[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]




 
                             THE SECTION 8
                           VOUCHER REFORM ACT

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

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                   HOUSING AND COMMUNITY OPPORTUNITY

                                 OF THE

                    COMMITTEE ON FINANCIAL SERVICES

                     U.S. HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               __________

                             MARCH 9, 2007

                               __________

       Printed for the use of the Committee on Financial Services

                           Serial No. 110-11



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                 HOUSE COMMITTEE ON FINANCIAL SERVICES

                 BARNEY FRANK, Massachusetts, Chairman

PAUL E. KANJORSKI, Pennsylvania      SPENCER BACHUS, Alabama
MAXINE WATERS, California            RICHARD H. BAKER, Louisiana
CAROLYN B. MALONEY, New York         DEBORAH PRYCE, Ohio
LUIS V. GUTIERREZ, Illinois          MICHAEL N. CASTLE, Delaware
NYDIA M. VELAZQUEZ, New York         PETER T. KING, New York
MELVIN L. WATT, North Carolina       EDWARD R. ROYCE, California
GARY L. ACKERMAN, New York           FRANK D. LUCAS, Oklahoma
JULIA CARSON, Indiana                RON PAUL, Texas
BRAD SHERMAN, California             PAUL E. GILLMOR, Ohio
GREGORY W. MEEKS, New York           STEVEN C. LaTOURETTE, Ohio
DENNIS MOORE, Kansas                 DONALD A. MANZULLO, Illinois
MICHAEL E. CAPUANO, Massachusetts    WALTER B. JONES, Jr., North 
RUBEN HINOJOSA, Texas                    Carolina
WM. LACY CLAY, Missouri              JUDY BIGGERT, Illinois
CAROLYN McCARTHY, New York           CHRISTOPHER SHAYS, Connecticut
JOE BACA, California                 GARY G. MILLER, California
STEPHEN F. LYNCH, Massachusetts      SHELLEY MOORE CAPITO, West 
BRAD MILLER, North Carolina              Virginia
DAVID SCOTT, Georgia                 TOM FEENEY, Florida
AL GREEN, Texas                      JEB HENSARLING, Texas
EMANUEL CLEAVER, Missouri            SCOTT GARRETT, New Jersey
MELISSA L. BEAN, Illinois            GINNY BROWN-WAITE, Florida
GWEN MOORE, Wisconsin,               J. GRESHAM BARRETT, South Carolina
LINCOLN DAVIS, Tennessee             RICK RENZI, Arizona
ALBIO SIRES, New Jersey              JIM GERLACH, Pennsylvania
PAUL W. HODES, New Hampshire         STEVAN PEARCE, New Mexico
KEITH ELLISON, Minnesota             RANDY NEUGEBAUER, Texas
RON KLEIN, Florida                   TOM PRICE, Georgia
TIM MAHONEY, Florida                 GEOFF DAVIS, Kentucky
CHARLES A. WILSON, Ohio              PATRICK T. McHENRY, North Carolina
ED PERLMUTTER, Colorado              JOHN CAMPBELL, California
CHRISTOPHER S. MURPHY, Connecticut   ADAM PUTNAM, Florida
JOE DONNELLY, Indiana                MARSHA BLACKBURN, Tennessee
ROBERT WEXLER, Florida               MICHELE BACHMANN, Minnesota
JIM MARSHALL, Georgia                PETER J. ROSKAM, Illinois
DAN BOREN, Oklahoma

        Jeanne M. Roslanowick, Staff Director and Chief Counsel
           Subcommittee on Housing and Community Opportunity

                 MAXINE WATERS, California, Chairwoman

NYDIA M. VELAZQUEZ, New York         JUDY BIGGERT, Illinois
JULIA CARSON, Indiana                STEVAN PEARCE, New Mexico
STEPHEN F. LYNCH, Massachusetts      PETER T. KING, New York
EMANUEL CLEAVER, Missouri            PAUL E. GILLMOR, Ohio
AL GREEN, Texas                      CHRISTOPHER SHAYS, Connecticut
WM. LACY CLAY, Missouri              GARY G. MILLER, California
CAROLYN B. MALONEY, New York         SHELLEY MOORE CAPITO, West 
GWEN MOORE, Wisconsin,                   Virginia
ALBIO SIRES, New Jersey              SCOTT GARRETT, New Jersey
KEITH ELLISON, Minnesota             RANDY NEUGEBAUER, Texas
CHARLES A. WILSON, Ohio              GEOFF DAVIS, Kentucky
CHRISTOPHER S. MURPHY, Connecticut   JOHN CAMPBELL, California
JOE DONNELLY, Indiana
BARNEY FRANK, Massachusetts


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on:
    March 9, 2007................................................     1
Appendix:
    March 9, 2007................................................    61

                               WITNESSES
                         Friday, March 9, 2007

Cabrera, Hon. Orlando J., Assistant Secretary, Public and Indian 
  Housing, Department of Housing and Urban Development...........     9
Charlton, Janet S., President, Triton Advisors, Inc., on behalf 
  of The National Leased Housing Association, The National 
  Apartment Association, and The National Multihousing Council...    50
Crowley, Sheila, President, The National Low Income Housing 
  Coalition......................................................    46
Day, John E., President, DuPage Housing Authority and Executive 
  Director, Kendall Housing Authority............................    35
Godfrey, Richard, Executive Director, Rhode Island Housing, on 
  behalf of The National Council of State Housing Agencies.......    37
Hiebert, P. Curtis, Executive Director, Keene, New Hampshire 
  Authority, and Vice President for Legislation, The Public 
  Housing Authorities Directors Association......................    32
Ramirez, Saul N., Jr., Executive Director, National Association 
  of Housing and Redevelopment Officials (NAHRO).................    30
Sard, Barbara, Director of Housing Policy, Center on Budget and 
  Policy Priorities..............................................    48
Sperling, Andrew, Director of Legislative Advocacy, National 
  Alliance on Mental Illness, on behalf of The Consortium for 
  Citizens with Disabilities Housing Task Force..................    52
Tegeler, Philip, Executive Director, The Poverty & Race Research 
  Action Council.................................................    54
Zaterman, Sunia, Executive Director, Council of Large Public 
  Housing Authorities............................................    33

                                APPENDIX

Prepared statements:
    Miller, Hon. Gary G..........................................    62
    Sires, Hon. Albio............................................    67
    Cabrera, Hon. Orlando J......................................    68
    Charlton, Janet S............................................    74
    Crowley, Sheila..............................................    80
    Day, John E..................................................    86
    Godfrey, Richard.............................................    92
    Hiebert, P. Curtis...........................................    98
    Ramirez, Saul N., Jr.........................................   107
    Sard, Barbara................................................   127
    Sperling, Andrew.............................................   143
    Tegeler, Philip..............................................   149
    Zaterman, Sunia..............................................   155


                             THE SECTION 8
                           VOUCHER REFORM ACT

                              ----------                              


                         Friday, March 9, 2007

             U.S. House of Representatives,
                        Subcommittee on Housing and
                             Community Opportunity,
                           Committee on Financial Services,
                                                   Washington, D.C.
    The committee met, pursuant to notice, at 10:27 a.m., in 
room 2128, Rayburn House Office Building, Hon. Maxine Waters 
[chairwoman of the subcommittee] presiding.
    Present: Representatives Waters, Lynch, Cleaver, Green, 
Clay, Sires, Ellison, Murphy; Biggert, Shays, Miller, and 
Capito.
    Chairwoman Waters. This hearing of the Subcommittee on 
Housing and Community Opportunity will come to order.
    We are going to allow opening statements for the record, 
but without objection, all of our members' opening statements 
will be made a part of the record. We are going to allow 10 
minutes on either side.
    We do not have an indication from our members over here who 
wish to have opening statements, but we will allow 2 minutes 
each, if you wish.
    The Chair will yield herself 5 minutes for an opening 
statement. Good morning, ladies and gentlemen. I want to thank 
Chairman Frank and Ranking Member Biggert for making sure that 
this subcommittee hearing was placed on the calendar so early. 
I also want to thank the other members of the subcommittee who 
are here today, given the importance of Section 8 Voucher 
Reform Act issues, and I would like to welcome the new members 
of the subcommittee. We have not had an opportunity to meet 
together before.
    We have a few members who were present at the hearing that 
we had in New Orleans, but most of our members have not met in 
subcommittee before.
    As you know, the past several weeks have been busy as the 
committee sought practical solutions to speed the rebuilding 
process in the Gulf region.
    H.R. 1227, the Gulf Coast Housing Recovery Act of 2007, 
which the committee passed on Wednesday, is a major step 
towards assisting the people of the Gulf with their affordable 
housing needs and in rebuilding their lives.
    Today we begin the process of tackling one of the most 
important Federal housing programs in the Nation.
    The Section 8 Voucher Program serves some 2 million 
households. Last year, I was an original cosponsor of the 
Section 8 Voucher bill, H.R. 5443, which the committee passed, 
although the House did not take up the measure.
    The Section 8 Voucher Reform Act of 2006 represented the 
most comprehensive reform to the Section 8 Voucher Program that 
we have seen in several years.
    The major provisions of the voucher bill, including 
targeting, inspections, tenant rents, and move to work, 
represented a major step in the direction of reform.
    I share this with you because I believe that this year we 
can pass the Section 8 Voucher Act using a similar strategy, 
with bipartisan support.
    It is important that we move forward on Section 8 voucher 
reform if for no other reason than to restore our committee's 
legislative responsibility for the program.
    Many important aspects of the program, like the funding 
formula, have had to be addressed by the appropriators, because 
we did not reauthorize our own program.
    Just a month ago, the funding formula was placed in the 
continuing resolution, and of course it had not been heard in 
committee, the subcommittee or the full committee. A program of 
this importance to communities all over the country needs to be 
thoroughly scrutinized.
    I hope that we can lay the foundation to develop consensus 
around affordable housing programs that work for the Nation's 
poor, working families with children, and the elderly, as well 
as the disabled.
    We also must include public housing authorities and HUD by 
moving a Section 8 voucher reform once it is introduced.
    The Section 8 Voucher bill addresses a number of provisions 
that are important to me. One is the need to improve the 
mechanisms for inspections of rental units. Most would agree 
that tenants need protections and that these protections should 
meet current housing quality standards. The Voucher Reform Act 
requires inspections every 2 years.
    Any time a unit passes inspections related to another 
Federal program, like the home program, the idea would be to 
not have to inspect the unit as long as it occurred in the 
preceding 12 months, saving time and money and making the 
rental unit available for occupancy as soon as possible, while 
protecting the health and welfare of the tenant.
    This would be a major improvement over current practices.
    Another major provision of Section 8 voucher reform is 
related to rent reform and income reviews. Tenants will not pay 
more than 30 percent of income for rent. This is essential to 
ensure that those traditionally served by the program will 
continue to be served.
    We consider incentives for work by allowing income 
increases of less than 10 percent to be disregarded as well as 
last year's income.
    We also exempt the income of full-time students attending 
college in income calculations. PHA's would also recertify 
income every 3 years where the major resource of income is 
fixed.
    Another important aspect of Section 8 voucher reform is the 
issue of targeting vouchers to those most in need. Under the 
bill passed last year, 75 percent of new vouchers would go to 
families below 30 percent of income. Vouchers would be 
authorized for the next 5 years.
    The bill to be introduced will contain a similar provision. 
In addition, under current law, medical expenses in excess of 3 
percent of a tenant's income for elderly and disabled are 
deductible for income calculations. The Voucher Reform Act will 
raise the threshold from 3 percent to 10 percent for the 
elderly and disabled.
    As you know, the CR we just passed included a measure to 
change the Section 8 funding formula. The CR changed the 
funding formula to base funding in 2007 using the PHA's most 
recent verifiable 12-month period of voucher spending based on 
leasing and cost data.
    As a result, the actual voucher allocation would occur 
annually instead of being based forever on the 2004 allocation 
formula.
    I believe that the voucher reform is so essential to our 
ability to assist the poor working families with children and 
the elderly and disabled to have decent, safe, and affordable 
housing.
    Of course, we would all like to fund a voucher program that 
supported everyone who needs a voucher, but that is not 
possible. We can make needed improvements to the program while 
restoring faith in the voucher program for the tenants who are 
in need of affordable housing as well as for our PHA's.
    I hope that my colleagues will support the Section 8 
Voucher Act when it is introduced to ensure that these goals 
are met.
    Part of achieving the goal of voucher reform begins with 
this hearing and the witnesses' testimony. I hope that the 
witnesses will share their insight on this important issue so 
that we can begin to reform the program.
    At this time, I would like to yield 5 minutes to our 
ranking member, Congresswoman Biggert, for an opening 
statement.
    Mrs. Biggert. Thank you. Thank you, Chairwoman Waters, and 
I want to welcome all of today's witnesses here, and to thank 
you, Chairwoman Waters, for holding this important hearing to 
examine the Section 8 housing choice voucher program.
    I think that we on the subcommittee are acutely aware of 
the many difficult management and budget challenges inherent in 
this government program. It's my hope that we can take this 
opportunity to work together as we contemplate the future of 
Section 8.
    While homeownership is a desired goal for all Americans, 
there are many in today's society that are not yet ready to own 
their own home, and we must therefore continue to pursue 
alternatives to make sure that affordable rental housing is 
available, and we must encourage recipients of rental housing 
assistance to move towards self-sufficiency and we must make 
sure that the assistance is there for those who truly need it.
    As you know, the Section 8 housing assistance program is 
the major vehicle for providing rental assistance to low income 
families and individuals, helping over 2 million low income 
households, elderly, and disabled persons secure affordable 
housing in the private market.
    This program represents the Nation's largest low income 
housing assistance program and today's Section 8 program has 
become the largest component of HUD's budget.
    The rising cost of providing rental assistance is due in 
varying degrees to the expansion of the program, the cost of 
renewing expiring long-term contracts, and rising costs in 
housing markets across the country.
    The day of reckoning is coming fast. If we do not address 
the increased costs of this program, it will consume the HUD 
budget. It is already affecting the funding of other programs 
within the department. I trust that we can use today's hearing 
to engage in productive discussions and to help us find common 
sense solutions to reforming the Section 8 program.
    Not a day goes by that I don't talk to a constituent or an 
organization concerning the problems inherent in this program, 
such as long waiting lists, lack of affordable Section 8 
voucher housing, lack of local program flexibility, and various 
PHA funding concerns.
    The longer we wait to address some of these concerns, the 
greater the risk is, not just to Section 8 but to other HUD 
programs that surely will be cut to pay for it.
    I hope that we can draft language to address some of the 
funding shortfalls that occurred as a result of language placed 
in the most recent continuing resolution.
    Over 1,200 public housing authorities, over half of the 
PHA's in our Nation, including all of those in the Gulf Stream 
and all of those in my district and at least some in the 
chairwoman's district will take a hit in fiscal year 2007. The 
Chicago suburbs are hard hit by this new formula. Each housing 
authority in all three countries in my Congressional district 
will receive a funding cut this year. The housing authority and 
county will lose $8 million. Jolie will lose $1.1 million, 
Aurora and DuPage will lose over $1 million.
    These are not just dollars. These are families and seniors 
who are being hurt here. With this bill, proposed cuts to 
Section 8 housing funds, more than 100 families in DuPage 
County, about 150 in Will County, and thousands across this 
country will be kicked to the curb in 2007.
    With that said, my hope is that we will move this bill 
through the committee process. We can make modest changes to 
the voucher funding formula to provide incentives for agencies 
to operate in an efficient, cost-effective manner while serving 
the maximum number of low income tenants.
    We also should work to modify inspection rules, and to give 
agencies more flexibility, which will encourage owners to rent 
to voucher holders and preserve essential tenant protections.
    To reduce burdens on agencies, landlords, and tenants, I 
would support efforts to streamline rent determination and 
other procedures for the Section 8 program.
    Finally, we should promote local incentives that encourage 
recipients of rental assistance to move towards self-
sufficiency.
    As we seek ways to improve America's communities and 
strengthen housing opportunities for all citizens, particularly 
our poor, I recognize that the issue of reforming programs like 
Section 8 can be contentious. However, politics is the part of 
the possible, and I believe that today's hearing is a good 
first step on the road to reforming this country's largest 
rental assistance program, Section 8.
    Again, I welcome all of today's witnesses and look forward 
to your testimony.
    Thank you, Madam Chairwoman. I yield back.
    Chairwoman Waters. Thank you, very much.
    The gentleman from Massachusetts, Mr. Lynch, is recognized 
for 2 minutes for an opening statement.
    Mr. Lynch. Thank you, Madam Chairwoman, and Ranking Member 
Biggert, for holding this hearing. I also want to thank all of 
the panelists and the under secretary for attending.
    I have gone down to New Orleans previously on earlier Code 
Ls. I did not make that one. But I have the perspective of a 
former tenant of HUD housing. I grew up in the Old Colony 
Housing Projects in South Boston with my mom and dad and my 
five sisters, so I have that bias, as a former tenant.
    I must confess also that when I completed law school, I 
went back to the housing projects and represented tenants, my 
former neighbors, as free legal counsel on matters of asbestos 
and lead paid in apartments, people being underhoused.
    And by the way, I think that had a lot to do with me 
getting elected. You never know how many friends you have in 
this world until you start doing free legal work.
    But that being said, I do believe that there's a real 
struggle in this country about U.S. housing policy, and I think 
we have greater struggles than we had when I was living there 
because of the huge disparity in what is earned by the families 
in many of our housing projects and in Section 8 tenant-based 
units versus what it might cost them to move to private 
housing.
    I still live--I haven't moved far--two blocks from the 
housing project that I grew up in, and yet the rents in my area 
two blocks away are a couple of thousand dollars a month, and 
that's just beyond the hope and the reach of a lot of families 
in public housing, and we're going to talk about that hopefully 
a little bit later on.
    The bottom line here is, I think we can do better. I know 
we can, and we have to, not only in the situation post-Katrina, 
but also just in our general housing policy.
    I respect the people who come here before us today, and I 
think we could benefit from your counsel, and we could use your 
help, and I hope we can work in a constructive way to really 
recognize that the Federal Government does have a rightful 
place to play in national housing policy, and we want to get to 
that.
    Chairwoman Waters. The time of the gentleman has expired.
    Mr. Lynch. Thank you. I yield back.
    Chairwoman Waters. Thank you very much.
    The gentleman from California, Mr. Miller, is recognized 
for 2 minutes for an opening statement.
    Mr. Miller. Thank you.
    Over the years, Congress has grappled with the issue 
regarding the skyrocketing costs of Section 8 programs, under-
used vouchers, and the general management of the program.
    The cost of the program is growing so rapidly that HUD's 
other programs, including public housing, homeless programs, 
CDBG, Hope VI, and many others are suffering as a result. If 
Section 8 is to remain viable, we must take steps to reform the 
program.
    During this time of budget constraints, Congress is 
struggling to renew existing vouchers. As we try to reform this 
program, we must remain mindful that it is not feasible for the 
Federal Government to continue to increase funding for the 
program without enacting meaningful reforms.
    The Section 8 program must be implemented in a way that is 
fiscally responsible. With this goal in mind, in the 109th 
Congress, I introduced H.R. 1999, the State and Local Housing 
Flexibility Act of 2005, to help the Section 8 voucher housing 
program work better and remain available to those in need.
    Specifically, this legislation would improve the delivery 
of housing assistance to families in need by providing 
flexibility to the local public housing authorities, PHA's, and 
holding them accountable for results.
    Additionally, the legislation would allow PHA's to serve as 
many families as possible within their grant amount, rather 
than being held to a specific number of vouchers.
    Rather than H.R. 1999, the committee passed a different 
bill to make changes at the margins of the Section 8 program. 
While H.R. 5443 made important improvements to the inspection 
process and income verification process, the bill did not truly 
address the fundamental weakness in the Section 8 program.
    If we pass a bill this year, let us pass one with true 
reforms, not just one that gives the perception that reform was 
accomplished. We can do much more than merely provide changes 
on the margins. We should encourage PHA's to cooperate, and to 
operate in an efficient, cost-effective manner to serve the 
maximum number of low income tenants.
    For example, eligible PHA's should have a chance to be 
innovative in their efforts to move families to self-
sufficiency. Further, we must address the long list of waiting 
lines for the Section 8 assistance. The average length of time 
families spend on the waiting list for subsidized housing in 
the United States is more than 2 years. In cities like Los 
Angeles, the waiting list is 10 years.
    I undoubtedly must yield back.
    Chairwoman Waters. The time of the gentleman has expired.
    We're going to be keeping a very tight schedule today; I 
know people have planes to catch.
    So the gentleman from Missouri, Mr. Cleaver, is recognized 
for 2 minutes for an opening statement.
    Mr. Cleaver. Thank you, Madam Chairwoman. I will forego any 
opening comments and have questions later.
    Thank you.
    Chairwoman Waters. All right. The Chair will extend 
additional minutes for those members who are present in the 
room at this time.
    We had originally talked about 10 minutes on each side, and 
if the ranking member would like, we could expand the gentleman 
from California's time--
    Mr. Miller. May I finish my comments? That would be great.
    Chairwoman Waters. Yes, you may.
    Mr. Miller. Thank you, very much.
    Let's see. I think I know where I'm at.
    We should encourage PHA's to operate in an efficient, cost-
effective manner to serve the maximum number of low income 
tenants. For example, eligible PHA's should have the chance to 
be innovative in their efforts to move families toward self-
sufficiency.
    Further, we must address the long list of those waiting for 
Section 8 vouchers. The average length of time that families 
spend on the waiting list for subsidized housing in the United 
States is more than 2 years. In cities like Los Angeles, the 
waiting list is 10 years.
    How can we justify a situation where one person is given 
unlimited Federal housing assistance while another, who might 
have greater needs, is on the waiting list and forced to fend 
for themselves for almost 10 years?
    The answer is not to allow this program to continue to grow 
out of control. Rather, we must reform the program so that 
participants can transition to self-sufficiency within a 
reasonable period of time, giving more families the ability to 
benefit from our Nation's temporary helping hand.
    I believe we have worked in a positive, bipartisan manner 
thus far, and I look forward to working with my colleagues on 
both sides of the aisle on a bill that truly reforms the 
program.
    As we move forward, we must remain mindful that it is not 
feasible for the Federal Government to continue to increase 
funding for the program without enacting meaningful reforms. 
With this goal in mind, we must seek bipartisan ways to make 
existing housing programs work better and remain available for 
those in need.
    I yield back the balance of my time. Thank you.
    Chairwoman Waters. Thank you.
    The gentleman from Texas, Mr. Al Green, is recognized for 2 
minutes for an opening statement.
    Mr. Green. Thank you, Madam Chairwoman. And I thank you for 
hosting this hearing. It is important. Once again, you have 
demonstrated your desire to make sure that every person has a 
place to call home.
    Madam Chairwoman, I believe that H.R. 543 is going to prove 
to be a very important piece of legislation. It will change the 
funding formula such that the money divided among housing 
agencies will be fairly divided, such that some will not be 
shortchanged while others are over-compensated.
    It will preserve the income targeting provisions, the 75 
percent/30 percent provisions, but it also will have 
flexibility such that in areas where incomes are unusually low, 
we will be allowed to use the Federal poverty line, which in 
some cases may cause additional families to have opportunities, 
who are indeed still within poverty guidelines.
    It will streamline the inspection requirements and cause 
more landlords to lease. It will expand the existing authority 
from 30 to 40 for the moving to work agencies. And it will 
permit a voucher, and this may be most important, to be used 
for down payment by a first-time home buyer.
    We want to give everybody an opportunity to experience the 
American dream of homeownership.
    Madam Chairwoman, I am so honored that you have brought 
this piece of legislation to our attention, and I believe that 
it will help many persons who otherwise would not have an 
opportunity to have a place to call home.
    I yield back the balance of my time.
    Chairwoman Waters. Thank you.
    And the gentleman from Connecticut, Mr. Shays, is 
recognized for 2 minutes.
    Mr. Shays. Two minutes? Thank you.
    Chairwoman Waters. Yes.
    Mr. Shays. Thank you, Madam Chairwoman.
    First, let me congratulate you on this opportunity to chair 
what I think is an important committee for Congress, and I know 
you're going to do a terrific job.
    Chairwoman Waters. Thank you.
    Mr. Shays. And I'd like to just say to members that we on 
this side of the aisle have argued for years that we don't want 
people living in public housing being warehoused, and we've 
argued that we should participate in the market, and Section 8 
vouchers enable you to participate in the market.
    The challenge now is that it has become quite expensive 
because, in a sense, you don't own the property, and so we're 
having to pay for inflation, whereas when we used to own public 
housing, we didn't have to deal with the inflation aspect of 
housing as much.
    And so it's just a recognition, I think, on our side of the 
aisle. We have to recognize that costs will continue to go up.
    But our choice was to put people in a place where others 
might live who have income and have resources and have a young 
child, for instance, grow up in a unit that's not public 
housing, but in a unit where he might see someone, like in the 
case of where I live, go to UBS to work and get in his BMW to 
drive in to work instead of driving to make sales of drugs.
    Bottom line, I believe in Section 8 vouchers. I think we 
need reform. And I'm happy that we're looking at this issue.
    Thank you.
    Chairwoman Waters. Thank you, very much.
    I yield to the gentleman from New Jersey, Mr. Sires, 2 
minutes.
    Mr. Sires. Thank you, Madam Chairwoman.
    Congratulations for holding this hearing. I'm looking 
forward to working with you on this issue.
    Mr. Assistant Secretary, I am a former mayor, and a former 
speaker of the New Jersey Assembly, and I have to tell you that 
the housing issue, whether it's Section 8 or any other issue, 
is probably the number one issue facing people of poor means in 
American today.
    It just seems that they have no place to live. It seems to 
me that we haven't done anything lately regarding senior 
housing, or the disabled. And reforms are great, and all of 
these directions are great, but only if it leads to more 
opportunity. It just seems that with all of these reforms, we 
have less and less ability to give people housing.
    Just yesterday I received a call from one of the citizens 
in my district, Jersey City. They have to lay off 34 people 
because of all the cuts.
    People talk about drugs and housing. People talk about the 
insecurity in housing. But yet we cut the funding for all those 
places to make it secure.
    I don't know whether the intention is to turn it over to 
the local municipality or the State, but that seems to be the 
direction we're going. In New Jersey, it got so bad that I, as 
speaker, had to institute our own Section 8 program.
    The cuts here, the decisions here, impact not only New 
Jersey or other States, but the local level.
    So I will urge you, you know, reforms are great, but if 
we're going to cut the ability for people to have housing, I 
mean, I am not for reform. We have to provide--the Federal 
Government, in my opinion, has a role in providing housing for 
the most needy and seniors.
    Thank you, Madam Chairwoman.
    Chairwoman Waters. Thank you, very much.
    I yield to the gentleman from Connecticut, Mr. Murphy, 2 
minutes, for an opening statement.
    Mr. Murphy. Thank you, Madam Chairwoman.
    As the sole representative of the second row this morning, 
it's a great honor to be able to serve on this committee with 
you, a freshman member.
    Mr. Shays. If the gentleman would yield, we'd let him sit 
in the first row over here.
    [Laughter]
    Mr. Murphy. I'm finding it very comfortable on this row, 
Mr. Shays.
    Madam Chairwoman, coming from Connecticut, we have great 
successes and great challenges in the area of housing policy, 
and it was why I asked to serve with you on this committee.
    We have successes in partnering Section 8 vouchers with 
social services in our support of housing units, and I look 
forward to a conversation about how the Federal Government can 
help States that are doing supporting housing well continue to 
do that.
    But we have challenges with homeownership. In one of the 
richest States in the Nation, we have some of the lowest rates 
of homeownership, and so what I think is so productive about 
the discussion when it comes to Section 8 reform is the means 
that we can use Section 8 as a pathway to homeownership. That, 
in Connecticut, would mean so much to many of our low income 
citizens.
    But more than that, it is an honor to be able to serve on 
this committee, and I look forward to the work that we'll do on 
this issue and others.
    Chairwoman Waters. Thank you, very much.
    We will now call our witnesses.
    For the first panel, I think we have one witness, the 
Honorable Orlando J. Cabrera, Assistant Secretary of Public and 
Indian Housing, U.S. Department of Housing and Urban 
Development.
    Welcome, Mr. Cabrera.

   STATEMENT OF THE HONORABLE ORLANDO J. CABRERA, ASSISTANT 
SECRETARY, PUBLIC AND INDIAN HOUSING, DEPARTMENT OF HOUSING AND 
                       URBAN DEVELOPMENT

    Mr. Cabrera. Thank you, Madam Chairwoman.
    Good morning, Madam Chairwoman, Ranking Member Biggert, and 
members of the committee. Thank you for inviting me to speak 
today.
    I wanted to start by apologizing. I am getting over the 
flu. I'm not contagious, but I might struggle a little bit 
sometimes with my voice, so I'll take a break from time to 
time, if it's okay with you.
    Chairwoman Waters. Excuse me. If I may, we do not have your 
written statement. You will be recognized for 5 minutes, and 
we'd like to have you follow up with a written statement to us.
    Mr. Cabrera. Yes, Madam Chairwoman, we will submit a 
written statement. I believe I spoke to one of your staff, and 
I think we'll get that to you within 30 days, if that's 
acceptable to you.
    Chairwoman Waters. 30 days?
    Mr. Cabrera. Yes, please.
    Chairwoman Waters. I need it before then.
    Mr. Cabrera. Okay.
    Chairwoman Waters. Could you get it to us in 10 days?
    Mr. Cabrera. Yes, Madam Chairwoman.
    Chairwoman Waters. Thank you. I think that's sufficient.
    Mr. Cabrera. My name is Orlando Cabrera, and I'm Assistant 
Secretary for Public and Indian Housing at the Department of 
Housing and Urban Development.
    As you know, our portfolio includes a housing choice 
voucher program, which is the focus of this statement. In 
recent years, we have seen many positive outcomes in the HCV 
program. Budget based allocation of vouchers has provided 
predictability for public housing authorities.
    We have used tools that help us assure that we are serving 
those whom Congress intended to serve. Improper payments have 
been reduced significantly, down to $1.2 billion from $3.5 
billion annually, resulting in HUD's removal from the 
Government Accountability Office's high-risk list of government 
programs.
    But we also see areas that could make the housing choice 
voucher program even more resilient and vital. We would like to 
suggest that the platform for assuring that vitality is the 
continued route towards simplification and away from 
regulation. The vast majority of public housing authorities are 
good stewards of Federal funds. HUD believes it is good policy 
to encourage and incentivize that good stewardship in the HCV 
program.
    If the central theme is simplification, then we would 
suggest that this committee, as authorizers, craft and pass 
language that mirrors the budget based allocation set forth in 
appropriations law in recent years.
    The budget based system works. PHA's have noted that the 
predictability of funding has helped them administer their 
program. It allows the PHA's to maximize the number of families 
that they can help in their communities.
    We would also suggest simplifying rent calculations 
compared to what the current methodology is. The current one-
size-fits-all for income and rent we suggest should be 
revisited. It is very costly to administer and it encourages 
the under-reporting of income.
    One stakeholder group has published a chart that could not 
better illustrate the complex labyrinth that is rent-setting. 
I'd like to show that to you momentarily. This is the 
methodology for rent-setting in Section 8. It is extremely 
cumbersome.
    Local PHA's--oh, I'm sorry, and Madam Chairwoman, we're 
willing to have more copies of these delivered to the committee 
for their review.
    Local PHA's--
    Chairwoman Waters. Without objection, they will be 
submitted for the record.
    Mr. Cabrera. Thank you, Madam Chairwoman.
    Local PHA's know their markets better than we do here in 
Washington. We should let them use the information they know 
about their communities to better serve the voucher holders 
they serve.
    We would suggest simplifying the definition of income for 
purposes of calculation and then give PHA's a parameter of 
rent-setting tools, like flat rent, income-tiered rent, rent 
based upon percentage of income as determined by the PHA, 
current Housing Act rent calculation if the PHA elects, but 
always providing a safe harbor for the elderly and the 
disabled.
    Performance standards should be established that can 
independently verify how well PHA's are utilizing Federal funds 
in order to assure adequate oversight of PHA's.
    We would encourage focus on four essential pillars: 
effective utilization of funds, financial solvency of the PHA, 
physical condition of the units, and timely and accurate 
financial and data reporting.
    We would ask that you consider deregulating small PHA's, 
PHA's with a cumulative total of less than 500 public housing 
units and/or vouchers, by allowing them fungibility with both 
Section 8 and Section 9 money. They still would need to meet 
performance standards and report data.
    Provide those PHA's statutory relief, and allow them the 
fungibility so they can work those funds to the fullest extent 
for the benefit of their communities.
    Our sense is that there is some support for asset testing, 
as well. We agree that asset testing would be a useful tool to 
assure that Federal funds are going to those who Congress 
intended to serve.
    We agree that biennial, as opposed to annual, income 
certifications and unit inspections, would reduce 
administrative costs and be helpful, but would suggest that, 
with certain exceptions, relying on initial and then not 
conducting subsequent income certifications would work well for 
the elderly and disabled population.
    In conclusion, we would suggest that simplification is the 
route to greater effectiveness of the housing choice voucher 
program, not merely regulation.
    Thank you for your invitation.
    I will be happy to answer any questions.
    [The prepared statement of Assistant Secretary Cabrera can 
be found on page 68 of the appendix.]
    Chairwoman Waters. Thank you.
    The Chair yields herself 5 minutes for questions.
    Mr. Cabrera, as a result of the updated voucher formula for 
2007, and the structure that is contained in this bill, should 
the bill prevent the recapture of pre-2007 program reserves at 
least through 2008, if not permanently?
    Mr. Cabrera. I don't believe that we have proposed the 
recapture of the undesignated fund balances, and we have no 
intent of proposing the recapture of those undesignated fund 
balances.
    Chairwoman Waters. Is the proposed permanent 2 percent 
reserve level high enough to run the voucher program 
responsibly?
    Mr. Cabrera. I would answer the question in a different way 
than a fixed number.
    One of the issues is, what's the appropriate reserve for 
the agency that is in question? A reserve number for the New 
York City housing authority may not be the one that would apply 
to a smaller one or a different large city, so I would say that 
in some cases, I'm sure a 2 percent reserve would be fine, but 
in some cases, you may need a greater or a lesser reserve than 
that.
    Chairwoman Waters. Thank you, very much.
    That's all that I have by way of questions, and I would 
yield to the ranking member, Ms. Biggert, 5 minutes for 
questions.
    Mrs. Biggert. Thank you.
    The President's fiscal year 2008 budget proposes to 
eliminate the cap on the number of families each PHA is allowed 
to assist in order to assist at least 180,000 additional 
families.
    Could you explain the current difficulties with the cap and 
how it affects PHA's that may have funding reserves but are 
currently unable to spend them?
    Mr. Cabrera. The undesignated fund balance is an amount of 
money that most PHA's have, 200 out of 2,400, and it is split 
into two parts.
    One is that which is outside of the cap and can still be 
used, and that which is, or might be, within a cap. Every PHA 
is different. There is no uniform rule. And so for those that 
are now, that have hit their cap in terms of the ability to 
issue more vouchers, by having the cap there, we are impeding 
them from moving forward and leasing more.
    Removing the cap would give them the flexibility to lease 
more, but it would also impose on them, as we would want to 
impose on them, the obligation to be good, responsible 
financial stewards of Federal funds. And so they would be able 
to determine for themselves to what extent they would lease 
more beyond that cap.
    Mrs. Biggert. But aren't they the ones that really have 
been good stewards and have gotten, you know, all the vouchers 
out to all those that they can, and so it seems like right now 
we are penalizing them, and particularly with this continuing 
resolution, where they have lost their funding because they've 
had the reserves while they're waiting to be able to not have 
that cap limitation?
    Mr. Cabrera. The cap is impeding the ability of many very 
good performers from reaching further.
    Mrs. Biggert. Okay.
    Then in recent years, Congress has changed the way that the 
voucher program is funded, moving from a formula that was based 
on the number of units that a PHA was under contract was HUD at 
their current per-unit cost to a dollar-based formula 
established by the number of units under the lease on a given 
date, adjusted by the inflation formula.
    What further improvement could be made?
    Mr. Cabrera. The biggest improvement that could be made is 
providing PHA's with predictability.
    Re-benchmarking every year is going to, I think, impose an 
enormous burden on PHA's, and also open some real issues with 
respect to how vouchers are used and utilized, such that, for 
example, we may be put in a position where the over/under-
payments that we have just been taken off the high-risk list 
for at HUD, that that might become an issue again.
    Our suggestion would be that there would be a baseline and 
every 3 years, triennially, the re-benchmarking would be 
revisited based upon that baseline. It would be a periodic 
thing.
    That way, PHA's could plan, they could understand, they 
would understand that number is not immutable, it changes with 
time, depending upon what needs might be, and I think it 
addresses well the needs of particular PHA's.
    Mrs. Biggert. Does the current draft, does it revert back 
to a unit based formula, then?
    Mr. Cabrera. No, that would be a budget based formula where 
you would be re-benchmarking triennially, every 3 years, is 
what we would probably recommend most strongly.
    Mrs. Biggert. Okay. Thank you. I yield back.
    Chairwoman Waters. Okay. Thank you, very much.
    Before yielding to Mr. Lynch, I'd just like to be sure of 
what you said about the reserves or the--
    Mr. Cabrera. Undesignated fund balance?
    Chairwoman Waters. Yes.
    Mr. Cabrera. Yes.
    Chairwoman Waters. Did you say that you absolutely support 
PHA's being able to hold onto their reserves and to spend 
them--
    Mr. Cabrera. We do. We've included that, Madam Chairwoman, 
in our financial audit.
    As I recall, we have a footnote that says that the 
undesignated fund balances belong to the PHA's.
    Chairwoman Waters. All right.
    Mr. Cabrera. Now, as a matter of policy, that is what we 
believe.
    Chairwoman Waters. Thank you, very much.
    Mr. Lynch, 5 minutes.
    Mr. Lynch. Thank you, Madam Chairwoman.
    Under Secretary, again, thank you for coming.
    Mr. Cabrera. Mr. Lynch, thank you for the promotion.
    Mr. Lynch. I'm sorry, Mr. Under Secretary, yes.
    You know, if I listen to my housing tenants in my 
district--again, I think I have 22,000 families who are 
classified as extremely low income, and I have 13,000 who 
qualify under very low income, according to ho HUD standards--
they feel, and the advocates for these tenants feel that 
there's been a real retrenchment over the last 7 years 
regarding national housing policy, some would even say 
abandonment.
    We've seen it in this committee, and you heard from the 
ranking member, who's talking about the millions of dollars 
that will not be there for folks in her district, as well, who 
live in public housing.
    It just seems that right now, and for the last 7 years, 
we've been operating the public housing systems in the United 
States as housing of last resort, the nowhere-else-to-go 
housing.
    You have to realize, at least what I see broadly happening 
here, is we have, you know, 46 million people without health 
care, so that at any point, a family could be put in a 
disastrous, catastrophic situation that would require them to 
go to housing of last resort, or there's no job security, so we 
see people constantly being tossed out of work and then they 
have to get on a list for public housing, and also there's no 
retirement security, no pension security in this country 
anymore for a lot of people, so we see a lot of seniors getting 
stuck at the end of their working lives.
    And it's just troubling to see the development of our 
disinvestment in our public housing projects.
    Again, with those numbers that I talked about with the very 
low and extremely low in my district, I still have the highest 
private--well, it's the third highest in the country--the 
rental markets, the private rental markets.
    So there's really no other opportunity for them to move 
into private housing. And yet HUD itself defines affordability 
as spending no more than 30 percent of income on housing, and 
in my district, half of the extremely low income households are 
paying greater than 50 percent, so they're well beyond what the 
guidelines would be. And 20 percent of the very low income 
housing are in the same boat.
    My first question relates to the average rent burden for 
these voucher holders. Are the numbers we see in my district 
common to those across the country, and what can we do about 
that?
    And my second question relates to the goal of 
decentralizing concentrations of poverty. When we have the 
situation where folks are struggling, just like when I lived in 
the housing projects, folks were struggling, it just seems that 
it builds upon itself, you know, a feeling of some level of 
despair. The jobs aren't there. You know, it's just a very 
difficult situation.
    I have places in my district, Dorchester, Roxbury, the City 
of Brock--those are in Boston but also in Brockton--where 
gentrification and increasing rents are really concentrating 
people in very poor areas. And, you know, at the same time, we 
have a deficit of over 10,000 rental units that are needed for 
extremely low income families.
    I just want to know if you're doing anything that helps 
this situation to give families an opportunity to maybe 
diversify rather than being all together and generally in areas 
where the job opportunities are not there?
    Can we get people out of those developments and give some 
of those families a chance to move out, decrease the pressure 
in those areas, and connect these people with the jobs that 
will get them out of those situations and just ease the 
suffering in some of these developments?
    Mr. Cabrera. First, you need to know something that will 
illustrate for you why I'm answering this in a particular way.
    I'm from Boston. I grew up in Allston, just west of you. 
But the thing is, we moved to Florida, so I rediscovered R in 
the alphabet.
    Mr. Lynch. I have not.
    Mr. Cabrera. I know. I noticed that.
    Mr. Lynch. Sometimes we have an interpreter up here.
    Mr. Cabrera. I still remember. I don't need interpreters.
    So the next thing is that I grew up near Fidelis Way, so 
I'm familiar with the stresses of Boston.
    The third thing is that in Allston-Brighton, as you know, 
as you drive up Comm Ave, you have all those brownstones, used 
to be where my friends lived, and they used to be walkups, and 
they used to--I remember when my father, the rent went up from 
$180 a month to $200 a month, and I remember him going to our 
landlord, who lived on the second floor, and they had this 
pitched--they were two very close friends, and they had these 
pitched battle.
    So--
    Chairwoman Waters. The gentleman's time has expired.
    I yield 5 minutes for questioning to the gentleman from 
California, Mr. Miller.
    Mr. Miller. Thank you, Madam Chairwoman.
    I just think this program is growing out of control, and 
it's not efficient, and yet the basic need of reform, we have 
about 10 million households out there in different need of 
housing assistance, and they're on a wait list of a minimum of 
2 years, in the Los Angeles area 10 years.
    And can we justify a situation where one person is given 
unlimited Federal housing assistance while another one is put 
on a wait list, who might have a greater need?
    Mr. Cabrera. Well, one of the ways to address that, 
Congressman, is that--and we're beginning to explore this--is 
to start looking at the wait lists and using the tools that we 
use in order to verify income when folks get the voucher, to 
basically, periodically, move folks off the wait list who would 
not otherwise qualify at that point in time, and that would 
thin out the wait list to assure that the people on it actually 
qualify for the voucher.
    Mr. Miller. We placed limits on TANIF in 1996. Do you think 
we should impose the same limit requirements on those who 
receive Section 8 vouchers?
    Mr. Cabrera. I don't recall the limits on TANIF from 1996, 
Congressman. I'd like to request your indulgence and ask--
    Mr. Miller. Do you think we should impose time limits on 
vouchers?
    Mr. Cabrera. Oh, time limits. Oh.
    I think that the PHA's should have--I understand the 
question, and I apologize--the PHA's should have the 
flexibility to decide for themselves if they want to impose 
time limits, yes.
    Mr. Miller. I thought that when I introduced a bill 2 years 
ago, trying to go in that direction.
    Moving to work, currently we only allow about 32 of the 
PHA's out of the 3,000 to get involved in the move to work 
program. Could you give us your observation on the move to work 
program?
    Mr. Cabrera. Moving to work is a program that allows the 
funging, the combination of Section 8 money, housing choice 
voucher money, and Section 9 money, operating fund and other 
funds, and it gives them the ability to use the whole pool of 
money to address housing needs in the community in whatever way 
they really want, as long as it's within the contract of MTW.
    So my view of that is, it's worked for the most part 
extraordinarily well--
    Mr. Miller. Are we serving more families on that move to 
work program?
    Mr. Cabrera. I think more families are being served, and I 
think, coming back to your first point, not only that, but we 
have more efficient PHA's being run.
    Mr. Miller. In the current system, PHA's are forced to skip 
low income working families who have been on a waiting list for 
years in order to meet the existing targeting requirements that 
we face out there.
    Do you think Congress should change the current targeting 
requirements, and if you do, how would we go about doing that?
    Mr. Cabrera. I think that, on the Section 8 side, the 
targeting is 75 percent of vouchers for folks at 30 percent of 
AMI and below, while on the public housing side the target is 
40 percent of units for folks at 30 percent of AMI and below.
    I think that there--I can certainly understand that certain 
stakeholders would feel extremely committed to the idea of 
keeping the 75 percent number. I do believe it impedes a PHA's 
ability to fully function. I think giving some flexibility--I'm 
not saying a set number, but some kind of criteria, maybe a 
tiered criteria, maybe a set of options--would better serve 
people.
    I think at the end of the day, you're still serving the 
same demographic, but you are serving them in a more flexible 
way.
    One of the reasons that we're married to this particular 
demographic is simply the standards set by Congress. The 30 
percent of AMI is not regulatory, it's statutory.
    And so therefore, one of the things we should begin talking 
about is maybe it's not 30, maybe it's 40 percent of--
    Mr. Miller. So allowing more flexibility for PHA's based on 
their local needs--
    Mr. Cabrera. Without question.
    Mr. Miller.--local determination?
    Mr. Cabrera. Without question.
    Mr. Miller. Yes.
    Portability. We've discussed that in the past, and there's 
been some debate, because it's cumbersome for the housing 
authority.
    Sometimes a housing authority will have a person move to an 
area that really costs them two vouchers, based on the cost of 
that area.
    Do you think Congress should limit portability moves to 
issues such as job, medical, and education, and do you think it 
should be even limited to an area that's within the same cost 
range?
    Mr. Cabrera. I think portability is an issue that we need 
to visit. Portability, I think, is as much an issue of the 
reimbursement as it is the fact that there is portability. I 
think one of the things that would be helpful is looking at 
ways for the PHA that is carrying the burden to be more quickly 
reimbursed for having gone out and done the port, but at the 
end of the day, I would worry about restricting PHA's too much 
on portability on the one hand. Certainly, having wide open 
portability or imposing that on PHA's really is putting them in 
an uncomfortable position.
    Mr. Miller. But some kind of justification?
    Mr. Cabrera. Yes.
    Mr. Miller. Okay. Thank you.
    I yield back.
    Chairwoman Waters. The gentleman's time has expired.
    Mr. Cleaver, for 5 minutes.
    Mr. Cleaver. Thank you. Thank you, Madam Chairwoman.
    Mr. Cabrera, I was outside. I may have missed. Hopefully, 
you didn't address this in your opening statement.
    My first question is, do you believe that we are currently 
operating with sufficient Section 8 certificates?
    Mr. Cabrera. Vouchers, you mean?
    Mr. Cleaver. Yes. The voucher is certified, so I call them 
certificates.
    Mr. Cabrera. Congressman, we have proposed the budget that 
we always propose. That is what we believe, is that we are 
funded appropriately for the voucher program, yes.
    The voucher program has increased in funding every year 
since, well, since its inception--
    Mr. Cleaver. I know, since 1974.
    Mr. Cabrera. Yes.
    Mr. Cleaver. That's not my question, though. Let me ask it 
another way.
    Is HUD satisfied that there are sufficient vouchers to 
handle the people who need housing, the poor who are in need of 
housing?
    Mr. Cabrera. The President's budget is $16 billion for 
fiscal year 2008, and assuming we remove the caps and assuming 
that we--
    Mr. Cleaver. Okay, I'm sorry--
    Mr. Cabrera.--the answer is yes, I think we can do it well. 
Sure.
    Mr. Cleaver. Okay. Sometimes I'm not as articulate as I 
should be, so I'll try it again.
    Is HUD satisfied that there are sufficient dollars 
available in the budget to provide sufficient housing for the 
poor and that we don't need any additional vouchers?
    Mr. Cabrera. Okay.
    Congressman, respectfully, I have answered the question, 
and with the assumptions that I gave you, that is the answer.
    Mr. Cleaver. Respectfully, you haven't. I mean, very 
respectfully, you haven't.
    And if you could just say we don't have sufficient dollars 
or we think--
    Mr. Cabrera. The answer is not a yes or no question. We 
have made a proposal within the concept of appropriation, we 
have provided the parameters upon which we can expand Section 
8--
    Mr. Cleaver. So you don't need any additional dollars for 
vouchers?
    Mr. Cabrera. Assuming that we get the caps removed, the 
answer is that--we are getting additional dollars for vouchers. 
Assuming the caps were removed and those things that have been 
proposed are put in place--
    Mr. Cleaver. Enough to sufficiently house people who need 
them?
    Mr. Cabrera. In accordance with the budget that's been 
proposed, yes.
    Mr. Cleaver. Okay. You made up your mind before you left 
that you weren't going to answer that question, before you left 
the HUD building, so that's fine. Maybe you'll answer this one.
    Is there any way we can address the problem that many of 
us--I've served as a mayor, as well--have to deal with: if we 
concentrate the Section 8 housing in one area, it's generally 
because the amount of money for each unit is insufficient to 
move them into other neighborhoods that may be more socio-
economically upscale, so consequently, we always end up placing 
the Section 8 certificates in the same neighborhood, because 
that's the amount of money per voucher that will allow us to 
secure housing.
    So is there a way that we can actually accomplish the 
spreading out of Section 8 that would be supported by HUD in 
terms of raising the amount that each voucher is worth?
    Mr. Cabrera. The answer--well, I'm not sure of the 
question, but I'm going to try to answer it.
    Section 8 has two components to it. One is the tenant-based 
rental assistance program.
    Mr. Cleaver. Yes.
    Mr. Cabrera. That is a voucher held by a person, and they 
can go anywhere they want.
    So the fact that folks are concentrated or not concentrated 
is a function of whether the landlord will or will not accept 
the tenant-based rental assistance.
    Mr. Cleaver. Except that the landlord will not accept a 
voucher in Hollywood, and so therefore everybody lives in 
another section of the community.
    Mr. Cabrera. Right.
    Mr. Cleaver. And so how do we talk about dispersing the 
residents all over a community when only one section of the 
community will have landlords who will accept the voucher?
    Mr. Cabrera. I would say, Congressman, that I don't--you 
know, the idea that Congress would impose on landlords the 
obligation to accept all vouchers, I think that--that's what I 
think you're saying, and I'm not so sure that--
    Mr. Cleaver. That's not what I said. I said what can HUD 
do?
    Chairwoman Waters. The gentleman's time has expired.
    Mr. Cleaver. Thank you.
    Chairwoman Waters. The gentleman from Connecticut, Mr. 
Shays.
    Mr. Shays. I'd be happy to yield a second.
    Mrs. Biggert. Thank you so much. Well, a little more than a 
second, but I did want to clarify just one thing about the 
questioning before.
    I was talking about the draft legislation, not what is 
currently being done on the unit versus the budget.
    And as you mentioned, the appropriators have made changes 
to the Section 8 program that moves us from the unit based to a 
budget based program.
    But I think that HUD, and you have indicated that you have 
a concern about the draft proposal that we're working on that 
takes us back to the unit based pricing.
    Can you explain your concerns and how you think that this 
draft proposal does that, takes us back to the unit-based?
    Mr. Cabrera. The draft proposal--
    Mr. Shays. In 20 seconds.
    Mr. Cabrera. In 20 seconds, the draft proposal does go back 
to a unit based system.
    It basically says every year you fill out and add to the 
number, the dollar number, the units that are out. That's a 
huge difference from where we are right now.
    Mrs. Biggert. Okay.
    Mr. Shays. Thank you.
    When you were in dialogue with Mr. Lynch, you guys started 
to wax eloquent about Massachusetts, and that happens all the 
time, and you never answered his question.
    But it was--I'm being serious.
    Mr. Cabrera. I can continue if you'd like.
    Mr. Shays. No. I want to know afterwards, the rest of the 
story.
    Mr. Cabrera. Sure.
    Mr. Shays. But what I would like to know now is, the bottom 
line is, and this is a serious problem, aside from the fact 
that Section 8 consumes so much of HUD's budget, we're really 
finding a lot of families who are having to pay more than 30 
percent.
    I'd like a short answer to the question, are you trying to 
identify towns where this is a common practice, where they're 
simply, you know, seeing that happen, number one, and number 
two, if you are, are you trying to identify the tenants?
    Mr. Cabrera. Where someone is paying more than 30 percent 
of their income?
    Mr. Shays. Yes.
    Mr. Cabrera. No, there is no current effort that I know of 
where we are undertaking some survey of who's inside or outside 
the band of affordability.
    And that would happen by market. That's--that is--that's a 
very different issue than--
    Mr. Shays. Okay.
    But the issue is that some tenants are ending up paying, 
and I'd like to know if this is endemic in certain parts of the 
country, and if it's the practice of the housing authority 
that's allowing this to happen.
    Secondly, another concern I have is that it's my 
understanding that in some cities they're really not paying the 
fair market rate, they're really pushing the landlords to much 
lower, and I guess we should say that's good if they get a good 
deal.
    Is that a case that's happening?
    Mr. Cabrera. In most cities, the problem is that the way 
the fair market rents are being--this is one of the things I 
was trying to say earlier.
    The way fair market rent is calculated now, it is 
essentially a data collection, and it's 2 years old.
    Mr. Shays. Okay. Let me leave it with that.
    Mr. Cabrera. And it's 2 years behind the times.
    Mr. Shays. Okay.
    The last point, the GAO removed from high-risk series the 
FHA and the rental property. Len Wolfson didn't ask me to ask 
this question, but it seems to me you should be congratulated, 
so let's assume he did his job and asked me to ask that 
question.
    Mr. Cabrera. Thank you, Congressman.
    Mr. Shays. And by the way, he does a great job for you.
    Mr. Cabrera. Thank you, very much.
    Mr. Shays. So tell me about it, about being removed.
    Was it a long effort? Do you want to talk about it, or are 
you just--
    Mr. Cabrera. It was an effort of years and countless people 
who did wonderful work at HUD, and absolutely had nothing to do 
with me, and I couldn't be more proud of them. They did a 
terrific job.
    Mr. Shays. Great. Ms. Biggert, would you like any more of 
my time?
    Mrs. Biggert. Thank you, Mr. Shays, I would.
    I still am concerned about this issue.
    Could you explain your concerns about going back to the 
unit base?
    Mr. Cabrera. In broader than 20 seconds?
    Mrs. Biggert. Yes.
    Mr. Cabrera. The unit based system will, it's not a 
geometric progression, but it's a much faster progression if 
you do a unit based system, because there are issues of how 
vouchers are issued annually.
    So you will have a situation where there is no regulator, 
not in a legal perspective, but in a financial one, on what or 
how vouchers are issued, and if there is one, there isn't a 
very solid one.
    This is what the problem was before. That's where you saw 
the very much more vertical increase in Section 8 budgeting.
    With budget based Section 8, with that, what you had was a 
situation where PHA's were given money based on a baseline with 
an annual adjustment factor, with a couple of other factors, 
and they were told, ``Here is your budget, serve the folks that 
you need to serve within your budget.''
    So one of the things that they were also told there, 
though, regrettably, in my view, is that, ``Oh, incidentally, 
we're going to cap a portion of this. We're going to cap your 
undesignated fund balances and you can't exceed the issuance of 
vouchers if you hit that cap.''
    And if that's removed, I think it gives quite a bit of 
leeway for particular PHA's to move forward and house more 
people.
    Chairwoman Waters. The gentleman's time has expired.
    Mr. Green of Texas, 5 minutes.
    Mr. Green. Thank you, Madam Chairwoman.
    Sir, thank you for appearing today.
    Mr. Cabrera. Thank you.
    Mr. Green. Under your formula, would any agencies receive a 
cut?
    Mr. Cabrera. Under the appropriation formula?
    The issue is not cut or increase in terms of a cut. The 
issue is the distribution of money going to various PHA's, 
depending upon how their vouchers were utilized.
    Mr. Green. Would any agency receive less than the previous 
year?
    Mr. Cabrera. Congressman, the answer is yes.
    Mr. Green. And would you kindly give some indication as to 
how your proposal would address first-time homeowners using 
vouchers as a down payment?
    Mr. Cabrera. We don't have a proposal, Congressman, but in 
SEVRA, first of all, Section 8 has been used for homeowner 
assistance for the last 5 years, 10 years, so once the 
commitment is made, they have 10 years worth of Section 8 
vouchers which they can use to redeem mortgage payments.
    This codifies that policy, as I recall, that was previously 
in an appropriations act.
    Mr. Green. With reference to persons who are in exceedingly 
low income areas, how do you propose addressing persons who are 
in these very low income areas, and because they are making--
they are using 30 percent of their local median income, you 
still would miss persons who are working full-time and may be 
below the poverty line.
    How would you address those persons?
    Mr. Cabrera. The 30 percent of income is a statutory thing.
    That is, the purpose of Section 8 is to defray the cost 
between fair market rent and what the person can pay.
    So that's just part of how the voucher works.
    Mr. Green. With reference to the Federal poverty line, do 
you see a means by which that can be incorporated?
    Mr. Cabrera. The poverty line, I saw that language in the 
Act, and I thought, ``I need to think more about that,'' and 
I'm happy to answer that question later, but it's a relatively 
new proposal, and I'm trying to figure out in my head, which is 
going to take me a little bit, what the implication of that is.
    And if you'll indulge me, I'm happy to talk about that or 
respond to you in writing as to what the effect of that would 
be.
    Mr. Green. Please, if you would.
    Mr. Cabrera. I'll be happy to.
    Mr. Green. Madam Chairwoman, I'll yield back.
    Chairwoman Waters. Thank you, very much.
    Ms. Capito.
    Ms. Capito. Thank you, Madam Chairwoman.
    Chairwoman Waters. Five minutes.
    I will yield time to the ranking member, if she still has 
additional questions.
    Mrs. Biggert. Thank you, very much.
    I just have one quick question, and then I'll yield back to 
the gentlelady.
    Re-benchmarking every year, and I think you've talked about 
3 years, is there any middle ground, or could you--
    Mr. Cabrera. Two?
    Mrs. Biggert. Well, that would be one, two, three, but do 
you think that is enough time?
    Mr. Cabrera. Yes. No, I think re-benchmarking every 3 years 
would work.
    Re-benching annually I think, and I'm not presuming to 
speak on behalf of those organizations that represent PHA's, 
but my sense of life is that they will tell you that would, to 
a large degree, create some rather significant stress in the 
PHA community.
    Mrs. Biggert. Thank you. I yield back.
    Ms. Capito. Thank you.
    I'd like to ask a couple of questions.
    We hear a lot about the waiting list and the length of the 
waiting list, and the immovability of the waiting list.
    What kind of measures is HUD doing or helping to assist 
with the PHA's to move or weave through these waiting lists to 
make sure that they're verifiable, that they're still active, 
and that they are an accurate representation of those who are 
still in need?
    Mr. Cabrera. Congresswoman, the waiting lists are very 
static, and what we're trying to do now is use a tool that we 
use when the voucher is administered to verify income, to 
assure that the voucher holder is within the income bandwidth 
on the waiting list to make sure that periodically the waiting 
list is checked, to assure that people who are on the waiting 
list still qualify for vouchers.
    Ms. Capito. I have another two areas of concern with 
housing in general and some Section 8 issues.
    One involves the elderly. I mean, I represent West 
Virginia, and we have one of the most elderly populations in 
the country.
    And we have a real challenge finding the ability for our 
elderly to find sufficient housing that's not only affordable, 
but is safe and accessible for the elderly.
    What kind of initiatives are, either through this program 
or other programs, are you pursuing in a rural kind of setting?
    Mr. Cabrera. Vouchers for the elderly are under a different 
section, Section 811, but at the end of the day, elders are a 
huge component of all vouchers.
    Frankly, we've just undertaken those things that Congress 
has told us to do with respect to housing the elderly using 
vouchers.
    One of the things we did do is to try to consolidate the 
effort between HHS, Health and Human Services, and us, to make 
us more like a one-stop shop, so that we can port all of these 
services together.
    One of the issues with elders is services, and so we're 
making pretty significant efforts in trying to package that or 
create that package.
    Ms. Capito. Okay. My final question is on the substandard 
quality of some housing that is either, (a), uninhabitable, or 
is being lived in and still doesn't meet up to your biennial or 
annual inspections.
    I think we learned during the Katrina hearings that, I 
can't remember the exact percent, Madam Chairwoman, but it was 
very high, a lot of the units that were not being--that were 
uninhabitable, and I think we're having that across the 
country.
    What's the solution to that? I mean, you know, we talked 
about one-on-one replacement, we talked about, in this new 
bill, we've talked about biennial inspections instead of annual 
inspections.
    What's your perception of that?
    Mr. Cabrera. In the case of New Orleans, most of that issue 
with respect to housing quality, as I recall the testimony, was 
with respect to the public housing units. This is on Section 8.
    So really, when we talk about Section 8, we're talking 
about the private market, and there the housing quality 
inspection is actually pretty good.
    The issue, though, is twofold.
    Number one, funding inspections is key, and that is 
something that we would encourage.
    The second thing, though, is uniformity of inspection.
    Very often, what winds up happening is that if we do have 
inspections, we find things that are just, not just--it's not 
that they're innocuous, it's that they're inapplicable to a 
housing setting.
    The best example I can give you--this is someone who 
recently spoke to me; this happened 4 days ago.
    There was a landlord, and they were very brave. They said, 
``I have a unit. I take the Section 8 voucher. You need to know 
the ceiling fan was off of the ceiling, the electrical box door 
was torn off, an outside outlet had live exposed wire, and the 
inspector cited me for not having 6 inches of caulking on my 
kitchen window, but nothing else.''
    Chairwoman Waters. The gentlelady's time has expired. Thank 
you.
    Mr. Clay of Missouri, 5 minutes.
    Mr. Clay. Thank you, Madam Chairwoman.
    Welcome to the subcommittee, Mr. Cabrera.
    Mr. Cabrera. Thank you.
    Mr. Clay. You know, the Section 8 Voucher Act will 
eliminate some of the stranglehold that the Administration put 
on the Section 8 program in 2004.
    The program will return to funding a set number of vouchers 
rather than providing a lump sum that mostly resulted in 
drastically decreasing the numbers of vouchers funded.
    This Act will target vouchers to extremely low income 
families, increase tenant protections, and have quality 
inspections of both rental and privately owned assisted 
housing.
    And the proposal does much more than this. I say that 
because I represent St. Louis, and we are finding a 
disproportionate percentage of privately owned assisted housing 
contaminated with lead paint.
    When housing is inspected, I wanted to know, does HUD 
inspect for the presence of lead contamination in the home, and 
still allow tenants to move into the units?
    And as you are aware, lead is a very serious health hazard, 
especially to children.
    Just what is HUD's policy in regard to that when they find 
lead present in a unit?
    Mr. Cabrera. Congressman, I'm going to ask that you let me 
ask my staff. I don't know whether on the sheets, the checklist 
that they use for inspections, lead is on there.
    May I be excused for just a minute?
    Mr. Clay. Sure. Sure. Please.
    Mr. Cabrera. HUD does not require it on the checklist. The 
landlords are required to check for lead on their properties, 
particularly when the property is older than 1978.
    I think there's a disclosure, as I recall, in most leases. 
There is a provision, though, where if a child has an elevated, 
I don't know what the standard is, but an elevated level of 
lead, then they have to be moved out of the unit.
    Mr. Clay. I see. And as you are aware, a lot of the local 
communities have lead ordinances which require inspection.
    I would really love to see HUD put in place some kind of 
coordination with those local communities or States in order to 
protect these young children who inevitably are exposed to 
lead.
    I would really, really like to hear more on that from your 
agency.
    Let me ask you about a question that Representative Green 
also asked, about homeownership. Has there been any movement or 
decision by your agency to increase the number of tenants who 
are actually using their Section 8 vouchers for mortgage down 
payment or to pay that mortgage?
    I heard you say earlier that right now there are about 
5,000 homeowners nationally. Are there any plans to expand on 
that program?
    Mr. Cabrera. That program exists now, and to the extent 
that it can be fully utilized, we're great proponents of 
homeownership. We will continue to keep promoting 
homeownership.
    Mr. Clay. Okay. And so you would be willing to--
    Mr. Cabrera. I would be willing--
    Mr. Clay.--look at another opportunity, another--
    Mr. Cabrera. The issue with the Section 8 voucher and 
homeownership is simple.
    It's fitting the value of the property that someone might 
be able to buy and anything else they can get in terms of 
trying to buy that property and the voucher. That's a financing 
issue.
    But wherever the opportunity comes up, we're happy to 
promote it.
    Mr. Clay. Thank you for that response.
    What has been your agency's overall reaction to this 
proposed law?
    Mr. Cabrera. Well, it's much of what I noted in my opening 
statement, Congressman.
    It's basically that we believe we should stay on a budget 
based system. We believe that the issue is simplification more 
than anything else. We believe that PHA's are good stewards of 
their money, and that they know their markets better than we 
know their markets, and so therefore, we need some rent 
flexibility and some flexibility with respect to how income is 
certified.
    We believe that with all of those tools, I think everybody 
wants just a better business model, and that's what we're 
proposing, is a better business model to get and to serve more 
people.
    Mr. Clay. Thank you for your response.
    I yield back.
    Chairwoman Waters. The gentleman's time has expired.
    Mr. Sires from New Jersey.
    Mr. Sires. Thank you, Madam Chairwoman.
    Mr. Assistant Secretary, do you have a breakdown of the 
people who get Section 8--say seniors, veterans--do you have 
any, of the total?
    Mr. Cabrera. Congressman, every quarter, we report to 
Congress on exactly what that breakdown is. We're happy to 
provide you a copy of that.
    Mr. Sires. Would you?
    I guess I am looking for a way to make the Section 8 
program more senior friendly, more disabled friendly, and more 
veteran friendly. We're obviously going to get more veterans. 
What recommendations would you give this body that would make 
that possible, in your eyes?
    I know that Section 8 is broad, and I saw the formula that 
you put up. I can see it from here.
    But what recommendations would you give us to make it more 
friendly for those folks?
    Mr. Cabrera. For the veterans?
    Mr. Sires. Veterans, seniors, and disabled.
    Mr. Cabrera. I think on the elderly side, what I noted 
earlier, about packaging things in a particular way is 
important, and this also would apply to folks who are disabled.
    The issues, housing folks who are elderly and housing folks 
who are disabled, are similar in many ways, mostly have to do 
with not just the housing but the services package that comes 
with it.
    So trying to coordinate what is done with someone who is a 
voucher holder with all of the other things that they might 
receive I think has value. I think it would work well.
    For example, someone who is elderly, they typically are 
receiving Social Security, up to a certain amount, or they're 
getting Medicare help, and there's a package of services that 
they're getting.
    And coordinating that with the unit that they're in, so 
that the unit, for example, lends itself to the services that 
they might need is something that has value, and we're working, 
and we've been working on, for quite a while.
    On the veterans' side, we--yesterday we opened the--this is 
a broader issue, but we've just started a housing locator 2 
weeks ago at HUD, and so we're opening the housing locator to 
all veterans, period.
    That means when they come home, they can look for a place 
to live if they need one, and the locator will provide whether 
or not it's a Section 8, it's a landlord that accepts Section 8 
or if it's a public housing unit or if it's just a market unit.
    Beyond that, the issue on Section 8 is a budget based 
issue, so a lot of that would probably need to be worked within 
the concept of the budget of Section 8.
    Mr. Sires. Do you recommend that, if you're a veteran or a 
senior, that it be weighted a little more than the rest of the 
components of the formula?
    Mr. Cabrera. I think as a senior, you're getting vouchers 
under a different program already, so that's a given.
    VASH is the program for homeless veterans, and it's a pilot 
program, and it's been around since 1991, so that's a discrete 
program.
    My sense of life is that there would be considerable stress 
about--from a lot of quarters--about the fact that there are a 
lot of families who need housing.
    I'm not sure that--I think when issues, in terms of 
vouchers or anything else, start falling into areas of set-
aside, that people tend to react pretty strongly.
    Mr. Sires. Thank you.
    Thank you, Madam Chairwoman.
    Chairwoman Waters. Thank you, very much.
    Mr. Murphy of Connecticut.
    Mr. Murphy. Thank you, Madam Chairwoman.
    I wanted to return for a moment to the subject that Mr. 
Lynch and Mr. Shays, I believe, brought up, although I was out 
of the room when you may have answered his questions, and it's 
obviously a parochial concern that you understand, being 
originally from Massachusetts and Connecticut.
    Obviously, we have one of the highest costs of living in 
the Nation, but we also have some of the greatest disparities 
of wealth. We have some very poor people living in our cities 
with some relatively--some very high housing costs where we 
have, as Mr. Lynch said, people paying 50 percent of their 
income in housing.
    And I guess I want to understand, when you talk about 
flexibility for PHA's in trying to maybe deal with some of the 
nuances geographically, that sounds to me, coming from 
Connecticut, as a means to spread, to have a PHA spread 
vouchers out to fewer people, maybe understanding that the 
amount they need might be more, so that fewer people might end 
up getting served in Connecticut and more people might get 
served somewhere else.
    And so I guess my question is, as we're trying to address 
the sort of higher cost of living areas, is it a matter of just 
giving flexibility to PHA's or is this a matter of increasing 
the sort of end strength of the money that we put into the 
program?
    Mr. Cabrera. No, I think it's a matter of the flexibility 
in the PHA's.
    I don't think that it follows that it would be fewer people 
at all.
    I think one of the issues that is faced by most PHA's is 
that they administer. The cost of administering the whole 
income certification process, the whole rent-setting process is 
enormous for them.
    And I think on the one hand--I mean that from an 
administrative perspective.
    I really wasn't addressing that issue. I was trying to say, 
for PHA's, first of all, PHA's know far better and can tell you 
more acutely what their economics are than we can.
    The fair market rent standards that are used for the 
payment standard in the Section 8 program are 2 years behind 
today. That's the way it's designed, statutorily. They know 
their markets more recently, they know the data in their 
markets more recently than that.
    And so what we're trying to say is, let them use the data 
locally that they have to set these standards. I'm not saying 
don't look at them. I'm just saying give them the flexibility 
to use an alternative set of data in order to make these calls.
    And in terms of income certification, currently what we 
have is income with any number of deductions and additions and 
things that affect income in so many different ways, in so many 
permutations, one way on one day, one way on another. Trying to 
simplify what that is would be enormously helpful to PHA's.
    So most of the issue I was really addressing was the 
administration of the housing choice voucher program by PHA's.
    Mr. Murphy. And for a moment, I just want to turn to the 
issue of supportive housing, which is a major topic in 
Connecticut. We're beginning to do it very well, to try to 
partner some essentially State-funded social programs with some 
federally funded social programs with Section 8 vouchers.
    And this is maybe by means of just educating me on what our 
Federal Government is doing to help partner with States' 
efforts to try to put together Section 8 vouchers with some 
critical social services that hopefully are eventually going to 
lead, be part and parcel of our effort to move towards 
homeownership, move towards some type of income growth for 
these individuals, to just talk for a moment about what the 
Federal Government may be able to do to help a State like 
Connecticut on supportive housing issues.
    Mr. Cabrera. Again, just reiterating what I noted earlier, 
we're very much in agreement that, to the extent--so much of 
that has to do with accessibility to the overall menu of 
subsidy available to a person.
    And so one of the things that we've been focused on is 
trying to create a spate of options for someone who needs 
supportive housing, whomever they might be, so they don't have 
to go to the various windows, that you go to one place.
    And that is the single biggest effort that we're taking in 
that regard.
    Mr. Murphy. And that would be within that voucher?
    Mr. Cabrera. It would be within the entire spate of--no, 
not within the voucher. It would be within the--remember, these 
are different subsidies, so it can't be within the voucher.
    But to coordinate, for example, with HHS or with any other 
component out there that is the provider of that service, 
that's really--it's an issue of essentially everybody 
integrating with one an other in order to make sure that 
whomever the recipient is of the subsidy, they're getting what 
they should be getting, they're getting what is offered to 
them, and they're aware of it. That's a big issue, is 
awareness.
    Mr. Murphy. Thank you.
    Chairwoman Waters. The gentleman's time has expired.
    Mr. Ellison for 5 minutes.
    Mr. Ellison. Madam Chairwoman, thank you.
    Thank you for coming today. I just have a few questions, 
but I don't have much time.
    Currently, the policy of HUD with regard to verifying 
whether or not the units have lead in them is such that HUD 
relies on landlords to find out whether there's the presence of 
lead; is that correct?
    Mr. Cabrera. That's Federal law, yes.
    Mr. Ellison. Yes. Well, let me ask you this.
    Given that landlords sometimes--you know, the Federal 
Government can't really adequately know whether landlords are 
doing this all the time, and given the high risk and the 
serious danger lead presents to developing children, what are 
your views on whether HUD should have a role on verifying 
whether there's presence of lead in the units, in Section 8 
units?
    Mr. Cabrera. The--first of all, all the lead issues at HUD 
are in another office. I'll answer your question, nonetheless. 
But that isn't within PIH.
    We essentially will do what Congress tells us to do. At the 
end of the day, the Act itself says that the landlord has that 
responsibility.
    Mr. Ellison. Yes, I'm aware of that. And the way I framed 
the question to you was not what does the Act say.
    Mr. Cabrera. Right.
    Mr. Ellison. I told you what I understood it to say.
    Mr. Cabrera. Right.
    Mr. Ellison. I'm asking you your views on protecting 
children, and between the landlord and HUD, you know, what's 
your view on the relative power to make sure that we have lead-
safe homes for those kids?
    Mr. Cabrera. There are limits to what HUD can do because of 
the Act, and so therefore, that's why I'm answering in that 
particular way.
    Mr. Ellison. Yes, but I am asking you in terms of looking 
toward the future and protecting children, as a professional at 
HUD, what are your views on the relative ability between the 
landlord and HUD to make sure we have kids in a lead-safe 
environment?
    Mr. Cabrera. Congressman, I'm happy to have that 
conversation with you some other time, but right now, I really 
can't, not because of any other reason, than I really, I 
haven't really thought about it.
    Mr. Ellison. Okay. You know, that's a fair answer.
    Mr. Cabrera. It's not that I haven't thought about lead 
generally. I have concerns about lead.
    But I'm talking about thought in the context of Federal 
laws--
    Mr. Ellison. I appreciate you saying that you haven't 
thought about it. That's a fair answer. Because, I mean, I'm--
    Mr. Cabrera. It's not that I've thought less.
    Mr. Ellison. Right.
    Mr. Cabrera. It's that I'm happy to think with you on it, 
but I'd have to go back, look at where we are in terms of the 
Federal law, give you an idea from a policy position, which at 
this point in time--
    Mr. Ellison. Yes. Well, let me just tell you--
    Mr. Cabrera.--very difficult for me to do.
    Mr. Ellison.--I'm presently thinking about what we can do 
to protect kids from toxic substances like lead.
    Mr. Cabrera. Yes.
    Mr. Ellison. I'm trying to think creatively on what more we 
could do, since it is so detrimental to our children, and I 
just thought, as a person in your position, you might have some 
thoughts you could share.
    Mr. Cabrera. And I would be happy to have those thoughts 
with you, if you'd like to meet--
    Mr. Ellison. Well, I'm here. Could you share with us now?
    Mr. Cabrera. As I said, I can't do that right now. I'd have 
to actually think about it first.
    Mr. Ellison. Okay. Well, we'll get together on that.
    Mr. Cabrera. That would be great.
    Mr. Ellison. My next question has to do with the adequacy 
of the Section 8 program.
    I know that in Minneapolis, where I'm from, you know, we 
have long waiting lists.
    What are your views on the adequacy of the program to 
fulfill the housing needs of people around the country?
    Mr. Cabrera. The waiting list issue, we--actually, I had an 
earlier question on this.
    One of the things we'd like to do is to provide greater 
tools to--waiting lists are very static. We'd like to provide 
tools that would give the public housing authority the ability 
to monitor that waiting list periodically.
    So one of the issues that I think we would come up with 
there is to get a better idea of who is on the waiting list, 
how long, and whether they even qualify for the voucher at 
certain points in time.
    The second issue on waiting lists has to do with 
essentially what each PHA wants.
    Waiting lists really are developed according to the local 
prerogative of that PHA, so it's largely administered by them.
    Mr. Ellison. Do you recommend that we just have more 
Section 8 vouchers to sort of reduce these waiting lists?
    Mr. Cabrera. No, not in the way that you've just framed the 
question, I would not. We are pretty committed to a budget-
based system, because it works.
    Mr. Ellison. Yes, but I mean, isn't the real issue housing 
people?
    Mr. Cabrera. The real issue is running an effective program 
using Federal dollars to house as many people as you can within 
a budget.
    Mr. Ellison. Yes, but the real issue, the reason the 
program exists, is because there are people who are without 
housing who need it, right?
    Mr. Cabrera. I think issues can be framed in a variety of 
ways. That would be the way I would frame this issue.
    Mr. Ellison. So in terms of me asking you is the number of 
Section 8 vouchers adequate to meet the housing needs of poor 
Americans, you're just not willing to say yes or no?
    Mr. Cabrera. No, actually, I answered earlier, given the 
budget that we proposed in 2008, assuming--
    Mr. Ellison. But without regard to the budget, without 
regard to the budget--
    Mr. Cabrera. Oh, just generally?
    Mr. Ellison. Yes.
    Mr. Cabrera. No, I think it is adequate.
    Mr. Ellison. You think it is adequate?
    Mr. Cabrera. Yes.
    Mr. Ellison. Okay.
    Let me ask you this. One of the things about our public 
housing in Minneapolis again is that just maintenance, the 
ability to maintain and keep the property up.
    Have you thought about whether or not the HUD appropriation 
to help public housing meets just the physical plant needs of 
public housing is adequate?
    Chairwoman Waters. The gentleman's time has expired, and I 
would like to ask the gentleman if it is okay for him to 
respond to you in writing on that last question.
    Mr. Ellison. Certainly, Madam Chairwoman.
    Chairwoman Waters. Thank you. Certainly, you will do that, 
Mr. Assistant Secretary.
    Mr. Cabrera. I will be happy to do it, Madam Chairwoman.
    Chairwoman Waters. Thank you, very much.
    With that, we have completed the first panel.
    We would like to thank you, Mr. Cabrera, for being here 
today, and we look forward to getting your written testimony 
for the record.
    Mr. Cabrera. Absolutely. Thank you, Madam Chairwoman, and 
members of the committee.
    Chairwoman Waters. I will call up the second panel. Thank 
you very much.
    For our second panel, we have: Mr. Saul Ramirez, executive 
director of the National Association of Housing and 
Redevelopment Officials; Mr. Curt Hiebert, executive director, 
Keene, New Hampshire Authority, on behalf of the Public Housing 
Authorities Directors Association; Ms. Suniz Zaterman, 
executive director, Council of Large Public Housing 
Authorities; Mr. John E. Day, president, DuPage Housing 
Authority; and Mr. Richard Godfrey, executive director, Rhode 
Island Housing.
    Welcome. Let us get a proper introduction for Mr. Day from 
our ranking member.
    Mrs. Biggert. Thank you, Madam Chairwoman.
    I just wanted to welcome Mr. John Day to the committee. 
He's traveled to Washington from the windy city, Chicago, and 
he is a housing leader in my southwest suburban Congressional 
district, and for over 2 decades has helped thousands of my 
constituents and thousands of others throughout Illinois secure 
safe and affordable housing.
    He's the president of the DuPage Housing Authority in the 
district and he's served in this capacity since 1995. He's also 
executive director of another nearby housing authority, Kendall 
County Housing Authority, and he sits on the legislative board 
of the Public Housing Authorities Directors Association, PHADA, 
where he has served for 2 years.
    In addition, he has worked for the Illinois Housing 
Development Authority and was involved in the administration of 
low income housing tax credit programs, and he is a past 
president of the Northern Illinois Council of Housing 
Authorities, and NAHRO, the Illinois Chapter.
    I'm delighted that he is here today.
    Chairwoman Waters. Thank you.
    Without objection, your written statements will be made a 
part of the record. You will each be recognized for a 5-minute 
summary of your testimony.
    With that, we will start with Mr. Ramirez for 5 minutes.

STATEMENT OF SAUL N. RAMIREZ, JR., EXECUTIVE DIRECTOR, NATIONAL 
   ASSOCIATION OF HOUSING AND REDEVELOPMENT OFFICIALS (NAHRO)

    Mr. Ramirez. Thank you very much, Madam Chairwoman, Ranking 
Member Biggert, and the rest of the members of the committee.
    We appreciate the opportunity to be here, and on behalf of 
the 22,000 agency and individual members that NAHRO represents, 
many of them agencies since 1933, as one of the Nation's oldest 
and largest not-for-profits representing officials that operate 
and produce affordable housing the redevelopment, it is indeed 
our pleasure to be here and speak to these comments.
    I will keep my comments even shorter than the 5 minutes to 
move the discussion along, to say that we appreciate it being 
entered into the record in its entirety.
    We're here to express our support for SEVRA.
    It does several things that are important for stabilizing a 
program that for the last 3 years was thrown into a series of 
gyrations that have caused an imbalance of funding amongst 
agencies, some getting more than they can spend, others getting 
less than they need in order to meet the needs that they have 
out there.
    We also believe that instituting this 12-month formula as 
it was under the House Resolution 20, that it does stabilize 
the program further.
    At this time, unfortunately, HUD has not put this into 
effect yet, and is still funding in many ways under the 
current, and the former amounts that were there before. We have 
seen as a result of the current funding formula that still has 
not transitioned itself to what was authorized by Congress a 
loss of over 150,000 vouchers as a result of this imbalance 
that was created with this formula.
    We also believe that SEVRA, under its--under what's being 
proposed does create an adequate way of reallocating resources 
for housing agencies. It allows with the reintroduction of 
maximized leasing the opportunity for agencies to be able to 
meet their demands.
    It further addresses the challenges of administering the 
program and allows agencies to be able to not just deal with 
the day-to-day challenges but also deal with very specific 
challenges within their communities, such as the hard to house 
and others, that was eliminated through appropriations in prior 
years.
    It does go forward to creating additional rent simplicity 
and allow for household recertifications that are much more 
effective for our operations as providers of affordable 
housing.
    It also creates additional flexibility in housing, and 
quality inspections.
    And as to the effective date of this law, should it move 
forward, we would recommend that if we were able to get this 
going and get it through, that it take effect January 1st of 
2008 in its entirety.
    There are other topics in SEVRA that we have addressed in 
our written testimony, such as the additional reforms that HUD 
can do now. It's great to hear that they still want to create 
additional reforms, but yet to date, 7 years later, many of 
them have not been put into effect, which they could have. 
We've submitted those for the record as well.
    We look forward to getting that done as soon as possible, 
to create greater flexibility.
    The moving to work program. We appreciate that SEVRA has 
addressed it. Our priorities are to take care of those that are 
existing now, to make this a permanent legislation through 
those that are existing, and work to expand it to create 
greater flexibility for those who want to pursue it.
    And finally, on public housing reform, we have some 
additional recommendations that we've made to help improve 
SEVRA that we would hope that the committee would take into 
consideration as we move forward, and finally say that our goal 
here is not just to maintain the program, but to work on 
building the program to allow for additional housing program to 
occur in our Nation, one that is sorely lacking, as there are 
more people in our Nation now who need housing than ever before 
and are not being met by these challenges.
    And with that, Madam Chairwoman, again, thank you for 
having the National Association of Housing and Redevelopment 
Officials here before you, and I will be pleased to answer any 
questions you may have for me.
    Thank you.
    [The prepared statement of Mr. Ramirez can be found on page 
107 of the appendix.]
    Chairwoman Waters. Thank you, very much.
    Mr. Curt, is that Hiebert of Hiebert?
    Mr. Hiebert. Yes, it is, Madam Chairwoman.
    Chairwoman Waters. Mr. Hiebert, executive director, Keene, 
New Hampshire Authority.

STATEMENT OF P. CURTIS HIEBERT, EXECUTIVE DIRECTOR, KEENE, NEW 
 HAMPSHIRE AUTHORITY, AND VICE PRESIDENT FOR LEGISLATION, THE 
        PUBLIC HOUSING AUTHORITIES DIRECTORS ASSOCIATION

    Mr. Hiebert. Chairwoman Waters, Ranking Member Biggert, and 
committee members, my name is Curt Hiebert.
    And I congratulate you. It took my wife 6 months to get my 
name correct.
    I'm executive director of the Keene--
    Mr. Shays. Before or after you were married, sir?
    [Laughter]
    Mr. Hiebert. We were only on a first-name basis before we 
were married.
    [Laughter]
    Mr. Hiebert. I'm executive director of the Keene Housing 
Authority in Keene, New Hampshire, and also vice president of 
PHADA, which is the Public Housing Authorities Directors 
Association, and I'm here to speak on behalf of the PHADA 
members.
    Our association was founded in 1979 and represents over 
1,800 housing authority chief administrative officers.
    We're grateful that this subcommittee is interested in 
pursuing this bill. It is a wonderful reform initiative that 
started during the last Congress and remains a matter that all 
of us are interested in.
    The draft bill language that PHADA has reviewed reflects 
significant improvements over the bill reported last year, and 
in general, we support the legislation.
    We're especially pleased with the treatment of assets, the 
treatment of base housing allowance income, and other 
provisions, including the Section 8 inspections provisions, the 
simplification of the medical deduction, elimination of imputed 
income from assets, and the other things are very attractive 
changes.
    There are a couple of items which we have some concerns 
about and would be glad to work with the committee to seek to 
rectify them. One of them is the effect of the rent reforms on 
public housing. We did some analysis of figures coming back 
from the Office--the Budget Office, and did an analysis and an 
estimation that these could potentially cause between $100- to 
$200 million loss of revenue to public housing authorities, so 
we think this bears some extra scrutiny and would be glad to 
work with you on that.
    Another thing that we would like to see that was not in the 
draft is what was retained in the bill last year, which was the 
moving to work, and I would like to echo some of the things 
that were said by Mr. Ramirez.
    We would like to see the permanence of the program. We 
would like to see it expanded. We would like to see an 
evaluation portion put into that to be able to analyze some of 
the things that have been done very innovatively by some 
housing authorities.
    I'm speaking on a non-biased basis, having been an MTW 
agency since 1999.
    But we would like to see this not continue to be such an 
exclusive club with just less than 1 percent of the housing 
authorities involved with the flexibility that's enabled by 
moving to work, but instead increased, and would be glad to 
work with you on that language, as well.
    We also, PHADA supports the Section 8 provisions that 
return the program's funding allocation system to a unit and 
cost basis with provisions for modest reserves, allowances that 
help agencies recover utilization loss since 2003, and help 
agencies absorb local housing market availability.
    I'll be glad to answer any questions that you may have, and 
again, PHADA is glad to support the efforts of this 
subcommittee in working on this bill.
    [The prepared statement of Mr. Hiebert can be found on page 
98 of the appendix.]
    Chairwoman Waters. Thank you, very much.
    Now, I must ask Ms. Zaterman, is it Sunia or Sunia?
    Ms. Zaterman. It's neither. It's Sunia.
    Chairwoman Waters. Sunia.
    Ms. Zaterman. Even simpler.
    Chairwoman Waters. Ms. Zaterman, executive director of the 
Council of Large Public Housing Authorities.

  STATEMENT OF SUNIA ZATERMAN, EXECUTIVE DIRECTOR, COUNCIL OF 
                LARGE PUBLIC HOUSING AUTHORITIES

    Ms. Zaterman. Yes. Thank you, Madam Chairwoman, Ranking 
Member Biggert, and members of the subcommittee.
    My name is Sunia Zaterman, and I'm the executive director 
of the Council of Large Public Housing Authorities. We'd like 
to thank you for the opportunity to present CLPHA's views on 
the SEVRA bill. CLPHA represents 60 of the large public housing 
authorities in the country, and on any given day, our members 
are serving more than a million households. They manage almost 
half of the Nation's public housing stock and administer 30 
percent of the Section 8 housing assistance program, and we 
estimate there are likely to be another million households 
waiting behind those households trying to get in.
    We welcome this new Congress and your renewed emphasis on 
the central importance of preserving, protecting, and expanding 
affordable housing opportunities. Public housing authorities 
are facing unprecedented budget and program challenges, 
primarily the issue of inadequate resources.
    Over the past 6 years, we have lived with the 
implementation of Administration policies and funding levels 
that are essentially death by a thousand cuts, forcing housing 
authorities to struggle to keep their doors open while 
continuing to serve community needs.
    Despite a very difficult budget and regulatory environment 
over the past 6 years, housing authorities such as Boston, 
Atlanta, the District of Columbia, and a long list of others, 
have utilized tools like Hope VI and the moving to work program 
to greatly improve their public housing infrastructure and the 
delivery and administration of local housing programs.
    We believe SEVRA marks a significant step forward in 
simplifying the administration and funding of the Section 8 
voucher program. We support the provisions requiring 
inspections every 2 years and allowing authorities to rely on 
other governmental inspections. We welcome administrative 
changes to rent-setting and income determination, making it 
easier, without impacting funding levels.
    Given that public housing is currently operating at an 
historic low of 83 percent of operating need, and the 
Administration proposes in their fiscal year 2008 funding to 
fund public housing at 80 percent of operating need, we are 
very concerned that these rent simplification provisions could 
lead to further reductions in operating funds and could have 
the unintended effect of serving fewer families.
    We appreciate that these concerns have been taken into 
account and understand that the bill's costs are significantly 
lower than the CBO's estimates from last year.
    We remain committed to working with the subcommittee to 
realize rent simplification without exacerbating the chronic 
underfunding of public housing programs. We are pleased that 
the subcommittee has introduced a formula that will be more 
accurate by using leasing and cost data from the preceding 
calendar year, thereby removing a 2-year lag in funding.
    We must move back to a unit-based funding system. The bill 
indicates that unspent voucher funds will be recaptured on 
December 31, 2007. CLPHA recommends delaying the recapture of 
unspent voucher funds until the end of calendar year 2008.
    HUD has yet to tell PHA's how much money they will receive 
under a new 12-month formula, and PHA's are very concerned 
about implementing aggressive lease-up plans without knowing 
how much money will be available to cover new voucher 
obligations.
    A 1-year delay would give PHA's enough time to increase 
leasing, spend down fund balances, and align their programs to 
the new formula, and ultimately serve more low income families.
    CLPHA strongly endorses the subcommittee's inclusion of a 
1-month reserve for the first year of the formula. An adequate 
and stable reserve allows housing authorities to mitigate and 
protect against funding risks in a program that is driven by a 
number of market factors completely outside the control of the 
PHA.
    We strongly encourage the subcommittee to allow PHA's to 
maintain a 1-month reserve during each year of the program. For 
a program of this size and scale, a 1-week reserve is simply 
too small. While the bill does not yet include--the revised 
bill does not yet include a moving to work section, we are 
hopeful that the final version of the bill will include a 
provision to permanently authorize and expand the program.
    MTW is our laboratory for innovation, and more PHA's should 
have access to these tools. A review of the current MTW sites 
shows that they have raised the standard of housing services, 
used program flexibility to create jobs, added affordable 
housing stock, served more households, and helped families 
build savings.
    They have also shown that they can operate and manage in a 
way that's accountable without needless and time-consuming HUD 
bureaucratic measures that add costs but add no value.
    The concerns about tenant protections, targeting and 
rigorous evaluation, should be addressed in the MTW provision. 
That is why we have submitted suggested language to address 
these concerns.
    Thank you very much for the opportunity to testify and we 
look forward to your questions.
    [The prepared statement of Ms. Zaterman can be found on 
page 155 of the appendix.]
    Chairwoman Waters. Thank you, very much.
    Mr. John E. Day.

 STATEMENT OF JOHN E. DAY, PRESIDENT, DuPAGE HOUSING AUTHORITY 
       AND EXECUTIVE DIRECTOR, KENDALL HOUSING AUTHORITY

    Mr. Day. Chairwoman Waters, Ranking Member Biggert, and 
members of the committee, I would like to thank you for this 
opportunity to address you today.
    And thank you, Mrs. Biggert, for the wonderful introduction 
you gave me.
    My name is John Day. I'm president of the DuPage Housing 
Authority, the DHA, and also the executive director of the 
Kendall Housing Authority, the KHA. Both of these are suburban 
Chicago countywide housing authorities which administer only a 
housing choice voucher program.
    Currently, due to portability, the DHA is administering 
about 2,900 vouchers while Kendall is at 200. The authorized 
cap for DuPage is 2,571 and 160 for the KHA.
    Among various programs that we participate in are family 
self-sufficiency, homeownership, development and preservation 
of affordable housing, and an employment program through a 
business incubator in our offices.
    Overall, the proposed legislation has many positive items 
for a PHA and I support its passage.
    There are a few areas I would like to discuss further.
    In terms of operations, there are some very positive things 
with respect to inspections, being able to pay for units that 
had failures of non-life-threatening reasons will allow a PHA 
greater flexibility in helping to minimize the disruption of 
voucher holders' lives. Some even end up having to rent two 
units while the repairs are being performed, and only one unit 
can be subsidized at a time.
    This last year, the DHA performed nearly 4,500 inspections. 
1,146 of those failed due to non-life-threatening violations. 
242 of those were new move-ins whose lives were disrupted. This 
can also be used as a tool to recruit new landlords.
    As for biennial inspections, last year 65 percent of the 
DuPage Housing Authority units passed on their first time. Our 
inspection staff knows who the good landlords are and who are 
the ones who need more work.
    There's also a check and balance with respect to 
administrative reviews on this, so I believe this is very 
helpful.
    As for income reviews, last year interim recertifications 
was a substantial part of what we had to do. We did over 2,000, 
almost half of our total income reviews. The majority of these 
were for reductions. This will significantly reduce the 
paperwork that is involved that we have to deal with.
    About 42 percent of our households are on a fixed income. 
The vast majority are either elderly or disabled.
    By having reviews of their income once every 3 years, the 
net result will be reduction of administrative 
responsibilities, about a 14 percent saving in staff, overall 
staff time.
    I keep mentioning administrative relief to PHA's. There is 
concern in the public housing industry, in talking to others in 
the field, that if you reduce some of the efforts we have to 
make, there's the possibility there will be a reduction in fees 
to follow.
    I would say that if we free up staff time, as I hope this 
legislation will, it will allow us to do other efforts and 
initiatives that we wish to do, those being working more on 
portability and also increasing our outreach to landlords.
    The DHA is one of those housing authorities that will lose 
money because of the continuing resolution. We have unspent 
balances which we would like to do. However, before we can do 
this, we need to know that we can go over our cap. We have 
people on a waiting list, we're pulling names off a waiting 
list constantly. We want to use our funds up, but the question 
is, can we go over that cap?
    The last item I'd like to talk about is portability.
    Mrs. Biggert will join me in saying DuPage County is a 
desirable place to live. Since 2003, we've had people port into 
DuPage County with their vouchers from 38 other States and from 
30 other housing authorities within Illinois. Just last year, 
we had 509 total ports into DuPage County, while we had 188 
porting outs.
    To put it in perspective, about one out of every five 
voucher users in DuPage and Kendall Counties are ports from 
another county.
    Now, as I understand, there's a proposed amendment which 
would require absorbing all incoming portable vouchers. The 
problem we have with this is, because, as you can see from the 
large number of ports in we have, we would never pull anyone 
from our waiting list, and I don't think that's fair to the 
residents of DuPage County, just continuing having the ports.
    Now, if a PHA absorbs incoming portable vouchers and 
receives funding for those new voucher holders in next year's 
allocation, I think this solution, or this problem would be 
overcome.
    In closing, I ask for your consideration of one additional 
item.
    When the legislation is approved, and I'm optimistic about 
that, please leave the program alone for 3 years so PHA's can 
truly make it work. I am confident you will be pleased with the 
results.
    I would also like to extend my appreciation to Arthur 
Donner, who is sitting behind me, the chairman of the DuPage 
Housing Authority Board of Commissioners, for joining me today.
    Thank you again for this opportunity, and I'll be glad to 
address any questions.
    [The prepared statement of Mr. Day can be found on page 86 
of the appendix.]
    Chairwoman Waters. Thank you, very much.
    Mr. Richard Godfrey, Rhode Island Housing.

STATEMENT OF RICHARD GODFREY, EXECUTIVE DIRECTOR, RHODE ISLAND 
  HOUSING, ON BEHALF OF THE NATIONAL COUNCIL OF STATE HOUSING 
                            AGENCIES

    Mr. Godfrey. Thank you, Madam Chairwoman, and Ranking 
Member Biggert.
    I also want to thank you, Madam Chairwoman, for joining 
NCSHA at our town hall meeting earlier this week to talk about 
housing issues, and also for meeting with my counterpart from 
California, Terry Parker, and our executive director, Barbara 
Thompson, so that we can explore housing reform going forward.
    I also had the opportunity this week to speak to my two 
Congressmen, Congressman Kennedy and Congressman Langevin, and 
they are extremely supportive of the efforts that you are 
taking and the direction of this bill.
    I also yesterday spoke with the heads of our two largest 
public housing authorities, Providence and Newport, and they 
are very supportive of the direction of this bill.
    I have submitted detailed testimony that addresses the 
direction of the Act, but I do want to address a couple of 
questions which were raised today by various Congressmen.
    And with all due respect to my good friend, Orlando 
Cabrera, I can tell you that there are not enough vouchers in 
America today, and going to a budget based formula instead of a 
unit based formula has reduced the number of vouchers in Rhode 
Island by 20 percent over the past 2 years.
    There have also been some questions raised about the 
validity of waiting lists. Well, we opened our waiting list 3 
years ago, and the last time we did that was 10 years ago, and 
10 years ago people camped out for 5 nights just to get on the 
waiting list for a voucher.
    Three years ago, we thought we had a better system. We had 
an open application period and then we moved to a stratified 
lottery where we pre-screened the residents and then drew a 
lottery, so our least fortunate wouldn't have to get in line.
    Notwithstanding that new system, people camped out again, 
because they were so desperate for a unit. And when all was 
said and done, people who applied are having to wait 10 years 
for a voucher.
    And I spoke to the people who were on line, and there were 
young women with children, there were grandparents, and it's 
very hard to tell them, ``You know, you need housing today, but 
the earliest I can get to you is 10 years from now.''
    And unfortunately, immediately after we went through that 
waiting list system, you went to a budget based formula. That 
budget based formula pushed that waiting list from 10 years to 
15 years.
    So the people I took onto the list in 2005 are going to 
have to wait until 2019 before they can get a housing unit. 
Those women with children, those children will be grown, and 
those grandmothers will not likely be with us anymore.
    We then talk about moving to work. Well, you need a place 
to move to. In Rhode Island, we have people who are living in 
shelters and going to work. The average wage earner in Rhode 
Island earns $10 an hour. If you work 40 hours a week at $10 an 
hour, you would have to pay 60 percent of your income for the 
average rent in Rhode Island.
    HUD's formula, they call it fair market, but it is neither 
fair nor market. We need flexibility, but for too long, 
flexibility has meant there's nothing left to cut, and we can't 
have that anymore.
    We need flexibility, but we also have to have new programs, 
new programs to have an affordably housed America, so that when 
I walk the waiting lines and I talk to people, I don't have to 
say, ``Gee, I'd love to help you, but it has to be 2019.''
    Madam Chairwoman, I want to thank you and I want to thank 
Chairman Frank for moving so quickly in bringing a new vitality 
and hope to housing in America.
    For too long, we have been on the defensive, and we've had 
cuts and hurtful regulations.
    But in speaking to my delegation this week and in speaking 
to my counterparts across the country, there is a new hope.
    It's been a long, cold winter in Washington, and I'm not 
just referring to the weather. There is a warm breeze coming. I 
hope it blooms into housing for all Americans.
    Thank you, very much.
    [The prepared statement of Mr. Godfrey can be found on page 
92 of the appendix.]
    Chairwoman Waters. Thank you very, very much.
    I will yield to myself 5 minutes for questioning.
    Let me just say to all of the panelists, I was talking with 
some of the staff back here about unit base versus what you 
guys are all complaining about, and I'm going to pay special 
attention.
    They tell me we have something of a hybrid that is being 
proposed in the bill.
    Everybody is shaking their heads like, ``Well, tell me 
about this hybrid that I don't really, really understand at 
this point,'' that I'm going to pay very special attention to.
    Let me start with Mr. Ramirez.
    Mr. Ramirez. In brief, the formula that's being proposed in 
SEVRA goes a long way to rectifying a simply dollar based 
program where you're really capped at a dollar amount and 
unable to reach the number of families that you could with 
those dollars.
    And again, the current distribution formula has shown to 
prove, or the one that was in effect for the last year has 
shown to prove to be very ineffective and creating a 
substantial imbalance.
    SEVRA goes a long way to recalibrating and establishing 
with this 12-month view a fair distribution of those dollars, 
still sensitive to the budget, but recognizing that we're 
trying to reach more families to serve.
    Chairwoman Waters. But am I to understand that's not good 
enough?
    Mr. Ramirez. Well, certainly it does not go as far as the 
legislation prior to it being amended several years ago, which 
was a completely unit based system that allowed for full 
funding on those bases, but it does go a long way to bringing 
some stability and also maintaining some rigor on the funding 
side.
    Chairwoman Waters. Thank you.
    Ms. Zaterman.
    Ms. Zaterman. I just want to add, prior to 2004, when we 
moved to what was essentially a snapshot formula, housing 
authorities had a contract with HUD. It identified how many 
vouchers they had.
    And they understood that within the fair market rent and 
payment standard constraints, that every one of those vouchers 
would be funded, and at that time, housing authorities were 
utilizing 97 percent of those vouchers, meaning 97 percent of 
that allocation was out on the street being used by housing 
authorities and households who were eligible.
    Currently, we have an average of 90 percent utilization.
    In 2004, Congress said, ``You have a snapshot. We're going 
to look at a 3-month period of what you were leasing in this 3-
month period and your funding is based on that amount.
    ``Regardless of who's on your waiting list and what you 
need in your community, you are only going to get this amount 
of money. You decide how many households you are going to 
serve.''
    What this does is move us back to more accurate leasing 
data instead of a very isolated short period of time, but it 
does not get us all the way back to a unit based system that 
says the Federal Government has said, ``You can serve X number 
of households in your communities and we will provide the 
funding in order to do that,'' and that is really our goal.
    Chairwoman Waters. Got it. All right.
    Mr. Godfrey, it has been implied that your waiting lists 
may not be really what you think they are, that there are 
people on the waiting lists, names that you have, who are 
perhaps not eligible, you need more income verification, 
perhaps they have dropped off, and they don't require your 
assistance anymore.
    How good are your waiting lists?
    Mr. Godfrey. How good can a waiting list be if it's 7 years 
old? And that's part of the problem.
    When we talk about years on the waiting list, that takes 
into account all of the checking that comes down the line.
    In fact, that actually understates the length of time, 
because as a person moves to the top of that waiting list, we 
start the screening early for eligibility, so that means we 
sift off those who are no longer income-eligible.
    But what the 10-year waiting list means, or the 15-year 
waiting list means is, if you're on the bottom of that list, 
it's going to take you 10 years to find an apartment.
    So yes, there are a lot of people on there who, when the 
time comes, may or may not have been qualified 7 years ago, but 
it takes 10 years to get from the bottom of the list to even 
being considered for an apartment, and then the tragedy is, 
because of the FMR's in Rhode Island, it takes that person 6 to 
9 months, and we've been having people turn them back because 
they can't find a landlord who will take the voucher at the 
FMR. It's just too low.
    Chairwoman Waters. Thank you, very much.
    Ms. Biggert.
    Mrs. Biggert. Thank you, Madam Chairwoman.
    Mr. Day, what would it mean if you, with the HUD budget 
calling for removing the voucher cap so that the unspent 
balances can be used for the vouchers that you have above the 
cap, but right now, we have the CR, which is really going to 
take away that pool of money that you have reserved for those 
people that are capped so that you can't give them out?
    Mr. Day. Yes. I'm sorry, the--
    Mrs. Biggert. Could you explain how this policy, number 
one, without removing the cap, will help you better anticipate 
costs and improve services, but also what does it mean with the 
CR now that has said that that money has to be returned?
    Mr. Day. The CR calls for us to return approximately 
$950,000. That's equating to between 100 and 110 vouchers less 
we will be able to help people
    We won't necessarily have to put people out in the street, 
but what it means is it's going to be longer for people coming 
off of our waiting list because we don't have that pool of 
funds.
    Mrs. Biggert. How many people do you have on the waiting 
list?
    Mr. Day. Right now, approximately 1,100, but we have not 
taken names on our waiting list since 2002.
    Mrs. Biggert. 2002?
    Mr. Day. Yes.
    Mrs. Biggert. So that means that those people that you 
could serve if the cap were limited right now, you would be 
able to give them the vouchers, but you can't do that, and then 
the pool of money will be gone.
    How long would it then take you to get back a reserve to be 
able to--or you'd have to increase your numbers then to get the 
funding for 2008?
    Mr. Day. My estimation is close to a year.
    We have a turnover in our program of approximately 1 
percent a month. In addition, something I'll add, something I 
was notified of yesterday, and it was not discussed earlier, on 
absorption of portability.
    I was notified yesterday that a neighboring housing 
authority absorbed 78 of our ports. We now have to make up 
those numbers, also, and I have to do that, in our position, 
also losing additional money, so I'm kind of getting it from 
both sides.
    Mrs. Biggert. Okay.
    How about the moving to work housing, would you like to be 
included in that?
    Mr. Day. I'd like to be the first person in line. Thank 
you.
    Mrs. Biggert. Okay.
    And why aren't you now? Is it because it's a smaller public 
housing, or just that there were so many, just so many housing 
authorities that could be in it?
    Mr. Day. Initially, and Mr. Hiebert can better answer that, 
because he is one, I believe it was in 1998 or 1997, that HUD 
offered this as a demonstration program. We did not make 
application at that time.
    I've watched it since then. I've been very impressed with a 
lot of the results and abilities to help eliminate a lot of the 
obstacles in helping to provide quality services to our 
clients.
    Mrs. Biggert. Okay.
    Maybe, Mr. Hiebert, you could tell me a little bit more 
about that.
    Mr. Hiebert. Yes, thank you.
    It was originally authorized in a bill in 1996, the 
Secretary was authorized to engage up to 30 housing 
authorities. I believe two were added since that point and a 
couple have left and done different programs.
    But there have been slots available right now that aren't 
being used, but we would like to see more of them added.
    Some of the things that have happened, for instance, just 
quickly, since 1999, in 1999, 47 percent of the families in my 
family housing were working full-time. Now 65 percent are. 
Income has increased by almost 30 percent in our families 
because we have policies that don't discourage it.
    We consistently have right around 105 to 108 percent 
utilization of Section 8 because of the flexibility allowed.
    I'm not saying that to promote the policies of Keene 
Housing Authority, but what I'm promoting is the fact that we 
were able to recognize our local conditions, our local 
demographics, our own waiting list, our own employment 
situation, and everything about our community. Other 
communities should have that ability, as well.
    Mrs. Biggert. What would happen if you leased up over your 
cap?
    Mr. Hiebert. We would serve more people and that would be 
the only consequence.
    Mrs. Biggert. Mr. Day?
    Mr. Day. If you keep the cap in place and I lease up above 
that, I have to pay for that out of our administrative fees.
    Mrs. Biggert. Okay. Thank you.
    I yield back.
    Chairwoman Waters. Thank you, very much.
    Let's see. Who do we have next here?
    Mr. Cleaver.
    Mr. Cleaver. Thank you, Madam Chairwoman.
    Mr. Ramirez and I have worked together over the years. It's 
good to see you.
    Mr. Ramirez. Good to see you, too, sir.
    Mr. Cleaver. Frankly, you answered all the questions that I 
asked the under secretary a few minutes ago, so I appreciate it 
very much.
    The only remaining issue for me is the issue of scattered 
site housing with the Section 8 vouchers.
    Do any of you have any recommendations on how we solve the 
problem of having vouchers actually only allow us to move into 
the poorest neighborhoods and then the demands from the public 
is, you know, ``It's okay, we don't mind having Section 8 in 
our community, but we want them scattered out.''
    And you can't scatter them because the vouchers won't allow 
you to move into property outside of the lowest income, the 
lowest property area of a community.
    Mr. Hiebert. I have a brief answer to that one, and it's 
under the moving to work flexibility.
    Our contract is directly with our participants, and not 
with the landlords. They are allowed to choose where they want 
to go. There aren't restrictions on the units that they may 
choose.
    And if they want to be closer to where they work or where 
their kids go to school, they have the ability to do that and 
the freedom to do that under our program.
    Mr. Cleaver. But do you have--Mr. Ramirez.
    Mr. Ramirez. I would go one step further in the interim, 
and that is that it's a matter of dedicated resources, in 
trying to reach as many people that are served.
    Currently, the vouchers can only go so far within the 
community, and as you move into other parts of the community 
that cost more to rent, that the subsidy cannot go deep enough 
to be able to house--
    Mr. Cleaver. Yes.
    Mr. Ramirez.--families that can be served there.
    So it's, one, a question of resources, and two, I've seen 
many an agency around the country through our membership really 
get quite aggressive in trying to attract landlords throughout 
the entire community, and as a result, it has produced some 
fruit, but it's really a question of resources and having a 
community make the difficult choice of do we serve more in 
pockets of the community that can house more or do we serve 
fewer and spread those families throughout?
    So it does come down to resources being--
    Mr. Cleaver. Resources.
    Mr. Ramirez. Yes, sir.
    Mr. Cleaver. Thank you.
    I yield back the balance of my time.
    Chairwoman Waters. Thank you, very much.
    Mr. Shays.
    Mr. Shays. Thank you, Madam Chairwoman.
    I'm wrestling with the fact that as I listen to people 
being on the waiting list for 5, 10, or 15 years, it sounds 
more like they're trying to join a golf course or get a boating 
dock space.
    If they're so desperate to be in housing now, describe to 
me where they're living, and am I to assume that after 5 or 10 
years, they still qualify for public housing?
    Mr. Godfrey. You can't say one thing over another.
    Many of the people are living in overcrowded conditions or 
substandard conditions. We have people who are working full-
time, and living in homeless shelters.
    So there are a lot of conditions that people are living in 
that are not suitable.
    Or they could be paying 60, 70, or 80 percent of their 
income for rent, which is more often the case. They're paying 
an extremely high amount.
    And over the course of the waiting list, there are many 
people who do move off, who no longer qualify, who have a more 
stable situation.
    But there are others, especially the elderly or the 
disabled, or the homeless veteran, whose opportunity for 
increasing their income does not come along, so they remain on 
the list forever, because their income is relatively static and 
will be for the foreseeable future.
    Mr. Shays. The Administration has continually tried to get 
rid of Hope VI grants because they say people aren't using 
them, and they've actually been a Godsend in more expensive 
parts of the country, because frankly, you can attract all 
income levels, and you can rebuild an area.
    And I literally have young men and young kids who live in 
housing facilities that--I used UBS employees, but these kids 
literally have at these housing units a pool, a workout room, 
and if they go to the workout room, they're not listening to 
young men and women talk about drug deals. They're talking 
about how they made money in some deal that was legal.
    And what I wrestle with is that when we decided to go to 
vouchers, we lost ownership, and so we just see as inflation 
goes up, and so big surprise, that half of HUD's budget are 
Section 8 vouchers.
    So what is--isn't there logic in getting housing 
authorities to own, in essence, so many units at a commercial 
site, and we buy into it, and then when one unit clears, maybe 
a rental person goes in, and then next time a rental person 
leaves, it's someone under public housing.
    Wouldn't that be a better formula than what we have now?
    Mr. Ramirez. May I?
    Mr. Shays. Sure.
    Mr. Ramirez. Quickly on two points.
    One, there's a constant misperception that's being promoted 
by some that this program has eaten up the HUD budget and that 
somehow it's spiraling out of control in cost.
    And I would be glad to submit the GAO report that was put 
out recently that shows that year after year, adjusting for 
inflation, the Section 8 program has only grown by 4 percent.
    And so--
    Mr. Shays. That's counterintuitive to me.
    I mean, adjusted for inflation, my units in Stamford could 
go up 10 percent. That's inflation.
    Mr. Ramirez. And the market, under the Section 8 program, 
would reflect that your increases in rent may have gone up 10 
percent, but in Laredo, Texas, they went down 20 percent, and 
so it adjusts for the markets throughout the Nation.
    Mr. Shays. Well, what happens is, we get less units. That's 
the bottom line.
    Mr. Ramirez. Well--
    Mr. Shays. I'm just making the point, though. So you made a 
point, and I accept, and I'll look into it.
    Mr. Ramirez. We'll submit it for the record, if you'd like.
    Mr. Shays. But I get to this issue of by not owning, we are 
like the person who is a renter all their life. They don't 
enjoy the--shouldn't the taxpayer enjoy being--you get my 
point.
    Ms. Zaterman. If I could just--
    Mr. Ramirez. On the Hope VI, I'll let Ms. Zaterman speak to 
the Hope VI.
    Ms. Zaterman. Thank you.
    I think the point that you're raising is very critical. We 
need to move back to a balanced housing policy that addresses 
both the demand and the supply side.
    And we've invested a great deal in the voucher program. 
It's a very successful program that addresses affordability, 
but it also has to be responsive to an inflated market.
    When we own units, we can control costs, and now we are at 
a point, the average unit cost for public housing is 
significantly less than it is to pay for a voucher.
    And so we would like to see, partly because we've had 
significant cuts, but it also is a way to control costs and 
control the property, and I think it's very important that we 
look both through Hope VI, through perhaps targeted tax credit 
programs for public housing, and through the moving to work, 
where we can actually produce additional units, where we can 
control those costs over time.
    Mr. Shays. Thank you.
    Chairwoman Waters. The gentleman's time has expired.
    Mr. Clay.
    Mr. Clay. Thank you, Madam Chairwoman.
    In reading testimony, I noticed a difference of opinion on 
the moving to work program, and Ms. Zaterman favors inclusion 
of the moving to work program in the legislation.
    Can you make the case for MTW?
    Ms. Zaterman. Well, I can make the case. I can go back to 
1998 when the Public Housing Reform Bill was passed and there 
was a bipartisan consensus that public housing had been saddled 
with unreasonable and burdensome regulations that did not add 
value.
    The whole moving to work notion is to say, in a local 
market, I have to live in my local market, I have to be 
responsive to my customers, my residents, and my local elected 
officials, and let me have a plan that responds to that.
    If I have too much public housing and not enough vouchers, 
I can fix the mix. If I need more supply and I need less 
vouchers, less tenant base, I can fix the mix. If I have a hot 
employment market, I can target training dollars. If I have a 
slow employment market, I can target dollars to provide self-
sufficiency. If I have a big senior population, I can provide 
supportive services.
    Today, I can only spend my dollar the way HUD tells me I 
can do it, in a very prescribed, and often not very responsive, 
way.
    I believe--I know there's concern about the program. I 
believe there is a way to balance those concerns by having 
tenant protections, by keeping targeting provisions to ensure 
that very low income households are served, and that housing 
authorities are accountable, both to their residents and to 
their local community, and still provide the flexibility that 
they need to operate within their local markets.
    Mr. Clay. So in actuality, the working relationship is not 
really there between HUD and the housing authority, nor is the 
flexibility to allow a fluid program?
    Ms. Zaterman. I couldn't agree more.
    Mr. Clay. Yes, Mr. Ramirez.
    Mr. Ramirez. I would just add that on the flexibility side, 
that we had the assistant secretary earlier talk a great deal 
about creating flexibility and pushing for flexibility.
    There are things regulatorily that HUD can do now that they 
could have done 7 years ago to relieve that burden and create 
greater flexibility, and allow agencies to do more to serve low 
income families, seniors, and disabled in our Nation, and that 
has not happened to date, to the level that it's talked about.
    And the words are much more rhetorical than the actions 
that come out of those words.
    Mr. Clay. So the words sound good, but in actuality, they 
don't apply?
    Mr. Ramirez. That is--
    Mr. Clay. Thank you. Thank you for that response.
    I represent, as I stated earlier, the City of St. Louis, 
and on any given day in our public schools, about 20 percent of 
the student population happens to be homeless.
    Do we, through the voucher program and the long waiting 
lists, do we contribute to that homelessness, and what do your 
agencies do when it comes across your desk, when you see that?
    Perhaps we can start with Mr. Godfrey.
    Mr. Godfrey. You're absolutely right. We have children who 
live in the shelters and they are on our waiting list, but they 
go to school every day from the shelter.
    One of the items which would help turn the voucher into a 
production program is to allow greater flexibility in terms of 
the project-basing.
    That way, we can work with our housing authorities to build 
more units, and bring all of the resources together, whether 
they're tax credits, or HOMF, and build new units.
    And we have housing authorities, Providence Housing and 
Newport Housing Authority, who are willing to work with us, but 
as soon as they set aside project based units, it counts 
against them in their SEMAP score, and they lost those units.
    So they can't participate in linking those units to 
production and to production of units which may provide the 
direct services that people need or in areas that are not 
deeply concentrated pockets of poverty.
    If we're going to increase housing opportunities in the 
suburbs, then we need to be able to offer production so that we 
can have affordable housing there.
    And so the flexibility to not count project based units 
against you would help a lot.
    Mr. Clay. Along those same lines, and perhaps you can take 
us there, Mr. Ramirez, or anyone else on the panel, has the 
replacement of units on a one-to-one basis kept abreast with 
the new development as it replaces public housing units, and 
Section 8 voucher units?
    Mr. Godfrey. I am pleased to say that in our Hope VI 
development--we have one Hope VI development in Newport, and as 
a State requirement, we required one for one, which was not an 
easy task to accomplish, but working with HUD, working with the 
local authority, we did it. We agreed to it up front.
    And so far, we have replaced 400 units out of the 500 units 
of public housing in this development, and we're very proud of 
that record.
    Chairwoman Waters. The gentleman's time has expired.
    The Chair notes that some members may have additional 
questions for this panel, which they may wish to submit in 
writing.
    Without objection, the hearing record will remain open for 
30 days for members to submit written questions to these 
witnesses and to place their responses in the record.
    I would like to thank you all for coming today, for 
spending your time helping to educate us about what really goes 
on in the real world, so that we can incorporate that into our 
thinking and, thus, legislation.
    Thank you, very much.
    I will now call on the third panel.
    This panel consists of: Ms. Sheila Crowley, president, 
National Low Income Housing Coalition; Ms. Barbara Sard, 
director of housing policy, Center on Budget and Policy 
Priorities; Ms. Janet Charlton, president, Triton Advisors, on 
behalf of National Leased Housing Association and National 
Multihousing Council; Mr. Andrew Sperling, director of 
government relations, National Association for the Mentally Ill 
Consortium of Citizens with Disabilities; and Mr. Phil Tegeler, 
executive director of the Poverty and Race Research Action 
Council.
    Welcome.
    Thank you, very much.
    Without objection, all members' opening statements will be 
made a part of the record.
    Let us begin with Ms. Crowley.

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

    Ms. Crowley. Thank you very much, Madam Chairwoman, Ranking 
Member Biggert, and members of the subcommittee, for the 
opportunity to testify today about your legislation to 
stabilize and strengthen the housing choice voucher program.
    Let me begin by expressing our sincere appreciation to you 
and the members of your staff who have done a really terrific 
job of drafting sound legislation for this Congress, the bills 
on the bipartisan legislation, H.R. 5443, introduced in the 
last Congress, as well as the considerable work done over the 
last 2 years by most of us testifying here today and many 
others who have been wanting to protect and improve the voucher 
program.
    The thoughtful process in which you have developed this 
legislation has produced a very good result, which will restore 
the credibility and the predictability of the program.
    And restoring the credibility and predictability of the 
program is essential to getting to the solutions that have 
been--to the questions that have been raised by many members of 
the committee today, which is, what do we do about all the 
people on the waiting lists?
    We have to get the voucher program back to a state of good 
functioning so that we can in fact begin to argue for 
increasing vouchers, and that's the fundamental question. How 
do we grow the program as opposed to reduce it, which has been 
the effect of these policies over the last several years.
    Just a quick thing about the scope of need.
    Seventy-one percent of all extremely low income households 
in the United States pay more than half of their income for 
their rent. Those are households with incomes up to $16,860 in 
Los Angeles and up to $21,720 in DuPage County.
    These are people who are elderly, disabled, on fixed 
incomes, and people in the low wage workforce; 71 percent pay 
more than half of their income for their housing.
    Those are the people on the waiting list. That's why 
they're on the waiting list, because they cannot continue to 
sustain that kind of cost for their housing.
    Among the many positive attributes of this bill are that it 
corrects the funding crisis that was created by HUD's snapshot 
formula. It simplifies the process for determining rent for 
each resident while incentivizing work and protecting elderly 
and disabled people with high housing costs. It streamlines the 
inspection process for owners who operate good properties.
    It maintains the housing choice voucher program's income 
targeting to serve those with the most serious needs while 
adapting that to meet the needs of poor and rural communities.
    It assures that all units of public housing that are lost 
to demolition or opt out are replaced by vouchers, not just 
those units that happened to be occupied at the time that they 
were closed.
    It provides for recapture of unused voucher funds so that 
agencies that can use them are able to use them, and that we 
can work on the mobility and family self-sufficiency objectives 
of the program.
    It helps tenants with good rent payments establish 
themselves as good credit risks.
    And it facilitates greater use of the project based 
vouchers to support production of new rental housing.
    A major improvement of the proposed legislation is that it 
does not include the moving to work program. We strongly urge 
that you not include that as you go forward.
    Our friends in the public housing industry feel very 
strongly, and quite genuinely, that they need the deregulation 
from expanded moving to work in order to survive.
    If you've been paying the slightest bit of attention, you 
know that public housing as an institution has been under 
serious assault in the last 6 years.
    Systematic reduction of public housing funding streams has 
left many public housing agencies depleted and unable to 
maintain basic services and do even routine maintenance. This 
is unacceptable.
    The National Low Income Housing Coalition stands side by 
side with our public housing partners to demand restoration of 
sufficient funds for them to be able to do their jobs.
    However, we see expanding moving to work to other public 
housing agencies as an off-target response to the real problem 
of Federal disinvestment in public housing.
    Moving to work is a demonstration program. We do not 
quarrel with promoting innovation and we think that should 
happen, nor do we doubt that some moving to work sites have 
shown very good results.
    What we object to is the complete failure of HUD to do what 
the legislation intended. That is, to evaluate the experiments 
that moving to work PHA's have undertaken. In the absence of 
evidence of effectiveness, how can Congress consider expanding 
it?
    At the very least, we urge the committee to hold a hearing 
specifically on moving to work, hear from PHA directors and 
tenants, from local officials and local housing advocates, from 
the HUD inspector general, who has lots of things to say about 
moving to work, and the researchers who have tried to assess 
its effectiveness.
    Form your own impressions of this program before 
considering expanding it.
    We oppose any expansion of moving to work until current 
programs are properly evaluated and lessons learned are 
incorporated into the expansion program.
    We look forward to working with this committee as you 
develop this bill for introduction, and support your efforts in 
getting it through the House and Senate.
    Thank you.
    [The prepared statement of Ms. Crowley can be found on page 
80 of the appendix.]
    Chairwoman Waters. Thank you.
    Ms. Barbara Sard.

 STATEMENT OF BARBARA SARD, DIRECTOR OF HOUSING POLICY, CENTER 
                ON BUDGET AND POLICY PRIORITIES

    Ms. Sard. Thank you, Madam Chairwoman, and Ranking Member 
Biggert, for holding this very important hearing.
    My name is Barbara Sard, and I am director of housing 
policy at the Center on Budget and Policy Priorities.
    Thank you very much for holding this very important hearing 
on this extremely positive bill that will do a great deal to 
respond to and fix the problems that have occurred in the last 
several years, and many that had been in the program before 
that.
    What I would like to briefly address is some of the 
questions that have arisen concerning the voucher funding 
formula, briefly on rents, and then highlight some additional 
changes that we hope you will include in the bill when it is 
filed.
    You have heard a great deal already today about the real 
effects of the funding formula that was in use in the last 3 
years. I think we're now in the position where we have to move 
off of theory and look at what has occurred and how do we fix 
the problems:
    150,000 vouchers lost, $1.4 billion in unspent funds 
accumulated in the last 2 years, and our analysis shows that 
only one-third of that money is in reserve because it could not 
be spent, because of the authorized cap issue. Two-thirds was 
not spent and could have been.
    Why wasn't it spent? That's the big question. And the 
answer is that what has occurred in the last 3 years was a 
system without the right incentives. It was an inefficient 
distribution of money in which agencies got the same amount 
regardless of how they performed. That isn't the way we ought 
to run a government program.
    The policy in SEVRA is comprehensive, it is multi-faceted, 
and it is balanced to get at the efficient distribution of 
money and the right incentives to control costs, while at the 
same time responding to some of the needs that have been 
expressed on the committee, that in areas of the country where 
costs grow faster, you have to meet that need or you shrink the 
number of vouchers, as Mr. Shays said, where you have 
concentrations of vouchers and you want to expand where they 
can be used, as Mr. Cleaver was mentioning. Those problems are 
addressed by the formula in SEVRA.
    There are a couple of issues that the members have raised 
that I think are important to look at more closely.
    In the 2007 funding resolution, it is true, as you said, 
Representative Biggert, that about half of the agencies get 
less than they would have under the old formula, but there's 
the other half that get more, and that's always the case if we 
don't have more money to spend.
    And if you look at the fairness of the situation, the 
agencies that got less this year are those that have large, 
often very large reserves, and in every case that we have 
looked at, the reserves far exceed--far, far, far exceeded, 
like four times--the difference in funding, whereas the 
agencies that got more money are those that have been cut each 
year and were facing having to cut another 13,000 vouchers, if 
the formula hadn't been changed.
    But the important thing is that changing the formula is 
only a piece of what needs to be done. This committee really 
needs to make the voucher funding formula part of the permanent 
authorizing statute, and to do it in a balanced way that 
considers issues over time.
    There are a few issues that you've raised that I'd like to 
respond to.
    One is this question of should the formula be re-
benchmarked annually, or every 2 years, or every 3 years?
    And there's no magic answer to this. What I want to 
emphasize is the interrelationship between the answer to that 
question and other features of the policy.
    If you do not re-benchmark annually, that means you're 
going to fall behind what is really needed to pay for the 
vouchers in use.
    And Mr. Cabrera actually told you why that's the case, and 
the answer is that the inflation factors that HUD uses are 2 
years out of date.
    So if you wait 2 years, you're inflating on out of date 
data, and the inflation factors only look at rent costs in the 
market, they don't look at tenant incomes.
    So if you've had a change in a community because a factory 
closes and you re-benchmark only every 2 years, you are doing 
nothing to make up for that agency's added need for funding.
    Well, you could do that if you wanted to, but then the 
agency had better have a substantial reserve, or it is going to 
have to cut at exactly the time it needs more money.
    And one of the things that SEVRA does in a constrained 
fiscal environment is avoid the old policy of having to spend 
extra money to fund reserves.
    It creates a mechanism where the agencies that need the 
most money get it through a recycling process. That is the 
cost-efficient way to do it.
    And on the authorized cap issue, we are fully supportive of 
agencies being able to serve as many needy people on the 
waiting list as they can.
    The hard question is what does exceeding the authorized cap 
in one community do to another community? So maybe we can--
    Chairwoman Waters. Unfortunately, we are going to have to 
go to the Floor. There is a vote going on.
    We have about 5 minutes to get up to the Floor, and I 
understand it is a series of votes, and it's going to take us 
anywhere from 30 to 45 minutes to get back.
    I would like to say to you that if you need to take a 
break, this would be the time to do it.
    We would hope that those of you, certainly, who have not 
testified, would stay.
    We would hope that those of you who have would stay so that 
we could ask some questions.
    I will return. At least several of us will return to 
complete the hearing with you.
    It's unfortunate, but that is just the way it works.
    So thank you, very much.
    [Recess]
    Chairwoman Waters. I would like to thank all of our 
witnesses for their patience.
    Unfortunately, we got into trouble on the Floor, and it 
took much longer than we thought that it would take, but I do 
appreciate your remaining here for this length of time.
    I think that, where were we? We were moving to Ms. 
Charlton.
    You had completed your testimony, right, Ms. Sard?
    Ms. Sard. Yes.
    [The prepared statement of Ms. Sard can be found on page 
127 of the appendix.]
    Chairwoman Waters. So next we will have Ms. Janet Charlton, 
president, Triton Advisors, on behalf of the National Leased 
Housing Association.

  STATEMENT OF JANET S. CHARLTON, PRESIDENT, TRITON ADVISORS, 
INC., ON BEHALF OF THE NATIONAL LEASED HOUSING ASSOCIATION, THE 
 NATIONAL APARTMENT ASSOCIATION, AND THE NATIONAL MULTIHOUSING 
                            COUNCIL

    Ms. Charlton. Thank you, Chairwoman Waters.
    My name is Janet Charlton, and I'm president of Triton 
Advisors, based in Rockville, Maryland, and I'm here today on 
behalf of three trade associations: The National Leased Housing 
Association; the National Multihousing Council; and the 
National Apartment Association.
    These groups represent the Nation's leading players in 
today's market rate and government assisted apartment industry.
    Due to the timing, I think I will totally digress from our 
prepared testimony. Obviously, since the members of the 
committee have copies of that, I hope that if there are any 
questions pertaining to anything that's in the written 
testimony, that you would contact us.
    And what I would like to do, basically, is focus on two 
comments that I've heard made today.
    Most of the day we've heard comments that, indeed, the 
waiting lists for the Section 8 Voucher Program are 
intolerable.
    And we've also heard that, and I've been in this business 
for quite a while, that HUD is somehow statutorily required to 
have their fair market rents lag 2 years behind current times.
    I've never seen that to be true, that they're statutorily 
required to. That they lag 2 years behind, absolutely. That 
they even sometimes lag 3 or 4 years behind, absolutely.
    And what all of this has done is not allowed, not 
incentivized the private sector to become more involved with 
this program,
    If there are waiting lists, doesn't it appear obvious that 
that's due to the lack of product that's out there for these 
people to use for their housing resource?
    Some of the comments that are in this bill are terrific, 
some of the provisions which would allow for decreasing some of 
the administrative burden that not only taxes onto the PHA's 
and certainly disincentivizes the owners, because it's much 
move expensive for an owner to rent to a subsidized tenant than 
it is to rent to a market rate tenant.
    If a market rate tenant walks into a unit, they want to 
take it, but they notice perhaps that, you know, there's a bump 
in the door or there's a slash in the screen, they ask the 
owner, ``Sure, I'll sign the lease, we'll have an addendum that 
those will be fixed.''
    We can't do that with subsidized residents. They have to 
then go back to the PHA, and the PHA has to come and inspect. 
They can't sign a lease until it's fixed.
    And then once the lease is approved, he still has to go 
through another burden of paperwork.
    So what do you have there? You have a family who doesn't 
have any housing. You have an owner that's there within a 
vacant unit, not collecting any rent, and owners don't like to 
do that. It doesn't incentivize them to even tolerate any of 
the delays in the program.
    So with the provisions in this bill that perhaps would 
allow for PHA's to have the discretion, if indeed they knew the 
owner, if they knew the property, if it's been inspected by 
another program, to alleviate those inspections, you might see 
more product coming on-line. I'm sure you would.
    If, in conjunction with that, you get the department to 
issue its fair market rents in a somewhat market coordinated 
manner--if the market can keep up with itself, why can't HUD? 
They have the same computers. They have the same access to 
information. To allow this to go on and on and on has been 
unforgivable.
    There was no shortage of private participation in the 
program when there was a project based portion to Section 8. 
That's how these properties were built. The Section 8 project 
based are indistinguishable from market rate properties.
    The voucher program can and should be allowed to operate in 
that exact same way, indistinguishable from market rate 
tenants.
    My final comment is--and again, there's a number of other 
points in our testimony--in order for the Section 8 Voucher 
Program to work as effectively as it can, some changes should 
be recognized to tie the program closer to a low income housing 
tax credit program.
    It's the only new construction deal in town. It makes not 
only new units available, but it preserves those units that 
certain existing owners are considering opting out.
    If you can increase the amount of project based Section 8 
through attaching vouchers to these units, it will extend their 
affordability, it certainly creates a larger resource than 
what's available now, and you're bringing the private sector, 
the private sector owners back into the game, because without 
them, there's not really a game going on.
    The residents are hurting, and we need to remember, at the 
end of the day, we're housing people.
    The last comment, when I heard these comments made about, 
you know, the insufferable burdens that PHA's go through with 
income certifications, you know, and the owners, the idea of 
going to a 3-year certification for fixed income residents is 
fabulous, because if I can only tell you the amount of fretting 
that goes on in an elderly property when these folks know they 
have to come up with their annual recert, and they've gotten a 
little increase last year in their Social Security, and is that 
going to put them over the top, are they going to have to 
move--you can't believe the rumors that rifle through a 
property when things like that happen.
    And these people shouldn't have to fret about those things 
in life. They have enough other things that they have to focus 
on.
    Chairwoman Waters. Thank you, very much.
    Ms. Charlton. Thank you very much.
    [The prepared statement of Ms. Charlton can be found on 
page 74 of the appendix.]
    Chairwoman Waters. Mr. Andrew Sperling.

STATEMENT OF ANDREW SPERLING, DIRECTOR OF LEGISLATIVE ADVOCACY, 
     NATIONAL ALLIANCE ON MENTAL ILLNESS, ON BEHALF OF THE 
  CONSORTIUM FOR CITIZENS WITH DISABILITIES HOUSING TASK FORCE

    Mr. Sperling. Thank you, Chairwoman Waters, and members of 
the subcommittee.
    My name is Andrew Sperling, and I'm the director of 
legislative advocacy for NAMI, the National Alliance on Mental 
Illness. I'm here today representing the Consortium for 
Citizens with Disabilities Housing Task Force. CCD is a 
coalition of national disability organizations representing 
both people with disabilities, their service providers, and 
their families. Among our organizations are United Cerebral 
Palsy, The Arc, United Spinal Association, Easter Seals, 
Lutheran Services, NAMI, and others.
    I'm here to deliver a message on behalf of the disability 
community and the CCD Coalition with respect to the SEVRA 
legislation, which we strongly support. Section 8 is an 
absolutely critical resource for people with disabilities, 
particularly people with disabilities who live on SSI and SSDI.
    In a couple of weeks, we'll be presenting to this 
subcommittee our Priced Out report for 2006. This will be the 
fifth report we've done comparing SSI income levels to fair 
market rents.
    What we are finding is that a picture that we thought 
couldn't get any worse, is actually finding a way to get worse.
    The affordability gap between what a tenant, someone living 
on SSI in the community, can afford to pay and fair market 
rents for zero and one-bedroom apartments has actually doubled 
since 1998.
    SSI is now at 18.2 percent of median income and falling. In 
order for someone living on SSI to rent a modest one-bedroom 
apartment at the HUD fair market rent, on average, nationally, 
that consumes 113 percent of their monthly income--113 percent 
of their monthly income. For an efficiency, it's 101 percent.
    People with disabilities who rely on SSI for their basic 
needs, people with severe disabilities, are completely priced 
out of the rental housing market. They must have rent 
subsidies, and Section 8 is a program that has to meet their 
need. It is the critical resource.
    As a coalition, our CCD coalition supports SEVRA. There are 
some long-overdue reforms to the Section 8 program that are 
part of this. We supported the legislation last year, and we 
look forward to supporting it again this year.
    It would bring about a more effective funding formula. It 
streamlines the process for rent determination, which is 
absolutely critical for people with disabilities whose incomes 
are static and not going up, because they're on disability 
benefits, and maintains, very importantly, maintains the 
extremely low income targeting for the Section 8 program.
    Section 8 must remain targeted to those with extremely low 
incomes, particularly people with disabilities.
    A couple of other notes. I'd like to summarize my 
testimony,
    We support the project based reforms that were proposed 
last year by your colleague, Ms. Velasquez from New York. We 
believe that these reforms need to be a part of this 
legislation. We would urge you to include those in the 
legislation for this year.
    CCD also has very strong reservations about any expansion 
of the moving to work program. We recognize that this is now, 
as you've heard the testimony today, there's lots of varying 
opinions on this.
    From the perspective of the disability community, 
representing people living on SSI at 18 percent of median 
income, allowing housing authorities the kind of flexibility to 
increase the rent burden on people with disabilities, allowing 
targeting of resources to higher income households, we believe 
is a very dangerous policy to go down, and would actually 
result in the Section 8 program serving fewer people with 
disabilities.
    I would urge this subcommittee not to include any kind of 
expansion of moving to work in the legislation.
    Finally, I want to note that there are now approximately 
64,000 vouchers out there that Congress made a decision over 
the years to target to non-elderly people with disabilities. 
These are 50,000 vouchers that Congressman Rodney Frelinghuysen 
from New Jersey, your colleague, placed in the appropriations 
bill over a period of years.
    There are also tenant-based rent subsidies funded under the 
Section 811 program. There are approximately 14,000 of those.
    We at CCD have a number of concerns about the way HUD has 
tracked those vouchers to ensure that housing authorities 
continue to target those vouchers to people with disabilities 
upon turnover.
    There was guidance that was put out in 2005. We want to try 
and work with this subcommittee to make sure that housing 
agencies that have those vouchers continue to target them to 
people with disabilities upon turnover so those resources 
aren't lost to the larger pool.
    Thank you very much, Madam Chairwoman.
    [The prepared statement of Mr. Sperling can be found on 
page 143 of the appendix.]
    Chairwoman Waters. Thank you, very much.
    All right, let's see. Who is our last witness here?
    Mr. Phil Tegeler.

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

    Mr. Tegeler. Thank you, Chairwoman Waters.
    I'm with the Poverty and Race Research Action Council. 
We're a civil rights policy organization in Washington, D.C.
    As several members of the committee have pointed out, a 
central purpose of the Section 8 program is to give families a 
meaningful choice to move to areas of lower poverty and higher 
opportunity.
    In this context, it is important to understand the damage 
done to this program in recent years.
    In our written testimony, we have included a consensus 
statement of over 50 national, State, and local civil rights 
and housing groups in support of Section 8 voucher reform.
    Footnote 1 of our written statement lists some of the 
restrictions to housing choice that have occurred under the 
current Administration.
    I'll briefly summarize those, because it's an important 
context for this discussion:
    Limits on exception rents that have limited the ability of 
families to move out to higher rent, lower poverty areas in 
recent years under HUD's administration of this program;
    Cuts in mobility counseling all over the country. Small, 
efficient mobility counseling programs in many highly 
segregated metro areas closed down in the early years of this 
Administration and not re-funded;
    Financial disincentives to portability, the ability to move 
across jurisdictional lines and into higher rent jurisdictions. 
You've heard about that already;
    In some cases, explicit restrictions on portability by HUD 
on top of all of the bureaucratic barriers to moving across 
city and town lines, as you've already heard.
    We think the current draft bill begins to repair this 
damage, but respectfully, it does not go far enough. We support 
the new budget formula in the bill and especially the use of 
reallocated funds for excess portability costs. This is a very 
important provision and removes a major disincentive to 
portability on the part of housing authorities.
    But we urge the committee to go further in the following 
ways:
    First, to reform the portability system entirely to require 
mandatory absorption of vouchers by receiving PHA's, eliminate 
the billing procedures, make it a cleaner and easier process 
for a family to move to a community of its choice;
    Secondly, reinstate the exception payment standards system 
so that families can move to higher rent areas, that there be a 
tiered system within metropolitan areas of different rent 
structures for different market, sub-markets within an area;
    Reauthorize the mobility counseling program that assisted 
families to find housing and move into housing outside the 
usual neighborhoods that were described earlier;
    Use deconcentration as a factor in the performance 
assessment of PHA's, an explicit factor;
    Encourage cooperation and regional administration of the 
voucher program.
    Now, some States have already started to do this. 
Connecticut and Massachusetts are good examples of States that 
are experimenting with regional administration of vouchers to 
eliminate these border disputes and billing difficulties.
    We recommend that the committee consider some pilot 
programs and incentives for PHA's to get together and cooperate 
more;
    Finally, looking forward, and perhaps this is beyond the 
scope of the present bill, but I think we need to ask what will 
this Congress do to build on the Moving to Opportunity program?
    What is the next Moving to Opportunity program going to 
look like? What dramatic steps is Congress going to take to 
help families move voluntarily to areas of greater employment 
opportunity and better schools?
    The answer is going to be found in the Section 8 Voucher 
Program. It's the only housing program we have that offers this 
opportunity, and it is up to Congress to press HUD to make it 
more of a choice-driven program.
    Thank you.
    [The prepared statement of Mr. Tegeler can be found on page 
149 of the appendix.]
    Chairwoman Waters. Thank you, very much.
    I do appreciate, again, the time that you have spent.
    As you can see, our members are not here. Our ranking 
member tried to remain, but she really had to catch a plane. 
She just had no other choice.
    But I think that, given the testimony that we have heard 
today, we have learned a lot about not only your thinking, but 
that of some of the others who testified before you.
    So I'll just take all the time that I want to talk with 
you, since everybody else is gone.
    Let me just ask a few questions.
    A lot has been said about portability here today, and I was 
trying to focus on a discussion that I was involved in some 
years ago about portability.
    And it seems to me that the problem does not simply lie 
with HUD or with the housing authorities, but it seems to me 
that we had elected officials, some of them members of city 
council, and others, who were adamantly opposed to portability 
that would bring people into their communities that they 
thought should not be there. It's called racism.
    Are you familiar with that part of the argument, that there 
are communities who do not wish to have Section 8 tenants in 
their community?
    Who would like to take that?
    Mr. Tegeler. I'll start, Chairwoman Waters.
    The beauty of the Section 8 voucher program is that there 
is no city council or board of selectmen anywhere in the 
country that has anything to say about whether families can 
move into their towns.
    And not only that, because it's a program that operates one 
family at a time, there is a chance for real integration to 
occur, there's not a huge zoning battle and a 4-hour meeting at 
night about whether to rezone a parcel for a 20-unit 
development.
    The family has the right to move in, and the city or town 
has no say in the matter, and that's the way the law is set up.
    And frankly, in my experience in my past life as a civil 
rights litigator, many towns are very happy with that 
arrangement, because they don't want to have to decide, you 
know, how many of these low income families are going to be 
allowed into our community.
    It's important that it not be something which is subject to 
local control.
    So that's my one feedback there.
    Chairwoman Waters. How many--well, I guess you all 
understand that the housing authority chiefs are appointed, are 
they not? And who are they appointed by? Mayors. Who votes on 
their confirmation? Members of city councils.
    I saw some of this and the influence of that in a 
particular area. Part of it was in my district.
    Yes, Ms. Sard, you're trying to say something.
    Ms. Sard. I think you're putting your finger on something 
very important, very subtle and difficult to get at.
    And while it is true that the Section 8 program has the 
potential to be kind of integration by stealth, there is still 
a lot that the administering agencies can do to promote it or 
to hinder it.
    The bill as drafted in the discussion draft goes very far 
toward solving the new problems, the new hindrances to 
portability that were created by the funding formula, but it 
doesn't do anything to fix the problems that had been there 
from 2004 and earlier.
    And the truth is that this is a program that doesn't 
accomplish as much as many of us would like to see to really 
promote choice of where people can live.
    There are several changes that could be added to the bill 
that would really advance these goals.
    One is the proposal that's been discussed, to require 
housing agencies to absorb the vouchers that move in, using the 
funds that are recycled within the bill to help pay for that.
    And if you did that, then the issuing agencies wouldn't 
have a disincentive to promoting portability, and the receiving 
agencies might be encouraged, because they would get more 
money. So that helps.
    Chairwoman Waters. All right.
    Ms. Sard. But that doesn't go far enough, either, and we 
strongly recommend that you add to the performance assessment 
section of the bill a specific requirement that performance be 
assessed on achievement of deconcentration of poverty 
objectives.
    Chairwoman Waters. Very interesting. Okay.
    Ms. Sard. And we have a proposal, proposed language that we 
submitted to staff, which I'm happy to send again.
    Chairwoman Waters. Okay. Very well.
    I'm very interested in that, because I think you make a 
good point.
    The other thing that was brought to my attention today that 
I'm very interested in, and you have to give me a better 
feeling and understanding of, is are housing authorities 
interested in building rental units?
    Ms. Sard. A number of them are.
    I think that the experience over the last 5 years with the 
changes that Congress made in 2000 in the project based voucher 
option has been one of the most positive and encouraging things 
that has happened in the low income housing world.
    And in order to encourage development, one of the things 
that housing authorities can bring to the table is the vouchers 
to project base to promote development.
    Some of them have other authority with other money, some of 
them don't, but that's a key thing that within this bill you 
could do to promote that.
    And in addition to the two provisions that people have 
spoken in support of that are already in the bill, there is a 
package of nine other changes to the project based voucher 
section that have been worked on by a very broad-based group of 
stakeholders that would make this aspect of the voucher program 
work even more effectively to promote rental housing 
development.
    Chairwoman Waters. And that's coupled with low income 
housing tax credits?
    Ms. Sard. In part, not only.
    Chairwoman Waters. Not only?
    Ms. Sard. Not solely, but in part.
    Chairwoman Waters. Okay.
    Ms. Charlton. The important part of taking the project 
based and attaching it to the property is the lending 
community.
    They're not going to be able to build new construction, 
whether it be a housing authority, whether it be the private 
developer, unless you have that subsidy attached to the 
project. It can't leave with the resident, or you're not going 
to find a strong lender that will do for you what you need 
done.
    Chairwoman Waters. Okay. We'll pay a lot of attention to 
that.
    The other thought that emerged here today was housing 
authorities doing more to recruit and work with landlords.
    I suppose each housing authority is different. I suppose 
you don't have any real money in the budget to really do a lot 
of outreach and training sessions and getting together and 
incentivizing.
    But what do you do? What do you do to get landlords 
interested in wanting to be a part of our Section 8 program?
    Ms. Sard. I'm happy to take that one.
    Chairwoman Waters. Yes.
    Ms. Sard. There are housing authorities that have worked 
through this problem. HUD put out a publication, under the 
Clinton Administration, that pulled together some of the best 
ideas that housing authorities had come up with.
    It does cost money, which raises the question of the 
adequacy of the administrative fees.
    One of the reforms in the discussion draft would be to 
return the administrative fee in the program to a payment for 
units leased.
    Well, if agencies get paid for their success in leasing, 
then they're going to do more to make sure they can lease. It's 
just common sense.
    And that has been one, in my opinion, it's been one of the 
biggest reasons for the decline in voucher use over the last 3 
years, is that agencies were no longer paid for performance, 
and we have to go back to a pay for performance system.
    Chairwoman Waters. Yes.
    Ms. Crowley. Two comments on how to get landlords to be 
more interested in the program.
    First, in terms of an incentive, the places where housing 
authorities operate efficiently, they get their inspections 
done quickly, they get their payments out quickly, they are 
good partners, are places where landlords are interested in 
doing that.
    So to the extent that housing authorities are incentivized 
to be good partners as opposed to being somebody that the 
landlord has to hassle in order to collect the rent, then that 
obviously is an important thing to do.
    The second thing is, getting back to your question about 
the issue of not accepting voucher holders, whether it's moving 
across the country or moving into the neighborhood, is the 
ability to use rejection of a voucher holder as a tenant as a 
proxy for rejecting a person for some other reason.
    And there are a couple of States and a handful of 
jurisdictions where it is illegal to reject a tenant on the 
basis of their source of income.
    There's no Federal protection along that line, and there 
isn't, and in most places, there is no protection along that.
    So one of the things that would be a very useful thing to 
do, I think, is to really look at the fair housing community to 
develop testing programs where you can begin to really 
document, is this rejection of voucher holders based on their 
voucher holders or is there something else going on?
    And I think that would really give us--I mean, I have my 
instincts, I have my anecdotes. But that would give us a lot of 
really good data on which to develop future policy around how 
to make the voucher program work better.
    Chairwoman Waters. Yes.
    Mr. Tegeler. Just briefly to follow up.
    Some of the other recruitment tools that have been used in 
the past, especially in high opportunity areas, some of the 
better functioning mobility programs have sometimes used one-
time payments to landlords as an incentive device to recruit 
them into the program.
    Also, the idea has come up, which I think Barbara alluded 
to, of performance incentives to PHA's, not just for their 
lease-up rate, but for their lease-up rate in high opportunity, 
low poverty areas, and reward PHA's financially for doing that.
    Finally, and most importantly, it's the rent structure 
that's most important in getting entry into high opportunity 
communities, and as you know, the fair market rent system and 
the way it's calculated, you know, goes to the mean in a 
particular region, and the inner city rents pull down the 
regional average, to the extent that in some metro areas, the 
FMR won't even reach into some of the higher opportunity areas.
    And we're not talking about, you know, single family 
bedroom communities. These are lower poverty areas that have 
lots and lots of rental housing.
    And if you had a more realistic rent structure in these 
metro areas, with tiers, as some States have done, of different 
rent levels for different areas, you could gain more access and 
successfully recruit landlords in those communities.
    Chairwoman Waters. Well, you all have made it very, very 
clear that it is absolutely unacceptable for HUD to use data 
that's 2 years old to determine market rate of the value, so I 
think we can do something about that.
    I don't know if it's a tactic that's used in order to 
reduce the number of participants or what, but I do think that 
that's just too easy to conquer.
    So we'll certainly take a look at that, also.
    Yes, were you trying to say something, Ms. Sard?
    Ms. Sard. I was just going to say that the excuses that HUD 
has had in the past, whether right or wrong, no longer apply, 
because starting in 2008, the data will be available from the 
American Community Survey to do both the fair market rents and 
the inflation factors on a much more current and local basis.
    And if we did not only current but also more local, we 
would address a number of these problems.
    Chairwoman Waters. Well, I thank you all for your patience 
and for being here today.
    Some members may have some additional questions for the 
panel, and they may submit it to you in writing, so without 
objection, the hearing record will remain open for 30 days for 
members to submit written questions to all of you, and to place 
your responses in the record.
    And with that, this hearing is adjourned.
    [Whereupon, at 2:53 p.m., the hearing was adjourned.]


                            A P P E N D I X



                             March 9, 2007


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