[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]
H.R. 3186, THE BUILD HOUSES FOR OUR
MILITARY'S ENLISTED SERVICEMEMBERS ACT
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON
HOUSING AND COMMUNITY OPPORTUNITY
OF THE
COMMITTEE ON FINANCIAL SERVICES
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED NINTH CONGRESS
SECOND SESSION
__________
FEBRUARY 8, 2006
__________
Printed for the use of the Committee on Financial Services
Serial No. 109-71
_____
U.S. GOVERNMENT PRINTING OFFICE
28-023 PDF WASHINGTON : 2006
_________________________________________________________________
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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
EDWARD R. ROYCE, California NYDIA M. VELAZQUEZ, New York
FRANK D. LUCAS, Oklahoma MELVIN L. WATT, North Carolina
ROBERT W. NEY, Ohio GARY L. ACKERMAN, New York
SUE W. KELLY, New York, Vice Chair DARLENE HOOLEY, Oregon
RON PAUL, Texas JULIA CARSON, Indiana
PAUL E. GILLMOR, Ohio BRAD SHERMAN, California
JIM RYUN, Kansas GREGORY W. MEEKS, New York
STEVEN C. LaTOURETTE, Ohio BARBARA LEE, California
DONALD A. MANZULLO, Illinois DENNIS MOORE, Kansas
WALTER B. JONES, Jr., North MICHAEL E. CAPUANO, Massachusetts
Carolina HAROLD E. FORD, Jr., Tennessee
JUDY BIGGERT, Illinois RUBEN HINOJOSA, Texas
CHRISTOPHER SHAYS, Connecticut JOSEPH CROWLEY, New York
VITO FOSSELLA, New York WM. LACY CLAY, Missouri
GARY G. MILLER, California STEVE ISRAEL, New York
PATRICK J. TIBERI, Ohio CAROLYN McCARTHY, New York
MARK R. KENNEDY, Minnesota JOE BACA, California
TOM FEENEY, Florida JIM MATHESON, Utah
JEB HENSARLING, Texas STEPHEN F. LYNCH, Massachusetts
SCOTT GARRETT, New Jersey BRAD MILLER, North Carolina
GINNY BROWN-WAITE, Florida DAVID SCOTT, Georgia
J. GRESHAM BARRETT, South Carolina ARTUR DAVIS, Alabama
KATHERINE HARRIS, Florida AL GREEN, Texas
RICK RENZI, Arizona EMANUEL CLEAVER, Missouri
JIM GERLACH, Pennsylvania MELISSA L. BEAN, Illinois
STEVAN PEARCE, New Mexico DEBBIE WASSERMAN SCHULTZ, Florida
RANDY NEUGEBAUER, Texas GWEN MOORE, Wisconsin,
TOM PRICE, Georgia
MICHAEL G. FITZPATRICK, BERNARD SANDERS, Vermont
Pennsylvania
GEOFF DAVIS, Kentucky
PATRICK T. McHENRY, North Carolina
CAMPBELL, JOHN, California
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
WALTER B. JONES, Jr., North BARBARA LEE, California
Carolina MICHAEL E. CAPUANO, Massachusetts
CHRISTOPHER SHAYS, Connecticut BERNARD SANDERS, Vermont
PATRICK J. TIBERI, Ohio STEPHEN F. LYNCH, Massachusetts
GINNY BROWN-WAITE, Florida BRAD MILLER, North Carolina
KATHERINE HARRIS, Florida DAVID SCOTT, Georgia
RICK RENZI, Arizona ARTUR DAVIS, Alabama
STEVAN, PEARCE, New Mexico EMANUEL CLEAVER, Missouri
RANDY NEUGEBAUER, Texas AL GREEN, Texas
MICHAEL G. FITZPATRICK, BARNEY FRANK, Massachusetts
Pennsylvania
GEOFF DAVIS, Kentucky
CAMPBELL, JOHN, California
MICHAEL G. OXLEY, Ohio
C O N T E N T S
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Page
Hearing held on:
February 8, 2006............................................. 1
Appendix:
February 8, 2006............................................. 19
WITNESSES
Wednesday, February 8, 2006
Barnes, Rodney D., City Manager, Junction City, Kansas........... 6
Bowling, Bobby IV, President, Tropicana Homes, El Paso, Texas, on
behalf of the National Association of Homebuilders............. 8
Green, Hon. Al, a U.S. Representative from the State of Texas.... 3
Kenny, Timothy R., Executive Director, Nebraska Investment
Finance Authority, Lincoln, Nebraska........................... 9
Ryun, Hon. Jim, a U.S. Representative from the State of Kansas... 2
APPENDIX
Prepared statements:
Oxley, Hon. Michael G........................................ 20
Ney, Hon. Robert............................................. 22
Brown-Waite, Hon. Ginny...................................... 24
Green, Hon. Al............................................... 25
Ryun, Hon. Jim............................................... 28
Barnes, Rodney D............................................. 31
Bowling, Bobby IV............................................ 38
Kenny, Timothy R............................................. 45
Additional Material Submitted for the Record
Hon. Robert Ney:
Statement of the National Low Income Housing Coalition....... 59
Hon. Jim Ryun:
Letter from Joseph M. Stanton................................ 62
Letter from Steven B. Nesmith................................ 63
H.R. 3186, THE BUILD HOUSES
FOR OUR MILITARY'S ENLISTED
SERVICEMEMBERS ACT
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Wednesday, February 8, 2006
U.S. House of Representatives,
Subcommittee on Housing and
Community Opportunity,
Committee on Financial Services,
Washington, D.C.
The subcommittee met, pursuant to notice, at 11:00 a.m., in
room 2128, Rayburn House Office Building, Hon. Robert Ney
[chairman of the subcommittee] presiding.
Present: Representatives Waters, Neugebauer, Ryun, Cleaver,
and Green.
Chairman Ney. Good morning. The Housing Subcommittee will
meet this morning to discuss H.R. 3186, a bill designed to help
our American servicemen and servicewomen gain access to
Affordable Housing Now programs.
It was introduced by Congressman Jim Ryun and Congressman
Al Green, our two distinguished colleagues who are here today
to testify on the bill, and we amended the Department of
Housing and Urban Development Act to exclude basic housing
assistance amounts received by a member of the Armed Forces
from consideration as income for any Federal housing assistance
program.
I look forward to hearing from the panel.
Today, enlisted military personnel and their families face
a shortage of quality affordable housing in duty stations
across the country. This shortage is likely to be further
complicated by the disappearance of military units as part of
the BRAC, the base closings.
There are several affordable housing programs in existence
that could assist our military personnel in finding affordable
housing, such as the Department of Housing and Urban
Development Section 8, housing choice voucher programs;
however, current regulations make enlisted military personnel
ineligible for these types of Federal housing programs.
Currently, HUD's policy is to include the basic allowance
for housing as income in its calculation for determining if a
military household meets the income qualifications for low
income Federal housing programs.
I'm not going to dwell on it further, because you two know
this bill better than I do.
But in closing, and not to distract from today's hearing,
but for me to just publicly get this off my chest. It has
nothing to do with either gentleman or the bill, but I wanted
to mention my disappointment over HUD's recent budget proposal
that would cut the community development block grant program by
over 25 percent.
My goal as chairman of the Housing Subcommittee is to make
certain the focus of the Department remains on housing, and
that it has the tools necessary. We went through this proposal,
it was going to switch to Commerce last year, but that went
bust and it wasn't implemented.
And I was very vocal in opposition against that, because
they were changing the whole focus of what CDBG is about.
And so, it's not a particularly fine bill, but I needed to
get that on the record because it's something that scares me,
and I think scares my constituents, and worries me about the
future ability of our communities that have been hard pressed
to recover.
With that, I will yield to Congressman Ryun.
STATEMENT OF HON. JIM RYUN, A U.S. REPRESENTATIVE FROM THE
STATE OF KANSAS
Mr. Ryun. Chairman Ney, thank you. Thank you very much for
holding this hearing and I appreciate the opportunity to
testify.
The issue which we are discussing today is extremely
important and in my estimation very urgent. I thank my
colleague, Mr. Green from Texas, for cosponsoring the Build
HOMES Act with me. I look forward to his testimony a little
later.
Mr. Chairman, we have a problem. We are discriminating
against our men and women in uniform. This Congress has a
solemn duty to provide high quality of life for the men and
women of our Armed Forces.
However, when it comes to obtaining affordable housing,
many of these servicemembers are currently at an unfair
disadvantage. The best way for me to demonstrate this
discrimination is to give you a hypothetical example.
Suppose two people submit applications to live in
affordable housing residency. Both are American citizens, both
have identical qualifying incomes, both have the same number of
family members, and both are in possession of housing
assistance of the same amount.
There is only one difference between these two
applications.
The first is a servicemember with military-issued basic
allowance for housing, or a BAH, and the second is a civilian
with a Section 8 voucher.
Currently, HUD rules are such that a civilian is not
required to count a Section 8 voucher as income, thereby
preserving his or her eligibility for the affordable housing.
However, no such exemption exists for BAH, and after
factoring this assistance into his or her income level, the
servicemember in a hypothetical situation is rendered
ineligible for the housing.
Mr. Chairman, I find this scenario inexcusable. We have
affordable housing programs for a reason, and that is to assist
low income Americans with obtaining quality housing.
That should be no less true for our men and women who put
their lives are on the line for us. Frankly, Mr. Chairman, I
was surprised when I discovered that this was the current
policy. There simply wasn't any way I could let this go
unchallenged. And I am confident that my colleagues will agree
with this.
Fortunately, a solution is relatively simple. HUD must
simply be directed to treat BAH assistance as it does Section 8
housing vouchers.
The bill I have introduced would statutorily direct HUD to
do just that, thereby ending the discrimination.
A secondary benefit would be a greater incentive for
builders to construct additional affordable housing in areas
surrounding military bases. This would be especially important
around bases that are getting more troops as a result of the
BRAC process.
I thank the Members on both sides of the aisle who have
agreed with me by cosponsoring the Build HOMES Act. I am
pleased about the bipartisan make-up of the cosponsor list, and
I look forward to obtaining broader support, even more as we
proceed along.
Let me close with a brief word on why this change must be
made quickly. As a result of the recent round of BRAC, hundreds
of thousands of soldiers are currently in the process of
relocating to a new housing area around a base.
During this process, many bases, including Ft. Riley, which
is in my district, are dramatically increasing in population.
This is causing a significant shortage of quality housing in
the surrounding areas. The Ft. Riley area is not alone in this
problem; far from it.
Bases across the Nation are in a similar situation. The
bill we are discussing today is a small part of alleviating
that problem.
Thank you again for considering this important legislation.
I hope that my colleagues on the subcommittee will see fit to
act favorably on the Build HOMES Act. I look forward to the
testimony from my colleague, as well as the next panel, and I
am happy to answer any questions.
Thank you for this time.
[The prepared statement of Hon. Jim Ryun can be found on
page 28 of the appendix.]
Chairman Ney. We all thank the gentleman.
The gentleman from Texas, Mr. Green.
STATEMENT OF HON. AL GREEN, A U.S. REPRESENTATIVE FROM THE
STATE OF TEXAS
Mr. Green. Thank you, Mr. Chairman, and I want to thank our
ranking member, Maxine Waters. The two of you and I had the
great opportunity to visit Louisiana together, to look at some
of the devastation caused by Hurricane Katrina.
And while visiting there with you, I drew some conclusions
about the two of you. You both care about people. You both want
to make sure that we have quality, affordable housing for every
person who needs it in this country.
And if I may, there is something that I would like to
devote or dedicate to the two of you. The author of this is
unknown to me:
``Some measure their lives by days and years. Others by
heart throbs, passions and tears. But the surest measure under
God's sun is what for others in your lifetime have you done.''
I want to thank you for what you and our ranking member
have done to help others in need of housing.
Because this is my first time testifying before Congress as
a Member, I also would like to thank all of those who made it
possible for me to have this opportunity to serve in the United
States Congress. I consider it a great privilege and a great
honor.
I have a great staff working with me, so I must thank them
for the work that they've done to help me with this piece of
legislation.
And finally, I would like to thank all of the Members who
support H.R. 3186.
I especially thank Congressman Jim Ryun for allowing me to
act as an original cosponsor of this legislation. I am honored
to do this because he has demonstrated a willingness to work
with others across the aisle and to reach out, and I am honored
to reach back.
Mr. Chairman, there is a need for more quality, low-income
housing. Right now, there is a 1.6 million unit deficit in
extremely low-income housing units. Nationally, there are 43
affordable and available units per 100 extremely low-income
renter households. And the majority of those who qualify for
affordable housing cannot find it.
It is my opinion, and I believe it is the opinion of
Congressman Ryun, that some things transcend politics. Some
things transcend party affiliation. There are some things that
transcend political persuasion. Eliminating invidious
discrimination is one. And supporting our soldiers is another.
H.R. 3186 does both by eliminating what I call added income
discrimination.
An example. There is a maximum income at which a person can
receive and qualify for low-income housing. My colleague has
made it very clear by way of example as to how this can impact
one's ability to acquire low-income housing if you exceed that
income.
I want to try now to make it conspicuously clear. Take the
case of the civilian on one hand, who is at the maximum level,
depending on the locality, who receives a Section 8 voucher.
That Section 8 voucher will not be considered income and
therefore, will not cause the civilian to go over the allowable
amount and not receive the affordable housing.
Take the soldier, who receives an income at the maximum
level. That soldier receives also the basic housing allowance.
That allowance, while comparable to the voucher, will cause the
soldier to exceed the maximum income by virtue of that
allowance being considered income, whereas the voucher was not.
This clearly is a form of discrimination against the people
who serve this Nation so well on a daily basis.
As a result of the Base Realignment and Closure Act, we in
Texas will have 9,700 new military persons. Many of them will
qualify for low-income housing. There will be others who will
not qualify because of what we call the added income
discrimination. We need to eliminate the added income
discrimination. It is invidious. It transcends politics. It
transcends political affiliation and political persuasion. I am
honored to join with my colleague in this effort.
And finally, I would like to quote Father Dennis O'Brien,
who reminds us that the ultimate protector of freedom is the
soldier. And I want to quote him because we should protect the
protectors.
But here's what he says: ``It's not the reporter who causes
us to have freedom of the press, it's the soldier. It's not the
poet who grants us freedom of speech, it's the soldier. It's
not the activist who accords us freedom to demonstrate. It's
the soldier. It's the soldier who salutes the flag. The soldier
who serves beneath the flag. The soldier whose coffin is draped
by the flag. It's the soldier who allows the protester to burn
the flag.''
I believe the soldiers deserve a debt of gratitude from us
in the form of the elimination of this added-on discrimination.
We ought to protect the soldier.
I thank you for the time, Mr. Chairman.
[The prepared statement of Hon. Al Green can be found on
page 25 of the appendix.]
Chairman Ney. I want to thank both gentlemen, and I want to
thank the gentleman from Texas for his kind comments. I also
would note that the gentleman was there with our ranking
member, Maxine Waters, and the staff of the House in New
Orleans and down in Gulfport, and I have already asked the
gentleman if I can use and somewhat plagiarize him, but it is
also about looking and taking care of the least, the lost, and
the last.
And when you go down there, you can realize there's a lot
of least, lost, and last down there. And so I appreciated your
participation and also that of our ranking member and the
members of the committee; the gentleman from Cleveland was also
down there.
And on this bill, I think you make a very good point. Also,
if I could, for the record, I want to submit the testimony
presented to us from the National Low Income Housing Coalition.
Some of the people said well, you know, maybe the
Department of Defense ought to build in certain housing
allowances.
But I think that both of you made very good points. Also, I
think Mr. Green makes the point of the IRS issue, and it's a
level playing field.
That's what this is about. If you look at people and
incomes, whether on the civilian end or the military end, it's
about a level playing field, and what's a fair application,
frankly, of IRS tax in a fair way.
So, I really don't have any questions about it.
The gentleman knows the system here. The second panel, I
would say, there's not a lot of members, but this constitutes a
hearing and therefore this helps progress this bill. And so I
appreciate it.
Questions?
Mr. Cleaver. Mr. Chairman, I would like to thank my two
colleagues for their vision in pushing forward with this
legislation. And I express appreciation to the Chair for
aggressively bringing it forward.
One of the concerns I have, and it may be easy to
eliminate, is what happens to members--this legislation would
affect, impact only those who are in the military and have been
sent to or shipped out to some base someplace, Whiteman Air
Force Base, just outside my district.
But what about the Reserve? We are seeing, with what's
going on in Iraq, that we are calling up tens of thousands of
Reservists, who may from time to time find themselves in a
community before they are shipped overseas having this very
same problem.
Mr. Ryun. Let me address that question, if I may. First of
all, we have looked at the bill very carefully and crafted it
in such a way that we are trying to help as many as possible,
but the Reserve aspect of it, because they don't have the basic
allowance for housing, would not be considered for this
particular bill.
Mr. Cleaver. I know, but what happens when a Reservist ends
up in active duty for 1 or 2 years? That is what is happening
now.
I have a parent in my district who came to me crying and
protesting because her son was scheduled to leave his active
duty, and he was called back.
So there is very little difference between him and someone
who is in the regular Army. What if somebody is called up from
Salina, Kansas, and they end up somewhere for a year? 2 years?
Mr. Ryun. Let me just say this. We'll have to get back to
you on that particular issue again when you are dealing with
the Reservist aspect. It's a little different. At the same
time, we do want to do what we can to help our active duty
personnel, and I will be happy to get back to you on that.
Mr. Cleaver. Thank you.
Mr. Green. I would like to respond as well. Congressman
Cleaver and I are classmates, and his brilliance is always
something that astounds me. And once again, you have come
through.
Clearly, you have raised a question that should be
addressed. This bill, however, may not address that question.
And we would hope that we could at least gain this much and
then consider moving another inch, another mile, as we
progress.
But I think it is an excellent point for us to consider.
Mr. Cleaver. Thank you. Thank you, Mr. Chairman.
Chairman Ney. Thank you. Well, thank you both, gentlemen,
for your dedication to this issue, and for bringing the bill to
us. Thank you.
The last panel consists of Mr. Rod Barnes, city manager,
Junction City, Kansas; Mr. Bobby Bowling IV, president,
Tropicana Homes, El Paso, Texas, testifying on behalf of the
National Association of Home Builders; and Mr. Timothy R.
Kenny, executive director, Nebraska Investment Finance
Authority, Lincoln, Nebraska.
Also, without objection, the written statements will be
made part of the record. You will each be recognized for a 5-
minute summary of your testimony.
We will start with Mr. Barnes.
STATEMENT OF ROD BARNES, CITY MANAGER, JUNCTION CITY, KANSAS
Mr. Barnes. Chairman Ney, thank you very much for this
opportunity to be before you today, to talk about this
important issue. I am the city manager for Junction City,
Kansas. I have with me also Sam Robinson, our military affairs
director for that area.
We are right outside the gates of Ft. Riley, Kansas, and we
are very proud to be the hometown of what's going to be the Big
Red One.
We are growing rapidly due to the increase in force
strength and growth at Ft. Riley. We currently anticipate
receiving approximately 30,000 people in the next 3 years in
our region, and need to have 9,000 additional housing units.
However, we do have a big problem with the Section 42 tax
credit program. Military families simply cannot meet the income
guidelines when their base housing allowance is included as
income. That means a large segment of our population is being
excluded, as Congressman Green and Congressman Ryun so
eloquently outlined.
Some of the newest, highest quality affordable housing
units in our community and the City of Manhattan, just 15 miles
away, are Section 42 tax credit units. The City of Junction
City currently has 264 units, 112 of those units constructed
after 1999. The balance has all been completely remodeled.
Manhattan has 108 brand new units which opened last year,
constructing 112 units, but because of the way that the base
housing allowance is calculated, the only military folks who
can live in these units would be an E-1, with various numbers
of dependents.
In our community, it means an E-1 with three dependents. In
Manhattan, it means an E-1 with two dependents. So it makes it
very difficult for those units to be available for that large
segment of our population.
We provided you in my written testimony with some
information on Investment Resources, Inc., that owns the units
in both Junction City and Manhattan. Ten percent of their units
are leased to military families. Three years ago, that was 40
percent.
Since the military housing allowance increases, these
families are squeezed out of their affordable income bracket
and forced to pay higher rents. Sometimes it's inferior
housing, and soldiers are forced to live in units that are not
inspected and approved by post housing.
We need affordable housing in our region. The tax credit
units provide a wonderful opportunity to help reduce the risk
to developers associated with military deployments. The State
of Kansas has set aside millions of dollars to assist with the
development of housing units. However, they are not going to
take that risk if a large segment of our population cannot live
in that housing once it is constructed.
We would like to have that as a tool again for an
opportunity to build affordable housing in our community.
We provided you today with color pictures of the units that
are in Junction City, and I think you'll see that they are
something you yourself would want to live in and be proud to
live there.
I will be happy to answer any questions a little bit later
on. We believe this is an important issue that needs to move
rapidly. We think that it is a tool that we need to have
available to us as we continue to grow housing units in our
community to help meet the growing demand for not only our
military folks, but our civilian personnel and folks who also
need quality affordable housing.
Thank you.
[The prepared statement of Mr. Barnes can be found on page
31 of the appendix.]
Chairman Ney. Thank you very much.
Chairman Ney. Mr. Bowling.
STATEMENT OF BOBBY BOWLING, IV, PRESIDENT, TROPICANA HOMES, EL
PASO, TEXAS, ON BEHALF OF THE NATIONAL ASSOCIATION OF
HOMEBUILDERS
Mr. Bowling. Chairman Ney, members of the subcommittee,
thank you for the opportunity to testify today.
My name is Bobby Bowling, and I am a third generation home
builder and the president of Tropicana Homes in El Paso, Texas.
My family has been building homes in El Paso for 50 years, and
we currently build about 400 single family homes, and about 225
affordable multifamily units every year.
I am pleased to be here today on behalf of the 225,000
members of the National Association of Home Builders to testify
in support of H.R. 3186, the Build HOMES Act.
This important legislation increases access to affordable
housing for enlisted military personnel, specifically through
the housing tax credit program. It does this by excluding the
military's housing subsidy, the basic allowance for housing, or
BAH, from income when qualifying residents for low-income
housing tax credit properties.
This would be especially helpful at Ft. Bliss in El Paso,
where there is a tremendous shortage of decent, affordable
housing for enlisted military personnel and their families.
I am here today instead of before the Ways and Means
Committee because the Housing Tax Credit Program takes its
guidance on calculating income from the Department of Housing
and Urban Development Section 8 guidelines.
These guidelines provide for a number of exclusions from
income, such as hazard duty pay for military personnel, but do
not exclude the BAH.
Curiously, Section 8, the primary housing subsidy for non-
military individuals and families, is not included as income
for the purposes of qualifying for housing tax credit
properties.
Further, neither Section 8 nor the BAH are considered
income for Federal income tax purposes.
The first concern we have is one of equity. Imagine, as the
examples that Congressman Ryun and Congressman Green gave, two
potential residents of a housing tax credit property. One is a
civilian and the other a military servicemember who each
received a subsidy for housing.
The civilian's housing subsidy is in the form of Section 8
assistance, and the servicemember's is in the form of the BAH.
Both residents meet the housing tax credit income restrictions,
in the absence of these housing subsidies. When a leasing agent
is qualifying each of the potential residents for that
property, he or she excludes the Section 8 assistance for the
civilian, but must include the servicemember's BAH in that
income calculation.
This often results in the rejection of the servicemember
because they are over-income, but by only a small amount, in
many cases. The end result is that enlisted military personnel
are disqualified for no other reason than the form of their
housing subsidy.
Another concern is the practical impact on enlisted
military personnel and their families in markets with high
housing costs, or where there is a shortage of affordable
housing. This is a trend in many military duty stations around
the country, including Ft. Bliss in El Paso.
The Department of Defense is straining to renovate and
modernize its existing on-base housing at Ft. Bliss, and there
are no plans to add substantial numbers of new on-base units.
As a result, the private market will continue to provide the
bulk of housing for troops stationed at Ft. Bliss.
However, El Paso's primary source of rental housing is
through Federal housing programs, like the housing tax credit,
and servicemembers cannot qualify for these properties, which
are also the best rental housing available in our market.
There is tremendous competition for the remaining rental
units, which will only get worse, once troops start relocating
at Ft. Bliss, as part of the BRAC process. Ft. Bliss is
scheduled to receive nearly 21,000 new troops and their
families over the next 5 years as part of BRAC, and demand in
the private housing market is going to skyrocket.
Servicemembers will have to search for affordable housing
at a substantial distance from Ft. Bliss. Enabling enlisted
troops to access housing tax credit properties would be a great
help in addressing this problem.
But even further, H.R. 3186 would create incentives for new
construction of affordable housing units or rehabilitation of
existing affordable housing stock. This would be especially
helpful in communities where the low- and moderate-income
civilian population alone cannot currently sustain housing
credit properties.
Also, States will have more options for helping low- and
moderate-income civilian and enlisted military personnel,
especially as the BRAC process moves forward.
H.R. 3186 is an important piece of legislation that will
help increase access to affordable housing for America's
enlisted military servicemembers and their families.
Thank you for the opportunity to share my views on this
legislation and I would love to entertain any questions that
you or the members might have, Mr. Chairman.
[The prepared statement of Mr. Bowling can be found on page
38 of the appendix.]
Chairman Ney. Thank you.
Mr. Kenny.
STATEMENT OF TIMOTHY R. KENNY, EXECUTIVE DIRECTOR, NEBRASKA
INVESTMENT FINANCE AUTHORITY, LINCOLN, NEBRASKA
Mr. Kenny. Mr. Chairman and members, thank you for the
opportunity to testify before the committee today. My name is
Timothy Kenny, and I am the executive director of the Nebraska
Investment Finance Authority, located in Lincoln, Nebraska. We
are the State authority that administers the Section 42 housing
tax credit program. I have had the honor of doing that for the
last 12 years, and then also did that in two other States.
I have been asked to testify today in support of H.R. 3186
in light of my recent experiences with the regulatory conflicts
that the bill seeks to correct.
The first experience was when I was on a tour with a
civilian support group in San Antonio, Texas, at Ft. Sam
Houston. And I was talking with our young tour guide, a
sergeant, an E-4, and I asked him what life was like in the
Army.
I was surprised when that young soldier told me that he
loved the military and he loved his job, but he was going to
have to quit. And when I asked him why, he said because I can't
find a safe place around here for my wife and kids, where I can
afford to live.
His problem struck me as quite strange, and I decided to do
some research. And that opportunity came not much later when
into my office in Nebraska came my tax credit program
administrator, who informed me that two important multifamily
rehab projects that we had going on in Bellevue, Nebraska, just
adjacent to our own Offutt Air Force Base, were having a hard
time achieving tax credit eligible occupancy.
What I discovered at that time was that military personnel,
as you have learned today, who have a housing voucher from the
Department of Defense are not treated in the same way as a
client of our local housing authority with a Section 8 voucher.
Unfortunately, when the Section 42 rules are applied
through Section 8 to determine if a low income service person
is eligible to live in a tax credit project, the test penalizes
that servicemember.
Simply stated, the HUD voucher is not included in income,
but the BAH amount from the Department of Defense is included
in income for tax credit unit occupancy qualification.
The result is that the low-income serviceman or
servicewoman, and their family, is often denied occupancy. This
unfortunate result certainly does not seem equitable or
appropriate, and furthermore, the designation of BAH as income
for purposes of testing occupancy eligibility, is, as you have
heard before, inconsistent with the treatment of the BAH for
Federal income tax purposes.
This exclusion, I believe, is simply the unintended
consequence of the conflicting regulatory provisions. I have
attached some graphics to my testimony that show the impact in
Omaha, Nebraska, which is the location of Nebraska's only large
military base.
The first graphic shows that for a single enlisted person,
E-1 to E-5, there is a problem at the E-4 and E-5 level in
Nebraska, our very highly technically trained sergeants and
sergeants first class.
The second graph shows that for a married person with no
outside income, E-5's are excluded because the rates change
slightly.
The third graph, which is very interesting, for married
personnel, and assuming that there might be a little outside
income, and a minimum wage job for, say, half a year--shows
that the problem begins at the E-1 level. Married military
personnel at the E-1 level, that's the basic recruit level.
Essentially enlisted personnel and noncommissioned officers
with dependents E-1's through E-5's, the lowest paid but the
highly trained technical working portion of our military
services, are excluded from this excellent housing resource
simply because their voucher comes from the Department of
Defense, as opposed to HUD.
Is this a temporary problem? Even after the major
privatization effort across the United States, it is estimated
by the Pentagon's privatization manager that the military bases
will still count on the local communities to provide up to 60
percent of the necessary housing for the base. The surrounding
communities will be expected, or counted upon, to provide up to
60 percent of the necessary housing for the military personnel.
And that responsibility will continue after the completion
of the current excellent privatization and improvement efforts.
One other issue. Could the proposed voucher change or could
the proposed change make military personnel with BAH allowances
eligible for Section 8 vouchers? I am certain that is not the
intent of H.R. 3186, and I believe that the HUD regulators can
insert the appropriate language to avoid that circumstance.
Let me note at this time that we have had great support
from other members in the community talking about this
particular issue. Many of your colleagues have supported us.
Members of the National Council of State Housing Agencies have
also given us their input, and I understand that they favor
improvements to the tax credit program, and they support the
concept proposed by H.R. 3186, with the understanding that
State HFA's, like myself, would be able to use their
discretion, as they do currently, in their qualified allocation
plans, to introduce this opportunity into their States in a
manner that is consistent with their State's housing needs in
the existing inventories.
This change, however, needs legislative action because in
our correspondence and conversations with HUD, they have
indicated to us that they cannot make this regulatory change
without evidence of Congressional intent.
So, members of the committee, I close by asking you to
consider this low-cost opportunity to improve the lot of all
military personnel and housers like myself, in trying to
provide affordable housing for our deserving military personnel
and their families.
Thank you.
[The prepared statement of Mr. Kenny can be found on page
45 of the appendix.]
Chairman Ney. Thank you. I note our current general
counsel, Clinton Jones, over here to my left, was raised from
the ages of 2 to 16 in Junction City. His dad was deployed on
Big Red One to Vietnam, and as far as I know, in his teen years
he didn't cause any trouble in Junction City.
So here's old history.
Mr. Ryun. We don't have his picture up on the hall of fame
in the police department, so I think that's a good sign.
Chairman Ney. There you go. I've got one quick question.
Anybody is free to answer. In 1996, Congress created the
privatization program initiative or MHPI, Military Housing
Privatization Initiative. That was supposed to, at the time, be
able to do construction a little bit quicker, some incentives,
tax credits, than military construction would do. That was
supposed to help.
Do you see any way this bill is a duplicative effort of
that original intent in 1996?
Mr. Kenny. Mr. Chairman, I have had conversations with the
people in the privatization effort, and they actually see this
as an enhancement to the overall challenge of housing military
personnel. Again, when the whole privatization process is
completed, the Defense Department managers of that
privatization process have told me that they still are
intending for the surrounding communities on the average across
the United States to provide housing.
They are relying on the surrounding communities to provide
off-base housing for up to 60 percent of the military
personnel. It varies from community to community, depending on
branch and mission, but for the most part, they still, after
all of the privatization is completed, are looking to the
private sector and this particular resource to provide that
housing.
Chairman Ney. So this is more of an enhancement?
Mr. Kenny. Right.
Mr. Bowling. Yes, I could address, too, Mr. Chairman, your
question specific to the part of the country where I live, in
El Paso, Texas, with Ft. Bliss. We are scheduled to get, as I
said in my testimony, over 20,000 new troops over the next 5
years. In discussions that we have had with the director of
base housing, through our chamber of commerce, and through our
home builders association, we understand that most of the
privatization projects that they are undertaking right now at
Ft. Bliss are designed to renovate and rehabilitate their
existing housing stock.
They really have come to us as an industry in our local
community and tried to emphasize to us that they are relying on
us in a big way to house these new troops who are coming to our
city in El Paso.
So this will be a tool that we want to have all the options
available to the troops when they come to El Paso to live in a
variety of different types of housing.
Right now, even as low as an E-1 with a BAH added in, in El
Paso, it's really hard to serve any military and tax credits
right now.
Chairman Ney. Thank you. Mr. Cleaver?
Mr. Cleaver. Thank you, Mr. Chairman. Let me preface my
comments by saying I am going to support this strongly. I think
our troops deserve the very best housing that we can provide
them as they are in some cases waiting to hoist themselves in
harm's way, thousands of miles from home.
With regard to legislative intent, I don't know if anybody
is here from HUD or not, but Section 202 was initially, with
regard to legislative intent, designed for elderly housing. I
am sure that Omaha has a number of 202 projects. I am not sure
about Junction City and El Paso. It was intended for elderly
housing. Over time, somehow, the project also began to include
the disabled.
This bill is so important that if there is a way for HUD to
do this, without having us go through fire and water to get it
approved, then I'd rather see that happen. If we can do what is
intended by this legislation, the same thing we did with 202,
or somebody did, that would help us solve the problem.
Is anyone here from HUD?
[No response.]
Mr. Bowling. Congressman, I can't speak for HUD, but there
was a copy in my testimony, the letter we received from HUD on
this issue, I believe in early 2004, signed by the then Deputy
Assistant Secretary for Multifamily Housing Programs, Tillman
Knight, and he articulated HUD's interest in the problem, but
indicated that they were hesitant to move forward without
evidence of Congressional intent, and I think that was a clear
signal that they understood the issue, but they weren't clear
as to which way they could go.
Mr. Cleaver. Thank you. We may want to get a response from
HUD. We have had controversy in my community when the elderly
felt invaded because they were bringing in more and more
disabled, and the buildings were not even adequately built for
the elderly. So, if we can solve this problem, we ought to try
to solve it. And sometimes, the bureaucrats, they don't mean to
be obstructionists, but sometimes they are.
Mr. Bowling. Right now we are asking Congress for some
Congressional action on this issue, because we have gone to HUD
and tried to address this with regulations, so it's our
understanding that right now, in order to move this particular
issue forward, we do need some Congressional action.
Mr. Cleaver. I'm not certain that HUD said that. Please
understand, I am not questioning at all what HUD said. I'm
questioning the necessity of it.
Thank you.
Chairman Ney. What the committee can do, gentlemen, is pose
this question to HUD concerning 202, and then we would ask HUD
to respond back, provide the gentleman with an answer, and then
inform the committee. So we will do that formally.
Thank you. Mr. Ryun?
Mr. Ryun. Mr. Chairman, if I could sort of pick up a little
bit on the question asked by my colleague. When we went to HUD
about this particular issue, they came back and said that they
would like a statutory change from Congress. This is the
letter. You are welcome to see that.
And that's really what we are attempting to do, to move the
ball around the field to help our service personnel. And so the
intent of this legislation is to eliminate the inequality that
exists now, and to help our service personnel. So you are
welcome to copy this as well.
If I could take just a moment and put the question to Mr.
Barnes, I am well aware that Ft. Riley is indicative of other
military installations that are going through the BRAC process
with the adjustments. There's a lot of construction going on,
but there is still much to do because it's just really
beginning.
But if you could just draw a little comparison between the
quality of the units that are in the area and those that would
be built. I know I have seen pictures, but perhaps you could
provide a little visual word picture for us of some of the
comparisons.
Mr. Barnes. Thank you, Congressman Ryun. I appreciate that
opportunity. We view the affordable units that are being built
through the Section 42 program as some of the nicest apartment
units in the area. The good thing about these particular units
is--you saw the pictures that you have here. They are two and
three bedroom. They have all of the amenities that you could
expect to have in an apartment complex with a club house, with
playgrounds, equipment, their landscape, their grounds are
maintained by the property managers operating these facilities.
So we see in our area, both in Manhattan and Junction City,
very affordable, high quality apartment units that anyone would
be proud to live in, and not necessarily connected to something
that was identified as low-income, but merely affordable. And
we think that is very, very important.
Chairman Ney. Mr. Green.
Mr. Green. Thank you again, Mr. Chairman. And for fear that
I will forget, I have some additional testimony that I would
like to submit for the record, if there is no objection.
Chairman Ney. No objection.
Mr. Green. Mr. Chairman, you have been more than generous
with your time as it relates to me today, so I can only say
thank you a thousand times.
I want to thank Congressman Ryun again, for allowing me to
work with him on this valuable piece of legislation, and would
like to address a question to Mr. Kenny, but anyone may
respond.
You touched a nerve, Mr. Kenny, when you indicated that
some of our servicepersons have families and they are trying to
locate not only themselves, but their families.
And I think too often when we think of military people, we
only think of the soldier himself and we think that soldiers
are tough, and that they can handle it. But they have families
that have to be considered as well.
Explain a little bit more, if you can, please, about the
impact that this has on the families. Where do they end up
locating sometimes, and how does this impact the persons in
that family, children in schools, and that sort of thing?
Mr. Kenny. Congressman, the first thing that caught my
attention, when I was first aware of this, was on this trip to
San Antonio, my home town. I grew up there, and am very
familiar with the area around Ft. Sam Houston.
And we had this wonderful young sergeant who was escorting
us. And Ft. Sam is a great medical training facility, where we
have very highly technically skilled enlisted personnel in the
training, both the medical and the dental areas.
And in just casual conversation with this young man in the
quadrangle at the Fort, and he said, I just love this job. And
I love the military, he said. But Mr. Kenny, there is no place
that I can live in this area, in Ft. Sam, that's in the heart
of San Antonio, that's safe for my family and that I can
afford.
And so he and his family were having to live in substandard
housing on the far edges of the community, and he said it's
just--my ability to sustain my family and keep this job are not
parallel, and so I am going to have to leave the service.
And I said, two things were kind of sad about that. The
first thing, which is obvious, is our military has spent a lot
of time training and investing in these young people to bring
them to this skill level. And certainly retention is a big
issue in the military services, particularly with the heartbeat
of what I call the military are our noncommissioned officers.
But the second thing was that issue in the family. We, as
Mr. Barnes said, from the administrative side, have excellent
housing in the Section 42 program. Well supervised by both the
State agencies and the investors. High quality housing.
What happens around military bases, and I can't say this
happens in Omaha, because we only have one base, but around the
United States, and it might happen in your communities, is the
basic allowance for housing typically often puts people into
substandard housing that is unregulated and unsupervised, and
curiously, the rent always seems to equal the BAH. So, whatever
the BAH is in that area, that's what the rent is.
In the Section 42 program, which is, again, excellent
units, well supervised and well reviewed, the rent is a
function of the actual cost of the housing in the area. It is a
function of the area median income.
So it really, I think, is to the advantage in the long term
of the soldier and the Department of Defense to have their
individuals have the opportunity to this, the well supervised,
well maintained units as opposed to substandard units where
it's just an opportunity for people to take advantage of them.
Mr. Green. Thank you. And I just have a parting comment,
and it is that, clearly, we desire to see every person have
decent housing. And I wish that this could address the needs of
persons in need across the length and breadth of the country. I
really wish that it could.
It's been my experience, however, since I have been in
Congress that you have to try to do what we can, when you can,
where you can.
So right now, here, we have an opportunity to be of
service, and I think we should do what we can to help our
military personnel, not to the exclusion of any other, but with
the understanding that we do want to help all others.
Thank you again, Mr. Chairman.
Chairman Ney. Thank you. The gentleman from Texas, Mr.
Neugebauer.
Mr. Neugebauer. Thank you, Mr. Chairman. I also want to
thank Mr. Ryun and Mr. Green for bringing forth this very
important legislation and I am proud to be a cosponsor of H.R.
3186.
I also want to extend a welcome to my good friend, Bobby
Bowling, from El Paso, Texas. Bobby's a longtime friend and a
great member of that community, but also very knowledgeable in
housing. So it's good to have you here today.
Mr. Bowling. Thank you, Congressman.
Mr. Neugebauer. You know, I know the members on the dais
have had an opportunity to go over to Iraq and Afghanistan and
other parts of the world to watch our young men and women do
unbelievable things to defend freedom and democracy.
And when they go off and serve our country, they leave
behind families. And those families serve right alongside those
young men and women that are serving over in harm's way.
And as I have a major B-1 bomber based in my district,
Dyess Air Force Base, we have a wait list for housing. So we've
got young airmen who can't get on base and are having to drive
sometimes 20 to 30 miles to go find an affordable place for
them to be able to live.
And if we are going to keep the kind of force that we have
in place today, which I believe is one of the finest forces
that we have ever put on the planet, this is an all-volunteer
force. Let me repeat that. This is an all-volunteer force.
If we are going to get young men and women to volunteer to
serve our Nation, for not the highest-paying job in the world,
but many of them are dedicated and love to do it, we have to
make sure that there is a quality of life that meets at least
their subsistence.
So I think this is a great plan. We are not reinventing the
wheel. We are just making some changes here so that we can
encourage the development of housing, to make sure that our
young men and women have the housing that they deserve.
So I again want to compliment the two gentlemen that
brought this bill forward.
And, Mr. Chairman, I hope that we will act quickly on this
bill and get this out of the committee, and let's get this to
the House Floor, and let's give those young men and women who
are in harm's way the kind of housing that they deserve.
Thank you, and I yield back.
Chairman Ney. Well, thank you, gentlemen. Also, Congressman
Ryun has asked for another moment.
Mr. Ryun. If I may, I would just like to make a point, and
actually, ask Mr. Bowling a question.
For the record, we are really dealing with as many as 50
bases across this country. So it is a significant number and
amount of housing.
And, as it has been said earlier, what we are trying to do
is make sure they have affordable and good housing.
I know, for example, in my area of Ft. Riley, we can have
long drives, which means less time for our servicemembers to
have with their families. And it doesn't necessarily mean that
they have better housing with that drive.
So, if we are able to move this legislation forward and
eliminate the inequity, Mr. Bowling, could you comment on the
fact, or have your comments on, would this eliminate some of
the risk and encourage builders to move forward with more
housing, if we can eliminate this inequity?
Mr. Bowling. Yes, sir, Mr. Ryun.
Our city has made a very concerted effort for the part of
our city--if you look at, geographically, where Ft. Bliss is
located in relation to El Paso, the northeast part of our city,
northeast El Paso, is where predominately the base entrances
are and where the base military families prefer to live.
Our city owns a lot of acreage in that part of El Paso. And
they have done a very good job of trying to promote that, and
make that available to us in the private sector to develop and
build on.
The problem is the amounts of rent that are there in the
market. In our world of low income being on the border and
being in west Texas, the numbers don't really work for private
sector non-subsidized, multifamily housing to be developed. I
mean, our rent levels would almost have to double to make those
numbers work.
In the Section 42 housing tax credit program, however, the
numbers work very well. So, a lot of what the city is trying to
do, in making this land available to us as builders and
developers, is being hampered by this process and this
interpretation from HUD that we can't include the military
families in the formula because of the BAH.
And let me just add, we're around the border, and being in
west Texas, we have very low median family incomes. The
soldiers have the same income levels, pretty much, around the
country. And in relation to our area median family income, they
will qualify up to like E-5's, and I have provided some charts
in our written testimony. But it's as low as like E-1's and E-
2's, Congressman, and they can't even get into low-income
housing making $15,000 to $20,000 a year. That's a severe
inequity, I think.
Mr. Ryun. Let me take that a step further. You would not,
then, say this is an isolated situation, your situation, but
it's characteristic of many other facilities as well?
Mr. Bowling. Oh, yes, sir. I can only speak to El Paso,
that's the location I build in, but in talking to my colleagues
and working with the National Association of Home Builders, I
think that this problem is pretty commonplace around the
country with relation to where bases are.
I was looking at some of Mr. Barnes' numbers. His rent
numbers are pretty much what ours are in El Paso. So I would
imagine his incomes are pretty close to what we are in El Paso.
So, it will affect the whole country, where those military
bases are located.
Mr. Barnes. Congressman Ryun, if I may. Investment
Resources is the largest provider of Section 42 housing in
Manhattan/Junction City. They did a survey and they found the
problem to be at Ft. Bliss in El Paso. They found it at Ft.
Bragg in Fayetteville. They found it at Ft. Benning in
Columbus, Georgia.
So, it is prevalent, not just in smaller communities and
not just in, for instance, near El Paso, where the median
income is an issue.
We have developers who are ready to build housing in
Junction City using the Section 42 program, but they are not
going to do that as long as a large segment of the population
is excluded from being able to rent their units.
Mr. Ryun. Very good. Thank you. Mr. Chairman?
Chairman Ney. Any other questions?
[No response.]
Chairman Ney. No? Well, thank you. Often members have
additional questions, so without objection, we will keep the
record open for 30 days, so that members can submit in writing
any additional questions, and also the record will be kept open
for additions to the record itself.
Thank you for your time on an important issue, and for
traveling all the way here to Washington, DC.
Thank you.
Mr. Bowling. Thank you, Mr. Chairman.
[Whereupon, at 11:53 a.m., the subcommittee was adjourned.]
A P P E N D I X
February 8, 2006
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