[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]




 
                     H.R. 1999--THE STATE AND LOCAL
                    HOUSING FLEXIBILITY ACT OF 2005

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

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                   HOUSING AND COMMUNITY OPPORTUNITY

                                 OF THE

                    COMMITTEE ON FINANCIAL SERVICES

                     U.S. HOUSE OF REPRESENTATIVES

                       ONE HUNDRED NINTH CONGRESS

                             FIRST SESSION

                               __________

                              MAY 17, 2005

                               __________

       Printed for the use of the Committee on Financial Services

                           Serial No. 109-30



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                 HOUSE COMMITTEE ON FINANCIAL SERVICES

                    MICHAEL G. OXLEY, Ohio, Chairman

JAMES A. LEACH, Iowa                 BARNEY FRANK, Massachusetts
RICHARD H. BAKER, Louisiana          PAUL E. KANJORSKI, Pennsylvania
DEBORAH PRYCE, Ohio                  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           DENNIS MOORE, Kansas
DONALD A. MANZULLO, Illinois         MICHAEL E. CAPUANO, Massachusetts
WALTER B. JONES, Jr., North          HAROLD E. FORD, Jr., Tennessee
    Carolina                         RUBEN HINOJOSA, Texas
JUDY BIGGERT, Illinois               JOSEPH CROWLEY, New York
CHRISTOPHER SHAYS, Connecticut       WM. LACY CLAY, Missouri
VITO FOSSELLA, New York              STEVE ISRAEL, New York
GARY G. MILLER, California           CAROLYN McCARTHY, New York
PATRICK J. TIBERI, Ohio              JOE BACA, California
MARK R. KENNEDY, Minnesota           JIM MATHESON, Utah
TOM FEENEY, Florida                  STEPHEN F. LYNCH, Massachusetts
JEB HENSARLING, Texas                BRAD MILLER, North Carolina
SCOTT GARRETT, New Jersey            DAVID SCOTT, Georgia
GINNY BROWN-WAITE, Florida           ARTUR DAVIS, Alabama
J. GRESHAM BARRETT, South Carolina   AL GREEN, Texas
KATHERINE HARRIS, Florida            EMANUEL CLEAVER, Missouri
RICK RENZI, Arizona                  MELISSA L. BEAN, Illinois
JIM GERLACH, Pennsylvania            DEBBIE WASSERMAN SCHULTZ, Florida
STEVAN PEARCE, New Mexico            GWEN MOORE, Wisconsin,
RANDY NEUGEBAUER, Texas               
TOM PRICE, Georgia                   BERNARD SANDERS, Vermont
MICHAEL G. FITZPATRICK, 
    Pennsylvania
GEOFF DAVIS, Kentucky
PATRICK T. McHENRY, North Carolina

                 Robert U. Foster, III, Staff Director
           Subcommittee on Housing and Community Opportunity

                     ROBERT W. NEY, Ohio, Chairman

GARY G. MILLER, California, Vice     MAXINE WATERS, California
    Chairman                         NYDIA M. VELAZQUEZ, New York
RICHARD H. BAKER, Louisiana          JULIA CARSON, Indiana
PETER T. KING, New York              BARBARA LEE, California
WALTER B. JONES, Jr., North          MICHAEL E. CAPUANO, Massachusetts
    Carolina                         BERNARD SANDERS, Vermont
CHRISTOPHER SHAYS, Connecticut       STEPHEN F. LYNCH, Massachusetts
PATRICK J. TIBERI, Ohio              BRAD MILLER, North Carolina
GINNY BROWN-WAITE, Florida           DAVID SCOTT, Georgia
KATHERINE HARRIS, Florida            ARTUR DAVIS, Alabama
RICK RENZI, Arizona                  EMANUEL CLEAVER, Missouri
STEVAN, PEARCE, New Mexico           AL GREEN, Texas
RANDY NEUGEBAUER, Texas              BARNEY FRANK, Massachusetts
MICHAEL G. FITZPATRICK, 
    Pennsylvania
GEOFF DAVIS, Kentucky
MICHAEL G. OXLEY, Ohio


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on:
    May 17, 2005.................................................     1
Appendix:
    May 17, 2005.................................................    57

                               WITNESSES
                         Tuesday, May 17, 2005

Brightbill, David, Executive Director, Washington-Morgan Counties 
  Community Action Agency, Marietta, Ohio........................    18
Crowley, Sheila, President, National Low Income Housing Coalition    45
Geese, Jody, Executive Director, Belmont Metropolitan Housing 
  Authority, Martins Ferry, Ohio.................................    15
Glover, Renee Lewis, President and CEO, The Housing Authority of 
  Atlanta........................................................    40
Gutzmann, Jon, Executive Director, Saint Paul Public Housing 
  Agency, Saint Paul, Minnesota..................................    20
Leach, Tarrah, Section 8 Housing Choice Voucher Participant, 
  Logan, Ohio....................................................    11
Montiel, Rudolf, Executive Director, City of Los Angeles Housing 
  Authority......................................................    17
Muha, Denise, Executive Director, National Leased Housing 
  Association....................................................    49
Nackerman, Daniel, Executive Director, Housing Authority of the 
  County of San Bernardino, California...........................    42
Reilly, Christopher, Area Vice President, Equity Residential, 
  Boston, Massachusetts, Representing National Multi Housing 
  Council and National Apartment Association.....................    47
Tegeler, Philip, Executive Director, Poverty and Race Research 
  Action Council.................................................    45
Turner, Margery Austin, Director, Metropolitan Housing and 
  Communities Policy Center, The Urban Institute.................    13

                                APPENDIX

Prepared statements:
    Ney, Hon. Robert W...........................................    58
    Cleaver, Hon. Emanuel........................................    60
    Maloney, Hon. Carolyn B......................................    63
    Waters, Hon. Maxine..........................................    69
    Brightbill, David............................................    71
    Crowley, Sheila (with attchments)............................    77
    Geese, Jody (with attchments)................................    92
    Glover, Renee Lewis..........................................   109
    Gutzmann, Jon................................................   113
    Leach, Tarrah................................................   127
    Montiel, Rudolf..............................................   132
    Muha, Denise (with attchments)...............................   135
    Nackerman, Daniel............................................   140
    Reilly, Christopher..........................................   148
    Tegeler, Philip (with attachments)...........................   154
    Turner, Margery Austin.......................................   163

              Additional Material Submitted for the Record

Miller, Hon. Gary G..............................................
    Housing Authority of Los Angeles County, prepared statement..   176
    National Association of Housing and Redevelopment Officials, 
      prepared statement.........................................   183
    National Council of State Housing Agencies, prepared 
      statement..................................................   191
Muha, Denise.....................................................
    American Association of Homes and Services for the Aging, 
      Council for Affordable and Rural Housing, Institute for 
      Real Estate Management, Institute for Responsible Housing 
      Preservation, National Apartment Association, National 
      Affordable Housing Management Association, National 
      Association of Affordable Housing Lenders, National 
      Association of Homebuilders, National Housing Conference, 
      National Leased Housing Association, National Multi Housing 
      Council, letter............................................   196


                     H.R. 1999--THE STATE AND LOCAL
                    HOUSING FLEXIBILITY ACT OF 2005

                              ----------                              


                         Tuesday, May 17, 2005

             U.S. House of Representatives,
                        Subcommittee on Housing and
                              Community Opportunity
                           Committee on Financial Services,
                                                   Washington, D.C.
    The subcommittee met, pursuant to call, at 2:04 p.m., in 
Room 2128, Rayburn House Office Building, Hon. Robert Ney 
[chairman of the subcommittee] presiding.
    Present: Representatives Ney, Miller of California, Tiberi, 
Pearce, Neugebauer, Davis of Kentucky, Waters, Velazquez, Lee, 
Miller of North Carolina, Scott, Frank, Davis of Alabama, 
Cleaver, Green, Maloney, and Watt.
    Chairman Ney. [Presiding.] The hearing will come to order.
    I will go ahead and give my opening statement and see if 
anyone else is going to be arriving.
    I want to thank all of our witnesses for appearing today, 
as we continue our examination of the important Section 8 
Housing Choice Voucher Program. Those of us on the Housing 
Subcommittee are acutely aware of the many difficult management 
and budget challenges inherent to this Government program. It 
is my hope that we can take this opportunity to work together 
as we contemplate the future of Section 8.
    While homeownership is a desired goal for many Americans, 
there are many in today's society that are not yet ready to own 
their home for a wide variety of reasons. It is, therefore, 
prudent that we continue to pursue alternatives to make sure 
that affordable rental housing is available. We must also make 
sure that assistance is there for those who need it.
    The Section 8 Housing Assistance Program is the major 
vehicle for providing rental assistance to low-income families 
and individuals. Today, the Section 8 program has become the 
largest component of the Department of Housing and Urban 
Development's budget. The rising cost of providing rental 
assistance is due in varying degrees to expansion in the 
program, the cost of renewing expiring long-term contracts, and 
rising costs in housing markets across the country.
    The day of reckoning is coming fast. If we do not address 
the increasing cost to the program, it will consume the HUD 
budget. It is already affecting the funding of other programs 
in the department, and I think that forces choices of good 
programs versus good programs, which is not what we want to do.
    Last Congress, we held six hearings on the Administration's 
proposal to block grant the Section 8 program--I feel like we 
are at Groundhog Day again. You wake up, and you go through 
another year and another year--and that, of course, was a block 
grant to the States.
    While I recognize we have to constantly seek ways to 
improve America's communities and strengthen housing 
opportunities for all citizens, particularly our poor, I also 
understand that the issue of reforming Section 8 is a 
contentious one. It is a difficult one.
    However, it is an issue that deserves a sustained debate so 
that all interested parties are heard. To that end, I intend to 
continue to hold roundtable discussions that will focus on the 
future of the Housing Choice Voucher Program.
    As to not plagiarize, I have to give credit to Jody Geese, 
who is here today. It actually was her idea. She allowed me to 
take some credit for it. It was an idea that she talked about 
one night when I was talking to some of the housing groups.
    Congressman Barney Frank, who just arrived, was at the 
roundtable, as was Congresswoman Maxine Waters. I think 
Congressman Miller stopped in and Congresswoman Velazquez of 
New York.
    I thought it was productive because we did not go the 
formal 5-minute, we had a give-and-take, and I think that was 
very, very healthy. So I think future roundtables would be 
healthy, too.
    Through these roundtables, it is my hope to continue 
identifying the top-level issues regarding the current 
operation, administration and funding of the Housing Choice 
Voucher Program and to craft solutions that will address the 
effectiveness and efficiency of the Government's role in the 
administration of the program.
    I trust we can engage in meaningful discussions with my 
colleagues on both sides of the aisle and the Administration to 
find a solution to the Section 8 program and some of the 
problems that are there.
    Not a day goes by that I do not talk to a constituent or an 
organization concerning the problems inherent in the program, 
such as a long waiting list, lack of affordable Section 8 
Voucher housing, and various PHA funding concerns. The longer 
we wait to address the increasing costs of the Section 8 
program, the greater risk there is to the program, as well as 
to other programs of HUD that will most surely suffer some 
additional cuts.
    I would like to recognize also, as I did our ranking member 
of the committee, Congressman Gary Miller of the subcommittee 
for his hard work on this issue, along with our ranking member, 
Maxine Waters and, again, Mr. Barney Frank.
    As we know, Congressman Miller introduced the 
Administration's most recent proposal to reform Section 8. H.R. 
1999, The State and Local Flexibility Act of 2005, makes 
significant changes to the Housing Choice Voucher Program and 
gives greater flexibility to Housing Authorities to meet their 
local housing needs.
    According to the Administration, the introduction of this 
proposal represents another step in the process, and I hope, 
again, that we will be able to eventually reach some 
conclusions on the issue.
    With that, I am going to yield to the gentleman from 
Massachusetts.
    [The prepared statement of Hon. Robert W. Ney can be found 
on page 58 in the appendix.]
    Mr. Frank. Thank you, Mr. Chairman.
    The ranking member of the subcommittee, the gentlewoman 
from California, Ms. Waters, is, of course, very interested in 
the subject, but what is relevant today is that she is not from 
California in general, but from Los Angeles, in which today 
they have a mayoral election. So she is on the way, but I think 
we all understand. Ms. Waters is in town now; she will be at 
the hearing, but the delay was because of the election.
    The chairman of the subcommittee has, in fact, done very 
useful work, as he said, with the roundtable he had, and I 
think we should make some things clear. I am very eager to 
participate in rationalizing the voucher system and making it 
less expensive by getting rid of duplication in dealing with 
what might not be the best set of incentives.
    Clearly, we ought to reform the system, but that ought to 
be driven by trying to make the system better. I have a problem 
here, as elsewhere, when we start the equation with the answer, 
when we posit a saving and then move the program around to 
reach that saving. We may or may not reach it.
    In that roundtable, I found it very useful, the one I was 
able to get to, because a number of very interesting 
suggestions came forward that we could use to save costs and 
make the program work better, and I look forward to that.
    But the bill goes far beyond that, and one thing in 
particular that troubles me on the bill--and I notice a number 
of the witnesses have mentioned it--is the absence of a funding 
formula. This is, after all, something about money, and it just 
is inconceivable to me that we can do this without putting the 
money in there.
    People are nervous about block granting. I have been here 
for a long time, and I have followed things before that. During 
my time here, I do not remember anyone ever proposing to block 
grant a program that he or she liked. People rarely propose 
block grants for things they really like.
    What we are afraid is the flexibility that the local 
authorities will be given. I want them to get appropriate 
flexibility; I have a lot of confidence in them, but I do not 
want them to get the kind of flexibility in which they are 
told, ``Look, you can take care of about 90 percent or 85 
percent of what you have been taking care of, and you get to 
pick who gets hurt.''
    I do not think the flexibility to pick victims is what we 
want. Is it ``Sophie's Choice'' where you have to pick among 
your children? That is not what we should do, and there is no 
way to assure that that does not happen without us putting the 
funding in there.
    You cannot, I think, pass this as not only a blank check. A 
blank check would not bother me. I am afraid we are going to 
send you a check that will be marked insufficient funds, and 
that is the problem. So I really want to focus on that.
    In addition, I am concerned about the one provision of the 
bill which gives communities an effective veto over anybody 
bringing a Section 8 into their nice pleasant precincts. 
Obviously, it makes sense to say that the authority that has 
the Section 8 has to have some control over whether or not 
people take them outside or not, but there is a provision in 
this bill that gives the receiving community the right to veto 
poor people coming into their city.
    It is one of the great frustrating things that I encounter 
from time to time. I tried to get the Secretary to explain that 
one to me, and it goes on the list of things that he would not 
explain to me. I do not understand why we would do that at all.
    So, yes, we want to rationalize this, and I think the 
chairman of this subcommittee has set a good tone for us in 
doing it, but let's not forget again that this needs to be 
about money.
    The final thing is this. As we change targeting and we give 
flexibility, I do believe we have to be careful about the 
effect on the homeless. I know the Secretary has said from time 
to time that one of his goals would be to get a less poor 
cohort of people into the program, and if we do that, then 
there needs to be some concern about what we do for the 
homeless.
    I have written to the Administration's homeless coordinator 
to ask his evaluation of the effect this could have on the 
homeless, and, apparently, that is in the same place as 
Secretary Jackson's explanation of how the piece would work 
because I have not gotten that one either. So I await that.
    But I appreciate the people who really do the tough job of 
trying to help these programs who are not coming here, and we 
all do want to work together. But, as I said, I do think the 
funding piece has to be there. It is simply unacceptable for us 
to send this out of here without dealing with that funding 
piece.
    Chairman Ney. I thank the gentleman.
    Opening statement?
    Mr. Miller of California. Yes, very briefly. Thank you, Mr. 
Chairman.
    Mr. Frank, on the accepting community or receiving 
community, I am more than happy to work with you on that issue, 
and we discussed that in the last hearing. So that, at this 
point, should not be of a great concern because we will resolve 
that issue with you on there.
    I do not think there is a doubt that we need to do 
something about Section 8. We need to allow more flexibility 
and more local control. You have a program that is spiraling 
out of control as far as cost, and the amount of people using 
it is not spiraling with the cost.
    That is tremendously of concern to us basically because 
there is a limited amount of funds. HUD's discretionary budget 
is just shrinking because Section 8 is just gobbling up more 
and more each year, yet the people that benefit are not 
increasing with it.
    I happen to trust local Housing Authorities. I think that 
we need to give them more control. I think we need to allow 
them more flexibility. I think there are certain parameters we 
need to place upon them from a Federal perspective, which we 
do. Ninety percent to 60 percent, I think, is reasonable. 
Ninety percent of the dollars have to go to 60 percent.
    If you want to take 90 percent of the dollars and give it 
to the bottom 30 percent, that is your call. If you do not want 
to change anything based on this bill in your local housing 
authority, you do not have to. So there is not a lot of mandate 
in this on local housing authorities.
    If you like most of the programs the way they are, the way 
the Federal Government mandates them and the way that HUD 
oversees them, leave them like they are. But, if you are 
progressive and your housing authority just says, ``We need to 
make sure that we get the best bang for the buck locally,'' I 
think the Federal Government should give you that authority, 
and that is what we are trying to do in this bill.
    Is this product I introduced the product we are going to 
actually send out of this committee? No, but I think it is a 
very good starting point, and I think we are willing to listen. 
We are willing to receive input. If somebody has a better idea, 
that is fine. I think we can work with that.
    Barney Frank is a friend of mine. He brought up the issue 
about a receiving, accepting community having the right to 
accept the voucher if they want to. Well, I think that is 
reasonable. I think we can work with him on that issue.
    But there are some things out there I think we need to 
reform, and I think there are certain things and certain people 
we need to trust, and we need to allow things to take place 
locally that we are not currently doing. So I am looking 
forward to the testimony.
    Thank you, Mr. Chairman.
    Chairman Ney. The gentlelady from California?
    Ms. Waters. Thank you very much.
    Mr. Chairman, I came in a little late, and I am sorry for 
that, but I wanted to introduce Mr. Rudolph Montiel. Is it okay 
that I do that at this point?
    I am very pleased to have Mr. Rudolph Montiel, the 
executive director of the housing authority of the City of Los 
Angeles, join us as one of the witnesses for today's Section 8 
hearing.
    Mr. Montiel was selected as HACLA's executive director 
after a national search. He began his work at HACLA in November 
2004 at HACLA. Mr. Montiel oversees an operation of over 1,000 
employees, a yearly consolidated budget of about $875 million, 
and is a provider of housing assistance to cover over $50,000 
Angeleno families.
    From 2001 until 2004, Mr. Montiel served as the president 
and CEO for the housing authority in El Paso, Texas, and, 
during his tenure there, the housing authority achieved the 
highest ranking from HUD among large housing authorities in the 
U.S. It was among the first four housing authorities in the 
country to successfully close a Hope VI Grant and successfully 
increase the stock of housing units through acquisition and 
remodernization and significantly increase the housing 
authority's net assets.
    Mr. Montiel holds a bachelor's degree and a master's degree 
in civil engineering from the University of Texas at El Paso. 
He has also served as a program manager for IT Group and 
operations manager for Delphi Automotive Systems and a regional 
manager for General Motors, all of El Paso.
    Mr. Montiel has plunged into his job at HACLA with great 
energy and diligence and is working hard to effectively address 
the many challenges facing the Section 8 program participants 
and public housing residents in Los Angeles.
    Since his appointment, HACLA now is operating under a 
balanced budget, the Section 8 program is no longer overleased, 
and the organization is moving to develop a strategic plan for 
redevelopment of citywide large public housing developments in 
Los Angeles.
    So we are very pleased to have Mr. Montiel with us in Los 
Angeles and look forward to his testimony today.
    I thank you for allowing me the opportunity to introduce 
him.
    Mr. Chairman, this is a very long statement, and I think I 
am going to submit it for the record.
    Chairman Ney. Without objection.
    Ms. Waters. I just want to thank you for holding this 
hearing. As many people in this room know, you have paid an 
awful lot of attention to Section 8.
    Chairman Ney. Thank you.
    Ms. Waters. You were in my fair city where we held a 
hearing on Section 8, and I am very appreciate to the fact that 
you recognize that this is a very important program and we have 
to do it right. So the witnesses that you have here today will 
help us to understand the implications of the bill that is 
being offered and help us to understand how best to serve the 
people that most need housing assistance.
    So with that, I will yield back the balance of my time and 
submit my statement for the record.
    [The prepared statement of Hon. Maxine Waters can be found 
on page 69 in the appendix.]
    Chairman Ney. I thank the gentlelady for her comments.
    The first hearing we ever had was out in your area, and 
then, prior to your arrival, I was also thanking you for your 
participation in the roundtable, which I thought was 
invaluable.
    Thank you.
    The gentleman from New Mexico, do you have a statement?
    The gentlelady from California?
    Ms. Lee. Thank you very much, Mr. Chairman.
    I want to also thank you and our ranking member for this 
hearing and for really helping us understand, as Congresswoman 
Waters said, the implications of this whole reform effort.
    I, quite frankly, believe that instead of calling this bill 
a reform bill, we should really call this bill what it is. I 
think it is a plan to put low-income and poor people out on the 
streets or yet another plan, as I have said earlier, to 
dismantle HUD and our Nation's housing safety net.
    How about maybe we should call it let's put one of our 
premier affordable assistance programs on the chopping block 
because, sadly, these suggested titles that I just mentioned 
are very accurate in their description of what is a terribly 
flawed bill that would have devastating impacts on our 
communities and especially the most vulnerable.
    We all know the basics of the bill. It block grants the 
voucher program, delinking it from the current voucher funding 
system in which allocations are based on the number of vouchers 
in use and on actual costs.
    It eliminates the current income system that targets the 
extremely low-income families; it eliminates the statutory 
requirements tying voucher rents to income and ensuring that 
rents are affordable; and it eliminates authority to provide 
enhanced voucher assistance to a tenant after 1 year, and the 
list goes on and on.
    So it also means that many extremely low-income people, who 
are disproportionately African Americans and Latinos, stand to 
lose their vouchers.
    So I think that this is morally wrong. I think this is just 
another way to put more people on the streets, and it erodes 
our housing safety net, and I think we have a moral obligation 
to work to assist low-income households, to increase the number 
of vouchers, and to help more people, not kick those who need 
the help to the curb.
    Thank you, Mr. Chairman.
    I yield the balance of my time.
    Chairman Ney. Thank you.
    The gentleman from Texas, Mr. Green?
    Mr. Green. Thank you, Mr. Chairman.
    Thank you, ranking member.
    Mr. Chairman, I do not quarrel with those who support 
flexibility. I assume that it is because of their life 
experiences that they have found good reason to support 
flexibility. I trust that they will not quarrel with me for 
being antithetical to flexibility because of my life 
experiences.
    Flexibility allowed colored water fountains. Flexibility 
allowed some to ride in the back of the bus. Flexibility is not 
always a good thing, and I fear unchecked, uncontrolled 
flexibility. I am concerned that in this legislation we are 
going to have the flexibility to segregate people and 
concentrate poverty. That kind of flexibility is invidious to 
the best interests of our country.
    I trust that I will hear words today that will give me 
reason to conclude otherwise, but I am concerned about 
flexibility.
    Thank you.
    I yield back the balance of my time.
    Chairman Ney. I thank the gentleman.
    Gentlelady?
    Mrs. Maloney. I would just like to place my comments in the 
record that this proposal would be devastating to the City of 
New York. I would assume in many cities across the country the 
same thing.
    Already, tenants are coming to my office and telling me 
that they have received notice that they will not be able to 
have their vouchers or that the Sticky Voucher Program will be 
abolished, and their question is, ``Where do we go?''
    I do not know about other localities, but the housing does 
not exist in New York City. We have a waiting list of over 
900,000 people to get on public housing in New York, and, for 
every single voucher, we have a waiting list of thousands and 
thousands and thousands.
    The Sticky Voucher Program has been incredibly--the markup-
to-market program--successful with landlords and the community 
people and HUD working together to keep people in their homes.
    The question that I am beginning to hear is, ``Where are we 
supposed to go?'' The housing does not exist. There is no place 
for these people to go.
    Now what do you intend to do--cut back the vouchers, cut 
back the income qualifications, cut back the sticky vouchers, 
get rid of all these programs, and just build up homeless 
housing? I just do not know where we are going to go.
    You cannot build housing or sustain housing, affordable and 
low-income housing, without a Federal role, and to abolish and 
cut back some of these very important programs would be 
absolutely devastating to the lives of millions of people 
across this country. I hope that this is just a trial balloon 
that will be changed and moved in a different direction.
    This is really problematic. Really I have no answers to 
people who are coming to me saying, ``I have gotten a notice. I 
am not going to have my voucher anymore. Where do I go? Is 
there any housing available? Give me a list.''
    There is no list; there is no housing available, and so I 
am showing some of the desperate cries that I am hearing in the 
community that I represent.
    I yield back.
    [The prepared statement of Hon. Carolyn B. Maloney can be 
found on page 63 in the appendix.]
    Chairman Ney. Additional opening statements?
    Mr. Neugebauer?
    Mr. Neugebauer. Thank you, Mr. Chairman, and thank you for 
having this hearing.
    I think ``flexibility'' is a good word because what we want 
to do is give our public housing authorities the flexibility to 
manage their business as they have more community knowledge 
than the Federal Government does, and so we give them the 
ability to look at what the needs are in that community.
    But the other thing about this bill--and, Mr. Chairman, I 
think it is important--is that there are provisions in this 
bill that also help transition people to homeownership and not 
keep them stuck on vouchers. One of the things that we do know 
about this country, it has a low savings rate, but one of the 
things that keeps that savings rate from really being 
embarrassing with the rest of the world is the equity buildup. 
Many Americans that have been able to access homeownership have 
been able to build up equity. What we also know is what 
homeownership does for our families.
    So I commend the chairman for this hearing. I think this is 
a good bill. I think it has some ability in there to give the 
people that are out managing these housing authorities the 
ability to decipher what is in the best need not for just a 
complex or a group, but for each individual recipient or 
resident that is participating in the housing programs.
    I look forward to the testimony of our guests today.
    Mr. Miller of California. Will the gentleman yield?
    Mr. Neugebauer. I yield back the balance of my time.
    Mr. Miller of California. Would the gentleman yield for a 
second?
    Chairman Ney. Do you yield back the balance or you yield it 
to Mr. Miller?
    Mr. Neugebauer. Yes, I will yield. Yes.
    Chairman Ney. Mr. Miller?
    Mr. Miller of California. Thank you.
    It is interesting because I heard comments that it is 
unchecked, it is uncontrolled, people are receiving notices 
already about their vouchers being revoked. We have not done 
anything yet except talk. So, if people are receiving notices 
vouchers are being revoked, that is something unbeknownst to me 
and nothing to do with this bill.
    But this bill does not create an uncontrolled environment. 
We need to read the bill. It allows flexibility within certain 
parameters, and that is the key. We do set guidelines. We do 
set parameters. We say that 90 percent of the money has to go 
to those under 60 percent of AMI. Currently, 75 percent has to 
go the people under 30 percent of AMI.
    If the local agencies want to keep it at 75 percent to 30 
percent, they can. We are just saying that we are going to 
allow flexibility, but you have to work within certain 
guidelines. There is a goal in here, is to try to help people 
get into homes of their own, allowing them to take vouchers and 
use them for that.
    We are saying that there needs to be a time limit, that 
they can establish a time limit if they want to, but the bill 
goes on to say that you cannot create a time limit of less than 
5 years. We do not want people creating a time limit locally of 
12 months or 24 months. If you want to make it 10 years or 15 
years, do what you want to do, but we are saying it cannot be 
less.
    So to say there is no parameters under which local PHAs 
have to work is unreasonable based on the language within the 
bill.
    Thank you.
    I yield back the balance of my time.
    Chairman Ney. I thank the gentleman.
    Mr. Miller from North Carolina?
    Mr. Scott from Georgia?
    Mr. Scott. Thank you very much, Mr. Chairman.
    First, let me ask for clarification, Mr. Chairman. Just for 
clarification, I think Mr. Frank had asked for a request for 
me. Is this the time for that, or is that later?
    Chairman Ney. That will be in a little bit.
    Mr. Scott. Okay. Thank you.
    Well, I look forward to that. Thank you.
    But let me just say this very quickly because I do not want 
to take from that time I have heard criticisms from some of my 
own housing authorities that H.R. 1999 would not address 
significant problems that now limit the success of Section 8 
and creates new obstacles.
    We all know that Congress has changed the way that the 
voucher program is funded, and this has caused budgetary stress 
for public housing authorities during the last 3 years, 
including unanticipated shortfalls and inadequate reserves.
    Regardless of the outcome of H.R. 1999, this committee, I 
feel, must establish a renewal formula for Section 8 Voucher 
funding, and I look forward to hearing your testimony.
    Thank you, Mr. Chairman.
    Chairman Ney. Thank you.
    The gentleman from Missouri, Mr. Cleaver?
    Mr. Cleaver. Chairman Ney, Ranking Member Waters, thank you 
for convening this hearing today on H.R. 1999, the so-called 
State and Local Housing Flexibility Act of 2005. I look forward 
to the testimony of the distinguished panelists here today.
    Although this is my first term in Congress, I am very 
familiar with public housing. As a child and teenager, I lived 
in public housing with my family for 7 years. We lived in 
public housing not because my parents were shiftless and lazy--
my father worked two jobs--and neither did my parents share 
some casual desire for a handout, but because of necessity, we 
lived in housing that was subsidized by the Federal Government.
    You see, Mr. Chairman, prior to moving into public housing, 
my family lived in what was once a slave shanty. My three 
sisters, my mother, father, and I lived in that shack until I 
was 7 and in public housing until I was 14. And when we moved 
into public housing, we did so because it provided a more 
decent and environmentally safe place to live.
    As the richest and most technologically and militarily 
powerful Nation on this planet, I believe that the United 
States Government has a responsibility to make sure that its 
citizens are not homeless or living in squalor, particularly 
for those individuals who are struggling to get out of poverty, 
as did my family.
    Particularly I raise this issue: We are perhaps 
unintentionally throwing out this age-old term that if anybody 
is in need of some public assistance, they are trifling, and 
that is offensive to me and to many of the other individuals I 
know living in public housing.
    I do not read about public housing. The leadership did not 
tell me my position on public housing. I know men and women who 
live in public housing. I know their names. I know their 
children. Many of them grew up with me. I resent any kind of 
implication that my somebodiness is lessened because I needed 
to live in public housing.
    My opposition to H.R. 1999 is drawn from this philosophy 
and my personal experience in public housing. Among the many 
flawed provisions of this bill are those that greatly relax the 
statutory income targeting and rent affordability requirements.
    In addition, the bill would eliminate the Brook Amendment 
which limits public housing tenant payments to 30 percent of 
their income, which is how my family was able to live there. As 
a result, H.R. 1999 would have the most devastating impact on 
the poorest Americans.
    For example, under current law, 75 percent of new vouchers 
must go to extremely low-income families or those who earn less 
than 30 percent of the median income. The legislation would 
replace that requirement so that 90 percent of new vouchers 
would go to families below 60 percent of median income.
    I have a lot of stuff to say, and I will stuff it in as we 
go along.
    [The prepared statement of Hon. Emanual Cleaver can be 
found on page 60 in the appendix.]
    Thank you, Mr. Chairman.
    Chairman Ney. I just gave a tap, not a gavel, just a tap. 
That is all.
    Mr. Scott. I will finish it as we ask questions.
    Chairman Ney. I thank the gentleman.
    I want to thank the panel for being here today.
    Tarrah Leach is a Section 8 Housing Choice Voucher 
participant from Logan, Ohio. Ms. Leach was recently awarded a 
certificate of practical nursing by Hocking College.
    Congratulations.
    Currently, she is seeking a licensed practical nursing 
position in the medical field. So if anybody has a position, 
please feel free to look Ms. Leach up.
    Thank you for being here.
    Margery Turner is the director of Metropolitan Housing 
Community's Policy Center at The Urban Institute, a nonprofit 
organization located here in Washington, D.C. The institute 
supports research in a wide variety of public policy issues.
    Jody Geese has been the executive director of the Belmont 
Metropolitan Housing Authority in Martins Ferry, Ohio, since 
1998, having joined the authority as an accountant in 1989. 
Currently, she is the legislative chair of the Ohio Housing 
Authorities Conference.
    Mr. Montiel has been introduced by the gentlelady from 
California, Ms. Waters.
    Welcome, Mr. Montiel.
    And David Brightbill is the executive director of the 
Washington-Morgan Counties Community Action, a nonprofit 
organization located in Mariette, Ohio. The agency seeks to 
reduce poverty and to help low-income people become self-
sufficient. There are 52 community action agencies in Ohio 
cumulatively administering nearly $525 million worth of 
resources. This amount places Ohio second in the Nation in the 
amount of resources developed by its community action network.
    Jon Gutzmann has been the executive director of the Saint 
Paul Public Housing Agency since 1987. The agency owns 4,300 
units of federally assisted housing, administers another 4,000 
in housing vouchers, both of which provide housing to over 
20,000 residents. It has had an annual operating budget of $61 
million and has received HUD's high performer rating each year 
under the Public Management Assessment Program.
    Welcome to all the distinguished panelists.
    Ms. Leach, we will start with you.
    Thank you.

  STATEMENT OF TARRAH LEACH, SECTION 8 HOUSING CHOICE VOUCHER 
                    PARTICIPANT, LOGAN, OHIO

    Ms. Leach. Mr. Chairman, my name is Tarrah J. Leach. I am a 
recipient of Section 8 housing assistance in Hocking County, 
Ohio. I am a divorced mother of three children and now a 
licensed practical nurse.
    It has taken me a lot to get where I am today. I am very 
proud of my accomplishments, but let me tell you how I got 
here.
    I lived with my grandparents most of my life because my 
mother had her own difficulties.
    At the age of 16, I went to stay with my sister in 
Lancaster, Ohio, for the summer. I met a man named James. My 
sister moved back to Columbus, Ohio, before the summer was 
over, but I decided to stay. So, at the age of 16, I was by 
myself with my boyfriend.
    We stayed with various people that we could because we did 
not have a permanent place to live. I found out that I was 
pregnant. I quit school, and we got married.
    We ended up in a homeless shelter in Lancaster, Ohio. The 
worst part of it all was that James was abusive to me.
    We got on Metropolitan Housing in Lancaster, Ohio, in 
December 1988 after waiting a year. We got a little apartment 
in Lancaster, so I thought things would get better. I was 
wrong, and the abuse got worse. I had another daughter at the 
age of 18.
    But I finally got the courage to leave him and went to stay 
at a domestic violence shelter for women and got divorced.
    I met another man shortly thereafter. David and I moved to 
Logan, Ohio, into a little apartment. I got pregnant again at 
age 20. I got married to David; he lost his job, so we decided 
to apply for HUD in Hocking County, Ohio, in 2001.
    I decided when I was pregnant with my third daughter that I 
at least wanted to get my GED. I did not want my kids to be 
able to say that I never graduated from high school. So my 
third daughter was born in October 2001, and my GED was issued 
December 12 of 2001. That was a very big accomplishment.
    David and I moved to a three-bedroom trailer in Logan, 
Ohio. We had various problems throughout our relationship. He 
would not keep a job. So I worked.
    Well, after having 3 kids, I never thought I would go to 
college, but my GED teacher at the Volunteers of America had 
told me that I scored very high on my GED and I should go to 
college. So I got the courage up and I decided I would go to 
school to become a nurse.
    So in June of 2002, at the age of 21 and after not being in 
school since I was 16, I stepped foot in college. My husband 
was not behind me to say the least. We ended up divorcing. But, 
after starting college, I was not going to let anything hold me 
back anymore.
    I went though 2 years of nursing school, raised three kids 
by myself, and worked a part-time job at Wal-Mart to accomplish 
my goals. Yes, I did have to sacrifice time away from my kids 
by working and going to school, but it was all for them.
    Throughout my 2 years of nursing school, I maintained a 3.8 
GPA, made the dean's list every quarter, and received various 
other awards. I graduated fourth in my class with honors.
    HUD has helped me to achieve so many of my goals. If it had 
not been for HUD, I, as a divorced mother, would not have been 
able to put a roof over my children's heads. I would not have 
had the time to devote to school to better my education for 
myself and my children. My children would have suffered more 
because I would have had to spend more time away from them just 
to make ends meet.
    I know I am not the only divorced mother out there with 
children that has goals and sees them slowly fade away because 
of the struggles that we go through, from not receiving child 
support to having to work all the time or to have the 
Government want to take programs away.
    I am living proof that one person can make a difference and 
make their life better, given the support and opportunity. The 
Government teaches us to better ourselves and to get off HUD 
and welfare, but how can you better yourself to get off of it 
if you take it away before giving the people the chance to try 
and succeed as I have?
    When I got my new job, I reported my changes to the Hocking 
Metropolitan Housing Authority. With my current income, they 
tell me that I am 46 percent of the median income for our 
county, but with the low fair market rent for our area, I would 
no longer be receiving rental assistance effective July 1 of 
2005.
    I am looking forward to standing on my own two feet after 
all my struggles, but my success did not happen overnight. It 
has taken me over 7 years to achieve some of my goals. I am a 
very motivated person, but someone a little less sure of his or 
her goals would take a lot longer to get to the place that I am 
today. I would like to see others be able to fulfill their 
goals even if it takes a long time.
    While I am very grateful for the assistance, I am worried 
that others will not have the opportunity to improve their life 
with the same support that I received. It is my understanding 
that when I go off the voucher program, the voucher will not be 
reissued because of budget cuts in the Section 8 program, which 
is unfair to other people who have waited so long just to get 
the assistance and now to be told, ``Sorry. You waited all that 
time for nothing because we just do not have it anymore.''
    Thank you for this opportunity to speak to the committee.
    [The prepared statement of Tarrah Leach can be found on 
page 127 in the appendix.]
    Chairman Ney. Thank you for your testimony.
    Now we will move on to Ms. Turner.

  STATEMENT OF MARGERY AUSTIN TURNER, DIRECTOR, METROPOLITAN 
   HOUSING AND COMMUNITIES POLICY CENTER, THE URBAN INSTITUTE

    Ms. Turner. Good afternoon.
    I direct The Urban Institute Center on Metropolitan Housing 
and Communities and conduct research on Federal housing policy 
and its impacts on families and neighborhoods. I appreciate the 
opportunity to testify today on the Administration's proposal 
to reform the Federal Housing Voucher Program.
    The Housing Choice Voucher Program plays a critical role in 
our nation's housing policy. One of its greatest strengths is 
that it allows families to choose the type of housing and the 
neighborhood that best meets their needs.
    Historically, many other low-income housing programs have 
exacerbated the geographic concentration of poor families, 
especially minority families, in high-poverty and distressed 
neighborhoods. In contrast, vouchers have generally allowed 
assisted families to disperse more widely and to live in lower-
poverty, less-segregated neighborhoods of their choice.
    Social science research shows clearly that living in a 
distressed high-poverty neighborhood undermines the well-being 
of families and the long-term life chances of their kids. When 
families are able to escape from distressed neighborhoods and 
move to healthier communities, their lives improve measurably.
    Rigorous research confirms that the opportunity to move to 
a healthy, low-poverty neighborhood can make families safer and 
more secure. It contributes to better health; it provides 
access to well-performing schools; and it may ultimately lead 
to higher employment and higher earnings.
    The proposed State and Local Housing Flexibility Act 
threatens to restrict choice for voucher families. Participants 
would not be able to use their housing vouchers to move from 
one jurisdiction to another unless the administering housing 
agencies had a standing agreement and the receiving 
jurisdiction agreed to have them move in.
    In addition, moves within a jurisdiction are likely to be 
restricted because the Administration's proposal would create 
very strong incentives for local housing agencies to set their 
payment standards lower in order to serve the same number of 
families. Lower payment standards will make vouchers less 
competitive in the rental market, particularly in healthy 
neighborhoods in the rental market and, therefore, could 
severely limit neighborhood choice.
    In effect, local housing agencies would be forced to choose 
between serving more families in higher-poverty, distressed 
neighborhoods or fewer families in healthy, opportunity-rich 
neighborhoods.
    The Administration's proposal also creates very strong 
financial pressures for local housing agencies to use their 
scarce resources to serve more families at higher income levels 
rather than targeting assistance to extremely low-income 
families.
    Again, there is strong social science research evidence 
suggesting that targeting vouchers to very low-income families 
may yield benefits that go way beyond housing per se, 
contributing to our country's larger policy goals of work and 
self-sufficiency.
    Finally, the Administration's proposal would allow local 
housing agencies to experiment with alternative subsidy 
formulas and even impose time limits on housing assistance. But 
there is no solid research evidence here to guide local housing 
agencies in designing these new formulas that would encourage 
work without sacrificing access to affordable housing in safe 
and opportunity-rich neighborhoods.
    The current voucher program certainly does not work 
perfectly, and there is a growing body of experience from 
innovative agencies around the country that point to promising 
strategies for addressing these shortcomings with the program.
    It is conceivable that some local housing agencies might be 
able to use the new flexibility in this proposal to implement 
one or more of these promising strategies, but the emphasis on 
cost containment and on local autonomy actually create the 
opposite incentives, moving away from the strategies that we 
know to be the most promising for strengthening the program.
    So, in summary, the proposed State and Local Housing 
Flexibility Act moves Federal housing policy in the wrong 
direction, trapping families in neighborhoods that are poor and 
distressed and perpetuating concentrated poverty and isolation 
from economic opportunity.
    Thank you.
    [The prepared statement of Margery Turner can be found on 
page 163 in the appendix.]
    Chairman Ney. Well, thank you for your testimony.
    I do not normally do this, but just one clarification 
before we move on, Ms. Geese.
    We were all three trying to find it up here. You had 
mentioned lower payment standards. Is that in your testimony?
    Ms. Turner. In mine?
    Chairman Ney. Yes.
    Ms. Turner. The flexibility that the bill would allow, 
given the funding constraints which are getting tighter all the 
time, really would encourage housing authorities to provide a 
shallower subsidy.
    Chairman Ney. Lower payment standards.
    Oh, thank you.
    Ms. Geese?

     STATEMENT OF JODY GEESE, EXECUTIVE DIRECTOR, BELMONT 
      METROPOLITAN HOUSING AUTHORITY, MARTINS FERRY, OHIO

    Ms. Geese. Chairman Ney, Ranking Member Waters, members of 
the subcommittee, I am the executive director of the Belmont 
Metropolitan Housing Authority--Am I better there? Can you hear 
me now? Could not resist--serving Belmont County, Ohio, the 
proud home of Congressman Bob Ney. I greatly appreciate the 
opportunity to testify on H.R. 1999.
    This bill has been introduced to better assist our low-
income families obtain decent, safe, and affordable housing, 
and to promote self-sufficiency, just as QHWRA was in 1998.
    My issues are not with flexibility and local 
decisionmaking, but, in an environment of adequate and 
dependable funding, they would produce very different results, 
the needing of flexibility to pay the bills. There are many 
housing authorities that could do great things with 
flexibility, but, as the saying goes, you cannot make a silk 
purse out of a sow's ear.
    Being forced to make the hard choices that negatively 
impact the less fortunate we serve is not one I relish, and I 
agree with Congressman Shays; HUD is passing the buck. This 
proposal is about dollars, and I do not call this flexibility. 
I call this no other choice.
    While I appreciate the difficult task this subcommittee is 
faced with, I still advocate for a unit-based voucher program 
reflective of actual costs and adequate funding and sensible 
rulemaking for our public housing programs. Costs have 
stabilized and are no longer spiraling out of control.
    The income-targeting requirements in this bill not only 
paint a dismal picture for the very poor, but turn back the 
clock on the hard work of Congress. If the desire is to allow 
families between 30 percent and 40 percent of median income a 
piece of the pie, then change the targeting requirements to 
reflect that. But clearly, the proposed targeting levels are 
extreme, but that is because this proposal is about dollars, 
not reform.
    I am also concerned with the apparent lack of concern this 
proposal gives to the large number of children housed in a 
nonelderly, nondisabled household. There will always be 
families that need our assistance, and there are many working 
poor that have already achieved the best job or financial 
situation available to them that could be hurt by term 
limitations.
    Interestingly, this bill provides up to 60 days of funding 
for vacant project-based vouchers to private sector properties, 
while HUD provides no vacancy provision for public housing, 
deleting the longstanding and modest 3 percent public housing 
vacancy allowance from the negotiated rule.
    The GAO felt a formal study was needed on the proposed 
rent-to-termination method. Concerns for the impact on tenants 
and the potential cost and burden placed on housing authorities 
and property owners were cited. They also felt the study was 
necessary to provide Congress with needed decision-making 
information.
    While inspection needs vary by community, I am concerned 
that the administrative funding will ultimately get tied to the 
proposed inspection requirements. Belmont Housing Authority has 
older housing stock with many mom-and-pop properties that need 
more frequent inspection.
    Requiring 50 percent of properties to be inspected annually 
could still provide for quality assurance while allowing 
agencies whose properties need to be inspected more frequently 
the funding to do them.
    Another approach would be to eliminate inspections on tax 
credit or other federally subsidized properties that already 
have mandated inspections. This would result in all units being 
inspected annually, reduce administrative burden, and avoid 
duplicate inspections.
    While great efforts are focused on the voucher program, 
public housing is being greatly compromised. The proposed 
voucher targeting will shift the very poor to public housing, 
and the less poor will once again have the greatest access to 
vouchers and rental choices.
    Public housing operating and modernization funds have been 
greatly reduced. Many housing authorities fund security out of 
their capital fund dollars and may be forced to choose between 
security and a new roof. My fear is that our public housing 
stock will deteriorate, creating blight, increasing crime, 
again turning back that clock.
    The study on the Moving to Work Demonstration indicated 
more time was needed to accurately measure its success, yet HUD 
proposes to make this a permanent program, while only 
authorizing the voucher program--with proven success--for the 
next 5 years. I would suggest the opposite: retain the 
successful voucher program's permanent status and continue to 
expand, study and monitor the Moving to Work demonstration over 
the next 5 years.
    In conclusion, I reiterate. Everything is relative to 
funding. Flexibility and local controls are great concepts in a 
good funding arena and necessary in a bad one, but the outcomes 
will be very different under each scenario.
    Again, thank you for the opportunity to express my views.
    [The prepared statement of Jody Geese can be found on page 
92 in the appendix.]
    Chairman Ney. Thank you.
    Mr. Montiel?

 STATEMENT OF RUDOLF MONTIEL, EXECUTIVE DIRECTOR, CITY OF LOS 
                   ANGELES HOUSING AUTHORITY

    Mr. Montiel. Chairman Ney, Ranking Member Waters, honorable 
members of the committee, I am Rudolf Montiel, the executive 
director of the Housing Authority of the City of Los Angeles.
    I am happy to report that HACLA is making great progress in 
fiscal stewardship, operational efficiency, and in bringing a 
culture of transparency and compliance to our organization.
    I would furthermore like to recognize the support of our 
congressional delegation led by Ranking Member Waters, our 
partners at HUD, the Los Angeles City leadership, and our HACLA 
chairperson and board for the fine work that took place in 2004 
to keep HACLA out of receivership.
    Today, I would like to frame my remarks on the situation we 
live in Los Angeles. A brief history will show us some 
highlights.
    Specifically, HACLA is no longer overleased. As a result, 
no families will be cut from the Section 8 program this year.
    Secondly, gang action and high rates of criminal activity 
continue to plague our public housing developments in Los 
Angeles.
    Third, despite wonderful redevelopment examples within the 
City of Los Angeles, we still find that the majority of our 
large citywide public housing developments have not been 
redeveloped.
    Fourth, little progress has been made in the past decade on 
significantly decreasing the wait lists of our public housing 
and Section 8 programs. Today, over 90,000 families are on the 
Section 8 wait list; over 24,000 families, on the public 
housing wait list.
    Given these facts, it is with great interest that we have 
analyzed H.R. 1999 and offer the following comments on this 
sweeping piece of legislation.
    Specifically, there is great value in reduced 
administrative requirements for rent calculations, inspections, 
and recertification. We believe that the cost that the housing 
authority will not undertake in added inspections, et cetera, 
can actually flow to helping more families, and that is a good 
aspect to the proposed legislation.
    Conversely, on income targeting, I do not concur with the 
structural shift in income-targeting provisions of this bill. 
Simply put, it will hurt the poorest of the poor. The income-
targeting provisions of the current program have allowed 
families from our Watts and our Boyle Heights areas of the city 
to move to more middle-class areas, such as San Fernando, where 
there are better schools, better job opportunities, and better 
opportunities for self-sufficiency.
    As far as public housing funding is concerned, the funding 
simply is not representative of what it takes to run public 
housing today. We have many more regulatory constraints than 
does the private marketplace or even the Low-Income Housing Tax 
Credit Program, which is the number one producer today of 
affordable housing in this country.
    As far as the public housing capital fund is concerned, 
there simply has not been enough investment in our public 
housing stock to keep the public housing in a safe, decent 
condition. As a result, public housing tends to have a stigma 
associated with it simply because of the appearance that it has 
in our neighborhoods.
    We in Los Angeles are working very hard to develop a 
strategic plan to redevelop our public housing, and one of the 
positive aspects to this legislation is the potential 
fungibility that we could have in diverting funds from one 
program to public housing to redevelop our public housing 
stock, which is vitally necessary in our large public housing 
developments, such as Nickerson Gardens, Ramona Gardens, Jordan 
Downs, Imperial Courts, et cetera.
    In addition, I would like to add for the record some 
provisions that we at the Housing Authority of Los Angeles 
believe would be extremely helpful and would be of mutual 
benefit to HUD and to the housing authorities, and that is the 
strengthening of penalties and permanent debarment for fraud 
violations of participants or landlords and also for providing 
a more automated, easily accessible system for third-party 
income verification on a national basis that would allow us to 
quickly determine a family's eligibility at a very low cost and 
with a high degree of accuracy.
    This sweeping legislation has good points and bad points. I 
have tried to outline those that are most relevant to the 
population that we serve in Los Angeles.
    It has been a great honor to address you today.
    [The prepared statement of Rudolf Montiel can be found on 
page 132 in the appendix.]
    Chairman Ney. Well, I thank the gentleman for his 
testimony.
    Mr. Miller of California. Mr. Chairman, can I ask that L.A. 
County's written testimony be included in the record?
    Chairman Ney. Without objection.
    Mr. Miller of California. Thank you.
    Chairman Ney. Mr. Brightbill?

 STATEMENT OF DAVID BRIGHTBILL, EXECUTIVE DIRECTOR, WASHINGTON-
    MORGAN COUNTIES COMMUNITY ACTION AGENCY, MARIETTA, OHIO

    Mr. Brightbill. Good afternoon.
    My name is David Brightbill. I am the executive director of 
Washington-Morgan Counties Community Action, a private 
nonprofit corporation located in Southeastern Ohio. The agency 
has been in business since 1967 and operates a variety of 
programs designed to help low-and moderate-income families.
    In 1988, the City of Marietta received funding for 50 
vouchers and subcontracted with our agency to provide the 
management for this new program. We currently manage 356 
vouchers.
    The Housing Voucher Choice Program has had a significant 
and important impact on our community throughout the years. It 
has provided tenants with the resources to afford decent, safe, 
and sanitary housing, and landlords with the incentive to 
provide quality housing.
    The fact that we have 168 active landlords and over 300 
have participated in the program indicates the level of local 
acceptance of the program.
    In reviewing The State and Local Housing Flexibility Act of 
2005, the proposed changes that we have particular interest in 
are income-targeting guidelines. Today, as has been mentioned, 
75 percent of the vouchers must go to families with incomes 
below 30 percent of area median income.
    H.R. 1999 would require that at least 90 percent of the 
vouchers go to families with incomes up to 60 percent of the 
median. This would have the effect of allowing housing 
authorities to reduce the HAP, consequently reducing the 
Federal funds necessary to support the same number of vouchers.
    This change seems to me to be getting away from the purpose 
of the program, which is to provide safe, affordable housing 
for those families with the most significant housing cost 
burdens. Until there are more resources available, I feel we 
should continue by national policy directing limited funds to 
individuals and families with the greatest need.
    Allowing public housing agencies to impose time limits on 
voucher assistance, this would, if used by the housing 
authorities, set limits for the first time on how long families 
could participate in the program. The change would obviously 
have the effect of increasing the number of total families 
served, but often at the expense of families that are working, 
but unable to earn sufficient income to pay the full cost of 
their housing.
    What is gained when we move one family on to the program 
and at the same time remove a family, even though they do not 
have the income to maintain needed housing? Investing in 
adequate job training and support services, expanding the 
Family Self-Sufficiency Program would be a better way to get 
additional turnover. The goal ought to be having the family 
earning enough money to take care of their needs, not just 
getting them off the rolls.
    Allowing housing authorities to change how rents are 
calculated so that rents may no longer be a percentage of 
resident income, this again would allow housing authorities to 
reduce their HAPs, decrease the cost of serving the same number 
of families.
    Given the current turmoil in funding, we can serve about 30 
vouchers less than we are actually authorized for because of 
funding. With the need to somehow make dollars stretch, it will 
be very tempting to impose tenant payments that shift the 
burden to the client.
    Organizations such as ours will be faced with the difficult 
decision of setting higher tenant rents to help balance the 
budget when we know that for families we serve. Even minimal 
increases are hard on them, let alone the kinds of increases 
that could be made under the proposed new law.
    Voucher portability, the current system has not been a 
problem for us. While once in a while, we are faced with rents 
much higher than normal, we have been able to deal with those 
within the existing law. The primary purpose of the proposed 
policy change, it seems to me, is another way of removing 
families from the program and, therefore, is contrary to the 
best interests of the families we serve.
    I would suggest that HUD create some type of central pool 
of funds which would provide local housing authorities with the 
ability when port rent is significantly higher than local rent 
to apply for funds to make up the difference.
    After January 1, 2009, voucher policy changes could also 
apply to new elderly and disabled families at the discretion of 
the local housing authority. About 57 percent of our current 
families are in that category.
    If the local housing authority does not make the decision 
to exempt elderly and disabled families from these changes, 
then they are applicable. Once again, people who are the least 
able to afford to pay more for housing will have an additional 
burden placed on them. Time limits would remove people who, in 
most cases, have no real way to earn additional income, so they 
will be faced with homelessness or an incredible rent burden.
    The enhanced vouchers, we currently do not have enhanced 
vouchers, but in a tight housing market, it seems to me that 
this would create a problem. Housing projects are taken to 
market with a corresponding increase in rent, and if the 
enhanced voucher is available for only 1 year, then the family 
could easily be faced with the necessity to move and no 
adequate place to go.
    The community loses both ways. Affordable housing is lost, 
and families may now have no place to go that is affordable.
    The voucher program has served the affordable housing needs 
of this country for years. At least now in our area, it is a 
great blend of public and private interests.
    The housing is affordable to clients. They are not forced 
to move from one home to another because they get behind in the 
rent. The Family Self-Sufficiency Program provides help and 
guidance in moving toward self-sufficiency. Private landlords 
are willing to invest in and maintain property because they 
select their own tenants, yet are guaranteed a portion of the 
rent will be paid every month and on time.
    While anything can be made better, I encourage the 
subcommittee to carefully consider the proposed changes and to 
reject those that do not improve the program. Costs should not 
be shifted to tenants who are not in the position to be able to 
afford the additional financial burdens.
    Thank you for the opportunity to appear today.
    [The prepared statement of David Brightbill can be found on 
page 71 in the appendix.]
    Chairman Ney. Well, thank you.
    I also wanted to note at this time with my colleagues with 
Washington-Morgan Counties, Morgan County also had hit near 24 
percent unemployment not too long ago and is still reeling, so 
these are counties where people are really having, I mean, a 
lot of problems, which happens across the Nation, too. I just 
wanted to point that out.
    Thank you.

   STATEMENT OF JON GUTZMANN, EXECUTIVE DIRECTOR, SAINT PAUL 
          PUBLIC HOUSING AGENCY, SAINT PAUL, MINNESOTA

    Mr. Gutzmann. Mr. Chairman and members, I am Jon Gutzmann, 
director of Public Housing in St. Paul. I have been there 18 
years. I have worked for and with residents for the past 25.
    Industry groups are just beginning to look at these bills. 
I am glad we have a bill, but I would like to work with 
everyone in this room to seek consensus on amendments that 
would preserve affordability, enhance decisionmaking at the 
local level, and ensure adequate and predictable funding. I 
have to mention funding because we cannot look at the bill in 
isolation.
    Despite all of our concerted efforts, our budget 
recommendations before Congress have not had much success. We 
lost the Drug Elimination Program years ago. The voucher 
program has already been transformed into a dollar-based 
budget.
    Because of the deep funding cuts for the last 3 years, I 
have already laid off 10 percent of our staff. We have reduced 
voucher payments to owners by 7 percent. We have scrimped on 
capital improvement. We have already sold off excess land to 
Habitat for Humanity. This is not a financial operating picture 
that can be sustained by even the most creative housing 
authority.
    I also for the record reject the Administration's 
contention that PHAs are to blame or just need to work harder 
to overcome these funding shortfalls. On the contrary, our PHA 
essentially invented the solution to last year's voucher crises 
by stretching the allowable rules under the existing program. 
The current voucher program is not nimble enough to allow PHAs 
to appropriately respond to the ups and downs of the rental 
housing market. Some reform is necessary.
    I also disagree with the blame-the-tenant sentiments that 
were expressed before this body. We have over 20 years of data 
at the Saint Paul Public Housing Authority that confirms that 
residents in public housing and voucher programs stay on 
average 6 years, that they are trying to move up and out and do 
all the right things.
    But I also want to importantly point out that we should 
remember the historical bargain struck between Congress and 
PHAs under the Housing Act of 1937, and that is that Congress 
would provide the necessary funding, PHAs would house low-and 
moderate-income people, and the part Congress keeps forgetting 
is to provide the funding.
    At Saint Paul, the average cost to run a public housing 
unit is about $600 a month. The average rent based on the 
income formula is about $200 a month. We house people at 20 
percent of AMI. If we do not get that $400 a month from HUD, 
the PHA cannot remain viable.
    Congress does not do its end of the bargain when subsidy 
levels are reduced, especially when Congress prevents anything 
to do on the income side, and, of course, that is the tricky 
part. Do not get me wrong; I want to keep the historical 
bargain and house low-and moderate-income people, but this has 
to pencil out at the PHA level.
    I agree with Sheila Crowley that public housing and the 
voucher programs are not broken, their costs have not spiraled 
out of control, and that this Nation can afford to keep this 
deeply affordable safety net program. We can afford it if we 
want, but we do not seem to want to too much as a country.
    At the end of the day, my colleagues and I are left to 
still balance the books and to fulfill our mission.
    So, to reiterate, public housing and the voucher program 
are already insufficiently funded today, despite our best 
collective efforts, and what is on the horizon looks even 
worse. These realities have forced PHAs to already make 
difficult decisions.
    If more decisions have to be made about bad money, 
shouldn't those decisions be made at the local PHA level and 
not in Washington? Shouldn't the painful decision that a New 
York State housing authority might have to face in 1 year about 
losing 40 percent of their funding occur at that New York State 
housing authority?
    If they had some consideration on the income side with 
tenant blessings, shouldn't that be allowed to happen? If we 
cannot improve the income portion of the equation, then 
Congress must. That is the historical bargain.
    Regarding the bill, I think on the flexible voucher 
program, it makes some sense to have PHAs set subsidy levels at 
their level, at their market, again, to allow us to control the 
costs. I do not think it makes any sense--and I would work 
against--creating term limits, curtailing enhanced vouchers, 
changing the income targeting, and restricting portability. 
Those provisions should be stricken. Of course, the bill needs 
a predictable funding formula.
    On the rent reform side, there are some very good things. 
The bill does keep Brook in, and it allows for two others that 
I like, creation of flat-tier grant systems and the percent of 
growth income, but the flat rent should be stricken because it 
could produce results that are not affordable.
    Finally, I like the idea of expanding the MTW, Moving to 
Work, sites, but probably only to about an additional 100 or 
200. I think the industry groups that are working at MTW sites 
are already demonstrating how they can preserve affordability 
while allowing local flexibility.
    Thank you.
    [The prepared statement of Jon Gutzmann can be found on 
page 113 in the appendix.]
    Mr. Miller of California. [Presiding.] Thank you very much.
    You all need to understand, first of all, we are not the 
appropriators. We do not establish funding levels. We wish we 
did sometimes. It might make life a lot easier for us, but we 
do not.
    Mr. Montiel, I guess my main question is--I enjoyed your 
testimony--you understand your current situation on Government 
housing right now, Section 8--what does this bill mandate that 
you do that changes that?
    Mr. Montiel. Well, Mr. Miller, as far as income targeting 
is concerned, I understand that it does not mandate income 
targeting.
    Mr. Miller of California. It does not mandate it at all.
    Mr. Montiel. Correct. The concern there is that you may 
have good stewardship and the boards of today believe that it 
is too important to house people at 30 percent of AMI.
    Mr. Miller of California. But you can currently still do 
that.
    Mr. Montiel. We can currently still do that.
    Mr. Miller of California. Even under this bill, you can 
still do that. In fact, you can go and you can say, ``We want 
to put 75 percent to the bottom 20 percent.''
    Then it is not the language in the bill that concerns you 
as much as it is how it might be applied by the PHAs.
    Mr. Montiel. It might be applied by a PHA in the future 
where a board might move to help people with a shallower 
subsidy as a result of pressure from a landlord group that 
says, ``Hey, let's cut the tenant and not cut our rent.''
    Mr. Miller of California. See, what I keep getting from 
everybody as their criticism of the bill is it is as if this 
bill is mandating that you do something. It does not mandate 
that you go 90 percent to the 60 percent level. It says, ``You 
must at least give 90 percent to the people below 60 percent.''
    It allows discretion. If you want to take 90 percent to the 
people below 20 percent, you can do that. It allows a 
tremendous amount of discretion at the local level that we 
currently do not allow, and that is what we are trying to do.
    We are trying to say, ``We honestly believe in most cases 
that local public housing authorities understand local needs 
and local people and local situations better than we might 
understand them here in Washington.''
    The criticism I keep hearing is that it is as if the bill 
mandates you do something, and that is bothersome to me.
    This bill is going to be modified. There is no doubt about 
it. We are going to ingest this bill to try to come out with a 
good product, but you basically think that the current program 
has been successful in providing decent and safe housing to 
families? Is that what you are telling me? If not, why not?
    Mr. Montiel. I believe that the floor, the safety net that 
the current program provides is vitally important to help 
families move from concentrated poverty areas to areas of 
middle income that provide better educational opportunities, 
better job opportunities to continue the process of family 
self-sufficiency.
    Mr. Miller of California. And you can still do that when 
this bill is in place.
    Mr. Montiel. Under the new legislation, that would be 
possible, but the flexibility might in the future not be used 
to the benefit of tenants.
    Mr. Miller of California. So it is that the unknown is what 
some future public housing authority might do at a local level?
    Mr. Montiel. Correct.
    Mr. Miller of California. Okay. The problem that HUD is 
having, experiencing today, is this program has grown to 62 
percent of their budget. In the near future, they say it will 
be somewhere in the 70th percentile in the next few years, and 
yet the growth has not occurred in the amount of people 
benefiting from the program. The growth has occurred in the 
cost of the program, and that is their main concern, is that 
they want to create more accountability at the local level 
where the dollars are being spent.
    If you look at the growth in a discretionary program, 
Section 8 has grown at a greater percentage than most any other 
program we have, and that is what we are trying to do.
    Ma'am, would you like to respond? Maybe you have a comment. 
I do not want you to fall out of the chair there. So we want to 
see you participate, too.
    Ms. Geese. I get a little overly excited.
    Mr. Miller of California. I understand.
    Ms. Geese. The one thing that is not spelled out in this 
proposal, sir, is the performance standards, and if you look at 
HUD's last proposal last year, the performance standards were 
closely tied to HUD's priorities and took away any real 
flexibility a housing authority had.
    Now you look at this environment and you do like they did 
last year and you tell us that we are to maintain 97 percent 
lease-up and that is our performance standards where we are 
going to be graded, I can tell you right now we are going to 
serve less poor people or we are going to lose our program.
    Not having the performance standards spelled out is a 
horrible scenario for housing authorities. We do not know how 
we are being graded; we do not know how we are being assessed; 
and that is another fear. Our fear on flexibility is not just 
the housing authorities are not going to do the right thing 
with it. It is that we are not going to have the opportunity to 
do the right thing with it when HUD sets performance standards 
that we cannot meet.
    Mr. Miller of California. What about the section, though, 
where we say, ``Let's change it. If the person goes out and 
finds a house, move in today, and we will inspect it after the 
fact,'' instead of the way it is today. Today, you have to go 
get an inspection when somebody wants to go and get into a 
home. We are saying, ``Let's help people get in a home. If you 
find a home you want, come in; get your voucher;have a given 
amount of time to inspect it. Do you think that is beneficial?
    Ms. Geese. I think that would be beneficial to some housing 
authorities. That would be what they would choose. It would not 
be beneficial to me. We are smaller. We turn over faster.
    I look in Belmont with older housing stock, and our 
concerns are lead-based paint and other safety issues.
    Mr. Miller of California. But we do not mandate that they 
have to move in. We are saying that they can after this bill is 
enacted. So we are trying to help you put people in homes.
    Ms. Geese. We understand that, sir, but, typically, the 
ultimate fear is all this flexibility that does not work for 
every agency will ultimately get tied to the administrative 
funding because they are going to say, ``You do not have to do 
that. You have chosen to do that.''
    We need to do some of these things. I have housing stock 
that you want me to go in regularly. I can see the tax credit 
properties, other federally subsidized properties. As I stated, 
they already have inspection. There is no reason to duplicate 
people's work.
    If he does not need to inspect his properties that often, 
then I agree he should not have to. I am not imposing Belmont 
on another authority. So I think there are many ways that 
flexibility and choices are good. But I do not think it is any 
accident that the performance measures are not included in this 
bill.
    Mr. Miller of California. But, in closing, it does not 
mandate that you cannot inspect as often as you want. Am I 
correct?
    Ms. Geese. Naturally, but, again, if I do not have the 
funds to pay my inspector to go out and I need to do it, what 
have we accomplished?
    Mr. Miller of California. I appreciate that, but understand 
we are not in any way trying to limit funding in this bill. 
That is not our goal at all. There is nothing in here that says 
you are not going to have funds, nothing in here that says we 
are going to change your funding. There is nothing that does 
that.
    So I understand your concerns, but I am saying I am dealing 
with a piece of legislation here, and I have to deal 
specifically with it. I cannot deal with the appropriators, and 
we are saying that this does not mandate anything, it does not 
put you in any harm's way in my opinion.
    Ms. Waters?
    Ms. Geese. Can I ask a question on that?
    Mr. Miller of California. Sure.
    Ms. Geese. I am sorry, but I just cannot help it. When you 
are looking at the targeting of 90 percent below 60 percent, 
all I have heard Secretary Jackson testify to and I have heard 
other people talk about--and I will tell you I will agree--is I 
do see people slightly above 30 percent that wait far too long 
on the waiting list.
    Mr. Miller of California. No, you are not understanding. We 
are saying that you have to put 90 percent below 60 percent. We 
are not going to just open it up and say, ``Do what you want to 
with the money.'' We are saying that we are going to allow 
discretion, but you have to put 90 percent below 60 percent. If 
you want to put 90 percent below 30 percent, you can do it.
    So I understand your concern, but the language does not 
mandate anything; except we did set a threshold. We absolutely 
did. We did not eliminate all the guidelines, but we tried to 
make them as flexible at the local level as possible.
    Ms. Waters, my time is concluded. I want to be fair to 
everybody on the committee.
    Ms. Geese. Okay. How are you going to vote? I cannot help 
it. How are you going to vote?
    Mr. Miller of California. Well, I am sorry, but your time 
is up.
    Ms. Geese. All right, sir. Thank you.
    Mr. Miller of California. Ms. Waters?
    Ms. Waters. Thank you very much.
    This argument about flexibility is bothersome. There are 
some types of discretion that we should not want the public 
housing authorities to have, but, first of all, we have to 
agree that philosophically there is a reason for all of this, 
reasons to provide housing, housing assistance, to people who 
otherwise would not have decent quality of life, would not have 
decent quality of housing. So some of this flexibility would 
cause us not to meet that part of our mission.
    This discretion to give vouchers to people with higher 
incomes is bothersome because I do not know what would happen 
to the people with low income. I do know in Los Angeles. I do 
not know what the numbers are in terms of the homeless, but I 
think this would just exacerbate that if, in fact, you chose to 
use that flexibility.
    The other thing that I am really bothered about is this 
portability flexibility. The bill appears to eliminate the 
nationwide voucher portability. It also makes voucher 
portability even within a State or region, say for example, 
between a city and a suburb, depend upon the existence of a 
written portability agreement. Vouchers would be portable only 
when the initiating and receiving housing authorities within a 
region had entered into a written agreement permitting such 
portability.
    Now, you know, it is a subject we do not like to talk 
about, but there are just some areas who do not want certain 
people in their jurisdiction, and this would give the 
flexibility for people to discriminate. And so what I have 
heard generally here today is that housing authority management 
is concerned about the overall thrust of this bill.
    Given that there are some who think you should be happy 
that you have flexibility, what I hear is this flexibility does 
not help you to do the job that you need to have done. While I 
suppose you could let people move in to an apartment without an 
inspection, there are some areas you better not do that because 
the housing is in such disrepair until it would be absolutely 
criminal to do that.
    So let me say to Mr. Montiel, who has all of this 
experience, what in this legislation really helps you to solve 
the problem of the long waiting list that we have for Section 8 
or the long waiting list we have for public housing or the 
problems that we experience? What in the bill would help you?
    Mr. Montiel. Ranking Member Waters, I believe that the most 
important part of the legislation has to do with the 
fungibility that the different funding streams can be used for, 
and specifically in the case of Los Angeles--and to answer your 
question, I have heard numbers of upwards of 50,000 homeless 
people in our city--what we have lacked for a long time in Los 
Angeles is a viable production vehicle for affordable housing.
    Although there has been a lot of talk about the cost of 
rental units throughout the country going down, the reality is 
in the five-county Southern California area of metropolitan Los 
Angeles, there are two types of rents, high and higher, and 
that will continue until the housing situation stabilizes to 
the point where the increases are not so dramatic.
    As a result, in the five-county area of Southern 
California, our affordability index is under 20 percent, and in 
some counties like Orange County, it is under 12 percent. That 
means that only 12 percent of the population of Orange County 
can afford a house, a median-priced house in Orange County.
    As a result, as we look at our public housing portfolio, as 
we look at the great need in our waiting list, unless we 
produce more units and unless we revitalize the units that we 
have, we have done very little to actually address the long 
wait list and the homelessness issue in Los Angeles. This bill 
and its related facets allow us to release the underlying value 
of the real estate that we have to develop additional units and 
put more people into safe, affordable, decent housing.
    On the Section 8 side, I am concerned, again, with the 
income targeting because it really reduces the floor, the 
safety net for the people that most need it. On the converse, 
there are very good aspects to the bill. The reduced 
inspections will cost us less money to do.
    Ms. Waters. But you are talking about something like 
instead of once a year, every 2 years or something like that?
    Mr. Montiel. Yes, ma'am. Yes, ma'am.
    Mr. Miller of California. You need to wrap up, if you can.
    Mr. Montiel. Usually, it is not a very large number, but it 
is significant enough to help more families.
    Ms. Waters. Thank you very much.
    Mr. Miller of California. We have a vote coming up at 4:00, 
so if everybody can hold their comments to 5 minutes, we can 
all have a chance at this panel before we leave, and then we 
will bring the new panel back afterwards.
    Mr. Pearce?
    Mr. Pearce. Thank you. I really appreciate the reasoned 
suggestions and contemplations, both pro and con. I was going 
to ask along the line that Mr. Miller did about what would you 
change if you had this flexibility.
    I am hearing that you probably would not change too much in 
the 90 percent; you might still direct it the same way you do, 
but you are more concerned about the people that are in the 
housing authorities. Really, there is nothing that mandates 
that you change, and so that is a confusing thing to me.
    Mr. Gutzmann, if I would address you specifically--you had 
mentioned the last 3 years of budget cuts in your testimony--
can you give me the actual level of your budget that was 
appropriated to you or distributed to your PHA in the last 3 
years?
    Mr. Gutzmann. For combined sources, sir, Mr. Chairman, 
member, it was about $65 million 3 years ago. It is about $61 
million today. We lost $3 million in the Housing Choice Voucher 
Program, and we lost about $1 million each in the public 
housing and capital fund.
    Mr. Pearce. I saw your testimony. You had to cut 10 percent 
of your personnel and 7 percent of your rentals. The losses do 
not represent 10 percent of your budget. In other words, if you 
lost $6 million, you would have lost 10 percent. So I am not 
sure why you were forced into those circumstances.
    Mr. Gutzmann. Mr. Chairman and member, because we are 
talking about 3 years of sustained cuts.
    Three years ago, I laid off 5 percent of my public housing 
staff.
    Last year, I dealt with the funding shortfall in the 
voucher program, which caused us to cut amounts we paid owners. 
Owners took that hit. We protected tenants. Owners took that 
hit. We had proposed 15 percent. After a public hearing, we cut 
their rents by 7 percent.
    Then this last year again, we got whipsawed. It is the 
public housing program that got cut. We are only funded at 89 
percent of what is eligible this last year by HUD.
    So these are cumulative cuts, and there are more on the 
horizon given what is coming out of OMB on the operating fund 
rule.
    Mr. Pearce. Ms. Geese, you had mentioned on Page 3 of your 
testimony that there are many provisions on the Quality Housing 
and Work Responsibility Act of 1998 that have never been 
implemented by HUD. Can you tell us a little bit about a couple 
of those things that have not been implemented and maybe the 
outcomes if they were?
    Ms. Geese. There were some things on it like, if you would 
take the rental inspections, when we are looking at means that 
would simplify, there was one way that HUD had the regulatory 
ability that we could group them geographically.
    I know running a rural housing authority, certainly not the 
size of my neighbor here, just to be able to concentrate 
annually doing them by location could save a tremendous amount 
of dollars and driving 40 miles for one inspection, coming back 
and having to go 30 miles for another based on the lease-up 
date, and the anniversary date to do them would have been 
simpler.
    Mr. Pearce. If you were to choose the best of these 
suggestions, how would that impact the lives, say, of people 
like Ms. Leach, people that really are trying to get a start, 
if you were to implement the best suggestion that has not been 
implemented up until now?
    Ms. Geese. I believe it would have absolutely no effect on 
the tenants. These are things that would just ease 
administrative burdens.
    Mr. Pearce. All right.
    Ms. Geese. I attached with my testimony a NAHRO study that 
would go individually, so I will not go into great detail of 
all the time, but most of them were administrative eases, such 
as like if you are having to reduce the payment standards--and 
we are in a tough scenario--or if your market changes, then it 
does not have to be the second re-exam.
    Mr. Pearce. If we were to go to this new choice and you do 
not have to direct funds at the full 60 percent spectrum, are 
you going to go ahead and put 90 percent to 30 percent or 
below?
    If someone were to misuse that authority and that 
flexibility, is there any reason that those administrators 
cannot be terminated or brought in check because there would be 
an outcry and someone would go in and say, ``I am sorry. You 
are directing money at this income level, and you have to these 
suffering people here.''
    Anyway, I see my time is up, but it is just an observation. 
We will leave it as an open question.
    Thank you.
    Mr. Miller of California. Thank you.
    Ms. Lee from California? Ms. Lee?
    Ms. Lee. Thank you very much, Mr. Chairman.
    Let me thank you all for being here today and for giving us 
your perspective on this again, this next effort to dismantle 
HUD and the safety net which so many people rely on in our 
country.
    I wanted to ask any of you to respond to this question. The 
more I look at this, the more I believe that this is going to 
become a real issue of civil rights and Fair Housing.
    First of all, Latinos and African Americans make up the 
majority of the extremely low-income households, and given this 
proposal and this redistribution of Section 8 Vouchers, 
hundreds of thousands of primarily African Americans and 
Latinos could lose and their lives could be destroyed because 
they no longer would be eligible for these because of the 
income level.
    I am wondering if any of you have looked at this as a Fair 
Housing or civil rights issue and could provide that kind of 
feedback in terms of what the unintended consequences could be 
to primarily African Americans and Latinos?
    Ms. Turner. Yes, thank you. I agree that the impacts of 
this flexibility are potentially felt most by the poorest 
families and particularly African Americans and Latinos, and I 
believe one of the speakers on the next panel will be 
addressing that issue very specifically.
    In addition to the potential for moving resources away from 
minority families, I think the proposal has the potential to 
worsen segregation as well, both poverty concentration and 
racial and ethnic segregation, by, as I said, reducing the 
ability of families to choose housing in neighborhoods of their 
choice, limiting portability, limiting mobility.
    I would argue that these are really important Federal goals 
that the existing program does a good job of advancing. It 
could do a better job, but these are important Federal goals 
and the Federal Fovernment should maintain the commitment to 
achieve them, not give way to flexibility on these fundamental 
issues.
    Mr. Gutzmann. Mr. Chair, member, I would just like to agree 
and say that that is why I support leaving the current income 
targeting provisions in place--that is a national standard--and 
keeping the current portability rules in place--that is also a 
national standard that permits furthering Fair Housing 
objectives of HUD and Congress.
    Ms. Lee. Let me just ask any of you then, in terms of just 
the lawsuits that could follow, I can see what could possibly 
happen in terms of civil rights lawsuits and in terms of 
discrimination lawsuits if, in fact, the bill were passed in 
this manner. Can any of you respond to that?
    Ms. Geese. That has been a concern, I know, of mine. I 
guess maybe the Moving to Work Demonstration--I cannot 
personally speak to that--might have some, you know, more 
evidence to bear on that.
    I know my concern is, if I have a tenant and I have a 
complaint, I have a regulation that supports my decision, and, 
with all these things all over the board, I do have fears more 
of legal aid, Fair Housing-type issues.
    Ms. Lee. Okay. Well, thank you very much, Mr. Chairman.
    I can see the danger of this from a variety of 
perspectives, and I certainly can see the very negative and 
discriminatory aspects of this legislation as it relates to 
African Americans and to Latinos, and I would hope that we keep 
that in mind as this bill, hopefully, does not move. Maybe that 
in itself would be enough for those who want it to move forward 
to say, ``We cannot violate the real civil rights of such an 
enormous amount of American citizens.''
    Thank you very much.
    Mr. Miller of California. Mr. Davis of Kentucky?
    Mr. Davis of Kentucky. Thank you, Mr. Chairman.
    I know that there are a variety of perspectives when we 
raise the issue of housing and, oftentimes, they become more 
political than personal. As someone who got into his first 
house as a child where my mother was helped by our Congressman 
to open a door, it had a dramatic change on our life, and I 
think all questions of fiscal responsibility and stewardship do 
not necessarily imply any negative intent whatsoever.
    I think it is fair that we ask the questions, particularly 
from a standpoint of congressional accountability, of how best 
to spend the dollars, challenge our assumptions on why we 
believe what we believe, so we can better help people, and I 
think that is a very important thing to do, certainly in those 
areas of our economy that are able to compete effectively 
globally. They have asked those hard internal questions 
ultimately to benefit communities, benefit individuals.
    I guess right now, as I look at current law, PHAs do not 
necessarily have, let's say, competitive incentives to control 
costs. That does not imply discrimination by any means 
whatsoever, but simple management. I can see places in our 
region, for example, in the Ohio Valley where in some 
communities costs have been artificially driven up where folks 
have taken advantage of Section 8.
    I guess my question, so it does not become simply a de 
facto entitlement program and becomes a partisan battle that 
actually ends up not helping the people that I think both sides 
of the committee really want to help is, do you believe that 
moving the program from a unit-based system to a dollar-or 
budget-based system has been effective?
    The person I am going to ask is a little bit closer to my 
home, is Mr. Brightbill.
    Mr. Brightbill. In our case, what has happened in the last 
2 years--and I think I mentioned this--is we are authorized to 
356 vouchers right now with a waiting list of somewhere around 
900, purged about 2 years ago. We are going to be able to 
actually issue about 25 less vouchers than what we are 
authorized because we just do not have the funds to carry them.
    While I understand that certainly this is not the committee 
that is responsible for appropriating them, my concern is that 
if you look at moving to the 90 percent, what happens is the 
pressure shifts, quite honestly, from Congress to fund those so 
that we can actually serve the 356 families that we are 
authorized to us to increase those tenant rates to the point 
that we can balance the budget. As has been mentioned, at the 
end of the year, at the end of the day, our budget has to come 
out even one way or the other.
    So right now it seems to me that what happens is the 
potential is that we have to shift that burden to tenants, and 
those are the people who cannot afford it. I would much rather 
see a greater emphasis on family self-sufficiency, on job 
training. In our case, our assistant housing person is across 
the hall from our one-stop training center. It is in the same 
facility with our Head Start people so that we try to approach 
it in a comprehensive way.
    I have been in this business a long time, and I long ago 
realized that the only way that people are not poor is if they 
have a job and if they have a job that pays something. That is 
just the way it is, and we are never going to appropriate 
enough money. We do not want people to not work. We want people 
to work. We have to encourage them to do that.
    I mean, it has certainly forced us to balance the budget. 
We have consistently tried to maintain reasonable rents because 
we think it is in the best interests of the program and the 
people that we serve, so I do not think that the change has 
forced us to do anything different than what we would have, 
except not issue vouchers.
    Mr. Davis of Kentucky. Okay. Thank you.
    I yield back my time.
    Mr. Miller of California. Thank you.
    Mr. Green of Texas?
    Mr. Green. Thank you, Mr. Chairman.
    I must say that I do marvel at how vouchers are very 
important to promote choice in schools, but not in public 
housing.
    We have approximately 44,000 voucher holders who have 
exercised choice, meaning that they were permitted to move from 
one jurisdiction to another in this country, and I think 
eliminating that choice is going to have some adverse 
consequences.
    I have had the opportunity to serve on a committee that 
crafted some laws that regulated landlords and tenants, and I 
assure you the landlords were well represented. Their views 
were well represented. The least, the last, and the lost rarely 
had their views represented.
    So my question is this--and maybe I will direct this to Mr. 
Montiel and Ms. Turner--how do you see the organized landlords 
impacting public policy in an adverse methodology, Mr. Montiel, 
Ms. Turner?
    Let me compliment Ms. Leach for your accomplishments in 
life. You are truly a role model and a person to be 
congratulated, and I do so.
    If you would, please?
    Mr. Montiel. Mr. Miller, Mr. Green, I think that is the 
point I was trying to stress earlier. Without the safety net of 
the income targeting, when you are going to get into a 
situation where two interest groups are fighting over the same 
pool of money, I assure you that organized landlords, property 
owners, et cetera, will have a lot more tools with which to 
make their policy perspective known.
    Without that wall, if you will, a retaining wall, to keep 
back these interest groups and that retaining wall being the 30 
percent, 75 percent of the 38 percent AMI, then what local 
housing authorities will be forced to do is to have to make the 
tough decision and not cut landlord rents and instead serve 
less families at a deep subsidy.
    Essentially, what in my mind happens when this all takes 
place is that when there is not enough money to go around, 
given this flexibility to serve 90 percent at 60 percent, then 
the onus will be passed from the appropriators to the public 
housing authorities that manage the program to make the tough 
decisions and at the local level have to adjust to reduced 
funding.
    So yes, it is good flexibility, and many aspects of the 
bill are good, but in this particular case, this is one that 
comes with a lot more pitfalls than it comes with benefits.
    Mr. Green. Thank you.
    Ma'am?
    Ms. Turner. Thank you.
    One of the challenges that the current voucher program 
faces is the unwillingness of some landlords, particularly 
landlords with property in healthy neighborhoods, to 
participate in the program. So the kind of flexibility that 
housing authorities really need is the flexibility to work 
constructively with those landlords and draw them into the 
program, addressing administrative challenges or red tape that 
legitimately make it difficult to work with the program, but 
still retaining the fundamental goals of the program.
    So, again, I think there are some ways to strengthen the 
programs. Some housing authorities have done really creative 
work in this area, but the flexibility that this bill offers 
and the funding constraints that go with it do not help them 
work in the right direction with regard to landlords.
    Mr. Green. I yield back the balance of my time.
    Thank you, Mr. Chairman.
    Mr. Miller of California. Thank you, sir.
    Mr. Scott from Georgia?
    Mr. Scott. Thank you, Mr. Chairman.
    You know, I am just growing in my apprehension about the 
direction in which we are moving in housing. We constantly see, 
it appears, an effort of dismantling HUD in and of itself. They 
seem to be more concerned with process than outcomes.
    We bring forth a plan in H.R. 1999 which will miss the most 
fundamental problem in the whole area and that is the inability 
to establish a renewal formula for Section 8 Voucher funding. 
We have flexibility in here that could be misconstrued as a 
vehicle that could cause discrimination.
    But paramount of my frustration is an example that occurred 
in this committee, and I probably would look to Ms. Geese or 
Ms. Turner, or any of you, to respond to this.
    The Secretary of HUD, Secretary Jackson, in his testimony 
before this committee on the Administration's fiscal year 2006 
HUD budget--I do not know how many of you saw that hearing--
claimed that HUD had reduced improper payments of Federal 
housing assistance by $800 million. But then under persistent 
questioning from myself and others on this committee, he later 
admitted that no money was actually recaptured.
    Now we now know that money was not recaptured because HUD 
is tracking paper and process rather than actual outcomes and 
results, and I want to get your response to this by simply 
asking the question in view of this. Would it not be prudent to 
change HUD's compliance focus from process to outcomes? In 
other words, should not HUD concern itself with the number of 
households served and not the red tape and not the paperwork?
    Ms. Turner or Ms. Geese? Any of you could comment on this, 
but I hoped that you all might.
    Ms. Geese. Part of the QHWRA that you can read that is 
attached to my testimony allowed for consortiums of housing 
authorities to be put together, and I can speak for some Ohio 
housing authorities; I cannot speak, you know, for the Nation, 
but a lot of our county housing authorities are smaller and, 
typically, when you get into a lot of the really small ones, 
you will have one director that oversees several counties.
    Now the consortium, the beauty of it, was they could come 
together; they could pay for one audit cost, which is a costly 
expense to a housing authority. They would only have to file 
paperwork, end-of-year statements, budgets, et cetera, reducing 
the payment simply for one agency as one whole agency. This 
process has never been fully enacted. I mean, you had to 
really, really fight and struggle and only very recently be 
allowed to get to the point where you could get down to doing 
one audit or conserving boards.
    On the funding formula you spoke of, I mean, I would love 
to be able to serve all my authorized vouchers, and we were 
pretty close on the borderline for a while of, you know, going 
pretty evenly. We now are finding that while we always had a 98 
percent and 99 percent lease-up rate by how we would handle 
ours--and we only have 275 vouchers. We are a little bit 
heavier in the public housing program--I am down to 262 by 
funding constraints. For the unit-based system, I mean, I think 
there has been plenty of studies that have shown the cost 
spiraling has quit.
    I question too on the funding formula that we keep talking 
about that is not proposed here, the current method we are 
working out of created winners and losers, sir, the way they 
took the snapshot from May, June, and July, and that picture in 
time. I mean, I have always found that my housing authority, 
that is the period of time when people move, kids are out of 
school, it is just a natural process. So for myself, it was a 
bad snapshot. It was the time my lease-up was down because I 
had people moving.
    Now this created winners. Some people got big wins, but 
they were temporary because HUD took the money back; they did 
not get to keep it, and the rest of us lost funds, and that 
just resulted in fewer vouchers being utilized. I mean, I think 
NAHRO did a study that, in fact, in 2004 believed Congress 
allocated enough funds to serve every single voucher out there, 
but it was the funding mechanism employed that caused the 
problem and the shortfall and all the nightmares that we are 
seeing.
    This was propagated on into 2005 and is being proposed to 
be used as the basis for 2006 and then forward.
    Mr. Scott. Ms. Turner, could we get you on this before my 5 
minutes is up?
    Ms. Turner. Thank you.
    I think a move toward measuring performance rather than 
process would be very positive for HUD if those performance 
measures really focused on the fundamental goals that this 
program has the potential to advance, like the number of 
households served, the share of the neediest, you know, the 
share of assistance going to the neediest, the success rates in 
finding units, the success rates in finding it in healthy 
neighborhoods, and making progress toward work and self-
sufficiency.
    Mr. Miller of California. We need to wrap up.
    Thank you.
    The gentleman's time has expired.
    Okay. Mr. Cleaver?
    Mr. Cleaver. Thank you, Mr. Chairman.
    Mr. Chairman, I also would like to express my appreciation 
to you, and you have said even away from the committee hearing 
that you wanted to do something that would improve the lives of 
people who live in public housing.
    I have two questions, and I will ask them quickly, and, 
hopefully, you can answer them quickly, whoever would like.
    Despite the fact that this bill is proposing to broaden 
income targeting requirements, the truth of the matter is the 
number of individuals eligible for new vouchers will expand.
    When that expands, that means that there may be people who 
would become eligible in some of the more affluent parts of our 
city because the new eligibility in my community in the Fifth 
District of Missouri could go to $41,000, opposed to $20,520 
right now.
    That means there are people who could qualify to receive 
this assistance who are almost middle class, and then it hurts 
the people who are poor. Am I wrong?
    I just want somebody to just answer that.
    Ms. Turner. You are correct, and one of the things that we 
have learned is that it is really important to offer the 
project-based housing to a mix of incomes so that you do not 
concentrate poor people in one development, but vouchers have 
the advantage since they disperse families, that that is a 
resource we really can safely target to the families who need 
help most.
    Mr. Cleaver. That would be true except for a couple of 
things. Number one, we have already labeled the people. One of 
the things I hated about living in public housing was that all 
of the kids when I would go to school pointed me out as a 
public housing resident, and now we do the same thing.
    In Kansas City, I heard my own children say one day, 
``Those are the Voucher Valley kids,'' because there is a 
section where a number of the Section 8 houses are located. We 
keep talking about scattered-site housing. The reality is we do 
not have much scattered-site housing in this country.
    Number two, we give names, ``You are poor, so you live in 
Section 8 housing.'' If you are affluent and the area where you 
live receives a Section 108 loan which subsidizes all kinds of 
neighborhoods, you know, you live in Quality Hill. If you are 
poor, you live in Section 8.
    I mean, how in the world can we not feel some regret about 
what we have done to people? They live in Section 8 housing. I 
mean, who do you know who would like to go around and say, ``I 
live in Section 8.'' It just sounds horrible. Am I wrong about 
that?
    I have lived there. So if you have not lived there, do not 
say it.
    You on the end?
    Ms. Leach. You are not wrong, but I am not ashamed to say 
that I lived in Section 8 because it got me where I am today.
    Mr. Cleaver. Yes, the point I am making is that children 
end up getting labeled.
    Ms. Leach. Yes, they do.
    Mr. Cleaver. It goes into their schools with them. These 
are Section 8 kids.
    Ms. Leach. Yes.
    Mr. Cleaver. I mean, it cannot be good for our country.
    Ms. Leach. No, it is not, not for kids. You know, my kids 
do not know exactly what it is. My kids do not understand, you 
know. When they get older, they will.
    Mr. Cleaver. Well, I thought it was big time myself because 
we had an indoor bathroom. You know, I had to get a little 
older before I was told that it meant that I was separated from 
the other kids who had real houses.
    Mr. Gutzmann. Of course, the labeling is not good; I agree, 
but the fact that we have safety net deeply affordable housing 
is a good thing, and in most communities, it is seen as part of 
that community, part of the fabric, not as warehouses for the 
poor.
    Remember that over 40 percent of public housing is for 
elderly and people with disabilities who look upon it as their 
permanent last place, and so when we talk, there are so many 
programs, it is confusing, you know, the voucher label, the 
public housing labels. It is only 2 percent of the housing 
supply in America that we keep deeply affordable.
    I agree; let's work to banish the labels, but let's also 
work to keep this housing deeply affordable and keep it places 
where, as a family, people want to move up and out, but as 
elderly and people with disabilities, they are going to be 
there for a long time.
    Mr. Cleaver. Of course, I do not know anybody who does not 
want to move up and out. I have not met anybody yet who said, 
``Boy, this public housing is hard to beat.''
    Mr. Miller of California. Ms. Velazquez?
    Mr. Cleaver. I yield back the balance of my time, Mr. 
Chairman.
    Mr. Miller of California. Thank you.
    Ms. Velazquez. Thank you, Mr. Chairman.
    I would like to address my first question to Ms. Geese and 
Mr. Gutzmann. You both mentioned the recent issue regarding the 
public housing operating subsidy formula, and you are concerned 
that H.R. 1999 contains a provision that will use a similar 
approach with the voucher program.
    With New York City standing to lose an estimated $120 
million in annual operating assistance under these supposed 
``good faith negotiations,'' I am acutely aware of this 
provision, and I share your concerns. Can you please expand on 
your testimony regarding this issue and explain why are you 
wary of such an approach?
    Ms. Geese. Well, I think on the negotiated rule and the 
operating fund, it is pretty clear they took, NAHRO estimates, 
$371 million out of the proposal, and, of course, that is 
before appropriations, so the cuts would be deeper.
    The different incentives that separated public housing from 
the private sector have been removed, and we are not the 
private sector. I mean, I think everybody can agree on that. 
Our approach is different.
    Also, the fact that this negotiated rule, there was a lot 
of time, effort, and energy putting into coming out with the 
process they did, which in my opinion was not a great one to 
begin with, let alone to have all these extra cuts.
    There are two areas in the budget proposing in this bill to 
use a negotiated rulemaking process, you know, and I think many 
of us have lost faith in that ability to work well.
    Ms. Velazquez. Thank you.
    Mr. Gutzmann?
    Mr. Gutzmann. I would agree. I think the parties were at 
the table in good faith on the negotiated rule for the 
operating fund, and OMB, HUD cherry-picked those things that 
would cost too much, took them out.
    I have colleagues at the New York State housing authorities 
who are going to lose 40 percent of their operating fund in 1 
year, and the stop-loss provision has been removed. They cannot 
survive as an entity without doing something on the income 
side, but that, Congresswoman, creates the challenge.
    Should they have some flexibility to do something on the 
income side? I say yes, and even as difficult as that 
discussion will be, probably it will include should we raise 
minimum rent. If they have that discussion, if they have the 
flexibility to have that discussion and they locally agree, 
that is the big part.
    If they agree minimum rents go from 25 percent to 75 
percent, should not that be allowed to occur? That is where I 
am coming a little bit on the side of parts of this bill. There 
is a lot that is wrong.
    Ms. Velazquez. Maybe that should be coupled with an 
increase in the minimum Federal wage.
    Many of you mentioned concerns about the provision in H.R. 
1999 that will limit enhanced vouchers to 1 year, and I share 
your concerns. I believe that a better approach would be to 
make efforts to preserve affordable units by helping tenants 
find ways to purchase their buildings if landlords choose not 
to remain in the program.
    I raised this issue with Secretary Jackson in last week's 
hearing, but of course, he failed to give me a straight answer 
or commit to ways in which HUD can work to help preserve 
affordable units. Can you share your thoughts on this idea or 
other ways in which HUD could preserve rather than jeopardize 
housing?
    Any of the members of the panel, have you thought of any 
ways?
    Yes?
    Mr. Montiel. Yes, ma'am. One way of doing it might be for 
actually housing authorities with the flexibility provided in 
the fungible aspects of this bill to actually step in and 
purchase buildings to preserve the affordability, and in Los 
Angeles, we are actually looking at doing that. Wherever an 
owner is opting out, if we can step in and purchase the 
building to continue the affordability, that is what we are 
trying to do, and that is a good aspect of the bill.
    Ms. Velazquez. And how will you do that if the landlord has 
the right to sell their building?
    Mr. Montiel. Well, again, given that you have some 
flexibility in how you use the income streams from HUD, then 
you can take some of that to leverage financing of these 
buildings to actually purchase them?
    Ms. Velazquez. Would any other person like to comment on 
that question?
    There seems to be a misconception that the Section 8 
program attracts families that are unemployed and lack the 
skill or ambition to support themselves without Government 
assistance. This mindset is evident in the bill before us in 
which PHAs will be allowed to limit voucher assistance to 5 
years.
    Recent data indicates, however, that over half of the 
voucher holders were employed, and the average stay in the 
program was just over 3 years, with only elderly residents 
staying more than 5 years. Can those of you who run PHA's share 
with us your experiences with residents in terms of employment 
status and length of stay in the program?
    Mr. Miller of California. Could you please make your 
testimony brief? The time has expired.
    Ms. Geese. I will try to be brief.
    Seventy-nine percent of our nonelderly, nondisabled workers 
are employed. They might not be employed to obviously where 
they can go off the program, but they are employed, and there 
are only 17 percent receiving TANF assistance.
    Ms. Velazquez. Yes?
    Mr. Gutzmann. About 45 percent of our family households are 
employed, have income, earned income. We have 20 years of data 
that show the average stay in public housing is 6 years, and 
people are trying to move up and out by getting jobs.
    Mr. Miller of California. That will have to do it. Good 
response. Thank you.
    Ms. Velazquez. Thank you.
    Mr. Miller of California. Mr. Scott? I mean, Mr. Davis of 
Alabama?
    Mr. Davis of Alabama. Thank you, Mr. Chairman.
    Let me go back to a question that Mr. Pearce asked you 
probably about 20 minutes ago. I have a lot of respect for Mr. 
Pearce. I view him as one of the thoughtful members of the 
committee, but I am not sure if I followed the logic of his 
question, so I want to pursue that with you a little bit.
    He was addressing with you what would happen as a practical 
matter if greater flexibility were given to the local housing 
authorities in terms of balancing the competing needs of this 
program, and I think Mr. Pearce's observation was that if, for 
whatever reason, the housing authorities started leaving too 
many of the poorest of the poor out of the equation that there 
would somehow be some kind of a public outcry or backlash 
around that.
    Do any of you sitting on the panel expect that in a given 
community, if the local authorities adjusted their formulas in 
that manner, that there would be any significant public outcry 
or the public would even know about it?
    Mr. Brightbill. I come from a relatively small community, 
and I would, without question, say that there would be no 
public pressure on us to go back to the 30 percent.
    Mr. Davis of Alabama. To follow up on that, do any of you 
serve in communities where there is an active and huge and 
vocal lobby of low-income people who have a lot of political 
influence?
    You are all shaking your heads no.
    Mr. Montiel. Yes, sir. Certainly in Los Angeles, we have 
very vocal advocates. But what I would add is if I were to 
compare the two, where would more vocal outcry come from? If we 
modified the rent standards or reduced the indexes, I believe 
that there would be a lot more outcry from the landlord 
community than there would be from the homeless advocates.
    Mr. Davis of Alabama. That sounds entirely reasonable.
    Let me ask you another question. Secretary Jackson last 
week in his testimony posited that one major problem was that 
people were remaining on Section 8 for too long and that they 
simply did not want to leave the program either through 
inertia, better known as laziness, or because they just had no 
desire to move into the world of housing.
    Ms. Leach, let me direct this to you. You are here today 
giving us your testimony literally and figuratively, and the 
people that you knew who were in the Section 8 program, were 
most of those--in fact, were the overwhelming majority of 
them--hardworking people who remain in Section 8 because they 
have no other economic choice?
    Ms. Leach. Yes, just like me. I had three children. I 
worked a part-time job at Wal-Mart making $7 an hour.
    Mr. Davis of Alabama. Do any of you think from your 
experience at the local housing authorities that there are any 
cognizable numbers of people who just like being on Section 8 
and remain on it because of the fun of it?
    Ms. Leach. No.
    Mr. Davis of Alabama. Okay. Let me ask one final set of 
questions. One of the points that I regularly try to make of 
Administration witnesses before this committee is that every 
now and then if we are going to make changes in housing 
programs, whether it is Section 8 or Hope VI or the whole 
panoply of programs, if we are going to make changes in funding 
levels, that every now and then that we do it with the idea of 
improving the housing mission and not just with the idea of 
meeting the bottom line. I assume you would all agree with 
that.
    Is there anyone on this panel who thinks that the proposed 
changes to Section 8 included in this bill would make any dent 
in reducing homelessness in this country?
    Mr. Gutzmann. No, nothing adds to the supply. We are 
talking about regulation and reform, but nothing in this 
provision would add to the supply. The only way you could do it 
is if you created shallower subsidies.
    Mr. Davis of Alabama. Of course, doctors take the 
Hippocratic Oath that at minimum do no harm, and I would hope 
that that would be the same standard for housing programs.
    My concern, as several members have stated very eloquently, 
if you add more people to a diminished pool, then fewer poor 
people can benefit from that pool. So does not it stand to 
reason that rather than reducing homelessness that these 
changes might actually push some people at the margins into 
homelessness because the Section 8 will not be available?
    Several of you are nodding your heads in agreement with 
that.
    Ms. Leach. Ours is about 46 percent. I am no longer 
eligible, and, you know, I am only about 46 percent.
    Mr. Davis of Alabama. Let me just conclude, Ms. Leach, by 
thanking you. One of my colleagues did it earlier, but I 
absolutely agree that there is too much of a stigma around this 
program. Some of us in this room do not think that there is any 
stigma around needing help, and some of us in this room do not 
think there is any stigma around trying to improve your lot in 
life. Thank you for testifying openly and boldly about your 
experience.
    Thank you, Mr. Chairman.
    Mr. Miller of California. Thank you very much.
    I want to thank the panel. You did an excellent job. It was 
very informative.
    Before I dismiss you, the chair notes that some members may 
have additional questions for this panel which they may wish to 
submit in writing. Without objection, the hearing record will 
remain open for 30 days for members to submit written questions 
and those witnesses then to replace their response in the 
record. I know members on this panel that were here would like 
to ask additional questions.
    Thank you very much.
    Mr. Gutzmann. Thank you very much.
    Mr. Miller of California. You have some members that would 
like to talk to you.
    With that, I would like to call the second panel forward.
    Mr. Miller of California. I would like to welcome the 
second panel and call the committee back to order.
    Mr. Scott, you would like to introduce our first witness?
    Mr. Scott. I certainly would. Thank you very much, Mr. 
Chairman.
    We have one of our distinguished citizens from Atlanta, 
Georgia, here and a good, good friend, and I would like to just 
highlight a few things about her distinguished career, and that 
is Ms. Renee Louis Glover.
    She is the CEO of the Atlanta Housing Authority and has 
been so since September 1994. She has been widely acknowledged 
for her business leadership and strategic approach to community 
redevelopment, and at the Atlanta Housing Authority, Ms. Glover 
pioneered master-planned, mixed-finance, mixed-income 
residential development where families of all socioeconomic 
profiles live next to each other in the same amenity-rich 
community.
    Ms. Glover has been nationally recognized for her role in 
transforming U.S. urban policy. By introducing mixed-income 
communities into our cities, we have improved not only housing, 
but also public schools, transit access, and employment 
opportunities. Her efforts have rebuilt entire communities from 
the ground up, and in creating a replicable model for 
redevelopment, Ms. Glover has helped cities across this country 
transform their urban landscape. In fact, the model that Ms. 
Glover created at the Atlanta Housing Authority is now used as 
the redevelopment blueprint by the United States Department of 
Housing and Urban Development.
    Finally, Ms. Glover has reorganized the Atlanta Housing 
Authority to become a diversified real estate company with 
public policy and service-oriented mission. The Atlanta Housing 
Authority is the sixth largest housing authority in the United 
States and owns and operates approximately 9,500 multifamily 
apartments and administers approximately 12,000 Section 8 
Vouchers.
    As a result of implementing private-sector-oriented 
strategies and outsourcing, the management of its properties to 
professional firms, the Atlanta Housing Authority was removed 
from HUD's troubled housing list in 1998 and was designated a 
high-performance agency in February 1999 with a score of 97 
percent and in January of 1998 was designated again. She earned 
a perfect score of 100 percent for its most recent HUD 
assessment for the fiscal year which ended in June of 1999.
    Ms. Glover has been named public official of the year for 
2002 by Governing magazine, and she joins 10 other officials 
honored for outstanding achievement in public service at the 
State and local level, and she has served on the National 
Advisory Council of Fannie Mae and was appointed by the United 
States Congress to the Millennial Housing Commission in 2000 
charged with providing legislative recommendations to Congress 
on national housing policy.
    Prior to joining the Atlanta Housing Authority, Ms. Glover 
was an accomplished corporate finance attorney in New York City 
and Atlanta, where she received her Bachelor of Arts degree 
from Fisk University and her master's degree from Yale 
University and her juris doctor degree from Boston University.
    I am extraordinarily proud to have you here, Ms. Glover, as 
one of my constituents.
    Thank you, Mr. Chairman, for giving me the opportunity to 
introduce her.
    Mr. Miller of California. Thank you, Mr. Scott.
    I am going to be a little more brief than that on the rest 
of you. Excuse me.
    Daniel Nackerman is executive director of Housing Authority 
of the County of San Bernardino, one of the largest counties in 
the United States.
    In fact, I represent part of that county. So welcome.
    Sheila Crowley is president of National Low Income Housing 
Coalition, a nonprofit organization concerned with the housing 
circumstances of low-income people. The coalition seeks to 
increase the stock of housing units for low-income families.
    Phil Tegeler--Is that correct?--is the executive director 
of the Poverty and Race Research Action Council, a nonprofit 
organization created in 1990 by major civil rights, civil 
liberties, and anti-poverty groups. The council supports social 
science research, links the State and national advocacy 
strategies.
    Chris Reilly is the area vice resident for Equity 
Residential, a real estate investment trust listed on the New 
York Stock Exchange. He oversees nearly 9,000 apartment units, 
quite a few, in 68 New England properties. He is testifying 
today on behalf of the National Multiple Housing Council and 
the National Apartment Association, organizations focused on 
public policies relating to the rental housing business.
    Dennis Muha--Is that right?--I am lucky today--is executive 
director of the National Leased Housing Association, the 
association, which represents private and public participation 
in the affordable multiple rental housing industry specializing 
in federally assisted rental housing.
    Welcome. It is good to have you all here.
    As my daughter lives in Atlanta, I will ask Ms. Glover to 
make a 5-minute presentation.

STATEMENT OF RENEE LEWIS GLOVER, PRESIDENT AND CEO, THE HOUSING 
                      AUTHORITY OF ATLANTA

    Ms. Glover. I do want to thank the outstanding David Scott. 
We love him, and we are so proud of him. He is doing a 
magnificent job, and we expect greater things from him.
    So thank you so much for that very generous introduction.
    Mr. Ney and Ms. Waters and the other members of the 
subcommittee, I really appreciate the opportunity to speak to 
you today about this very important issue.
    I want to mention two things to eliminate two 
misconceptions.
    First of all, the first misconception is that public 
housing agencies are seeking legislative flexibility to abandon 
their fundamental mission. That simply is not true.
    The second misconception is that there should be a trade-
off between regulatory flexibility and funding. That also is 
not the case.
    I want to say that there are too many American citizens who 
are ill-housed, undereducated and ill-nourished. Too often, the 
debate is around these very complicated issues that we find 
ourselves discussing before the issues and problems have really 
been identified before we seek solutions.
    Too many of our American citizens continue to live in 
poverty, and the question that really confronts us is whether, 
through thoughtful policy and strategic investment, we, as 
policymakers and practitioners, can make a difference.
    In my humble opinion, we can make a difference, but only if 
we are intentional about it and understand the problem that we 
are seeking to solve. So I want to offer the following framing 
principles that I believe must govern any thoughtful discussion 
of reform of the public housing or housing choice programs.
    There is no question that the programs need to be reformed. 
The programs are overly complex; they are too prescriptive; and 
the regulations are often contradictory in their spirit and 
intent with too many unintended consequences and unfunded 
mandates. There is no clear articulation of the outcomes that 
we seek to accomplish.
    The problems ought to be addressed and the scope of the 
need must clearly be articulated before defining outcomes, 
approaches, or how much it will cost. Currently, the public 
housing and housing choice voucher programs serve low-income 
seniors, in most cases, on fixed incomes; the disabled--
physically disabled, learning disabled and mentally disabled--
often also on fixed incomes.
    I would submit to you that each of these groups has 
different needs, and the policymakers should approach these 
groups based on their needs and agreed solutions and outcomes. 
The public housing and voucher programs in many ways have not 
served the groups well with the appropriate level of services.
    I believe we first must agree on the outcomes we desire to 
accomplish as a result of the United States Government making 
an investment. For example, we should ask what types of 
supportive services are needed for the mentally disabled so 
that they can function in community. We have all failed the 
mentally disabled because the States have been getting out of 
this business and the mentally disabled have been left to fend 
for themselves, often ending up homeless or in jail or in 
public housing originally designed for seniors, resulting in 
neither the seniors nor the mentally disabled being served very 
well.
    We should also ask the question is it a realistic 
expectation that if families who are capable of caring for 
themselves over a period of time, if the environment is decent 
and services are available and required to be used for that 
purpose, that after that time period and after they have 
accomplished their goals, they should move on and move up. 
Should we as a Nation provide a permanent housing subsidy to 
seniors and disabled persons who live on fixed incomes and who 
cannot take care of themselves?
    All real estate is local, and, therefore, the approaches to 
addressing the problems need to be locally crafted and 
implemented. The real estate markets vary vastly, including 
availability, cost, and condition.
    Mr. Miller of California. Could you conclude your 
testimony?
    Ms. Glover. Next, the public policy resulting in the 
concentration of poverty--I want to make this point--has caused 
horrible outcomes because it has institutionalized poverty; it 
has created environments of crime, drugs, hopelessness; and it 
has destroyed neighborhoods.
    In Atlanta, as Representative Scott mentioned, we have been 
able to address it through creating market-rich communities.
    Mr. Miller of California. You will need to wrap up your 
testimony. Time is up.
    Ms. Glover. Last point: HUD must be re-engineered if we are 
going to implement reform, and I will answer my questions as 
they come up in other comments.
    [The prepared statement of Renee Glover can be found on 
page 109 in the appendix.]
    Mr. Miller of California. Thank you very much.
    Ms. Glover. Thank you.
    Mr. Miller of California. Mr. Nackerman?

  STATEMENT OF DANIEL NACKERMAN, EXECUTIVE DIRECTOR, HOUSING 
     AUTHORITY OF THE COUNTY OF SAN BERNARDINO, CALIFORNIA

    Mr. Nackerman. Thank you, Vice Chairperson Miller, Ranking 
Member Waters, and subcommittee members.
    I would like to first thank you for not comparing my resume 
to that of Ms. Glover.
    But my name is Daniel Nackerman, and I am the executive 
director of the Housing Authority of the County of San 
Bernardino, and I have also served as executive director or 
senior manager at three other large California urban housing 
authorities, including Oakland, Richmond, and Contra Costa 
County.
    At the agency I am with now, we take pride in taking 
progressive approaches in areas, such as development of 
additional housing, creating first-time home buyer 
opportunities, and providing supportive services to help 
families transition from assisted housing to self-sufficiency.
    Through these experiences, I have come to the following 
conclusions.
    First of all, housing authority personnel, as you have 
heard probably here today, genuinely understand the plight and 
struggle of the seniors, families, disabled individuals, and 
other individuals that we serve.
    The programs we administer, as Ms. Glover stated, are 
overly complex and overly prescriptive. HUD has a chokehold on 
us. This bill releases that chokehold slightly, but the hands 
are still there.
    Presently, the key elements of these programs include 
disincentives to employment. In particular, income up equals 
rent up. Also, the intrusive complexity of some of these 
programs actually create sort of a hopelessness with some of 
the residents we serve.
    HUD's past approach of one-size-fits-all does not work in 
many individual communities, and I think you heard that today 
too.
    Also, despite these problems, the HUD programs of public 
housing and Section 8 have had overall success in recent years, 
as evidenced by the record number of people assisted, a record 
high for homeownership, the elimination of many severely 
distressed properties, but as Mr. Frank said, we are at a day 
of reckoning.
    I also believe that there are acres of common ground of 
agreement here. We are talking about the areas of disagreement. 
There is a lot of pieces of agreement that we have been working 
on for 2 or 3 years, long before some of the tragic stories of 
the Section 8 program from the past year.
    This bill is a culmination of the 3 years of efforts. The 
bill proposes to allow local design of programs by simplifying 
rent structures, standardizing income requirements, which match 
tax credit and home programs, reducing the number of required 
inspections, if you can, on a local level, providing 
homeownership incentives.
    We have sold over 60 homes in our county to public housing 
and Section 8 residents. We have developed an infrastructure, 
and it works, and we will sell more than 60 this coming year.
    Most of these changes will be optional based on new locally 
adopted policies, and a very important point: If adopted, the 
persons served in both programs, both Section 8 and public 
housing, would continue to pay only 30 percent to 40 percent of 
income just as before.
    I have included in my written testimony a brief summary of 
some of the specific proposals. However, I would like to 
emphasize a few of those points.
    On the budget, as noted by our three reputable public 
housing entity organizations, CLPHA, PHADA and NAHRO, the bill 
does not prescribe a distinct allocation formula or permanent 
authorizations for budgets. These could be clarified before 
passage, or perhaps, as some have alluded, that is an 
appropriations issue. However, it is very clear that these 
substantial and successful programs require stable funding that 
we have not had over the past 2 or 3 years.
    The income targeting: This bill proposes to change the 
income ratio of persons served by targeting 90 percent of 
vouchers to households below 60 percent of median, in lieu of 
the current 75 percent at 30 percent. As the gentleman from 
Minnesota pointed out, a few agencies may need that flexibility 
to design the programs at a local level to be successful.
    In conclusion, the reform aspects of this bill are long 
overdue and have been formulated through years of work. Except 
for funding appropriation issues that may not be adequately 
addressed, these overhauls will result in the following: many 
benefits to residents, including simplification, matched 
savings, keeping money as incomes rise, less intrusion; number 
two, financially stable programs for the authorities; number 
three, higher employment levels for participants, 
simplification on a national level, significant administrative 
efficiencies and cost savings, full rents paid in every market, 
and higher level of first-time home buyer sales.
    Thank you for your time.
    [The prepared statement of Daniel Nackerman can be found on 
page 140 in the appendix.]
    Mr. Miller of California. Thank you, sir.
    Ms. Crowley?

  STATEMENT OF SHEILA CROWLEY, PRESIDENT, NATIONAL LOW INCOME 
                       HOUSING COALITION

    Ms. Crowley. Mr. Miller, Ms. Waters, and other members of 
the committee, thank you for the opportunity to testify on H.R. 
1999.
    The Housing Voucher Program has been in a state of tumult 
since 2003 due to actions by the Administration and Congress 
creating instability in the program that has adversely effected 
all program participants. It is to the credit of the many PHA 
managers who work hard everyday to provide safe, decent, and 
affordable housing for needy Americans that more families have 
not been upended and lost their homes.
    Recognizing the impasse in coming to agreement over how 
best to return the program to the degree of stability needed 
for it to work, the National Low Income Housing Coalition 
convened a National Housing Voucher Summit earlier this year 
for the purpose of developing a consensus agenda on legislative 
and regulatory changes to the program to restore credibility 
and stability with the intent of paving the way for future 
growth. Sixty-six experts, representing a range of 
perspectives, including members of the committee's staff from 
both sides of the aisle, participated in the summit.
    While the summit participants have not yet completed their 
process of reaching a consensus agenda, it is safe to say that 
H.R. 1999 does not reflect what the majority of participants 
would agree are prudent and appropriate changes that will 
improve the voucher program.
    I urge the committee to continue the consensus-seeking 
process begun by Mr. Ney with his roundtables and to build upon 
the substantial work already completed by the National Housing 
Voucher Summit before considering changes to the voucher 
program.
    In my written testimony, I go over several concerns that we 
raised on H.R. 1999, but I want to focus on just three now.
    One, H.R. 1999 would block grant voucher funding. Once 
Congress's decision on the annual appropriation for the voucher 
program is severed from the actual number and cost of 
authorized vouchers, it will be impossible for Congress to know 
the actual cost, the true cost, of housing vouchers.
    Congress will give up its authority and responsibility to 
provide funding based on what the program costs. We believe 
that this action will result in cuts to the program in future 
years, and, indeed, that is the Administration's intention.
    Of all the reforms to the voucher program that the 
committee should consider, none is more important than 
restoring stability and predictability in the program's 
funding. This means accurate knowledge of what it costs to fund 
the program to meet its current obligations and future 
objectives. It means confidence that the program is operating 
at maximum cost efficiency. It means the transparent and 
predictable method of distributing funds from HUD to PHAs. And 
it means a system of reserves to deal with naturally occurring 
and unpredictable changes in the housing market and in tenant 
income.
    My second point is about the income targeting. H.R. 1999 
would reduce access to housing vouchers to the very people who 
need it the most. Many witnesses have noted that the current 
income targeting focuses on those with incomes of 30 percent of 
area median income or less. The bill would move that to 60 
percent of area median income or less.
    On a national basis, 30 percent of AMI is about $15,000 a 
year. Sixty percent is about $30,000 a year.
    There are 6.3 million renter households in the U.S with 
incomes at or less than 30 percent of area median income that 
are now paying more than half of their income for their 
housing. That is what we refer to as severely unaffordable 
housing.
    This compares to 1.1 million renter households with incomes 
between 30 percent and 60 percent of AMI that have such severe 
housing cost burdens, and there is a poster here that 
illustrates this point, and there are hand-outs that have the 
same data that have been circulated.
    Parenthetically, I might note that we see on this poster a 
severe cost burden based on rent and ownership, and, indeed, 
what you will see here is that homeownership does not, in fact, 
protect or low-income people or low-income people from severe 
housing cost burdens.
    In my written testimony, there is a chart attached which 
will give you this information on a State-by-State basis.
    There is simply no policy justification to increase the 
upper limit on income eligibility when the unserved population 
of currently eligible renter households with severe housing 
cost burdens outnumbers the population proposed to be served by 
6 to 1. Raising income eligibility is merely a strategy to 
reduce the cost of the program by serving people who need less 
assistance.
    While we are on the subject of income targeting, I want to 
take this opportunity to point out to members of the committee 
that you are going to be marking up legislation on the GSEs 
next week, and we are very much hoping that you will take into 
consideration the severe affordability problems of people at 30 
percent of area median income when you take up that 
legislation.
    And finally, H.R. 1999 gives HUD sweeping authority to 
exempt PHAs from the vast majority of Federal requirements for 
the public housing and housing voucher programs. This is the 
equivalent of enacting the super waiver that Congress has 
consistently rejected in other legislation.
    Mr. Miller of California. If you could conclude?
    Ms. Crowley. The proposal resembles the Moving to Work 
Demonstration Program in name only. Many lessons have been 
learned from the Moving to Work programs, and I urge the 
committee to hold hearings on what we have learned or not 
learned from Moving to Work before proceeding to try to 
implement this program any further.
    [The prepared statement of Sheila Crowley can be found on 
page 77 in the appendix.]
    Mr. Miller of California. Thank you very much.
    Ms. Crowley. Thank you.
    Mr. Miller of California. Mr. Tegeler?

 STATEMENT OF PHILIP TEGELER, EXECUTIVE DIRECTOR, POVERTY AND 
                  RACE RESEARCH ACTION COUNCIL

    Mr. Tegeler. Thank you.
    We are grateful to the members of the committee, 
particularly Chairman Ney, Ranking Member Waters, Vice Chairman 
Miller, for this opportunity to discuss our serious civil 
rights concerns about House Bill 1999.
    We have previously summarized these concerns in a letter to 
the House Financial Services Committee dated May 10, 2005, from 
the Lawyers Committee for Civil Rights, the Poverty and Race 
Research Action Council, the National Fair Housing Alliance, 
and the National Housing Law Project. This letter was entered 
into the record at last week's hearing and is appended to my 
written testimony today.
    In the time we have here, I am going to focus on the 
adverse Fair Housing consequences of Title I of the bill, the 
Flexible Voucher proposal. The Section 8 Voucher Program is our 
one major Federal housing program that has the built-in 
capacity to promote housing integration and voluntary moves out 
of high-poverty neighborhoods. This is called housing mobility 
and it was part of the Section 8 program's original design, and 
it has been supported by Congress and HUD for decades.
    But the current administration at HUD seems determined to 
disable the very features that give families the ability to 
move out of poverty. For example, over the past 2 years, HUD 
has stopped approving exception payment standards for moves to 
lower-poverty neighborhoods and communities. HUD has authorized 
some PHAs, public housing agencies, to refuse tenants the right 
to move across jurisdictional lines through the portability 
process. They have also encouraged the lowering of payment 
standards across the board which leads to reduced choices and 
greater concentration of voucher families in poor 
neighborhoods.
    The proposals in the bill before this committee will do 
even more to take away housing choice from low-income families.
    First, the bill would continue a version of the current 
voucher budgeting system that has been in effect for the last 2 
years, which creates a financial conflict on the local level 
between the number and the quality of housing placements.
    In other words, since apartments in higher-poverty 
neighborhoods are more likely to have lower rent, local 
agencies now face pressure to serve more families in lower-cost 
and often lower-opportunity areas. HUD knows that this problem 
could be fixed without undue expense by designating a special 
reserve fund for moves to lower-poverty areas, but such a 
reserve fund does not appear in this bill.
    Secondly, the bill appears to restrict the longstanding 
portability rights of Section 8 families. The language of the 
bill suggests that city and suburban housing authorities must 
agree on a system for transferring vouchers before families can 
move.
    If this interpretation of the bill is correct, it would 
give suburban government officials or city government officials 
the authority to simply say no to additional city families 
seeking to rent private apartments in suburban towns. From a 
Fair Housing perspective, this would be outrageous, and it 
would tie up these local housing agencies in a new round of 
litigation.
    Finally, by removing the program's current focus on the 
poorest city residents, the proposal to eliminate income 
targeting would steer new vouchers away from the most 
segregated and poverty-concentrated neighborhoods, undermining 
one of the voucher program's core goals to deconcentrate 
poverty.
    Also--and I know this was raised by Representative Lee on 
the last panel--the proposal to lift the current income 
targeting would reduce the number of vouchers going to black 
and Latino families. This is a natural consequence of the way 
black, Hispanic, and white families are distributed in the 
population, particularly in the eligible low-income population.
    A bill like this, before it comes to Congress, should have 
had a racial impact and civil rights analysis. I do not believe 
this is something HUD did when it drafted this bill, and it had 
the responsibility to do that before presenting it.
    Thank you.
    [The prepared statement of Philip Tegeler can be found on 
page 154 in the appendix.]
    Mr. Miller of California. Thank you very much.
    Mr. Reilly?

 STATEMENT OF CHRISTOPHER REILLY, AREA VICE PRESIDENT, EQUITY 
RESIDENTIAL, BOSTON, MASSACHUSETTS, REPRESENTING NATIONAL MULTI 
       HOUSING COUNCIL AND NATIONAL APARTMENT ASSOCIATION

    Mr. Reilly. Chairman Ney, Vice Chairman Miller, Ranking 
Member Waters, and distinguished members of this subcommittee, 
my name is Chris Reilly, and I am an area vice president for 
Equity Residential.
    Today, I am representing the National Multi Housing Council 
and the National Apartment Association, whose combined 
memberships represent the Nation's leading firms participating 
in the multifamily rental housing industry.
    Equity itself owns or has interest in 939 properties 
containing 199,510 units. We operate in 32 States and the 
District of Columbia and employ more than 6,000 people.
    NMHC and NAA commend you, Chairman Ney, for your 
leadership, and we thank the members of the subcommittee for 
your valuable work addressing affordable rental housing in 
America. We also commend the U.S. Department of Housing and 
Urban Development, Secretary Jackson, and the Administration 
for their interest in improving the Section 8 Housing Choice 
Voucher Program.
    As you are aware, we have submitted written testimony to 
the committee on the Section 8 program. I would like to 
underscore that testimony by sharing with you one of our firm's 
experiences with the program.
    We own and manage a 143-unit property in West Roxbury, 
Massachusetts, that serves elderly residents. The property is 
now part of an 80-20 program that requires at least 20 percent 
of the apartments to be rented to low-income tenants. Before 
entering into the 80-20 program, the property had been 100 
percent subsidized.
    As a result, in addition to the 49 required affordable 
units, another 30 percent of the units are currently occupied 
by low-income residents who lived there when the property was 
fully subsidized and now receive Section 8 vouchers.
    In April of 2004, we received notice from the Boston 
Housing Authority that they were experiencing a shortfall in 
Section 8 funding and that to close that shortfall, they would 
be making a 7 percent across-the-board cut in Section 8 
contract rents throughout their entire portfolio. Those cuts 
were announced and then implemented within 14 days.
    Before the housing authority's rent reduction, the Section 
8 contract rents at Rockingham Glen were $1,200 on a one-
bedroom unit and $1,335 dollars for a two-bedroom unit. 
Comparable market rents were $1,200 on a one-bedroom and $1,495 
respectively. After the housing authority's unilateral rent 
reduction, the Section 8 rent for one-bedroom apartments was 
$84 below market rent, and the two-bedroom units were now $253 
below market rent. The housing authority's shotgun approach to 
its funding crisis resulted in a $76,800 reduction in annual 
revenues at Rockingham Glen.
    At the same time that the rental revenues were falling, the 
aging property required $422,000 in capital investments to 
maintain it, including rehabilitating the elevator systems and 
upgrading and replacing the fire alarm system. We were 
fortunate as a company to have the resources to absorb these 
increased capital costs, despite the rental revenue reductions.
    However, other property owners, particularly those who 
already have high mortgages, may find it difficult to do so. In 
fact, smaller owners finding themselves in a similar situation 
could be forced to choose between three alternatives, none of 
which benefit low-income tenants.
    First, the owner may choose to delay or cancel the repairs 
and upgrades. Second, the owner may make a business decision to 
nonrenew the leases of the Section 8 residents and instead rent 
the apartments to market-rate residents. A third option would 
be to try to obtain bank loans or other funds to pay for 
capital improvement. But as we have mentioned in our written 
testimony, some lenders may be unwilling to give these 
properties new loans because of the lenders' concerns about the 
predictability of the future income stream.
    We agree that the Nation must meet the needs of low-and 
moderate-income families, and we believe that improving the 
Section 8 program is the key way to do that. However, NMHC/NAA 
urge Congress and HUD to make fewer apartments available to 
voucher residents.
    We wholeheartedly support the Section 8 program as a means 
for private housing owners to provide affordable rental housing 
to families who need it. We believe more apartment owners would 
participate if the program were more stable and if the cost of 
renting to voucher residents were more comparable to the cost 
of serving unsubsidized residents.
    We propose the following recommendations to achieve that 
goal. First, we urge continued funding and program 
stabilization. Next, we support the changes introduced in H.R. 
1999 that speed up the move-in process by amending the 
inspection procedures. This will reward well-managed properties 
and allow public housing authorities to focus their scarce 
resources elsewhere.
    However, we are adamantly opposed to provisions that would 
disconnect Section 8 Voucher rents from FMRs and instead allow 
rents to be set by the more than 2,500 public housing 
authorities across the country. This change would put property 
owners and lenders and other housing providers that operate in 
many States and jurisdictions in the unmanageable position of 
trying to keep track of potentially 2,500 individual programs.
    In closing, we believe the Section 8 program with the 
improvements I have noted will make affordable housing 
available to more Americans.
    Thank you.
    [The prepared statement of Christopher Reilly can be found 
on page 148 in the appendix.]
    Mr. Miller of California. Thank you.
    Ms. Muha?

 STATEMENT OF DENISE MUHA, EXECUTIVE DIRECTOR, NATIONAL LEASED 
                      HOUSING ASSOCIATION

    Ms. Muha. Thank you.
    Being that I am last and the lateness of the day, I think I 
will be brief and spare you repeating what has already been 
said.
    My written testimony, I ask, be presented for the record, 
and I just want to make a couple of brief points and spend time 
answering your questions.
    One of the things I want to say is that I have been in this 
business for 20 years, and when anybody uses the word 
``reform'' in the context of a Government program, I get very 
scared, and I want to run the other way. I think the word 
``reform'' conjures up something that is unworkable or broken, 
and I do not believe the Section 8 program is broken. I think 
it is an excellent program and has served its purpose well.
    If there is a problem with the program, it is the fact that 
the funding formula has been changed so dramatically that the 
monies are not getting to the housing authorities in a way that 
allows them to lease up their vouchers, and that instability 
affects a lot of different constituents.
    So the other point I want to make is that we have housing 
authorities here, one developer--we do not have lenders present 
and others--but there are a broader array of stakeholders who 
are interested in preserving the Section 8 Voucher Program.
    I want to draw your attention to a letter that we sent up--
oh, I guess, at the end of April--as soon as HUD introduced 
this proposal, and it was signed by the National Association of 
Home Builders, the National Apartment Association, the 
Institute of Real Estate Management, National Housing 
Conference, and others, and I will just read a little brief 
part of it.
    ``We are concerned that the HUD's proposal lacks 
specificity with regard to the amount and manner of funding for 
the voucher program. Further, the bill's treatment of enhanced 
vouchers raises serious questions about ongoing preservation 
transactions, not to mention the ability of landlords, lenders, 
and other housing providers that operate in many States and 
jurisdictions to be able to keep track of potentially 2,000 
individual programs. We strongly believe that the current 
Housing Choice Voucher Program is successful in providing 
housing opportunities for eligible families.''
    And, with that, I will conclude.
    [The prepared statement of Denise Muha can be found on page 
135 in the appendix.]
    Mr. Miller of California. Thank you very much.
    Chairman Ney?
    Mr. Ney. Thank you, Mr. Chairman.
    I apologize. I had a meeting I absolutely could not get out 
of. So I could not ask questions of the first panel. I know the 
first panel quite well, and I can see them down the road at 
home.
    But let me just ask one generic question, which I would 
have asked of the first panel.
    Again, thank you for coming today.
    Whenever we change something, whether, you know, it is the 
first change that was going to occur in the block granting or 
this change, internally, what type of havoc does this create or 
does not create and does it cost money once you make these 
changes? Does it cost money to make changes such as the 
proposal? Any reflections on that from anyone? It is a generic 
question. I just wonder does it cause internal problems.
    Mr. Nackerman. Chairperson Ney, in speaking, we have about 
10,000 total Section 8 vouchers and about 2,500 public housing 
and a staff of close to 150. The key point is if the elements 
of this bill go through, those changes would vary from housing 
authority to housing authority.
    In most cases, including some of the Moving to Work 
Demonstration sites, as demonstrated by some of those sites, 
those changes could include a reduction in staffing levels. As 
an example, if you do 75 percent fewer inspections, you need 75 
percent fewer inspectors.
    So a lot of the changes are administrative. I think they 
are fairly easy to make as far as those types of changes, 
staffing impact, and the costs would be less to the agencies.
    Chairman Ney. Do you want to add to that?
    Ms. Glover. Well, of course, whenever you change these 
things deeply incessantly, there are changes in terms of re-
engineering financial systems, inspection systems, and so there 
are costs associated with any type of change.
    One of the things that we have not seen are changes at HUD 
in terms of re-engineering their system so that, as these 
things walk lockstep, we are not doing things and then having 
to make adjustments with either the field office or what-have-
you.
    So, if reforms are made, I think they have to be looked at 
for the long term so that when systems are re-engineered--and 
there is some of that, and you spend money to do it--they can 
actually be sustained and improved rather than having to make 
abrupt changes in direction, which is really what we have been 
going through over the last several years.
    Mr. Ney. Thank you, Mr. Chairman.
    Mr. Miller of California. Ms. Waters?
    Ms. Waters. I would like to thank all of the members of the 
panel for being here today. I guess I could ask you a lot of 
questions, but I do not agree with this bill at all. It just do 
not make good sense. You know, if I had my way, I would just 
put more money in the program.
    We have waiting lists of people who have no place to live, 
and even though we complain about the increased costs or the 
rising costs, well, people increasingly do not have anyplace to 
live, and so I would fund all of the vouchers that were needed.
    I would try and do something about public housing and make 
it more livable. I would try and do something about real job 
training programs and assistance to these young people in many 
of these large housing projects in the city.
    For the people who get jobs, I would go back to the old 
working mother's budget that we had before Ronald Reagan that 
allowed people who have a job for the first time not to be cut 
off welfare. In the same way with increased rent, I think 
people need a break. If you get a job, I do not think your rent 
needs to increase immediately; maybe, you know, after 6 months, 
a year or so, once somebody has gotten stable in a job and they 
have met the increased costs of having to buy new clothes and 
all of that to be in the workplace.
    I certainly would not deal with this portability in the way 
that this bill is doing. I think it is really problematic, 
discriminatory, and maybe even racist. So the bill is just 
going in the wrong direction, and while one may make a case for 
flexibility, again, it is about the mission. You know, why do 
we have these programs to begin with, and are we going to 
undermine the mission of these programs by creating so-called 
flexibility?
    I think with flexibility comes a lot of uncertainty. I 
really do not know what it means to have so much flexibility 
that as you move from one county or one area to the next, 
things are so drastically different. How do you reconcile all 
of that?
    So, you know, we disagree, but we have to work to try and 
make sense out of all of this so-called reform. I think we have 
some willing partners on the other side of the aisle. They may 
not go as far as Maxine Waters would go, but we are going to 
work with them to see if we cannot eliminate a lot of this and 
see if we cannot do some improvements in ways that will be 
helpful to you.
    I wish I could give you high hopes that there was going to 
be more money, but, even though they will not like me to say 
this, the money is gone. We have given it away in tax cuts to 
rich people, the richest 1 percent in America, and we have very 
expensive wars in Afghanistan and in Iraq. So, you know, 
philosophically, we have problems that we have to overcome.
    Let me just say this--and even to the landlords--we had 
great cooperation with landlords in Los Angeles trying to solve 
the problems that we had there, and so I think there are some 
ways that we can work with landlords to make it more attractive 
to be in the program.
    I do not think we should try and starve you or to squeeze 
you to death. I think we should try and pay fair rents, and I 
think we should eliminate some of the paperwork, and I think we 
should have inspections in a cycle that makes good sense. So I 
am not, you know, opposed to any of that.
    I am going to work with my colleagues. Again, I think both 
Mr. Ney and Mr. Miller can be worked with. He is on message 
today, but we are going to get him off message.
    Mr. Ney. You think so?
    Ms. Waters. We are going to work with him so that we are 
able to serve all of these people who need it so desperately.
    Again, thank you very much for being here. I really do 
appreciate the tough problems that you have.
    I have worked with public housing in Los Angeles, created 
training programs. I used to use the Wagner-Peyser monies that 
came from the Federal Government in ways that nobody understood 
but me, and we were able to try and connect people with the old 
GEPTA program only to find out that GEPTA did not have much 
that worked at the time.
    But my greatest desire--my greatest desire in all of this--
is to, number one, get some temp opportunities away from public 
housing during summer months to give the kids a break.
    My greatest desire is to have some real job training 
programs where people could find jobs and to make that public 
housing project in some areas a lot more livable, perhaps in 
ways that you have done in Atlanta.
    Mr. Miller of California. The lady's time has expired.
    Ms. Waters. He is tapping. He is tapping. So I have to say 
thank you and good-bye. I yield back the balance of my time.
    Mr. Miller of California. I believe to have a viable 
Section 8 market, we need an affordable move-up marketplace, 
and I have been in the building industry for over 30 years, and 
I can write a book on how the Federal, State and local 
governments have negatively impacted the affordable housing 
market and created a real problem for us in this country.
    Mr. Nackerman, how would you say this legislation would 
benefit or impact your local housing authority?
    Mr. Nackerman. Well, I think our county, which is the 
largest geographical county in the United States, we are in 
solid fiscal condition in all our programs. We have not 
experienced some of the problems in Section 8 that many 
authorities did last year. As my friend in Santa Clara, San 
Jose says, it is like bungee jumping and almost hitting the 
ground, but bouncing back up.
    Our greatest fear is really that these programs are not 
reformed, but that the budgets stay static or are cut in future 
years. That to us is a recipe for disaster. If you want to see 
fewer people housed in this country under these programs, do 
not pass the elements of this bill because each agency needs 
the flexibility, especially the agencies like City of Alameda, 
which was another example of an authority that really had 
trouble with the Section 8 funding, unit-based versus 
overleasing, et cetera.
    So, in our county, we would likely take some of the more 
progressive elements of this bill, such as encouraging more 
homeownership opportunities, such as removing a few of the 
disincentives to work. Again, those disincentives are, ``Do not 
report your income to us and we will not raise your rent. If 
you report your income to us, we will raise your rent. If you 
do not report it, HUD will call that fraud,'' you know, that 
type of issue.
    Just to give you an example of that, how ridiculous some of 
these regulations are, at all of these housing authorities, 
unless they have adopted a recent sort of escape hatch, if a 
senior citizen has $50 in the bank in a savings account, once a 
year, they have to bring us proof of that $50.
    They cannot bring their Bank of America statement. That is 
not okay. We have to get it directly from the bank to prove 
they have that asset. That costs $10. Now that senior's savings 
is reduced by 20 percent. That is how ridiculous some of these 
constraints that I mentioned are, the choke hold on these 
programs are.
    So in our county, we would likely combine some of the 
funding that we would like to become a Moving to Work site. We 
would likely use some of that combination of funding to create 
more affordable housing in our county. We presently build about 
100 new units a year of new affordable housing in all areas, 
including the higher-income areas, and we would probably reduce 
our inspections.
    We would add more self-sufficiency elements for residents, 
more incentives, probably things like matching funds for 
homeownership, IDA accounts where the authority can actually 
match what the resident is saving in rent. So our agency is 
quite a bit different.
    On that note, we have 42 residents who were previously 
homeless before they moved into our program. That is different 
than Central Boston. However, you know, we are not Newport 
Beach, as Ms. Waters knows. San Bernardino has the second 
highest crime rate in California, so out of the 12,000 families 
we serve, 41, 43, depending on how you count it, were 
previously homeless. That differs from agency to agency, which 
is why there is so much contention in this one-size-fits-all 
approach that HUD has taken.
    Mr. Miller of California. Thank you.
    Ms. Crowley, you referred to that 90-60, and it really 
concerns you. I know you would like the 75-30, but the intent 
of 90-60 is to say you have to spend at least 90 percent of it 
at the 60 percent or below. Why do you think that is so 
negative?
    Ms. Crowley. Well, precisely because of the funding 
uncertainty that is facing housing authorities.
    Mr. Miller of California. So is funding authority that your 
concerned with in the future, not necessarily us wanting to 
make sure that at least that amount is spent below that level?
    Ms. Crowley. Under the current income targeting us, we 
would like for it to all be more deeply targeted. Obviously, if 
you shifted it in this way, the access for people who are 
extremely low income would be reduced if the housing authority 
were faced with those kind of choices.
    Mr. Miller of California. So the concern is that they might 
be faced with a choice if funding's decreased in the future? 
That is the basic concern?
    Ms. Crowley. Yes.
    Mr. Miller of California. I believe we needed to set some 
criteria. We wanted to be flexible, but we had to have a 
criteria.
    Ms. Crowley. Let me just add a bit about why it is that we 
have 75 percent of vouchers that go to extremely low-income 
people in the law now. In the development of QWHRA, there was a 
huge debate about exactly who should live in public housing, 
and we relaxed the income targeting.
    Mr. Miller of California. I am going to have to conclude my 
questioning. We are running out of time. We have 5 minutes, and 
I am going to give Ms. Lee 2-1/2 minutes and Mr. Davis 2-1/2 
minutes.
    Ms. Lee. Thank you, Mr. Chairman. I will be very quick.
    Oftentimes, accusations that the race card is being played 
are made when one views public policy impacts on minorities, 
especially on African Americans, but I must say that 
institutional racism is alive and well in America 
unfortunately.
    So in advance of this bill moving, which I hope, of course, 
it does not, I wanted to ask Mr. Tegeler to comment on what you 
said in your testimony, that if this bill passes, you would 
expect about 65,000 black and Latino families to lose vouchers 
and, over the course of 5 to 10 years, 300,000 vouchers would 
be taken away from very low-income African-American and Latino 
families. I mean, is that a fact?
    Mr. Tegeler. One can quibble with the numbers, but the 
basic analysis, I think, is sound. Black and Latino families 
are more heavily represented in the lower-income tiers of the 
eligible family groups eligible for Section 8. Whites are more 
represented in the higher-income tiers. So if you lift income 
targeting, as this bill allows public housing agencies to do, 
the natural consequence will be that kind of shift from black 
and Hispanic families to white families in the program.
    We are talking about every year turnover in the program 
generates about 10 percent to 11 percent of the program 
quantity of vouchers. You see over 200,000 families a year 
coming into the program. It is those families that are subject 
to income targeting, and the assumption we make is that if all 
PHAs lifted income targeting, then you would see that shift.
    Ms. Lee. Okay. You mentioned that the racial impact and 
civil rights analysis was not conducted on this bill, and is 
that a requirement, and if it is a requirement, then I do not 
know, Mr. Chairman, maybe we need to try to figure out how to 
have that done. It is not a requirement?
    Ms. Waters. It is not a requirement for racial impact, but 
it should be common sense.
    Mr. Tegeler. So it has been our duty, Representative Lee, 
to affirm----
    Mr. Miller of California. Well, look it. I mean, I would be 
happy to work with you. Anything you believe is racial 
profiling or any way, I would be happy to work with you on 
that.
    Ms. Lee. Thank you very much, Mr. Chairman. I appreciate 
that.
    Mr. Miller of California. Mr. Scott?
    Mr. Scott. Thank you very much, Mr. Chairman.
    I have two lines of questioning. One, I first want to ask 
Ms. Glover, and then I want to come back to you, Mr. Tegeler. 
Is that right?
    Ms. Glover, in your testimony, you stated that the voucher 
programs have not served targeted populations well because the 
program is focused on numbers and not outcomes, if you remember 
my earlier comment about Mr. Jackson and the thrust of the HUD 
in that direction.
    Given that, can you provide the Congress with any 
suggestions about how the voucher program can be changed to 
better address needs rather than merely being a program of 
numbers and objectives.
    Ms. Glover. Absolutely. And I would like to offer the 
following outcomes for consideration.
    One, I think deconcentrating poverty is critically 
important. I think continuing to serve the lowest-income 
families, below 30 percent. I want to address this question 
because it has not been answered. But what happens here is that 
if the performance requirement is that the agencies continue to 
serve the same number of families before the reforms and after, 
by just sheer attrition, the money will not support continuing 
to serve families below 30 percent because you would have to 
start moving up the income tier in order to meet the 
performance standard.
    So what happens is the monies are block granted and 
reduced, and you have to serve the same number of families. You 
will by necessity have to stop serving families at the lower-
income tier, which I do believe will result in an increase in 
homelessness, and the concern also about seniors and disabled 
persons on fixed incomes who have no earning upside. If reform 
eliminates the safety net for them, after, I think, it is 2009, 
I think that would be a travesty.
    Mr. Scott. Thank you.
    Mr. Tegeler, your testimony is very disturbing, and you 
raised some very important points. You know, if you feel and if 
it is documented that their civil rights are being violated 
with this piece of legislation, then I am sure the chairman 
would not want to push forward a piece of legislation that 
would do that.
    Mr. Miller of California. If the gentleman could give me an 
example of where he believes that is occurring, I would 
appreciate that.
    Mr. Scott. Yes.
    Mr. Miller of California. We are going to have to wrap up. 
I am sorry. We have votes.
    Very, very briefly. Very brief.
    Mr. Tegeler. Very brief.
    Mr. Miller of California. You can submit additional 
comments.
    Mr. Tegeler. Very brief. No housing program is race neutral 
or civil rights neutral. That is clear. But this bill has such 
serious consequences. My only point is that it should be sent 
back for a closer look.
    Mr. Miller of California. We would love to work with you on 
that.
    Mr. Scott. Okay. Thank you, Mr. Chairman.
    Mr. Miller of California. I ask unanimous consent to 
include in the record the statement of the Housing Authority of 
Los Angeles County, the statement of the National Council of 
State Housing Agencies, the statement of the National 
Association of Housing Redevelopment Officials.
    The chair notes that some members may have additional 
questions for this panel which they may wish to submit in 
writing. Without objection, the hearing record will remain open 
for 30 days for members to submit written questions to these 
witnesses and to place their responses in the record.
    Any other comments?
    The meeting is adjourned.
    [Whereupon, at 5:01 p.m., the subcommittee was adjourned.]


                            A P P E N D I X



                              May 17, 2005


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