[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



                                 _____

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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

                              ----------                              
                                                                   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

                              ----------                              


                      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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