[House Hearing, 108 Congress]
[From the U.S. Government Publishing Office]




 
                    THE SECTION 8 PROGRAM--COMMUNITY
                     DEVELOPMENT BLOCK GRANT (CDBG)
                    PROGRAMS, AND AFFORDABLE HOUSING
                                IN OHIO

=======================================================================

                             FIELD HEARING

                               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

                               __________

                             JULY 29, 2003

                               __________

       Printed for the use of the Committee on Financial Services

                           Serial No. 108-50



92-234              U.S. GOVERNMENT PRINTING OFFICE
                            WASHINGTON : 2003
____________________________________________________________________________
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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
Hearing held on:
    July 29, 2003................................................     1
Appendix:
    July 29, 2003................................................    63

                               WITNESSES
                         Tuesday, July 29, 2003

Baughn, Bambi, Deputy Director, Community Action Commission of 
  Fayette County, Washington Court House, OH.....................    35
Cates, Walter R. Sr., President, Main Street Business 
  Association, Columbus OH.......................................    37
Coleman, Hon. Michael B., Mayor of Columbus, OH..................    28
Faith, Bill, Executive Director, Coalition on Homelessness and 
  Housing in Ohio (COHHIO), Columbus, OH.........................     6
Fisher, Latoya N., Resident, Columbus, OH........................     9
Garber, Roberta, Executive Director, Community Research Partners, 
  Columbus, OH...................................................    39
Gladman, Steven D., Governmental Affairs Coordinator, Ohio 
  Apartment Association, Columbus, OH, appearing on behalf of 
  Columbus Apartment Association and Midwest Affordable Housing 
  Management Association.........................................    11
Guest, Dennis S., Executive Director, Columbus Metropolitan 
  Housing Authority, Columbus, OH................................    13
Hale, William, President, Portage Area Development Corp., 
  Ravenna, OH....................................................    48
Klaben, Amy, President and CEO, Columbus Housing Partnership, 
  Columbus, OH...................................................    41
Kuhn, Amy, Deputy Director, Community Development Division, Ohio 
  Department of Development, Columbus, OH........................    50
Lowenstein, Roy, Vice President, Development, Ohio Capital 
  Corporation for Housing, Columbus, OH..........................    51
Luken, Sally, Acting Director, Corporation for Supportive 
  Housing, Columbus, OH..........................................    53
McCleary, Cornell H., Commander, PRO-Private Police Training 
  Academy, Columbus, OH..........................................    15
Ring, Cynthia K., Executive Director, Allen Metropolitan Housing 
  Authority, Lima, OH............................................    43
Slemmer, Thomas W., President, National Church Residences, 
  Columbus, OH, on behalf of the American Association of Homes 
  and Services for the Aging.....................................    16
Tavares, Charleta Bell, Member, Columbus City Council, Columbus, 
  OH, Chair of Health, Housing and Human Services Committee......    55
Weaver, April, Resident, Columbus, OH............................    42
Woda, Jeffrey J., President, The Woda Group LLC, Columbus, OH....    57
Zawilinski, Fred, Executive Director, Lake Metropolitan Housing 
  Authority, Painesville, OH.....................................    18

                                APPENDIX

Prepared statements:
    Ney, Hon. Robert W...........................................    64
    LaTourette, Hon. Steven C....................................    66
    Tiberi, Hon. Patrick J.......................................    68
    Baughn, Bambi................................................    75
    Cates, Walter R. Sr..........................................    84
    Coleman, Hon. Michael B......................................    90
    Faith, Bill..................................................    93
    Fisher, Latoya N.............................................   100
    Garber, Roberta..............................................   103
    Gladman, Steven D............................................   108
    Guest, Dennis S..............................................   115
    Hale, William................................................   122
    Klaben, Amy..................................................   131
    Kuhn, Amy....................................................   136
    Lowenstein, Roy..............................................   139
    Luken, Sally.................................................   143
    McCleary, Cornell H..........................................   167
    Ring, Cynthia................................................   173
    Slemmer, Thomas W............................................   176
    Tavares, Charleta Bell.......................................   182
    Weaver, April................................................   186
    Woda, Jeffrey J..............................................   187
    Zawilinski, Fred.............................................   191

              Additional Material Submitted for the Record

Ring, Cynthia:
    Letter to Hon. James Walsh...................................   195


                             FIELD HEARING
                    THE SECTION 8 PROGRAM--COMMUNITY
                     DEVELOPMENT BLOCK GRANT (CDBG)
                    PROGRAMS, AND AFFORDABLE HOUSING
                                IN OHIO

                              ----------                              


                         Tuesday, July 29, 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 1:35 p.m, at the 
Martin Luther King, Jr. Performing & Cultural Arts Complex, 
Mount Vernon Avenue, Columbus, Ohio, Honorable Robert W. Ney, 
[chairman of the subcommittee] presiding.
    Present: Representatives Ney, Jones, Tiberi, and 
LaTourette.
    Staff Present: Clinton Jones, Counsel; Cindy Chetti, 
Professional Staff; and Paula Johnson, Professional Staff.
    Chairman Ney. I want to--can you hear me?
    I want to welcome everyone here today for the Subcommittee 
on Housing and Community Opportunity. We're going to meet this 
afternoon to discuss housing and community development policies 
in the State of Ohio.
    With us today are Clinton Jones, and Paula Johnson--where's 
Cindy?--Cindy Chetti. Cindy, raise your hand. And these three 
are with the housing committee staff in Washington, D.C., who 
have come here for this--for this hearing.
    And I want to thank my colleagues who will speak in a 
second here, to my right, Congresswoman Stephanie Tubbs Jones 
from Cleveland, Ohio, Cuyahoga County; and to my left here--
missing, but he'll be right back--Congressman Tiberi, 
everybody, I think, knows him, from Columbus, Ohio, we also 
share half of Licking County with Congressman Tiberi; and, 
also, to the far left is Congressman Steve LaTourette, who is 
also from Ohio, around the Cuyahoga County area. So I want to 
thank my colleagues for coming here today.
    This is our 17th hearing, and the housing committee 
actually started around January 21st of this year, so it's been 
very busy. It has two bills out of the house and six bills out 
of the committee, all contributing to trying to help with the 
area of housing.
    As the housing subcommittee began a series of field 
hearings--this is the second field hearing outside of the 
capitol, the other hearings we had with our ranking member, 
Maxine Waters, out in Los Angeles a couple weeks ago--I 
promised a series of field hearings, I promised to shift 
America's housing debate outside the Washington beltway to 
different regions of this country.
    Today we focus especially on affordable housing 
availability in Ohio, the effectiveness of the Federal 
Government's Community Development Block Grant program, and the 
Section 8 housing voucher program for low income families.
    Within the State of Ohio, affordable housing is essential 
for this State to continue to grow and for working families in 
order to prosper. The subcommittee and its members of the Ohio 
delegation, some of them are here today, are committed to 
working with State and local officials on this very, very 
important issue.
    Today the housing subcommittee continues the process of 
listening, learning, and then discussing the situation.
    I am certain my colleagues from Ohio would agree that the 
best economic development plan for any city or community 
consists of three factors: Effective public safety, good 
schools, and affordable housing. When one of these factors is 
lagging, the community will deteriorate.
    In the previous months we've heard a variety of opinions on 
causes and solutions to help build communities and prevent 
deterioration. While we may not all agree on the possible 
solutions, it's important that this committee act prudently and 
provide an exhaustive review of all existing housing programs 
and determine how regulatory and legislative adjustments could 
provide additional housing across the United States.
    At the same time, it is fair that the committee consider 
new ideas, provided they are fiscally prudent, maximize the 
taxpayers' investment, and provide accountability and results 
for the individuals that need assistance in this country.
    Among the forms that have been discussed is an 
administration proposal to replace Section 8 tenant-based 
housing vouchers with State-managed block grants.
    I introduced this bill at the administration's request and 
the request of Secretary Martinez so it could be debated. And 
that's, again, why we're here specifically today, but also to 
discuss other housing issues.
    Rather than contracting with an estimated 2,600 separate 
public housing authorities, as HUD currently does, the 
department would like to 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 look at other crucial housing 
programs, such as HUD's Community Development Block Grant 
program, or CDBG, which is what we also discussed in Los 
Angeles.
    CDBG is one of the primary vehicles for local Mayors and 
officials to revitalize our nation's neighborhoods and provide 
economic opportunity and hope for millions of lower income 
Americans to achieve self-efficiency.
    I look forward to hearing testimony from today's panelists 
on how the Community Development Block Grant program operates 
in the greater Columbus area, and how local development groups 
contribute to the effectiveness of the program.
    And also we'll be hearing from people throughout the entire 
State of Ohio.
    And at this point in time I want to thank and recognize the 
gentlewoman from Ohio, Ms. Stephanie Tubbs Jones.
    Ms. Jones. Thank you. Good afternoon. I'm pleased to join 
Chairman Ney and my colleagues from around Ohio to discuss the 
issue of housing.
    Actually, I used to serve on this subcommittee for four 
years, and had a great opportunity to talk about the issues. 
Now that I've had an opportunity to move to the Ways and Means 
Committee, I still know housing is an important part of any 
fabric of any community.
    As we go through the upcoming years, specifically in 
Cuyahoga County, Ohio, we have a large number of foreclosures 
that come about as a result of lack of jobs et cetera, and we 
are going to need more and more affordable housing for people 
who traditionally may not have been looking for housing--or 
affordable housing, as well as the hundreds of people who are 
looking for affordable housing throughout Ohio.
    I'm pleased to be here. I look forward to the testimony, 
and look forward to asking some questions so we can get some 
responses on particularly the issue of the block grant for 
voucher--excuse me--for Section 8 housing.
    Thank you, Mr. Chairman.
    Chairman Ney. Thank you.
    And next is Congressman Pat Tiberi.
    Mr. Tiberi. Thank you, Mr. Chairman.
    I want to commend Bob Ney, the chairman of the 
subcommittee, for scheduling today's hearing entitled ``Housing 
and Community Development Policies in the State of Ohio,'' and 
scheduling it especially here in my Congressional district, in 
the city in which I've lived my entire life. But I also want to 
thank my colleagues, Steve LaTourette and Stephanie Tubbs 
Jones, for taking time out of their busy schedules from their 
districts to come down here and listen to the folks here in 
central Ohio about the issues impacting housing.
    The hearing will focus on three topics: The current 
operation and administration of Section 8 housing assistance to 
families program, Community Development Block Grant program, 
and housing production.
    I want to thank Chairman Ney for his attention and 
dedication to the many housing issues that impact our country.
    For this hearing today we hope to learn more about problems 
faced by many of our working families and determine how we 
might better address their housing needs.
    Housing is the number one consumer product in America. And 
while the homeownership rate in this country is an impressive 
all-time high at 68 percent, there are still some that are 
unable to share in this American dream.
    It is essential to restore confidence and accountability to 
our nation's housing policies by reforming programs that are 
underused, duplicative, or hindered by vague objectives.
    Despite the fact that more and more people are sharing in 
the American dream of homeownership, many working families are 
finding it more difficult to find affordable housing.
    The nation's lost more than 197,000 units of federally 
subsidized affordable housing over the last several years, 
including more than 9,500 in Ohio. More than a third of those 
units housed poor seniors.
    It is essential that affordable housing be made available 
to people that need it.
    Clearly, we must take steps to encourage new production and 
preservation of existing housing stock. Many witnesses 
testifying today are working hard every day to provide 
affordable housing to those in need. We need to make sure that 
they have the tools necessary to enhance and define affordable 
housing.
    The Section 8 program serves more than 2 million people 
throughout the country. In Columbus alone there are 10,000 
recipients of Section 8 assistance from the Columbus 
Metropolitan Housing Authority.
    Recent proposals have been made that I believe threaten to 
destabilize the Section 8 program. The current proposals focus 
on shifting Section 8 management responsibilities to the States 
by converting them into block grants. This idea will not be 
effective, in my opinion, because the States have only limited 
experience with such programs. The last thing that the Columbus 
Metropolitan Housing Authority needs is another layer of 
bureaucracy upon it, which is certainly the outcome if these 
proposals are to be put into place.
    Changes must be made to this program as it loses 2 billion 
annually to fraud and other factors nationally. However, I 
believe the best solution to Section 8 is to give more 
flexibility to local housing agencies.
    These local agencies, along with elected officials, 
landlords, and others, work together to assure Section 8 
provides the proper assistance. It's a simple idea: Local 
residents can better address local problems.
    Another important issue facing central Ohio is that of the 
Community Development Block Grants, CDBGs. While the criteria 
established by the Formula A of CDBGs in 1974 and Formula B in 
1976 may have been fair and equitable at that time, continued 
usage of these formulas, these old formulas, have led to a 
tremendously unfair situation in the 21st century.
    Case in point is the criteria that we deal with the age of 
housing stock in Formula B. Formula B establishes houses built 
prior to 1940 as 50 percent of the funding formula. For cities 
such as Columbus, which saw the bulk of their growth occur 
after World War II, the failure to update this criteria means 
aging neighborhoods built in the '40s and '50s, such as the 
North Linden area, the Woodland and Joyce area, other areas, 
are ineligible for assistance under the CDBJ--BG grant program.
    While these neighborhoods were not in need of assistance in 
the early 1970s, now they are more than 50 years old. They are 
experiencing the same level of need as older cities showed in 
the 1970s.
    Comparing Columbus to cities whose main growth was prior to 
World War II, you can see the disparities that have arisen.
    Take, for example, Saint Louis, Missouri, with a population 
of just under 350,000 people, it is the 49th largest city in 
the United States. In fiscal year 2001, Saint Louis received 
over $28 million in CDBG funding. Columbus, the 15th largest 
city, with a population of 710,000 people, received 
approximately 8.8 million. Similar discrepancies can be found 
when comparing Columbus to Baltimore, Pittsburgh, Boston, New 
Orleans, just to name a few.
    Yes, all these cities share one common theme, they're 
smaller than Columbus.
    Clearly, the criteria used in the formula needs to be 
updated and changed. The age of housing should be indexed to 
maintain fairness and consistency across the country.
    Mr. Chairman, Ms. Tubbs Jones, Mr. LaTourette, thank you 
for coming to Columbus today to be part of this hearing.
    We look forward to hearing from our witnesses.
    Chairman Ney. I want to thank the gentleman from Ohio.
    Congressman LaTourette.
    Mr. LaTourette. Mr. Chairman, thank you very much for the 
opportunity to be here today. Thank you for inviting us down 
here.
    I was going to begin my remarks by saying thank you for 
having this hearing in our back yard, but it's not really our 
back yard. And, as a matter of fact, Congresswoman Tubbs Jones 
and I needed a green card to get across the border, being from 
the state of Cleveland; but we're very happy--we're very happy 
to be here.
    And I also want to commend our colleague, Congressman 
Tiberi, he was the fellow who approached me with your guidance 
a few months ago, indicated that this was an issue that would 
be vital to the constituents that he represented, and I'm happy 
to be here to aid in whatever questions come about today.
    And, Mr. Chairman, I want to commend you for your 
leadership. As you mentioned, this is the 17th hearing that the 
subcommittee has held, and your interest in this issue is not 
only known in the State, but nationally.
    The Section 8 housing voucher program, which was started in 
the 1970s, and there's no doubt that countless Americans have 
benefited from this Federal assistance and have found a means 
to put a roof over their heads, over the years, though, this 
worthwhile program has fallen victim to the same plague that, 
in fact, many government-run programs, in some instances, 
inefficiency, a lack of managerial accountability, and, in some 
cases, a bloated bureaucracy.
    There's no doubt in anyone's mind that the founding 
principles the Section 8 program were built upon are still 
intact, and are probably more relevant and necessary today than 
they were even a decade ago.
    The proposal, however, to reform the Section 8 voucher 
program introduced by the Bush administration has certainly 
generated a tremendous amount of interest and controversy. It 
is unclear to me, for example, whether or not States like Ohio 
will manage to be successful if the State begins receiving 
funding for Section 8 vouchers in direct Federal block grants.
    One of the tensions that sometimes exists in Washington, as 
we all know, is: Who is better able to take care of problems, 
is it the Federal Government or the State government? In this 
particular instance, I differ from time to time with my party 
and believe that the Federal Government has a role to play and 
needs to be an active partner with the States, and we just 
simply can't wash our hands and say: State, here, take this.
    And I'm looking very much forward to the testimony that we 
receive from all of the panelists today as they help guide not 
only this subcommittee, but also the full Financial Services 
Committee and then the Congress of the United States in 
grappling with these important issues.
    Again, Mr. Chairman, I want to thank you for having this 
hearing today, and I look very much forward to hearing from 
everyone.
    Chairman Ney. I want to thank all three of my colleagues, 
all three members, for their time.
    I would note that this is the district work period for the 
Congress, and a lot of these members have given up their 
personal time and their items that they had scheduled to do to 
be here, so I want to thank all of them--all three of my 
colleagues for that.
    Chairman Ney. And could the witnesses please--please come 
forward, first panel.
    In the first panel is Bill Faith, Executive Director of 
Coalition on Homelessness and Housing in Ohio; LaToya N. 
Fisher, a resident, Columbus, Ohio--we'll get the chair there--
Steven Gladman, Governmental Affairs Coordinator, Ohio 
Apartment Association, Columbus, Ohio, appearing on behalf of 
the Columbus Apartment Association and the Midwest Affordable 
Housing Management Association; Dennis Guest, Executive 
Director, Columbus Metropolitan Housing Authority; and Cornell 
H. McCleary, Commander, PRO-Private Police Training Academy, 
Columbus, Ohio; Thomas W. Slemmer, President, National Church 
Residences, Columbus, Ohio, on behalf of the American 
Association of Homes and Services for the Aging; and Fred 
Zawilinski, Executive Director of the Lake Metropolitan Housing 
Authority in Painesville, Ohio.
    I want to welcome the first panel. This is an official 
hearing of the U.S. House, and it's being transcribed. And also 
I would note that we're going to operate by the five-minute 
rule; each of the witnesses will have five minutes in which to 
present their testimony. And, also, without objection, all 
members' opening statements are made part of the record, any 
additional statements that they want to make, and each of the 
witnesses' statements, without objection to the written 
language, your statements will be made part of the record. 
You'll each be recognized again for five minutes, if there's 
additional information, without objection, to be put into the 
record, and the members of the committee will have 30 days in 
which to ask additional questions without objection of 
particular witnesses of the panel.
    So when you hear the tone, you've got about a minute to 
wrap up, and so we'll hold you to the rule so we can get all 
three panels.
    I want to thank all of you for being here today, we'll 
start with Bill Faith.

   STATEMENT OF BILL FAITH, EXECUTIVE DIRECTOR, COALITION ON 
        HOMELESSNESS AND HOUSING IN OHIO, COLUMBUS, OHIO

    Mr. Faith. Thank you, Mr. Chairman. I want to thank you for 
taking the time to come to Columbus for this field hearing. I 
also want to thank all the committee members for coming; 
particularly, Congressman Pat Tiberi, for allowing me to 
testify and to offer my comments and suggestions.
    I am here representing the Coalition on Homelessness and 
Housing in Ohio, better known as COHHIO. We're a statewide 
organization with over 600 member groups throughout all of 
Ohio's 88 counties.
    There are several issues that I want to bring up today. I 
have more extended written comments that I've submitted, but I 
want to make a few highlights.
    I know during this hearing you will be hearing from others 
who will talk more specifically about the housing needs here in 
Columbus. I wanted to bring to your attention a couple of more 
recent national studies.
    The reason is this--this crisis that we face in affordable 
housing is national in scope and does require a national 
response.
    The studies I want to point out to you is the most recent 
State-of-the-Nation's Housing Report published by the Joint 
Center on Housing Studies at Harvard University. One of the key 
points of their findings this year--and I included a graph 
which illustrates this--there is a 2-million-unit gap between 
the number of renter households in the bottom fifth of the 
income distribution and the number of physical units that they 
can afford to rent.
    Also, in that same report, many households working at lower 
wage jobs are struggling to keep up with the escalating rents. 
I'll just illustrate a couple of these. Of the 2.1 million 
waiters, waitresses and cooks who rent, nearly half spend more 
than 30 percent of their incomes on housing; more than 40 
percent of renter households with an earner employed in child 
care, home health care, cashiers, library assistants, maids, 
janitors, are similarly cost burdened. If they are the sole 
wage earner, renters in several other moderate paying 
occupations, like receptionists, carpenters, and electricians, 
also have a hard time affording their housing. And I included 
another graph which illustrates those dynamics.
    I also wanted to point out to you another study, which may 
not have come to your attention, but the President's New 
Freedom Initiative Mental Health Commission, which was chaired 
by Dr. Mike Hogan of the Ohio Department of Mental Health, 
recently issued their report, in fact, on July 22nd, and I just 
want to provide in my written testimony a brief excerpt from 
that report, which I will summarize.
    ``The lack of decent, safe, affordable, and integrated 
housing is one of the most significant barriers to full 
participation in community life for people with serious mental 
illness. Today, millions of people with serious mental 
illnesses lack housing that meets their needs.
    ``The shortage of affordable housing and accompanying 
support services causes people with severe--serious mental 
illnesses to cycle among jails, institutions, shelters, and the 
streets; to remain unnecessarily in institutions; or to live in 
seriously substandard housing. People with serious mental 
illnesses also represent a large percentage of those who are 
repeatedly homeless, who are--or who are homeless for long 
periods of time.''.
    All over the country, local and State governments have 
stepped forward to provide support for the affordable housing 
efforts by creating housing trust funds. In fact, today there 
are 282 State and local housing trust funds operating 
throughout the United States. In an effort to leverage other 
resources to better address the affordable housing crisis, 
local governments in Ohio, such as Summit County, Montgomery 
County, Toledo, here in Columbus, Franklin County, as well as 
the State of Ohio, have established trust funds and dedicated 
local and State revenues to provide permanent funding.
    In fact, as a result of the recently passed State budget 
bill, on August 1st the recording fees will be increased with 
the first $50 million proceeds going to the housing trust fund.
    There's a similar bill that's been introduced at the 
national level, which would create a national version of a 
housing trust fund. This bill has very deep targeting, it would 
provide flexible resources----
    Chairman Ney. That's not our tone.
    Mr. Faith. That's a really fancy tone.
    Chairman Ney. That's somebody else.
    Mr. Faith. It would provide flexible resources to the State 
that are deeply targeted to those with the greatest housing 
needs.
    Chairman Ney. That's not ours either.
    Mr. Faith. This legislation has tremendous grassroot 
support. There are now over 4,300 endorsements from across the 
country, and I've submitted a copy, hopefully for the record, 
if you will, Mr. Chairman, of all those endorsers, including 
232 from across Ohio.
    The national housing trust fund legislation has 204 
cosponsors in the house, and I want to thank Congresswoman 
Tubbs Jones for being one of them, and encourage the rest of 
you cosponsoring this legislation.
    There is, I guess, tripartisan support for the bill. 11 
republicans have joined. But--and I urge you, Chairman Ney, to 
hold a hearing on this legislation. Surely, a bill with this 
level of support deserves such a hearing.
    I want to add my voice--I know you'll be hearing from other 
members of this panel--about the HANF proposal. We are very 
much opposed to this proposal. As Congressman Tiberi, I think, 
articulated the best, this is a ill-conceived proposal that 
would not add any value and simply put the State bureaucracy in 
the middle of an already burdensome process of distributing 
critically needed rental assistance.
    And I work a lot with the State of Ohio, and I know that 
they do a great job at many things. But administering a rental 
assistance program, I don't believe is one of them. They are 
good at production, they are good at tax credit, the bond 
programs, the home program, but administering a rental 
assistance program, they are entirely ill equipped for. They 
would need a hire literally hundreds of new staff to take on 
that job.
    And, finally, my last comment, Mr. Chairman, is related to 
the Section 8 project-based. In the information I received, 
you're open to comments on that program, as well. And we--we 
are involved in this.
    Ohio has 86,000 Section 8 project-based units, more than 
any other State outside of California and New York. As you 
know, we're going through massive changes in that program 
because of all the expiring contracts. And my organization 
provides a small part, but an important part, in the average 
technical assistance grants that we receive from HUD.
    Now, HUD has held up distributing any new funds for this 
program, in spite of the fact that the Inspector General went 
through a very thorough audit, they moved into our offices for 
six weeks, went through all of our records, found no findings. 
I think the auditor almost came to tears when she realized they 
had no findings after six weeks.
    But in spite of no findings, this administration has failed 
to issue a NOFA for the past two years for any new funds for 
this program. And I encourage you to add an amendment to the 
bill which would require them to issue a NOFA to get this 
program back up and running.
    I know Ms. Jones has spent a fair amount of time--actually 
an unfair amount of time--trying to resolve this issue. And I 
think the only solution at this point is some additional 
legislation to require the administration to get back on the 
right track.
    So with that, I'll close.
    Thank you for your patience, and I'll be happy to respond 
to any questions.
    Chairman Ney. Thank you.
    [The prepared statement of Bill Faith can be found on page 
93 in the appendix.]
    Chairman Ney. Ms. Fisher.

    STATEMENT OF LaTOYA N. FISHER, RESIDENT, COLUMBUS, OHIO

    Ms. Fisher. Testimony of LaToya N. Fisher before the House 
Subcommittee on Housing and Community Opportunity.
    Chairman Ney, Ranking Member Waters, and the distinguished 
members of the subcommittee, thank you for allowing me to 
testify on the subject of the Housing Choice Voucher Program 
and the role of the Columbus Metropolitan Housing Authority and 
how it has been beneficial to me.
    My name is LaToya N. Fisher. I reside at 3035 Osgood Road 
West, Columbus, Ohio 43232. I am a 26-year-old single parent to 
four children, two of which I have adopted. I am currently 
employed at Ross Laboratories, and I attend Ohio State School 
of Cosmetology. My future goals are to complete the courses at 
this school to receive a certificate of completion in 
technology and further my education to obtain a degree in 
nursing.
    At this point, I do not have the knowledge to comment on 
the national implications of changing the Housing Choice 
Voucher Program; but I would like to share with you my 
experience about being a participant in CMHA's Housing Choice 
Voucher Program.
    I applied for Section 8 assistance in 1996. At the time my 
son and I were living at home with my mother and father, and I 
wanted to live on my own. I received my voucher several months 
after completing my application, and I was successful in 
finding an apartment that could fulfill my living needs at that 
time.
    Two years later, I had another child and moved into a 
house. I enrolled in the Family Self-Sufficiency Program in 
February, 2003. I was able to obtain information about this 
program through my realtor. This program was the beginning of 
my becoming a first-time homebuyer.
    I was able to achieve the goal May 23, 2003. Without CMHA's 
homeownership program, I would not have been able to achieve 
this goal so soon in my life. Because of the benefits from this 
program, I was able to find a home in a nice neighborhood and a 
stable environment for my children. I am grateful to HUD and 
CMHA for the assistance provided for my family and myself.
    With the housing assistance, I am able to pay for school 
and afford the cost of everyday living for my family.
    Since I have started this program, I have built a strong 
relationship with the coordinators of the FSS program, Ms. 
Carol Winchester and Ms. Michelle Barthelemy. Throughout the 
process of finding my home, I have had to speak with either one 
or both of these ladies on a daily basis, so I would know which 
steps to take next.
    I am proud to say that I am very pleased with my 
relationship with CMHA staff--with the CMHA. The staff is 
friendly, courteous and professional.
    CMHA has provided a valuable resource to our community. I 
would not want any changes to the Housing Choice Voucher 
Program that would reduce its current impact upon the thousands 
of Housing Choice participants who reside in Columbus, Ohio.
    However, I would like to make a few suggestions on how to 
improve the program and weed out the people who don't plan to 
better their lives with this--with the help of this program.
    One, require all able-body individuals to work or attend at 
least 30 hours per week at school or work. With responsibility, 
these people can feel a sense of self-importance in their lives 
and not live by society's standards, but want to achieve more 
in life.
    Number two, take more of an aggressive against participants 
and landlords that are not following the CMHA rules.
    Number 3, have the landlords attend the inspection with the 
inspectors so that they will understand clearly what needs to 
be fixed and for which reason. Hold payment on landlords that 
do not keep up on routine maintenance.
    Number 4, find a way to acknowledge the workers for their 
hard work.
    And Number 5, if possible, give more CMHA vouchers to 
assist families that are motivated to better their lives and 
current situation so that one day they can also live out the 
American dream and become a homeowner, also.
    I would like to thank you once again for your time and 
interest. And I would be happy to answer any questions that you 
may have about my comments and suggestions.
    Chairman Ney. I want to thank you for your fine testimony.
    [The prepared statement of LaToya N. Fisher can be found on 
page 100 in the appendix.]
    Chairman Ney. Let's move on to Mr. Gladman.

     STATEMENT OF STEVEN D. GLADMAN, GOVERNMENTAL AFFAIRS 
   COORDINATOR, OHIO APARTMENT ASSOCIATION, COLUMBUS, OHIO, 
   APPEARING ON BEHALF OF COLUMBUS APARTMENT ASSOCIATION AND 
       MIDWEST AFFORDABLE HOUSING MANAGEMENT ASSOCIATION

    Mr. Gladman. Thank you, Chairman.
    Chairman Ney and distinguished members, my name is Steve 
Gladman. I serve as the Executive Director of the Columbus 
Apartment Association as the Governmental Affairs Coordinator 
for the Ohio Apartment Association. Both organizations are 
affiliated with the National Apartment Association.
    I also am the Executive Director of the Midwest Affordable 
Housing Management Association, which is affiliated with the 
National Affordable Housing Management Association.
    All three of these organizations represent companies 
dedicated to provide quality rental housing.
    My involvement in these three associations provides me 
unique insight into the Section 8 rental assistance program.
    I believe it's critical to meet the housing needs of low 
and moderate income families, and that improving the Section 8 
program is a central part of meeting those needs. However, I 
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, I think HANF will not 
reduce administrative costs to participating rental owners and 
will not maximize program benefits to--for residents.
    I support the Section 8 program as a means for private 
housing owners to provide affordable rental housing to families 
who need it.
    More apartment owners would participate if the costs of 
renting to voucher residents were more comparable to the costs 
of serving unsubsidized residents. Eliminating transactional 
barriers will encourage more owners to participate in the 
program. More owner participation will result in greater 
housing choice and increased voucher utilization rates.
    But do I think the Section 8 program needs to be improved? 
I think there are four simple things:
    First, fund the program adequately; second, ensure that the 
rental property owners are paid on time; set fair market rents 
so they're truly fair; and, finally, eliminate inspections and 
replace them with a process that is helpful to the resident and 
owner alike.
    Funding: I urge continued funding for the existing program 
structure administered by HUD. Historically, many have 
criticized the Section 8 appropriation structure because too 
much funding remained unused each year. Effective this year, 
Congress enacted changes to minimize recaptures and national 
utilization rates have risen to nearly 96 percent.
    I believe that the existing successful appropriations 
structure should be supported.
    Timely payment: PHAs are required to make prompt subsidy 
payments to apartment owners. However, subsidy payments are 
sometimes untimely because of antiquated systems or processing 
delays. Just as owners would not regularly accept late rental 
payments from conventional residents, they should not be asked 
to accept late subsidy payments.
    Some PHAs already use automated systems, but it would be 
helpful if HUD would provide technical assistance, funding, and 
other support so all the PHAs have the capability to utilize 
automated payment systems. HUD should also establish some 
incentives to make sure that the owners are paid on time.
    Fair market rents: I urge that HUD enact a more efficient 
process for PHAs to apply for higher fair market rents that are 
more reflective of the submarket rents. I also propose changes 
that would allow PHAs to raise the payment standard to 120 
percent of FMR without HUD approval and to afford PHAs 
increased flexibility in requesting higher payment standards 
when necessary. FMRs must be set high enough to encourage owner 
participation; and, in turn, create a sufficient supply of 
apartments and choices for voucher holders.
    I 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 Ohio, FMRs have not been 
updated in years and are well below market rates in both high-
cost and moderately priced areas.
    Inspections: Finally, I propose eliminating what many 
owners see as the greatest barrier to program participation, 
the inspection process.
    The current inspection requirement is a losing proposition 
for all involved. The owner doesn't like the inspection because 
it delays resident move-in. The PHA struggles to keep up with 
the demand for inspections, and realizes that the inspection 
requirement discourages many rental owners from participating 
in the program. The resident has to wait to move in and has 
fewer housing options because of the limited owner 
participation.
    Rental housing is a competitive business, and housing 
quality is market driven. Local housing codes and State 
landlord-tenant law already provides adequate protections for 
residents.
    I urge that the inspection requirement be eliminated and 
the funds currently used for inspection be used to establish 
resident-owner liaisons. These liaisons would be PHA staff that 
work with both the resident and the owner to ensure both 
parties are benefiting from the Section 8 rental assistance 
program.
    If a housing quality issue exists, the liaison could 
intervene on behalf of the resident; if appropriate, a housing 
quality inspection could be performed. If there's a payment or 
resident relationship issue that exists, the liaison would work 
with the owner to resolve these problems.
    This process would focus on establishing a long-term 
relationship with owners and residents rather than focusing on 
a once-a-year inspection process.
    I believe the existing Section 8 program, with the 
improvements I've just noted, will make affordable housing 
available for more Americans.
    Thank you.
    Chairman Ney. Thank you for your testimony.
    [The prepared statement of Steven D. Gladman can be found 
on page 108 in the appendix.]
    Chairman Ney. Mr. Guest.

    STATEMENT OF DENNIS S. GUEST, EXECUTIVE DIRECTOR OF THE 
    COLUMBUS METROPOLITAN HOUSING AUTHORITY, COLUMBUS, OHIO

    Mr. Guest. Chairman Ney and other distinguished 
representatives of the Subcommittee on Housing and Community 
Opportunity.
    I'm Dennis Guest, I'm Executive Director of the Columbus 
Metropolitan Housing Authority, which is responsible for the 
operation of 3,814 units of public housing and the 
administration 9,732 budgeted Section 8 vouchers throughout 
Columbus and Franklin County.
    I might also add, since one of our residents talked about 
the self-sufficiency program, that we currently have 500 
residents registered in the program with over $480,000 in 
escrow accounts.
    There are three issues on which I will comment:
    A, the HANF block grant proposal; B, the potential 
improvements to the Section 8 program; and C, PHA selected 
project-based vouchers.
    First, let me state that CMHA is opposed to the current 
proposal to block grant the voucher program.
    And I dare say, most other State PHAs would be in the same 
boat. And there are three reasons for my opposition.
    Number one, the concept of the voucher program could or 
should be coordinated with the TANF program is weak. 
Specifically, of the 10,000 vouchers currently under lease with 
CMHA, only 24 percent of households, heads of households with 
TANF, in Ohio called Ohio Works First, income, the majority, 76 
percent, of our clients are seniors, the disabled, pensioners, 
and those working with modest incomes.
    Number two, it is proposed that the States could better 
administer the program because they are more aware of the local 
needs, and by allowing increased regulatory waivers could more 
adequately meet such needs.
    Members of the subcommittee, by passing the QWRA bill and 
by allowing the PHAs to utilize vouchers in a project-based 
manner, you have already encouraged the customization of the 
voucher program to the community level, an outstanding 
achievement.
    For example, CMHA has customized its program to meet the 
needs of the City of Columbus, Franklin County, the Alcohol 
Drug and Mental Health Board, MR/DD, Community Shelter Board, 
United Way, et cetera. In one instance specifically, The Ohio 
State University and CMHA have partnered to provide housing 
assistance to young mothers with children who are students at 
OSU. Special supportive services provided by the University 
will allow these mothers to pursue degrees and begin successful 
careers without the need for TANF.
    I have attached a list of our partnering agencies and 
nonprofits.
    I am hard pressed to understand how a State-administered 
program could function more effectively at our city/county 
level. Rather, this committee should consider allowing PHAs 
more flexibility provided there is local governmental and 
community and private sector support.
    Number three, it is difficult to comprehend the transition 
of the voucher program to a State block grant program being 
anything other than a time-consuming burden. If the State of 
Ohio alone were to administer the program, absorbing just our 
portfolio of housing would require inspecting 14,000 to 15,000 
units a year, conducting 14,000 to 15,000 annual 
recertifications a year, processing 30,000 individual landlord 
checks, establishing relationships with over 2,200 owners of 
property, hearing a thousand grievances, and negotiating 12,000 
unit rents. Plus, dealing with 27,000 residents currently in 
our program.
    I might add, if you let the State of Ohio take all of these 
numbers and multiply them by about eight, then you'll find out 
what the volume of work would be at the State level.
    Of course, the State could elect to subcontract their work 
to the PHAs, or the State could even decide not to participate 
in the program. All three scenarios are possible.
    It is unlikely that this will create anything less than an 
administrative nightmare for HUD.
    B, if the goal is to improve this section, the voucher 
program, I suggest the following for your consideration, and 
Mr. Gladman and I are probably on the same page:
    We have variations of this, but we would allow PHAs to 
inspect units every two or three years, rather than yearly, 
based on unit history upkeep by landlords.
    At least 85 percent of the landlords here in Columbus, I 
would say, are diligent, professional and maintain quality 
units. Annual inspections of their property is wasteful of 
their time and the PHAs' time and of the residents' time.
    Fewer inspections should result in cost savings for both 
the public housing authorities and eventually to HUD, and 
result in more individual landlords participating in the 
program.
    Number two, rent recertifications for senior citizens could 
be done every two years instead of yearly. For most senior 
citizens, you're seeing very little, if any, change in their 
annual income on a year-to-year basis. And rather than hauling 
them in on a yearly basis, money could also be spent and time 
saved, in terms of administrative savings in just doing that 
every two years.
    Number three, this is where we get into some real technical 
stuff that some people may or may not be interested at this 
hearing right now, establish a LOCCS system of funding for 
Section 8. LOCCS stands for Lines of Credit Control System, and 
it's the method in which housing authorities draw down money. 
It could be set up on a yearly basis schedule. It's very 
similar to the way we get subsidy and other funds right now, 
rather than individual requests for often only two months at a 
time, which are paperwork intensive.
    Finally, I would like to emphasize that the project-based 
program is tremendously successful locally. Because of the use 
of vouchers as financial backing, CMHA has been able to work 
with the Community Shelter Board and other nonprofit housing 
providers and support service agencies to develop over 200 
units of housing for the homeless. Additionally, 48 new family 
units and 30 senior units are being developed with National 
Church Residences by utilizing project-based vouchers.
    Thank you very much for allowing me to make this 
presentation.
    Chairman Ney. Thank you.
    [The prepared statement of Dennis S. Guest can be found on 
page 115 in the appendix.]
    Chairman Ney. Mr. McCleary.

   STATEMENT OF CORNELL H. McCLEARY, COMMANDER, PRO-PRIVATE, 
            POLICE TRAINING ACADEMY, COLUMBUS, OHIO

    Mr. McCleary. Honorable Members of the Subcommittee on 
Housing and Community Opportunity.
    I want to thank subcommittee chairperson, Bob Ney, 
committee members, and Congressman Pat Tiberi for bringing it 
to Columbus.
    Columbus, Ohio is a community under siege, and it's quickly 
becoming the murder capital of America. Our children are 
getting shot while they play and while they sleep. During 
daylight hours, people's homes are being broken into where 
they're either raped, robbed or both. Just recently, three 
young people were tied up and shot in the head, for the lack of 
a better description, executed.
    In our war on terrorism, we are not as worried about Saddam 
Hussein as we are worried about the boys in the hood, little 
Jermaine and Booboo.
    Dead center of this horrific development in Columbus is the 
Section 8 low income housing communities. These communities 
have become unintended breeding grounds for violent and 
destructive criminals.
    The public housing program was designed to provide safe, 
decent and affordable housing to low income families. In 
reality, the program has evolved to become a multibillion-
dollar growth industry for politically connected developers, an 
economic nightmare for small and emerging property owners, and 
pure hell for too many low income families.
    The Bush administration advocates shifting most of the 
management responsibility of the program from the Federal 
Government to the States by converting the program into block 
grants. Currently, the program loses billions of dollars to 
fraud and other factors. If Congress were to, in fact, reshift 
management of the program to inexperienced States, fraud and 
waste factors in the program would go through the roof. Not to 
mention the possibility of States, for budgetary reasons, never 
earnestly attempting to resolve community crime issues 
associated with the program.
    My formal written testimony that I have presented to the 
subcommittee for consideration in the matter of achieving to 
the community's ability, making a factual argument that we must 
earnestly go after the boys in the suites, as well as the boys 
in the streets; the blood flow--and I must say, mostly the 
blood of African-Americans--must be stopped; the omissions of 
powerful and politically connected developers and property 
owners, quote, their respectability, must be reconciled in 
favor of safe and stable communities, and this reconciliation 
must be done by the Federal Government. If this challenge is 
left up to the States, God would have to be the Governor to get 
the job done.
    Thank you for your invitation to speak.
    And I will at this time entertain any questions that the 
subcommittee may have.
    Chairman Ney. Thank you.
    [The prepared statement of Cornell H. McCleary can be found 
on page 167 in the appendix.]
    Chairman Ney. Mr. Slemmer.

  STATEMENT OF THOMAS W. SLEMMER, PRESIDENT, NATIONAL CHURCH 
     RESIDENCES, COLUMBUS, OHIO, ON BEHALF OF THE AMERICAN 
        ASSOCIATION OF HOMES AND SERVICES FOR THE AGING

    Mr. Slemmer. Chairman Ney, Members of the Subcommittee.
    Thank you for inviting me today. I'm President of the 
National Church Residences, but today I'll be speaking on the 
American of Association of Homes and Services for the Aging. We 
think we have a unique voice as it relates to affordable 
housing and services for affordable housing for seniors.
    Also, as affiliate, is the Association of Ohio 
Philanthropic Homes and Services for Aging, and it represents 
350 not-for-profit primarily faith-based organizations 
statewide.
    I want to call your attention, my original testimony where 
we address several issues, including the Section 202 production 
programs, social service coordination, affordable housing and 
preservation and production. But first let me echo some of the 
sentiments of the panelists here as it relates to concerns of 
the administration's proposal to block--block grant Section 8 
voucher programs as reflected in HR 1841.
    I have a couple of practical examples I thought you might 
be interested in, as relates to Columbus. In your district, 
Congressman Tiberi, under construction right now is a 300-unit 
affordable housing development on Waggoner Road, east of 270, 
in the eastern part of Columbus, in a recently annexed 
property.
    In that development we've established a partnership with 
the Columbus Metropolitan Housing Authority to develop 75 units 
of high-quality, affordable, service enrichment housing for 
senior citizens, and we've used HOPE VI funds, tax credits, tax 
exempt bonds, home funds from the city and State, as well as 
city TIF funds. Really, a complex development.
    We also have on that same location 55 units of senior 
housing that's been developed under the Section 202 program, in 
cooperation with the local HUD office, and a 176-unit family 
affordable housing development, which includes 50 four-bedroom 
houses. And in that family development, we have worked very 
closely with the Columbus Metropolitan Housing Authority to--
and, Dennis, you said 48, but 50--53 Section 8 vouchers on that 
property to serve the poorest of the poor.
    And the emphasis I want to place on this was the close 
cooperation and working relationship with the Columbus housing 
authority, and their understanding of the local situation 
really brought that about, and especially as it relates to the 
need for four-bedroom housing industry for families.
    A second development in Westerville, Ohio, is starting 
construction as a 75-unit senior housing facility that was 
developed in partnership with CMHA. They've purchased the land 
and are leasing it back to us to help us with our targeted 
development costs. Furthermore, they provide 30 project-based 
Section 8 vouchers so that we can serve the poorest of the poor 
in those developments.
    Both of these developments, I think, speak to the success 
of the current program. It's operating well. Section 8 vouchers 
are being administered well. And the need for close local 
cooperation between the development community and the public 
housing authority has been met and really is working well.
    It's our opinion that implementing HR 1841 will not improve 
the program. It is exactly the situation here in Columbus that 
really enables us to customize and meet the special local 
needs, which I think will be lost if this is administered at 
the State level.
    It's hard to imagine that transitioning the voucher program 
to the States will be anything more than a time-consuming 
burden, as Mr. Guest mentioned.
    It's really our experience that the existing program 
currently operated locally provides the flexibility and the 
partnership and the local coordination that you need.
    If I could speak just briefly about the Section 202 program 
that your committee oversees. Many not-for-profits, that's 
their primary vehicle for developing affordable senior housing 
for services. And in our written testimony we have several 
specific suggestions on how to make the program work better.
    But one of them, I thought I would bring to your attention, 
HUD has still not implemented, after three years, your 
committee's intent, which was passed in the legislation, which 
allows us to combine the 202 program with tax credits so we can 
expand affordable housing supply in this country. I would 
submit to you that that's embarrassing.
    Furthermore, HUD needs to speed up the process of 
refinancing its older portfolio of Section 202 housing. Some of 
those loans are financed at 9-1/2 percent interest. Right now, 
I think today, you could refinance those at 4-1/2 percent 
interest, and that money could be used to expand services and 
improve those properties. To date, that program has not been 
implemented. There's only been three applications approved so 
far in Washington.
    I submit that this committee ought to really look into 
that, and instead of HUD dragging its feet on those 
applications, they ought to be pushing sponsors to refinance 
and take advantage of that lower interest rate environment.
    Finally, we're grateful for your support of the Social 
Service Coordination program. It is vital for senior housing. I 
know you know it. But on the written testimony, we express 
concerns that are also shared by the American Association of 
Service Coordinators, that the 203--2003 NOFA on service 
coordination we think adversely affects both the quality and 
the training program of service coordinators. We would urge you 
to take a look at that.
    Again, we want to thank you for your time.
    Chairman Ney. Thank you.
    [The prepared statement of Thomas W. Slemmer can be found 
on page 176 in the appendix.]
    Chairman Ney. Mr. Zawilinski.

    STATEMENT OF FRED ZAWILINSKI, EXECUTIVE DIRECTOR, LAKE 
       METROPOLITAN HOUSING AUTHORITY, PAINESVILLE, OHIO

    Mr. Zawilinski. Thank you, Congressman Ney and Congressman 
LaTourette for the invitation to speak to the entire 
subcommittee this afternoon here in Columbus.
    My name is Fred Zawilinski, and I'm the Executive Director 
of the Lake Metropolitan Housing Authority headquartered in 
Painesville, Ohio. We are a suburban county to the east of 
Cleveland.
    The first point I'd like to make about the HANF proposal is 
that you're not going to see the results that the TANF proposal 
and welfare reform did in the last several years. First of all, 
you're not going to see the decrease in caseloads that has been 
celebrated as the success of TANF. The reason is, is that we're 
not operating an entitlement program; we're operating a program 
in the Housing Choice Voucher which has extensive waiting lists 
in most communities, if the housing authority's, indeed, even 
taking applications at all. Successes will be replaced by other 
folks from that waiting list. And sanctions do not carry the 
same impact under the Section 8 program that they would under 
welfare reform.
    Simply put, sanctioning a family for not fulfilling work 
requirements not only penalizes the family for that, but also 
jeopardizes the business relationships housing authorities and 
those tenants share with landlords dependent on that steady 
stream of income that is promised through the contract that we 
sign with them.
    The Housing Choice Voucher is not a failing program. It's--
its primary emphasis is not on families in the sense of TANF 
recipient cash assistance. There are approximately only 14 
percent of our families that we assist that are receiving cash 
assistance, and a much higher percentage of our families are 
receiving Social Security and disability assistance.
    The Lending for Housing Commission has referred to the 
program as flexible, cost effective and successful under the 
commission. And the Housing Choice Vouchers' already 
administered at the most local level possible here in Ohio. 
Flexibility offered to us in preferences, payment standards 
allow us to adapt to the local needs of our community.
    And our governance is local as well. Our boards are 
appointed by locally elected officials, they are responsive to 
their communities, and--and offer the opportunity to provide 
input to every individual in our community.
    Additionally, housing authorities uniquely have the 
opportunity to administer Section 8 because of our--of our 
experience in public housing. Simply put, landlords have a 
greater trust for us because we share many of the 
responsibilities of a landlord through our public housing 
program.
    I serve on the board of the National--or I'm sorry--the 
Lake County Apartment Owners Association, and that 
participation, from the landlord's perspective, allows me to 
have greater input into apartment policies in our community; 
but also has provided the trust needed to develop the business 
relationships needed to expand our program over the last 
several years.
    One of the justifications for making the HANF program is 
that there are hundreds of pages of HUD regulation and guidance 
that would be pared down at the Federal level. Indeed, that 
probably would happen. However, some of that guidance is 
offered to us through the Housing Choice Voucher Guidebook, 
which was designed in the last year, and provides tremendous 
relief as far as guidance to offering the program on a national 
basis.
    If given to the States, the opportunities for technical 
assistance and guidance is diminished because we are now 
dependent upon Columbus for that same guidance as every housing 
authority or administrator of a Section 8 voucher program would 
be dependent upon their State capital.
    The myriad of regulations that housing authority and, more 
importantly, the families that receive our housing assistance 
would indeed grow. They would not--not only be responsive to 
the Federal guidelines established for the program, but the 
States and indeed local communities would be still designing 
implementation policies that would affect their lives as well.
    One of the other arguments that has been made is that by 
paring the number of HUD-administered Section 8 recipients from 
2,600 public housing authorities and nonprofit organizations to 
approximately 50 States and a few territories that we would be 
streamlining a program and that HUD would be better able to 
manage the program. I find this curious in an environment where 
they've established a very good indicator of Section 8 
management through the SEMAP evaluation process, and more 
importantly in the development of information technology 
through PIC and the LOCCS system that Mr. Guest described 
where, indeed, management of 26,000 housing--2,600 housing 
authorities should not be much more difficult than 
administering 50, and simply shifting that burden to the States 
does not provide for the program efficiency of the people--to 
the people that most need it, the families that are--are 
involved in our program.
    This is not to say that the Housing Choice Voucher Program 
is not in need of some changes and improvement. However, I 
would--I would make the analogy that it's more like taking your 
car in for a tune-up than buying a new car. The greater 
flexibility in setting H2S inspections to ensure that housing 
quality is maintained is indeed a good point that Mr. Guest 
made and others will make.
    Many of our landlords are very responsible, many are 
constructing new housing specifically for the program. And we 
have the opportunity to waive those inspection requirements.
    Rent calculations could also be simplified to--to allow 
families the opportunity to have less burden on them.
    And I'd also like to mention, in closing, that you've 
offered in the last five years the opportunity for housing 
authorities to explore deregulation to the Move Into Work 
program. You've created this demonstration for housing 
authorities to take essentially a block grant program, modify 
it, and design rules that will fit their local community. I 
urge you to take a look at those results and see what 
innovative housing authorities in our communities have already 
done.
    I thank you for your time this afternoon, and wish you well 
for the rest of this afternoon.
    [The prepared statement of Fred Zawilinski can be found on 
page 191 in the appendix.]
    Chairman Ney. I want to thank all the witnesses.
    We'll be in a series of questions.
    I just want to note to Bill Faith, in Los Angeles we had 
someone raise an issue about homelessness and Section 8 and 
something that HUD did not proceed with. And we have been in 
the process of finding out why that didn't happen. I don't know 
if you're aware of that or not. But it was raised to our 
attention.
    So we'll--because every hearing, somebody raises something 
that we don't know that HUD hasn't done. So homelessness was 
raised out there. Today you raised the--what we did three years 
ago about combining the 202 and the--and the tax credits, so 
we'll follow back up on that as we're following back up on 
homelessness. So I just wanted to assure you of that.
    Just a generic question, I guess I'd want to ask, of people 
that--you know, when you look at the State of Ohio, and do you 
feel that the present piece of legislation that we presented 
for discussion, when it comes to--when it comes to HANF, do you 
think it's locked tight enough to guarantee that the State 
couldn't move monies?
    The only reason I mention that, the State acquired the TANF 
monies for Head Start--Mom and Dad used to call it stealing--
but the State acquired those monies and moved those monies.
    So, you know, is there--do you think it's--if we did this 
that there's a foolproof way that State--the State would not be 
in a budget crunch if any money----
    Mr. McCleary. Can I respond, Mr. Chairman?
    I think that you have to look at it this way: Basically, 
any money that the State can steal, they will steal it if 
there's a way to do it, it will be done.
    I mean, one of the problems of the program is a lot of 
independence, for a lot of people to get things done, and 
because we've never had the enforcement apparatus in place to 
stringently enforce the rules that we have. To give it to the 
State that's not heretofore--have no idea that bureaucracy, the 
money that they would need, just to get in place to take the 
program, it would be a nightmare.
    I think they would do it. They might not do it 
intentionally, but they probably would do it.
    Mr. Faith. Mr. Chairman, I just experienced very close-up 
and personal the State budget process this year. And I have to 
tell you that they were some four-plus billion dollars in the 
hole when they started. They looked for money under every rock, 
and even uprooted a few trees to see if there was any money 
under there. They raided rotary funds, they looked--they raided 
unclaimed funds, they raided any funds they could find, raised 
taxes, raised fees, which--some of which were very positive, by 
the way.
    However, they looked for money everywhere they could find 
it.
    And I don't--I don't think it's the administrators of the 
program that would shuffle money from here to there. But I 
think as States struggle with this very difficult economy and a 
lack of resources to simply fund basic State government 
services, you could bet there would be supplanting of--of 
funds. I mean, if they can get away with it, they would do it. 
Because they feel they're forced to. They don't have the 
resources that they need to manage their own affairs.
    So I think that's a fear.
    But I think there's a more fundamental problem, and that is 
the State is simply not in the ongoing rental assistance 
business. They--that's not their expertise; they have no 
history with that. They administer production programs and do a 
decent job of that, because it's basically a onetime 
commitment. They monitor for ongoing compliance, but they're 
not involved in the manner that Mr. Guest described with that 
kind of hands-on year-to-year basis with these owners and 
tenants.
    And I don't--and I just don't think that's their expertise, 
I don't think they want to get into that business, and I think 
that's one of the bigger problems with the proposal.
    Chairman Ney. Thank you.
    On the comment Mr. Guest made, is everybody pretty well in 
agreement about the rent recertifications for seniors, we could 
do it for every two years? And also the PHAS to inspect the 
units every two to three years rather than yearly? Does 
everybody feel pretty comfortable with that?
    Mr. McCleary. If there is a waiver where there is immediate 
inspection upon complaint. I think if there's a process if 
there's a problem, has to be well in place that the resident 
could ask for that at any rate.
    Chairman Ney. My final question, I did want to ask you----
    I'm sorry. Yes?
    Mr. Gladman. Mr. Chairman, if I may just add to what Mr. 
McCleary said. I think that that process for inspection, in my 
testimony, I'm suggesting eliminating it and going with a 
liaison person to resolve problems, because I think that we 
become focused on this process of inspection and really we kind 
of lose sight of housing quality in general. There's other 
issues besides the physical aspect of the properties. The 
point-in-time inspection, you could inspect it one day, it 
could deteriorate the next. There needs to be a process that's 
ongoing that provides the resident some support as well as the 
owner to make this program really work.
    But right now we're spending a lot of time and energy and 
frustrating a lot of people to do these point-in-time 
inspections.
    Chairman Ney. Thank you.
    My time's run out. But, Ms. Fisher, I did want to 
afterwards just get some of the ideas you had about--ideas of 
how we would reward people who have been hard workers, maybe 
later on we could.
    Ms. Fisher. I just think they should be acknowledged. I 
don't have any ideas as far as how----
    Chairman Ney. Acknowledge them.
    Ms. Fisher.----but I just think they should be 
acknowledged.
    Chairman Ney. Thank you.
    My final question, Mr. McCleary, I noted in your testimony, 
you were talking about systematic--systemic, I'm sorry, 
problems relating to developers and private property owners 
having appropriate security-related budgets. So that would be--
what would that be?
    Mr. McCleary. Well, the current cap, I think, you have like 
a 10-percent administrative cost that goes to the property 
managers. The problem with that, they have--most property 
owners have to choose between maintenance and security and 
other issues, so the end result, maintenance taking priority to 
security unless they have a total crises. Then, the traditional 
response is, once the crisis is over, go back to inadequate 
security.
    One of the biggest things that hurt expansion of the 
program and people welcoming this program into the community is 
both the fear and perception of crime that's done in these 
communities. And putting different monies available to the 
property owners who do have security budgets and the legal--
legal budgets to accommodate that, not only would it stabilize 
the community, but I think it would do a great job in changing 
the whole perception of this program in the broader community, 
and make more people welcoming in engaging the program.
    Chairman Ney. Thank you.
    The gentlewoman.
    Ms. Jones. Thank you. Thank you, Mr. Chairman.
    I would like to thank all of you for testifying here this 
afternoon.
    Mr. McCleary, I support many of the commentaries that you 
made. One of the things that we spoke out about last year was 
the fact that HUD reduced the drug elimination grant dollars 
going to public housing to address many of the various issues 
that you raised. And I guess our horses weren't just quite loud 
enough, because they still eliminated some of the money anyway.
    But I want you to know that your comments are not falling 
on deaf ears. There are a lot of us who know of many of the 
issues that you raised with regard to that.
    Let me quickly, Mr. Guest, bring you greetings from Terry 
Hamilton Brown, who is now actually the head of University 
Circle, Inc., in Cleveland, but she told me--I told her I was 
coming, and she said, tell everybody she said hello.
    I want to talk briefly about this inspection piece. And 
I'll talk to Mr. Guest about it or anyone else.
    The dilemma I have comes from a history of having been an 
attorney for landlords as well as an attorney for tenants back 
in the day, as my 20-year-old son says, and dealing with the 
landlord-tenant laws and dealing with the--in someone's 
testimony, they said that the landlord-tenant laws were 
convenient or--adequate enough to address some of the issues 
that are raised by people in Section 8 settings.
    I would say, based on that--the background that I have that 
it would be very, very important that the housing authorities 
maintain as much control as possible over inspections because 
when you start going to the court system to resolve an issue 
that ought to have been resolved between you and the landlord 
and the tenant, it presents a problem.
    I don't understand--and I need a short answer, because we 
don't have very much time--what you're saying that the--a 
person could do, or you were talking about having a tenant 
representative or something.
    Mr. Gladman?
    Mr. Gladman. My suggestion is to take the existing funding 
that you use for inspections and transfer that staff and make 
them really problem-solvers and resolvers. So if there is a 
housing quality issue, they can do a housing quality 
inspection. But there are a lot of issues that are unrelated, 
that affect the quality of life, whether it's resident disputes 
or unfairly administered program rules as far as the owner.
    Ms. Jones. So you would be happy, then, if we put some 
money in for residents' disputes and other quality-of-life 
instances----
    Mr. Gladman. The purpose----
    Ms. Jones.----not necessarily diminishing inspections, you 
just say there are other issues that ought to be addressed.
    Mr. Gladman. Yes. I think there are broader issues, and to 
focus--really, the inspection is the primary control, if you 
will, and it's a point-in-time inspection. The market drives 
that--what happens now is----
    Ms. Jones. Let me ask you this, Mr. Gladman: You know we're 
coming on the end of the 20 years where--period where there 
were all these contracts with these different buildings to 
provide housing, and now they are not renewed because the 
market value far exceeds the dollars that people are getting. 
When you start going into some of those facilities and looking 
at how they've deteriorated over the years, how do you justify 
no inspection?
    Mr. Gladman. Well, from the project basis, there certainly 
is an inspection process, as you know, I think the react 
process.
    But what happens currently, because inspections are such a 
barrier--an example, in the Columbus market we have several 
companies that have project-based properties all over the 
country and operate a variety of subsidized programs, but will 
not accept any vouchers in their market-rate programs because 
of all the transactional barriers because of inspections.
    My argument is if you eliminate the inspections or at least 
streamline, as Mr. Guest said, you will get more property 
owners that are providing a quality product, and there will be 
greater choice for voucher holders. That's one of the issues 
now is the choice.
    Ms. Jones. I hate to cut you off, but I want to go to a 
couple of issues before the day is gone.
    Talk to me, Mr. Slemmer, about what barriers there are to 
the construction of additional affordable housing across the 
country. A real short answer, if you could.
    Mr. Slemmer. In talking about senior housing, the barriers 
are basically the limitation of funds. To develop affordable 
housing, you have to have subsidies on the construction, the 
debt service side, or subsidies on the operations side. Both of 
them are very limited.
    One of the things that I've mentioned before to this 
committee is that the preservation of housing is, therefore, 
even more important, because you could preserve the affordable 
housing stock that we have at much less cost than we have--we 
have for new construction. So I would really urge you to 
consider that as we look at ways of--of expanding or continuing 
to supply affordable housing.
    Ms. Jones. Thank you.
    My time is up.
    I just want to go on the record in opposition to the 
proposal for block granting Section 8. I'm opposed to block 
granting Head Start. I'm opposed to block granting everything 
that we can block grant. Because there are so many issues that 
the Federal Government has requirements that will not be 
imposed by the State of Ohio. And I won't--I won't get partisan 
up here today, so I'll leave that alone.
    Chairman Ney. Thank you.
    On a bipartisan basis, I have to let you know, the good 
Congressman Tiberi, I introduced his proposal at 7:00 in the 
evening, and he opposed it at 6:30.
    Mr. Tiberi. Thanks, Mr. Chairman.
    Let me--let me continue down the road that Ms. Tubbs Jones 
talked about that was mentioned in several of your testimony, 
and that is this issue of inspections again from Ms. Fisher to 
Mr. Gladman to Mr. Guest.
    One of the issues that I've heard a little bit about from 
those who may be proponents of this block granting is the 
frustration with this particular issue, the inspection issue.
    Mr. Guest, can you give me a--give the panel an idea of the 
breakdown in the Columbus Metropolitan Housing Authority of the 
Section 8 program of residents in private landlord facilities 
versus public facilities? Do you know that breakdown?
    Mr. Guest. Well, we have--if you're looking at the size of 
programs, we have 10,000 vouchers right now. We're a little 
overleased over what we're allotted. So we're--we're past that 
hundred percent category here.
    We have 27,000 residents in the Section 8 program. In the 
public housing program, we have about 8,000. So there is no 
doubt that it is a predominant program in Franklin County. And 
it's critical that it work well.
    And in Congress we get going about the--we talk about the 
inspections and how all of this works. I've not seen the 
answers in two or three years. Obviously, Steve and I have 
variations. I think there is general agreement that it doesn't 
work the way it does now. And I think the key thing is that--I 
would propose, maybe on an experimental basis, maybe far more 
conversation, as to what are the alternatives to the current 
system of inspections? Are there criteria that could be set up 
where provided--you know, I would guess every two to three 
years somebody does a really good job, every time we've been 
out there, it's up-to-date, bang, bang, bang, bang, all right, 
it's three years before we have to go back out.
    Others who have been more problematical, maybe it's every 
six months you need to go back out. Or maybe you need to have a 
liaison system.
    But right now it does frustrate very good owners to say, 
well, I'd rather have--I mean, I hear from the other side of 
it, you know, every once in a while, you know, I don't want to 
have to go deal with somebody and spend time on an inspection 
when I've been leasing my units to other people, and they have 
the common sense to determine themselves whether that's a good 
unit or a bad unit.
    So I think we make great leaps and set up cumbersome 
procedures that may only affect a small number of people, we 
need to focus more on them. So what we can do to generate a 
more localized version of that, or at the national level, if 
you can just give more flexibility and say, come up with 
something at the local level that makes sense, that most 
everybody can agree on, I think would be really helpful.
    Mr. Tiberi. Mr. Zawilinski, have you heard some of the 
same, similar issues up in Lake County?
    Mr. Zawilinski. I agree that we have actually much 
different inspection needs than--than inner city Cleveland and 
Cuyahoga County faces in the sense that our housing stock is 
much newer. We get the reports, for example, on children that 
we receive, elevated blood levels for lead poisoning, and we 
may have one a year in our county for all houses, not 
subsidized housing. And certainly in many of the cities that is 
a much greater issue.
    If we could grant to owners the opportunity to--to be 
waived from inspections for two or three years, the safeguard 
to that is that the tenants or an owner can request an 
inspection at any time to verify that our inspection standards 
are still being met.
    Mr. Tiberi. You don't believe you have authority today to 
do that?
    Mr. Zawilinski. To waive the annual inspection? I know we 
don't have the authority to do that. We have to do it every 12 
months.
    Mr. Tiberi. Thank you.
    Mr. McCleary. Congressman Tiberi, may I make a comment----
    Mr. Tiberi. Yes.
    Mr. McCleary.----listening to them?
    Can I suggest we can put in place a sworn affidavit 
process, that the property owner signs an affidavit the unit 
meets the criteria set by CMHA, or whatever, with substantial 
penalties to anybody that perjured on the affidavit?
    I think that would accomplish the objective and save a 
whole lot of money and time. That way you only focus on getting 
the bad people. So if a complaint is validated that they lied, 
then there would be a heavy penalty for them for doing that.
    Mr. Tiberi. Thank you.
    One last question because I know my time is about ready to 
expire.
    The issue that Mr. Gladman brought up of timely payments 
and fair market rents, and an issue that we've heard about 
today with respect to the number of housing units that are 
available in a marketplace, whether that marketplace be 
Columbus, Cincinnati, Cleveland, whatever city, is that an 
issue that you and Mr. Guest have heard about in terms of a 
national issue? Or do you guys have some flexibility in your 
local housing authority with respect to that issue with private 
owners?
    Mr. Zawilinski. I would say for our housing authority, 
we've been timely based on the HUD-established timeliness 
standard.
    Mr. Tiberi. What does that mean?
    Mr. Zawilinski. Well, it means that we get our checks out 
to our landlords within five days, business days, of when we 
get the money from HUD. And if the 1st happens to fall on 
Saturday, on Labor Day weekend, we don't get our checks out at 
best until the 4th. Landlords are typically expecting those 
checks out on the 1st. To us, we've been timely; to a landlord, 
they may not think so.
    Mr. Tiberi. Very good point.
    Mr. Guest. I was going to say, that's a very similar 
problem that all of us have.
    Another issue that you may hear about is the whole project-
based issue of payments on that. Now, that has been very slow. 
Like I said, we've got a lot of project-based developments we 
deal with, and there is a case--we're only doing two-month 
renewals oftentimes, the dollars--it's paperwork intensive. I 
know we've had some owners within the last four or five months, 
it's been as much as 20, 30 and 45 days before we have gotten 
the money from HUD. And we're not talking about a thousand 
dollars. We're talking about in some cases over $100,000. These 
are large developments. That is particularly--we can all 
imagine what that means.
    Mr. Tiberi. Thank you all. Thank you all for coming.
    Chairman Ney. Mr. LaTourette.
    Mr. LaTourette. Thank you, Mr. Chairman and Fred, for 
both--thanks, Fred, for driving all the way from Lake County, 
and thank you more for describing why we call Lake County God's 
country in that part of Ohio.
    I--you would come to see me with a couple other fellows 
earlier in the year, and I'd like to just ask you to comment--
I'll go ahead and turn the spotlight on you, and then maybe ask 
Mr. Guest to make an observation from Columbus's point of 
view--but on the omnibus appropriations bill at the beginning 
of this year had a provision that indicated that there was a 
cap placed upon the amount of administrative fees to be placed 
in an agency's reserve fund and in general reserve funds that 
could be maintained by a housing authority. If I remember--and 
you can certainly, in your answer, tell me if I remember it 
right--indicated--and then we'll go to Mr. Gladman and other 
folks' comments about timely payments to the landlord--but when 
you get to the end of the year, and you have to roll out the 
checks for the first of January of 2003 or 2004, it was--many 
times that those reserve funds made the difference between 
whether or not you were able to make the bills and the payments 
for the--for the landlords, particularly when--and I'll take a 
slap at the republicans and democrats--we didn't get our work 
done, and don't have an appropriations bill in place in a 
timely fashion on September the 30th of whatever year we're 
dealing with.
    Could you make an observation about the impact that you 
think that provision of the omnibus appropriations bill had?
    And, Mr. Guest, then I'd like you to share any thoughts 
that you have as well.
    Mr. Zawilinski. The issue that you referred to is the 
recapture of administrative fee reserves that we had as the 
housing authority during that bill. And for us it provided a 
buffer so that were HUD to be late in releasing functions, or 
were Congress, in appropriating funds, that we have the ability 
to at least meet a month, perhaps two, if it broke down to 
that--that level of payments to our landlords on a timely 
basis. By recapturing those funds, we've lost a tremendous 
amount of flexibility in not only working our program, Section 
8 program, but it also alleviated us of the opportunity of 
being able to use those funds for other housing-related 
purposes in our community.
    It also has created an atmosphere and attitude that we have 
very little incentive to make equipment and programs stretch 
because the risk of recapturing those funds means that there's 
no reward for getting an extra year out of our inspector's car 
or computer.
    And so replacement of equipment on a much more quick basis, 
you know, will be more of an emphasis, because we have no 
incentive to save.
    Mr. LaTourette. And so basically if I--we've run into this 
problem with a number of programs on Capitol Hill. So basically 
the effect of the recapture provision was you might as well 
spend it if you've got it, because they're just going to take 
it back at the end of the year anyway.
    Mr. Zawilinski. Well, and in our case, not only was it a 
recapture of funds from the previous year, but it was a buildup 
of surplus of funds over many years. And so the rewards of 
frugality and responsible administration were--were punished.
    Mr. LaTourette. Thank you.
    Mr. Guest, do you have a similar situation here in 
Columbus?
    Mr. Guest. Yes, we're in a similar situation. Obviously, it 
cuts down on your flexibility to run into this situation where 
the funds aren't coming on time.
    But there's other issues that came up. For example, Mr. 
Slemmer mentioned that we help--that we're helping on 
developing a senior community up in Westerville. Over the 
years, we have accumulated money from being efficient. That 
land was purchased with the Section 8 funds in order to make 
that program work.
    So there is an incentive to make other programs come about 
because of it. And if that incentive, as Mr. Zawilinski pointed 
out, is removed, it is--gets to be, let's just spend it all 
this year. It's a terrible attitude, but that's what inevitably 
will happen.
    Mr. LaTourette. And to both of you, too, a question: In 
your experience, have either of your authorities returned 
Section 8 vouchers unused? Have you not been able to completely 
subscribe those?
    Mr. Zawilinski. We have not used the number of vouchers 
issued; but we've more than used the number of dollars issued, 
attached to those vouchers. Because of the rising cost in 
utilities and rental charges, we've always been able to use our 
dollars.
    Mr. LaTourette. And, Mr. Guest.
    Mr. Guest. We haven't returned any. Like I said, we're 
overleased right now, so there won't be any coming back.
    Mr. LaTourette. Thank you very much.
    Thank you, Mr. Chairman.
    Chairman Ney. Thank you.
    I want to thank a very good panel. I appreciate your input. 
It's important to the process. And appreciate your 
participation here at the U.S. House field hearing.
    And I want to thank the members for their time, also.
    And with that, we'll move on to Panel II.
    Thank you.
    We're going to move on immediately to the second panel. So 
if you don't want to stay for the second panel, move on.
    The subcommittee will come to order for Panel II.
    We'll begin Panel II, and introduce the Mayor.
    We welcome you, Mayor.
    Mayor Coleman of Columbus, Ohio, meet Congressman Tiberi.
    Mr. Tiberi. Thank you, Mr. Chairman.
    It's a pleasure and honor for me to introduce my Mayor, the 
Mayor of the City of Columbus, Michael Coleman, who was elected 
to City Council in the early 1990s, and really doesn't need to 
be introduced to anybody in the audience, but at least to the 
panel, was later elected council President, in 1999 was elected 
Mayor of the City of Columbus, and will be reelected to a 
second term in November.
    Most importantly from my perspective, though, he is a 
constituent and a friend. Thank you for testifying today.
    Mayor.

 STATEMENT OF HONORABLE MICHAEL B. COLEMAN, MAYOR OF COLUMBUS, 
                              OHIO

    Mr. Coleman. Thank you very much. Thank you.
    Chairman--Chairman Ney. Congressman Tiberi, who is my 
Congressman, and is doing a great job for his district and the 
City of Columbus and central Ohio. Congresswoman Stephanie 
Tubbs Jones, who's also my friend, welcome back to the City of 
Columbus. Congressman Steve LaTourette, thank you very much for 
being in the great City of Columbus.
    And I want to also thank all of you for bringing this 
hearing to our city and choosing the City of Columbus to talk 
about such an important issue as we are presented with here 
today.
    Housing. Housing has been a very important part of my 
administration, because in this city we view housing and 
residential opportunities as a way to build strong 
neighborhoods, strong families, and a better quality of life. 
In our neighborhoods we view them as key to the survival of our 
city. They're the lifeblood of our city. That is where we live, 
where we work, and where--and where we play and raise families.
    In Columbus we're doing a great deal to address many of our 
needs locally. The City of Columbus has helped finance or 
participated in approximately 6,000 residential units during my 
first four years as Mayor. And when we first took office, we 
felt that housing was so important, working with Columbus City 
Council, and Charleta Tavares, who is here today, that we 
pulled together what's called--what we called the Affordable 
Housing Task Force of members of the community who are involved 
in housing to address many of the issues in our city, in a city 
where only 49 percent of our residents own a home when the 
national average is about 68, 69 percent. There is a great 
disparity there.
    We looked at things such as tax incentive for housing, land 
banking, streamlining the development process, driving down the 
cost of buying a home, and, very importantly, the establishment 
of a local housing trust fund and corporation.
    The Franklin County/Columbus Affordable Housing Trust 
Corporation was subsequently put together. It's a collaboration 
between the county commissioners and the City of Columbus where 
we utilize a dedicated resource of funding, that being the 
hotel-motel tax of about $1 million annually, to revitalize 
neighborhoods, increase homeownership, and make housing more 
affordable for people in our city.
    Presently, the affordable housing trust corporation has 
some 800 units through this trust fund.
    In addition, we've created five neighborhood investment 
districts, we call them NIDs. And these investment districts 
are areas of our city where there has been a disinvestment of--
of businesses, people moving out of the area, fewer students in 
our schools, a proliferation of vacant lots. And in these five 
areas we indicated and designed a program where if someone were 
to move into the area, build a home on one of these vacant 
lots, or substantially rehab a home, they will receive a 15-
year tax abatement and live there tax-free for 15 years.
    We have $3.4 million commitment of HOME funds for 
supportive housing as well. And in 2002 through 2003 we 
committed $6.3 million in HOME funds, upgrading three large 
Section 8 projects, to preserve affordable housing and enhance 
their contribution to our neighborhoods.
    Let me just touch on remedying the concentration of Section 
8 projects in Columbus neighborhoods.
    One of our major efforts is to renovate and upgrade Section 
8 housing, and that is being led by Community Properties of 
Ohio. They now own one of the largest scattered site Section 8 
projects in the entire nation, more than 1,100 apartments and 
249 buildings located in the central city. Through new 
homeownership agreement, we are now--we are not only helping 
leverage the rehabilitation of the housing stock, but also 
ensuring that these residents can continue to receive the 
affordable housing that they need.
    Decentralization of these affordable units must also occur 
in order to improve the quality of life of the neighborhoods. 
Community Properties is currently working with members of 
Congress to design a solution that would allow Section 8 
subsidies and use restrictions to be transferred to properties 
in areas of the city where such properties are not heavily 
concentrated.
    In other words, share the burden among everybody in the 
City of Columbus, not just in one area or two areas of our 
city. We all have that responsibility and obligation.
    This will help ease the concentration of poverty and allow 
new investments to flow into neighborhoods. I look forward to 
working with the legislature in this regard.
    Let me just touch on Section 8 vouchers. I believe that the 
proposal to block grant the Section 8 voucher program to States 
should not be enacted in this country. The Section 8 voucher 
program administered through our local public housing authority 
is the most effective way to assure local families' housing 
needs are addressed by a local community and not by the State 
of Ohio or any State, for that matter.
    Let me touch on the need for greater Federal commitment for 
housing and community development.
    In Columbus the combination of Federal home resources and 
local funds are still not enough to meet the housing needs of 
the very low income households. Those earning less than 30 
percent of the area median income in the City of Columbus. 
That's why it is important that additional Federal resources be 
considered for increasing and preserving the supply of 
affordable housing in the City of Columbus.
    One option is the creation of a national housing trust 
fund, something that Congress is--has recently introduced and 
is entertaining. By leveraging additional Federal funds with 
the efforts of our local housing trust corporation that was 
established in 2001, we can increase the production of 
affordable housing and better address the housing needs of low 
income households in the City of Columbus.
    I also ask that you consider the creation of a 
homeownership tax credit. An initiative that can have as great 
an impact on homeownership rate in Columbus as the low income 
housing tax credit has had for affordable rental housing.
    Columbus needs to increase the percentage of homeownership 
rate, which is, as you know, 49 percent.
    We believe that a homeownership tax credit can 
significantly increase the homeownership rate by attracting 
needed investment in new home development and complementing 
local efforts to stimulate owner-occupied housing in our older 
neighborhoods.
    Let me just touch on Community Development Block Grants.
    As in so many cities, parts of Columbus's urban core are 
still experiencing high levels of poverty, declining 
populations, and low homeownership rates. Columbus has received 
about $8 million in CDBG entitlement in the year 2003 to 
directly serve such areas. Yet, this amount is significantly 
below other cities of similar size and demographics in the 
country.
    The population of the older City of Columbus approximates 
that of several other--other urban areas, such as Baltimore, 
Memphis, Seattle and Honolulu. But Columbus receives less CDBG 
funds than any of these cities.
    The need for revitalization in Columbus is just as great as 
in those other cities.
    HUD should look at their current allocation formulas and 
update the criteria so that cities like Columbus, which 
experienced major growth after 1940, can get a balanced amount 
of CDBG funds.
    I urge you to partner with us to take a look at how the 
CDBG formula works and make recommendations on the distribution 
of these funds to reflect the community development and housing 
needs of our city and in other cities.
    In summary, let me just touch basically again on the four--
four or five areas that we're asking that you take a look at.
    Number one, transferring of Section 8 subsidies and use 
restrictions on the--one of the largest Section 8 projects in 
the nation, Community Properties, in order to reduce the 
concentration of subsidized housing in one area of the city, so 
they can be shared in all areas of the city.
    Number two is the proposed Housing Assistance to Needy 
Families should not be enacted. Local administration of Section 
8 voucher program is the best way to address local housing 
needs.
    Number three, we need additional Federal resources, and 
they should be considered for increasing and preserving the 
supply for affordable housing. And one option is the creation 
of a national housing trust fund. We think that could go a long 
way when you partner with local communities around the country, 
particularly those communities that have trust fund 
incorporations like the City of Columbus.
    And number four, the creation of a homeownership tax credit 
to increase homeownership.
    And number five, take a new look at how the CDBG formula 
works, and make recommendations on the distribution of these 
funds to achieve a balanced allocation of CDBG funds to reflect 
the community development and housing needs of our city and 
other cities.
    I thank you for the opportunity to testify. Thanks for 
holding this hearing in Columbus.
    And I also want to thank those who have come out today to 
testify from all over the State of Ohio.
    Mr. Chairman.
    [The prepared statement of Hon. Michael B. Coleman can be 
found on page 90 in the appendix.]
    Chairman Ney. Thank you, Mayor, for your testimony and your 
office's participation in helping us with this hearing.
    I really don't have any questions. Just a couple 
observations, though.
    I have supported the bill by Rob Portman, which would be of 
interest to you, with the tax credit.
    And then the issue of the CDBG was raised in California, 
too. They're looking at 1950-some statistics, is what they're 
looking at.
    Mr. Coleman. Yeah.
    Chairman Ney. Which opens it--that back up to be a huge 
food fight, because some cities are going to get less. We're 
probably all on the same page here, but other cities and other 
States that wouldn't be so happy with this. But it's an issue 
that keeps cropping up.
    And I'll move on to the gentlelady.
    But one--one statistic that you said shocks me. Columbus is 
48 percent housing ownership?
    Mr. Coleman. About 49 percent. It was less than that a few 
years ago.
    Chairman Ney. This was my second home for 22 years between 
Belmont County and here going to Ohio State and also the 
legislature, and I've seen amazing growth in this city. And 
it's just shocking, I guess, with that growth not everybody has 
bought places to live.
    Mr. Coleman. Yes. And it's something that I saw back in 
'99, '98, that we felt was important to deal with because in my 
view--and the reason why homeownership is so important in our 
city, and the rest of America, not only for the American dream, 
but when people have ownership in their neighborhoods, they 
have a vested interest in the success of their neighborhoods.
    And our rate is far too low. And it's going to take a lot 
of help from the Federal Government to increase homeownership 
rates in our community and all neighborhoods of our city.
    Chairman Ney. Gentlelady.
    Ms. Jones. Thank you, Mr. Chairman.
    Mayor Coleman, good afternoon. I'm so pleased to be in 
Columbus once again.
    I have not had an opportunity to say this publicly, I'm so 
very proud of the work that you do. It just makes my chest 
stick out. When I grow up, I want to be like you, run 
unopposed.
    But I--and your words are loud and clear, and I support 
many of the things that you've said.
    I am interested in talking for a moment in your testimony 
about the disbursement of low income housing so that it's not 
all concentrated in one area. Tell me what that will do for the 
City of Columbus.
    Mr. Coleman. Well, first of all, I think there's an 
obligation for everybody to be of help in this area, and every 
neighborhood, and not just one or two neighborhoods in the City 
of Columbus. Because we all have an obligation.
    Number two is that I believe it's important, for example, 
downtown--I call downtown everybody's neighborhood--but I 
believe like for our downtown that there has to be every income 
level represented in our downtown. Historically, we haven't had 
very much housing in our downtown. We've developed a plan, a 
policy, and now we're actually building units in our downtown 
now. But it is representative of the entire economic spectrum, 
the entire market within our community, the high income, the 
low income, and everywhere in between.
    And, in fact, the very first project we were involved in 
the City of Columbus was a low income housing effort and 
homeless effort downtown called Commons at Grant. That is now 
constructed on Grant, where there are a hundred units, and it 
took a great partnership between a lot of people, a lot of 
entities to make it happen.
    But I think it makes stronger neighborhoods, a better 
quality of life, and spreads the opportunity among all 
neighborhoods in our city.
    Ms. Jones. Do you have a large network of community 
development corporations in the City of Columbus?
    Mr. Coleman. Well, it depends on what you compare it to. 
We've been actively--in fact, I've created a community 
development corporation, a couple of them now, and about to 
create a third one for this area you're in right now called the 
King-Lincoln Development Corporation.
    We have community development corporations. They need 
strengthening in the City of Columbus. They need tools. They 
need financing. They need capacities. And that's something that 
we could use some help on as well.
    Ms. Jones. I asked that question because in Cleveland we've 
had great success with community development corporations with 
a lot of the housing development that has occurred, and I am 
sponsoring a piece of legislation called the Seed Act, which 
provides capacity for community development corporations to 
train the members of the board because they're traditionally 
neighborhood folk, to offer them economists, architects, et 
cetera, et cetera, et cetera.
    That's my only paid political announcement. So anybody out 
there who would be interested in that, please call your 
Congressperson.
    And I will close with that, Mr. Chairman.
    Again, Mayor Coleman, it's so good to be with you this 
afternoon, and always good to see you. And I promise I'll be in 
touch.
    Mr. Coleman. Thank you very much, Congresswoman.
    Chairman Ney. Thanks, gentlelady.
    Mr. Pat Tiberi.
    Mr. Tiberi. Thank you, Mr. Chairman.
    I'm going to put an ad in for Ms. Jones, as well, for the 
legislation, I'm a cosponsor of that legislation.
    And I'd make one request of you, Mayor, is before you 
leave, if you could put in--a word in for Ms. Jones, and make 
sure that she spends a lot of money here in Columbus before she 
goes back to Cleveland.
    Mr. Coleman. That's my Congressman right there.
    Mr. Tiberi. Thank you and your staff for your work on these 
issues, and for communicating with me and my staff, I truly 
appreciate that, Director Barbash as well and his staff on 
these issues and other issues.
    In fact, I was at the Homeless Families Foundation this 
morning, and both of your names came up, and your working with 
them on trying to partner with the Federal Government and the 
city on trying to improve their situation on the near west 
side.
    I really appreciate your relationship on the CDBG issue and 
look forward to working with you, and maybe not just with you, 
with other Mayors who face similar problems in their cities, 
who are being shortchanged because of the formula, and working 
with those Mayors and their members of Congress, maybe we can 
win that food fight, because it will be a food fight, with 
other members of Congress and those Mayors who now benefit from 
that formula.
    So thank you for your leadership.
    Mr. Coleman. Thank you.
    Chairman Ney. Congressman LaTourette.
    Mr. LaTourette. Thank you, Mr. Chairman.
    Mayor, it's a pleasure to be in your company. Although 
you're the Mayor of Columbus, your reputation certainly goes up 
to the part of the State that I'm from, and you are clearly an 
example of a chief executive of a city and how it should be 
run, and I congratulate you on that.
    Mr. Coleman. Thank you.
    Mr. LaTourette. You don't have to worry about Ms. Tubbs 
Jones, Mr. Tiberi, she's cut the wide slot through many malls. 
And I'm sure--I am sure she'll do her part in the Columbus area 
as well.
    Mayor, my question, I was intrigued with--Mr. Faith was 
here on the first panel, and he talked a little bit about the 
same issue, being that of the national trust fund. One of the 
difficulties that I have with it, not being a cosponsor, even 
though it's tripartisan, as he indicated, it has the only 
independent, Mr. Sanders of Vermont, who is the lead sponsor, 
is how he proposes to fund it. So I was interested in your 
idea. Do you devote all of the hotel-motel tax to that purpose?
    Mr. Coleman. No. We have set aside a specific percentage of 
the hotel-motel tax collections towards providing for 
affordable housing in the City of Columbus. So that if you 
spend the night here in the City of Columbus----
    Are you spending the night here?
    Mr. LaTourette. I am.
    Mr. Coleman.----a percent of your bill that you will pay 
will go directly to providing housing for somebody in our city.
    Mr. LaTourette. Okay.
    Is it possible to get the Tiberi discount while I'm here, 
too?
    Mr. Coleman. As long as--as long as you use the word 
``Tiberi.''.
    Mr. LaTourette. Can I ask you what is the rate that your 
hotel--what is the percentage?
    Mr. Coleman. Oh, let's see here.
    You've got me on that one.
    Mr. LaTourette. Can I ask you and, maybe you can get back 
to it, but what percentage of whatever your rate is, is set 
aside for----
    Mr. Coleman. It's set aside by a council act, set aside, 
every year it goes into a fund, and the Housing Trust 
Corporation uses that to leverage private financing for 
affordable housing.
    It's about 20 percent of the bed tax. What's the bed tax?
    Mr. LaTourette. 80 percent more.
    Mr. Coleman. Yes.
    Mr. LaTourette. And that generates about a million dollars, 
you're saying?
    Mr. Coleman. Well, yes. The good thing about setting aside 
a percentage is that as that fund grows, as the--more people 
come to Columbus, and that's why we're glad that you're here, 
the more people that come to Columbus, they pay more for hotel 
rooms, and the bed tax goes up, and, therefore, they're 
supporting some of our neediest people in our city in the 
process.
    Our bed tax also pays for emergency human services, part of 
it goes to the general fund, part of it goes to the arts and 
the visitors bureau as well.
    Mr. LaTourette. I think that's--where I'm from, the bulk of 
it goes to the visitors bureau, if I have it right. And your 
idea of sort of separating it, or trifurcating it, or whatever 
the word for splitting it in fives is, is probably an idea 
that's worthy of studying in other areas of the State. And I've 
learned something today.
    And, again, I appreciate the opportunity to hear you 
testify, I appreciate the benefit of your insight.
    And, Mr. Chairman, the last question, this has nothing to 
do with housing: Mr. Mayor, is it Jerry Springer or Eric 
Fingerhut that gets your----
    Mr. Coleman. I guess we'll just have to see.
    Mr. LaTourette. Thank you, Mr. Chairman.
    Chairman Ney. I can see why you're unopposed, and now I 
understand why our colleague, Steve LaTourette, keeps winning.
    Any further questions of the Mayor?
    Mr. Coleman. If I might, I might want to add on to the 
discussion with--about the community development corporations. 
Because what I have found as Mayor of this city is that 
community development corporations, if they have the capacity, 
are very, very successful in providing economic development 
opportunities and housing opportunities in this city.
    And we need to hold them up, we need to give them 
additional tools and additional capacity.
    And I can see many ways where the Federal Government can be 
of assistance.
    Chairman Ney. Thank you, Mayor.
    Appreciate your time.
    Mr. Coleman. Thank you.
    Chairman Ney. And we'll move on to Panel III. Panel III:
    Mr. Tiberi. While the chairman makes his way up here, I 
would like us all to give our thanks to Barbara Nicholson, the 
Executive Director--Barbara, can you wave?--of the King Arts 
Center and her staff for doing a wonderful job in accommodating 
us today in this wonderful facility.
    Thank you, Barbara.
    Chairman Ney. I want to welcome our third panel.
    And we--first, we have Bambi Baughn, the Deputy Director of 
the Community Action Commission of Fayette County, Washington 
Court House, Ohio; Walter Cates, Sr., President, Main Street 
Business Association, Columbus, Ohio; Roberta Garber, Executive 
Director, Community Research Partners, Columbus, Ohio; Amy 
Klaben, President and CEO, Columbus Housing Partnership, 
Columbus, Ohio; Cynthia K. Ring, Executive Director, Allen 
Metropolitan Housing Authority, Lima, Ohio; and April Weaver, a 
resident of Columbus, Ohio.
    And with that, we'll begin with Bambi. Thank you.

 STATEMENT OF BAMBI BAUGHN, DEPUTY DIRECTOR, COMMUNITY ACTION 
  COMMISSION OF FAYETTE, COUNTY, WASHINGTON COURT HOUSE, OHIO

    Ms. Baughn. Well, thanks for the opportunity to submit 
testimony on housing policy in Ohio to this subcommittee.
    Thank you, Chairman Ney, for convening this hearing.
    I'm the deputy director of Community Action Agency in 
Washington Court House, Ohio. We are not part of Columbus. We 
are 45 miles south of Columbus. We are contiguous to Ross 
County.
    My written testimony addresses the subcommittee's questions 
concerning affordable housing production. And it includes a 
description of the housing programs and activities of our 
agency and a rural perspective of the housing needs and 
activities in the State of Ohio, especially the difficulties in 
developing housing in rural areas compared to developing them 
in an urban area.
    So in this brief oral presentation, I'm just going to focus 
on what we're doing in our agency in Fayette County, I'm going 
to emphasize on homeownership programs. Because in the rural 
counties we have access to USDA rural developments, or as we 
always call it back home, the Farmers Home Administration, and 
we've found that homeownership under USDA is a good option for 
affordable housing.
    The Community Action Commission of Fayette County is a 
multipurpose organization. We've been in Fayette County for 
over 35 years. Fayette County is a rural county. We have 28,000 
people total. And our agency is just one of a few social 
services in agencies in the county.
    And besides the housing program, we operate two Head Start 
centers, we have the public transit system, we offer home 
winterization, emergency assistance, we have health clinics and 
a dental clinic. We have numerous programs for the elderly and 
services to the families with children.
    The housing programs created by our agency cover the entire 
continuum of housing services. We have prevention programs for 
persons facing impending homelessness. We operate an emergency 
shelter and transitional housing for the homeless.
    Our agency owns and operates a single-room occupancy 
facility for the homeless that provides permanent supportive 
housing for 17 single adults. That particular facility does 
have Section 8 project-based vouchers with it. So that's my 
experience with Section 8.
    And we're also involved in several rental communities, and 
we've used a variety of funding for that, which is tax credits, 
USDA 515, we've done some housing trust fund money from the 
State, and we've also used the HOME money from HUD, mainly as 
gap funding for tax credits.
    Our most successful housing activity, however, is our 
homeownership program, which we operate almost exclusively 
through USDA funding.
    Our program's called Self-Help Housing, and we have the 
only mutual Self-Help Housing program in the State of Ohio, 
although I do think there is one getting ready to start 
operating in Athens.
    Our program's funded through a USDA 523 grant. We began 
operating this program in 1995, after nearly five years of 
planning and predevelopment.
    Since it began, our agency has received five USDA 523 
grants and four Self-Help Housing Opportunity Program or SHOP 
awards from HUD, totaling $1.75 million at leveraging 
additional funds for a total economic impact to Fayette County 
of 8.9 million.
    133 homes have been built through our Self-Help Housing 
program.
    Under this unique program, the agency organizes families in 
groups of six to five to eight, and we assist them in applying 
for USDA Section 502 single-family mortgages. We work with them 
as they put in over 1,000 hours of sweat equity in the building 
of their own and their neighbors' homes. No one moves into 
their homes until all the houses in the group are finished.
    A skilled construction supervisor from our staff works with 
the families, providing training and technical assistance 
during construction. A family worker is on-site to monitor the 
family's schedules.
    After the families complete the homes, they have done 65 
percent of the construction labor themselves, the families have 
approximately $10,000 of true equity in their homes. These are 
not soft second mortgages that need to be forgiven over a 
period of time. This is true, honest equity.
    In our Self-Help Housing program, we've used the housing 
assistance council's HUD-funded Self-Help Housing Opportunity 
Program. We received $850,000 in SHOP funds from HAC, and 
another $800,000 in loans from HAC's Rural Housing Loan Fund.
    The SHOP funding helps us buy land and put in 
infrastructure for our Self-Help Homes. Without this SHOP 
money, we would have a very difficult time doing Self-Help in a 
subdivision as we're doing now, because the cost of getting the 
land, putting in the infrastructure is high.
    For many rural families, homeownership through the USDA 
programs is another option in affordable housing. In our Self-
Help program, a very low income family of 50 percent of the 
area median income can qualify for as low an interest rate as 1 
percent on a 502 loan. The Self-Help Homes generally appraise 
for over $90,000; with the sweat equity, the mortgage amount is 
usually around $82,000. For an actual family in our program, 
their 502 mortgage is $80,588.76. The family's payment over a 
33-year period is $245.77 per month for their mortgage, and 
with tax and insurance added to the mortgage, the total payment 
is between 350 and $400.
    This is equal to or less than rent prices in our area.
    And in spite of the benefits, homeownership is not an 
option for all families. A family's tenure limit in an area is 
short, renting may make more financial sense. And many of the 
families that come to our agency have very poor credit, making 
it impossible for them to qualify for a mortgage at that time. 
We do spend time with them to get their credit improved.
    Another program I wanted to discuss with this committee, 
because it's growing in Ohio, is Youthbuild. The program 
provides academic and job training services to low income 
dropouts between the ages of 16 and 24.
    Chairman Ney. I'm sorry. I just wanted to note the time has 
expired. If you could please just sum it up.
    Ms. Baughn. Okay.
    The 13 Youthbuild----
    Chairman Ney. We will accept the rest of the record.
    Ms. Baughn. Okay.
    There are 13 Youthbuild sites in Ohio for rural, non-urban. 
I have the list of towns that they're in, if you are 
interested. And it's going to become very important in Ohio 
because we're the third highest State with Youthbuild centers.
    Chairman Ney. Thank you very much.
    [The prepared statement of Bambi Baughn can be found on 
page 75 in the appendix.]
    Chairman Ney. Mr. Cates.

   STATEMENT OF WALTER R. CATES, SR., PRESIDENT, MAIN STREET 
                      BUSINESS ASSOCIATION

    Mr. Cates. My name is Walter Cates. I am Founder and 
President, CEO, of Main Street Business Association. And I 
would like to thank the members of this committee, Mr. Ney, 
chair; Mr. Tiberi, my Congressman from Columbus; and Mr. 
LaTourette, and Ms. Stephanie Tubbs Jones. Appreciate your 
being able to be here.
    I'm just very glad to be at this hearing, this table of 
individuals. I asked them to take a picture so I can show it to 
my 89-year-old mother to let her know I'm still functioning. 
I'm the only guy sitting here, and I feel proud of that.
    But out of all of the talk that we've been doing this 
afternoon, I've been listening, everybody's talking about the 
housing market, the problems with housing, affordability, and 
the need. I have my statement already presented in writing, so 
I will not talk from that.
    But when we have these needs for housing, does anybody 
think about the impact of the economic development in our 
community?
    Because if we just pack people in affordable housing in the 
central city, which is where they have gone, because I started 
out with this process with getting a first HUD-funded 
recreation center by Chalmers P. Wylie, the Congressman from 
our community, on Main Street, called the Blackburn Recreation 
at South 18th and Main Street. That was when I couldn't swim at 
the YMCA or anything else. So Congressman Wylie saw the benefit 
of that, and he provided a HUD grant in 1968. I was with the 
East Central Citizens Organization, first federally funded 
program in the nation from the Office of Economic Opportunity.
    The second opportunity I had to work with Congressman Wylie 
was to secure the funding for the Urbancrest--Urbancrest Hollow 
under the first black elected Mayor, lady Mayor, Mrs. Ellen 
Walker Craig, and Homewood Builders was sponsoring that, and he 
has always stood firm to do what he could to help develop our 
community.
    We haven't talked about the problem that has hurt us 
greatly in being able to deconcentrate housing; and that's 
exactly what we're going to have to do with this huge portfolio 
purchase by Broad Street Management.
    We have not talked about the fact that the 49-percent 
homeownership of housing in the central city has been sort of 
sidetracked due to redlining from the banks and from the 
insurance companies. Now, that's a reality. We've got predatory 
lenders running around throughout our State, and the State 
would not allow the local communities to deal with predatory 
lending, which goes after our senior citizens, people who 
sometimes have a house that's cash rich but unable to pay for 
the kind of flipping that they do of those mortgages. So that's 
another thing.
    In Columbus we've got an issue called Win-Win and 
annexation. Win-Win protects the major suburban communities, 
like New Albany and other kinds of communities that are bumped 
up against Columbus, who want our water but don't want our 
children in their school districts. So you can locate next to 
New Albany and have a Columbus address but send your kids to 
the New Albany schools, those who can afford to buy close at 
hand.
    Now, those are the facts that we've got to deal with. Some 
part of it is just because of our local zoning laws, we 
understand that, so we're not going to flip everything over and 
blame the Federal Government for our local problems, because we 
don't have the guts to take on this type of things that are 
happening in our community.
    How should I know?
    Because I was born and raised in Columbus, and I was past-
President of NAACP in 1973, and I filed a lawsuit against the 
police and the fire and the Columbus Board of Education, Penick 
U.S. College Board of Education.
    The police and the fire because two friends of mine, 
Vietnam era veterans, couldn't get a job who had returned home 
and applied for the police department. My one brother applied 
for the fire department.
    And the school systems were horrendous. So I filed suit 
about the desegregation because all the central city schools 
did not have air conditioning, nor carpet. The one on Main 
Street that elementary school has now been totally rebuilt, in 
the wintertime the coal furnaces that they had, had the kids--
they couldn't heat the building, so the kids had to wear their 
gloves and their hats and coats in school. In the summertime 
they would have to open the top floors on third and use these 
big, heavy-duty fans to blow air and circulate around in there, 
and had bats and bugs and all kinds of things.
    When I filed that lawsuit, one of the settlements was is 
that they demolished all the central city schools that were 
falling down as a means of sort of placating the citizens.
    So we've got problems on both sides.
    One strength that I would like for our Federal Government 
to look at is letting the local HUD office have the strength to 
do the job they should do. These folk here at the HUD office 
are like a bunch of high-paid secretaries. They basically just 
send everything to Chicago, send everything to Washington, and 
it can't get dealt with because there's no decision-making 
authority.
    So if anything that you can do, hold the local folk into 
account, but give them the authority to make decisions so that 
they can help the community. Because those of us who have been 
at this 35 or 40 years, we know what's needed in the community, 
we just can't get nothing done about it.
    Chairman Ney. Thank you.
    [The prepared statement of Walter R. Cates can be found on 
page 84 in the appendix.]
    Chairman Ney. Ms. Garber.

  STATEMENT OF ROBERTA GARBER, EXECUTIVE DIRECTOR, COMMUNITY 
               RESEARCH PARTNERS, COLUMBUS, OHIO

    Ms. Garber. Thank you, Chairman Ney and Members of the 
Committee.
    My name is Roberta Garber, and I'm Executive Director of 
Community Research Partners. We are a nonprofit partnership of 
United Way of Central Ohio, the City of Columbus, and the John 
Glenn Institute at OSU.
    I would like to briefly touch on two areas today: One is to 
talk about research we have done on housing needs in central 
Ohio; and to talk just briefly about a topic that has already 
been mentioned a couple of times, the allocation of Community 
Development Block Grant resources to urban areas in Ohio.
    There are three areas of housing needs that we've looked 
at: One is affordable rental housing needs; the other deals 
with housing condition needs and the third is homeownership 
needs.
    The testimony that I've presented to you in writing has 
data and sources on these topics, but I'd like to just touch on 
them briefly.
    Since renter households typically have lower incomes than 
homeowners, they comprise the largest group in central Ohio 
with housing needs. We've found that 75 percent of low income 
renters are cost burdened. That is, they pay more than 30 
percent of their income for housing. And in 2002 a household 
had to earn more than $25,000 a year to afford a two-bedroom 
apartment at fair market rent in Franklin County.
    We've identified a large deficit of rental housing 
affordable to the lowest income renters, those at or below 
poverty level. That deficit is estimated at 22,000 units.
    There are few affordable rental units in central Ohio near 
the suburban areas where job creation is happening.
    Since 1996 we've lost over 1,200 privately owned HUD-
assisted units from the affordable housing stock through opt-
outs and prepayments; and with those that are expected to opt 
out in the near future, that represents 12 percent of that 
housing stock that will no longer be in the affordable stock.
    It all adds up to persons still being homeless in the 
community and over 7,500 persons a year experiencing 
homelessness.
    If we look at housing condition, we know that lower income 
renters and owners are more likely to live in housing that is 
in poor condition. The new American Housing Survey that was 
just released last week shows 29,000 housing units in Franklin 
County with severe or moderate physical problems, and two-
thirds of these are rental units.
    There are over 12,000 vacant housing units in the older 
part of Columbus, and the city has over 1,600 active vacant 
housing cases that they're following.
    We know that there are over 12,000 low and moderate income 
homeowners who may be able to--may not be able to afford home 
maintenance because these owners are paying more than 50 
percent of their income for mortgage and utilities.
    Finally, there are homeownership needs. I know that there 
was some surprise at the fact that the homeownership rate in 
Columbus is only 49 percent. But homeownership rates are even 
lower for minority households. There's a huge gap in 
homeownership rates in Franklin County between white households 
and minority households. The gap ranges from 23 to 35 
percentage points difference, depending on the groups you're 
looking at.
    There are few new single-family homes being built that are 
affordable even to moderate income households, those that may 
be making $45,000 a year. In 1999 only 10 percent of the new 
single-family homes built were affordable to that group.
    So, obviously, with those needs, the Community Development 
Block Grant and other HUD funds are very important to be able 
to address housing needs.
    As has been mentioned, there is a significant disparity 
between Columbus and other communities in Ohio only in CDBG 
allocation. We looked at per capita allocation for the total 
population of the largest cities in Ohio and found a huge 
disparity.
    If you look at per capita CDBG allocation only by poverty 
population of Columbus and the other big Ohio communities, 
there is still a significant disparity.
    But then we took it one step further, and pretended that 
Columbus only consists of the area within the 1950 boundaries 
of the city, before there was all this annexation. This area is 
much more like the other urban communities. We still found that 
Columbus ranks last among the large Ohio cities in allocation 
per capita of persons living in poverty.
    In this case, the annual grant to Columbus would need to be 
increased by 50 percent to nearly one hundred percent to be 
equivalent to the funds received by Cincinnati or Cleveland.
    I want to close by saying that this formula issue has 
implications not just for Community Development Block Grant, 
because this formula forms the foundation of other HUD 
programs, such as the HOME program, the Emergency Shelter Grant 
program, and even some of the continuing care of allocations.
    Thank you.
    Chairman Ney. Thank you.
    [The prepared statement of Roberta Garber can be found on 
page 103 in the appendix.]
    Chairman Ney. Amy Klaben.

 STATEMENT OF AMY KLABEN, PRESIDENT AND CEO, COLUMBUS HOUSING 
                    PARTNERS, COLUMBUS, OHIO

    Ms. Klaben. Thank you, Chairman Ney.
    Thank you, Chairman Ney and Members of the Committee, and 
Mrs. Jones, for allowing me to provide you with comments this 
afternoon. Thank you for coming to Columbus, Ohio.
    I'm Amy Klaben the President, CEO, of Columbus Housing 
Partnership. We are a nonprofit housing development 
corporation, and we were formed 16 years ago.
    Access to safe, affordable housing is one of the most 
important issues we face in our nation. People cannot retain 
their jobs, stay in school, and live a decent life without an 
affordable home to go home to every day.
    We see in our community, without affordable homes, people 
continually change schools. We have mobility problems within 
the school system.
    And people cannot go to their jobs every day unless they 
have a home that is safe, decent and affordable.
    To enable people to purchase affordable homes, we provide 
both a housing counseling program and we build affordable 
homes. Our housing counseling program is supported financially 
through the CDBG program, and we thank you very much for that 
support. People need economic literacy training and people need 
to know how to buy a home. Without such programs, people cannot 
become successful long-term homeowners.
    So far this year we've had 324 people complete an eight-
hour homebuyer education program. We are HUD certified, and our 
numbers this year are twice what they were last year. We 
attribute that to a marketing program that we started this 
year. The marketing program needs to continue. I'm explaining 
this to you because part of the HUD funding that we received 
does not cover marketing, and it's so important for nonprofit 
organizations to be able to market their programs so people 
know what's available. Many people who currently rent don't 
know that they can one day become a homeowner, and we need to 
help them know that they can achieve the American dream of 
homeownership.
    We provide not only prepurchase counseling, but 
postpurchase counseling, default counseling, and other 
programs. All of these programs together are important to 
helping people remain successful homeowners.
    In the past 16 years, we've built over 3,200 homes in our 
community--homes and apartments. Most of our homes are built 
through the low-income housing tax credit program and are 
rental units. We currently have 70 units under construction, 70 
will start in the next couple of months, and approximately that 
many next year.
    We have a pipeline for development, and that pipeline is 
very important for the continued development of affordable 
housing.
    We also have an AmeriCorps Community Safety Program, which 
I know you're not involved with, but it's a very important 
program to Mr. Tiberi. This program has been very important to 
dealing with community safety issues that must be addressed as 
we look at revitalizing our central city. This program works in 
conjunction with the HUD programs that we're involved with.
    As I said, we receive CDBG funds for our housing counseling 
programs. And I just want to say that there's not enough funds 
in Columbus to support the need for these programs.
    We would be happy to participate in counseling participants 
in HUD's Housing Choice Voucher Program. This is a very 
important program to help Section 8 participants become and 
remain successful homeowners.
    CDBG funds and HOME dollars are also used for down payment 
assistance. We administer down payment assistance programs, and 
it's needed in conjunction with counseling. Not everybody's 
able to save funds necessary for a down payment. To enable 
people to become homeowners, down payment assistance is 
necessary, and I would like you to consider increasing the 
current cap of 80 percent area median income to 100 percent.
    If you look at revitalizing central city neighborhoods, we 
need to attract higher income people into those neighborhoods. 
One way to do that is by providing down payment assistance to 
incentivize people to come into the central city.
    There's currently limits on the amount of funds that we're 
able to use through the HOME and CDBG programs, for development 
of rental housing and homeownership opportunities. Those 
amounts need to be increased, as well. We find that the cost of 
building new homes is much higher than the amount we can sell 
the houses for in many areas of the central city. It's called 
an appraisal gap.
    To attract people to buy in these areas, we need to provide 
incentives.
    Thank you very much.
    Chairman Ney. Thank you. I appreciate it.
    [The prepared statement of Amy Klaben can be found on page 
131 in the appendix.]
    Chairman Ney. Before we move on, is Ruth McNeil still in 
the audience?
    Ruth, do you want to stand up? She is with Congresswoman 
Deborah Pryce's office, so I wanted to make sure everybody saw 
her.
    And we can move on to April Weaver then. Welcome.

      STATEMENT OF APRIL WEAVER, RESIDENT, COLUMBUS, OHIO

    Ms. Weaver. Good afternoon. Thank you for allowing me to be 
here today. I'm really excited to be here to sort of reiterate 
what Ms. Klaben was talking about with Columbus Housing 
Partnership.
    I began working with Columbus Housing Partnership, I would 
say, about a year ago, last July, I found out about one of the 
homeownership classes they were offering, found out about it 
through the newspaper, and I called and got enrolled in one of 
the classes. And I really think it's important what Ms. Klaben 
was talking about with--we all know it's one thing to buy a 
home, but it's probably another to maintain the home. I think 
that's what I really learned from the homeownership classes, a 
lot about budgeting, and a lot about home maintenance, and just 
all sorts of things.
    I also appreciate how well-organized the classes were. I 
didn't have a lot of time, because I'm a single parent, I have 
a 3-1/2-year-old little girl, so it's like time is money, I pay 
the babysitter by the hour. So it was nice to get into a class, 
have my itinerary, and to stick with that and get it finished. 
And I really learned a lot through those classes.
    Not only did I learn a lot through the classes, but I 
learned a lot through working with Ms. Klaben and her 
colleagues with Columbus Housing Partnership. They kept in 
touch with me through the whole process of buying a home. One 
of the representatives came with me to close on the home. And 
I've kept in touch with Columbus Housing Partnership through e-
mails and phone calls. And any questions that I have and 
concerns there, they're there to help me out.
    Oh, yeah, I didn't introduce myself. I'm April Weaver. I 
teach second grade here in Columbus. And I love Columbus, I'm 
so happy to be here. I moved here from Akron two years ago. And 
two years ago, I was living in Section 8 housing in Akron and 
on food stamps. And it's just so great to be at this point in 
my life, I'm really excited about that.
    I don't know what else to tell you. I guess--I just--I 
really feel like Columbus Housing Partnership has helped a lot 
of people. I recommended it to some of my schoolteacher 
friends, and they're very excited about it, they've called and 
are really interested in it.
    And I guess that's all I can tell you. I don't know what 
else.
    So thank you very much.
    Chairman Ney. Thank you.
    [The prepared statement of April Weaver can be found on 
page 186 in the appendix.]
    Chairman Ney. And we'll move on to Cynthia K. Ring, who 
Congressman Oxley had requested you to be here. And I think he 
said you won an award or something.

    STATEMENT OF CYNTHIA K. RING, EXECUTIVE DIRECTOR, ALLEN 
           METROPOLITAN HOUSING AUTHORITY, LIMA, OHIO

    Ms. Ring. We did.
    Actually, he asked me to be here, and I want to thank 
Chairman Ney and the other Members of the Committee for 
allowing me to testify.
    Actually, I was gone last week, so I didn't get my written 
testimony to you in advance.
    I am the Executive Director of the Allen Metropolitan 
Housing Authority located in Lima, Allen County, Ohio.
    And I had to explain to Ms. Weaver where that was. For 
those of you who don't know, it's in northwest Ohio between--
kind of halfway between Toledo and Dayton.
    I'm also past-President and a current member of the Ohio 
Housing Authority's Conference, called OHAC, that represents 75 
housing authorities in the State of Ohio. Many of my colleagues 
are here today, as is our current President, Terry Meese.
    These public housing authorities administer assistance to 
approximately 85,000 families under what you call--or what you 
know as the Section 8 tenant-based assistance program, called 
the Housing Choice Voucher Program.
    And AMHA proudly has served our community for 30 years. 
We're a high performer under the public housing assessment, or 
PHAS, and a standard performer under SEMAP. And recently, just 
last week, we received an award from NAHRO, which is the 
National Housing and Redevelopment Officials, at their summer 
conference, for innovation.
    We have a landlord training program that we have 
implemented in Lima. It's a cooperative effort between our 
city, our local law enforcement, and housing consortium. And 
it's provided free of charge to any landlord or property 
manager in our community.
    And we believe because of the flexibility we have as a 
local housing authority, we're able to have programs in our 
area that really meet our needs.
    Lima, of course--and I put approximately 50 percent of the 
housing stock is rental housing, and that's being kind, because 
there's a great deal more than 50 percent of our housing stock 
that's rental housing. So it's important for us to have 
landlords who are knowledgeable about State law and how to be 
integrated into the neighborhoods.
    We have a highly trained staff of 29. We provide housing 
services to the most needy populations. And I think sometimes 
we tend to forget about that. You see only the negative things 
in the media about PHAs and you don't hear about the positive 
things.
    We deal with our senior citizens, our handicapped and 
disabled individuals, and the homeless and families with 
children.
    And the families we serve are someone's grandparents, their 
mother or father, sister or brother, child, or perhaps 
grandchild, and we know what type of services they need, 
because we live and work in the community.
    And we give them something very special. I think somewhere 
that's--a decent home can sometimes be the first decent place 
that they've lived.
    AMHA has sold 16 of our homes to public housing residents, 
and we continue to prepare others to accomplish the same goals.
    And last month HUD recognized our PHA during National 
Homeownership Month because we had another resident who was 
successful in purchasing her home through the 5(h) program.
    We also are preparing a Section 8 Housing Choice Voucher 
Program that will enable many of our other families to also 
realize the American dream.
    And we also have the Family Self-Sufficiency Program, which 
you may know about, that also will enable families to become 
free of any type of public assistance.
    We serve over 1,600 families in our community on a monthly 
basis through some sort of Section 8 rental subsidy. And we are 
surrounded by a lot of rural counties, and oftentimes families 
are able to have some sort of choice, and our housing authority 
is the place that they come to, to get that assistance.
    There is a portability issue, a feature with a voucher that 
they are allowed to use. And I know that Assistant Secretary of 
HUD, Michael Liu, has said that that is very complicated. And 
in our community, it is not. It's fairly simple to do, and we 
encourage the mobility.
    I want to tell you that the PHAs in Ohio need many more 
additional resources. We currently have had our waiting list 
closed for over a year. And we have about half the number of 
families waiting as we do spots available for housing. And it's 
not unusual to have your waiting list close when you anticipate 
the need being over one year.
    Last year we were 15 percent overleased, and that caused 
quite a bit of funding issues and concerns that we had until 
just recently. But one of the reasons that we were overleased 
is because of the great need that we have in our community; 
also, to meet HUD's program requirements; and because of our 
declining economy.
    And lastly, I guess, I just want to mention to you that I 
would like seriously for you to look at the Section 8 
administrative fee issue and the fee reserve issues very 
closely before agreeing to those.
    I have some additional information, and a letter that one 
of your colleagues sent that I would like to introduce into 
testimony.
    Chairman Ney. Without objection, the letter will be 
introduced for the record.
    Ms. Ring. Okay.
    [The following information can be found on page 195 in the 
appendix.]
    [The prepared statement of Cynthia K. Ring can be found on 
page 173 in the appendix.]
    Chairman Ney. I want to thank all the witnesses.
    There is the American Dream Down Payment, we were talking 
about the down payments. I think a lot of people go out and 
they struggle with work, or work a second job, but they have a 
terrible time trying to get that down payment. And in my 
family, it took--my father was 45, I think he was, before he 
could get a down payment on a house. So I think that's a 
difficult thing. The American Dream Down Payment is going to 
help 44,000-some people. In fact, the committee has got 
tremendous bipartisan support.
    We've got to get this law and get it to the floor. If 
anybody can make a phone call, American Dream Down Payment, to 
a member of Congress, please--please do that. It's American 
Dream Down Payment, has tremendous bipartisan support, so I 
thought I would want to mention it.
    I wanted to ask April Weaver, you said--you read first 
about the housing opportunity in the newspaper, did you?
    Ms. Weaver. Yes.
    Chairman Ney. In the Columbus Dispatch?
    Ms. Weaver. Yes.
    Chairman Ney. You saw it in the newspaper.
    What kind of ad was it? Do you know who sponsored it?
    I'm just always curious how people get all the information.
    Ms. Weaver. It wasn't a very big ad. I just remembered 
looking through, I was actually looking for rental property, 
and I looked over in the homeownership, they had Homes for 
Families, and I called. And I think that class was actually 
closed. And so when I went to look at my house in the Hilltop 
area, the gentleman who showed me the home said, well, have you 
tried calling CHP and getting into one of their classes. I 
said, no, I hadn't tried calling again. He said, try again, and 
see if they're going to be doing that. So he was--sort of 
backed that up and encouraged me to call back.
    Chairman Ney. That's great.
    I'm a secondary ed degreed teacher.
    Ms. Weaver. Oh, really.
    Chairman Ney. I think you've got a rougher job in 
elementary, by the way. Nice little kids, but kind of squirmy, 
running around, kind of like herding cats.
    Congratulations on that.
    Ms. Weaver. Thanks.
    Chairman Ney. I want to ask Ms. Ring, were you talking 
about the portability of the voucher was a problem--the 
portability?
    Ms. Ring. It is not a problem in our community, because we 
have a lot of rural counties surrounding Allen County, where 
there are no housing authorities; besides, they're able to use 
the vouchers to move elsewhere.
    Chairman Ney. And one point about the HUD----
    Mr. Cates. Yes, sir.
    Chairman Ney.----we have had discussion on that, and at 
some point in time we'll talk to you about some discussions 
we've had about a better flexibility at local levels.
    Mr. Cates. No question.
    Chairman Ney. The gentlelady.
    Ms. Jones. Mr. Chairman, in the interest of time, I'm going 
to bypass my questions and let my colleagues ask questions.
    I want to thank all of the panel for coming here this 
afternoon and participating. And it's not that I don't want to 
ask you questions, but I want to try----
    You want to ask me a question, Mr. Cates?
    Mr. Cates. I would.
    I do appreciate your CDC's in Cleveland.
    Ms. Jones. Oh, yes.
    Mr. Cates. They are powerful. We have not yet began to make 
that happen in Columbus. And I can tell you a lot of reasons. 
The main thing is we've got a serious food chain operation: The 
sharks who've got installed stay at the top. That's just the 
best way to say that.
    Ms. Jones. Thank you, Mr. Cates, for the compliments.
    Chairman Ney. Mr. Tiberi.
    Mr. Tiberi. Just a question regarding homeownership in 
rural areas that kind of caught my attention on your testimony.
    You said Fayette County operates the only USDA Self-Help 
Housing program in the State.
    And also in your testimony, just to put that in 
perspective, you mentioned that while many people don't 
consider Ohio as a rural State, Ohio's the fourth largest rural 
population.
    Why in the world aren't there more of you? In Ohio.
    Ms. Baughn. I don't know.
    We have had lots of interest from other counties, they have 
come and looked at our site. Our housing director is right 
behind me. We have talked the program up. We think it's 
wonderful. I mean, it's not just for housing development, it's 
an antipoverty program, it's no risk to the housing developer.
    We do think that we've got two counties on either side of 
us are in the predevelopment phase, Clinton County and Highland 
County. And there is a program, I believe, in--Athens?--Athens, 
there's a Rural Alliance or--Rural Alliance, I think.
    It's a hard program to start because it's not like a grant 
program where you write a grant and you fund activities. You 
have to actually have your families' loans approved, your lots 
secured, your home plans approved by your local--your 
localities. And basically the day you close the grant, the next 
day you build.
    So we were able to get predevelopment money from USDA and 
from the State of Ohio to hire Mrs. Griffiths to come in and 
actually do all of the predevelopment activities that needed to 
be done.
    But it is a wonderful program. I wish more people did that.
    Mr. Tiberi. Well, Mr. Chairman, I would--I would 
encourage--I would encourage you to look to see what they have, 
and it is in Washington Court House, it is a wonderful program. 
And if there's a way that maybe we or this committee can 
encourage others in the State to utilize it, I think it's a 
great program.
    Thank you all for coming.
    Chairman Ney. Mr. LaTourette.
    Mr. LaTourette. Thank you very much.
    And like Congresswoman Tubbs Jones, I don't have any 
questions other than to indicate to you, Mr. Cates, that the 
committee was sad when Congresswoman Tubbs Jones was elevated 
to the Ways and Means Committee because no one--there wasn't a 
bigger champion on predatory lending in Congress than Stephanie 
Tubbs Jones. All of us have horror stories from our districts 
where folks come in and use a variety of unscrupulous 
techniques, not only against the elderly but the poor and 
overleverage the value of homes. And so the Ways and Means 
Committee, now with the rest of the people is a so much more 
violent place, it was their gain, but it was our loss on the 
Financial Services Committee. And I know that I very much miss 
Stephanie--Congresswoman Tubbs Jones' leadership on that issue. 
And we're lucky to have such a leader in the Congress.
    And I do just want to make a comment to Ms. Garber, in your 
observations, CDBG and how Columbus is being treated not fairly 
has come up as sort of a theme here, I'm getting--I'm in 
Columbus, I've got a theme. And I would suggest that it's going 
to be more than a food fight. Because the answer to these 
questions--we have a similar thing with the highway trust fund, 
for instance, where it's not based on anything reasonable other 
than who's got the biggest delegation of how many miles of 
interstate highway system you have, and so, as a result, while 
we get about 90 cents back on the dollar that we send to 
Washington here in Ohio, Massachusetts gets $2.25, and 
Pennsylvania gets $1.16. And I can tell you, as we're in 
negotiations on that as well, the guys from Massachusetts 
aren't saying, oh, we're sorry, it's not fair, here's some of 
your money back.
    And so the only way that we solve those problems is to grow 
the pot of money. And it's not a problem in the house to fix 
it, because usually there's more of us from those States, and 
we can beat up the other guys and take it back. But in the 
senate everybody gets two votes, and the senators aren't 
anxious to give it back.
    So I really think that the solution to the CDBG dilemma in 
Columbus is find yourself, and, Mr. Chairman, that we have to 
find a way to grow the pot, make more money available so that 
we can all benefit and perhaps rectify some of the situations 
that Columbus finds itself in.
    I thank you and yield my time.
    Ms. Jones. Real quickly, Mr. LaTourette, you've made up for 
your shopping comment.
    Chairman Ney. I also want to thank Fayette County for 
participation in Washington that you all have done to help us 
out there.
    A fine panel. And with that, we'll move on to Panel III. 
Thank you very much. Panel IV.
    Move on with Panel IV.
    We have William Hale, President, Portage Area Development 
Corporation of Ravenna, Ohio; Amy Kuhn, Deputy Director of 
Community Development Division, Ohio Department of Development, 
Columbus, Ohio; Roy Lowenstein, Vice President, Development, 
Ohio Capital Corporation for Housing, Columbus; Sally Luken, 
Acting Director, Corporation for Supportive Housing in 
Columbus, Ohio; Charleta Bell Tavares, Columbus City Council, 
Columbus, Ohio; and Jeffrey Woda, President of The Woda Group, 
which is located in Columbus, Ohio.
    Thank you.

STATEMENT OF WILLIAM HALE, PRESIDENT, PORTAGE AREA DEVELOPMENT 
                      CORP., RAVENNA, OHIO

    Mr. Hale. Good afternoon. Thanks. I'm glad to see 
everybody's awake, and I'm surprised I--I'm awake, it's been an 
interesting afternoon.
    And the encouragements I have for you this afternoon, I 
don't think are new from the other testimony, but since I have 
five minutes, I'll go through it.
    It's exciting that you take this interest in housing. It's 
a critical needs----
    Ms. Jones. Why don't you move the microphone over.
    Mr. Hale. How about this?
    Chairman Ney. There you go.
    Mr. Hale. It's exciting because in the deficit era that 
we're in, both Federal and State, you know, we need to go ahead 
and concentrate on the lowest third income group in Ohio, those 
making under 80 percent.
    A little bit about PADCorp., we're a rural CBC nonprofit, 
covering all of northeast Ohio, rural being for us those 
populations under--under 50,000. We touch a number of 
Congressional areas, pretty much a mirror image of Congressman 
LaTourette's area. And by the way, we have found your office 
knowledgeable, helpful and responsive. And we thank you for 
this partnership.
    We go ahead--we produce both affordable rental properties, 
preservation, as well as creation, as well as homeownership. 
Nothing that I say today should decrease the importance of the 
rental property. But I want to go ahead and focus on 
homeownership, because I find that the most dynamic tool in 
neighborhood revitalization, as well as family self-sufficiency 
and self-determination.
    We've been doing this since we started in 1985. In 2001 we 
went ahead and adopted NeighborWorks, a full cycle lending 
model. If you're not familiar with it, I have a section in my 
written testimony. It deals with intensive pre- and 
postpurchase counseling and homeownership education, and we 
feel it's a superior system, not that there aren't others that 
are also good, but we have found that by implementing it we've 
been able to go ahead and in two years double what we've done 
over the last 15.
    And so my first encouragement would be to go ahead and take 
a look at programs that are working for homeownership and 
support them, increase that pool that Congressman LaTourette 
was talking about.
    The second area that I would like to talk about deals with 
the Section 8 to homeownership program. I think this is a slick 
program. It goes ahead and takes those families that are on 
Section 8, that are working, that are productive members in 
their community, and it goes ahead and gives them the 
opportunity to make the Section 8 program what it was 
originally designed to be, and that's temporary.
    And so what we've done now is we have a memorandum of 
understanding with three different housing authorities. And it 
represents about 10 percent of what we have done to date--I 
mean, 10 percent of what we've done in the last couple of 
years. Those counties are very, very different, they include 
Lake County, Portage County, and Columbiana County, and, of 
course, as Congressman Ney knows, we're in discussions in--in 
Zanesville. All four of those areas are uniquely different. All 
four of those housing authorities are dealing with a 
different--a different population, with different market need.
    I would encourage not to consider--or your result would be 
not to go ahead and have block grant--block granting Section 8 
program because of those unique needs.
    The State of Ohio has some excellent service delivery 
systems, one's sitting next to me, and it's not so much that, 
but the unique need to respond to the communities can only be 
done on a local level with the local housing authorities. In 
some States they're not as fortunate as Ohio, and I think the 
product would suffer.
    The other two encouragements that I have for you--and then 
I'll quit--is, again, like my first encouragement, take a look 
at those programs that are working partnerships with housing 
authorities and nonprofits and go ahead and assure that they 
have adequate funding both in operation capital as well as 
financing capital.
    Last, but not least, there's been some discussion as to 
housing trust fund, and I encourage you to move forward on 
that. The State of Ohio, the legislature, and the Governor's 
office, went ahead I think and took a very bold step and its 
programs were stripped out of the Ohio budget. The housing 
trust fund is still there to go ahead and give positive force 
so that they can be a partner in affordable housing.
    Chairman Ney. Thank you.
    [The prepared statement of William Hale can be found on 
page 122 in the appendix.]
    Chairman Ney. Ms. Kuhn.

 STATEMENT OF AMY KUHN, DEPUTY DIRECTOR, COMMUNITY DEVELOPMENT 
    DIVISION, OHIO DEPARTMENT OF DEVELOPMENT, COLUMBUS, OHIO

    Ms. Kuhn. Thank you, Chairman Ney.
    My name is Amy Kuhn, and I'm Deputy Director of the 
Community Development Division of the Ohio Department of 
Development.
    This division, among its many programs, is responsible for 
the distribution of Federal community development programs, 
including Community Development Block Grant, the HOME 
Investment Partnerships, Emergency Shelter Grants, and Housing 
Opportunities for Persons with AIDS.
    Before I begin, I would like to thank the members of the 
committee for the opportunity to speak here today, and I'll try 
to keep it brief.
    The State of Ohio and Ohio Department of Development have a 
long and successful history of working with its local 
communities and nonprofit organizations to maintain Ohio's 
great quality of life.
    Today I would like to address some changes related to the 
State's ability to continue to successfully administer the U.S. 
Department of Housing and Urban Development's CDBG program.
    The Department of Development requests your support of the 
following three minor but very important revisions to the CDBG 
program. None of the revisions would require an increase in 
funding or allocation levels, but would provide flexibility for 
the changing environment as I think we've heard about here 
today.
    The first issue is to increase flexibility at the 
discretion of the States to allocate technical assistance and 
administrative funds between the two activities without 
financial limitations and without a match requirement being 
applied to the technical assistant funds.
    Currently, States may allocate 1 percent of the annual CDBG 
allocations to technical assistance activities and 2 percent 
plus $100,000 to administration. As an example, in fiscal year 
2002, Ohio allocated approximately $437,000 of CDBG funds to 
technical assistance, and $1,236,000 to administration.
    If the percentage requirements were eliminated, Ohio would 
have the flexibility to expend these funds based on the needs 
of the communities.
    For example, in order for Ohio's rural areas to make the 
best use of limited resources, ODOD is encouraging Ohio Small 
Cities CDBG Program eligible communities to develop a community 
assessment strategy.
    Now, this is a planning document designed to encourage 
communities to match local needs with available resources; 
facilitate a holistic approach to addressing housing, economic, 
and community development needs, identify the type and degree 
of community development needs; identify the type and degree of 
community development needs within areas of low and moderate 
income concentration or distressed areas; and provide 
information that will serve as a resource for State planning 
efforts.
    In order for communities to develop a credible strategy, it 
is imperative that we be able to supply direct technical 
assistance. As with most initiatives, the initial training 
costs could be higher but will decrease as the communities 
build administrative capacity and experience.
    And I think you've heard from several folks today, from 
some of our rural counties and communities, which are very 
capable and provide very good services.
    If States were permitted the flexibility to allocate funds 
between technical assistance and administrative activities it 
would be much easier for these Ohio associations.
    The second issue is an increase in the State match 
threshold from 2 percent of the State allocation plus $100,000 
to 2 percent of the State allocation plus $500,000.
    Basically, the States receive CDBG funds through a formula 
allocation. The allocation includes funding for administration 
of the program. The amount of funds available to States for 
administration is 2 percent of each state's formula allocation 
plus a hundred thousand dollars.
    However, States are required to provide a 50-percent match 
for any administrative funds received greater than $100,000.
    As you heard, the latest biennium budget process, it was 
determined that the availability of the State funds as matching 
funds has been decreasing at an alarming rate. Until the 
economy improves, this trend is expected to continue. Although 
the threshold requirement has not been revised since the 
program's inception in 1982, the cost of administering the 
program continues to increase due to the many things we've 
discussed here today.
    If the State administrative threshold for the CDBG program 
were increased to 2 percent plus $500,000 of the State 
allocation, the States would have additional revenue to 
dedicate to administration.
    Without adequate administrative funding, ODOD will be 
unable to continue to effectively administer approximately 280 
CDBG program grants every year.
    The final issue I would like to address is the dedicated 
source of funding for training and technical assistance 
activities.
    States would benefit greatly from a dedicated source of 
funding for training. If such an initiative were funded, the 
national organizations could access the funds needed to keep 
States abreast of new CDBG program rules and regulations, 
proper program administration, and tips for innovatively 
implementing projects and activities.
    In the past, HUD provided funds to these organizations and 
this has no longer been possible.
    Thank you.
    Chairman Ney. Thank you.
    [The prepared statement of Amy Kuhn can be found on page 
136 in the appendix.]
    Chairman Ney. Mr. Lowenstein.

STATEMENT OF ROY LOWENSTEIN, VICE PRESIDENT, DEVELOPMENT, OHIO 
        CAPITAL CORPORATION FOR HOUSING, COLUMBUS, OHIO

    Mr. Lowenstein. Thank you, Chairman Ney and distinguished 
Members of the Committee.
    I'm Roy Lowenstein, the Vice President for Development, 
Ohio Capital Corporation for Housing here in Columbus.
    Ohio Capital assists developers around the State to secure 
low income housing tax credits, and we operate an equity fund 
which purchases the credits.
    We have, since 1989, raised about half a billion dollars 
for investment in Ohio. We put it into about 200 different 
affordable housing developments with about 10,000 units.
    Recently we acquired a portfolio of more than 1,300 Section 
8 units, primarily in Columbus, as well as a management 
company, renamed Community Properties of Ohio, which you've 
heard about--a little bit about earlier.
    Along with local partners, we will be rehabilitating and 
preserving a great majority of those units over the next few 
years.
    So we have a variety of roles, consultant, developer, 
investor, asset manager, and property manager, and those 
provide many insights into the rental housing and finance 
operation areas.
    You've heard already today from many of the other speakers 
today about housing needs in Ohio, so I don't need to comment 
further on that.
    What I would like to do is comment on some of the housing 
tools that we need in our toolbox.
    Ohio's a microcosm of the whole country, so it's not 
surprising that many different housing tools are needed. For 
example, fair market rents in some rural counties are so low 
that no new construction is incentivized. Some cities in Ohio 
have been losing population for 20 or 30 years, but they still 
need more affordable housing. Why? Because many of the people 
most in need are still there, and because people--other people 
are leaving, you don't see new construction going on, you need 
replacement housing just to maintain the housing stock.
    Some neighborhoods in decline or that have declined and 
then stabilized, provide very little economic incentive for 
reinvestment without public dollars to lead the way to help 
recreate a market in some of our neighborhoods.
    The message here is that great flexibility is needed to 
craft solutions to these distortions to what's normally a 
market.
    Sometimes the biggest problem is housing supply; other 
times it's the gap between the income that the people have and 
what it costs to actually operate housing.
    Other times it's the appraised value being too low to allow 
for new development.
    So what programmatic tools do we need? Some of them are 
going to cost money, and actually some of them won't.
    Poor families need both rental subsidies and production 
subsidies to target to extremely low income households. 
However, rental subsidies are in very short supply as we've 
heard from other speakers.
    This is particularly a shame when we have a fair amount of 
vacancy in the market, and it's just a shame that we're not 
able to house more extremely low income households from our 
vouchers. Why? Because there aren't enough vouchers to go 
around, but there is a housing supply in some markets.
    It's particularly a concern here in Columbus where we have 
an exemplary program known as Rebuilding Lives to house long-
term homeless individuals, using a range of Section 8 and 
McKinney funds as operating subsidies. Halfway to the goal of 
800 permanent housing units for the homeless, we sure hope that 
the Section 8 subsidies will again materialize to provide an 
operating base for some of those most severely--or for people 
most severely in need.
    Secondly, we do need a larger Federal source of gap 
financing. Gap is the--what it costs to--the difference between 
what folks can pay and what it costs to develop housing. We've 
really been starving these production programs for the last 15 
or 20 years compared to the amount of need there is in this 
country.
    And basically what happens is that a project--given Ohio's 
relatively low rent structure, those rental properties cannot 
support such a high level of debt. And even in the case of 
Federal tax credits, a gap exists between what it costs to 
deliver new housing and what folks can afford to pay.
    And the tax credit program serves those who have enough 
income to maybe pay 400 or $500 a month in rent. But those 
people who can't pay that, basically the minimum wage or a 
little bit above minimum wage workers, they cannot afford 
enough in rent to support any permanent debt on the housing 
unit. And so that provides no incentive for folks to develop 
new housing for that population.
    We need a Federal targeted source that's going to help 
support production for people, for example, under 30 percent of 
the median income, along with providing operating support.
    Finally, we need greater flexibility in the Section 8 
program to allow the portability of--for project-based rental 
assistance. That's a big issue in Cincinnati, and it's a big 
issue with our portfolio in Columbus, as well.
    [The prepared statement of Roy Lowenstein can be found on 
page 139 in the appendix.]
    Chairman Ney. Thank you.
    Mr. Lowenstein. Thank you.
    Chairman Ney. Ms. Luken.

  STATEMENT OF SALLY LUKEN, ACTING DIRECTOR, CORPORATION FOR 
               SUPPORTIVE HOUSING, COLUMBUS, OHIO

    Ms. Luken. Mr. Chairman, Representative Tiberi, and other 
Members of the Subcommittee.
    On behalf of the Corporation for Supportive Housing, thank 
you for the opportunity to testify.
    CSH has a long-standing and productive relationship with 
this subcommittee and its excellent staff throughout the 
tenures of your predecessors, Mr. Lazio and Ms. Roukema.
    I appear before you today to draw on CSH's experience 
nationally, including Ohio, and my recommendations to the 
subcommittee are based on our experience with housing 
production, targeting the lowest income individuals and 
families, those that have been homeless repeatedly, for long 
periods, and those who are at risk of homelessness.
    In a moment I'm going to present some evidence about the 
supportive housing solution. But now I'd like to let you know 
what we're seeking from you today.
    CSH encourages the subcommittee to act to ensure that the 
HUD McKinney-Vento homeless assistance programs continue to 
sustain and produce new supportive housing.
    You can do this by establishing a homeless housing 
permanence account for renewals of expiring rent and operating 
subsidies under the Shelter Plus Care and the Supportive 
Housing Programs.
    And you can also do it by enacting authorizing legislation 
targeting 30 percent of those grants to permanent supportive 
housing.
    In addition, we recommend that the subcommittee enact 
legislation that will close the affordability gap for 
households earning less than 30 percent of area median income. 
Specifically, CSH endorses the creation of a national housing 
trust fund.
    Now to the evidence.
    In addition to grinding poverty and high housing costs, 
tens of thousands of Americans are homeless and struggle with 
mental illness, substance addiction, and other health problems 
that are creating barriers to their stability.
    Research from around the country and right here in Columbus 
and Franklin County show that as a consequence of this double 
whammy these folks are cycling repeatedly in and out of 
shelters and institutions and the streets, for months and even 
years.
    Supportive housing ends this vicious cycle. It combines 
permanent affordable housing with flexible voluntary services 
that many people need to achieve stability. This includes 
mental health and substance abuse services, employment 
services, and other services that keep people housed, but also 
help them participate in their communities.
    Supportive housing is cost-effective as well as humane. 
Research has shown that it costs little more to permanently 
house and support these folks than just to leave them homeless.
    And Columbus and Franklin County was one of the first in 
the nation to overhaul its approach to homelessness in 
recognition of this research. Led by the Community Shelter 
Board and Franklin County and the City of Columbus, they 
launched, as Roy has mentioned, Rebuilding Lives. This 
initiative to address long-term homelessness is to create 800 
units of permanent supportive housing.
    And what's great about it is it's working. Over 93 percent 
of Rebuilding Lives' tenants have retained their housing for 
one year or more. They are not going back to the shelter.
    In addition, the cost to operate a unit of supportive 
housing here in Franklin County is 36 to $38 a day. That's 
quite a bit less than the public systems that traditionally 
have served and taken care of these folks; namely, prisons and 
mental health hospitals.
    Policy makers at every level are taking a new look at 
homelessness, and a consensus is emerging. We can and must plan 
to end homelessness, not manage it.
    Recognizing that we face a significant but solvable 
problem, the Bush administration, Congress, and two blue ribbon 
commissions have adopted the goal of ending chronic 
homelessness.
    Most recently, as Bill Faith has mentioned, the President's 
new Freedom Commission on Mental Health has recommended that, 
quote, in partnership with the interagency council on 
homelessness, HUD develop and implement a comprehensive plan 
designed to facilitate access to 150,000 units of permanent 
supportive housing for people who are chronically homeless.
    To speed the progress to that goal, the policy strategies 
that this committee should implement are amplified in my 
written report.
    But to reiterate them simply: Ensure McKinney-Vento 
homeless programs continue to generate new permanent supportive 
housing, and work to close the affordability gap for those 
lowest income Americans.
    Chairman Ney. Thank you.
    [The prepared statement of Sally Luken can be found on page 
143 in the appendix.]
    Chairman Ney. Ms. Tavares, welcome.

   STATEMENT OF CHARLETA BELL TAVARES, MEMBER, COLUMBUS CITY 
                    COUNCIL, COLUMBUS, OHIO

    Ms. Tavares. Thank you.
    Thank you Chairman Ney and Members of the Committee.
    I am Charleta Tavares, on I'm the chair of the Health, 
Housing and Human Services Committee on Columbus City Council. 
I want to welcome you to my city and to thank not only Chairman 
Ney, but also my friend, Congresswoman Stephanie Tubbs Jones, 
my Congressman, as well, Pat Tiberi, and Congressperson 
LaTourette for coming to Columbus.
    We're proud of what we're doing in this city. As chair of 
the committee, I work with our Mayor, Mayor Coleman, to focus 
attention on developing more affordable housing, increasing 
homeownership in our community, and revitalizing our older 
neighborhoods.
    We have developed a toolbox to help us in accomplishing 
these three goals. And we have created partnerships to 
strengthen and sustain our efforts. One of our tools was to 
create the Columbus/Franklin County Affordable Housing Trust 
Corporation with the city and the county, which enabled us to 
look at where affordable housing units were needed in our 
community, the community of Franklin, and to determine what 
kinds of units were needed, apartment, single-family, senior 
housing, et cetera.
    In addition, we were able to pool our resources in order to 
better leverage our dollars and expand our partnerships to the 
public and private sectors.
    The housing trust corporation has three--has a three-part 
goal: To increase the number of affordable housing units as was 
expressed by another witness, we need at least 22,000 units; 
increase homeownership opportunities; and, three, to strengthen 
and revitalize our older neighborhoods.
    Increasing the number of affordable housing units is 
critical if we are going to provide opportunity and present--
and prevent homelessness amongst our individual and family 
residents.
    Ensuring that we have safe, decent, and affordable housing 
for all families in our community has largely depended upon the 
partnerships we have had with the Federal Government through 
the Department of Housing and Urban Development and the 
Columbus Metropolitan Housing Authority.
    I'm going to touch on the Community Development Block Grant 
program. The CDBG program has been effectively used to increase 
our supply of affordable housing, to revitalize central city 
neighborhoods, strengthen our neighborhood and commercial 
strips, provide loans to create and expand small businesses, 
and help low income families maintain their homes. All of these 
issues are critical to central cities and rural communities who 
are attempting to rehabilitate older housing stock, attract 
business development, and eliminate blight and flight from the 
core city.
    The CDBG program has allowed communities to target the 
dollars where they are needed, to leverage the dollars with the 
private and other public investments, such as our housing trust 
and HOME funds.
    The next area that I want to touch on deals a little bit 
with the city and the county again and our work with the CDBG 
program.
    I believe the key to this program is to keep it local, not 
to pass it on to the State, and not to pass it into any kind of 
a regional plan. The key has been that it's been a local 
program with the Federal Government. That has enabled us to 
develop the needs--meet the needs of our city and to develop 
the programs and services that best meet those needs.
    A State or regional administration would add another level 
or layer of administrative expenses, monitoring, and 
interpretation of regulations. Regional or State administration 
of the entitlement CDBG would add negative dimensions of 
competition between rural and suburban, small city, large city, 
et cetera.
    Unfortunately, there is nowhere in America that a family or 
an individual working a minimum wage job can afford a two-
bedroom apartment. Mr. Chairman and Members of the Committee, 
as you know, far too many of our children are growing up in 
single-parent households, many working minimum wage or low wage 
jobs, who are one crisis, one paycheck away from homelessness.
    We are fortunate in Columbus, Ohio, that our cost of living 
is well below our sister cities, such as New York, Los Angeles, 
San Francisco, and Chicago. However, we cannot forget that we 
have thousands of families in our community living below the 
poverty line who are responsible, who are working, and who 
cannot afford a clean, safe, and decent place to call home.
    We have to do more. Our children and families are depending 
on us to ensure that their basic needs of food, clothing, 
housing, and health care are met.
    We have a need in our great city for more housing units 
that are affordable. It is both a cost and production issue in 
our community. Columbus is working hard to produce and 
decentralize our affordable housing units throughout the city. 
Many of our job centers are on the fringe areas of Columbus. 
And we believe, in order to make any affordable housing program 
work, we have to be able to locate the housing where the jobs 
are located, in the fringe areas of Columbus and suburban 
communities throughout this county.
    I thank you, Mr. Chairman and Members of the Committee, and 
more than happy to respond to any questions.
    Chairman Ney. Thank you, Ms. Tavares.
    [The prepared statement of Charleta Bell Tavares can be 
found on page 182 in the appendix.]
    Chairman Ney. And Mr. Woda, although he has a Columbus 
office, he's a River Rat. And I'll let you explain that.

 STATEMENT OF JEFFREY J. WODA, PRESIDENT, THE WODA GROUP, LLC, 
                         COLUMBUS, OHIO

    Mr. Woda. Thank you, Mr. Chairman. Thank you Congressman 
Tiberi and the rest of the committee for allowing me to testify 
before you today.
    I am the last person to testify, so I will try to keep it 
as brief as possible.
    My name is Jeff Woda, I'm a member of The Woda Group. I 
grew up in rural Ohio, in Belmont County, and the last few 
years I have relocated to the Columbus area.
    Our expertise is developing, constructing, and managing 
housing in the rural area, and specifically affordable housing. 
And that's what I would like to concentrate my testimony on 
here today.
    In my written testimony, I've listed various programs that 
we have used to create such housing. And I've also gone on to 
talk about some of the challenges that we have encountered when 
working in programs that combine funds from HUD, tax credits 
with IRS regulations, funds from the United States Department 
of Agriculture, USDA, and different State programs. So I won't 
bore you with reading some of the horror stories that I've 
noted there.
    But we have found that a lot of times these programs have 
inconsistent policies that don't help us in either preserving 
or creating affordable housing in the rural areas.
    I'd like to just cut right to the chase and talk to you 
about some recommendations and what we see that could be done 
in the rural areas to help us increase the affordable rental 
housing.
    The United States Department of Agriculture Rural 
Development Section 515 funds have been greatly cut over the 
years. That was probably the main producer of affordable 
multifamily housing in the rural areas. Those funds need to be 
either increased or looked at so we can best leverage what is 
already allocated.
    For instance, there are RD 515 funds allocated, a lot of 
times they're coupled with tax credits, but currently you're 
only allowed to use a 4-percent tax credit, which is less than 
half of the available 9-percent credit that's out there. In 
other words, one small change, we could double, if not triple, 
the amount of housing produced with the same funds already 
available.
    The rental assistance contracts that go with those funds 
don't have any minimum payment that a tenant has to pay. If 
that was somewhat modeled after the Welfare to Work program or 
where there were minimum payments, we could stretch those 
dollars a lot further.
    A new program that has really caught a lot of interest in 
the private sector is the USDA Section 538 guaranteed rural 
rental program. This program leverages private sector dollars, 
as the United States only provides a 90-percent guarantee to 
the lender. We've had some administrative rules that you've--
that members of your committee have helped us change to make 
that more usable. Some other things that we see is that we 
provide interest credit up to 20 percent of your annual 
allocation. And what that interest credit does is you buy the 
interest rate down to the applicable Federal rate, which is 
around the 10- to 30-year treasury amount. Although it's not 
very expensive, that really helps the rural areas reduce our 
rents.
    And if you could look at expanding that 20 percent to a 
larger portion of the pool, again, not near as costly as the 
direct program that you've had in the past.
    Also, you should offer flexibility to your State RD 
offices. If they have interest credit available, why not link 
it to those guaranteed loans that you have there. The program's 
already in place, dollars that are already there, with slight 
administrative changes could be much more leveraged and provide 
much more affordable housing in the rural area.
    The national housing trust fund may be another avenue if 
enacted to assist the rural areas. Our groups believe that a 
portion of that, 30, 40 percent, should be designated for the 
rural areas, but not only to provide support on the development 
of housing, but also the continuing support, such as the rental 
assistance program noted earlier.
    Another area that we see a problem is that currently county 
median incomes for the tax cutter program use the greater of 
the county AMGI, area median gross income, or the State non-
metro average. Again, a slight change in using the State 
average would certainly widen the band of rural households that 
would now be eligible for this program.
    An example, a rural household consisting of a single 
parent, one child in Ohio, earning in excess of $24,300 is not 
eligible in most of our average counties. That's certainly a 
low number. With one change of how we calculate what the AMGI 
is, we could really broaden that band and make a lot more 
households eligible.
    Finally, I would like to express the support that we have 
for the homeownership tax credit. It's an excellent concept in 
rural areas, especially where you've been told by other people 
testifying about the gap in the rural areas, trying to get 
enough dollars to entice a developer to go out and build homes 
where the prices that you can charge can't generate enough 
dollars. The tax credit's an excellent avenue, if it could be 
modeled after the housing credit rental program that's there, 
that's been extremely successful, we see that that's another 
avenue that could greatly benefit all areas of Ohio.
    Please keep in mind, not all households, though, are meant 
to be homeowners. There is still a great demand out there for 
affordable rental housing. And I encourage you to keep that in 
mind as you look at these pieces of legislation.
    Again, thank you very much for your time. I would be more 
than happy to answer any questions.
    Thank you.
    Chairman Ney. Thank you for your testimony. I explained to 
my colleagues, if you live on the Ohio River, you're a River 
Rat. So it's not an insult; it's a compliment.
    Mr. Woda. That was the nickname of our high school, 
actually.
    Chairman Ney. In Congress we call our Congressional 
softball team the Ohio River Rats, too.
    [The prepared statement of Jeffrey J. Woda can be found on 
page 187 in the appendix.]
    Chairman Ney. Ms. Luken, I thought 30 percent was dedicated 
in the McKinney-Vento language to permanent housing. Are you 
worried that that will change?
    Ms. Luken. Well, it's something that is happening on a 
yearly basis. And we're encouraging you to authorize 
legislation to make it permanent.
    Chairman Ney. Make it permanent. I see. So you're worried 
about future----
    Ms. Luken. Yes.
    Chairman Ney.----future terms.
    Okay. The--Mr. Woda, we had that Amendment 515, I think 
we're going to try to redo that. But it just does what was done 
for the urban program, you know, a long time ago. And I think 
that was a good idea, if we could do it.
    I have one question I want to ask, and I don't know if you 
can answer this, but I'm going to ask it, Mrs. Kuhn. Would the 
State of Ohio want the Section 8 block grant? It's a joint 
question. It's a bipartisan group. Would the State of Ohio want 
to do--if this piece of legislation passed, would the State 
take it, has it developed a position?
    We do invoke the fifth amendment here in the subcommittee 
formally.
    Ms. Kuhn. I don't have the official answer to that. But I 
do know that it's a very complicated issue. I think a lot of 
the points that have been brought up here today about our 
staffing levels, the ability of the State to do these 
additional duties, are something we would take very much into 
consideration.
    I think we have a very talented group of people that could 
do it, but it would take resources and whatever.
    So I don't know that we're really ready to answer that 
question.
    Chairman Ney. Thank you.
    Ms. Jones. Real short.
    I want to thank everyone for testifying this afternoon. The 
information you provided us was very useful.
    Mr. Woda, I just want to ask you one question: Remember 
back earlier in the year when we were debating tax cuts, there 
was a whole--and the dividend tax cut, there was a whole 
discussion about the impact dividend tax cuts had on low income 
housing tax credits. Can you briefly discuss that, if you 
could--if you would, or could.
    Mr. Woda. Sure. It was certainly a big scare to our 
industry, as we looked at it, the assumption was most of the 
investors would lose a lot of the benefit they have in 
investing in those credits because of the tax treatment of 
dividends.
    I'd just like to thank all of you for the way you worked it 
out, and that that scare has now passed. And I think whenever 
looking at an issue like that the unintended consequence of 
hurting probably our best producer of affordable housing in 
this country would not have been what any of us wanted. But you 
worked with the investors out there in the private sector to 
make sure that we had legislation that didn't do that.
    So, yeah, it was a big scare. A lot of our investors really 
pulled back until they saw what you ended up doing. And, again, 
I'd like to thank you for that.
    Ms. Jones. Thank you.
    Chairman Ney. Mr. Tiberi.
    Mr. Tiberi. Thank you, Mr. Chairman.
    Ms. Tavares, thank you for coming to testify today. From 
where you sit in the council chambers and from your experience 
with this State, what--what can we do up here--what can the 
Federal Government do and the State government do to help you 
all? And I should have asked this of the Mayor, but I'll ask it 
of you: What can we do to help you increase that homeownership 
from 49 to 55 or 60?
    Obviously, knowing we're not going to get to a hundred 
percent. But getting it closer to the national average.
    Ms. Tavares. I think a couple of things that have been 
mentioned about some of my other colleagues on this panel and 
other panels. Certainly the homebuyer education is critically 
important. We've got to make sure that people understand what 
it is they're venturing into, and to make sure that they have 
the assets, so to speak, or at least some cushion money set 
aside for whatever might happen when you own a home. All of us 
know that there are major expenses. And maybe we haven't 
educated individuals enough about how to get into homeownership 
and how to stay in homeownership. Because that's one of my 
other concerns, it's maintaining homeownership. It's one thing 
to get into a house. But to stay there, we have to make sure 
that people have the tools not only to fix the house, but also 
the assets or a pool of money to maintain that home.
    I think the other thing that the Federal Government can do 
is to continue work with us to keep the program as flexible as 
possible, the CDBG program, the HOME program, so that as we see 
there are other tools that we can develop locally, that we'll 
have the money to help us implement those programs.
    It's education. I think critically important is the 
education of our electorate that you can get into a home in 
many cases more easily than you can pay the rent that's being 
commanded today in the market.
    Mr. Tiberi. Did you want to comment on that, too?
    Mr. Lowenstein. Thank you, Mr. Tiberi.
    I think that the homeownership tax credit would be a 
critical tool to add to that. Because, for example, our 
company, you know, kind of in a small way got into trying to 
develop some new units in a relatively depressed neighborhood 
of the city, and the problem that we have in trying to sell new 
houses--and believe me even in an area that is, you know--isn't 
the best neighborhood in the city, they don't want to see 
little boxes built. People want to see nice houses put in. 
Well, it costs $120,000 or $130,000 to put in a fairly nice 
house. But the problem that you have in some of these areas is 
that the appraised value of houses in the existing neighborhood 
may be 60,000 or $70,000.
    So you need some vehicle to cover the gap between the 
mortgage that could be supported. Maybe you can get an 
appraisal at $100,000 or $90,000, but it costs another 30,000 
or $40,000 to put in a new house. But that's what you need to 
help turn the neighborhood around.
    The same thing would be true if it's a rehabilitated house, 
with the cost of what rehab are, you still have that gap, and 
that's where you--a financing vehicle like the credit would be 
critical.
    Mr. Tiberi. Thank you.
    Chairman Ney. Mr. LaTourette.
    Mr. LaTourette. Thank you, Mr. Chairman.
    Folks, it's been a long afternoon, so I won't drag it out 
much longer. Thank you for coming.
    And for the record, Mr. Chairman, the tax board is a new 
constituency of mine, since the geniuses down here in Columbus 
did the redistricting. And I've been more than impressed with 
the work that you do, Mr. Hale, and your group.
    And, Ms. Tavares, I know you by reputation, and you 
certainly represent yourself well not only on behalf of your 
city but and party and the people that you represent and the 
issues you advocate, and it's a pleasure to finally make your 
acquaintance.
    And, Ms. Kuhn, I'm going to try to be charitable to your 
organization, not you personally, but I think one of the 
reasons we put caps on various programs is that we haven't just 
made it up, it was subject to abuses, and not to say anything 
bad went on in Ohio relative to abuses, but that's why we have 
caps on technical assistance and also administration costs, we 
found that in some areas some States short of cash were 
siphoning off all the dough in administration costs, and that 
the money wasn't getting to where it needed to be.
    And I would say that if--if the issue that you brought to 
our attention, and that is the 2 percent plus 100,000 proposal 
were to come to me to take it to 2 percent plus 500,000, I 
don't think that I'd be favorable. Again, no criticism of you 
or your organization, but I, as an Ohioan, have been horrified, 
and as a republican, by this budget process, and the idea that 
our legislators would give back--it's not free money, but money 
back is like penalizing the taxpayers of Ohio twice. And not to 
have the political courage to come up with matching funds where 
assistance is offered from the Federal Government, I think is 
sinful, and I'm not proud of anybody that participated in that 
process.
    And I yield back the balance of my time.
    Chairman Ney. And we're not redistricting for ten years, so 
I'm agreeing with everything he said about the legislature.
    With that--they already did damage to me--I want to thank 
the panel. I want to thank our members. And we think this is 
the first housing hearing in Ohio that we've had in the history 
on the housing subcommittee on the books. Black caucus met two 
years ago, I believe, you chaired it up in Cleveland. And I 
think this is the first housing subcommittee, so we appreciate 
the staff coming in, the members spending their time, and all 
of you, it gives us good insight. Believe me, it was very 
helpful.
    We appreciate the Martin Luther King Center--Jr. Center and 
the director of that.
    And with that, that concludes--I would note for the record, 
if members have additional questions they might want to ask the 
panel, if they want to ask them in writing without objection, 
the hearing record will remain open for 30 days for members to 
submit written questions and witnesses to place their response 
in the record.
    And I want to thank all of you again, and this concludes 
the hearing.
    [Whereupon, at 4:52 p.m., the subcommittee was adjourned.]


                            A P P E N D I X



                             July 29, 2003


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