectively house very low income housing persons. I do not
believe that to be the case.
Lease up in Los Angeles is 99 percent. This success is
based on partnerships with 17,000 owners and numerous owner
associations, which has resulted in more units being made
available and in good condition.
We support voucher holders with trained staff, other
partner agencies and nonprofits in both their search and self-
sufficiency and needs.
Following earlier models like Project Build, we learned to
integrate housing supportive services and job training to add
value to the future of these families, hopefully we will
continue to improve our support of voucher holders in their
difficult task of securing decent homes.
Besides continued operational improvements internally in
the housing authority, how can we improve the program?
Let me give just one brief example. This is a market-driven
program and needs market flexibility, especially as the markets
tighten and rents spike. When HUD reduced the basis for the
FMRs to the 40th percentile in a declining vacancy market,
followed by an unwarranted 14 percent cut to the FMR, it caused
a long-term disruption to voucher holders and contributed
substantially to the increased failure rate.
Rent setting flexibility could have made a huge difference.
No immediate rent mechanisms were available. By the time we had
succeeded in HUD's lengthy approval process, the market and
thousands of opportunities for voucher holders were gone.
And finally, HANF seems like an idea whose time has not
come. In the interest of continuing to serve local families,
the elderly and the disabled, I urge you not to adopt the HANF
proposal and to continue working with local jurisdictions and
housing authorities directly.
On behalf of the Board of Commissioners of the Housing
Authority, as Chair, Ozie B. Gonzaque, I want to thank you for
your careful evaluation at the hearings on this program. Thank
you.
Chairman Ney. Thank you, Mr. Smith.
[The prepared statement of Donald J. Smith can be found on
page 518 in the appendix.]
Chairman Ney. Mr. Jackson.
STATEMENT OF CARLOS JACKSON, EXECUTIVE DIRECTOR, LOS ANGELES
COUNTY COMMUNITY DEVELOPMENT COMMISSION
Mr. Carlos Jackson. Good morning, again.
Yesterday I had the opportunity to testify on the Community
Development Block Grant program and the importance to Los
Angeles County.
Today I'd like to really again express the importance of
housing and impose the burden on the Federal government to deal
with the real major crisis in Southern California.
Therefore, I'd like to cover three areas in my testimony.
One is to talk to about this legislative proposal. The second
one is to discuss the proposal to cap and restrict Section 8
administrative fees, particularly how it's detrimental to
managing public housing and also some of the things that we
have done to make Section 8 a success in Los Angeles County.
First of all, we administer 20,000 Section 8 vouchers in
Los Angeles County. We--on behalf of six small public housing
authorities, we manage their programs as well. We are the
fourth largest local administrator in managing Section 8.
73 percent of our voucher holders are below 30 percent of
area median income area. 24 percent are at 30 to 50 percent. So
you can see that we're dealing with extremely low income
residents.
As Don mentioned, one of the key areas are our landlords.
We have partnership with over 100--I'm sorry--10,000 property
owners in our program.
I'd like to announce as of yesterday, we are leased up 100
percent. We exceeded our annual budget authority by a few
percentage, because again recognizing that this is a real tight
real estate market, and rents are continuing to increase.
Just for your information, in California there are over
300,000 vouchers. Between the city and the county, we
administer 14.4 percent of those vouchers in the State.
I'm sorry. Let me back up again. There's 300,000 vouchers
in the State, which represent 14.4 percent of the nation's
total. Between the county and the city, we represent 22 percent
of the State's vouchers. So you can see that again, there is a
major clientele in Southern California.
There was reference to rent. The market rent for a two-
bedroom unit in Southern California is $1300. The fair market
rent that we are allowed to operate with is $967, and the gap
continues to grow.
Our vacancy rate in LA County is 4 percent, less than 4
percent. And the median price to purchase a home is over
$300,000, where only 36 percent of the families in Los Angeles
County can afford to purchase a home. So that number continues
to increase over the period of time.
As a local administrator when the proposal came out, my
question: Was why? What is happening to stimulate this kind of
a legislative proposal? It just doesn't make sense.
Over the past years there have been gallant efforts made to
lease up to 100 percent. There is a great need at the local
level. I do not see inefficiencies, ineffectiveness.
What I see is a great local partnership between landlords,
tenants, the community and public agency to make this a real
successful program, this in spite of all the real estate market
conditions in Southern California.
It is very hard to penetrate the rental market, but there
is a real sincere interest on the part of landlords and
property owners to participate in the program.
To transfer it to the State would remove their ability to
interact locally, and I would feel that they would be more
isolated and alienated from being a good partner at this
particular time.
It would be very logical and very business like for them
not to participate today. They could get more rents on the open
market than participating in our program.
But I have found out that there are quite a few landlords
that are very sincere and have a commitment to the local
community, and they want to participate and be part of the
overall effort of providing affordable housing in Southern
California.
The other side on the performance issue is that lease up
nationwide has increased. There has been much attention
throughout the country to make this an ongoing successful
program. So, therefore, I don't see why there is a need to
change to this level.
I would also think it would be very harmful to the program
to try to think about transition during a time when many of the
successes are occurring today. How long would it take to
transition the program from the Federal level to the State
level, particularly in times where many of the State are facing
fiscal crisis?
As you might be well aware, in the State of California the
deficit is at $38,000,000. And today we still do not have a
State budget for local government.
So to think about the most meaningful protocol for
affordable housing in a local community and to debate this at
this time, I think is not right. And that's why what I was
saying early on. It just doesn't make sense.
Chairman Ney. The time has expired. Would you like to just
summarize it and put most of your comments in the record?
Mr. Carlos Jackson. Well, one of the reasons we're--I mean
what we did to lease up to 100 percent, we had to go back and
revamp our program, really look at streamlining things that we
were doing that should not have been done, things that we could
improve. But one of the most critical factors that we had was
just to listen to landlords and determine what aspects of our
program we could improve so they could feel comfortable and
gain confidence in our ability to work with it.
And I thank you for the time.
Chairman Ney. Thank you, sir.
[The prepared statement of Carlos Jackson can be found on
page 488 in the appendix.]
Chairman Ney. Mr. Triesch.
STATEMENT OF LARRY TRIESCH, ASSISTANT DEPUTY DIRECTOR, LONG
BEACH HOUSING AUTHORITY
Mr. Triesch. Thank you, and good morning, Chairman Ney,
Congresswoman Waters.
I'm the Deputy Executive Director of the City of Long Beach
Housing Authority. And I'm honored to have been invited to
speak before you. And I'm pleased that you are seeking
testimony with regard to the proposed block renting of the
Section 8 program.
The need for assisted housing in Long Beach is great. Of
our 163,000 households, 25,000 of them are at 30 percent or
less than median income.
Our housing authority provides vouchers to a little more
than 6,000 of these households. And many others are housed in
privately owned, but publicly subsidized units. But there are
still thousands of very low income households in Long Beach who
are in need of housing assistance.
As an anecdote, we recently opened our waiting list, and
when, after presenting information on the application process
at our local Cambodian community center, an older gentleman
came up to me and asked: ``What if four families are all
sharing the same house? Should they all put down the same
address as their place of residence?''.
To me that expresses the need for assisted housing better
than a book full of statistics. And by the way, we did receive
approximately 15,000 applications for the waiting list. So
there is a tremendous need.
We are a successful housing authority. We are 100 percent
leased up. In fact, I got a report from my accountant
yesterday, we're 101 percent leased up, which will cause me
another problem, but that's not a bad problem.
We are a high performer, according to the SEMAP scoring. We
are always looking in ways--looking for ways to make our
service more efficient and more attractive to the landlords,
who are the one critical element to our program.
Because we operate at the local level, we are able to
partner closely with the apartment association, California
Southern Cities, with our local Legal Aid Foundation, with the
Fair Housing Foundation, just to name a few organizations.
Because of partnerships such as these, we can provide good
service to both our landlords and to our participating
families. So we are very concerned that the proposed block
granting of the Section 8 program could seriously impact the
delivery of housing assistance to the families most in need.
Two critical issues come immediately to mind, and you've
heard these over and over again, and this morning as well.
Number one, the program would no longer be a cost-driven
program, but would become, instead, just a number, a dollar
amount that could easily be reduced in tough times or not
increased to keep up with the actual cost of housing.
The second issue is just so obvious. If the State becomes
the grantee, there is no way to know how the State will deliver
the services. Will the State contract with the city of Long
Beach Housing Authority?
Will the State contract with the larger regional entity?
And then what would happen to all the goodwill and the
relationships built up at the local level to support landlords
and the people we serve?
And finally, as I understand it, one of HUD's stated goals
is to end chronic aimlessness within 10 years. I think it's
important to understand, as my friend Steve Ranahan, from the
Housing Authority of the City of Los Angeles likes to say, that
the Section 8 program prevents aimlessness.
Most of the people that we serve are just one step away
from being without a roof over their head. Each family we serve
is given the chance to live in dignity, to live in a stable
situation, where the kids can go to school and come home and
have a place to do their homework.
Each elderly person on SSI that we serve will have enough
money through the month to purchase food for each meal.
I know that there is a concern that the program is
expensive. But if we want to help people pay the rent, I think
the program will be expensive. I think there are ways that we
could reduce the administrative costs a bit, given a bit of
administrative leeway, regulatory leeway at the local level.
I think that we could cut some administrative costs. I have
examples. These are sorts of nuts and bolts that came out of my
staff. For example, if we enacted a legislation--enacted a
provision that would not allow landlords to increase their rent
more than one time a year, we would serve energy and costs and
money.
If--currently we put landlords in abatement after 30 days
when they fail to comply with our HQS requirements. If we said
``In 45 days, if you do not comply, the contract is
terminated,'' we would save energy and we would save money.
I think that the elderly should be recertified once every
two years, rather than every year. And I think that we should
tie the inspection process to the annual recertification
process.
I think that we should get rid of the 40 percent
affordability limit. Let people make their own choices.
There's lots of areas like this where we could work the
program and save money administratively.
In conclusion, I ask that you don't fix a program that
really isn't broken.
Thank you for the opportunity.
Chairman Ney. Thank you very much.
[The prepared statement of Larry Triesch can be found on
page 548 in the appendix.]
Chairman Ney. Mr. Burger.
STATEMENT OF EUGENE BURGER, PRESIDENT, EUGENE BURGER
MANAGEMENT, ON BEHALF OF THE NATIONAL LEASED HOUSING
ASSOCIATION
Mr. Burger. Chairman Ney, members of the subcommittee, my
name is Eugene Burger. I'm President of Eugene Burger
Management Corporation.
We represent some of the tenants here. We've worked with a
lot of the housing authorities and PHAs around the area right
here in Los Angeles.
Today I'm representing the National Leased Housing
Association, whose members include both owners and managers of
Section 8 housing, as well as housing agencies that administer
the Section 8 voucher program.
We appreciate the opportunity to testify on H.R. 1841
administration's block grant or HANF program. We urge the
subcommittee to reject H.R. 1841. This is an unnecessary
reform, because the Section 8 voucher program works quite well
in its current form.
In fact, the Section 8 subsidy has provided much needed
rental assistance to low and moderate income tenants so they
can live in safe and decent housing.
I would like to discuss two important points regarding the
administration's proposal: The effectiveness of the current
system and utilization of the Section 8 vouchers. We feel that
it isn't broken, and if it isn't broken, we don't need to fix
it.
However, under HANF, the State would receive block grant
funds from HUD to fund Section 8 vouchers. The State may, but
is not required to subcontract with housing agencies or other
entities within the State to administer the block grant funds.
Thus the State could choose to use these funds for other than
housing purposes. Meaning that the public housing agencies
would receive less funding than needed to administer the
Section 8 vouchers.
In a State such as California, where there is a substantial
budget shortfall, it's highly likely that the block grant funds
will be diverted to other programs at the State's discretion.
And, because HANF provides that funding for Section 8
vouchers in subsequent years is tied directly to the amount of
funds used the previous year, this diversion of block grant
funds could, over a period of years, cause the public housing
authorities to lose their funding for Section 8 vouchers
altogether.
Thus, we believe that block granting of Section 8 funds to
the States could have disastrous results for affordable
housing, and could have the long-term effect of eliminating
Section 8 vouchers.
HANF will only serve to widen the gap between the need for
affordable housing subsidy and the amount of subsidy available.
Again, the current system of delivering the Section 8 funding
administration program is working fine.
Utilization of the Section 8 vouchers in high rent areas,
such as Los Angeles, we are somewhere in the 95 percent range
right now. And if I heard correctly, we're getting close to 100
percent right now. So I think that that delivery system here is
working very well.
One of the important benefits of Section 8 vouchers is
their portability feature. In theory, a Section 8 voucher
issued by a public housing agency in Los Angeles to a low
income family can be taken to any rental property, so that the
family can live wherever they choose.
This is a laudable goal, albeit unrealistic goal, due to
limits imposed on the value of the Section 8 voucher. The
reality is that FMR-based rent and the value of the voucher
relegates the family to lower rent areas.
And one of the things that we haven't talked about so far
in this is, whether we like it or not, in California a number
of properties are being converted from affordable housing to
conventional housing.
The vouchers are allowing a smooth transition in that
respect. We are able to negotiate with local housing
authorities for an annual period to carry over those tenants
who are in place now and give them an annual--a year to find
new housing, where they can take their vouchers. That's a very
important feature that is currently in need of.
The payment standards set by housing agencies are tied to
the FMR. However, HUD established fair market rents are often
not reflective of real market conditions, especially in places
like Los Angeles where rents continue to rise.
HUD has taken steps to rectify this situation in recent
years by providing higher FMR's in certain markets, but often
the FMR rents lag behind the actual rents in the area.
When you compare actual comparable market rents to FMR's in
high rent areas, you realize that the FMR's are not fair
market. The result is that the voucher payment standard limits
the value of the Section 8 voucher, which does not cover the
owners' prescribed rents, which is based on actual rents.
Ideally the housing agency should be able to set a payment
standard relative to market rents in the area served. However,
if the FMR standard is to continue to be used, PHAs should be
able to set the payment standard at whatever percentage of FMR
is necessary to accommodate that.
Currently, the PHAs are allowed to go 110 percent and 120
percent over with HUD approval.
In conclusion, HANF does not address the utilization of
Section 8 vouchers and does absolutely nothing to improve the
mechanism for delivery of the funding and administration of the
Section 8 voucher program.
On the contrary, by block granting the Section 8 voucher
funds of the States where they are vulnerable to be siphoned
off to fund state budget shortfalls, HANF stands to place the
future of Section 8 vouchers in grave doubt.
As mentioned, the current delivery section is alive and
well, and we think it should be continue to be used that way.
And I would support the idea of looking at some flexibility
in the 40 percent cap rate. Also going to a move-in now for a
new tenant. Give them 30 days. If there's an HQS problem, then
fix it in 30 days or cut off the funding.
Those are some of the things we could do. Thank you.
Chairman Ney. Thank you for your testimony.
[The prepared statement of Eugene Burger can be found on
page 470 in the appendix.]
Chairman Ney. Mr. Shelton.
STATEMENT OF TOM SHELTON, CPM, GREYSTAR REAL ESTATE PARTNERS,
AND PRESIDENT, NATIONAL APARTMENT ASSOCIATION, ON BEHALF OF
NATIONAL MULTI HOUSING COUNCIL
Mr. Shelton. Chairman Ney, ranking member Waters, my name
is Tom Shelton. I'm a partner of Greystar Real Estate Partners,
one of the largest privately held apartment firms in the
country.
In addition to that, I'm also the 2003 President of the
National Apartment Association and a member of the National
Multi Housing Council.
Our combined memberships are engaged in all aspects of the
apartment industry, including development, ownership,
professional management and finance.
It is my pleasure to testify on behalf of both
organizations. NAA and NMHC commend you, Chairman Ney, for your
leadership, and we thank the members of the subcommittee for
your valuable work addressing affordable rental housing in
America.
We also commend HUD Secretary Mel Martinez and the current
administration for their interest in improving the Section 8
Housing Program.
We too believe Section 8 is critical to meet the housing
needs of low- and moderate-income families, and believe that
improving the existing Section 8 program is a central part of
meeting those needs.
Although it is well intentioned, we think the Housing
Assistance for Needy Families Act of 2003, H.R. 1841, will not
reduce the administrative cost to participating property
owners, and will not maximize program benefits for residents,
as it does not bring the program closer to conforming to
conventional market practices.
My testimony will first focus on how the Section 8 program
works in tight housing markets since barriers to program
participation can be particularly formidable in large, high-
cost areas.
For example, the Los Angeles City Council recently adopted
an ordinance that effectively prohibits owners from terminating
Section 8 leases, which in turn discourages them from joining
the program for fear that they will not be able to opt out in
the future.
If an owner chooses to terminate a Section 8 lease and
convert that unit into a conventional one, for the following
five years the owner may only collect the portion of rent which
the former Section 8 resident paid.
Local property owners report that the new law has already
contributed to a decrease in affordable housing stock, because
they left the program in advance of the law's passage, and are
not now signing new Section 8 leases.
Owners also say they are frustrated with local program
administration, and cite as an example that periodic
inspections are not scheduled at specified times, so owners
must wait for hours to meet inspectors.
We propose the following recommendations to improve the
Section 8 program. First, we would like to see enacted a more
efficient process for PHAs to apply for higher fair market
rents that are more reflective of submarket rents.
We also propose to allow PHAs to raise the payment standard
to 120 percent of FMR without HUD approval, and to request
higher payment standards when necessary. FMR's must be set high
enough to encourage owner participation, and, in turn, create a
sufficient supply of apartments for voucher holders.
We thank HUD for raising the current FMR level to the 50th
percentile in 39 high-cost areas. That level remains
insufficient in areas with outdated FMR's and in high-cost
submarkets.
In addition, we propose speeding up the move-in process by
allowing PHAs to conduct individual unit inspections within 60
days after the resident moves in and payment commences.
PHAs could also conduct building-wide inspections in
certain cases. Alternatively, PHAs could initially inspect a
representative sample of units in order to certify that a
building is eligible and conduct regular periodic inspections
thereafter.
This approach would reward well-managed properties, allow
PHAs to focus their scarce resources elsewhere, and all the
while maintain resident safety.
Finally, we urge Congress to continue to fund the existing
program structure administered by HUD. Effective this year,
Congress enacted changes to minimize recapture, and moreover,
national utilization rates have risen to nearly 96 percent.
That success should be recognized and the process supported.
NAA/NMHC believe that the existing, successful
appropriation structure, while not perfect, is working. We have
considerable concern about the complexity of the proposed state
level funding structure contained in H.R. 1841.
I thank you for the opportunity to testify and wish to
offer our assistance to the subcommittee as you continue your
important work to improve affordable housing opportunities for
low- and moderate-income families.
[The prepared statement of Thomas K. Shelton can be found
on page 512 in the appendix.]
Chairman Ney. I want to thank all the witnesses for your
thoughtful and good testimony.
I have just a few questions. First would be directed to Mr.
Franklin and to Mr. Jackson.
Is there any merit to regionalizing Section 8 vouchers?
Would there be any merit to the administration to regionalize
versus a block granting to States?
Mr. Franklin. You know, I would certainly concur with much
of the testimony today, as to the value of the local PHAs being
the front lines.
I really do think the PHAs are doing a good job. In
California, they have made tremendous progress and, at its
core, Section 8 is a local program. However, I do believe that
regional collaboration and cooperation could be a very smart
approach to deal with some of the kind of sticky wickets here--
most particularly, the utilization rate issue.
Currently there is discussion about moving vouchers between
States; taking away from those who aren't using them, giving
them to those that are.
This has to be considered long and hard to make sure there
aren't unintended consequences. But when you look at the
performance on the regional level--and we ran some numbers,
looking at the local authorities' utilization rates and
combining them to get a county average, and the average county
utilization rates looked very good, although an individual PHA
may not be performing as well.
Many are virtually right at 100 percent utilization, which
shows, as you might expect, that housing markets are not
necessarily consistent with city boundaries. You do need that
cooperation across city boundaries and on the regional level.
So I do think there be could some real potential in that
area.
Mr. Carlos Jackson. I support the same notion. To some
extent we are already doing regional administration at the
present time.
We administer six, six small cities public housing, I'm
sorry, the Housing Authority Section 8 Program. And we found
that you can reduce and streamline the administrative process
and have cost saving there, as well as developing a good
working relationship with the landlords.
I would support maybe almost to the extent, if you look at
parallel to the community development block urban county side,
where on behalf of small cities, we are administering their
program. So there are streamlining measures that could be
undertaken.
Chairman Ney. Thank you.
Mr. Smith, you mentioned about the voucher utilization
rate. How did LA significantly increase its voucher utilization
rates from low to very high? I'm just trying to see what
lessons we can learn from LA.
Mr. Smith. Well, we applied a complete reorganization. We
did have to add staff. We added about 20 percent of our total
Section 8 staff and reorganized them along the lines of
supporting the residents in their search and owner outreach and
streamlined the process of issuing vouchers the same day, in
terms of verification, and a wide variety of approaches that
were more responsive to the market.
We formed what's called TESS, Tenant Empowerment Support
Services, probably the best thing we ever did, because to
actually go out with the tenants when they are negotiating the
leases is a difficult task and worked particularly well between
the leases--between the owner and the voucher holder.
We conduct extensive orientations for owners on a regular
basis. Every Saturday there is usually a lot of owners at the
housing authority learning about the program. And we are very
aggressive in terms of outreach to the owner associations.
It's important to understand, in the City of Los Angeles of
the 17,000 owners I mentioned, 16,000 of those owners are mom
and pop owners. So you really have to do a lot of outreach, a
lot of educating because they rely on their rent income on the
1st of every month to make their mortgages, keep up their
property, pay their people.
Chairman Ney. Thank you.
Mr. Burger and Mr. Shelton, you both are basically saying
the current system is working. How would we make improvements
to serve the community, more particularly in light of tight
Federal budget environments, any other areas?
Mr. Burger. I think we mentioned a couple of them in making
the system more efficient, and at the site level down at the
PLA level I think we need to use that money more effective than
we have. I'm not sure that we need to increase all that much
the funding to PHA level, particularly if it's not all being
utilized. We need to use it better obviously.
And I think that it's important that we do look at the gap
rates and look at the percentiles. I think we need to move the
percentile up a little bit to areas like Los Angeles, that type
of thing.
Chairman Ney. My last question, Mr. Triesch. What about--
what problems do you encounter when you're overleased, and how
does HUD work with you on that issue or do they or how do they?
Mr. Triesch. It's a bit of transition right now. To this
point in time we could be overleased, if we had budget
authority to be overleased. With the new regulations that have
just gone into effect, as I understand it, we can no longer do
that.
I can be 101 percent overleased this month as long as by
year end I am not overleased. So my target is to be as close to
100 percent as I possibly can be at the end of my fiscal year.
Our accountant works well with the HUD administrative financial
staff. We have a good working relationship with them.
Chairman Ney. Thank you.
Mr. Triesch. My goal is to be at 100 percent even Steven,
assuming the max--serving the maximum people that can be served
in the city of Long Beach.
Chairman Ney. Okay. Thank you.
Also I asked a question--never gave Mr. Shelton a chance to
answer. I'm sorry.
Mr. Shelton. I was going to agree with Mr. Burger. I'm
certain there are areas where the budget could help, but I
think our primary objective in administering Section 8 at the
site level is to make it as transparent as we can and as
comparable as we can to how we treat regular market rate units.
Additional provisions make the process somewhat cumbersome.
Anything that can be done to make the leasing process itself at
the site level as easy as possible, I think would encourage
more participation from our members and owners.
Chairman Ney. Thank you.
Congresswoman Waters.
Ms. Waters. Thank you very much, Mr. Chairman.
One of the reasons I'm so pleased that you're here is
because you will have an opportunity to understand what is
happening here in California, and in the Los Angeles area in
particular.
You have seen some of the information that was shared with
you on the testimony of the cost of housing and the escalation
of price that has taken place and continues to spiral upward,
so that you get a real sense of what we are confronted with
here.
Also, I'm very pleased that, you know, for once perhaps in
many of the hearings that we have we are all together on this.
I mean we have all of our associations, our owners, our PHAs,
everybody singing from the similar hymn book, and that's good,
that's very good.
We are all opposed to this idea of block granting. So what
we need to do is what I think you have already come to
understand is: How do we use this as an opportunity to
straighten out a few of the wrinkles in the program? How do we
come back with an alternative to this block granting and talk
about what we can do to better serve all of our clients who
need us so desperately?
And I'm also interested in working out some of the problems
of the owners and the landlords. I think that's extremely
important.
Now, you had some ideas, Mr. Triesch. You gave us a few
recommendations. Would you kind of reiterate what you said to
us in your recommendations?
Mr. Triesch. I sat down with staff yesterday afternoon, and
I asked them: How can we really streamline administration of
the program? And these just were ideas that came from
brainstorming.
The first one was that we could enact a provision that
limited landlords to just one increase a year. I'm sure that
typically the Congressperson doesn't know what we have to go
through when a landlord requests a rent increase.
If it's--we have to do an inspection of the property, if
one hasn't been done within 120 days of the increase. So if
somebody waits six months after the last one, we have to do a
whole new inspection again.
Ordinary we have to do an amendment to the contract. We
don't have to do a new contract, but the whole thing is time
consuming. And if we limited just landlords just once, let them
know up front you only get one a year, then I think that it
would be a cost saving.
Ms. Waters. Thank you. Would you hold that for a moment
here?
Chairman Ney. That was one point I wanted to talk about. I
just wanted--how many times can they--in a normal lease I've
ever had when I rented, it's you get one shot per year, or
sometimes you don't get a shot until the lease is done.
How many times a year can people do it?
Mr. Triesch. The way the program is set, we are allowed to
enter into a lease--well, in Long Beach what we do, and I think
most of us probably, initial lease for a year. After the
initial lease for a year, we just follow California State law.
It goes from month to month.
When it goes from month to month, by California State law,
an owner can request a rent increase every month if he wanted
to.
Chairman Ney. And Section 8 they can do the same thing?
Mr. Triesch. Well, we require 90 days, a 90-day notice. So
they have to give a 90-day notice, every four years if they
wanted to.
And we get them typically to--especially right now when
costs are spiralling and the landlords are getting more and
more rent.
Ms. Waters. All right. Let me hear what the landlords think
about that.
Mr. Burger. Being a landlord, from my standpoint, once a
year will work just fine for me. Actually, it will. We have to
go through a lot of hoops also to make that application. And if
we can do it once a year, we could work it.
Ms. Waters. Mr. Shelton.
Mr. Shelton. I'm not sure so I'm in agreement with Mr.
Burger about the once-a-year-rent increase. I think--however, I
think there is some sense that can be made, particularly in
high cost areas where rents continue to escalate.
I would remind you, too, that a lot of the apartment
markets across the country are not in the same financial
situation that California or New York or South Florida is where
the markets do pretty well. There are markets that we operate
in that apartment owners are facing significant losses,
vacancies are high, and occupancies are down and rents are
down.
So I think that we just need to be--the key to me, I think,
is communication, working with the local housing authorities,
and I think some of those issues could be resolved.
Ms. Waters. We really are interested in eliminating
bureaucracy and streamlining the process, because I hear from
both the tenants and landlords that it's too cumbersome in
various ways. So we are--we are interested in your
recommendations about how to do this so that the tenants are
not hassled, and the landlords get as fair price as you can
get, and it's done in a way that does not cause long waiting
periods, et cetera. That's how I think we ought to use this
time.
You know, the administration threw this out here, and we
need to come back with something other than block granting
where we can show we're all together. And I think we ought to
be able to do something very positive about it.
What was the second one?
Mr. Triesch. The second one--you know, I'd like to say, you
know, we might do well to get an organization, like NARO or
FADA, to get a bunch of executive directors together to
brainstorm, they could come up probably with a lot of good
ideas for streamlining the program.
But the second one was with regard to the abatement process
and inspections. Now, when we inspect, if the unit fails, they
have 30 days to correct the deficiencies or it goes into
abatement. If they don't correct it within the 30 days, then
they have until the end of the following month, and we
terminate the contract.
But we just said if they have 45 days to correct the
deficiency or the contract is terminated, then you're going to
be saving the time of multiple inspections, for example.
Ms. Waters. How does that comport with state law that
allows for deducting repair? I mean what happens here when, for
example, if you gave 45 days, the tenant says ``I've got a
problem here, and they said, ``I can't wait. I'm going to do it
myself, and I'm going to give you the bill,'' how does that
work or does it work?
Mr. Triesch. I don't think I could address that.
Ms. Waters. Don, do you know?
Mr. Smith. Well, my feeling is, based on experience, that
we intervene so rapidly, in terms of tenant complaints, and we
have a good relationships with most owners, that that issue of
inhabitability doesn't come into play, only in those cases
where we abate, and the situation is not resolvable, that may
come into play.
Ms. Waters. Okay. Well, let me ask you--and this will be
the last question--you have mom and pop--a lot of mom and pop
landlords. I think you said the overwhelming number of
participants in the program are mom and pop.
What do we have that assists mom and pops in capital costs
for the upkeep and repair of property? Low cost loans?
Mr. Smith. There are rehab loans available through the city
and most local jurisdictions have repair loans, I think.
Ms. Waters. At low interest rates?
Mr. Smith. Some are at low interest rates. Although
compared to today's market, they may not be adjusting as
rapidly.
Ms. Waters. Well, if we have--the majority of our
participants are mom-and-pop operations, people who own 40
units----
Mr. Smith. Basically 10 units and less, over 16,000 owners.
Ms. Waters. Have you found that there's a problem when
their capital costs, like putting on a new roof or repairing a
staircase, I mean capital--are they able to do it and get it
done on time?
Mr. Smith. If they get adequate rents over a significant
period of time, they are able to amortize. But they are not
generally able to get it immediately.
Ms. Waters. Okay. Are they able--they are able, not able
to. That's a problem we need to look at?
What are you finding, Mr. Jackson?
Mr. Carlos Jackson. Well, the question you were asking is a
real challenging one in that you have to have--well, many of
the cities that we are operating in have an agreement with
Section 8 and their own programs, and it's really a local
decision there. For the unincorporated areas we do have limited
rehab money that we predominantly give it to the homeowner who
is living in the unit. We have emergency grants for roof
repair, but not really rental units.
Again, you look at the tier of priorities, we have a lot of
seniors asking for emergency grants right after a rainstorm or
like that.
We've done a lot in terms of campaigning to do our lease
up. One of the things that we did was to sit down and look at
the entire process and ask on each step: Does it make sense? Do
we need to do this?
And during that process we also had a lengthy discussion
with landlords as to where were the common areas of agreement
and where were the differences so we could focus on those
areas.
For example, one of the--one of the areas was landlords say
it would take us too long to return the contracts. Well, when
the inspector went out to conduct the inspections, we would
have them take the contract and meet the landlord at the site
at the same time for signature.
Through that process we found out that there is whatever we
did we couldn't get a landlord to sign an agreement, with all
the rents have been agreed to, everything has been agreed to,
all we needed was the signature, we found a small group of
landlords that were procrastinating.
But we--the inspections, again, we made some determinations
on the housing quality standards. There are some things that we
could say, ``Look, give them 30 days to rectify and let them
move in in the meantime.''.
Again, if the unit remains vacant, it's lost income to the
landlord. We were trying to accommodate those different kinds
of things.
We had large orientations for tenants, counseling them
about when you go out to an apartment, what to look for,
housing counseling services, groups that will help the tenants
go through the screening process.
Many of the things that will cost money--with the
Department of Public Social Services we have data sharing,
again so that we could streamline the information that has to
be collected. And one of the things that should be done is we
should be able to share data between agencies. That's a
stumbling block right now.
We don't know if someone goes to a housing authority and
gets rejected, and we go through the same process. It's a
costly venture.
Ms. Waters. Thank you. Thank you very much.
Chairman Ney. I want to thank all the panelists for your
testimony. Thank you.
And we will move on to the second panel.
[Recess.]
Chairman Ney. The subcommittee will come to order. We want
to welcome panel 2. And the order is Chanda Peters, a voucher
recipient of Los Angeles; and Leona Thompson, a voucher
recipient from Los Angeles; Mr. Beverly Martin, voucher
recipient--or voucher program owner--I'm sorry--of Los Angeles;
Larry Gross, Executive Director, Coalition for Economic
Survival, Los Angeles; John Jackson, head organizer Los Angeles
ACORN; and Jeff Farber, Chief Operating Officer, LA Family
Housing Corporation of California; and Ruth Schwartz, Executive
Director, Shelter Partnership, Incorporated, Los Angeles.
We have a timer. So when you hear--you'll hear two beeps,
and then another beep, and that's the five minutes. But without
objection, any additional testimony you have for the record
will be submitted.
The five minutes is simply to try to make sure everybody
gets their say in. So we'd like to make it longer, but then
we'll have questions and you'll be able to respond.
So with that, we'll begin with Ms. Peters. Okay.
STATEMENT OF CHANDA PETERS, VOUCHER RECIPIENT, LOS ANGELES,
CALIFORNIA
Ms. Peters. Good morning, committee members. I want to
thank you for the opportunity to present to you my personal
testimony on this very important issue, Section 8 Housing
Assistance Program and the Family Self-Sufficiency Program.
These two programs have not only changed my life, but also
my children's lives dramatically for the better. My grandmother
moved into the Eastchester Gardens Housing developments located
in the Bronx, New York in the early 1950s. My mother grew up
there, and I also grew up there.
Due to my mother's illness I, an only child, was raised on
welfare, so our life was not easy. After an extremely abusive
marriage, I left New York with my three daughters and moved to
Los Angeles, where I started my life all over again.
With very little money, no job and having to start all over
again, I had to get on public assistance. First I got on
welfare, and then I signed up for the Section 8 program,
because I simply could not afford to pay rent, utilities, the
high cost of childcare, et cetera.
Then one day I received an invitation to participate in the
GAIN program, Greater Avenues for Independence, where they pay
for your school tuition, books, supplies, travel, and, most
importantly, your childcare expenses.
I immediately signed up and registered at the Los Angeles
Trade Technical College, where I took computer classes and
office procedures. Shortly after I received another invitation
to participate in the Family Self-Sufficiency Program, where
they assist you with your career goals, such as providing you
with educational development, technical, trade and vocational
training, job counseling, as well as other services to help you
become self-sufficient and eventually a homeowner. And again I
did sign up for that.
The Family Self-Sufficiency Program especially changed my
life for the better because through their partnerships with
other agencies I was able to utilize the facilities for
studying and had access to their computers to do my homework
assignments.
The job counseling was extremely valuable and it motivated
me to reach my goals. To this day I still use those skills for
interviews for promotions that I seek.
After completing GAIN I worked for temp agencies all over
Downtown Los Angeles until I was hired permanently, and I have
been employed ever since.
I can't begin to express to you how important these
programs and others that help encourage, inspire and support
needy families to live in decent housing and get out of a
situation that may seem hopeless.
This is how my life has been since: I've utilized the tools
and services needed to upgrade my computer and office skills,
preparing me for the job market.
I completed a two-year GAIN program, and I'm now gainfully
employed full time since 1997, no longer on public assistance
of any kind.
I completed the Family Self-Sufficiency Program, receiving
over $14,000. And I am now a proud homeowner of a beautiful
two-bedroom, two-and-a-half bath townhouse located in
Inglewood, California.
I have two daughters attending UCLA, studying law, and one
daughter at UC Riverside, studying veterinary medicine. My
youngest attends University High, and they all have very high
self-esteem because of my example, where I always tell them to
reach for their dreams.
I'm now employed with the Housing Authority of the City of
Los Angeles as an eligibility interviewer, helping other
families with housing assistance.
And my mother no longer lives in Eastchester Gardens. I
have moved her here, closer to her loved ones, this year just a
few months ago, breaking a family cycle of a public assistance.
Every single day when I go to work and I return home--
sorry--I'm so thankful. I truly enjoy my job, and I especially
enjoy helping others.
It is my hope and prayer that these programs continue to
assist other families to becoming self-sufficient.
Thank you for allowing me to give you my testimony, and I
especially thank the Housing Authority of the City of Los
Angeles.
Chairman Ney. Thank you for your wonderful testimony and a
great story.
[The prepared statement of Chanda Peters can be found on
page 505 in the appendix.]
Chairman Ney. Also, before we go on, without objection, for
the record, we have a letter from Governor Gray Davis that we
will submit for the record.
[The following information can be found on page 551 in the
appendix.]
Chairman Ney. And with that, we will go to Ms. Thompson.
Ms. Waters. Thank you very much, Mr. Chairman.
We need to know that the letter is a letter that's
basically going in the same direction that we are all going in
on Section 8. So we'll have that submitted.
Chairman Ney. Thank you.
STATEMENT OF LEONA THOMPSON, VOUCHER RECIPIENT, LOS ANGELES,
CALIFORNIA
Ms. Thompson. Good morning, committee members. I am very
honored to be here today, and I thank you each of you for this
wonderful opportunity to share my personal testimony of how my
life was transformed by the Section 8 Housing Assistance
Program and the Family Self-Sufficiency Program. Excuse me.
As a recipient of these programs, I stand before you today
as a self-sufficient individual, raising two sons in the heart
of a very prominent Los Angeles community and helping others to
achieve a level of independence that they possibly never
imagined could exist.
After separating from my children's father, due to
unfavorable circumstances, I had to step out on a faith that
would propel me into a better way of living and economic
security. Not knowing which way to go, nor did my pride allow
me to turn to my family members or relatives, I ventured out
into the deep with nowhere to go, only a prayer of restoration
would be my only consolation.
A dear friend availed herself to me, allowing me to move in
with nothing, as she and her two children struggled as well. We
shared a comfortable, safe and secure place to live, hearty
meals and transportation. I became a welfare recipient and
fully utilized each opportunity presented to me to make a
better life for my children.
My friend told me about a program she was participating in
called GAP. This program, like GAIN, provided childcare
assistance, bus fare, money for books and school supplies, just
to name a few.
With only a high school education and some college, I knew
that this would be an excellent opportunity to sharpen my job
skills and choose a professional career path that would lead to
economic independence.
Shortly after enrolling in the GAP program, the Northridge
earthquake rocked Los Angeles. Due to the extreme damage of the
building that I lived in, I was able to receive an emergency
Section 8 voucher, which initially was supposed to only last 18
months, but thank God for the funding, it was able to be
granted longer.
I finally was on the road to self-sufficiency. With the
housing assistance payment program I began to have extra money
to save and do extracurricular activities with my children that
was almost impossible to do prior.
And also with the Section 8 voucher program I was able to
secure a two-bedroom, two-bath apartment unit, with a pool,
jacuzzi, 1200 square feet, which I would not have been able to
afford otherwise.
I was informed about a new program that the housing
authority was offering to clients who wanted to set further
goals for themselves and graduate from all public assistance
programs to become totally self-sufficient and homeowners,
first-time homeowners. This program was called the Family Self-
Sufficiency Program.
After mastering many office skills through vocational
training I was able to secure better job positions and higher
pay. By leaps and bounds I transcended from extremely low-
income to well above the average low-income household within.
Within one year of participating in this program I
surpassed the income limit to participate and financially
succeeded in stabilizing my family's future.
I began to set aside money to purchase our first home. I
received a check from the account that had been set aside for
me while in the Family Self-Sufficiency Program. This was
derived from the gradual increases in personal earnings that I
received from my employment.
To date, I am in the process of purchasing a new home. And
I owe a great deal of thanks and appreciation to the Housing
Authority of the City of Los Angeles Section 8 program and the
Family Self-Sufficiency Program for providing the resources and
information, savings account and self-empowerment to rise above
the elements that keep so many people in economic bondage.
My accomplishments since 1994: I received a certificate in
medical assisting, a certificate in nurse assisting. I
completed the GAP program. I've also successfully completed job
trainings in medical front office, patient relations, and
sales.
I've secured enrollment for my sons to attend college
preparatory schools. I am currently an eligibility interviewer
for the Housing Authority of the City of Los Angeles.
And I'm also enrolled in the PACE program at West Los
Angeles College.
Chairman Ney. What do you do in your spare time?
Ms. Thompson. I thank God every day for where he's brought
me from, and I'm happy and content with who I've become. And I
plan to continue to help others who wish to step outside of the
parameters of substandard living to well above average living.
Thank you for affording me this great opportunity to share
my testimony thank you housing authority of the City of Los
Angeles.
Chairman Ney. Thank you for your testimony.
[The prepared statement of Leona Thompson can be found on
page 546 in the appendix.]
Chairman Ney. Mr. Martin.
STATEMENT OF BEVERLY MARTIN, OWNER/LANDLORD HOUSING UNITS, LOS
ANGELES, CALIFORNIA
Mr. Martin. Who wants to follow these two young ladies?
Anyone out here?
During the last three years, my wife and I became owner/
landlords in the Los Angeles area. This experience is
relatively new to me, to us, after retiring from the Los
Angeles Unified School District as a former school principal
for 10 years, and as assistant superintendent my final seven
years.
This self-chosen investment as an owner/landlord has been
both invigorating and gratifying.
In a brief period I have owned a triplex, a 7-unit
building, and a 29-unit building. All of these buildings are
located in the South Los Angeles area, with the major
concentration of my time being devoted to the 29 unit complex.
Of the 29 units, 24 of the units are occupied by Section 8
voucher tenants. I appear before you today as a strong advocate
and staunch supporter of the current structure and operation of
the present Section 8 voucher program.
It is my understanding that legislation, via block grants
to States, is being considered as an avenue for dissemination
of funds for housing. I view this as a deterrent and another
unnecessary layer of bureaucracy.
The concept would indeed bring a negative impact and could
prove to be an impediment in providing assistance to those in
greatest need of affordable housing.
As a resident of the State of California for 41 years, the
State's financial and budget crisis has peaked in this state.
This is a most inappropriate time to consider shifting these
major housing responsibilities to the State of California. It
would be devastating and would compound the present financial
situation in California. Above all, the recipients, those to
whom this service is intended, would suffer.
The current local administration of the Section 8 voucher
program, though not flawless, is functioning extremely well in
this city and the cliche of ``If it ain't broke, don't fix it''
is an appropriate statement at this time.
Last week as I read an article in a journal, a thought
remained with me. In conclusion, allow me to share that thought
with you, and I quote:
``Serious attention must be given to the awesome task, the
awesome task of helping those who live below the poverty level,
if we, as Americans, expect to maintain our image as a
democracy.''.
This thought has great merit. I'm available to respond to
questions and to convey my personal views and opinions
regarding the current local administration of the Section 8
voucher program in the Los Angeles area.
Thank you, Mr. Chairman.
Chairman Ney. Thank you, Mr. Martin.
[The prepared statement of Beverly Martin can be found on
page 504 in the appendix.]
STATEMENT OF LARRY GROSS, EXECUTIVE DIRECTOR, COALITION FOR
ECONOMIC SURVIVAL, LOS ANGELES, CALIFORNIA
Mr. Gross. Chairman Ney and Congressmember Waters, thank
you for the opportunity to offer testimony today.
I'm Larry Gross, Executive Director of the Coalition for
Economic Survival. CES is a 30-year-old tenants' rights
organization assisting tenants, including project-based Section
8 and housing choice voucher renters throughout the Southern
California area. Many are here today.
CES also overseas a HUD Outreach and Training Grant to
assist to tenants living in expiring Section 8 housing and
buildings subject to HUD Mark-to-Market program.
I'm here today to express strong opposition to the Section
8 block granting proposal because we believe it will have a
disastrous impact on the ability to provide affordable housing
to low-income seniors and families.
Section 8 is a cornerstone of the Federal affordable
housing program, providing vouchers to nearly 2 million
households.
As with most government programs, there is room for
improvement, but the voucher program is highly effective in
providing needed housing assistance. One of its main problems
is inadequate funding, which results in tenants waiting years
to receive vouchers. And then once finally obtaining them, face
losing them, unable to find landlords willing to accept the
voucher within the time period allowed.
The Greater Los Angeles Area is facing one of the nation's
most severe affordable housing crises. We can ill afford to
take action which will further increase this crisis.
The block grant proposal will likely result in fewer
Section 8 vouchers, when many more are needed. Block granting
would eliminate the current structure where Congress adjusts
funding each year to ensure covering all vouchers being used.
With block granting, Congress may decide on funding that
has no correlation to voucher use, and on not providing
adjustments for increases in rent. This approach would lead to
the funding erosion of vouchers over time.
Vouchers allow poor people to achieve a degree of less
poverty and the ability to live in less segregated communities.
Block granting would do the opposite. States could reduce the
value of the voucher, that would make it more difficult to use
the vouchers to move into neighborhoods with more
opportunities, jobs, better schools and less crime.
States could direct vouchers to specific developments and
limit voucher use to certain neighborhoods. Thus, we can likely
see the creation of voucher ghettos and barrios.
States could also increase tenants' rental payments.
Households could end up paying far more than 30 percent of
their income for rent, a 30-year Federal affordable housing
standard.
We are greatly concerned about the impact on tenants living
in housing where a mortgage pre-payment or project-based
Section 8 opt-out has occurred.
Los Angeles has the largest stock of privately-owned HUD
subsided housing. There's nearly 25,000 units at risk due to
pre-payments and opt-outs. Latest figures indicated that we've
already lost 8600 units in the county and over 3500 units in
the city. This is one of the highest rates of pre-payments and
opt-outs in the nation.
Currently, tenants in pre-payment and opt-out complexes for
the most part are provided enhanced vouchers, which protect
tenants from rent increases and displacement. Enhanced voucher
tenants have the right to remain in their units as long as it's
funded; and owners are mandated to accept the enhanced
vouchers.
Block granting threatens these protections because States
wouldn't be required to issue new enhanced vouchers. A state
might decide only to provide regular vouchers. And this could
result in tenants having to pay higher rents, thus, forced to
move, and owners would be under no obligation to accept the
vouchers, resulting in tenant displacement.
The City of Los Angeles has undertaken new initiatives to
do its part to address affordable housing needs, such as
creating a $100 million Housing Trust Fund and adopting a
preservation program to address pre-payments and opt-outs.
These significant local actions assume a certain level of
support and commitment of funding on the Federal level. Block
granting would likely undermine LA's affordable housing
efforts. Locally, affordable housing advocates have developed
an effective working relationship with the Section 8 division
of the city's housing authority.
Together we've been able to identify problems, develop
effective approaches to deal with those problems, and implement
programs to benefit tenants.
This relationship would be placed at risk to block
granting, which limits administrative costs to 10 percent of
the State's total funding, yet adding administrative
responsibility.
In conclusion, we strongly urge that the Section 8 block
grant proposal be firmly rejected. It would only bring
increased hardship to our nation's low-income households, who
are in dire need of securing affordable housing.
Thank you again for giving me this opportunity to provide
you with the views of the Coalition for Economic Survival.
Chairman Ney. Thank you.
[The prepared statement of Larry Gross can be found on page
482 in the appendix.]
Chairman Ney. Mr. Jackson.
STATEMENT OF JOHN JACKSON, HEAD ORGANIZER, LOS ANGELES ACORN
Mr. John Jackson. Good morning. My name is John Jackson.
I'm the head organizer for Los Angeles ACORN; and we'd like to
thank subcommittee Chairman Bob Ney for holding these field
hearings, and also to just salute Maxine Waters--Congressman
Maxine Waters who has been there on the 1,001 issues that we
hold near and dear to our hearts.
ACORN is the Association of Community Organization for
Reform Now is the nation's largest organization of low- and
moderate-income families in the country, with over 150,000
member families, as well as 700 neighborhood chapters, in a 51
cities across the country.
Since 1970, ACORN has taken action and won and worked on
issues of concern to our members. Our priorities include:
Better housing for first-time home buyers, improved quality of
life issues in the low-income communities, living wage jobs,
investments--I mean more investment from banks, as well as
government, and better public schools.
Of course, if you look at saying ``Say yes to children,''
we really firmly believe in a child's right to live, grow, and
grow up healthy in low-income communities. And that means
affordable childcare, as well as affordable housing.
We achieve these goals by building community organizations
that have the power to implement changes through direct action,
negotiation, legislation, voter participation.
Los Angeles--our Los Angeles chapter consists of 20
organizers of 550--5500 members. I don't do this. So let me
just say, I don't really do public speaking.
Chairman Ney. You're doing all right.
Mr. John Jackson. But our office is really located walking
distance from here, 3655 South Grand.
We have a 1-800 number, where folks call every day for
1,001 different reasons, some of which are around Section 8,
some of which are around welfare, some of which are around
childcare, just a lot of things that impact low-income
community folks. And we just find ourselves being in a position
to become problem solvers, rather than problem creators.
I'm here today to express ACORN's opposition to
restructuring the Section 8 voucher program and the State block
grant.
A lot of what I'm saying probably has already been said. So
I probably would just like to set the testimony aside and speak
from my heart a little bit here.
We experience every day here in Los Angeles people that are
going through trials and tribulations with the Section 8
program. But more importantly, I think that it's building a
dialogue. I'm jumping to the second part of it, and we'll
submit this for public record.
But we actually have been innovative in trying to create a
dialogue between the landlords and tenants. It's the notion of
a common ground, a common space where folks can get a sense of
who this man is to my right. And I don't know his name, but,
you know, we have to tip our hat to people that are willing to
take a chance and take a stand on renting to low-income folks,
and see there is some value in doing so because it improves the
quality of life in communities that are struggling under the
yoke of gang violence and substandard schools in this country.
We have to salute them; we have to embrace them. And we
have to do our part in educating our folks as to what their
responsibilities are and engage with them with some dignity and
respect and try to solve those problems rather than cast the
burden upon the landlord. Because it isn't always the landlord.
And we can't cast the blame or the burden on the tenant,
because it isn't always the tenant. Or it's just sometimes just
not enough information. And a streamlining of the process that
landlords in increasing number can be comfortable in going into
a program that can assist people in improving the life in these
communities.
But we oppose the block grant system because we think
welfare reform was a failure. We believe the sending of block
rent down to the State of California, then down to Los Angeles,
it just leads to less services rather than more services. And
by the time it gets down to the people that it's intended for,
they probably will not be--obviously it won't be enough of
those services to go around. It's not enough right now.
But when you look at the crisis that the State of
California is in right now, we love California, but we can't
trust that these services to get down to the people that they
deserve to go to with the $38 billion budget deficit.
We just believe somehow some that of money just will go to
unintended places and just representing the poor folks'
organization, we would just be shocked and appalled that we
can't afford to have any less than what the people are
deserving of today.
We appreciate you being here. This is an amazing thing to
see a Republican here in a Democratic district to try to
problem solve. We salute you. We salute--we salute you. We
salute you for wanting to build bridges rather than walls and
trying to problem solve rather than problem create.
Thank you.
Chairman Ney. I appreciate that. I also want to note for
the record, I'm not sure of the accuracy, but I think my old
district is 16 percent Republican. You may have more
Republicans than I do. So I'm pretty comfortable.
Thank you. I appreciate your comment.
Mr. John Jackson. We welcome you, and we appreciate you
being here.
Chairman Ney. Thank you.
[The prepared statement of John Jackson can be found on
page 500 in the appendix.]
STATEMENT OF JEFF FARBER, CHIEF OPERATING OFFICER, LA FAMILY
HOUSING CORPORATION
Mr. Farber. Good morning, Chairman Ney, ranking member
Waters, and staff of the subcommittee.
I thank you for the opportunity to testify today. I'm Jeff
Farber, Chief Operating Officer for LA Family Housing. Founded
in 1983, our organization is the leading nonprofit housing
development corporation that provides housing and supportive
services to over 14,000 homeless and low-income families and
individuals in Los Angeles.
We provide a range of services from emergency shelter,
transitional housing, permanent affordable housing, and home
ownership opportunities.
We oppose the proposal to convert the Section 8 Housing
Voucher Program into a block grant to the States. We consider
Section 8 vouchers to be an essential component of the
solutions to affordable housing crisis in Los Angeles and
across the nation, production and preservation and income
subsidies.
We operate--our organization participates in a variety of
partnerships with the housing authorities of the City and
County of Los Angeles. Local leadership of the housing
authorities has led to the creation of many innovative programs
promoting affordable housing opportunities to those in need,
including the nationally recognized Homeless Section 8 Program.
Through our partnership with both housing authorities, we
are able to place 100 to 150 homeless individuals and families
in safe, decent and affordable housing annually. In this model,
we refer Section 8 eligible households to the respective
housing authority and provide them with the support services
they need to gain tenant skills and maintain housing.
Through this program we have assisted over 900 households
secure and maintain affordable housing in the last 10 years.
Many of these households have participated in Family Self-
Sufficiency Programs and have gone on to become homeowners.
The Housing Assistance for Needy Families Act attempts to
address the administration of the current voucher program.
However, its approach is heavy-handed and fails to recognize
the improvements made nationally to the program over the last
several years.
Nationwide utilization of the program has increased. And as
you heard this morning, many of our housing authorities are
leasing up at 100 percent or over.
Additionally, switching from one set of administrative
rules known and used by all jurisdictions to a separate set of
rules used by each state creates incredible complications and
difficulties.
Block granting of the program adds an additional layer of
bureaucracy. And as John so well stated, when you have a
problem in a State, and you add in another funding source to
it, you don't know how that bureaucracy will handle that
funding source.
Finally, relying on local codes to determine housing
quality creates the potential for rules to vary from locality
to locality.
HANF fails to guarantee that the funding of the Housing
Voucher Program will keep pace with housings costs. Los Angeles
is in an affordable housing crisis. Almost 75 percent of
families with annual incomes of $26,000 or less, which is
120,000 families, spend more than half of their income on rent.
In the City of Los Angeles a two-bedroom apartment rents
for anywhere from 1,100 to $1,300 per month. Using the HUD
guideline, that a family should not spend more than 30 percent
of their income on housing costs, a household needs to earn
over $21 an hour or $44,000 per year just to afford a two-
bedroom apartment.
Section 8 is a life line for many of our city's working
poor: Janitors, fast food workers, nurses aids, security
officers, cashiers, who otherwise would find themselves
homeless and be knocking on the doors of my agency for
assistance if that Section 8 voucher was not available to them.
HANF places these hard-working families at great risk.
States--based on the system set up under HANF, States would
either have to contribute their own funds or scale back their
programs in the following manner: Reducing the number of
families that receive housing vouchers, shifting rent burdens
to families participating in the program, limiting
opportunities to use vouchers to escape high-poverty areas, and
shifting housing assistance from poor families to moderate-
income families.
Each of these changes would damage the program and move it
from its mission of using a market-based approach that allows
voucher participants to move to apartments in areas of their
choice.
Congress can improve the administration and utilization of
housing vouchers in a manner that is not detrimental to the
well-being of families and does not disrupt the process of the
existing program.
HUD already has the authority to reallocate unused vouchers
from one administering agency to another. To add strength to
this policy, Congress should consider making reallocation
provisions that automatically move vouchers from communities
that cannot use them to those that can in the same region.
Congress should look at reforms that incentivize owners. A
couple of examples are more flexibility regarding inspections
and an electronic payment system for the monthly payments that
go to owners.
Congress should also provide funds to assist housing
voucher holders find and access available housing in their
area. Our local housing authorities have been masters at this
and have worked with a wide network of nonprofits to guarantee
that households are able to find and maintain affordable
housing using the voucher program.
Thank you for your opportunity to testify.
Chairman Ney. Thank you, Mr. Farber.
[The prepared statement of Jeff Farber can be found on page
474 in the appendix.]
Chairman Ney. Ms. Schwartz.
STATEMENT OF RUTH SCHWARTZ, EXECUTIVE DIRECTOR, SHELTER
PARTNERSHIP
Ms. Schwartz. Good afternoon. It's now noon. Chairman Ney
and Ranking Member Waters, who is a long-standing affordable
housing advocate. And I just have to say thank you so much for
all that you do.
I also wanted to acknowledge that Mayor Hahn's housing
deputy is here today, Sara Dusseault. I think the Mayor has on
record support also of the position taken----
Chairman Ney. Thank you.
Ms. Schwartz.----by most of the folks.
Chairman Ney. Sorry to interrupt. If I could, just for the
record, we have a letter for the record, which Congresswoman
Waters may want to make a comment on, to be submitted without
objection.
Ms. Waters. Well, I'd like to move that this letter be
inserted into the record. And it starts out in no uncertain way
expressing its opposition to H.R. 1841.
The Mayor is to be commended, not only for understanding
the housing needs of the city, but for having put together the
$100,000,000 program for housing assistance in this city. It's
extraordinary. He is a leader in the nation on this. And we are
very, very pleased that he is providing this kind of
leadership.
Chairman Ney. Without objection, it's part of the record.
We stopped the clock so it didn't come off your time.
Ms. Schwartz. My name is Ruth Schwartz, and I'm the
Executive Director of Shelter Partnership.
We were established in 1985. And what we do is fairly
unique. We provide technical assistance and resource
development for agencies developing housing for homeless people
in all of Los Angeles County.
As you know, Los Angeles County has a huge problem with
aimlessness. It's estimated as many as 80,000 people are
homeless nightly in the county. And I'm talking about people
living in shelters, on the street, abandoned buildings and the
like, about half of whom are located in the City of Los
Angeles.
Based on my 18 years experience--and I know I look much
younger than to have 18 years experience at anything, but based
on that I think without doubt the most successful program that
has been developed for homeless families and individuals in Los
Angeles County has been the Section 8 homeless assistance
programs and the programs that have resulted since then.
Without doubt, I mean you can provide all the services you
want in the world to homeless people, but if you don't have
housing, you don't have a program. And you don't have an exit
from aimlessness. And that's documented from all the national
studies as well. The most important intervention in the life of
a homeless person is stable, affordable, and in some cases,
supported housing.
And I just want to congratulate the City of Los Angeles and
the County of Los Angeles for being incredible leaders in this
area. Since 1991, we've had a homeless assistance program, way
before New York or anywhere else. So we've done it well. We've
got over 12,000 people who were previously homeless, are now
receiving Section 8 assistance, and that's families who are
poor, including families that have experienced domestic
violence and other incidents, people with mental illness,
chronic mental illness who have lived on the street, as well as
people living with HIV/AIDS thousands and thousands of people
who were previously homeless. And there's a very high incidence
of aimlessness of people with HIV/AIDS.
These are very successful partnerships, and they include
strong collaborations of community-based organizations, from
groups like Watts Labor Community Action Committee, Minority
Aids Project in the Congresswoman's district, to traditional--
more traditional mental health agencies and family agencies,
like LA Family Housing throughout the City and County of Los
Angeles.
They've also been a great partnership, and I think this is
why it's so important that things remain local. I mean local is
what's relevant. We've been able to strategize and combine
other kinds of Federal funds. So it's not all on the Section 8
side. Things like the FEMA funds, other HUD funds like the HOPA
grant funds, as well as State Department of Mental Health
dollars. We've got a great program for chronically mentally ill
people from the State legislature.
We are combining those funds with Section 8 funds and
really getting people who are really what we consider the most
tragic victims of aimlessness into housing. And the support
services are paid for through the State Department of Mental
Health. So we've got some wonderful partnerships and
partnerships that I think we can all be very proud of in Los
Angeles.
I'd also like to just mention something that hasn't been
mentioned before, and that's having to do with project basing.
And this is an area that maybe the oversight committee can help
us solve.
In the 2001 Federal Appropriations Act, it was agreed that
housing authorities could again increase the number of project-
based units that would be allowable and give more local
discretion in that. However, HUD has never issued final rules.
All they did, after a long time, was submit those rules to OMB,
only to recently withdraw those rules.
So we have--so places like Los Angeles, where unfortunately
we do have high concentrations of poverty, a lot because of
families coming into the community from other countries, we
can't really effectively use those project-based certificates
with nonprofit developments. And we need those new rules to be
released by HUD and find out why they haven't been.
Just in conclusion, as you've heard the State through the
$1,000,000,000 state Housing Trust Fund the city through the
$100,000,000 Trust Fund and also the County of Los Angeles
through their special initiative through industry funds is
really doing--is recognizing the importance of housing and
being able to combine that with the Section 8 program on a
local administrative level would be lost if we were to not
continue the program as it is.
Thank you.
Chairman Ney. Thank you.
[The prepared statement of Ruth Schwartz can be found on
page 507 in the appendix.]
Chairman Ney. I just wanted to note, we will follow up on
the rules. In the expansiveness of government and all the
agencies you have--and that's why I'm glad you've raised it
here today--we lose track of what went where and when where
it's at. And you raised a very good issue: Where are those
rules? What's happening? We will continue to follow up on that.
Ms. Schwartz. Okay. Thank you. I'll get you some more
information, too.
Chairman Ney. And I would note you might have gotten
somebody in trouble today because whoever you were working with
18 years ago violated child labor laws.
Ms. Schwartz. Yeah that's probably true.
Chairman Ney. You should warn them.
Ms. Schwartz. Yeah, I think it's true. I think it's true.
Chairman Ney. Having said that, I have one quick question.
And this is: Sometimes we've had them; sometimes we haven't had
set asides. For example, set aside Section 8 for person
specifically and/or families with aimlessness or HIV.
What do you think about--and again, sometimes we've have
and I understand sometimes we haven't. What do you think about
set asides and how that impacts this issue?
Ms. Schwartz. I'm really supportive of set asides for the
people that are the most extremely poor and needy, especially
those people who have no home to call home.
I think that the program, as it started in Los Angeles, was
because HUD wanted to demonstrate how--that the needy--the most
needy could be served.
Those set asides aren't part of the priorities today, but
yet there's is a commitment locally to continue that and still
serve and other households. And personally I think that's a
good thing.
Chairman Ney. Mr. Gross, I had a question. It goes to the
30 percent of tenant income or the 40 percent. And I wondered
if you had an opinion on that. And also, you know, the unique
circumstance where tenants sometimes are now paying 70 percent,
which is obviously a large strain on them.
Any thoughts on going above the 30 or 40?
Mr. Gross. Well, as was pointed out in Los Angeles, most
renters are in, or a good percentage of renters, who are not on
Section 8, are already paying way over 50 percent of their
income.
When that happens of course their options, they cut back on
food, on clothing, on the ability to take care of their
children and healthcare. And so we would oppose that. I think
that's the one good thing about Section 8 right now. That it is
that percentage of income to rent.
Under this block renting proposal, we can see that figure
rise, you know, much higher. Out of people's reach of being
able to afford housing, even with a voucher.
Chairman Ney. Thank you. And my last question, Mr. Jackson:
You mentioned about building a dialogue with the landlords and
tenants. And would you describe a few of the challenges you
have in building that dialogue, and, you know, does the current
system help with that, or are there ways that we can help the
current system to do more with dialogue? Because that's
important, I think, communication and dialogue.
Mr. John Jackson. We did do some internal trainings--we do
some internal trainings called the Common Ground Forum, which
we try to examine, explore one of the things that are we
allowing to keep us apart, and then we try to explore those
things that are bigger than those things that are keeping us
apart which we have in common, which is usually the quality of
life in the community, because if you are a landlord in a
particular community, and it's starting to deteriorate, there
needs to be a dialogue about how to fix that. And we just need
to figure out a way to separate perception from reality.
Could you guys assist in that? Of course. There should be
some way that landlords as well as tenants--I think that there
is perceptions, and those perceptions become reality because of
the lack of dialogue, not because of dialogue.
And at every turn of the road there needs to be more input
for those programs by the people it's intended to serve.
John, Maxine Waters' staffperson, had a challenge of
getting me to sit here and speak on behalf of this organization
because I just feel more comfortable helping to prepare
somebody that actually could say and articulate what their
trials and tribulations were.
God bless these sisters that are successful, and we tip our
hat to them. But there is also another side of that that
welfare reform hasn't been the ideal, dream forum. And how is
that challenge getting to housing and how it interacts with
housing needs to be a part of that equation as well.
So could you guys help and what specific ways that you
could help? I don't know what the specific ways that you can
help, but I'm sure talented staff people out of these talented
Congressional offices certainly could be a part of that
equation. And we'd love to work with them to do that.
Chairman Ney. They should contract with you to get some pay
raises for the advocates that you have.
In all seriousness, one other question I have of you is:
Let's say, hypothetically, we do a block renting, and we have
iron clad protection for Section 8 voucher recipients. Could
you still trust, not the State of California, but would you be
comfortable to trust a State that they will carry out
protections for voucher recipients?
Voice. No.
Chairman Ney. Let's hear from Mr. Jackson first.
Mr. John Jackson. It's such an uneven process. California
is so vast that from county to county to county, there would
not be uniformity. And quite frankly, Section 8 is a Federal
program, and the Federal government has the obligation to see
to the equity that's placed into it, not necessarily the States
or the counties or the cities. And they're not going to own
that obligation as well as we would trust that the Federal
government would.
Chairman Ney. One thing, and I'm concluding my questions
and we'll move on to my colleague, but I did want to note one
thing. If we did do this, we had block granting, I don't know
how you write in certain protections. The thing I wanted to
mention and I have a great state, the State of Ohio, and a lot
of great people. However, in the budget process, because they
were up against a wall like California, Head Start monies, we
all know the basic 101 beginning law, if you're in office, you
do not supplant Federal dollars with Federal dollars. That is
course No. 101.
In the State of Ohio, during the budget process they took
our Head Start monies, went in, took $300,000,000 of HANF
monies and applied the 300 million to the Head Start monies.
Now, they appropriated it. When I was raised it was called
theft; but they appropriated the money.
Now, clearly, I made this objection known to everybody that
did it, you know, clearly you don't supplant Federal with
Federal. They did it. But in this whole process the one
overriding question I've always had is: How do you write
something so iron clad that it can't be done? Because it's a
pretty iron clad thing, Federal to Federal. I'm asking the
overriding--and I'm speaking as a former state legislator, and
I'm looking at that side of it now as a Federal member.
Mr. John Jackson. The punishment should be equal to the
crime. I mean if people are dying as a result of the theft and
thievery and thuggery, then the punishment--because they
certainly right now in California they have a three strikes
you're out law. You can be punished for a misdemeanor and wind
up in prison for the rest of your life. If in fact the State of
California, or any state for that matter, has the gall to take
to money that's been allocated for poor folks and utilize it
for what would not be considered the greater good, in their
mind they may attempt to justify it that way, but when you look
at it as in--through the eyes of the people that those funds
were intended for in the first place, it's a whole totally
different answer.
So I would say let the punishment fit the crime and make,
you know, the crime more severe as the devastation and how it
affects people's lives.
Chairman Ney. Congresswoman Waters.
Ms. Waters. Thank you very much, Mr. Chairman.
I can't tell you how proud I am of both of our panels that
have appeared here today. I am so proud not only of the
panelists, but their ability to articulate the partnerships and
the working relationships here in this area that help to make
Section 8 a workable, viable program.
And I think in all that you've heard, we certainly will go
back to the Congress of the United States looking at this
legislation and understanding even better why there is so much
opposition to the legislation and why we are all together.
There is such a consensus of opposition here in California and
in the Los Angeles area.
Let me just say to Ms. Peters and Ms. Thompson, you heard
the people in this room just start to applaud you. And I think
you can see from our reactions up here how absolutely proud we
are of you.
You have literally taken tools that have been offered to
you, and you've used them in ways that we want so many people
to be able to do. Not only are we proud of you and the work
that you're doing and the opportunity that's been afforded to
you to help others, but, you know, I'm going to follow up, and
we're going to not only keep up with you. We want you to come
and tell your stories to some of the other men and women in
some of the places where the message has not gotten to.
So we are just going delighted to have you here today with
stories of success and positive actions that led to a whole new
lifestyle for you.
We are very proud of you, Bev Martin, I guess I've been
knowing for 100 percent. I'm 100 and he is 101. And I didn't
realize that he had retired, and that he was now an apartment
owner providing rental services to people who need them so
desperately.
Thank you, Bev for, your new career, and again, I would
like to use this legislation as an opportunity to look at other
ways by which we can strengthen the program.
Certainly number one is I want more money. I'm a tax and
spend liberal. I want more money, more services for people. I
just think that, you know, this nation could invest more.
And I raised some questions earlier today about mom and pop
or smaller landlords and capital costs and all of that, and I
will certainly follow up looking at that. But again, to have a
20--a unit--a building with 29 units, and I think you said 24
of them occupied with Section 8, it sends a real message out
there to other apartment owners that this can be done, this can
work. And thank you very much for that.
Larry Gross, you guys have been on the cutting edge of
organizing for a long time now. And I really do appreciate that
because we have so many people who need you, who need advocates
who cannot only be in the streets, but in Washington and in
places like this, speaking on behalf of people and helping them
to be able to negotiate their environment and all that goes on
in these complicated processes. You have a long and rich
history, and just you continue to be there.
Mr. Gross. Thank you very much.
Ms. Waters. Now, John talks about not wanting to be in
these kinds of arenas testifying. Now, John, we know, you're an
organizer extraordinaire, but sometimes the organizer has to
come from the streets and get into a room like this and help to
merge the work of organizing with the work of this kind of
legislative advocacy, and you do it well.
You do it absolutely well. When you talk about speaking
from the heart, that's what we need more of. We need more
people who are willing to throw aside the paper and just talk.
I appreciate the work that you do every day and also the
work that you all do in, particularly ACORN on predatory
lending that has been one of the hallmarks of your work here in
the city. You've been at the city level, the State level and
the Federal level.
We are going to try and try desperately to do a bipartisan
effort on that new predatory lending bill. And we are going to
look to you to help us work and negotiate that.
Mr. Farber and Ms. Schwartz, I thank you both for being
here. Again, we have the thousands of renters and homeless
folks who are out there not knowing or understanding which way
to go. And if it were not for you guys, we would not have the
kind of accomplishments that you've been able to describe here
today.
It is my greatest wish that we can keep evolving with this
work so that we would not only be able to sing the praises of
what has been accomplished so far with our government, but that
we can move it to another level.
I dream of the day when I can go into Downtown Los Angeles
and not step over bodies on the street. I dream of the day
where we won't have a Patch Park of the homeless who convene
there every day. Many of those people are from my district.
When I go through Downtown Los Angeles, I begin to hear the
calls ``Hey, Maxine. Hey, Ms. Waters.'' These are folks who,
you know, came from different places, but many of them from so-
called South Los Angeles, who have ended up down in Downtown
Los Angeles.
And I thank you for all that we have done to get a portion
of them off the streets, those people, and into Section 8
assistance so that they are now into units where the quality of
life has changed for them.
To the landlords, let me just say I dream of a day when
we'll have some assistance where landlords can take the folks
living in their units and provide services above and beyond
what landlords do.
For example, I just believe that you have a building of 24
Section 8 folks, that the same kind of opportunities that have
been extended through the housing authorities for those who
were lucky enough to get connected, they could be unveiled and
unfolded where ongoing meetings are going on in the apartment
building, and people are being educated about the programs and
the possibilities and get them up and out and doing things and
changing their lives.
Let me just say--and I'm kind of full with all of this
now--that your testimony has been extremely important and
meaningful here today. And really much of what you have said
today should help restore everyone's faith in the possibilities
of this government to be of an assistance to the least of
these.
I oftentimes am very frustrated and sometimes angry about
what I see in the poor people and the lack of opportunity. But
you know, each night that I go to bed, I go to bed filled with
a little bit more optimism that tomorrow can be better, and
that we can do it better.
And with your being here today I know that tomorrow and the
next day and the next day we can do even more to assist the
many people of this nation to be able to have a decent quality
of life.
Most people simply want a decent home and roof over their
heads. They want to be able to feed their families. They want
transportation to get back and forth to their jobs and to be
able to take care of their business.
They want their children--Ms. Peters said ``My children at
UCLA.'' We all--everybody would like to have the opportunity to
support their children to be able to be educated.
So I believe in--I believe in this country, but I believe
more in each of us. This country will only be what we make it.
I did not intend to be on the soap box today, but I could not
help it. I'm just inspired by your presence.
Thank you very much.
Chairman Ney. Well, I'm glad you got on that soap box. It
helps me listen to a few things.
I just want to thank you for some great testimony,
compelling advocacy you do, the personal stories you have
shared with us.
And like the movie ``Take It Forward''--Pay It Forward''--I
think it's ``Pay It Forward''--I know you're doing that with
other people in this area across the country.
This has helped me a lot to be out here. We come from
different districts. A town of 30,000 people to me is Los
Angeles. Where I come from that's a huge, huge city. So we have
some different concerns. But again, people I represent need
housing. People out here need housing.
I don't know if either Congresswoman Waters and I have ever
been able to tell persons that need help of what they're
registered. We don't care. We just help people that need help.
The government needs to be able to step forward to do that.
We may disagree on some things philosophically, but we
agree on trying to make the system work. I'm thankful to be
here because you have a whole different cost situation that is
very, very difficult that we don't have, but yet we have some
lack of space to help individuals.
So this personally helps me, as Chairman of the
subcommittee, and I appreciate the hospitality of my colleague,
Congresswoman Maxine Waters, of having us here, appreciate the
staff, both sides, to be able to make this hearing come about.
And we've had a lot of trauma in this country over the
course of its history. We've had a lot of trauma over the last
couple years. But America will go on and continue and,
hopefully, make itself better. And this is where America does
her work.
So I'm very pleased that we have been able to come outside
the Capitol and bring the Capitol here and hear from the people
right on the front firing line who live every single day with
trying to help others.
I've always said this many times. In 50 to 60 years, no one
may know our names, any of us, but we will have rested, and our
generations to follow can have comfort that everybody tried to
do something to help other people. And down the road somebody
will be in housing and going to college or get a good job, and
it's because of things you all are doing today.
So I'll give you an awful lot of credit for that. The
energetic give-and-take of public debate, this is what it's
about. We appreciate it.
I want to thank my colleague for taking her time for two
days straight now, after coming off a marathon session, I think
we voted at 2:30 in the morning one day last week.
So I want to thank Congresswoman Waters for sharing her
time and all of you and her staff and all of you.
And we will leave the record open for 30 days. There might
be additional questions without objection that will conclude
this hearing.
Ms. Waters. Let me break all the rules of committee
hearings and ask this great Los Angeles office to stand with me
and this Chairman for the work that he is doing and his
presence here.
Okay. This is a wonderful facility that we are in, the
California Science Center, and Monique Hudson, Government
Affairs Director, and Carl Phillips, would you give them a big
round of applause.
And for those of you who have not visited this facility and
you have not seen the great exhibits and all the work that many
of us put in for years in the California State Assembly, you
better come and bring your children.
Okay. Thank you very much.
[Whereupon, the subcommittee was adjourned.]
A P P E N D I X
May 22, 2003
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A P P E N D I X
June 10, 2003
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A P P E N D I X
June 17, 2003
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A P P E N D I X
July 1, 2003
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